An overwhelming majority of investors in the crisis-hit AIG Life Enhanced Fund have chosen not to cash in their policies when the fund closes in December, opting instead to transfer their assets into another investment vehicle that will mature in 2012.

Faced with receiving 87 per cent of the face value of their total holdings in the Enhanced Fund, 95 per cent of investors chose to trust their investments to a Protected Recovery Fund.

A “very small number” of policyholders chose the Exit Plan, which necessitated the sale of some of the Enhanced Fund's assets.  Cairn Capital, which conducted the auction of these assets, managed to secure values “within the indicative range quoted in November”,AIG said.

Those exiting the plan will receive a price of 73.1 per cent of their Enhanced Fund holdings on 14 December, which when added to the 50 per cent cash holding already transferred amounts to just under 87 per cent of their total investment.

Investors in the Protected Recovery Fund were perhaps swayed by the fact that AIG is providing a guarantee on the minimum value of their holdings if realisable asset values do not recover by 1 July 2012.

Nearly 99 per cent of policyholders returned their nomination forms to AIG by the 25 November decision deadline, the firm said; those who did not respond will be automatically placed in the recovery fund.

While AIG life has reached a resolution with investors on the restructuring of the Enhanced Fund, controversy over how the fund was sold by financial advisors and private banks looks set to continue.

A spokesperson for the action group AIG Victims told WealthBriefing its members say they were mis-sold the fund and that there are a number of legal actions in the pipeline.