REG - Aviva PLC - Final Results - PART 2 OF 4 <Origin Href="QuoteRef">AV.L</Origin> - Part 1

AvivaAnnouncement

09/03/2017 07:08

RNS Number : 9297Y
Aviva PLC
09 March 2017
START
PART 2 OF 4
Page 1
Contents
In this section
Page 
Overview
Key financial metrics
2
1
Operating profit 
3
2
Cash
5
i 
Cash remitted to Group
5
ii 
Excess centre cash flow
5
iii
Operating capital generation: Solvency II basis
6
iv
Solvency II future surplus emergence
7
3
Expenses
8
4
Value of new business
9
5
Combined operating ratio
10
6
Business unit performance
11
i
United Kingdom & Ireland Life
11
ii
United Kingdom & Ireland general insurance and health
13
iii
Europe
15
iv
Canada
17
v
Asia
18
vi
Aviva Investors
19
7
Operating profit drivers
20
i
Life business
20
ii
General insurance and health
23
iii
Fund flows
25
8
Capital & assets summary
26
i
Summary of assets
26
ii
Net asset value
28
iii
Return on equity
29
iv
Solvency II
30
Financial supplement
33
Income & expenses
34
IFRS financial statements
39
Capital & assets
97
Capital & liquidity
97
Analysis of assets
101
VNB & Sales analysis
123
Other information
133
Page 2
Operating profit 
2016
m
Restated1
2015
m
Sterling % change
Life business
2,642
2,442
8%
General insurance and health
833
765
9%
Fund management
138
106
30%
Other2
(603)
(625)
4%
Total3,4
3,010
2,688
12%
Operating earnings per share3,4,5
51.1p
49.7p
3%
Cash remittances and Operating capital generation: Solvency II basis
2016
2015
Cash Remittances m
Operating Capital Generation bn
Cash Remittances m
Operating Capital
Generation6
bn
United Kingdom & Ireland Life
1,096
2.5
667
United Kingdom & Ireland General Insurance and Health
91
0.3
358
Europe
449
1.0
431
Canada
130
0.3
6
Asia, Aviva Investors & Other
39
(0.6)
45
Total
1,805
3.5
1,507
Expenses
2016
m
Restated1
2015
m
Sterling % change
Operating expenses 
3,408
3,030
12%
Integration & restructuring costs
212
379
(44)%
Expense base
3,620
3,409
6%
Operating expense ratio1
50.5%
49.8%
0.7pp
Value of new business: MCEV basis
2016
m
2015
m
Sterling %
Change7
Constant currency %
Change7
United Kingdom & Ireland
695
625
11%
11%
France
224
198
13%
-
Poland8
65
65
(1)%
(9)%
Italy
124
79
58%
39%
Spain
42
31
33%
18%
Turkey
25
27
(7)%
(9)%
Asia
148
151
(2)%
(11)%
Aviva Investors
29
16
77%
77%
Total
1,352
1,192
13%
8%
General insurance combined operating ratio
2016 excluding Ogden9
2016
2015
Change
United Kingdom & Ireland
94.9%
106.3%
95.0%
11.3pp
Europe
95.8%
95.8%
95.4%
0.4pp
Canada
94.6%
94.6%
93.8%
0.8pp
Combined operating ratio
95.2%
101.1%
94.6%
6.5pp
IFRS profit after tax
2016
m
Restated1
2015
m
Sterling % change
IFRS profit after tax3
859
1,097
(22)%
Basic earnings per share3
15.3p
23.1p
(34)%
Dividend
2016
2015
Sterling % change
Final dividend per share
15.88p
14.05p
13%
Total dividend per share
23.30p
20.80p
12%
Capital position
2016
2015
Sterling % change
Estimated Solvency II cover ratio10,11
189%
180%
9.0pp
Estimated Solvency II surplus11
11.3bn
9.7bn
16%
Net asset value per share (restated)1
414p
390p
6%
1 Following a correction to accounting and modelling for annual management charge rebates in UK Life, prior year comparatives have been restated. This has led to an increase in operating profit and profit before tax of 23 million for 2015 and an increase in opening retained earnings for 2015 of 20 million with an increase in equity at 31 December 2015 of 38 million. See note B2 for further details.
2 Other includes other operations, corporate centre costs and group debt and other interest costs.
3 Operating profit is a non-GAAP measure used by management and excludes the impact of the exceptional Ogden charge. Refer to 'Financial supplement' for the reconciliation of Group operating profit to profit after tax - IFRS basis and refer to note B7 - Earnings per share for a reconciliation of operating earnings per share to basic earnings per share.
4 2016 and 2015 exclude the impact from an outward quota share reinsurance agreement written in 2015 and completed in 2016 in Aviva InsuranceLimited (AIL). See note A10 for further details.
5  Operating EPS is shown net of tax, non-controlling interests, preference dividends, and coupon payments in respect of direct capital instrument (DCI) and tier 1 notes (net of tax).
6  Operating capital generation was calculated on a Solvency II basis for the first time in 2016. No comparatives are available for 2015.
7 Currency movements are calculated using unrounded numbers so minor rounding differences may exist.
8 Poland includes Lithuania.
9 Excludes the impact of the change in the Ogden discount rate.
10 The estimated solvency II ratio represents the shareholder view. This excludes the contribution to Group Solvency Capital Requirement (SCR) and Group Own Funds of fully ring fenced with-profits funds 2.9 billion (2015: 2.7 billion) and staff pension schemes in surplus 1.1 billion (2015: 0.7 billion) - these exclusions have no impact on Solvency II surplus.
11 The estimated Solvency II position includes an estimated adverse impact of a notional reset of the transitional measure on technical provisions ('TMTP') to reflect interest rates at 31 December 2016. Removing this notional reset of TMTP would increase the estimated Solvency II surplus by 0.4 billion. Amortisation of TMTP since 1 January 2016 is also reflected. Also included are the pro forma impacts of the disposal of Aviva's 50% shareholding in Antarius to Sogecap, expected to complete 1 April 2017 (0.2 billion increase to surplus) and a future change to UK tax rules restricting the tax relief that can be claimed in respect of tax losses (0.4 billion decrease to surplus)
Page 3
2016 overview
The Group has delivered an increase in operating profit, cash remittances to the Group, strengthening of its Solvency II capital position and growth in value of new business (VNB). Operating profit excludes the impact of the change in the Ogden discount rate of 475 million (2015: nil), which has been recognised as an exceptional non-operating item.
 Aside from the benefits of foreign exchange movements, these results include the contribution of an additional quarter of Friends Life along with the realisation of integration benefits, which secured run rate synergies in excess of our 225 million target, a year ahead of schedule. The results also include the acquisition of RBC General Insurance Company (RBC) in Canada.
1 - Operating Profit
Group operating profit
For the year ended 31 December 2016
2016
m
Restated1
2015
m
Operating profit before tax attributable to shareholders' profits
Life business
United Kingdom & Ireland
1,555 
1,455 
France
429 
395 
Poland
132 
129 
Italy
170 
139 
Spain
107 
92 
Turkey
6 
11 
Europe
844 
766 
Asia
241 
244 
Other
2 
(23)
Total life business (note 7.i)
2,642 
2,442 
General insurance and health
United Kingdom & Ireland2
471 
430 
Europe
120 
114 
Canada
269 
214 
Asia
(13)
(6)
Other
(14)
13 
Total general insurance and health2 (note 7.ii)
833 
765 
Fund management
Aviva Investors
139 
105 
Asia
(1)
1 
Total fund management
138 
106 
Other
Other operations (note A1)
(94)
(84)
Market operating profit2
3,519 
3,229 
Corporate centre (note A2)
(184)
(180)
Group debt costs and other interest (note A3)
(325)
(361)
Operating profit before tax attributable to shareholders' profits2
3,010 
2,688 
Tax attributable to shareholders' profit
(706)
(603)
Non-controlling interests
(147)
(152)
Preference dividends and other3
(85)
(74)
Operating profit attributable to ordinary shareholders2
2,072 
1,859 
Operating earnings per share2,4
51.1p
49.7p
1  Following a correction to accounting and modelling for annual management charge rebates in UK Life, prior year comparatives have been restated. This has led to an increase in operating profit and profit before tax of 23 million for 2015 and an increase in opening retained earnings for 2015 of 20 million with an increase in equity at 31 December 2015 of 38 million. See note B2 for further details.
2 2016 excludes the impact of the change in the Ogden discount rate of 475 million, which has been recognised as an exceptional non-operating item. 2016 and 2015 exclude the impact from an outward quota share reinsurance agreement written in 2015 and completed in 2016 in Aviva Insurance Limited (AIL). See note A10 for further details.
3 Other includes coupon payments in respect of the direct capital instrument (DCI) and tier 1 notes (net of tax).
4 Net of tax, non-controlling interests, preference dividends, coupon payments in respect of the direct capital instrument (DCI) and tier 1 notes (net of tax). The calculation of earnings per share uses a weighted average of 4,051 million (2015: 3,741 million) ordinary shares in issue, after deducting treasury shares.
Page 4
1 - Operating Profit continued
Operating profit was 3,010 million (2015: 2,688 million). This includes an additional quarter's contribution from Friends Life, six months of results from RBC and a favourable impact from foreign exchange movements of 141 million.
The life business operating profit increased to 2,642 million (2015: 2,442 million) mainly driven by UK & Ireland and Europe. The performance of UK & Ireland Life reflected the additional quarter's contribution from Friends Life, realisation of integration synergies and growth primarily in protection and long term savings, partially offset by investments in digital. Europe's contribution to the life operating profit benefitted from movements in foreign exchange rates; on a constant currency basis Europe's life operating performance was slightly down, with growth and margin improvements particularly in Italy more than offset by adverse market movements and the impact of a new asset levy in Poland. The discontinuation of the bancassurance agreement with DBS Bank Ltd (DBS) in Asia resulted in a lower contribution to the overall life operating profit.
The general insurance and health business operating result increased to 833 million (2015: 765 million), mainly due to better weather and improved underlying performance in the UK, coupled with the acquisition of RBC and higher favourable prior year development in Canada. The result also benefitted from the continued focus of the business on cost control. This was partially offset by the adverse weather experience in France, fires experienced in Alberta, Canada and increased costs associated with the Flood Re levy in the UK.
Higher fund management operating profit of 138 million (2015: 106 million) mainly reflects the further transfer in of Friends Life assets, a change in pricing by Aviva Investors to manage funds on behalf of other Aviva entities and an increase in revenue from Aviva Investors external business, together with continued cost control and operational efficiency initiatives despite continued investment in the business. 
Operating earnings per share is up 1.4p to 51.1p (2015: 49.7p) due to the increase in operating profit in the year partly offset by the dilutive impact of an additional quarter of ordinary shares in issue from the Friends Life acquisition.
Page 5
2.i - Cash remitted to Group
The flow of sustainable cash remittances from the Group's businesses is a key financial priority. We use a wholly-owned, UK domiciled reinsurer subsidiary for internal capital and cash management. Some of the remittances otherwise attributable to the operating businesses arise from this internal reinsurance vehicle. The table below reflects actual remittances received by the Group.
 The cash remittances for 2016 were 1,805 million (2015: 1,507 million) and includes cash paid by our operating businesses to the Group, comprising dividends and interest on internal loans.
2016
m
2015
m
United Kingdom & Ireland Life1
1,096
667
United Kingdom & Ireland General Insurance and Health1
91
358
Europe
449
431
Canada
130
6
Asia, Aviva Investors & Other2
39
45
Total3
1,805
1,507
1 2016 cash remittances include amounts of 100 million received from UK & Ireland Life and 83 million from UK & Ireland General Insurance in February 2017 in respect of 2016 activity. 2016 cash remittances also include 159 million received from France in January 2017 in respect of 2016 activity. 2015 cash remitted included 351 million received from UK & Ireland General Insurance in February 2016 in respect of 2015 activity. 
2 Other includes Group Reinsurance.
3 Cash remittances are eliminated on consolidation and are hence not directly reconcilable to the Group's IFRS statement of cash flows.
Cash remittances to the Group increased primarily driven by the UK & Ireland Life business and Canada, partially offset by a decrease in remittances from UK & Ireland general insurance and health. The 2016 remittance includes 250 million, which is the first instalment of the overall planned 1 billion Friends Life integration additional remittance. Cash remittances from Europe increased due to increased profitability in Italy and increased remittances from Poland due to a legal entity restructure in 2015 which had seen remittances withheld; however, remittances from France decreased due to investment in the business. In 2015, dividends were withheld in Canada to part-fund the acquisition of RBC. Subsequent to the completion of the acquisition in 2016, Canada has paid 130 million to the Group. Remittances from UK & Ireland general insurance and health decreased in 2016 as cash was used to fund an increase in the internal reinsurance arrangement. 
2.ii - Excess centre cash flow
Excess centre cash flow represents cash remitted by business units to the Group centre less central operating expenses and debt financing costs. It is an important measure of the cash that is available to pay dividends, reduce debt, pay exceptional charges or invest back into our business units. It does not include non-operating cash movements such as disposal proceeds or capital injections. 
2016
m
2015
m
Dividends received
1,635
1,378
Internal interest received
170
129
Cash remitted to Group
1,805
1,507
External interest paid
(540)
(554)
Internal interest paid
(85)
(138)
Central spend
(227)
(252)
Other operating cash flows1
(24)
136
Excess centre cash flow2, 3
929
699
1 Other operating cash flows include central investment income and group tax relief payments and other financial cash flows previously reported under central spend.
2 Before non-operating items and capital injections.
3 This table represents cash movements only and therefore will not reconcile to accounting based disclosures throughout the Preliminary announcement.
The increase of 230 million in excess centre cash flow is primarily driven by higher cash remittances to the Group as discussed above, coupled with lower internal interest paid and other operating cash outflows. Internal interest paid decreased primarily due to the reduction in the internal loan between UK & Ireland general insurance and the Group centre. Other operating cash outflows were 24 million (2015: 136 million cash inflows) mainly due to adverse margin movements on derivatives and the cost of renewing hedges.
Holding company liquidity consists of cash and liquid assets. Holding company liquidity at 28 February 2017 was 1.8 billion (28 February 2016: 1.3 billion). 
Page 6
2.iii - Operating capital generation: Solvency II basis 
The active management of the generation and utilisation of capital is a primary Group focus, balancing new business investment and shareholder distribution to deliver our "cash flow plus growth" investment thesis.
Solvency II operating capital generation was 3.5 billion during 2016, incorporating 4.0 billion from our operating business units, net of 0.5 billion of debt and corporate centre costs. Solvency II operating capital generation excludes the impact of the change in the Ogden discount rate of c.0.2 billion, which has been recognised as an exceptional non-operating item. 
Life business SII Operating Capital Generation
Non-Life SII Operating Capital Generation
2016 
bn
Impact of New
Business1
Earnings from Existing Business
Other2
Life SII Operating Capital Generation
GI, Health, FM & Other SII Operating Capital Generation
Total SII Operating Capital Generation
United Kingdom & Ireland Life
(0.1)
1.4
1.2
2.5
-
2.5
United Kingdom & Ireland General Insurance and Health
0.3
0.3
Europe
(0.1)
0.6
0.4
0.9
0.1
1.0
Canada
0.3
0.3
Asia, Group centre costsand Other2
-
-
0.2
0.2
(0.8)
(0.6)
Total Group Solvency II operating capital generation3
(0.2)
2.0
1.8
3.6
(0.1)
3.5
1 Impact of new business (Life) as set out in note 4b Solvency II Surplus impact of new business
2 Other includes changes in Group diversification benefit.
3 As reported in the movement in Group Solvency II surplus disclosure in note 8iv.
Operating capital generation (OCG) was previously calculated on a MCEV basis for long-term covered business and an adjusted IFRS basis for other business. 
