Aviva plc Annual Report 2023

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FY2023 Annual Report · Aviva plc

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Delivering on
our promises
It takes Aviva

Aviva plc
Annual Report and
Accounts 2023
Part 1

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

It all starts with
our customers

Make the most out of life, plan for
the future. Have the confidence that
if things go wrong, we’ll be there to
help put them right.

It takes Aviva.

Our reporting suite
This report forms part of our reporting suite.

Find out more on www.aviva.com

How to navigate this report

Throughout the Strategic report we use a colour coding system
for our four strategic pillars: Growth, Customer, Efficiency and
Sustainability:

Growth
Accelerating growth
in capital-light
businesses

Efficiency
Top-quartile efficiency,
synergies from our model,
and technology at the core

Customer
Digitally-led customer
experience and serving
more needs

Sustainability
Committed to social action,
climate action and being a
sustainable business

Throughout the Strategic report we use a colour coding system for
the three areas of our business: Insurance, Wealth and Retirement

Insurance

Wealth

Retirement

Use your browser’s bookmarks and tools to navigate
To search this document: PC use Ctrl+F; MAC use Command+F

Results Presentation 2023
Presentation of our full year results.

Results
Announcement 2023
Includes our news
release and analysis of
the financial results.

Climate-related Financial
Disclosure 2023
Our report in compliance with
the Taskforce on Climate-related
Financial Disclosure (TCFD).

Reporting Criteria 2023
Sets out the principles and definitions
used to report the Group’s key
sustainability performance indicators
and selected data points.

Sustainability Datasheet 2023
All sustainability metrics are
included in our datasheet.

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other information

Contents

1. Strategic Report (Part 1)

2. Governance (Part 1)

1.02 Aviva on a page
1.03
2023 highlights
1.04 Delivering for customers
and shareholders

Our external environment

Chair’s statement
Chief Executive Officer’s report
Chief Financial Officer’s report

1.09 Our investment case
1.10
1.11
1.14
1.19 Our business model
1.21
1.23 Our strategy
1.28 Our key performance indicators
1.31
Our business review
1.43 Capital management
1.50 Our stakeholders
1.55 Our people
1.58 Our sustainability ambition
1.80 Non-financial and sustainability

information statement

1.85 Our risks and risk management
1.94 Going concern and longer-term

viability statement

2.02 Chair’s introduction to governance
2.03 Our compliance with the Code
2.04 Our Board of Directors
2.09 Our approach to governance
2.14 Our Board’s activities
2.18 Nomination and Governance

Committee report
2.21 Audit Committee report
2.27 Risk Committee report
2.29 Customer and Sustainability

Committee report
Remuneration Committee report

2.31
2.35 Remuneration at a glance
2.37 Directors’ remuneration policy
2.47 Annual report on remuneration
2.67 Directors’ report
2.70 Statement of directors’
responsibilities

3. IFRS Financial Statements (Part 2)

3.03 Independent auditors’ report
3.18 Accounting policies
3.38 Consolidated financial statements

3.44

Notes to consolidated financial
statements

3.171 Company financial statements

4. Other Information (Part 2)

4.02 Alternative Performance
Measures (APMs)
4.19
Shareholder services
4.20 Cautionary statement

Foreword
The Strategic report and Governance
pages form part 1 of the Annual Report
and Accounts. The IFRS Financial
Statements and Other Information
form part 2 of the Annual Report and
Accounts. Parts 1 and 2 together
comprise the Aviva plc Annual Report
and Accounts 2023.

The Strategic report contains
information about Aviva, how we
create value and how we run our
business. It includes our strategy, our
business model, key performance
indicators, overview of our businesses,
our approach to risk and our
responsibility to our people, our
communities and the planet. The
Strategic report is only part of the
Annual Report and Accounts 2023,
which was approved by the Board on
6 March 2024 and signed on its behalf
by Amanda Blanc, Chief Executive
Officer. The Directors’ report required
under the Companies Act 2006
comprises the Governance section of
the Annual Report and Accounts 2023.

The Strategic report should be read in
conjunction with the Cautionary
statement, included within the Other
information section.

As a reminder
Reporting currency: We use £ sterling.
Unless otherwise stated, all figures in
this report relate to Group.

Explanations of key terms used
in this report are available on:
www.aviva.com/glossary
www.aviva.com/climate-goals-
glossary

The Company’s
registered office:
80 Fenchurch Street
London, EC3M 4AE

Alternative Performance
Measures:
Throughout the Annual Report and
Accounts we use a range of financial
metrics to measure our performance
and financial strength. These metrics
include Alternative Performance
Measures (APMs), which are non-
Generally Accepted Accounting
Principles (GAAP) measures that are
not bound by the requirements of
IFRS or Solvency II. A complete list of
the APMs used by the Group, and
further guidance in respect of their
use, can be found in the Other
information section in part 2 of the
Annual Report and Accounts.

This guidance includes definitions
and, where possible, reconciliations
to relevant line items or sub-totals in
the financial statements.

More information about Aviva
can be found at www.aviva.com

Aviva plc

1.01

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Aviva on a page

Aviva is the UK’s leading diversified insurer across Insurance, Wealth and Retirement,
with 19.2 million customers in the UK, Ireland and Canada

Our purpose is to be with you today for a better tomorrow
We’re there to protect the things that matter most to our customers: their homes and belongings, their health and wealth, their future and their families.

We are guided by
our values:

Offering customers a range of
products and services across:

To live up to that purpose,
we have an ambition to be:

The leading UK
provider and go-to
customer brand for all
insurance, wealth and
retirement solutions,
with major businesses
in Canada and Ireland

We have a clear strategy to
achieve this vision based on
four pillars:

Growth
Accelerating growth in
capital-light businesses

Customer
Digitally-led customer
experience and serving
more needs

Commitment
We understand the impact we
have on the world and take
the responsibility that comes
with it seriously

Care
We care deeply about the positive
difference we can make in our
customers’ lives

Efficiency
Top quartile efficiency,
synergies from our model
and technology at the core

Community
We recognise the strength that
comes from working as one team,
built on trust and respect

Sustainability
Committed to social action,
climate action and being a
sustainable business

Confidence
We believe the best is yet
to come for our customers,
our people, and society

c e

sura n

n
I

tireme n t

a
l
t
h

Read more in our business review

Passed first time, now
she’s going places

Car insurance

Congratulations,
it's a girl

Junior ISA

Step on to that
career ladder

Workplace pension

Ouch! Need some
physio, fast

Set-up her own
start-up

SME cyber cover

New home, new
responsibilities

Employee private medical cover

Life insurance

Home insurance

Put something away
for a rainy day

Financial advice

Make the most
of retirement

Annuities

Equity release

Aviva plc

1.05

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Consistent performance

Strong growth

We're taking advantage
of opportunities to grow
in our chosen markets,
and accelerating our
progress through M&A

Growing organically
2023 has been another year of strong
and consistent performance.

General insurance gross written
premiums (GWP)1 have grown by 12%
overall. Our Insurance, Wealth and
Retirement business increased overall
new business value (VNB) by 4%, with
health insurance and protection sales1
both growing. Our workplace business
continues to progress with a record
£6.9 billion of net flows, winning 477
new schemes during the year. In our
retirement business, we transacted on 56
BPA deals, for total sales1 of £5.5 billion.

Accelerating through acquisitions
In 2023, we announced two acquisitions
that will accelerate growth of our
capital-light2 businesses, which now
make up over half our portfolio.

In September, we announced the
acquisition of AIG’s UK protection
business for £460 million3. We already
have strong organic growth and an
award-winning protection business and
this transaction, due to complete in 2024,
will add further scale.

In November 2023, we announced
a deal to acquire Canadian vehicle
replacement insurance business
Optiom. Completed in January 2024,
the deal will improve our offering
and distribution in a highly attractive
segment of the Canadian market.

1. Reference to sales represents Annual Premium Equivalent

(APE) for Protection & Health, Present Value of New
Business Premiums (PVNBP) for Annuities and Equity
Release and Gross Written Premiums (GWP) for General
Insurance. APE, PVNBP and GWP are APMs and further
information can be found in 'Other Information' section.
2. Capital-light refers to Aviva's General Insurance, Wealth,
Protection and Health and Aviva Investors businesses
3. Completion of this transaction is subject to customary
closing conditions, including regulatory approvals

Read more in our business review

Aviva plc

1.07

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Superior returns

Delivering for
our shareholders

Cash remittances 2021-2023

£5,636m

Total capital and dividend returned
to shareholders over last 3 years:

£9bn

Sustainable cash
generation underpins
our ongoing commitment
to shareholders. It
supports our dividend
and allows us to make
regular capital returns.

In March 2024 we announced a new share
buyback programme of £300 million.

We have declared a final dividend of
22.3 pence, bringing our total dividend
for the year to 33.4 pence.

In recognition of the group's strong
prospects we have upgraded our
dividend guidance to mid-single digit
growth in the cash cost.

Read more in our business review

Highlights

£10.9bn

General insurance gross
written premiums
(2022: £9.7bn)

£8.3bn

Wealth net flows
(2022: £9.1bn)

55%

Operating profit from
capital-light businesses1
(2022: 47%)

1. Capital-light refers to Aviva’s General Insurance, Wealth,
Protection and Health and Aviva Investors businesses,
excluding International Investments and IWR Other.
2. Completion of this transaction is subject to customary

closing conditions including regulatory approvals

Aviva plc

1.24

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Our strategy

Customer

Digitally-led customer
experience and serving
more needs

2023 progress
Helping our customers to navigate the
challenges of today's world is central
to our strategy. We are there for
our customers when they need us,
supporting them through the cost of
living crisis, building engaging digital-led
customer experience and serving more
of their needs.

Supporting our customers
We have supported our customers
throughout the year, for example in
Health, fulfilling our COVID-19 Customer
Value Pledge Rebate payments with over
£128 million paid in total and offering
Quotemehappy Essentials car insurance
to give greater flexibility to more cost-
conscious customers.

Our Transactional Net Promoter Score
(TNPS) remained strong in 2023, however
it has reduced slightly versus 2022.
This has largely been driven by significantly
increased customer service volumes as
a result of the cost of living crisis and
increasing private health demand.
We continue to work hard to provide
additional customer service support to
be there for our customers when they
need us.

Building engaging digital-led
customer experience
We have prioritised improvements to
our digital customer journeys, making
it easier and more convenient for
customers to interact with us, supporting
more customers to self-serve across
their products, and expanded our digital
support opening LiveChat to all UK
customers using MyAviva.

Serving more of our
customers’ needs
Customers who hold multiple products
are more engaged, more inclined to buy
new products and more likely to stay
with us for longer.

We have 4.8 million UK multi-product
holding customers with more than one
Aviva policy1, an increase of c.150k in
2023 and 39% of our new sales are to
existing customers. We are deepening
our customer relationships, for example
in Health, where over 45% of new
corporate schemes are with existing
Aviva customers.

Focus for 2024
We will continue to deliver value for
our customers, including supporting
them through the cost of living crisis
across our markets.

We will further enhance our digital
customer journeys as we aim to engage
more customers through launching a next
generation MyAviva app and will continue
to serve more of our customer needs.

Highlights

19.2m

Number of customers
(2022: 18.7m)

36.3

Transactional
Net Promoter Score (TNPS)
(2022: 40.5)

4.8m

Multi-product holding
customers (UK only)1
(20222: 4.7m)

1. Multi-product holding customers captures the total number

of UK customers with two or more Aviva policies, e.g.
health and car policies, or two or more products within
a single policy e.g. multi-car policies. It also includes
individuals who have consolidated multiple pension policies
with Aviva.

2. The 2022 comparative has been re-presented as the scope

of this metric has been expanded to include pension
consolidation and health spouses

Read more in our business review

Aviva plc

1.25

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Our strategy

Efficiency

Top-quartile efficiency,
synergies from our
model, and technology
at the core

2023 progress
We are delivering on our cost
commitments, by transforming our
operations, extracting cost synergies
from our model and putting technology
at the core. We have delivered
£757 million of gross savings, beating our
£750 million target one year early.

Transforming our operations
We have simplified our IT estate,
removing several legacy systems and
applications, delivering a 29% reduction
in UK IT applications, exceeding our
ambition of 25%1 by the end of 2023.

We have also simplified our UK Personal
Lines product portfolio, rationalising the
number of product variations we offer by
77%, exceeding our ambition of 65%1.

In January 2024 we announced a 15 year
extension to our strategic partnerships
with Diligenta and FNZ enabling us to
further simplify our IT estate, enhance
customer journeys and improve
customer experience across our IWR
business.

Extracting cost synergies from
our model
Maximising the benefits of our scale
has been a key focus through 2023.
We continue to use our scale to drive
efficiency, generating over £300 million
cost synergies per annum from shared
services, technology and purchasing power.

Putting technology at the core
Artificial Intelligence (AI) is an
established capability for Aviva delivering
efficiency across our business. An
example of this is our AI-led pension
tracing and consolidation service, Fabric,
which has driven an over 90% reduction
in pension tracing & checking time.

We are also building our Generative AI
capabilities, partnering with Microsoft
in the Early Access Program launching
Microsoft 365 Copilot pilot with over 200
employees and deploying it on use cases
in General Insurance and Protection.

Focus for 2024
We will continue to transform our
operations and drive scale efficiencies
as we grow the business. Putting
technology at the core will continue
to be a key priority and we remain
committed to delivering top quartile
efficiency across our businesses.

Highlights

£757m

Cumulative gross costs
savings (vs. 2018 baseline2)
(2022: £575m)

29%

Reduction in UK IT applications1
(2022: 22%)

60%

UK application estate that is
cloud-hosted (2022: 58%)

1. Momentum and ambitions against 2020 baseline,

unless otherwise stated

2. Baseline controllable costs exclude strategic

investment, cost reduction implementation, IFRS 17
and other costs not included in the 2018 cost savings
target baseline

Read more in our Board of Directors

• Overseeing the subsidiary governance

Roles and responsibilities
The Committee assists the Board in its
oversight of Board composition, Board
and senior executive succession and
Group corporate governance by:
• Assessing the balance of skills,

knowledge, experience and diversity
on the Board.

• Recommending Board and Committee

appointments to the Board.

• Assessing succession plans for the

Executive Directors.

• Assessing diversity, equity and inclusion

initiatives.

framework and regulatory control
environment.

2023 highlights
• Led the process for the appointment of

the Group Company Secretary.

• Reviewed the succession plans and
the talent development framework
for senior executives and continued
to oversight the governance and
effectiveness of the Group’s
subsidiary boards.

• Focused on strengthening the Group

Executive Committee (ExCo) and
business CEO succession plans
throughout the business.

Aviva plc

2.18

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Nomination and Governance Committee report

I am pleased to present the Nomination
and Governance Committee report for
the year ended 31 December 2023.

The Committee’s considerations and the
Board's decisions are outlined in Our
approach to governance.

Board composition
The Committee, on behalf of the Board,
evaluates the structure, size and
composition of the Board, taking into
account the required balance of skills,
knowledge, experience and diversity and
the Company’s risk appetite and strategy.

Board composition is also considered as
part of the annual Board and Committee
evaluation, which you can read more
about in Our approach to governance.

The Committee considered the Board to
have the appropriate balance of skills,
experience and knowledge to enable
them to effectively discharge their duties
and responsibilities throughout 2022.

Board independence
During the year, the Committee assessed
the independence of the Non-Executive
Directors to ensure they can fulfil their
roles on the Board and provide
constructive challenge to the
Executive Directors.

The Committee determined that all
Non-Executive Directors, other than
Michael Mire due to his tenure on the
Board, met the independence criteria set
out in the Code and were free from any
relationship or circumstance that could
affect, or appear to affect, their
independent judgement.

In line with the Code, over half of the
Board members, excluding the Chair, are
independent non-executive directors.

Directors’ external appointments
During the year, the Committee
considered Directors’ potential external
appointments, considering time
commitment and conflicts of interest,
before making recommendations to
the Board.

In particular the Committee carefully
considered the time commitments for
Shonaid Jemmett-Page, taking into
account investor guidelines and voting
policies and their application to
Shonaid's current directorships. The
Committee reviewed in detail Shonaid's
portfolio, overall capacity and noted that
Shonaid had retired from Greencoat UK
Wind from the conclusion of their 2023
Annual General Meeting.

In March 2023, Mohit Joshi was
appointed as Managing Director and
CEO designate to Tech Mahindra
Limited, leaving his position at Infosys.
He assumed the position as Managing
Director and CEO in December 2023.

On 1 February 2024, Andrea Blance
retired from her role as Senior
Independent Director of Vanquis
Banking Group.

The Committee was satisfied that each
director continued to have sufficient
time to allocate to the Company to
discharge their responsibilities
effectively.

Succession planning
The Code places an emphasis on
succession planning and the Committee
continues to build on its existing
processes to strengthen its focus in
this area.

An external market mapping exercise was
completed for the role of the Group
Company Secretary to strengthen the
leadership and succession in the function
following Kirstine Cooper's retirement
and splitting the Group Company
Secretary and General Counsel roles. As
a result Susan Adams was appointed as
Group Company Secretary on
8 January 2024.

The Committee also reviewed the
succession plan for the Group CEO
and Group CFO to ensure that internal
and external talent pipeline was robust
and diverse.

The development of the Group Executive
Committee (ExCo) is also monitored to
ensure that there is an appropriate
pipeline of senior executives and
potential future Executive Directors with
the required skills and experience.

During 2023, the Committee received
updates from the Group CEO on
composition and changes to the Group
ExCo and considered the development
plans and talent profiles of these
individuals in line with the Group’s
succession plans.

The development plans designed to
prepare successors for ExCo roles were
also considered. Internal talent
development and developing a pipeline
of potential future leaders remained an
area of focus for the Committee during
the year.

The Committee also considered
initiatives to enhance, strengthen and
diversify the talent pipeline across the
wider Group and members of the
Committee remain involved in various
initiatives, including the Ethnically
Diverse Leadership programme and
cross-company mentoring programmes
with senior leaders.

Diversity, equity and inclusion
Diversity, equity and inclusion continued
to be an area of focus for the Committee.
The Board is committed to having a
diverse and inclusive leadership team
which provides a range of perspectives
and insights and the challenge needed to
support good decision making. Diversity
at Aviva includes, but is not limited to,
gender, ethnicity, skills and experience,
geographic and socio-economic and
educational backgrounds, disability and
sexual orientation.

The ways in which we seek to put into
practice these values are set out in our
Board Diversity, Equity and Inclusion
Statement (the Statement), which
supports the Committee’s approach to
succession planning. This includes our
commitment to increasing the number of
women in leadership roles to 40% by
2024 and to enhancing the ethnic
diversity of our leadership and
succession pipeline.

During the year, the Committee updated
the Statement to reflect that Aviva has
achieved its commitment to 40% female
representation amongst our leadership
cadre.

Aviva plc

2.19

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

The Committee considers proposals for
operating model simplification within the
Group. The reduced geographic size of
the Group provided an opportunity to
optimise and simplify our operating
model to drive efficiency and deliver
greater value to our shareholders. The
Committee reviewed the organisational
design plans and the programme work-
streams and considered the governance
and controls around the proposed
changes.

George Culmer
Chair of the Nomination and
Governance Committee
6 March 2024

Nomination and Governance Committee report

The Statement, which aligns to the
overall Group Diversity, Equity and
inclusion strategy, is available on the
Company’s website at www.aviva.com/
corporate-governance.

In accordance with Listing Rule 9.8.6(9),
the representation of women on the
Board as at 31 December 2023 was 42%,
with both the Group CEO and Group
CFO positions being held by women, as
are the roles of Chair of the Risk,
Customer and Sustainability and
Remuneration Committees. The Board is
pleased to have met the Parker Review
Committee’s target for all FTSE 100
boards to have at least one director from
an ethic minority background. Since 31
December 2023, no Board changes have
occurred that have affected our ability to
meet the targets above.

Numerical data on the ethnic background
and gender of the Board and Group
Executive Committee required by Listing
Rule 9.8.6(10) can be found in the
Directors' report.

In accordance with the Code, I can
report that the gender balance of the
Group Executive Committee and their
direct reports as at 31 December 2023
was 35.7% women and 64.3% men.

Further details on diversity in the
workforce and wider senior leadership
population can be found in the
Strategic report.

We actively support women advancing
into senior roles, with the Group CEO
being a member of the 30% Club and HM
Treasury’s Women in Finance Champion,
which commits financial services
companies to a range of measures to
improve gender diversity amongst senior
management.

Corporate governance
The Committee monitors the Group’s
compliance with the Code and other
areas of regulation and guidance. The
Group Company Secretary provides
updates to the Committee on governance
matters which have the potential to
impact the reputation of the Group.

During 2023, the Committee focused on
the implementation and embedding of
the Group Governance Framework for
the oversight of the Group’s subsidiaries,
as reported in the Subsidiary Governance
dashboard. Updates were provided
relating to enhancements to the
Subsidiary Governance Principles, the
effectiveness of the Company’s subsidiary
boards and the Group conflicts of
interest policy and related safeguards.

Succession planning for material
subsidiaries around the Group is
considered and, where appropriate,
changes to the composition of the
material subsidiary boards are approved
by the Committee. The Committee also
reviews the outcomes of the evaluations
completed by subsidiary boards and
monitors and actions plans developed by
those boards in response to
those outcomes.

Aviva plc

2.20

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Audit Committee
report

2024 priorities
• Continue to monitor the embedding
of the IFRS 17 controls and processes
within financial accounting and
reporting architecture.

• Monitor the transition of the external
auditor from PwC to EY upon EY’s
approval, as Aviva plc auditor for year
ending 31 December 2024, at the 2024
AGM.

• Review and challenge the approach

developed on climate emissions
calculations and oversee the progress
towards measurement of Scope 3
emissions of investments.

• Consider the potential impact of the

revised 2024 UK Corporate Governance
Code, including the proposed directors’
attestation on control environment
and Aviva plc response.

Committee at a glance
Membership
• Patrick Flynn (Chair)
• Andrea Blance
• Shonaid Jemmett-Page
• Jim McConville
• Martin Strobel

Read more in our Board of Directors

Roles and responsibilities

The Committee assists the Board in its
oversight of financial, climate-related
and non-financial reporting and related
controls by:

• Overseeing the integrity of the

Company’s financial statements,
climate-related and non-financial
reporting disclosures, and related
announcements.

• Together with the Risk Committee,

monitoring the adequacy and
effectiveness of the systems of internal
control over financial, climate-related
and non-financial disclosures.

• Overseeing and monitoring the Group’s

whistleblowing processes.

• Monitoring the effectiveness,

performance and objectivity of our
internal and external auditors.

2023 highlights
• Reviewed and recommended for

approval the quarterly, half-year and
full-year financial results.

• Reviewed developments in climate-
related and non-financial reporting,
in particular the developing nature
of climate metrics measurement
standards, particularly in relation
to the estimation of Scope 3 finance
emissions, the challenges of measurement
of Scope 3 emissions and the controls
framework in place to support
preparation of information.

• Monitored the implementation of
financial reporting under IFRS 17,
reviewed the financial impact on
transition date and oversaw the
integrity of restated 2022 comparatives.

• Monitored the process for the

transition of the external auditor
from PwC to EY.

• Assessed the effectiveness of the work

of the external auditors and the internal
audit function including the outcomes
of associated external reviews.

• Monitored the effectiveness of the
systems of internal control over
financial and non-financial reporting
that support the integrity of Aviva’s
financial and non-financial disclosures.

The Committee monitored
the implementation of IFRS 17,
oversaw its impact on financial
results and discussed the
development and challenges
to measure climate metrics.

Patrick Flynn
Chair of the Audit Committee

Aviva plc

2.21

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Audit Committee report

I am pleased to present the Audit
Committee report for the year ended
31 December 2023.

Committee member requirements
The Board annually review how members
meet the experience and expertise
criteria set out in the Code and the FCA
Disclosure Guidance and Transparency
Rules (DTRs). I, as Committee Chair,
Andrea Blance, Shonaid Jemmett-Page
and Jim McConville fulfilled both this
Code and the DTR requirements for
financial expertise, experience and
independence. The Committee as a
whole has competence relevant to
the Insurance and broader Financial
Services Industry.

Financial and non-financial
reporting
The Committee reviewed the integrity
and accuracy of the Company's financial,
and principal non-financial reporting and
related announcements. This included
quarterly results announcements, the
Annual Report and Accounts and the
Solvency and Financial Condition Report.

The Committee monitored the
implementation of IFRS 17 during 2023,
including oversight over new financial
reporting processes, systems and control
environment.

The Committee reviewed the integrity
and accuracy of the financial impact of
IFRS 17 on the transition date 1 January
2022 and the publication of restated 2022
financial information and the related
disclosures in the Half Year Report 2023.

Climate-related reporting
The Committee reviewed the principal
climate-related disclosures made by
Aviva plc in 2023 Annual Report and
Accounts and Climate-related Financial
Disclosure report and to ensure
appropriate controls are in place to
support the preparation of disclosures.

The Committee noted the developing
nature of climate metrics measurement
standards, particularly in relation to the
estimation of Scope 3 financed emissions
in context of continued challenges
towards measurement of Scope 3
emissions and associated complexity,
due to limited and unsophisticated data
and methodologies.

Fair, balanced and understandable
To support the directors’ statement that
the Annual Report and Accounts, taken
as a whole is fair, balanced and
understandable, the Committee reviewed
the process of preparing the report.
There is a robust process to ensure each
section of the report is signed off by an
appropriate member of management and
the overall production of the report is
overseen by the Chief Financial
Controller to ensure consistency across
the document. The report is reviewed by
members of the Group Executive
Committee, the Disclosure Committee,
the Aviva plc Board and each of its
Committees. Furthermore an extensive
verification process is undertaken to
ensure factual accuracy.

External and internal audit
effectiveness
The Committee and management have
a regular and open dialogue with PwC
and our audit partner regularly attends
Committee meetings. The Committee
also receives reports from the external
auditor on the progress of its audit
activities.

The Committee reviews the contents of
these reports and the level of professional
scepticism and challenge of management
assumptions demonstrated by the
external auditor, and where appropriate,
requests that management respond to
that challenge and tracks management
response to ensure a satisfactory
outcome to the challenges raised.

The 2023 external audit effectiveness
review was undertaken to assist the
Committee in assessing the quality
of external auditor services provided
to the Group through completion of
a questionnaire by the Committee,
subsidiary company audit committees,
senior management, and members of
the Group’s finance teams. The review
focused on the effectiveness of the
external auditor team, expertise and
resources and interaction with Audit
Committee meetings. Overall feedback
was positive and where opportunities for
improvement were identified, PwC was
asked to take account of that feedback
in audit activity.

The Committee was provided with the
FRC Audit Quality Review (AQR) report
on the PwC audit of the 2021 Annual
Report and Accounts and discussed the
findings with PwC.

No specific actions were required as
a result of the AQR. The AQR provided
further external evidence to the
Committee of the robustness and quality
of the external audit. The Committee
concluded that the external auditor
continued to perform effectively.

The Committee also conducts an annual
review of the internal audit function to
assess its independence, effectiveness
and to satisfy itself that the quality,
experience and expertise of the internal
audit function is appropriate for the
business. This is carried out by reviewing
reports issued by internal audit and
the output of an annual stakeholder
effectiveness survey. This formal process
is supplemented by regular private
discussions with executive management,
the internal auditor and the external
auditor. The Committee concluded that
for 2023 the function performed well
and remained effective.

Aviva plc

2.22

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Internal controls
The Committee, together with the Risk
Committee, monitored the effectiveness
of the systems of internal control over
financial and non-financial reporting that
support the integrity of Aviva's financial
and non-financial disclosures.

In January 2024, the FRC announced
the publication of the 2024 Code.
The Committee, together with the
Risk Committee, will oversee and
make recommendations to the Board in
relation to the changes to Provision 29.
The changes will require the Board to
make a disclosure relating to the
effectiveness of internal controls
including a declaration in relation to
material internal controls as at year-end.

Whistleblowing
In my role as Committee Chair, I am
the whistleblowers’ champion for
the Group and I am responsible for
overseeing the integrity, independence
and effectiveness of the Group’s policies
in relation to whistleblowing.

The Committee receives reports on
the number of cases reported to the
Speak Up service, the proportion of
reports that are designated as instances
of whistleblowing, the number of
substantiated cases and summaries of
the action taken.

The Committee continues to support the
Speak Up team and review opportunities
to further enhance the Speak Up service.
The outcome of the Voice of Aviva survey
is used to assess staff comfort and
confidence in the whistleblowing
processes.

FRC Minimum Standard
In May 2023, the FRC published the
Audit Committees and External Audit:
Minimum Standard (the Minimum
Standard). The Committee can confirm
that the Company is compliant with the
Minimum Standard. Activities undertaken
to meet the requirements of the
Minimum Standard are described
throughout this report.

Patrick Flynn
Chair of the Audit Committee
6 March 2024

Audit Committee report

Audit rotation
In 2021, the Committee conducted a
competitive audit tender process and
recommended the appointment of EY to
the Board. Following Board approval, we
announced on 18 November 2021 our
intention to appoint EY as our auditor for
the financial year ending 31 December 2024.

Shareholder approval for EY's appointment
will be sought at the 2024 AGM and PwC
will resign as auditor, after 12 years in
position. PwC has confirmed that there
are no matters that need to be brought to
the attention of holders of securities of
the Company.

The Company is compliant with the
requirements of the Statutory Audit
Services for Large Companies Market
Investigation (Mandatory Use of
Competitive Tender Processes and Audit
Committee Responsibilities) Order 2014.

The Committee is monitoring the
transition of auditor from PwC to EY.
The Committee will monitor EY's
effectiveness as external auditor and
report on its findings for the financial
year ending 31 December 2024 in next
year's Annual Report and Accounts.

No Audit Committee member had a
connection with EY.

Aviva plc

2.23

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Audit Committee report

Key matters considered during 2023
The significant matters that the Committee considered during the year are set out in the table below.

Matter considered

Context

Committee’s response

IFRS and Solvency II (SII)
technical provisions

IFRS and SII key accounting
judgements and disclosures

The Committee reviews IFRS
and SII technical provisions and
the impact of those technical
provisions on IFRS total equity
and SII surplus used for the
quarterly operating updates,
and 2023 Half Year and Full Year
financial statements.
The Committee reviews the
underlying assumptions as
these involve complex
judgements and changes can
have a significant impact on
reported results.

The Committee reviews and
recommends to the Board
Quarterly, Half Year and Full
Year disclosures and the impact
of accounting judgements on
those disclosures. The
Committee reviews and
recommends to the Board the
Annual Solvency and Financial
Condition Report.

Technical provisions. The Committee reviewed and challenged the assumptions used in the calculation of the Best Estimate Liability component
of the technical provisions required under IFRS and SII across our life and general insurance businesses, including restatement of technical
provisions on introduction of IFRS 17.

The Committee reviewed and challenged the longevity, persistency, expense and residential and commercial property growth assumptions used
for the quarterly operating updates, and 2023 Half Year and Full Year financial statements. The process around the setting of longevity
assumptions was a particularly significant area for review as those judgements could have a material impact on Aviva’s IFRS and SII results.
During 2023, the Committee worked closely with the Audit Committee of the Group’s IWR subsidiary, Aviva Life Holdings UK Limited, to review the
detailed analysis and to validate changes observed in recent mortality experience and the resulting impact on the existing longevity assumptions.
The Committee reviewed the impact in the period of higher inflation and the rising interest rate environment during 2023. This included residential
property assumptions, the impact on the general insurance business of current and future claims inflation and impacts on the Aviva Staff Pension
Scheme.

Reserving process. Reviewed the controls associated with the IFRS and SII reserving process. The Committee reviewed the sign off procedures
and control framework for movements in IFRS reporting and SII results.

Estimates and judgements for IFRS and SII reporting bases. The Committee reviewed, challenged and recommended approval of IFRS and SII
judgements, including the impact of acquisitions on the Group balance sheet and the outcome of goodwill and intangible asset impairment reviews.
The Committee reviewed the Group's exposure to contingent liabilities and other risk factors, including amounts allowed for and disclosures. The
Committee also considered the financial impact and disclosures stemming from the war in the Middle East and the Ukraine. Where appropriate, the
Committee monitored and tracked management's response to the challenges it raised to ensure a satisfactory outcome.

Alternative Performance Measures (APMs). The Committee reviewed and approved the clarification and treatment of certain items within the
Group’s APMs to further improve the transparency and consistency of reporting of APMs.

Fair, balanced and understandable. The Committee reviewed the Quarterly Trading Update, 2023 Half Year and 2023 Full Year financial
statements to support the Board conclusion that taken as a whole, these reports were fair, balanced and understandable and provided the
information necessary for shareholders to assess the Group’s position, performance, business model and strategy.

Review, challenge and approval of the above matters took into account the impact from implementation of IFRS 17.

Implementation of IFRS 17

IFRS 17 is a new insurance
accounting standard issued by
the International Accounting
Standards Board (IASB)
effective from 1 January 2022.

The Committee monitored the implementation of new IFRS standards, but most significantly in respect of IFRS 17. IFRS 17 has a significant impact
on the measurement and presentation of insurance contracts and the Committee has spent significant time monitoring the implementation of the
new accounting policies and judgements. The Committee continued to regularly assess the impact on the financial reporting process, the
operation of new internal financial tools used for financial forecasting and planning purposes, and the calculation of insurance liabilities under the
new standard. The Committee also assessed the effectiveness of the system of controls over the new IFRS 17 reporting systems.

The Committee reviewed the integrity and accuracy of the financial impact of IFRS 17 on the transition date 1 January 2022 and the publication of
restated 2022 financial information in July 2023 and related disclosures in 2023 Half Year report.

Aviva plc

2.24

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Audit Committee report

Matter considered

Context

Committee’s response

Climate-related reporting

Internal Controls

The Committee review the
principal climate-related
disclosures made by Aviva plc
in 2023 Annual Report and
Accounts and Climate-related
Financial Disclosure report,
consider the significant
inherent challenges in the
measurement of climate
emissions and ensure the
disclosures of these
challenges are addressed and
given appropriate priority.

The Committee provides
oversight of the system of
internal control over financial
and non-financial reporting.

Internal Audit

The Committee has
responsibility for overseeing
the work, effectiveness and
independence of the internal
audit function.

The Committee reviewed and challenged the application of critical climate-related policies, practices, methods and judgements to
calculate the metrics. The Committee focused on the continued development of the climate reporting control environment which supports
non-financial disclosures.
The Committee discussed and provided feedback on Net Zero ambition and climate disclosures in Aviva plc 2023 Annual Report and
Accounts and Climate-related Financial Disclosure report. A significant area of discussion on Net Zero ambition related to Aviva's
dependency on the external factors and whether they continued to support achievement of Aviva's Net Zero ambition. The Committee
noted the developing nature of climate measurement standards, particularly in relation to the estimation of Scope 3 financed emissions,
which has an inherent potential for double counting across entities in the same value chain.

The Committee noted that emissions estimates and other climate metrics should be read acknowledging these are in initial stages of
development and subject to change as standards emerge and underlying data sources become more complete and developed. The
Committee recognised that climate measurement standards are not at the same level of maturity as financial accounting standards. In
addition, enhancements to availability of data and control frameworks will be required to align with IFRS financial statements. Currently,
industry wide, the attestation provided by an auditor is to a weaker level than applies to IFRS financial statements.

Review of the effectiveness of the Operational Risk and Control Management (ORCM) system. The Committee regularly reviewed a number of
reports to allow the evaluation of the effectiveness of controls and any failings or weaknesses. The Committee continued to challenge and support
developments to the risk aware culture of our people and strong internal control framework.

Review of internal controls. The Committee reviewed reports on the effectiveness of the internal controls over financial and non-financial
reporting to gain assurance that these remained in tolerance with no control weaknesses which could have a material impact on the financial
results and non-financial metrics. As referenced in ‘Our approach to governance’ section, the Committee received reports on the assessment of
financial reporting controls deficiencies and the detailed findings of the testing undertaken for their remediation.

Legal and regulatory reports. The Committee received quarterly reports on current and emerging legal and regulatory matters and any potential
impact on Aviva’s financial statements.

Annual plan, budget and reports. The Committee reviewed and approved the internal audit plan and budget and monitored progress against this
plan to ensure completion of the plan by year end. The Committee received an annual report where internal audit provided an assessment of the
control environment of the areas on which work had not been undertaken. The Committee reviewed the output of the external quality assessment
and actions to further enhance the effectiveness of the internal audit function.

Internal Audit Charter. Reviewed and approved the Internal Audit Charter.

Quarterly reports. The Committee also received quarterly control reports from the internal audit function, including monitoring the quantum and
trend in internal report findings, and challenged management on the actions being taken to improve the effectiveness of the governance and risk
and control framework of the organisation. The quarterly internal audit reports contain control environment metrics including: the status of internal
audit opinions that are rated as unsatisfactory or where major improvement is needed; key issues identified, emerging trends and their impacts on
the organisation’s risk profile; and the status of management actions to resolve issues identified.

Aviva plc

2.25

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Audit Committee report

Matter considered

Context

Committee’s response

External auditor independence. The Committee reviewed the auditors compliance with the independence criteria in the UK Corporate
Governance Code and monitored compliance with our External Auditor Business Standard. The Committee meets with external auditor
without management present to provide a forum for any issues to be raised.

External audit plan and budget. The Committee reviewed and approved the 2023 audit plan presented by PwC and progress against
the plan.

Audit related and non-audit services. The Committee monitors the External Auditor Business Standard to ensure no firm, other than
PwC, undertakes audit and audit-related services other than in exceptional circumstances. The Committee also monitors non-audit
services (including audit-related and other assurance services) provided by PwC. The Committee has put in place a structure to review
and approve the provision of audit and audit-related services by PwC and receives annual reports on these services provided by PwC and
the fees charged for those services. The Committee also gains assurance that the fees remain well below the 70% non-audit services fee
cap. There were no material non-audit services provided by PwC during 2023.

In 2023 the Group paid PwC £26.4 million (2022: £30.4 million) for audit and audit-related assurance services. PwC were paid £1.3 million
(2022: £1.7 million) for other assurance services, giving a total fee to PwC of £27.7 million (2022: £32.1 million). Further information on
auditors' remuneration is set out in note 13.

Implementation of IFRS 17. The Committee reviewed reports from PwC on Aviva's progress in implementing IFRS 17. PwC reviewed and
provided commentary to the Committee on key accounting policies and judgements which supported the Committee's oversight of IFRS 17.
The Committee did not request any specific areas of review from the external auditor beyond the normal cycle of audit activity.

The Committee reviewed the principles underpinning the Statement for 2023 and concluded that the Company and its subsidiaries will be
able to continue in operation and meet their liabilities as they become due. The Committee recommended the Statement and going
concern assessment to the Board. More information on these statements can be found in the Directors' report. The Committee continues
to consider it appropriate that the Statement covers a three-year period.

External Audit

The Committee has
responsibility for monitoring
the external auditor
PricewaterhouseCoopers
LLP’s (PwC) independence and
objectivity and the
effectiveness of the external
audit process.

Longer Term Viability
Statement (the Statement)
and Going Concern
Assessment

The UK Corporate Governance
Code requires the Board to
assess the Company’s current
position and principal risks
and state whether it has a
reasonable expectation the
Company will be able to
continue in operation and
meet its liabilities as they fall
due over the period of their
assessment. The Committee
supports the Board in making
that assessment.

Aviva plc

2.26

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Risk Committee
report

Committee at a glance
Membership
• Andrea Blance (Chair)
• Patrick Flynn
• Shonaid Jemmett-Page
• Mohit Joshi
• Jim McConville
• Martin Strobel

Read more in our Board of Directors

Roles and responsibilities

The Committee assists the Board in its
oversight of risk by:

• Assessing the effectiveness of the Group’s

risk management framework, risk
strategy, risk appetite and profile.

• Assessing the methodology used in
determining the Group’s capital
requirements and stress testing these
requirements.

• Providing oversight and advice to the

Board in relation to current and emerging
risk exposures of the Group and the
strategic approach to managing risk.

The Company’s approach to risk and risk
management is set out in the Our Risks
and Risk Management section of the
Strategic report.

2023 highlights
• Monitored risk appetite, risk

management and reporting, including
approving the Group’s Solvency II
capital risk tolerances by risk type.
• Reviewed and approved the longevity

internal model major change
application, and the internal model
validation plan.

• Reviewed management actions in
response to the Group's increased
exposure to general insurance property
catastrophic risk as a result of hardening
reinsurance markets.

• Monitored reporting on the Group's
capital and liquidity requirements,
particularly in light of changing
macroeconomic conditions, and related
risks to the financial plan.

• Approved the scenarios for Group-wide
stress testing to support the financial
plan and the Group recovery plan.
• Oversighted the implementation of
Phase 1 of the New Consumer Duty
regulations throughout the Group.
• Reviewed operational risks to the
financial plan, including people,
cyber, AI, operational resilience,
sustainability, conduct, reputation
and transformation risks.

• Monitored external risk factors, and

assessed the most significant emerging
risk scenarios with the potential to
affect the implementation of the
Group’s strategy.

• Supported the appointment of James

Hillman as Group CRO.

2024 priorities
• Monitor the impacts and associated
risks arising from changes to the
macroeconomic and political
environment, regulatory landscape,
and from global climate change.
• Oversee the current and projected
future risk exposures of the Group,
including determination of risk
appetites and tolerances.

• Provide effective oversight of the

management of key areas of financial
and non-financial risk, including cyber,
data, AI, operational resilience, reputation
and people risks.

• Review action taken in relation to the
implementation of Phase 2 of the New
Consumer Duty regulations.

• Oversee the implementation of the
2024 Co-ordinated Assurance Plan.

• Continue to support the newly-
appointed Group CRO in the
implementation of an effective target
operating model for the Group Risk
function.

2.27

Annual Report and Accounts 2023

Strong risk management remains
vital in the continuing challenging
macroeconomic and political
environment. The Committee has
focused on key areas of financial
and non-financial risk and on
overseeing the continued
evolution of the Risk function.

Andrea Blance
Chair of the Risk Committee

Aviva plc

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Risk Committee report

I am pleased to present the Risk
Committee report for the year ended
31 December 2023.

Oversight of risk management
The Committee plays a vital role in
supporting the Board in the oversight and
management of risk throughout the
Group. The main purpose of the
Committee in assisting the Board in its
oversight of risk within the Group is to
review the Group’s risk appetite and risk
profile in relation to solvency, liquidity,
climate, operational, conduct and
reputational risks and to review the
effectiveness of the Group’s risk
management framework (RMF), making
recommendations to the Board as
required.

The Committee reviews the methodology
and oversees the governance of the
internal model used in determining the
Group’s capital requirements and
associated stress testing, including the
key assumptions, methodologies and areas
of expert judgement, activities undertaken
to validate the outputs of the model and
the development required to ensure that
it continues to reflect the risk profile of
the group.

The Group Own Risk and Solvency
Assessment (ORSA) is an ongoing
assessment of the risks the Group is
exposed to, and of the capital resources
available to ensure that the Group is
able to sustain its business over the
plan horizon.

The Committee's review of the Group’s
ORSA process included proposed stress
tests and scenarios to be used in the
evaluation of capital adequacy, the profile
of risks within the Group’s strategic plan
and how they may change over the
planning period and the Group’s overall
capacity for the risks identified.

Group CRO Report
The Committee receives and reviews a
report from the Group CRO at each
meeting which highlights key information
impacting the Group-wide risk profile, as
well as an assessment of the current and
forward-looking Group risk exposures.
The report includes analysis of risks
arising from the macroeconomic outlook
and conditions in financial markets,
together with geopolitical, legislative and
regulatory change risks that may impact
the Group's business and the Groupwide
top risk themes. It includes updates on
key activities undertaken by the Risk
function to deliver on its vision and
purpose in supporting the Group's
strategic objectives, outputs of regular
risk monitoring activities and, details of
any current and specific financial, non-
financial or regulatory and compliance
risk matters.

Alongside the Group CRO report, the
Committee is provided with information
on risk appetites and tolerances,
assessing actual positions relative to the
Group's risk appetite statements, and
quantitative analysis of the Group's
exposures to financial and operational
risks, including risk-based capital
requirements in relation to the core risks
within the Group's businesses.

In November 2023, we welcomed James
Hillman as Group Chief Risk Officer, and
the Committee looks forward to working
closely with him over the coming years.

Macroeconomic environment
A number of risk events crystallised
during 2023, including the Israel- Palestine
conflict, the continuing impact of the
Russian invasion of Ukraine, strong
inflationary pressures and sustained
higher interest rates, and a significant
hardening of property reinsurance market.
During the year the Committee monitored
the potential impacts of macroeconomic
risks in a number of areas including
widening credit spreads and downgrades,
interest rate movements and the risk of
property price volatility on the commercial
mortgage portfolio.

The Committee conducted a deep dive
into conduct and financial crime risks,
including the impacts of the continuing
cost of living crisis. The Committee
reviewed the Group's cyber risk and
control environment, including the threat
posed by the risk of ransomware attacks
on both the Group and our material third
party suppliers

Employee wellbeing remained an area
of focus and the Committee people risk,
including resource stretch and cost of
living pressures.

Conduct Risk
In addition to those matters set out above,
the Committee approved updates to the
conduct risk policy to reflect the
requirements of the FCA New Consumer
Duty regulations and monitored the
progress of measures taken within the
UK subsidiaries to achieve compliance.

Data and AI
The Committee carried out a deep
dive review of the Group's data risk
environment, including our data ethics
framework, to facilitate the responsible
deployment of Artificial Intelligence
(including Generative AI) capabilities.

Operational Resilience
The Committee received regular updates
and challenged the progress made by
management on operational resilience
and change management related risk
management appetites and tolerances.
The Committee reviewed the Group
transformation risk profile and the
associated change execution and delivery
risks, including the material Groupwide
thematic drivers to our delivery risk.

Co-ordinated Assurance Plan
The Committee reviewed the 2024
Co-ordinated Assurance Plan which
will provide a more connected approach
to assurance, aligned to the Group’s
strategic priorities.

Andrea Blance
Chair of the Risk Committee
6 March 2024

Aviva plc

2.28

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Customer and Sustainability
Committee report

• Reviewing Group sustainability

reporting, including the Sustainability
section of the Annual Report and
the Climate-related Financial Disclosure
Report.

2023 highlights
• Reviewed the impact of the FCA's
Consumer Duty Regulations on
customers.

• Undertook deep dives in relation to

various aspects of customer journeys.

• Monitored the progress in building
an enhanced customer experience.
• Monitored the progress of Aviva's
Sustainability Ambition, including
tracking performance against key
metrics and targets.

• Reviewed our Sustainability reporting,
Climate-related Financial Disclosure
report and non-financial metrics.

• Reviewed the Group's Modern Slavery

Statement and approved Aviva's Human
Right's Policy and Business Ethics Code.

2024 priorities
• Continue to focus on the customer

agenda and the progress of the
customer strategy, including further
developments to enable us to gain a
deeper understanding of our customers,
be more relevant to them, easier for
them to interact with and able to meet
more of their needs.

• Continue to monitor the impact the

implementation of the FCA's Consumer
Duty regulations.

• Continue to oversee progress against
our sustainability ambition, including
our work on social action and our
place-based approach to maximising
the impact for our communities.

• Oversee progress against our Climate

Transition Plan and Nature and
Biodiversity Policy.

Committee at a glance
Membership
• Shonaid Jemmett-Page (Chair)
• Mike Craston
• Jim McConville
• Pippa Lambert
• Michael Mire

Read more in our Board of Directors

Roles and Responsibilities

The Committee assists the Board in its
oversight of our customer agenda and
sustainability ambition by:

• Evaluating progress on Aviva's ambition

to be a leading customer service-
oriented company, including in our
investments and innovation in customer
experience.

• Reviewing customer experience,
customer journeys, service levels,
customer trends and the use of
customer data.

• Evaluating progress on the priorities

and objectives across Aviva's
Sustainability Ambition, including
our Nature and Biodiversity policy,
Climate Transition plan and our
overall contribution to, impact on,
and role in society in the countries
in which we operate.

2.29

Annual Report and Accounts 2023

The Committee focuses on two
of the four strategic priorities for
Aviva: Customer and Sustainability.
Monitoring progress against both
these agendas is significantly
important, and a duty the Committee
takes extremely seriously.

Shonaid Jemmett-Page
Chair of the Customer and
Sustainability Committee

Aviva plc

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Customer and Sustainability Committee report

Aviva Canada and Aviva Ireland
During the year, Aviva Canada and Aviva
Ireland presented to the Committee
updates on their customer strategies
including customer journeys and
experience, and on the sustainability
scorecards for their markets. The
presentations provided the Committee
with information on how Aviva Canada
and Ireland contributed to the overall
Group performance in both respect.

Shonaid Jemmett-Page
Chair of the Customer and
Sustainability Committee
6 March 2024

Sustainability
The Committee tracked progress against
Aviva’s Sustainability Ambition, including
Key Performance Indicators and the
Sustainability Ambition scorecard.
The Committee reviewed and agreed
the non-financial metrics, which
demonstrate Aviva's sustainability
performance and monitored progress
against the sustainability ambitions. The
Committee also provided input into the
governance model for external reporting.

The Committee discussed pathways to
Aviva’s Net Zero ambitions, whilst
recognising that Aviva do not have full
control over the delivery of this ambition.
The Committee noted that government
action on policy and development of new
technologies were and still remain of
fundamental importance to create the
conditions for success. Without good
progress on these issues, achieving
Aviva’s climate ambition becomes
increasingly challenging.

The Committee discussed and provided
feedback on our Net Zero ambition in our
2023 Annual Report and Accounts and
Climate-related Financial Disclosure
report. A significant area of discussion
related to Aviva's dependency on the
external factors and whether they
continued to support achievement of
Aviva's Net Zero ambition.

The Committee noted the developing
nature of climate metrics measurement
standards, particularly in relation to the
estimation of Scope 3 financed emissions
in context of continued challenges
towards measurement of Scope 3
emissions and associated complexity, due
to limited and unsophisticated data and
methodologies.

The Committee reviewed Group
sustainability and climate reporting,
including the Climate-related Financial
Disclosure report in preparation for the
climate disclosures summary being voted
on (on an advisory basis) at the 2024
Annual General Meeting. In addition the
Committee reviewed the Sustainability
section of the Annual Report.

The Committee reviewed Aviva's social
action strategy, which focuses on the
difference we make to society.

The Committee also received updates
on the progress of Aviva's sustainability
governance activity, including reviewing
the refreshed Aviva Human Rights Policy,
our Business Ethics code, Sustainability
Business Standard and our performance
in external sustainability benchmarks and
indices.

Further information on our integrated
responsibility and sustainable business
approach can be found on the Company’s
website at: www.aviva.com/
sustainability.

I am pleased to present the Customer
and Sustainability Committee report for
the year ended 31 December 2023.

Customer
During 2023, the Committee provided
oversight of our customer strategy
and operations. This included regular
reviews of the customer dashboard
which provides insight into key customer
metrics, material customer trends,
customer growth, experience and
engagement.

The Committee monitored progress in
building an enhanced customer experience,
including through improvements to
our digital capability such as better
transactional functionality and digital
support.

The impact of the FCA’s Consumer Duty
Regulation was closely monitored by the
Committee during the year and reports
from management relating to the
customer considered Consumer Duty.
We received regular updates on the
implementation of the regulation and
Aviva's approach to actively engage and
support customers.

The Committee undertook deep-dives in
relation to customer communications,
digital customer journeys and customer
complaints, all with a focus on the
application of the Consumer Duty
regulation.

The Committee reviewed the progress
of our brand campaign, “Making it Click”
which recognises that taking financial
action can be difficult for customers and
was aimed at helping customers make
positive decisions in relation to their
finances.

Aviva plc

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Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Remuneration
Committee report

2024 priorities
• Implementation of the new Policy.
• Ensuring the broader colleague reward

proposition remains competitive.

More details about our 2024 focus areas
are provided in the letter below.

Committee at a glance
Membership
• Pippa Lambert (Chair)
• Andrea Blance
• Patrick Flynn
• Jim McConville (from 1 February 2023)

Read more in our Board of Directors

Roles and responsibilities
The Remuneration Committee (the
Committee) assists the Board in its
oversight of remuneration by:

• Reviewing the Directors’ Remuneration

Policy (the Policy) and Directors’
Remuneration Report.

• Approving remuneration packages
for the Non-Executive Chair and
Executive Committee (ExCo).

• Approving the remuneration framework
for regulated employees and reviewing
wider workforce remuneration and
policies.

• Working with the Risk Committee to

ensure that risk management is
considered in setting the Policy through
the alignment of incentive and rewards
with risk management.

2023 highlights
• Review of the Policy.
• Senior management objectives, pay
decisions, bonus and Long Term
Incentive Plan (LTIP) target setting.

• Monitoring the impact on colleagues as
a result of the continued cost of living
challenges.

• Progressing our ambitious diversity,
equity and inclusion (DE&I) agenda.

• Share plan operations and

performance testing.

• Governance and regulatory matters.

More details are provided in the Annual
report on remuneration.

The Committee’s decisions are taken in
the context of the Reward Governance
Framework, which sets out the key
policies, guidelines and internal controls
and is summarised in the Annual report
on remuneration.

Read more in Annual report
on remuneration

2.31

Annual Report and Accounts 2023

Our 2023 remuneration
outcomes reflect another year
of strong performance for Aviva.
The limited proposed changes
to our 2024 Remuneration Policy
ensure continued alignment to
our purpose and strategy.

Pippa Lambert
Chair of the Remuneration
Committee

Aviva plc

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Remuneration Committee report

On behalf of the Committee, I am pleased
to present the Directors’ Remuneration
Report (DRR), for the year ended
31 December 2023.

Performance against the annual bonus
financial measures was strong, exceeding
the targets set for the majority of
measures.

Supporting our people
Oversight of remuneration across the
wider colleague population remains a
focus area for the Committee.

The DRR is presented in three parts in
addition to this letter:

• Remuneration at a glance - key aspects

of interest to shareholders.

Read more in Remuneration Policy

• Annual report on remuneration -

further detail on how the Policy has
been applied and remuneration
outcomes in respect of 2023, and how
the new Policy will be implemented
in 2024.

Read more in Annual report
on remuneration

2023 Company performance
2023 was another year of strong
performance, reflecting our market
leading positions, customer focus and the
benefits of our diversified business. We
have continued capital-light growth
momentum and delivery across our
diversified Group, and are in a strong and
resilient capital position.

• Growth in the value created by our
businesses was seen in the increase
in Solvency II operating own funds
generation (Solvency II OFG) and gross
cash remittances, both exceeding
target levels.

• Growth and expense discipline saw
increased Group adjusted operating
profit and we have exceeded our
£750 million gross cost reduction
target, one year early.

• Solvency II shareholder cover ratio

remains strong at 207%, underpinned
by robust capital generation.

In terms of non-financial performance,
the Committee welcomed the continued
improvement evident in our risk and
control environment, as reflected in an
above target assessment against the
qualitative and quantitative measures
within the Risk scorecard. Our employee
engagement levels saw a two point
increase to 88%, a figure well ahead of
market norms. This reflects the focus on
leadership development and visibility, and
actions to support our people through
a difficult economic environment.

Performance against our customer
measures was more challenging, given
the continued impact of inflation on
product pricing and supply chain issues.
Our investment in improving digital
customer journeys resulted in online
experience targets being achieved.

• We are proud to pay all of our UK
colleagues at least the Real Living
Wage, plus an additional 8% to enable
colleagues to benefit from our 14%
matching pension contribution and
save for their retirement.

• In addition, in March 2023, we were
one of the first UK employers to be
awarded the Living Pension accreditation.
This signifies that we provide a Living
Pension savings level which equates
to 12% of a full-time real Living Wage
salary, of which at least 7% comes
from Aviva as an employer.

• Further actions taken to support

our colleagues in 2023 included an
extension to our financial education
programmes, improved communication
of our overall reward package and
improvements to our UK health and
wellbeing proposition.

For 2024, the UK salary budget was 6%.
Recognising the cost of living challenges,
a higher budget was targeted at more
junior colleagues offset by a significantly
lower budget for senior management.

