our hands. Everyone in the organisation knows that, and we all strive to be worthy of the trust our customers place in us.
Performance and dividend Overall operational performance improved in the year, despite having been impacted by a weaker euro exchange rate. The acquisition of Friends Life in April 2015 has had a significant effect on most metrics1.
Talk us through some of the numbers for 2015? Operating profit was up by 20% to £2.7 billion despite headwinds from foreign exchange.
} Launched a new leadership development programme called Leading@Aviva for society, we have: } Led debates on sustainable finance and the risk of climate change
} Increased community investment by 71% to £10.8 million by extending Aviva’s Community Funds around the world
5 Excludes Eurovita, Aseval, CxG, South Korea and Malaysia, which have been sold.
This measure expresses operating expenses as a percentage of operating income and improved by 1.1 percentage points to 50.0% during 2015.
We made strong progress in 2015 and are pleased to say we have already achieved a 39% reduction against a restated 2010 baseline to include Friends Life data.
For definitions of our financial performance indicators, turn to the glossary on pages 348-350.
Where the world is going 14 | Aviva plc Annual report and accounts 2015
Asset & liability management Customer premiums are invested by specialist teams to balance investment return with risk and to maintain sufficient funds to pay claims. We match liabilities to assets whenever possible.
Financial strength Our financial strength gives customers confidence that we will pay out in the event of a claim and meet our promises many years into the future, as we have done for over 300 years.
Capital allocation We focus on markets and products where we have scale, profitability or competitive advantage. We deploy capital selectively to focus on the things we’re good at.
What we plan to do next We will continue to develop our True Customer Composite proposition across our markets. As well as the further roll-out of MyAviva, we will look to extend our asset management and accident & health offer. The latter is a key part of our composite proposition and an area in which we have historically been underrepresented (see Spotlight on page 23).
Digital First helps make True Customer Composite central to a new relationship with customers which builds on our understanding of how customers want to use our products in a digital world.
Increase in visits to Aviva.co.uk via mobile and tablet devices in 2015
Strateg ic rep o rt again and, as the local mayor said “everybody came together to make it work” – that included Aviva, as the Market’s insurer.
} Continue the transformation of the business to make the most of digital technology, and ensure our products and services are accessible to all our customers, new and existing, including the continuing enhancement of MyAviva 2 Operating profit has been restated to exclude amortisation and impairment of acquired value of in-force business, which is now shown as a non-operating item.
with our broad product range we are well placed to meet customers’ needs
Looking ahead, we expect further significant changes in the market over the next two to three years. The Government is expected to announce the outcome of the Financial Advice Market Review (FAMR) which could have significant implications for how we engage with our customers, and their advisers. In addition, the UK Chancellor has indicated he may announce reforms to the taxation of pensions. We expect continued evolution of regulation around retirement income, and 2017 will see the introduction of a secondary market in annuities, as well as a review of Auto-Enrolment. With so much change on the horizon, it is vital that we are engaged with Government and regulators to ensure that their reforms
We have market leading capabilities in the insurance fundamentals: underwriting, pricing, claims management and predictive analytics. We utilise the strength and expertise around the businesses to use and share best practice. For example, we’ve created a single centre of excellence to combat insurance fraud.
Financial performance Total cash remitted to Group was £358 million (2014: £294 million).
} Continue to deliver profitable growth in general insurance by improving our underwriting and analytics capabilities hIGhLIGhtStransact with us through face-to-face meetings, telephone and digital.
We have grown our general insurance premiums by 3% in constant currency excluding disposals whilst improving our combined operating ratio to a healthy 95.4%. General insurance and health operating profit was £114 million (2014: £113 million), up 12% on a constant currency basis mainly driven by the disposal of the loss-making Turkey GI business in December 2014.
Overview We have more than 3.3 million customers in France and offer a full range of life, protection, pension, general insurance, health and asset management products.
We also upgraded our distribution capabilities with the addition of Mike Cranston as Global Head of Business Development and Louise Kay as Global Head of Client Solutions.
And in 2015 we continued to make strong progress, while being clear about how much further we still have to travel.
Financial crime can severely impact businesses, increasing costs for customers. To manage and mitigate this risk across our business every Aviva employee – from the boardroom to our contact centres – receives training on financial crime prevention, in areas such as market abuse, anti-money laundering and fraud.
} A leading business voice in the debate around the Sustainable Development Goals and the Climate Change Summit in Paris
Under the Carbon Reduction Commitment Energy Efficiency Scheme, we reported total emissions of 312,925 CO2e in 2015, costing £2.1 million. This scheme is restricted to UK businesses emissions from building energy, and includes the property portfolio of our investment funds managed by Aviva Investors.
Michael was very fond of his car and thought it was a write-off, but had a more welcome surprise when Aviva, as his insurer, found a way to repair it. The physical and psychological scars, as he said, “took quite a lot of time to deal with.”
In 2016 the full impact of the Friends Life acquisition will affect Aviva, with year end 2015 shares outstanding of 4,048 million.
Excess centre cash flow of £699 million in 2015 did not show improvement from the £692 million in 2014, but this also reflects our decision to retain cash in Canada, rather than pay a planned dividend, to partly fund the proposed acquisition of Royal Bank of Canada General Insurance Company.
in those businesses and our group expenses include a significant investment in digital.
• On-going investment in simplifying our technology estate to improve the resilience and reliability of our systems
For us, conduct risk management is all about doing the right thing for our customers
As Chairman and as a Board, we take our governance responsibilities extremely seriously: we take pride not only in what we do but also in the way that we conduct our business and deliver our strategy. Our governance structure is key to this: good governance helps to deliver value for customers and shareholders and to manage the inherent risks of the business prudently.
Governance framework This year the Board and each of its committees have applied the revised UK Corporate Governance Code (the Code), to the Group for the 2015 financial year. Whilst many of the recommendations were adopted in our 2014 annual report, one new element for 2015 is that the Board is required to make a statement of Aviva’s longer-term viability. The Board has decided to present a viability statement that will cover the three year period to 2018 and the assessment of the Group’s prospects are underpinned by management’s 2016-2018 business plan. The longer-term viability statement can be found in Other Statutory Information later in this report.
Note: percentages are shown as a proportion of the Board/Group Executive and do not equal 100%.
External Appointments: Michael is currently the senior independent director at the Care Quality Commission.
Kirstine is a lawyer and held a number of legal and senior management roles within Aviva’s legacy companies before leading the Group legal function of Aviva for eight years.
