Aviva 2009 Annual Report Download - page 213

211
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
38 – Insurance liabilities continued
Mortality assumptions are set with regard to recent company experience and general industry trends. The mortality tables used
in the valuation are summarised below:
Mortality tables used
2008 and 2009 2007
Assurances
Non-profit
Pure endowments and deferred annuities before vesting
Pensions business after vesting
Annuities in payment
General annuity business
AM00/AF00 or TM00/TF00
adjusted for smoker status and
age/sex specific factors
AM00/AF00 adjusted
PCMA00/PCFA00 adjusted plus
allowance for future mortality
improvement
IML00/IFL00 adjusted plus
allowance for future mortality
improvement
AM80/AF80 or AM92/AF92 or
TM92/TF92 adjusted for smoker
status and age/sex specific factors
Nil or AM80/AF80 or AM92/AF92
adjusted
PCMA00/PCFA00 adjusted plus
allowance for future mortality
improvement
IML00/IFL00 adjusted plus allowance
for future mortality improvement
(b) France
The majority of reserves arise from a single premium savings product and is based on the accumulated fund value, adjusted
to maintain consistency with the value of the assets backing the policyholder liabilities. The net premium method is used for
prospective valuations, in accordance with local regulation, where the valuation assumptions depend on the date of issue of
the contract. The valuation discount rate also depends on the original duration of the contract and mortality rates are based
on industry tables.
Valuation discount rates Mortality tables used
2009, 2008 and 2007 2009, 2008 and 2007
Life assurances 0% to 4.5% TD73-77, TD88-90,
TH00-02, TGF05/TGH05
Annuities 0% to 4.5% TPRV (prospective table)
(c) Netherlands
On transition to IFRS, the valuation of most long-term insurance and participating investment contracts was changed from existing
methods that used historic assumptions to an active basis using current market interest rates. A liability adequacy test is performed
in line with IFRS requirements. Where liabilities are based on current market interest rates and assets are valued at market value,
the margin in the liability adequacy test is determined by comparison of the liabilities with the present value of best estimate cash
flows. The yield curve is constructed from yields on collateralised AAA bonds.
Valuation discount rates Mortality tables used
2009, 2008 and 2007 2009, 2008 and 2007
Life assurances Market risk-free yield curves, based
on iBoxx index for collateralised
AAA bonds
(2007: Based on DNB
swap rates)
Annuities in deferment and in payment Market risk-free yield curves, based
on iBoxx index for collateralised
AAA bonds
(2007: Based on DNB
swap rates)
GBM 61-65, GBM/V 76-80,
GBM 80-85, GBM/V 85-90
and GBM/V90-95
GBM/V 76-80, GBM/V 85-90,
GBM/V 95-00, Coll 1993/2003 and
DIL 98, plus further allowance for
future mortality improvement
Financial statements IFRS
(d) United States
For the major part of our US business, insurance liabilities are measured in accordance with US GAAP as at the date of acquisition.
The liability for future policy benefits for traditional life insurance is computed using the net level method, based on
guaranteed interest and mortality rates as used in calculating cash surrender values. Reserve interest assumptions ranged from
2.00% to 7.50% in 2009
(2008: 2.00% to 7.50%) . The weighted average interest rate for all traditional life policy reserves in 2009
was 4.47%
(2008: 4.47%) .