Policy Review and Shareholder
Consultation
In line with the usual three-year cycle,
we are required to submit our Policy to
shareholders for approval at our AGM in
May 2024. The Committee has therefore
completed a review of the Policy to
ensure it remains aligned to our purpose
and strategy and continues to drive and
reward strong performance.

Our review concluded that, overall, our
framework continues to achieve these
aims and remains fit for purpose. As
such, we are proposing only modest
changes to the Policy, ensuring that it
remains market aligned and that our
incentive measures reflect business
priorities.

I would like to thank our major
shareholders and their representative
bodies for their level of engagement and
overall positive feedback received as part
of our consultation process.

Proposed changes to our Policy are
outlined below and in the “Directors’
Remuneration Policy” section of
this report.

Policy Changes
To better align with market practice and
ensure our approach remains
competitive and fair, the level of bonus
deferral will reduce from two-thirds to
half. This change will increase alignment
with FTSE 100 practice and that of close
peers, while continuing to ensure that a
meaningful proportion of any bonus
award is deferred into Aviva shares.

As part of a broader improvement to our
wider workforce health proposition,
Company-provided wellbeing services
such as health assessments will be
provided for NEDs.

Aviva plc

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Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Remuneration Committee report

Non-Policy Changes - Annual Bonus
Plan Measures
Following the achievement of the
previously communicated cost reduction
target and reflecting our growing
businesses, the Cost Reduction measure
will be replaced by efficiency measures.
Recognising the diversified nature of Aviva,
each of our core businesses will have
targeted efficiency measures, which we will
use to measure progress against our overall
efficiency ambition. The weighting will
remain at 10%.

Non-Policy Changes - LTIP
The current LTIP measures and weightings
remain appropriate as key drivers of our
long-term success. Therefore, changes are
limited to refining the methodology and
operation of 3 of the 7 measures:

Solvency II Return on Equity
(Solvency II RoE)
The Solvency II RoE calculation basis will
move to a total capital basis, rather than a
target 180% basis. This will simplify the
calculation methodology whilst continuing
to provide a clear incentive for
management to actively deploy excess
capital. We continue to report and monitor
target capital basis for in-flight LTIPs.

Relative Total Shareholder Return
(rTSR)
Consistent with prior years, we continue to
review the comparator group for rTSR
purposes. To ensure the group represents
our geographic footprint and those
companies we compete with directly,
we will remove AXA, Allianz and Zurich.

Our current approach provides for 20%
of award value vesting when threshold
performance is achieved. Market practice
is mixed, with threshold vesting being set
at 25% in many cases, and numerous
recent examples of companies increasing
their threshold vesting level. However,
the Committee concluded that, aligned
with our view that incentive arrangements
should drive and reward strong performance,
it was not appropriate to propose a change
to our approach in this regard. We are
though, proposing a small change to the
operation of the rTSR element of the
LTIP such that maximum vesting will be
triggered by upper quartile performance,
rather than upper quintile performance.
This approach will ensure we incentivise
and reward strong performance, bringing
us more into line with market practice and
improving the overall competitiveness of
the LTIP’s operation.

Customer – Relationship Net
Promoter Score (RNPS)
Reflecting our strategy being centred
around our customers, a customer
measure with a 7.5% weighting, will
be retained. In place of a standalone
RNPS measure, we will introduce a
Customer Scorecard that better reflects
our strategic ambitions to grow our
customer franchise and serve more
customer needs. The measures within
the scorecard will be simple in design
and operation, more aligned to growth,
and easier for stakeholders to understand
and scrutinise. The measures will not
overlap with the customer measures
within the ABP, which are shorter term
measures focused on the active management
of customer experience and continue to
work well.

Remuneration outcomes for 2023
Our remuneration outcomes reflect the
continued strong performance of Aviva in
2023, as set out below.

2023 annual bonus
The formulaic outcome from the annual
bonus scorecard was 70.6% of maximum
(at 141.1%). The Committee carefully
considered this outcome in the context of
broader performance and a quality of
earnings assessment, noting input from the
Audit and Risk Committees, to ensure the
scorecard outcome was reflective of
overall performance and aligned with the
experience of shareholders. The
Committee determined that no adjustments
were required to the formulaic bonus
scorecard outcome.

In line with the Policy the Committee also
considered the individual performance of
the Group Chief Executive Officer (CEO)
and Group Chief Financial Officer (CFO) to
determine whether individual adjustments
to the scorecard outcome were required.

Amanda Blanc’s performance as Group
CEO continues to be exceptional.
Successful progression of the strategy,
which Amanda set out, has resulted in
Aviva pivoting to capital-light and
outperforming the competition in the
growth of General Insurance, Workplace,
Protection and Health, alongside strategic
bolt-on acquisitions. Our strategy continues
to engage colleagues at record levels.

Throughout the year Amanda has also
continued to strengthen the senior
leadership team including three ExCo
appointments.

From an external perspective, Amanda
has continued to enhance Aviva's profile
across multiple industry and public forums
such as the Prime Minister’s Business
Council and the Association of British
Insurers (ABI) Board.

This performance is reflected in Amanda’s
annual bonus for 2023 of 88.1% of
maximum (at 176.1% of salary).

Charlotte Jones has demonstrated strong
performance in 2023, driving the effective
performance management processes
across the Group that support the delivery
of our financial results. Maintaining our
balance sheet strength and effective
capital management has enabled
investment for growth and efficiency
as well as delivery of regular and
sustainable capital returns. Charlotte
has successfully executed M&A activity
and led the delivery of the transition to
IFRS 17. The £300 million share buyback
has been effectively executed and
Charlotte has led extensive market,
investor and analyst engagement.
Internally, Charlotte has strengthened
her leadership team and re-shaped our
approach to transformation activity.

Charlotte’s annual bonus for 2023
was 85.4% of maximum (at 128.1%
of salary).

2021-23 LTIP
The formulaic vesting outcome was 91.8%,
reflecting very strong performance against
the Solvency II RoE target and maximum
vesting of the rTSR element (performance
exceeding upper quintile of the
peer group).

Aviva plc

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Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Remuneration Committee report

2024 focus areas
The Committee will continue to focus
on ensuring that remuneration fairly
rewards, and is aligned with, business
performance, particularly in the context
of the changes being made to incentive
measures following the review of the
Policy.

In addition we will ensure that the
broader colleague reward proposition
remains competitive.

Conclusion
We have again delivered very strong
results in a challenging and volatile
economic environment, demonstrating
the benefits of our diversified business.
As a Committee, we have sought to make
decisions which effectively drive and
reward results, while continuing to align
with UK best practice remuneration and
governance expectations. I hope that this
report is clear and informative and I look
forward to seeing shareholders at the
forthcoming AGM.

Pippa Lambert
Chair of the Remuneration Committee
6 March 2024

Shareholder consultation
The Chair and EDs met with institutional
shareholders during the year. Topics
raised during 2023 included Aviva’s
dividend policy, capital returns, climate
risk and progress against our strategic
plan. A shareholder newsletter is
published quarterly on aviva.com.

I look forward to continued constructive
engagement with shareholders this year
as we present our revised Policy for
approval at the 2024 AGM.

Remuneration in 2024
Salary
Amanda will receive a salary increase of
3.7%. Charlotte will receive a salary
increase of 3.9%.

The percentage increases for our EDs are
below the overall increase in the UK
salary budget of 6%.

2024 Annual Bonus and
2024-26 LTIP
For Amanda and Charlotte, the
opportunities are unchanged from the
awards made for the prior year.

Annual bonus

Target
opportunity

Maximum
opportunity

LTIP
opportunity

Group CEO

Group CFO

100%

200%

150%

350%

225%

Opportunities are in line with the Policy.

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2. Governance

3. IFRS Financial Statements

4. Other Information

Remuneration at a glance

Short Term

Long Term

1. What are the elements of our
EDs' remuneration?

Salary

Pension and
other benefits

Bonus:
Cash

2. How did we determine performance-based pay in 2023?

Fixed

Bonus:
Deferred into
shares released
annually over
three years

Variable

LTIP

Total
remuneration

Component: 2023 Annual bonus

Component: 2021-2023 LTIP

Measure

Cash remittances

Solvency II OFG

Group adjusted operating profit

Risk scorecard

Cost reduction

Employee engagement

Online experience score

Outcome

Maximum

32.7%

13.9%

19.0%

5.5%

50%

40.0%

30%

20.0%

10.0%

10%

Transactional Net Promoter Score (TNPS)

0.0%

Total

141.1%

200%

Outcome

Measure

rTSR

Cumulative cash remittances

Solvency II RoE (adjusted
for excess capital)

Reduction in CO₂ intensity
of shareholder assets

Ethnically diverse employees in
senior leadership roles

Females in senior leadership roles

2021 LTIP vesting outcome

15.3%

1.5%

Maximum

45.0%

22.5%

5.0%

2.5%

91.8%

100%

3. How much did we pay our EDs in 2023?

4. Performance against our peer group and the FTSE 100 - rTSR

Chief Executive Officer
Amanda Blanc

Chief Financial Officer
Charlotte Jones

£6.63m

£1.71m

3 year rTSR Performance

l Salary, pension and other benefits l Bonus l LTIP1

1. No LTIP vested for Charlotte Jones due to her starting in 2022 thus was not awarded a 2021 LTIP

Aviva plc

2.35

Annual Report and Accounts 2023

68.5%51.2%35.5%Aviva2021 LTIP comparator group medianFTSE 1001. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Remuneration at a glance

5. Remuneration policy and implementation for 2024

6. How remuneration is linked to our strategy

Fixed pay

Group CEO

Group CFO

Our incentives are aligned to our strategic priorities as set out below

Our strategic priorities

£1,120k (3.7% increase)

£735k (3.9% increase)

Pension contribution rate aligned to wider workforce (14% of basic salary)

Benefits are in line with the Policy

Annual Bonus

LTIP

Growth

Customer

Efficiency

Sustainability

2024 Annual Bonus Plan (ABP)

2024-2026 LTIP

Gross cash remittances

rTSR

•Group CEO - maximum of 200% of salary
•Group CFO - maximum of 150% of salary

• Group CEO - maximum of 350% of salary
• Group CFO - maximum of 225% of salary

Solvency II OFG

Cumulative cash remittances

Operation:

1/2 paid in cash

Shares released in
equal tranches
after years 1, 2
and 3

1/2 deferred into
shares

Operation:
3 year performance period followed by 2 year
holding period

1 year

2 years 3 years

Measures
Financial measures (70% of total):

Measures
Financial measures (80 % of total):

25%

20%

15%

10%

Cash remittances

Solvency II OFG

Group adjusted operating profit

Efficiency measures

40%

25%

15%

rTSR

Cumulative cash remittances

Solvency II RoE

Group adjusted operating profit

Solvency II RoE

Efficiency measures

Risk scorecard

TNPS

Reduction in weighted average
carbon intensity of shareholder
and with-profits credit and equity
assets

Customer scorecard

Online experience score

Females in senior leadership roles

Employee engagement

Ethnically diverse employees in
senior leadership roles

Strategic measures (30% of total):

Strategic measures (20% of total):

7. Wider workforce remuneration

15%

Risk scorecard

Employee engagement

Online experience score

TNPS

7.5%

2.5%

Reduction in weighted average carbon
intensity of shareholder and with-
profits credit and equity assets

Customer scorecard

Females in senior leadership roles

Ethnically diverse employees in
senior leadership roles

Shareholding requirements

Group CEO – 300% of salary

Group CFO - 225% of salary

Post-cessation shareholding requirements apply for two years

Salary

Pension

Health and wellbeing

6% salary increase
budget for 2024
with a higher budget
targeted at more junior
colleagues offset by a
lower budget for senior
management

More detail can be found in Table 23

Aviva pays all UK
colleagues at least the Real
Living Wage, plus 8%
enabling colleagues to benefit
from our 14% matching pension
contribution and save for their
retirement

Living pension accreditation
achieved in March 2023

Competitive provision
for all UK colleagues
includes Digital GP services,
and either full Private Medical
Benefit, or access to physio
support and critical illness
cover (all company funded)

Aviva plc

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Annual Report and Accounts 2023

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2. Governance

3. IFRS Financial Statements

4. Other Information

Directors’
Remuneration Policy

The proposed Remuneration Policy for directors is
set out in accordance with the requirements of the
Companies Act 2006 (as amended) and the Large and
Medium Sized Companies and Groups (Accounts and
Reports) Regulations 2008 (as amended) and is subject
to shareholder approval at the 2024 AGM on 2 May
2024. If approved, it will apply immediately, for up to
three years.

The key changes between this Policy and the current Policy as approved at the 2021
AGM are detailed below and noted in the tables that follow:

• Annual bonus - The current Policy requires two-thirds of any bonus award to be
deferred. To better align with market practice and ensure our approach remains
competitive and fair, we are proposing to reduce the level of deferral to 50%.

• NED benefits – The proposed policy allows flexibility to introduce health assessments

for our NEDs. This change follows broader wellbeing improvements that we have
made for our wider workforce in the UK.

Alignment of Group strategy with executive remuneration
The Committee considers that alignment between Group strategy and ED remuneration
is critical. The Policy provides market competitive remuneration, and incentivises EDs
to achieve the annual business plan and the longer-term strategic objectives of the
Group. Significant levels of deferral, and within and post-employment shareholding
requirements, align EDs’ interests with those of shareholders and aid retention of key
personnel. As well as rewarding the achievement of objectives, variable remuneration
can be zero if performance thresholds are not met. Remuneration payments to
Directors can only be made if they are consistent with the approved Policy.

Table 1 provides an overview of the Policy for EDs. The Policy for NEDs is in table 3.

Table 1 Key aspects of the Policy for Executive Directors
Element

Basic salary

Purpose
To provide core market related pay
to attract and retain the required level
of talent.

Operation
Annual review, with changes normally
taking effect from 1 April each year.
The review is informed by:

•Individual and business

performance.

•Levels of increase for the broader

employee population.

•Relevant pay data including market
practice among relevant FTSE listed
companies of comparable size to
Aviva in terms of market
capitalisation, large European and
global insurers, and UK financial
services companies.

Maximum opportunity
There is no maximum increase within
the Policy. However, basic salary
increases take account of the average
basic salary increase awarded to the
broader employee population.
Different levels of increase may be
agreed in certain circumstances at
the Committee’s discretion, such as:

•An increase in job scope and

responsibility.

•Development of the individual

in the role.

•A significant increase in the size,
value or complexity of the Group.

Assessment of performance
Any movement in basic salary takes
account of the performance of the
individual and the Group.

Note:
No changes proposed over current
Policy.

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Directors’ Remuneration Policy

Element

Long-term
incentive plan

Element

Annual bonus

Purpose
To reward EDs for achievement
against the Company’s strategic
objectives and for demonstrating the
Aviva values and behaviours.

Deferral provides alignment with
shareholder interests and aids
retention of key personnel.

Operation
Awards are based on performance in
the year. Targets are normally set
annually and pay-out levels are
determined by the Committee based
on performance against those targets
and a quality of earnings assessment
and risk review.

Form and timing of payment
•50% of any bonus is payable in cash

at the end of the year.

•50% of any bonus awarded is

deferred into shares which vest in
three equal annual tranches.

Additional shares are awarded at
vesting in lieu of dividends paid on the
deferred shares.

Malus and clawback
Cash and deferred awards are subject
to malus and clawback. Details of
when these may be applied are set
out in the notes below.

Maximum opportunity
200% of basic salary for Group CEO
150% of basic salary for other EDs

Outcome at threshold and on target
Performance is assessed against
multiple measures. Threshold
performance against a single measure
would result in a bonus payment of no
more than 25% of basic salary.

100% of basic salary is payable for on
target performance.

Assessment of performance
Performance is assessed against a
range of relevant financial, employee,
customer and risk targets designed to
incentivise the achievement of our
strategy, as well as individual strategic
objectives as set by the Committee.

Although financial performance is the
major factor in considering overall
expenditure on bonuses, performance
against non-financial measures
including progress towards our
strategic priorities and behaviours in
line with our values will also be taken
into consideration.

Discretion
See notes to this table.

Note:
Proposed revised Policy reduces
deferral from two-thirds to half to
better align with competitive practice.

Purpose
To reward EDs for achievement
against the Company’s longer-term
objectives; to align EDs’ interests with
those of shareholders and to aid the
retention of key personnel and to
encourage focus on long-term growth
in enterprise value.

Operation
Shares are awarded annually which
vest dependent on the achievement
of performance conditions. Vesting is
subject to an assessment of quality of
earnings, the stewardship of capital
and risk review.

Performance period
Three years. Additional shares are
awarded at vesting in lieu of dividends
on any shares which vest.

Additional holding period
Two years.

Malus and clawback
Awards are subject to malus and
clawback. Details of when these
may be applied are set out in the
notes below.

Maximum opportunity
350% of basic salary.

Performance measures
Awards will vest based on a
combination of financial, rTSR and
strategic performance measures.

The Policy provides for a minimum
aggregate weighting of 80% for
financial measures and rTSR and for
up to 20% to be based on strategic
performance measures. We would
engage with shareholders before
changing measures or weighting in
future years.

For the 2024 awards the measures
and weightings will be:

•40% rTSR
•25% Cumulative cash remittances
•15% Solvency II RoE
•20% Strategic measures:
•7.5% Carbon intensity
•7.5% Customer scorecard
•2.5% Ethnicity
•2.5% Gender

Vesting at threshold
Threshold vesting for all measures
is 20%.

Discretion
See notes to this table.

Note:
No changes proposed over current
Policy.

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Directors’ Remuneration Policy

Element

Pension

Benefits

Purpose
To give a market competitive level of
provision for post-retirement income.

Operation
EDs are eligible to participate in a
defined contribution plan up to the
annual limit.

Any amounts above annual or lifetime
limits are paid in cash.

Maximum opportunity
If suitable employee contributions are
made, the Company contributes 14% of
basic salary for all EDs, aligned to the
rate available to the majority of the UK
workforce.

Note:
No changes proposed over current
Policy.

Element

Relocation
and mobility

Purpose
To assist with mobility across the
Group to ensure the appropriate talent
is available to execute strategy locally.

Operation
EDs who are relocated or reassigned
from one location to another receive
relevant benefits to assist them and
their dependants in moving home and
settling into the new location.

Maximum opportunity
Dependent on location and family size,
benefits are market related and time
bound. They are not compensated for
performing the role but to defray costs
of a relocation or residence outside
the home country.

The Committee would reward no
more than it judged reasonably
necessary, in the light of all applicable
circumstances.

Maximum opportunity
Set at a level which the Committee
considers appropriate against
comparable roles in companies of
a similar size and complexity to
provide a reasonable level of benefit.

Costs would normally be limited
to providing a cash car allowance,
private medical insurance, life
insurance, and reasonable travel
benefits (including the tax cost where
applicable). In addition, there may
be one-off or exceptional items on a
case by case basis, which would be
disclosed in the DRR.

Note:
No changes proposed over current
Policy.

Purpose
To provide EDs with a suitable but
reasonable package of benefits as
part of a competitive remuneration
package. This involves both core
executive benefits, and the
opportunity to participate in flexible
benefits programmes offered by the
Company (via salary sacrifice).

This enables us to attract and retain
the right level of talent necessary to
deliver the Company’s strategy.

Operation
Benefits are provided on a market
related basis. The Company reserves
the right to deliver benefits to EDs
depending on their individual
circumstances, which may include
a cash car allowance, life insurance,
private medical insurance and access
to a company car and driver for
business use. In the case of non-UK
executives, the Committee may
consider additional allowances
in line with standard relevant
market practice.

EDs are eligible to participate in the
Company’s broad based employee
share plans on the same basis as other
eligible employees.

Shareholding
requirements

Purpose
To align EDs’ interests with those
of shareholders.

Operation
A requirement to build a shareholding
in the Company equivalent to 300%
of basic salary for the Group CEO and
225% for other EDs.

This shareholding is normally to be
built up over a period not exceeding
five years (subject to the Committee’s
discretion where personal
circumstances dictate).

Note:
No changes proposed over current
Policy.

Post-cessation shareholding
requirements also apply to EDs
being the lower of 300% of basic
salary for the Group CEO and 225%
for other EDs, or the holding on
termination of employment, for
two years post-cessation.

Note:
No changes proposed over current
Policy.

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Directors’ Remuneration Policy

Notes to the table:
Performance measures
For the annual bonus, performance measures are chosen to align to the Group’s key
performance indicators and include financial, strategic, risk, employee and customer
measures. Achievement against individual strategic objectives is also taken into
account.

LTIP performance measures are chosen to provide an indication of both absolute and
relative return generated for shareholders. In terms of target setting, a number of
reference points are taken into account each year including, but not limited to, the
Group’s business plan and external market expectations of the Company. Maximum
payouts require performance that significantly exceeds expected performance under
both the annual bonus and the LTIP.

Quality of earnings assessments
Throughout the year, the Committee engages in a regular quality of earnings
assessment. A quality of earnings assessment sign-off is the final step in determining
annual bonus scorecard outcomes, and is performed before vesting is determined
against financial measures under the LTIP.

As a minimum, at any Committee meeting where LTIP vesting or annual bonus
scorecard decisions are considered, the Financial Controller or equivalent prepares
a report to the Committee on the quality of earnings reflected in the results being
assessed, against performance targets. Extensive information from the audited
accounts is used to explain the vesting and scorecard outcomes – ranging from
movements in reserves, capital management decisions, consistency of accounting
treatment and period to period comparability. The Financial Controller or equivalent
attends the Committee meeting to answer any questions that any member of the
Committee may choose to ask. Any vesting decision or confirmation of awards is made
after this process has been undertaken.

Malus and clawback
The circumstances when malus (the forfeiture or reduction of unvested shares awarded
under the ABP and LTIP) and clawback (the recovery of cash and share awards after
release) may apply include (but are not limited to) where the Committee considers that
the employee concerned has been involved in or partially/wholly responsible for:

• A materially adverse misstatement (as defined by the Board) of the Company’s financial

statements, or a misleading representation of performance;

• A significant failure of risk management and/or controls;
• A scenario or event which causes material reputational damage to the Company;
• A scenario or event which causes material corporate failure;
• Any regulatory investigation or breach of laws, rules or codes of conduct;

• Misconduct which, in the opinion of the Committee, ought to result in the complete or

partial lapse of an award;

• Conduct which resulted in significant loss(es) or summary termination of employment;
• Failure to meet appropriate standards of fitness and propriety;
• A material error (as defined by the Board) in the calculation of a financial or strategic

measure used to determine the outcome of variable pay, or any other error or material
misstatement that results in overpayment to employees;

• Any circumstances determined by the Board that mean the underlying financial health

of the Group or member of the Group has significantly deteriorated, resulting in
severe financial constraints which preclude or limit the ability to fund variable pay;
and

• Any other circumstance required by local regulatory obligations or that, in the Board’s

opinion, justifies the reduction or repayment of variable pay.

The clawback period runs for two years from the date of payment in the case of the
cash element of any annual bonus award.

For deferred bonus elements and LTIP awards, the overall malus and clawback period
is five years from the date of grant.

Discretions
The discretions the Committee has in relation to the operation of the ABP and LTIP are
set out in the plan rules. In relation to the outcomes under these plans, the Committee
has unfettered discretion to adjust upward or downward (including to nil) the
mechanical outcome where it considers that:

• The outcome does not reflect the underlying financial or strategic performance of the

participant or the Group over the relevant period;

• The outcome is not appropriate in the context of circumstances that were unexpected

or unforeseen at the award date;

• There exists any other reason why an adjustment is appropriate; and/or
• It is appropriate to do so, taking into account a range of factors, including the
management of risk and good governance and, in all cases, the experience of
shareholders.

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Directors’ Remuneration Policy

Other discretions include, but are not limited to, the ability to set additional conditions
and the discretion to change or waive those conditions. Such discretions would only be
applied in exceptional circumstances, to ensure that awards properly reflect underlying
business performance. Any use of the discretions and how they were exercised will be
disclosed, where relevant, in the DRR and, where appropriate, be subject to consultation
with Aviva’s shareholders.

Change in control
In the event of a change in control, unless a new award is granted in exchange for an
existing award, or if there is a significant corporate event like a demerger, awards under
the LTIP would normally vest to the extent that the performance conditions have been
satisfied as at the date of the change in control, and unless the Committee decides
otherwise, would be pro-rated to reflect the time between the date of grant and the
change in control event. Awards under the ABP would normally vest on the date of the
change in control and may vest if there is a significant corporate event.

Consistency of executive Policy across the Group
The Policy for our EDs is designed as part of the remuneration philosophy and
principles that underpin remuneration for the wider Group. Remuneration
arrangements for colleagues below the EDs take account of the seniority and nature of
the role, individual performance and local market practice. The components and levels
of remuneration for different colleagues may therefore differ from the Policy for EDs.

Any such elements are reviewed against market practice and approved in line with
internal guidelines and frameworks.

Differentiation in reward outcomes based on performance and behaviour that is
consistent with the Aviva values is a feature of how Aviva operates its annual bonus plan
for its senior leaders and managers globally.

A disciplined approach is taken to moderation across the Company in order to
recognise and reward the key contributors. The allocation of LTIP awards also involves
strong differentiation, with expected contribution and ability to collaborate effectively
in implementation of the strategy driving award levels.

Legacy payments
The Committee reserves the right to make any remuneration payments and payments
for loss of office (including exercising any discretions available to it in connection with
such payments) notwithstanding that they are not in line with the Policy set out above,
where the terms of the payment were agreed (i) before May 2014 (the date the
Company’s first Policy came into effect), (ii) before the Policy set out above came into
effect, provided that the terms of the payment were consistent with the Policy in force
at the time they were agreed, or (iii) at a time when the relevant individual was not a
director of the Company and, in the opinion of the Committee, the payment was not in
consideration for the individual becoming a director of the Company. For these
purposes, ‘payments’ includes the Committee satisfying awards of variable
remuneration and, in relation to an award over shares, the terms of the payment are
‘agreed’ at the time the award is granted.

Approach to recruitment remuneration
On hiring a new ED, the Committee would align the proposed remuneration package
with the Policy in place for EDs at the time of the appointment.

In determining the actual remuneration for a new ED, the Committee would consider
the package in totality, taking into account elements such as the skills and experience
of the individual, local market benchmarks, remuneration practice, and the existing
remuneration of other senior executives. The Committee would ensure any
arrangements agreed would be in the best interests of Aviva and its shareholders. It
would seek not to pay more than necessary to secure the right candidate.

Where considered appropriate the Committee may make awards on hiring an external
candidate to ‘buyout’ remuneration arrangements forfeited on leaving a previous
employer. In doing so, the Committee would take account of relevant factors including
any performance conditions attached to these awards, the form in which it was paid
(e.g. cash or shares) and the timeframe of awards.

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Directors’ Remuneration Policy

Buyout awards would be awarded on a ‘like for like’ basis compared to remuneration
being forfeited, and would be capped to reflect the value being forfeited. The
Committee considers that a buyout award is a significant investment in human capital
by Aviva, and any buyout decision will involve careful consideration of the contribution
that is expected from the individual.

The maximum level of variable pay which could be awarded to a new ED, excluding any
buyouts, would be in line with the Policy set out above and would therefore be no more
than 550% of basic salary for the Group CEO (200% of basic salary annual bonus
opportunity and 350% of basic salary as the face value of a LTIP grant) and 500% of
basic salary for other EDs (150% of basic salary annual bonus opportunity and 350% of
basic salary as the face value of a LTIP grant).

All other elements of remuneration will also be in line with the Policy set out above.

Should the Company have any prior commitments outside of this Policy in respect of
an employee promoted internally to an ED position, the Committee may continue to
honour these for a period of time. Where an ED is appointed from within the
organisation, the normal policy of the Company is that any legacy arrangements would
be honoured in line with the original terms and conditions. Similarly, if an ED is
appointed following Aviva’s acquisition of, or merger with, another company, legacy
terms and conditions may be honoured.

On appointing a new NED, the Committee would align the remuneration package with
the Policy for NEDs, outlined in table 3, including fees and travel benefits.

Aviva plc

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Directors’ Remuneration Policy

Illustration of the Policy
The charts below illustrate how much EDs could earn under different performance
scenarios in one financial year:

• Minimum – basic salary, pension or
cash in lieu of pension and benefits,
no bonus and no vesting of the LTIP.

• Maximum – basic salary, pension or
cash in lieu of pension, benefits, and:
• A bonus of 200% and a LTIP of 350%
of basic salary (with notional LTIP
vesting at maximum) for the
Group CEO.

• A bonus of 150% and a LTIP of 225%
of basic salary (with notional LTIP
vesting at maximum) for the
Group CFO.

• Target - basic salary, pension or cash

in lieu of pension, benefits, and:
• A bonus of 100% and a LTIP of 350%
of basic salary (with notional LTIP
vesting at 50% of maximum) for the
Group CEO.

• A bonus of 100% and a LTIP of 225%
of basic salary (with notional LTIP
vesting at 50% of maximum) for the
Group CFO.

• Maximum with share price

appreciation – indicative maximum
remuneration, assuming a notional
LTIP vesting at maximum and share
price appreciation of 50% on the LTIP.

Employment contracts and letters of appointment
ED employment contracts and NED letters of appointment are available for inspection
at the Company’s registered office during normal hours of business, and at the place of
the Company’s 2024 AGM on 2 May 2024 from 10.15am until the close of the meeting.

The key employment terms and conditions of the current EDs, and those who served
during the year, as stipulated in their employment contracts, are set out in the table below.

Potential earnings by pay element - Amanda Blanc

£4.2m

45%

25%
30%

£1.3m
100%

£7.2m

52%

30%

18%

l Fixed l Annual Bonus l LTIP

Potential earnings by pay element - Charlotte Jones

£2.3m
34%
30%

36%

46%

30%

24%

100%

£9.1m

62%

24%

14%

56%

25%

19%

l Fixed l Annual Bonus l LTIP

Notes to the charts

1. The charts are illustrative only and the actual value EDs could earn is subject to business performance and share price

movement to the date of vesting of the LTIP and of the deferred share element of the annual bonus

2. Fixed pay consists of basic salary, pension as described in table 5, and estimated value of benefits provided under the

Policy, excluding any one-offs. Actual figures may vary in future years.

3. The value of the deferred element of the annual bonus assumes a constant share price and does not include additional

shares awarded in lieu of dividends that may accrue during the vesting period

4. The value of the LTIP assumes a constant share price (with the exception of the maximum with share price increase

scenario) and does not include additional shares awarded in lieu of dividends that may accrue during the vesting period

5. The LTIP is as proposed to be awarded in 2024, which would vest in 2027, subject to the satisfaction of performance

conditions. The shares would then be subject to a further two-year holding period.

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£m2024 Minimum2024 Target2024 Maximum2024 Maximum with share price appreciation0.005.0010.00£m£0.8m£3.5m£4.3m2024 Minimum2024 Target2024 Maximum2024 Maximum with share price appreciation0.02.55.01. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Directors’ Remuneration Policy

Table 2 Executive Directors’ key conditions of employment
Provision

Policy

Notice period

6 months.

By the ED
By the Company

Termination
payment

Remuneration
and benefits

Expenses

12 months, rolling. No notice or payment in lieu of notice to be paid where
the Company terminates for cause.

Pay in lieu of notice up to a maximum of 12 months’ basic salary.

Any payment is subject to phasing and mitigation requirements. An ED
would be expected to mitigate the loss of office by seeking alternative
employment. Any payments in lieu of notice would be reduced, potentially
to zero, by any salary received from such employment.

The operation of the annual bonus and LTIP is at the Company’s discretion.

Reimbursement of expenses reasonably incurred in accordance with
their duties.

Holiday entitlement

30 working days plus public holidays.

Private medical
insurance

Other benefits

Sickness

Non-compete

Contract dates

Private medical insurance is provided for the ED and their family. The ED
can choose to opt out of this benefit or take a lower level of cover.
However, no payments are made in lieu of reduced or no cover.

Other benefits include participation in the Company’s staff pension
scheme, life insurance and, where applicable, access to a Company car
and driver for business related use.

100% of salary for the first 52 weeks and up to £150,000 per annum for
a further 5 years.

During employment and for nine months after leaving (less any period
of garden leave) without the prior written consent of the Company.

Director
Amanda Blanc
Charlotte Jones

Date current contract commenced
6 July 2020
5 September 2022

Policy on payment for loss of office
There are no pre-determined ED special provisions for compensation for loss of office.
The Committee has the ability to exercise its discretion on the final amount actually
paid. Any compensation would be based on basic salary, pension entitlement and other
contractual benefits during the notice period, or a payment made in lieu of notice,
depending on whether the notice is worked.

Where notice of termination of a contract is given, payments to the ED would continue
for the period worked during the notice period. Alternatively, the contract may be
terminated, and phased monthly payments made in lieu of notice for, or for the balance
of, the 12 months’ notice period. During this period, EDs would be expected to mitigate
their loss by seeking alternative employment. Payments in lieu of notice would be
reduced by the salary received from any alternative employment, potentially to zero.
The Company would typically make a reasonable contribution towards an ED’s legal
fees in connection with advice on the terms of their departure.

There is no automatic entitlement to an annual bonus for the year in which loss of
office occurs. The Committee may determine that an ED may receive a pro rata bonus
in respect of the period of employment during the year loss of office occurs based on an
assessment of performance. Where an ED leaves the Company by reason of death,
disability or ill health, or any other reason determined by the Committee, there may be
a payment of a pro rata bonus for the relevant year at the discretion of the Committee.

The treatment of leavers under the ABP and LTIP is determined by the rules of the
relevant plans. Good leaver status under these plans would be granted in the event of,
for example, the death of an ED. Good leaver status for other leaving reasons is at the
discretion of the Committee, taking into account the circumstances of the individual’s
departure, but would typically include planned retirement, or their departure on ill
health grounds.

In circumstances where good leaver status has been granted, awards may still be
subject to malus and clawback in the event that inappropriate conduct of the ED is
subsequently discovered post departure, and retirees are subject to post-activity
restrictions which allow the Committee to reduce or recover awards if certain
employment is taken elsewhere. If good leaver status is not granted, all outstanding
awards will lapse.

In the case of LTIP awards, where the Committee determines an ED to be a good leaver,
vesting is normally based on the extent to which performance conditions have been
met at the end of the relevant performance period, and the proportion of the award
that vests is pro-rated for the time from the date of grant to final date of service (unless
the Committee decides otherwise). Any decision not to apply this would only be made
in exceptional circumstances and would be fully disclosed. It is not the practice to allow
such treatment.

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2. Governance

3. IFRS Financial Statements

4. Other Information

Directors’ Remuneration Policy

Consideration of wider employee pay and shareholder views
When determining the Policy and arrangements for our EDs, the Committee considers:

Non-Executive Directors
The table below sets out details of our Policy for NEDs.

• Pay and employment conditions elsewhere in the Group to ensure that pay structures
are suitably aligned and that levels of remuneration remain appropriate. The Committee
reviews levels of basic salary increases for other employees and executives based on
their respective locations. It reviews changes in overall bonus pool funding and long-
term incentive grants. The Committee considers feedback on pay matters from
sources including the employee opinion survey and employee forums. The Committee
also takes into account information provided by the people function and external
advisers and the Committee Chair has in place a programme of consultation and
meetings with employee forums including trade unions, Your Forum and the Evolution
Council to discuss remuneration.

• In its ongoing dialogue with shareholders, the Committee seeks shareholder views
and takes them into account when any significant changes are being proposed to
remuneration arrangements and when formulating and implementing the Policy.
For example, there was detailed engagement with our largest shareholders regarding
the proposed Policy during 2023.

Table 3 Key aspects of the Policy for Non-Executive Directors
Element

Chair and
NEDs’ fees

Chair’s travel
benefits

Purpose
To attract individuals with the
required range of skills and
experience to serve as a Chair
or as a NED.

Operation
NEDs receive a basic annual fee in
respect of their Board duties. Further
fees are paid for membership and,
where appropriate, chairing Board
committees.

The Chair receives a fixed annual fee.
Fees are reviewed annually taking
into account market data and trends
and the scope of specific Board
duties. NEDs are able to use up to
100 % of their post-tax base fees to
acquire shares in Aviva plc.

The Chair and NEDs do not participate
in any incentive or performance plans
or pension arrangements and do not
receive an expense allowance.

NEDs are reimbursed for reasonable
expenses, and any tax arising on
those expenses is settled directly by
Aviva. To the extent that these are
deemed taxable benefits, they will be
included in the DRR, as required.

NEDs may be provided with benefits,
if deemed appropriate including
health and wellbeing benefits.

Purpose
To provide the Chair with suitable
travel arrangements for them to
discharge their duties effectively.

Maximum opportunity
The Company’s Articles of
Association provide that the total
aggregate remuneration paid to the
Chair of the Company and NEDs will
be determined by the Board within
the limits set by shareholders and
detailed in the Company’s Articles
of Association.

Note:
Proposed revised Policy includes
addition of health and wellbeing
benefits.

The Chair has access to a company
car and driver for business use.
Where these are deemed a taxable
benefit, the tax is paid by the
Company.

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4. Other Information

Directors’ Remuneration Policy

Element

NED travel and
accommodation

Purpose
To reimburse NEDs for appropriate
business travel and accommodation,
including attending Board and
committee meetings.

Operation
Reasonable costs of travel and
accommodation for business
purposes are reimbursed to NEDs.
On the limited occasions when it is
appropriate for a NED’s spouse or
partner to attend, such as a business
event, the Company will meet these
costs. The Company will meet any
tax liabilities that may arise on
such expenses.

The NEDs, including the Chair of the Company, have letters of appointment which set
out their duties and responsibilities. The key terms of the appointments are set out in
the table below.

Table 4 Non-Executive Directors’ key terms of appointment
Provision

Policy

In line with the requirement of the Code, all NEDs, including the Chair, are
subject to annual re-election by shareholders at each AGM.

Director

Appointment date1

Appointment end date2

Committee

George Culmer

25 September 2019

Andrea Blance

21 February 2022

Mike Craston

Patrick Flynn

17 May 2022

16 July 2019

Shonaid Jemmett-Page

20 December 2021

Mohit Joshi

Pippa Lambert

Jim McConville

Michael Mire

Martin Strobel

1 December 2020

1 January 2021

1 December 2020

12 September 2013

22 October 2021

AGM 2024

1. The dates shown reflect the date the individual was appointed to the Aviva plc Board
2. All appointment end dates are the 2024 AGM, in accordance with the NEDs' letters of appointment

Committee membership key

Nomination and Governance Committee

Period

Termination

Fees

Expenses

By the director or the Company at their discretion without compensation upon
giving one month’s written notice for NEDs and three months written notice
for the Chair of the Company.

Audit Committee

Risk Committee

As set out in table 22.

Reimbursement of travel and other expenses reasonably incurred in the
performance of their duties.

Customer and Sustainability Committee

Remuneration Committee

Time commitment Each director must be able to devote sufficient time to the role in order to

Chair

discharge responsibilities effectively.

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Annual report on
remuneration

This section of the report sets out how Aviva has
implemented its Policy during 2023.

During the year, the Committee received assistance in considering executive
remuneration from a number of senior managers, who attended certain meetings
(or parts thereof) by invitation during the year, including:

This is in accordance with the requirements of the Large & Medium Sized Companies
and Groups (Accounts and Reports) Regulations 2008 (as amended).

Committee membership
The members of the Committee during the year are shown below.

Pippa Lambert1
Patrick Flynn

Andrea Blance

Jim McConville

Appointed

Years on the
Committee

1 January 2021

15 June 2020

21 February 2022

1 February 2023

1. Became Chair of the Committee on 14 September 2021

The Committee met seven times during 2023, all of which were scheduled meetings.
Details of Committee members’ experience, qualifications and attendance at Committee
meetings during the year are shown in the ‘Our Board of Directors' section of the
Governance report.

The Group Chair attended all meetings of the Committee. The Group General Counsel
and Company Secretary acted as secretary to the Committee. The Chair of
the Committee reported to subsequent meetings of the Board on the Committee’s work
and the Board received a copy of the minutes of each Committee meeting.

• the Group CEO;
• the Group Chief People Officer;
• the Group Reward and Performance Director;
• the Chief Financial Controller;
• the Group Financial Planning Director;
• the Chief Audit Officer; and
• the Group Chief Risk Officer.

No person was present during any discussion relating to their own remuneration.

During the year, the Committee received advice on executive remuneration matters
from Deloitte LLP. Deloitte LLP were approved by the Committee and appointed as
their advisers in 2012 following a competitive tender process. The Committee regularly
reviews and satisfies itself that the advice received from Deloitte LLP is independent
and objective.

The Committee notes Deloitte LLP is a member of the Remuneration Consultants
Group and adheres to its Code of Conduct. During the year, Deloitte LLP also provided
advice to the Group on various taxation, risk, compliance and other consulting advisory
services.

Tapestry Compliance Limited, appointed by the Company, provided legal and regulatory
advice on share incentive plan related matters, including on senior executive
remuneration matters and views on shareholder perspectives.

During the year, Deloitte LLP were paid fees totalling £208,300 and Tapestry
Compliance Limited were paid fees totalling £46,292 for their advice to the Committee
on these matters. Fees were charged on a time plus expenses basis.

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3. IFRS Financial Statements

4. Other Information

Share plan operation and performance testing
• Reviewed performance testing of all existing LTIP awards, approved targets

for future LTIP awards.

• Approved vesting outcomes for the 2020 LTIP and noted the interim testing

for the 2021, 2022 and 2023 awards.

• Reviewed and approved any application of malus and clawback.
• Approved the terms of the SAYE, the Aviva Ireland Save as You Earn Scheme,

the Ireland Profit Share Scheme, and the invitation terms for eligible employees.

The Committee’s decisions were taken in the context of the Reward Governance
Framework, which sets out the key policies, guidelines and internal controls and
is summarised on the next page.

Annual report on remuneration

The Committee reflects on the quality of the advice provided and whether it properly
addresses the issues under consideration as part of its normal deliberations.
The Committee is satisfied that the advice received during the year was objective
and independent.

Committee effectiveness review
The Committee undertakes a review of its effectiveness annually as part of the Board
Evaluation. More information can be found in the Our approach to governance section
of the Governance report.

Committee activities during 2023
Governance, regulatory issues and reporting policy
• Reviewed and developed a new proposed Policy to be put forward for shareholder

approval at the 2024 AGM, taking into account the views of shareholders.

• Reviewed updates from external advisers on the regulatory environment and on
benchmarking the Group’s remuneration policies and practices against industry
best practice.

• Reviewed and approved the Company’s annual remuneration regulatory reporting

and disclosures.

• Reviewed and approved the Reward Governance Framework Policies.
• Approved the list of in scope staff in respect of the different regulatory regimes

to which the Company is subject.

Senior management objectives, pay decisions and bonus and
LTIP target setting
• Discussed and approved the annual bonus targets for 2024.
• Reviewed and approved the proposed individual remuneration for each member

of the ExCo in relation to their performance.

• Agreed an appropriate approach to remuneration packages for incoming and

outgoing ExCo members in line with policy.

• Reviewed wider workforce pay and employment terms and conditions.
• Concluded its review of 2023 performance:

• Reviewed the Risk and Internal Audit 2022 Performance Opinion in relation

to remuneration.

• Discussed and approved the overall maximum bonus pool available to senior
managers for the 2022 performance year, taking into account measures on
customer, culture and risk as well as on financial performance.

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Annual report on remuneration

Reward Governance Framework

Terms of reference, policies and guidelines

Terms of reference

Remuneration Committee terms of reference
Sets out the Committee’s scope and responsibilities, including authorities
which may be delegated but which still retain Committee oversight

Subsidiary board remuneration committee terms of reference
Sets out the subsidiary remuneration committees’ scopes and responsibilities

Aviva Remuneration Policy
Approved by the Committee,
applies to all employees in
entities within Aviva Group

Directors’ Remuneration Policy
Approved by shareholders, applies
to directors of Aviva Group plc

Identification of remuneration
regulated employees

Variable pay and risk adjustment
(includes bonus, LTIPs, buyout,
retention, recognition awards
and funding)

Malus and
clawback

Overarching policy

Supporting policies

Internal guidelines and non-Remuneration
Committee approved policies (examples)

Global mobility

Retention awards

Benchmarking

Bonus deferral

Buyouts and
guarantees

Specialist
incentive
schemes

Key

Element of the Reward Governance Framework managed as part of the business of the Committee

Element of the Reward Governance Framework managed mainly under delegated authority from the Committee

Control and assurance

Remuneration
business standard
Assurance
framework
to attest reward
operations are
conducted
within the Aviva
Remuneration
Policy, Directors’
Remuneration
Policy and
supporting policies

Reward approvals
framework
Approval
requirements
to ensure Reward
operations are
conducted
within the Aviva
Remuneration
Policy, Directors’
Remuneration
Policy and
supporting policies

Aviva plc

2.49

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Annual report on remuneration

Alignment with the UK Corporate Governance Code
The Committee is mindful of the UK Corporate Governance Code’s six principles when it determines remuneration policy. The Committee’s view is that the
Remuneration Framework at Aviva is well-aligned with these areas.

Simplicity
• We operate a simple

Proportionality
• There is clear alignment

remuneration
framework, comprising
fixed pay elements,
along with short- and
long-term variable
elements.

• This structure provides
clear line of sight for
both executives and
shareholders.

• The annual bonus and

LTIP are focused on our
strategic priorities,
rewarding performance
against key measures of
success for the business.

between the
performance of the
Company and the
rewards available to EDs.

• Incentive elements are
closely aligned to our
strategic goals,
transparent and robustly
assessed, with the
Committee having full
discretion to adjust
outcomes to ensure they
align with overall Aviva
performance.

Predictability
• The Policy sets out
the possible future
value of remuneration
which EDs could receive,
including the impact of
share price appreciation
of 50 % – see under the
illustration of the Policy
for further details.

Alignment to culture
• We are committed to

effective stakeholder and
colleague engagement.

• As part of this, the

Committee regularly
reviews data and insights
relating to pay and
broader employment
conditions in the
workforce, and takes
these into account when
considering executive
remuneration.

Clarity
• Our remuneration

framework is structured
to support the financial
and strategic objectives
of the Company, aligning
the interests of our EDs
with those of shareholders
and wider stakeholders.

• We are committed
to transparent
communication with
all our stakeholders,
including shareholders –
further details of our
engagement process
for the Policy are set out
under the consideration
of wider colleague pay
and shareholder views
section.

Risk
Our reward structure
ensures risk events are
reflected in remuneration
outcomes through:

• Opinion from Risk on

appropriate performance
measures and targets;
risk, performance
management and
consequence
management inputs are
considered before
awards are made.

• Overarching discretion is

retained to adjust
formulaic outcomes to
properly reflect any risk
events.

• Deferral of annual bonus
(over three years) and
LTIP (five years, including
an additional two-year
holding period for EDs),
subject to malus and
clawback provisions
which mitigates against
future risk.

• Our within- and post-

employment
shareholding guidelines
align to the successful
delivery of the company’s
long-term strategy.

Aviva plc

2.50

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Annual report on remuneration

Views
Shareholders
In its ongoing dialogue with shareholders and proxy advisory bodies, the Committee
actively seeks their views, ensuring that feedback received is discussed at Committee
meetings and ultimately feeds into the development of new proposals. We consulted
with major shareholders and their representatives during 2023 in preparation for
presenting our Policy to shareholders at the 2024 AGM.

Our colleagues
The Committee has sight of colleague views through the colleague engagement survey
(Voice of Aviva), input from the People function during Committee meetings, colleague
forums and the Evolution Council, chaired by the Board Chair. Specifically for the last
two channels:

• The Committee Chair met with Your Forum (a fully elected employee forum

representing UK colleagues) and members of Unite the Union in April 2023. Discussion
included matters of interest to colleagues and members covering areas such as Smart
Working, Recruitment and Retention, the Company's ongoing response to the cost of
living challenges as well as our sustainability goals and strategy for the future.

• The Evolution Council consists of a diverse group of high calibre leaders from across

the business who discuss a range of topics related to the Group strategy, values,
culture and performance.

When determining the Policy and arrangements for EDs, the Committee also reviews:

• Pay and employment conditions elsewhere in the Group to ensure reward structures
are suitably aligned and that levels of remuneration remain appropriate, as set out
below table 16. Other considerations include:

- Changes in remuneration (salary, benefits and bonus) of UK colleagues compared

with that of directors (see table 12).

- The ratio of CEO pay to that of colleagues (see tables 15 and 16).

- Gender and ethnicity pay gaps. We released our UK Pay Gap Report 2023 in

February 2024. This was the seventh year that we published our gender pay gap and
the second time we published our ethnicity pay gap. The report also included
details of actions we are taking to drive change and close the gap. The report can be
found at www.aviva.com/about-us/uk-pay-gap-report.

- Any material changes to benefit and pension provision for colleagues more widely.

Single total figures of remuneration for 2023
The table below sets out the total remuneration for 2023 and 2022 for each of our EDs.

Table 5 Total 2023 remuneration – Executive Directors (audited information)

Executive Directors

Amanda Blanc

Charlotte Jones6

Total emoluments of
Executive Directors

2023
£000

2022
£000

1,068

1,023

131

1,247

1,902

3,479

5,381

6,628

125

1,206

2,001

2,242

4,243

5,449

2023
£000

699

804

906

—

906

1,710

2022
£000

2023
£000

220

1,767

217

249

2,051

283

2,808

—

3,479

283

6,287

532

8,338

2022
£000

1,242

152

1,455

2,284

2,242

4,526

5,981

Basic salary1
Benefits2
Pension3

Total fixed pay
Annual bonus4
LTIP5

Total variable pay
Total7

1. Basic salary received during the relevant year
2. The benefits disclosure includes the cost, where relevant, of private medical insurance, life insurance, accommodation, travel

and car benefits. All numbers disclosed include the tax charged on the benefits, where applicable.

3. Pension contributions consist of employer defined contribution benefits, excluding salary exchange contributions made by

the employees, plus cash payments in lieu of pension. Amanda and Charlotte received cash payments equivalent to a pension
contribution of 14%, reduced for the effect of employers’ National Insurance contributions when paid as cash. No ED has a
prospective entitlement to benefit in a defined benefit scheme.

4. Bonus payable in respect of the financial year including any deferred element at the face value at the date of award. EDs are

required to defer two-thirds of any bonus awarded in 2022 and 2023 into Aviva shares. The deferred share element is granted
under the ABP and will vest in equal tranches on the first, second and third anniversary of the award date, subject to continued
employment.

5. The value of the LTIP awards for 2023 relate to the 2021 award, which had a three-year performance period ending 31 December
2023. 91.8% of the award will vest in March 2024 and is the first full year of LTIP vesting Amanda is receiving (2020 award that
vested in 2023 was prorated for service in 2020 and there was a 10% downward adjustment to reflect potential windfall gains).
An assumed share price of 413.49 pence has been used to determine the value of the award based on the average share price
over the final quarter of the 2023 financial year. The amount of the value of the LTIP that is attributable to share price
appreciation (the appreciation being the difference between the face value at the date of award and the vested value of the
award) is £156k. The LTIP amounts shown in last year’s report in respect of the LTIPs awarded in 2020 were calculated with an
assumed vesting share price of 429.65 pence. The actual share price at vesting was 416.00 pence, and the table has been
updated to reflect this change. The estimated value of the award was £2,315k; the actual value was £2,242k (decrease of £73k).

6. Charlotte Jones was appointed as Group CFO on 5 September 2022; the figures for 2022 reflect the period since her

appointment. Year-on-year increase in total fixed pay is primarily due to 2022 figures only reflecting part-year remuneration.
The 2023 nil LTIP amount reflects the fact that Charlotte was not employed by Aviva at the time the LTIP was awarded in 2021.

7. The EDs have not received any items in the nature of remuneration other than those disclosed in table 5. Due to rounding the

totals above may be higher than the sum of individual elements.

Aviva plc

2.51

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Annual report on remuneration

2023 Annual bonus outcomes
The chart below summarises how our annual bonus1 operated for 2023.

Step II – Individual performance
The bonus scorecard outcome from step I
may then be modified based on:

•Individual contribution and

achievements;

•Individual contribution in driving
progress against Group strategic
objectives;

•The leadership they have exhibited; and
•How the individual has demonstrated

Aviva’s values.

Individual adjustments are not determined
in a formulaic manner. The Committee
reviews overall performance against each
individual’s objectives and applies
judgement as to whether any adjustment
is warranted. In recent years adjustments
have ranged from -17.5% to +35%.

s
e
r
u
s
a
e
m

a
c
n
a
n
F

Step I

25% Cash
remittances

20% Solvency II OFG

15% Group adjusted
operating profit

10% Cost reduction

15% Risk scorecard

Performance
against
financial
measures
subject to a
quality of
earnings
assessment.

s
e
r
u
s
a
e
m
c
g
e
t
a
r
t
S

5% Employee
engagement

5% Online
experience score

5% TNPS

Performance is assessed against defined
minimum, target and maximum targets

Step I – Bonus scorecard
The table below sets out performance against financial and strategic measures under
the bonus scorecard. The overall scorecard outcome percentage applies to all EDs.

Table 6 2023 performance against bonus scorecard for Executive Directors’ bonuses
(audited information)

Measure

Weighting

Minimum
(50%)

Target
(100%)

Maximum
(200%)

Actual Outcome

Financial measures (70% of total)

Cash remittances

Solvency II OFG

25.0%

£1,820m £1,875m £1,930m £1,892m

32.7%

20.0%

£1,335m £1,445m £1,555m £1,729m

40.0%

Group adjusted operating profit
Cost reduction1

15.0%

£1,340m £1,490m £1,640m £1,467m

13.9%

10.0%

£700m

£725m

£750m £757m

20.0%

Total financial measures

70.0%

106.6%

Strategic measures (30% of total)
Risk scorecard2

15.0%

7.5%

15.0%

30.0%

19.0%

Employee engagement

5.0%

79.0%

82.0%

87.0%

88.0%

10.0%

Online experience score

5.0%

54.0%

57.0%

60.0%

57.3%

TNPS

5.0%

39.0

42.0

45.0

36.3

Total strategic measures

Scorecard outcome

30.0%

100.0%

5.5%

0.0%

34.5%

141.1%

1. Cumulative gross of inflation savings versus 2018 baseline
2. The risk scorecard objectively assesses and reports on how effectively first line Aviva employees and senior management

manage risk and controls. The risk scorecard considered risk behaviours, outcomes and a second line check and challenge.
The Group outturn rating reflects ongoing progress with strengthening the risk and control environment and desired risk
culture throughout Aviva.

1. This approach also used as the basis for determining bonuses for colleagues across the Group. For Aviva Investors, bonus

funding is primarily based on profitability.

Aviva plc

2.52

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Annual report on remuneration

Step II – Individual performance
The Committee assessed Amanda and Charlotte on their individual performance in the
year which is set out below.

Amanda Blanc

Charlotte Jones

Amanda’s exceptional leadership has delivered another strong year for Aviva.
Key achievements include:

Charlotte and the finance function supported Aviva well in a strong year.
Key achievements include:

•A strong set of financial results with 12% growth in Solvency II OFG, 9% growth in Group
adjusted operating profit, £1.9 billion of cash remittances and delivery of in excess of
£750 million expense savings one year earlier than planned.

•Supported the delivery of strong financial results while maintaining resilient balance sheet

strength and effective capital management to enable investment for growth and
efficiency in the business and deliver on regular and sustainable capital return.

•Successfully progressing the strategy of pivoting Aviva to capital-light; this includes

•Driven strong effective performance management processes across the Group, ensuring

outperforming the competition in the growth of General Insurance, Workplace, Protection
and Health, as well as the acquisitions of AIG's UK protection business (subject to
regulatory approvals) and Optiom in Canada.

•£300 million share buyback – bringing the return to shareholders, including dividends,

over the last three years to £9 billion and upgraded forward dividend guidance
announced in March 2023.

•Announcing the divestment of Aviva's Singapore business realising c.£930 million of total

consideration.

•Working with industry, government, and regulators to shape relevant legislation - for

example Solvency II and the Mansion House Compact.

Aviva exceeded the external financial targets relating to Solvency II OFG and cash
remittances and exceeded the £750 million expense saving target one year earlier than
planned.

•Led the delivery of the transition to IFRS 17 and communication to the market.
•Ensured execution and delivery of £300 million share buyback, updated external dividend
guidance, successfully completed debt consent process and raised £500 million sub-debt
at optimal rates.

