Aviva 2009 Annual Report Download - page 298

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Aviva plc MCEV financial statements continued
Annual Report and Accounts 2009
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
2008 Restated £m £m £m £m £m £m £m £m £m £m £m £m £m £m £m
Value of new business1 147 79 10 21 46 68 24 248 (48) 200 36 24 9 33 416
Earnings from existing
business
– expected existing business
contribution (reference
rate) 244 115 26 9 64 23 15 252 74 326 56 10 18 28 654
– expected existing business
contribution (in excess of
reference rate) 151 24 5 2 6 9 — 46 56 102 35 2 1 3 291
Experience variances
– maintenance expense 15 1 (1) (2) 4 — (1) 1 (22) (21) — (3) — (3) (9)
– project and other related
expenses2 (45) (7) (5) — — (4) (5) (21) (18) (39) (9) — — — (93)
– mortality/morbidity3 13 26 1 1 15 — 1 44 12 56 — 4 1 5 74
– lapses4 (17) (4) (5) (5) 18 (10) (9) (15) (1) (16) (2) (3) 2 (1) (36)
– other5 5 (29) (27) (6) (6) 1 (1) (68) 29 (39) (20) (1) (8) (9) (63)
(29) (13) (37) (12) 31 (13) (15) (59) — (59) (31) (3) (5) (8) (127)
Operating assumption
changes:
– maintenance expense6 (11) (8) (1) (3) 3 — (10) (19) (109) (128) (3) (3) — (3) (145)
– project and other related
expenses 9 — — — — — — — 4 4 — — — — 13
– mortality/morbidity7 39 — 16 4 3 (1) — 22 (77) (55) — 1 (1) — (16)
– lapses8 (53) 65 4 (3) (8) (7) (16) 35 — 35 — (10) 1 (9) (27)
– other9 12 — 15 1 18 — 11 45 (13) 32 — (8) 4 (4) 40
(4) 57 34 (1) 16 (8) (15) 83 (195) (112) (3) (20) 4 (16) (135)
Expected return on
shareholders’ net worth 119 66 23 20 10 10 6 135 145 280 39 8 6 14 452
Other operating variances10 7 98 (11) (1) (1) 8 2 95 104 199 — 3 — 3 209
Earnings after tax and
minority interests 635 426 50 38 172 97 17 800 136 936 132 24 33 57 1,760
1.In Spain £12 million has been reclassified from value of new business to other operating variances.
2.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. Expenses in Delta Lloyd reflect an overrun in Belgium following the acquisition of Swiss Life Belgium, and restructuring within the intermediary division.
3.Mortality experience continues to be better than the assumptions set across a number of our businesses.
4.Lapse experience has been volatile, in part reflecting wider economic volatility. In Poland, lapse experience continued to be better than the long-term assumptions for both life and pension
products.
5.In France, other experience profits include the reduction in value arising from reductions in fees and commissions received. In Ireland, certain statutory provisions were increased following
a review. The movement in Delta Lloyd reflects changes on group pension scheme contribution. In the USA, other experience reflects the cost of enhancing policyholder crediting rates.
6.In Delta Lloyd, expense assumptions have been updated following a review of expense allocations.
7.In UK, favourable mortality assumption changes are in respect of mortality and morbidity changes across a range of products. In Delta Lloyd, mortality assumption changes reflect the impact of
using a new industry mortality basis.
8.In the UK, an additional lapse provision has been set up in anticipation of higher short-term recession related withdrawals (pre tax £50 million) and higher mortgage and income protection claims
(pre tax £20 million) to reflect rising unemployment. In France, persistency assumptions have been weakened following continual favourable experience on AFER products.
9.In the UK, other operating assumption changes include the impact of the with-profit special distribution. In Ireland, other assumption changes reflect a reduction in the assumed future tax
charges. In Poland, other assumptions reflect a change in the pattern of future mortality charging structure.
10. Other operating variances in France are mainly in respect of the impact of the mutualisation of funds following the merger of two legal entities. In Delta Lloyd, changes are mainly in respect
of aligning the profit sharing policy for existing group business in Belgium, following the acquisition of Swiss Life Belgium.