Aviva 2014 Annual Report Download - page 182

Aviva plc Annual report and accounts 2014
Notes to the consolidated financial statements continued
178
27 – Financial investments continued
(d) Financial investment arrangements
(i) Stock lending arrangements
The Group has entered into stock lending arrangements in the UK and overseas in accordance with established market
conventions. The majority of the Group’s stock lending transactions occur in the UK, where investments are lent to EEA-regulated,
locally domiciled counterparties and governed by agreements written under English law.
The Group receives collateral in order to reduce the credit risk of these arrangements, either in the form of securities or cash.
See Note 60 for further discussion regarding collateral positions held by the Group.
(ii) Other arrangements
In carrying on its bulk purchase annuity business, the Group’s UK Life operation is required to place certain investments in trust on
behalf of the policyholders. Amounts become payable from the trust funds to the trustees if the Group were to be in breach of its
payment obligations in respect of policyholder benefits. At 31 December 2014 £1,447 million (2013: £1,201 million) of financial
investments were restricted in this way.
Certain financial investments are also required to be deposited under local laws in various overseas countries as security for the
holders of policies issued in those countries. Other investments are pledged as security collateral for bank letters of credit.
(e) Non UK Government Debt Securities (gross of non-controlling interests)
The following is a summary of non UK government debt by issuer as at 31 December 2014 analysed by policyholder, participating
and shareholder funds.
Policyholder Participating Shareholder Total
Non UK Government Debt Securities
2014
£m
2013
£m
2014
£m
2013
£m
2014
£m
2013
£m
2014
£m
2013
£m
Austria 11 9705 636 107 133 823 778
Belgium 28 29 1,368 1,475 165 154 1,561 1,658
France 103 108 11,182 9,714 1,950 1,909 13,235 11,731
Germany 142 146 1,590 1,922 591 763 2,323 2,831
Greece
—
—
—
1— —
—
1
Ireland 521 613 364 155 28 773 413
Italy 330 255 6,666 8,458 485 628 7,481 9,341
Netherlands 43 43 1,336 1,222 414 399 1,793 1,664
Poland 571 649 823 885 443 490 1,837 2,024
Portugal 6
—
173 187 — — 179 187
Spain 104 101 1,263 1,355 694 930 2,061 2,386
European Supranational debt 61 89 2,952 2,612 1,826 1,583 4,839 4,284
Other European countries 133 91 1,040 587 473 359 1,646 1,037
Europe 1,537 1,541 29,711 29,418 7,303 7,376 38,551 38,335
Canada 16 7164 171 2,376 2,198 2,556 2,376
United States 94 112 48 32 347 280 489 424
North America 110 119 212 203 2,723 2,478 3,045 2,800
Singapore 11 8598 450 277 288 886 746
Other 493 330 1,917 1,623 63 60 2,473 2,013
Asia Pacific and other 504 338 2,515 2,073 340 348 3,359 2,759
Total 2,151 1,998 32,438 31,694 10,366 10,202 44,955 43,894
Less: assets of operations classified as held for sale —13 —1,649 — 201 —1,863
Total (excluding assets held for sale) 2,151 1,985 32,438 30,045 10,366 10,001 44,955 42,031
At 31 December 2014, the Group’s total government (non-UK) debt securities stood at £45.0 billion (2013: £43.9 billion), an
increase of £1.1 billion. The significant majority of these holdings are within our participating funds where the risk to our
shareholders is governed by the nature and extent of our participation within those funds.
Our direct shareholder asset exposure to government (non-UK) debt securities amounts to £10.4 billion (2013: £10.2 billion).
The primary exposures, relative to total shareholder (non-UK) government debt exposure, are to Canadian (23%), French (19%),
Spanish (7%), German (6%) and Italian (5%) government debt securities.
The participating funds exposure to (non-UK) government debt amounts to £32.4 billion (2013: £31.7 billion), an increase of
£0.7 billion. The primary exposures, relative to total (non-UK) government debt exposures included within our participating funds,
are to the (non-UK) government debt securities of France (35%), Italy (21%), Germany (5%), Belgium (4%), Netherlands (4%) and
Spain (4%).
178 | Aviva plc Annual report and accounts 2014