Aviva 2013 Annual Report Download - page 257

Strategic report Governance IFRS Financial statements Other information
Aviva plc
Annual report and accounts 2013
255
Financial and operating performance continued
lower fixed income security market values partly offsetting
growth in equity markets.
Year ended 31 December 2012
Net investment income for the year increased by £16,762
million to £21,135 million (2011: £4,373 million) reflecting
positive market performance and narrowing credit spreads on
assets as market sentiment improved in the Eurozone. This led
to significant increases in net unrealised gains on investments.
Other income (from continuing operations)
Year ended 31 December 2013
Other income, which consists of fee and commission income,
share of profit/(loss) after tax of joint ventures and associates,
and profit/(loss) on disposal and remeasurement of subsidiaries,
joint ventures and associates, increased by £660 million, or
77%, to £1,514 million in 2013 (2012: £854 million). This was
mainly due to profits on disposal and remeasurement of
subsidiaries of £115 million (2012: £164 million loss), including
profits on disposal of Aseval in Spain (£197 million) and Ark Life
in Ireland (£87 million), partly offset by a £178 million
remeasurement loss relating to Eurovita in Italy following its
classification as held for sale. Fee and commission income was
stable and the share of profits from joint ventures and
associates was £120 million (2012: £255 million loss).
Year ended 31 December 2012
Other income, which consists of fee and commission income,
share of loss after tax of joint ventures and associates, and
(loss)/profit on disposal of subsidiaries and associates, decreased
by £1,053 million, or 55%, to £854 million in 2012 (2011:
£1,907 million). 2011 benefited from the profit on disposal of
RAC (£532 million), whilst 2012 saw a loss on disposal of our
associate stake in Delta Lloyd, lower fee and commission income
and higher losses from our share of JV’s and associates.
Expenses (from continuing operations)
Year ended 31 December 2013
Claims and benefits paid net of reinsurance in 2013 decreased
by £1,508 million, or 6%, to £22,093 million (2012: £23,601
million) mainly reflecting lower claims payments in our
life businesses.
Change in insurance liabilities in 2013 was a credit of
£2,493 million (2012: £430 million charge), resulting from
changes in economic and non-economic assumptions.
The change in investment contract provisions was a charge
of £7,050 million (2012: £4,450 million charge) as a result of
improved investment market conditions causing an increase
in contract liabilities.
The change in unallocated divisible surplus (“UDS”) was a
credit of £280 million (2012: £6,316 million charge).
Fee and commission expense, other expenses and finance
costs decreased by £1,149 million to £6,804 million (2012:
£7,953 million) mainly as a result of the Group’s cost savings
programme. See ‘IFRS Financial Statements – note 7 – Details
of expenses’ for further details.
Year ended 31 December 2012
Claims and benefits paid net of reinsurance in 2012 decreased
by £779 million, or 3%, to £23,601 million (2011: £24,380
million) mainly reflecting lower claims payments in our life
businesses.
Changes in insurance liabilities in 2012 was a charge of
£430 million (2011: £2,284 million charge). This was primarily
due to changes in economic and non-economic assumptions.
The change in investment contract provisions was a charge
of £4,450 million (2011: £1,478 million credit) as a result of
improved investment market conditions causing an increase in
contract liabilities.
The change in unallocated divisible surplus (“UDS”) was a
charge of £6,316 million (2011: £2,721 million credit). UDS in
certain funds in Italy and Spain were negative as at 31
December 2012. The main driver of the movement was a
charge in France due to an increase in fixed interest asset values
from lower risk-free rates and credit spreads.
Fee and commission expense, other expenses and finance
costs increased by £137 million to £7,953 million (2011: £7,816
million). See ‘IFRS Financial Statements – note 7 – Details of
expenses’ for further information.
Profit/(loss) before tax attributable to shareholders’ profits
(from continuing operations)
Year ended 31 December 2013
Profit before tax attributable to shareholders was £1,281
million (2012: £175 million). The increase mainly reflects
lower expenses.
Year ended 31 December 2012
Profit before tax attributable to shareholders was £175 million
restated (2011: £648 million). The decrease was primarily due to
the increased tax charge attributable to policyholders’ returns.
Market performance
United Kingdom and Ireland
UK & Ireland life
The table below presents sales, net written premiums, adjusted
operating profit and profit before tax attributable to
shareholders’ profits under IFRS from our UK and Ireland long-
term businesses for the three years ended 31 December 2013,
2012 and 2011.
2013
£m
Restated1
2012
£m
Restated1
2011
£m
Pensions 5,476 5,158 5,279
Annuities 2,327 3,211 3,832
Bonds 183 379 801
Protection 992 1,228 1,025
Equity release 401 434 317
United Kingdom 9,379 10,410 11,254
Ireland 469 632 917
Life and pensions sales 9,848 11,042 12,171
Investment sales 2,040 1,730 1,689
Long term savings sales 11,888 12,772 13,860
UK Health net written premiums 536 528 473
Sales 12,424 13,300 14,333
IFRS net written premiums 4,228 5,623 6,823
Adjusted operating profit before tax
United Kingdom 930 887 917
Ireland 22 5 47
Life business 952 892 964
General insurance and health – UK health 18 14 12
Fund management 23 11 11
Other operations 131 (14) (17)
Total adjusted operating profit before tax 1,124 903 970
Profit before tax attributable to
shareholders’ profits 717 107 134
1 Restated for the adoption of IAS19. See note 1 for further details.
Year ended 31 December 2013
On a PVNBP basis, sales in the UK long-term insurance and
savings business decreased by £1,031 million, or 10%, to
£9,379 million (2012: £10,410 million). Volumes in the UK
reduced significantly during the year, reflecting our focus on
improving value and capital efficiency.
Pension sales were up 6% to £5,476 million (2012: £5,158
million). Within this, sales of group pensions increased to
£3,809 million (2012: £3,231 million) whilst sales of individual
pensions were £1,667 million (2012: £1,803 million) with
growth in our platform (self-invested personal pension)
business more than offset by lower sales of other individual
pensions products.