Aviva 2009 Annual Report Download - page 196

194
2009
Aviva plc Notes to the consolidated financial statements continued
Annual Report and Accounts 2009
24 – Financial investments continued
(iii) The tables below show movements in the assets measured at fair value based on valuation techniques for which any
significant input is not based on observable market data (Level 3 only).
Fixed Other
maturity Equity invest-
securities securities ments Total
£m £m £m £m
Total funds
Balance at 1 January 1,850 931 64 2,845
Total net gains or losses recognised in the income statement 2 (55) 1 (52)
Total net gains or losses recognised in other comprehensive income 107 1 (4) 104
Purchases 820 117 104 1,041
Disposals (247) (133) (5) (385)
Settlements — (73) — (73)
Transfers into Level 3 7,659 134 1,186 8,979
Transfers out of Level 3 (923) (54) (19) (996)
Foreign exchange rate movements (129) (74) — (203)
9,139 794 1,327 11,260Balance at 31 December
The Group assesses the fair value hierarchy of its financial investments biannually at 30 June and 31 December. Transfers between
fair value hierarchy levels are deemed to have occurred at the assessment date.
Transfers into and out of Level 3 arose for the following reasons:
— Changes in the market observability of valuation inputs.
— Changes in the market observability of inputs used to validate valuations.
— Significant differences between third party prices used for valuations and validation prices either sourced from third parties or
internal models.
The transfers into Level 3 principally relate to certain debt securities held by our businesses in the UK, Italy and France and
private equity investment funds in the UK. These investments were previously classified as Level 2. The single largest transfer was
of £6.8 billion structured bond type products, whose valuation methodology is described earlier in this section.
Of the £52 million net losses recognised in the income statement during the year, £2 million gain relates to net investment
income and £54 million loss relating to impairments is included in other expenses.
(c) Cost, unrealised gains and fair value
The following is a summary of the cost/amortised cost, gross unrealised gains and losses and fair value of financial investments:
Cost/
amortised Unrealised Unrealised Impairment
cost gains losses losses
Fair value
£m £m £m £m £m
Fixed maturity securities 159,287 5,872 (4,500) (149) 160,510
Equity securities 44,188 4,173 (3,975) (1,043) 43,343
Other investments
Unit trusts and specialised investment vehicles 30,230 784 (484) (15) 30,515
Derivative financial instruments 1,518 896 (337) — 2,077
Deposits with credit institutions 969 — — — 969
Minority holdings in property management undertakings 635 69 (26) (11) 667
Other long-term investments 729 191 (297) (2) 621
237,556 11,985 (9,619) (1,220)238,702
These are further analysed as follows:
At fair value through profit or loss 210,635 10,506 (8,785) (160)212,196
Available for sale 26,921 1,479 (834) (1,060) 26,506
237,556 11,985 (9,619) (1,220)238,702
2009