•Successfully executing merger and acquisition activity including announcing the disposal
of Singapore and the acquisitions of Optiom in Canada and AIG’s UK protection business
(subject to customary closing conditions and regulatory approvals).

•Phase 1 of implementation of New Consumer Duty deadline met for active products with

•Led extensive market, investor and analyst engagement, including one to one meetings,

minimal disruption to customers and to operations.

•Employee engagement at an all-time high of 88% and 7% above Financial Services (FS)

norms1. Colleagues feeling motivated by the strategy up 9% across the Group. Aviva also
achieved Great Place to Work accreditation.

•Continued strengthening of the senior leadership team through the appointment of James
Hillman as Group Chief Risk Officer, Tracy Garrad as CEO Aviva Canada and Jason Storah
as CEO of UK&I General Insurance.

•Successfully negotiated new long-term contracts with two strategic partners in

Insurance, Wealth & Retirement (IWR) delivering material benefits for customers and
shareholders.

•Substantial progress in foundations for customer digital journeys including Direct Wealth
app, Health Quote & Buy journey and a step change in self-serve for Pension customers.

•Implementation of IFRS 17 – performing well against peers.
•Continued to represent Aviva through external activity. Participation in a number of

industry and public forums such as the Prime Minister’s Business Council and the ABI
Board. Voted City AM Personality of the Year, also received The Insurance Times
Industry Achiever Award and Insurance Post’s BIA Achievement Award.

1. FS norms are provided by Perceptyx. The benchmark is composed of 53 global financial services organisations.

roadshows, external conferences and leading the Personal Lines Business In Focus
market presentation.

•Strengthened the Finance Leadership Team with a number of key appointments critical to

both the future success of Finance and the wider business.

•Reshaped approach to Group Transformation activity with new leadership and more

effective oversight across the Group.

Aviva plc

2.53

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Annual report on remuneration

The Committee considered that in light of Amanda and Charlotte’s performance during
the year, it was appropriate to apply an individual adjustment of 35% to Amanda's bonus
outcome and 15% to Charlotte's bonus outcome.

Table 7 2023 bonus outcomes for Executive Directors (audited information)1

Amanda Blanc

Charlotte Jones

Bonus scorecard (0% – 200%)

Committee discretion

Sub total

Individual adjustment

Final outcome

Target opportunity (% of salary)
Maximum opportunity for 2023 (% of salary)1

Final bonus outcomes
% of salary2

% of maximum

£ amount

141.1%

0.0%

35.0%

176.1%

100.0%

200.0%

176.1%

88.1%

141.1%

0.0%

15.0%

156.1%

100.0%

150.0%

128.1%

85.4%

£1,901,880

£905,954

1. The Group CEO has a maximum bonus opportunity, inclusive of any individual adjustment, of two times target (i.e. 200% of salary) while

the Group CFO has a maximum opportunity, inclusive of any individual adjustment, of one and a half times target (150% of salary)
2. The bonus scorecard for EDs can range from 0% to 200%. When the final outcome is above 100%, the resulting final bonus

outcome, as a percentage of salary, is on a ‘1% for 1%’ basis for the Group CEO and on a ‘2% for 1%’ basis for other EDs; e.g. a final
outcome of 140% would result in a bonus of 140% of salary for the Group CEO and 120% of salary for other EDs. When below
100%, scaling is ‘1% for 1%’, such that a final outcome of 80% would result in a bonus of 80% of salary for all EDs, including the
Group CEO.

Discretion
The Committee is conscious of the provisions of the 2018 Code, with remuneration
committees being encouraged to review incentive outcomes (ABP and LTIP) against
individual and company performance, together with any wider circumstances, and to
exercise independent judgement and discretion in relation to remuneration outcomes.
Taking into account the impact of the outcome of the quality of earnings assessment
(see next page), the Committee is of the view that these outcomes appropriately reflect
the overall performance of Aviva during the year and align with the experience of
shareholders and no discretion was exercised.

2021 LTIP vesting in respect of performance period 2021-2023
The outcomes for the 2021 LTIP are detailed in the table below.

Table 8 2021 LTIP award – performance conditions (audited information)
Measure

Threshold
(20% vest)1

Maximum
(100% of vest)

Vesting
(% of maximum)

rTSR2 - 45%

Cumulative cash
remittances3 - 22.5%

Solvency II RoE
(adjusted for excess
capital)3 - 22.5%

Reduction in CO2
intensity of shareholders'
assets4 - 5%

Ethnically diverse
employees in senior
leadership roles5 - 2.5%

Females in senior
leadership roles6 - 2.5%

Final outcome

Aviva
performance

Median

£5.1bn

10%

7.5%

36%

Upper Quintile

45.0%

£5.6bn

£5.4bn

15.3%

12%

14.9%

22.5%

15%

54.5%

12.5%

40%

40.6%

10.0%

5.0%

1.5%

2.5%

91.8%

1. Threshold vesting is 20% for each performance measure independently
2. Aviva’s rTSR performance was assessed against that of the following companies: Aegon, Allianz, Assicurazioni Generali, AXA,

Direct Line Group, Intact, Legal & General, Lloyds Banking Group, M&G, Phoenix and Zurich Insurance. The performance period
for the rTSR performance condition was the three years beginning 1 January 2021. For the purposes of measuring the rTSR
performance condition, the Company’s TSR and that of the comparator group is based on the 90-day average TSR for the period
immediately preceding the start and end of the performance period.

3. Any vesting of the SII RoE and Cumulative cash remittances elements of the LTIP are subject to a SII shareholder cover ratio that

meets or exceeds the minimum of the stated working range (range: 160% to 180%)

4. Reduction in CO2 intensity of shareholder assets over the three-year performance period is aligned to Aviva Group’s target of

being Net Zero by 2040. A 54.5% reduction in the CO2 intensity of shareholder credit and equities has been achieved in 2023 from
our 31 December 2020 baseline with delivery underpinned by the embedding of carbon intensity into our investment strategy,
including the implementation of our coal exclusions policy and divestments, stewardship actions and ongoing emission reduction
activities.

5. Percentage of colleagues in senior leadership roles in the UK who identify their ethnicity as anything other than ‘white’
6. Percentage of colleagues in senior leadership roles in the UK, Ireland, Canada who identify as female

Amanda was granted 759,493 conditional shares under the LTIP on 27 May 2021 for the
three-year performance period from 1 January 2021 to 31 December 2023. An additional
157,044 shares have accrued as dividend equivalents.

On a formulaic basis, the 2021 LTIP award vested at 91.8% of maximum. The outcome
reflects very strong performance across the measures.

Aviva plc

2.54

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Annual report on remuneration

Quality of earnings assessment – 2023 remuneration decisions
The Committee discussed those items that impacted the overall results in 2023 e.g.
foreign exchange, acquisitions and disposals, life assumption and modelling changes,
prior year reserve development, and other items that are non-recurring in nature. This
process provides the Committee with an understanding of the core profitability of the
business taking these factors into account.

Malus and clawback
As part of the annual pay review process, the Committee has considered whether any
recovery or withholding under the malus and clawback provisions of Aviva’s incentive
plans is required by any current circumstances.

Measure

rTSR1

No incidents concerning the EDs are currently subject to action under Aviva’s Malus
and Clawback policy (2022: No incidents).

Share awards granted to EDs during the year are set out below.

Table 9 Awards granted during the year (audited information)

Date of
award

Award
type1

Face
value (%
of basic
salary)2

Face value
(£)2

Threshold
performance
(% of face
value)3

Maximum
performance
(% of face
value)

End of
performance
period

Amanda
Blanc

Charlotte
Jones

20 Mar
2023

LTIP

350% £3,605,000

20%

100%

31 Dec
2025

ABP

130%

£1,334,190

N/A

LTIP

225%

£1,518,997

20%

100%

31 Dec
2025

ABP

28%

£188,610

N/A

End of
vesting/
holding
period

20 Mar
2028

20 Mar
2026

20 Mar
2028

20 Mar
2026

1. ABP and LTIP awards have been granted as conditional share awards. The LTIP is a conditional right to receive shares, which

vest at the end of a three-year performance period, with an additional two-year holding period. ABP represents two-thirds of the
2022 bonus, which is deferred into shares and vests in three equal annual tranches. Shares issued in lieu of dividends accrue on
ABP and LTIP awards during the ABP deferral period and the LTIP performance period.

2. Face values for the awards granted on 20 March 2023 have been calculated using the average of the middle-market closing price

of an Aviva ordinary share on the three consecutive business days immediately preceding the date of the main grant for
employees, 20 March 2023, of 409.00 pence

3. Threshold vesting is 20% for each performance measure independently. This means less than 20% may vest overall.

Targets for LTIP awards made in 2023
Three-year targets are set annually within the context of the Company’s strategic plan.
The 2023 targets are provided below.

Table 10 2023 LTIP performance targets (audited information)

Vesting

threshold Threshold

Maximum

Below

Above
maximum

Weighting

0 % 20%

20-100%

100%

40%

25%

15%

7.5%

2.5%

Median

£5.5bn

Upper
quintile

£6.0bn

15%

17%

12.5%

8.0

12.0%

38.0%

17.5%

11.0

14.0%

41.0%

Cumulative cash
remittances¹

Solvency II RoE
(adjusted for excess
capital)2

Reduction in CO2
intensity of
shareholders’ assets
and with-profit funds3

RNPS gap to
competition4

Ethnically diverse
employees in senior
leadership roles5

Females in senior
leadership roles6

1. Aviva’s rTSR performance will be assessed against that of the following companies: Admiral, Allianz, AXA, Direct Line Group,
Hargreaves Lansdown, Hiscox, Intact, Legal & General, Lloyds Banking Group, M&G, Phoenix, Quilter and Zurich Insurance
Group. The performance period for the TSR performance condition is the three years beginning 1 January 2023. For the purposes
of measuring the TSR performance condition, the Company’s TSR and that of the comparator group will be based on the 90-day
average TSR for the period immediately preceding the start and end of the performance period.

2. Any vesting of the Solvency II RoE and Cumulative cash remittances elements of the LTIP are subject to a Solvency II

shareholder cover ratio that meets or exceeds the minimum of the stated working range (Range: 160% to 180%)

3. Reduction in CO2 intensity of shareholder assets and with-profit funds over the three-year performance period is aligned to Aviva

Group’s ambition of being Net Zero by 2040

4. RNPS is calculated on gap to competition over a three-year average
5. Percentage of colleagues in senior leadership roles in the UK, Ireland and Canada who identify their ethnicity as anything other

than ‘white’

6. Percentage of colleagues in senior leadership roles in the UK, Ireland and Canada who identify as female

Payments to past directors (audited information)
There were no payments made to past directors during the year.

Payments for loss of office (audited information)
There were no payments for loss of office made during the year.

Aviva plc

2.55

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Annual report on remuneration

The table below sets out the total remuneration earned by each NED who served during 2023 for Group-related activities.

Table 11 Total 2023 remuneration for Non-Executive Directors (audited information)

Fees

2023
£000

Aviva plc

Benefits1

2022
£000

2023
£000

2022
£000

Total

2023
£000

Fees

Subsidiaries

Benefits1

Total

Group

Total

2022
£000

2023
£000

2022
£000

2023
£000

2022
£000

2023
£000

2022
£000

2023
£000

2022
£000

Chair

George Culmer

NEDs
Andrea Blance2
Mike Craston2
Patrick Flynn3
Shonaid Jemmett-Page4
Mohit Joshi

Pippa Lambert
Jim McConville5
Michael Mire6
Martin Strobel

550

175

104

210

170

105

145

154

100

125

144

210

156

105

145

151

125

565

564

—

184

115

218

180

109

149

170

106

140

148

219

160

107

147

170

129

141

—

205

—

150

—

150

505

—

129

—

113

—

326

—

565

564

—

205

—

160

—

154

519

—

132

—

125

—

106

363

184

320

218

180

109

149

330

106

294

148

212

219

160

107

147

295

129

247

2,454

2,228

Total emoluments of NEDs

1,838

1,785

1,935

1,864

1. Benefits include the gross taxable value of expenses relating to accommodation, travel and other expenses incurred on Company business in accordance with our expense policy and may vary year-on-year dependent on the time required to be spent in the UK
2. Andrea Blance was appointed to the Board on 21 February 2022 and Mike Craston on 17 May 2022
3. Patrick Flynn was appointed as Senior Independent Director of Aviva plc on 7 September 2020
4. Shonaid Jemmett-Page joined the Audit Committee and the Risk Committee on 14 February 2022; she became chair of the Customer and Sustainability Committee on 17 May 2022
5. Jim McConville stood down as Chair of the Customer and Sustainability Committee, remaining a member, on 17 May 2022. He joined the Remuneration Committee on 1 February 2023.
6. Michael Mire stood down from the Risk Committee and Remuneration Committee on 14 September 2022

The Aviva plc total fees paid to NEDs in 2023 was £1,838,000, which is within the limits
set in the Company’s Articles of Association, as previously approved by shareholders.

Subsidiary company board memberships
During 2022, the following NEDs were appointed to subsidiary companies and received
emoluments in respect of those appointments:

• Mike Craston received an additional fee of £205,000 (2022: £129,000) in respect of his
duties as Chair of Aviva Investors Holdings Ltd, Chair of Aviva Investors Canada Inc.
and as a director of two Aviva Investors subsidiary companies, all positions which he
held before his appointment as a NED of Aviva plc. For 2022, only the fees payable
during his time as a director of Aviva plc are disclosed.

• Jim McConville received an additional fee of £150,000 (2022: £112,500) in respect of his
duties as Chair of both Aviva Life Holdings UK Ltd and Aviva Life & Pensions UK Ltd,
positions to which he was appointed as a NED on 27 April 2022 and took on the role of
Chair from 16 December 2022.

• Martin Strobel received an additional fee of £150,000 (2022: £84,462) in respect of his
duties as a NED and then Chair of Aviva Insurance Ltd. He was appointed as a NED on
5 May 2022 and took on the role of Chair from 30 June 2022.

Aviva plc

2.56

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Annual report on remuneration

Percentage change in remuneration of the directors
Table 12 sets out the change in the basic salary, bonus and benefits of each of the directors and that of the wider workforce. The regulations require a comparison between the
remuneration of each director and that of all employees of the parent company on a full-time equivalent basis. As Aviva plc has no direct employees, and in line with our approach in
prior years, we have voluntarily disclosed for the UK employee workforce. The Group CEO and CFO are based in the UK (albeit with global responsibilities) and pay changes across
the Group vary widely depending on local market conditions.

Table 12 Percentage change in remuneration of the directors

Salary/Fees

Bonus

Benefits

Salary/Fees

Bonus

Benefits7,8

Salary/Fees

Bonus

Benefits7,8

Salary/Fees

Bonus

Benefits

2022-23

2021-22

2020-21

2019-20

4.4%

(5.0) %

(18.3) %

2.3%

13.3%

(51.4) %

0.0 %

47.2 %

(23.9) %

—

3.6%

3.5%

141.1%

—

6.0%

0.0%

—

74.8%

0.0%

—

57.7%

263.6%

—

(26.3) %

0.0%

4.5%

0.0%

9.2%

0.0%

15.0%

(19.7) %

31.6%

9.5%

—

86.3%

(26.4) %

(9.6) %

141.8%

130.4%

90.8%

(16.5) %

57.8%

(51.6) %

0.0%

83.0%

0.0%

17.0%

55.3%

(7.8) %

67.2%

6.5%

1433.4%

5.0%

—

69.8%

350.7%

— 4997.8%

—

484.0%

—

4.9%

—

(75.0) %

44.8%

—

(39.4) %

—

10.5%

—

9.6%

—

— %

(82.8) %

—

9.5%

2.4%

2.1%

(14.2) %

3.8%

47.4%

34.8%

3.3%

0.5%

10.7%

1. Salary/fees, annual bonus and benefit amounts for the EDs, the Chair and the NEDs have been annualised where applicable to reflect what they would have been over a full 12-month period to aid comparison
2. Patrick Flynn was appointed as Senior Independent Director of Aviva plc and a Remuneration Committee member on 15 June and 7 September 2020 respectively
3. Andrea Blance was appointed to the Board on 21 February 2022 and Mike Craston on 17 May 2022
4. Shonaid Jemmett-Page joined the Audit Committee and the Risk Committee on 14 February 2022; she became chair of the Customer and Sustainability Committee on 17 May 2022
5. Jim McConville stood down as Chair of the Customer and Sustainability Committee, remaining a member, on 17 May 2022. He joined the Remuneration Committee on 1 February 2023.
6. Michael Mire stood down from the Risk Committee and Remuneration Committee on 14 September 2022
7. The increase in taxable benefits for UK based employees in 2021, and subsequent decrease in 2022 has been mainly driven by the one-off recognition in 2021 of colleagues for their hard work during the pandemic. The taxable benefits also increased in 2021 due to the

increase in the cost of private medical insurance. Without these items, benefits would have increased by 8.4 % in 2021 reflecting greater use of our online recognition platform.

8. The increase in benefits for NEDs in 2022 compared to 2021 is largely reflective of the return of taxable travel and subsistence costs after the pandemic. The reduction in benefits in 2021 compared to 2020 is largely reflective of reduced taxable travel and subsistence

costs due to the pandemic.

Aviva plc

2.57

Annual Report and Accounts 2023

Group CEO¹

Amanda Blanc

Group CFO¹

Charlotte Jones

Chair¹

George Culmer

NEDs
Andrea Blance3
Mike Craston3
Patrick Flynn1,2
Shonaid Jemmett-Page1,4

Mohit Joshi
Pippa Lambert1
Jim McConville5
Michael Mire6
Martin Strobel1

All UK-based employees

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Annual report on remuneration

Historical TSR performance and Group CEO remuneration outcomes
The table below compares the TSR performance of the Company over the past ten years
against the TSR of the FTSE 100. This index has been chosen because it is a recognised
equity market index of which Aviva plc is a member.

For additional context, the chart below also shows on a three-year basis the
performance against the FTSE 100 and median TSR performance for the LTIP
comparator group. The companies that comprise the 2023 LTIP group for TSR purposes
are listed below table 10.

Table 13
Aviva plc ten-year TSR performance against the FTSE 100

Three-year TSR performance against the FTSE 100 and the median of the 2023
LTIP comparator group

The table below summarises the historical Group CEO single figure for total remuneration, and annual bonus and LTIP outcomes as a percentage of maximum over this period.

Table 14 Historical Group CEO remuneration outcomes

Annual bonus payout
(as a % of maximum opportunity)

LTIP vesting
(as a % of maximum opportunity)

Group CEO single figure
of remuneration (£000)

Group CEO
Amanda Blanc1

Maurice Tulloch2

Mark Wilson3

Amanda Blanc

Maurice Tulloch

Mark Wilson

Amanda Blanc

Maurice Tulloch

Mark Wilson

2014

2015

2016

2017

2018

—

86.7%

91.0%

94.0%

42.0%

—

53.0%

41.3%

36.9%

—

2,600

5,438

4,523

4,318

1,836

2019

—

2020

2021

2022

60.0%

88.3%

97.2%

48.1%

0.0%

—

50.0%

0.0%

—

2,352

—

1,205

1,030

—

2023

88.1%

—%

72.2%

91.8%

—

3,010

5,449

6,628

—

1. Amanda Blanc was appointed Group CEO on 6 July 2020
2. Maurice Tulloch was appointed Group CEO on 4 March 2019. Maurice stepped down as Group CEO and retired from the Board on 6 July 2020.
3. Mark Wilson joined the Board as an ED with effect from 1 December 2012 and became Group CEO on 1 January 2013. Mark stepped down as Group CEO and left the Board on 9 October 2018.

Aviva plc

2.58

Annual Report and Accounts 2023

FTSE 100Aviva201320142015201620172018201920202021202220235010015020068.5%35.5%23.1%AvivaFTSE 1002023 TSR Group Median—%25.0%50.0%75.0%
1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Annual report on remuneration

CEO Pay ratio reporting
The table below sets out the ratio at median, 25th and 75th percentile of the total
remuneration received by the Group CEO compared to the total remuneration received
by our UK employees. Total remuneration reflects all remuneration received by an
individual in respect of the relevant years, and includes salary, benefits, bonus, pension,
and value received from incentive plans.

Table 15 CEO Pay ratio table

Table 16 provides further information on the total remuneration figure for each quartile
employee, and the salary component within this.

Table 16 Salary and total remuneration used in the CEO pay ratio calculations

Year

2023

Pay element

P25
(lower quartile)

P50
(median)

P75
(upper quartile)

Salary

Total remuneration

£26,648

£32,590

£37,276

£45,822

£60,042

£75,262

Year

2023

2022

2021

2020

2019

Method

Option A

P25
(lower quartile)

P50
(median)

P75
(upper quartile)

203:1

181:1

102:1

80:1

90:1

145:1

127:1

70:1

56:1

63:1

88:1

76:1

42:1

34:1

37:1

We would highlight the following in terms of the approach taken.

• In calculating the ratio for 2020, the single figure for both Amanda Blanc and Maurice

Tulloch in respect of their services as Group CEO were aggregated

• In 2019, the single figure for Maurice Tulloch was aggregated with the pro rata fees for

Sir Adrian Montague as Executive Chairman

• The P25, P50 and P75 employees were calculated based on full-time equivalent data as

at 31 December of the relevant years

• Out of the three alternatives available for calculating the ratio, we chose to use Option
A as it is considered to be the most accurate way of identifying employees at P25, P50
and P75, and is aligned with shareholder expectations. Under this approach we
calculate total remuneration on a full-time equivalent basis for all of our UK employees
and rank them accordingly.

The increase in the 2023 ratio reflects the first full year LTIP vesting since Amanda
became Group CEO. 2022 reflects a pro-rata LTIP vesting, as well as 10% reduction for
windfall gains, and 2021 reflected no LTIP vesting. Executive Directors receive a greater
proportion of their remuneration in elements tied to performance, including
participation in the LTIP. This means that the pay ratio will vary in large part due to
incentive outcomes each year.

Although the CEO pay ratio has increased, the total remuneration for each quartile
employee has also increased. This reflects the measures taken by Aviva to support our
colleagues through the rising cost of living.

In reviewing the employee pay data, the Committee is comfortable that the P25, P50
and P75 individuals identified appropriately reflect the employee pay profile at those
quartiles, and that the overall picture presented by the ratios is consistent with our pay,
reward and progression policies for UK employees.

At Aviva, we are equally focused on our colleagues as we are on our customers.
We recognise the individual needs of colleagues and we are proud of the reward,
benefits and overall career packages that we offer our colleagues:

• In the UK, we have been an accredited Real Living Wage employer since April 2014 and
a Real Living Hours employer since October 2020. Our salaries are at least 8% above
Real Living Wage to allow colleagues to save for their retirement and benefit from an
employer pension contribution up to 14% whilst still earning the Real Living Wage.

• In addition, in March 2023, Aviva was one of the first UK employers to be awarded the
Living Pension accreditation. This signifies that we provide a Living Pension savings
level which equates to 12% of a full-time real Living Wage salary, of which at least 7%
comes from Aviva as an employer. We have been at the forefront of campaigning to
drive proposals to abolish auto-enrolment contribution thresholds to enable more
people to save into a pension for their retirement.

• We have a structured salary progression scheme for our frontline colleagues, providing

salary increases to recognise colleagues as they develop and gain experience.
• We conduct regular market reviews of our salary ranges in order to maintain

competitiveness to market rates, and we move everyone who is below a band to at least
the minimum of that range each year.

• Our comprehensive, flexible benefits offering provides colleagues with the opportunity
to select the benefits that matter most to them, and our range of inclusive colleague
policies support life's big moments, including equal parental leave.

• UK colleagues are eligible to participate in our SAYE and All Employee Share Ownership

Plan (AESOP) offerings with similar plans operating for many of our overseas
colleagues. We are proud of the participation rates in these plans, with over 60%
participating in the SAYE and over 70% in the AESOP, meaning colleagues both share
in Aviva's success and benefit from tax-efficient savings.

Aviva plc

2.59

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Annual report on remuneration

Relative importance of spend on pay
Table 17 outlines Group adjusted operating profit, dividends paid to shareholders and
share buybacks, compared to overall spend on pay in total. This measure of profit has
been chosen as it is used for decision-making and the internal performance management
of the Group’s operating segments.

Table 17 Relative importance of spend on pay

Group adjusted operating profit1
Ordinary dividends paid to shareholders
Share buybacks2
Capital return3
Total staff costs4

2023
£m

1,467

878

300

—

1,754

2022
£m

1,350

828

336

3,750

1,658

%
change
between
2023 – 2022

• EDs are required to retain shares vesting from incentive plans within the Company-
sponsored nominee account, and are not permitted to transfer them, e.g. into their
own brokerage accounts, unless otherwise agreed by the Committee. In this manner,
the Committee is able to retain oversight of the shares and is comfortable that this
provides the ability to enforce the post-cessation guidelines in practice and helps with
the enforcement of malus and clawback.

Table 18 Executive Directors – share ownership requirement (audited information)

Shares held

Options held

(11%)

(100%)

Executive
Directors

Amanda
Blanc

Charlotte
Jones

Unvested and
subject to
performance
conditions2

Unvested and
subject to
continued
employment3

Unvested and
subject to
continued
employment

Owned
outright1

Vested
but not
exercised

Shareholding
requirement
(% of salary)

Current
shareholding4
(% of salary)

Requirement
met

785,722 2,466,382

702,944

—

300%

316%

12,957

729,588

46,115

—

225%

Yes

1. The 2022 comparative results, which were previously prepared under IFRS 4, have been restated following the adoption of IFRS 17

from 1 January 2023, as described in note 1 of the Financial Statements

2. On 2 June 2023, Aviva completed the share buyback programme originally announced on 9 March 2023 for up to a maximum

aggregate consideration of £300 million. During the period £300 million (2022: £336 million) of shares were purchased and shares
with a nominal value of £24 million (2022: £19 million) were cancelled, giving rise to an additional capital redemption reserve of an
equivalent amount. See note 32 for further details.

3. On 2 March 2022, Aviva announced a proposed return of capital, including a £3,750 million B Share Scheme for the holders of
ordinary shares. The capital return was completed on 16 May 2022. The capital return is included here as it was a material
distribution to shareholders. The value stated aligns with the value attributed to the capital return in the Consolidated statement of
changes in equity. See note 32 for further details.

4. Total staff costs includes wages and salaries, social security costs, post-retirement obligations, profit sharing and incentive plans,

equity compensation plans and termination benefits. The average number of employees was 25,529 (2022: 23,701).

Statement of Directors’ shareholdings and share interests
EDs share ownership requirements
Under our Shareholding Policy applicable to 2023, the Company requires the Group
CEO to build a shareholding in the Company equivalent to 300% of basic salary and
each ED to build a shareholding in the Company equivalent to 225% of basic salary.

• The EDs are required to retain 50% of the net shares released from ABP and LTIP

awards until the shareholding requirement is met.

• The shareholding requirement needs to be built up over a period not exceeding

five years.

• Unvested share awards, including shares held in connection with bonus deferrals, are

not taken into account in applying this test.

• A post-cessation holding period of two years applies. This is at the same level as the

current (within employment) guideline. The Committee retains the discretion to waive
part or all of the guideline where considered appropriate, for example in exceptional or
compassionate circumstances.

1. Directors’ beneficial holdings in the ordinary shares of the Company. This information includes holdings of any connected persons.
2. Awards granted under the Aviva LTIPs, which vest only if the performance conditions are achieved
3. Awards arising through the ABP. Under this plan, some of the earned bonuses are paid in the form of conditional shares which are
deferred for three years and released in three equal annual tranches. The transfer of the shares to the director at the end of the
period is not subject to the attainment of performance conditions but the shares can be forfeited if the ED leaves service before the
end of the period.

4. Based on the closing middle-market price of an ordinary share of the Company on 29 December 2023 of 434.7 pence. The closing

middle-market price of an ordinary share of the Company during the year ranged from 369.2 pence to 462.4 pence.

There were no changes to the EDs interests in Aviva shares during the period 1 January
2024 to 6 March 2024.
Table 19 Non-Executive Directors’ shareholdings1 (audited information)

1 January 2023

31 December 2023

George Culmer

Andrea Blance

Mike Craston

Patrick Flynn

Shonaid Jemmett-Page

Mohit Joshi

Pippa Lambert

Jim McConville

Michael Mire

Martin Strobel

99,500

15,000

30,771

7,600

4,565

5,789

6,985

14,186

38,000

30,400

210,175

15,000

30,771

7,600

10,490

65,089

12,739

14,186

38,000

30,400

1. This information includes holdings of any connected persons

There were no changes to the NEDs interests in Aviva shares during the period 1 January
2024 to 6 March 2024.

Aviva plc

2.60

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Annual report on remuneration

Share awards and share options
Details of the EDs who were in office for any part of the 2023 financial year and hold or
held outstanding share awards or options over ordinary shares of the Company pursuant
to the Company’s share based incentive plans are set out in the table below. EDs are
eligible to participate in the Company’s broad-based employee share plans on the same
basis as other eligible employees. Details of awards granted to EDs under these plans are
also included in tables 5, 9 and 18.

Table 20 LTIP, ABP and options over Aviva shares (audited information)

More information around HMRC tax-advantaged plans can also be found in note 33. EDs
are restricted from entering into any form of hedging arrangement or remuneration and
liability-related insurance policies which might undermine the risk alignment features of
share awards (such as delivery in shares, performance conditions, malus and
clawback provisions).

At 1 January 2023
(number)

Options/awards
granted during year1
(number)

Options/awards
exercised/vesting
during year2
(number)

Options/awards
lapsing during
year3 (number)

At 31 December
2023 (number)

Market price at
date
awards granted4
(pence)

SAYE exercise
price (options)
(pence)

Market price at
date awards
vested/option
exercised (pence)

Vesting date(s)/
exercise period(s)5

Amanda Blanc
LTIP6,7
2020

2021

2022

2023

ABP

2021

2022

2023

Charlotte Jones
LTIP6,7
2022

2023

ABP

2023

538,865

(178,583)

641,921

759,493

825,471

—

66,043

277,672

—

881,418

—

36,824

98,024

—

759,493

825,471

881,418

33,022

185,115

297.50

412.50

426.30

411.60

412.50

426.30

—

326,208

—

326,208

411.60

358,195

—

371,393

—

358,195

371,393

425.30

411.60

—

437.80

—

416.00

Mar-23

Mar-24

Mar-25

Mar-26

Mar-24

1/2: Mar-24
1/2: Mar-25

1/3: Mar-24
1/3: Mar-25
1/3: Mar-26

—

Mar-25

Mar-26

—

46,115

—

46,115

411.60

—

416.00

1/3: Mar-24
1/3: Mar-25
1/3: Mar-26

1. The aggregate net value of share awards granted to the EDs in the period was £6.7 million (2022: £6.2 million). The net value has

6. For the 2021 LTIP, the rTSR comparator group is: Aegon, Allianz, AXA, Direct Line, Generali, Intact, Legal & General, Lloyds

been calculated by reference to the closing middle-market price of an ordinary share of the Company at the date of grant.
2. The shares comprised in these vested awards include shares issued in lieu of dividends accrued during the deferral period
3. Lapsed quantity includes the downwards adjustment of 10% to recognise the issue of windfall gains
4. The actual price used to calculate the ABP and LTIP awards is based on a three-day average closing middle-market price of an
ordinary share of the Company, prior to the date of main grant to employees. These were in 2020: 229 pence, 2021: 395 pence,
2022: 424 pence and 2023: 409 pence.

5. Vesting date(s)/exercise period(s) for awards outstanding at 31 December 2023. ABP awards are deferred and released in three

Banking Group, M&G, Phoenix and Zurich. For the 2022 and 2023 LTIP, the rTSR comparator group is: Admiral, Allianz, AXA,
Direct Line Group, Hargreaves Lansdown, Hiscox, Intact, Legal & General, Lloyds Banking Group, M&G, Phoenix, Quilter and
Zurich Insurance Group.

7. The performance periods for these awards begin at the commencement of the financial year in which the award is granted and

run for a three-year period

equal annual tranches.

Aviva plc

2.61

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Annual report on remuneration

Dilution
Awards granted under Aviva employee share plans, apart from SAYE options, have
historically been satisfied primarily through shares purchased in the market. SAYE
options have historically been satisfied primarily through new issue shares. In future,
all awards granted under Aviva employee share plans, including SAYE options will be
satisfied primarily through shares purchased in the market. Shares are held in employee
trusts, details of which are set out in note 34.

The Company monitors the number of shares issued under the Aviva employee share
plans and their impact on dilution limits. The Company’s usage of shares compared to
the relevant dilution limits set by the Investment Association in respect of all share
plans (10% in any rolling ten-year period) and executive share plans (5% in any rolling
ten-year period) was 4.91% and 2.28% respectively on 31 December 2023.

Year of
AGM

2021

2023

Policy

DRR

Statement of voting at AGM
The results of the shareholder votes at the Company’s 2021 AGM in respect of the
Policy and at the 2023 AGM in respect of the 2022 DRR are set out in the below table.
The Committee was pleased with the level of support received from shareholders for
the resolutions.

Table 21 Results of votes at AGM

Percentage of
votes cast

For

Against

For

Against

Votes withheld

Number of votes cast

96.93%

3.07%

2,374,520,911

75,190,042

2,529,266

96.82%

3.18%

1,610,649,645

52,960,504

779,149

Directors' Remuneration Policy

Directors' Remuneration Report

l For
l Against

96.93%

3.07%

l For
l Against

96.82%

3.18%

Governance Regulatory Remuneration Code
Aviva Investors Global Services Limited (AIGSL) and a number of small ‘firms’ (as
defined by the FCA) within the IWR Insurance business are subject to the Investment
Firms Prudential Regime (IFPR) and the Markets in Financial Instruments Directive II
(MiFID II).

Aviva Investors UK Funds Services Ltd and Aviva Investors Luxembourg are subject to
the Alternative Investment Fund Management Directive (AIFMD) and the Undertakings
for Collective Investments in Transferable Securities (UCITS V) directive.

Remuneration Code requirements include an annual disclosure. For AIFMD and UCITS
V the disclosure is part of the Financial Statements and/or Annual accounts of the
Alternative Investment Funds or UCITS. For IFPR the 2023 AIGSL disclosure will be
found, when published, at https://www.aviva.com/investors/regulatory-returns/
along with the disclosure for the UK Insurance firms.

Solvency II remuneration
Remuneration Requirements (PRA PS22/16 & SS10/16) apply to the Aviva Group.
Our remuneration structures have been designed in a way that is compliant with these
requirements for all senior managers across the Group, not just those identified as
being specifically covered by the requirements of the regulation. Such employees at
Aviva are termed ‘Covered Employees’. We are required to complete a Remuneration
Policy Statement, which outlines how we have complied with each of the requirements.
This document is approved annually by the Group Remuneration Committee.

The Solvency II reporting requirements for the year ended 31 December 2023
necessitate firms to produce the Solvency and Financial Condition Report (SFCR) which
contains remuneration information and is publicly available. Aviva’s reward principles
and arrangements are designed to incentivise and reward employees for achieving
stated business goals in a manner that is consistent with the Company’s approach to
sound and effective risk management.

Aviva plc

2.62

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Annual report on remuneration

Approach to NED fees for 2024
NED fees are reviewed annually with a limited number of the fee arrangements
increased by the Board on 5 March 2024, effective from 1 April 2024. Before this, NED
fees had not been increased since 1 July 2020. The committee chair and committee
membership fees of the Customer and Sustainability and Remuneration Committees
were increased to bring them into parity with the current fees of the Audit and Risk
Committees, in recognition that the time commitment, breadth of remit and regulatory
accountabilities for these roles are broadly comparable. Following the increase, the
total base fees paid to NEDs remains within the current aggregate limit of £2,000,000
per annum.

A resolution will be put to the 2024 AGM which will seek approval to increase the
aggregate NED fee limit to £3,000,000 per annum. The limit has not been increased
since 2012 and the increase will bring the limit in line with other large financial
services groups.

Table 22 Non-Executive Directors’ fees

Role
Board Chair1
Board membership

Additional fees are paid as follows:

Senior Independent Director

Committee Chair (inclusive of committee membership fee):

Audit

Risk

Customer and Sustainability

Remuneration

Committee membership:

Nomination and Governance

Audit

Risk

Customer and Sustainability

Remuneration

Fee from
1 April
2024

Fee from
1 January
2023

£550,000

£75,000

£35,000

£55,000

£10,000

£20,000

£55,000

£45,000

£10,000

£20,000

£15,000

Inclusive of Board membership fee and any committee membership fees, and committee chair of the Nomination and Governance
Committee

Aviva plc

2.63

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Annual report on remuneration

Table 23 Operation of the Remuneration policy throughout the wider workforce

Executive Directors

Executive Committee

Senior Management

Wider workforce

Salary

Our principle is of pay equity for performing the same, or broadly similar, work, accounting for local market benchmarks and union/collective agreements, where applicable.

Salaries are reviewed annually and increases are typically in line with or less than the wider employee population.

Salaries are reviewed annually subject
to engagement with employee
representatives/unions where applicable.
It is important that all colleagues enjoy a
reasonable standard of living and we are
proud to be both a Real Living Wage and a
Living Hours employer in the UK.

Benefits

Eligible for a range of voluntary benefits and Wellbeing available to all colleagues in respective markets.
Colleagues can participate in a share matching plan (Aviva matches two shares for every one bought up to £50 per month) and, in the UK, the Aviva Savings Related Share
Option Scheme 2020 (SAYE).
UK benefits include 8 times’ salary death-in-service. In addition, flexible benefits allow colleagues to add to and/or supplement where Company provisions differ, e.g. private
health benefit:

Private Medical insurance.

Essential health support in lieu of Private
Medical insurance and online GP.

Pension

Eligible to participate in Aviva’s UK defined contribution pension scheme with a 14% contribution (or where applicable receive cash in lieu).
Rates in Ireland are 14%, different rates apply in Canada in line with market.

Bonus Basis

Annual performance-related bonus based on Group, business unit (where applicable) and individual performance against goals.

Bonus Deferral

½ into shares

⅓ into shares

Long-Term Incentive LTIP share awards are subject to strategic performance measures over three years.

Additional two-year holding period post-
vesting applies to EDs.

Additional holding period post-vesting not
applicable to ExCo.

Eligible for Restricted Share Awards
aligned with shareholder interests, long-
term Aviva performance and retention of
key talent.

All paid in cash

Not eligible

Aviva plc

2.64

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Annual report on remuneration

The implementation of the Policy will be consistent with that outlined in table 1.

Table 24 How will our Policy be implemented in 2024?
Key element

Implementation in 2024

Fixed Pay

Group CEO

Group CFO

•Salary1: £1,120,000 per annum

•Salary1: £735,000 per annum

•Pension: 14% of salary in line with wider workforce

•Benefits: As outlined in the Policy

Phasing

2024

2025

2026

2027

2028

2029

Annual
Bonus2

•Group CEO – 200% of salary

•Group CFO - 150% of salary

•One-year performance assessed against financial and strategic performance measures

Performance
period

1/2 paid
in cash

•Financial measures (70% of total)

•Strategic measures (30% of total)

- 25% – Cash Remittances

- 20% – Solvency II OFG

- 15% – Risk scorecard

- 5% – Employee engagement

- 15% – Group Adjusted Operating Profit

- 5% – Online experience score

- 10% –Efficiency Measures

- 5% – TNPS

•A quality of earnings assessment will be undertaken by the Committee to provide assurance that bonus payouts

appropriately reflect underlying performance and the shareholder experience

•Individual performance during the year will be taken into account

LTIP

•Group CEO – 350% of salary

•Group CFO - 225% of salary

1/2 deferred into shares vesting in
three equal tranches over three years

1/3 released
after 1 year

1/3 released
after 2 years

1/3 released
after 3 years

•Performance assessed over three years against financial (80%) and strategic (20%) performance measures

Performance period

2 year holding period

Released

•Performance measures (see LTIP measures and weightings for 2024 on next page)

•Group CEO – 300% of salary

•Group CFO - 225% of salary

•To be built up over a period not exceeding five years

Share
ownership
guidelines

•Post-cessation shareholding requirements also apply to EDs being the guideline or the holding on termination of

employment, for two years post-cessation

1. Group CEO and Group CFO's salaries will be effective from 1 April 2024
2. The target ranges are considered by the Board to be commercially sensitive and disclosure of these would put the Company at a disadvantage compared to its competitors. Target ranges will be disclosed in the 2024 DRR.

Aviva plc

2.65

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Approval by the Board
This Directors’ Remuneration Report was reviewed and approved by the
Board on 6 March 2024.

Pippa Lambert
Chair of the Remuneration Committee

Annual report on remuneration

LTIP measures and weightings for 2024
Below
threshold

Vesting

Threshold

Maximum

Above
maximum

Measure Weighting

20%

20-100%

100%

rTSR1

Cumulative cash
remittances
Solvency II RoE2,3

40.00%

25.00%

15.00%

Median

£5.6bn

13%

Upper
Quartile

£6.1bn

15%

Reduction in
weighted average
carbon intensity
of shareholder and
with-profit credit
and equity assets4

Customer
Scorecard:
Customer
Numbers (millions)

Customer
Scorecard: MPH
(millions)

Ethnically diverse
employees in
senior leadership
roles5

Females in senior
leadership roles6

7.50%

17.5%

22.5%

3.75%

2.50%

19.3

4.95

13%

41%

19.7

5.20

15%

43%

The Committee will continue to consider the impacts of any future acquisitions and
disposals on targets.

1. Aviva’s rTSR performance will be assessed against that of the following companies: Admiral, Direct Line Group, Hargreaves

Lansdown, Hiscox, Intact Financial, Legal & General, Lloyds Banking Group, M&G, Phoenix and Quilter. The performance period
for the rTSR performance condition is the three years beginning 1 January 2024. For the purposes of measuring the rTSR
performance condition, the Company’s TSR and that of the comparator group will be based on the 90-day average TSR for the
period.

2. For 2024 awards, the Solvency II shareholder cover ratio is to meet or exceed the minimum of the stated working range (Range:

160% to 180%)

3. The Committee is mindful of the volatile economic environment and the impact of significant changes in key external
variables such as interest rates on RoE outcomes. The Committee therefore will keep the economic assumptions and
environment under review.

4. Reduction in weighted average carbon intensity of shareholder and with-profit credit and equity assets over the three-year

performance period.

5. Percentage of colleagues in senior leadership in the UK, Ireland and Canada who identify their ethnicity as anything other than

'white', excluding colleagues who have not disclosed their ethnicity.

6. Percentage of colleagues in senior leadership roles in the UK, Ireland and Canada who are female

Aviva plc

2.66

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Directors’ report

Disclosure

Accounting policies

Agreement for compensation for loss of office because of a takeover bid

Appointment and removal of directors

Board of Directors

Change of control

Changes to the Articles of Association

Corporate governance statement

Culture

Directors’ indemnities

Directors’ training

Disclosure of information to the auditors

Dividends

Dividend waivers

Engagement with employees

Engagement with suppliers, customers and others

Employment of disabled people

Financial instruments and risk management

Future developments

Greenhouse gas emissions

Hedging policy

Major shareholders

Political donations

Purchase of own shares

Related party transactions

Research and development

Share capital and rights

Subsequent events

Subsidiaries, joint ventures and associates

Pages

3.18 to 3.37

2.69

2.67

2.69

1.56, 2.12

2.67

2.11

2.70

2.69

3.91

1.51, 1.56

1.50 to 1.53

1.57

3.152 to 3.154

1.02 to 1.94

1.80 to 1.84

3.152 to 3.154

2.69

3.156

1.02 to 1.94

2.68

3.170

3.157

In accordance with Section 415 of the Companies Act 2006 (the Act), the directors
present their report for the year ended 31 December 2023. Other sections of the Annual
Report and Accounts have been deemed to be incorporated into the Directors’ Report
by reference and the table to the left details where required disclosures can be found.
In accordance with section 414C(11), some disclosures have been included in the
Strategic report.

Directors
The Company’s directors who served during the financial year ended 31 December 2023
were George Culmer, Amanda Blanc, Charlotte Jones, Andrea Blance, Mike Craston,
Patrick Flynn, Shonaid Jemmett-Page, Mohit Joshi, Pippa Lambert, Jim McConville,
Michael Mire and Martin Strobel.

Appointment and removal of directors
The rules regarding the appointment and removal of directors are contained in the
Company’s Articles of Association (the Articles) and all appointments are made in
accordance with the UK Corporate Governance Code 2018 (the Code). All directors
must submit themselves for re-election each year at the AGM. Under the Articles, the
Board can appoint additional directors or appoint a director to fill a casual vacancy.

Powers of directors
The powers of directors are described in the Aviva plc Board Terms of Reference and
the Articles, both of which can be found on our website. The powers of the Company’s
directors are subject to relevant legislation and, in certain circumstances (including in
relation to the issue or buying back by the Company of its shares), are subject to
authority being given to the directors by shareholders at a general meeting. At the 2024
Annual General Meeting (AGM), shareholders will be asked to renew the directors’
authority to allot new securities and buy back Company shares. Details will be
contained in the Notice of 2024 AGM (the Notice) due to be published at the end of
March 2024.

Directors’ indemnities and insurance
In accordance with the Articles, the Company has granted qualifying third-party
indemnity provisions for the benefit of each person who was a director of the Company
during the year, in respect of liabilities that may attach to them in their capacity as
directors of the Company or of associated companies. These indemnities were in force
during the financial year and remain in force. Throughout the year, the Company has
also purchased and maintained directors’ and officers’ liability insurance in respect of
itself, its directors, and others. The Company has also granted qualifying third-party
indemnities to the directors of the Group’s subsidiary companies. These indemnities
were in force during the financial year and remain in force.

Aviva plc

2.67

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other information

Directors’ report

Director and senior management diversity
In accordance with Listing Rule 9.8.6R(10), the following tables set out numerical data
on the ethnic background and the gender of the Company’s directors and ‘executive
management’, being members of the Group Executive Committee, as at 31 December
2023.

Data concerning ethnic background and gender is collected directly from individuals.
Company directors are required to complete a form on an annual basis, whereas
members of Group Executive Committee are required to complete a diversity
declaration upon joining the Company and advise if this information changes.

(a) Table for reporting on gender

Number of
Board
members

Percentage of
the Board

Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair)

Number in
executive
management

Percentage
of executive
management

Men

Women

Not specified/
prefer not to say

—

58 %

42 %

— %

—

54 %

46 %

— %

(b) Table for reporting on ethnic background

Number of
Board
members

Percentage of
the Board

Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair)

Number in
executive
management

Percentage
of executive
management

White British or
other White
(including minority-
white groups)

Mixed/Multiple
Ethnic Groups

Asian/Asian British

Black/African/
Caribbean/Black
British

Other ethnic group,
including Arab

Not specified/
prefer not to say

—

92%

—%

—

100%

—%

Kirstine Cooper, who retired on 31 December 2023, has been included in this disclosure

Share capital
At 31 December 2023, the Company’s issued share capital comprised:

Number of shares

% of total capital

Type

2,739,487,140

200,000,000

82.00%

18.00%

Ordinary Shares

Preference Shares

£1 each

Nominal value
3217/19 pence each

All the Company’s shares in issue are fully paid up and the Ordinary and Preference
Shares have a Premium and Standard listing respectively on the London Stock
Exchange. The Company held no treasury shares during the year or up to the date of
this report. Further details of the Company’s issued share capital, together with
information on movements in the Company’s issued share capital during the year, can
be found in note 32 and note 35 of the financial statements.

Share class rights
Rights and obligations attaching to the Company’s shares are set out in the Articles.
No person holds securities in the Company carrying special rights with regard to
control of the Company.

Restrictions on transfer of securities or voting rights
With the exception of restrictions under the Company’s employee share incentive
plans, where the shares are subject to the plan rules, there are no restrictions on the
voting rights attaching to the Company’s ordinary shares or the transfer of securities in
the Company. The Company is not aware of any agreements between holders of
securities that may result in restrictions on the transfer of securities or voting rights.

Rights attaching to shares under employee share schemes
Where, under an employee share incentive plan operated by the Company, participants
are the beneficial owners of shares but not the registered owners, the voting rights are
normally exercised at the discretion of the participants.

Authority to purchase own shares
At the 2023 AGM, shareholders renewed the Company’s authorities to make market
purchases of up to 280 million ordinary shares, up to 100 million preference shares of
8¾% each and up to 100 million preference shares of 8⅜% each. No shares have been
purchased under this authority.

At the 2024 AGM, shareholders will be asked to renew the authorities to buy the
Company’s shares for another year and the resolution in relation to the ordinary shares
will once again propose a maximum aggregate number of ordinary shares which the
Company can purchase of less than 10% of the issued ordinary share capital. Details will
be contained in the Notice due to be published at the end of March 2024.

Aviva plc

2.68

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other information

Directors’ report

Acquisition of own shares
On 2 June 2023, Aviva completed the share buyback programme of ordinary shares
originally announced on 9 March 2023 for an aggregate purchase price of up to
£300 million. In total, 72,797,191 ordinary shares of 3217/19 pence each were repurchased
for an aggregate consideration of £300 million and a nominal value of £24 million.

Overall, the number of shares in issue is reduced by c.73 million in respect of shares
acquired and cancelled under the buyback programme. Net of new shares issued, in
respect of the Company’s employee share plans, during the period from 10 March 2023
to 1 June 2023, the number of shares in issue reduced by 65 million.

Details of shares purchased, held, or disposed by employee share plan trusts on the
recommendation of the Company in 2023 for use in conjunction with the Company’s
employees’ share plans are set out in note 33 to the financial statements.

Major shareholders
The table below shows the holdings of major shareholders in the Company’s issued
ordinary share capital in accordance with section 5.1.2 of the Disclosure Guidance and
Transparency Rules (DTRs) notified to the Company as at 31 December 2023 and
6 March 2024. Information provided to the Company under the DTRs is publicly
available via the regulatory information services and on the Company’s website.

Articles of association
Unless expressly stated to the contrary in the Articles, the Company’s Articles may only
be amended by special resolution of the shareholders. The Company’s current Articles
were adopted on 9 May 2022.

Change of control
There are a number of agreements that take effect, alter, or terminate upon a change of
control of the Company following a takeover bid, such as commercial contracts and
joint venture agreements. None are considered to be significant in terms of their
potential impact on the business of the Group as a whole. There are no agreements with
employees or directors for compensation for loss of office or employment that occurs
because of a takeover bid. However, all of the Company’s employee share incentive
plans contain provisions relating to a change of control. Outstanding awards and
options would normally vest and become exercisable on a change of control, subject to
the satisfaction of any performance conditions and pro rata reduction as may be
applicable under the rules of the employee share incentive plans.

Significant contacts
During the year, there were no significant contracts of the Company or a subsidiary in
which a director was materially interested.

Shareholder

BlackRock, Inc.

Dodge & Cox

Norges Bank

As at 31 December 2023

As at 6 March 2024

Date of change
in interest

% of issued
ordinary
share capital

5.01%

Date of change
in interest

n/a

29 December 2023

4.99%

21 February 2024

30 June 2023

2.98%

5 January 2024

% of issued
ordinary
share capital

5.01%

4.99%

3.00%

Political donations
Aviva did not make any political donations during 2023.

Information required by UK Listing Rule (LR) 9.8.4

Disclosure

More information

Shareholder waiver of dividend

Note 34 to the financial statements

Shareholder waiver of future dividends

Note 34 to the financial statements

Dividends
Dividends for ordinary shareholders of Aviva plc are as follows:
• Paid interim dividend of 11.1 pence per 3217/19 pence ordinary share (2022: 10.3 pence

per 3217/19 pence ordinary share).

• Proposed final dividend of 22.3 pence per 3217/19 pence ordinary share

(2022: 20.7 pence per 3217/19 pence ordinary share). Total ordinary dividend of
33.4 pence per 3217/19 pence ordinary share (2022: 31.0 pence per 3217/19 pence ordinary
share).

• Total cost of ordinary dividends paid in 2023 was £878 million (2022: £828 million).

Information about our dividend policy and historical dividend payments can be found at
www.aviva.com/investors/dividends.

Management report
The Strategic report, Governance section and Directors’ report together are the
management report for the purposes of DTR 4.1.5(2).

Corporate governance statement
The Governance section of this report, including the Directors' Remuneration Report,
fulfils the requirement of a corporate governance statement under DTR 7.2.1.

By order of the Board on 6 March 2024.

Susan Adams
Group Company Secretary

Aviva plc

2.69

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Statement of directors’ responsibilities

Directors’ responsibilities
The directors are responsible for
preparing the Annual Report and
Accounts including the Directors’
Remuneration Report and the Financial
Statements in accordance with
applicable law and regulations.

UK company law required the directors
to prepare financial statements for
each financial year. Under that law
the directors have prepared the
Group and parent financial statements
in accordance with UK-adopted
international accounting standards.

Under UK company law the directors
must not approve the financial
statements unless they are satisfied that
they give a true and fair view of the state
of affairs of the Group and Company
and of the profit or loss for that period.

In preparing these financial statements,
the directors are required to:

• select suitable accounting policies

and apply them consistently;
• make reasonable and prudent

judgements and accounting estimates;

• state where applicable the directors

have prepared the Group and
Company's financial statements in
accordance with UK-adopted
international accounting standards; and

• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Group and Company will continue
in business.

The directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the
Company’s transactions and disclose
with reasonable accuracy at any time the
financial position of the Group and
Company, enable them to ensure that the
financial statements and the Directors’
Remuneration report comply with the
Companies Act 2006 and, as regards the
Group financial statements, Article 4 of
the IAS Regulation. They are also
responsible for safeguarding the assets of
the Company and the Group and hence
for taking reasonable steps for the
prevention and detection of fraud and
other irregularities.

The directors are responsible for making,
and continuing to make, the Company’s
Annual Report and Accounts available on
the Company’s website. The directors are
responsible for the maintenance and
integrity of the Company’s website.
Legislation in the UK governing the
preparation and dissemination of
financial statements may differ from
legislation in other jurisdictions.

Directors’ confirmations
The directors consider that the Annual
Report and Accounts, taken as a whole,
is fair, balanced and understandable and
provides the information necessary for
shareholders to assess the Group’s and
the Company’s position, performance,
business model and strategy.

Each of the current directors whose
names and functions are detailed in the
Our Board of Directors section confirm
that, to the best of their knowledge:

• the Group and Company's financial

statements, which have been prepared
in accordance with UK-adopted
international accounting standards, give
a true and fair view of the assets,
liabilities, financial position and profit of
the Group; and

• the Strategic report, Governance

section and the Directors’ report in this
Annual Report include a fair review of
the development and performance of
the business and the position of the
Group, together with a description of
the principal risks and uncertainties
that it faces.

In the case of each director in office
at the date the Directors’ report is
approved:
• so far as they are aware, there is no
relevant audit information of which
the Company’s external auditor, PwC, is
unaware; and

• each director has taken all steps that

ought to have been taken as a director
in order to make themselves aware of
any relevant audit information and to
establish that PwC is aware of that
information.

By order of the Board on 6 March 2024.

Amanda Blanc DBE
Group Chief Executive Officer

Aviva plc

2.70

Annual Report and Accounts 2023

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Aviva plc
80 Fenchurch Street
London, EC3M 4AE
+44 (0)20 7283 2000
www.aviva.com

Registered in England
Number 2468686

Search for Aviva plc:

Delivering on
our promises
It takes Aviva

Aviva plc
Annual Report
and Accounts 2023
Part 2

Make
the most
out of life

Plan for your future.
Have the confidence
that if things go wrong,
we’ll be there to help
put them right.

It takes Aviva.

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Foreword
The Strategic report and Governance
pages form part 1 of the Annual
Report and Accounts. The IFRS
Financial Statements and Other
Information form part 2 of the Annual
Report and Accounts. Parts 1 and 2
together comprise the Aviva plc
Annual Report and Accounts 2023.

The Strategic report contains
information about Aviva, how we
create value and how we run our
business. It includes our strategy, our
business model, key performance
indicators, overview of our
businesses, our approach to risk and
our responsibility to our people, our
communities and the planet. The
Strategic report is only part of the
Annual Report and Accounts 2023,
which was approved by the Board on
6 March 2024 and signed on its behalf
by Amanda Blanc, Chief Executive
Officer. The Directors’ report
required under the Companies Act
2006 comprises the Governance
section of the Annual Report and
Accounts 2023. The Strategic report
should be read in conjunction with
the Cautionary statement, included
within the Other information section.

