Finance

Dear Shareholder,

During my first year as Group Finance Director there has been significant activity across the Aviva finance community and our major achievements are set out below.

We have made significant progress on the development of the global finance strategy this year. This will enable us to lay firm foundations for future growth, meet future regulatory requirements and prepare for financial reporting change. In 2007 we focused on two areas: the creation of robust governance to secure the timely and efficient delivery of the strategy; and the development of the policies, frameworks and guidelines that we will use in 2008 to deliver and embed the change group-wide.

At the end of August, I chaired the first finance directors’ forum since the creation of our regional structure. Its representatives come from every business and region and have a key role in defining our finance agenda. Our first meeting focused on managing our considerable finance talent – developing leaders for the future and finance professionals with the skills and experience to support our challenging plans.

The global finance conference at the beginning of October gave the finance leadership team the chance to see the benefits of working together to deliver financial clarity and simplicity across the group. We are committed to creating a “One Finance” team and to play our part in achieving “one Aviva, twice the value”.

Philip Scott
Group finance director

Allocate capital

• We completed our work on the individual capital assessment (ICA) of the group for 2006
• We achieved an AM Best upgrade for the US business to A+ (“superior”) from A (“excellent”). Additionally, Standard & Poor’s have reaffirmed their rating of our core subsidiaries as AA/AA- ("very strong") including upgrading the Aviva USA rating to AA-, all with a “stable” outlook

Manage risk

• The risk management framework and guidance was rolled out across the group during 2007
• We appointed Marcelo Cruz as our new chief risk officer

Financial reporting

• We introduced a new approach to reporting our life operating profit on an IFRS basis, which enables us to monitor underlying performance without the distortions caused by market volatility
• We continued to participate in development of IFRS Phase II and submitted our feedback on the International Accounting Standard’s Board preliminary views in November

Looking forward

• We will build on the progress made to date to deliver and embed the Global Finance strategy across the group
• In line with other CFO forum members, we are working to roll out market consistent embedded value reporting for year end 2008
• We will continue to embed ICA into our business decision making process for investment assessment and for capital allocation.