11th Aug 2005 07:01
Aviva PLC11 August 2005 PART 4 OF 4 --------------------------------------------------------------------------------------------------------------------Page 67 Statistical supplement Segmental analysis of the components of life EEV operating return 6 months ended 30 June 2005 £m UK France Ireland Italy Netherlands Poland Spain Other International Total Europe New business contribution (after the effect of required capital) 105 48 8 20 18 5 70 2 10 286Profit from existing business - expected return 203 61 16 16 64 23 23 12 16 434 - experience variances: Maintenance expenses (1) 1 - (1) (6) 3 (2) - (2) (8) Exceptional expenses* (80) 1 (2) - (6) - (1) - - (88) Mortality/Morbidity** 41 11 3 - 8 7 (1) - 3 72 Lapses*** (5) (2) (6) (3) (6) - (3) (3) (1) (29) Other**** 15 7 (2) 1 (3) 2 1 - 1 22--------------------------------------------------------------------------------------------------------------------- (30) 18 (7) (3) (13) 12 (6) (3) 1 (31) - operating assumption changes: Maintenance expenses - - - - - - - - - - Exceptional expenses - - - - - - - - - - Mortality/Morbidity - - - - - - - - - - Lapses - - - - - - - - - - Other***** - - - - 6 - - 1 - 7--------------------------------------------------------------------------------------------------------------------- - - - - 6 - - 1 - 7Expected return on shareholders' net worth 49 31 5 14 40 6 5 2 9 161---------------------------------------------------------------------------------------------------------------------Life EEV operating return before tax 327 158 22 47 115 46 92 14 36 857===================================================================================================================== * Exceptional expenses in the UK reflect £30 million relating to the ongoing transformation of the Life business and £50 million of other exceptional project costs associated with regulatory change.** Mortality experience continues to be better than assumed across most of our businesses, and particularly for protection and annuity business in the UK and AFER in France.*** Lapse experience in the UK has been worse than assumed and mainly relates to with-profit bonds. In Ireland, the adverse persistency has mainly arisen on unit-linked pensions business. In the Netherlands the adverse persistency has mainly arisen on group business.**** In the UK, other experience profits primarily relates to better than assumed default experience on corporate bonds and commercial mortgages.***** In the Netherlands, other operating assumption changes mainly relates to the reduction of the guaranteed investment return on certain products in Belgium. --------------------------------------------------------------------------------------------------------------------Page 68 Segmental analysis of the components of life EEV operating return 6 months ended 30 June 2004 £m UK France Ireland Italy Netherlands Poland Spain Other International Total Europe New business contribution (after the effect of required capital) 106 27 11 14 25 4 55 (2) 11 251Profit from existing business - expected return 200 53 14 15 71 21 21 10 12 417 - experience variances: Maintenance expenses (1) (1) 1 - (2) 2 1 (2) - (2) Exceptional expenses* (32) (1) - - (10) - - (1) (10) (54) Mortality/Morbidity** 17 7 1 - 3 3 1 - 1 33 Lapses*** (14) 2 (8) - - - (1) (1) 2 (20) Other**** 11 (5) - 1 8 1 - 7 - 23--------------------------------------------------------------------------------------------------------------------- (19) 2 (6) 1 (1) 6 1 3 (7) (20) - operating assumption changes: Maintenance expenses - - - - - - - - 1 1 Exceptional expenses - - - - - - - - - - Mortality/Morbidity - - - - - - - - - - Lapses***** - - (9) - - - - - - (9) Other 7 (1) (1) - 3 - - - - 8--------------------------------------------------------------------------------------------------------------------- 7 (1) (10) - 3 - - - 1 -Expected return on shareholders' net worth 51 31 7 6 34 4 4 3 11 151---------------------------------------------------------------------------------------------------------------------Life EEV operating return before tax 345 112 16 36 132 35 81 14 28 799===================================================================================================================== * Exceptional expenses reflect project spend, including costs associated with the pace of regulatory change in the UK.** Mortality experience has typically been better than anticipated in many of the group businesses in particular in the UK on annuity and PHI contracts.*** Lapse experience has been adverse in a number of businesses including on savings businesses in the UK, and on some classes of business in Ireland.**** In the UK, other experience profits include exceptional profits arising from better than assumed default experience on corporate bonds and commercial mortgages.