A complete list of the APMs used by
the Group, and further guidance in
respect of their use, can be found in
the Other information section in part
2 of the Annual Report and Accounts.
This guidance includes definitions
and, where possible, reconciliations
to relevant line items or sub-totals in
the consolidated financial statements.

As a reminder
Reporting currency:
We use £ sterling.

Unless otherwise stated, all figures
referenced in this report relate
to Group.

IFRS 17 Insurance Contracts
adoption
Aviva plc has adopted International
Financial Reporting Standard (IFRS)
17 Insurance Contracts (IFRS 17) from
1 January 2023 and comparatives
have been retrospectively restated
from the transition date of 1 January
2022. See note 1 to the consolidated
financial statements for more
information.

Explanations of key terms used
in this report are available on:
www.aviva.com/glossary

The Company’s
registered office:
80 Fenchurch Street,
London, EC3M 4AE

Aviva plc

3.01

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

IFRS Financial Statements

In this section

Independent auditors’ report to the
members of Aviva plc
Accounting policies

3.03

3.18

Deferred acquisition costs on non-
participating investment contracts

Pension surpluses, other assets,
prepayments and accrued income

3.87

Consolidated financial statements
Consolidated income statement
Consolidated statement of
comprehensive income
Reconciliation of Group adjusted operating
profit to profit/(loss) for the year
Consolidated statement of changes in equity 3.41
Consolidated statement of financial position 3.42
Consolidated statement of cash flows
3.43

3.38
3.39

3.40

3.44
3.50
3.50
3.51
3.55
3.56
3.58
3.58
3.59
3.59

Notes to the consolidated financial statements
1
2
3
4
5
6
7
8
9
10

Changes to comparative amounts
Exchange rates
Strategic transactions
Segmental information
Insurance revenue
Net financial result
Fee and commission income
Expenses
Other finance costs
Investment variances and economic
assumption changes
Employee information
Directors
Auditors’ remuneration
Tax
Earnings per share
Dividends and appropriations
Goodwill
Acquired value of in-force business
(AVIF) and intangible assets

Interests in, and loans to,
joint ventures
Interests in, and loans to, associates
Property and equipment
Investment property
Lease assets and liabilities
Fair value methodology
Loans
Securitised mortgages and
related assets
Interests in structured entities
Financial investments
Receivables

3.61
3.61
3.62
3.62
3.65
3.66
3.67
3.69

3.70

3.71
3.72
3.72
3.73
3.74
3.81
3.82

3.82
3.84
3.86

11
12
13
14
15
16
17
18

20
21
22
23
24
25
26

27
28
29

32 Ordinary share capital
33
34
35
36
37
38 Other reserves
39 Non-controlling interests
40
41
42
43

3.87
Group’s share plans
3.89
Treasury shares
3.91
Preference share capital
3.91
Tier 1 notes
3.91
Capital reserves and retained earnings 3.92
3.93
3.93
3.94
3.119
3.121
3.122

Insurance and reinsurance contracts
Non-participating investment contracts
Financial guarantees and options
Effect of changes in non-financial
assumptions and estimates during the
year

Tax assets and liabilities
Pension deficits and other provisions
Pension obligations
Borrowings
Payables and other financial liabilities

44
45
46
47
48
49 Other liabilities
50

Contingent liabilities and other
risk factors
Commitments
Group capital management
Statement of cash flows
Risk management
Derivative financial instruments
and hedging

51
52
53
54
55

Financial assets and liabilities subject
to offsetting, enforceable master
netting agreements and similar
arrangements

Related party transactions

57
58 Organisational structure
59
60

Related undertakings
Subsequent events

Financial statements of the Company
Income statement
Statement of comprehensive income
Statement of changes in equity
Statement of financial position
Statement of cash flows

Notes to the Company’s financial
statements

3.122
3.124
3.124
3.130
3.133
3.134
3.134

3.135
3.135
3.137
3.138
3.152

3.154

3.156
3.157
3.158
3.170

3.171
3.171
3.172
3.173
3.174

3.175

Aviva plc

3.02

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Independent auditors’ report to the members of Aviva plc

Report on the audit of the financial statements

Opinion
In our opinion, Aviva plc’s Group financial statements and Company financial statements (the “financial statements”):
• give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2023 and of the

Group’s and Company’s profit and the Group's and Company's cash flows for the year then ended;

• have been properly prepared in accordance with UK-adopted international accounting standards; and
• have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements, included within the Annual Report and Accounts 2023 (the “Annual Report”),
which comprise: the Consolidated and Company statements of financial position as at 31 December 2023; the
Consolidated and Company income statements and statements of comprehensive income for the year then ended; the
Reconciliation of Group adjusted operating profit to profit/(loss) for the year then ended; the Consolidated and Company
statements of cash flows for the year then ended; the Consolidated and Company statements of changes in equity for the
year then ended; the Accounting policies; and the notes to the financial statements.

Our opinion is consistent with our reporting to the Audit Committee.

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.

Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements.

To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were
not provided.

Other than those disclosed in Note 13, we have provided no non-audit services to the Company or its controlled
undertakings in the period under audit.

Our audit approach
Context
As part of this opinion we have also provided information on how we approached the audit, including the impact of the
adoption of International Financial Reporting Standard 17 - Insurance Contracts (IFRS 17) by the Group.

Overview
Audit scope
• Our audit scope has been determined to provide coverage of all material financial statement line items; and
• In designing our audit, we have considered the impacts that climate change could have on the Group, including the

physical or transitional risks which could arise. In particular, we have assessed the impacts on reporting of the
commitments related to climate change which the Group has made.

Key audit matters
• Adoption of IFRS 17 and restatement of comparatives (Group)
• Valuation of life risk and life participating insurance contract liabilities (Group)
• Annuitant mortality assumptions (Group)
• Credit default assumptions for illiquid assets (commercial mortgages, equity release mortgages) and corporate

bonds (Group)

• Expense assumptions (Group)
• Valuation of the life risk and life participating risk adjustment (Group)
• Valuation of the life risk and life participating insurance contractual service margin (“CSM”) (Group)
• Valuation of general insurance contract liabilities and reinsurance assets (Group)
• Valuation of hard to value investments (Group)
• Valuation of investments in subsidiaries (Company)

Materiality
• Overall Group materiality: £142,000,000 based on 1% of equity attributable to shareholders of Aviva plc, plus CSM net of

tax.

• Overall Company materiality: £75,271,000 based on 0.5% of total equity.
• Performance materiality: £106,500,000 (Group) and £56,453,250 (Company).

Aviva plc

3.03

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Independent auditors’ report to the members of Aviva plc

The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements.

Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of
the financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and
any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.

This is not a complete list of all risks identified by our audit.

This year there are three new key audit matters:

• Adoption of IFRS 17 and restatement of comparatives (Group);
• Valuation of the life risk and life participating risk adjustment (Group); and
• Valuation of the life risk and life participating CSM (Group).

The key audit matters “Valuation of life risk and life participating insurance contract liabilities (Group)” (previously
“Valuation of life insurance liabilities (Group)”) and the "Valuation of general insurance and reinsurance contract liabilities
(Group)” (previously “Valuation of general insurance liabilities (Group)”) have been updated this year to reflect the impacts
from the adoption of IFRS 17. This new standard changes the way in which life risk, life participating and general
insurance contract liabilities are measured, introduces new concepts and language, and changes a range of judgements
that insurers must make.

Disclosure of the impact of adopting IFRS 17, which was a key audit matter last year, is no longer included because this
was a risk relevant to a specific disclosure made in the prior year financial statements. Otherwise, the key audit matters
below are consistent with last year.

Aviva plc

3.04

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Independent auditors’ report to the members of Aviva plc

Key audit matter

How our audit addressed the key audit matter

Adoption of IFRS 17 and restatement of comparatives (Group)

Refer to Accounting policy A and Note 1

IFRS 17 became effective for periods beginning on or after
1 January 2023, replacing International Financial Reporting
Standard 4, ‘Insurance Contracts’. As a result, Aviva has
adopted IFRS 17 in these financial statements.

The transition to IFRS 17 has introduced new financial
statement line items and disclosures, requiring significant
changes to the measurement of transactions and balances
in the financial statements, including new areas of
judgement and estimation. New systems, data flows,
interfaces, processes and models have been developed and
introduced, giving rise to increased risks of material
misstatement.

International Accounting Standard 8 ‘Accounting Policies,
Changes in Accounting Estimates and Errors’ (“IAS 8”)
requires that when the impact of adopting a new
accounting standard would be material to the financial
statement comparatives, these comparatives should be
restated. As a result, the 2022 opening balance sheet and
the 2022 comparatives have been restated.

In particular, we consider the key risks in relation to the
adoption of IFRS 17 and restatement of comparatives to be
as follows:
• The determination of the transition approach adopted for

each group of insurance contracts;

• The judgments involved in the determination of the
measurement model to apply under the standard, in
particular, management’s use of the Premium Allocation
Approach (‘PAA’) measurement model for groups of
contracts that are not automatically eligible;

• The methodology that has been used to determine the
fair value of CSM on transition for annuity and with-
profits business;

• The methodology and assumptions in respect of

determining the risk adjustment;

• The methodology applied to the amortisation of the CSM
for annuities where the fully retrospective approach is
being applied;

• The methodology used by management to determine
discount rates, in particular those inputs that most
materially impact the calculations, including the
calibration of the credit risk premium for unexpected
defaults for each asset class, based on an appropriate
reference portfolio of assets, used to derive the discount
rate applied to the initial measurement of individual and
bulk purchase annuities along with the use of an
adjustment made to liabilities where appropriate assets
are yet to be sourced for recent contracts;

• The implementation of new models to produce the IFRS
17 results, which include the CSM calculation engine;

• The new data flow and interfaces arising from the
implementation of IFRS 17, from new systems; and

• The appropriateness of methodologies, assumptions and

significant judgements applied in the calculation of
relevant balances.

In performing our audit work over the transition to IFRS 17,
and restatement of comparative financial statements
(including the opening balance sheet), the procedures we
performed included the following:
• Tested the design and operating effectiveness of controls

in place;

• Assessed the appropriateness of the transition approach

adopted for each group of insurance contracts;

• Assessed whether the judgements, methodology and

assumptions applied by management in determining their
accounting policies are in accordance with IFRS 17;
• Assessed the appropriateness of the judgements and

supporting estimates used to determine use of the PAA
measurement model;

• Applied industry knowledge and compared the
methodology, models and assumptions used in
determining the risk adjustment, CSM (including its
amortisation profile) and discounted IFRS 17 best
estimate liabilities (including assessment of yield curves)
against expected market practice. This included
consideration of the reasonableness of methodologies
and assumptions and the appropriateness of any
judgements applied, including whether or not there was
any indication of management bias;

• Assessed the appropriateness of the methodology to

derive the credit risk premium applied for unexpected
defaults within the discount rate for annuities,
considering the data used to calibrate the assumption
and any judgements applied in arriving at the final
assumption, and by comparing the assumption to other
insurers of a similar nature;

• Assessed the appropriateness of the methodology used to
determine the reference portfolio of assets used to derive
the discount rate for the initial measurement of
individual and bulk purchase annuities and the
adjustment made to liabilities where appropriate assets
are yet to be sourced for recent contracts. Tested
whether the adjustments made, based on new business
written in prior periods, were appropriate;

• Performed validation of certain new models by evaluating

the testing performed by management to assess its
appropriateness and, where necessary, performed
independent validation testing using sample scenarios
and comparing the output between our calculations and
those produced by management’s models and relevant IT
applications;

• Tested the mathematical accuracy and completeness of
the supporting calculations and adjustments used to
determine the 2022 comparatives;

• Evaluated output controls, such as the analysis of change
in the CSM, to assess the reasonableness of movements
between periods and the commentary provided over
these movements by management; and

• Performed testing over key data flows within the IFRS 17

business processes.

Based on the work performed and the evidence obtained,
we consider the approaches adopted and resulting
measurements and disclosures in the financial statements
to be appropriate.

Aviva plc

3.05

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Independent auditors’ report to the members of Aviva plc

Key audit matter

How our audit addressed the key audit matter

Valuation of life risk and life participating insurance contract liabilities (Group)

Refer to Accounting policy (M) ‘Insurance, participating investment and reinsurance contracts’ and Note 40 – Insurance
and Reinsurance Contracts.

The valuation of the provision for life risk and life
participating insurance contracts involves complex and
subjective judgements about future events, both internal
and external to the business. Small changes to these
assumptions can result in material impacts to the valuation
of the fulfilment cash flows, CSM and risk adjustment.

Our assessment of the related audit risks is focused in the
following three areas:

1. The significant assumptions that involve high levels of

judgement in determining the best estimate liabilities, in
particular the following assumptions:

a) the mortality assumptions used in the valuation of

annuity business life risk insurance contracts (“annuitant
mortality”);

b) credit default assumptions for illiquid assets

(commercial mortgages, equity release mortgages) and
corporate bonds for life risk insurance contracts; and

c) expense assumptions for life risk and participating

investment contracts.

2. The methodology and judgement involved in

determining the valuation of the risk adjustment; and

3. The methodology and assumptions used in determining

the valuation of the life CSM.

We provide more detailed consideration of each of these
assumptions, the valuation of the risk adjustment, and the
valuation of the life CSM below.

The work to address the valuation of the life insurance
liabilities included the following procedures:

• Understood and evaluated the process and the design

and implementation of controls in place to determine the
life risk and life participating insurance contract
liabilities;

• Tested the design and operating effectiveness of controls

in place over life risk and life participating insurance
contract liabilities, including those covering the approval
of assumptions, and the completeness and accuracy of
the data used;

• Using our actuarial specialist team members, applied

industry knowledge and experience and compared the
methodology, models and assumptions used against
recognised actuarial practice. This included
consideration of the reasonableness of assumptions
against actual historical experience, and the
appropriateness of any judgements applied, including if
there was any indication of management bias;

• Tested the key judgements over the preparation of the

life risk and life participating insurance contract
liabilities, including manual calculation of components
focussing on the consistency in treatment and
methodology year-on-year and with reference to
recognised actuarial practice; and

• Used the results of an independent PwC annual

benchmarking survey of assumptions to further challenge
the assumption setting process by comparing certain
assumptions used relative to the Group’s industry peers.

Further details on the specific procedures performed over
each of the identified key assumptions are included in the
below sections of our Key Audit Matters. Based on the
work performed and the evidence obtained, we consider
the assumptions used for valuation of life risk and life
participating insurance contract liabilities to be
appropriate.

Aviva plc

3.06

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Independent auditors’ report to the members of Aviva plc

Key audit matter

How our audit addressed the key audit matter

a) Annuitant mortality assumptions (Group)

Refer to Accounting policy (M) ‘Insurance, participating investment and reinsurance contracts’ and Note 40 – Insurance
and Reinsurance Contracts.

Annuitant mortality assumptions used to value the life risk
best estimate liabilities for the UK Life insurance business
require a high degree of judgement due to the number of
factors which may influence mortality experience. The
differing factors which affect the assumptions are
underlying mortality experience (in the portfolio), industry
and management’s views on the future rate of mortality
improvements, and external factors arising from
developments in the annuity market. COVID-19 has caused
additional challenges in estimating long term mortality
assumptions due to the uncertainty in more recent data
which is reflected, for example, in management’s exclusion
of 2022 experience from the Continuous Mortality
Investigation ("CMI") model 2022.

There are two main components to the annuitant mortality
assumptions:

• Mortality base assumption: this component is typically
less subjective as it is derived using the external (“CMI”)
tables for individual annuities and Club Vita 3 (“CV3”)
tables for Bulk Purchase Annuities ("BPA”), adjusted for
internal experience. However, judgement is required in
choosing the appropriate table and fitting Aviva’s own
experience to this table. In setting this assumption
management adopted the latest CMI model (CMI 2022),
opting to exclude the 2022 experience from the analysis
and allow for a flat increase to the base table as well as
including an anti-selection adjustment for certain
pension annuities; and

• Rate of mortality improvements: this component is more
subjective given the uncertainty over how life expectancy
will change in the future and the lack of available data to
support judgements made in respect of this. In setting
this assumption, management has adopted the latest CMI
model (CMI 2022) and dataset, and updated the
calibration of key parameters within the model.

In respect of the annuitant mortality assumptions, our
work included the following on the judgements applied:

• Tested the methodology used by management to derive
the assumptions with reference to relevant rules and
actuarial guidance and by applying our industry
knowledge and experience. This included evaluating
management’s approach to the adoption of the latest CMI
model (CMI 2022) particularly around the
appropriateness of excluding the 2022 experience from
the analysis and including a flat increase to the base
table;

• Assessed the reasonableness of the base mortality

assumptions. This included assessing any adjustments
made by management in respect of experience impacted
by the COVID-19 pandemic, and the choice of anti-
selection assumptions;

• Considered the reasonableness of mortality improvement

assumptions, including those unchanged, such as the
socio-economic group adjustments, following the move
to the latest CMI model. We performed this by assessing
the continued appropriateness of these elements of the
mortality improvement basis against the impact arising
from the change in the CMI model; and

• Compared annuitant mortality assumptions selected by

management against those that have been used by others
in the market, based on our expert actuarial experience.

Based on the work performed and the evidence obtained,
we consider the assumptions used for annuitant mortality
to be appropriate.

Aviva plc

3.07

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Independent auditors’ report to the members of Aviva plc

Key audit matter

How our audit addressed the key audit matter

b) Credit default assumptions for illiquid assets (commercial mortgages, equity release mortgages) and corporate
bonds (Group)

Refer to Accounting policy (M) ‘Insurance, participating investment and reinsurance contracts’ and Note 40 – Insurance
and Reinsurance Contracts.

Life risk best estimate liabilities are valued by discounting
expected future cash flows at an interest rate based on the
yield of assets backing the liabilities, allowing for a deduction
for the credit risk associated with holding these assets. UK
Life has substantial holdings in asset classes with significant
credit risk.

For illiquid assets, the underlying asset valuation requires a
number of different assumptions. Internally developed models
are then used to project the associated cash flows for the
assets, using these assumptions, to calculate the asset value
and associated credit risk.

There is a heightened risk that corporate bond credit default
assumptions may not be appropriate given the ongoing
heightened economic uncertainty and high inflation
environment observed in the current year. We have
consequently included this asset class within this key audit
matter.

The calculated credit risk for illiquid assets and corporate
bonds is converted into credit default assumptions for each
asset type. These assumptions are then uplifted by a risk
allowance to allow for unexpected credit losses and used,
alongside credit default assumptions for other assets, in the
calculation of the valuation interest rate used to value life
insurance liabilities.

In respect of the credit default assumptions for illiquid assets,
our work included the following:

• Tested the methodology and the credit risk pricing

models used by management to derive the assumptions
for commercial and equity release mortgages. This
included consideration of the relevant rules and actuarial
guidance, such as the adoption of an appropriate risk
allowance, and by applying our industry knowledge and
experience; and

• Validated the significant assumptions used by
management by ensuring consistency with the
assumptions used for the valuation of the illiquid assets
and by considering any additional judgements applied,
market observable data (to the extent available and
relevant) and our experience of market practice.

In respect of the credit default assumptions for corporate
bonds, our work included performing the following:

• Tested the appropriateness of the methodology used by

management. This included consideration of the relevant
rules and actuarial guidance, such as the adoption of an
appropriate risk allowance, and by applying our industry
knowledge and experience; and

• Assessed the reasonableness of the significant

assumptions used in the calculation of the credit default
assumption, with a focus on recent market volatility.

Based on the work performed and the evidence obtained,
we consider the assumptions used for credit default risk
on commercial mortgages, equity release mortgages and
corporate bonds to be appropriate.

Aviva plc

3.08

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Independent auditors’ report to the members of Aviva plc

Key audit matter

c) Expense assumptions (Group)

How our audit addressed the key audit matter

Refer to Accounting policy (M) ‘Insurance, participating investment and reinsurance contracts’ and Note 40 – Insurance
and Reinsurance Contracts.

Future maintenance expenses and expense inflation
assumptions are used in the measurement of the life risk best
estimate liabilities and life participating contracts. The
assumptions reflect the expected future expenses that will be
required to maintain the in-force policies at the balance sheet
date. The assumptions used require significant judgement
which includes how expenses are allocated between
maintenance and acquisition expenses as well as how
expenses are split between attributable and non-attributable
costs under IFRS 17.

In the prior period, and over the course of the year ended
31 December 2023, inflation has been significantly higher than
historical rates. As a result, there remains significant
uncertainty around future inflation and how inflation will vary
across the economy. This increases the materiality and risk
associated with judgements applied in the calculation of
expense inflation.

In respect of the expense assumptions, our work included
the following:

• Tested the methodology used by management to derive
the assumptions with reference to relevant rules and
actuarial guidance and by applying our industry
knowledge and experience. This included testing the split
of expenses between acquisition and maintenance
expenses, and agreeing the split of attributable and non-
attributable costs under IFRS 17, by agreeing a sample to
supporting evidence;

• Tested the actuarial reserving models to ensure that the

expense assumptions continue to be applied
appropriately within the models, and assessed the
appropriateness of new and existing maintenance
expense manual provisions; and

• Tested that the assumptions appropriately reflect the
expected future maintenance expenses for policies in
force at the balance sheet date, which includes
consideration of the allowance for project costs and
planned controlled cost reduction as well as sufficiency
of new business volume projections.

In respect of the inflation assumption, we considered the
reasonableness of the expense inflation assumption with
respect to the market view of inflation as at 31 December
2023. This included the reasonableness of any adjustments
made to market inflation to set the expense inflation
assumption.

Based on the work performed and the evidence obtained,
we consider the expense assumptions to be appropriate.

Valuation of the life risk and life participating risk adjustment (Group)

Refer to Accounting policy (M) ‘Insurance, participating investment and reinsurance contracts’ and Note 40 – Insurance
and Reinsurance Contracts.

The risk adjustment represents the compensation that the
Group requires for bearing the uncertainty about the
amount and timing of the cash flows that arise from non-
financial risk.

The method by which management determines the
valuation of the risk adjustment requires them to carry out
a number of calculations that involve a significant degree
of judgement.

As a result of our risk assessment procedures, we
identified the following key risks:

• The appropriateness and application of judgements

applied in the execution of management’s determined
methodology given that the standard does not prescribe
the calculation of risk adjustment and a variety of
approaches can be taken to satisfy the standard’s
requirements; and

• The appropriateness of the confidence level given the

judgement involved in determining the confidence level
percentile calibration and judgement involved in whether
to determine a confidence level over a 1-year time
horizon vs a “to-ultimate” time horizon.

In respect of the Risk Adjustment, our work included the
following:

• Tested the application of the methodology used to derive

the risk adjustment, focussing on any key judgements
applied when updating the calibration result. These
include determining how to reflect the Solvency UK
reforms within the calibration and removing the Solvency
II transitional measures in the technical provisions
(“TMTP”);

• Compared management’s approach to the wider market,
where applicable, particularly where adjustments are
applied to the calibration to reflect external events and
by applying our industry knowledge and experience; and
• Evaluated results of management’s analysis of the change

in the risk adjustment results to assess the
reasonableness of movements between periods and the
commentary provided over these movements by
management.

Based on the work performed and the evidence obtained,
we consider the life risk and life participating risk
adjustment to be appropriate

Aviva plc

3.09

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Independent auditors’ report to the members of Aviva plc

Key audit matter

How our audit addressed the key audit matter

Valuation of the life risk and life participating CSM (Group)

Refer to Accounting policy (M) ‘Insurance, participating investment and reinsurance contracts’ and Note 40 – Insurance
and Reinsurance Contracts - (e) Contractual Service Margin.

The CSM is a component of the carrying amount of the
asset or liability for a group of insurance contracts
measured under the General Measurement Model (“GMM”)
and Variable Fee Approach (“VFA”). It represents the
unearned profit that the Group will recognise as it
provides insurance contract services in the future.

The CSM engine is driven by complex calculations and
sensitive assumptions, which in combination with manual
adjustments increase the risk of calculation error.

In particular the key areas in which we have identified
risks relate to:

• The implementation of management’s methodology in

the CSM calculation engine; and

• The appropriateness of any manual adjustments made by

management to the output of their calculations.

In respect of the valuation of the life risk and life
participating CSM, our work included the following:

• Understood and evaluated the process and the design
and implementation of controls in place. This included
testing the design and operating effectiveness of the
relevant controls in place, and the completeness and
accuracy of data used;

• Tested the accuracy of the CSM calculation engine and

the application of management’s judgements by
comparing a sample of outputs against those produced
by our own independent CSM model;

• Reviewed management’s testing over the accuracy of the

model used for the calculation of the CSM as at 31
December 2023;

• Tested manual adjustments made by management; and
• Tested management’s key review controls over the CSM

valuation through reperformance and independent
testing.

Based on the work performed and the evidence obtained,
we consider the life risk and life participating CSM to be
appropriate.

Aviva plc

3.10

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Independent auditors’ report to the members of Aviva plc

Key audit matter

How our audit addressed the key audit matter

Valuation of general insurance contract liabilities and reinsurance assets (Group)

Refer to Accounting policy (M) ‘Insurance, participating investment and reinsurance contracts’ and Note 40 – Insurance
and Reinsurance Contracts.

General insurance contract liabilities and reinsurance assets
are highly uncertain and require considerable judgement and
interpretation to determine their valuation.

Our work included the following procedures to address the
risks identified in relation to the valuation of general
insurance contract liabilities and reinsurance assets:

We focused on the following:

• The risk of inappropriate methodologies and assumptions
being used to estimate the undiscounted best estimate
liabilities for future claims cash flows, which now forms
part of the liability for incurred claims (“LIC”), and the
associated reinsurers’ share, which form part of the
assets for incurred claims (“AIC”);

• The determination of the bottom up discount rates

(including choice of illiquidity premium);

• The determination of payment patterns used to derive

the cash flows for incurred claims;

• The appropriateness of significant judgements applied to
the selection of the Premium Allocation Approach (“PAA”)
measurement model for groups of contracts that are not
automatically eligible, including the selection of
“reasonably expects” assumptions;

• The appropriateness of methodologies and assumptions

adopted to value reinsurance assets associated with
Adverse Development Covers (“ADC”) measured under
the General Measurement Model (“GMM”); and

• The appropriateness of methodologies and assumptions

adopted to calculate the amount of the risk adjustment to
reflect the entity’s view of the compensation that it
requires for bearing risk.

• Understood and evaluated the process and the design
and implementation of controls in place. This included
testing the operating effectiveness of the relevant
controls;

• Independently estimated the undiscounted best estimate

liabilities (for the LIC) on selected classes of business,
particularly focusing on the largest and most uncertain
estimated cash flows. For these classes we compared our
estimated cash flows to those booked by management,
and understood the reasoning behind any significant
differences;

• Evaluated the appropriateness of the actuarial claims
projection techniques and the reasonableness of the
methodology and significant assumptions for the
remaining lines of business;

• Understood and evaluated the reasonableness of the
actuarial assumptions impacting the forecast future
claims cash flows. This included assumptions related to
payment patterns and the rates used to discount future
claims cash flows;

• Assessed the appropriateness of the judgements and

supporting estimates used to determine use of the PAA
measurement model;

• Assessed the appropriateness of the methodology and
assumptions involved in the recognition of reinsurance
assets associated with ADC contracts by reviewing the
inputs to, and outputs from management’s model
including assessing any manual adjustments made to the
output of the model; and

• Assessed the appropriateness of the methodology and
assumptions applied to determine the risk adjustment
and testing of the derivation of the risk adjustment.

Based on the work performed and evidence obtained, we
consider the methodology and assumptions used to value the
general insurance liabilities and reinsurance assets to be
appropriate.

Aviva plc

3.11

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Independent auditors’ report to the members of Aviva plc

Key audit matter

How our audit addressed the key audit matter

Valuation of hard to value investments (Group)

Refer to Accounting policy (Y) Loans and Note 25 – Loans.

The valuation of the investment portfolio involves
judgement and continues to be an area of inherent risk.
The valuation risk is not uniform for all investment types
and is greatest for particular assets categorised as level 3
under the fair value methodology. This is because of the
level of judgement required in the selection and
application of significant assumptions and unobservable
inputs, and the resulting sensitivities on the reported
amounts.

The asset classes that we consider for this risk are:

• Commercial mortgage loans (UK life);
• Equity release mortgage loans (UK life); and
• Infrastructure loans (UK Life).

Our work over the valuation of hard to value investments
included the following:

• Understood and evaluated the process and the design

and implementation of controls in place to determine the
pricing and oversight of the process;

• Evaluated the valuation methodologies and models

adopted by management against expected methods, by
performing independent recalculations of valuations
determined by models covering each asset class;
• Tested data inputs used in the valuation models to

underlying documentation on a sample basis;

• Evaluated assumptions used by management, including
yield curves, discounted cash flows, property growth
rates, house prices, longevity, credit spread and illiquidity
premiums as relevant to each asset class and credit
ratings through benchmarking these to market available
data and engaging valuation experts;

• Tested the operation of data integrity and change

management controls for the commercial mortgage and
equity release valuation models;

• Using our property valuation experts, assessed the
objectivity, independence and competency of the
surveyors used by management to determine the
collateral values input into the commercial mortgage
valuation models; and

• Using our valuation experts, performed independent

valuations for a sample of loans valued by each different
type of infrastructure loan model.

Based on the work performed and the evidence obtained,
we consider the methodology and assumptions used by
management to value hard to value assets to be
appropriate.

Valuation of investments in subsidiaries (Company)

Refer to Accounting policy (D) Consolidation principles - (F) The Company’s investments; and the Company Financial
Statements and Note E - Investments in subsidiaries and joint venture.

In the Company's statement of financial position,
investments in subsidiaries are reported at cost less
impairment. The investments in subsidiaries are the
largest assets on the Company's statement of financial
position. There is a risk that the carrying value of the
investments in subsidiaries exceeds the recoverable
amount and therefore an impairment loss should be
recognised.

In respect of the carrying value of investments in
subsidiaries we have:

• Obtained management’s assessment of impairment
indicators in investments in subsidiaries and tested
relevant key inputs;

• Evaluated whether there is an impact on the carrying

value of the investment based on our understanding of
the business and accounting treatment; and

• Tested the disclosures made by management in the

financial statements.

Based on the work performed and the evidence obtained,
we consider the carrying value of investments in
subsidiaries to be appropriate.

Aviva plc

3.12

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Independent auditors’ report to the members of Aviva plc

How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the structure of the Group and the Company, the accounting
processes and controls, and the industry in which they operate.

Based on the output of our risk assessment, along with our understanding of the Aviva group structure, we performed full
scope audits over the following components: UK Life (which forms part of the Insurance, Wealth and Retirement
operating segment as disclosed in the financial statements), UK General Insurance, Canada General Insurance and Aviva
plc.

We also performed audit procedures over the corporate centre operations and the consolidation process, as well as over
certain other group activities, including specific account balances in Aviva Employment Services Limited, Aviva Central
Services UK Limited, Aviva Group Holdings Limited and and Aviva Investors UK Fund Services Limited.

We completed review procedures over the other components not subject to full scope audits.

As the Group audit team, we determined the level of involvement required at those components to be able to conclude
whether sufficient and appropriate audit evidence had been obtained as a basis for our opinion on the consolidated
financial statements as a whole. In our role as Group auditors, we exercised oversight of the work performed by auditors
of the components including performing the following procedures:

• Issued Group instructions outlining areas requiring additional audit focus, including the key audit matters above;

• Maintained an active dialogue with reporting component audit teams throughout the year;

• Attended meetings with local management;

• Reviewed reporting requested from component teams, including those areas determined to be of heightened audit risk;
and
• Met with all full scope components and reviewed the detailed working papers, where relevant.

The impact of climate risk on our audit
We have made enquiries of management (both within and outside of the Group’s finance functions) in order to
understand the extent of the impact of climate change risks and the commitments made by the Group on the Group’s
financial statements. As part of this, we reviewed the Group’s climate reporting framework, and have also made enquiries
to understand, and performed a risk assessment in respect of, the commitments made by the Group and how these may
affect the financial statements and the audit procedures that we perform. We have assessed the risks of material
misstatement to the financial statements as a result of climate change and concluded that for the year ended
31 December 2023, the main audit risks are related to consistency of disclosures included within the Annual Report and
‘other information’ including the Task Force on Climate-related Financial Disclosure ("TCFD") report. As a result of this
assessment, we concluded that there was no impact on our key audit matters.

Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual financial statement line items and disclosures and in
evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Financial statements – Group

Financial statements – Company

Overall materiality

£142,000,000.

How we determined it

1% of equity attributable to shareholders of Aviva plc, plus
CSM net of tax.

£75,271,000.

0.5% of total equity

Rationale for
benchmark applied

In determining our materiality, we considered financial
metrics which we believed to be relevant and concluded that
equity attributable to shareholders of Aviva plc, plus CSM net
of tax was the most appropriate benchmark. CSM, net of tax,
represents an estimate of locked-in future net profits to be
generated from current in-force business which will
ultimately increase total shareholders’ equity available for
distribution as dividends. Together with equity attributable to
Aviva shareholders, this metric provides an expectation of
the future total equity of Aviva, and is an appropriate
benchmark to determine the materiality level under IFRS 17.

In determining our materiality, we considered
financial metrics which we believed to be relevant
and concluded, consistent with prior year, that
total equity was the most appropriate benchmark.
The primary use of the financial statements is to
determine the entity's ability to pay dividends, and
the users will therefore be focused on a total
equity benchmark.

For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group
materiality. The range of materiality allocated across components was between £30,000,000 and £129,000,000. Certain
components were audited to a local statutory audit materiality that was also less than our overall Group materiality.

Aviva plc

3.13

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Independent auditors’ report to the members of Aviva plc

We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining
the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and
disclosures, for example in determining sample sizes. Our performance materiality was 75% of overall materiality,
amounting to £106,500,000 for the Group financial statements and £56,453,250 for the Company financial statements.

In determining the performance materiality, we considered a number of factors - the history of misstatements, risk
assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of
our normal range was appropriate.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
£7,100,000 (Group audit) and £3,763,550 (Company audit) as well as misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.

Conclusions relating to going concern
Our evaluation of the directors’ assessment of the Group's and the Company’s ability to continue to adopt the going
concern basis of accounting included:

• Obtaining the directors’ going concern assessment and challenging the rationale for the downside scenarios adopted

and material assumptions made using our knowledge of Aviva’s business performance, review of regulatory
correspondence and obtaining further corroborating evidence;

• Considering the directors' assessment of the regulatory solvency coverage and liquidity position in the forward looking

scenarios considered, which have been derived from Aviva’s Own Risk and Solvency Assessment ("ORSA");

• Considering information obtained during the course of the audit and publicly available market information to identify

any evidence that would contradict the directors' assessment of going concern; and

• Enquiring and understanding the actions taken by the directors to mitigate the risks arising from the impacts of

economic uncertainty, including review of Board Risk Committee minutes and attendance of all Audit Committees.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group's and the Company’s ability to continue as a
going concern for a period of at least twelve months from when the financial statements are authorised for issue.

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.

However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the
Group's and the Company's ability to continue as a going concern.

In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the
directors considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.

Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements
does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent
otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency
or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement
of the financial statements or a material misstatement of the other information. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report based on these responsibilities.

With respect to the Strategic Report and Directors’ report, we also considered whether the disclosures required by the
UK Companies Act 2006 have been included.

Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain
opinions and matters as described below.

Strategic Report and Directors’ report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and
Directors’ report for the year ended 31 December 2023 is consistent with the financial statements and has been prepared
in accordance with applicable legal requirements.

In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of
the audit, we did not identify any material misstatements in the Strategic Report and Directors’ report.

Aviva plc

3.14

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Independent auditors’ report to the members of Aviva plc

Directors’ Remuneration
In our opinion, the part of the Annual report on remuneration to be audited has been properly prepared in accordance
with the Companies Act 2006.

Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and
that part of the corporate governance statement relating to the Company’s compliance with the provisions of the UK
Corporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate
governance statement as other information are described in the Reporting on other information section of this report.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
corporate governance statement is materially consistent with the financial statements and our knowledge obtained
during the audit, and we have nothing material to add or draw attention to in relation to:

• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify

emerging risks and an explanation of how these are being managed or mitigated;

• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going

concern basis of accounting in preparing them, and their identification of any material uncertainties to the Group’s and
Company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial
statements;

• The directors’ explanation as to their assessment of the Group's and Company’s prospects, the period this assessment

covers and why the period is appropriate; and

• The directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in

operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures
drawing attention to any necessary qualifications or assumptions.

Our review of the directors’ statement regarding the longer-term viability of the Group and Company was substantially
less in scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their
statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance
Code; and considering whether the statement is consistent with the financial statements and our knowledge and
understanding of the Group and Company and their environment obtained in the course of the audit.

In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of
the corporate governance statement is materially consistent with the financial statements and our knowledge obtained
during the audit:

• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable,
and provides the information necessary for the members to assess the Group’s and Company's position, performance,
business model and strategy;

• The section of the Annual Report that describes the review of effectiveness of risk management and internal control

systems; and

• The section of the Annual Report describing the work of the Audit Committee.

We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the
Company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code
specified under the Listing Rules for review by the auditors.

Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of directors' responsibilities, the directors are responsible for the preparation of
the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair
view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no
realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.

Aviva plc

3.15

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Independent auditors’ report to the members of Aviva plc

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws
and regulations related to breaches of UK and European regulatory principles, such as those governed by the Prudential
Regulation Authority ("PRA"), the Financial Conduct Authority ("FCA") and the UK tax authorities, and we considered the
extent to which non-compliance might have a material effect on the financial statements. We also considered those laws
and regulations that have a direct impact on the financial statements such as Companies Act 2006. We evaluated
management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of
override of controls), and determined that the principal risks were related to management bias in accounting estimates
and judgmental areas of the financial statements as shown in our 'Key Audit Matters'. The Group engagement team
shared this risk assessment with the component auditors so that they could include appropriate audit procedures in
response to such risks in their work. Audit procedures performed by the Group engagement team and/or component
auditors included:

• Discussions with the Board of Directors, management, internal audit, senior management involved in the risk and

compliance functions and the Group's and the Company’s legal function, including consideration of known or suspected
instances of non-compliance with laws and regulation and fraud;

• Evaluation and testing of the operating effectiveness of management’s controls designed to prevent and detect irregularities;
• Assessment of matters reported on the Group's and the Company’s whistleblowing helpline and fraud register and the

results of management’s investigation of such matters;

• Meeting with the PRA periodically and reading key correspondence with the PRA and the FCA, including those in

relation to compliance with laws and regulations;

• Reviewing relevant meeting minutes including those of the Board of Directors, Remuneration and Disclosure

Committees;

• Identifying and testing journal entries based on risk criteria;
• Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing;
• Testing transactions entered into outside of the normal course of the Group's and the Company’s business;
• Reviewing the Group’s register of litigation and claims, internal audit reports, and compliance reports in so far as they

related to non-compliance with laws and regulations and fraud; and

• Attendance at Audit and Risk Committee meetings.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances
of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the
financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.

Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete
populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases,
we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance
with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions,
accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent in writing.

Other required reporting

Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been

received from branches not visited by us; or

• certain disclosures of directors’ remuneration specified by law are not made; or
• the Company financial statements and the part of the Annual report on remuneration to be audited are not in

agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Aviva plc

3.16

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Independent auditors’ report to the members of Aviva plc

Appointment
Following the recommendation of the Audit Committee, we were appointed by the members on 3 May 2012 to audit the
financial statements for the year ended 31 December 2012 and subsequent financial periods. The period of total
uninterrupted engagement is 12 years, covering the years ended 31 December 2012 to 31 December 2023.

Other matter
In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these
financial statements will form part of the UKSEF-prepared annual financial report filed on the National Storage
Mechanism of the Financial Conduct Authority in accordance with the UKSEF Regulatory Technical Standard ("UKSEF
RTS"). This auditors’ report provides no assurance over whether the annual financial report will be prepared using the
single electronic format specified in the UKSEF RTS.

Philip Watson (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London

6 March 2024

Aviva plc

3.17

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Accounting policies

Aviva plc (the ‘Company’), a public limited company
incorporated and domiciled in the United Kingdom (UK),
together with its subsidiaries (collectively, the ‘Group’ or
‘Aviva’) transacts life assurance and long-term savings
business, fund management and most classes of general
insurance and health business through its subsidiaries,
joint ventures, associates and branches in the UK, Ireland,
Canada, India, China and Singapore.

The principal accounting policies adopted in the
preparation of these financial statements are set out
below. These policies have been consistently applied to all
years presented, unless otherwise stated.

(A) Basis of preparation
The consolidated financial statements and those of the
Company have been prepared and approved by the
directors in accordance with UK-adopted international
accounting standards and the legal requirements of the
Companies Act 2006.

The consolidated financial statements have been prepared
under the historical cost convention, as modified by the
revaluation of land and buildings, investment property,
and financial assets and financial liabilities (including
derivative instruments) at fair value through profit or loss.

Items included in the financial statements of each
of the Group’s entities are measured in the currency
of the primary economic environment in which
that entity operates (the functional currency).
The consolidated financial statements are stated in
pounds sterling, which is the Company’s functional
and presentational currency. Unless otherwise noted,
the amounts shown in these financial statements are
in millions of pounds sterling (£m).

Comparative figures have been restated following the
implementation of IFRS 17 Insurance Contracts and IFRS 9
Financial Instruments as detailed in note 1.

New standards, interpretations and amendments
to published standards that have been issued and
endorsed by the UK and adopted by the Group or
the Company
The Group has applied IFRS 17 Insurance Contracts and
IFRS 9 Financial Instruments retrospectively from 1
January 2023. As a result, the Group has restated certain
comparative amounts. IFRS 17 significantly impacts the
measurement and presentation of insurance contracts,
reinsurance contracts and investment contracts with
discretionary participation features (participating
investment contracts). Adoption of IFRS 9 has had no
impact on the measurement of the Group's financial
instruments, but introduces new disclosure requirements.
The nature and effects of the transition to IFRS 17 and
IFRS 9 are summarised in note 1, including the financial
impacts on the statement of financial position as at
1 January 2022. The Group’s revised accounting policies
are set out in (B), (C), (H), (I), (M), (N), (O), (P), (T), (U), (W),
(X), (Y), (AA) and (AF) below.

In addition, the Group and the Company has adopted the
following amendments to standards which became
effective for the annual reporting period beginning on
1 January 2023. The amendments do not have a significant
impact on the Group’s consolidated financial statements
or the Company’s financial statements.

(i) Amendments to IAS 1 Presentation of Financial
Statements and IFRS Practice Statement 2: Disclosure
of Accounting Policies

(ii) Amendments to IAS 8 Accounting Policies, Changes
in Accounting Estimates and Errors: Definition of
Accounting Estimates

(iii) Amendments to IAS 12 Income Taxes: Deferred Tax
related to Assets and Liabilities arising from a Single
Transaction

(iv) Amendments to IAS 12 Income Taxes: International
Tax Reform – Pillar Two Model Rules

Standards, interpretations and amendments to
published standards that are not yet effective and have
not been adopted early by the Group or the Company
The following amendments to existing standards have
been issued, are not yet effective for the Group and the
Company, and have not been adopted early by the Group
and the Company. None of the amendments are expected
to have a significant impact on the Group’s consolidated
financial statements or the Company’s financial
statements.

(i) Amendments to IAS 1 Presentation of Financial
Statements: Classification of Liabilities as Current or
Non-current
Published by the International Accounting Standards
Board (IASB) in January 2020. The amendments are
effective for annual reporting beginning on or after
1 January 2024 and have been endorsed by the UK.

(ii) Amendments to IAS 1 Presentation of Financial
Statements: Non-current Liabilities with Covenants
Published by the IASB in October 2022. The amendments
are effective for annual reporting beginning on or after
1 January 2024 and have been endorsed by the UK.

(iii) Amendments to IFRS 16 Leases: Lease Liability in
a Sale and Leaseback
Published by the IASB in September 2022. The amendments
are effective for annual reporting beginning on or after
1 January 2024 and have been endorsed by the UK.

(iv) Amendments to IAS 7 Statement of Cash Flows and
IFRS 7 Financial Instruments Disclosures: Supplier
Finance Arrangements
Published by the IASB in May 2023. The amendments
are effective for annual reporting beginning on or after
1 January 2024 and have been endorsed by the UK.

(v) Amendments to IAS 21 The Effects of Changes in
Foreign Exchange Rates: Lack of Exchangeability
Published by the IASB in August 2023. The amendments
are effective for annual reporting beginning on or after
1 January 2025 and have yet to be endorsed by the UK.

(B) Group adjusted operating profit
The long-term nature of much of the Group’s operations
means that, for management’s decision-making and
internal performance management of our operating
segments, the Group focuses on Group adjusted operating
profit, a non-GAAP alternative performance measure
(APM) which is not bound by IFRS. The APM incorporates
the expected return on investments which supports its
long-term and non-long-term businesses.

Aviva plc

3.18

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Accounting policies

Group adjusted operating profit for life and non-life
business is based on expected investment returns on
financial investments backing shareholder and
policyholder funds over the reporting period, with
allowance for the corresponding expected movements in
liabilities. This includes movements in the liabilities to
with-profit policyholders that offset the operating result
of non-profit contracts written in the with-profit funds.
Group adjusted operating profit also includes the effect
of the mismatch between movements in expected future
insurance contract cash flows measured at current
discount rates and the corresponding adjustment to the
contractual service margin (CSM) measured at locked-
in rates (see policy M).

(C) Critical accounting policies and the use of
estimates
The preparation of financial statements requires the
Group to select accounting policies and make estimates
and assumptions that affect items reported in the
consolidated income statement, consolidated statement
of financial position, other primary statements and notes
to the consolidated financial statements.

The Audit Committee reviews the reasonableness
of judgements and assumptions applied and the
appropriateness of material accounting policies.
The material judgements considered by the Committee in
the year are included within the Audit Committee Report.

Variances between actual and expected investment
returns, and the impact of changes in economic
assumptions on liabilities, are disclosed separately outside
Group adjusted operating profit.

The accounting policies in the table below are those that
have the most material impact on the amounts recognised
in the financial statements, with those judgements
involving estimation summarised thereafter.

The exclusion of economic variances from the Group
adjusted operating profit APM reflects the long-term
nature of much of our business and presents separately
the operating profit APM which is used in managing the
performance of our operating segments from the impact
of economic factors. Further details of this analysis and
the assumptions used are given in note 10.

Group adjusted operating profit excludes impairment
of goodwill, associates and joint ventures; amortisation
and impairment of intangibles acquired in business
combinations; amortisation and impairment of acquired
value of in-force business; and the profit or loss on
disposal and remeasurement of subsidiaries, joint
ventures and associates. These items principally relate
to mergers and acquisition activity which we view as
strategic in nature, hence they are excluded from the
operating profit APM as this is principally used to manage
the performance of our operating segments when
reporting to the Group’s chief operating decision maker.

From 1 January 2023, Group adjusted operating profit
excludes integration and restructuring (I&R) costs that
relate to a well-defined programme that materially
changes the scope of our business or the manner in which
it is conducted, with the exception of I&R costs directly
attributable to insurance contracts. Directly attributable
I&R costs are reflected in the CSM and the impact
recognised in Group adjusted operating profit as CSM is
amortised. This change in accounting policy had no
impact on the 2022 comparative amounts.

Group adjusted operating profit also excludes other items,
which 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. Details of these items,
including an explanation of the rationale for their
exclusion, are provided in the Alternative Performance
Measures section within ‘Other information’.

The Group adjusted operating profit APM should be
viewed as complementary to IFRS GAAP measures. It is
important to consider Group adjusted operating profit
and profit before tax together to understand the
performance of the business in the period.

Critical accounting judgement

Consolidation (accounting policy – D)

Assessment of whether the Group controls the underlying
entities including consideration of its decision-making authority
and rights to the variable returns from the entity. As part of this
assessment Aviva applies a corridor approach to consolidation
thresholds, where the Group’s percentage ownership in certain
investment vehicles fluctuates daily.

Classification of insurance and investment contract
(accounting policy – G)

Assessment of the significance of insurance risk transferred to
the Group and discretionary participation features in
determining whether a contract should be accounted for as an
insurance or investment contract. Insurance contracts are
defined as those containing significant insurance risk. Contracts
that transfer financial risks, but not significant insurance risk
are classified as investment contracts. Judgement is required
to assess whether insurance risk is significant at inception of
the contract. Some insurance and investment contracts contain
a discretionary participation feature which is a supplement to
guaranteed benefits. Judgement is required to determine
whether discretionary additional benefits are likely to be a
significant portion of the total contractual payments.

Level of aggregation and measurement model for insurance,
participating investment and reinsurance contracts
(accounting policies - M(b) and M(c))

For measurement purposes, insurance contracts are
aggregated into groups based on an assessment of risks and
dividing each portfolio into annual cohorts by year of issue.
Judgement is required in assessing if the contracts have similar
risks that are managed together. Each annual cohort is further
subdivided into three groups, and judgement is applied to
determine the profitability of contracts at initial recognition.
Judgement is then applied to determine if the group of
contracts is eligible for either the variable fee approach (VFA)
or premium allocation approach (PAA) to measurement.

All estimates are based on management’s knowledge of
current facts and circumstances, assumptions based on
that knowledge and their predictions of future events and
actions. Actual results may differ from those estimates,
possibly significantly.

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Accounting policies

The table sets out those items considered particularly
susceptible to changes in estimates and assumptions, that
have a significant risk of resulting in a material adjustment
to the carrying amounts of assets and liabilities within the
next financial year, and the relevant accounting policy and
note disclosures.

Material accounting estimates

Assumptions

Carrying
Values

note
40(a)

Sensitivity

note
54(h)

note
40(g)

Measurement of insurance,
participating investment and
reinsurance contracts (accounting
policy - M)
The principal subjective or
complex assumptions used in the
calculation of life insurance and
participating investment contract
fulfilment cash flows include non-
financial assumptions (in particular,
annuitant and assurance mortality
and future expenses) and the
allowance for illiquidity in discount
rates (in particular, top-down
discount rates applied to annuity
liabilities). The immediate impact of
changes in these assumptions on
the carrying amounts of insurance,
participating investment and
reinsurance contracts is reduced
when there is a corresponding
adjustment to the CSM, i.e. for all
changes in non-financial
assumptions (calculated at locked-
in discount rates for GMM
contracts) and for financial
changes to VFA contracts, unless
contracts are onerous.
The principal subjective or
complex assumptions used in the
calculation of non-life liabilities
include the allowance for illiquidity
in the discount rates used to
determine our latent claim and
structured settlements liabilities
and the assumption that past
claims experience can be used as a
basis to project future claims
(estimated using a range of
standard actuarial claims
projection techniques).

Fair value of financial instruments
and investment property
(accounting policies - F, R, W)
Where quoted market prices are
not available, valuation techniques
are used to value financial
instruments and investment
property. These include broker
quotes and models using both
observable and unobservable
market inputs. The valuation
techniques involve judgement with
regard to the valuation models
used and the inputs to these
models can lead to a range of
plausible valuations for financial
investments.

note
24(g)

Carrying
Values

note
44(b)

Sensitivity

n/a

Material accounting estimates

Assumptions

note
44(b)

Deferred tax assets (accounting
policy - AE)
The deferred tax asset relates to
UK tax losses which carry forward
indefinitely and the reduction in net
assets on adoption of IFRS 17,
including the CSM recognition. This
element of the deferred tax asset
will reverse as the CSM unwinds
and profits are recognised in
future. The losses are recognised
based on probable future taxable
investment income and gains and
taxable profits within five years.
Assumed investment returns and
profits are consistent with
assumptions used in actuarial
reserving and the Group Board
approved Plan. Alternative
assumptions modelled by the
Group also show full recovery of
the deferred tax asset over this
period.

The Group has considered the impact of climate risk
on the carrying value of assets and liabilities and
considers that there is no significant risk of a material
adjustment within the next financial year resulting from
climate risk. The impact of climate risk on the valuation
of financial instruments and investment property is
described in note 24(g).

(D) Consolidation principles
(a) Subsidiaries
Subsidiaries are those entities over which the Group has
control. The Group controls an investee if and only if the
Group has all of the following:
• Power over the investee,
• Exposure, or rights, to variable returns from its

involvement with the investee, and

• The ability to use its power over the investee to affect

its returns.

The Group considers all relevant facts and circumstances
in assessing whether it has power over an investee,
including: the purpose and design of an investee, relevant
activities, substantive and protective rights, and voting
rights and potential voting rights.

The Group reassesses whether or not it controls an
investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control.

(b) Investment vehicles
In several countries, the Group has invested in a number
of specialised investment vehicles such as Open-ended
Investment Companies (OEICs) and unit trusts. These
invest mainly in equities, bonds, cash and cash
equivalents, and properties, and distribute most of their
income. In determining whether the Group controls such
vehicles, primary considerations include whether the
Group is acting as a principal or an agent (including an
assessment of the substantive removal rights of third
parties) and the variability in the returns associated with
the Group’s aggregate economic interest in the fund
(direct interest and expected management fees) relative to
the total variability of returns.

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Additionally, the Group’s percentage ownership in these
vehicles can fluctuate on a daily basis according to the
level of participation of the Group and third-parties. To
avoid transitory or minor changes in fund holdings (which
do not reflect the wider facts and circumstances of the
Group’s involvement) resulting in binary changes in the
consolidation conclusions, the Group takes into account
the trend of ownership over a period of time.

This is performed in line with the following principles:
• Where the entity is managed by a Group asset manager,
and the Group’s ownership holding in the entity exceeds
40%, the Group is judged to have control over the entity;
• Where the entity is managed by a Group asset manager,

and the Group’s ownership holding in the entity is
between 30% and 40%, the facts and circumstances of
the Group’s involvement in the entity are considered in
forming a judgement as to whether the Group has
control over the entity. Considerations include the rights
held by other parties, the Group’s rights to fees from the
entity, the variability in the returns associated with the
Group’s aggregate economic interest in the fund and the
nature of the Group’s exposure to variability compared
with that of other investors; and

• Where the entity is managed by a Group asset manager,
and the Group’s ownership holding in the entity is less
than 30%, the Group is judged to not have control over
the entity.

Where the Group is deemed to control such vehicles, they
are consolidated, with the interests of parties other than
Aviva being classified as liabilities. These appear as ‘Net
asset value attributable to unitholders’ in the consolidated
statement of financial position.

The interest of parties other than Aviva in the investment
return on these funds appear as ‘Investment expense/
(income) attributable to unitholders’ in the income
statement.

Where the Group does not control such vehicles, and
these investments are held by its insurance or investment
funds, they are carried at fair value through profit or loss
within financial investments in the consolidated
statement of financial position, in accordance with IFRS 9
Financial Instruments.

As part of their investment strategy, long-term business
policyholder funds have invested in a number of property
limited partnerships (PLPs), either directly or via property
unit trusts (PUTs), through a mix of capital and loans. The
PLPs are managed by general partners (GPs), in which the
long-term business shareholder companies hold equity
stakes and which themselves hold nominal stakes in the
PLPs. The PUTs are managed by a Group subsidiary.

Accounting for the PUTs and PLPs as subsidiaries, joint
ventures, associates or other financial investments
depends on whether the Group is deemed to have control
or joint control over the PUTs and PLPs’ shareholdings in
the GPs and the terms of each partnership agreement are
considered along with other factors that determine
control, as outlined above. Where the Group exerts
control over a PUT or a PLP, it has been treated as a
subsidiary and its results, assets and liabilities have been
consolidated.

Where the partnership is managed by an agreement such
that there is joint control between the parties,
notwithstanding that the Group’s partnership share in the
PLP (including its indirect stake via the relevant PUT and
GP) may be lower or higher than 50%, such PUTs and
PLPs have been classified as joint ventures (see below).

Where the Group has significant influence over the PUT
or PLP, as defined in the following section, the PUT or PLP
is classified as an associate. Where the Group holds non-
controlling interests in PLPs, with no significant influence
or control over their associated GPs, the relevant
investments are carried at fair value through profit or loss
within financial investments.

