Aviva 2009 Annual Report Download - page 301

2009
299
Performance review
Aviva plc MCEV financial statements continued
Corporate responsibility
Annual Report and Accounts 2009
Governance
Shareholder information
Financial statements IFRS
Financial statements MCEV
Other information
M6 – Analysis of life and pension earnings
The following table provides an analysis of the movement in embedded value for covered business. The analysis is shown
separately for free surplus, required capital and the value of in-force covered business, and includes amounts transferred between
these categories. All figures are shown net of tax and minority interests.
Free Required Total
surplus capital1 VIF MCEV
£m £m £m £m
Opening group MCEV 1,348 8,148 4,716 14,212
Opening adjustments — — — —
Adjusted opening group MCEV 1,348 8,148 4,716 14,212
New business value (1,571) 983 963 375
Expected existing business contribution (reference rate) — — 381 381
Expected existing business contribution (in excess of reference rate) — — 952 952
Transfers from VIF and required capital to the free surplus 1,869 (738) (1,131) —
Experience variances (198) 135 (38) (101)
Assumption changes 48 6 19 73
Expected return on shareholders’ net worth 164 182 — 346
Other operating variance 10 (141) 283 152
Operating MCEV earnings 322 427 1,429 2,178
Economic variances 1,317 (324) (42) 951
Other non-operating variances (238) 909 (407) 264
Total MCEV earnings/(loss) 1,401 1,012 980 3,393
Capital and dividend flows2 (250) — — (250)
Foreign exchange variance 6 (556) (193) (743)
Acquired/divested business (301) (1,058) (252) (1,611)
Closing MCEV 2,204 7,546 5,251 15,001
1.Required capital is shown net of implicit items permitted by local regulators to cover minimum solvency margins.
2.Included within capital and dividend flows is the transfer to Life and related businesses from other segments consisting of service company profits and losses during the reported period that have
emerged from the value of in-force. Since the “look through” into service companies includes only future profits and losses, these amounts must be eliminated from the closing embedded value.
We have reported other non operating variances of £264 million for 2009 (2008: loss £232 million). This represents the impact on
the Life MCEV of the reattribution of the inherited estate in the UK and the adverse impact of legislation changes relating to the
capping of management changes on pension funds in Poland. In 2008 the impact related to the settlement agreed by Delta Lloyd
for its unit-linked policyholders, following an industry-wide challenge on the level of fees. Acquired/divested businesses consist of
the disposal of our Australian life and pensions business and the IPO of Delta Lloyd in 2009.
Free Required Total
Restated surplus capital1 VIF MCEV
2008 £m £m £m £m
Opening MCEV 3,204 6,240 8,945 18,389
Opening adjustments — — — —
Adjusted opening group MCEV 3,204 6,240 8,945 18,389
New business value (1,867) 1,109 1,174 416
Expected existing business contribution (reference rate) — — 654 654
Expected existing business contribution (in excess of reference rate) — — 291 291
Transfers from VIF and required capital to the free surplus 1,926 (637) (1,289) —
Experience variances 154 3 (284) (127)
Assumption changes 563 (114) (584) (135)
Expected return on shareholders’ net worth 270 182 — 452
Other operating variance 44 (29) 194 209
Operating MCEV earnings 1,090 514 156 1,760
Economic variances (3,140) (433) (4,873) (8,446)
Other non-operating variances (104) 19 (147) (232)
Total MCEV earnings/(loss) (2,154) 100 (4,864) (6,918)
Capital and dividend flows2 (63) — — (63)
Foreign exchange variance 459 1,597 661 2,717
Acquired/divested business (98) 211 (26) 87
Closing MCEV 1,348 8,148 4,716 14,212
1.Required capital is shown net of implicit items permitted by local regulators to cover minimum solvency margins.
2.Included within capital and dividend flows is the transfer to Life and related businesses from other segments consisting of service company profits and losses during the reported period that have
emerged from the value of in-force. Since the “look through” into service companies includes only future profits and losses, these amounts must be eliminated from the closing embedded value.
Financial statements MCEV