Following the introduction of the Solvency II regime on 1 January 2016, OCG is now reported on a Solvency II basis for all business. As such, for 2016 the OCG has been calculated on a Solvency II basis and no prior year comparative is available for 2015.
OCG is the Solvency II surplus movement in the period due to operating items including new business contribution, expected investment returns on existing business, operating variances, operating assumption changes and management actions. It excludes economic variances, economic assumption changes and integration and restructuring costs which are included in non-operating capital generation. The expected investment returns are consistent with the returns used in IFRS (as set out in notes A4 and A5 in the financial supplement), except in UK Life where a risk-free curve plus an allowance for expected real-world returns (less an adjustment for credit risk, where required) is applied. Total Group OCG is a component of the movement in Group Solvency II surplus over the period as set out in note 8.iv and is not reconcilable to IFRS.
For life business, the impact of new business is the change in Solvency II surplus resulting from new business written in the period. In the current period, the contribution from new business creates a strain; however, this business is expected to generate an operating surplus through earnings from existing business in future periods.
 Life business earnings from existing business is the Solvency II surplus movement in the period due to operating items excluding the impacts of New Business and Other OCG.
In 2016, Other OCG for life business includes a number of initiatives such as Friends Life capital synergies and approved model changes that improved our position under the Solvency II regime.
 Our principal source of Group centre liquidity is cash remittances in the form of dividends and debt interest receipts from our businesses. OCG measures the amount of Solvency II capital the Group generates from operating activities. Capital generated enhances Solvency II surplus which can be used to fund business unit remittances and, in turn, the group dividend as well as for investment in initiatives that provide potential future growth.
Page 7
2.iv - Solvency II future surplus emergence
Emergence of future profit and release of Solvency II capital requirements - life business
2016
bn
Year 1
1.4
Year 2
1.3
Year 3
1.2
Year 4
1.1
Year 5
1.0
Year 6
0.9
Year 7
0.8
Year 8
0.8
Year 9
0.7
Year 10
0.7
Year 11-15
2.7
Year 16-20
3.3
Year 20+
8.8
Total net of non-controlling interests
24.7
This disclosure was previously based on equivalent embedded value cash flows under the Solvency I regime. Following the introduction of the Solvency II regime on 1 January 2016, the projection has been adjusted to reflect Solvency II future surplus emergence.
The table above shows the expected future emergence of Solvency II surplus from the existing long-term in-force life business. For business subject to short contract boundaries under Solvency II, allowance has been made for the impact of renewal premiums as and when they are expected to occur. The cash flows have been split for the first ten years followed by five year tranches depending on the date when the surplus is expected to emerge.
The projected surplus, which is primarily expected to arise from the release of risk margin (net of transitional measures) and solvency capital requirement as the business runs off over time, is expected to emerge through OCG in future years. The cash flows are real-world cash flows, i.e. they are based on best estimate non-economic assumptions used in the Solvency II valuation and real-world investment returns rather than risk-free. The expected investment returns are consistent with the returns used in IFRS (as set out in note A4 in the financial supplement), except in the UK where a risk-free curve plus an allowance for expected real-world returns (less an adjustment for credit risk where required) is applied. 
Solvency II future surplus emergence is a projection of the movement in Group Solvency II surplus from existing long-term in-force life business as set out in note 8.iv and is not reconcilable to IFRS. The projection is a static analysis as at a point in time and hence it does not include the potential impact of active management of the business (for example, active management of market, demographic and expense risk through investment, hedging, risk transfer and operational risk and expense management), which may affect the actual amount of OCG earned from existing business in future periods.This is the first time the disclosure has been calculated on a Solvency II basis and, as such, no prior year comparatives are available for 31 December 2015.
Page 8
3 - Expenses
2016
m
2015
m
United Kingdom and Ireland Life
867 
815 
United Kingdom and Ireland General Insurance & Health
665 
697 
Europe
641 
526 
Canada
396 
298 
Asia 
177 
141 
Aviva Investors
367 
345 
Other Group activities
295 
208 
Operating cost base 
3,408 
3,030 
Integration & restructuring costs1
212 
379 
Expense base
3,620 
3,409 
Operating expense ratio2, 3
50.5%
49.8%
1 As reported within other expenses of 3,853 million (2015: 2,784 million) in the consolidated income statement.
2 Group operating expenses expressed as a percentage of operating profit before operating expenses and group debt costs.
3 Following a correction to accounting and modelling for annual management charge rebates in UK Life, prior year comparatives have been restated. This has led to an increase in operating profit and profit before tax of 23 million for 2015 and an increase in opening retained earnings for 2015 of 20 million with an increase in equity at 31 December 2015 of 38 million. See note B2 for further details.
The table below shows the lines of the IFRS consolidated income statement in which operating expenses have been included: 
2016
m
2015
m
Claims handling costs1
290 
303 
Non-commission acquisition costs2
846 
818 
Other expenses3
2,272 
1,909 
Operating cost base
3,408 
3,030 
1 Operating expenses as reported within net claims and benefits paid of 23,782 million (2015: 21,985 million) in the consolidated income statement.
2 Operating expenses as reported within fee and commission expense of 3,885 million (2015: 3,324 million) in the consolidated income statement.
3 Operating expenses as reported within other expenses of 3,853 million (2015: 2,784 million) in the consolidated income statement.
Operating expenses were 3,408 million (2015: 3,030 million).  
Excluding the adverse impact from foreign exchange movements of 132 million and an additional quarter of expenses from Friends Life, the increase in operating expenses was primarily driven by continued investment in growth across the business and digital initiatives, six months of expenses from RBC and new regulatory levies in the UK and Poland. This was partially offset by the delivery of integration savings in UK Life and continued focus on cost control, in particular in UK general insurance. 
In 2016, integration & restructuring costs decreased by 167 million (44%) as a result of lower integration spend relating to the Friends Life acquisition and lower Solvency II project costs, partially offset by costs related to the acquisition of RBC.
Page 9
4 - Value of new business (VNB) by market
a) Value of new business by market (MCEV basis) 1
Gross of tax and non-controlling interests
2016
m
2015
m
United Kingdom2
671
609
Ireland
24
16
United Kingdom & Ireland
695
625
France
224
198
Poland
65
65
Italy 
124
79
Spain 
42
31
Turkey
25
27
Europe
480
400
Asia 
148
151
Aviva Investors
29
16
Total value of new business
1,352
1,192
The Group's VNB3 increased to 1,352 million (2015: 1,192 million), up 13%. This was primarily driven by growth of new business in the UK, Europe and Aviva Investors and a favourable impact from foreign exchange movements of 65 million. 
The UK benefitted from an additional quarter's contribution of Friends Life, as well as an increase in VNB primarily on long term savings and protection. The main contributor to the Group's increase in VNB in Europe was Italy, which recorded growth across all products, as well as favourable foreign exchange movements. VNB in Asia benefitted from positive foreign exchange movements but was impacted by the discontinuance of the Group's bancassurance agreement with DBS. The increase in VNB in Aviva Investors was driven by higher sales in the AIMS fund range. 
b) Reconciliation of Group MCEV VNB to adjusted Solvency II VNB and Solvency II Own Funds impact of new business 
Following the introduction of Solvency II, the new prudential regulatory framework that came into force on 1 January 2016, the Group has calculated VNB on an adjusted Solvency II basis in addition to MCEV VNB. From 2017 onwards, the adjusted Solvency II VNB will replace MCEV VNB as a key performance indicator. 
Adjusted Solvency II VNB reflects Solvency II assumptions and allowance for risk and is defined as the increase in Solvency II Own Funds resulting from business written in the period, adjusted to:
 Include business in MCEV VNB which is not included in the Solvency II Best Estimate liability (BEL) valuation (e.g. UK and Asia Healthcare business, Retail fund management business and the UK Equity release business);
 Remove the impact of contract boundaries; and
 Include look through profits in service companies (where not included in Solvency II).
A reconciliation between MCEV VNB, adjusted Solvency II VNB, Solvency II Own Funds impact of new business and Solvency II surplus impact of new business is provided below. This is the first time this information has been calculated and no prior period comparatives are available for 2015.
2016
UK & Ireland m
Europe
m
Asia & Other m
Group
m
MCEV VNB (gross of tax and non-controlling interests)
695
480
177
1,352
Remove MCEV CNHR/frictional costs4
74
59
29
162
Include Solvency II risk margin
(309)
(120)
(45)
(474)
Total risk adjustments
(235)
(61)
(16)
(312)
Difference in economic assumptions
(19)
(2)
(27)
(48)
Adjusted Solvency II VNB (gross of tax and non-controlling interests)
441
417
134
992
Allowance for Solvency II contract boundary rules
51
(55)
(9)
(13)
Differences due to change in business in scope between MCEV and Solvency II
(131)
(41)
(51)
(223)
Tax & Other5
(78)
(146)
(13)
(237)
Solvency II Own Funds impact of new business (net of tax and non-controlling interests)
283
175
61
519
1 The principal methodologies and assumptions underlying the calculation of VNB (on a MCEV basis) are set out in section E1 and E14 respectively.
2 UK Life VNB includes 3 million relating to the internal transfer of annuities from a with-profits fund to a non-profit fund during the second half of 2016.
3 The trend analysis of VNB and present value of new business premiums (PVNBP) is included in the financial supplement, section E: VNB & sales analysis.
4 CNHR is the Cost of Non-Hedgeable Risks.
5 Other includes the impact of look through profits in service companies (where not included in Solvency II) and the reduction in value when moving to a net of non-controlling interests basis.
The life new business written during the year has increased the Solvency II Capital Requirement by 0.7 billion, split 0.4 billion for UK & Ireland, 0.3 billion for Europe and nil for Asia & Other business. This has resulted in a reduction in Solvency II Surplus from life new business of 0.2 billion, split 0.1 billion for UK & Ireland, 0.1 billion for Europe and nil for Asia & Other business. 
Solvency II Surplus impact of new business is set out in section 2.iii Life business Solvency II Operating Capital Generation impact of new business.
Page 10
5 - General insurance combined operating ratio (COR)1
Net written premiums
Claims ratio4
Commission and 
expense ratio5
Combined 
operating ratio6
2016
m
2015
m
2016
%
2015
%
2016
%
2015
%
2016
%
2015
%
United Kingdom2,3
3,930 
3,685
73.8
64.7
33.9
30.4
107.7
95.1
Ireland
378 
282
63.3
67.9
27.9
26.7
91.2
94.6
United Kingdom & Ireland
4,308 
3,967
73.0
64.9
33.3
30.1
106.3
95.0
Europe
1,438 
1,200
66.7
66.2
29.1
29.2
95.8
95.4
Canada
2,453 
1,992
63.5
63.3
31.1
30.5
94.6
93.8
Asia7
12 
12
72.0
62.6
40.9
39.0
112.9
101.6
Total3,7
8,211 
7,171 
69.2
64.5
31.9
30.1
101.1
94.6
1 Please refer to '7ii - General insurance and health' for further analysis of the components of COR
2 United Kingdom excluding Aviva Re and agencies in run-off. 
3 Excludes the impact from an outward quota share reinsurance agreement written in 2015 and completed in 2016 in Aviva Insurance Limited (AIL). See note A10 for further details.
4 Claims ratio: incurred claims expressed as a percentage of net earned premiums.
5 Commission and expense ratio: written commissions and expenses expressed as a percentage of net written premiums.
6 Combined operating ratio: aggregate of claims ratio and commission and expense ratio.
7 Includes Aviva Re net written premiums.
Group COR for the period was 101.1% (2015: 94.6%), of which the claims ratio was 69.2% (2015: 64.5%) and the commission and expense ratio was 31.9% (2015: 30.1%).
In 2016, excluding the impact of the change in the Ogden discount rate which had an impact of 5.9pp, the claims ratio decreased by 1.2pp, thanks to better weather experience compared to the long-term average (0.8pp) and claim costs savings initiatives across all major general insurance markets.
The increase in the Group's commission and expense ratio was mainly attributable to the UK, due to commission strain from the new HomeServe partnership agreement (0.8pp) and the Flood Re levy (0.3pp). Canada's commission and expense ratio increased due to investment in technology and internalising certain claims expenses. 
We continue to apply our reserving policy consistently and to focus on understanding the cost of claims to ensure that reserves are maintained at an appropriate level. Prior year reserve movements will vary year to year but our business is predominantly short tail in nature and the loss development experience is generally stable. In 2016, excluding the impact of the change in the Ogden discount rate, we had continued prior year releases in our general insurance and health business of 247 million (2015: 236 million) which had a beneficial impact of 2.9pp (2015: 3.2pp). 
Normalised accident year combined operating ratio (COR)
UK & Ireland1
Europe
Canada
Total
2016
%
2015
%
2016
%
2015
%
2016
%
2015
%
2016
%
2015
%
Normalised accident year claims discount ratio2
66.0
67.1
68.6
69.0
68.2
68.4
67.1
67.8
Impact of change in Ogden discount rate
11.4
-
-
-
-
-
5.9
-
Prior year reserve release3
(2.1)
(2.4)
(2.5)
(2.7)
(5.4)
(4.4)
(2.9)
(3.2)
Weather over/(under) long term average4
(2.3)
0.2
0.6
(0.1)
0.7
(0.7)
(0.9)
(0.1)
Claims ratio
73.0
64.9
66.7
66.2
63.5
63.3
69.2
64.5
Commission and expense ratio5
33.3
30.1
29.1
29.2
31.1
30.5
31.9
30.1
Normalised accident year combined operating ratio6
99.3
97.2
97.7
98.2
99.3
98.9
99.0
97.9
Combined operating ratio
106.3
95.0
95.8
95.4
94.6
93.8
101.1
94.6
1 Excludes the one-off impact from an outward quota share reinsurance agreement written in 2015 in Aviva Insurance Limited (AIL). See note A10 for further details.
2 Normalised accident year claims ratio represents the claims ratio adjusted to exclude the impact of the change in the Ogden discount rate, prior year claims development and weather variations vs. expectations, gross of the impact of profit sharing arrangements.
3 Prior year reserve release represents the changes in the ultimate cost of the claims incurred in prior years, gross of the impact of profit sharing arrangements.
4 Weather over/(under) long term average represents the difference between the reported net incurred cost of general insurance claims that have occurred as a result of weather events and the equivalent long term average expected net costs, gross of the impact of profit sharing arrangements.
5 Commission and expense ratio includes the impact of profit sharing arrangements.
6 Normalised accident year combined operating ratio represents the combined operating ratio adjusted to exclude the impact of the change in the Ogden discount rate, prior year claims development and weather variations vs. expectations, gross of the impact of profit sharing arrangements.
Group normalised accident year COR for the period deteriorated by 1.1pp to 99.0% (2015: 97.9%) driven by the impact of the commission strain from HomeServe and the new Flood Re Levy. The remaining increase in the commission and expense ratio was offset by a lower normalised accident year claims ratio. Group normalised accident year claims ratio for the period improved by 0.7pp to 67.1% (2015: 67.8%) driven primarily by portfolio rebalancing in the UK, pricing actions and improved underwriting discipline in Europe and claims cost saving initiatives in both Canada and the UK.
Page 11
6.i - United Kingdom & Ireland Life
2016
m
2015
m
Sterling % change
Life operating profit (restated)1
1,555 
1,455 
7%
Cash remitted to Group2
1,096
667
64%
Expenses 
Operating expenses
867 
815 
6%
Integration and restructuring costs
119 
215 
(45)%
986 
1,030 
(4)%
Value of new business: MCEV basis
695 
625 
11%
1 Following a correction to accounting and modelling for annual management charge rebates in UK Life, prior year comparatives have been restated. This has led to an increase in operating profit and profit before tax of 23 million for 2015 and an increase in opening retained earnings for 2015 of 20 million with an increase in equity at 31 December 2015 of 38 million. See note B2 for further details.
