Aviva 2001 Annual Report Download - page 92

45 – Cash flow statement continued
(f) Movements in opening and closing non-long-term portfolio investments were:
2001 2000
£m £m
Net purchases/(sales) of investments 1,223 (1,541)
Net investments (divested)/acquired with subsidiary undertakings (6,165) 105
Changes in market values and foreign exchange rate movements (732) 1,435
Net movement in opening and closing non-long-term portfolio investments (5,674) (1)
Balance at 1 January 23,224 23,225
Balance at 31 December 17,550 23,224
(g) Non-long-term portfolio investments included in the consolidated balance sheet comprised:
2001 2000 Changes in year
£m £m £m
Land and buildings 857 820 37
Other participating interests 25 12 13
Other financial investments 15,886 21,788 (5,902)
Deposits with ceding undertakings 152 145 7
Banking and stockbroking investments 630 459 171
17,550 23,224 (5,674)
46 – Contingent liabilities
In the course of conducting insurance business, various companies within the CGNU Group receive general insurance liability claims,
and become involved in actual or threatened litigation arising therefrom, including in respect of pollution and other environmental
hazards. Amongst these are claims notified in respect of asbestos production and handling in various jurisdictions, including Australia,
Canada and South Africa. Given the significant delays that are experienced in the notification of these claims, the potential number of
incidents which they cover and the uncertainties associated with establishing liability and the availability of reinsurance, the ultimate
cost cannot be determined with certainty. However, the Group’s exposure to such liabilities is not significant and, on the basis of
current information and having regard to the level of provisions made for general insurance claims, the directors consider that any
costs arising are not likely to have a material impact on the financial position of the Group.
Note 36 gives details of the assumptions used in determining the long-term business provision which are designed to allow for
prudence and the appropriate emergence of surpluses to pay future bonuses. Note 37 gives details of the estimation techniques used
in determining the general business outstanding claims provision. Both are estimated to give a result within the normal range of
outcomes. To the extent that the ultimate cost falls outside this range, for example where experience is worse than that assumed for
long-term business, or assumptions over general business claims inflation may alter in the future, there is a contingent liability in
respect of this uncertainty.
The Group is continuing with a review of those past sales of personal pension policies which involved transfers, opt outs and
non-joiners from occupational schemes, as required by the Personal Investment Authority and the Financial Services Authority.
The regulators have extended the initial scope of the review so that further sales are to be reviewed within a second phase
which began in 1999. A provision of some £96 million (2000: £225 million) has been made to meet the outstanding costs of the
extended review, including potential levies payable to the Investors Compensation Scheme. It continues to be the Group’s view that
there will be no material effect either on the Group’s ability to meet the expectations of policyholders or on shareholders.
In addition, the Company has guaranteed the overdrafts and borrowings of certain subsidiary and associated undertakings.
In the opinion of the directors, no material loss will arise in respect of these guarantees and indemnities.
47 – Capital commitments
In carrying on the business of investment, the Group has entered into future commitments, including property development, after
31 December 2001. These amounts are not reflected in the consolidated Group balance sheet on pages 52 and 53. The Group has
in hand a number of property developments which, under contracts already signed, will require expenditure of £207 million
(2000: £51 million) for long-term business and £1 million (2000: £48 million) for general business operations.
90 CGNU plc Annual report + accounts 2001 Notes to the accounts continued