Aviva 2009 Annual Report Download - page 182

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Aviva plc Notes to the consolidated financial statements continued
Annual Report and Accounts 2009
17 – Acquired value of in-force business (AVIF) and intangible assets
This note shows the movements in cost and amortisation of the in-force business and intangible assets acquired when we have
purchased subsidiaries.
Other Intangible
intangible assets with
AVIF on AVIF on assets indefinite
insurance investment with finite useful
contracts* contracts** useful lives lives (a) Total
£m £m £m £m £m
Gross amount
At 1 January 2008 2,273 110 1,005 709 4,097
Additions 4 — 60 — 64
Acquisition of subsidiaries 59 — 24 — 83
Disposals (4) (5) (79) — (88)
Movement in shadow adjustment 327 — — — 327
Transfers (4) 67 (63) — —
Transfers to goodwill and other assets — — — (31) (31)
Foreign exchange rate movements 869 44 277 149 1,339
At 31 December 2008 3,524 216 1,224 827 5,791
Additions 17 — 30 — 47
Acquisition of subsidiaries (note (b)) (20) — 3 — (17)
Disposals — — (33) (20) (53)
Movement in shadow adjustment (484) — — — (484)
Transfers (note (c)) — — 431 (431) —
Transfers from property and equipment (note 20) — — 23 — 23
Foreign exchange rate movements (329) (17) (71) (50) (467)
At 31 December 2009 2,708 199 1,607 326 4,840
Accumulated amortisation
At 1 January 2008 (498) (18) (242) — (758)
Amortisation for the year (333) (13) (100) — (446)
Disposals — — 39 — 39
Transfers (1) (43) 44 — —
Foreign exchange rate movements (230) (18) (85) — (333)
At 31 December 2008 (1,062) (92) (344) — (1,498)
Amortisation for the year (249) (15) (127) — (391)
Disposals — — 21 — 21
Transfers from property and equipment (note 20) — — (3) — (3)
Foreign exchange rate movements 105 7 24 — 136
At 31 December 2009 (1,206) (100) (429) — (1,735)
Accumulated impairment
At 1 January 2008 (77) — (8) (57) (142)
Impairment losses charged to exceptional item — — (32) (20) (52)
Other impairment losses charged to expenses (2) — (13) — (15)
Foreign exchange rate movements (17) — (2) (18) (37)
At 31 December 2008 (96) — (55) (95) (246)
Disposals — — — 20 20
Impairment losses charged to expenses (13) — (12) — (25)
Foreign exchange rate movements 1 — — 5 6
At 31 December 2009 (108) — (67) (70) (245)
Carrying amount
At 1 January 2008 1,698 92 755 652 3,197
At 31 December 2008 2,366 124 825 732 4,047
At 31 December 2009 1,394 99 1,111 256 2,860
* On insurance and participating investment contracts.
**On non-participating investment contracts.
(a) Intangible assets with indefinite useful lives comprise the RAC brand, and the value of the Union Financière de France Banque
distribution channel, where the existing lives of the assets and their competitive position in, and the stability of, their respective
markets support this classification.
Impairment testing of these intangibles is covered in note 16(b).
(b) The negative figure of £20 million for AVIF on insurance contracts arises from the updating of fair values for Swiss Life Belgium,
described in note 3(a)(ii).
(c) During the year, the Group reviewed the terms of its bancassurance agreement with Banco Popolare, signed in December 2008,
which was initially for 10 years with five-year automatic renewal periods. This agreement is expected to be renewed indefinitely.
Although this agreement had originally been classified as an intangible asset with indefinite useful life, it is now considered
more appropriate to reclassify it as having a finite useful life where the residual value is high, as a consequence of the terms of
the put option, and amortisation immaterial and this is consistent with other similar contracts. This has resulted
in a reallocation in the year of £431 million from intangible assets with indefinite useful lives to those with finite useful lives.
(d) Other intangible assets with finite useful lives consist primarily of the value of bancassurance and other distribution agreements.