Aviva 2006 Annual Report Download - page 232

Aviva plc
Annual Report and Accounts 2006 228Financial statements continued
Alternative method of reporting long-term business profits continued
New business contribution
The following tables set out the premium volumes and contribution from new business written by the life and related businesses,
consistent with the definition of new business set out on page 224.
The contribution generated by new business written during the period is the present value of the projected stream of after tax
distributable profit from that business. New business contribution before tax is calculated by grossing up the contribution after tax
at the full corporation tax rate for UK business and at appropriate rates of tax for other countries. New business contribution has been
calculated using the same economic assumptions as those used to determine the embedded value as at the start of the year and
operating assumptions used to determine the embedded value as at the end of the year, and is rolled forward to the end of the financial
period. New business contribution is shown before and after the effect of required capital, calculated on the same basis as for in-force
covered business.
New business sales are expressed on two bases: annual premium equivalent (APE) and the present value of new business premiums
(PVNBP). The PVNBP calculation is equal to total single premium sales received in the year plus the discounted value of regular premiums
expected to be received over the term of the new contracts, and is expressed at the point of sale. The premium volumes and projection
assumptions used to calculate the present value of regular premiums for each product are the same as those used to calculate new
business contribution, so the components of the new business margin are on a consistent basis.
New business New business
Present value of new contribution before the margin before the
Annual premium equivalent business premiums effect of required capital effect of required capital1
2006 2005 2006 2005 2006 2005 2006 2005
£m £m £m £m £m £m % %
Life and pensions
France 391 384 3,552 3,530 153 135 4.3% 3.8%
Ireland 190 100 1,273 665 15 16 1.2% 2.4%
Italy 323 252 2,768 2,294 70 59 2.5% 2.6%
Netherlands (including Belgium,
Germany and Luxembourg) 270 323 2,346 2,739 56 90 2.4% 3.3%
Poland 72 47 534 320 28 16 5.2% 5.0%
Spain 248 240 2,059 2,013 184 175 8.9% 8.7%
Other Europe 63 51 308 240 (4) (1) (1.3)% (0.4)%
Continental Europe 1,557 1,397 12,840 11,801 502 490 3.9% 4.2%
Asia 107 63 685 396 26 20 3.8% 5.1%
Australia 58 64 297 337 17 16 5.7% 4.7%
United States 97 66 884 527 20 13 2.3% 2.5%
Rest of the World 262 193 1,866 1,260 63 49 3.4% 3.9%
International 1,819 1,590 14,706 13,061 565 539 3.8% 4.1%
United Kingdom 1,439 1,155 11,146 9,185 327 269 2.9% 2.9%
Total (beforethe effect
of required capital) 3,258 2,745 25,852 22,246 892 808 3.5% 3.6%
Germany has been reclassified from Other Europe to the Netherlands, Lithuania has been reclassified from Other Europe to Poland and Norwich Union’s Dublin-based
offshore life and savings business has been reclassified from Other Europe to the United Kingdom.
1. New business margin represents the ratio of new business contribution before the effect of required capital to PVNBP, expressed as a percentage.