Aviva 2009 Annual Report Download - page 53

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Performance review
Aviva plc Analysis of investments continued
Corporate responsibility
Annual Report and Accounts 2009
Governance
Shareholder information
Financial statements IFRS
Financial statements MCEV
Other information
Performance review
Analysis of financial investments
We distinguish between policyholder, participating fund and shareholder investments, which are terms used to reflect the differing
exposure to investment gains and losses. Policyholder assets are connected to our unit-linked business, where the policyholder
bears the investment risk on the assets in the unit-linked funds. Our exposure to loss on policyholder assets is limited to the extent
that income arising from asset management charges is based on the value of assets in the funds. Participating fund assets related
to some of our insurance and investment contracts which contain a discretionary participating feature, which is a contractual right
to receive additional benefits as a supplement to guaranteed benefits. Our exposure to investment losses on participating funds is
generally limited to our participation in the fund. Shareholder assets are other assets held within our long-term businesses that are
not backing unit-linked liabilities or participating funds. Investments held at 31 December 2009, 31 December 2008 and
31 December 2007 are analysed below:
Less assets
of
operations
classified as
Policyholder Participating Shareholder Total assets held Balance
assets fund assets assets analysed for sale sheet total
2009 £m £m £m £m £m £m
Investment property 3,941 6,338 2,151 12,430 (8) 12,422
Loans 1,468 7,543 32,068 41,079 — 41,079
Financial investments
Debt securities 17,596 86,464 56,450 160,510 — 160,510
Equity securities 28,638 9,678 5,027 43,343 — 43,343
Other investments 24,867 7,222 2,760 34,849 (23) 34,826
Total 76,510 117,245 98,456 292,211 (31) 292,180
Total % 26.2% 40.1% 33.7%
2008
2008 %
72,205
25.1%
119,083
41.5%
96,031
33.4%
287,319 (396) 286,923
2007
2007 %
76,025
28.3%
112,136
41.7%
80,579
30.0%
268,740 (316) 268,424
As the table indicates, 34% of total investments can be directly attributed to shareholders. The apportionment of our shareholder
assets is predominantly weighted towards debt securities and loans. In comparison, policyholder and participating funds contain a
greater proportion of investment property, equities, and other investments (eg, unit trusts), reflecting the underlying investment
mandates.
Financial investment balances included in the remainder of this disclosure include financial investments of operations classified
as held for sale.
Measurement basis
We carry investments on our statement of financial position at either fair value or amortised cost. As shown in the table below,
at 31 December 2009, 93% of the group’s total investments were carried at fair value on the statement of financial position.
2009 2008 2007
Amortised Amortised Amortised
Fair value cost Total Fair value cost Total Fair value cost Total
£m £m £m £m £m £m £m £m £m
Investment property 12,430 — 12,430 14,426 — 14,426 15,391 — 15,391
Loans 20,890 20,189 41,079 21,468 20,769 42,237 18,540 17,653 36,193
Financial investments
Debt securities 160,510 — 160,510 150,734 — 150,734 121,591 — 121,591
Equity securities 43,343 — 43,343 43,411 — 43,411 59,065 — 59,065
Other investments 34,849 — 34,849 36,511 — 36,511 36,500 — 36,500
Total 272,022 20,189 292,211 266,550 20,769 287,319 251,087 17,653 268,740
Total % 93.1% 6.9% 92.8% 7.2% 93.4% 6.6%
For more information about financial investments analysed according to their accounting classification and valuation approach, as
well as the cost, unrealised gains and losses, impairments, fair value and other information concerning financial investments, see
the “Financial Statements IFRS – Note 24 – Financial investments”.
Debt securities
We grade debt securities according to current external credit ratings issued. The credit rating used for each individual security is the
second highest of the available ratings from Standard & Poor’s, Moody’s and Fitch. If a credit rating is available from only one of
these three rating agencies then this rating is used. If an individual security has not been given a credit rating by any of these three
rating agencies, the security is classified as “non-rated”.
For the tables below we have used the standard Standard & Poor’s rating classifications. Investment grade debt securities are
classified within the range of AAA (extremely strong) to BBB (good) ratings, with AAA being the highest possible rating. Debt
securities which fall outside this range are classified as speculative grade. Where we use a rating provided by Moody’s or Fitch, we
have expressed it as the Standard & Poor’s equivalent rating. For example, we consider Standard & Poor’s rating of AA (very strong)
to be equivalent to Moody’s rating of AA (excellent) and Fitch’s rating of AA (very strong).