(c) Consolidation procedure
Subsidiaries are consolidated from the date the Group
obtains control and are excluded from consolidation
from the date the Group loses control. All intercompany
transactions, balances and unrealised surpluses and
deficits on transactions between Group companies
have been eliminated. Accounting policies of subsidiaries
are aligned on acquisition to ensure consistency with
Group policies.

The Group is required to use the acquisition method of
accounting for business combinations. Under this method,
the Group recognises identifiable assets, liabilities and
contingent liabilities at fair value, and any non-controlling
interest in the acquiree. For each business combination,
the Group has the option to measure the non-controlling
interest in the acquiree either at fair value or at the
proportionate share of the acquiree’s identifiable net
assets. The excess of the consideration transferred over
the fair value of the net assets of the subsidiary acquired
is recorded as goodwill (see accounting policy O below).
Acquisition-related costs are expensed as incurred.

Transactions with non-controlling interests that lead to
changes in the ownership interests in a subsidiary but do
not result in a loss of control are treated as equity
transactions.

(d) Merger accounting and the merger reserve
Prior to 1 January 2004, the date of first time adoption
of IFRS, certain significant business combinations were
accounted for using the ‘pooling of interests method’ (or
merger accounting), which treats the merged groups as
if they had been combined throughout the current and
comparative accounting periods. Merger accounting
principles for these combinations gave rise to a merger
reserve in the consolidated statement of financial
position, being the difference between the nominal value
of new shares issued by the Parent Company for the
acquisition of the shares of the subsidiary and the
subsidiary’s own share capital and share premium
account. These transactions have not been restated,
as permitted by the IFRS 1 transitional arrangements.

The merger reserve is also used where more than 90%
of the shares in a subsidiary are acquired and the
consideration includes the issue of new shares by the
Company, thereby attracting merger relief under the
Companies Act 1985 and, from 1 October 2009, the
Companies Act 2006.

Aviva plc

3.21

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(e) Associates and joint ventures
Associates are entities over which the Group has
significant influence. Significant influence is the power to
participate in the financial and operating policy decisions
of the investee, but is not control or joint control.
Generally, it is presumed that the Group has significant
influence if it has between 20% and 50% of voting rights.
Joint ventures are joint arrangements whereby the Group
and other parties that have joint control of the
arrangement have rights to the net assets of the joint
venture. Joint control is the contractually agreed sharing
of control of an arrangement, which exists only when
decisions about the relevant activities require unanimous
consent of the parties sharing control. In a number of
these, the Group’s share of the underlying assets and
liabilities may be greater or less than 50% but the terms of
the relevant agreements make it clear that control is not
exercised. Such jointly controlled entities are referred to
as joint ventures in these financial statements.

Gains on transactions between the Group and its
associates and joint ventures are eliminated to the extent
of the Group’s interest in the associates and joint
ventures. Losses are also eliminated, unless the
transaction provides evidence of an impairment of the
asset transferred between entities.

Other than investments in investment vehicles which are
carried at fair value through profit or loss, investments in
associates and joint ventures are accounted for using the
equity method of accounting. Under this method, the cost
of the investment in a given associate or joint venture,
together with the Group’s share of that entity’s post-
acquisition changes to shareholders’ funds, is included as
an asset in the consolidated statement of financial
position. As explained in accounting policy O, the cost
includes goodwill recognised on acquisition. The Group’s
share of their post-acquisition profit or losses is
recognised in the income statement and its share of post-
acquisition movements in reserves is recognised in
reserves. Equity accounting is discontinued when the
Group no longer has significant influence or joint control
over the investment.

If the Group’s share of losses in an associate or joint
venture equals or exceeds its interest in the undertaking,
the Group does not recognise further losses unless it
has incurred obligations or made payments on behalf of
the entity.

(f) The Company’s investments
In the Company’s statement of financial position,
subsidiaries, associates and joint ventures are stated at
cost less impairment. Investments are reviewed annually
to test whether any indicators of impairment exist.

Where there is objective evidence of such an asset being
impaired the investment is impaired to its recoverable
value and any unrealised loss is recorded in the income
statement.

(E) Foreign currency translation
Income statements and cash flows of foreign entities are
translated into the Group’s presentation currency at
average exchange rates for the year, while their
statements of financial position are translated at the
year-end exchange rates.

Exchange differences arising from the translation of the
net investment in foreign subsidiaries, associates and joint
ventures, and of borrowings and other currency
instruments designated as hedges of such investments,
are recognised in other comprehensive income and taken
to the currency translation reserve within equity.

On disposal of a foreign entity, such exchange differences
are transferred out of this reserve and are recognised in
the income statement as part of the gain or loss on sale.
The cumulative translation differences were deemed to be
zero at the transition date to IFRS.

Foreign currency transactions are accounted for at the
exchange rates prevailing at the date of the transactions.
Gains and losses resulting from the settlement of such
transactions, and from the translation of monetary assets
and liabilities denominated in foreign currencies, are
recognised in the income statement.

Translation differences on fixed maturity securities and
other monetary financial assets measured at fair value
through profit or loss (FVTPL) (see accounting policy W)
are included in foreign exchange gains and losses in the
income statement. Translation differences on non-
monetary items, such as equities which are designated as
FVTPL, are reported as part of the fair value gain or loss.

(F) Fair value measurement
Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date, regardless of whether that price is
directly observable or estimated using another valuation
technique. This presumes that the transaction takes place
in the principal (or most advantageous) market under
current market conditions. Fair value is a market-based
measure and in the absence of observable market prices in
an active market, it is measured using the assumptions
that market participants would use when pricing the asset
or liability.

The fair value of a non-financial asset is determined based
on its highest and best use from a market participant’s
perspective. When using this approach, the Group takes
into account the asset’s use that is physically possible,
legally permissible and financially feasible.

The best evidence of the fair value of a financial
instrument at initial recognition is normally the
transaction price i.e. the fair value of the consideration
given or received. In certain circumstances, the fair value
at initial recognition may differ from the transaction price.

If the fair value is evidenced by comparison with other
observable current market transactions in the same
instrument (i.e. without modification or repackaging), or is
based on a valuation technique whose variables include
only data from observable markets, then the difference
between the fair value at initial recognition and the
transaction price is recognised as a gain or loss in the
income statement.

Aviva plc

3.22

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4. Other Information

Accounting policies

When unobservable market data has a significant impact
on the valuation of financial instruments, the difference
between the fair value at initial recognition and the
transaction price is not recognised immediately in the
income statement, but deferred and recognised in the
income statement on an appropriate basis over the life of
the instrument but no later than when the valuation is
supported wholly by observable market data or the
transaction is closed out or otherwise matured.

If an asset or a liability measured at fair value has a bid
price and an ask price, the price within the bid-ask spread
that is most representative of fair value in the
circumstances is used to measure fair value.

(G) Product classification
Insurance contracts are defined as those containing
significant insurance risk if, and only if, an insured event
could cause an insurer to make significant additional
payments in any scenario, excluding scenarios that lack
commercial substance, at the inception of the contract.
Such contracts remain insurance contracts until all rights
and obligations are extinguished or expire. Contracts can
be reclassified as insurance contracts after inception if
insurance risk becomes significant. Contracts that
transfer financial risks, but not significant insurance risk
are classified as investment contracts.

Some insurance and investment contracts contain a
discretionary participation feature, which is a contractual
right to receive additional benefits as a supplement to
guaranteed benefits (i) that are likely to be a significant
portion of the total contractual payments; (ii) whose
amount or timing is at the discretion of the issuer; and (iii)
that are based on the performance of a specified pool of
assets, company, or other entity that issues the contracts.
Investment contracts with discretionary participation
features, referred to as participating investment
contracts, are accounted for under IFRS 17 as set out in
policy (M). This includes hybrid participating investment
contracts, which are a combination of unit-linked and
with-profits investments for which the discretionary
participation feature is a significant portion of the
combined contract. Investment contracts without
discretionary participation features, referred to as non-
participating investment contracts, and the related
reinsurance assets are accounted for as financial
instruments under IFRS 9.

The classification of the Group’s main contracts is
summarised below:

Type of contract

Annuities

Unit-linked with significant
insurance risk or with a
significant discretionary
participation feature

Unit-linked without significant
insurance risk and without
significant discretionary
participation features

Protection

General insurance
(motor, property, liability)

With-profits

Classification

Insurance contract

Insurance contract/
Participating investment
contract

Non-participating investment
contract

Insurance contract

Insurance contract/
Participating investment
contract

(H) Insurance service result
The insurance service result represents the Group’s profit
or loss recognised on insurance contracts, participating
investment contracts and reinsurance contracts
(measured in accordance with policy M) in the period,
excluding the impact of the time value of money and
financial risks related to such contracts. The insurance
service result contains three components:

(a) Insurance revenue
For insurance contracts and participating investment
contracts applying General Measurement Model (GMM)
and Variable Fee Approach (VFA), insurance revenue is
comprised of:
• The amortisation of contractual service margin (CSM);
• The release of the risk adjustment included within the

liability for remaining coverage;

• Claims and expenses expected to be incurred in the
period, as released from the liability for remaining
coverage and adjusted for the allocation of loss Other,
including revenue recognised for policyholder tax and
other incurred expenses that have been charged to
policyholder funds; and

• The recovery of insurance acquisition cash flows, which
offsets the amortisation included in insurance service
expenses.

For insurance contracts applying the premium allocation
approach (PAA), insurance revenue is based upon the
amount of expected premium receipts allocated to
insurance contracts in the period. Premium receipts are
allocated to insurance contracts based upon the passage
of time or, where there is evidence that the release of risk
differs from the passage of time, on the basis of the
expected timing of insurance service expenses.

(b) Insurance service expenses
For insurance contracts and participating investment
contracts, insurance service expenses are comprised of:
• Actual claims (excluding investment components) and
non-acquisition fulfilment expenses incurred, adjusted
for the allocation of loss components;

• The recognition and reversal of losses on onerous

contracts;

• Non-financial assumption changes which do not adjust

the CSM;

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3.23

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• Non-financial assumption changes which affect the

valuation of the liability for incurred claims;

• Any impairment of acquisition cash flows, net of

reversals; and

• The amortisation of insurance acquisition cash flows.

For contracts measured under the GMM and VFA,
recovery of insurance acquisition cash flows is included in
insurance revenue, as described above, and an equal and
opposite amount for the amortisation of insurance
acquisition cash flows is included in insurance service
expenses.

For contracts measured under the PAA, amortisation of
insurance acquisition cash flows is based on the passage
of time or, where there is evidence that the release of risk
differs from the passage of time, on the basis of the
expected timing of insurance service expenses.

(c) Net income and expenses from reinsurance contracts
Net income (expenses) from reinsurance contracts held
represents the insurance service result for groups of
reinsurance contracts held and is comprised of:
• The allocation of reinsurance premiums paid, which is

calculated using the same principles as used to calculate
revenue on insurance contracts;

• Amounts recoverable from reinsurers, which is

calculated using the same principles as used to calculate
insurance service expenses on insurance contracts;
• The recognition of, and subsequent movements in,

reinsurance loss recovery components; and

• The effect of changes in the risk of reinsurers’ non-

performance.

(I) Insurance finance result
Insurance finance income/expenses are calculated on
insurance contracts, participating investment contracts
and reinsurance contracts, comprising:
• Changes in the fair value of underlying items;
• The accretion of interest on the CSM;
• The unwind of discounting on fulfilment cash flows and

the risk adjustment; and

• The impact of financial assumption changes upon

fulfilment cash flows and the risk adjustment.

The latter two components apply to contracts measured
under the GMM and PAA, in addition to VFA contracts
where the risk mitigation option is applied.

Where changes in expected future cash flows and risk
adjustment on GMM contracts arise from non-financial
assumption changes and experience variances, the
difference between measuring the change in fulfilment
cash flows using current financial assumptions and the
impact which adjusts the CSM using locked in financial
assumptions is recognised in the income statement in net
finance expenses.

The accounting policies used to calculate amounts within
the insurance finance result are discussed in greater detail
in policy M.

(J) Investment contract fee revenue
Non-participating investment contract policyholders are
charged fees for policy administration, investment
management, surrenders or other contract services.

The fees may be for fixed amounts or vary with the
amounts being managed, and will generally be charged as

an adjustment to the policyholder’s balance. Fees related
to investment management services are recognised as
revenue over time, as performance obligations are
satisfied. In most cases this revenue is recognised in the
same period in which the fees are charged to the
policyholder. Fees that are related to services to be
provided in future periods are deferred and recognised
when the performance obligation is fulfilled. Variable
consideration, such as performance fees and commission
subject to clawback arrangements, is not recognised as
revenue until it is reasonably certain that no significant
reversal of amounts recognised would occur.

Initiation and other ‘front-end’ fees (fees that are assessed
against the policyholder balance as consideration for
origination of the contract) are charged on some non-
participating investment and investment fund
management contracts.

Where the investment contract is measured at fair value,
the front-end fees that relate to the provision of
investment management services are deferred and
recognised as the services are provided. Origination fees
are recognised immediately where the sale of fund
interests represent a separate performance obligation.

(K) Other fee and commission income
Other fee and commission income consists primarily of
fund management fees, distribution fees from mutual
funds, commissions on reinsurance ceded, commission
revenue from the sale of mutual fund shares and transfer
agent fees for shareholder record keeping. Reinsurance
commissions receivable are deferred in the same way as
acquisition costs, as described in accounting policy AA. All
other fee and commission income is recognised over time
as the services are provided.

(L) Other investment income
Investment income consists of dividends, interest and
rents receivable for the year, movements in amortised
cost on fixed maturity securities, realised gains and losses,
and unrealised gains and losses on investments held at
FVTPL (as defined in accounting policy W). Dividends on
equity securities are recorded as revenue on the ex-
dividend date. Interest income is recognised as it accrues,
taking into account the effective yield on the investment.
It includes the interest rate differential on forward foreign
exchange contracts.

Rental income is recognised on an accruals basis using a
straight line method, unless there is compelling evidence
that benefits do not accrue evenly over the period of the
lease.

A gain or loss on a financial investment is only realised on
disposal or transfer, and is the difference between the
proceeds received, net of transaction costs, and its
original cost or amortised cost, as appropriate.

Unrealised gains and losses, arising on investments which
have not been derecognised as a result of disposal or
transfer, represent the difference between the carrying
value at the year end and the carrying value at the
previous year end or purchase value during the year, less
the reversal of previously recognised unrealised gains and
losses in respect of disposals made during the year.

Aviva plc

3.24

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4. Other Information

Accounting policies

Realised gains or losses on investment property represent
the difference between the net disposal proceeds and the
carrying amount of the property.

(M) Insurance, participating investment and
reinsurance contracts
Insurance contracts, participating investment contracts
and reinsurance contracts are accounted for in
accordance with IFRS 17.

The key measurement principles are outlined below.

(a) IFRS 17 measurement models
The Group applies three measurement models to
insurance contracts, participating investment contracts
and reinsurance contracts as follows:

Model

Applicable business

GMM

• Bulk purchase annuities
• Individual immediate and deferred

annuities

• Individual and group protection
• With-profits contracts with guaranteed

annuity terms

• Reinsurance contracts held, including

non-life reinsurance contracts that are
not eligible for PAA

VFA

• Participating investment contracts
• Unit linked or with-profits contracts

with significant insurance risk

PAA

• Short duration non-life insurance

contracts

• Longer duration non-life insurance
contracts which are eligible for PAA
• Reinsurance contracts held which are

eligible for PAA

The Group applies judgement when determining eligibility
criteria for the VFA and PAA measurement models (see
Accounting policy M section (b)).

Under each measurement model insurance contract
liabilities are measured as the sum of the liability for
remaining coverage (LRC) and the liability for incurred
claims (LIC). The LRC represents the obligation under the
insurance contract for insured events that have not yet
occurred i.e., the obligation that relates to the unexpired
portion of the coverage period, including the contractual
service margin (CSM). The LIC reflects the obligation to
investigate and pay valid claims for insured events that
have already occurred, including events that have already
occurred but for which claims have not been reported.

The key features of each measurement model are set
out below.

(i) General measurement model (GMM)
The GMM is the default IFRS 17 measurement model.
The fulfilment cash flows comprise the present value of
future cash flows within the boundary of the contract,
discounted at current rates, and an explicit risk
adjustment for non-financial risk.

At inception, a CSM liability is recognised for each new
group of contracts which represents the unearned profit
to be recognised over the coverage period.

Initial measurement is based on the cash flows within the
boundary of the contract discounted at the rate when the
contract is written. Except for reinsurance contracts held,
losses on groups of contracts that are onerous at
inception are recognised immediately.

For subsequent measurement, fulfilment cash flows are
discounted at current rates at each balance sheet date,
while the CSM is remeasured applying the discount rate
when the contract is written (the locked-in rate). Other
financial assumptions including inflation and foreign
exchange rates are also locked in at inception for the
purposes of remeasuring the CSM. The CSM is
remeasured for changes in the fulfilment cash flows
relating to non-financial risk only, applying these locked
in financial assumptions. Interest is accreted on the CSM
using the locked-in discount rate and the CSM is
amortised over the coverage period of the contract.

The coverage period is determined based on the service
provided to customers including both insurance and
investment services. Losses on groups of contracts that
are profitable at inception but subsequently become
onerous are recognised immediately.

In contrast to insurance contracts, the CSM for
groups of reinsurance contracts held can be an asset
or liability. If reinsurance is in place when underlying
groups of insurance contracts become onerous, the
reinsurance CSM recognised is adjusted to offset
the gross losses arising.

Where the net cost of purchasing reinsurance contracts
held relates to events that occurred prior to purchase
(for example adverse development cover) no CSM is
recognised, and the net cost is recognised immediately
in the income statement.

(ii) Variable fee approach (VFA)
The VFA is a modified approach to the GMM that is
applied to groups of insurance and investment contracts
with direct participating features which meet eligibility
requirements that demonstrate they provide substantial
investment related services to policyholders.

Fulfilment cash flows for VFA contracts comprise the
obligation to pay policyholders an amount equal to the
fair value of underlying items, less the variable fee for
future service.

Changes in the obligation to pay policyholders the fair
value of underlying items are recognised within net
finance expenses from insurance contracts in the
income statement.

The variable fee includes the present value of the Group’s
share of the fair value of underlying items, adjusted for
cash flows that do not vary with those underlying items.
The risk adjustment reflects the compensation for non-
financial risk in relation to the variable fee only.

The CSM is subsequently remeasured for changes in the
variable fee due to both financial and non-financial risks
using current market discount rates.

Consistent with the GMM, the CSM is recognised in profit
or loss over the coverage period in line with the insurance
and investment services provided to customers.

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1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Accounting policies

(iii) Premium allocation approach (PAA)
The PAA is a simplified measurement model which can
be applied to all short duration contracts and to longer
duration contracts that meet PAA eligibility criteria.
It is applied to all of the Group's non-life insurance and
reinsurance contracts except for contracts that reinsure
adverse development of incurred claims.

The LRC is measured as the amount of premium
received net of acquisition cash flows, less the amount
of premiums and acquisition cash flows that have been
recognised in profit or loss over the expired portion of
the coverage period.

Premium receipts and acquisition cash flows are
recognised in profit or loss over the life of the contract,
based on the expected timing of incurred claims.

Where policyholder premiums are yet to be remitted by
intermediaries, these premiums are treated as received
within the LRC with a separate financial asset recognised for
the amounts due from intermediaries. Commissions due to
intermediaries are treated as paid within the LRC with a
separate financial liability recognised. Variable commissions
which are not yet due and which are dependent upon
underwriting performance are measured within the liability
for remaining coverage, until the coverage period expires and
the liability amount is known, at which point they are
reclassified as financial liabilities.

If facts and circumstances indicate that a group of
contracts may be onerous, the LRC is measured using
GMM principles and losses for onerous contracts are
recognised immediately in the income statement.

For most contracts applying PAA, the measurement
of the LIC aligns to the GMM, with an explicit risk
adjustment for non-financial risk, and discounting
applied to expected cash flows. For Health contracts
a PAA exemption is applied to measure the LIC on an
undiscounted basis, allowable because claims are settled
within 12 months of their incurred date.

(b) Choice of measurement model
(i) VFA eligibility
Life business is considered to have direct participating
features, and is required to be measured under the VFA
model where:
• Contractual terms evidence that policyholders

participate in a pool of clearly identified underlying
items, for example unit-linked or with-profits funds;
• The policyholders expect to receive a substantial share

of the returns on underlying items (defined by the Group
as greater than 50%); and

• A substantial proportion of changes in amounts payable
to policyholders varies with returns on the underlying
items (defined by the Group as a correlation coefficient
of greater than 50%).

Reinsurance contracts held are not eligible to apply
the VFA.

(ii) PAA eligibility
The vast majority of the Group’s direct non-life business
has a duration of one year or less and is automatically
eligible for the PAA model. For the remainder, financial
modelling is performed to compare the value of the LRC
measured under GMM and PAA.

Where the LRC does not materially differ between the two
measurement models (over the duration of the contract
and in a range of reasonably foreseeable scenarios) the
contract group is PAA eligible.

The Group has multiple non-life reinsurance contracts which
are greater than one year in duration. These are assessed for
PAA eligibility by applying the same financial modelling
approach and are all PAA eligible except for treaties
reinsuring the adverse development of incurred claims.

(c) Level of aggregation
The unit of account is a group of contracts, so insurance
contracts are aggregated into groups for measurement
purposes. Discrete CSMs are determined for each group
of insurance contracts applying GMM or VFA.

Groups of insurance contracts have been determined by
identifying portfolios of insurance contracts, comprising
contracts subject to similar risks that are managed
together, and dividing each portfolio into annual cohorts
by year of issue.

Each annual cohort is then further subdivided into three
groups based on the profitability of contracts determined
at initial recognition and comprising:
• Contracts that are onerous;
• Contracts that have no significant possibility of

becoming onerous; (based on the probability that
changes in assumptions would result in contracts
becoming onerous); and
• All remaining contracts.

Reinsurance contracts held are also subdivided into
three profitability groups, determined by reference to
net gains/losses on initial recognition, and comprising:
• Contracts that have a net gain at initial recognition;
• Contracts that have no significant possibility of a net

gain arising subsequently; and

• All remaining contracts.

The approach to profitability grouping makes use of sets.
Where it can be demonstrated that all contracts within a
set are sufficiently homogeneous, they are allocated to the
same profitability group without performing an individual
contract assessment. For Life product lines, sets of
contracts usually correspond to policyholder pricing
groups. The likelihood of changes in insurance, financial
and other exposures resulting in contracts becoming
onerous is monitored at the level of these pricing groups.

For contracts measured under the PAA, IFRS 17 permits
a simplification whereby contract groups are assumed
not to be onerous unless facts and circumstances indicate
otherwise. The Group has used internal management
information to identify facts and circumstances that may
indicate that a group is onerous.

Aviva plc

3.26

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Accounting policies

(d) Recognition and derecognition
An insurance contract issued by the Group is recognised
from the earliest of:
• The beginning of its coverage period (i.e. the period

during which the Group provides insurance contract
services in respect of any premiums within the boundary
of the contract);

• The date the first payment from the policyholder

becomes due or, if there is no contractual due date,
when it is received from the policyholder; and

• The date when facts and circumstances indicate that the

contract is onerous.

Reinsurance contracts are recognised on the
following dates:
• Reinsurance contracts that provide proportionate

coverage: the later of the date on which any underlying
insurance contract is initially recognised and the date
the reinsurance is entered into. This applies to the
Group’s quota share reinsurance contracts.

• Other reinsurance contracts: The beginning of the

coverage period of the group of reinsurance contracts.
However, if the Group recognises an onerous group of
underlying insurance contracts on an earlier date and
the related reinsurance contract was entered into before
that earlier date, then the group of reinsurance
contracts is recognised on that earlier date. This applies
to the Group’s excess of loss and catastrophe cover
reinsurance contracts.

An insurance or reinsurance contract acquired in a
transfer of contracts or a business combination is
recognised on the date of acquisition.

When the contract is recognised, it is added to an existing
group of contracts or, if the contract does not qualify
for inclusion in an existing group, it forms a new group
to which future contracts are added. Groups of
contracts are established on initial recognition and
their composition is not revised once all contracts have
been added to the group.

Insurance contracts are derecognised when the contract
is extinguished, i.e. when the specified obligations expire,
are discharged, or are cancelled.

The Group also derecognises a contract if its terms are
modified in a way that would have changed the
accounting for the contract significantly had the new
terms always existed, in which case a new contract based
on the modified terms is recognised.

(e) Estimate of future cash flows
The estimate of future cash flows is assessed at the level
of groups of contracts and represents the best estimate of
the Group's cost to fulfil a contract incorporating current
estimates of non-financial assumptions. The estimate
allows for all the cash inflows and outflows expected to
occur within the contract boundary. Cash flows are
modelled separately for gross and reinsurance contracts.

(i) Contract boundaries
Cash flows are within the contract boundary if they arise
from substantive rights and obligations that exist during
the reporting period in which the Group can compel the
policyholder to pay premiums or has a substantive
obligation to provide insurance contract services.

A substantive obligation to provide services ends when
the Group has the practical ability to reassess the risks
(insurance and financial risks transferred from the
policyholder, so excluding lapse and expense risks) and
set a price or level of benefits that fully reflects those
reassessed risks for either the particular policyholder
or the portfolio that contains the contract.

Riders, representing add-on provisions to a basic
insurance policy that provide additional benefits to the
policyholder at additional cost, issued together with the
main insurance contracts form part of a single insurance
contract with all of the cash flows within its boundary.

Some insurance contracts issued by the Group provide
policyholders with the option to buy additional insurance
coverage. The Group assesses the practical ability to
reprice such insurance contracts in their entirety to
determine if the option cash flows are within or outside
the insurance contract boundary. As a result of this
assessment, options for which pricing is not guaranteed
are not measured by the Group until they are exercised.

Cash flows are within the boundaries of participating
investment contracts if they result from a substantive
obligation of the Group to deliver cash at a present or
future date.

Cash flows are within the contract boundary of a
reinsurance contract held if they arise from substantive
rights and obligations that exist during the reporting
period in which the Group is compelled to pay amounts
to the reinsurer or has a substantive right to receive
services from the reinsurer.

The contract boundary is reassessed at each reporting
date to include the effect of changes in circumstances
on the Group’s substantive rights and obligations and,
therefore, may change over time. Cash flows outside the
contract boundary relate to future insurance contracts
and are recognised when those contracts meet the
recognition criteria.

(ii) Principal non-financial assumptions
Principal non-financial assumptions used in the
calculation of life insurance and participating investment
contract fulfilment cash flows include those in respect
of annuitant and assurance mortality and future expenses.
Expenses must be directly attributable to fulfilling
insurance contracts, including an allocation of overheads
to the extent that they can be allocated to groups of
contracts in a systematic and rational way.

Principal non-financial assumptions used in the
calculation of the non-life LIC use past claims experience
to project future claims (estimated using a range of
standard actuarial claims projection techniques).

(iii) Financial assumptions
Discount rates
Discounting is applied to the estimate of future cash
flows. The Group uses a bottom-up discount rate for all
life and non-life insurance contracts except for annuities.
A top-down discount rate is applied to annuities to reflect
more appropriately the characteristics of the annuity
liabilities.

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3.27

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Accounting policies

For other contracts where liabilities are subject to lapse
risk or where cash flows depend on underlying asset
performance (such as unit-linked and with-profits), the
characteristics of the liability can be reflected using the
bottom-up method which requires the application of less
judgement.

The change in risk adjustment relating to current or past
service is recognised within insurance revenue in the
income statement. The impact of discounting the risk
adjustment for GMM and PAA contracts is disaggregated
and recognised within net finance expenses from
insurance contracts.

Top-down discount rates
The discount rate is determined from the yield implicit
in the fair value of an appropriate reference portfolio
of assets that reflects the characteristics of the liability.
Adjustments are made for differences between the
reference portfolio and liability cash flows, including an
allowance for defaults which reflects the compensation
a market participant would require for credit risk.

The CSM for annuity contracts is measured using a
locked-in discount rate based on assets expected to be
originated for new business at initial recognition of the
contracts. On subsequent measurement of the fulfilment
cash flows the reference portfolio is based on the assets
held to match the portfolio of liabilities. For recently
written contracts, an adjustment is made to liabilities
where appropriate assets are yet to be sourced.

Bottom-up discount rates
The discount rate is determined as the risk-free yield,
adjusted for differences in liquidity characteristics
between the financial assets used to derive the risk-free
yield and the relevant liability cash flows (known as an
‘illiquidity premium’).

The illiquidity premium is determined as a percentage
of the current spread over the risk-free yield on an
index of covered bonds. The percentage applied reflects
the liquidity characteristics of the liabilities including
the propensity and ability of policyholders to lapse
or surrender their contracts; for example, 100% for
structured settlements where surrenders are not possible,
and 0% for unit-linked contracts where policyholders
can normally immediately surrender their contract for
the unit value. An intermediate percentage is applied
for other types of business.

Inflation assumptions
Future inflation assumptions are treated as a financial
assumption when applied to policyholder benefits or
outsourced maintenance expenses that are contractually
linked to an inflation index.

Presentation of financial assumption changes
The Group recognises the impact of financial assumption
changes in the income statement, except for those that
relate to changes in the variable fee for VFA contracts
which adjust the CSM.

(f) Risk Adjustment
The risk adjustment reflects the compensation required
by the Group to accept the uncertainty about the amount
and timing of future cash flows that arises from non-
financial risk.

The calculation of the risk adjustment is calibrated to
the Group’s pricing and capital allocation framework,
leveraging the Solvency II view of non-financial risk,
considering a lifetime view, and including diversification
between risks.

(g) CSM
The CSM represents a liability for unearned profit
measured at inception and recognised in the income
statement over the life of the contract as insurance and
investment related services are provided to the customer.

For profitable groups of insurance contracts, the CSM is
established to ensure no profit is recognised at inception,
hence it is equal and opposite to the net present value of
the expected cash flows (including initial premiums and
insurance acquisition cash flows) and the risk adjustment.
For groups of gross insurance contracts issued that are
onerous at initial recognition, the CSM is set to nil and
losses are recognised in the income statement. For
reinsurance contracts the CSM is initially recognised at a
value that ensures no gain or loss is recognised but may
be adjusted for loss offsetting as set out in (h).

Subsequently, the CSM is adjusted for:
• Accretion of interest at locked-in discount rates (groups
of GMM contracts only), which is charged to net finance
expenses in the income statement;

• New contracts added to the same group;
• Changes in fulfilment cash flows (including risk

adjustment) that relate to future service;

• For reinsurance contracts held, income recognised in

profit or loss on initial recognition of onerous underlying
contracts and adjustments to the loss recovery
component set out in (h); and
• Currency exchange differences.

Changes in fulfilment cash flows that relate to future
service include:
• Experience variances in premiums received during the
period that relate to services provided from the start of
the current period;

• Changes in expected future cash flows and risk

adjustment on GMM contracts arising from non-
financial assumption changes and experience variances,
measured using locked in financial assumptions;

• Changes in the variable fee and risk adjustment on VFA

contracts arising from financial and non-financial
assumption changes and experience variances, except
where the risk mitigation option is applied; and
• Experience variances in non-distinct investment

components, premium refunds and rights to withdraw
payable in the period.

Changes in fulfilment cash flows that relate to past
or current service do not adjust the CSM and are
recognised immediately in the income statement,
including the following:
• Experience variances in claims and expenses incurred,

which are recognised as the difference between
insurance revenue (expected claims and expenses
incurred) and insurance service expenses (actual claims
and expenses incurred); and

Aviva plc

3.28

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Accounting policies

• Changes in expected future cash flows and risk

adjustment on GMM contracts arising from financial
assumption changes and experience variances, including
changes in cash flows that are contractually linked to an
inflation index, which are recognised in net finance
expenses from insurance contracts.

The balance on the CSM at the end of the period is
available for release to profit or loss.

The amount of CSM recognised in insurance revenue
each period (the CSM amortisation) is determined by
considering, for each group of contracts, coverage units
that reflect the quantity of the benefits provided in
each period and the expected coverage period.

Benefits provided included those arising from both
insurance and investment related services. Investment
related services are only included if the Group is deemed
to be providing a significant investment service when
providing an investment component, or policyholder’s
right to withdraw, that is expected to include an
investment return generated by investment activity
performed by the Group. This includes contracts where
the value of the investment return that the policyholder
benefits from is not directly related to the value of the
underlying investments.

Coverage units are discounted and are updated at each
reporting date to reflect the current best estimate of
service expected to be provided in future periods.

Coverage units for reinsurance contracts held are
typically consistent with the underlying gross contracts,
adjusted for differences in the services provided.

(h) Loss components and loss offsetting
Losses on onerous contracts are recognised immediately
within insurance service expenses in the income statement,
and a loss component is established. Subsequent losses,
and reversals of losses, arising from changes in fulfilment
cash flows that relate to future service adjust the loss
component and are recognised immediately in insurance
service expenses to the extent that a balance remains on
the loss component, after which a CSM will be established.

A variable proportion approach is used to systematically
allocate changes in fulfilment cash flows that relate to
past or current service to the loss component, resulting
in a deduction from the amount of these changes that
is recognised within insurance revenue in the income
statement with an offsetting adjustment to insurance
service expenses. The variable proportion is determined
each reporting date as the proportion of the balance on
the loss component relative to the fulfilment cash flows
for that group of contracts.

A reinsurance loss recovery component is established for a
group of reinsurance contracts that covers a group of
onerous underlying contracts. At initial recognition this is the
amount that the reinsurance CSM has been adjusted as a
result of recognising income to offset losses recognised at
inception on underlying insurance contracts, based on the
percentage of the claims that are recoverable through the
reinsurance.

Subsequently the loss recovery component is adjusted for
changes in the reinsurance fulfilment cash flows that
correspond to change in fulfilment cash flows that relate to
future service for the underlying onerous contracts.

The balance on the loss recovery component
is systematically allocated to the income statement
using a similar approach to loss components.

(i) Investment components and rights to withdraw
Investment components are amounts that are payable
to the policyholder in all circumstances, regardless
of whether an insured event occurs. This typically
includes the account balance on unit-linked and with-
profit contracts, surrender and maturity values on
protection contracts and guaranteed payments on
immediate annuities. Rights to withdraw, which
may include items that are investment components,
are amounts payable to policyholders that do not
represent an additional benefit payable when an
insured event occurs.

This includes, but is not restricted to, maturity values that
are not determined by the occurrence of an insured event,
a policyholder’s rights to receive a surrender value or
refund of premiums on cancellation of a policy, rights to
transfer an amount to another insurance provider and
guaranteed annuity payments on a deferred annuity in
excess of the death benefit payable prior to retirement.
Investment components and rights to withdraw are
excluded from insurance revenue and insurance service
expenses in the income statement.

(j) Insurance acquisition cash flows
Insurance acquisition cash flows are initially deferred on
the balance sheet as an insurance acquisition cash flow
asset and then allocated against groups of insurance
contracts to which they are directly attributable.

This includes instances where insurance acquisition cash
flows are directly attributable to the future renewal of
existing contract groups for some products in the Group’s
non-life business. For contract groups applying PAA, the
Group has chosen not to apply an exemption to recognise
insurance acquisition cash flows as an expense at the
point they are incurred.

Where insurance acquisition cash flows are allocated to
contract groups applying GMM or VFA, they are included
within the measurement of the CSM and recognised in the
income statement over the period which services are
provided to the customer. Insurance acquisition cash
flows allocated to contract groups applying PAA are
recognised in the income statement over the life of the
contract based on the expected timing of incurred claims.

Insurance acquisition cash flow assets are assessed for
impairment where facts and circumstances indicate that
they may be impaired. The Group uses data on customer
retention rates and the profitability of products to identify
such facts and circumstances.

Aviva plc

3.29

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Accounting policies

(N) Non-participating investment contract liabilities
(a) Claims
For non-participating investment contracts with an
account balance, claims reflect the excess of amounts paid
over the account balance released.

(b) Contract liabilities
Non-participating investment contract liabilities are
designated at FVTPL. Under IFRS 9, the Group elects to
recognise the movement in own credit risk through the
income statement in order to eliminate an accounting
mismatch. Deposits collected under non-participating
investment contracts are not accounted for through the
income statement, except for the investment income
attributable to those contracts, but are accounted for
directly through the statement of financial position as an
adjustment to the investment contract liability.

The majority of the Group’s contracts classified as non-
participating investment contracts are unit-linked
contracts and are measured at fair value.

The liability’s fair value is determined using a valuation
technique to provide a reliable estimate of the amount for
which the liability could be transferred in an orderly
transaction between market participants at the measurement
date, subject to a minimum equal to the surrender value. For
unit-linked contracts, the fair value liability is equal to the
current unit fund value, including any unfunded units.

In addition, if required, non-unit reserves are held based on a
discounted cash flow analysis. For non-linked contracts, the
fair value liability is based on a discounted cash flow analysis,
with allowance for risk calibrated to match the market price
for risk.

(O) Reinsurance for non-participating investment
contracts
Reinsurance assets for non-participating investment
contracts includes balances in respect of investment
contracts that are legally reinsurance contracts but do not
meet the definition of a reinsurance contract under IFRS
17 as they principally transfer financial risk. Premiums
payable on these contracts are accounted for directly
through the statement of financial position.

A deposit asset is initially recognised, based on the
consideration paid less any explicitly identified premiums
or fees to be retained by the reinsured. The assets are
subsequently measured at FVTPL.

(P) Goodwill, AVIF and intangible assets
(a) Goodwill
Goodwill represents the excess of the cost of an
acquisition over the fair value of the Group’s share of the
net assets of the acquired subsidiary, associate or joint
venture at the date of acquisition. Goodwill arising on the
Group’s investments in subsidiaries is shown as a separate
asset, while that on associates and joint ventures is
included within the carrying value of those investments.

Goodwill on acquisitions prior to 1 January 2004 (the date
of transition to IFRS) is carried at its book value (original
cost less cumulative amortisation) on that date, less any
impairment subsequently incurred. Goodwill arising
before 1 January 1998 was eliminated against reserves and
has not been reinstated.

Where negative goodwill arises on an acquisition, this is
recognised immediately in the consolidated income
statement.

(b) Acquired value of in-force business (AVIF)
The present value of future profits on a portfolio of long-
term non-participating investment contracts, acquired
either directly or through the purchase of a subsidiary,
is recognised as an asset.

If the AVIF results from the acquisition of an investment
in a joint venture or an associate, it is held within the
carrying amount of that investment. In all cases, the AVIF
is amortised over the useful lifetime of the related
contracts in the portfolio on a systematic basis. The rate
of amortisation is chosen by considering the profile of the
additional value of in-force business acquired and the
expected depletion in its value.

AVIF is reviewed for evidence of impairment, consistent
with reviews conducted for other finite life intangible
assets and impairment tested at product portfolio level
by reference to a projection of future profits arising from
the portfolio.

(c) Intangible assets
Intangible assets consist primarily of contractual
relationships such as access to distribution networks,
customer lists and software.

The economic lives of these are determined by
considering relevant factors such as usage of the asset,
typical product life cycles, potential obsolescence,
maintenance costs, the stability of the industry,
competitive position and the period of control over the
assets. Finite life intangibles are amortised over their
useful lives, which range from three to 30 years, using the
straight-line method.

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.

(d) Impairment testing
For impairment testing, goodwill and intangible assets
with indefinite useful lives have been allocated to cash-
generating units. The carrying amount of goodwill and
intangible assets with indefinite useful lives is reviewed
at least annually or when circumstances or events
indicate there may be uncertainty over this value.
Goodwill and indefinite life intangibles are written
down for impairment where the recoverable amount is
insufficient to support its carrying value. Further details
on goodwill allocation and impairment testing are given
in note 17. Any impairments are charged as expenses in
the income statement.

Aviva plc

3.30

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Accounting policies

(Q) Property and equipment
Owner-occupied properties are carried at their
revalued amounts, and movements are recognised in
other comprehensive income and taken to a separate
reserve within equity. When such properties are sold,
the accumulated revaluation surpluses are transferred
from this reserve to retained earnings.

These properties are depreciated down to their estimated
residual values over their useful lives.

This excludes owner-occupied properties held under
lease arrangements, which are measured at amortised
cost. See accounting policy AB for further information.

All other items classed as property and equipment within
the statement of financial position are carried at historical
cost less accumulated depreciation.

Investment properties under construction are included
within property and equipment until completion, and are
stated at cost less any provision for impairment in their
values until construction is completed or fair value
becomes reliably measurable.

Depreciation is calculated on a straight-line basis to write
down the cost of other assets to their residual values over
their estimated useful lives as follows:

• Properties under construction No depreciation

• Owner-occupied properties,
and related mechanical and
electrical equipment

• Motor vehicles

25 years

Three years, or lease
term (up to useful life)
if longer

• Computer equipment

Three to five years

• Other assets

Three to five years

The assets’ residual values, useful lives and method of
depreciation are reviewed regularly, and at least at each
financial year end, and adjusted if appropriate. Where the
carrying amount of an asset is greater than its estimated
recoverable amount, it is written down immediately to its
recoverable amount.

Gains and losses on disposal of property and equipment
are determined by reference to their carrying amount.

Borrowing costs directly attributable to the acquisition
and construction of property and equipment are
capitalised. All repair and maintenance costs are charged
to the income statement during the financial period in
which they are incurred. The cost of major renovations is
included in the carrying amount of the asset when it is
probable that future economic benefits in excess of the
most recently assessed standard of performance of the
existing asset will flow to the Group and the renovation
replaces an identifiable part of the asset. Major
renovations are depreciated over the remaining useful life
of the related asset.

(R) Investment property
Investment property is held for long-term rental yields
and is not occupied by the Group.

Completed investment property is stated at its fair value,
as assessed by qualified external valuers or by qualified
staff of the Group. Changes in fair values are recorded in
the income statement in net investment income.

As described in accounting policy Q above, investment
properties under construction are included within
property and equipment, and are stated at cost less any
impairment in their values until construction is completed
or fair value becomes reliably measurable.

(S) 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
annually for possible reversal of the impairment.

(T) Recognition and classification of financial assets
Financial assets are measured initially at fair value plus
eligible transaction costs for financial assets held at
amortised cost. Financial assets are subsequently
measured at amortised cost or FVTPL based on a business
model assessment and the extent to which the contractual
cash flows associated with the financial assets are solely
payments of principal and interest (SPPI).

The Group measures financial assets at FVTPL if they do
not meet the SPPI criteria or if they are held within a
business model where they are managed and evaluated on
a fair value basis resulting from the Group’s management
of capital on a regulatory basis.

A financial asset is classified at amortised cost if it is held
within a business model whose objective is to hold assets
to collect contractual cash flows and its contractual terms
give rise to cash flows that are SPPI on the principal
amount outstanding.

On initial recognition, the Group may irrevocably
designate a financial asset at FVTPL if doing so eliminates
or significantly reduces an accounting mismatch that
would otherwise arise. The Group has designated certain
cash balances at FVTPL to reduce an accounting
mismatch when these balances form part of the risk
mitigation for insurance contracts measured under the
VFA and to which the risk mitigation option is applied
under IFRS 17. These cash balances would otherwise be
measured at amortised cost.

The Group measures equity instruments at FVTPL, with
subsequent changes in fair value recognised in the income
statement, as it did not make an irrevocable election on
initial recognition to measure equity instruments at fair
value through other comprehensive income (FVOCI).

Aviva plc

3.31

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Accounting policies

Financial assets are not reclassified subsequent to their
initial recognition unless the Group changes its objectives
for managing those financial assets, in which case all
affected financial assets are reclassified on the first day
of the next reporting period.

(U) Impairment of financial assets
Financial assets held at amortised cost and lease
receivables are in the scope of expected credit loss
requirements under IFRS 9.

This includes financial assets held at amortised cost such
as loans to banks, other loans, and receivables.

Expected credit loss is an unbiased, probability-weighted
estimate of credit losses. It considers all reasonable and
supportable information, including forward looking
economic assumptions and a range of possible outcomes.

Expected credit losses are calculated on either a 12-month
or lifetime basis depending on the extent to which credit
risk has increased significantly since initial recognition,
except where the Group uses the simplified approach to
apply lifetime expected credit losses to trade receivables
that do not contain a significant financing component.

The gross carrying amount of a financial asset is written
off to the extent that there is no reasonable expectation of
recovery. Subsequent recoveries in excess of the financial
asset’s written-down carrying value are credited to the
income statement.

(V) Derecognition, contract modification and offset
of financial assets and financial liabilities
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is
derecognised where:

• The rights to receive cash flows from the asset have

expired;

• The Group retains the right to receive cash flows from
the asset, but has assumed an obligation to pay them in
full without material delay to a third party under a ‘pass-
through’ arrangement; or

• The Group has transferred its rights to receive cash

flows from the asset and has either transferred
substantially all the risks and rewards of the asset, or
has neither transferred nor retained substantially all the
risks and rewards of the asset, but has transferred
control of the asset.

A financial liability is derecognised when the obligation
under the liability is extinguished (that is when the
obligation is discharged, or cancelled or expires). The
difference between the carrying amount extinguished and
the consideration paid is recognised in profit or loss.

If the terms of a financial asset or financial liability
measured at amortised cost are substantially modified,
then the contractual rights to cash flows from the original
financial asset or financial liability are deemed to have
expired or extinguished. The original financial asset or
financial liability is derecognised, and a new financial asset
or financial liability is recognised at fair value.

A financial asset measured at amortised cost is not
derecognised if the contractual terms are not
substantially modified and a modification gain or loss is
recognised in profit or loss.

Financial assets and liabilities are offset, and the net
amount reported in the statement of financial position
when there is a currently enforceable legal right to set off
the recognised amounts and there is the ability and
intention to settle on a net basis, or realise the asset and
settle the liability simultaneously.

(W) Financial investments
The Group classifies financial investments at FVTPL using
the business model assessment as described in accounting
policy T.

The FVTPL category has two subcategories – those that
meet the definition as being held for trading and those
that are held at FVTPL based on the business model
assessment. Fixed maturity securities and equity
securities, which the Group acquires with the intention
to resell in the short term and derivatives are classified
as trading. All other investments are classified as other
than trading.

The fair value of investments is based on the quoted price
within the bid-ask spread that is most representative of
fair value or based on the cash flow models using market
observable inputs or unobservable inputs. Changes in the
fair value of investments are included in the income
statement in the period in which they arise.

Purchases and sales of investments are recognised on the
trade date, which is the date that the Group commits to
purchase or sell the assets, at their fair values.

(X) Derivative financial instruments and hedging
Derivative financial instruments include foreign exchange
contracts, interest rate futures, currency and interest rate
swaps, currency and interest rate options (both written
and purchased) and other financial instruments that
derive their value mainly from underlying interest rates,
foreign exchange rates, credit or equity indices,
commodity values or equity instruments.

All derivatives are initially recognised in the statement of
financial position at their fair value, which usually represents
their cost. They are classified as mandatorily held at FVTPL,
with the method of recognising movements in this value
depending on whether they are designated as hedging
instruments and, if so, the nature of the item being hedged.
Fair values are obtained from quoted market prices or, if
these are not available, by using valuation techniques such as
discounted cash flow models or option pricing models.

All derivatives are carried as assets when the fair values
are positive and as liabilities when the fair values are
negative. Premiums paid for derivatives are recorded as an
asset on the statement of financial position at the date of
purchase, representing their fair value at that date.

Derivative contracts may be traded on an exchange or
over-the-counter (OTC). Exchange-traded derivatives are
standardised and include certain futures and option
contracts. OTC derivative contracts are individually
negotiated between contracting parties and include
forwards, swaps, caps and floors.

Aviva plc

3.32

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Accounting policies

Derivatives are subject to various risks including market,
liquidity and credit risk, similar to those related to the
underlying financial instruments. Many OTC transactions
are contracted and documented under International
Swaps and Derivatives Association master agreements or
their equivalent, which are designed to provide legally
enforceable set-off in the event of default, reducing the
Group’s exposure to credit risk.

The notional or contractual amounts associated with
derivative financial instruments are not recorded as assets
or liabilities on the statement of financial position as they
do not represent the fair value of these transactions.
These amounts are disclosed in note 55(b).

The Group has collateral agreements in place between the
individual Group entities and relevant counterparties.
Accounting policy Z covers collateral, both received and
pledged, in respect of these derivatives.

(a) Interest rate and currency swaps
Interest rate swaps are contractual agreements between
two parties to exchange fixed rate and floating rate
interest by means of periodic payments, calculated on a
specified notional amount and defined interest rates. Most
interest rate swap payments are netted against each
other, with the difference between the fixed and floating
rate interest payments paid by one party. Currency swaps,
in their simplest form, are contractual agreements that
involve the exchange of both periodic and final amounts in
two different currencies.

Both types of swap contracts may include the net
exchange of principal. Exposure to gain or loss on these
contracts will increase or decrease over their respective
lives as a function of maturity dates, interest and foreign
exchange rates, and the timing of payments.

(b) Interest rate futures, forwards and options contracts
Interest rate futures are exchange-traded instruments
and represent commitments to purchase or sell a
designated security or money market instrument at a
specified future date and price.

Interest rate forward agreements are OTC contracts in
which two parties agree on an interest rate and other
terms that will become a reference point in determining,
in concert with an agreed notional principal amount, a net
payment to be made by one party to the other, depending
upon what rate prevails at a future point in time.

Interest rate options, which consist primarily of caps and
floors, are interest rate protection instruments that
involve the potential obligation of the seller to pay the
buyer an interest rate differential in exchange for a
premium paid by the buyer.

This differential represents the difference between
current rate and an agreed rate applied to a notional
amount. Exposure to gain or loss on all interest rate
contracts will increase or decrease over their respective
lives as interest rates fluctuate. Certain contracts, known
as swaptions, contain features which can act as swaps
or options.

(c) Foreign exchange contracts
Foreign exchange contracts, which include spot, forward
and futures contracts, represent agreements to exchange
the currency of one country for the currency of another
country at an agreed price and settlement date.

Foreign exchange option contracts are similar to interest
rate option contracts, except that they are based on
currencies, rather than interest rates.

(d) Hedge accounting
Hedge accounting is applied to certain transactions of
the Group so that the financial statements represent the
impact of the Group’s hedging strategies for currency risk.
The Group has applied the IFRS 9 hedge accounting
requirements from 1 January 2023.

Hedge accounting can be applied only if all the following
criteria are met:
• The hedge relationship consists only of eligible hedging

instruments and hedged items;

• There is formal designation and documentation of the

hedging relationship and the risk management objective
and the risk management strategy; and

• The hedge relationship meets the hedge effectiveness

requirements.

The Group applies hedge accounting by using net
investment hedges to hedge the currency risk arising
from our foreign operations (hedged item) against foreign
currency borrowings (hedging instrument). Cash flow
hedging is also used to hedge currency risk arising from
the expected sale of Aviva Singapore. Changes in the fair
value of the hedging instrument is recognised in other
comprehensive income in a separate reserve within
equity to the extent that it is effective. Gains and losses
accumulated in this reserve are transferred to the income
statement on disposal or part-disposal of the foreign
operation.

For derivative transactions where hedge accounting is not
applied, the fair value gains and losses on these derivatives
are recognised immediately in net investment income.

Prior to 1 January 2023, hedge accounting was applied to
certain transactions which met the criteria set out in
IAS 39.

At the inception of the transaction, the Group
documented the relationship between the hedging
instrument and the hedged item, as well as the risk
management objective and the strategy for undertaking
the hedge transaction. The Group also documented its
assessment of whether the hedge was expected to be
highly effective in offsetting the risk in the hedged item
and whether it was actually effective, both at inception
and on an ongoing basis. Changes in the fair value of
hedging instruments that were designated as a net
investment hedge were recognised in other
comprehensive income in a separate reserve within
equity. The Group did not apply the hedge accounting
rules to its derivative translations during 2022.

Aviva plc

3.33

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Accounting policies

(Y) Loans
Loans with fixed maturities, mortgage loans on
investment property, securitised mortgages and
collateral loans, are recognised when cash is advanced
to borrowers. Certain loans are carried at their unpaid
principal balances and adjusted for amortisation of
premium or discount, non-refundable loan fees and
related direct costs. These amounts are deferred and
amortised over the life of the loan as an adjustment to
loan yield using the effective interest rate method.

As described in accounting policy T, loans are classified
and measured at either amortised cost or FVTPL based on
the outcome of an assessment of the business model for
managing financial assets and the extent to which the
financial assets’ contractual cash flows are solely payment
of principal and interest.

The majority of mortgage loans are measured at fair value
since they’re managed and evaluated on a fair value basis.
The fair values of these mortgages are estimated using
discounted cash flow models, based on a risk-adjusted
discount rate which reflects the risks associated with
these products. They are revalued at each period end,
with movements in their fair values being taken to the
income statement.

The impairment policy is described in accounting policy U
for loans measured at amortised cost.

(Z) 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.

Collateral received in the form of cash, which is not
legally segregated from the Group, is recognised as an
asset in the statement of financial position with a
corresponding liability for the repayment in financial
liabilities (see note 56). However, where the Group has
a currently enforceable legal right of set-off and the
ability and intent to settle net, the collateral liability and
associated derivative balances are shown net. Non-cash
collateral received is not recognised in the statement
of financial position unless the transfer of the collateral
meets the derecognition criteria from the perspective
of the transferor.

Such collateral is typically recognised when the Group
either (a) sells or repledges these assets in the absence of
default, at which point the obligation to return this
collateral is recognised as a liability; or (b) the
counterparty to the arrangement defaults, at which point
the collateral is seized and recognised as an asset.

Collateral pledged in the form of cash, which is legally
segregated from the Group, is derecognised from the
statement of financial position with a corresponding
receivable recognised for its return. Non-cash collateral
pledged is not derecognised from the statement of
financial position unless the Group defaults on its
obligations under the relevant agreement, and therefore
continues to be recognised in the statement of financial
position within the appropriate asset classification.

(AA) Deferred acquisition costs for non-
participating investment contracts and other assets
For non-participating investment and investment fund
management contracts, incremental acquisition costs
and sales enhancements that are directly attributable to
securing an investment management service are deferred.

These deferred acquisition costs are amortised over the
period in which the service is provided.

Deferred acquisition costs are reviewed by category
of business at the end of each reporting period and are
written-off where they are no longer considered to be
recoverable.

Other receivables and payables are initially recognised at
cost, being fair value. Subsequent to initial measurement
they are measured at amortised cost.

(AB) Leases
Where the Group is the lessee, a lease liability equal to
the present value of outstanding lease payments and a
corresponding right-of-use asset equal to cost are initially
recognised.

The right-of-use asset is subsequently measured at
amortised cost and depreciated on a straight-line basis
over the length of the lease term. Depreciation on lease
assets and interest on lease liabilities is recognised in the
income statement.

The Group has made use of the election available under
IFRS 16 to not recognise any amounts on the balance
sheet associated with leases that are either deemed to be
short term, or where the underlying asset is of low value.
A short-term lease in this context is defined as any
arrangement which has a lease term of 12 months or less.
Lease payments associated with such arrangements are
recognised in the income statement as an expense on a
straight-line basis. The Group’s total short term and low
value lease portfolio is not material.

Where the Group is the lessor, leases are classified
as finance leases if the risks and rewards of ownership
are substantially transferred to the lessee and operating
leases if they are not substantially transferred. Lease
income from operating leases is recognised in the income
statement on a straight-line basis over the lease term.
When assets are subject to finance leases, the present
value of the lease payments, together with any unguaranteed
residual value, is recognised as a receivable. The Group
has not entered into any material finance lease
arrangements as lessor.

Aviva plc

3.34

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Accounting policies

(AC) Provisions and contingent liabilities
Provisions are recognised when the Group has a present
legal or constructive obligation as a result of past events,
it is more probable than not that an outflow of resources
embodying economic benefits will be required to settle
the obligation, and a reliable estimate of the amount of the
obligation can be made.

The Group recognises provisions under a variety of
circumstances including for product governance
rectification, which may include customer redress, and
for onerous contracts when the expected benefits to be
derived from a contract are less than the unavoidable
costs of meeting the obligations under the contract.

