Aviva 2009 Annual Report Download - page 44

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Aviva plc Financial and operating performance continued
Annual Report and Accounts 2009
The table below presents our consolidated adjusted operating
profit for 31 December 2009, 2008 and 2007, as well as
the reconciliation of adjusted operating profit to profit before
tax attributable to shareholders’ profits under IFRS.
2009 2008 2007
£m £m £m
United Kingdom 1,165 1,377 1,126
Europe 1,196 1,141 1,197
North America 213 149 229
Asia Pacific 77 36 37
Aviva Investors 115 114 147
Other (744) (520) (520)
Adjusted operating profit 2,022 2,297 2,216
Add back adjusting items:
Investment return variances and economic
assumption changes on long-term
insurance business (75) (1,631) 15
Short-term fluctuation in return on investments
on non-long-term business 95 (819) (184)
Economic assumption changes on general
insurance and health business 57 (94) 2
Impairment of goodwill (62) (66) (10)
Amortisation and impairment of intangibles (144) (117) (103)
Profit on the disposal of subsidiaries
and associates 153 7 49
Integration and restructuring costs (286) (326) (153)
Exceptional items 45 (551) —
Profit/(loss) before tax attributable to
shareholders’ profits 1,805 (1,300) 1,832
Consolidated results of operations
The table below presents our consolidated sales for years ended
31 December 2009, 2008 and 2007.
2009 2008 2007
£m £m £m
United Kingdom 14,261 18,756 20,445
Europe 21,750 21,806 20,488
North America 6,345 7,316 5,058
Asia Pacific 2,712 3,499 4,283
Total sales 45,068 51,377 50,274
The table below presents our consolidated income statement
under IFRS for years ended 31 December 2009, 2008 and 2007.
2009 2008 2007
£m £m £m
Income
Gross written premiums 34,690 36,206 30,991
Premiums ceded to reinsurers (2,576) (1,841) (1,658)
Premiums written net of reinsurance 32,114 34,365 29,333
Net change in provision for
unearned premiums 559 277 (21)
Net earned premiums 32,673 34,642 29,312
Fee and commission income 1,789 1,885 1,760
Net investment income/(expense) 24,972 (16,043) 9,689
Share of loss of joint ventures and associates (504) (1,128) (304)
Profit on the disposal of subsidiaries
and associates 153 7 49
59,083 19,363 40,506
Expenses
Claims and benefits paid, net of recoveries
from reinsurers (27,549) (29,353) (27,121)
Change in insurance liabilities, net of reinsurance (5,682) 3,885 (3,508)
Change in investment contract provisions (11,185) 10,629 (2,018)
Change in unallocated divisible surplus (1,547) 4,482 2,922
Fee and commission expense (4,396) (4,411) (4,244)
Other expenses (5,366) (5,416) (3,473)
Finance costs (1,336) (1,547) (1,217)
(57,061) (21,731) (38,659)
Profit/(loss) before tax 2,022 (2,368) 1,847
Tax attributable to policyholders’ returns (217) 1,068 (15)
Profit/(loss) before tax attributable to
shareholders’ profits 1,805 (1,300) 1,832
Sales
Year ended 31 December 2009
Sales in 2009 were £45,068 million, a decrease of £6,309
million, or 12%, from £51,377 million in 2008. All regions
reported a decrease in sales in 2009. Long-term insurance and
savings and general insurance and health sales decreased by
24% in the UK with Europe reporting an increase of 6% in
long-term insurance and savings sales offset by a 26% decrease
in general insurance and health sales mainly attributable to the
sale of the Delta Lloyd health business on 1 January 2009. North
America long-term insurance and savings sales decreased by
£1,170 million, offset by a 12% increase in general insurance
sales in Canada. Asia Pacific reported a decrease in sales of 22%
mainly attributable to the sale of the Australian business on
1 October 2009.
Year ended 31 December 2008
Sales in 2008 were £51,377 million, an increase of £1,103
million or 2% from £50,274 million in 2007. This increase was
mainly attributable to growth in Europe and North America in
life and pension sales. Life and pension sales in Europe increased
by 8% from £15,684 million in 2007 to £16,952 million in
2008, boosted by strength in the euro exchange rate, and in
North America life and pension sales increased considerably
to £5,715 million, an increase of £2,069 million or 57% from
£3,646 million in 2007. General insurance and health sales
were £11,137 million, an increase of 5% across the whole
group from £10,569 million in 2007.
Income
Year ended 31 December 2009
Net written premiums in 2009 were £32,114 million, a decrease
of £2,251 million, or 7%, from £34,365 million in 2008. Long-
term insurance and savings and general insurance and health
both reported decreases in net written premiums primarily in
the UK with a 36% decrease in long-term insurance and savings
and 22% decrease in general insurance and health net written
premiums in the UK. Europe reported a 12% increase in net
written premiums with both North America and Asia Pacific
reporting a decrease in net written premiums of 2% and
11% respectively.
Year ended 31 December 2008
Net written premiums in 2008 were £34,365 million, an
increase of £5,032 million or 17% from £29,333 million in
2007. This increase reflects a 24% increase in life and pension
premiums due to strong new business sales across most of our
operations and a 5% increase in general insurance and health
sales predominantly driven by our operations in France, the
Netherlands and Canada.
Net investment income
Year ended 31 December 2009
Net investment income for the year was £24,972 million,
an increase of £41,015 million (
2008: £16,043 million loss ).
During 2009, investment markets across the regions in which
we operated improved significantly from the falls in property
and equity markets that were experienced in 2008.
Year ended 31 December 2008
Net investment income decreased by £25,732 million to a loss
of £16,043 million (
2007: £9,689 million profit ). This decrease
reflects the lower market value of properties in the UK, 30%
to 50% fall in equity values across the world and the impact
of falling yields and widening credit spreads on fixed income
securities.