Aviva 2007 Annual Report Download - page 260
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Geographical analysis of the components of life EEV operating return
Nether- Other North Aus- Asia
UK France Ireland Italy lands Poland Spain Europe Europe America Asia tralia Pacific Total
2007 £m £m £m £m £m £m £m £m £m £m £m £m £m £m
New business
contribution
(after the effect of
required capital) 305 117 25 61 53 32 173 (5) 456 108 27 16 43 912
Profit from existing
business
– expected return 538 163 45 37 192 62 65 16 580 114 13 21 34 1,266
– experience
variances:
Maintenance
expenses 10 4 (4) (2) (3) 3 (1) (5) (8) (2) (1) – (1) (1)
Project and
other related
expenses1(90) 9 (3) – (19) – (2) (8) (23) (17) (2) (3) (5) (135)
Mortality/
Morbidity214 27 (1) 1 7 14 (4) 3 47 (3) 8 3 11 69
Lapses3(5) 10 3 (6) (9) 23 (9) 3 15 – (4) (1) (5) 5
Other426 3 (5) 7 (3) 9 10 (3) 18 (1) – 3 3 46
(45) 53 (10) – (27) 49 (6) (10) 49 (23) 1 2 3 (16)
– operating
assumption
changes:
Maintenance
expenses57 2 (1) (2) – 5 – (8) (4) (30) 1 – 1 (26)
Project and
other related
expenses (2) (1) – – (7) – – (9) (17) – – – – (19)
Mortality/
Morbidity6(133) (2) – 3 (31) 14 (8) (1) (25) – (1) 4 3 (155)
Lapses7(6) – – (2) 2 35 (16) 4 23 (8) (4) (2) (6) 3
Other8108 122 – 7 12 – 16 5 162 42 – (1) (1) 311
(26) 121 (1) 6 (24) 54 (8) (9) 139 4 (4) 1 (3) 114
Expected return
on shareholders’
net worth 92 83 18 33 158 9 15 3 319 52 6 8 14 477
Life EEV operating
return before tax 864 537 77 137 352 206 239 (5) 1,543 255 43 48 91 2,753
1. Project and other related expenses in the UK reflect project costs associated with strategic initiatives, including developments designed to offer simpler
products to customers, and the simplification of systems and processes. In the Netherlands, project costs mainly represent one-off restructuring costs in the
Dutch businesses. In the USA, expenses reflect a number of one-off expenses including management incentive rewards, brand awareness and investment
in strategic systems.
2. Mortality experience continues to be better than the assumptions set across a number of our businesses.
3. Lapse experience in Poland continues to be better than the long-term assumptions set for both Life and Pension products.
4. In the UK, other experience profits include better than assumed default experience on corporate bonds and commercial mortgages.
5. In the USA, expense assumptions have been strengthened following investment in the business capability.
6. In the UK, the allowance for annuitant mortality improvement has been strengthened, by increasing the minimum rates of improvement.
7. In Poland lapse assumptions have been changed following continued favourable experience. In Spain, lapse assumptions have been strengthened mainly
on risk products.
8. In the UK, other operating assumption changes reflect the reduction in the level of required capital assumed on our annuity portfolio. In France, other
operating assumption changes reflect increased profitability driven by product development and the increased proportion of unit-linked assets within
managed funds. In the USA, other assumption changes relate to the implementation of an efficient financing solution to free up capital previously held to
support excessive regulatory reserves.
Aviva plc
Annual Report and
Accounts 2007
256
Financial
statements
Alternative method of reporting long-term business profits continued