Aviva 2009 Annual Report Download - page 297

295
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 continued
Net of tax and Other Aviva Delta North Asia
minority interests UK France Ireland Italy Poland Spain Europe Europe Lloyd Europe America Asia Australia Pacific Total
2009 £m £m £m £m £m £m £m £m £m £m £m £m £m £m £m
Value of new business 177 94 8 38 39 51 8 238 (78) 160 16 9 13 22 375
Earnings from existing
business
– expected existing business
contribution (reference
rate) 81 100 15 5 47 15 17 199 29 228 55 6 11 17 381
– expected existing business
contribution (in excess of
reference rate) 289 170 12 2 3 44 — 231 171 402 249 12 — 12 952
Experience variances
– maintenance expense 27 — 4 (1) 10 (8) 4 9 4 13 — 5 — 5 45
– project and other related
expenses1 (26) — (5) — — (3) (6) (14) (21) (35) (35) — — — (96)
– mortality/morbidity2 4 30 5 1 9 (3) 6 48 (17) 31 5 3 5 8 48
– lapses3 (22) 36 (16) (15) 12 (20) (14) (17) 5 (12) (17) (31) — (31) (82)
– other4 (4) (49) 1 37 5 1 1 (4) 35 31 (40) (1) (2) (3) (16)
(21) 17 (11) 22 36 (33) (9) 22 6 28 (87) (24) 3 (21) (101)
Operating assumption
changes:
– maintenance expense5 — (14) 3 (10) 38 (69) 7 (45) 197 152 (9) (9) 6 (3) 140
– project and other related
expenses — — — — — (5) — (5) — (5) — — — — (5)
– mortality/morbidity6 4 42 4 4 42 (3) 1 90 1 91 (20) — 3 3 78
– lapses7 (36) (13) (6) (12) 58 (24) (5) (2) (25) (27) (105) (6) 3 (3) (171)
– other8 (16) 2 8 1 (1) — (3) 7 (48) (41) 96 (5) (3) (8) 31
(48) 17 9 (17) 137 (101) — 45 125 170 (38) (20) 9 (11) 73
Expected return
on shareholders’
net worth 100 38 11 18 6 10 6 89 57 146 89 7 4 11 346
Other operating variances9 (11) 34 (3) — 83 12 1 127 14 141 (18) 40 — 40 152
Earnings after tax and
minority interests 567 470 41 68 351 (2) 23 951 324 1,275 266 30 40 70 2, 178
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