2 Cash remittances include amounts of 100 million received from UK & Ireland Life in February 2017 in respect of 2016 activity.
2016 overview 
Despite heightened political uncertainty during the year, our strong franchises across long term savings, protection and retirement have increased new business production, with value of new business up 11% to 695 million (2015: 625 million). Together with cost savings arising from the realisation of integration synergies and an additional quarter of profit contribution from Friends Life, this underpinned growth in operating profit. The Friends Life integration synergy target has been exceeded and delivered one year ahead of the original plan while the first 250 million of the targeted 1 billion of special remittances was paid.
Operating and financial performance
Operating profit 
UK & Ireland Life operating profit for 2016 increased to 1,555 million (2015: 1,455 million). In the UK, operating profit increased to 1,523 million (2015: 1,431 million). Together, our four major business segments delivered growth in operating profit, more than offsetting the reduction in operating profit from Other. Operating profit benefitted from an additional quarter contribution from Friends Life, integration synergies, and growth in long term savings assets and individual annuity and protection sales. This was partly offset by lower bulk purchase annuity (BPA) volumes and continued investment in digital. Ireland operating profit increased to 32 million (2015: 24 million), as we continue to grow market share.
Life Operating Profit1
2016
2015
New
Business2
Existing Business
Total
m
New 
Business2
Existing Business
Total
m
Sterling % change
Long term savings3
(77)
219 
142 
(79)
181 
102 
39% 
Annuities & equity release
305 
351 
656 
292 
227 
519 
26% 
Protection
118 
124 
242 
70 
89 
159 
52% 
Legacy4
-
332 
332 
-
341 
341 
(3)%
Other5
-
151 
151 
-
310 
310 
(51)%
UK Life
346 
1,177 
1,523 
283 
1,148 
1,431 
6% 
Ireland Life
32 
24 
33% 
Total
1,555 
1,455 
7% 
1  Following a correction to accounting and modelling for annual management charge rebates in UK Life, prior year comparatives have been restated. This has led to an increase in operating profit and profit before tax of 23 million for 2015 and an increase in opening retained earnings for 2015 of 20 million with an increase in equity at 31 December 2015 of 38 million. See note B2 for further details.
2  New business represents the income earned on new business written during the period reflecting premiums less initial reserves and initial expenses (including commission) less deferred costs along with any changes to existing contracts, which were not anticipated at the outset of the contract that generates additional shareholder risk.
3 Includes pensions and the advisor and consumer Platforms.
4  Products no longer actively marketed, including with-profits and Bonds.
5 Other represents changes in assumptions and modelling, other non-recurring product specific items, and non product specific items.
Long Term Savings
Long term savings generated 142 million of operating profit in 2016 (2015: 102 million) comprising 219 million from existing business net of 77 million of expenses pertaining to new business. The increase compared to 2015 reflected an additional quarter of Friends Life, integration synergies and an increase in managed assets. Net fund flows were 2.9 billion driven by performance from our platform (3.9 billion) and workplace pensions (2.0 billion) partially offset by net outflows from individual pensions. Total assets under administration in long term savings increased 19% to 105 billion (2015: 88 billion) due to net flows and positive investment market movements.
Annuities and Equity Release 
Annuities and Equity Release generated 656 million of operating profit in 2016 (2015: 519 million) comprising 351 million from the existing business and 305 million from new business. The growth in new business was driven by individual annuities, where sales increased 19% to 1,197 million, excluding the impact of an additional quarter of Friends Life. This was offset by BPAs, where sales declined to 620 million (2015: 2,034 million) and equity release, where sales declined to 637 million (2015: 699 million). We remain a major player at the smaller end of the BPA market, where volumes suffered as a result of low bond yields and Brexit uncertainty. We responded by maintaining our pricing discipline, only writing schemes that met our target return on capital. Operating profit from the existing business included an 80 million benefit from increased spread margins (which is expected to recur) following a refinement in expected cost of credit defaults. We have also begun to optimise our asset mix, increasing our investment in illiquid assets which has resulted in a 50 million benefit in 2016.
Page12
6.i - United Kingdom and Ireland Life continued
Protection
Protection generated 242 million of operating profit in 2016 (2015: 159 million) including 124 million from the existing business (2015: 89 million) and 118 million from new business (2015: 70 million). Operating profit benefitted from an additional quarter of Friends Life, solid growth in individual protection sales and integration synergies from migrating both books onto a new digital platform.
Legacy
Legacy contributed 332 million of operating profit (2015: 341 million) benefitting from an additional quarter of Friends Life, offset by the expected run off of the business and an increase in liabilities of 77 million reflecting a move to bring consistency of approach in Friends Life entities.
Other 
Other of 151 million in 2016 includes longevity assumption change benefits of 153 million for the move from CMI13 to CMI15 and a 130 million benefit from the expected impact of the enhanced annuity market on the in-force book, partly offset by economic capital optimisation activity, including hedging, of 51 million, along with various other reserve and modelling movements. 2015 mainly related to a 259 million benefit from expense reserve releases following actions taken to reduce the current and future cost.
Cash
Cash remittances to Group increased 64% in 2016 to 1,096 million. The 2016 payment includes 250 million, the first instalment of the targeted 1 billion Friends Life integration additional remittance. 
Expenses 
Operating expenses increased 6% to 867 million (2015: 815 million). UK Life operating expenses increased to 827 million (2015: 788 million) due to the inclusion of an additional quarter of Friends Life costs in 2016. Excluding this impact, operating expenses declined by 93 million, of which realisation of Friends Life synergies contributed 83 million (2015: 73 million). Ireland operating expenses increased to 40 million (2015: 27 million), an increase of 10 million on a constant currency basis as the business continues to focus on growth. Integration and restructuring expenses reduced by 45% to 119 million due to lower integration spend on the Friends Life acquisition and lower Solvency II costs.
Value of new business: MCEV Basis (VNB)
2016
m
2015
m
Sterling % change
UK Life1
Long term savings
138
97
42%
Annuities and equity release
314
330
(5)%
Protection
189
156
21%
Health & Other
30
26
15%
671
609
10%
Ireland Life
24
16
50%
Total
695
625
11%
1 UK Life VNB includes 3 million relating to the internal transfer of annuities from a with-profits fund to a non-profit fund during the second half of 2016.
UK & Ireland Life VNB increased to 695 million (2015: 625 million). UK Life VNB increased to 671 million (2015: 609 million). Long term savings VNB increased to 138 million (2015: 97 million), driven by an increase in contributions from the advisor platform, new workplace pension schemes and the benefit of integration synergies.The reduction in annuities and equity release VNB to 314 million (2015: 330 million) is due to lower bulk annuity volumes partially offset by increased individual annuity volumes following pension freedoms. Protection VNB increased to 189 million (2015: 156 million), benefitting from an additional quarter of Friends Life, synergy savings as we migrated to our new digital platform, and the launch of new products with an increased contribution from the direct channel. Ireland VNB increased 50% to 24 million (2015: 16 million), with increases in volumes and margins across most product lines.
Page 13
6.ii - United Kingdom & Ireland general insurance and health
2016
m
2015
m
Sterling % change
Operating profit1
471 
430 
10%
Cash remitted to Group2
91 
358 
(75)%
Expenses 
Operating expenses
665 
697 
(5)%
Integration and restructuring costs
15 
26 
(42)%
680 
723 
(6)%
Combined operating ratio1,3
106.3%
95.0%
11.3pp
Combined operating ratio excluding impact of change in Ogden discount rate1,3
94.9%
95.0%
(0.1)pp
General insurance net written premiums1
4,308 
3,967 
9%
1 2016 excludes the impact of the change in the Ogden discount rate of 475 million, which has been recognised as an exceptional non-operating item. 2016 and 2015 exclude the impact from an outward quota share reinsurance agreement written in 2015 and completed in 2016 in Aviva Insurance Limited (AIL). See note A10 for further details.
2 Cash remittances include amounts of 83 million received from UK & Ireland General Insurance in February 2017 in respect of 2016 activity and 351 million received in February 2016 in respect of 2015 activity.
3 General insurance business only. 
2016 overview
The 2016 UK general insurance underwriting result, which excludes the impact of the change in the Ogden discount rate, was the best for ten years, as we developed our core pricing, underwriting and claims management capabilities. The 2016 results also include more benign weather after the floods of December 2015. 
Improvement in our performance was also reflected in premium growth, as we incorporated new partnerships with HomeServe and TSB, as well as expansion of our Digital offering, while further benefitting from our continued focus on cost control despite the impact of the new Flood Re levy. Ireland's growth in profitability due to strong rate increases and improved underlying performance enables us to continue to invest in growing the business. 
The impact of the change in the Ogden discount rate is the main driver of the deterioration in combined operating ratio. We have separately disclosed the impact of this to combined operating ratio.
Operating and financial performance
Operating profit1
United Kingdom and Ireland
2016
m
2015
m
Sterling %
change
General insurance
Underwriting result 
259 
163 
59%
Longer-term investment return
176 
236 
(25)%
Other
(2)
(1)
(100)%
433 
398 
9%
Health
Underwriting result
35 
27 
30%
Longer-term investment return
3 
5 
(40)%
38 
32 
19%
General insurance & health operating profit
471 
430 
10%
1 2016 excludes the impact of the change in the Ogden discount rate of 475 million, which has been recognised as an exceptional non-operating item. 2016 and 2015 exclude the impact from an outward quota share reinsurance agreement written in 2015 and completed in 2016 in Aviva Insurance Limited (AIL). See note A10 for further details.
UK & Ireland general insurance and health operating profit increased by 10% to 471 million. The general insurance underwriting result increased 59% to 259 million (2015: 163 million) with lower weather claims in 2016 compared to the December 2015 floods and an improvement in underlying performance, from our continued focus on portfolio rebalancing and cost initiatives.
UK & Ireland general insurance longer-term investment return declined by 60 million to 176 million (2015: 236 million), of which 46 million is due to the impact of the reduction in the internal loan (Group net neutral) and 10 million due to a reduction in assets through the completion of an outwards reinsurance contract in 2015 for 0.7 billion of latent exposures. Excluding the internal loan impact, the UK & Ireland general insurance operating profit was up 23% to 471 million.
Cash
Total cash remitted to Group was 91 million (2015: 358 million), as cash was used to fund an increase in the internal reinsurance arrangement.
Expenses 
UK & Ireland general insurance and health expenses were lower at 680 million (2015: 723 million), reflecting the continued focus on cost control in the UK and a reduction in integration and restructuring costs, partly offset by the new 2016 Flood Re Levy costs (23 million) and continued investment to grow the Ireland general insurance business.
Page 14
6.ii - United Kingdom & Ireland general insurance and health continued
Net written premiums
Combined operating ratio
United Kingdom and Ireland General insurance1
2016
m
2015
m
Sterling % change
2016
%
2015
%
Change
Personal Motor
1,076 
1,062 
1%
Personal Home and Specialty
1,332 
1,106 
20%
UK Personal Lines
2,408 
2,168 
11%
94.6%
94.5%
0.1pp
Commercial Motor
538 
542 
(1)%
Commercial Home and Specialty
984 
975 
1%
UK commercial Lines
1,522 
1,517 
-
96.2%
95.8%
0.4pp
UK general insurance excluding impact of change in Ogden discount rate
3,930 
3,685 
7%
95.3%
95.1%
0.2pp
Impact of change in Ogden discount rate
-
-
-
12.4%
-
12.4pp
UK general insurance
3,930 
3,685 
7%
107.7%
95.1%
12.6pp
Ireland general insurance
378 
282 
34%
91.2%
94.6%
(3.4)pp
Total
4,308 
3,967 
9%
106.3%
95.0%
11.3pp
1 Excludes the one-off impact from an outward quota share reinsurance agreement completed in 2015 in Aviva Insurance Limited (AIL). See note A10 for further details.
General insurance net written premiums
UK & Ireland general insurance net written premiums increased 9%. In the UK, premiums were up 7%, our highest growth in 11 years, with Personal Lines premiums up including the benefit from the HomeServe deal and Commercial Lines premiums stable. 
UK Personal Motor was up slightly, with volumes stable as retention remained broadly flat. New business rating is marginally ahead of market, and we have benefitted from increases in the Digital channel while we remediated our Broker book. This rebalancing is reflected with lower average premiums across motor as we improve our risk mix.
UK Personal Home and Specialty grew 20%, driven by the impact of the new HomeServe deal on Specialty lines, while Home declined slightly due to lower levels of new business activity.
UK Commercial was flat, reflecting rating action in the Motor book, and selective growth and exits across the book in continued soft market conditions.
Ireland saw a 34% growth (19% in constant currency), driven by increases in both Personal Motor and Commercial, reflecting continued rating and account improvement actions.
General insurance combined operating ratio (COR)
UK & Ireland COR was 106.3% (2015: 95.0%). Once adjusted for the impact of the change in the Ogden discount rate, which added 11.4pp, COR was also affected by UK Flood Re Levy (0.4pp) and commission strain from the new HomeServe partnership (1.2pp), which will have fully earned through by HY17. Excluding these impacts, UK & Ireland general insurance COR was 1.7pp better, reflecting lower absolute weather costs and improvements in underlying underwriting performance from portfolio rebalancing, claims initiatives and efficiency savings.
UK Personal Lines COR increased to 104.6%. Excluding the impact of Ogden, UK Personal Lines COR was stable at 94.6%. Growth in Digital and targeted remediation and higher prior year releases in Broker business were offset by the impact of HomeServe and Flood Re.
UK Commercial Lines COR was 112.3%. Excluding the impact of Ogden, the UK Commercial Lines COR is marginally higher than prior year at 96.2%, due to lower prior year releases, and the impact of a continued soft rate environment, offset by favourable weather experience (2015 December floods and storms). 
Ireland COR of 91.2% was 3.4pp better, reflecting a lower claims ratio and improvement in the expense ratio, due to rate increases and improvement in underlying claims following management actions.
Page 15
6.iii - Europe1
2016
m
2015
m
Sterling % change
Constant currency % 
Operating profit
Life
844 
766 
10%
(2)%
General insurance & health
120 
114 
5%
(6)%
964 
880 
10%
(3)%
Cash remitted to Group2
449
431
4%
-
Expenses 
Operating expenses
641 
526 
22%
8%
Integration and restructuring costs
9 
22 
(59)%
(64)%
650 
548 
19%
5%
Value of new business: MCEV basis
480 
400 
20%
7%
Combined operating ratio3
95.8%
95.4%
0.4pp
0.4pp
Net written premiums (General insurance and health)
1,673 
1,410 
19%
5%
1 Our European business includes life and general insurance business written in France, Poland and Italy, life business in Spain and Turkey and health business in France. 
2 Cash remittances include amounts of 159 million received from Europe in January 2017 in respect of 2016 activity.
3 General insurance business only.
2016 overview
Our European businesses have shown resilient performance during 2016 due to actions taken during the year resulting in an increase in operating profit of 24% in the second half of 2016 when compared with the first. Italy has produced significant profit and volume growth which have offset headwinds impacting primarily our French and Polish businesses. We have seen increased volatility in financial markets, persistently low interest rates and regulatory changes which have negatively impacted a number of our metrics.
Despite this, we reported year on year growth, with VNB and NWP increasing by 20% and 19% respectively, and broadly stable levels of operating profit and cash remitted to Group, reflecting the strength and diversity of our European franchise. The business has benefitted from foreign exchange movements following the strengthening of the euro and Polish zloty by 15% and 7% respectively against sterling. 
All percentage movements below are quoted in constant currency unless otherwise stated.