The Board’s view is that the Company was compliant throughout the accounting period with the relevant provisions of the Code. Further information on the Code can be found on the Financial Reporting Council’s website www.frc.org.uk
Digital Governance Our strategy is to maximise our competitive advantage as a composite insurer and asset manager by putting digital first. That means integrating digital throughout our businesses so that we can provide better products and services for our customers.
Solvency II – 8% Approve the Group’s Partial Internal Model Application Package (IMAP).
1 John McFarlane retired from the Board and the Nomination Committee on 29 April 2015. 2 Sir Adrian Montague was appointed as Chairman of the Company on 29 April 2015 and Chairman of the Nomination Committee on 14 May 2015. He resigned as a member of the Audit and Governance Committees on 14 May 2015. Sir Adrian was unable to participate in one ad hoc Board call due to a prior engagement which could not be altered.
The review of the performance of John McFarlane, who was Chairman until the Company’s AGM, concluded that he continued to operate to a high level, exhibiting positive leadership and ensuring that the necessary conditions for effective discussion both on an individual and Board level were met.
Induction, training and development The Board and the Chairman believe strongly in the development of the directors and the Group’s employees. It is a requirement of each director’s appointment that they commit to continuing their professional development.
The chart above shows the Board and committee structure that oversees the Company’s frameworks for risk management and internal control.
• material existing or emerging risks within the business have been identified and assessed and the business operates in a manner which conforms to the minimum requirements outlined in Group risk policies and business standards
What are the Committee’s priorities in 2016? The Committee made a recommendation to the Board that Claudia Arney be appointed as a NED and this appointment was made on 8 February 2016. This appointment is in line with the Committee’s plans for succession that were identified during 2015 and has helped the Company move nearer to its target of having 25% of female representation on the Board.
Scott Wheway was appointed to the Committee on 14 May 2015 and Belén Romana García was appointed as a member of the Committee on 26 June 2015. Gay Huey Evans served on the Committee until she retired on 29 April 2015. The members of the Committee are shown in the table above and details of members’ attendance at Committee meetings are shown in the table earlier in the directors’ and corporate governance report.
As part of our activities, we review the risks inherent in our investment portfolios and in the insurance products we offer our clients, as well as the operational risks present in the business.
Group Capital, Financial Plan, Liquidity and Stress Testing – 14% Review and monitor the risks to and arising from the Company’s strategy and business plan and major transactions.
In response to the new regulatory requirement for whistleblowing in large financial services firms, including insurers, I agreed to be the whistleblowers’ champion for the Group.
Discuss control issues identified by Internal Audit and review reports on the Group’s malpractice reporting.
What is the main function of the Governance Committee and what is its role? The Committee’s role is to help the Board to shape and direct the culture and ethical values of the Aviva Group by overseeing and advising on conduct, reputation, corporate responsibility and sustainability, people, regulatory and financial crime matters. The focus of the Committee adapts as the business and regulatory environment evolves – for example, in 2014 we extended the remit to oversee all forms of risk that impact customer outcomes and during 2015 to oversee the governance processes within our UK Digital business.
At the 2016 AGM, shareholders will be asked to renew the directors’ authority to allot new securities. Details are contained in the 2016 Notice of Annual General Meeting (Notice of AGM).
Fair, balanced and understandable To support the directors’ statement below that the Annual report and accounts, taken as a whole, is fair, balanced and understandable, the Board considered the process followed to draft the Annual report and accounts: • each section of the Annual report and accounts is prepared by a member of management with appropriate knowledge, seniority and experience. Each preparer receives guidance on the requirement for content included in the Annual report and accounts to be fair, balanced and understandable
Key 2015 performance highlights and acquisition of Friends Life Group (FLG) 2015 was a milestone year for the Group and saw a renewed focus on the transformation of the business, securing the balance sheet and growing profitability. Our Solvency II (SII) cover ratio is 180%, operating profit grew 20% to £2,665 million, value of new business increased for the 12th consecutive quarter, and the combined operating ratio improved 1.1 points to 94.6%. The improved financial strength, and sustained operational performance underpin the 15% increase in our final dividend.
• Never Rest - because our competitors won't and all of our stakeholders require our constant engagement; and
Overview of Policy (approved in 2015)  Set by reference to relevant pay data, levels of increase for the broader UK employee population and individual and business performance
Review and recommend to management the level and structure of senior management remuneration.
Weighting 100% Metric 25% Cash remittances 15% Economic surplus generation 20% VNB
Cash Remittances (35% Financial KPI weighting at target) £1,267m £1,472m £1,412m 30.9% 20.6%
2013 LTIP award vesting in respect of performance period 2013-2015 As mentioned in the Chairman’s letter, the targets for both the 2013 and 2014 LTIPs were adjusted to ensure that they were appropriately calibrated for the enlarged Group to support the realisation of benefits from the acquisition and the achievement of the Group’s strategic agenda.
Due to the de-listing of FLG during the performance period, for the purposes of assessing TSR performance over the period, FLG’s performance was re-invested in Aviva reflecting the subsequent conversion of FLG shares to Aviva shares. Performance for the 2013 grant was assessed against the following companies: Aegon, Allianz, Assicurazioni Generali, Axa, CNP Assurances, Direct Line Group, FLG (with performance subsequently reinvested in Aviva), Legal & General, MetLife, Old Mutual, Prudential, RSA Insurance Group, Standard Life and Zurich Financial.
FLG Payments to current directors Remuneration in relation to employment with FLG In the interests of transparency with our shareholders, we are making an additional voluntary disclosure and details of awards relating to Andy's employment with FLG are set out below. This is in line with the disclosure previously made in FLG acquisition documents. All awards relate to the performance of FLG, and payments were determined by the FLG Remuneration Committee prior to the completion of the acquisition and relate to contractual arrangements between Andy and FLG.
Single total figure of remuneration for 2015 – Non-Executive Directors (NED) (audited information) The table below sets out the total remuneration earned by each NED who served during 2015.
Approach to Non-Executive Directors’ fees for 2016 NED fees were last reviewed in March 2016. No changes are made to the current fee levels, as set out in the table below: 17 Non-Executive Directors’ fees
Actual targets for ROE and the appropriate TSR comparator group are agreed by the Committee annually and disclosed in the annual remuneration report section.
Clawback was introduced in 2015 so applies to the annual bonus from 2015 (paid March 2016) and the LTIP awards granted in 2015 and any future awards.
