One million customers of insurance giant Aviva who were looking forward to a windfall payout of £1000 were today warned the deal may be scrapped.

The insurer says plans unveiled last July to distribute funds in its so-called orphan estate will have to be re-examined in light of falling stock markets and turmoil in the credit markets.

Aviva chief executive Andrew Moss has already begun backtracking from the offer and has opened talks about a lower payout with Clare Spottiswoode, who is negotiating on behalf of policyholders. If markets keep falling, the payout could be ditched all together.

“We are operating in a pretty tricky environment,” said Moss. “It is possible that we reach the conclusion that it is not in the interests of policyholders and shareholders. We are working really hard to try and come to a sensible answer.”

Under the terms of the original deal, Aviva is allowed to re-examine the payout if the FTSE is below 5000. It was at 4179.06 today.

The orphan estate is money built up over decades in the insurers' funds.

The concern comes as the industry slashes bonuses on with-profits policies citing market turmoil.

Customers awaiting the payout — mostly those of Norwich Union and the former Commercial Union — must now wait several months at least for further news.

Some policyholders have already expressed anger that Aviva is spending £10 million on a television rebranding campaign featuring celebrities such as Bruce Willis and Alice Cooper.

Aviva's move comes despite rising sales. In the year to the end of December global sales rose 1% to £40 billion. Life and pension sales are up 11% to £36 billion. But Moss says sales growth is far from a priority, with Aviva trying to reassure that it remains a source of financial strength. It has surplus assets of £2 billion, a solvency level that would still be £1.3 billion even if stock markets fall another 40%.

As it positions itself as a global player, Aviva is adopting the accounting practices favoured by the large European insurers. The Market Consistent Embedded Value rules spread out the profit that will be made from sales over a longer period.

After a large rise yesterday, the shares were up 131/4p to 346p today.