Operating and financial performance
Operating profit
Life
General insurance & health
2016
m
2015
m
Sterling % change
Constant currency % 
2016
m
2015
m
Sterling % change
Constant currency % 
France
429 
395 
9%
(4)%
70 
71 
(1)%
(14)%
Poland
132 
129 
2%
(6)%
8 
10 
(20)%
(27)%
Italy
170 
139 
22%
8%
42 
33 
27%
14%
Spain
107 
92 
16%
3%
-
-
-
-
Turkey
6 
11 
(45)%
(45)%
-
-
-
-
Total
844 
766 
10%
(2)%
120 
114 
5%
(6)%
Life operating profit was 844 million (2015: 766 million) and decreased marginally on a constant currency basis. Italy operating profit increased to 170 million (2015: 139 million), up 8% reflecting portfolio growth and margin improvements across all products. France operating profit was 429 million (2015: 395 million) with growth in protection and with-profits offset by lower unit-linked asset management charges due to adverse market movements. Expenses in France increased during the period as we invested and reorganised the business. Poland operating profit of 132 million (2015: 129 million) reduced by 6% as a result of a new asset levy effective from 1 February 2016 and adverse equity market movements impacting asset management charges offsetting portfolio growth. Spain operating profit increased 3% to 107 million (2015: 92 million), mainly due to the positive performance of protection margin resulting from significant improvements in the claims ratio. Operating profit in Turkey decreased to 6 million (2015: 11 million) due to market turbulence.
General insurance and health operating profit decreased by 6% to 120 million. This was mainly driven by France operating profit of 70 million (2015:71 million), a 14% decrease primarily due to weather events in the first half of the year. Operating profit in Italy improved to 42 million, up 14% (2015: 33 million) with underwriting improvements offsetting lower investment results. In Poland, operating profit decreased to 8 million (2015: 10 million) mostly due to commercial large losses early in the year and increased motor claim frequencies.
Cash
Remittances to Group during the period amounted to 449 million (2015: 431 million). France remitted 163 million in the second half of the year. Poland's remittances of 176 million (2015: 81 million) increased as a result of a legal entity restructuring deferring the timing of remittances from 2015 into 2016.
Page 16
6.iii - Europe continued
Expenses
Operating expenses were 641 million (2015: 526 million), up 8%. In France, expenses increased due to investment required for growing and reorganising the business. In Poland, expenses increased due to the impact of the asset levy and additional expense from the acquisition of the Expander distribution network in July 2015. Italy's expenses increased due to investment supporting business growth. Integration and restructuring costs decreased to 9 million (2015: 22 million).
Value of new business: MCEV basis (VNB)
2016
m
2015
m
Sterling % change1
Constant currency % change1
France
224
198
13%
-
Poland
65
65
(1)%
(9)%
Italy
124
79
58%
39%
Spain
42
31
33%
18%
Turkey
25
27
(7)%
(9)%
Total
480
400
20%
7%
1 Currency movements are calculated using unrounded numbers so minor rounding differences may exist.
VNB increased by 7% largely driven by a strong performance in Italy. VNB in Italy was up by 39% as a result of growth in all product lines, including over 30% growth in sales of unit-linked versus a market that contracted by over 30%. VNB in France was flat as higher protection and with-profits sales were offset by lower unit-linked volumes as a result of reduced customer's appetite for equity linked products. In Poland, VNB decreased by 9% mainly as a result of a new asset levy impacting banks and insurance companies and lower unit-linked volumes following regulatory changes impacting distribution, partly offset by increased sales of protection business. Spain VNB increased by 18%, reflecting mix improvements within protection business and sales of unit-linked products in the fourth quarter, partly offset by the adverse impact of lower interest rates. Turkey's VNB decreased by 9% as a result of market volatility and uncertainty on the pension reforms resulting in lower investment levels.
Net written premiums1
Combined operating ratio1
2016
m
2015
m
Sterling % change
Constant currency % 
2016
m
2015
m
Change
France
957 
804 
19%
5%
96.9%
95.7%
1.2pp
Poland
86 
66 
30%
19%
96.1%
94.7%
1.4pp
Italy
395 
330 
20%
6%
92.7%
94.3%
(1.6)pp
Total
1,438 
1,200 
20%
6%
95.8%
95.4%
0.4pp
1 General insurance business only 
Net written premiums 
General insurance net written premiums of 1,438 million have increased by 6% with growth in all our markets. In France, general insurance net written premiums were 957 million (2015: 804 million), an increase of 5% reflecting rating actions and volume growth in SME and commercial. Italy's net written premiums grew by 6% to 395 million (2015: 330 million), despite a shrinking market. In Poland, our net written premiums increased by 19% to 86 million (2015: 66 million) driven by rating actions in our motor book. 
Combined operating ratio
The European combined operating ratio has marginally increased to 95.8% (2015: 95.4%). Our claims ratio has increased by 0.5pp to 66.7% (2015: 66.2%) as a result of weather events in France. Our pricing actions across the markets, notably in Poland, and underwriting discipline when selecting risks have helped us mitigate adverse market conditions in both Italy and Poland. Our commission and expense ratio has improved by 0.1pp to 29.1% (2015: 29.2%) primarily as a result of the benefits from our cost saving initiatives.
Page 17
6.iv - Canada 
2016
m
2015
m
Sterling % change
Constant currency % 
General Insurance operating profit
269 
214 
26%
16%
Cash remitted to Group
130 
6 
-
-
Expenses 
Operating expenses
396 
298 
33%
23%
Integration and restructuring costs
18 
7 
157%
157%
414 
305 
36%
25%
Combined operating ratio
94.6%
93.8%
0.8pp
0.8pp
Net written premiums
2,453 
1,992 
23%
14%
2016 overview
In 2016, we completed the acquisition of the RBC General Insurance Company (RBC), assisted our customers affected by the Alberta wildfires, the largest Canadian insured event in history, and opened our Digital Garage in Toronto to spearhead innovation. Operating profit of 269 million (2015: 214 million) is the highest on record for this business. 
Difficult economic conditions, particularly in Western Canada, have led to reduced growth in premium of 2% excluding the impact of the RBC acquisition. Following the RBC transaction, our market share has increased to c.10.6% and our products are now available to a broader range of customers. 
Operating and financial performance
Operating profit 
2016
m
2015
m
Sterling % change
Constant currency % 
Underwriting result
168 
120 
40%
29%
Longer-term investment return
105 
98 
7%
(1)%
Other1
(4)
(4)
-
-
Total
269 
214 
26%
16%
1 Includes unwind of discount and pension scheme net finance costs
Operating profit was 269 million (2015: 214 million), and increased 16% on a constant currency basis mainly due to the acquisition of RBC, partially offset by increased catastrophe experience. Prior year development contributed 130 million (2015: 87 million) to profit, driven by lower ultimate losses in Ontario auto following government actions to bring down the cost of insurance for consumers, while net catastrophe losses were 49 million higher in the year. 
Cash
Net cash remittances during the period were 130 million (2015: 6 million). Cash generated in 2015 was largely retained to part fund the RBC acquisition.
Expenses 
Operating expenses increased to 396 million (2015: 298 million) and integration and restructuring costs increased to 18 million (2015: 7 million)mainly driven by the RBC acquisition and the impact of foreign exchange movements.
Net written premiums 
Net written premiums
Combined operating ratio
2016
m
2015
m
Sterling % change
Constant currency % 
2016
m
2015
m
Change
Personal Lines
1,680 
1,282 
31%
21%
95.7%
94.6%
1.1pp
Commercial Lines
773 
710 
9%
1%
92.4%
92.5%
(0.1)pp
Total
2,453 
1,992 
23%
14%
94.6%
93.8%
0.8pp
Net written premiums were 2,453 million (2015: 1,992 million), up 14% excluding the impact of foreign exchange rate movements, mostly due to the RBC acquisition. Net written premiums increased 2% in constant currency, excluding RBC. 
Combined operating ratio
The combined operating ratio was 94.6% (2015: 93.8%), driven by a higher claims ratio mainly due to increased catastrophe experience. The commission and expense ratio increased by 0.6pp in part due to investment in technology and internalising certain claims expenses. This latter factor benefitted the claims ratio.
Page 18
6.v - Asia
2016
m
2015
m
Sterling % change
Constant currency % 
Operating profit
Life
241 
244 
(1)%
(5)%
General insurance & health
(13)
(6)
(117)%
(106)%
228 
238 
(4)%
(8)%
Cash remitted to Group
-
21 
(100)%
(100)%
Expenses 
Operating expenses
177 
141 
26%
16%
Integration and restructuring costs
17 
7 
143%
140%
194 
148 
31%
21%
Value of new business: MCEV basis
148 
151 
(2)%
(11)%
Combined operating ratio1
112.9%
101.6%
11.3pp
11.3pp
Net written premiums1
11 
12 
(8)%
(15)%
1 General insurance business only.
2016 overview
The discontinuation of the bancassurance agreement with DBS Bank Ltd (DBS) and our focus on investment in distribution, digital and analytics capabilities to support future growth in Asia has led to a challenging year in 2016. This has been partially offset by the strengthening of Asia's existing distribution platforms, particularly Aviva Financial Advisers in Singapore which was launched in August 2016 and also the strengthening of the agency and broker channels in China.
All percentage movements below are quoted in constant currency unless otherwise stated.
Operating and financial performance
Operating profit 
2016
m
2015
m
Sterling % change
Constant currency % 
Life operating profit
Singapore
112 
94 
19%
5%
FPI1
140 
151 
(7)%
(8)%
Other Asia
(11)
(1)
-
-
241 
244 
(1)%
(5)%
General insurance & health operating profit
(13)
(6)
(117)%
(106)%
Total operating profit
228 
238 
(4)%
(8)%
1 Friends Provident International Limited (FPI) was acquired in April 2015 and contributed 9 months of performance in 2015.
Operating profit from life and general insurance and health businesses was 228 million (2015: 238 million), a decrease of 8%. Life operating profit decreased 5% to 241 million (2015: 244 million) impacted by the discontinuance of the bancassurance agreement with DBS (15 million), continuous investment in distribution and infrastructure in the region and the one-off benefit of an internal reinsurance transaction in FPI in the prior year (Group net neutral). This was partly offset by a recovery of indirect taxes paid in Singapore. The contribution from FPI post amortisation of acquired value of in-force business was a loss of 2 million (2015: profit of 15 million). 
The general insurance and health business reported a 13 million loss (2015: 6 million loss), as a result of higher claims experience from the Singapore Health business.
Cash
No dividends were remitted to Group during the financial year (2015: 21 million) as we continue to reallocate capital to support initiatives in the region.
Expenses 
Expenses were up 21% to 194 million (2015: 148 million) reflecting the additional quarter of operating expenses and integration costs for FPI; and investments to support business growth across Asia. 
Value of new business: MCEV basis (VNB)
2016
m
2015
m
Sterling %
change1
Constant currency %
change1
Singapore
104
103
1%
(10)%
FPI
5
5
5%
5%
Other Asia
39
43
(10)%
(15)%
Total
148
151
(2)%
(11)%
1 Currency movements are calculated using unrounded numbers so minor rounding differences may exist.
VNB declined 11% to 148 million (2015: 151 million) impacted by the discontinuance of the bancassurance agreement with DBS, partly offset by growth in the sales from Singapore's core financial advisory channel. VNB movement in other Asia markets fell due to the adverse impact of lower sales and higher expense overrun.
Combined operating ratio
Net written premiums for general insurance business were down 15% due to the continued softening of motor insurance market premium rates. As general insurance operating expenses remained broadly flat, this resulted in a higher combined operating ratio of 112.9% (2015: 101.6%).
Page 19
6.vi - Aviva Investors 
2016
m
2015
m
Sterling % change
Revenue: Fee income
506 
450 
12%
Expenses
Operating expenses
367 
345 
6%
Integration and restructuring costs
19 
11 
73%
386 
356 
8%
Operating profit
Fund management
139 
105 
32%
Other operations
19 
-
-
 
158 
105 
50%
Cash remitted to Group
39 
24
63%
Value of new business: MCEV basis
29 
16 
81%
2016 overview 
Fund management operating profit has increased by 32% to 139 million in 2016 despite turbulent markets. Operating profit margin has increased by 4pp to 27% (2015: 23%) as a result of the progress made in externalising the business and developing higher value outcome oriented propositions for our clients, continuing cost control and improved operational efficiency. 
Operating and financial performance
Revenue
Revenue has increased by 12% to 506 million due to positive external flows into higher value added products and a change in pricing by Aviva Investors to manage funds on behalf of other Aviva entities. Aviva Investors Multi-Strategy (AIMS) assets under management have continued to grow to 9.0 billion (2015: 3.0 billion). Working closely with UK Life, origination of infrastructure assets has increased by 16% to 3.3 billion. External clients contributed to generating 32% of total revenue.
Expenses 
Operating expenses in Aviva Investors were 367 million (2015: 345 million) reflecting investment to support the growth and further development of the business. Integration and restructuring costs were 19 million (2015: 11 million) largely relating to the Friends Life integration.
Operating profit 
Fund management operating profit increased by 34 million in 2016 to 139 million (2015: 105 million). The growth in operating profit is driven by a 56 million increase in revenue due to positive external net flows and the transfer to Aviva Investors of a further 14 billion of Friends Life assets during 2016, taking the total Friends Life assets on boarded to 59 billion, and the change in pricing charges by Aviva Investors to manage funds on behalf of other Aviva entities. Cost increases have been controlled as we invest to grow the business.
Other operations comprise 19 million operating profit relating to insurance recoveries. Of this, 16 million was from the Group's internal reinsurer which therefore has a neutral effect on overall Group operating profit.
Cash
Dividends and interest paid from the business to Group increased by 63% to 39 million (2015: 24 million).
Value of new business: MCEV basis 
Value of new business in Aviva Investors increased by 81% to 29 million (2015: 16 million) driven by higher sales in the AIMS fund range.
Net flows and assets under management - Aviva Investors1
Internal
Legacy2
m
Internal
Core
m
External
m
Total
m
Aviva Investors
Assets under management at 1 January 2016
81,239
164,935
43,736
289,910
Total Inflows
3,501
19,750
9,393
32,644
Total Outflows
(9,048)
(16,050)
(6,519)
(31,617)
Net Flows
(5,547)
3,700
2,874
1,027
Net Flows into Liquidity Funds
4
8,331
(337)
7,998
Friends Life asset transfers
11,434
2,606
-
14,040
Market and foreign exchange movements3
10,160
11,095
10,288
31,543
Assets under management at 31 December 2016
97,290
190,667
56,561
344,518
1  Assets under management represents all assets managed by Aviva Investors. These comprise Aviva (internal) assets which are included within the Group's statement of financial position and those belonging to external clients outside the Aviva Group which are therefore not included in the Group's statement of financial position. These assets under management exclude those funds that are managed by third parties. 
2 Assets managed by Aviva Investors on behalf of internal Aviva Clients relating to products that are no longer actively marketed.
3  Within the market and foreign exchange movements number is a 4.1 billion reclassification from internal core assets under management to external assets under management. 
Aviva Investors assets under management increased by 55 billion to 345 billion (2015: 290 billion) over the year with net external inflows of 2.9 billion (2015: (0.3) billion) and 14.0 billion of further Friends Life assets transferred to Aviva Investors in 2016. Internal Core net inflows were 3.7 billion while net outflows on the rest of the internal book were 5.5 billion. Net flows into liquidity funds were 8 billion. The remaining increase of 32 billion comprised favourable market movements of 19 billion and favourable foreign exchange rate movements of 13 billion.
Page 20
7.i - Life business profit drivers
Life business operating profit before shareholder tax increased by 8% to 2,642 million (2015: 2,442 million), up 4% on a constant currency basis, mainly due to the benefit of an additional quarter's contribution from Friends Life.