Consolidated income statement 147 Consolidated statement of comprehensive income 148 Reconciliation of Group operating profit to profit for the year 149 Consolidated statement of changes in equity 151 Consolidated statement of financial position 152 Consolidated statement of cash flows 153
• We performed reasonableness checks on the modelled results of management’s analysis of change, including testing over the controls improvements implemented in Friends Life in the second half of the year to respond to limitations in the analysis.
In respect of the expense assumptions: • We understood and tested the governance process in place to determine the maintenance expense and expense inflation assumptions.
Given their size in relation to the consolidated Group and the complexity of the judgements involved our work focused on the liabilities in the UK General Insurance and Canada markets.
In December 2015, the IASB published an Exposure Draft to consult on amendments to IFRS 4 Insurance Contracts that would address the accounting consequences of the application of IFRS 9 to insurers prior to the publication of the new accounting standard for insurance contracts. The ED introduces two alternative options to insurers: the overlay approach and the deferral approach. The deferral approach provides an entity, if eligible, with a temporary exemption from applying IFRS 9 until the earlier of the effective date of a new insurance contract standard or 2021.The overlay approach allows an entity to remove from profit or loss the effects of some of the accounting mismatches that may occur before the new insurance contracts standard is applied. These amendments are expected to be finalised and issued in 2016.
(viii) Amendments to IFRS 10 and IAS 28 – Sale of Contribution of Assets between an Investor and its Associate or Joint Venture
Consolidation Assessment of whether the Group controls the underlying entities including consideration of its decision making authority and the rights the variable returns from the entity
Calculation and recognition of temporary differences giving rise to deferred tax balances includes estimates of the extent to which future taxable profits are available against which the temporary differences can be utilised
Provisions for latent claims are discounted, using rates based on the relevant swap curve, in the relevant currency at the reporting date, having regard to the expected settlement dates of the claims. The discount rate is set at the start of the accounting period with any change in rates between the start and end of the accounting period being reflected below operating profit as an economic assumption change. The range of discount rates used is described in note 40(c)(ii). Outstanding claims provisions are valued net of an allowance for expected future recoveries. Recoveries include non-insurance assets that have been acquired by exercising rights to salvage and subrogation under the terms of insurance contracts.
The amortisation charge for the year is included in the income statement under ‘Other expenses’. For intangibles with finite lives, impairment charges will be recognised in the income statement where evidence of such impairment is observed. Intangibles with indefinite lives are subject to regular impairment testing, as described below.
(R) Impairment of non-financial assets Property and equipment and other non-financial assets are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in the income statement for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows. Non-financial assets except goodwill which have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
(W) Collateral The Group receives and pledges collateral in the form of cash or non-cash assets in respect of stock lending transactions, certain derivative contracts and loans, in order to reduce the credit risk of these transactions. Collateral is also pledged as security for bank letters of credit. The amount and type of collateral required depends on an assessment of the credit risk of the counterparty.
154 | Aviva plc Annual report and accounts 2015 1 – Presentation changes Management has changed the definition of Group operating profit on an IFRS basis to exclude amortisation and impairment of acquired value of in-force business (‘AVIF’), aligning the presentation of this item with the amortisation and impairment of intangible assets as non-operating items. Comparatives have been restated as shown below. This change in presentation had no impact on reported profit or loss or equity, the statement of financial position or the statement of cash flows.
2 – Exchange rates The Group’s principal overseas operations during the year were located within the eurozone, Canada and Poland. The results and cash flows of these operations have been translated into sterling at the average rates for the year and the assets and liabilities have been translated at the year end rates as follows: Eurozone Average rate (€1 equals) £0.72 £0.81 Year end rate (€1 equals) £0.74 £0.78 Canada Average rate ($CAD1 equals) £0.51 £0.55 Year end rate ($CAD1 equals) £0.49 £0.55 Poland Average rate (PLN1 equals) £0.17 £0.19 Year end rate (PLN1 equals) £0.17 £0.18 3 – Subsidiaries This note provides details of the acquisitions and disposals of subsidiaries, joint ventures and associates that the Group has made during the year, together with details of businesses held for sale at the year end.
Liabilities Insurance liabilities 36,068 12 36,080 Liability for investment contracts 68,778 (129) 68,649 Unallocated divisible surplus 724 — 724 Net asset value attributable to unitholders 212 — 212 Deferred tax liabilities 1,203 240 1,443 Borrowings 1,064 243 1,307 Other liabilities 2,355 668 3,023
Profit/(loss) before tax attributable to shareholders’ profits 2,075 759 105 (658) 2,281 Adjusted for: Non-operating items from continuing operations3 (56) 49 (19) (42) (68)
Gross insurance liabilities 127,050 13,506 — — 140,556 Gross liabilities for investment contracts 181,173 — — — 181,173 Unallocated divisible surplus 8,811 — — — 8,811 Net asset value attributable to unitholders 3,479 — — 7,936 11,415 External borrowings 1,857 — — 6,913 8,770 Other liabilities, including inter-segment liabilities 15,387 (307) 346 3,491 18,917 Liabilities of operations classified as held for sale — — — — —
Share of profit after tax of joint ventures (note 18) 162 129 Share of profit/(loss) after tax of associates (note 19a) 18 18 Share of profit after tax of joint ventures and associates 180 147 Profit on disposal and remeasurement of subsidiaries, joint ventures and associates (note 3b) 2 174
Participating investment contracts (note 41) 1,270 3,218 Non-participating investment contracts (2,957) 678
The effect of differences between actual and expected economic experience on liabilities, and changes to economic assumptions used to value liabilities, are taken outside operating profit. For many types of long-term business, including unit-linked and with-profits funds, movements in asset values are offset by corresponding changes in liabilities, limiting the net impact on profit. For other long-term business the profit impact of economic volatility depends on the degree of matching of assets and liabilities, and exposure to financial options and guarantees.
Fees payable to PwC LLP and its associates for services to Group companies 34.5 26.2
Tax calculated at standard UK corporation tax rate of 20.25% (2014: 21.5%) 281 (44) 237 503 82 585 Reconciling items
Profit/(loss) attributable to ordinary shareholders from discontinued operations — — — — 58 58
Profit/(loss) attributable to ordinary shareholders 1,841 (997) 844 1,421 62 1,483 1 Operating profit has been restated to exclude amortisation and impairment of acquired value of in-force business, which is now shown as a non-operating item. See note 1 for further details. There is no impact on the result or the total equity for any period presented as a result of this restatement.
