Aviva 2009 Annual Report Download - page 270

268
Aviva plc Notes to the consolidated financial statements continued
Annual Report and Accounts 2009
56 – Risk management continued
Long-term business
Sensitivities as at 31 December 2009
Impact on profit before tax (£m)
Interest
rates
+1%
Interest
rates
-1%
Equity/
property
+10%
Equity/
property
-10%
Expenses
+10%
Assurance
mortality
+5%
Annuitant
mortality
-5%
Insurance participating
Insurance non-participating
Investment participating
Investment non-participating
Assets backing life shareholders’ funds
(20)
(190)
(65)
(30)
(10)
(275)
270
(15)
45
10
15
35
20
20
135
(35)
(35)
(30)
(20)
(140)
(15)
(25)
(15)
(5)
—
(5)
(40)
—
—
—
(40)
(280)
—
—
—
Total (315) 35 225 (260) (60) (45) (320)
Impact before tax on shareholders’ equity (£m)
Interest Interest Equity/ Equity/ Assurance Annuitant
rates rates property property Expenses mortality mortality
+1% -1% +10% -10% +10% +5% -5%
Insurance participating (40) (235) 20 (40) (15) (5) (40)
Insurance non-participating (380) 535 220 (220) (25) (40) (280)
Investment participating (65) (15) 20 (30) (15) — —
Investment non-participating (80) 125 20 (20) (5) — —
Assets backing life shareholders’ funds (65) 85 215 (215) — — —
Total (630) 495 495 (525) (60) (45) (320)
Sensitivities as at 31 December 2008 restated1
Impact on profit before tax (£m)
Interest Interest Equity/ Equity/ Assurance Annuitant
rates rates property property Expenses mortality mortality
+1% -1% +10% -10% +10% +5% -5%
Insurance participating (10) (165) 85 (90) (20) (5) (10)
Insurance non-participating (280) 525 65 (50) (20) (25) (310)
Investment participating (35) (55) 25 (20) — — —
Investment non-participating (10) 10 20 (20) (5) — —
Assets backing life shareholders’ funds (20) 30 180 (180) — — —
Total (355) 345 375 (360) (45) (30) (320)
1. The comparative 2008 economic sensitivities for insurance non-participating business have been restated to reflect modelling enhancements in Delta Lloyd.
Impact before tax on shareholders’ equity (£m)
Interest Interest Equity/ Equity/ Assurance Annuitant
rates rates property property Expenses mortality mortality
+1% -1% +10% -10% +10% +5% -5%
Insurance participating (30) (135) 85 (90) (20) (5) (10)
Insurance non-participating (440) 660 290 (270) (20) (25) (310)
Investment participating (50) (40) 30 (25) — — —
Investment non-participating (210) 230 20 (20) (5) — —
Assets backing life shareholders’ funds (80) 95 190 (190) — — —
Total (810) 810 615 (595) (45) (30) (320)
1. The comparative 2008 economic sensitivities for insurance non-participating business have been restated to reflect modelling enhancements in Delta Lloyd.
The different impacts of the economic sensitivities on profit and shareholders' equity arise from classification of certain assets
as available for sale in some business units, for which movements in unrealised gains or losses would be taken directly to
shareholders’ equity.
The sensitivities to economic movements relate mainly to business in the UK, US and the Netherlands. In general a fall in
market interest rates has a beneficial impact on non-participating business and shareholders’ funds, due to the increase in market
value of fixed interest securities and the relative durations of assets and liabilities; similarly a rise in interest rates has a negative
impact. In the US most debt securities are classified as available-for-sale, which limits the overall sensitivity of IFRS profit to interest
rate movements. The sensitivity to movements in equity and property market values relates mainly to holdings in the Netherlands,
although the impact on IFRS profit is moderated by the classification of equities as available for sale.
Changes in sensitivities between 2008 and 2009 reflect movements in market interest rates, portfolio growth, changes to
asset mix and the relative durations of assets and liabilities, asset liability management actions, and reattribution of inherited estate
in the UK.
The mortality sensitivities relate primarily to the UK.