Preliminary results year ended 31 December 2008
05 March 2009
3. Geographical analysis of long-term business IFRS operating profit
| 2008 £m |
Restated1 2007 £m |
|
|---|---|---|
| With-profit | 289 | 178 |
| Non-profit | 462 | 545 |
| United Kingdom | 751 | 723 |
| France | 275 | 243 |
| Ireland | 61 | 73 |
| Italy | 48 | 78 |
| Netherlands (including Belgium and Germany) | 196 | 181 |
| Poland | 162 | 110 |
| Spain | 155 | 119 |
| Other Europe | (16) | (27) |
| Europe | 881 | 777 |
| North America | 16 | 79 |
| Asia | 2 | (6) |
| Australia | 44 | 37 |
| Asia Pacific | 46 | 31 |
| Total | 1,694 | 1,610 |
- Following the establishment of Aviva Investors, the fund management portion of the US business has been separately identified and transferred to fund management. This has reduced the life 2007 IFRS operating profit by £24 million.
IFRS long-term business operating profit before shareholder tax was £1,694 million (2007 restated: £1,610 million), an increase of 5%.
United Kingdom
On an IFRS basis, life operating profit increased by 4% to £751 million (2007: £723 million), driven by the with-profits business and supported by £124 million profit relating to the shareholder proportion of the special distribution announced in February 2008.
The non-profit result was £462 million (2007: £545 million). The prior year result included a £167 million benefit from the implementation of the reserving changes introduced by PS06/14 from the reserving changes. Underlying earnings were up £84 million reflecting the cumulative benefits of the recent efficiency programmes of £65 million and lower new business strain.
Europe
In Europe, life IFRS operating profit increased by 13% to £881 million (2007: £777 million). The result has been impacted by the strengthening of the euro which has had a positive impact on all our major markets.
In France, the operating profit was higher at £275 million (2007: £243 million) with the strength of the euro partly offset by the reduced income from unit-linked sales due to market volatility.
In Ireland operating profit was £61 million (2007: £73 million) reflecting the costs of migrating to new IT systems.
In Italy, operating profit was lower at £48 million (2007: £78 million) reflecting provisions to support customers affected by counterparty defaults on structured bond products.
In the Netherlands operating profit was higher at £196 million (2007: £181 million) with the strengthening of the euro and expense savings being offset by a higher new business strain.
In Poland, operating profit was £162 million (2007: £110 million) reflecting higher management fees and cost efficiencies.
In Spain, operating profit increased to £155 million (2007: £119 million) primarily driven by higher profits on protection business. This is due to improved claims experience and growth in the underlying portfolio. In addition, protection profits were further enhanced by the acquisition of Cajamurcia in the fourth quarter of 2007.
The operating loss from our other European businesses improved to £16 million (2007: £27 million loss) reflecting the ongoing development of our central and eastern European businesses.
North America
Life operating profit was £16 million (2007 restated: £79 million) driven by lower annuity margins and lower yield on variable rate investments. Annuity margins were adversely impacted by increased option costs and lower account value, driven by underperformance of the equity markets and higher lapse rates.
Asia Pacific
Life operating profit increased in 2008 to £46 million (2007: £31 million), reflecting lower new business strain from sales and business mix.