Diluted operating profit per share from continuing operations 1,841 3,780 48.7 1,421 2,987 47.6
176 | Aviva plc Annual report and accounts 2015 16 – Goodwill This note analyses the changes to the carrying amount of goodwill during the year, and details the results of our impairment testing on both goodwill and intangible assets with indefinite lives.
If required, the present value of expected profits arising from future new business written over a given period is calculated on an MCEV basis, using profit projections based on the most recent three year business plans approved by management. These plans reflect management’s best estimate of future profits based on both historical experience and expected growth rates for the relevant cash generating unit. The underlying assumptions of these projections include market share, customer numbers, mortality, morbidity and persistency.
Property management undertakings — 1,097 94 1,191 — 692 73 765 Long-term business undertakings 77 288 — 365 87 278 — 365 General insurance and health undertakings 13 21 — 34 — 10 — 10
(a) Carrying amount and details of associates (i) The movements in the carrying amount comprised: Goodwill and intangibles £m
1 The Group has significant influence over Encore+ and it is therefore accounted for as an associate.
Total net fair value gains of £39 million on owner occupied properties consist of £27 million gains (2014: £7 million gains) which have been taken to other comprehensive income, £13 million reversal of losses taken to the income statement in previous years and £1 million of losses in the year (2014: £3 million losses) which have been taken to the income statement.
Recurring fair value measurements Investment Property (note 21) — — 8,925 8,925 — 8,925 Loans (note 23 (a)) — 3,895 17,000 20,895 4,365 25,260 Financial investments measured at fair value (note 26 (b))
Other debt securities of £10,765 million (2014: £8,177 million) include residential and commercial mortgage-backed securities, as well as other structured credit securities.
Austria 14 11 697 705 140 107 851 823 Belgium 34 28 1,195 1,368 166 165 1,395 1,561 France 139 103 10,673 11,182 1,846 1,950 12,658 13,235 Germany 145 142 1,470 1,590 590 591 2,205 2,323 Greece — — — — — — — — Ireland 12 5 595 613 100 155 707 773 Italy 319 330 6,090 6,666 442 485 6,851 7,481 Netherlands 31 43 1,156 1,336 302 414 1,489 1,793 Poland 559 571 689 823 399 443 1,647 1,837 Portugal 7 6 110 173 — — 117 179 Spain 98 104 1,093 1,263 636 694 1,827 2,061 European Supranational debt 72 61 2,798 2,952 1,760 1,826 4,630 4,839 Other European countries 167 133 1,107 1,040 520 473 1,794 1,646
At 1 January 2,950,487,340 737 1,172 2,946,939,622 736 1,165 Shares issued under the Group’s Employee and Executive Share Option
The comparative figures as at 31 December 2014 were: Range of exercise prices
(a) Shares held by employee trusts Prior to 2014, we satisfied awards and options granted under the Group’s share plans primarily through shares purchased in the market and held by employee share trusts. From 2014 we primarily issue new shares except where it is necessary to use shares held by an employee share trust. In 2015 however, new shares were issued to the trust, in order to facilitate the release of shares. This note gives details of the shares held in these trusts. Movements in the carrying value of shares held by employee trusts comprise: Number £m Number £m
Outstanding claims provisions 1,702 7,063 8,765 1,343 7,298 8,641 Provision for claims incurred but not reported — 2,383 2,383 — 2,578 2,578
- Old With-Profits Sub-Fund (OWPSF), With-Profits Sub-Fund (WPSF) and Provident Mutual Sub-Fund (PMSF) of UKLAP, where the with-profit policyholders are entitled to at least 90% of the distributed profits, with the shareholders receiving the balance.
- The Friends Provident Life Assurance Limited With-Profits Fund (FPLAL WPF), which is closed to new business and where policyholders are entitled to 100% of the distributed profits.
Annuities Conventional immediate and deferred annuities 0.9% to 3.6% 1.3% to 3.3%
(iv) Movements The following movements have occurred in the gross long-term business provisions during the year: Carrying amount at 1 January 98,110 94,972 Provisions in respect of new business 4,059 4,796 Expected change in existing business provisions (8,180) (5,806) Variance between actual and expected experience 428 1,383 Impact of operating assumption changes (735) (1,118) Impact of economic assumption changes (2,242) 6,819 Other movements 30 (227) Change in liability recognised as an expense (note 40a(ii)) (6,640) 5,847 Effect of portfolio transfers, acquisitions and disposals1,2 35,099 (805) Foreign exchange rate movements (1,221) (1,904)
(ii) Discounting Outstanding claims provisions are based on undiscounted estimates of future claim payments, except for the following classes of business for which discounted provisions are held: Rate Mean term of liabilities
During 2015, the propensity for new bodily injury claims settled by periodic payment orders (PPOs) or structured settlements, which are reserved for on a discounted basis, has remained fairly stable.
Key elements of the movement in prior accident year general insurance and health net provisions during 2014 were: • £112 million release from UK & Ireland due to favourable development on personal and commercial motor, and commercial property claims. • £97 million release from Canada mainly due to continued favourable experience on motor, following the legislative changes in
Carrying amount at 31 December 78,048 67,232 1 The movement during 2015 relates to Friends Life, as at the acquisition date and the movement during 2014 relates to the disposal of Eurovita.
The variance between actual and expected experience of £1.6 billion is primarily driven by favourable equity returns in Europe. The impact of assumption changes in the analysis shows the resulting movement in the carrying value of participating investment contract liabilities. For participating business, a movement in liabilities is generally offset by a corresponding adjustment to the unallocated divisible surplus and does not impact on profit. Where assumption changes do impact on profit, these are included in the effect of changes in assumptions and estimates during the year shown in note 44, together with the impact of movements in related non-financial assets.
216 | Aviva plc Annual report and accounts 2015 42 – Financial guarantees and options continued (iii) Guaranteed annuity options The Group’s UK with-profit funds have written individual and group pension contracts which contain guaranteed annuity rate options (GAOs), where the policyholder has the option to take the benefits from a policy in the form of an annuity based on guaranteed conversion rates. The Group also has exposure to GAOs and similar options on deferred annuities.
Other provisions comprise provisions throughout the Group for obligations such as costs of compensation, litigation and staff entitlements.
