Aviva 2002 Annual Report Download

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Annual report + accounts 2002
A brand new company,
300 years strong

Table of contents

  • Page 1
    Annual report + accounts 2002 A brand new company, 300 years strong

  • Page 2
    ... Alternative method of reporting long-term business 99 Aviva Group of companies 100 Shareholder information Our position 7th No1 25m £28bn customers worldwide premium income and investment sales from continuing operations* largest insurer worldwide We are the world's seventhlargest insurer, the...

  • Page 3
    Our brand: why is it important?

  • Page 4
    ..., but not enough time, brands are increasingly useful as signposts, helping people make choices with confidence. Aviva is determined to build a distinctive brand. Research worldwide revealed that consumers associate the name Aviva with making the most out of life. Building a brand that stands out

  • Page 5

  • Page 6
    ... We reviewed our trading brands market by market and retained the strongest. Now we are rolling out Aviva as a new international brand to reinforce the best and replace the rest. The Aviva brand is already live in many of our operations in Europe and Asia. It will be introduced in Australia, Canada...

  • Page 7

  • Page 8
    It takes time, commitment and consistent delivery to build a strong brand. Norwich Union (UK), Hibernian (Ireland), Delta Lloyd (Netherlands) and Commercial Union (Poland) are valuable assets that we have retained. Protecting the value in our strongest brands

  • Page 9

  • Page 10
    Making our marketing activity work harder We are concentrating our efforts on promoting fewer brands to help achieve greater consistency and value for money from our marketing and advertising activity worldwide.

  • Page 11

  • Page 12
    With 59,000 people working for Aviva around the world, a strong group brand - with shared values of integrity, performance, progressiveness and teamwork - helps unite us as a single team. Creating a stronger sense of belonging

  • Page 13

  • Page 14
    Aviva - making the most out of life

  • Page 15
    ....6bn 23p £9.7bn £959m operating profit before tax** worldwide long-term savings new business sales full year dividend shareholders' funds operating profit before tax from general insurance†**From continuing and discontinued operations, including life achieved operating profit and stated before...

  • Page 16
    ... our long-term savings business aggressively and profitably. 2 To build a world-class fund management business. 3 To take a focused approach to general insurance, with disciplined underwriting and efficient claims handling. 4 To build top-five positions in key markets. 5 To withdraw from lines of...

  • Page 17
    ... 300 Life rebased to 100 FTSE Eurotop 300 rebased to 100 We are looking forward to an open, transparent and competitive European Market becoming a reality. The European Financial Services Round Table (EFR) - a group of top people from Europe's largest banks and insurance companies - is working to...

  • Page 18
    ...of world 5% *With reference to premium income from continuing operations. #Including health premium income. 5 6 1 4 3 2 Group at a glance Long-term savings Key market positions for Aviva No 2 market positions: UK, Poland Top-five market positions: Ireland, Netherlands, Spain, Singapore, Turkey...

  • Page 19
    ... New life and pension sales Net premiums written including share of associates' premiums* Life achieved operating profit before tax *Including health premiums of £928 million. Assets under management Investment sales New external mandates in the UK Net premiums written†Combined operating...

  • Page 20
    ... an impact on our group financial performance. Under the circumstances, our pre-tax operating profit†of £1,798 million (2001: £1,983 million) was a good result. Worldwide long-term savings new business sales held up well, despite a loss of customer confidence in equity-backed investments. Our...

  • Page 21
    ... offer a degree of capital security or a fixed rate of return for investors wary of falling share prices. We are also confident that demand for equity-backed investments will improve as the markets recover in the medium to long term. We see the planned expansion of the European Union in 2004 as an...

  • Page 22
    ... the UK, Spain and Italy, with worldwide total bancassurance sales up 50% at £3.0 billion (2001: £2.0 billion). We delivered a robust life achieved operating profit of £1,524 million (2001: £1,665 million) after strengthening our annuity reserves in the UK. 08 Aviva plc Annual report + accounts...

  • Page 23
    ...). In reporting our financial numbers we include AssureWeb portal. The accelerating move towards e-only products our share of the total partnership sales. will benefit providers, IFAs and customers through a more streamlined policy administration process. Our market-leading equity release business...