The amount recorded as a provision is the best estimate
of the expenditure required to settle the present obligation
at the balance sheet date. Discounting is applied to the
provision where the effect of the time value of money
is material. Provisions are not recognised for future
operating losses.

Restructuring provisions are recognised when the
Group has a detailed formal plan and has raised a valid
expectation that the restructure will be carried out,
for example by announcing its main features to those
affected. Costs included in restructuring provisions
comprise only the direct expenditures arising from the
restructuring. Costs associated with the ongoing
activities of the entity are excluded.

Where the Group expects a provision to be reimbursed, for
example under an insurance contract, the reimbursement
is recognised as a separate asset but only when the
reimbursement is virtually certain.

Contingent liabilities are disclosed if there is a possible
future obligation as a result of a past event, or if there
is a present obligation as a result of a past event but either
a payment is not probable or the amount cannot be
reasonably estimated.

(AD) Employee benefits
(a) Pension obligations
The Group operates a number of pension schemes, whose
members receive benefits on either a defined benefit or
defined contribution basis. Under a defined contribution
plan, the Group’s legal or constructive obligation is limited
to the amount it agrees to contribute to a fund and there
is no obligation to pay further contributions if the fund
does not hold sufficient assets to pay benefits.

A defined benefit pension plan is a pension plan that is
not a defined contribution plan and typically defines the
amount of pension benefit that an employee will receive
on retirement.

The defined benefit obligation is calculated by
independent actuaries using the projected unit credit
method. The pension obligation is measured as the
present value of the estimated future cash outflows, using
a discount rate based on market yields for high-quality
corporate bonds that are denominated in the currency in
which the benefits will be paid and that have durations
approximating to the terms of the related pension liability.

The resultant net surplus or deficit recognised as an asset
or liability on the statement of financial position is the fair
value of plan assets less the present value of the defined
benefit obligation at the end of the reporting period.

Plan assets exclude unpaid contributions due from Group
entities to the schemes, and any non-transferrable
financial instruments issued by a Group entity and held
by the schemes. If the fair value of plan assets exceeds
the present value of the defined benefit obligation, the
resultant asset is limited to the asset ceiling defined as
present value of economic benefits available in the
form of future refunds from the plan or reductions in
contributions to the plan. In order to calculate the present
value of economic benefits, consideration is given to any
minimum funding requirements that apply to any plan in
the Group.

Remeasurements of defined benefit plans comprise
actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions, the
return on plan assets (excluding net interest) and the
effect of the asset ceiling (if any). The Group recognises
remeasurements immediately in other comprehensive
income and does not reclassify them to the income
statement in subsequent periods.

Service costs comprising current service costs, past
service costs, gains and losses on curtailments and net
interest expense/income are charged or credited to the
income statement.

Past service costs are recognised at the earlier of the date
the plan amendment or curtailment occurs or when
related restructuring costs are recognised.

The Group determines the net interest expense/income
on the net defined benefit liability/asset for the period by
applying the discount rate used to measure the defined
benefit obligation at the beginning of the year to the net
defined benefit liability/asset. Net interest expense is
charged to finance costs, whereas net interest income is
credited to investment income.

For defined contribution plans, the Group pays
contributions to publicly or privately administered
pension plans. Once the contributions have been paid,
the Group, as employer, has no further payment
obligations. The Group’s contributions are charged to
the income statement in the year to which they relate
and are included in staff costs.

(b) Equity compensation plans
The Group offers share award and option plans over
the Company’s ordinary shares for certain employees,
including a Save As You Earn plan (SAYE plan), details of
which are given in the Directors’ Remuneration Report
and in note 33.

The Group accounts for options and awards under
equity compensation plans, which were granted after
7 November 2002, until such time as they are fully vested,
using the fair value based method of accounting (the ‘fair
value method’).

Aviva plc

3.35

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Accounting policies

Under this method, the cost of providing equity
compensation plans is based on the fair value of the
share awards or option plans at date of grant, which is
recognised in the income statement over the expected
vesting period of the related employees and credited to
the equity compensation reserve, part of shareholders’
funds. In certain jurisdictions, awards must be settled in
cash instead of shares, and the credit is taken to liabilities
rather than reserves. The fair value of these cash-settled
awards is recalculated each year, with the income
statement charge and liability being adjusted accordingly.

Shares purchased by employee share trusts to fund these
awards are shown as deduction from shareholders’ equity
at their weighted average cost.

When the options are exercised and new shares are
issued, the proceeds received, net of any transaction
costs, are credited to share capital (par value) and the
balance to share premium.

Where the shares are already held by employee trusts,
the net proceeds are credited against the cost of these
shares, with the difference between cost and proceeds
being taken to retained earnings. In both cases, the
relevant amount in the equity compensation reserve
is then credited to retained earnings.

(AE) Income taxes
The current tax expense is based on the taxable profits
for the year, after any adjustments in respect of prior
years. Tax, including tax relief for losses if applicable,
is allocated over profits before taxation and amounts
charged or credited to components of other
comprehensive income and equity, as appropriate.

Provision is made for deferred tax liabilities, or credit
taken for deferred tax assets, using the liability method,
on all material temporary differences between the tax
bases of assets and liabilities and their carrying amounts
in the consolidated financial statements.

The rates enacted or substantively enacted at the
statement of financial position date are used to value the
deferred tax assets and liabilities.

Deferred tax assets are recognised to the extent that it is
probable that future taxable profit will be available against
which the temporary differences can be utilised. Where
there is a history of tax losses, deferred tax assets are only
recognised in excess of deferred tax liabilities if there is
convincing evidence that future profits will be available.

Deferred tax is provided on any temporary differences
arising from investments in subsidiaries, associates and
joint ventures, except where the timing of the reversal of
the temporary difference can be controlled and it is
probable that the difference will not reverse in the
foreseeable future.

Deferred taxes are not provided in respect of temporary
differences arising from the initial recognition of goodwill,
or from the initial recognition of an asset or liability in a
transaction which is not a business combination and
affects neither accounting profit nor taxable profit or loss
at the time of the transaction.

Current and deferred tax relating to items recognised in
other comprehensive income and directly in equity are
similarly recognised in other comprehensive income and
directly in equity respectively.

Current and deferred tax includes amounts provided
in respect of uncertain tax positions, where management
expects it is more likely than not that an economic
outflow will occur as a result of examination by a relevant
tax authority. Provisions reflect management’s best
estimate of the ultimate liability based on their
interpretation of tax law, precedent and guidance,
informed by external tax advice as necessary. The final
amounts of tax due may ultimately differ from
management’s best estimate at the balance sheet date.
Changes in facts and circumstances underlying these
provisions are reassessed at each balance sheet date,
and the provisions are re-measured as required to reflect
current information.

In addition to paying tax on shareholders’ profits
(‘shareholder tax’), the Group’s life businesses in the
UK, Ireland and Singapore pay tax on policyholders’
investment returns (‘policyholder tax’) on certain products
at policyholder tax rates. The incremental tax borne by
the Group represents income tax on policyholder’s
investment return.

In jurisdictions where policyholder tax is applicable,
the total tax charge in the income statement is allocated
between shareholder tax and policyholder tax. The shareholder
tax is calculated by applying the corporate tax rate to
the shareholder profit. The difference between the total
tax charge and shareholder tax is allocated to policyholder
tax. This calculation methodology is consistent with the
legislation relating to the calculation of tax on shareholder
profits.

The Group has decided to show separately the amounts
of policyholder tax to provide a meaningful measure of
the tax the Group pays on its profit. In the pro forma
reconciliations, the Group adjusted operating profit has
been calculated after charging policyholder tax.

(AF) Borrowings
Borrowings are classified as being for either core
structural or operational purposes. They are recognised
initially at their issue proceeds less transaction costs
incurred. Subsequently, most borrowings are stated at
amortised cost and any difference between net proceeds
and the redemption value is recognised in the income
statement over the period of the borrowings using the
effective interest rate method. All borrowing costs are
expensed as they are incurred except where they are
directly attributable to the acquisition or construction
of property and equipment as described in accounting
policy Q.

Where loan notes have been issued in connection with
certain securitised mortgage loans, the Group has taken
advantage of the fair value option under IFRS 9 to present
them at fair value to eliminate any accounting mismatch
which would otherwise arise from using different
measurement bases for these items and the associated
mortgages and derivative financial instruments.

Aviva plc

3.36

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

(AI) Earnings per share
Basic earnings per share is calculated by dividing net
income available to ordinary shareholders by the weighted
average number of ordinary shares in issue during the
year, excluding the weighted average number of treasury
shares.

Earnings per share has also been calculated on Group
adjusted operating profit attributable to ordinary
shareholders, net of tax, non-controlling interests,
preference dividends and coupon payments on the direct
capital instrument (DCI) as the directors believe this
figure provides a better indication of operating
performance. Details are given in note 15.

For the diluted earnings per share, the weighted average
number of ordinary shares in issue is adjusted to assume
conversion of all dilutive potential ordinary shares, such
as convertible debt and share options granted to
employees.

Potential or contingent share issuances are treated as
dilutive when their conversion to shares would decrease
net earnings per share.components;

Accounting policies

The Group elects to recognise the amount of change in
the fair value of borrowings attributable to changes in
credit risk in the income statement, as the alternative of
recognising the impact in other comprehensive income
would create an accounting mismatch.

(AG) Share capital and treasury shares
(a) Equity instruments
An equity instrument is a contract that evidences a
residual interest in the assets of an entity after deducting
all its liabilities. Accordingly, a financial instrument is
treated as equity if:
• There is no contractual obligation to deliver cash or

other financial assets or to exchange financial assets or
liabilities on terms that may be unfavourable; and
• The instrument is a non-derivative that contains no

contractual obligation to deliver a variable number of
shares or is a derivative that will be settled only by the
Group exchanging a fixed amount of cash or other assets
for a fixed number of the Group’s own equity
instruments.

(b) Share issue costs
Incremental external costs directly attributable to the
issue of new shares are shown in equity as a deduction,
net of tax, from the proceeds of the issue and disclosed
where material.

(c) Dividends
Interim dividends on ordinary shares are recognised in
equity in the period in which they are paid. Final dividends
on these shares are recognised when they have been
approved by shareholders. Dividends on preference
shares are recognised in the period in which they are
declared and appropriately approved.

(d) Treasury shares
Where the Company or its subsidiaries purchase the
Company’s share capital or obtain rights to purchase
its share capital, the consideration paid (including any
attributable transaction costs net of income taxes) is
shown as a deduction from total shareholders’ equity.
Gains and losses on own shares are charged or credited
to the treasury share account in equity.

(AH) Fiduciary activities
Assets and income arising from fiduciary activities,
together with related undertakings to return such
assets to customers, are excluded from these financial
statements where the Group has no contractual rights
in the assets and acts in a fiduciary capacity such as
nominee, trustee or agent.

Aviva plc

3.37

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Consolidated income statement

For the year ended 31 December 2023

Insurance revenue
Insurance service expense
Net expense from reinsurance contracts

Insurance service result
Investment return
Net finance (expense)/income from insurance contracts and participating investment contracts
Net finance income/(expense) from reinsurance contracts
Movement in non-participating investment contract liabilities
Investment (expense)/income attributable to unitholders

Net financial result
Fee and commission income
Share of (loss)/profit after tax of joint ventures and associates
Other operating expenses
Other net foreign exchange gains/(losses)
Other finance costs
Profit/(loss) before tax
Tax attributable to policyholders’ returns
Profit/(loss) before tax attributable to shareholders’ profits

Tax (expense)/credit
Less: tax attributable to policyholders’ returns

Tax attributable to shareholders’ profits
Profit/(loss) for the year

Attributable to:
Equity holders of Aviva plc
Non-controlling interests
Profit/(loss) for the year

Earnings per share
Basic (pence per share)
Diluted (pence per share)
1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

Note

2023
£m

Restated1
2022
£m

641

18,497
(16,217)
(761)
1,519
22,380

(13,558)
(861)
1,374
1,309

16,889
(15,505)
(383)
1,001
(37,669)
(7,228) 24,499
(2,123)
12,462
531
(2,300)
1,314
8
(1,719)
(73)
(470)
(2,239)
764
(1,475)
1,209
(764)
445
(1,030)

(71)
(2,108)
146
(479)
1,690
(249)
1,441
(584)
249
(335)
1,106

1,085
21
1,106

(1,051)
21
(1,030)

37.7
37.2

(34.7)
(34.7)

6
7

The above consolidated income statement should be read in conjunction with the accounting policies and accompanying
notes to the financial statements.

Aviva plc

3.38

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Consolidated statement of comprehensive income

For the year ended 31 December 2023

Profit/(loss) for the year
Other comprehensive income:
Items that may be reclassified subsequently to income statement

Note

2023
£m

Restated1
2022
£m

1,106

(1,030)

Share of other comprehensive loss of joint ventures and associates
Foreign exchange rate movements
Aggregate tax effect – shareholder tax on items that may be reclassified subsequently to income statement

14(b)

—
(86)
(2)

(38)
119
6

Items that will not be reclassified to income statement

Remeasurements of pension schemes
Aggregate tax effect – shareholder tax on items that will not be reclassified subsequently to income
statement

Total other comprehensive loss, net of tax

Total comprehensive income/(loss) for the year

Attributable to:
Equity holders of Aviva plc
Non-controlling interests
Total comprehensive income/(loss) for the year

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

46(b)(i)

(495)

(1,542)

14(b)

122

412

(461)

(1,043)

645

(2,073)

627
18
645

(2,086)
13
(2,073)

The above consolidated statement of comprehensive income should be read in conjunction with the accounting policies
and accompanying notes to the financial statements.

Aviva plc

3.39

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Reconciliation of Group adjusted operating profit to profit/(loss) for the year

For the year ended 31 December 2023

Group adjusted operating profit before tax attributable to shareholders' profits
Adjusted for the following:

Investment variances and economic assumptions
Impairment of goodwill, joint ventures, associates and other amounts expensed
Amortisation and impairment of intangibles acquired in business combinations
Amortisation and impairment of acquired value of in-force business
Integration and restructuring costs2
Other3

Adjusting items before tax
Profit/(loss) before tax attributable to shareholders' profits

Tax on Group adjusted operating profit
Tax on other activities

Tax attributable to shareholders' profits
Profit/(loss) for the year

Note

10
17, 19, 20
18
18

2023

£m

Restated1
2022

£m

1,467

1,350

322
—
(52)
(59)
(61)
(176)
(26)

1,441
(289)
(46)
(335)
1,106

(2,736)
(8)
(54)
(68)
—
41
(2,825)
(1,475)
(178)
623
445
(1,030)

1. The 2022 comparative results have been restated following the adoption of IFRS 17 and for methodology changes described in note 1.
2. Integration and restructuring costs of £61 million have been incurred during 2023 in relation to extension to our key strategic partnerships with Diligenta and FNZ to simplify our operations and

support our growth ambitions, with further changes improving how we serve our customers. See note 8 for more information.

3. Other in 2023 primarily includes £92 million of fees paid to bondholders in respect of modification to the terms and conditions of the Group's Tier 2 Fixed to Floating notes, and charges of £71 million
relating to our historic divestments. Other in 2022 primarily includes £77 million negative goodwill on the acquisition of Aviva India partially offset by £15 million charge associated with reinsurance
accepted from the former Aviva France general insurance entity and charges in relation to our historic divestments, share buybacks and acquisitions in the period.

The above reconciliation of group adjusted operating profit to profit/(loss) for the year should be read in conjunction
with the accounting policies and accompanying notes to the financial statements.

Aviva plc

3.40

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Consolidated statement of changes in equity

For the year ended 31 December 2023

Balance at 1 January
Profit for the year
Other comprehensive loss

Total comprehensive (loss)/income for the year
Dividends and appropriations
Shares purchased in buyback
Capital reductions
Non-controlling interests share of dividends
declared in the year
Reserves credit for equity compensation plans
Shares purchased under equity compensation
plans
Non-controlling interests in acquired subsidiaries
Changes in non-controlling interests in
subsidiaries
Issue of tier 1 notes
Return of capital to ordinary shareholders via B
share scheme
Balance at 31 December

Ordinary
share
capital
Note 32
£m

924
—
—
—
—

(24)

—

Preference
share
capital

Capital
reserves¹
Note 35 Notes 37
£m

£m

Treasury
shares
Note 34
£m

Other
reserves
Note 38
£m

Retained
earnings
Note 37
£m

Tier 1
notes
Note 36
£m

Total equity
excluding
non-
controlling
interests
£m

Non-
controlling
interests
Note 39
£m

Total
equity
£m

(85) 355
—

200
—
—
—
—
—
—

10,342
—
—
—
—
24

—
—
—
—
—
(5,108) —

(2,328) 496
—
1,085
(373) —
—
(929) —
(300) —
—

5,108

712

(85)
(85)

—
—
—

9,904
1,085
(458)
627
(929)
(300)
—

—

(2)

(52)

(35) —

(81)

—

310
21
(3)
18
—
—
—

10,214
1,106
(461)
645
(929)
(300)
—

(21)

—

(81)

—

901

200

5,265

(87) 279

2,228

496

9,282

318

9,600

1. Capital reserves consist of share premium of £17 million, a capital redemption reserve of £24 million and a merger reserve of £5,224 million

For the year ended 31 December 2022 - restated1

31 December 2021 as previously reported
Total change relating to IFRS 17 transition
Prior period correction for with-profits funds
Balance at 1 January 2022 restated for transition
to IFRS 17 and prior period correction

(Loss)/profit for the year
Other comprehensive income/(loss)

Total comprehensive income/(loss) for the year
Dividends and appropriations
Shares purchased in buyback
Capital reductions
Non-controlling interests share of dividends
declared in the year
Reserves credit for equity compensation plans
Shares purchased under equity compensation
plans
Non-controlling interests in acquired subsidiaries
Changes in non-controlling interests in
subsidiaries
Issue of tier 1 notes
Return of capital to ordinary shareholders via B
share scheme
Balance at 31 December

Ordinary
share
capital

Note 32

Preference
share
capital
Note 35

Capital
reserves2
Notes 37

Treasury
shares
Note 34

Other
reserves
Note 38

Retained
earnings
Note 37

Tier 1
notes
Note 36

£m

Total equity
excluding
non-
controlling
interests
£m

Non-
controlling
interests
Note 39

£m

Total
equity
£m

941
—
—

200 10,308

(51) 248 7,556 —
— — — — (2,523) —
(241) —
— — — —

19,202
(2,523)
(241)

252 19,454
— (2,523)
(241)
—

941

200 10,308

(51) 248 4,792 —

16,438

252 16,690

—
—

—
—
(19)
—

— — — — (1,051) —
95 (1,130) —
— — —

95 (2,181) —
— — —
(862) —
— — — —
—
(336) —
19 — —
— — — — — —

(1,051)
(1,035)

(2,086)
(862)
(336)
—

—

— — — — — —

—

— — —

58 — —

—

(34)

(46)

9 —

—

— — — — — —

—

(54)

—

— — — — — —

—

— — — — — 496

496

21 (1,030)
(8) (1,043)

13 (2,073)
(862)
—
(336)
—
—
—

(21)

—

(21)

—

(54)

—

496

—

— — — — (3,750) —

(3,750)

— (3,750)

924

200 10,342

(85) 355 (2,328) 496

9,904

310 10,214

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).
2. Capital reserves consist of share premium of £1,263 million, a capital redemption reserve of £3,855 million and a merger reserve of £5,224 million

The above consolidated statement of changes in equity should be read in conjunction with the accounting policies and
accompanying notes to the financial statements.

Aviva plc

3.41

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Consolidated statement of financial position

As at 31 December 2023

Note

2023
£m

Restated1
2022
£m

Restated1
1 January
2022
£m

2,100
17
968
18
1,189
19
160
20
424
21
22
6,232
25 31,685
28 245,831
7,704
40
4,713
41
958
44
44
95
3,721
29
788
30
862
31
3,392
17,273
748
328,843

31
53
3

1,741
2,102
994
940
1,784
1,872
118
41
428
350
7,003
5,899
29,633
38,611
224,086 264,961
8,190
5,122
525
170
3,740
892
2,769
2,391
12,485
—
309,583 351,924

6,760
5,290
1,382
336
3,480
851
1,234
2,822
22,505
—

32
35

37
37
37

34
38
37

901
200
1,101
17
24
5,224
5,265

(87)
279
2,228
8,786
496
9,282
318
9,600

924
200
1,124
1,263
3,855
5,224
10,342
(85)
355
(2,328)
9,408
496
9,904
310
10,214

941
200
1,141
1,248
86
8,974
10,308
(51)
248
4,792
16,438
—
16,438
252
16,690

40
41

45
44
44
47
48
49

121,875
158,588
14,184
795
453
15
6,374
13,670
3,289
319,243

117,561
141,188
14,080
724
703
40
6,755
15,751
2,567

143,418
151,295
16,427
1,001
1,466
35
7,344
11,703
2,545
299,369 335,234

328,843

309,583 351,924

Assets
Goodwill
Acquired value of in-force business and intangible assets
Interests in, and loans to, joint ventures
Interests in, and loans to, associates
Property and equipment
Investment property
Loans
Financial investments
Reinsurance contract assets
Reinsurance assets for non-participating investment contracts
Deferred tax assets
Current tax assets
Receivables
Deferred acquisition costs on non-participating investment contracts
Pension surpluses and other assets
Prepayments and accrued income
Cash and cash equivalents
Assets of operations classified as held for sale
Total assets
Equity

Ordinary share capital
Preference share capital

Capital

Share premium
Capital redemption reserve
Merger reserve

Capital reserves
Treasury shares
Other reserves
Retained earnings
Equity attributable to shareholders of Aviva plc
Tier 1 notes
Equity excluding non-controlling interests
Non-controlling interests
Total equity
Liabilities
Insurance contract and participating investment contract liabilities
Non-participating investment contract liabilities
Net asset value attributable to unitholders
Pension deficits and other provisions
Deferred tax liabilities
Current tax liabilities
Borrowings
Payables and other financial liabilities
Other liabilities
Total liabilities

Total equity and liabilities

1. The 2022 comparative amounts have been restated from those previously published (see note 1).

Approved by the Board on 6 March 2024

Charlotte Jones
Chief Financial Officer

Company number: 02468686

The above consolidated statement of financial position should be read in conjunction with the accounting policies and
accompanying notes to the financial statements.

Aviva plc

3.42

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Consolidated statement of cash flows

For the year ended 31 December 2023

The cash flows presented in this statement cover all the Group’s activities and include flows from both policyholder
and shareholder activities. All cash and cash equivalents are available for use by the Group.

Cash flows from operating activities
Cash (used in)/generated from operating activities1
Tax paid
Total net cash (used in)/generated from operating activities
Cash flows from investing activities
Acquisitions of, and additions to, subsidiaries, joint ventures and associates, net of cash acquired
Purchases of property and equipment
Proceeds on sale of property and equipment
Purchases of intangible assets
Total net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of ordinary shares
Return of capital to ordinary shareholders via B share scheme
Shares purchased in buyback
Treasury shares purchased for employee trusts
New borrowings drawn down, net of expenses
Repayment of borrowings2
Net repayment of borrowings
Interest paid on borrowings
Repayment of leases
Preference dividends paid
Ordinary dividends paid
Capital contributions from non-controlling interests of subsidiaries
Coupon payments on tier 1 notes
Issue of tier 1 notes3
Dividends paid to non-controlling interests of subsidiaries
Total net cash used in financing activities
Total net (decrease)/drawn down in cash and cash equivalents
Cash and cash equivalents at 1 January
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at 31 December

Note

53(a)

53(b)

32
32
32

16
16

16
36

2023
£m

2022
£m

(2,664)
(68)
(2,732)

16,093
(210)
15,883

—
(149)
—
(201)
(350)

8
—
(300)
(76)
941
(1,181)
(240)
(206)
(62)
(17)
(878)
6
(34)
—
(21)
(1,820)
(4,902)

(275)
(16)
35
(83)
(339)

17
(3,750)
(336)
(75)
659
(1,554)
(895)
(450)
(63)
(17)
(828)
—
(17)
496
(21)
(5,939)
9,605
11,878
93
21,576

21,576

(22)

53(c)

16,652

1. Cash flows from operating activities include interest received of £5,560 million (2022: £4,335 million ) and dividends received of £3,999 million (2022: £4,347 million ). Cash flows from operating
activities in 2022 include disinvestment from financial investments ahead of the return of capital to ordinary shareholders in 2022. This activity is reflected as an increase in cash generated from
operating activities in 2022.

2. Repayment of borrowings includes the redemption of £531 million (2022: £1,002 million) subordinated debt and senior notes.
3. On 15 June 2022, the Group issued £500 million of 6.875% fixed rate reset perpetual restricted tier 1 contingent convertible notes (the RT1 Notes).

The above consolidated statement of cash flows should be read in conjunction with the accounting policies and
accompanying notes to the financial statements.

Aviva plc

3.43

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

1 - Changes to comparative amounts
Changes to comparative amounts impact the 1 January 2022 opening statement of financial position, the income
statement for the year ended 31 December 2022 and the statement of financial position at 31 December 2022.

(a) Changes to 1 January 2022 opening statement of financial position
The financial impacts on transition to IFRS 17 and IFRS 9 and a prior period correction for with-profits funds in respect of
a historic accounting issue are summarised in the table below, with further explanation in note 1(a)(i) and note 1(a)(ii).

31 December
2021
As
previously
reported
£m

Reclassification
and
derecognition
£m

IFRS 17
measurement
£m

Total change
relating to
IFRS 17
transition
£m

1 January
2022
Restated for
transition to
IFRS 17
£m

Prior period
correction
for with-
profits funds
£m

1 January
2022
Restated for
transition to
IFRS 17 and
prior period
correction
£m

1,741
1,950
1,855
118
428
7,003
38,624
264,961
15,032

Deferred tax assets
Current tax assets
Receivables
Deferred acquisition costs on non-participating
investment contracts

Pension surpluses and other assets
Prepayments and accrued income
Cash and cash equivalents
Total assets
Equity

Ordinary share capital
Preference share capital

Capital

Share premium
Capital redemption reserve
Merger reserve

Capital reserves
Treasury shares
Currency translation reserve
Other reserves
Retained earnings
Equity attributable to shareholders of Aviva plc
Non-controlling interests
Total equity
Liabilities
Insurance contract and participating investment contract
liabilities (formerly gross insurance liabilities)
Non-participating investment contract liabilities
(formerly gross liabilities for investment contracts)

Unallocated divisible surplus
Net asset value attributable to unitholders
Pension deficits and other provisions
Deferred tax liabilities
Current tax liabilities
Borrowings
Payables and other financial liabilities
Other liabilities
Total liabilities

—
(956)
—
—
—
—
(13)
—
(5,122)

—
—
(71)
—
—
—
—
—
(1,753)

1,741
—
994
(956)
1,784
(71)
118
—
428
—
7,003
—
(13)
38,611
— 264,961
8,157

(6,875)

N/A

5,122

—

5,122

349
—
—

349
—
(2,348)

487
170
3,740

1,741
—
994
—
1,784
—
118
—
428
—
7,003
—
—
38,611
— 264,961
8,190
33

—

38
—
—

5,122

525
170
3,740

—

(1,829)

892

—

892

—
—
—
(1,475)

—
—
—

2,769
2,391
12,485
(6,621) 351,853

—
2,769
—
2,391
12,485
—
71 351,924

138
170
6,088

2,721

2,769
2,391
12,485
358,474

—
—
(2,348)

(1,829)

—
—
—
(5,146)

941
200
1,141
1,248
86
8,974
10,308
(51)
314
(66)
7,556
19,202
252
19,454

—
—
—
—
—
—
—
—
—
—
253
253
—
253

—
—
—
—
—
—
—
—
—
—
(2,776)
(2,776)
—
(2,776)

—
—
—
—
—
—
—
—
—
—
(2,523)
(2,523)
—
(2,523)

941
200
1,141
1,248
86
8,974
10,308
(51)
314
(66)
5,033
16,679
252
16,931

—
—
—
—
—
—
—
—
—
—
(241)
(241)
—
(241)

941
200
1,141
1,248
86
8,974
10,308
(51)
314
(66)
4,792
16,438
252
16,690

122,250

19,038

1,818 20,856

143,106

312

143,418

172,452

(21,157)

—

(21,157)

151,295

—

151,295

1,960
16,427
1,001
1,983
35
7,344
12,609
2,959
339,020

(1,960)
—
—
—
—
—
(906)
(414)
(5,399)

—
—
—
(517)
—
—
—
—
1,301

(1,960)
—
—
(517)
—
—
(906)
(414)

—
16,427
1,001
1,466
35
7,344
11,703
2,545
(4,098) 334,922

—
—
16,427
—
1,001
—
1,466
—
35
—
7,344
—
11,703
—
—
2,545
312 335,234

Total equity and liabilities

358,474

(5,146)

(1,475)

(6,621) 351,853

71 351,924

Aviva plc

3.44

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(i) Transition to IFRS 17 and IFRS 9
The Group has adopted IFRS 17 Insurance Contracts from 1 January 2023 and comparatives have been retrospectively
restated from the transition date of 1 January 2022. A restated opening statement of financial position is shown above.

IFRS 17 Insurance Contracts provides a comprehensive and consistent approach to accounting for insurance contracts.
It replaces IFRS 4, which was issued in 2005 and was largely based on grandfathering of previous local accounting
policies.

The Group has also adopted IFRS 9 Financial Instruments from 1 January 2023 and comparatives have been
retrospectively restated. IFRS 9 incorporates new classification and measurement requirements for financial assets,
introduces a new expected credit loss impairment model to replace the IAS 39 incurred loss model and new hedge
accounting requirements. The Group had previously deferred the application of IFRS 9 to align with the implementation
of IFRS 17. IFRS 9 has not resulted in any measurement differences on adoption by the Group but does impact the
disclosure of financial instruments as described in note 1(e).

Accounting policies that have been revised as a result of adoption of IFRS 17 and IFRS 9 are presented in Accounting
Policies. Significant methods, judgements and assumptions applied in measurement of insurance contracts are set out
in note 40(g). This note focuses on the changes made on transition to IFRS 17 and IFRS 9. Further information in respect of
the adoption of IFRS 17 is provided in note 1(d).

Financial impacts
Group consolidated equity attributable to shareholders of Aviva plc, has reduced by £2,523 million relative to the
£19,202 million reported on an IFRS 4 basis at 31 December 2021. The value of the CSM liability recognised is £6,146 million
(gross of tax). The additional impact of the prior period correction for with-profits business on this CSM is explained in
note 1(a)(ii).

The material components of the total impact are explained below.

Reclassification and derecognition in the restated opening statement of financial position
Under IFRS 17, the concepts of acquired value in force (AVIF), deferred acquisition costs (DAC) and unallocated divisible
surplus (UDS) are no longer applied to produce separately recognised assets and liabilities in relation to insurance and
participating investment contracts, instead they are implicitly included in the measurement of insurance contract assets
and liabilities. £956 million AVIF, £751 million DAC and £(1,960) million UDS on long-term insurance and participating
investment contracts has been derecognised on transition. £1,078 million DAC on non-life insurance contracts has been
presented as a reclassification to insurance contract liabilities. AVIF and DAC in respect of non-participating investment
contracts are unchanged.

There are also changes in presentation and content of the following financial statement line items:
• Non-participating investment contract liabilities and related reinsurance assets to which IFRS 9 applies, are now

presented in separate line items;

• Participating investment contracts to which IFRS 17 applies, are presented within insurance and participating

investment contract assets or liabilities;

• Receivables, payables and other liabilities in respect of insurance contracts to which IFRS 17 applies, are now included

within insurance and participating investment contract assets or liabilities; and

• Policy loans to which IFRS 17 applies have been reallocated from loans to insurance contract and participating

investment contract liabilities.

Aviva plc

3.45

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Remeasurement in the restated opening statement of financial position
There has been a decrease of £2,776 million in Group consolidated equity attributable to shareholders of Aviva plc as a
result of remeasurement adjustments arising from the adoption of IFRS 17.

The drivers of remeasurements in the restated opening statement of financial position include the following:

Drivers

IFRS 4 margins

Description

Remeasurement
£m

Margins included in the IFRS 4 measurement of insurance contract liabilities are
excluded from the IFRS 17 fulfilment cash flows, as the liabilities are measured on
a best estimate basis with a separate explicit adjustment for risk.

3,141

Differences in the valuation of future
cash flows

The primary differences in measurement of the future cash flows are:
•Inclusion of future shareholder profits from unit-linked and with-profits

business, that are not fully recognised under IFRS 4;

•Change in discount rate for life insurance business, most materially for

annuities; and

•Introduction of discounting for all non-life insurance business (under IFRS 4

only longer duration claims are discounted).

This IFRS 17 liability represents the unearned profit of the insurance contracts
which will be recognised in profit or loss over the coverage period in line with the
service provided to customers.

The risk adjustment is an explicit allowance for risk recognised under IFRS 17,
replacing some of the IFRS 4 margins.

Taxable profits are generally based on an accounting profit and the adoption of
IFRS 17 will impact current tax liabilities. The principles of deferred tax mean that
the total tax (current and deferred) remains aligned to the reported profits. The
transition CSM includes profits that were previously reported in accordance with
IFRS 4 and subject to tax. The reduction in net assets on adoption of IFRS 17,
including the CSM recognition, gives rise to deferred tax asset as tax on profits is
only paid once. The deferred tax asset will reverse as the CSM unwinds and
profits are recognised in future.

1,445

(6,146)

(2,082)

866

(2,776)

Contractual service margin

Risk adjustment

Change in deferred tax due to increase
in liabilities

Total

The impact on transition to IFRS 17 is most significant for the Group's annuity and protection business where the deferral
of profit in the CSM is the most material. A significant proportion of the CSM on transition arises from the Group's
existing immediate annuity portfolio, the unwind of which will become a material driver of the contribution to future
profits by the UK & Ireland Insurance, Wealth and Retirement (IWR) operating segment. Offsetting this, the majority of
profits on new annuity and protection business will now be deferred. In addition, under IFRS 17, the impact of changes in
non-financial assumptions on future cash flows will be adjusted through the CSM and spread forward rather than being
recognised immediately in profit as under IFRS 4.

There are more limited impacts from the Group's other lines of insurance business, with no impact for business out of
scope of IFRS 17 including non-participating investment contracts, equity release mortgage loans, and investment
management business.

Financial impact of transition to IFRS 9
The adoption of IFRS 9 has no financial impact on the opening 1 January 2022 statement of financial position or the
income statement for the year ended 31 December 2022 as it has not changed the measurement of the Group’s financial
instruments. Further information in respect of the adoption of IFRS 9 is set out in note 1(e).

(ii) Accounting for with-profits funds
A review of accounting processes for with-profits funds has identified corrections to previous reported values on the
consolidated statement of financial position and comparative amounts have been restated. The costs of providing
policyholders with certain annuity benefits were incorrectly allocated between shareholder and with-profits funds.
Correction of the cumulative misallocation from the shareholder funds to with-profits funds has resulted in an increase in
participating with-profits insurance contract liabilities of £312 million (including an increase in participating CSM of
£17 million) and a decrease in shareholder equity of £241 million, net of reinsurance recoveries and tax on the statement of
financial position as at 1 January 2022.

The income statement for the period ended 31 December 2022 has not been restated, as the impact on profit for the year
was insignificant, as was the impact on the income statement for the period ended 31 December 2023 and previously
reported periods.

The Half Year Report 2023 included an adjustment for £50 million of misallocations identified at that point in time which
reduced insurance revenue during the six months to 30 June 2023 and increased insurance contract liabilities at
30 June 2023. This amount has been included within the total estimated prior period correction at 1 January 2022 and
30 June 2023 comparatives will be adjusted accordingly in the interim accounts to 30 June 2024.

Aviva plc

3.46

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(b) Changes to the income statement for the year ended 31 December 2022
IFRS 17 also introduces significant changes in the presentation of the income statement:
• The insurance service result separately presents the result, before the effects of financial risks, for insurance and

participating investment contracts, and comprises insurance revenue and insurance service expenses.

• Insurance revenue, the composition of which is set out in the revised accounting policy H, represents the allocation

over the life of the insurance contract of premiums received (excluding investment components as set out in accounting
policy M(i)). Insurance revenue replaces net earned premiums.

• Insurance service expense separately presents the claims and expenses incurred in fulfilling insurance and participating
investment contracts, including losses and reversals of losses on onerous contracts. Costs incurred in relation to other
types of business, including non-participating investment contracts, continue to be presented within other operating
expenses.

• The net financial result comprises investment return, the finance income/expense on insurance and participating

investment contracts that arises from discounting, changes in financial risk and changes in the fair value of underlying
items, and the previously presented movement in non-participating investment contract liabilities.

• Other income and expense items are presented in a similar manner as previously reported.

The restated 2022 comparatives in the table below include two changes unrelated to the adoption of IFRS 17 resulting in a
£183 million reduction in group adjusted operating profit previously reported under IFRS 4. The changes relate to an
update to the methodology to report the volatility from the impact of market movements on policyholder tax in non-
operating investment variances and economic assumption changes for the Heritage business and a change in the
calculations of General Insurance investment return from a long-term investment return (LTIR) approach to an expected
return approach as used for life business.

IFRS loss for the year ending 31 December 2022 has been restated as follows:

Group adjusted operating profit before tax attributable to shareholders' profits
Adjusted for the following:

Investment variances and economic assumption changes
Impairment of goodwill, joint ventures, associates and other amounts expensed
Amortisation and impairment of intangibles acquired in business combinations
Amortisation and impairment of acquired value of in-force business
Other

Adjusting items before tax
IFRS loss before tax attributable to shareholders’ profits
Tax on Group adjusted operating profit
Tax on other activities
IFRS loss for the period

As previously
reported
£m

Change1
£m

As restated
£m

2,213

(863)

1,350

(3,615)
(8)
(54)
(182)
41
(3,818)
(1,605)
(289)
755
(1,139)

879
—
—
114
—
993
130

111
(132)
109

(2,736)
(8)
(54)
(68)
41
(2,825)
(1,475)
(178)
623
(1,030)

(c) Changes to 31 December 2022 statement of financial position
In addition to the changes set out in note 1(b), the Succession Wealth acquisition balance sheet has been restated for
revisions to the methodology on the valuation of the intangible assets acquired and to reduce the value of other liabilities,
with corresponding movements in the deferred tax liabilities and goodwill balances. The restated acquisition balance
sheet, which also reflects the impact on the statement of financial position as at 31 December 2022, is set out below:

Assets
Intangible assets
Other assets
Cash and cash equivalents
Total identifiable assets
Liabilities
Borrowings
Deferred tax liabilities
Other liabilities
Total identified liabilities
Net identifiable assets acquired
Goodwill arising on acquisition

As reported
£m

Adjustment
£m

Restated
£m

191
12
6

209

139
48
93

280

(71)

324

(89)
—
—
(89)

—
(22)
(37)
(59)
(30)
30

102
12
6
120

139
26
56
221
(101)
354

As a result, goodwill in the consolidated statement of financial position as at 31 December 2022 has increased by
£30 million to £2,102 million and pension deficits and other provisions have been reduced by £37 million to £724 million.
The adjustments reflect additional information obtained about conditions existing at the acquisition date.

Aviva plc

3.47

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(d) Further information in respect of adoption of IFRS 17 Insurance Contracts
IFRS 17 establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts,
participating investment contracts and reinsurance contracts. It introduces a model that measures groups of contracts
based on the present value of future cash flows with an explicit risk adjustment for non-financial risk (the fulfilment
cash flows) and a CSM representing the unearned profit to be recognised in profit or loss over the service period
(coverage period).

Losses on contracts that are onerous at inception are recognised immediately. The core of IFRS 17 is the GMM,
supplemented by the VFA which is a specific adaptation for contracts with direct participation features, and the PAA
which is a simplified model for short duration contracts.

The application of IFRS 17 significantly impacts the measurement and presentation of insurance and participating
investment contracts, and reinsurance contracts. The financial impact of measurement changes is more significant for
life insurance than non-life insurance contracts, however, there are significant changes to presentation and disclosures
for all insurance contracts. Investment contracts with no significant insurance risk or discretionary participation
features, equity release mortgage loans and investment management business are out of scope and therefore not
impacted by the new standard.

Under IFRS 17 the presentation of insurance revenue and insurance service expenses in the income statement is based
on the concept of insurance services provided during the period. Extensive disclosures provide information on the
recognised amounts from insurance contracts and the nature and extent of risks arising from these contracts. Our
disclosures will be aligned to three major groupings: life risk; life participating; and non-life (general insurance and health)
which broadly align with the IFRS 17 measurement models GMM, VFA and PAA respectively. Further details of these
groupings are provided in note 40.

Changes in accounting policies resulting from the implementation of IFRS 17 have been applied in accordance with the
transitional provisions of the standard, which impact the measurement of the CSM at the transition date. The CSM
represents a liability for unearned profit, hence will be recognised in the income statement over the remaining life of the
contract as insurance and investment related services are provided to the customer.

The fully retrospective approach (FRA) has been used where practicable, calculating the CSM at the date of transition
as if the standard had always applied. Where FRA is not practicable for a particular group of insurance contracts there
is a choice to apply the modified retrospective approach (MRA) to the extent that reasonable and supportable information
exists, or the fair value approach (FVA). The choice between MRA and FVA can have a significant impact on the valuation
of the CSM on transition and has been made separately for each group of insurance contracts for which it is
impracticable to apply FRA.

For non-life business in scope of the PAA the FRA has been used.

For life business and non-life adverse development reinsurance, the Group has applied judgement when determining
whether the FRA is practicable and whether reasonable and supportable information exists to apply the MRA. For this
business the following approaches have been applied on transition to IFRS 17:
• The FRA has been used for the majority of business written or acquired since 2016, as prior to this date the risk

adjustment is considered indeterminable without the benefit of hindsight due to the multiple views of risk that were
reported at that time;

• The MRA has been used for certain portfolios of UK individual protection business written in the period 2012-2015 and

for certain portfolios of acquired UK unit-linked and with-profits business; and

• The FVA has been used for all other business written prior to 2016, including annuities.

On transition, 35% of the CSM is calculated under the FRA, 9% under the MRA and 56% under the FVA.

Application of the MRA
Where information is not available to undertake the FRA the MRA allows certain modifications to be applied provided
reasonable and supportable information is available to apply the modification. The aim is to achieve the closest possible
outcome to the FRA.

For UK individual protection business measured using the MRA, modifications have been applied in respect of:
assessment of groups using information at the transition date; determination of future cash flows and risk adjustment at
the date of initial recognition; and determination of the coverage provided prior to the transition date.

For UK VFA business measured using the MRA, modifications have been applied in respect of: calculation of the CSM at
the transition date; and using information available at the transition date for the assessments of contracts within the
scope of IFRS 17, eligibility for the VFA measurement model and grouping of contracts.

For contracts transitioned under the FRA or MRA, the opening CSM balance at 1 January 2022 includes the effect of
amortisation of the CSM for the period of retrospective restatement.

Aviva plc

3.48

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Application of the FVA
Under the FVA, the CSM recognised at the transition date has been determined as the fair value of the group of contracts
less the fulfilment cash flows at the transition date. Unlike the FRA and MRA, no pre-transition information is required to
calculate the FVA CSM. The FVA measures the value of the CSM at the date of transition to IFRS 17, 1 January 2022, the
start of the comparative period. Subsequent to the transition date, the CSM is remeasured for movements since the date
of transition according to the general (non-transition) requirements of IFRS 17, however the initial fair value as at
1 January 2022 is a point in time assessment that will not be reassessed for future reporting.

Where FVA has been applied to determine the value at transition, the fair value has been derived in accordance with
IFRS 13 Fair Value Measurement (except a demand deposit floor was not applied) and represents the price a market
participant would require to assume the insurance contract liabilities in an orderly transaction. As quoted market prices
are not available for groups of insurance contracts, valuation models have been used to calculate the fair value of each
group at the transition date. The choice of model and inputs to the model involves judgement and this gives rise to a
range of plausible fair values at the transition date.

Whilst the fair value at transition impacts the size of the CSM that will subsequently be recognised in profit over the
remaining life of the contracts applying the accounting policy set out in accounting policy M, the fair value model and
inputs to that model will not be applied to, or result in adjustment to, any subsequent measurement of the CSM.

The valuation models determine the fair value using a cost of capital approach. Expected cash flows and the required
capital to run the business are projected forward, applying an appropriate weighted average cost of capital (WACC).
Inputs have been calibrated to those Aviva would expect market participants to use had they priced the insurance
contracts for transfer to them at the transition date.

This is based on a number of actuarial assumptions, including discount rates, and involves consideration of:
• The most appropriate assumptions for use by a third party in the principal market.
• The specifics of the group of insurance contracts being valued, such as the insurance cover and policyholder benefits

provided and any legal requirements for its administration.
• Benchmarking against market transactions, where these exist.

Valuation inputs reference market information where available, with unobservable inputs otherwise used to estimate
those that a third party would have applied as at the transition date of 1 January 2022. The most significant judgements for
each portfolio were as follows:
• Identification of the principal market;
• The return on assets backing the insurance contracts and the consequential impact on the discount rate, particularly for

UK annuities where the Solvency II capital regime was assumed to apply to market participants;

• The level of regulatory capital required to support the group of insurance contracts, which reflected Aviva's total Group
working range for the Solvency II cover ratio of 160%-180%, adjusted to reflect differences in market participants for
specific types of insurance contracts. It was assumed that a third party would require a higher level of regulatory capital
for certain UK with-profits business aligned to the legal commitments made following the reattribution of the inherited
estate in 2009; and

• The required rate of return on capital deployed, which reflected the characteristics of the group of contracts

being measured.

All other material assumptions were aligned to the Aviva Solvency II valuation basis.

The FVA CSM on UK annuities is included within the life risk product group (total CSM at transition of £4,853 million),
whilst the FVA CSM on UK with-profits business measured in accordance with the VFA is included in the life participating
product group (total CSM at transition £1,293 million).

For business transitioning under the FVA, the Group has taken advantage of the simplification permitting contracts in
different annual cohorts to be placed into a single group of contracts.

(e) Further information in respect of adoption of IFRS 9 Financial Instruments
IFRS 9 introduces new classification and measurement requirements for financial assets, resulting in the Group’s financial
assets being measured at FVTPL or amortised cost. The basis of classification depends on the business model for
managing the cash flows from these assets and their contractual cash flow characteristics, as set out in accounting policy
T. The IFRS 9 expected credit loss model for impairment is applied to any financial assets held at amortised cost and lease
receivables. The outcome for financial liabilities remains unchanged as the Group has elected to recognise fair value
changes attributable to own credit risk in the income statement for financial liabilities designated at FVTPL.

Changes in accounting policies as a result of adopting IFRS 9 have been implemented retrospectively with the exception of:
• Hedge accounting, where the election to apply the IFRS 9 requirements for hedge accounting has been applied

prospectively. Hedge relationships that were previously designated under IFRS 9 are deemed to be continuing hedges as
they met the IFRS 9 criteria for hedge accounting at 1 January 2023.

• Assessments that have been made on the basis of facts and circumstances that existed at the date of initial application of

1 January 2023, as follows:

- The determination of the business model within which a financial asset is held.

- The designation (and revocation of previous designations) of certain financial assets and financial liabilities measured

at FVTPL.

Aviva plc

3.49

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

The retrospective restatement of comparatives has resulted in no material adjustments to the measurement of financial
instruments in the consolidated financial statements.

The following table shows the original measurement categories and carrying amounts under IAS 39 and the new
measurement categories and carrying amounts under IFRS 9 for each class of the Group's financial assets as at the
transition date of 1 January 2022. The classification overlay is applied to financial assets derecognised in the comparative
period as if the classification and measurement requirements of IFRS 9 had been applied to those financial assets at the
transition date. The table presents the carrying amount of loans as previously reported, before the reclassification of
£13 million policy loans to insurance contract liabilities under IFRS 17 as set out in note 1(a).

IFRS 9

IAS 39

At 1 January 2022
Loans
Cash and cash equivalents
Financial investments
Reinsurance assets for non-participating investment contracts

29,980
—
264,961
5,122

Mandatorily
held at
FVTPL
£m

Designated
at FVTPL
£m
—
1,855
—
—

Amortised
cost
£m

Designated
at FVTPL
£m

Total
carrying
amount
£m
8,644 38,624 29,980
—
12,485
10,630
— 264,961 264,961
5,122
—

5,122

Amortised
cost
£m

Total
carrying
amount
£m
8,644 38,624
12,485
12,485
— 264,961
5,122
—

There were no impacts on the categorisation or measurement of financial liabilities.

2 - Exchange rates
The Group’s principal overseas operations during the year were located within the Eurozone and Canada. 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)
Year end rate (€1 equals)
Canada
Average rate ($CAD1 equals)
Year end rate ($CAD1 equals)

3 - Strategic transactions

2023
£

2022
£m

0.87
0.87

0.60
0.59

0.85
0.89

0.62
0.61

(a) Acquisitions
(i) AIG Life Limited (AIG Life UK)
On 25 September 2023 Aviva announced the acquisition of AIG Life UK from Corebridge Financial, Inc. (Corebridge), a
quoted subsidiary of American International Group, Inc. (AIG), for consideration of £460 million. The transaction is
expected to complete in the first half of 2024, subject to customary closing conditions, including regulatory approvals.

(ii) Optiom O2 Holdings Inc (Optiom)
On 27 November 2023, Aviva announced the acquisition of Optiom from Novacap and other minority shareholders for
consideration of c.$CAD 170 million (approximately £100 million). The transaction completed on 5 January 2024.

(iii) Probitas Holdings (Bermuda) Limited and its subsidiaries (Probitas)
On 4 March 2024, Aviva announced the acquisition of Probitas for a total consideration of £242 million. The transaction
includes the acquisition of Probitas’ fully-integrated Lloyd’s platform, encompassing its Corporate Member, Managing
Agent, international distribution entities and tenancy rights to Syndicate 1492. The transaction is subject to customary
closing conditions, including regulatory approvals, and is expected to complete in 2024. The transaction is not expected
to have a material impact on the Group's IFRS net asset value.

(iv) The following acquisitions took place during 2022:
• On 11 August 2022 the Group acquired 100% of the ordinary share capital and preference share capital of

Succession Jersey Limited for an initial cash consideration of £385 million. For further information relating to the assets
and liabilities acquired on acquisition see note 1(c).

• On 28 September 2022 the Group acquired an additional 25% of the ordinary share capital of Aviva Life Insurance

Company India Limited for cash consideration of £37 million, increasing the Group's total shareholding from 49% to 74%
and giving Aviva a controlling interest in the entity. On that date, Aviva derecognised its investment in associate and
recognised Aviva India as a consolidated subsidiary. For further information see note 2 of the Aviva plc Annual Report
and Accounts 2022.

Aviva plc

3.50

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(b) Disposals
On 13 September 2023, Aviva announced the sale of its entire shareholding in Aviva SingLife Holdings Pte Ltd, together
with two debt instruments, to Sumitomo Life Insurance Company for a total cash consideration of $SGD 1,444 million
(approximately £853 million). On 27 December 2023 Aviva announced that it expected to receive an additional $SGD 140
million from Sumitomo Life Insurance Company in respect of the sale, resulting in a total cash consideration of $SGD
1,584 million (approximately £936 million). The shareholding and the debt instruments (see note 19 and note 25) have been
classified as held for sale at 31 December 2023 and there was no gain or loss recognised on remeasurement to held for
sale. The transaction received its final regulatory approval on 4 March 2024. We expect the transaction to complete in
March 2024.

There were no significant disposals during 2022.

4 - Segmental information
The Group’s results can be segmented either by activity or by geography. Our primary reporting format is along business
unit reporting lines, with supplementary information being given by business activity. This note provides segmental
information on the consolidated income statement.

Financial performance of our key business units are presented as Insurance, Wealth & Retirement (IWR), General
Insurance (which brings together our UK & Ireland General Insurance businesses and Canada General Insurance) and
Aviva Investors. Our international businesses are presented as International investments (consisting of our interests in
India, China and Singapore).

(a) Operating segments
Insurance, Wealth & Retirement (IWR)
The principal activities of our IWR operations are life insurance, long-term health and accident insurance, savings,
pensions and annuity business.

General Insurance
UK & Ireland
The principal activities of our UK & Ireland General Insurance operations are the provision of insurance cover to
individuals and businesses, for risks associated mainly with motor vehicles, property and liability (such as employers’
liability and professional indemnity liability).

Canada
The principal activity of our Canada General Insurance operation is the provision of personal and commercial lines
insurance products, for risks associated mainly with motor, property and liability principally distributed through
insurance brokers.

Aviva Investors
Aviva Investors operates in a number of international markets, in particular the UK, North America and Asia Pacific.
Aviva Investors manages policyholders' and shareholders' invested funds, provides investment management services for
institutional pension fund mandates and manages a range of retail investment products. These include investment funds,
unit trusts, open-ended investment companies and individual savings accounts.

International investments
International investments comprise our long-term business operations in India, China and Singapore. In India, the
Group has a 74% shareholding in Aviva India. In China, Aviva plc have a 50% shareholding in Aviva-COFCO Life Insurance
Company Limited. On 13 September 2023, Aviva plc announced the sale of its entire shareholding in Aviva Singlife
(see note 3(b) for details).

Other Group activities
Other Group activities includes investment return on centrally held assets, head office (Corporate centre) expenses such
as Group treasury and finance functions, financing costs arising on central borrowings, the elimination entries for certain
inter-segment transactions and group consolidation adjustments.

Measurement basis
The accounting policies of the segments are the same as those for the Group as a whole. Any transactions between the
business segments are subject to normal commercial terms and market conditions. The Group evaluates performance
of operating segments on the basis of:

(i) profit or loss from operations before tax attributable to shareholders; and
(ii) profit or loss from operations before tax attributable to shareholders, adjusted for non-operating items, including

investment market performance.

Aviva plc

3.51

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(i) Segmental income statement for the year ended 31 December 2023

Insurance,
Wealth &
Retirement
(IWR)
£m

UK & Ireland
General
Insurance
£m

Canada
General
Insurance
£m

Aviva
Investors
£m

International
investments
(India, China
and
Singapore)
£m

Other Group
activities
£m

Total
£m

Insurance revenue1
Insurance service expense
Net (expense)/income from reinsurance contracts

Insurance service result
Investment return1
Net finance (expense)/income from insurance contracts
and participating investment contracts

Net finance income/(expense) from reinsurance
contracts
Movement in non-participating investment contract
liabilities

Investment expense attributable to unitholders

Net financial result
Fee and commission income1
Inter-segment revenue

Share of (loss)/profit after tax of joint ventures and
associates1
Other operating expenses
Other net foreign exchange gains
Other finance costs
Inter-segment expenses
Profit/(loss) before tax
Tax attributable to policyholders’ returns

Profit/(loss) before tax attributable to shareholders’ profits

Adjusting items:
Reclassification of unallocated interest
Investment variances and economic assumption changes
Impairment of goodwill, joint ventures, associates and
other amounts expensed

Amortisation and impairment of intangibles acquired in
business combinations

Amortisation and impairment of acquired value of in-force
business

Integration and restructuring costs
Other
Group adjusted operating profit/(loss) before tax
attributable to shareholders' profits

8,164
(7,055)
(278)
831
20,604

6,219
(5,443)
(409)
367
442

4,070
(3,639)
(78)
353
303

(6,593)

(399)

(180)

531

133

(13,559)

—
983
1,110
—

—

—
176
54
—

(46)

—

(1,065)

—
(200)
(219)

1,394
(249)

1,145

(90)
48
(1)
(10)
544
—

544

—

—
133
11
—

(44)
—
(5)
(6)

443
—

443

(9)
(302)

(27)
(67)

48
(104)

—

61
—

—

—
—

—

—
2

994

452

399

—
—
—
—
13

—

—
14
126
238

—

(357)
—
—
—
21
—

—
—

—

—
—

61
(81)
—
(20)
98

(17)
1
4
(12)

18,497
(16,217)
(761)
1,519
22,380

920

(73)

(7,228)

—

—
25
—
—

(26)

(1)
—
—
—
(22)
—

(22)

—
85

—

—
—

(33)

641

—

(13,558)

(861)
43
8
—

—

(551)
98
(273)
(3)
(690)
—

(861)
1,374
1,309
238

(71)

(2,108)
146
(479)
(238)
1,690
(249)

(690)

1,441

(12)
66

—
(322)

—

—
174

—

61
176

(462)

1,467

1. Total reported income, excluding inter-segment revenue, includes £37,751 million from the United Kingdom (Aviva plc’s country of domicile). Income is attributed on the basis of geographical origin

which does not differ materially from revenue by geographical destination, as most risks are located in the countries where the contracts were written.