***** In Ireland, lapse assumption changes have been made on unit linked pension business following recent experience. --------------------------------------------------------------------------------------------------------------------Page 69 Segmental analysis of the components of life EEV operating return Full year 2004 £m UK France Ireland Italy Netherlands Poland Spain Other International Total Europe New business contribution (after the effect of required capital) 215 54 16 34 43 9 121 - 24 516Profit from existing business - expected return 367 112 30 29 141 45 40 24 31 819 - experience variances: Maintenance expenses* 31 (2) (1) 2 (9) 5 - 1 1 28 Exceptional expenses** (153) - - - (12) - (1) (3) (1) (170) Mortality/Morbidity*** 49 21 7 - 17 8 1 2 5 110 Lapses**** (50) 5 (1) (5) (2) 5 2 (4) 6 (44) Other***** 42 (2) - 3 18 - 2 - (2) 61---------------------------------------------------------------------------------------------------------------------- (81) 22 5 - 12 18 4 (4) 9 (15) - operating assumption changes: Maintenance expenses****** 77 - (6) (3) - 14 3 1 4 90 Exceptional expenses******* (34) (2) - - (72) - - - - (108) Mortality/Morbidity 2 - (2) 7 5 (2) - 1 (1) 10 Lapses******** (110) - (16) (3) 9 - 1 1 (1) (119) Other********* 7 37 - 1 79 2 3 (6) (3) 120---------------------------------------------------------------------------------------------------------------------- (58) 35 (24) 2 21 14 7 (3) (1) (7)Expected return on shareholders' net worth 108 63 13 14 60 7 8 5 20 298----------------------------------------------------------------------------------------------------------------------Life EEV operating return before tax 551 286 40 79 277 93 180 22 83 1,611====================================================================================================================== * Maintenance expenses in the UK reflect the benefit of cost saving initiatives undertaken.** Exceptional expenses in the UK reflect costs of £65 million for the restructuring of the business services division and one-off project costs of £88 million associated with the pace of regulatory change.*** Mortality experience across our major businesses continues to be better than our assumptions for protection and annuity business in the UK and protection business in Continental Europe.**** Lapse experience in the UK has been adverse and mainly relates to bonds, protection schemes and pension products. ***** In the UK, other experience profits include £29 million of profits arising from better than assumed default experience on corporate bonds and commercial mortgages.****** Maintenance expense assumption changes in the UK reflect the benefit of cost saving initiatives coming through.******* The UK and the Netherlands include capitalised additional future project expenses.******** Adverse lapse assumption changes in the UK relates to unitised with-profit bonds and unit-linked bonds. In Ireland, lapse assumption changes have been made on unit-linked pensions business following recent experience.********* Other operating assumptions in the Netherlands relates to positive changes in asset mix and tax reflecting, in part, the fact that the embedded value of Delta Lloyd was previously assessed using a blended average tax rate of 25%, which is below the local corporation tax rate. The calculation has been refined to tax all future profits at the full corporation tax rate at the beginning of the year of 34.5% and to allow explicitly for the tax benefit arising from investing in the "5% holdings" (investments in Dutch companies where at least 5% of the share capital is owned), on which all investment income is tax free. This change results in a £53 million one-off benefit. France includes the benefit of tax assumption changes. France has historically recorded favourable tax operating experience as a result of better than assumed tax on dividend income. Previously the tax assumptions had been set at full corporation tax for all future profits, whereas in fact dividend income from subsidiaries is tax exempt. In 2004, the calculation has been refined such that the future tax benefit arising from dividend from subsidiaries has now been recognised. This change results in a £39 million benefit. --------------------------------------------------------------------------------------------------------------------Page 70 Supplementary analyses - life and related businesses (a) Analysis of service companies and fund management businesses within embedded value The EEV methodology incorporates the impact of profits and losses arising from subsidiary undertakings providing administration, investment management and other services where these arise in relation to covered business. The principal subsidiaries of the Aviva group providing such services are NU Life Services Ltd (UK), Morley Fund Management (UK) and Aviva Gestion d'Actifs (France). The following table provides an analysis of the elements within the life and other related business embedded value: 31 December 30 June 2005 2004 ------------------------------------------- ----------- Fund Management Non-Insurance Total Total £m £m £m £m United Kingdom 53 (397) (344) (343)France 43 (10) 33 32Other Europe and International 11 (18) (7) (15)------------------------------------------------------------------------------------------------------------------- 107 (425) (318) (326)=================================================================================================================== The "look-through" value attributable to fund management is based on the level of after-tax profits expected to be earned in the future over the outstanding term of the covered business in respect of services provided to the Group's life operations. The EEV basis profit and loss account excludes the