Aviva 2007 Annual Report Download - page 239
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Please find page 239 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.58 – Related party transactions
This note gives details of the transactions between Group companies and related parties which comprise our joint
ventures, associates and staff pension schemes.
The Group received income from related parties from transactions made in the normal course of business. Loans to related
parties are made on normal arm’s length commercial terms.
Services provided to related parties
2007 2006
Income Income
earned Receivable at earned Receivable at
in year year end in year year end
£m £m £m £m
Associates 58 – 50 1
Joint ventures 4216 241
Employee pension schemes 2666–
88 8 72 242
The related parties’ receivables are not secured and no guarantees were received in respect thereof. The receivables will be
settled in accordance with normal credit terms. Details of guarantees, indemnities and warranties provided on behalf of
related parties are given in note 50(h).
Services provided by related parties
There were no services provided by related parties in either 2006 or 2007.
Details of loans made to joint ventures and associates may be found in notes 18 and 19 respectively.
The total compensation to those employees classified as key management, being those having authority and responsibility
for planning, directing and controlling the activities of the Group, including the executive and non-executive directors is
as follows:
2007 2006
£m £m
Salary and other short-term benefits 33 32
Post-employment benefits 11
Equity compensation plans 14 16
Termination benefits 24
Total 50 53
Information concerning individual directors’ emoluments, interests and transactions is given in the Directors’
remuneration report.
59 – Post-balance sheet event
Special bonus declared by UK Life business
On 5 February 2008, the Group’s UK long-term business operation, Norwich Union Life, announced a one-off, special
bonus worth an estimated £2.3 billion, benefiting around 1.1 million with-profit policyholders in its CGNU Life and CULAC
with-profit funds. This special bonus has been made possible by the strength of the two with-profit funds and a change to
the investment strategy for supporting policy guarantees. This has enabled the business to free up a significant part of the
inherited estate (included within the unallocated divisible surplus) for payment to policyholders. This change will not affect
normal policy returns, nor will it impact on policyholders’ security or alter the type of investments backing their policies.
The bonus will be used to enhance policy values by around 10% in total, in three instalments, with the qualifying dates
being 1 January 2008, 1 January 2009 and 1 January 2010. In accordance with the way the funds are managed, the
bonus distribution is being split on a 90/10 basis between policyholders and shareholders. Over the three years,
policyholders will receive a total currently estimated as £2,127 million and shareholders will receive a total currently
estimated as £236 million.
As explained in accounting policy K and note 38(b), the Group’s insurance and participating investment contract liabilities
are measured in accordance with IFRS 4, Insurance Contracts, and FRS 27, Life Assurance. The latter requires liabilities for
with-profit funds falling within the scope of the UK’s Financial Services Authority’s capital regime to be determined in
accordance with this regime, adjusted to remove the shareholders’ share of future bonuses. This requires us to recognise
planned discretionary bonuses within policyholder liabilities at the balance sheet date, even if there was no constructive
obligation at the time. As a result of the announcement made above, a transfer of £2,127 million has been made from
the unallocated divisible surplus (note 43) in order to increase insurance liabilities by £1,728 million (note 38(b)) and
participating investment contract liabilities by £399 million (note 39(c)). In compliance with paragraph 4(a) of FRS 27, the
insurance liabilities on a realistic basis exclude any shareholders’ interest in this bonus. Furthermore, no profit arising to
shareholders has been accrued in these financial statements as the payment to them was not a constructive obligation at
the balance sheet date.
Aviva plc
Annual Report and
Accounts 2007
235
Financial
statements