Aviva 2007 Annual Report Download - page 29
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Aviva plc
Annual Report and
Accounts 2007
25
Business
review
We continue to review the appropriateness of the
operating assumptions that underpin the embedded
value of our business. In 2007 we have revised the
assumption relating to the rate of improvement of life
expectancy, bringing it in line with latest industry studies.
This change has adversely impacted profitability by
£153 million. We also revised our assumption about the
amount of risk capital that we believe we should hold
for annuity business to reflect the outcome of our
latest risk modelling, which has enhanced our new
and existing business profitability by £14 million and
£132 million respectively.
During 2007 we have continued to work towards
the proposed reattribution of the inherited estate.
We are the first company to do so under new rules from
the FSA published in 2007, which require negotiation
through a policyholder advocate. This is a complex process
and has taken longer than anticipated. We have now
agreed the eligibility criteria for the reattribution with
the policyholder advocate and established the parameters
for determining the surplus in the fund and obligations
to current investors. Separately to this, we were delighted
to announce a special bonus of £2.1 billion for around
1.1 million with-profits policyholders who have invested
in CGNU Life and CULAC Life with-profits funds.
The distribution of this special bonus clears the way
to negotiate a fair price for the balance of the inherited
estate, amounting to a further £2.6 billion.
We are confident in our medium to long term
outlook for market growth at between 5-10%. However,
given the uncertainty over the performance of the UK
economy, market growth in 2008 may be slightly slower
than in 2007. The UK is the fifth largest economy in the
world, yet within this market there remain large numbers
of people who either do not save or who are under-
protected. In 2008, our focus will remain on completing
our simplification programme, driving further operational
efficiencies and building on service improvements. At the
same time we will remain engaged with the Government,
FSA, ABI and other stakeholders on the Retail Distribution
Review and NPSS in order to influence an outcome that
is satisfactory for customers, distributors and the industry
as a whole.
Our scale, brand, broad product offering and strong
distribution footprint position us well to succeed in an
uncertain 2008. Our aim remains to improve profitability
and grow our new business sales at least in line with the
market, while maintaining or increasing our overall new
business margin from current levels.
“Find the Fisherman”
campaign
We believe that all companies
should be taking steps to return
unclaimed assets to their rightful
owners. The “Find the Fisherman”
campaign was launched in January
2007, to track down fishermen
who worked on the fishing fleets
around the UK during the 60s
and 70s and had not claimed
their pensions. The campaign was
a resounding success, generating
around 10,000 telephone enquiries
from the public, enabling 6,000
policies to be traced and the return
of £2.8 million to customers or
their families.
Customers can begin to trace
a policy by completing a form
available from either 0800 152465
or
www.norwichunion.com/existing-
customer/trace-policies/index