Overall, total income increased by 15% to 4,522 million (2015: 3,944 million) and total expenses increased by 12% to 2,096 million (2015: 1,866 million). This increase in net income of 348 million was partly offset by a lower benefit from DAC and other items to give a total increase in life operating profit of 200 million for the year including a positive foreign exchange impact of 108 million largely driven by the strengthening of the euro against sterling.
United Kingdom & Ireland
Europe
Asia
Total 
2016
m
Restated1
2015
m
2016
m
2015
m
2016
m
2015
m
2016
m
Restated1
2015
m
New business income2
801 
708 
267 
228 
184 
152 
1,252 
1,088 
Underwriting margin3
326 
279 
223 
208 
76 
82 
625 
569 
Investment return4
1,352 
1,208 
1,134 
989 
159 
90 
2,645 
2,287 
Total Income
2,479 
2,195 
1,624 
1,425 
419 
324 
4,522 
3,944 
Acquisition expenses5
(396)
(405)
(274)
(243)
(158)
(127)
(828)
(775)
Administration expenses6
(652)
(584)
(520)
(434)
(96)
(73)
(1,268)
(1,091)
Total Expenses
(1,048)
(989)
(794)
(677)
(254)
(200)
(2,096)
(1,866)
DAC and other
124 
249 
14 
18 
76 
120 
214 
387 
1,555 
1,455 
844 
766 
241 
244 
2,640 
2,465 
Other business7
2 
(23)
Total life business operating profit
2,642 
2,442 
1 Following a correction to accounting and modelling for annual management charge rebates in UK Life, prior year comparatives have been restated. This has led to an increase in operating profit and profit before tax of 23 million for 2015 and an increase in opening retained earnings for 2015 of 20 million with an increase in equity at 31 December 2015 of 38 million. See note B2 for further details.
2 Represents the income earned on new business written during the period reflecting premiums less initial reserves.
3 Underwriting margin represents the release of reserves held to cover claims, surrenders and expenses less the cost of actual claims and surrenders in the period.
4 Represents the expected income on existing business (other than the underwriting margin). Life investment return comprises unit-linked margin, shareholders' return on participating business, spread margin and the expected return on shareholder assets.
5 Initial expenses and commission incurred in writing new business less deferred costs.
6 Expenses and renewal commissions incurred in managing existing business.
7 Other business includes the total result for Aviva Investors Pooled Pensions and Aviva Life Reinsurance. 
Income: New business income and underwriting margin
United Kingdom & Ireland
Europe
Asia
Total 
2016
m
2015
m
2016
m
2015
m
2016
m
2015
m
2016
m
2015
m
New business income (m)
801 
708 
267 
228 
184 
152 
1,252 
1,088 
APE (m)1
2,456 
2,075 
1,236 
947 
270 
356 
3,962 
3,378 
As margin on APE (%)
33% 
34%
22% 
24%
68% 
43%
32% 
32%
Underwriting margin (m)
326 
279 
223 
208 
76 
82 
625 
569 
Analysed by:
Expenses
70 
65 
62 
44 
47 
39 
179 
148 
Mortality and longevity
249 
201 
150 
142 
27 
38 
426 
381 
Persistency
7 
13 
11 
22 
2 
5 
20 
40 
1 Used as a measure of life sales. It is calculated as the sum of new regular premiums plus 10% of new single premiums written in the period. APE excludes UK Retail Fund Management and Health business in UK & Ireland and Asia.
(a) New business income
New business income increased to 1,252 million (2015: 1,088 million), mainly driven by the additional quarter of Friends Life and Italy. 
The net contribution from new business is the new business income less associated acquisition expenses (see (g) below). This increased to a profit of 424 million (2015: profit of 313 million).
In the UK & Ireland, net contribution from new business increased to 405 million (2015: 303 million) mainly driven by an additional quarter of Friends Life in 2016, improved asset mix in annuities and improved individual protection performance partly offset by lower BPA volumes.
In Europe, the net contribution improved to a loss of 7 million (2015: loss of 15 million) due to growth and margin improvements in Italy, offset by reduced contributions due to market turbulence in Turkey. Volumes based on APE increased by 17% in constant currency, reflecting growth across all product lines in Italy and increased unit-linked volumes in Spain. This resulted in a slight decrease in new business margin on APE in Europe to 22% (2015: 24%).
In Asia, net contribution decreased 19% in constant currency to a profit of 26 million (2015: profit of 25 million) as a result of the discontinuance of the bancassurance distribution agreement with DBS Bank Ltd, and higher acquisition expenses reflecting a change in product mix.
(b) Underwriting margin
The underwriting margin increased to 625 million (2015: 569 million). This was driven by the UK & Ireland, as the margin increased to 326 million (2015: 279 million) mainly due to an additional quarter of Friends Life in 2016 and improved mortality margins. In Europe, the underwriting margin was 223 million (2015: 208 million) benefitting from favourable foreign currency movements, however on a constant currency basis it decreased 4% mainly due to lower mortality margins in France and lower persistency margin in Italy.
In Asia, underwriting margin decreased 12% in constant currency to 76 million (2015: 82 million) mainly due to lower mortality margins in FPI offset by favourable expense margins on non-participating annuities in China. 
Page 21
7.i - Life business profit drivers continued
Income: Investment return
United Kingdom & Ireland
Europe
Asia
Total 
2016
m
Restated1
2015
m
2016
m
2015
m
2016
m
2015
m
2016
m
Restated1
2015
m
Unit-linked margin2 (m)
826 
763 
518 
435 
112 
70 
1,456 
1,268 
As annual management charge on average reserves (bps)
75 
83 
155 
140 
132 
108 
96 
98 
Average reserves (bn)
110.1 
92.3
33.4 
31.0
8.5 
6.5
152.0 
129.8
Participating business3 (m)
195 
152 
524 
470 
15 
(3)
734 
619 
As bonus on average reserves (bps)
38 
31 
80 
84 
43
n/a
61 
57 
Average reserves (bn)
51.1 
49.5 
65.5 
55.9 
3.5 
2.7 
120.1 
108.1 
Spread margin4 (m)
269 
198 
11 
7 
9 
10 
289 
215 
As spread margin on average reserves (bps)
42 
36 
34 
23 
75 
111 
43 
37 
Average reserves (bn)
63.3 
54.6
3.2 
3.1
1.2 
0.9
67.7 
58.6
Expected return on shareholder assets5 (m)
62 
95 
81 
77 
23 
13 
166 
185 
Total (m)
1,352 
1,208 
1,134 
989 
159 
90
2,645 
2,287 
1 Following a correction to accounting and modelling for annual management charge rebates in UK Life, prior year comparatives have been restated. This has led to an increase in operating profit and profit before tax of 23 million for 2015and an increase in opening retained earnings for 2015 of 20 million with an increase in equity at 31 December 2015 of 38 million. See note B2 for further details.
2 Unit-linked margin represents the annual management charges on unit-linked business based on expected investment return.
3 The shareholders' share of the return on with-profit and other participating business.
4 Spread margin represents the return made on annuity and other non-linked business, based on the expected investment return less amounts credited to policyholders.
5 The expected investment return based on opening economic assumptions applied to expected surplus assets over the reporting period that are not backing policyholder liabilities.
6 An average of the insurance or investment contract liabilities over the reporting period, including managed pension business which is not consolidated within the statement of financial position.
(c) Unit-linked margin
The unit-linked average reserves have increased to 152 billion (2015: 130 billion), with the movement largely driven by higher weighted average Group reserves following the Friends Life acquisition on 10 April 2015. The unit-linked margin increased to 1,456 million (2015: 1,268 million) mainly driven by the additional quarter from Friends Life and increased margins in FPI and Italy. The margin as a proportion of average unit-linked reserves decreased to 96 bps (2015: 98 bps).
The unit-linked margin in UK & Ireland has increased mainly due to the benefit of an additional quarter from Friends Life, partly offset by the expected run-off in the back book. Unit-linked margin in Europe increased 10% on a constant currency basis, reflecting a change in business mix to higher margin products in Italy. The increase in unit-linked margin in Asia is mainly due to an additional quarter and higher management charges from existing business in FPI.
(d) Participating business
The participating average reserves have increased to 120 billion (2015: 108 billion), largely driven by favourable foreign exchange movements in Europe. Income from participating business increased to 734 million (2015: 619 million). In the UK & Ireland, the income has increased due to the additional quarter from Friends Life. In Europe, income has increased to 524 million (2015: 470 million) reflecting favourable foreign currency movements of 62 million. The majority of participating business income is earned in France, where there is a fixed management charge of around 50 bps on AFER business, which is the largest single component of this business. 
(e) Spread margin
The average reserves have increased to 68 billion (2015: 59 billion), largely driven by the higher weighted average reserves as a result of the Friends Life acquisition. Spread business income, which mainly relates to UK in-force annuity and equity release business, improved to 269 million (2015: 198 million). This increase is due to a refinement in the expected cost of credit defaults in operating profit. The spread margin increased to 42 bps (2015: 36 bps), on average reserves of 63 billion (2015: 55 billion). In Europe, spread income improved to 11 million (2015: 7 million), mainly due to improved margins in Spain. In Asia, spread business income reduced to 9 million (2015: 10 million) due to reduced investment margins in Singapore, partly offset by higher investment margins on non-participating business in China. 
(f) Expected return on shareholder assets
Expected returns, representing investment income on surplus funds, decreased to 166 million (2015: 185 million). The decrease is mainly driven by the impact of the economic capital optimisation (hedging) activity in Friends Life, reducing the expected return on shareholder assets in UK Life and adverse foreign exchange movements on shareholder assets in France. 
Page 22
7.i - Life business profit drivers continued
Expenses
United Kingdom & Ireland
Europe
Asia
Total 
2016
m
Restated1
2015
m
2016
m
2015
m
2016
m
2015
m
2016
m
Restated1
2015
m
Acquisition expenses (m)
(396)
(405)
(274)
(243)
(158)
(127)
(828)
(775)
APE (m)2
2,456 
2,075 
1,236 
947 
270 
356 
3,962 
3,378 
As acquisition expense ratio on APE (%)
16% 
20%
22% 
26%
59% 
36%
21% 
23%
Administration expenses (m)
(652)
(584)
(520)
(434)
(96)
(73)
(1,268)
(1,091)
As existing business expense ratio on average reserves (bps)
29 
30 
51 
48 
73 
72 
37 
37 
Average reserves (bn)
224.5 
196.4 
102.1 
90.0 
13.2 
10.1 
339.8
296.5 
1 Following a correction to accounting and modelling for annual management charge rebates in UK Life, prior year comparatives have been restated. This has led to an increase in operating profit and profit before tax of 23 million for 2015and an increase in opening retained earnings for 2015 of 20 million with an increase in equity at 31 December 2015 of 38 million. See note B2 for further details.
2 APE excludes UK Retail Fund Management and Health business in UK & Ireland and Asia.
(g) Acquisition expenses
Acquisition expenses increased to 828 million (2015: 775 million) reflecting unfavourable exchange rate movements of 29 million in Europe in addition to increased expenses as volumes grew in Spain and Italy. Acquisition expenses in the UK reflect integration synergies, partly offset by the additional quarter of Friends Life. 
The increase in Asia is due to a change of business mix towards non-participating products in China and Singapore. The overall group-wide ratio of acquisition expenses to APE improved to 21% (2015: 23%).
(h) Administration expenses
Administration expenses increased to 1,268 million (2015: 1,091 million). The expense ratio was 37 bps (2015: 37 bps) on average reserves of 340 billion (2015: 297 billion). The increase in UK & Ireland is driven by the additional quarter of Friends Life expenses, investment in digital, partly offset by integration synergies. Administration expenses in Europe have increased to 520 million (2015: 434 million), with adverse exchange rate movements of 53 million, higher renewal-related expenses and investment required for growing and reorganising the business in France and a new asset levy in Poland effective from 1 February 2016. On a constant currency basis, Asia administration expenses increased primarily due to the additional quarter of FPI costs along with continued investment in distribution and infrastructure across the region. 
The overall increase in life business acquisition and administration expenses was 230 million, with an additional quarter of Friends Life expenses, adverse foreign exchange rate movements of 94 million, increased administration expenses in France, investment in growth as the Italian and Spanish businesses grew and a change of business mix in China and Singapore towards more non-participating business.
(i) DAC and other
DAC and other items amounted to an overall positive contribution of 214 million (2015: 387 million), which was mainly driven by UK Life reflecting a lower level of non-recurring items with the longevity assumption change benefit of c.290 million, partly offset by various other net reserve and modelling movements. In Asia DAC and other items reduced to 76 million (2015: 120 million) due to a provision for maintenance expense overruns in Hong Kong, the non-recurrence of the one off benefit in the prior year of an internal reinsurance transaction in FPI, partly offset by a recovery of indirect taxes paid in Singapore.
Page 23
7.ii - General insurance and health 
2016
UK
Personal
m
UK Commercial m
Total
UK
m
Ireland
m
Total
UK & Ireland
m
Canada Personal
m
Canada Commercial m
Total Canada
m
Europe
m
Asia & 
Other2
m
Total
m
General insurance
Gross written premiums
2,476 
1,743 
4,219 
392 
4,611 
1,711 
831 
2,542
1,499
12
8,664
Net written premiums1
2,408 
1,522 
3,930 
378 
4,308 
1,680 
773 
2,453
1,438
12
8,211
Net earned premiums1
2,295 
1,526 
3,821 
351 
4,172 
1,645 
775 
2,420
1,396
12
8,000
Net claims incurred1
(1,602)
(1,220)
(2,822)
(222)
(3,044)
(1,104)
(433)
(1,537)
(931)
(24)
(5,536)
Of which claims handling costs
(137)
(9)
(146)
(93)
(45)
-
(284)
Written commission
(672)
(314)
(986)
(56)
(1,042)
(313)
(161)
(474)
(284)
-
(1,800)
Written expenses3
(166)
(178)
(344)
(49)
(393)
(167)
(122)
(289)
(134)
(6)
(822)
Movement in DAC and other
88 
-
88 
3 
91 
47 
1 
48
17 
-
156 
Impact of change in Ogden discount rate excluded from underwriting result
230
245
475
-
475
-
-
-
-
-
475
Underwriting result1
173 
59
232 
27 
259 
108 
60 
168 
64
(18)
473
Longer-term investment return4
162 
14 
176 
105 
55
3
339
Other5
(2)
-
(2)
(4)
-
-
(6)
Operating profit1
392
41 
433
269 
119
(15)
806
Health insurance
Underwriting result
35 
-
-
(12)
23 
Longer-term investment return
3 
-
1 
-
4
Operating profit
38 
-
1 
(12)
27 
Total operating profit1
471 
269 
120
(27)
833
General insurance combined operating ratio1
Claims ratio1
69.8%
80.0%
73.8%
63.3%
73.0%
67.1%
55.8%
63.5%
66.7%
69.2%
Commission ratio
27.9%
20.6%
25.1%
14.9%
24.2%
18.6%
20.8%
19.3%
19.7%
21.9%
Expense ratio
6.9%
11.7%
8.8%
13.0%
9.1%
10.0%
15.8%
11.8%
9.4%
10.0%
Combined operating ratio6
104.6%
112.3%
107.7%
91.2%
106.3%
95.7%
92.4%
94.6%
95.8%
101.1%
Combined operating ratio, excluding the impact of change in Ogden discount rate6
94.6%
96.2%
95.3%
91.2%
94.9%
95.7%
92.4%
94.6%
95.8%
95.2%
Assets supporting general insurance and health business
Debt securities
3,718
360
4,078
4,349
2,175
197
10,799
Equity securities
7
-
7
235
25
-
267
Investment property
208
-
208
-
133
-
341
Cash and cash equivalents
757
47
804
115
220
23
1,162
Other7
1,464
4
1,468
256
305
3 
2,032
Assets at 31 December 2016
6,154
411
6,565
4,955
2,858
223
14,601
Debt securities
3,993
470
4,463
2,999
1,937
209
9,608
Equity securities
8
-
8
188
21
-
217
Investment property
198
0
198
-
137
-
335
Cash and cash equivalents
639
79
718
107
118
26
969
Other7
2,559
104
2,663
135
209
1 
3,008
Assets at 31 December 2015
7,397
653
8,050
3,429
2,422
236
14,137
Average assets
6,776
532
7,308
4,192
2,640
229
14,369
LTIR as % of average assets
2.4%
2.6%
2.4%
2.5%
2.1%
1.3%
2.4%
1 Excludes the impact from an outward quota share reinsurance agreement written in 2015 and completed in 2016 in Aviva Insurance Limited (AIL). See note A10 for further details. 
