Aviva 2009 Annual Report Download - page 321

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Performance review
Aviva plc Glossary continued
Corporate responsibility
Annual Report and Accounts 2009
Governance
Shareholder information
Financial statements IFRS
Financial statements MCEV
Other information
Product Definitions cont.
Single premium
A single lump sum is paid by the policyholder
at commencement of the contract.
Stakeholder pensions
Low cost and flexible pension plans available
in the UK, governed by specific regulations.
Superannuation
Superannuation is a pension product sold in
Australia where employers pay a proportion
of an employee’s salaries and wages into
a fund, which can be accessed when the
employee retires.
Takaful
Insurance products that observe the rules and
regulations of Islamic law.
Term assurance
A simple form of life insurance, offering
cover over a fixed number of years during
which a lump sum will be paid out if the
life insured dies.
Unit trusts
A form of open ended collective investment
constituted under a trust deed, in which
investors can buy and sell units.
Unit-linked annuities
A unit-linked annuity is a type of deferred
annuity which is invested in units of investment
funds, whose value depends directly on the
market value of assets in those funds.
Whole life
Whole life insurance is a protection policy that
remains in force for the insured’s whole life.
Traditional whole life contracts have fixed
premium payments that typically cannot be
missed without lapsing the policy. Flexible
whole life contracts allow the policyholder to
vary the premium and/or amount of life cover,
within certain limits.
With profits
A type of long-term savings and insurance
product sold in the UK Under with profits
policies premiums are paid into a separate
fund. Policyholders receive a return on their
policies through bonuses, which “smooth”
the investment return from the assets which
premiums are invested in. Bonuses are declared
on an annual and terminal basis. Shareholders
have a participating interest in the with-profit
funds and any declared bonuses. Generally,
policyholder and shareholder participation in
with-profit funds in the UK is split 90:10.
Wrap investments
An account in which a broker or fund manager
executes investment decisions on behalf of
a client in exchange for a single quarterly or
annual fee, usually based on the total assets
in the account rather than the number
of transactions.
General terms
Available for Sale (AFS)
Securities that have been acquired neither
for short-term sale nor to be held to maturity.
These are shown at fair value on the statement
of financial position and changes in value
are taken straight to equity instead of the
income statement.
Association of British Insurers (ABI)
Association of British Insurers – A major trade
association for UK insurance companies,
established in July 1985.
Acquired value of in force (AVIF)
An estimate of future profits that will emerge
over the remaining term of all existing life and
pensions policies for which premiums are being
paid or have been paid at the statement of
financial position date.
Bancassurance
An arrangement whereby banks and building
societies sell insurance and investment
products to their customers on behalf of
other financial providers.
Combined Code on Corporate Governance
The Combined Code on Corporate Governance
sets out guidance in the form of principles
and provisions on how companies should be
directed and controlled to follow good
governance practice. The Financial Services
Authority requires companies listed in the
UK to disclose, in relation to the Combined
Code, how they have applied its principles
and whether they have complied with its
provisions throughout the accounting year.
Where the provisions have not been
complied with, companies must provide
an explanation for this.
Deferred acquisition costs (DAC)
The cost directly attributable to the acquisition
of new business for insurance and participating
investment contracts (excluding those written
in the UK) are deferred to the extent that they
are expected to be recoverable out of future
margins in revenue on these contracts.
Fair value
The price that a reasonable buyer would be
willing to pay and a reasonable seller would
be willing to accept for a product on the
open market.
FSA
The UK’s Financial Services Authority – Main
regulatory body appointed by the government
to oversee the financial services industry in the
UK. Since December 2001 it has been the
single statutory regulator responsible for the
savings, insurance and investment business.
Other information