Aviva plc

3.52

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(ii) Segmental income statement for year ended 31 December 2022 - restated1

Insurance revenue2
Insurance service expense
Net (expense)/income from reinsurance contracts

Insurance service result
Investment return2
Net finance income/(expense) from insurance contracts
and participating investment contracts

Net finance (expense)/income from reinsurance
contracts

Movement in non-participating investment contract
liabilities

Investment income attributable to unitholders

Net financial result
Fee and commission income2
Inter-segment revenue

Share of (loss)/profit after tax of joint ventures and
associates2
Other operating expenses
Other net foreign exchange (losses)/gains
Other finance costs
Inter-segment expenses
(Loss)/profit before tax
Tax attributable to policyholders’ returns
(Loss)/profit before tax attributable to shareholders’
profits
Adjusting items:
Reclassification of unallocated interest
Investment variances and economic assumption changes
Impairment of goodwill, joint ventures, associates and
other amounts expensed

Amortisation and impairment of intangibles acquired in
business combinations

Amortisation and impairment of acquired value of in-force
business

Integration and restructuring costs
Other
Group adjusted operating profit/(loss) before tax
attributable to shareholders' profits

Insurance,
Wealth &
Retirement
(IWR)
£m

7,382
(6,745)
(142)
495
(36,126)

UK & Ireland
General
Insurance
£m

Canada
General
Insurance
£m

Aviva
Investors
£m

International
investments
(India, China
and
Singapore)
£m

Other Group
activities
£m

Total
£m

5,575
(5,186)
(176)
213
(605)

3,916
(3,538)
(71)
307
(239)

—
—
—
—
(1)

33
(33)
—
—
35

(17)
(3)
6
(14)
(733)

16,889
(15,505)
(383)
1,001
(37,669)

23,477

1,023

206

—

(35)

(172) 24,499

(1,805)

(556)

(11)

—

249

(2,123)

12,458

—
(1,996)
1,069
—

(124)

(1,009)
—
(176)
(222)
(1,963)
764

—

—
(138)
48
—

—

(57)
(48)
(2)
(6)
10
—

—

—
(44)
9
—

(35)
—
(5)
(7)
226
—

—
3
160
240

—

(378)
1
(1)
—
25
—

—

—
—
—
—

77
—
—
—
95
—

—

12,462

531
(125)
28
—

531
(2,300)
1,314
240

113

(317)
(26)
(286)
(5)
(632)
—

(1,719)
(73)
(470)
(240)
(2,239)
764

(1,199)

226

(632)

(1,475)

(8)
2,270

(17)
285

34
81

—
—

—
36

(9)
64

—
2,736

—

(15)

—

—
4

—

—
—

—

—
—

—

—
—

—

—
(77)

—

—
32

—
(41)

1,199

278

352

(543)

1,350

1. The 2022 comparative results have been restated following the adoption of IFRS 17 and for methodology changes described in note 1.
2. Total reported income, excluding inter-segment revenue, includes £(25,770) million from the United Kingdom (Aviva plc’s country of domicile). Income is attributed on the basis of geographical

origin which does not differ materially from revenue by geographical destination, as most risks are located in the countries where the contracts were written.

(b) Further analysis by products and services
The Group’s results can be further analysed by products and services which comprise long-term business, general
insurance and health, fund management and other activities.

Long-term business
Our long-term business comprises life insurance, long-term health and accident insurance, savings, pensions and annuity
business written by our life insurance subsidiaries, including managed pension fund business. Long-term business also
includes our share of the other life and related business written in our associates and joint ventures, as well as lifetime
mortgage business written in the UK.

General insurance and health
Our general insurance and health business provides insurance cover to individuals and to businesses, for risks associated
mainly with motor vehicles, property and liability, such as employers’ liability and professional indemnity liability, and
medical expenses.

Aviva plc

3.53

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Fund management
Our fund management business invests policyholders’ and shareholders’ funds and provides investment management
services for institutional pension fund mandates. It manages a range of retail investment products, including investment
funds, unit trusts, open-ended investment companies and individual savings accounts. Clients include Aviva Group
businesses and third-party financial institutions, pension funds, public sector organisations, investment professionals
and private investors.

Other
Other includes service companies, head office expenses such as Group treasury and finance functions, and certain
financing costs and taxes not allocated to business segments and elimination entries for certain inter-segment
transactions and group consolidation adjustments.

(i) Segmental income statement - product and services for the year ended 31 December 2023

Insurance revenue
Insurance service expense
Net (expense)/income from reinsurance contracts

Insurance service result
Investment return
Net finance (expense)/income from insurance contracts and participating
investment contracts

Net finance income/(expense) from reinsurance contracts
Movement in non-participating investment contract liabilities
Investment expense attributable to unitholders

Net financial result
Fee and commission income
Inter-segment revenue
Share of (loss)/profit after tax of joint ventures and associates
Other operating expenses
Other net foreign exchange gains
Other finance costs
Inter-segment expenses
Profit/(loss) before tax
Tax attributable to policyholders’ returns
Profit/(loss) before tax attributable to shareholders’ profits
Adjusting items
Group adjusted operating profit/(loss) before tax attributable to shareholders'
profits

General
insurance
and health1
£m

Fund
management
£m

Long-term
business
£m

7,589
(6,554)
(278)
757
20,680

10,925
(9,664)
(487)
774
715

(6,667)

(578)

531

(13,558)

—
986
1,105
—
(72)
(1,070)

—
(200)
(219)
1,287
(249)
1,038

143
—
—
280
70
—
1
(101)
42
(6)
(16)

1,044
—
1,044

(47)

(128)

Other
£m

Total
£m

(17)
1
4
(12)
971

18,497
(16,217)
(761)
1,519
22,380

(7,228)

(33)
—
(861)
94
8
—
—
(580)
104
(273)
(3)
(662)
—
(662)
201

641
(13,558)
(861)
1,374
1,309
238
(71)
(2,108)
146
(479)
(238)
1,690
(249)
1,441
26

—
—
—
—
14

—

—
—
—
14
126
238
—
(357)
—
—
—
21
—
21
—

991

916

(461)

1,467

1. General insurance and health product segment includes insurance revenue of £637 million relating to health business. The remaining segment relates to property and liability insurance.

Aviva plc

3.54

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(ii) Segmental income statement - product and services for the year ended 31 December 2022 - restated1

Insurance revenue
Insurance service expense
Net (expense)/income from reinsurance contracts

Insurance service result
Investment return
Net income/(expense) from insurance contracts and participating investment
contracts
Net (expense)/income from reinsurance contracts
Movement in non-participating investment contract liabilities
Investment income attributable to unitholders

Net financial result
Fee and commission income
Inter-segment revenue
Share of (loss)/profit after tax of joint ventures and associates
Other operating expenses
Other net foreign exchange (losses)/gains
Other finance costs
Inter-segment expenses
(Loss)/profit before tax
Tax attributable to policyholders’ returns
(Loss)/profit before tax attributable to shareholders’ profits
Adjusting items
Group adjusted operating profit/(loss) before tax attributable to shareholders'
profits

Long-term
business
£m

General
insurance and
health 2
£m

Fund
management
£m

6,857
(6,343)
(142)
372
(36,173)

10,049
(9,172)
(247)
630
(829)

23,442

1,229

(1,805)
12,458
—
(2,078)
1,069
—
(106)
(795)
—
(176)
(222)
(1,936)
764
(1,172)
2,333

(567)
—
—
(167)
57
—
1
(146)
(48)
(7)
(13)
307
—
307
400

—
—
—
—
(1)

—

—
4
—
3
160
240
(1)
(378)
1
(1)
—
24
—
24
1

Other
£m

(17)
10
6
(1)
(666)

Total
£m

16,889
(15,505)
(383)
1,001
(37,669)

(172) 24,499

249
—
531
(58)
28
—
114
(400)
(26)
(286)
(5)
(634)
—
(634)
91

(2,123)
12,462
531
(2,300)
1,314
240
8
(1,719)
(73)
(470)
(240)
(2,239)
764
(1,475)
2,825

1,161

707

(543)

1,350

1. The 2022 comparative results have been restated following the adoption of IFRS 17 and for methodology changes described in note 1.
2. General insurance and health product segment includes insurance revenue of £558 million relating to health business. The remaining segment relates to property and liability insurance.

5 - Insurance revenue
This note analyses the insurance revenue recognised in relation to our insurance contracts and participating investment
contracts (which are described in note 40).

Insurance revenue for the year ended 31 December comprised:

Life Risk
£m

Participating
£m

Non-Life
£m

2023

Total
£m

Life Risk
£m

Participating
£m

Non-Life
£m

2022

Total
£m

Amounts relating to changes in liabilities for
remaining coverage

CSM recognised for services provided

729

151

Change in risk adjustment for non-financial
risk for risk expired

Expected incurred claims and other
insurance service expenses
Other1
Recovery of insurance acquisition cashflows

Contracts not measured under the PAA
Contracts measured under the PAA
Total insurance revenue

5,788

—
301
6,914
—
6,914

462

36
6
658
—
658

—

—
—
—
10,925
10,925

880

578

172

—

750

171

—

176

6,250

36
307
7,572
10,925
18,497

5,764

—
288
6,801
—
6,801

266

(414)
10
39
—
39

—

6,030

—
—
—
10,049
10,049

(414)
298
6,840
10,049
16,889

1. Other predominantly relates to revenue recognised for incurred policyholder tax expenses on participating business.

For contracts measured under the PAA, amounts recognised in insurance revenue are based on the expected premiums
earned in the year.

Aviva plc

3.55

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

6 - Net financial result
This note analyses the Group’s net financial results in profit or loss. This analysis is provided by reportable product
groups for insurance and participating investment contracts, which are explained in note 40(a).

Interest and similar income from financial instruments at
amortised cost

Interest and similar income from financial instruments at
FVTPL

Other investment income
Net impairment loss on financial assets

Total investment return

Changes in fair value of underlying items
Effects of risk mitigation option
Interest accreted on contractual service margin
Effect of, and changes in, interest rates and other financial
assumptions

Effect of measuring changes in estimates at current rates
and adjusting the CSM at rates on initial recognition

Net finance expense from insurance contracts and
participating investment contracts

Interest accreted
Other

Net finance income from reinsurance contracts

Investment expense allocated to non-participating investment
contracts

Changes in non-participating investment contract provisions
Change in reinsurance asset for non-participating
investment contract provisions

Movement in non-participating investment contract liabilities
Investment expense attributable to unitholders
Net financial result

Note

Life risk
£m

Participating
£m

Non-life
£m

Non-
Participating
£m

Non
insurance
£m

2023

Total
£m

6(a)

648

3,586
—
4,243

(204)
—
(207)

392

2,163
—
2,560
(2,383)

5
—

359

353

(3)

715
—
—
—

1,902

2,753

6,054

11,648
—
13,577
—
—
—

(1,516)
—
1,285
—
—
—

16,234
(3)
22,380
(2,587)
5
(207)

(3,454)

(120)

(578)

(292)

—

(4,157)

(2,493)

(578)

18
513
531

—

—
—
617

—
—
—

—

—
—
67

81
29
110

—

—
—
247

—

—
—
—

(13,558)

(1)

—

—
—
—

—

(4,152)

(287)

(7,228)

99
542
641

(13,558)

(1)

(13,558)

—
19

—
(861)
424

(13,558)
(861)
1,374

Underlying items comprise financial instruments and other assets and liabilities held within unit-linked and with-profits
funds whose value determines some of the amounts payable to policyholders. For policyholders invested in with-profits
funds with a policyholder estate the underlying items may include non-profit insurance contracts written within the
funds.

Aviva plc

3.56

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Interest and similar income from financial instruments at
amortised cost
Interest and similar income from financial instruments at
FVTPL

Other investment income
Net impairment loss on financial assets

Total investment return

Changes in fair value of underlying items
Effects of risk mitigation option
Interest accreted on contractual service margin
Effect of, and changes in, interest rates and other financial
assumptions

Effect of measuring changes in estimates at current rates
and adjusting the CSM at rates on initial recognition

Note

Life risk
£m

Participating
£m

Non-life
£m

Non-
Participating
£m

Non
insurance
£m

Restated1
2022

Total
£m

6(a)

1,419

326

262

1,011

1,678

4,696

(21,010)
—
(19,579)
1,219
—
(165)

(4,332)
—
(4,004)
3,558
532
—

(1,110)
(3)
(839)
—
—
—

(13,776)
—
(12,758)
—
—
—

(2,233)
—
(489)
—
—
—

(42,461)
(3)
(37,669)
4,777
532
(165)

17,554

127

1,229

445

—

Net finance income from insurance contracts and participating
investment contracts

19,053

4,217

1,229

Interest accreted
Other

Net finance expense from reinsurance contracts

Investment expense allocated to non-participating
investment contracts

Changes in non-participating investment contract provisions
Change in reinsurance asset for non-participating
investment contract provisions

Movement in non-participating investment contract liabilities

Investment income attributable to unitholders
Net financial result

(a) Other investment income

4
(1,795)
(1,791)

—

—
(13)
(13)

—

—
(2,317)

—
200

14
(333)
(319)

—

—
71

Dividend income
Net gains/(losses)

From financial assets mandatorily held at FVTPL
From financial assets held at amortised cost
From borrowings designated as FVTPL
From financial liabilities mandatorily held at FVTPL2

Net losses from investment properties

Rent
Expenses relating to these properties
Realised losses on disposal
Fair value losses on investment properties

Net foreign exchange (losses)/gains on financial instruments not held at FVTPL
Other
Other investment income

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and IFRS 9, as described in note 1.
2. Financial liabilities consist of derivative financial liabilities which meet the definition of held for trading under IFRS 9.

—

—
—
—

12,452

—

18,910

—

445

— 24,499

—
—
—

—

18
(2,141)
(2,123)

12,452

12,462

—

12,462

—
(296)

531
42

531
(2,300)

2023
£m

3,999
12,317
15,206
91
74

(3,054)
(14)
319
(22)
(10)
(301)
(91)
23
16,234

Restated1
2022
£m

4,347
(46,804)
(56,047)
93
(16)
9,166
(859)
316
(17)
(8)
(1,150)
850
5
(42,461)

Aviva plc

3.57

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

7 - Fee and commission income

Fee income from non-participating investment contract business
Fund management fee income
Other fee income
Other commission income
Net change in deferred revenue
Total

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

8 - Expenses
This note analyses the Group’s expenses in profit or loss.

Claims and benefits incurred
Claims and benefits on long-term business

Insurance contracts and participating investment contracts
Claims and benefits on general insurance and health business

Claim recoveries from reinsurers

Insurance contracts and participating investment contracts
Claims and benefits incurred, net of recoveries from reinsurers
Losses on onerous insurance contracts and participating investment contracts
Fee and commission expense
Acquisition costs

Commission expenses
Other acquisition costs
Amount attributed to insurance acquisition cash flows incurred during the year

Acquisition costs for non-participating investment contracts
Amortisation of insurance acquisition cash flows
Change in deferred acquisition costs for non-participating investment contracts
Other fee and commission expense
Fee and commission expense
Other expenses
Staff costs
Central costs
Depreciation
Amortisation of acquired value of in-force business on non-participating investment contracts
Amortisation of intangible assets
Impairment of intangible assets
Other expenses (see below)
Other net foreign exchange (gains)/losses
Other expenses
Total expenses
Represented by expenses included within the income statement:
Insurance service expense
Expense recovery from reinsurance contracts2
Other operating expenses
Other net foreign exchange (gains)/losses
Total expenses

2023
£m

715
134
369
86
5
1,309

Restated1
2022
£m

741
163
292
110
8
1,314

Note

2023
£m

Restated1
2022
£m

5,850
6,557
12,407

5,572
6,237
11,809

(3,040)
9,367
122

(2,953)
8,856
136

2,541
1,055
(3,179)
417
2,842
70
36
3,365

1,032
354
66
59
119
—
959
(146)

2,443
15,297

4,149
999
(4,844)
304
2,689
49
24
3,066

936
310
57
68
142
4
635
73
2,225
14,283

16,217
(2,882)
2,108

(146)

15,297

15,505
(3,014)
1,719
73
14,283

11(b)

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).
2. Expense recovery from reinsurance contracts is presented in consolidated income statement within net expense from reinsurance contracts, which comprises an allocation of premiums paid to

reinsurers of £(3,643) million (2022: £(3,397) million) and amount recovered from reinsurers of £2,882 million (2022: £3,014 million).

Other expenses were £959 million (2022: £635 million) which mainly included costs relating to property and IT. In 2023, it
also included £92 million of fees paid to bondholders in respect of modification to the terms and conditions of the
Group's Tier 2 Fixed to Floating notes, charges of £71 million relating to our historic divestments, and integration and
restructuring costs of £61 million as set out below. In 2022, other expenses were partially offset by a gain of £77 million
relating to negative goodwill on the acquisition of Aviva India.

Aviva plc

3.58

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Other operating expenses presented on the consolidated income statement of £2,108 million (2022: £1,719 million)
includes the Group's Aviva Investors segment, amortisation on AVIF and intangibles acquired in business combinations,
expenses attributable to non-participating investment contract, expenses attributable to non-insurance products such as
wealth management services and Corporate Centre costs.

Integration & restructuring costs
At the beginning of 2024, IWR announced a 15 year extension to our key strategic partnerships with Diligenta and FNZ to
simplify our operations and support our growth ambitions, with further changes improving how we serve our customers.
Integration and restructuring costs of £61 million have been incurred during 2023 in relation to this simplification, with
additional costs expected to be incurred over the period 2024-2028. This programme will rationalise our administration
platforms to remove complexity and improve customer outcomes. The costs will cover changes to data and systems and
expenditure to deliver associated efficiency savings. Benefits of this restructuring programme will include a reduction in
the operating cost base of the IWR business, resulting in higher capital generation and cash remittances. These costs are
included in other expenses.

9 - Other finance costs
This note analyses the interest costs on our borrowings (which are described in note 47) and similar charges.
Other finance costs comprise:

Subordinated debt
Long term senior debt
Commercial paper

Interest expense on core structural borrowings at amortised cost

Amounts owed to financial institutions at amortised cost
Securitised mortgage loan notes at fair value

Interest expense on operational borrowings
Interest on collateral received
Net finance charge on pension schemes
Interest on lease liabilities
Other similar charges
Total finance costs

Note

46(b)(i)

2023
£m

219
10
4
233
26
70
96
39
25
8
78
479

2022
£m

253
10
1
264
5
79
84
12
20
9
81
470

10 - Investment variances and economic assumption changes
The investment variances and economic assumption changes impacting the Group consolidated income statement are as
follows:

Life business2
General insurance business
Other operations3
Total investment variances and economic assumption changes

2023
£m

217
171
(66)
322

Restated1
2022
£m

(2,306)
(366)
(64)
(2,736)

1. The 2022 comparative results have been restated following the adoption of IFRS 17, as described in note 1 of the Aviva plc Annual Report and Accounts 2023. In addition, the 2022 comparative

amounts have been restated for methodology changes described in the 'Other Information - overview' section of the Aviva plc Annual Report and Accounts 2023.

2. Life business includes IWR and International Investments.
3. Other operations represents short-term fluctuations on Group centre investments, including the centre hedging programme.

(a) Definitions
Investment variances and economic assumption changes show the impact of changes due to economic items, such as
market value movements and interest rate change over the year, which give rise to variances between actual and
expected investment returns, as well as the impact of changes in economic assumptions on liabilities.

(b) Methodology
The expected investment returns and corresponding expected movements in liabilities are calculated separately for each
principal business unit.

The expected return on investments for both policyholders’ and shareholders’ funds is based on opening economic
assumptions applied to the expected funds under management over the reporting period:

• For fixed interest securities the expected investment returns are based on average prospective yields for the actual

assets held less an adjustment for credit risk.

• The expected return on equities and properties is calculated by reference to the opening 10-year swap rate in the

relevant currency plus an appropriate risk premium.

Aviva plc

3.59

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

• Expected funds under management are equal to the opening value of funds under management, adjusted for sales and

purchases during the year arising from expected operating experience.

The actual investment return is affected by differences between the actual and expected funds under management and
changes in asset mix, as well as other market movements. To the extent that these differences arise from the operating
experience, or management decisions to change asset mix, the effect is not included in the investment variance. The
residual difference between actual and expected investment return is included in investment variances.

Similarly, the effect of differences between actual and expected economic experience on liabilities, and changes to
economic assumptions used to value liabilities, are included in the investment variance and economic assumption
changes.

For many types of life 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. The profit impact of economic volatility on other
business depends on the degree of matching of assets and liabilities, exposure to financial options and guarantees, and
the application of relevant IFRS 17 risk-mitigation options.

(c) Assumptions
The expected rate of investment return is determined using consistent assumptions at the start of the year
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 equity and property are:

United Kingdom
Ireland
Canada

2023

2022

Equity

Property

Equity

Property

7.2 %
6.7 %
7.3 %

5.7 %
5.2 %
5.8 %

4.4 %
3.8 %
5.5 %

2.9 %
2.3 %
4.0 %

The expected return on equity and property has been calculated by reference to ten-year SONIA rates for the UK and the
ten-year mid-price swap rate for an AA rated bank in the relevant currency for other markets, to which a risk premium is
added. 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:

Equity risk premium
Property risk premium

The ten-year mid-price swap rates at the start of the year are set out in the table below:

United Kingdom
Ireland
Canada

2023

3.5 %
2.0 %

2022

3.5 %
2.0 %

2023

3.7 %
3.2 %
3.8 %

2022

0.9 %
0.3 %
2.0 %

The expected return on cash holdings is a 1-year risk-free rate assumption taken as at the start of the year.

(d) Analysis of investment variances and economic assumption changes
(i) Life business
The gain of £217 million (2022 restated: loss of £2,306 million) in relation to investment variances and economic
assumption changes on life business was primarily driven by UK 10-year term interest rates falling c.40 bps and
favourable credit default experience, partly offset by a loss from hedging gains on equity markets.

The positive impact of interest rate falls and adverse impact of equity market gains reflect the fact that we hedge on a
Solvency II basis rather than an IFRS basis. For example, when equity markets increase we gain from the increase in the
value of future annual management charges on unit-linked products on an economic basis which are not recognised
under IFRS, however, the loss from hedges in place is recognised on both Solvency II and IFRS bases.

The negative variance for 2022 was primarily driven by the significant increase in UK interest rates, with the rate on
10-year swaps increasing by 280bps during 2022. This resulted in a reduction in the value of fixed income securities and
loans which was not fully offset by a reduction in the valuation of long-term insurance liabilities from the increase in the
valuation interest rate. Other components of investment variances and economic assumption changes were smaller and
broadly offset. These included positive impacts from hedging negative global equity returns and a reduction in the
allowance for risk of default on assets backing annuities due to reduced asset values; and negative impacts from foreign
exchange losses and widening of spreads on corporate bonds.

Aviva plc

3.60

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(ii) General insurance business
The gain of £171 million (2022 restated: loss of £366 million) in relation to investment variances and economic assumption
changes for the general insurance and health business was primarily driven by currency movements and equity, as well as
smaller contributions from falling interest rates and narrower credit spreads. The negative variance for 2022 was
primarily driven by rising interest rates, losses from equity market falls, foreign exchange losses and credit spreads
widening.

11 - Employee information
This note shows where our staff are employed, excluding staff employed by our joint ventures and associates, and
analyses the total staff costs.

(a) Employee numbers
The number of persons employed by the Group, including directors under a service contract, was:

Insurance, Wealth & Retirement (IWR)
UK & Ireland General Insurance
Canada General Insurance
Aviva Investors
International investments
Other operations
Total employee numbers

At 31 December

Average for the year1

2023
Number

9,963
8,653
4,657
963
1,490
656
26,382

2022
Number

9,163
7,858
4,471
997
1,334
541
24,364

2023
Number

9,562
8,333
4,643
967
1,447
577
25,529

2022
Number

8,717
7,680
4,439
1,069
1,294
502
23,701

1. Average employee numbers have been calculated using a monthly average that takes into account recruitment, leavers, transfers, acquisitions and disposals of businesses during the year.

(b) Staff costs

Wages and salaries
Social security costs
Post-retirement obligations
Defined benefit schemes
Defined contribution schemes
Profit sharing and incentive plans
Equity compensation plans
Termination benefits
Total staff costs

Staff costs are charged within:

Acquisition costs
Claims handling expenses
Central costs
Staff costs
Total staff costs

Note

46(d)

33(d)

Note

2023
£m

1,132
132

27
190
198
61
14
1,754

2023
£m

465
190
67
1,032
1,754

2022
£m

1,042
126

23
172
220
58
17
1,658

2022
£m

459
204
59
936
1,658

12 - Directors
Information concerning individual directors’ emoluments, interests and transactions is given in the Directors’
Remuneration report in the ‘Corporate governance’ section of this report. For the purposes of the disclosure required by
Schedule 5 to the Companies Act 2006, the total aggregate emoluments of the directors in respect of 2023 was
£7.3 million (2022: £6.5 million). Employer contributions to pensions for executive directors for qualifying periods were
£nil in both 2023 and 2022. The aggregate net value of share awards granted to the directors in the year was £nil in both
2023 and 2022. No share options were exercised by directors during the year in either 2023 and 2022.

Aviva plc

3.61

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

13 - Auditors’ remuneration
This note shows the total remuneration payable by the Group, excluding VAT and any overseas equivalent thereof,
to our auditors.

Fees payable to PwC LLP and its associates for the statutory audit of the Aviva Group and Company financial
statements

Fees payable to PwC LLP and its associates for other services

Audit of Group subsidiaries
Additional fees related to the prior year audit of Group subsidiaries

Total audit fees
Audit related assurance
Total audit and audit-related assurance fees
Other assurance services
Total audit and assurance fees
Tax compliance services
Tax advisory services
Services relating to corporate finance transactions
Other non-audit services not covered above
Fees payable to PwC LLP and its associates for services to Group companies
Fees payable to PwC LLP and its associates for Group occupational pensions scheme audits

2023
£m

3.2

18.6
0.1
21.9
4.5
26.4
1.3
27.7
—
—
—
—
27.7
0.1

2022
£m

3.4

21.8
0.7
25.9
4.5
30.4
1.7
32.1
—
—
—
—
32.1
0.1

Fees payable for the audit of the Group’s subsidiaries include fees for the statutory audit of the subsidiaries, both inside
and outside the UK, and for the work performed by the principal auditors in respect of the subsidiaries for the purpose of
the consolidated financial statements of the Group. Included in the statutory audit fees for the Group and its subsidiaries
for 2022 and 2023 are fees payable in respect of adopting new accounting standards, most significantly, IFRS 17.

Audit related assurance comprises services in relation to statutory and regulatory filings. These include fees for the audit
of the Group’s Solvency II regulatory returns, services for the audit of other regulatory returns of the Group’s subsidiaries
and review of interim financial information under the Listing Rules of the UK Listing Authority. Total audit fees (including
additional fees related to the audit of Group subsidiaries) and audit-related assurance fees were £26.4 million
(2022: £30.4 million).

Other assurance services in 2023 of £1.3 million (2022: £1.7 million) mainly include assurance fees over a selection of
non-financial reporting metrics.

In addition to these fees, audit fees payable to PwC LLP in respect of investment funds consolidated in the Group
financial statements were £4.1 million (2022: £3.9 million). These fees are borne directly by the unitholders of the funds
and are not borne by the Group.

Details of the Group’s process for safeguarding and supporting the independence and objectivity of the external auditors
are given in the Audit Committee report.

14 - Tax
This note analyses the tax charge for the year and explains the factors that affect it.

(a) Tax charged/(credited) to the income statement
(i) The total tax charged/(credited) comprises:

For the period
Adjustments in respect of prior years

Current tax

Origination and reversal of temporary differences
Write down/(back) of deferred tax assets

Deferred tax
Total tax charged/(credited) to income statement

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).

2023
£m

321
(29)
292
306
(14)
292
584

Restated1
2022
£m

89
(35)
54
(1,190)
(73)
(1,263)
(1,209)

Aviva plc

3.62

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(ii) Policyholder tax
The Group, as a proxy for policyholders in the UK and Ireland, is required to record taxes on investment income and
gains each year. Accordingly, the tax benefit or expense attributable to UK and Ireland life insurance policyholder returns
is included in the tax charge. The tax charge attributable to policyholder returns included in the charge above is
£249 million (2022: credit of £764 million).

(iii) The tax charged/(credited) to the income statement, comprising current and deferred tax, can be analysed as
follows:

UK tax
Overseas tax
Total tax charged/(credited) to income statement

2023
£m

517
67
584

Restated1
2022
£m

(1,238)
29
(1,209)

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).

(iv) Unrecognised tax losses and temporary differences
Unrecognised tax losses and temporary differences of previous years were used to reduce the current tax expense and
deferred tax charge by £nil million and £14 million (2022: £nil million and £73 million) respectively.

(v) Deferred tax charged/(credited) to the income statement
Deferred tax charged/(credited) to the income statement represents movements on the following items:

Long-term business technical provisions and other insurance items
Deferred acquisition costs
Unrealised gains on investments
Pensions and other post-retirement obligations
Unused losses and tax credits
Subsidiaries, associates and joint ventures
Intangibles and additional value of in-force long-term business
Provisions and other temporary differences
Total deferred tax charged/(credited) to income statement

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).

(b) Tax credited to other comprehensive income
(i) The total tax credited comprises:

In respect of pensions and other post-retirement obligations
In respect of foreign exchange movements

Current tax

In respect of pensions and other post-retirement obligations

Deferred tax
Total tax credited to comprehensive income

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).

(ii) Policyholder tax
There is no tax charge/(credit) attributable to policyholders’ return included above in either 2023 or 2022.

2023
£m

(195)
(25)
57
14
225
—
(27)
243
292

Restated1
2022
£m

(162)
17
(300)
15
(295)
(28)
(25)
(485)
(1,263)

2023
£m

(3)
2
(1)
(119)
(119)
(120)

Restated1
2022
£m

—
(6)
(6)
(412)
(412)
(418)

Aviva plc

3.63

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(d) Tax reconciliation
The tax on the Group’s profit/(loss) before tax differs from the theoretical amount that would arise using the tax rate of
the home country of the Company as follows:

Total profit/(loss) before tax
Tax calculated at standard UK corporation tax rate of 23.50% (2022:
19.00%)

Reconciling items
Different basis of tax – policyholders
Adjustment to tax charge in respect of prior periods
Non-assessable income and items not taxed at the full statutory rate
Disallowable expenses
Different local basis of tax on overseas profits
Movement in valuation of deferred tax
Tax effect of profit from joint ventures and associates
Other
Total tax charged/(credited) to income statement

Shareholder
£m

Policyholder
£m

2023

Total
£m

Shareholder
£m

Policyholder
£m

Restated1
2022

Total
£m

1,441

249

1,690

(1,475)

(764)

(2,239)

339

397

(280)

(145)

(425)

—
(9)
(13)
32
8
(30)
6
2
335

192
—
—
—
(1)
—
—
—
249

192

(9)
(13)
32
7
(30)
6
2
584

—
(28)
(31)
16
(3)
(113)
(6)
—
(445)

(620)
—
—
—
1
—
—
—
(764)

(620)
(28)
(31)
16
(2)
(113)
(6)
—
(1,209)

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).

The tax charge/(credit) attributable to policyholder returns is removed from the Group’s total profit before tax in arriving
at the Group’s profit before tax attributable to shareholders’ profits. As the net of tax profits attributable to with-profits
and unit-linked policyholders is zero, the Group’s pre-tax profit attributable to policyholders is an amount equal and
opposite to the tax charge/(credit) attributable to policyholders included in the total tax charge.

The UK corporation tax rate increased to 25% from 1 April 2023. This rate has been used in the calculation of the UK’s
deferred tax assets and liabilities.

In addition, the UK government announced a reduction in the authorised surplus payments charge, applicable to
withdrawing amounts from pension schemes in surplus, from 35% to 25% to take effect from 6 April 2024. This provision
was not substantively enacted at the balance sheet date, however, its implementation is expected to reduce the deferred
tax liabilities of the group by approximately £43 million.

During 2023, legislation on The Organisation for Economic Co-operation and Development proposals to reform the
international tax system and introduce a global minimum effective rate of corporation tax of 15% was enacted or
substantively enacted by a number of jurisdictions in which the group operates, to take effect from 31 December 2023. In
accordance with the amendments to IAS 12, endorsed in the UK on 19 July 2023, the Group has applied the exemption and
not provided for deferred tax in respect of these reforms.

The Group has assessed its potential exposure, based on the available information, and has identified that the effective
tax rates in most jurisdictions are either over 15% or that transitional safe harbour relief is expected to apply. Where these
do not apply, the Group expects to be exposed to no greater than £10 million of additional tax under these provisions in
those jurisdictions.

(e) Tax paid reconciliation
The tax on the Group’s profit before tax differs from the tax paid per the consolidated statement of cash flows as follows:

Total tax charged/(credited) to income statement

Deferred tax
Adjustments in respect of prior years
Current tax recorded in other comprehensive income

Accounts adjustments

Amounts paid in (earlier)/later accounting periods

Amounts received relating to prior accounting periods

Payment timing differences
Total tax paid

2023
£m

584
(292)
29
(1)
(264)
(180)
(72)
(252)
68

Restated1
2022
£m

(1,209)
1,263
35
(6)
1,292
131
(4)
127
210

Total tax paid has arisen in our main jurisdictions of the UK, Canada and Ireland by £46 million, £20 million and £2 million,
respectively (2022: £134 million, £65 million and £6 million). Other jurisdictions accounted for £nil million
(2022: £5 million).

Deferred tax represents the tax on profits or losses, which are required by legislation to be taxed in a different period to
which they impact the Group’s financial statements. Adjustments in respect of prior years arise where the final tax
liability payable to tax authorities is different from the tax charge for the period reported in the Annual Report and
Accounts.

Aviva plc

3.64

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

15 - Earnings per share
This note shows how to calculate earnings per share on profit attributable to ordinary shareholders, based both on the
present shares in issue (the basic earnings per share) and the potential future shares in issue, including conversion of
share options granted to employees (the diluted earnings per share). We have also shown the same calculations based on
our Group adjusted operating profit as we believe this gives an important indication of operating performance.
Consideration of both these measures gives a full picture of the performance of the business during the year.

(a) Basic earnings per share
(i) Basic earnings per share is calculated as follows:

Profit/(loss) tax attributable to shareholders’ profits
Tax attributable to shareholders’ profits
Profit/(loss) for the period
Amount attributable to non-controlling interests
Coupon payments in respect of tier 1 notes
Cumulative preference dividends
Profit attributable to ordinary shareholders
Weighted average number of shares
Operating earnings per share/Basic earnings per share2

Group
adjusted
operating
profit
£m

1,467
(289)
1,178

(21)
(34)
(17)

1,106
2,744
40.3 p

Adjusting
items
£m

(26)
(46)
(72)
—
—
—
(72)

2,744
(2.6) p

Note

15(a)(iii)

2023

Total
£m

1,441
(335)
1,106

(21)
(34)
(17)

1,034
2,744
37.7 p

Group
adjusted
operating
profit
£m

1,350
(178)
1,172
(21)
(17)
(17)
1,117
3,126
35.7 p

Adjusting
items
£m

(2,825)
623
(2,202)
—
—
—
(2,202)
3,126
(70.4) p

Restated1
2022

Total
£m

(1,475)
445
(1,030)
(21)
(17)
(17)
(1,085)
3,126
(34.7) p

1. The 2022 comparative results have been restated following the adoption of IFRS 17 and for methodology changes described in note 1.
2. Operating earnings per share in 2022 was impacted by the share consolidation completed on 16 May 2022. The operating earnings per share numbers using weighted average number of shares as if

the share consolidation had taken place on 1 January 2022 would have been 39.9 pence per share.

(ii) Basic earnings per share comprises:

Group adjusted operating profit attributable to ordinary
shareholders

Adjusting items:

Investment variances and economic assumption changes
Impairment of goodwill, joint ventures, associates and other
amounts expensed

Amortisation and impairment of intangibles acquired in
business combinations

Amortisation and impairment of acquired value of in-force
business

Integration and restructuring costs
Other

Profit/(loss) attributable to ordinary shareholders

Net of tax, NCI,
preference
dividends and
tier 1 notes
coupon
payments
£m

Before tax
£m

2023

Per share
pence

Before tax
£m

Net of tax, NCI,
preference
dividends and
tier 1 notes
coupon
payments
£m

Restated1
2022

Per share
pence

1,467

1,106

40.3

1,350

1,117

35.7

322

207

7.5

(2,736)

(2,139)

(68.4)

—

(8)

(0.3)

(52)

(40)

(1.5)

(54)

(45)

(1.4)

(59)

(61)
(176)
1,441

(43)

(46)
(150)

1,034

(1.6)

(1.7)
(5.5)
37.7

(68)

—
41
(1,475)

(56)

—
46
(1,085)

(1.8)

—
1.5
(34.7)

The 2022 comparative results have been restated following the adoption of IFRS 17 and for methodology changes described in note 1.

(iii) Weighted average number of shares
The calculation of basic earnings per share uses a weighted average of 2,744 million (2022: 3,126 million) ordinary shares in
issue, after deducting treasury shares. The actual number of shares in issue at 31 December 2023 was 2,739 million
(2022: 2,808 million) or 2,652 million (2022: 2,723 million) excluding treasury shares. See note 32 for further information
on the movements in share capital during the year.

Aviva plc

3.65

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(b) Diluted earnings per share
(i) Diluted earnings per share is calculated as follows:

Profit attributable to ordinary shareholders
Dilutive effect of share awards and options2
Diluted earnings per share

Net of tax, NCI,
preference
dividends and
tier 1 notes
coupon
payments
£m

1,034

Weighted
average
number of
shares
£m

2,744
33
2,777

2023

Per share
pence

37.7
(0.5)
37.2

Net of tax, NCI,
preference
dividends and
tier 1 notes
coupon
payments
£m

(1,085)

Weighted
average
number of
shares
£m

3,126
—
3,126

Restated1
2022

Per share
pence

(34.7)
—
(34.7)

1. The 2022 comparative results have been restated following the adoption of IFRS 17 and for methodology changes described in note 1.
2. Excluded from the diluted (pence per share) figures are £39 million ordinary shares issued during the year ended 31 December 2022. If exercised, these would have a 0.4 pence per share and are

excluded in accordance with IAS 33 Earnings per share.

(ii) Diluted earnings per share on Group adjusted operating profit attributable to ordinary shareholders is calculated as
follows:

Profit attributable to ordinary shareholders
Dilutive effect of share awards and options
Diluted earnings per share

Net of tax,
NCI,
preference
dividends
and tier 1
notes coupon
payments
£m

1,106

Weighted
average
number of
shares
£m

2,744
33
2,777

2023

Per share
pence

40.3
(0.5)
39.8

Net of tax,
NCI,
preference
dividends and
tier 1 notes
coupon
payments
£m

Weighted
average
number of
shares
£m

1,117

3,126
39
3,165

Restated1
2022

Per share
pence

35.7
(0.4)
35.3

1. The 2022 comparative results have been restated following the adoption of IFRS 17 and for methodology changes described in note 1.

16 - Dividends and appropriations
This note analyses the total dividends and other appropriations paid during the year, as set out in the table below. Details
are also provided of the proposed final dividend for 2023, which is not accrued in these financial statements and is
therefore excluded from the table.

Interim 2023 – 11.10 pence per share, paid on 5 October 2023
Final 2022 – 20.70 pence per share, paid on 18 May 2023
Interim 2022 – 10.30 pence per share, paid on 28 September 2022
Final 2021 – 14.70 pence per share, paid on 19 May 2022
Ordinary dividends declared and charged to equity in the year
Preference dividends declared and charged to equity in the year
Coupon payments on tier 1 notes charged to equity in the year
Total dividends and appropriations

2023
£m

302
576
—
—
878
17
34
929

2022
£m

—
—
287
541
828
17
17
862

Subsequent to 31 December 2023, the directors proposed a final dividend for 2023 of 22.3 pence pence per ordinary
share, amounting to £611 million in total. The cash value of dividend is calculated using 2,739,487,140 shares as at 1 March
2024 representing issued shares eligible for dividend payment. Subject to approval by shareholders at the AGM, the
dividend will be paid on 23 May 2024 and will be accounted for as an appropriation of retained earnings in the year ending
31 December 2024. See shareholder services in the Other information section for further details. See note 32 for
information on share buyback and return of capital to ordinary shareholders.

Aviva plc

3.66

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

17 - 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.

(a) Carrying amount

At 1 January
Acquisitions and additions1
Disposals
Foreign exchange rate movements
Impairment charges
At 31 December

Gross
amount
£m

Accumulated
impairment
£m

2,185
2
—
(5)
—
2,182

(83)
—
—
1
—
(82)

2023

Carrying
amount
£m

2,102
2
—
(4)
—
2,100

Gross
amount
£m

Accumulated
impairment
£m

1,821
354
—
10
—
2,185

(80)
—
—
(3)
—
(83)

Restated1,2
2022

Carrying
amount
£m

1,741
354
—
7
—
2,102

1. Comparative amounts for acquisitions and additions to goodwill have been increased by £30 million following restatement of the Succession Wealth acquisition balance sheet (see note 1(c)).
2. Comparative amounts for gross amount and accumulated impairment have been net down by £15 million to remove historic goodwill balances that had been fully impaired in disposed of entities.

This does not impact the carrying amount of goodwill at 31 December 2022.

Impairment tests on goodwill were conducted as described in section (b).

(b) Goodwill allocation and impairment testing
A summary of the goodwill and intangibles with indefinite useful lives allocated to groups of cash generating units (CGUs)
is presented below.

United Kingdom – long-term business
United Kingdom – fund management business
United Kingdom – general insurance and health
Ireland – general insurance and health
Canada
Other
Total

Carrying
amount of
intangibles with
indefinite
useful lives
note 18
£m

—
—
1
—
—
—
1

Carrying
amount of
goodwill
£m

663
356
924
96
61
—
2,100

2023

Total
£m

663
356
925
96
61
—
2,101

Carrying
amount of
intangibles with
indefinite
useful lives
note 18
£m

—
—
1
—
—
—
1

Carrying
amount of
goodwill
£m

663
354
924
98
63
—
2,102

Restated1
2022

Total
£m

663
354
925
98
63
—
2,103

1. Comparative amounts for fund management business have been increased by £30 million following restatement of the Succession Wealth acquisition balance sheet (see note 1(c)).

Goodwill in all business units is tested for impairment by comparing the carrying value of the cash generating unit to
which the goodwill relates, to the recoverable value of that CGU. The recoverable amount is the value in use of the CGU
unless otherwise stated.

(i) Long-term business
Value in use has been calculated based on a shareholder value of the business calculated in accordance with Solvency II
principles, adjusted where Solvency II does not represent a best estimate of shareholders’ interests. The principal
adjustments relate to the exclusion of the benefit of transitional measures on technical provisions and the volatility
adjustment under Solvency II, modification of the Solvency II risk margin to an economic view and removal of restrictions
on contract boundaries or business scope.

The present value of expected profits arising from future new business may be included within the shareholder value and
is calculated on an adjusted Solvency II 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.

Future new business profits beyond the initial three years are extrapolated using a steady growth rate. Growth rates and
expected future profits are set with regards to management estimates, past experience and relevant available market
statistics.

Expected profits from future new business are discounted using a risk adjusted discount rate. The discount rate is a
combination of a risk-free rate and a risk margin to make prudent allowance for the risk that experience in future years
for new business may differ from that assumed.

Aviva plc

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Annual Report and Accounts 2023

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Notes to the consolidated financial statements

(ii) Key assumptions
The Solvency II non-economic assumptions in relation to mortality, morbidity, persistency and expenses and other items
are, based on management’s best estimate assumptions. Economic assumptions are based on market data as at the end of
each reporting period. The basic risk-free rate curves used to value the technical provisions reflect the curves, credit risk
adjustment and fundamental spread for the matching adjustment published by the European Insurance and Occupational
Pensions Authority (EIOPA) and the Bank of England on their websites. For the purposes of calculating value in use, the
Solvency II risk margin has been modified to an economic view, with a cost of capital rate of 2%.

(iii) General insurance, health, fund management and other businesses
Value in use is calculated as the discounted value of expected future profits of each business. The calculation uses cash
flow projections based on business plans approved by management covering at least a three-year period. 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, premium rate and fee income changes, claims inflation and commission rates and consider future risks
associated with climate change.

Cash flows beyond the plan period are extrapolated using a steady growth rate. Growth rates and expected future profits
are set with regards to past experience and relevant available market statistics.

Future profits are discounted using a risk adjusted discount rate which is based on the Capital Asset Pricing Model
(CAPM). The inputs include the risk-free rate of interest appropriate to the geographic location of the cash flows related
to each CGU being tested, market risk premium, beta and other adjustments to factor local market risks and risks specific
to each CGU.

Key assumptions

United Kingdom general insurance and health
Ireland general insurance and health
Canada general insurance

2023

2022

Extrapolated
future profits
growth rate
%

Future pre-
tax profits
discount rate
%

Extrapolated
future profits
growth rate
%

Future pre-
tax profits
discount rate
%

1.0
Nil

5.0

11.9
9.3
10.8

1.0
Nil
5.0

12.4
9.6
10.8

Results of impairment testing
Management’s impairment review of the Group’s cash generating units did not identify any necessary impairments to
goodwill. There were no impairments in 2022.

Aviva plc

3.68

Annual Report and Accounts 2023

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3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

18 - Acquired value of in-force business (AVIF) and intangible assets
This note shows the movements in cost, amortisation and impairment of the acquired value of in-force business and
intangible assets during the year.

AVIF on
investment
contracts (a)
£m

Internally
generated
intangibles
assets
£m

Other
intangible
assets with
finite useful
lives (b)
£m

Intangible
assets with
indefinite
useful lives
£m

AVIF on
investment
contracts (a)
£m

Total
£m

Internally
generated
intangibles
assets
£m

Other
intangible
assets with
finite useful
lives (b)1
£m

Intangible
assets with
indefinite
useful lives
£m

2023

Restated1,2
2022

Total
£m

Gross amount
At 1 January
Additions
Disposals
Foreign exchange rate
movements

At 31 December
Accumulated amortisation
At 1 January
Amortisation for the
year

Disposals
Foreign exchange rate
movements

At 31 December
Accumulated Impairment
At 1 January
Impairment charges
Foreign exchange rate
movements

At 31 December
Carrying amount at 1
January

Carrying amount at 31
December

1,432
—
—

687
185
—

822
25
—

(1)

(2)

1,431

870

(6)

841

(886)

(516)

(528)

(59)

(67)

(52)

—

(945)

(582)

(576)

(25)
—

(47)
—

—

(25)

(47)

521

461

124

241

—
—

—

294

265

1
—
—

—

—
—

—

2,942
210
—

1,430
—
—

732
55
(108)

(9)

3,143

1,432

687

711
101
—

822

1
—
—

2,874
156
(108)

—

2,942

(1,930)

(818)

(524)

(471)

—

(1,813)

(178)

—

(68)

—

(88)

102

(54)

—

(6)

(3)

(2,103)

(886)

(516)

(528)

(72)
—

—

(72)

(24)
—

(1)

(25)

(43)
(4)

—

(47)

—
—

—

940

588

165

240

968

521

124

294

—

—
—

—

(210)

102

(9)

(1,930)

(67)
(4)

(1)

(72)

994

940

1. Comparative amounts for acquisitions and additions to other intangible assets with finite useful lives have decreased by £89 million following restatement of the Succession Wealth acquisition

balance sheet (see note 1(c)).

2. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

(a) Acquired value of in-force business
AVIF on non-participating investment contracts is generally recoverable in more than one year. Of the total of
£461 million, £409 million (2022: £464 million) is expected to be recoverable more than one year after the statement of
financial position date.

AVIF is reviewed for evidence of impairment, consistent with reviews conducted for other finite life intangible assets.
If evidence of impairment exists, AVIF is tested at product portfolio level by reference to the value of future profits in
accordance with Solvency II principles, adjusted where Solvency II does not represent a best estimate of shareholders’
interests, consistent with the impairment test for goodwill for long term business (see note 17(b)).

(b) Other intangible assets
Additions to Internally generated intangible assets in 2023 relate to capitalisation of software costs in relation to the
Group’s digital initiatives. Impairments totalling £nil million (2022: £4 million) have been recognised in 2023.

Other intangible assets with finite useful lives primarily includes the value of bancassurance and other distribution
agreements.

Aviva plc

3.69

Annual Report and Accounts 2023

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4. Other Information

Notes to the consolidated financial statements

19 - Interests in, and loans to, joint ventures
In several businesses, Group companies and other parties jointly control certain entities. This note analyses these
interests and describes the principal joint ventures in which we are involved.

(a) Carrying amount and details of joint ventures
(i) The movements in the carrying amount comprised:

At 1 January
Share of loss after tax
Additions
Disposals
Share of losses taken to other comprehensive income
Dividends received from joint ventures
Foreign exchange rate movements
At 31 December
Less: Joint ventures classified as held for sale
At 31 December

Goodwill and
intangibles
£m

70
—
—
—
—
—
(3)
67
(67)
—

Equity
interests
£m

1,802

(33)
8
(19)
—
(51)
(36)

2023

Total
£m

1,872

(33)
8
(19)
—
(51)
(39)

1,671
(482)
1,189

1,738
(549)
1,189

Goodwill and
intangibles
£m

Equity
interests
£m

62
—
—
—
—
—
8
70
—
70

1,722
27
94
(12)
(38)
(46)
55
1,802
—
1,802

Restated1
2022

Total
£m

1,784
27
94
(12)
(38)
(46)
63
1,872
—
1,872

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

Additions and disposals in 2023 relate to the Group's holdings in property management undertakings.

On 13 September 2023, Aviva announced the sale of its entire shareholding in Aviva Singlife Holdings Pte Ltd to Sumitomo
Life Insurance Company. The shareholding, together with two debt instruments, have been classified as held for sale at
31 December 2023. No remeasurement loss has been recognised on reclassification to held for sale (see note 3(b)).

The Group’s share of total comprehensive income related to joint venture entities is £33 million loss (2022: £11 million
loss).

(ii) The carrying amount at 31 December comprised:

Property management undertakings
Long-term business undertakings
At 31 December
Less: Joint ventures classified as held for sale
At 31 December

Goodwill and
intangibles
£m

Equity
interests
£m

—
67
67
(67)
—

927
744
1,671
(482)
1,189

2023

Total
£m

927
811
1,738
(549)
1,189

Goodwill and
intangibles
£m

Equity
interests
£m

—
70
70
—
70

982
820
1,802
—
1,802

Restated1
2022

Total
£m

982
890
1,872
—
1,872

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

The property management undertakings perform property ownership and management activities, and are incorporated
and operate in the UK. All such investments are held by subsidiary entities.

The long-term business undertakings perform life insurance activities. All investments in such undertakings are unlisted
and held by subsidiaries, except for the shares in the Chinese joint venture, Aviva-COFCO Life Insurance Company
Limited, which are held by Aviva plc. The Group’s share of net assets of that company is £252 million
(2022 restated: £319 million) and the carrying value at cost of £123 million (2022: £123 million).

(iii) Principal joint ventures
No joint ventures are considered to be material from a Group perspective in either 2023 or 2022. The Group’s principal
joint ventures are as follows:

Ascot Real Estate Investments LP
2-10 Mortimer Street Limited Partnership
Aviva-COFCO Life Insurance Company Ltd.
Singapore Life Holdings Pte Limited (formerly known as
Aviva Singlife Holdings Pte. Ltd)

Nature of activities

Property management
Property management
Life insurance
Insurance holding
company

Principal place
of business

UK
UK
China

2023
Proportion of
ownership
interest
%

50.00%
50.00%
50.00%

2022
Proportion of
ownership
interest
%

50.00%
50.00%
50.00%

Singapore

24.19%

25.95%

Aviva plc

3.70

Annual Report and Accounts 2023

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4. Other Information

Notes to the consolidated financial statements

(iv) Contingent liabilities and commitments
From time to time Group joint ventures may receive liability claims or become involved in actual or threatened related
litigation. The joint ventures have no other contingent liabilities at 31 December 2023 (2022: none) to which the Group
has significant exposure. The Group has no commitments to provide funding to property management joint ventures
(2022: none).

In certain jurisdictions the ability of joint ventures to transfer funds in the form of cash dividends or to repay loans and
advances made by the Group is subject to local corporate or insurance laws and regulations and solvency requirements.

(b) Impairment testing
Interests in joint ventures are tested for impairment of goodwill and intangibles when there is an indicator of impairment.
They are tested for impairment by comparing the carrying value of the cash generating unit to which the goodwill or
intangible relates to the recoverable value of that cash generating unit. Recoverable amount for long-term and general
insurance businesses are calculated on a consistent basis with that used for impairment testing of goodwill, as set out in
note 17(b). The recoverable amount of property management undertakings is the fair value less costs to sell of the joint
venture, measured in accordance with the Group’s accounting policy for investment property (see accounting policy R).

20 - Interests in, and loans to, associates
This note analyses our interests in entities which we do not control but where we have significant influence.

(a) Carrying amount and details of associates
(i) The movements in the carrying amount comprised:

At 1 January
Share of results before tax
Share of tax
Share of results after tax
Impairment
Reversal of impairment
Share of loss after tax
Reclassification of subsidiary1
Reclassification from financial investments2
Additions
Reduction in group interest
Dividends received from associates
Foreign exchange rate movements
At 31 December

2023
interests
£m

2022
interests
£m

41
(39)
—
(39)
—
—
(39)
—
195
1
(8)
(30)
—
160

118
(11)
—
(11)
(23)
15
(19)
(73)
—
7
(1)
(1)
10
41

1. On 28 September 2022 the Group acquired an additional 25% of the ordinary shares of Aviva India, increasing the Group's total shareholding from 49% to 74% giving Aviva a controlling interest in

the entity.

2. The reclassification from financial investments of £195 million relates to the Group’s holding in a property management undertaking.

The Group’s share of total comprehensive income related to associates is £39 million loss (2022: £19 million loss).

(ii) Principal associates
No associates are considered to be material from a Group perspective in either 2023 or 2022. Investments in principal
associates are held by subsidiaries. The Group's principal associates are as follows:

Balanced Commercial Property Trust
AI UK Commercial Real Estate Debt Fund

Nature of activities

Principal place
of business

Property Management
Property Management

UK
UK

2023
Proportion of
ownership
interest
%

23.18 %
20.90 %

2022
Proportion of
ownership
interest
%

— %
20.86 %

(iii) Contingent liabilities
The associates have no contingent liabilities to which the Group has significant exposure. The Group has no
commitments to provide funding to property management associates (2022: £2 million).

In certain jurisdictions the ability of associates to transfer funds in the form of cash dividends or to repay loans and
advances made by the Group is subject to local corporate or insurance laws and regulations and solvency requirements.

(b) Impairment testing
The recoverable amount of property management undertakings is the fair value less costs to sell of the associate,
measured in accordance with the Group’s accounting policy for investment property (see accounting policy R).

There is no impairment charge in 2023. In 2022, £23 million was recognised in the income statement and primarily related
to the full impairment of an investment held by the UK & Ireland Life business.

Aviva plc

3.71

Annual Report and Accounts 2023

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4. Other Information

Notes to the consolidated financial statements

21 – Property and equipment
This note analyses our property and equipment, the total of which primarily consists of properties occupied by
Group companies.