2 Asia & Other includes Aviva Re.
3 Operating expenses shown in note 3 includes claims handling costs and written expenses included in general insurance COR above, plus operating expenses of other non-insurance operations.
4 The UK & Ireland LTIR includes 69 million relating to the internal loan. This is lower than 2015 primarily as a result of the reduction in the balance of this loan during 2016.
5 Includes unwind of discount and pension scheme net finance costs.
6 COR is calculated as incurred claims expressed as a percentage of net earned premiums, plus written commissions and written expenses expressed as a percentage of net written premiums. COR is calculated using unrounded numbers so minor rounding differences may exist.
7 Includes loans and other financial investments.
Page 24
7.ii - General insurance and health continued
2015
UK
Personal m
UK Commercial m
Total
UK
m
Ireland
m
Total UK & Ireland
m
Canada Personal m
Canada Commercial m
Total Canada
m
Europe
m
Asia & 
Other2
m
Total
m
General insurance
Gross written premiums
2,253 
1,719 
3,972 
291 
4,263 
1,324 
785 
2,109
1,263
12
7,647
Net written premiums1
2,168 
1,517 
3,685 
282 
3,967 
1,282 
710 
1,992
1,200
12
7,171
Net earned premiums1
2,160 
1,493 
3,653 
262 
3,915 
1,258 
719 
1,977
1,171
16
7,079
Net claims incurred1
(1,413)
(950)
(2,363)
(177)
(2,540)
(840)
(411)
(1,251)
(775)
1 
(4,565)
Of which claims handling costs
(170)
(7)
(177)
(74)
(45)
-
(296)
Written commission
(479)
(307)
(786)
(36)
(822)
(248)
(147)
(395)
(245)
-
(1,462)
Written expenses3
(153)
(182)
(335)
(39)
(374)
(108)
(105)
(213)
(105)
(7)
(699)
Movement in DAC and other
(18)
3 
(15)
(1)
(16)
5 
(3)
2
13 
-
(1)
Underwriting result1
97 
57 
154 
9 
163 
67 
53 
120 
59
10 
352
Longer-term investment return4
215 
21 
236 
98 
53
3
390
Other5
(1)
-
(1)
(4)
-
-
(5)
Operating profit1
368
30 
398
214 
112
13 
737
Health insurance
Underwriting result
27 
-
1
(6)
22 
Longer-term investment return
5 
-
1 
-
6
Operating profit
32 
-
2
(6)
28 
Total operating profit1
430 
214 
114
7 
765
General insurance combined operating ratio1
Claims ratio1
65.4%
63.6%
64.7%
67.9%
64.9%
66.8%
57.1%
63.3%
66.2%
64.5%
Commission ratio
22.1%
20.2%
21.3%
12.8%
20.7%
19.3%
20.7%
19.8%
20.4%
20.4%
Expense ratio
7.0%
12.0%
9.1%
13.9%
9.4%
8.5%
14.7%
10.7%
8.8%
9.7%
Combined operating ratio6
94.5%
95.8%
95.1%
94.6%
95.0%
94.6%
92.5%
93.8%
95.4%
94.6%
Assets supporting general insurance and health business
Debt securities
3,993
470
4,463
2,999
1,937
209
9,608
Equity securities
8
-
8
188
21
-
217
Investment property
198
-
198
-
137
-
335
Cash and cash equivalents
639
79
718
107
118
26
969
Other7
2,559
104
2,663
135
209
1 
3,008
Assets at 31 December 2015
7,397
653
8,050
3,429
2,422
236
14,137
Debt securities
4,429
825
5,254
3,261
2,140
203
10,858
Equity securities
7
-
7
222
22
-
251
Investment property
91
4
95
-
128
-
223
Cash and cash equivalents
865
79
944
123
185
48
1,300
Other7
3,372
101
3,473
122
172
-
3,767
Assets at 31 December 2014
8,764
1,009
9,773
3,728
2,647
251
16,399
Average assets
8,080
831
8,911
3,578
2,535
244
15,268
LTIR as % of average assets
2.7%
2.5%
2.7%
2.7%
2.1%
1.2%
2.6%
1 Excludes the one-off impact from an outward quota share reinsurance agreement completed in 2015 in Aviva Insurance Limited (AIL). See note A10 for further details.
2 Asia & Other includes Aviva Re.
3 Operating expenses shown in note 3 includes claims handling costs and written expenses included in general insurance COR above, plus operating expenses of other non-insurance operations.
4 The UK & Ireland LTIR includes 115 million relating to the internal loan. 
5 Includes unwind of discount and pension scheme net finance costs.
6 COR is calculated as incurred claims expressed as a percentage of net earned premiums, plus written commissions and written expenses expressed as a percentage of net written premiums. COR is calculated using unrounded numbers so minor rounding differences may exist.
7 Includes loans and other financial investments. 
Page 25
7.iii - Fund flows
Net flows is one of the measures of growth used by management and is a component of the movement in Life and platform business managed assets (excluding UK with-profits) during the period. It is the difference between the inflows (being IFRS net written premiums plus deposits received under investment contracts) and outflows (being IFRS net paid claims plus redemptions and surrenders under investment contracts). It excludes market and other movements. 
Restated1
Managed assets at
1 January 
20164
m
Premiums and deposits,
net of reinsurance m
Claims and redemptions, net of reinsurance m
Net flows2,3 m
Market
and other movements m
Managed assets at
31 December 
20164
m
Life and platform business
UK - non-profit:
- platform
8,376
4,778
(859)
3,919
668
12,963
- pensions and other long term savings
79,261
6,591
(7,580)
(989)
13,317
91,589
- long term savings
87,637
11,369
(8,439)
2,930
13,985
104,552
- annuities and equity release
52,463
1,101
(2,222)
(1,121)
5,974
57,316
- other
25,801
1,315
(3,110)
(1,795)
1,845
25,851
Ireland
5,152
628
(570)
58
779
5,989
United Kingdom & Ireland (excluding UK with-profits)
171,053
14,413
(14,341)
72
22,583
193,708
Europe
94,632
10,218
(7,632)
2,586
16,624
113,842
Asia
11,484
1,469
(1,152)
317
1,655
13,456
Other
1,752
39
(207)
(168)
15
1,599
278,921
26,139
(23,332)
2,807
40,877
322,605
UK - with-profits and other
62,067
61,796
Total life and platform business
340,988
384,401
1 Restated to include externally reinsured non-participating investment contracts.
2 Life business net flows in the table above are net of reinsurance.
3 For the period to 31 December 2016, net flows of 2.8 billion includes net flows of 1.7 billion that are included in the IFRS income statement within net written premiums and net paid claims.
4 Life and platform business managed assets at the balance sheet date includes financial investments, loans, investment property, externally reinsured non-participating investment contracts and cash and cash equivalents included on the IFRS statement of financial position, plus assets administered by the Group that are not included on the IFRS statement of financial position. At 31 December 2016, life and platform business managed assets of 384 billion (2015: 341 billion1) includes 373 billion (2015: 333 billion) that is on the IFRS statement of financial position.
United Kingdom & Ireland (excluding UK with-profits)
UK long term savings managed assets5 have increased to c.105 billion (2015: c.88 billion) during the period. Within this, net inflows were 2.9 billion mainly reflecting continued growth from our platform business of 3.9 billion with managed assets increasing 55% in the period to 13 billion (2015: 8.4 billion). Additionally workplace pensions net inflows of 2.0 billion were partially offset by outflows from individual pensions.
UK annuities and equity release and other non-profit outflows were 2.9 billion driven by net outflows in annuities (including the impact of lower bulk purchase annuity new business volumes) and traditional savings products. Market and other movements include favourable market movements driven by a decrease in interest rates and growth in equities.
Europe
Net inflows were 2.6 billion. This was mainly driven by increased volumes across all products in Italy and protection sales in France. Market and other movements in Europe primarily reflect favourable foreign exchange movements mainly driven by the strengthening of the euro against sterling.
Asia and other
Net inflows in Asia were 0.3 billion arising mainly in Singapore. Other business net outflows of 0.2 billion primarily relate to Aviva Investors' Pooled Pensions business. 
5 Includes platform and pensions business and externally reinsured non-participating investment contracts.
Page 26
8.i - Summary of assets
The Group asset portfolio is invested to generate competitive investment returns for both policyholders and shareholders while remaining within the Group's appetite for market, credit and liquidity risk.
The Group has a low appetite for interest rate risk and currency risk which means that the asset portfolios are well matched by duration and currency to the liabilities they cover. The Group also runs a low level of liquidity risk which results in a high proportion of income generating assets and a preference for more liquid assets where there is the potential need to realise those assets before maturity.
The Group seeks to diversify its asset portfolio in order to reduce risk and provide more attractive risk-adjusted returns. In order to achieve this there is a comprehensive risk limit framework in place. There is an allowance for diversification in our economic capital model and we continue to broaden the investment portfolio in individual businesses. 
Asset allocation decisions are taken at legal entity level and in many cases by fund within a legal entity in order to reflect the nature of the liabilities, customer expectations, the local accounting and regulatory treatment, and any local constraints. These asset allocation decisions are made in accordance with a group-wide framework that takes into account consensus investment views across the Group, prioritised Group objectives and metrics and Group risk limits and constraints. This framework is overseen by the Group Asset Liability Committee (ALCO) and facilitates a consistent approach to asset allocation across the business units in line with Group risk appetite and shareholder objectives.
The asset allocation as at 31 December 2016 across the Group, split according to the type of liability the assets are covering, is shown in the table below. Further information on these assets is given in the Analysis of Assets Section.
Shareholder business assets
Participating fund assets
Carrying value in the statement of financial position
General Insurance & health & 
other1
m
Annuity and non-profit m
Policyholder (unit-linked assets)
m
UK style with-profits m
Continental European-style Participating funds
m
Total assets analysed
m
Less assets of operation classified as held for sale m
Carrying value in the statement of financial position
m
Debt securities
Government bonds
7,523
15,360
12,756
18,165
29,353
83,157
(2,325)
80,832
Corporate bonds
4,586
23,547
11,616
15,844
31,268
86,861
(4,576)
82,285
Other
363
2,336
2,676
1,348
6,533
13,256
(837)
12,419
12,472
41,243
27,048
35,357
67,154
183,274
(7,738)
175,536
Loans
Mortgage loans
-
18,133
-
120
1
18,254
-
18,254
Other loans
177
3,052
1,027
1,522
827
6,605
(75)
6,530
177
21,185
1,027
1,642
828
24,859
(75)
24,784
Equity securities
273
397
52,571
12,558
3,213
69,012
(664)
68,348
Investment property
351
176
6,625
2,423
1,241
10,816
(48)
10,768
Other investments
879
2,627
45,630
4,692
4,427
58,255
(2,304)
55,951
Total as at 31 December 2016
14,152
65,628
132,901
56,672
76,863
346,216
(10,829)
335,387
Total as at 31 December 2015
11,550
58,586
117,941
57,508
62,366
307,951
-
307,951
1 Of the 14.2 billion of assets 14% relates to other shareholder business assets.
There is an internal loan between Aviva Insurance Limited (AIL) and Aviva Group Holdings Limited (AGH) that has a net value of zero at a consolidated level.
General insurance and health
All the investment risk is borne by shareholders and the portfolio held to cover these liabilities contains a high proportion of fixed and variable income securities, of which 84% are rated A or above. The assets are relatively short duration reflecting the short average duration of the liabilities. Liquidity, interest rate and currency risks are maintained at a low level within risk appetite.
Annuity and other non-profit
All the investment risk is borne by shareholders. The annuity liabilities have a long duration but are also illiquid as customers cannot surrender their policies. The assets are chosen to provide stable income and cash flow. Currency and interest rate exposures are closely matched to the liabilities in line with risk appetite. We are able to invest part of the portfolio in less liquid assets in order to improve risk-adjusted returns given the illiquid nature of the liabilities. The asset portfolio is principally comprised of long maturity bonds and loans including a material book of commercial mortgage loans. The other non-profit business assets are a smaller proportion of this portfolio and are generally shorter in duration and have a high proportion invested in fixed income.
10.9 billion of Shareholder loan assets are backing annuity liabilities and comprise of commercial mortgage loans (6.4 billion), Healthcare, Infrastructure and PFI mortgage loans (3.3 billion) and Primary Healthcare, Infrastructure and PFI other loans (1.2 billion). The Group carries a valuation allowance within the liabilities against the risk of default of commercial mortgages, including Healthcare and PFI mortgages, of 0.5 billion which equates to 50 bps at 31 December 2016 (2015: 59 bps). 
Policyholder assets
These assets are invested in line with the fund choices made by our unit-linked policyholders and the investment risk is borne by the policyholder. This results in a high allocation to growth assets such as equity and property. Aviva's shareholder exposure to these assets arises from the fact that the income we receive is a proportion of the assets under management.
Page 27
8.i - Summary of assets continued
UK style with-profits (WP)
UK style with-profit funds hold relatively long-term contracts with policyholders participating in pooled investment performance subject to some minimum guarantees. Smoothed returns are used to declare bonuses to policyholders which increase the level of the guarantees through time. The part of the portfolio to which policyholder bonuses are linked is invested in line with their expectations and includes growth assets as well as fixed income. The remainder of the portfolio is invested to mitigate the resultant shareholder risk. This leads us to an overall investment portfolio that holds a higher proportion of growth assets than our other business lines although there are still material allocations to fixed income assets.
Continental European style participating funds
Continental European style participating funds hold relatively long-term contracts with policyholders participating in pooled investment performance subject to some minimum guarantees. Smoothed returns are used to declare bonuses to policyholders. A certain portion of the guarantees are subject to annual discretion declared at the start of the year. Other guarantees are subject to revision downwards at contractual dates. The investment portfolio holds a higher proportion of fixed income assets than the UK style equivalent. Fixed income assets also give rise to less volatility on the local statutory balance sheet than growth assets.
Page 28
8.ii - Net asset value
At the end of 2016, IFRS net asset value per share was 414 pence (2015 restated3: 390 pence). The increase was driven by operating profit, favourable foreign exchange movements and remeasurements of pension schemes, partly offset by the impact of the change in the Ogden discount rate as an exceptional charge within Other, payment of the dividend to shareholders, adverse economic variances and amortisation of acquired value of in-force business. 
Total investment variances and economic assumption changes were 381 million adverse. This included 760 million adverse variances in the non-life business partly offset by positive variances of 379 million in the life businesses. The adverse non-life variances reflect both unfavourable short-term fluctuations and adverse economic assumption changes. Foreign exchange losses on Group centre holdings including external borrowings are the main component within 518 million of adverse short-term fluctuations. These partly offset the favourable foreign exchange movement within other comprehensive income arising from translation of the net investment in foreign subsidiaries, associates and joint ventures, as sterling weakened against a number of currencies including the euro and Canadian dollar. Adverse economic assumption changes of 242 million reflect the impact of a decrease in the real interest rates used to discount claim reserves for periodic payment orders and latent claims.
