Aviva 2005 Annual Report Download - page 164
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Financial statements continued
Notes to the consolidated financial statements continued
39 – Effect of changes in assumptions and estimates during the year
Certain estimates and assumptions used in determining liabilities for insurance and investment contract business were changed from
2004 to 2005, and had the following effect on liabilities and the profit recognised for the year: This disclosure only shows the impact on
liabilities and does not allow for offsetting movements in the value of backing assets.
Effect
on profit
Assumptions £m
Long-term insurance business
Interest rates (1,078)
Expenses (12)
Persistency rates 3
Mortality for assurance contracts 25
Mortality for annuity contracts (39)
Tax and other assumptions (3)
Investment contracts
Interest rates (11)
Expenses (6)
Tax and other assumptions (2)
General insurance and health business
Change in loss ratio assumptions 2
Change in expense ratio assumptions 4
Total (1,117)
The impact of interest rates for long-term business relates primarily to the UK and the Netherlands. This results from the use of lower
valuation interest rates on annuities and other business, reflecting the fall in market interest rates over the year.
The mortality impacts relate primarily to assumption changes in the UK and Ireland.
40 – Tax assets and liabilities
(a) General
Current tax assets and liabilities recoverable or payable in more than one year are £78 million and £339 million (2004: £nil and
£435 million) respectively.
(b) Deferred tax
(i) The balances at 31 December comprise:
2005 2004
£m £m
Deferred tax assets 1,018 908
Deferred tax liabilities (2,458) (1,543)
Net deferred tax liability (1,440) (635)
(ii) The net deferred tax liability arises on the following items:
2005 2004
£m £m
Long-term business technical provisions and other insurance items 1,155 991
Deferred acquisition costs (245) (210)
Unrealised gains/losses on investments (2,561) (1,932)
Provisions and other timing differences (223) (64)
Impairment of assets 1–
Pensions and other post-retirement obligations 488 275
Unused losses and tax credits 57 318
Other temporary differences (112) (13)
Net deferred tax liability (1,440) (635)
Aviva plc 2005 Financial statements
162