Surpluses included in other assets (note 28) 2,523 — — 2,523 2,695 — — 2,695 Deficits included in provisions (note 47) (422) (189) (75) (686) (41) (265) (85) (391)
UK– ASPS Club Vita pooled experience, including an allowance for future improvements 60 89.8 91.7 90.8 92.6 (29.8) (31.7) (30.8) (32.6) – RAC SAPS, including allowances for future improvement 65 87.5 90.1 89.3 91.6 (22.5) (25.1) (24.3) (26.6) – FPPS SAPS, including allowances for future improvement 60 88.6 90.2 89.6 91.9 (28.6) (30.2) (29.6) (31.9)
There were no significant contributions payable or prepaid in the consolidated statement of financial position as at either 31 December 2015 or 2014.
Movements in the year 1,602 (210) 1,392 185 (655) (470) Balance at 1 January 5,310 2,068 7,378 5,125 2,723 7,848 1 Gross issuances of commercial paper were £982 million in 2015 (2014: £1,830 million), offset by repayments of £985 million (2014: £1,829 million). 2 Certain subsidiary companies have purchased issued subordinated notes and securitised loan notes as part of their investment portfolios. In the consolidated statement of financial position, borrowings are shown net of these holdings but movements in such holdings over the year are reflected in the tables above.
In June 2015 Aviva plc issued €900 million and £400 million of Lower Tier 2 subordinated debt callable in 2025 and 2030 respectively. The proceeds were used in part to repay the following instruments: £268 million Step-up Tier 1 Insurance Capital Securities at first call date in July 2015; €500 million undated subordinated debt at first call date in September 2015; and £200 million debenture loans in September 2015, ahead of the June 2016 maturity.
Risk models are an important tool in our measurement of risks and are used to support the monitoring and reporting of the risk profile and in the consideration of the risk management actions available. We carry out a range of stress (where one risk factor, such as equity returns, is assumed to vary) and scenario (where combinations of risk factors are assumed to vary) tests to evaluate their impact on the business and the management actions available to respond to the conditions envisaged.
(x) Impairment of financial assets In assessing whether financial assets carried at amortised cost or classified as available for sale are impaired, due consideration is given to the factors outlined in accounting policies (T) and (V). The following table provides information regarding the carrying value of financial assets subject to impairment testing that have been impaired and the ageing of those assets that are past due but not impaired. The table excludes assets carried at fair value through profit or loss.
Debt securities 1,021 — — — — — 1,021 Reinsurance assets 5,425 — — — — — 5,425 Other investments 1 — — — — 4 5 Loans 4,286 2 2 — — 75 4,365 Receivables and other financial assets 5,849 60 9 7 8 — 5,933
(i) Brand and reputation risk We are exposed to the risk that litigation, employee misconduct, operational failures, the outcome of regulatory investigations, media speculation and negative publicity, disclosure of confidential client information, inadequate services, whether or not founded, could impact our brands or reputation. Any of our brands or our reputation could also be affected if products or services recommended by us (or any of our intermediaries) do not perform as expected (whether or not the expectations are founded) or customers’ expectations for the product change. We seek to reduce this risk to as low a level as commercially sensible.
The Group uses a variety of derivative financial instruments, including both exchange traded and over-the-counter instruments, in line with our overall risk management strategy. The objectives include managing exposure to market, foreign currency and/or interest rate risk on existing assets or liabilities, as well as planned or anticipated investment purchases.
Amounts receivable related to securities lending and reverse-repurchase arrangements totalling £2,723 million (2014: £3,763 million) are recognised within ‘Loans to banks’ in note 23(a).
The increase in total key management compensation in 2015 mainly reflects the effect of an increase in the number of employees classified as key management compared to 2014.
Associates and joint ventures The Group has ongoing interests in the following operations that are classified as joint ventures or associates. Further details of those operations that were most significant in 2015 are set out in notes 18 and 19 to the financial statements.
A.G.S Lanka (Private) Limited Sri Lanka 2 Of 6 Pence Shares 100 A.G.S. Customer Services (India) Private Limited India Ordinary Shares 100 Aberdeen A M L&P Multiast (Ex Prop) 1 Gross United Kingdom OEIC 27 Aberdeen Multi Asset A Acc United Kingdom OEIC 43 Aberdeen UK Tracker Fund United Kingdom Unit Trust 23 Actions France M France Mutual Fund 67 Actis China Investment Company Limited Mauritius US$ A Shares 40 Ad Rate Sp Zoo Poland Ordinary Shares 90 AFER - SFER France Ordinary Shares 50 Afer Actions Amerique Fcp France Mutual Fund 100 Afer Actions Euro A France Mutual Fund 100 Afer Actions Euro I France Mutual Fund 100 Afer Actions Monde France Mutual Fund 100 Afer Actions Pme C. France Mutual Fund 100 Afer Convertibles C. France Mutual Fund 100 Afer Diversifie Durable France Mutual Fund 100 AFER Immo France Ordinary Shares 100 Afer Marches Emergents Fcp France Mutual Fund 100 Afer Objectif 2017 Fcp France Mutual Fund 100 Afer Obl Md Ent C. France Mutual Fund 100 Afer Patrimoine France Mutual Fund 100 Afer-Flore France Mutual Fund 95 AFRP S.à r.l. Luxembourg Ordinary Shares 100 Agents 3A France Ordinary Shares 50 Agenzia Aviva Srl Italy Ordinary Shares 100 Ahorro Andaluz, S.A Spain Ordinary Shares 70 Ai Eu Cr B 1-3 Hd France Mutual Fund 60 Ai Euro Credit Bonds France Mutual Fund 92 Ai Euro Crédit Bonds 1-3 Hd R France Mutual Fund 92 Ai Inflation Euro France Mutual Fund 100
Biomass UK No.3 Limited United Kingdom Ordinary 'A' Shares 100 260 | Aviva plc Annual report and accounts 2015
