Aviva 2009 Annual Report Download - page 265

263
Aviva plc
Annual Report and Accounts 2009 Notes to the consolidated financial statements continued
Performance review
Corporate responsibility
Governance
Shareholder information
Financial statements IFRS
Financial statements MCEV
Other information
56 – Risk management continued
On
demand No fixed
or within Over term
Total 1 year 1-5 years 5 years (perpetual)
At 31 December 2009 £m £m £m £m £m
Debt securities 160,510 17,309 44,051 98,792 358
Equity securities 43,343 — — — 43,343
Other investments 34,849 32,423 414 493 1,519
Loans 41,079 6,867 4,146 30,066 —
Cash and cash equivalents 25,176 25,176 — — —
304,957 81,775 48,611 129,351 45,220
The assets above are analysed in accordance with the earliest possible redemption date of the instrument at the initiation of the
Group. Where an instrument is transferable back to the issuer on demand, such as most unit trusts or similar types of investment
vehicle, it is included in the “On demand or within 1 year” column. Debt securities with no fixed contractual maturity date are
generally callable at the option of the issuer at the date the coupon rate is reset under the contractual terms of the instrument.
The terms for resetting the coupon are such that we expect the securities to be redeemed at this date, as it would be uneconomic
for the issuer not to do so, and for liquidity management purposes we manage these securities on this basis. The first repricing and
call date is normally 10 years or more after the date of issuance. Most of the Group’s investments in equity securities and fixed
maturity securities are market traded and therefore, if required, can be liquidated for cash at short notice.
As explained in note 2(a)(ii), comparative information for the disclosures required by the IFRS 7 amendments is not needed
in the first year of application and so no table for 2008 is presented above.
(e) Insurance risk
(i) Life insurance risk
Types of risk
Life insurance risk in the Group arises through its exposure to mortality and morbidity insurance and exposure to worse than
anticipated operating experience on factors such as persistency levels and management and administration expenses.
Risk management framework
The Group has developed a life insurance risk policy and guidelines on the practical application of this policy. Individual life
insurance risks are managed at a business unit level but are also monitored at Group level.
The impact of life insurance risks is monitored by the business units as part of the control cycle of business management.
Exposure is monitored through the assessment of liabilities, the asset liability management framework, profit reporting (under both
IFRS and MCEV), and the ICA process. Significant insurance risks will be reported through the Group risk management framework
and overseen by the Life Insurance Committee. At Group level the overall exposure to life insurance risk is measured through the
ICA and other management reporting.
The Life Insurance Committee monitors the application of the risk policy in each business, and receives management
information on life insurance risks. The committee considers all areas of life insurance risk, but in particular has a remit to monitor
mortality, longevity, morbidity, persistency, product development and pricing, unit pricing and expenses.
The committee also considers the reinsurance coverage across the life businesses. It confirms that guidance and procedures
are in place for each of the major components of life insurance risk, and that the businesses mitigate against any life insurance risk
outside local appetite, within the parameters for the overall Group risk appetite.
The committee has also developed guidance for business units on management of a number of areas of life insurance risk
to ensure best practice is shared throughout the Group and common standards are adopted.
Financial statements IFRS