  • Page 24
    ... insurers, with some 1.5 million customers. We have a broad product offering, focused on individual savings, protection and unit-linked products. These are sold through a mixture of distribution channels, including tied agents, brokers, a salaried sales force, direct operations and an agreement...

  • Page 25
    ...' share of premiums. Ireland Hibernian is a top-five long-term savings provider in Ireland with a market share of over 11%. Our business strategy is to seek profitable growth through brokers, tied agents and financial institutions such as banks and building societies. Total new business sales were...

  • Page 26
    ... reflected lower pension sales arising in part from changes in tax legislation, offset by increased sales of immediate annuity products as we sought to retain monies from maturing life policies. Operating profit was £200 million (2001: £221 million). The integration of our activities in Belgium...

  • Page 27
    ... 3,500 branches with access to about nine million customers. We are also investing in complementary distribution channels, including financial advisers, brokers and agents. Aviva Vida, our broker and agency company, continues to develop a specialist sales force. Pension reforms, tax incentives and...

  • Page 28
    .... We cover all the major asset classes and specialise in actively managed funds. As a major shareholder in many organisations we are actively involved in issues of corporate governance. This includes talking directly with companies in which we invest. We introduced several new socially responsible...

  • Page 29
    ... Standard & Poor's for our emerging markets fund management team. We were also awarded specialist manager of the year in the UK Pension Awards, in recognition of our SRI expertise. Our retail products, such as unit trusts and individual savings accounts (Isas), are marketed under our Norwich Union...

  • Page 30
    ...Claims Academy in 2002 to provide our staff with the training support they need to deliver excellent customer service. Our expense ratio in 2002 - broadly a measure of costs excluding commission as a percentage of premiums - was 10.4% (2001: 10.5%), one of the lowest among major UK insurers. The key...

  • Page 31
    ... the sale of CGU Courtage. During the year we began work on a common claims platform for Aviva Assurances and Eurofil. This shared approach offers the opportunity for improved operational efficiency and management of costs, coupled with better customer service. 17 Aviva plc Annual report + accounts...

  • Page 32
    ... insurance operations in Australia and New Zealand. General insurance continued Ireland Hibernian is Ireland's largest general insurer, with a 24% market share. We provide cover for all aspects of motor, home and small commercial insurance through brokers and corporate partnerships, by telephone...

  • Page 33
    ... Incident Management concept developed by Norwich Union in the UK. Another important initiative is our broker portal, which provides personal lines policy information to brokers via the internet. Net premiums written rose to £1,009 million (2001: £878 million), together with an operating profit of...

  • Page 34
    ... designed to benefit our employees include the involvement of hundreds of call centre staff in the UK in a work-life balance project sponsored by the Department of Trade and Industry to test a range of flexible working arrangements. Our Dutch business, Delta Lloyd, won the diversity award from the...

  • Page 35
    ... the Acorn Trust, which has developed an accreditation system for small and medium-sized enterprises in the UK. Further details More CSR information can be found in the Directors' report on page 32. Full details of our activities, including our annual CSR report, are on our website at www.aviva.com...

  • Page 36
    .... Performance management Key financial objectives The group strategy is underpinned by the following key financial objectives: • Delivering an after-tax operating profit, including life achieved profit, equivalent to a 10% net real return on opening equity capital; • Maintaining a dividend cover...

  • Page 37
    ... to a sales slowdown in France and Ireland. Long-term savings: new business contribution1 Year ended 31 December 2002 £m 2001 £m (Loss)/profit before tax: - achieved profit basis - modified statutory basis Earnings per share based on (loss)/profit for the financial year: - achieved profit basis...

  • Page 38
    ... on our UK annuity portfolio by a net £123 million (2001: £78 million). On a modified statutory basis, the profit from long-term business operations before tax was £1,022 million (2001: £1,194 million). The year on year reduction principally reflects falling annual and final bonus rates to our...

  • Page 39
    ... of upgrading our unit-pricing system and costs associated with the reorganisation of a number of IFA service centres borne by the UK life service company. Component of shareholders' funds Additional value of in-force1 Other net assets Borrowings2 Shareholders' funds 4.4 12.9 (6.9) 10.4 4.1 12...

