Aviva 2006 Annual Report Download - page 239

Overview Business review Governance Financial statements Other information
Aviva plc
Annual Report and Accounts 2006 235
Segmental analysis of life and related businesses embedded value
Value of
Net worth in-force covered business Total
Cost of
Required Free Present value required
capital1surplus of in-force capital Embedded value
31 December 2006 £m £m £m £m £m
France 1,143 250 1,142 (244) 2,291
Ireland 254 143 535 (40) 892
Italy 320 329 206 (63) 792
Netherlands (including Belgium, Germany and Luxembourg) 1,067 1,701 1,461 (362) 3,867
Poland 105 107 540 (33) 719
Spain 273 37 606 (59) 857
Other Europe 18 25 75 (12) 106
Continental Europe 3,180 2,592 4,565 (813) 9,524
United States2618 211 794 (145) 1,478
Other 182 125 204 (51) 460
Rest of the World 800 336 998 (196) 1,938
International 3,980 2,928 5,563 (1,009) 11,462
United Kingdom 1,334 641 5,103 (442) 6,636
Total 5,314 3,569 10,666 (1,451) 18,098
Germany has been reclassified from Other Europe to the Netherlands, Lithuania has been reclassified from Other Europe to Poland and Norwich Union’s Dublin-based
offshore life and savings business has been reclassified from Other Europe to the United Kingdom.
1. Required capital is shown net of implicit items permitted by local regulators to cover minimum solvency margins.
2. AmerUs holding company debt amounting to £362 million at 31 December 2006 has been included with non-insurance.
Value of
Net worth in-force covered business Embedded value
2006 2005 2006 2005 2006 2005
As at 31 December 2006 £m £m £m £m £m £m
France 1,393 1,264 898 803 2,291 2,067
Ireland 397 286 495 353 892 639
Italy 649 602 143 114 792 716
Netherlands (including Belgium, Germany and Luxembourg) 2,768 2,204 1,099 933 3,867 3,137
Poland 212 214 507 445 719 659
Spain 310 262 547 463 857 725
Other Europe 43 42 63 54 106 96
Continental Europe 5,772 4,874 3,752 3,165 9,524 8,039
United States 829 254 649 77 1,478 331
Other 307 289 153 106 460 395
Rest of the World 1,136 543 802 183 1,938 726
International 6,908 5,417 4,554 3,348 11,462 8,765
United Kingdom 1,975 1,803 4,661 4,545 6,636 6,348
Total 8,883 7,220 9,215 7,893 18,098 15,113
Germany has been reclassified from Other Europe to the Netherlands, Lithuania has been reclassified from Other Europe to Poland and Norwich Union’s Dublin-based
offshore life and savings business has been reclassified from Other Europe to the United Kingdom.
The shareholders’ net worth is the market value of the shareholders’ funds and the shareholders’ interest in the surplus held in the
non-profit component of the long-term business funds, determined on a statutory solvency basis and adjusted to add back any
non-admissible assets. Required capital, net of implicit items, of £5,314 million at 31 December 2006 (31 December 2005:
£4,448 million) is included within the net worth.
The value of in-force covered business includes the effect of holding shareholders’ capital to support the level of required capital and
allowing for projected future releases. This impact reduces the value of in-force covered business at 31 December 2006 by £1,451 million
(31 December 2005: £1,187 million).
The embedded value at the end of 2006 includes minority interests of £1,387 million (2005: £1,000 million).This comprises minority
interests in France of £162 million (2005: £148 million),Ireland £216 million (2005: nil),Italy £413 million (2005: £365 million),
Netherlands £102 million (2005: £70 million),Poland £118 million (2005: £107 million),Spain £366 million (2005: £310 million)
and Other £10 million (2005: nil).