Aviva 2009 Annual Report Download - page 167

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Performance review
Aviva plc Notes to the consolidated financial statements continued
Corporate responsibility
Annual Report and Accounts 2009
Governance
Shareholder information
Financial statements IFRS
Financial statements MCEV
Other information
6 – Details of expenses continued
Integration and restructuring costs
Integration and restructuring costs incurred in the year amounted to £286 million (2008: £326 million) . This includes £210 million
for the cost savings initiatives in the UK life and general insurance businesses and Europe, which have delivered £170 million
annualised cost savings in the year.
Exceptional items
Exceptional items totalled £45 million net profit (2008: £551 million net expense) in the year.
For the year ended 31 December 2009, this comprised:
— A net exceptional profit before tax of £207 million as a result of the reattribution of the inherited estate (see note 44), of which
£674 million is included in “other expenses” and £881 million credit is included in changes in “unallocated divisible surplus”;
— A £60 million expense for the strengthening of reserves in respect of several specific discontinued commercial liability risks
written in Canada a significant number of years ago, which is included in “change in insurance liabilities”; and
— A £102 million expense for the migration of all remaining local brands, except Delta Lloyd and RAC, to the single global Aviva
brand, which has been implemented over the two year period 2008 to 2009. The cost is included in “other expenses”.
For the year ended 31 December 2008, this comprised:
— A £142 million expense for closing or exiting non-core business operations such as the lifetime wrap platform and The British
School of Motoring in the UK and the structured settlement business in the United States;
— A £304 million expense after reinsurance for the discounted cost of strengthening latent claims provisions, mainly in the UK
(see note 38);
— A £126 million expense for the settlement agreed by our Netherlands life business for its unit-linked policyholders, following
an industry-wide challenge on the level of fees;
— Brand migration costs of £37 million (referred to above); and
— A £58 million credit from settlement of a disputed Australian tax liability and the consequent release of a provision for
interest charges.
The table below sets out the lines of the income statement that the exceptional items have been included in:
2009
£m
2008
£m
Change in unallocated divisible surplus (note 43)
Change in insurance liabilities, net of reinsurance (note 38)
Other expenses (as in the table above)
881
(60)
(776)
—
(304)
(247)
45 (551)
Impairment of financial investments
Group policy is to recognise an impairment on available for sale (AFS) equity securities when there has been a prolonged or
significant decline in their fair value below their cost, irrespective of general market movements. Although management believes
that these equity securities will ultimately recover their value, there can be no certainty that this will happen as, unlike fixed
maturity securities, the value of an equity security cannot be recovered in full by holding it to maturity.
Financial statements IFRS