Basis of preparation

The results for the six months to 30 June 2007 have been prepared on the basis of the accounting policies set out in Aviva plc’s 2006 Annual Report and Accounts. The results for the six months to 30 June 2007 and 2006 are unaudited but have been reviewed by the external auditor, Ernst & Young LLP. The interim financial statements do not constitute financial statements as defined in Section 240 of the Companies Act 1985. The results for the full year 2006 have been taken from the group’s 2006 Annual Report and Accounts. The external auditor has reported on the 2006 financial statements and the report was unqualified and did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985. Additionally, the group’s 2006 Report and Accounts have been filed with the Registrar of Companies.

In accordance with Phase I of International Financial Reporting Standard 4, Insurance Contracts (IFRS 4), the group has continued to apply existing accounting practices for insurance and participating investment contracts, modified as appropriate to comply with the IFRS framework and applicable standards. Items included in the financial statements of each of the group’s entities are measured in the currency of the primary economic environment in which that entity operates (the functional currency). The consolidated financial statements are stated in sterling, which is the company’s functional and presentational currency. Unless otherwise noted, the amounts shown in the financial statements are in millions of pounds sterling (£m). As supplementary information, consolidated financial information is also presented in euros.

In addition to presenting our results and financial position on an International Financial Reporting Standards (IFRS) basis, we also use European Embedded Value (EEV) as an alternative performance measure. We continue to focus on the EEV basis in this period’s report, as the directors believe life EEV operating return is a more meaningful measure of the performance of our life business than the IFRS basis. The EEV methodology is in accordance with the EEV principles introduced by the CFO Forum in May 2004 and the additional guidance issued in October 2005.

In producing this review, we aim to present a view that is balanced and comprehensive and that is consistent with the size and complexity of our business. The review is written in the context of the risks and uncertainties facing our business. We anticipate that the format and content of the review will evolve over time, along with developments in our business and the external environment.

Forward-looking statements

This review contains forward-looking statements about:

• Our future plans
• Our current goals
• Expectations of our future financial condition, performance and results

By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events that are beyond our control. For example, certain insurance risk disclosures are dependent on our choices about assumptions and models, and by their nature are only estimates. As a result, actual future gains and losses could differ materially from those that have been estimated. Other factors that could cause actual results to differ materially from those estimated by the forward-looking statements include, but are not limited to:

• UK domestic and global economic business conditions
• Monetary and interest rate policies
• Foreign currency exchange rates
• Equity and property prices
• The impact of competition, inflation and deflation
• Changes to regulations, taxes or UK and foreign legislation
• The timing and impact of acquisitions or business combinations in relevant industries
• Natural and other disasters
• Changes to consumer saving or spending habits
• Our success in managing the above factors

As a result, our actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in our forward-looking statements. We undertake no obligation to update the forward-looking statements contained in this review or any other forward-looking statements we make.

Key performance indicators

The Companies Act requires that a fair review of the business contains financial and, where applicable, non-financial key performance indicators (KPIs). We consider that our financial KPIs are those that communicate to the members the financial performance and strength of the group as a whole. The KPIs comprise:

• Return on equity shareholders’ funds
• Proposed ordinary dividend
• Dividend cover
• Operating profit (International Financial Reporting Standards basis)
• Operating profit (European Embedded Value basis)

Management also use a variety of Other Performance Indicators (OPIs) in both running and assessing the performance of individual business segments, rather than the group as a whole. OPIs include measures such as present value of new business premiums, new business margins, combined operating ratio and underwriting profit.

In addition to reporting on our financial performance, it is important that as a forward thinking company we are aware of our wider responsibilities and report on the non-financial aspects of our performance. We consider that our employees and customers are fundamental to the success of our business; as such, they form the basis for our non-financial measures, and include:

• Leadership and employee engagement
• Customer satisfaction

Data relating to non-financial performance indicators is collected from a variety of sources throughout the year and is used in the assessment of senior management remuneration. A significant element of the data used to determine senior management remuneration is collected during the second half of the year and so it is not appropriate to quantify our non-financial performance as part of the Interim Report; however, this review does include qualitative comments on developments during the first half of 2007. Additionally, the 2007 Report and Accounts will provide quantitative measures on which our non-financial performance can be assessed.