Aviva 2013 Annual Report Download - page 138

Aviva plc
Annual report and accounts 2013
136
Notes to the consolidated financial statements continued
4 – Subsidiaries continued
(vii) Discontinued operations – US long term business
The profit/loss on disposal and remeasurement on discontinued operations is as follows:
2013
£m
2012
£m
Profit/(Loss) on disposal and remeasurement from discontinued operations 808 (2,359)
On 21 December 2012, the Group announced that it had agreed to sell US Life for consideration of £1.0 billion including the
shareholder loan. Following classification as held for sale, US Life was remeasured to fair value less costs to sell in 2012 resulting in
an impairment loss of £2,359 million recognised as a loss on remeasurement of subsidiaries.
The sale of US Life completed on 2 October 2013 and the transaction proceeds received were based on the estimated earnings
and other improvements in statutory surplus over the period from 30 June 2012 to 30 September 2013. The final purchase price is
subject to customary completion adjustments. The process to agree completion adjustments is on-going and is expected to
complete by mid-2014. Until the outcome of this process is known there remains uncertainty on the final determination of the
completion adjustment.
The transaction resulted in a profit on disposal of £808 million in 2013, reflecting management’s best estimate of the
completion adjustment. The profit on disposal, calculated as follows, includes £644 million of currency translation and investment
valuation reserves recycled to the income statement on completion of the sale.
2013
£m
Assets
Acquired value of in-force business and intangible assets 445
Investment property 6
Loans 3,615
Financial Investments 28,185
Reinsurance assets 648
Receivables and other financial assets 329
Prepayments and accrued income 340
Other assets 293
Cash and cash equivalents 2,467
Total assets 36,328
Liabilities
Insurance liabilities 31,219
Liability for investment contracts 1,826
Provisions 172
Reinsurance deposits and collateral payable 654
Current and deferred tax liabilities 704
External borrowings 179
Intra-group liabilities 553
Other liabilities 308
Total liabilities 35,615
Net assets 713
Cash consideration received1 1,434
Less: Settlement of intercompany loan (553)
Less: transaction costs (4)
Net cash consideration 877
Currency translation and investment valuation reserves recycled to the income statement 644
Profit on disposal 808
1 Cash consideration received of £1,434 million above includes a recognised loss of £4 million related to hedging the currency exposure on the expected proceeds of the sale. As noted above, the process to agree completion
adjustments is on-going. Until the outcome of this process is known there remains uncertainty on the final determination of the consideration.
Other comprehensive income, net of tax from discontinued operations of £(319) million includes £(215) million in fair value gains
on available for sale financial instruments, £(281) million in fair value gains on available for sale financial instruments transferred to
the income statement on disposal, £12 million of impairment losses transferred to the income statement, £(4) million recycled out
of other comprehensive income and £169 million aggregate shareholder tax effect.