F&C Institutional Investment Funds ICVC - Institutional UK Equity Fund United Kingdom OEIC 51 F&C Investment Funds ICVC - North American Fund United Kingdom OEIC 22 F&C Investment Funds ICVC II - Global Bond Fund United Kingdom OEIC 26 F&C Investment Funds ICVC II - Pacific Growth Fund United Kingdom OEIC 29 F&C Investment Funds ICVC III - Strategic Bond Fund United Kingdom OEIC 44 F&C Multi-Capital Fund ICVC - F&C MM Navigator Progressive United Kingdom OEIC 28 F&C Multi-Capital Fund ICVC - F&C MM Navigator Select United Kingdom OEIC 40 F&C Private Equity Trust plc United Kingdom Ordinary Shares 24 Fastighets AB Lagomstansen Sweden Ordinary Shares 100 Financial Options Services Limited United Kingdom Ordinary Shares 82 Financiere du Carrousel France Ordinary Shares 76 Finoa Srl Italy Quota Shares 100 First-Aviva Life Insurance Co., Ltd. 3 Taiwan Ordinary Shares 49 Fitzroy Place GP 2 Limited United Kingdom Ordinary Shares 50 Fitzroy Place Management Co Limited United Kingdom Ordinary Shares 50 Fitzroy Place Residential Limited United Kingdom Ordinary Shares 50 FLG Holdings Limited Guernsey Ordinary Shares 100 Focus Mall Zielona Gora Sp Zoo Poland Ordinary Shares 100 Focus Park Piotrków Trybunalski sp.z o.o. Poland Ordinary Shares 100 Focus Park Zielona Góra sp.z o.o. Poland Ordinary Shares 100 FP (Portfolio) Nominees Limited United Kingdom Ordinary Shares 100 FP Finance plc United Kingdom Ordinary Shares 100 FP Financial Management Limited United Kingdom Ordinary Shares 100 FP Group Limited United Kingdom Ordinary Shares 100 FPB Holdings GmbH Germany Series A Shares
The Ocean Marine Insurance Company Limited United Kingdom Ordinary Shares 100 The Square Brighton Limited United Kingdom Ordinary Shares 100 The Welsh Insurance Corporation Limited United Kingdom Ordinary Shares 100 The Yorkshire Insurance Company Limited United Kingdom Ordinary Shares 100 Tokyo Recovery Fund FCP-SIF Luxembourg FCP 10 Traders General Insurance Company Canada Common Shares 100 Triseas Korea Property Fund L.P. Jersey Limited Partnership 48 Tyne Assets (No 2) Limited United Kingdom Ordinary Shares 100 Tyne Assets Limited United Kingdom Ordinary Shares 100 Ubi Sicav Euro Fixed Income Cl I Italy SICAV 34 Ubi Sicav Euro Liquidity Cl I Italy SICAV 28 Ubi Sicav Global Corporate Bond Italy SICAV 29 Ubs L Bd Co Gl Ia3d D. France Mutual Fund 78 Uff Act Fce A 4d C. France Mutual Fund 100 Uff Actions France I France Mutual Fund 100 Uff Avenir Euro-Valeur France Mutual Fund 100 Uff Cap Defensif France Mutual Fund 100 Uff Cap Diversifie France Mutual Fund 47 Uff Capital Planete A France Mutual Fund 100 Uff Context Hy Lg Terme A France Mutual Fund 100 Uff Croissance Pme A France Mutual Fund 100 Uff Diversifie 0-70 A France Mutual Fund 100 Uff Emergence A France Mutual Fund 100 Uff Emergence I France Mutual Fund 100 Uff Eu-Val 0-100 A C. France Mutual Fund 100 Uff Gde Eur 0-100 A France Mutual Fund 100 Uff Gestion Fl 0-100 A France Mutual Fund 99 Uff Gestion Fl 0-30 A France Mutual Fund 98 Uff Gestion Fl 0-70 A France Mutual Fund 99 Uff Gestion Flexible 0-100 I France Mutual Fund 99 Uff Gestion Flexible 0-70 I France Mutual Fund 99 Uff Grande Europe 0-100 I France Mutual Fund 99 Uff Liberty A France Mutual Fund 100 Uff Liberty I France Mutual Fund 100 Uff Oblicontext 2021 A C. France Mutual Fund 99 Uff Oblicontext Sept.2020 A France Mutual Fund 100 Uff Obligations 3-5 C. France Mutual Fund 86 Uff Obligations 5-7 A France Mutual Fund 100 Uff Rendement Diversifie A France Mutual Fund 100 Uff Select Alpha A C. France Mutual Fund 100 Uff Selection Premium A France Mutual Fund 99 268 | Aviva plc Annual report and accounts 2015
(iv) Tax reconciliation The tax on the Company’s profit before tax differs from the theoretical amount that would arise using the tax rate of the home country of the Company as follows: Profit before tax 562 496
Balance at 1 January 2014 735 8,902 54 3,158 Arising in the year: Profit for the year — — — 563 Fair value gains on investments in subsidiaries and joint ventures — 866 — — Actuarial gains on pension provision — — — (1) Dividends and appropriations — — — (551) Reserves credit for equity compensation plans — — 39 — Trust shares distributed in the year — — — (18) Issue of share capital under equity compensation scheme — — (28) 24 Redemption of direct capital instrument — — — (57) Aggregate tax effect — — — 19
Liquidity risk Liquidity risk is the risk of not being able to make payments as they become due because there are insufficient assets in cash form. The Company’s main sources of liquidity are liquid assets held within the Company and its subsidiaries Aviva Group Holdings Limited (AGH) and Friends Life Holdings plc, and dividends received from the Group’s insurance and asset management businesses. Sources of liquidity in normal markets also includes a variety of short and long-term instruments including commercial papers and medium and long-term debt. In addition to the existing liquid resources and expected inflows, the Company maintains significant undrawn committed borrowing facilities (£1,650 million) from a range of leading international banks to further mitigate this risk.
Maturity analysis of external borrowings and amounts due to and by subsidiaries are provided in notes F and I respectively.
We generally do not hedge foreign currency revenues, as we retain local currency in each business to support business growth, to meet local and regulatory market requirements and to maintain sufficient assets in local currency to match local currency liabilities.
Adjusted operating profit before tax after integration and restructuring costs 2,286 2,073 1,734
Adjusted operating profit before tax (from continuing operations) Year ended 31 December 2015 Adjusted operating profit before tax increased by £452 million to £2,665 million (2014: £2,213 million1) for the reasons set out in the market performance section below.
Net Written Premiums (from continuing operations) Year ended 31 December 2015 Net written premiums for continuing operations were £19,035 million (2014: £20,056 million) which includes a reinsurance premium ceded of £712 million relating to an outwards reinsurance contract completed by the UK General Insurance business. Excluding this, net written premiums decreased by £309 million, or 2%, to £19,747 million (2014: £20,056 million).
