Aviva 2009 Annual Report Download - page 322

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Aviva plc Glossary continued
Annual Report and Accounts 2009
General terms cont.
Funds under management
Represents all assets actively managed or
administered by or on behalf of the Group
including those funds managed by third parties.
Funds under management by Aviva
Represents all assets actively managed or
administered by the fund management
operations of the Group.
General insurance
Also known as non-life or property and casualty
insurance. Casualty insurance primarily covers
losses arising from accidents that cause injury
to other people or damage property of others.
Property insurance covers loss or damage
through fire, theft, flood, storms and other
specified risks.
Gross written premiums
The total earnings or revenue generated by
sales of insurance products, before any
reinsurance is taken into account. Not all
premiums written will necessarily be treated
as income in the current financial year,
because some of them could relate to
insurance cover for a subsequent period.
“Hard” insurance market
A term used to describe the state of the
general insurance market. A “hard” insurance
market is characterised by high levels of
underwriting profits and the ability of insurers
to charge high premium rates. Hard insurance
markets generally occur when capital is
scarce and are the opposite of “soft”
insurance markets.
Independent Financial Advisers (IFAs)
A person or organisation authorised to give
advice on financial matters and to sell the
products of all financial service providers. In the
UK they are legally obliged to offer the product
that best suits their clients’ needs. Outside
the UK IFAs may be referred to by other names.
IFRS
International Financial Reporting Standards.
These are accounting regulations designed to
ensure comparable statement of financial
position preparation and disclosure, and are the
standards that all publicly listed companies in
the European Union are required to use.
Inherited estate
In the UK, the assets of the long-term with-
profit funds less the realistic reserves for non-
profit policies, less asset shares aggregated
across the with-profit policies and any
additional amounts expected at the valuation
date to be paid to in-force policyholders
in the future in respect of smoothing costs
and guarantees.
Long-term and savings business
Collective term for life insurance, pensions,
savings, investments and related business.
Market Consistent Embedded Value
Aviva’s Market Consistent Embedded Value
(MCEV) methodology which is in accordance
with the MCEV Principles published by the CFO
Forum in June 2008 with the exception of the
use of an adjusted risk-free yield due to current
market conditions for immediate annuities in
the UK and the Netherlands and for immediate
annuity, deferred annuity and other contracts
in the US.
Net written premiums
Total gross written premiums for the given
period, minus premiums paid over or ‘ceded’
to reinsurers.
Present value of new business (PVNBP)
Present value of new regular premiums plus
100% of single premiums, calculated using
assumptions consistent with those used to
determine the value of new business under
Market Consistent Embedded Value (MCEV)
principles published by the CFO Forum of
major European listed and non-listed
insurance companies.
“Soft” insurance market
A term used to describe the state of the
general insurance market. A “soft” insurance
market is characterised by low levels of
profitability and market competition driving
premium rates lower. Soft insurance markets
generally occur when there is excess capital and
are the opposite of “hard” insurance markets.
Turnbull Guidance on Internal Control
The Turnbull guidance sets out best practice on
internal controls for UK listed companies, and
provides additional guidance in applying certain
sections of the Combined Code.
Market Consistent Embedded Value
(MCEV) terms
Asymmetric risk
Risks that will cause shareholder profits to vary
where the variation above and below the
average are not equal in distribution.
CFO Forum
The CFO Forum www.cfoforum.nl is a high-
level group formed by the Chief Financial
Officers of major European listed and non-listed
insurance companies. Its aim is to discuss issues
relating to proposed new accounting
regulations for their businesses and how they
can create greater transparency for investors.
The Forum was created in 2002, the Market
Consistent Embedded Value principles were
launched in June 2008 and CFO Forum
members across Europe have agreed to adopt
these for their 2009 published accounts. The
principles are a further development of the
European Embedded Value principles first
launched in May 2004.