  • Page 40
    ...- Australia and New Zealand Equity shareholders' funds 12,046 (651) At 31 December (200) Long-term savings 11,195 General insurance and health 357 Other business 11,552 Corporate Borrowings Minority interests Preference capital Total continuing operations Discontinued operations - Australia and New...

  • Page 41
    ...million for a single event covering more than one country or a series of events throughout the calendar year. This cover protects the net exposures of our individual business units who have their own reinsurance in place. Mike Biggs Group Finance Director 27 Aviva plc Annual report + accounts 2002

  • Page 42
    Pehr Gyllenhammar Richard Harvey George Paul Mike Biggs Guillermo de la Dehesa Wim Dik Sir Michael Partridge Philip Scott Patrick Snowball Derek Stevens Philip Twyman Elizabeth Vallance André Villeneuve Tony Wyand 28 Aviva plc Annual report + accounts 2002

  • Page 43
    ... Corporation and executive director of Reuters plc. Member of the remuneration committee. Tony Wyand (59) Executive director Appointed to the board in 1987. Joined Commercial Union in 1971 and worked for the group in the UK, the United States and France. Currently responsible for Aviva's operations...

  • Page 44
    ...' report Accounting policies Consolidated profit and loss account Technical account - long-term business 48 Consolidated profit and loss account Technical account - general business 49 Consolidated profit and loss account Non-technical account 50 Reconciliation of Group operating profit to profit on...

  • Page 45
    .... Details of any options long-term savings business, fund management, and all classes and awards held through the Company's share schemes and of general insurance through its subsidiaries, associates and incentive plans are shown on pages 39 to 41. All the disclosed branches in the United Kingdom...

  • Page 46
    ...to purchase Aviva shares at the prevailing market price from their pre-tax income. The second element enables staff to receive free shares, at the Board's discretion, based broadly on the performance of the Company's operations in the UK. The Group also operates a savings related share option scheme...

  • Page 47
    ...for ensuring that Board procedures are followed and all directors have access to his advice and services. The Board has established a number of committees, including Remuneration, Audit, Nomination, Chairman's and Information Technology Strategy. Each operates within clear terms of reference and the...

  • Page 48
    .... Morley Fund Management Limited, the Group's UK asset management company, has regular meetings with senior management of companies where it will raise all relevant matters which may affect the future performance of those companies. Morley operates a Corporate Governance and Voting Policy in respect...

  • Page 49
    ... of the annual business plan and the longterm profitable growth of the Company. During the year, New Bridge Street Consultants were appointed to review and advise on the current remuneration policy and packages which were introduced in 2000 upon the merger of CGU and Norwich Union. New Bridge Street...

  • Page 50
    ... bonus plan is not excessive. Long-term incentives The Aviva Long Term Incentive Plan is a discretionary share plan and it is the Committee's policy to make an annual award of shares to executive directors with a value of 100% of their basic salary at the time the award is granted. All awards...

  • Page 51
    ... Union merged to form Aviva. The graph also includes the median TSR of the companies in the comparator group. This graph is included as it is the group with which performance is measured for the purposes of the long-term incentive plan. In addition to insurers, there are a number of European banks...

  • Page 52
    ...of Norwich Union Life's operations are based and relocation expenses reimbursed by the Company relating to the purchase of a property in London where Philip Scott needs to be located to fulfil his executive duties. A charge relating to the benefits which cannot be provided from the pension scheme as...

  • Page 53
    ... Details of the directors who held executive office for any part of the financial year, and hold or held options to subscribe for ordinary shares of the Company or hold or held awards over shares in the Company, pursuant to the Company's share-based incentive plans, are set out below. Share options...

  • Page 54
    ...1999 and 2000 under the CGU Deferred Bonus Plan. Participants who deferred their annual cash bonus and received an award of shares also received a matching award over an equivalent number of options. These options, which are not subject to performance conditions, are normally exercisable between the...

  • Page 55
    ... annual cash bonus plan. This plan, which operated in respect of bonuses awarded in 1999 and 2000, was replaced by the Aviva Deferred Bonus Plan referred to above. Awards vest on the third anniversary of their grant. The CGNU Integration Incentive Plan relates to the merger of CGU and Norwich Union...

