Aviva 2007 Annual Report Download - page 175
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24 – Financial investments continued
(c) Financial investment arrangements
(i) Stock lending arrangements
The Group has entered into stock lending arrangements in the UK and overseas during the year in accordance with
established market conventions. The majority of the Group’s stock lending transactions occur in the UK, where investments
are lent to EEA-regulated, locally-domiciled counterparties and governed by agreements written under English law.
The Group receives collateral in order to reduce the credit risk of these arrangements. The level of collateral held is
monitored regularly, with further collateral obtained where this is considered necessary to manage the Group’s risk exposure.
In certain markets, the Group or the Group’s appointed stock lending managers obtain legal ownership of the collateral
received and can re-pledge it as collateral elsewhere or sell outright in the absence of default. The carrying amounts
of financial assets received and pledged in this manner at 31 December 2007 were £23,779 million and £4 million
respectively (2006: £16,902 million and £nil respectively). The value of collateral that was actually sold or re-pledged in the
absence of default was £nil (2006: £nil).
In addition to the above, the Group has received and pledged cash collateral under stock lending arrangement that has
been recognised on the balance sheet with a corresponding obligation or receivable for its return. These latter balances are
shown separately in notes 48 and 25 respectively.
(ii) Stock repurchase arrangements
Included within financial investments are £358 million (2006: £722 million) of debt securities and other fixed income
securities which have been sold under stock repurchase arrangements. The obligations arising under these arrangements are
shown in note 48.
(iii) Other arrangements
Certain financial investments are specifically deposited under local laws in various overseas countries as security for the
holders of policies issued in those countries.
25 – Receivables and other financial assets
This note analyses our total receivables.
2007 2006
£m £m
Amounts owed by contract holders 2,554 1,921
Amounts owed by intermediaries 1,417 1,258
Deposits with ceding undertakings 1,163 1,028
Amounts due from reinsurers 701 707
Amounts due from brokers for investment sales 326 89
Amounts receivable for collateral pledged (notes 24c(i) and 56e) 21 –
Other financial assets 3,001 3,184
Total 9,183 8,187
Less: Amounts classified as held for sale (554) –
8,629 8,187
Expected to be recovered in less than one year 8,271 7,757
Expected to be recovered in more than one year 358 430
8,629 8,187
Concentrations of credit risk with respect to receivables are limited due to the size and spread of the Group’s trading base.
No further credit risk provision is therefore required in excess of the normal provision for doubtful receivables.
Aviva plc
Annual Report and
Accounts 2007
171
Financial
statements