Key financial highlights

– MCEV operating profits increased by 3% to £3,483 million, reflecting an improved long-term business result, partly offset by lower general insurance result.

– Long-term business operating profit increased 11% supported by efficiency improvements and reduced new business volumes (resulting in lower new business strain).

– Strong profits from in-force portfolios.

– UK Life result includes benefit from the reattribution of the inherited estate, partly offset by reduced with-profit special distribution bonus of £86 million (2008: £124 million).

– Asia Pacific benefited from a £68 million one-off release from reserves following an actuarial review of risk margins in H1 2009.

– Underlying cost base, excluding foreign exchange and restructuring costs, reduced by 13% over the last 12 months.

– Previously announced cost savings targets of £500 million was delivered ahead of plan. Overall headcount reduced by 10,700 from 57,000 at the start of 2008 to 46,300 by the end of the year.

– New business margin of 2.2%, compared with 2.1% at 1H 2009 and full year 2008, with particular improvement in the UK where margin increased from 1.7% to 2.8%, offsetting falls elsewhere.

– IRR on life and pension new business for the group was 10.0% (2008: 11.4%)

– Worldwide long-term new business sales, including investment products, of £35,875 million, a reduction of 11% compared with 2008 (down 17% in local currency), reflects the tough external environment in 2009 and management’s decision to focus on value over volume. The fourth quarter saw sales improvements across all regions.

– Bancassurance remains a significant contributor, accounting for almost a third of our global life and pensions sales. Sales through bancassurance channels were £9.3 billion for 2009 (2008: £8.6 billion).

– Life MCEV operating earnings up by 21% to £3,389 million (2008: £2,810 million), with improvements in Europe, US and Asia Pacific.

– Net operating variances and assumption changes were £(55) million unfavourable (2008: £(389) million unfavourable).

– UK Life result includes benefit from the reattribution of the inherited estate.

– In contrast to EEV, MCEV does not include the value of any future spread earnings. In 2009 these were around £500 million (after tax and minority interest). If a capitalisation factor of 5 times were applied to this amount, this would give an additional embedded value of £2.5 billion in respect of these earnings.

– Strong growth in IGD to £4.5 billion (2008: £2.0 billion) reflects a combination of operating and market performance as well as the benefit of capital management initiatives.

– IGD solvency includes the £0.4 billion uplift from the sale of the Australian business and the additional £0.5 billion from the Delta Lloyd IPO, partly offset by the deduction of £0.5 billion for policyholder incentive payments as part of the reattribution of the inherited estate.

– 40% fall in equities would reduce IGD surplus by £0.7 billion.

– Strong liquidity position with direct access to £2.2 billion of liquid assets (2008: £1.4 billion).

– £2.1 billion of undrawn committed credit facilities provided by a range of leading international banks.

– Final dividend for 2009 of 15 pence, a reduction of 25% from 2008, broadly in line with the reduction at half year, bringing total dividend to 24 pence

– Prudent management of investments has limited our exposure to market volatility and toxic assets.

– In UK Life, the default provision set up in 2008 remained unutilised in 2009, with no material deterioration in default experience in either our commercial or corporate bond portfolio.

– Interest service cover on our commercial mortgage portfolio remains stable at 1.3 times and our commercial mortgage portfolio average LTV has reduced to 94% (HY09: 106%).

– In the US, there was a net unrealised gain on debt securities of £0.1 billion at 31 December 2009 following improvements in the US credit markets in 2009. Net unrealised losses at 31 December 2008 were £2.4 billion. After allowing for movements in shadow DAC this improvement contributed 43 pence to NAV.

– Net default and impairment losses on debt securities in 2009 were £98 million (2008: £400 million).

– Aviva’s exposure to sovereign debt is well within our risk appetite. We hold these assets for the long term and believe that the risk of European countries defaulting on their sovereign debt is low.

– Total foreign currency movements during 2009 resulted in a gain recognised in profit before tax of £155 million (2008: £327 million loss)