Aviva 2009 Annual Report Download - page 295

293
Aviva plc
Annual Report and Accounts 2009 MCEV financial statements continued
Performance review
Corporate responsibility
Governance
Shareholder information
Financial statements IFRS
Financial statements MCEV
Other information
M2 – Geographical analysis of MCEV operating earnings
Gross of tax and
minority interests Other Aviva Delta North Asia
2009 UK France Ireland Italy Poland Spain Europe Europe Lloyd Europe America Asia Australia Pacific Total
£m £m £m £m £m £m £m £m £m £m £m £m £m £m £m £m
Value of new business 247 169 12 124 55 151 10 521 (103) 418 16 11 18 29 710
Earnings from existing
business
– expected existing business
contribution (reference
rate) 113 161 22 15 67 39 22 326 43 369 55 11 15 26 563
– expected existing business
contribution (in excess of
reference rate) 402 282 18 5 4 119 — 428 270 698 249 15 1 16 1,365
Experience variances
– maintenance expense1 37 — 6 (2) 14 (10) 5 13 (3) 10 — 6 (1) 5 52
– project and other related
expenses1 (34) (1) (7) — — (7) (7) (22) (42) (64) (35) — — — (133)
– mortality/morbidity2 6 50 8 2 12 (6) 8 74 (22) 52 5 5 8 13 76
– lapses3 (30) 53 (23) (46) 17 (52) (17) (68) 13 (55) (17) (38) — (38) (140)
– other4 (8) (80) 1 116 7 1 1 46 51 97 (40) — (3) (3) 46
(29) 22 (15) 70 50 (74) (10) 43 (3) 40 (87) (27) 4 (23) (99)
Operating assumption
changes:
– maintenance expense5 1 (22) 5 (31) 54 (94) 10 (78) 275 197 (9) (10) 8 (2) 187
– project and other
related expenses — — — — — (13) — (13) — (13) — — — — (13)
– mortality/morbidity6 5 64 7 12 58 (9) (1) 131 (4) 127 (20) (1) 5 4 116
– lapses7 (51) (22) (9) (37) 83 (69) (7) (61) (40) (101) (105) (9) 4 (5) (262)
– other8 (22) 3 12 1 (1) — (2) 13 (60) (47) 96 (6) (5) (11) 16
(67) 23 15 (55) 194 (185) — (8) 171 163 (38) (26) 12 (14) 44
Expected return on
shareholders’ net worth 138 66 16 57 8 26 7 180 88 268 89 11 6 17 512
Other operating variances9 (17) 62 (4) — 121 37 (2) 214 65 279 (18) 50 — 50 294
Earnings before tax
and minority interests 787 785 64 216 499 113 27 1,704 531 2,235 266 45 56 101 3,389
1.Maintenance expense experience in the UK relates to profits from existing business administration. Project and other related expenses in the UK reflect project costs associated with strategic
initiatives, including developments designed to offer a wider range of products to customers, and the simplification of systems and processes. Project and other related expenses in Delta Lloyd
relate to integration costs in Belgium.
2.Mortality experience continues to be better than the assumptions set across a number of our businesses.
3.Persistency experience has been volatile across most of our businesses, in part reflecting wider economic volatility. In France, positive persistency experience including the release of a short term
provision, in line with positive underlying experience. In Poland, lapse experience continued to be better than the long-term assumptions for both Life and Pension products.
4.Other experience is favourable overall. Both France and Italy include one off adjustments reflecting final commission payments from prior years. The favourable impact in Italy reflects to one-off
profit sharing on a reinsurance treaty. The favourable impact in Delta Lloyd relates to the revised investment and bonus strategy in Germany following the decision to close this operation to new
business. The adverse impact in the USA relates to the cost of enhancing policyholder crediting rates.
5.Favourable expense assumption changes reflect the impact of cost reductions in Delta Lloyd and Poland, together with the impact of revisions to expense allocations in Delta Lloyd. The adverse
impact in Spain relates to the capitalisation of certain governance costs in respect of bancassurance joint ventures.
6.Favourable mortality assumption changes in France, Poland reflecting recent experience. The adverse impact in the Delta Lloyd reflects the net impact of using updated mortality tables in the
Netherlands, Germany and Belgium, following the issuance of revised advice from the respective actuarial associations.
7.Persistency assumptions have been strengthened across most of our businesses, in light of experience. In Poland, persistency assumptions have been weakened following sustained favourable
experience.
8.Other assumption changes in the US primarily relate to the timing of management action in setting policyholder credited rates. In Delta Lloyd, the change represents tax effects resulting from
a reallocation of assets.
9.Other operating variances in France, Poland and Asia have arisen as a result of more accurate modelling. In the Delta Lloyd, these relate to revisions to investment and bonus strategies and
expenses in Delta Lloyd Germany following the decision to close this operation to new business. In Spain, these reflect the impact of re-pricing actions on risk products.
Financial statements MCEV