Long-term insurance and savings premiums decreased by £98 million, or 1% to £11,658 million (2014: £11,756 million). Higher sales in France and the UK (mainly due to the contribution from Friends Life) were more than offset by lower premiums in Italy and Spain (mainly due to the effect of disposals in the prior period and adverse foreign exchange), and Ireland.
Expenses (from continuing operations) Year ended 31 December 2015 Claims and benefits paid net of reinsurance in 2015 increased by £2,511 million, or 13% to £21,985 million (2014: £19,474 million). This was mainly due to higher claims payments in UK Life following the acquisition of Friends Life, partly offset by lower claims in our European life businesses due in part to the weakening of the euro during 2015. General insurance and health claims decreased by £437 million, or 8% to £5,176 million (2014: £5,613 million) mainly due to lower claims in UK & Ireland GI.
Fee and commission expense, other expenses and finance costs increased by £841 million, or 14% to £6,749 million (2014: £5,908 million) mainly as a result of increased amortisation of acquired value of in-force business following the acquisition of Friends Life, and higher integration and restructuring costs principally driven by transaction and integration activities in relation to the Friends Life acquisition. See ‘IFRS Financial Statements – note 6 – Details of expenses’ for further details.
Life business adjusted operating profit before tax increased by 8% to £1,049 million (2013 (restated): £967 million). Within this, UK adjusted operating profit increased by 9% to £1,025 million (2013 (restated): £941 million). 2014 results saw a net additional benefit to profit from non-recurring items of £282 million (2013: £116 million), mainly from longevity assumption changes and expense reserve releases, which are partially offset by increased DAC amortisation charges on pension business. Excluding these items, profits have decreased 10%, with the benefits of cost savings offset by the impact of reduced annuity trading and lower expected returns as a result of de-risking activity. Ireland adjusted operating profit was down to £24 million (2013 (restated): £26 million) as we continue to make progress in turning the business around.
Adjusted operating profit from other operations resulted in a £4 million loss (2013: £131 million profit which included a £145 288 | Aviva plc Annual report and accounts 2015
Sales Long-term insurance and savings business 4,821 4,633 4,498 General insurance and health net written
In Italy (excluding Eurovita), life sales increased by £498 million, or 25%, to £2,473 million (2013: £1,975 million) driven by higher sales of with-profits products.
Adjusted operating profit before tax Long-term insurance and savings business Singapore 94 82 83 Other Asia 150 5 13 Total 244 87 96
Assets under management increased by £44.0 billion to £289.9 billion (2014: £245.9 billion). This was driven by acquisitions partly offset by net outflows and adverse market and other movements including adverse euro exchange rate movements.
Fund management Aviva Investors, our fund management business, provides fund management services to Aviva’s long-term insurance and savings, and general insurance operations as well as to thirdparty investors. The fund management operations are in the UK, Europe, North America and Asia. All sales of retail fund management products are included in our long-term insurance and savings business sales.
The UK long-term savings market is highly competitive and we consider our main competitors to be Standard Life, Prudential, Legal & General, Scottish Widows, JRP Group and Royal London.
Since the return to growth in the life and pensions market in Ireland in 2013, there has been continued and increasing growth in 2014 and 2015. The life insurance market in Ireland is relatively concentrated. We consider our main competitors to be Bank of Ireland Life, Irish Life, Zurich Life and Friends First.
300 | Aviva plc Annual report and accounts 2015 market share respectively. The life insurance industry in Italy reported another year of increased volumes as of 30 June 2015 with gross written premiums up by c.15% compared to the same period in 201416. The general insurance segment decreased by 1.8% in the first half 2015 compared to the previous year, mainly driven by a 5.9% decline in Motor16 due to lower average prices.
Products Our Life business offers a wide range of products covering protection, savings and pensions, with a continued focus on less capital intensive products, to optimise the product mix. We have reviewed our Unit Linked product range, and further improved our protection offering for both retail and bancassurance networks.
Aviva Investors Business overview and strategy Aviva Investors offers a range of fund management services, operating in the UK, Europe, North America and Asia and had £290 billion in assets under management as at 31 December 2015 (31 December 2014: £246 billion), including assets 23 Insurance Regulatory and Development Authority of India (31 October 2015). 24 Swiss Re Sigma Study (World Insurance 2014). 25 Asian Development Bank, Asian Development Outlook 2015 update.
Debt securities 24,022 91,006 47,936 162,964 Equity securities 47,394 15,627 537 63,558 Other investments 39,795 5,739 2,161 47,695
Corporate Public utilities — 170 3,106 1,892 4 232 5,404 Convertibles and bonds with warrants — — — — — — — Other corporate bonds 2,227 2,959 8,109 5,095 481 2,127 20,998
The financial modelling techniques employed in economic capital enhance our practice of risk and capital management. They enable understanding of the impact of the interaction of different risks allowing us to direct risk management activities appropriately. These same techniques are employed to enhance product pricing and capital allocation processes.
All employees are required to read, understand and sign their acceptance of the Code annually except in France where the Code is included as part of their employment contracts.
Information. This included visiting head offices in two out of sixteen markets, and performing alternative testing procedures for the remaining fourteen markets, selected on the basis of their inherent risk and materiality to the group, to understand the key processes and controls for reporting site performance data to the group CR team; • performed limited substantive testing on a selective basis of the Selected Information to check that data had been appropriately measured, recorded, collated and reported; and
Company address 318 Share capital 318 Related party disclosures 320 Dividend data 320 Guarantees, securitised assets and off-balance sheet arrangements 321 Liquidity and capital resources 321 Regulation 325 Risks relating to our business 331
Aviva Group employee share ownership scheme Aviva Group operates an Irish Revenue approved share scheme for employees of the Aviva Group in Ireland. Under the Aviva Group Employee Share Ownership Scheme, eligible employees can elect to forego some of their gross bonus and gross salary (up to a maximum of €12,700 per tax year) in exchange for the Company’s shares. The shares are held in trust for three years.
Our fund management companies also charge fees to these joint ventures for administration services and for arranging external finance.
UK & Ireland life 667 France 252 Poland 81 Italy 45 Spain 49 Other Europe 4 Canada1 6 Asia 21 Other2 24 1,149 UK & Ireland general insurance & health3 358 1 CAD$230 million in respect of 2015 activity has been retained at the Canadian holding company in order to part-fund the RBC General Insurance Company acquisition.
