Aviva 2007 Annual Report Download - page 138
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Please find page 138 of the 2007 Aviva annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Aviva plc
Annual Report and
Accounts 2007
134
Financial
statements
Notes to the consolidated financial statements continued
3 – Subsidiaries continued
The assets and liabilities at the date of acquisition were:
Fair value and
accounting
policy
Book value adjustments Fair value
£m £m £m
Assets
Acquired value of in-force business on insurance contracts – 6 6
Intangible assets 2 18 20
Investments 411 5 416
Loans 204 16 220
Reinsurance assets 33 – 33
Receivables and other financial assets 22 – 22
Prepayments and accrued income 13 – 13
Cash and cash equivalents 35 – 35
Other assets 31 1 32
Total assets 751 46 797
Liabilities
Gross insurance liabilities (674) (20) (694)
Borrowings (15) – (15)
Provisions (4) (6) (10)
Tax liabilities (1) (3) (4)
Other liabilities (20) – (20)
Total liabilities (714) (29) (743)
Total net assets acquired 37 17 54
Goodwill arising on acquisition –
The value of Erasmus’s distribution channels has been identified as a separate intangible asset and valued by an
independent third party at £8 million, using estimated post-tax cash flows and discount rates. It has been assessed as
having a life of 20 years and is being amortised on a straight-line basis over that period. As permitted by IFRS 4, Insurance
Contracts, an intangible asset of £12 million has also been recognised for the impact of discounting the non-life insurance
liabilities, to bring them to fair value. This intangible asset will be amortised over the life of the relevant non-life insurance
contracts.
The assets and liabilities as at the acquisition date in the table above are stated at their provisional values, and may be
amended in 2008, in accordance with paragraph 62 of IFRS 3, Business Combinations.
The results of Erasmus have been included in the consolidated financial statements of the Group with effect from
26 March 2007, and have contributed £5 million to the consolidated profit before tax.
(ii) Bancassurance partnership with Cajamurcia
On 6 June 2007, the Group announced that it had entered into a long-term bancassurance agreement with Spanish
savings bank Caja de Ahorros de Murcia (Cajamurcia) that will enhance the Group’s leading position in the Spanish life
market. Cajamurcia will provide exclusive access to its network of branches to Caja Murcia Vida y Pensiones, de Seguros y
Reaseguros SA (Cajamurcia Vida), the newly-created life insurance company jointly-owned by the Group and
Cajamurcia, to sell insurance and pension products. Regulatory approval to write new business was received on
21 November 2007 and the new company began trading on 30 November 2007.
On signing the agreement, the Group acquired 5% of the share capital of Cajamurcia Vida and Cajamurcia granted the
Group a call option over a further 45% of the shares in this company which may be exercised in the two month period
following the first anniversary of the agreement being signed. Further consideration of £69 million would be payable on
exercising the option, with additional amounts of up to £187 million payable, dependant on the performance of the new
company. If it does not exercise this option during this period, the Group has granted a call option over its 5% holding to
Cajamurcia.
The Group paid £8 million for the initial 5% holding on completion on 6 June 2007. The Group has the power to control
the financial and operating policies of Cajamurcia Vida through having the majority vote at meetings of the company’s
board of directors. We have therefore consolidated its results and balance sheet since that date.