actual statutory basis profits arising from the provision of fund management services to the Group's life businesses. The EEV income statement records the experience profit or loss compared to the assumed profitability, the return on the in-force value arising from the unwind at the relevant risk discount rate and the effect on the in-force value of changes to economic assumptions. NU Life Services Ltd (NULS) is the main provider of administration services to the UK Life business. NULS incurs substantially all of the UK Life business' operating expenditure, comprising acquisition, maintenance and project costs. Costs are recharged to the UK Life companies (the product companies) on the basis of pre-determined Management Services Agreement (MSA) which was negotiated in 1998 and will be reviewed in 2008. The EEV principles "look-through" the contractual terms of the MSA to the underlying expenses of NULS. Accordingly theactual maintenance expenses and a "normal" annual level of project expense allowances have been applied to theproduct companies. Under EEV, any further one-off project expenditure is reported as experience losses when incurred. (b) Pension schemes (i) Treatment of pension scheme deficits for IFRS On the IFRS balance sheet, the amount described as Provisions includes the pension scheme deficits and comprises: 30 June 31 December 2005 2004 £m £m Deficits in the staff pension schemes 1,220 893Other obligations to staff pension schemes - Insurance policies issued by Group companies 813 813------------------------------------------------------------------------------------------------------------------Total IAS 19 obligations to staff pension schemes 2,033 1,706Other provisions 468 419------------------------------------------------------------------------------------------------------------------Provisions 2,501 2,125================================================================================================================== (ii) Treatment of pension scheme deficits in embedded value The adoption of the EEV principles and the inclusion of NULS in the calculations have resulted in the recognition within EEV of the future funding obligations to the UK pension scheme in relation to both future service costs and pension deficits. The table below shows the component parts of the impact of adopting the EEV principles on the UK life valuation. 30 June 31 December 2005 2004 £m £mImpact of:Increasing maintenance and normal project allowances (128) (124)Increase in future service pension scheme contribution rate from 11% to 29% (31 December 2004: 25%) (123) (126)------------------------------------------------------------------------------------------------------------------ (251) (250)Pension scheme deficits funding (146) (147)------------------------------------------------------------------------------------------------------------------- (397) (397)=================================================================================================================== --------------------------------------------------------------------------------------------------------------------Page 71 Pension costs are accounted in NULS following the "look-through" principle and are included in the embedded value. The funding rate for the annual pension cost is 29% of pensionable salaries and allowance has been made for the entire contribution reducing the embedded value of UK Life and related business at 30 June 2005 by £123 million (31 December 2004: £126 million). In addition, pension deficit funding equivalent in 2004 to a further 13% of pensionable salaries commenced on 1 January 2004. The NULS share of the total UK pension scheme deficit is approximately 42% and this liability is fully provided for in the UK embedded value. In effect, under the EEV methodology the element of the pension fund deficit which relates to the UK life and other related businesses is now incorporated within shareholders' funds at an amountequivalent to the post-tax contributions discounted using the UK Life business risk discount rate. This is equal to £146 million at 30 June 2005 (31 December 2004: £147 million), which differs from the IAS19 basis of evaluating pension deficits. In quantifying the impact on the embedded value for the UK covered business, the shareholders have been assumed to incur all of the additional contributions except for an amount equivalent to approximately 2% of pensionable salarieswhich has been attributed to the with-profits funds. This reflects the contractual nature of the current MSA which prevents shareholders from recharging both the increase in future service costs from 11% to 29% (31 December 2004: 25%) of pensionable salaries and the cost of funding the deficit to the UK with-profit funds. Under the MSA, NULS can renegotiate the terms relating to the recharging of the costs to the UK with-profit funds in 2008, subject to regulatory approval. In evaluating the impact on EEV, Aviva has not sought to pre-empt the outcome ofthis renegotiation. Any changes to the recharges in respect of the pension costs and the pension deficit to the with-profits funds will be reported as profits or losses in the period in which agreement is obtained. (iii) Treatment of pension scheme deficits on the Group embedded value balance sheet The Group has accounted for its pension scheme costs in accordance with IAS 19 for the non life and overseas life businesses. The element of the pension fund deficits which relates to the UK life and other related businesses is included at an amount equivalent to the post-tax contributions discounted using the UK Life business risk discount rate. The following table sets out the pension scheme deficits in the Group embedded value balance sheet. 