Supplement 5 - Principal economic assumptions
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Economic assumptions are derived actively based on market yields on risk-free
fixed interest assets at each period end.
Margins are applied on a consistent basis to risk-free yields to obtain
investment return assumptions for ordinary shares and
property and risk discount rates. New business contribution has been
calculated using economic assumptions set at the end
of the previous year, as shown in the tables below:
| |
United Kingdom |
|
France |
| |
2003 |
2002 |
|
2003 |
2002 |
| |
|
|
|
|
|
| Risk discount rate |
7.5% |
7.3% |
|
8.1% |
8.1% |
| Pre-tax investment returns: |
|
|
|
|
|
| Base government fixed interest |
4.8% |
4.5% |
|
4.3% |
4.3% |
| Ordinary shares |
7.3% |
7.0% |
|
6.3% |
6.3% |
| Property |
6.3% |
6.0% |
|
5.8% |
5.8% |
| Future expense inflation |
4.1% |
3.6% |
|
2.5% |
2.5% |
| Tax rate |
30.0% |
30.0% |
|
35.4% |
35.4% |
| |
Ireland |
|
Italy |
| |
2003 |
2002 |
|
2003 |
2002 |
| |
|
|
|
|
|
| Risk discount rate |
8.6% |
8.7% |
|
7.4% |
7.3% |
| Pre-tax investment returns: |
|
|
|
|
|
| Base government fixed interest |
4.5% |
4.6% |
|
4.4% |
4.4% |
| Ordinary shares |
7.5% |
7.6% |
|
7.4% |
7.4% |
| Property |
6.0% |
6.1% |
|
5.9% |
5.9% |
| Future expense inflation |
4.0% |
4.0% |
|
3.3% |
3.3% |
| Tax rate |
12.5% |
12.5% |
|
38.3% |
39.8% |
| |
Netherlands |
|
Poland* |
| |
2003 |
2002 |
|
2003 |
2002 |
| |
|
|
|
|
|
| Risk discount rate |
7.4% |
7.4% |
|
13.5% |
15.4% |
| Pre-tax investment returns:
|
|
|
|
|
|
| Base government fixed interest |
4.2% |
4.2% |
|
6.0% |
8.0% |
| Ordinary shares |
7.2% |
7.2% |
|
6.0% |
8.0% |
| Property |
5.7% |
5.7% |
|
n/a |
n/a |
| Future expense inflation |
2.5% |
2.5% |
|
3.4% |
5.4% |
| Tax rate |
25.0% |
25.0% |
|
19.0% |
27.0% |
| |
Spain |
| |
2003 |
2002 |
| |
|
|
| Risk discount rate |
7.7% |
7.7% |
| Pre-tax investment returns: |
|
|
| Base government fixed interest |
4.6% |
4.6% |
| Ordinary shares |
7.6% |
7.6% |
| Property |
6.1% |
6.1% |
| Future expense inflation |
3.0% |
3.0% |
| Tax rate |
35.0% |
35.0% |
| * The economic assumptions
shown above are those in the calculations for the
life business. The economic assumptions for the
pension business are identical with the exception
of the risk discount rate which is 12.7% (2002: 13.8%). |
Aviva plc is a company registered in England No. 2468686.
Registered office St Helen's 1 Undershaft London EC3P 3DQ
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