Aviva plc: Adoption of Aviva Market Consistent Embedded Value (MCEV) methodology and impact on results
MCEV notes to the financial statements
5 – Free surplus emergence
This note shows how our business generates free surplus. To do this the impact of the business on net worth and required capital is considered separately for existing business and new business.
The following table illustrates the free surplus expected to emerge from existing business into net worth over 2007 and the impact of writing new business on the net worth and required capital free surplus levels. As this new disclosure will be included within the 2008 preliminary results announcement, 2007 comparatives are presented below.
| Audited Full year 2007 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Existing business | New business | Total business | |||||||
| Transfer from VIF to net worth £m |
Return on net worth £m |
Impact of experience variances and assumption changes on net worth £m |
Release of required capital to free surplus £m |
Total existing business surplus generation £m |
Impact on net worth £m |
Reduction in free surplus from required capital £m |
Total new business surplus generation £m |
Total free surplus generation £m |
|
| United Kingdom | 549 | 66 | 225 | 57 | 897 | (245) | (149) | (394) | 503 |
| Europe | 537 | 197 | 42 | 118 | 894 | (225) | (345) | (570) | 324 |
| North America | 103 | 33 | 19 | 133 | 288 | (107) | (280) | (387) | (99) |
| Asia Pacific | 55 | 12 | (4) | 4 | 67 | (47) | (34) | (81) | (14) |
| Total | 1,244 | 308 | 282 | 312 | 2,146 | (624) | (808) | (1,432) | 714 |
