Aviva 2009 Annual Report Download - page 210

208
Aviva plc Notes to the consolidated financial statements continued
Annual Report and Accounts 2009
38 – Insurance liabilities
This note analyses our insurance contract liabilities by type of product and describes how we calculate these liabilities and what
assumptions we have used.
(a) Carrying amount
Insurance liabilities at 31 December comprise:
2009 2008 2007
Long-term
business
£m
General
insurance
and health
£m
Total
£m
Long-term
business
£m
General
insurance
and health
£m
Total
£m
Long-term
business
£m
General
insurance
and health
£m
Total
£m
Long-term business provisions
Participating
Unit-linked non-participating
Other non-participating
64,702
23,158
66,198
—
—
—
64,702
23,158
66,198
66,863
22,060
67,265
—
—
—
66,863
22,060
67,265
66,093
20,601
48,618
—
—
—
66,093
20,601
48,618
154,058 — 154,058 156,188 — 156,188 135,312 — 135,312
Outstanding claims provisions 921 9,977 10,898 907 11,842 12,749 727 10,842 11,569
Provision for claims incurred but not reported — 2,719 2,719 — 2,518 2,518 — 2,099 2,099
921 12,696 13,617 907 14,360 15,267 727 12,941 13,668
Provision for unearned premiums — 4,781 4,781 — 5,493 5,493 — 5,484 5,484
Provision arising from liability adequacy tests — 7 7 — 13 13 — 24 24
Other technical provisions — — — — — — — 3 3
Total 154,979 17,484 172,463 157,095 19,866 176,961 136,039 18,452 154,491
Less: Obligations to staff pension schemes transferred
to provisions (note 46a) (1,351) — (1,351) (1,402) — (1,402) (1,025) — (1,025)
Amounts classified as held for sale — (20) (20) — (709) (709) — (627) (627)
153,628 17,464 171,092 155,693 19,157 174,850 135,014 17,825 152,839
(b) Long-term business liabilities
(i) Business description
The Group underwrites long-term business in a number of countries as follows:
— In the UK mainly in:
– New With-Profits sub-fund (NWPSF) of Aviva Life & Pensions UK (UKLAP), where the with-profit policyholders are entitled to
at least 90% of the distributed profits, the shareholders receiving the balance. Any surplus or deficit emerging in NWPSF that
is not distributed as bonus will be transferred from this sub-fund to the Reattributed Inherited Estate External Support
Account (RIEESA) (see below).
– Old With-Profits sub-fund (OWPSF), With-Profits sub-fund (WPSF) and Provident Mutual sub-fund (PMSF) of UKLAP, where
the with-profit policyholders are entitled to at least 90% of the distributed profits, the shareholders receiving the balance.
– “Non-profit” funds of Aviva Annuity UK and UKLAP, where shareholders are entitled to 100% of the distributed profits.
Shareholder profits on unitised with-profit business written by WPSF and on stakeholder unitised with-profit business are
derived from management fees and policy charges, and emerge in the non-profit funds.
– The RIEESA of UKLAP, which is a non-profit fund where shareholders are entitled to 100% of the distributed profits, but
these cannot be distributed until the “lock-in” criteria set by the Reattribution Scheme have been met. RIEESA will be used to
write non-profit business and also to provide capital support to NWPSF.
— In France, where the majority of policyholders’ benefits are determined by investment performance, subject to certain
guarantees, and shareholders’ profits are derived largely from management fees. In addition, a substantial number of policies
participate in investment returns, with the balance being attributable to shareholders.
— In the Netherlands, the balance of profits, after providing appropriate returns for policyholders and after tax, accrues for the
benefit of the shareholders. The bases for determining returns for policyholders are complex, but are consistent with methods
and criteria followed generally in the Netherlands. In addition, a substantial number of policies provide benefits that are
determined by investment performance, subject to certain guarantees, and shareholders’ profits are derived largely from
management fees.
— In the United States, there are two main types of business – protection products and accumulation products. Protection
products include interest-sensitive whole life, term life, universal life and indexed life insurance policies. The accumulation
product segment includes traditional fixed and indexed deferred annuities for individuals and funding agreements for business
customers. In addition, there are two closed blocks of participating contracts arising from demutualisations of subsidiary
companies. All products are classified as insurance contracts except for the funding agreements and term certain immediate
annuities, which are classified as non-participating investment contracts.
— In other overseas operations.