In the life businesses, investment variances and economic assumption changes were 379 million positive (2015: 14 million positive).Positive variances in the UK reflect lower interest rates and narrowing credit spreads, which increase asset values more than liabilities. In the first half of 2016 the Group revised its expectation of future property prices and rental income in light of the UK referendum vote for the UK to leave the European Union. The adverse impact of this adjustment on the Group's equity release and commercial mortgage portfolios has been broadly offset in the second half of the year as expectations for future property price and rental growth have increased. The positive variance in the UK has been partially offset by negative variances in France and Italy. The negative variance in France reflects losses on equity hedges managed on an economic basis rather than an IFRS basis and falling interest rates, while the negative variance in Italy reflects widening credit spreads.
The favourable movement on the Group's staff pension schemes of 242 million post tax is principally due to the main UK staff pension scheme. The surplus has increased over the period mainly due to increased asset values primarily driven by a reduction in interest rates in the UK partly offset by an increase in the defined benefit obligation following a decrease in the UK discount rate. 
IFRS 
31 December 2016
m
pence per
share2
Restated3
31 December 2015
m
Restated3
pence per 
share2
Equity attributable to shareholders of Aviva plc at 1 January1
15,802
390p
10,038 
340p
Operating profit
3,010 
73p
2,688 
67p
Investment return variances and economic assumption changes on life and non-life business 
(381)
(9)p
(170)
(4)p
(Loss)/profit on the disposal and remeasurements of subsidiaries, joint ventures and associates 
(11)
-
2 
-
Goodwill impairment and amortisation of intangibles 
(175)
(4)p
(177)
(4)p
Amortisation and impairment of acquired value of in-force business
(540)
(13)p
(498)
(12)p
Integration and restructuring costs 
(212)
(5)p
(379)
(9)p
Other4
(498)
(13)p
(53)
(1)p
Tax on operating profit and on other activities
(334)
(8)p
(316)
(8)p
Non-controlling interests 
(156)
(4)p
(161)
(4)p
Profit after tax attributable to shareholders of Aviva plc
703 
17p
936 
25p
AFS securities (fair value) & other reserve movements
4 
-
10 
-
Ordinary dividends
(871)
(22)p
(635)
(16)p
Direct capital instrument and tier 1 notes interest and preference share dividend
(85)
(2)p
(74)
(2)p
Foreign exchange rate movements
945 
23p
(325)
(8)p
Remeasurements of pension schemes
242 
6p
(142)
(4)p
Friends Life acquisition5
-
-
5,975 
55p
Other net equity movements
63 
2p
19 
-
Equity attributable to shareholders of Aviva plc at 31 December1
16,803 
414p
15,802 
390p
1 Excluding preference shares of 200 million (31 December 2015: 200 million).
2 Number of shares as at 31 December 2016: 4,062 million (31 December 2015: 4,048 million).
3 Following a correction to accounting and modelling for annual management charge rebates in UK Life, prior year comparatives have been restated. This has led to an increase in operating profit and profit before tax of 23 million for 2015 and an increase in opening retained earnings for 2015 of 20 million with an increase in equity at 31 December 2015 of 38 million. See note B2 for further details.
4 Other items include an exceptional charge of 475 million (2015: nil), with a post tax impact of 380 million, relating to the impact of the change in the Ogden discount rate from 2.5% set in 2001 to minus 0.75% announced by the Lord Chancellor on 27 February 2017. Refer to note B9 (c)(iii) for further details. Other items also include a loss upon the completion of an outwards reinsurance contract by the UK General Insurance business, which provides significant protection against claims volatility from mesothelioma, industrial deafness and other long tail risks. The 23 million loss comprises 107 million in premiums ceded less 78 million in reinsurance recoverables recognised and 6 million claims handling provisions released (2015: 53 million charge comprises 712 million in premiums ceded, less 659 million reinsurance recoverables recognised).
5 Includes the dilution effect on IFRS NAV per share of the increase in number of shares arising as a result of the acquisition of Friends Life.
Page 29
8.iii - Return on equity1
The return on equity calculation is based on operating return after tax attributable to ordinary shareholders expressed as a percentage of weighted average ordinary shareholders' equity.
During 2016, return on equity has decreased to 12.5% (2015: 14.1%), primarily driven by the higher weighted average shareholders' equity reflecting the Group's acquisition of the Friends Life business on 10 April 2015. 
2016
%
Restated2
2015
% 
United Kingdom & Ireland Life
11.2%
14.4%
United Kingdom & Ireland General Insurance and Health3,4
15.6%
10.2%
Europe
13.1%
12.7%
Canada4
15.7%
16.2%
Asia
14.0%
22.0%
Fund management
24.4%
30.1%
Corporate and Other Business3
n/a
n/a
Return on total capital employed 
9.7%
10.8%
Subordinated debt
4.5%
4.4%
Senior debt
0.1%
3.5%
Return on total equity
12.1%
13.4%
Less: Non-controlling interest
11.5%
12.2%
Direct capital instrument and tier 1 notes
6.1%
6.6%
Preference capital
8.5%
8.5%
Return on equity shareholders' funds
12.5%
14.1%
1 Please refer to note C1 for further analysis of return on equity.
2 Following a correction to accounting and modelling for annual management charge rebates in UK Life, prior year comparatives have been restated. This has led to an increase in operating profit and profit before tax of 23 million for 2015 and an increase in opening retained earnings for 2015 of 20 million with an increase in equity at 31 December 2015 of 38 million. See note B2 for further details.
3 2015 comparatives have been restated to exclude c.0.9 billion of goodwill which does not support the general insurance and health business for capital purposes and is included in 'Corporate and Other Business'. There is no impact on Group return on equity as a result of this restatement.
4 2015 comparatives have been restated for the impact of an internal loan between Canada and United Kingdom general insurance. There is no impact on Group return on equity as a result of this restatement. 
Page 30
8.iv - Solvency II
The estimated pro forma shareholder coverage ratio on a Solvency II basis is 189% at 31 December 2016. The Solvency II position disclosed is based on a 'shareholder view'. This excludes the contribution to Group Solvency Capital Requirement (SCR) and Group Own Funds of fully ring fenced with-profits funds (2.9 billion at 31 December 2016) and staff pension schemes in surplus (1.1 billion at 31 December 2016). These exclusions have no impact on Solvency II surplus. The most material fully ring fenced with-profit funds and staff pension schemes are self-supporting on a Solvency II capital basis with any surplus capital above SCR not recognised in the Group position. The shareholder view is therefore considered by management to be more representative of the shareholders' risk-exposure and the Group's ability to cover the SCR with eligible own funds.
The Solvency II risk margin is highly sensitive to movements in interest rates, which for business written prior to 1 January 2016 can be offset by a reset of the transitional measure on technical provisions ('TMTP'). Because of this, the Solvency II position disclosed assumes that the TMTP, approved for use by the PRA, has been notionally reset to reflect interest rates at 31 December 2016. This presentation is in line with the Group's preference to manage its capital position assuming a dynamic TMTP in respect of the impact of interest rate movements on the risk margin, as this avoids step changes to the Solvency II position that arise only when the formal TMTP reset points are triggered.
The 31 December 2016 Solvency II position disclosed includes two pro forma adjustments, to reflect known or highly likely events materially affecting the Group's solvency position post 31 December 2016. The adjustments consist of the disposal of Aviva's 50% shareholding in Antarius to Sogecap, as announced on 9 February 2017, and the future impact of changes to UK tax rules announced in the Chancellor of the Exchequer's Autumn statement of 23 November 2016. This includes a restriction to the tax relief that can be claimed in respect of tax losses carried forward to a maximum of 50% of future profits in any year. These adjustments have been made in order to show a more representative view of the Group's solvency position.
Summary of Solvency II position 
2016
bn
2015
bn
Own Funds1,2
24.0
21.8
Solvency Capital Requirement before diversification1,2
(18.1)
 (16.3)
Diversification benefit
5.4
 4.2
Diversified Solvency Capital Requirement1,2
(12.7)
(12.1)
Estimated Solvency II Surplus at 31 December2
11.3
9.7
Estimated Shareholder Cover Ratio1,2
189%
 180%
1 The estimated Solvency II position represents the shareholder view. This excludes the contribution to Group Solvency Capital Requirement (SCR) and Group Own Funds of fully ring fenced with-profits funds 2.9 billion (2015: 2.7 billion) and staff pension schemes in surplus 1.1 billion (2015: 0.7 billion) - these exclusions have no impact on Solvency II surplus.
2 The estimated Solvency II position includes an estimated adverse impact of a notional reset of the transitional measure on technical provisions ('TMTP') to reflect interest rates at 31 December 2016. Removing this notional reset of TMTP would increase the estimated Solvency II surplus by 0.4 billion. Amortisation of TMTP since 1 January 2016 is also reflected. Also included are the pro forma impacts of the disposal of Aviva's 50% shareholding in Antarius to Sogecap, expected to complete 1 April 2017 (0.2 billion increase to surplus) and a future change to UK tax rules restricting the tax relief that can be claimed in respect of tax losses (0.4 billion decrease to surplus).
Movement in Group Solvency II Surplus
2016
Total
bn
Group Solvency II Surplus at 1 January 2016
9.7
Operating Capital Generation
3.5
Non-operating Capital Generation
(1.8)
Dividends
(1.0)
Foreign exchange variances
0.6
Hybrid debt issuance
0.4
Acquired/divested business
(0.1)
Estimated Solvency II Surplus at 31 December 2016
11.3
The estimated Solvency II surplus at 31 December 2016 is 11.3 billion, with a shareholder cover ratio of 189%.This is an increase of 1.6 billion compared to the 31 December 2015 surplus.The beneficial impacts of operating capital generation, foreign exchange variances and hybrid debt issuance have been partially offset by the impact of the Aviva plc dividend, acquisitions and the adverse non-operating capital generation, driven by adverse market movements, notably falls in interest rates over the year. The operating capital generation includes the beneficial impact of increasing the scope of the Group's internal model to include the non-profit funds of Friends Life Limited and Friends Life and Pensions Limited, effective 31 December 2016.The non-operating capital generation includes a notional reset of the transitional measure on technical provisions ('TMTP') to reflect interest rates at 31 December 2016. It also includes the impact of the change in the Ogden discount rate.
Page 31
8.iv - Solvency II continued
Summary of diversified Solvency Capital Requirement
2016
bn
2015
bn
Credit risk1
3.3
2.5
Equity risk2
1.3
1.1
Interest rate risk3
0.4
0.7
Other market risk4
1.6
1.3
Life insurance risk5
3.3
3.4
General insurance risk6
0.6
0.8
Operational risk
1.1
1.1
Other risk7
1.1
1.2
Total
12.7
12.1
1  Capital held in respect of credit risk recognises the Group's shareholder exposure to changes in the market value of assets and defaults. A range of specific stresses are applied reflecting the difference in assumed risk relative to investment grade and duration.
2  Capital held in respect of equity risk recognises the Group's shareholder exposure to changes in the market value of assets.
3  Capital held in respect of interest rate risk recognises the Group's shareholder exposure to changes in the value of net assets as a result of movements in interest rates.
4  Capital held in respect of other market risk recognises the Group's shareholder exposure to changes in the market value of commercial mortgages and property, but also captures risk in association with inflation and foreign exchange
5  Capital held in respect of life insurance risk recognises the Group's shareholder exposure to life insurance specific risks, such as longevity and lapse.
6  Capital held in respect of general insurance risk recognises the Group's shareholder exposure to general insurance specific risks, such as claims volatility and catastrophe.
7 Capital held in respect of other risk recognises the Group's shareholder exposure to specific risks unique to particular business units and other items.
Changes to the diversified Solvency Capital Requirement have arisen from reductions in interest rates during 2016, which has led to increases in credit risk and longevity risk within the Group's annuity portfolios. In addition to this, the extension of the scope of the internal model to include the non-profit funds of Friends Life Limited and Friends Life and Pensions Limited, effective 31 December 2016, has also led to changes to the Group's risk profile. This arises from the difference in capital requirements between the Group's internal model and that of the standard formula.
Sensitivity analysis of Solvency II surplus
The following table shows the sensitivity of the Group's Solvency II surplus to:
Economic assumptions:
 25 basis point increase and decrease, 50 basis point decrease and 100 basis point increase in the risk-free rate, including all consequential changes (including assumed investment returns for all asset classes, market values of fixed interest assets, risk discount rates);
 50 basis point increase and decrease and 100 basis point increase in credit spreads for corporate bonds with credit rating A at 10 year duration, with the other ratings and durations stressed by the same proportion relative to the stressed capital requirement;
 an immediate full letter downgrade on 20% of the annuity portfolio bonds (e.g. from AAA to AA, from AA to A);
 10% increase and decrease and 25% decrease in market values of equity assets.
Non-Economic assumptions:
 10% increase in maintenance and investment expenses (a 10% sensitivity on a base expense assumption of 10 p.a. would represent an expense assumption of 11 p.a.);
 10% increase in lapse rates (a 10% sensitivity on a base assumption of 5% p.a. would represent a lapse rate of 5.5% p.a.); 
 5% increase in both mortality and morbidity rates for life assurance; 
 5% decrease in mortality rates for annuity business;
 5% increase in gross loss ratios for general insurance and health business.
Page 32
8.iv - Solvency II continued
The sensitivity allows for any consequential impact on the assets and liability valuations. All other assumptions remain unchanged for each sensitivity, except where these are directly affected by the revised economic conditions or where a management action that is allowed for in the Solvency Capital Requirement calculation is applicable for that sensitivity. For example, future bonus rates are automatically adjusted to reflect sensitivity changes to future investment returns.
Transitional Measures on Technical Provisions is assumed to be recalculated in all sensitivities where its impact would be material.
The table below shows the absolute change in cover ratio under each sensitivity, e.g. a 4% positive impact would result in a cover ratio of 193%.
Sensitivities 
Impact on 
cover ratio 
%
Changes in Economic assumptions
25 bps increase in interest rate
4% 
100 bps increase in interest rate
18% 
25 bps decrease in interest rate
(5%)
50 bps decrease in interest rate
(11%)
50 bps increase in corporate bond spread1
0%
100 bps increase in corporate bond spread
(1%)
50 bps decrease in corporate bond spread
(1%)
Credit downgrade on annuity portfolio
(4%)
10% increase in market value of equity
2%
10% decrease in market value of equity
(1%)
25% decrease in market value of equity
(4%)
Changes in Non-Economic assumptions
10% increase in maintenance and investment expenses
(7%)
10% increase in lapse rates
(1%)
5% increase in mortality/morbidity rates - Life assurance
(1%)
5% decrease in mortality rates - annuity business
(11%)
5% increase in gross loss ratios 
(3%)
1  A 50 bps increase in corporate bond spread results in a proportionate decrease in Group Own Funds and Group SCR with no overall impact on the rounded Group cover ratio.
Limitations of sensitivity analysis
The table above demonstrates the effect of a change in a key assumption while other assumptions remain unchanged. In reality, there is a correlation between the assumptions and other factors. It should also be noted that these sensitivities are non-linear, and larger or smaller impacts should not be interpolated or extrapolated from these results.
The sensitivity analysis does not take into consideration that the Group's assets and liabilities are actively managed. Additionally, the Solvency II position of the Group may vary at the time that any actual market movement occurs. For example, the Group's financial risk management strategy aims to manage the exposure to market fluctuations.
As investment markets move past various trigger levels, management actions could include selling investments, changing investment portfolio allocation, adjusting bonuses credited to policyholders, and taking other protective action.