  • Page 56
    ... who became directors of Aviva at the time of the merger. In respect of these directors, the Committee reserved the right to approve a discretionary cash payment and, in this regard, the Committee awarded a cash bonus to these directors based on a number of shares and the Company's share price on...

  • Page 57
    ...than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors The directors' responsibilities for preparing the Annual report, the Directors' remuneration report and the accounts in...

  • Page 58
    ... over profits on ordinary activities and amounts charged or credited to reserves as appropriate. In the long-term business technical account, the charge is based on the method of assessing tax for long-term funds applicable in the relevant country of operation. 44 Aviva plc Annual report + accounts...

  • Page 59
    ... the difference between the total embedded value of the long-term operations and their net assets included in these accounts. Movements in the additional value of internally-generated in-force long-term business are taken to the revaluation reserve. 45 Aviva plc Annual report + accounts 2002

  • Page 60
    ... included in the profit and loss account. V - Share-based compensation The Group offers share award and option plans over the Company's ordinary shares for certain employees, including a Save As You Earn plan ("SAYE plan"), details of which are given in the Directors' remuneration report on pages 35...

  • Page 61
    ... Tax credit attributable to balance on the long-term business technical account Profit from long-term business operations before tax 610 260 870 764 353 1,117 The table below provides a reconciliation between the analysis used in the narrative sections of this Report and the profit from long-term...

  • Page 62
    ... General insurance - continuing operations (4a) Health - continuing operations (4a) General insurance - discontinued operations (2 & 4a) Profit before exceptional items Financial Services Compensation Scheme levy Change in the equalisation provision Balance on the general business technical account...

  • Page 63
    ... (7a) Allocated investment return transferred to the general business technical account (F & 7b) Other income/(charges), including value adjustments Profit from fund management (4a) Loss on wealth management (Loss)/profit from other operations Other charges: - corporate costs (10) - amortisation...

  • Page 64
    ...-long-term business (7b) Change in the equalisation provision (40) Net (loss)/profit arising on the disposal of subsidiary undertakings (17c) (Loss)/profit on ordinary activities before tax Continuing operations Modified statutory life profit (4a) Health (4a) Fund management (4a) General insurance...

  • Page 65
    ...)/profit for the financial year Movement in internally-generated additional value of in-force long-term business* (34) Foreign exchange gains/(losses) (U & 34) Total recognised gains and losses arising in the year Prior year adjustment (3a) Total recognised gains and losses since last annual report...

  • Page 66
    ... Assets held to cover linked liabilities (25) Reinsurers' share of technical provisions Provision for unearned premiums (B) Long-term business provision (P) Claims outstanding (C) Technical provision for linked liabilities (P & 25) Debtors Debtors arising out of direct insurance operations...

  • Page 67
    ... Ordinary share capital (32c) Preference share capital (33a) Called up share capital Share premium account (32c) Revaluation reserve (A & 34) Merger reserve (34) Profit and loss account (A & 34) Shareholders' funds: Equity Non-equity Minority interests - equity - non-equity (42j) Total capital and...

  • Page 68
    ... only. Long-term business profits are included as net cash inflow from operating activities only to the extent that they have been remitted to shareholders by way of dividends from life operations. The proceeds from the sale of our Australian and New Zealand general insurance businesses are...

  • Page 69
    ... and reserves Ordinary share capital (32) Preference share capital (33) Called up share capital Share premium account (32c) Revaluation reserve (35) Merger reserve (35) Profit and loss account: (35) Distributable Non-distributable Shareholders' funds Analysed between: Equity Non-equity 10,615 20...

  • Page 70
    ... charges Balance on the general business technical account Underwriting result Longer term investment return Unallocated interest charges* Operating profit/(loss) Amortisation of goodwill Short-term fluctuation in investment returns and other items Profit/(loss) on ordinary activities before tax Tax...

  • Page 71
    ... of profit from other operations in the non-technical account. The loss reclassified in 2002 is £54 million (2001: profit of £9 million). 4 - Geographical segmental information The Group's reportable business segments are long-term business, health business, fund management and general insurance...

