Aviva 2013 Annual Report Download - page 180

Aviva plc
Annual report and accounts 2013
178
Notes to the consolidated financial statements continued
29 – Deferred acquisition costs, other assets, prepayments and accrued income continued
(b) Deferred acquisition costs – movements in the year
The movements in deferred acquisition costs (DAC) during the year were:
2013 2012
Long-term
business
£m
General
insurance
and health
business
£m
Retail fund
management
business
£m
Total
£m
Long-term
business
£m
General
insurance
and health
business
£m
Retail fund
management
business
£m
Total
£m
Carrying amount at 1 January 3,088 939 14 4,041 3,778 986 14 4,778
Acquisition costs deferred during the year 407 2,276 — 2,683 841 2,221 4 3,066
Amortisation (466) (2,327) (4) (2,797) (804) (2,257) (4) (3,065)
Impact of assumption changes (213) — — (213) (201) — — (201)
Effect of portfolio transfers, acquisitions and disposals1 (2,418) — — (2,418) (15) (1) — (16)
Foreign exchange rate movements (22) (20) — (42) (89) (10) — (99)
Shadow adjustment 1,149 — — 1,149 (422) — — (422)
Carrying amount at 31 December 1,525 868 10 2,403 3,088 939 14 4,041
Less: Amounts classified as held for sale — (6) — (6) (1,538) — — (1,538)
1,525 862 10 2,397 1,550 939 14 2,503
1 Disposals in 2013 include the disposal of the US business (£2,344 million), and the disposal of Ark Life (£67 million).
The balance of deferred acquisition costs for long-term business decreased by £1.6 billion in 2013, primarily reflecting the disposal
of the US Life and Ark Life businesses.
Where amortisation of the DAC balance depends on projected profits, changes to economic conditions may lead to a
movement in the DAC balance and a corresponding impact on profit. It is estimated that the movement in the DAC balance would
reduce profit by £2 million (2012: £30 million) if market yields on fixed income investments were to increase by 1% and increase
profit by £8 million (2012: £50 million) if yields were to reduce by 1%.
The shadow adjustments relate to deferred acquisition costs on business in the US backed by investments classified as available
for sale (AFS). As explained in accounting policies T and L, movements in unrealised gains and losses on the AFS investments and
movements in the shadow adjustments are recognised directly in other comprehensive income.
(c) Other assets
Other assets include £1 million (2012: £3 million) that is expected to be recovered more than one year after the statement of
financial position date.
(d) Prepayments and accrued income
Prepayments and accrued income of £2,599 million including assets classified as held for sale (2012: £3,104 million), includes £103
million (2012: £108 million) that is expected to be recovered more than one year after the statement of financial position date.
30 – Assets held to cover linked liabilities
Certain unit-linked products have been classified as investment contracts, while some are included within the definition of an
insurance contract. The assets backing these unit-linked liabilities are included within the relevant balances in the consolidated
statement of financial position, while the liabilities are included within insurance and investment contract provisions. This note
analyses the carrying values of assets backing these liabilities.
2013
£m
Restated1
2012
£m
Loans 471 605
Debt securities 12,835 16,494
Equity securities 25,836 22,648
Reinsurance assets 2,043 1,576
Cash and cash equivalents 4,725 4,380
Other 30,703 28,027
76,613 73,730
Less: Assets classified as held for sale (44) (3,048)
76,569 70,682
1 Restated for the adoption of IFRS10. See note 1 for further details.