30 June 31 December 2005 2004 £m £mIAS 19 pension scheme deficits post tax 855 628Deduct element relating to UK life on IAS 19 basis (239) (216)------------------------------------------------------------------------------------------------------------------- 616 412Element relating to UK life funding contributions included within EEV covered business 146 147------------------------------------------------------------------------------------------------------------------Total pension scheme deficits on the embedded value balance sheet 762 559Deferred tax asset 365 265------------------------------------------------------------------------------------------------------------------Total pension scheme deficits on the embedded value balance sheet pre-tax 1,127 824Other obligations to staff pension schemes - Insurance policies issued by Group companies 813 813Other provisions 468 419------------------------------------------------------------------------------------------------------------------Pension obligations and other provisions 2,408 2,056================================================================================================================== The pension scheme deficits shown above of £855 million (31 December 2004: £628 million) include the associated deferred tax asset of £365 million (31 December 2004: £265 million). --------------------------------------------------------------------------------------------------------------------Page 72 (c) Assets under management General Life and related business business and other Group Group 30 June 30 June 30 June 31 December 2005 2005 2005 2004 £m £m £m £m Total IFRS assets included in the balance sheet 211,535 36,760 248,295 239,303 Additional value of in-force long-term business 5,335 - 5,335 5,018-----------------------------------------------------------------------------------------------------------------Total EEV assets included in the balance sheet 216,870 36,760 253,630 244,321Third party funds under management:Unit trusts, Oeics, Peps and Isas 11,207 10,527Segregated funds 25,831 24,899-----------------------------------------------------------------------------------------------------------------Total assets under management 290,668 279,747================================================================================================================= --------------------------------------------------------------------------------------------------------------------Page 73 General insurance business only: geographical analysis (a) General insurance Longer-term Operating Profit investment return Underwriting result --------------------- -------------------- --------------------- 6 months Full year 6 months Full year 6 months Full year 2005 2004 2005 2004 2005 2004 £m £m £m £m £m £m United Kingdom 431 788 325 647 106 141France 14 25 22 39 (8) (14)Ireland 83 135 30 53 53 82Netherlands 39 51 21 33 18 18Canada 67 133 53 96 14 37Other 41 73 32 61 9 12----------------------------------------------------------------------------------------------------------------- 675 1,205 483 929 192 276================================================================================================================= (b) Combined operating ratio analysis - geographical basis - general insurance business only Claims ratio Expense ratio Combined operating ratio --------------------- -------------------- ------------------------ 6 months Full year 6 months Full year 6 months Full year 2005 2004 2005 2004 2005 2004 % % % % % % United Kingdom 64.3% 64.4% 10.8% 10.6% 96% 97%France 72.3% 73.4% 10.3% 12.1% 100% 101%Ireland 59.2% 66.6% 11.1% 10.3% 80% 87%Netherlands 60.0% 59.4% 12.9% 11.9% 94% 95%Canada 66.4% 66.6% 12.5% 12.1% 98% 97%------------------------------------------------------------------------------------------------------------------ 64.5% 65.0% 11.2% 11.2% 95% 97%================================================================================================================== Ratios are measured in local currency.The total Group ratios are based on average exchange rates applying to the respective periods. Definitions:Claims ratio - Incurred claims expressed as a percentage of net earned premiums.Expense ratio - Written expenses excluding commissions expressed as a percentage of net written premiums.Commission ratio - Written commissions expressed as a percentage of net written premiums.Combined operating ratio - Aggregate of claims ratio, expense ratio and commission ratio. (c) General insurance business only: class of business analyses (i) United Kingdom Net written premiums Underwriting result Combined operating ratio --------------------- -------------------- ------------------------ 6 months Full year 6 months Full year 6 months Full year 2005 2004 2005 2004 2005 2004 £m £m £m £m % %PersonalMotor 774 1,383 (14) (12) 102% 102%Homeowner 