Other limitations in the above sensitivity analysis include the use of hypothetical market movements to demonstrate potential risk that only represent the Group's view of possible near-term market changes that cannot be predicted with any certainty, and the assumption that all interest rates move in an identical fashion.
Reconciliation of IFRS total equity to Solvency II Own Funds
The reconciliation from total Group equity on an IFRS basis to Solvency II Own Funds is presented below. The valuation differences reflect moving from IFRS valuations to a Solvency II shareholder view of Own Funds. 
2016
bn
Restated1
2015
bn
Total Group equity on an IFRS basis
19.6
18.3
Elimination of goodwill and other intangible assets2
(10.0)
(9.9)
Liability valuation differences (net of transitional deductions)3
22.1
20.4
Inclusion of risk margin (net of transitional deductions)
(4.4)
(4.0)
Net deferred tax3,4
(1.6)
(1.3)
Revaluation of subordinated liabilities
(0.9)
(0.7)
Estimated Solvency II Net Assets (gross of non-controlling interests)3
24.8
22.8
Difference between Solvency II Net Assets and Own Funds5
 (0.8)
(1.0)
Estimated Solvency II Own Funds6
24.0
21.8
1 Following a correction to accounting and modelling for annual management charge rebates in UK Life, prior year comparatives have been restated. This has led to an increase in operating profit and profit before tax of 23 million for 2015 and an increase in opening retained earnings for 2015 of 20 million with an increase in equity at 31 December 2015 of 38 million. See note B2 for further details.
2 Includes 2.0 billion (2015: 1.9 billion) of goodwill and 8.0 billion (2015: 8 billion) of other intangible assets comprising acquired value of in-force business of 3.9 billion (2015: 4.4 billion), deferred acquisition costs (net of deferred income) of 2.5 billion (2015: 2.3 billion) and other intangibles of 1.6 billion (2015: 1.3 billion).
3 Includes an estimated adverse impact of a notional reset of the transitional measure on technical provisions ('TMTP') to reflect interest rates at 31 December 2016. Removing this notional reset of TMTP would increase the estimated Solvency II Own Funds by 0.4 billion. Amortisation of TMTP since 1 January 2016 is also reflected. Also included are the pro forma impacts of the disposal of Aviva's 50% shareholding in Antarius to Sogecap expected to complete 1 April 2017 and a future change to UK tax rules restricting the tax relief that can be claimed in respect of tax losses, resulting in a combined decrease of 0.1 billion to Own Funds.
4 Net deferred tax includes the tax effect of all other reconciling items in the table above which are shown gross of tax. 
5 Regulatory adjustments to bridge from Solvency II Net Assets to Own Funds include recognition of subordinated debt capital and non-controlling interests.
6 The estimated Solvency II position represents the shareholder view. It excludes the contribution to Group SCR and Group Own Funds of fully ring-fenced with-profits funds 2.9 billion (2015: 2.7 billion) and staff pension schemes in surplus 1.1 billion (2015: 0.7 billion) - these exclusions have no impact on Solvency II surplus.
Page 33
Financial supplement
Page
A
Income & expenses
34
B
IFRS financial statements and notes
39
C
Capital & liquidity
97
D
Analysis of assets
101
E
VNB & Sales analysis
123
In this section
A
Income & expenses
34
Reconciliation of Group operating profit to profit after tax
34
A1
Other operations
35
A2
Corporate centre
35
A3
Group debt costs and other interest
35
A4
Life business: Investment return variances and economic assumption changes
36
A5
Non-life business: Short-term fluctuation in return on investments
37
A6
General insurance and health business: Economic assumption changes
37
A7
Impairment of goodwill, associates, joint ventures and other amounts expensed
38
A8
Amortisation and impairment of acquired value of in-force business 
38
A9 
Profit/loss on the disposal and re-measurement of subsidiaries, joint ventures and associates
38
A10 
Other
38
Page 34
Reconciliation of Group operating profit to profit after tax
For the year ended 31 December 2016
2016
m
Restated1
2015
m
Operating profit before tax attributable to shareholders' profits
Life business
United Kingdom & Ireland
1,555 
1,455 
Europe
844 
766 
Asia
241 
244 
Other
2 
(23)
Total life business
2,642 
2,442 
General insurance and health
United Kingdom & Ireland
471 
430 
Europe
120 
114 
Canada
269 
214 
Asia
(13)
(6)
Other
(14)
13 
Total general insurance and health
833 
765 
Fund management
Aviva Investors
139 
105 
Asia
(1)
1 
Total fund management
138 
106 
Other
Other operations (note A1)
(94)
(84)
Market operating profit
3,519 
3,229 
Corporate centre (note A2)
(184)
(180)
Group debt costs and other interest (note A3)
(325)
(361)
Operating profit before tax attributable to shareholders' profits
3,010 
2,688 
Integration and restructuring costs
(212)
(379)
Operating profit before tax attributable to shareholders' profits after integration and restructuring costs
2,798 
2,309 
Adjusted for the following:
Investment return variances and economic assumption changes on long-term business (note A4)
379 
14 
Short-term fluctuation in return on investments backing non-long-term business (note A5)
(518)
(84)
Economic assumption changes on general insurance and health business (note A6)
(242)
(100)
Impairment of goodwill, joint ventures and associates and other amounts expensed (note A7)
-
(22)
Amortisation and impairment of intangibles
(175)
(155)
Amortisation and impairment of acquired value of in-force business (note A8)
(540)
(498)
(Loss)/profit on the disposal and re-measurement of subsidiaries, joint ventures and associates (note A9)
(11)
2 
Other (note A10)
(498)
(53)
Non-operating items before tax
(1,605)
(896)
Profit before tax attributable to shareholders' profits
1,193 
1,413 
Tax on operating profit
(706)
(603)
Tax on other activities
372 
287 
(334)
(316)
Profit for the year
859 
1,097 
1 Following a correction to accounting and modelling for annual management charge rebates in UK Life, prior year comparatives have been restated. This has led to an increase in operating profit and profit before tax of 23 million for 2015 and an increase in opening retained earnings for 2015 of 20 million with an increase in equity at 31 December 2015 of 38 million. See note B2 for further details.
Page 35
Other Group Operating Profit Items
A1 - Other operations
2016
m
2015
m
United Kingdom & Ireland Life
(7)
(29)
United Kingdom & Ireland General Insurance
3 
5 
Europe
(19)
(22)
Asia
(26)
(16)
Other Group operations1
(45)
(22)
Total
(94)
(84)
1 Other Group operations include Group and head office costs. 
Other operations relate to non-insurance activities and include costs associated with our Group and regional head offices, pension scheme expenses, as well as non-insurance income. Total costs in relation to non-insurance activities were 94 million (2015: 84 million). 
'Other Group operations' includes increased investment in the development of the UK digital business, partly offset by an income of 19 million relating to insurance recoveries. Of this, 16 million was from the Group's internal reinsurer which therefore has a neutral effect on overall Group operating profit. 
A2 - Corporate centre
2016
m
2015
m
Project spend
(30)
(6)
Central spend and share award costs
(154)
(174)
Total
(184)
(180)
Corporate costs of 184 million increased by 4 million in 2016 (2015: 180 million) mainly due to an increase in Group led projects. This increase in project spend was offset by a decrease in central spend, which included Friends Life costs in 2015. 
A3 - Group debt costs and other interest
2016
m
2015
m
External debt
Subordinated debt
(387)
(335)
Other
(1)
(15)
Total external debt
(388)
(350)
Internal lending arrangements
(23)
(92)
Extinguishment of debt
-
(13)
Net finance income on main UK pension scheme
86 
94 
Total
(325)
(361)
Page 36
Non-operating profit items
A4 - Life Business: Investment variances and economic assumption changes
(a) Definitions 
Operating profit for life business is based on expected investment returns on financial investments backing shareholder and policyholder funds over the period, with consistent allowance for the corresponding expected movements in liabilities. Operating profit includes the effect of variance in experience for non-economic items, such as mortality, persistency and expenses, and the effect of changes in non-economic assumptions, where not treated as other items. Changes due to economic items, such as market value movements and interest rate changes, which give rise to variances between actual and expected investment returns, and the impact of changes in economic assumptions on liabilities, are disclosed separately outside operating profit.
(b) Economic volatility 
The investment variances and economic assumption changes excluded from the life operating profit are as follows:
Life business
2016
m
2015
m
Investment variances and economic assumptions
379 
14 
Investment variances and economic assumption changes were 379 million positive (2015: 14 million positive). Positive variances in the UK reflect lower interest rates and narrowing credit spreads, which increase asset values more than liabilities. In the first half of 2016 the Group revised its expectation of future property prices and rental income in light of the UK referendum vote for the UK to leave the European Union. The adverse impact of this adjustment on the Group's equity release and commercial mortgage portfolios has been broadly offset in the second half of the year as expectations for future property price and rental growth have increased. In addition, in the UK the investment variance reflects the refined approach of assuming best estimate expected credit defaults on corporate bonds with a resulting increase in operating profit in the period. The positive variance in the UK has been partially offset by negative variances in France and Italy. The negative variance in France reflects losses on equity hedges managed on an economic basis rather than an IFRS basis and falling interest rates, while the negative variance in Italy reflects widening credit spreads.
In 2015, positive investment variances of 14 million were driven by France and Asia, partially offset by a negative variance in Italy. The positive variance in France reflected realised bond gains and equity outperformance, while the positive variance in Asia was driven by increased interest rates in Singapore, which reduced liabilities by more than asset values. The negative variance in Italy was driven by widening credit spreads. The investment variance was largely neutral in the UK, reflecting the positive variance from a reduction in equity release asset default provisions following favourable property market performance, offset by the negative impact of widening credit spreads.
(c) Assumptions 
The expected rate of investment return is determined using consistent assumptions at the start of the period between operations, having regard to local economic and market forecasts of investment return and asset classification under IFRS.
The principal assumptions underlying the calculation of the expected investment return for equities and properties are:
Equities
Properties
2016
%
2015
%
2016
%
2015
%
United Kingdom
5.5%
5.4%
4.0%
3.9%
Eurozone
4.5%
4.3%
3.0%
2.8%
The expected return on equities and properties has been calculated by reference to the 10 year mid-price swap rate for an AA-rated bank in the relevant currency plus a risk premium. The use of risk premium reflects management's long-term expectations of asset return in excess of the swap yield from investing in different asset classes. The asset risk premiums are set out in the table below:
All territories
2016
%
2015
%
Equity risk premium
3.5%
3.5%
Property risk premium
2.0%
2.0%
The 10 year mid-price swap rates as at the start of the period are set out in the table below:
Territories
2016
%
2015
%
United Kingdom
2.0%
1.9%
Eurozone
1.0%
0.8%
For fixed interest securities classified as fair value through profit or loss, the expected investment returns are based on average prospective yields for the actual assets held less an adjustment for credit risk (assessed on a best estimate basis); this includes an adjustment for credit risk on all eurozone sovereign debt. Where such securities are classified as available for sale, the expected investment return comprises the expected interest or dividend payments and amortisation of the premium or discount at purchase.
Page 37
A5 - Non-life business: Short-term fluctuation in return on investments
General Insurance and health
2016
m
2015
m
Analysis of investment income:
- Net investment income
383 
240 
- Foreign exchange gains/losses and other charges
(35)
(10)
348 
230 
Analysed between:
- Longer-term investment return, reported within operating profit
343 
396 
- Short-term fluctuations in investment return, reported outside operating profit
5 
(166)
348 
230 
Short-term fluctuations:
- General insurance and health
5 
(166)
- Other operations1
(523)
82 
Total short-term fluctuations 
(518)
(84)
1 Represents short-term fluctuation on assets backing non-life business in Group centre investments, including the centre hedging programme. 
The longer-term investment return is calculated separately for each principal non-life business unit. In respect of equities and properties, the return is calculated by multiplying the opening market value of the investments, adjusted for sales and purchases during the year, by the longer-term rate of investment return. The longer-term rate of investment return is determined using consistent assumptions between operations, having regard to local economic and market forecasts of investment return. The allocated longer-term return for other investments is the actual income receivable for the year. Actual income and longer-term investment return both contain the amortisation of the discounts/premium arising on the acquisition of fixed income securities.
Market value movements which give rise to variances between actual and longer-term investment returns are disclosed separately in short term fluctuations outside operating profit.
The impact of realised and unrealised gains and losses on Group centre investments, including the centre hedging programme which is designed to economically protect the total Group's capital against adverse equity and foreign exchange movements, is included in short-term fluctuations on other operations. 
The adverse movement in short-term fluctuations during 2016 compared with 2015 are mainly due to foreign exchange losses on Group centre holdings, including the centre hedging programme, and Group external borrowings.
Total assets supporting the general insurance and health business, which contribute towards the longer-term return, are:
2016
m
2015
m
Debt securities
10,799 
9,608 
Equity securities
267 
217 
Properties
341 
335 
Cash and cash equivalents
1,162 
969 
Other1
2,032 
3,008 
Assets supporting general insurance and health business
14,601 
14,137 
Assets supporting other non-long term business2
724 
538 
Total assets supporting non-long term business
15,325 
14,675 
1 Includes the internal loan.
2 Represents assets backing non-life business in Group centre investments, including the centre hedging programme.
The principal assumptions underlying the calculation of the longer-term investment return are:
Longer-term rates of
return on equities
Longer-term rates of
return on property
2016
%
2015
%
2016
%
2015
%
United Kingdom
5.5%
5.4%
4.0%
3.9%
Eurozone
4.5%
4.3%
3.0%
2.8%
Canada
5.4%
5.8%
3.9%
4.3%
The longer-term rates of return on equities and properties have been calculated by reference to the 10 year mid-price swap rate for an AA-rated bank in the relevant currency plus a risk premium. The underlying reference rates and risk premiums are shown in note A4(c). 
A6 - General insurance and health business: Economic assumption changes 
Economic assumption changes of 242 million adverse (2015: 100 million adverse) mainly arise as a result of a decrease in the real interest rates used to discount claim reserves for periodic payment orders and latent claims. Market interest rates used to discount periodic payment orders and latent claims have reduced and the estimated future inflation rate used to value periodic payment orders has been increased to be consistent with market expectations. This has, in part, been offset by a change in estimate for the interest rate used to discount periodic payment orders to allow for the illiquid nature of these liabilities.
Page 38
A7 - Impairment of goodwill, joint ventures, associates and other amounts expensed 
There was no impairment of goodwill, associates and joint ventures expensed in the period (2015: 22 million charge). 
A8 - Amortisation and impairment of acquired value of in-force business
Amortisation of acquired value of in-force business in the year is a charge of 540 million (2015: 498 million charge). There were no impairments of acquired value of in-force business in the period (2015: nil). 
A9 - Loss/profit on the disposal and remeasurement of subsidiaries, joint ventures and associates 
The total Group loss on the disposal and remeasurement of subsidiaries, joint ventures and associates in the period is 11 million (2015: 2 million profit). This primarily relates to the Group's sale of its entire stake in its Irish private medical insurance business and a closed book of offshore bonds business which both completed in the third quarter of 2016. Further details are provided in note B4.
A10 - Other
Other items are those items that, in the directors' view, are required to be separately disclosed by virtue of their nature or incidence to enable a full understanding of the Group's financial performance. An exceptional charge of 475 million (2015: nil) relates to the impact of the change in the Ogden discount rate from 2.5% set in 2001 to minus 0.75% announced by the Lord Chancellor on 27 February 2017. 
 Other items also include a charge of 23 million (2015: 53 million charge), representing a recognition of the loss upon the completion of an outwards reinsurance contract, written in 2015 by the UK General Insurance business, which provides significant protection against claims volatility from mesothelioma, industrial deafness and other long tail risks.
ENDS
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