Aviva 2013 Annual Report Download - page 30

Aviva plc
Annual report and accounts 2013
28
Measuring our performance in 2013 continued
Financial key performance indicators Our performance
Operating capital generation (OCG)1
Operating capital generation – continuing
excluding Delta Lloyd (£bn)
2011 2012 2013
2.1
1.9
1.8
Relevance and measurement Performance
OCG measures the amount of surplus
capital generated by our business and is
one of the indicators we use to monitor
future cash remittances from businesses
to Group. OCG in our life business
represents surplus on a MCEV basis,
after investment in new business. For
non-life business, we use after tax
operating return adjusted for
movements in capital requirements.
OCG on a continuing basis is down 5%
impacted by losses incurred in the
Canada oods, partly offset by expense
savings across the Group. The life
business contributed £1.2 billion (2012:
£1.3 billion) and the non-life business
contributed £0.6 billion (2012: £0.6
billion) to OCG in 2013.
Economic capital surplus2
Economic capital surplus
(£bn)
2011 2012 2013
3.6
5.3
8.3
100
125
150
175
200
Coverage (%)
Relevance and measurement Performance
This is a measure of the nancial
strength of our business. A ratio over
100% represents a surplus of available
economic capital over our required
economic capital.
Economic capital surplus has increased
by £3.0 billion in 2013, driven in part by
the completion of the US, Delta Lloyd,
Aseval and other disposals. In addition,
there was a further contribution from
prots earned in the year and positive
market movements, partly offset by
changes in the pension scheme and
Polish pension reform.
Return on equity1
Return on equity
(%)
2013
17.8%
2012
11.2%
2011
12.5%
Relevance and measurement Performance
This shows the return generated on the
capital we have invested. Return on
equity is calculated as total after tax
operating return divided by opening
equity shareholders’ funds.
Return on equity has increased in 2013
principally due to a reduction in opening
capital as a result of a write-down of the
United States life and annuities business
following the announcement to sell this
business.
1 The Group adopted the amendments to IAS19 during the year and the requirements of the revised standard have been applied retrospectively.
2 The economic capital surplus represents an estimated position. The capital requirement is based on Aviva’s own internal assessment and capital management policies. The term ‘economic capital’ does not
imply capital as required by regulators or third parties.