572 1,041 25 24 97% 97%Other 309 737 7 9 96% 100%------------------------------------------------------------------------------------------------------------------ 1,655 3,161 18 21 99% 100%------------------------------------------------------------------------------------------------------------------CommercialMotor 364 755 17 19 95% 97%Property 451 924 56 98 85% 88%Other 266 597 15 3 94% 99%------------------------------------------------------------------------------------------------------------------ 1,081 2,276 88 120 91% 94%------------------------------------------------------------------------------------------------------------------£m 2,736 5,437 106 141 96% 97%================================================================================================================== During the six months to 30 June 2005, annualised rating increases were as follows; personal motor: 5%; homeowners: 6% (including indexation); commercial motor: 3% decrease; commercial property: 1% decrease; and commercial liability:1%. --------------------------------------------------------------------------------------------------------------------Page 74 (ii) France Net written premiums Underwriting result Combined operating ratio --------------------- -------------------- ------------------------ 6 months Full year 6 months Full year 6 months Full year 2005 2004 2005 2004 2005 2004 •m •m •m •m % % Motor 221 370 (6) (12) 100% 103%Property and other 264 399 (6) (9) 99% 100%------------------------------------------------------------------------------------------------------------------•m 485 769 (12) (21) 100% 101%------------------------------------------------------------------------------------------------------------------£m 335 530 (8) (14) 100% 101%================================================================================================================== (iii) Netherlands Net written premiums Underwriting result Combined operating ratio --------------------- -------------------- ------------------------ 6 months Full year 6 months Full year 6 months Full year 2005 2004 2005 2004 2005 2004 •m •m •m •m % % Property 207 368 23 6 92% 90%Motor 178 347 12 27 93% 95%Liability 48 56 - (12) 102% 119%Other 189 287 (9) 6 105% 97%------------------------------------------------------------------------------------------------------------------•m 622 1,058 26 27 94% 95%------------------------------------------------------------------------------------------------------------------£m 429 720 18 18 94% 95%================================================================================================================== (iv) Canada Net written premiums Underwriting result Combined operating ratio --------------------- -------------------- ------------------------ 6 months Full year 6 months Full year 6 months Full year 2005 2004 2005 2004 2005 2004 C$m C$m C$m C$m % % Automobile 863 1,747 11 5 99% 100%Property 418 821 25 79 93% 90%Liability 151 249 (7) (12) 105% 106%Other 22 42 4 14 80% 66%------------------------------------------------------------------------------------------------------------------C$m 1,454 2,859 33 86 98% 97%------------------------------------------------------------------------------------------------------------------£m 627 1,232 14 37 98% 97%================================================================================================================== --------------------------------------------------------------------------------------------------------------------Page 75 Appendix A Group Capital Structure The Group maintains an efficient capital structure from a combination of equity shareholders' funds, preference capital, subordinated debt and borrowings, consistent with the Group's risk profile and the regulatory and marketrequirements of its business. The European Embedded Value basis provides a more accurate reflection of the performanceof the Group's life operations year on year than results under IFRS. Accordingly, the Group's capital structure isanalysed on this basis. The Group's capital, from all funding sources, has been allocated such that the capital employed by trading operationsis greater than the capital provided by its shareholders and its subordinated debt holders. As a result, the Group isable to enhance the returns earned on its equity capital. Capital employed by segment 30 June 31 December 2005 2004 £m £m Long-term savings 13,757 13,826General insurance and health 5,485 5,005Other business 1,714 838Corporate (365) (372)-------------------------------------------------------------------------------------------------------------------Total capital employed 20,591 19,297------------------------------------------------------------------------------------------------------------------Financed byEquity shareholders' funds and minority interests 13,916 12,821Direct capital instrument 990 990Preference shares 200 200 Subordinated debt 2,789 2,847 External debt 1,550 1,452Net internal debt 1,146 987------------------------------------------------------------------------------------------------------------------ 20,591 19,297================================================================================================================== At 30 June 2005 the Group had £20.6 billion (31 December 2004: £19.3 billion) of total capital employed in our tradingoperations which is efficiently financed by a combination of equity shareholders' funds, preference capital, directcapital instruments, subordinated debt and internal and external borrowings. In the first half of 2005, the total capital employed in our long-term savings operations decreased by £0.1 billion from the previous year end; the capital employed in our general insurance businesses increased by £0.5 billionreflecting the profits in the period; the capital employed in our non-insurance businesses rose by £0.9 billion from£0.8 billion to £1.7 billion reflecting the RAC acquisition. In addition to its external funding sources, the Group has a number of internal debt arrangements in place. These have allowed the assets supporting technical liabilities to be invested into the pool of central assets for useacross the Group. They have also enabled the shareholders to deploy cash from some parts of the business to others in order to fund growth. Although intra-group loans in nature, they are counted as part of the capital base for the purpose of capital management. All internal loans satisfy arms length criteria and all interest payments have been made when due. In order to better reflect the underlying level of internal leverage the presentation of internal debt was revised at the 2004 year end. The revised presentation depicts a net debt position which represents the upstream ofinternal loans from business operations to corporate and holding entities net of tangible assets held by these entities. The corporate net liabilities represent the pension scheme deficit held centrally. The ratio of the Group's external debt plus subordinated debt to shareholders' funds was 29% (31 December 2004: 31%). Fixed charged cover on an EEV basis, which measures the extent to which external interest costs are covered by EEV operating profit, was 9.2 times (31 December 2004: 8.2 times). At 30 June 2005 the market value of the Group's external debt, subordinated debt, preference shares, including both the Aviva plc preference shares and the General Accident plc preference shares of £250 million, within minorityinterests, and direct capital instrument was £6,383 million (31 December 2004: £5,953 million), with a weighted average cost of 3.8% (31 December 2004: 3.9%). The Group WACC is 7.1% and has been calculated by reference to thecost of equity and cost of debt at the relevant date. It is based on an equity market premium of 3% and a market beta of 1.46. --------------------------------------------------------------------------------------------------------------------Page 76 Group capital structure (continued) Deployment of equity shareholders' funds 31 December 30 June 2005 2004 ---------------------------------------------------------------- ----------- Fixed income Other Other net Equities securities investments assets Total Total £m £m £m £m £m £mAssetsLong-term savings 686 3,522 1,157 1,923 7,288 7,572General insurance, health, and other business 3,062 1,160 1,687 (1,272) 4,637 4,859----------------------------------------------------------------------------------------------------------------- 3,748 4,682 2,844 651 11,925 12,431Goodwill 2,506 1,401Additional and acquired value of in-force long-term business and other intangible assets 6,160 5,465-----------------------------------------------------------------------------------------------------------------Assets backing total capital employed in continuing operations 20,591 19,297External debt (1,550) (1,452)Net Internal debt (1,146) (987)Subordinated debt (2,789) (2,847)------------------------------------------------------------------------------------------------------------------ 15,106 14,011Minority interests (1,283) (1,160)Direct Capital Instrument (990) (990)Preference capital (200) (200)-------------------------------------------------------------------------------------------------------------------Equity shareholders' funds 12,633 11,661================================================================================================================== Our exposure to equities has decreased from £3.9 billion at 31 December 2004 to £3.7 billion, which represents 18% of our capital employed. Return on capital employed 31 December 30 June 2005 2004 ------------------------------------------ ------------ Normalised after-tax Opening Return Return return equity capital on capital on capital £m £m % % Long-term savings 591 13,826 8.7% 8.9%General insurance and health 447 5,005 18.7% 17.1%Other business 45 838 11.1% (2.0)%Corporate (56) (372) 32.4% 40.9%------------------------------------------------------------------------------------------------------------------- 1,027 19,297 10.9% 10.4%Borrowings (120) (5,286) 4.6% 3.9%------------------------------------------------------------------------------------------------------------------- 907 14,011 13.4% 13.9%Minority interests (77) (1,160) 13.7% 17.5%Direct capital instrument - (990) - -Preference capital (9) (200) 8.5% 8.5%-------------------------------------------------------------------------------------------------------------------Equity shareholders' funds 821 11,661 14.6% 13.7%=================================================================================================================== The