Aviva 2009 Annual Report Download - page 316

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Aviva plc MCEV financial statements continued
Annual Report and Accounts 2009
M19 – Sensitivity analysis continued
(b) Non-economic assumptions
The following tables below show the sensitivity of the embedded value and the value of new business to the following changes
in non-economic assumptions:
— 10% decrease in maintenance expenses (a 10% sensitivity on a base expense assumption of £10 pa would represent an
expense assumption of £9 pa). Where there is a “look through” into service company expenses the fee charged by the service
company is unchanged while the underlying expense decreases;
— 10% decrease in lapse rates (a 10% sensitivity on a base assumption of 5% pa would represent a lapse rate of 4.5% pa); and
— 5% decrease in both mortality and morbidity rates disclosed separately for life assurance and annuity business.
No future management actions are modelled in reaction to the changing non-economic assumptions. In each sensitivity calculation
all other assumptions remain unchanged. No changes to valuation bases have been included.
Embedded value
5%
5% decrease in
decrease in mortality/
10% mortality/ morbidity
decrease in 10% morbidity rates –
2009 As reported maintenance decrease in rates – life annuity
Embedded value on page 304 expenses lapse rates assurance business
(net of tax) £m £m £m £m £m
United Kingdom 5,903 185 50 40 (250)
France 2,773 45 50 35 (15)
Ireland 888 20 25 5 (5)
Italy 660 10 — — —
Poland 1,141 40 50 15 —
Spain 612 10 45 15 (5)
Other Europe 259 10 15 5 —
Aviva Europe 6,333 135 185 75 (25)
Delta Lloyd 1,531 100 5 10 (70)
Europe 7,864 235 190 85 (95)
North America 694 65 (60) 55 (20)
Asia 540 15 10 5 —
Australia — — — — —
Asia Pacific 540 15 10 5 —
Total 15,001 500 190 185 (365)
New business
5%
5% decrease in
decrease in mortality/
10% mortality/ morbidity
decrease in 10% morbidity rates –
2009 As reported maintenance decrease in rates – life annuity
Value of new business on page 295 expenses lapse rates assurance business
(net of tax) £m £m £m £m £m
United Kingdom 177 12 13 6 (10)
France 94 2 2 1 —
Ireland 8 1 2 — —
Italy 38 2 1 1 —
Poland 39 2 3 2 —
Spain 51 1 8 2 —
Other Europe 8 1 4 1 —
Aviva Europe 238 9 20 7 —
Delta Lloyd (78) 11 3 2 (3)
Europe 160 20 23 9 (3)
North America 16 10 (11) 13 —
Asia 9 3 2 1 —
Australia 13 1 2 1 —
Asia Pacific 22 4 4 2 —
Total 375 46 29 30 (13)