  • Page 72
    ...271 Total 2002 £m Restated 2001 £m United Kingdom Europe (excluding UK) International Other business Additional value of in-force long-term business Corporate and other holding company assets External borrowings Internal borrowings Subordinated debt Discontinued operations Total 2,650 2,923 384...

  • Page 73
    ... Canadian dollar United States dollar Other Total Net assets are stated after taking account of the effect of currency swaps and forward foreign exchange contracts. 5 - New long-term savings business premiums The analysis of new life and savings business premiums written is: New business - single...

  • Page 74
    ... operations Premiums before reinsurance 2002 £m 2001 £m Premiums after reinsurance 2002 £m 2001 £m United Kingdom Europe (excluding UK) France Ireland Italy Netherlands (including Belgium and Luxembourg) Poland Spain Other Europe International Total long-term business premiums, including share...

  • Page 75
    ... written and sales of investment products continued (v) General insurance business premium income by geographical origin - discontinued operations Premiums before reinsurance 2002 £m 2001 £m Premiums after reinsurance 2002 £m 2001 £m Australia and New Zealand United States Total discontinued...

  • Page 76
    ...below shows the sensitivity to changes in the longer term rates of return: Movement in investment return By Change in By Equities Properties 1% higher/lower 1% higher/lower Group operating profit before tax Group operating profit before tax £40m £13m 62 Aviva plc Annual report + accounts 2002

  • Page 77
    ... Australia Limited and Aviva Limited (formerly known as The Insurance Corporation of Singapore). The tax impact of these charges was a credit of £8 million. 11 - Employee information The average number of persons employed by the Group during the year was: 2002 Number 2001 Number United Kingdom...

  • Page 78
    ...14 - Tax (a) Tax on (loss)/profit on ordinary activities Tax charged /(credited) in the non-technical account comprises: 2002 £m Restated 2001 £m Current tax: UK corporation tax Overseas tax Prior year adjustments United Kingdom Overseas Tax attributable to balance on long-term business technical...

  • Page 79
    ...-technical account is higher than the standard UK corporation tax rate, because of the following factors: (676) 51 (625) (163) (171) 8 (163) (641) - (641) Non-long-term business 2002 £m Restated 2001 £m (Loss)/profit on ordinary activities before tax Current tax (credit)/charge at standard UK...

  • Page 80
    ...- 37 (146) (61) (78) (139) 299 - 19 (180) 138 (104) 34 Long-term business 2002 £m Restated 2001 £m Non-long-term business 2002 £m Restated 2001 £m Net (asset)/provision at 1 January Amounts credited to the profit and loss account Other items Net (asset)/provision at 31 December (iii) The net...

  • Page 81
    ... bancassurance partnership with DBS Group Holdings Limited (DBS) and acquired 100% of the issued equity share capital of Dao Heng Assurance and DBS Kwong On Insurance (together DBS Hong Kong), DBS's life and general subsidiary in Hong Kong. Total cash consideration was £31 million and net assets on...

  • Page 82
    ...£m Long-term savings businesses: Canada General insurance businesses: UK (see (i) below) France (see (ii) below) New Zealand - State Insurance Australia and New Zealand (see (v) below) United States Belgium Spain (see (iv) below) Other businesses: France (see (iii) below) UK Other small operations...

  • Page 83
    ... 2002. Under the terms of the agreement, the Group sold its wholly-owned subsidiaries CGU Australia Limited and Belves Investments Limited, which are the holding companies for all of Aviva's general insurance businesses in Australia and New Zealand, for a total cash consideration of £651 million...

  • Page 84
    ... strategy, the UK long-term business policyholder funds have invested in a number of property limited partnerships ("PLPs") during the year, through a mix of capital and loans. The PLPs are managed by general partners ("GPs"), in which the UK long-term business shareholder companies hold equity...

  • Page 85
    ... and operation Global Aerospace Underwriting Managers Limited Norwich Winterthur Holdings Limited ProCapital S.A. RBS Life Investments Limited Société Foncière Lyonnaise The British Aviation Insurance Company Limited Ordinary £1 shares Ordinary £1 shares Ordinary 11 shares Ordinary £1 shares...

  • Page 86
    ... equities, bonds and properties, and distribute most of their income. The Group's interests in these companies are included in these accounts within other financial investments or land and buildings as appropriate. 22 - Other financial investments (a) These financial investments comprise: Long-term...