This measure represents the excess of the aggregate value of regulatory capital employed in our business over the aggregate minimum solvency requirements imposed by local regulators, excluding the surplus held in the UK and Ireland with-profit life funds. The minimum solvency requirement for our European businesses is based on the Solvency I Directive. In broad terms, for EU operations, this is set at 4% and 1% of non-linked and unit-linked life reserves respectively and for our general insurance portfolio of business is the higher of 18% of gross premiums or 26% of gross claims, in both cases adjusted to reflect the level of reinsurance recoveries. For our business in Canada a risk charge on assets and liabilities approach is used.
UK Regulation of the Aviva Group A number of the Groups’ UK subsidiaries are dual regulated (directly authorised by both the PRA (for prudential regulation) and the FCA (for conduct regulation)) whilst others are solo regulated (regulated solely by the FCA for both prudential and conduct regulation).
Long-term assets and liabilities Where a UK insurer carries on life insurance business, its longterm business assets and liabilities i.e. those assets and liabilities relating to life and health insurance policies, must be segregated from the assets and liabilities attributable to non-life insurance business or to shareholders. Separate accounting and other records must be maintained and a separate fund established to hold all receipts of long-term business.
Ongoing difficult conditions in the global financial markets and the economy generally may adversely affect our business and results of operations, and these conditions may continue. Our results of operations are materially affected by uncertainty in the worldwide financial markets and macro-economic conditions generally. A wide variety of factors, including concerns over slowing growth (more recently in China), high sovereign debt within, and to a lesser degree outside, the eurozone, the stability and solvency of financial institutions, longer-term low interest rates in developed markets, inflationary threats as well as geopolitical issues in, and emanating from, the Middle East, Russia, Ukraine and North Africa, have contributed to increased volatility in the financial markets in recent years and have diminished growth expectations for the global economy. Global fixed income markets continue to experience periods of both volatility and limited market liquidity, which have affected a broad range of asset classes and sectors.
The interdependence of global financial institutions means that the failure of a sufficiently large and influential financial institution could materially disrupt global securities markets or clearance and settlement systems in the markets. This could cause severe market decline or volatility. Such a failure could also lead to a chain of defaults by counterparties that could materially adversely affect the Group. This risk, known as ‘systemic risk’, could adversely impact our future product sales as a result of reduced confidence in the financial services industry. It could also adversely impact our results because of market declines and write downs of assets.
We hold certain investments that may lack liquidity such as commercial mortgages, real estate, privately placed fixedmaturity securities, and unlisted equities. The valuations of such assets are based on inputs which are not directly observable in the market. The inputs used reflect the assumptions that we consider market participants would normally use based on a combination of independent third party evidence and internally developed models, intended to be calibrated to market observable data where possible. These are known as Level 3 334 | Aviva plc Annual report and accounts 2015
While reinsurance makes the assuming reinsurer liable to the Group to the extent of the risk ceded, it does not discharge us from our primary obligation to pay under an insurance policy for losses incurred. We are therefore subject to credit risk with respect to our current and future reinsurers. The insolvency of any reinsurers or their inability or refusal to pay claims under the terms of any of their agreements with us could therefore have a material adverse effect on the Group. Collectability of reinsurance is largely a function of the solvency of reinsurers. Significant reinsurance purchases are reviewed annually by us to verify that the levels of protection being bought reflect any developments in exposure and our risk appetite.
We operate in several markets through arrangements with third parties, and this may expose us to additional risks. Our ability to exercise management control over our partnership operations, our joint ventures and our investment in them depends on the terms of the legal agreements. In particular, the relationships depend on the allocation of control among, and continued co-operation between, the participants.
Having acquired Friends Life Group, the Group’s success will be dependent upon its ability to integrate the two businesses; there will be numerous challenges associated with the integration and the synergies expected from the acquisition of Friends Life Group may not be fully achieved. Following the acquisition of Friends Life Group on 10 April 2015, a process was commenced to integrate the operations of the Aviva Group and the Friends Life Group over a period expected to last two to three years. To the extent that the enlarged Group is unable to efficiently integrate operations, realise cost reductions, transfer existing Friends Life Group asset management contracts to Aviva Investors, retain qualified personnel or customers and avoid unforeseen costs or delay, there may be an adverse effect on the business, results of operations and/or the financial condition of the enlarged Group. While Aviva believes that the costs and synergies expected to arise from the acquisition have been reasonably estimated, unanticipated events or liabilities may arise which result in a delay or reduction in the benefits derived from the transaction, or in costs significantly in excess of those estimated. The integration of the Group and the Friends Life Group will be supported by a strong management team with experience of large integration processes. However, no assurance can be given that the integration process will deliver all or substantially all of the expected benefits or realise such benefits in a timely manner.
Our ability to generate an appropriate return depends significantly upon our capacity to anticipate and respond appropriately to these competitive pressures.
Where larger groups or matters of public policy are concerned, the PRA and the FCA may intervene directly to provide redress to customers. There have been several industrywide issues in recent years in which the PRA or the FCA (or previously the Financial Services Authority) has intervened directly, including the sale of personal pensions, the sale of mortgage-related endowments and investments in split capital investment trusts and sale of payment protection insurance.
344 | Aviva plc Annual report and accounts 2015 new causes of liability or mass claims; claims in respect of directors’ and officers’ coverage, professional indemnity and other liability covers; and climate change related litigation.
All of the above could adversely impact our results of operations or financial condition.
A number of other jurisdictions, in which we operate, have introduced or announced that they intend to introduce similar measures requiring financial institutions in their territory to report account information. The OECD Common Reporting Standard (CRS), which was endorsed by the G20 in July 2014, calls on jurisdictions to obtain information from their financial institutions regarding non-resident account holders and automatically exchange that information with other participating jurisdictions on an annual basis. To date, over 90 jurisdictions have committed to participating in automatic exchange by reference to CRS requirements, 56 of those jurisdictions committing to implement legislation to implement CRS as of 1 January 2016 and require first reporting by financial institutions in 2017 of 2016 information. Despite commitments, certain participating jurisdictions have yet to implement domestic legislation and there is a lack of concrete domestic implementation guidance in many jurisdictions. As there remains uncertainty over the precise scope of measures, we are at risk of late changes to interpretation of implementation requirements and consequently an increase of our compliance costs, and impact to the results of operations.
America and is subject to certain reporting requirements of the Securities Exchange Commission (SEC). Aviva files its Form 20-F with the SEC, copies of which can be found at www.aviva.com/reports