return on capital is calculated as the after-tax return on opening equity capital, based on Group operating profit, including Life EEV operating return, on continuing operations. ----------------------------------------------------------------------------------------------------------------------Page 77 Group capital structure (continued) Shareholders' funds, including minority interests 30 June 2005 31 December 2004 Closing shareholders' funds Closing shareholders' funds ----------------------------- ----------------------------- Internally Internally IFRS net generated Total IFRS net generated Total assets AVIF Equity assets AVIF Equity Note £m £m £m £m £m £m Life assurance 1,2 United Kingdom 2,868 2,829 5,697 3,162 2,703 5,865France 1,149 723 1,872 1,175 644 1,819Ireland 376 253 629 403 248 651Italy 606 87 693 478 72 550Netherlands (including Belgium and Luxembourg) 1,761 649 2,410 1,758 727 2,485Poland 142 364 506 176 381 557Spain 717 345 1,062 761 279 1,040Other Europe 161 64 225 160 53 213International 642 21 663 735 (89) 646----------------------------------------------------------------------------------------------------------------------- 8,422 5,335 13,757 8,808 5,018 13,826----------------------------------------------------------------------------------------------------------------------- General insurance and health 2,3United Kingdom 3,006 3,006 2,504 2,504France 351 351 416 416Ireland 453 453 498 498Netherlands 510 510 461 461Other Europe 137 137 162 162Canada 704 704 687 687Other 324 324 277 277--------------------------------------------------------------------------------------------------------------------- 5,485 - 5,485 5,005 - 5,005--------------------------------------------------------------------------------------------------------------------- Other business 2,3 1,714 1,714 838 838Corporate (365) (365) (372) (372)External debt 4 (1,550) (1,550) (1,452) (1,452)Internal debt (1,146) (1,146) (987) (987)Subordinated debt (2,789) (2,789) (2,847) (2,847)--------------------------------------------------------------------------------------------------------------------- (4,136) - (4,136) (4,820) - (4,820)---------------------------------------------------------------------------------------------------------------------Shareholders' funds, including minority interests 9,771 5,335 15,106 8,993 5,018 14,011===================================================================================================================== ComprisingEquities 3,748 3,748 3,881 3,881Debt and fixed income securities 4,682 4,682 4,802 4,802Property 1,521 1,521 1,292 1,292Deposits and other investments 1,323 1,323 1,480 1,480Intangible assets 5 3,331 5,335 8,666 1,848 5,018 6,866Other net assets 651 651 976 976Borrowings (5,485) (5,485) (5,286) (5,286)--------------------------------------------------------------------------------------------------------------------- 9,771 5,335 15,106 8,993 5,018 14,011===================================================================================================================== ---------------------------------------------------------------------------------------------------------------------Page 78 Group capital structure (continued) Shareholders' funds, including minority interests (continued) Notes 1. The internally generated AVIF includes an adjustment of £93 million (2004: £69 million) relating to the treatment of the pension fund deficit.2. Goodwill of £2,506 million (2004: £1,401 million) has been allocated as follows: life assurance £768 million (2004: £812 million); general insurance and health £845 million (2004: £465 million) and other business £893 million (2004: £124 million).3. Intangibles of £493 million (2004: £65 million) have been allocated as follows: general insurance and health £379 million (2004: £106 million); other businesses £114 million (2004: £46 million).4. The external borrowings reported in the summary consolidated balance sheet of £10,700 million (2004: £10,090 million) comprise £5,481 million (2004: £5,096 million) securitised mortgage funding, £2,789 million (2004: £2,847 million) subordinated debt, £881 million (2004: £695 million) borrowings by operating businesses and £1,550 million (2004: £1,452 million) borrowings by holding companies of the Group not allocated to operating companies (shown as external debt).5. Total intangible assets of £8,666 million (2004: £6,866 million) comprise goodwill of £2,506 million (2004: £1,401 million), additional value of in-force long-term business of £5,667 million (2004: £5,400 million) and other intangibles of £493 million (2004: £124 million). The associated deferred tax liability on the other intangibles of £141 million (2004: nil) is included within other net assets. Geographical analysis of return on capital employed For the six months to 30 June 2005 Opening Shareholders' funds including minority Annualised Operating return (Note 1) interests Return on Capital ------------------------- ------------------- ----------------- Note Before tax After tax £m £m £m %Life assuranceUnited Kingdom 327 229 5,865 8.0%France 158 103 1,819 11.6%Ireland 22 19 651 5.9%Italy 47 29 550 10.8%Netherlands (including Belgium and Luxembourg) 115 79 2,485 6.5%Poland 46 36 557 13.3%Related Shares:
Aviva