  • Page 87
    ... accounts. The economic benefits of ownership of an additional holding of 21.2% (2001: 16.6%) belong to the Delta Lloyd Pension Fund. (e) Included within other financial investments are shareholdings held on a long-term basis in the issued share capital of Société Générale, a banking company...

  • Page 88
    ... transfer to ERF2. The purchases of the mortgages were funded by the issue of fixed and floating rate notes by the ERF companies. The ultimate effective holding company of both the ERF companies is Equity Release Funding Holdings Limited, whose shares are held on trust. NUER does not own, directly...

  • Page 89
    ...-term operations Additional value of in-force long-term business 5,957 (231) 5,726 4,422 10,148 5,359 (244) 5,115 5,948 11,063 Analyses of the geographical split of the embedded value and of the movement in the year are given in the supplementary information on page 95. 25 - Assets held to cover...

  • Page 90
    ... are owned by employee share trusts in the Company and a subsidiary undertaking to satisfy awards under the Group's Long Term Incentive Plan, Executive Share Option Plans and Deferred Bonus Plans. The shares are purchased in the market and carried at cost. Further details of the shares held can be...

  • Page 91
    ... each in the Company were outstanding as follows: Aviva Savings Related Share Option Scheme Option price p Number of shares Normally exercisable Option price p Number of shares Normally exercisable 484.66 478.26 580.27 797.60 Norwich Union Savings Related Share Option Scheme Option price p 53,426...

  • Page 92
    ... allotted and issued by the Company as follows: Number of shares Share capital £m Share premium £m At 1 January Shares issued under the Group's Employee and Executive Share Option Schemes Shares issued in relation to the acquisition (in 2000) of UK Property Gold Limited At 31 December 2,254,928...

  • Page 93
    ... - Group reserves Revaluation reserve £m Merger reserve £m Profit and loss account £m Total £m At 1 January 2002 as previously reported Prior year adjustment (3a) Restated opening balances Transfer to non-technical account Foreign exchange rate movements Decrease in value of in-force long-term...

  • Page 94
    ...value of these notes at 31 December 2002 was £1,167 million (2001: £1,133 million). 37 - Long-term business (a) The Group underwrites long-term business in a number of countries as follows: (i) In the United Kingdom mainly in - "with-profit" funds of CGNU Life, Commercial Union Life, Norwich Union...

  • Page 95
    ... of £57 million (2001: £56 million) in the balance on the general business technical account and the profit on ordinary activities before tax, offset by £15 million representing the equalisation provision of a subsidiary company sold during the year. 81 Aviva plc Annual report + accounts 2002

  • Page 96
    ... 2,149 51 11 2,651 2,662 2,713 "Other" comprises borrowings by holding companies within the Group which are not allocated to operating companies. The amounts shown above are net of related derivative contracts. (b) Debenture loans comprise: Long-term business 2002 £m 2001 £m 2002 £m Other 2001...

  • Page 97
    ... to the policyholder or shareholders' funds of any companies in the Aviva Group. The figures in the long-term business columns above relate to those PLPs which have been consolidated as subsidiaries. (d) Commercial paper comprises: Other 2002 £m 2001 £m Average rate 4% (2001: 5%) The interest...

  • Page 98
    ...) United Kingdom and overseas tax Bank overdrafts Other Other creditors including tax and social security 3,249 322 868 348 2,191 6,978 3,312 536 174 918 3,627 8,567 Bank overdrafts arise substantially from unpresented cheques and amount to £61 million (2001: £554 million) in long-term business...

  • Page 99
    ... Group operates a large number of pension schemes around the world, whose members receive benefits on either a defined benefit basis or a defined contribution basis. The largest defined benefit schemes are in the United Kingdom, the Netherlands, Canada and Ireland, where the scheme assets comprise...

  • Page 100
    ... comprises: Total 2002 £m Current service cost Past service cost Charge to net operating expenses Expected return on pension scheme assets Interest on pension scheme liabilities (Credit) to investment income Total charge that would be made to profit on ordinary activities before tax in respect of...

