Aviva 2014 Annual Report Download - page 199

Aviva plc Annual report and accounts 2014
195
41 – Insurance liabilities continued
(d) Loss development tables
(i) Description of tables
The tables that follow present the development of claim payments and the estimated ultimate cost of claims for the accident years
2005 to 2014. The upper half of the tables shows the cumulative amounts paid during successive years related to each accident
year. For example, with respect to the accident year 2005, by the end of 2014 £6,537 million had actually been paid in settlement
of claims. In addition, as reflected in the lower section of the table, the original estimated ultimate cost of claims of £7,106 million
was re-estimated to be £6,612 million at 31 December 2014.
The original estimates will be increased or decreased, as more information becomes known about the individual claims and
overall claim frequency and severity.
The Group aims to maintain strong reserves in respect of its general insurance and health business in order to protect against
adverse future claims experience and development. The Group establishes strong reserves in respect of the current accident year
(2014) where the development of claims is less mature and there is much greater uncertainty attaching to the ultimate cost of
claims. As claims develop and the ultimate cost of claims become more certain, the absence of adverse claims experience will result
in a release of reserves from earlier accident years, as shown in the loss development tables and movements table (c)(iv) above.
Releases from prior accident year reserves are also due to an improvement in the estimated cost of claims.
Key elements of the release from prior accident year general insurance and health net provisions during 2014 were:
• £112 million release from UK & Ireland due to favourable development in UK & Ireland on personal and commercial motor, and
commercial property claims.
• £97 million release from Canada mainly due to continued favourable experience on motor, following the legislative changes
in Ontario.
• £15 million release from Europe mainly due to favourable development in France and Italy, partly offset by strengthening of
motor third party claims in Turkey.
Key elements of the movement in prior accident year general insurance and health net provisions during 2013 were:
• £32 million release from UK & Ireland, including Group reinsurance business, mainly due to favourable development in health,
commercial motor and commercial liability in Ireland, slightly offset by a small strengthening in the UK.
• £160 million release from Canada mainly due to continued favourable experience on motor, following the legislative changes
in Ontario.
• £9 million release from Europe mainly due to favourable development across a number of lines of business in France.
(ii) Gross figures
Before the effect of reinsurance, the loss development table is:
Accident year
All prior
years
£m
2005
£m
2006
£m
2007
£m
2008
£m
2009
£m
2010
£m
2011
£m
2012
£m
2013
£m
2014
£m
Total
£m
Gross cumulative claim payments
At end of accident year (3,345) (3,653) (4,393) (4,915) (3,780) (3,502) (3,420) (3,055) (3,068) (3,102)
One year later (5,011) (5,525) (6,676) (7,350) (5,464) (5,466) (4,765) (4,373) (4,476)
Two years later (5,449) (5,971) (7,191) (7,828) (6,102) (5,875) (5,150) (4,812)
Three years later (5,784) (6,272) (7,513) (8,304) (6,393) (6,163) (5,457)
Four years later (6,001) (6,531) (7,836) (8,607) (6,672) (6,405)
Five years later (6,156) (6,736) (8,050) (8,781) (6,836)
Six years later (6,311) (6,936) (8,144) (8,906)
Seven years later (6,467) (7,015) (8,224)
Eight years later (6,496) (7,062)
Nine years later (6,537)
Estimate of gross ultimate claims
At end of accident year 7,106 7,533 8,530 9,508 7,364 6,911 6,428 6,201 6,122 5,896
One year later 6,938 7,318 8,468 9,322 7,297 7,006 6,330 6,028 6,039
Two years later 6,813 7,243 8,430 9,277 7,281 6,950 6,315 6,002
Three years later 6,679 7,130 8,438 9,272 7,215 6,914 6,292
Four years later 6,603 7,149 8,409 9,235 7,204 6,912
Five years later 6,605 7,167 8,446 9,252 7,239
Six years later 6,591 7,167 8,381 9,213
Seven years later 6,596 7,176 8,381
Eight years later 6,604 7,184
Nine years later 6,612
Estimate of gross ultimate claims 6,612 7,184 8,381 9,213 7,239 6,912 6,292 6,002 6,039 5,896
Cumulative payments (6,537) (7,062) (8,224) (8,906) (6,836) (6,405) (5,457) (4,812) (4,476) (3,102)
2,575 75 122 157 307 403 507 835 1,190 1,563 2,794 10,528
Effect of discounting (447) 3 1
—
(4) (3)
—
— — —
—
(450)
Present value 2,128 78 123 157 303 400 507 835 1,190 1,563 2,794 10,078
Cumulative effect of foreign exchange
movements — 8 12 7 (25) (30) (42) (50) (51) (38)
—
(209)
Effect of acquisitions 2 1 4
—
—
—
—
— — —
—
7
Present value recognised in the statement of
financial position 2,130 87 139 164 278 370 465 785 1,139 1,525 2,794 9,876
Aviva plc Annual report and accounts 2014 |195
IFRS Financial statements