Aviva 2006 Annual Report Download - page 240
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Aviva plc
Annual Report and Accounts 2006 236Financial statements continued
Alternative method of reporting long-term business profits continued
Time value of options and guarantees
The following table sets out the time value of options and guarantees relating to covered business by territory at 31 December 2006
and 31 December 2005.
2006 2005
£m£m
France 77 84
Ireland 23
Italy 17 19
Netherlands (including Belgium, Germany and Luxembourg) 146 118
Poland 45
Spain 48
Other Europe –2
Continental Europe 250 239
United States 68 11
Other 45
Rest of the World 72 16
International 322 255
United Kingdom 50 48
Total 372 303
Germany has been reclassified from Other Europe to the Netherlands, Lithuania has been reclassified from Other Europe to Poland and Norw ich Union’sDublin-based
offshore life and savings business has been reclassified from Other Europe to the United Kingdom.
The time value of options and guarantees (TVOG) is most significant in the United Kingdom, France, the Netherlands and the United
States. In the United Kingdom, this relates mainly to non-market value adjustment (MVA) guarantees on unitised with-profit business and
guaranteed annuity rates. In France, this relates mainly to guaranteed crediting rates and surrender values on traditional business including
the AFER fund. In the Netherlands, this relates mainly to maturity guarantees on unit-linked products and interest rate guarantees on
traditional individual and Group profit sharing business. In the United States, this relates to crediting rate, death benefit and surrender on
life business.
The TVOG has increased to £372 million reflecting acquired TVOG from AmerUs of £56 million.
M inority interest in life and related businesses’ EEV results
2006 2005
Shareholders’ Minority
interest interest Group Group
£m £m £m £m
New business contribution beforeeffect of required capital 717 175 892 808
Effect of required capital (176) (33) (209) (196)
New business contribution including effect of required capital 541 142 683 612
Life EEV operating return before tax 1,786 247 2,033 1,814
Life EEV returnbeforetax 2,744 279 3,023 3,696
Attributed tax (830) (95) (925) (1,145)
Life EEV return after tax 1,914 184 2,098 2,551
Closing life and related businesses’ embedded value 16,711 1,387 18,098 15,113