Aviva 2002 Annual Report Download - page 89

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24 – Additional value of in-force long-term business
(a) Movements in the additional value of in-force long-term business (“AVIF”) comprise:
Restated
Internally Restated
generated Acquired Total
£m £m £m
Balance at 1 January 2002 5,349 599 5,948
Foreign exchange rate movements 75 21 96
Adjustment to in-force long-term business previously acquired –(15) (15)
Amortisation charge for the year –(100) (100)
Other movements during the year
Transfer to revaluation reserve reflecting movement in AVIF in the year (34) (1,511) – (1,511)
Movement in minority interest on internally-generated in-force business (24b) 4–4
Movements arising in the year (1,432) (94) (1,526)
Balance at 31 December 2002 3,917 505 4,422
The amortisation charge for the year appears under the heading “Other technical charges” in the long-term business technical account
on page 47. This is grossed up for attributable tax in the reconciliations on pages 47 and 50.
The adjustment to in-force business previously acquired arises from the final determination of the embedded value of long-term
businesses acquired in 2001. The Group received a refund of part of the consideration it paid to reflect the reduced additional value of
in-force long-term business acquired.
Details of the assumptions and methodology supporting the additional value of in-force long-term business can be found on pages
96 to 97.
(b) The reserve arising from the additional value of in-force long-term business comprises:
Restated Movement
2002 2001 in the year
£m £m £m
Additional value of internally-generated in-force long-term business 3,917 5,349 (1,432)
Amount attributable to minority interests (85) (81) (4)
Balance at 31 December 3,832 5,268 (1,436)
Excluding this reserve, total shareholders’ funds at 31 December 2002 would be £5,837 million (2001: £6,484 million, restated).
(c) The embedded value of the long-term operations comprises:
Restated
2002 2001
£m £m
Net assets of the long-term businesses (4c) 5,957 5,359
Less: Goodwill arising on investment in Royal Bank of Scotland Life Investments (21c) (231) (244)
Net assets of long-term operations 5,726 5,115
Additional value of in-force long-term business 4,422 5,948
10,148 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 linked liabilities
(a) A reconciliation of assets to linked liabilities is as follows:
2002 2001
£m £m
Assets held to cover linked liabilities 29,538 28,704
Reinsurers’ share of technical provision 337 537
Technical provision for linked liabilities 29,875 29,241
(b) The cost of assets held to cover linked liabilities is £28,047 million (2001: £27,336 million).
75 Aviva plc
Annual report + accounts 2002