Aviva 2007 Annual Report Download - page 192
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38 – Insurance liabilities continued
(iii) Net of reinsurance
After the effect of reinsurance, the loss development table is:
All prior years 2001 2002 2003 2004 2005 2006 2007 Total
Accident year £m £m £m £m £m £m £m £m £m
Net cumulative claim payments
At end of accident year (2,970) (2,913) (2,819) (2,870) (3,281) (3,612) (4,317)
One year later (4,624) (4,369) (4,158) (4,378) (4,925) (5,442)
Two years later (5,088) 4,779) (4,565) (4,712) (5,344)
Three years later (5,436) (5,064) (4,924) (4,986)
Four years later (5,648) (5,297) (5,180)
Five years later (5,763) (5,424)
Six years later (5,841)
Estimate of net ultimate claims
At end of accident year 6,186 6,037 6,218 6,602 6,982 7,430 8,363
One year later 6,333 6,038 6,093 6,266 6,818 7,197
Two years later 6,321 5,997 6,037 6,082 6,688
Three years later 6,329 5,973 5,942 5,882
Four years later 6,286 5,912 5,851
Five years later 6,219 5,855
Six years later 6,173
Estimate of net ultimate claims 6,173 5,855 5,851 5,882 6,688 7,197 8,363
Cumulative payments (5,841) (5,424) (5,180) (4,986) (5,344) (5,442) (4,317)
1,634 332 431 671 896 1,344 1,755 4,046 11,109
Effect of discounting (39) (3) (4) (4) (2) (3) (5) (9) (69)
Present value 1,595 329 427 667 894 1,341 1,750 4,037 11,040
Cumulative effect of foreign
exchange movements – 13 21 34 45 34 97 – 244
Effect of acquisitions 8 2 2 43 16 22 28 19 140
Present value recognised
in the balance sheet 1,603 344 450 744 955 1,397 1,875 4,056 11,424
In the loss development tables shown above, the cumulative claim payments and estimates of cumulative claims for each
accident year are translated into sterling at the exchange rates that applied at the end of that accident year. The impact of
using varying exchange rates is shown at the bottom of each table. Disposals are dealt with by treating all outstanding and
IBNR claims of the disposed entity as “paid” at the date of disposal.
The loss development tables above include information on asbestos and environmental pollution claims provisions from
business written before 2001. The claim provisions, net of reinsurance, in respect of this business at 31 December 2007
were £323 million (2006: £312 million). The movement in the year reflects strengthening of provisions by £20 million
(2006: £9 million), foreign exchange rate movements and timing differences between claim payments and reinsurance
recoveries.
(e) Provision for unearned premiums
Movements
The following changes have occurred in the provision for unearned premiums (UPR) during the year:
2007 2006
£m £m
Carrying amount at 1 January 5,182 5,381
Premiums written during the year 11,369 11,427
Less: Premiums earned during the year (11,345) (11,516)
Changes in UPR recognised as expense/(income) 24 (89)
Gross portfolio transfers and acquisitions 87 3
Foreign exchange rate movements 191 (113)
Carrying amount at 31 December 5,484 5,182
Aviva plc
Annual Report and
Accounts 2007
188
Financial
statements
Notes to the consolidated financial statements continued