Aviva 2009 Annual Report Download - page 219

217
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
(iii) Net of reinsurance
After the effect of reinsurance, the loss development table is:
All prior
years 2001 2002 2003 2004 2005 2006 2007 2008 2009 Total
Accident year £m £m £m £m £m £m £m £m £m £m £m
Net cumulative claim payments
At end of accident year (2,970) (2,913) (2,819) (2,870) (3,281) (3,612) (4,317) (4,808) (3,650)
One year later (4,624) (4,369) (4,158) (4,378) (4,925) (5,442) (6,542) (7,165)
Two years later (5,088) (4,779) (4,565) (4,712) (5,344) (5,881) (7,052)
Three years later (5,436) (5,064) (4,924) (4,986) (5,671) (6,181)
Four years later (5,648) (5,297) (5,180) (5,163) (5,892)
Five years later (5,763) (5,424) (5,325) (5,327)
Six years later (5,841) (5,508) (5,442)
Seven years later (5,896) (5,552)
Eight years later (5,954)
Estimate of net ultimate claims
At end of accident year 6,186 6,037 6,218 6,602 6,982 7,430 8,363 9,262 7,115
One year later 6,333 6,038 6,093 6,266 6,818 7,197 8,302 9,104
Two years later 6,321 5,997 6,037 6,082 6,688 7,104 8,244
Three years later 6,329 5,973 5,942 5,882 6,544 6,996
Four years later 6,286 5,912 5,851 5,709 6,476
Five years later 6,219 5,855 5,772 5,699
Six years later 6,173 5,786 5,683
Seven years later 6,109 5,754
Eight years later 6,130
Estimate of net ultimate claims 6,130 5,754 5,683 5,699 6,476 6,996 8,244 9,104 7,115
Cumulative payments (5,954) (5,552) (5,442) (5,327) (5,892) (6,181) (7,052) (7,165) (3,650)
1,860 176 202 241 372 584 815 1,192 1,939 3,465 10,846
Effect of discounting (404) (2) (3) (3) (1) (2) (4) (8) (11) (13) (451)
Present value 1,456 174 199 238 371 582 811 1,184 1,928 3,452 10,395
Cumulative effect of foreign
exchange movements — 31 38 60 79 99 143 126 (42) — 534
Effect of acquisitions — 6 7 38 11 18 18 17 9 — 124
Present value recognised in the
statement of financial position 1,456 211 244 336 461 699 972 1,327 1,895 3,452 11,053
In the loss development tables shown above, the cumulative claim payments and estimates of cumulative claims for each accident
year are translated into sterling at the exchange rates that applied at the end of that accident year. The impact of using varying
exchange rates is shown at the bottom of each table. Disposals are dealt with by treating all outstanding and IBNR claims of the
disposed entity as “paid” at the date of disposal.
The loss development tables above include information on asbestos and environmental pollution claims provisions from
business written before 2001. The undiscounted claim provisions, net of reinsurance, in respect of this business at
31 December 2009 were £968 million
(2008: £1,019 million, 2007 £323 million) . The movement in the year reflects exceptional
strengthening of provisions by £60 million in respect of several specific discontinued commercial liability risks written in Canada a
significant number of years ago (
2008: £668 million due to the increased market trend in mesothelioma claim notifications ), other
releases of £62 million
(2008: £16 million strengthening) , foreign exchange rate movements and timing differences between claim
payments and reinsurance recoveries.
(e) Provision for unearned premiums
Movements
The following changes have occurred in the provision for unearned premiums (UPR) during the year:
2009 2008
£m £m
Carrying amount at 1 January 5,493 5,484
Premiums written during the year 9,968 11,934
Less: Premiums earned during the year (10,613) (12,322)
Changes in UPR recognised as income (645) (388)
Gross portfolio transfers and acquisitions — (11)
Foreign exchange rate movements (67) 408
Carrying amount at 31 December 4,781 5,493
Financial statements IFRS