Preliminary results year ended 31 December 2008
05 March 2009
Appendix B – Analysis of assets
B1 – Key highlights
- The quality of Aviva’s balance sheet asset base continues to be strong, despite challenging economic and market conditions.
- Balance sheet assets have been appropriately valued with 82% of assets (including 100% of financial investments) measured at fair value.
- Except for tax asset and interests in joint ventures and associates (which are equity accounted) the remaining assets are recognised at cost/amortised cost and tested for impairment.
- The principal asset classes are Debt Securities (£151 billion), Equities (£43 billion), Other Financial Investments (£36 billion) and Loans (£42 billion).
- The majority (95%) of debt securities are investment grade (with 1.5% below investment grade and 3.8% not rated).
- The group has very limited exposure to RMBS (Sub prime, Alt A), ABS, Wrapped Credit, CDOs and CLOs; with these investments representing less than 1.0% of total balance sheet assets.
- Of the group’s total asset base of £340 billion analysed in detail in this disclosure, investments (investment property, loans and financial investments) amount to £287 billion. Shareholders are only directly exposed to market and credit risk on £95 billion of these investments.
- Of this, £51 billion (54%) are debt securities, 91% of which are investment grade.
- Only 6% of shareholder assets are held in equities and other financial investments – equities and other financial investments are principally held to back Policyholder liabilities (in unit-linked and participating funds) and as such reflect policyholder investment mandates.
- £31.7 billion of shareholder assets are loans.
- £7.9 billion of these loans are secured through non-recourse borrowings in our UK Life and Dutch business whereby the risk is passed to the note holders.
- 56% of non-securitised mortgages are commercial loans rather than residential mortgages; which are typically held to back annuity liabilities and a further 14% of non-securitised mortgages are to government supported healthcare.
- All our USA loan portfolio is commercial loans.
- The group’s loan portfolio continues to perform well with 95% of the portfolio neither past due nor impaired.
However, the fall in property values has led to a deterioration in loan to value (LTV) ratios so that now £9 billion loans have an LTV greater than 100%.