  • Page 101
    ... the balance sheet Third party funds under management Securitised mortgages (gross of non-recourse funding) Unit trusts, Oeics, Peps and Isas Segregated funds Total assets under management 184,923 2,099 3,636 16,955 207,613 188,324 1,149 4,677 14,849 208,999 87 Aviva plc Annual report + accounts...

  • Page 102
    ... in banking and stockbroking assets and liabilities Movement in other assets/liabilities Profits not yet transferred from long-term business funds Loan interest expense Net cash inflow from operating activities, excluding exceptional items and merger transaction costs (b) Analysis of cash flows...

  • Page 103
    ... Net (sales)/purchases of investments Net investments (divested)/acquired with subsidiary undertakings Changes in market values and foreign exchange rate movements Investments sold for non-cash consideration Changes in non recourse funding Net movement in opening and closing non-long-term portfolio...

  • Page 104
    ... the financial position of the Group. (c) Guarantees on long-term savings products As a normal part of their operating activities, various Group companies have given guarantees, including interest rate guarantees, in respect of certain long-term insurance and fund management products. In the United...

  • Page 105
    ... sales, including share of associates General insurance Health Total continuing operations Consolidated profit and loss account Life assurance (achieved profit basis) Health Fund management and non-insurance operations General insurance Corporate costs and unallocated interest charges Wealth...

  • Page 106
    ... Financial Services Compensation Scheme levy Integration costs Operating profit before tax Variation from longer-term investment return Effect of economic assumption changes Change in the equalisation provision (Loss)/profit on the disposal of subsidiary undertakings Loss on ordinary activities...

  • Page 107
    ... Investment return variances Effect of economic assumption changes Total life achieved (loss)/profit before tax Tax on operating (loss)/profit Tax on other ordinary activities Total life achieved (loss)/profit after tax *The other life and savings result has been reclassified to non-insurance (page...

  • Page 108
    ... the embedded values as at the end of the year. The effect of solvency margin represents the impact of holding the minimum European Union (EU) solvency margin (or equivalent for non-EU operations) and discounting to present value the projected future releases from the solvency margin to shareholders...

  • Page 109
    ...before tax Attributed tax Total life achieved (loss)/profit after tax Closing life embedded value 509 (108) 401 1,434 (1,371) 401 (970) 9,738 69 (18) 51 90 14 (4) 10 410 578 (126) 452 1,524 (1,357) 397 (960) 10,148 591 (112) 479 1,665 22 (12) 10 11,063 95 Aviva plc Annual report + accounts 2002

  • Page 110
    ... embedded value. The embedded value is the total of the net assets of the long-term operations and the present value at risk discount rates (which incorporate a risk margin) of the projected releases to shareholders arising from the business in-force, less a deduction for the effect of holding the...

  • Page 111
    ...discounted value of projected exceptional costs has been deducted from the value of in-force business. A realistic estimate of future fund management expenses that will be charged to long-term businesses by Group companies not included in the long-term business covered by the achieved profits method...

  • Page 112
    ... long-term business continued Auditors' report to the directors of Aviva plc on the alternative method of reporting long-term business profits We have audited the supplementary information on pages 92 to 97 in respect of the year ended 31 December 2002, which comprises the Summarised profit and loss...

  • Page 113
    ... Union Linked Life Assurance Limited Norwich Union Wealth Management Limited Scottish General Insurance Company Limited your-move.co.uk Limited Australia CGNU Australia Holdings Limited and its principal subsidiaries: Norwich Union Life Australia Limited Navigator Australia Limited Belgium Bank...

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    ...the Transcontinental Account Payment Service ("TAPS") - which allows shareholders in many countries to have dividends credited direct to bank accounts in local currencies. To obtain further details and a mandate form for either service please contact the Company's registrars (at the address opposite...

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    ... Registrars (Isa Manager) 0870 514 3263 Individual Savings Accounts ("Isas") 0870 242 4244 Internet sites Aviva owns various internet sites, most of which interlink with each other. For a list of all our websites, please go to: http://www.aviva.com/customers/global.cfm Aviva group UK long-term...

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    Aviva plc St Helen's, 1 Undershaft London EC3P 3DQ Telephone +44 (0)20 7283 2000 www.aviva.com Registered in England Number 2468686