Aviva 2007 Annual Report Download - page 261
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Please find page 261 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.Geographical analysis of the components of life EEV operating return continued
Nether- Other North Asia
UK France Ireland Italy lands Poland Spain Europe Europe America Asia Australia Pacific Total
2006 £m £m £m £m £m £m £m £m £m £m £m £m £m £m
New business
contribution
(after the effect of
required capital) 263 110 9 50 25 25 168 (6) 381 8 22 9 31 683
Profit from existing
business
– expected return 474 142 41 26 158 52 53 9 481 29 10 17 27 1,011
– experience
variances:
Maintenance
expenses 13 9 4 (1) (11) 5 (2) (2) 2 – – (2) (2) 13
Project and
other related
expenses1(149) 1 (4) – (23) – (1) (2) (29) – – – – (178)
Mortality/
Morbidity2(13) 33 (2) 4 3 16 1 2 57 – 8 7 15 59
Lapses3(66) 8 (9) (8) 2 21 (1) (2) 11 (9) (6) 3 (3) (67)
Other475 20 (9) 6 20 3 11 (1) 50 (2) (2) 2 – 123
(140) 71 (20) 1 (9) 45 8 (5) 91 (11) – 10 10 (50)
– operating
assumption
changes:
Maintenance
expenses558 – (3) – 60 (3) – (11) 43 (12) (1) (5) (6) 83
Project and
other related
expenses6(46) (2) (22) – (9) – – (3) (36) – – – – (82)
Mortality/
Morbidity757 45 (13) – – 17 – (1) 48 3 4 7 11 119
Lapses8(224) (41) (47) – (14) 17 (21) (1) (107) – – 2 2 (329)
Other9215 9 – 2 19 1 2 3 36 – (1) 3 2 253
60 11 (85) 2 56 32 (19) (13) (16) (9) 2 7 9 44
Expected return
on shareholders’
net worth 87 68 15 31 99 8 11 2 234 15 3 6 9 345
Life EEV operating
return before tax 744 402 (40) 110 329 162 221 (13) 1,171 32 37 49 86 2,033
1. Project and other related expenses in the UK reflect £32 million relating to the ongoing transformation of the life business and £117 million of other
exceptional and project costs associated with strategic initiatives, including developments designed to improve the future new business volumes,
and regulatory changes. In the Netherlands, these expenses reflect higher project costs compared to allowances as well as the payment to ABN AMRO
in respect of the joint venture operations.
2. Mortality experience continues to be better than the assumptions set across many of our businesses.
3. Lapse experience in the UK has been worse than assumed and primarily relates to bonds and pensions. In Poland, lapses for both life and pension
products have been lower than assumed resulting in the favourable experience variance.
4. In the UK, other experience profits include better than assumed default experience on corporate bonds and mortgages, and the benefit of higher than
expected performance fees in Morley.
5. Maintenance expenses in the UK relate to Morley’s change in profit margin. The change in Delta Lloyd is also driven by improved asset management
profitability. The adverse movement in North America is due to a reassessment of expenses in our Boston-based operations.
6. In the UK, exceptional expenses relate to short-term project costs and capitalisation of reorganisation costs. Ireland reflects changes in expense
assumptions regarding the future attribution of investment income and expenses between policyholders and shareholders.
7. The change in mortality assumptions in the UK includes an alignment in the basis for internal business. Mortality assumptions in France were changed
following improvements in mortality experience over the last few years.
8. In the UK, the lapse assumption change relates to bonds and pension business while the change in Ireland relates to the Celebration Bond and unit-linked
bonds. In France, lapse assumptions have been changed for non-AFER business in Aviva Vie. In Spain, lapse assumptions have been changed for risk
business and some savings products.
9. In the UK, the assumption changes reflect the beneficial impact of the with-profit funds sharing the pension scheme deficit funding (£126 million) and the
impact of PS06/14, primarily in reducing the non-profit reserves (£50 million). In Delta Lloyd the impact is due to changes to management fee rebates.
Aviva plc
Annual Report and
Accounts 2007
257
Financial
statements