Aviva 2013 Annual Report Download - page 167

Strategic report Governance IFRS Financial statements Other information
Aviva plc
Annual report and accounts 2013
165
Notes to the consolidated financial statements continued
23 – Fair value methodology continued
The majority of the Group’s assets and liabilities measured at fair value are based on quoted market information or observable
market data. 16.6% of assets and 0.9% of liabilities measured at fair value are based on estimates and recorded as Level 3. Where
estimates are used, these are based on a combination of independent third-party evidence and internally developed models,
calibrated to market observable data where possible. Third-party valuations using significant unobservable inputs validated against
Level 2 internally modelled valuations are classified as Level 3, where there is a significant difference between the third-party price
and the internally modelled value. Where the difference is insignificant, the instrument would be classified as Level 2.
(b) Changes to valuation techniques:
There were no changes in the valuation techniques during the year compared to those described in the 2012 annual consolidated
financial statements, other than those noted below.
(c) Comparison of the carrying amount and fair values of financial instruments
Set out below is a comparison of the carrying amounts and fair values of financial instruments, excluding assets classified as held
for sale. These amounts may differ where the asset or liability is carried on a measurement basis other than fair value, e.g.
amortised cost.
2013
Restated1
2012
Fair value
£m
Carrying
amount
£m
Fair value
£m
Carrying
amount
£m
Financial Assets
Loans (note 24) 23,811 23,879 24,311 24,537
Financial Investments (note 27)
Fixed maturity securities 124,385 124,385 128,160 128,160
Equity securities 37,326 37,326 33,065 33,065
Other investments (including derivatives) 31,250 31,250 27,518 27,518
Financial liabilities
Non-participating investment contracts (note 42(a)) 48,140 48,140 43,741 43,741
Net asset value attributable to unitholders 10,362 10,362 9,983 9,983
Borrowings (note 50) 8,222 7,819 8,324 8,179
Derivative liabilities (note 51) 1,188 1,188 1,643 1,643
1 Restated for the impact of the adoption of IFRS 10. Refer to note 1 for further details.
Fair value of the following assets and liabilities approximate to their carrying amounts:
 Receivables
 Cash and cash equivalents
 Payables and other financial liabilities
 The equivalent assets to those above, which are classified as held for sale
d) Fair value hierarchy analysis
An analysis of assets and liabilities measured at amortised cost and fair value categorised by fair value hierarchy is given below:
Fair value hierarch
y
2013
Level 1
£m
Level 2
£m
Level 3
£m
Sub-total
fair
value
£m
Amortised
cost
£m
Total
carrying
value
£m
Recurring fair value measurements
Investment Property (note 22) — — 9,451 9,451 — 9,451
Loans (note 24) — 3,115 15,362 18,477 5,402 23,879
Financial investments measured at fair value (note 27)
Fixed maturity securities 74,904 40,602 8,879 124,385 — 124,385
Equity securities 36,783 102 441 37,326 — 37,326
Other investments (including derivatives) 24,077 4,283 2,890 31,250 — 31,250
Financial assets of operations classified as held for sale 2,245 282 148 2,675 — 2,675
Total 138,009 48,384 37,171 223,564 5,402 228,966
Financial liabilities measured at fair value
Non-participating investment contracts1 (note 42(a)) 47,889 251 — 48,140 — 48,140
Net asset value attributable to unit holders 10,183 179 — 10,362 — 10,362
Borrowings (note 50) — 831 482 1,313 6,506 7,819
Derivative liabilities (note 51) 218 907 63 1,188 — 1,188
Financial liabilities of operations classified as held for sale — — — — 29 29
Total 58,290 2,168 545 61,003 6,535 67,538
1 In addition to the balances in this table, included within Reinsurance Assets in the Statement of Financial Position and note 44 are £2,048 million of non-participating investment contracts, which are legally reinsurance but do not
meet the definition of a reinsurance contract under IFRS. These assets are financial instruments measured at fair value through profit and loss and are classified as level 1 assets.
Fair value hierarch
y
2013
Level 1
£m
Level 2
£m
Level 3
£m
Total fair
value
£m
Non-recurring fair value measurements1
Properties occupied by group companies (note 21) — — 257 257
Properties occupied by group companies classified as held for sale — — — —
Total — — 257 257
1 Non-recurring fair value measurements are those that are required or permitted by other IFRS to be measured at fair value in the statement of financial position in particular circumstances. Owner occupied property is revalued in
accordance with IAS 16.