Aviva 2014 Annual Report Download - page 173

Aviva plc Annual report and accounts 2014
169
23 – Fair value methodology continued
Fair value hierarchy
2014
Level 1
£m
Level 2
£m
Level 3
£m
Total fair
value
£m
Non-recurring fair value measurement1
Properties occupied by group companies — — 316 316
Total — — 316 316
1 Non-recurring fair value measurements of assets or liabilities are those fair value measurements that other IFRSs permit or require in particular circumstances.
Owner-occupied properties are stated at their revalued amounts, as assessed by qualified external valuers in line with the Group’s
policy. Further details on the valuation of these properties can be found in note 21.
Fair value hierarchy
2013 (Restated)1
Level 1
£m
Level 2
£m
Level 3
£m
Sub-total
fair value
£m
Amortised
cost
£m
Total carrying
value
£m
Recurring fair value measurements
Investment Property (note 22)
—
—
9,451 9,451
—
9,451
Loans (note 24)
—
3,115 15,362 18,477 5,402 23,879
Financial investments measured at fair value (note 27)
Fixed maturity securities 74,904 40,602 8,879 124,385
—
124,385
Equity securities 36,783 102 441 37,326
—
37,326
Other investments (including derivatives) 24,129 5,170 3,017 32,316
—
32,316
Financial assets of operations classified as held for sale 2,245 282 148 2,675
—
2,675
Total 138,061 49,271 37,298 224,630 5,402 230,032
Financial liabilities measured at fair value
Non-participating investment contracts2 (note 42(a)) 47,889 251 — 48,140
—
48,140
Net asset value attributable to unit holders 10,183 179 — 10,362
—
10,362
Borrowings (note 50)
—
831 482 1,313 6,506 7,819
Derivative liabilities(note 51) 220 1,830 201 2,251
—
2,251
Financial liabilities of operations classified as held for sale
—
—
— — 29 29
Total 58,292 3,091 683 62,066 6,535 68,601
1 Restated following the adoption of amendments to IAS 32 ‘Financial instruments: Presentation’ – see note 1 for details.
2 In addition to the balances in this table, included within Reinsurance assets in the Statement of financial position and note 44 are £2,048 million of non-participating investment contracts, which are legally reinsurance but do not
meet the definition of a reinsurance contract under IFRS. These assets are financial instruments measured at fair value through profit and loss and are classified as level 1 assets.
Fair value hierarchy
2013
Level 1
£m
Level 2
£m
Level 3
£m
Total fair
value
£m
Non-recurring fair value measurement1
Properties occupied by group companies — — 257 257
Total — — 257 257
1. Non-recurring fair value measurements of assets or liabilities are those fair value measurements that other IFRSs permit or require in particular circumstances.
Investments classified as Level 2
Please see note 23(a) for a description of typical Level 2 inputs.
Fixed income assets, in line with market practice, are generally valued using an independent pricing service. These valuations
are determined using independent external quotations from multiple sources and are subject to a number of monitoring controls,
such as monthly price variances, stale price reviews and variance analysis. Pricing services, where available, are used to obtain the
third-party broker quotes. Where pricing services providers are used, a single valuation is obtained and applied. When prices are
not available from pricing services, quotes are sourced from brokers.
Other Level 2 investments, including Unit Trusts, are valued using net assets values which are deemed to be observable market
inputs.
(e) Transfers between levels of the fair value hierarchy
For financial instruments that are recognised at fair value on a recurring basis, the Group determines whether transfers have
occurred between levels of the fair value hierarchy by re-assessing categorisation (based on the lowest level input that is significant
to the fair value measurement as a whole) at the end of the reporting period.
Transfers between Level 1 and Level 2
For the year ended 31 December 2014, transfers of financial assets from fair value hierarchy Level 1 to Level 2 amounted to £3.4
billion. These arose primarily in the UK and Ireland (£3.1 billion) as a result of the enhanced understanding of pricing vendor
methodologies for the fair value hierarchy level classification of certain debt securities. The remaining £0.3 billion were transferred
as a result of a decline in the level of market activity for certain debt securities.
Transfers from Level 2 to Level 1 of £0.2 billion followed changes in the level of market activity of certain investments.
Aviva plc Annual report and accounts 2014 |169
IFRS Financial statements