Aviva 2009 Annual Report Download - page 226

224
Aviva plc Notes to the consolidated financial statements continued
Annual Report and Accounts 2009
41 – Reinsurance assets continued
(ii) In respect of general insurance and health outstanding claims provisions and IBNR
2009 2008
£m £m
Carrying amount at 1 January 1,766 1,663
Impact of changes in assumptions (72) 21
Exceptional strengthening of latent claims provisions — 52
Reinsurers’ share of claim losses and expenses
Incurred in current year 255 228
Incurred in prior years 7 12
Reinsurers’ share of incurred claim losses and expenses 262 240
Less:
Reinsurance recoveries received on claims
Incurred in current year (138) (107)
Incurred in prior years (202) (257)
Reinsurance recoveries received in the year (340) (364)
Unwind of discounting 22 24
Change in reinsurance asset recognised as income (128) (27)
Effect of portfolio transfers, acquisitions and disposals 57 27
Foreign exchange rate movements (50) 105
Other movements (2) (2)
Carrying amount at 31 December 1,643 1,766
(iii) Reinsurers’ share of the provision for unearned premiums (UPR)
2009 2008
£m £m
Carrying amount at 1 January 418 511
Premiums ceded to reinsurers in the year 775 798
Less: Reinsurers’ share of premiums earned during the year (861) (909)
Changes in reinsurance asset recognised as income (86) (111)
Reinsurers’ share of portfolio transfers and acquisitions 5 8
Foreign exchange rate movements (5) 10
Carrying amount at 31 December 332 418
42 – Effect of changes in assumptions and estimates during the year
Certain estimates and assumptions used in determining our liabilities for insurance and investment contract business were changed
from 2008 to 2009, affecting the profit recognised for the year with an equivalent effect on liabilities. This note analyses the effect
of the changes. This disclosure only allows for the impact on liabilities and related assets, such as reinsurance, deferred acquisition
costs and AVIF, and does not allow for offsetting movements in the value of backing financial assets.
Effect on Effect on
profit profit
2009 2008
£m £m
Assumptions
Long-term insurance business
Interest rates (363) (521)
Expenses 69 24
Persistency rates — 2
Mortality for assurance contracts 11 44
Mortality for annuity contracts 6 26
Tax and other assumptions (49) 93
Investment contracts
Interest rates 20 (75)
Expenses 40 (27)
Persistency rates — 2
Tax and other assumptions (89) 36
General insurance and health business
Change in loss ratio assumptions (2) (1)
Change in discount rate assumptions 57 (94)
Change in expense ratio and other assumptions (21) —
Total (321) (491)
The impact of interest rates for long-term business relates primarily to the US, driven by the reduction in credit spreads on
corporate bonds; this had the effect of increasing liabilities for indexed business and hence a negative impact on profit. The overall
impact on profit also depends on movements in the value of assets backing the liabilities, which is not included in this disclosure.
Other assumption changes include the effect of business migration and expense inflation adjustments in the UK, and reserve
releases in Asia.