Aviva 2005 Annual Report Download - page 213

Segmental analysis of the components of life EEV operating return
UK France Ireland Italy Netherlands Poland Spain Other Europe International Total
Year ended 31 December 2005 £m £m £m £m £m £m £m £m £m £m
New business contribution
(after the effect of
required capital) 213 91 13 36 57 13 155 2 32 612
Profit from existing
business
– expected return 424 122 29 30 139 48 48 22 33 895
– experience variances:
Maintenance
expenses 12 3 (2) (2) 3 5 (2) 1 (4) 14
Exceptional
expenses1(148) – (5) – (12) – (2) (3) – (170)
Mortality/Morbidity286 29 (1) 2 16 16 5 – 5 158
Lapses3(78) (4) (9) (4) 2 6 1 (6) 9 (83)
Other435 4 (4) 4 (17) 8 2 11 (1) 42
(93) 32 (21) – (8) 35 4 3 9 (39)
– operating assumption
changes:
Maintenance
expenses (21) – 1 (3) 25 2 1 (4) (9) (8)
Exceptional
expenses (4) (3) – – (2) – – 1 – (8)
Mortality/Morbidity519 1 (4) 4 (25) 7 – 2 5 9
Lapses6(130) – (8) – (10) – (2) (2) 4 (148)
Other779 16 – – 59 13 (2) 5 2 172
(57) 14 (11) 1 47 22 (3) 2 2 17
Expected return on
shareholders’
net worth 98 62 10 29 83 10 10 4 23 329
Life EEV operating
return before tax 585 321 20 96 318 128 214 33 99 1,814
1. Exceptional expenses in the UK reflect £47 million relating to ongoing transformation of the life business and £101 million of other exceptional and project costs associated
with regulatory change and strategic initiatives.
2. Mortality experience continues to be better than assumed across most of our businesses, and particularly for protection business in the UK, AFER and unit-linked business in
France and group business in the Netherlands.
3. Lapse experience in the UK has been worse than assumed and mainly relates to bonds and pension business. In Ireland, the adverse persistency has mainly arisen on unit-
linked pensions business.
4. In the UK, other experience profits includes better than assumed default experience on corporate bonds and commercial mortgages.
5. Mortality assumptions have been revised in the Netherlands following the publication of new annuitant mortality tables used for group business.
6. In the UK, the adverse lapse assumption change reflects a more prudent allowance for future persistency experience in the UK following recent experience. In Ireland, the
lapse assumption change mainly relates to unit-linked pension business. Lapse assumption changes in the Netherlands largely relate to group business in the intermediary
division.
7. Other operating assumption changes in the UK primarily relate to the change in annuitant required capital to 150% of required minimum margins which results in a
£110 million one-off benefit. In France other operating assumptions represent an allowance for further tax benefits arising from dividends from subsidiaries. In the
Netherlands, they reflect a variety of changes including increased annual management fees on unit-linked contracts, favourable change in asset mix, and the reduction of
future guaranteed returns on group pensions business in Belgium. In Poland it was previously assumed that the introduction of new individual pension products would lead
to significant conversion of existing policies. The prudent allowance made for this is no longer required.
Financial statements
Aviva plc 2005
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