Aviva 2009 Annual Report Download - page 309

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Aviva plc MCEV financial statements continued
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Annual Report and Accounts 2009
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Other information
M18 – Principal economic assumptions
(a) Economic assumptions – Deterministic calculations
Economic assumptions are derived actively, based on market yields on risk-free fixed interest assets at the end of each
reporting period.
In setting the risk-free rate we have, wherever possible used the mid-price swap yield curve for an AA-rated bank.
The curve is extrapolated if necessary to get rates suitable to the liabilities. For markets in which there is no reliable swap yield
curve the relevant government bond yields are used.
Required capital is shown as a multiple of the EU statutory minimum solvency margin or equivalent.
The adjustments made to swap rates to derive a risk-free rate for immediate annuity type contracts and all US contracts are
shown below the reference rate table.
The principal economic assumptions used are as follows:
Reference rate (spot, swap rates) and expense inflation
United Kin
g
dom
2009 2008 2007
Reference rate
1 year 1.2% 2.8% 5.7%
5 years 3.5% 3.2% 5.1%
10 years 4.3% 3.5% 5.0%
15 years 4.6% 3.8% 4.9%
20 years 4.6% 3.8% 4.8%
Expense inflation 3.3% 2.4% 3.6%
Delta Llo
y
d1
2009 2008 2007
Reference rate
1 year 1.3% 2.5% 4.7%
5 years 2.9% 3.3% 4.6%
10 years 3.7% 3.8% 4.7%
15 years 4.1% 4.0% 4.9%
20 years 4.2% 3.9% 5.0%
Expense inflation 2.4% 2.5% 3.0%
1.The economic assumptions used in Delta Lloyd differ from those in the Eurozone as the Dutch bank swap rate is used by Delta Lloyd.
Eurozone
(excludin
g
Delta Llo
y
d)
2009 2008 2007
Reference rate
1 year 1.3% 2.5% 4.8%
5 years 2.8% 3.3% 4.6%
10 years 3.7% 3.8% 4.7%
15 years 4.1% 3.9% 4.9%
20 years 4.2% 3.9% 4.9%
Expense inflation 2.5% 2.1% 2.9%
Poland
2009 2008 2007
Reference rate
1 year 4.5% 4.4% 6.2%
5 years 5.8% 4.3% 5.8%
10 years 5.8% 4.2% 5.5%
15 years 5.7% 4.1% 5.4%
20 years 5.5% 4.0% 5.4%
Expense inflation 3.0% 2.9% 4.7%
United States
2009 2008 2007
Reference rate
1 year 0.7% 1.3% 4.2%
5 years 3.1% 2.2% 4.2%
10 years 4.2% 2.6% 4.7%
15 years 4.6% 2.9% 4.9%
20 years 4.8% 2.9% 5.0%
Expense inflation 3.0% 3.0% 3.5%
Financial statements MCEV