Aviva 2007 Annual Report Download - page 229
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55 – Risk management continued
Unit-linked business
As discussed previously, in unit-linked business the policyholder bears the market risk, including credit risk, on investment
assets in the unit funds, and the shareholders’ exposure to credit risk is limited to the extent that their income arises from
asset management charges based on the value of assets in the fund.
Impairment of financial assets
The following table provides information regarding the carrying value of financial assets that have been impaired and the
ageing of financial assets that are past due but not impaired.
At 31 December 2007
Financial assets that are past due but not impaired
Financial Carrying
Neither past assets that value
due nor 6 months- Greater than have been in the
impaired 0-3 months 3-6 months 1 year 1 year impaired balance sheet
£m £m £m £m £m £m £m
Debt securities 118,866 ––––71118,937
Reinsurance assets 8,107––––28,109
Other investments 40,413–––––40,413
Loans 35,937 210 11 3 15 17 36,193
Receivables and other financial assets 8,347 200 21 13 2 46 8,629
At 31 December 2006
Financial assets that are past due but not impaired
Financial Carrying
Neither past assets that value
due nor 6 months- Greater than have been in the
impaired 0-3 months 3-6 months 1 year 1 year impaired balance sheet
Restated Restated
£m £m £m £m £m £m £m
Debt securities 114,466 –––––114,466
Reinsurance assets 7,707 ––––1187,825
Other investments 33,050–––––33,050
Loans 28,388 101 3 4 15 63 28,574
Receivables and other financial assets 7,274 711 49 32 26 6 8,098
The fair value of collateral held against loans that are past due or impaired at 31 December 2007 was £185 million
(2006: £61 million). This predominantly consists of commercial properties.
Credit terms are set locally within overall credit limits prescribed by the Group Credit Committee and within the framework
of the Group Credit Policy. The credit quality of financial assets is managed at the local business unit level. Where assets
have been classed as “past due and impaired”, an analysis is made of the risk of default and a decision is made whether
to seek collateral from the counterparty.
There were no material financial assets that would have been past due or impaired had the terms not been renegotiated.
Aviva plc
Annual Report and
Accounts 2007
225
Financial
statements