Aviva 2013 Annual Report Download - page 215

Strategic report Governance IFRS Financial statements Other information
Aviva plc
Annual report and accounts 2013
213
Notes to the consolidated financial statements continued
53 – Contingent liabilities and other risk factors continued
(e) Structured settlements
The Company has purchased annuities from licensed Canadian life insurers to provide for fixed and recurring payments to
claimants. As a result of these arrangements, the Company is exposed to credit risk to the extent that any of the life insurers fail to
fulfil their obligations. The Company’s maximum exposure to credit risk for these types of arrangements is approximately $1,119
million as at 31 December 2013 (2012: $1,145 million, 2011: $1,085 million). Credit risk is managed by acquiring annuities from a
diverse portfolio of life insurers with proven financial stability. This risk is reduced to the extent of coverage provided by Assuris, the
life insurance industry compensation plan. As at 31 December 2013, no information has come to the Company’s attention that
would suggest any weakness or failure in life insurers from which it has purchased annuities and consequently no provision for
credit risk is required.
(f) Other
In the course of conducting insurance and investment business, various Group companies receive liability claims, and become
involved in actual or threatened related litigation or regulatory action. In the opinion of the directors, adequate provisions have
been established for such claims and no material loss will arise in this respect.
In addition, in line with standard business practice, various Group companies have given guarantees, indemnities and
warranties in connection with disposals in recent years of subsidiaries and associates to parties outside the Aviva Group. In the
opinion of the directors, no material loss will arise in respect of these guarantees, indemnities and warranties.
There are a number of charges registered over the assets of Group companies in favour of other Group companies or third parties.
In addition, certain of the Company’s assets are charged in favour of certain of its subsidiaries as security for intra-Group loans.
The Group’s insurance subsidiaries pay contributions to levy schemes in several countries in which we operate. Given the
economic environment, there is a heightened risk that the levy contributions will need to be increased to protect policyholders if an
insurance company falls into financial difficulties. The directors continue to monitor the situation but are not aware of any need to
increase provisions at the statement of financial position date.
54 – Commitments
This note gives details of our commitments to capital expenditure and under operating leases.
(a) Capital commitments
Contractual commitments for acquisitions or capital expenditures of investment property and property and equipment, which have
not been recognised in the financial statements, are as follows:
2013
£m
2012
£m
Investment property 3 6
Property and equipment 24 36
27 42
Contractual obligations for future repairs and maintenance on investment properties are £nil (2012: £nil). Note 19 sets out the
commitments the Group has to its joint ventures.
(b) Operating lease commitments
(i) Future contractual aggregate minimum lease rentals receivable under non-cancellable operating leases are as follows:
2013
£m
2012
£m
Within 1 year 252 269
Later than 1 year and not later than 5 years 807 832
Later than 5 years 1,307 1,570
2,366 2,671
(ii) Future contractual aggregate minimum lease payments under non-cancellable operating leases are as follows:
2013
£m
2012
£m
Within 1 year 111 136
Later than 1 year and not later than 5 years 357 421
Later than 5 years 575 587
1,043 1,144
Total future minimum sub-lease payments expected to be received under non-cancellable sub-leases 45 53
55 – Group capital structure
The Group maintains an efficient capital structure from a combination of equity shareholders’ funds, preference capital,
subordinated debt and borrowings, consistent with our overall risk profile and the regulatory and market requirements of our
business. This note shows where this capital is employed.