Owner occupied
properties
Leasehold
£m

Freehold
£m

Motor
vehicles
£m

Computer
equipment
£m

Other
assets
£m

2023

Total
£m

Owner occupied
properties
Leasehold
£m

Freehold
£m

Motor
vehicles
£m

Computer
equipment
£m

Other
assets
£m

2022

Total
£m

Cost or valuation
At 1 January
Additions
Disposals
Fair value losses
Modification of right-of-use
assets
Foreign exchange rate
movements

At 31 December
Depreciation and impairment
At 1 January
Charge for the year
Disposals
Foreign exchange rate
movements

9
—
—
—

—

1,125
69
(2)
—

—

(6)

1,186

6
—
—
—

—

(1)

—
—

(895)
(47)
1

(3)
—
—

64
9
(7)
—

181
71
(1)
(16)

27
1,385
—
149
(10)
(17)
(16) —

1,149

7
6 —
(2)
(1)
— —

178 1,429
68
28
8
14
(19)
(50)
(11)
— — —

—

(36) —

— —

(36)

(3)

(1)

8 —

245

1,509

1,125

181 1,385

(48)
(5)
7

(88) (1,035)
(14)

(12)
(66) —
11

—

(855)

(3)
(33) —
1 —

(50)
(14)
18

(81) (1,001)
(57)
(10)
34
4

—

(8) —

(2)

(1)

(11)

At 31 December

(1)

(937)

(3)

(43)

(101) (1,085)

(1)

(895)

Carrying amount at 31 December

249

144

424

230

(3)

(48)

(88) (1,035)

93 350

Owner-occupied properties, excluding £249 million (2022: £230 million) held under lease arrangements, are stated at
their revalued amounts, as assessed by qualified external valuers. The valuation assessment adopts market-based
evidence and is in line with guidance from the International Valuation Standards Committee and the requirements of
IAS 16 Property, Plant and Equipment.

Owner-occupied properties held under lease arrangements are stated at amortised cost and are amortised on a straight-
line basis over the lease term, unless the carrying value of the leased asset exceeds the recoverable amount. Where this is
the case, the asset is impaired to its recoverable amount and the impaired carrying value is amortised on a straight-line
basis over the remainder of the lease term. For further information on the Group’s lease arrangements see note 23.

If owner-occupied properties (freehold and leasehold) were stated on a historical cost basis, the carrying amount would
be £58 million (2022: £134 million).

22 – Investment property
This note gives details of the properties we hold for long-term rental yields or capital appreciation.

Freehold
£m

Leasehold
£m

At 1 January
Additions
Capitalised expenditure on existing properties
Fair value losses
Disposals
Foreign exchange rate movements
At 31 December

4,476
809
132
(250)
(63)
3
5,107

1,423
23
52
(51)
(318)
(4)

1,125

6,232

2023

Total
£m

5,899
832
184
(301)
(381)
(1)

Freehold
£m

Leasehold
£m

5,333
313
56
(923)
(319)
16
4,476

1,670
14
51
(227)
(97)
12
1,423

2022

Total
£m

7,003
327
107
(1,150)
(416)
28
5,899

See note 24 for further information on the fair value measurement and valuation techniques of investment property.

The fair value of investment properties leased to third parties under operating leases at 31 December 2023 was
£6,085 million (2022: £5,676 million). Future contractual aggregate minimum lease rentals receivable under the
non-cancellable portion of these leases are given in note 23.

Aviva plc

3.72

Annual Report and Accounts 2023

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4. Other Information

Notes to the consolidated financial statements

23 – Lease assets and liabilities
The Group’s leased assets primarily consist of properties occupied by Group companies carried at amortised cost (see
note 21), leasehold investment properties carried at fair value (see note 22) which are sublet to third parties and real
estate long income finance leases (see note 29). Leasehold investment properties are measured in accordance with IAS 40
Investment Property (see accounting policy R).

Although the Group is exposed to changes in the residual value at the end of the current leases to third parties on
investment property, the Group typically enters into new operating leases and therefore is not expected to immediately
realise any reduction in residual value at the end of these leases. Expectations about the future residual values are
reflected in the fair value of the properties.

(a) The following amounts in respect of leased assets have been recognised in the Group’s consolidated income
statement.

Interest expense on lease liabilities
Total lease expenses recognised in the income statement

2023
£m

8
8

2022
£m

9
9

Total cash outflows recognised in the year in relation to leases were £62 million (2022: £63 million).

(b) Right-of-use assets
The following table analyses the right-of-use assets relating to leased properties occupied by Group companies.

At 1 January
Additions
Disposals
Foreign exchange rate movements
Depreciation
Modification of right-of-use assets
At 31 December

2023
£m

230
69

(1)
(2)
(47)
—
249

2022
£m

294
6
(1)
—
(33)
(36)
230

There were no gains arising from sale and leaseback transactions during the year. Included within the income statement
is £3 million (2022: £3 million) of income in respect of sublets of right-of-use assets. Impairment of right-of-use assets
was £3 million (2022: £nil).

(c) Future contractual aggregate minimum lease payments
Lease liabilities included within note 48 total £372 million (2022: £386 million). Future contractual aggregate minimum
lease payments are as follows:

Within one year
Later than one year and not later than five years
Later than five years
Total future contractual aggregate minimum lease payments

2023
£m

77
149
128
354

2022
£m

70
196
165
431

The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not
included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take
effect, the lease liability is reassessed and adjusted against the right-of-use asset.

The lease agreements do not impose any covenants other than the security interest in the leased assets that are held by
the lessor.

(d) Future contractual aggregate minimum lease rentals receivable
Future contractual aggregate minimum lease rentals receivable under non-cancellable operating leases are as follows:

Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
Later than five years
Total future contractual aggregate minimum lease rentals receivable - operating leases

2023
£m

192
171
154
130
113
998
1,758

2022
£m

227
198
175
154
128
1,162
2,044

Aviva plc

3.73

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4. Other Information

Notes to the consolidated financial statements

Future contractual aggregate minimum lease rentals receivable under non-cancellable finance leases are as follows:

2023
£m

4
4
4
4
4
133
153

2022
£m

4
4
4
4
4
157
177

Finance income on the net investment in finance leases during the year was £3 million (2022: £nil).

Unearned finance income in respect of finance leases at 31 December 2023, representing the difference between the
gross and net investment in the leases, was £30 million (2022: £34 million). Unguaranteed residual value in respect of
finance leases was £nil (2022: £nil).

24 – Fair value methodology
This note explains the methodology for valuing our assets and liabilities measured at fair value and for fair value
disclosures. It also provides an analysis of these according to a fair value hierarchy, determined by the market
observability of valuation inputs.

(a) Basis for determining fair value hierarchy
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the
fair value hierarchy described as follows, based on the lowest level input that is significant to the fair value measurement
as a whole.

Level 1
Inputs to Level 1 fair values are quoted prices (unadjusted) in active markets for identical assets and liabilities that the
entity can access at the measurement date. Level 1 inputs implicitly reflect market view of climate risks to future
cashflows.

Level 2
Inputs to Level 2 fair values are inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be
observable for substantially the full term of the instrument. Level 2 inputs include the following:
• Quoted prices for similar assets and liabilities in active markets;
• Quoted prices for identical or similar assets and liabilities in markets that are not active, the prices are not current,
or price quotations vary substantially either over time or among market makers, or in which little information is
released publicly;

• Inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves

observable at commonly quoted intervals, implied volatilities and credit spreads); and

• Market corroborated inputs.

Where we use broker quotes and no information as to the observability of inputs is provided by the broker, the
investments are classified as follows:
• Where the broker price is validated by using internal models with market observable inputs and the values are similar,

we classify the investment as Level 2; and

• In circumstances where internal models are not used to validate broker prices, or the observability of inputs used by

brokers is unavailable, the investment is classified as Level 3.

Level 3
Inputs to Level 3 fair values are unobservable inputs for the asset or liability. Unobservable inputs may have been used to
measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is
little, if any, market activity for the asset or liability at the measurement date. However, the fair value measurement
objective remains the same, i.e. an exit price at the measurement date from the perspective of a market participant that
holds the asset or owes the liability. Unobservable inputs reflect the assumptions the business unit considers that market
participants would use in pricing the asset or liability. Examples are investment properties and commercial and equity
release mortgage loans. Climate risks are factored into the inputs to Level 3 fair values as described in note 24(g).

The majority of the Group’s assets and liabilities measured at fair value are based on quoted market information or
observable market data. Of the total assets and liabilities measured at fair value 14.3% (2022 restated: 15.5%) of assets and
0.7% (2022: 0.9%) of liabilities are based on estimates and recorded as Level 3. Where estimates are used, these are based
on a combination of independent third-party evidence and internally developed models, calibrated to market observable
data where possible. Third-party valuations using significant unobservable inputs validated against Level 2 internally
modelled valuations are classified as Level 3, where there is a significant difference between the third-party price and the
internally modelled value. Where the difference is insignificant, the instrument would be classified as Level 2.

Aviva plc

3.74

Annual Report and Accounts 2023

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3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(b) Changes to valuation techniques
There were no changes in the valuation techniques during the year compared to those described in the Group's 2022
Annual Report and Accounts.

(c) Carrying amount and fair values of financial instruments
The carrying amounts of financial assets and financial liabilities are set out in the following table:

Mandatorily
held at FVTPL
£m

Designated
at FVTPL on
initial recognition
£m

Amortised
cost
£m

2023

Total
carrying
amount
£m

Mandatorily
held at FVTPL
£m

Designated
at FVTPL on
initial recognition
£m

Amortised
cost
£m

Restated1
2022

Total
carrying
amount
£m

Note

25(a)

Financial assets
Loans
Cash and cash equivalents
Fixed maturity securities
Equity securities
Other investments (including
derivatives)

27,220
—
113,889
92,572

39,370

Financial investments
Reinsurance assets for non-
participating investment contracts
Financial assets classified as held for
sale

Financial liabilities
Non-participating investment contracts
Net asset value attributable to
unitholders

28(a)

245,831

4,713

—

—
959
—
—

4,465
16,314
—
—

31,685
17,273
113,889
92,572

25,919
—
103,776
85,790

—

3,714 29,633
1,064 21,441 22,505
— 103,776
— 85,790

—
—

—

39,370

34,520

—

245,831

224,086

—

— 34,520

— 224,086

—

4,713

5,290

—

— 5,290

199

—

158,588

—

158,588

—

141,188

— 141,188

14,184

—

14,184

—

14,080

— 14,080

Borrowings
Derivative liabilities2

47(a)

55(b)

—
7,426

941
—

5,433
—

6,374
7,426

—
9,541

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and IFRS 9, as described in note 1.
2. Derivative financial liabilities meet the definition of held for trading.

1,091 5,664 6,755
9,541

—

For financial liabilities designated at FVTPL where the change in the credit risk of the financial liability impacts the fair
value, the amounts recognised in the income statement are set out below:

Financial liabilities
Borrowings

2023

2022

During the
year
£m

From initial
recognition
£m

During the
year
£m

From initial
recognition
£m

(103)

Fair values for borrowings held at amortised cost are presented in note 47(a). Fair values of the following financial assets
and financial liabilities approximate to their carrying amounts:
• Receivables;
• Cash and cash equivalents;
• Loans at amortised cost; and
• Payables and other financial liabilities.

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(d) Fair value hierarchy analysis
An analysis of assets and liabilities measured at amortised cost and fair value categorised by fair value hierarchy
is given below.

Fair value hierarchy

Note

Level 1
£m

Level 2
£m

Level 3
£m

Fair value
total
£m

Amortised
cost
£m

2023

Total
carrying
amount
£m

Fair value hierarchy

Level 1
£m

Level 2
£m

Level 3
£m

Fair value
total
£m

Amortised
cost
£m

Restated1
2022

Total
carrying
amount
£m

Recurring fair value measurements
Investment property
Loans
Cash and cash
equivalents

25(a)

—
—

6,232
27,220

—
4,465

6,232
31,685

—
—

— 5,899 5,899
— 5,899
— 25,919 25,919 3,714 29,633

959

—

959

16,314

17,273

1,064

—

— 1,064 21,441 22,505

Fixed maturity securities
Equity securities
Other investments
(including derivatives)

Financial investments
measured at fair value
Reinsurance assets for
non-participating
investment contracts
Financial assets
classified as held for sale

Total financial assets
Non-participating
investment contracts
Net asset value
attributable to
unitholders

42,989
92,259

64,876
—

6,024
313

113,889
92,572

—
—

113,889 22,140 74,448 7,188 103,776
331 85,790
92,572

85,459

—

— 103,776
— 85,790

34,354

4,158

858

39,370

—

39,370

28,192 5,021

1,307 34,520

— 34,520

28(a)

169,602 69,034

7,195

245,831

—

245,831 135,791 79,469 8,826 224,086

— 224,086

41(a)

4,713

—

4,713

—

4,713

5,290

—

— 5,290

—

199

—

175,274 69,034

40,647

284,955 20,978

305,933 142,145 79,469 40,644 262,258 25,155 287,413

41(a)

158,588

—

158,588

—

158,588 141,188

—

— 141,188

14,184

—

14,184

—

14,184

14,070

—

10 14,080

— 14,080

941
304
1,245

941
7,426
181,139

5,433
—
5,433

—

1,091 5,664 6,755
6,374
— 9,541
7,426
186,572 155,458 8,986 1,456 165,900 5,664 171,564

1,091
355 9,541

—
200 8,986

47(a)

Borrowings
Derivative liabilities
Total financial liabilities
Non-recurring fair value measurements
Properties occupied by
group companies

—
7,072
172,822 7,072

—
50

—

55(b)

Total

—

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and IFRS 9, as described in note 1.

IFRS 13 Fair Value Measurement permits assets and liabilities to be measured at fair value on either a recurring or
non-recurring basis. Recurring fair value measurements are those that other IFRSs require or permit in the statement of
financial position at the end of each reporting period, whereas non-recurring fair value measurements of assets or
liabilities are those that other IFRSs require or permit in the statement of financial position in particular circumstances.
The value of freehold owner-occupied properties measured on a non-recurring basis at 31 December 2023 was £8 million
(2022: £8 million), stated at their revalued amounts in line with the requirements of IAS 16 Property, Plant and Equipment.

(e) Valuation approach for fair value assets and liabilities classified as Level 2
Please see section (a) for a description of typical Level 2 inputs.

Fixed maturity securities, in line with market practice, are generally valued using an independent pricing service. These
valuations are determined using independent external quotations from multiple sources and are subject to a number of
monitoring controls, such as monthly price variances, stale price reviews and variance analysis.

Pricing services, where available, are used to obtain the third-party broker quotes. Where pricing services providers are
used, a single valuation is obtained and applied. When prices are not available from pricing services, quotes are sourced
from brokers.

Over-the-counter derivatives are valued using broker quotes or models such as option pricing models, simulation models
or a combination of models. The inputs for these models include a range of factors which are deemed to be observable,
including current market and contractual prices for underlying instruments, period to maturity, correlations, yield curves
and volatility of the underlying instruments.

Unit Trusts and other investment funds (included under the other investments category) are valued using net asset values
which are not subject to a significant adjustment for restrictions on redemption or for limited trading activity.

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(f) Transfers between levels of the fair value hierarchy
For financial instruments that are recognised at fair value on a recurring basis, the Group determines whether transfers
have occurred between levels of the fair value hierarchy by re-assessing categorisation (based on the lowest level input
that is significant to the fair value measurement as a whole) at the end of the reporting period.

Transfers between Level 1 and Level 2
There were no significant transfers between Level 1 and Level 2 (2022: no significant transfers).

Transfers to/from Level 3
£152 million (2022: £699 million) of assets transferred into Level 3 and £2,398 million (2022: £510 million) of assets
transferred out of Level 3 relate principally to fixed maturity securities held by our business in the UK. These are
transferred between Levels depending on the availability of observable inputs and whether the counterparty and broker
quotes are corroborated using valuation models with observable inputs.

£16 million (2022: £297 million) of liabilities transferred into Level 3 relate to derivatives held by our business in the UK.
These have been transferred into level 3 following a change to using an internally-derived valuation model from the
previous counterparty supplied valuations to ensure consistency of approach with the associated assets and liabilities
held at fair value.

£54 million (2022: £nil) of liabilities transferred out of Level 3 relate to derivatives held by our business in the UK.

(g) Further information on Level 3 assets and liabilities
The table below shows movement in the Level 3 assets measured at fair value.

Investment
Property
£m
5,899

Loans
£m
25,919

Fixed
maturity
securities
£m
7,188

Equity
securities
£m
331

2023

Other
investments
(including
derivatives)
£m
1,307

2022

Investment
Property
£m

Loans
£m

7,003 29,979

Fixed
maturity
securities
£m
8,477

Other
investments
(including
derivatives)
£m
1,530

Equity
securities
£m
350

(258)

971
—
(369)
—
—
—

124

116

(50)

(1,159)

(6,691)

(2,053)

2,777
189
(1,786)
—
—
—

1,531
—
(530)
—
67

(2,343)

23
—
(8)
—
23
—

170
—
(634)
—
62
(55)

434
—
(407)
—
—
—

4,979
139
(2,496)
—
—
—

2,274
—
(1,681)
—
666
(508)

18
—
(64)
—
6
(1)

(214)

190
—
(233)
—
27
(1)

(11)

(3)

(5)

(6)

(5)

At 1 January

Total net (losses)/gains
recognised in the income
statement1
Purchases
Issuances
Disposals
Settlements
Transfers into Level 3
Transfers out of Level 3
Foreign exchange rate
movements

At 31 December

6,232

27,220

6,024

313

858

5,899 25,919

7,188

331

1,307

1. Total net (losses)/gains recognised in the income statement includes realised gains/(losses) on disposals.

The table below shows movement in the Level 3 liabilities measured at fair value.

At 1 January
Total net gains/(losses) recognised in the income statement1
Purchases
Issuances
Disposals
Settlements
Transfers into Level 3
Transfers out of Level 3
Foreign exchange rate movements
At 31 December

2023

2022

Net asset
value
attributable
to unitholders
£m

Derivative
liabilities
£m

Borrowings
£m

Net asset
value
attributable
to unitholders
£m

Derivative
liabilities
£m

Borrowings
£m

(10)
10
—
—
—
—
—
—
—
—

(355)
(53)
(10)
—
64
9
(16)
54
3
(304)

(1,091)
66
—
—
—
84
—
—
—
(941)

(10)
—
—
—
—
—
—
—
—
(10)

(445)
280
(1)
—
74
34
(297)
—
—
(355)

(1,140)
(22)
—
—
71
—
—
—
—
(1,091)

1. Total net gains/(losses) recognised in the income statement includes realised gains/(losses) on disposals.

Total net losses recognised in the income statement in the year ended 31 December 2023 in respect of Level 3 assets
measured at fair value amounted to £55 million (2022: net losses of £10,106 million) with net gains in respect of liabilities
of £23 million (2022: net gains of £258 million). Net losses of £27 million (2022: net losses of £10,203 million) attributable
to assets and net gains of £32 million (2022: net gains of £258 million) attributable to liabilities relate to those still held at
31 December 2023.

Aviva plc

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Notes to the consolidated financial statements

The principal assets classified as Level 3, and the valuation techniques applied to them, are described below.

(i) Investment property
• Investment property is valued in the UK at least annually by external chartered surveyors in accordance with guidance
issued by The Royal Institution of Chartered Surveyors, and using estimates during the intervening period. Outside the
UK, valuations are produced by external qualified professional appraisers in the countries concerned. External valuers
in the UK comply with the 'Sustainability and ESG in commercial property valuation and strategic advice' professional
standard issued by the Royal Institution of Chartered Surveyors in December 2021. In a valuation context, sustainability
involves the consideration of matters that include environment and climate change, health and wellbeing, and personal
and corporate responsibility that can or do impact the valuation of an asset. This includes the consideration of capital
expenditure required to maintain the utility of the asset due to the longer-term obsolescence and risk.

• Investment properties are valued on an income approach that is based on current rental income plus anticipated uplifts
at the next rent review, lease expiry, or break option taking into consideration lease incentives and assuming no further
growth in the estimated rental value of the property. The uplift and discount rates are derived from rates implied by
recent market transactions on similar properties. These inputs are deemed unobservable. The yield used to value the
portfolio ranges from 20bps to 2620bps (2022: 100bps to 2160bps) with higher yields predominately relating to
properties in the retail and leisure sectors. Over 95% of the portfolio is valued using spreads within the range from
20bps to 795bps (2022: 100bps to 810bps).

(ii) Loans
• Commercial mortgage loans and Primary Healthcare loans held by our IWR business are valued using a Portfolio Credit

Risk Model. This model calculates a Credit Risk Adjusted Value for each loan. The risk adjusted cash flows are discounted
using a yield curve plus an allowance for illiquidity. Loans valued using the Portfolio Credit Risk Model have been
classified as Level 3 as the liquidity premium is deemed to be non-market observable. At 31 December 2023 the liquidity
premium used in the discount rate was 170bps (2022: 110bps). Future capital expenditure costs of 0.9% per annum
(2022: 0.9%) are included in the modelling of the Credit Risk Adjusted Value of the loans to address climate change
actions, including potential climate-related changes. The impact is a reduction in the fair value of the properties
securing the loans.

• Equity release mortgage loans held by our IWR business are valued using an internal model, with fair value initially being

equal to the transaction price. The value of these loans is dependent on the expected term of the mortgage and the
forecast property value at the end of the term, and is calculated by adjusting future cash flows for credit risk and
discounting using a yield curve plus an allowance for illiquidity. At 31 December 2023 the illiquidity premium used in the
discount rate was 205bps (2022: 155bps).

• The equity release mortgages include a no negative equity guarantee (‘NNEG’) such that the cost of any potential

shortfall between the value of the loan and the realised value of the property at the end of the term is recognised by a
deduction to the value of the loan. Property valuations at the reporting date are obtained by taking the most recent
valuation for the property and indexing using an internal house price index based on published Land Registry data.
NNEG is calculated using base property growth rates reduced for the cost of potential dilapidations, using a stochastic
model. In addition, a cost of capital charge is applied to reflect the variability in these cash flows. The base property
growth rate assumption is RPI +0.75% (2022: RPI +0.75%) which includes a reduction to the growth rate of 0.75% per
annum (2022: 0.5%) for the potential impact of climate change actions. The modelled growth rates include an
adjustment for the 5-year period 2024-2028 to reflect the market view of short-term growth being lower than long-
term average growth.

• The combination of the adjusted rate over the first five years and the base property growth rate equates to a long-term

average growth rate of 3.0% per annum at 31 December 2023 (2022: 3.1%) over a twenty five year projection. After
applying the cost of capital charge, dilapidations and the stochastic distribution, the effective net long-term growth rate
equates to 0.8% per annum (2022: 0.4%).

• Infrastructure and Private Finance Initiative (PFI) loans held by our IWR business are valued using a discounted cash

flow model. This adds spreads for credit and illiquidity to a risk-free discount rate. Credit spreads used in the discount
rate are calculated using an internally developed methodology which depends on the credit rating of each loan, credit
spreads on publicly traded bonds and an estimated recovery rate in event of default and are deemed to be unobservable.
At 31 December 2023, the illiquidity premium used in the discount rate was 140bps (2022: 115bps) for the PFI loans and
ranged from 25bps to 594bps (2022: 25bps to 210bps) for the infrastructure loans.

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Notes to the consolidated financial statements

(iii) Fixed maturity securities
• Structured bond-type, non-standard debt products and privately placed notes held by our business in the UK do not
trade in an active market. These fixed maturity securities are valued using discounted cash flow model, designed to
appropriately reflect the credit and illiquidity risk of the instrument. These bonds have been classified as Level 3
because the valuation approach includes significant unobservable inputs and an element of subjectivity in determining
appropriate credit and illiquidity spreads.

• Other fixed maturity securities held by our Life business in the UK which are not traded in an active market have been
valued using third-party or counter party valuations. These prices are considered to be unobservable due to infrequent
market transaction.

• The unobservable credit and illiquidity spreads used in the discount rate range from 33bps to 499bps

(2022: 25bps to 604bps) with 99% of the modelled assets valued using spreads within the range from 33bps to 419bps
(2022: 25bps to 344bps). Fixed maturity securities held by our UK and Asian businesses which are not traded in an active
market have been valued using third-party or counterparty valuations. These prices are considered to be unobservable
due to infrequent market transaction.

(iv) Equity securities
• Equity securities which primarily comprise private equity holdings held in the UK are valued by a number of third-party

specialists. These are valued using a range of techniques, including earnings multiples, forecast cash flows and
price/earnings ratios which are deemed to be unobservable.

(v) Other investments (including derivatives)
• Other investments are held for index-linked, unit-linked and with-profit funds and are valued based on external

valuation reports received from fund managers. The investments consist of:

– Unit trusts;

– Other investment funds including property funds; and

– Derivatives.

• Where valuations are at a date other than the balance sheet date, as is the case for some private equity funds,

adjustments are made for items such as subsequent draw-downs and distributions and the fund manager’s carried
interest.

(vi) Liabilities
• The principal liabilities classified as Level 3 are securitised mortgage loan notes, presented within Borrowings, which are
valued using a similar technique to the related Level 3 securitised mortgage assets. These liabilities are included within
the relevant liability category within the sensitivity table below.

Sensitivities
The valuation of Level 3 assets involves a high degree of judgement and estimation uncertainty due to the reliance of
valuation models on unobservable inputs. Where possible, the Group tests the sensitivity of the fair values of Level 3
assets and liabilities to changes in unobservable inputs to reasonable alternatives. Level 3 valuations are sourced from
independent third parties when available and, where appropriate, validated against internally-modelled valuations, third-
party models or broker quotes. Where third-party pricing sources are unwilling to provide a sensitivity analysis for their
valuations, the Group undertakes, where feasible, sensitivity analysis on the following basis:

• For third-party valuations validated against internally-modelled valuations using significant unobservable inputs, the

sensitivity of the internally-modelled valuation to changes in unobservable inputs to a reasonable alternative is
determined.

• For third-party valuations either not validated or validated against a third-party model or broker quote, the third-party
valuation in its entirety is considered an unobservable input. Sensitivities are determined by flexing inputs of internal
models to a reasonable alternative, including the yield, NAV multiple or other suitable valuation multiples of the financial
instrument implied by the third-party valuation. For example, for a fixed income security the implied yield would be the
rate of return which discounts the security’s contractual cash flows to equal the third-party valuation.

Aviva plc

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Notes to the consolidated financial statements

The tables below show the sensitivity of the fair value of Level 3 assets and liabilities to changes in unobservable inputs to
a reasonable alternative:

Investment property
Loans

Most significant unobservable input

Equivalent rental yields

2023

Sensitivities

Restated1
2022

Sensitivities

Reasonable
alternative
£bn

Fair value
£bn

Positive
impact
£bn

Negative
impact
£bn

Fair value
£bn

Positive
impact
£bn

Negative
impact
£bn

+/-5-10%

6.2

0.3

(0.3)

5.9

0.3

(0.3)

Illiquidity premium

Commercial mortgage loans
and Primary Healthcare
loans
Equity release mortgage
loans
Infrastructure and Private
Finance Initiative (PFI) loans Illiquidity premium

Base property growth rate

Base property growth rate
Current property market values

Other

Illiquidity premium

Fixed maturity securities

Structured bond-type and
non-standard debt products

Market spread (credit, liquidity
and other)

Credit spreads

+/-20 bps

9.3

+/-100 bps p.a.

+/-50 bps p.a.
+/-10%

9.8

+/-25 bps2
+/-25 bps2

7.0

1.1

+/-25 bps
+/-25 bps2

1.5

4.0

Credit and liquidity spreads

+/-20-25 bps

0.5

0.1

—

0.2
0.3

0.2

—

0.1

—

(0.1)

9.4

0.1

(0.1)

—

(0.2)
(0.3)

9.6

0.1

(0.1)

0.2
0.2

(0.2)
(0.2)

(0.2)

5.3

0.2

(0.2)

—

1.6

—

(0.1)

0.4

2.9

—

0.1

(0.1)

—

3.9

0.1

(0.1)

Privately placed notes
Other fixed maturity
securities

Equity securities

Other investments

Property Funds

Market multiples applied to net
asset values

Other investments (including
derivatives)

Market multiples applied to net
asset values

Liabilities

Borrowings
Other liabilities (including
derivatives)

Illiquidity premium
Independent valuation vs
counterparty

Total Level 3 investments

+/-30bps

0.3

0.1

(0.1)

0.3

0.1

(0.1)

+/-5-20%

0.2

—

0.2

—

+/-10-40%3

0.7

0.1

(0.1)

1.1

0.1

(0.1)

+/-50 bps

(0.9)

—

N/A

(0.3)

39.4

—

1.5

—

(0.4)

(1.5)

39.1

—

1.5

(1.1)

—

(1.5)

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and IFRS 9, as described in note 1.
2. On discount rate spreads.
3. Dependent on investment category.

The above tables demonstrate the effect of a change in one unobservable input while other assumptions remain
unchanged. In reality, there may be a correlation between the unobservable inputs and other factors. It should also be
noted that some of these sensitivities are non-linear, and larger or smaller impacts should not be interpolated or
extrapolated from these results.

(h) Liabilities not carried at fair value for which fair value is disclosed
The table below shows the fair value and fair value hierarchy for those liabilities not carried at fair value.

Fair value hierarchy

Note

Level 1
£m

Level 2
£m

Level 3
£m

Fair value
total
£m

2023

As recognised in
the consolidated
statement of
financial
position line item
£m

Fair value hierarchy

Level 1
£m

Level 2
£m

Level 3
£m

Fair value
total
£m

2022

As recognised in
the consolidated
statement of
financial position
line item
£m

Liabilities not carried at fair value
Borrowings

47(a)

5,104

—

258

5,362

5,433

5,212

144 5,408

5,664

Aviva plc

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Notes to the consolidated financial statements

25 – Loans
This note analyses the loans our Group companies have made, the majority of which are mortgage loans.

(a) Carrying amounts
The carrying amounts of loans were as follows:

Mandatorily
held at FVTPL
£m

At amortised
cost
£m

Note

Loans to banks
Healthcare, infrastructure & PFI other loans
UK securitised mortgage loans
Non-securitised mortgage loans
Other loans
Total loans
Less: Loans classified as held for sale
At 31 December

1,050
8,766
1,633
15,771
—
27,220
—
27,220

3,815
—
—
—
849
4,664

(199)

4,465

31,685

2023

Total
£m

4,865
8,766
1,633
15,771
849
31,884

Mandatorily
held at FVTPL
£m

At amortised
cost
£m

Restated1
2022

Total
£m

1,568
6,837
1,759
15,755
—
25,919
—
25,919

2,913
—
—
—
801

4,481
6,837
1,759
15,755
801
3,714 29,633
—
3,714 29,633

—

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and IFRS 9, as described in note 1.

Of the above total loans, £25,595 million (2022: £24,245 million) are due to be recovered in more than one year after the
statement of financial position date.

Loans at fair value
Fair values have been calculated by using cash flow models appropriate for each portfolio of mortgages. Further details of
the fair value methodology and models utilised are given in note 24(g).

Healthcare, infrastructure and PFI other loans of £8,766 million (2022: £6,837 million) are secured against the income from
healthcare and educational premises.

Non-securitised mortgage loans include £8,184 million (2022: £7,784 million) of residential equity release mortgages,
£5,646 million (2022: £5,971 million) of commercial mortgages and £1,940 million (2022: £2,000 million) relating to UK
primary healthcare and PFI businesses. The healthcare and PFI mortgage loans are secured against General Practitioner
premises, other primary health-related premises or other emergency services related premises. For all such loans,
government support is provided through either direct funding or reimbursement of rental payments to the tenants to
meet income service and provide for the debt to be reduced substantially over the term of the loan. Although the loan
principal is not government-guaranteed, the nature of these businesses and premises provides considerable comfort of
an ongoing business model and low risk of default.

The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial
assets mentioned above.

Loans at amortised cost
The carrying amount of these loans at both 31 December 2023 and 31 December 2022 was a reasonable approximation for
their fair value.

(b) Analysis of loans carried at amortised cost

Loans to banks
Other loans
Total loans at amortised cost
Less: Loans classified as held for sale
Total loans at amortised cost

At amortised
cost
£m

Impairment
£m

3,815
849
4,664

(199)

4,465

—
—
—
—
—

2023

Carrying
Value
£m

3,815
849
4,664

(199)

4,465

At amortised
cost
£m

Impairment
£m

2,913
801
3,714
—
3,714

—
—
—
—
—

Restated1
2022

Carrying
Value
£m

2,913
801
3,714
—
3,714

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and IFRS 9, as described in note 1.

There are no material impairment provisions on these loans.

(c) Collateral
Loans to banks include cash collateral received under stock lending arrangements (see note 56 for further discussion
regarding these collateral positions). The obligation to repay this collateral is included in payables and other financial
liabilities (see note 48). The Group holds collateral in respect of loans where it is considered appropriate in order to
reduce the risk of non-recovery. This collateral generally takes the form of liens or charges over properties for the
majority of the loan balances above. In all other situations, the collateral must be in a readily realisable form, such as listed
securities, and is held in segregated accounts.

Aviva plc

3.81

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

26 – Securitised mortgages and related assets
The Group, in its IWR business, has loans receivable, secured by mortgages, which have then been securitised through
non-recourse borrowings. This note gives details of the relevant transactions.

(a) Description of current arrangements
In a UK long-term business subsidiary, Aviva Equity Release UK Limited (AER), the beneficial interest in certain portfolios
of lifetime mortgages has been transferred to five special purpose securitisation companies (the ERF companies), in
return for initial consideration and, at later dates, deferred consideration. The deferred consideration represents receipts
accrued within the ERF companies after meeting all their obligations to the note holders, loan providers and other third
parties in the priority of payments. The purchases of the mortgages were funded by the issue of fixed and floating rate
notes by the ERF companies.

All the shares in the ERF companies are held by independent companies, whose shares are held on trust. Although AER
does not own, directly or indirectly, any of the share capital of the ERF companies or their parent companies, it has
control of the securitisation companies, and they have therefore been treated as subsidiaries in the consolidated financial
statements. AER has no right to repurchase the benefit of any of the securitised mortgage loans, other than in certain
circumstances where AER is in breach of warranty or loans are substituted in order to effect a further advance.

AER has purchased subordinated notes and granted subordinated loans to some of the ERF companies. In addition,
Group companies have invested £180 million (2022: £208 million) in loan notes issued by the ERF companies. These have
been eliminated on consolidation through offset against the borrowings of the ERF companies in the statement of
financial position.

In all of the above transactions, the Company and its subsidiaries are not obliged to support any losses that may be
suffered by the note holders and do not intend to provide such support. Additionally, the notes were issued on the basis
that note holders are only entitled to obtain payment, of both principal and interest, to the extent that the available
resources of the respective special purpose securitisation companies, including funds due from customers in respect
of the securitised loans, are sufficient and that note holders have no recourse whatsoever to other companies in the
Aviva Group.

(b) Carrying values
The following table summarises the securitisation arrangements:

Securitised mortgage loans and loan notes issued
Other securitisation assets/(liabilities)
Total securitisation arrangements

Loan notes held by third parties are as follows:

Total loan notes issued, as above
Less: Loan notes held by Group companies
Loan notes held by third parties

2023

2022

Note

Securitised
assets
£m
1,633
280
1,913

Securitised
liabilities
£m
(1,121)
(792)
(1,913)

Securitised
assets
£m
1,759
286
2,045

Securitised
liabilities
£m
(1,299)
(746)
(2,045)

Note

47(c)(i)

2023
£m

1,121
(180)
941

2022
£m

1,299
(208)
1,091

27 – Interests in structured entities
A structured entity is defined as an entity that has been designed so that voting or similar rights are not the dominant
factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only, or when the
relevant activities are directed by means of contractual arrangements.

The Group has interests in both consolidated and unconsolidated structured entities as described below.

The Group holds redeemable shares or units in investment vehicles, which consist of:
• Debt securities comprising of securitisation vehicles that Aviva does not originate. These investments are comprised of

a variety of debt instruments, including asset-backed securities and other structured securities.

• Investment funds which include: hedge funds, liquidity funds, private equity funds, unit trusts, mutual funds and Private

Finance Initiatives (PFIs).

• Specialised investment vehicles include Open Ended Investment Companies (OEICs), Property Limited Partnerships

(PLPs), Sociétés d’Investissement a Capital Variable (SICAVs), Tax Transparent Funds (TTFs) and other investment vehicles.

Aviva plc

3.82

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

The Group’s holdings in investment vehicles are subject to the terms and conditions of the respective investment
vehicle’s offering documentation and are susceptible to market price risk arising from uncertainties about future values
of those investment vehicles. The investment manager makes investment decisions after extensive due diligence of the
underlying investment vehicle including consideration of its strategy and the overall quality of the underlying investment
vehicle’s manager.

All of the investment vehicles in the investment portfolio are managed by portfolio managers who are compensated by
the respective investment vehicles for their services. Such compensation generally consists of an asset-based fee and a
performance-based incentive fee, and is reflected in the valuation of the investment vehicles.

(a) Interests in consolidated structured entities
The Group has determined that where it has control over investment vehicles, these investments are consolidated
structured entities. As at 31 December 2023, the Group has granted loans to consolidated PLPs for a total of £72 million
(2022: £82 million). The purpose of these loans is to assist the consolidated PLPs to purchase or construct properties.
The Group has also provided support, without having a contractual obligation to do so, to certain consolidated PLPs
via letters of support amounting to £28 million (2022: £73 million). The Group has commitments to provide funding to
consolidated structured entities of £159 million (2022: £311 million), primarily relating to a commitment to provide
funding to the Aviva Investors Climate Transition Real Assets Fund.

The Group has also given support to five special purpose securitisation companies (the ERF companies) that are
consolidated structured entities. As set out in note 26, at the inception of the securitisation vehicles, the UK subsidiary,
Aviva Equity Release UK Limited (AER), has granted subordinated loan facilities to some of the ERF companies. AER
receives various fees in return for the services provided to the entities. AER receives cash management fees based on the
outstanding loan balance at the start of each quarter for the administration of the loan note liabilities. AER receives
portfolio administration fees as compensation for managing the mortgage assets. See note 26 for details of securitised
mortgages and related assets as at 31 December 2023.

As at the reporting date, the Group has no intentions to provide financial or other support in relation to any other
investment vehicles.

(b) Interests in unconsolidated structured entities
As part of its investment activities, the Group invests in unconsolidated structured entities. As at 31 December 2023,
the Group’s total interest in unconsolidated structured entities was £50,033 million (2022: £42,153 million) on the Group’s
statement of financial position. The Group’s total interest in unconsolidated structured entities is classified as ‘interests
in, and loans to, joint ventures and associates’ and ‘financial investments held at fair value through profit or loss’.
The Group does not sponsor any of the unconsolidated structured entities.

A summary of the Group’s interest in unconsolidated structured entities is as follows:

Interest in,
and loans
to, joint
ventures
£m

Interest in,
and loans
to,
associates
£m

Financial
investments
£m

Loans
£m

2023

Total
assets
£m

Interest in,
and loans
to, joint
ventures
£m

Interest in,
and loans
to,
associates
£m

Financial
investments
£m

Loans
£m

2022

Total
assets
£m

—

3,983

—

3,983

—

3,726

—

3,726

—

927

—

927

—
927

—

34,159

—

34,159

159

—

702

416

—

1,788

416

159

35,277

—

36,363

—
159

—
39,260

9,687
9,687

9,687
50,033

—

980

—

980

—
980

— 29,211

—

222

—

1,242

40 29,450

— 30,470

—
—
40 33,176

7,957
7,957
7,957 42,153

Structured debt securities1

Unit trust and other
investment vehicles

PLPs and property funds

Other

Other investments
Loans2
Total

1. Primarily reported within other debt securities in note 28(a).
2. Loans include Healthcare, Infrastructure & PFI other loans along with certain non-securitised mortgage loans.

The Group’s maximum exposure to loss related to the interests in unconsolidated structured entities is £50,033 million
(2022: £42,153 million).

The majority of debt securities above are investment grade securities held by the UK business. In some cases, the Group
may be required to absorb losses from an unconsolidated structured entity before other parties when and if Aviva’s
interest is more subordinated with respect to other owners of the same security.

For commitments to property management joint ventures and associates, please see notes 19 and 20, respectively. The
Group has not provided any other financial or other support in addition to that described above as at the reporting date,
and there are no intentions to provide support in relation to any other unconsolidated structured entities in the
foreseeable future.

In relation to risk management, disclosures on debt securities and investment vehicles are given in note 54(b). In relation
to other guarantees and commitments that the Group provides in the course of its business, please see note 50(f).

Aviva plc

3.83

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Aviva’s interest in unconsolidated structured entities that it also manages at 31 December 2023 is £1,167 million
(2022: £1,648 million) and the total funds under management relating to these investments at 31 December 2023 is
£14,209 million (2022: £17,381 million).

(c) Other interests in unconsolidated structured entities
The Group receives management fees and other fees in respect of its asset management businesses. The Group does not
sponsor any of the funds or investment vehicles from which it receives fees. Management fees received for investments
that the Group manages, but does not have a holding in, also represent an interest in unconsolidated structured entities.
As these investments are not held by the Group, the investment risk is borne by the external investors and therefore the
Group’s maximum exposure to loss relates to future management fees.

The table below shows the assets under management of entities that the Group manages but does not have a holding in
and the fees earned from those entities.

OEICs
PLPs
SICAVs
Specialised investment vehicles

Assets under
management
£m

387
4,258
831
5,476

2023
Investment
management
fees
£m

1
16
3
20

Assets under
management
£m

398
4,165
1,060
5,623

2022
Investment
management
fees
£m

1
17
4
22

28 – Financial investments
This note analyses our financial investments by type and shows their cost and fair value. These will change from one
period to the next as a result of new business written, claims paid and market movements.

(a) Carrying amount
Financial investments comprise:

UK government
Non-UK government
Corporate bonds - public utilities
Other corporate bonds
Other

Debt securities
Certificates of deposit
Fixed maturity securities

Public utilities
Banks, trusts and insurance companies
Industrial, miscellaneous and all other

Ordinary shares
Non-redeemable preference shares
Equity securities

Unit trusts and other investment vehicles
Derivative financial instruments
Deposits with credit institutions
Minority holdings in property management undertakings
Other investments – long-term
Other investments – short-term

Other investments
Total financial investments

Note

28(d)

2023
£m

2022
£m

24,281
24,722
5,563
46,385
2,313
103,264
10,625
113,889
2,732
19,337
70,410
92,479
93
92,572
34,159
3,992
77
702
184
256
39,370
245,831

19,658
24,038
5,536
42,245
2,240
93,717
10,059
103,776
5,047
16,215
64,369
85,631
159
85,790
29,211
4,916
56
222
114
1
34,520
224,086

Financial investments are held mandatorily at fair value through profit or loss (FVTPL) as the investments are managed
and their performance evaluated on a fair value basis to support the Group in managing its capital on a regulatory basis
(Solvency II).

Of the above total, excluding those financial investments with no fixed contractual maturity date, £93,033 million
(2022: £88,793 million) is due to be recovered in more than one year after the statement of financial position date.

Other debt securities of £2,313 million (2022: £2,240 million) include residential and commercial mortgage-backed
securities, as well as other structured credit securities.

Financial investments include £3,511 million (2022: £3,970 million) in respect of non-cash collateral pledged to third
parties where the economic rights are retained by the Group.

Aviva plc

3.84

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(b) Cost, unrealised gains and fair value
The following is a summary of the cost/amortised cost, gross unrealised gains and losses and fair value of financial
investments:

Fixed maturity securities
Equity securities

Unit trusts and other investment vehicles
Derivative financial instruments
Deposits with credit institutions
Minority holdings in property
management undertakings

Other investments – long-term
Other investments – short-term

Other investments
Total financial investments

Cost/
amortised
cost
£m

121,436
77,769
36,601

(90)
77

Unrealised
gains
£m

2,757
19,849
14,231
5,156
—

Unrealised
losses and
impairments
£m

2023

Fair value
£m

Cost/
amortised
cost
£m

Unrealised
gains
£m

Unrealised
losses and
impairments
£m

2022

Fair value
£m

(10,304) 113,889
(5,046) 92,572
(16,673) 34,159
3,992
77

(1,074)

—

110,029
75,981
33,737
300
56

8,475
16,610
3,907
5,258
—

(14,728) 103,776
(6,801) 85,790
29,211
(8,433)
4,916
(642)
56
—

705

(60)

702

228

(34)

222

194
256
37,743
236,948

21
—
19,465
42,071

(31)
—

184
256
(17,838) 39,370
(33,188) 245,831

114
137
1
1
34,459
(9,135) 34,520
220,469 34,281 (30,664) 224,086

3
—
9,196

(26)
—

All unrealised gains and losses and impairments on financial investments classified as fair value through profit or loss have
been recognised in the income statement.

Unrealised gains and losses on financial investments classified as fair value through profit or loss, recognised in the
income statement in the year, were a net gain of £8,779 million (2022: £48,683 million net loss). Of this net gain,
£6,606 million net gain (2022: £43,663 million net loss) related to investments designated as other than trading and
£2,173 million net gain (2022: £5,020 million net loss) related to financial investments designated as trading.

The movement in the unrealised gain/loss position reported in the statement of financial position during the year, shown
in the table above, includes foreign exchange movements on the translation of unrealised gains and losses on financial
investments held by foreign subsidiaries, which are recognised in other comprehensive income, as well as transfers due
to the realisation of gains and losses on disposal and the recognition of impairment losses.

(c) Financial investment arrangements
(i) Stock lending arrangements
The Group has entered into stock lending arrangements in the UK and overseas in accordance with established market
conventions. The majority of the Group’s stock lending transactions occur in the UK, where investments are lent to
EEA-regulated, locally domiciled counterparties and governed by agreements written under English law.

The Group receives collateral in order to reduce the credit risk of these arrangements, either in the form of securities or
cash. See note 56 for further discussion regarding collateral positions held by the Group.

(ii) Other arrangements
In carrying on its bulk purchase annuity business, the Group’s IWR operation is required to place certain investments in
trust on behalf of the policyholders. Amounts become payable from the trust funds to the trustees if the Group were to be
in breach of its payment obligations in respect of policyholder benefits. At 31 December 2023, £1,570 million
(2022: £1,778 million) of financial investments were restricted in this way.

Certain financial investments are also required to be deposited under local laws in various overseas countries as security
for the holders of policies issued in those countries. Other investments are pledged as security collateral for bank letters
of credit.

Aviva plc

3.85

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(d) Non-UK government fixed maturity securities (gross of non-controlling interests)
The following is a summary of non-UK government debt by issuer, analysed by policyholder, participating and
shareholder funds.

Belgium
Czech Republic
France
Germany
Ireland
Italy
Netherlands
Poland
European supranational debt
Other European countries

Europe

Canada
United States
North America

Chile
China
India
Indonesia
Japan
Mexico
South Africa
South Korea
United Arab Emirates
Other supranational debt
Other

Asia Pacific and other
Total Non-UK government fixed
maturity securities

Policyholder
£m

Participating
£m

Shareholder
£m

87
75
384
269

20
381
91
85
712
747
2,851
279
3,111
3,390
105
418
86
220
1,260
299
229
325
12
440
1,640
5,034

117
188
103
58

89
64
28
36
119
283
1,085
59
619
678
30
122
17
60
285
84
66
133
27
168
529
1,521

511
98
132
154

23
20
46
337
1,126
580
3,027
2,611
1,543
4,154
393
24
699
154
450
16
13
108
333
217
575
2,982

2023

Total
£m

715
361
619
481

132
465
165
458
1,957
1,610
6,963
2,949
5,273
8,222
528
564
802
434
1,995
399
308
566
372
825
2,744
9,537

Policyholder
£m

Participating
£m

Shareholder
£m

79
50
343
536

17
275
81
75
830
467
2,753
180
2,536
2,716
68
343
91
230
951
335
247
179
37
—
1,312
3,793

149
230
175
330

176
68
49
24
218
364
1,783
40
645
685
24
140
—
82
404
118
88
211
37
211
561
1,876

261
1
395
326

171
14
193
94
1,467
635
3,557
3,666
1,084
4,750
229
7
688
5
275
7
5
159
134
53
563
2,125

2022

Total
£m

489
281
913
1,192

364
357
323
193
2,515
1,466
8,093
3,886
4,265
8,151
321
490
779
317
1,630
460
340
549
208
264
2,436
7,794

11,275

3,284

10,163

24,722

9,262

4,344

10,432 24,038

Our direct shareholder asset exposure to government (non-UK) fixed maturity securities amounts to £10,163 million
(2022: £10,432 million). The primary exposures, relative to total shareholder (non-UK) government debt exposure, are to
Canadian (26%), US (15%), Indian (7%), Belgian (5%) and Japanese (4%) government fixed maturity securities.

29 – Receivables Receivables
This note analyses our total receivables.

Amounts owed by contract holders for non-participating investment contracts
Amounts owed by intermediaries
Amounts due from reinsurers for non-participating investment contracts
Amounts due from brokers for investment sales
Amounts receivable for collateral pledged
Amounts due from government, social security and taxes
Finance lease receivables
Other receivables
Total receivables
Expected to be recovered in less than one year
Expected to be recovered in more than one year
Total receivables

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

2023
£m

122
1,115
96
601
165
675
153
794
3,721
3,552
169
3,721

Restated1
2022
£m

147
1,066
96
460
266
545
143
757
3,480
3,294
186
3,480

Exposure to significant concentrations of credit risk is limited due to the regulations applicable in most markets and the
Group credit policy and limits framework, which limits investments in individual assets and asset classes.

Aviva plc

3.86

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

30 – Deferred acquisition costs on non-participating investment contracts
(a) Carrying amount and movements in the year

Carrying amount at 1 January
Acquisition costs deferred during the year
Amortisation
Impact of assumption changes
Foreign exchange rate movements
Other movements2
Carrying amount at 31 December

2023
Total
£m

851
78
(116)
(32)
(3)
10

788

Restated1
2022
Total
£m

892
70
(103)
(16)
8
—

851

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).
2. Other movements in 2023 relates to an allocation of £10 million to deferred acquisition costs from deferred income liability.

Deferred acquisition costs (DAC) on non-participating investment contracts are generally recoverable in more than one
year. Of the above total, £767 million (2022: £684 million) is expected to be recovered in more than one year after the
statement of financial position date. Where amortisation of the DAC balance depends on projected profits, the amount
expected to be recovered is estimated and actual experience will differ.

DAC for non-participating business decreased overall over 2023 as increases from new business sales were more than
offset by amortisation.

Where amortisation of the DAC balance depends on projected profits, changes to economic conditions may lead to a
movement in the DAC balance and a corresponding impact on profit.

At both 31 December 2023 and 31 December 2022 the DAC balance has been restricted by the value of projected future
profits.

31 – Pension surpluses, other assets, prepayments and accrued income
(a) Pension surpluses and other assets – carrying amount
The carrying amount comprises:

Surpluses in the staff pension schemes
Other assets
Total pension surpluses and other assets

Note

46(a)

2023
'£m

817
45
862

2022
'£m

1,192
42
1,234

Surpluses in the staff pension schemes and £nil (2022: £14 million) of other assets are recoverable more than one year
after the statement of financial position date.

(b) Prepayments and accrued income
Prepayments and accrued income of £3,392 million (2022: £2,822 million) are all expected to be recovered within one
year.

32 – Ordinary share capital
This note gives details of Aviva plc’s ordinary share capital and shows the movements during the year.

(a) Carrying amount
Details of the Company’s ordinary share capital are as follows:

The allotted, called up and fully paid share capital of the Company was: 2,739,487,140
(2022: 2,807,964,676) ordinary shares of 3217/19 pence each

2023
'£m

2022
'£m

901

924

At the Annual General Meeting that took place on 4 May 2023, the Company was authorised to allot up to a further
maximum nominal amount of:
• £614 million of which £307 million can be in connection with an offer by way of a rights issue
• £150 million in relation to any issue of Solvency II compliant capital instruments

Aviva plc

3.87

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(b) Movement in issued share capital

At 1 January
Shares issued under the
Group’s Employee and
Executive Share Option
Schemes

Shares cancelled through
buyback

Shares issued under the B
share scheme

Shares cancelled following B
share scheme redemption

Note

25p
each

Number of shares
3217/19p
each

B shares
each

2023

Share
capital
£m

25p
each

3217/19p
each

Number of shares

B shares
each

2022

Share
capital
£m

—

2,807,964,676

—

924

3,766,095,426

—

941

—

4,319,655

—

1,214,203

5,599,956

—

32(b)(i)

—

(72,797,191) —

(24)

(79,987,629)

—

(19)

32(b)(ii)

—

32(b)(ii)

—

— 3,687,322,000 3,750

— (3,687,322,000) (3,750)

Share consolidation
At 31 December

32(b)(iii)

—
—

—
2,739,487,140

—
—

(3,687,322,000) 2,802,364,720
— 2,807,964,676

901

— —
— 924

Ordinary shares in issue in the Company rank pari passu with any new ordinary shares issued in the Company. All the
ordinary shares in issue carry the same right to receive all dividends and other distributions declared, made or paid by the
Company.

(i) Share buyback
On 9 March 2023, Aviva announced a share buyback programme for up to a maximum aggregate consideration of
£300 million to commence on 10 March 2023 (the "Programme"). On 2 June 2023, Aviva announced that it had successfully
completed the Programme. In total, 72,797,191 shares were purchased with a nominal value of £24 million and were
subsequently cancelled, giving rise to an additional capital redemption reserve of an equivalent amount. The 72,797,191
shares were acquired at an average price of 412 pence per share.

On 31 March 2022, Aviva completed the share buyback programme originally announced on 12 August 2021, and extended
to an aggregate purchase of up to £1 billion on 16 December 2021. In total, 245,225,489 shares were purchased with a
nominal value of £61 million and were subsequently cancelled, giving rise to an additional capital redemption reserve of an
equivalent amount. The 245,225,489 shares were acquired at an average price of 408 pence per share. 79,587,629 shares
were purchased during 2022, had a nominal value of £19 million, for total consideration of £336 million and were acquired
at an average price of 423 pence per share.

(ii) Return of capital to ordinary shareholders via B share scheme
On 2 March 2022, Aviva announced a proposed return of capital, including a £3,750 million B Share Scheme for the
holders of ordinary shares. 3,687,322,000 B shares were issued for nil consideration with a nominal value of 101.69 pence
per share on 16 May 2022, resulting in a total of £3,750 million being credited to the B share capital account. At the same
time, the merger reserve was reduced by £3,750 million. On 17 May 2022, the B shares were redeemed at 101.69 pence per
share, which resulted in a £3,750 million reduction in the B share capital account and a corresponding increase in the
capital redemption reserve. Retained earnings reduced by £3,750 million on payment of the return of capital to ordinary
shareholders.

(iii) Share consolidation
On 16 May 2022, the Company’s share capital was consolidated whereby 76 new ordinary shares of 3217/19 pence were
issued for each holding of 100 ordinary shares of 25 pence each. The number of ordinary shares in issue reduced by
884,957,280 from 3,687,322,000 to 2,802,364,720.

(c) Subsequent events
On 6 March 2024, Aviva plc approved a share buyback of its ordinary shares for up to a maximum aggregate consideration
of £300 million which is expected to commence on 8 March 2024. The buyback will reduce IFRS net asset value and
Solvency II own funds by £300 million.

Aviva plc

3.88

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

33 – Group’s share plansGroup’s share plans
This note describes various equity compensation plans operated by the Group, and shows how the Group values the
options and awards of shares in the Company.

(a) Description of the plans
The Group maintains a number of active share option and award plans and schemes across all markets (the Group’s share
plans). All employees are eligible for share plans and the plans offered are as follows:

Plan

Description

(i) Savings-related options

These are options granted under the tax-advantaged Save As You Earn (SAYE) share option
scheme in the UK and Irish revenue-approved SAYE share option scheme in Ireland. The SAYE
allows eligible employees to acquire options over the Company’s shares at a discount of up to
20% of their market value at the date of grant.

Options are normally exercisable during the six month period following either the third or fifth
anniversary of the start of the relevant savings contract. Seven year contracts were offered
prior to 2012. Savings contracts are subject to the statutory savings limits of £500 per month in
the UK and €500 per month in Ireland. A limit of £250 per month was applied to contracts in the
UK prior to 2016.

(ii) Aviva long-term incentive plan
awards

These awards have been made under the Aviva Long-Term Incentive Plan 2011 (LTIP), and are
described in section (b) below and in the directors’ remuneration report.

(iii) Aviva annual bonus plan awards

These awards have been made under the Aviva Annual Bonus Plan 2011 (ABP), and are
described in section (b) below and in the directors’ remuneration report.

(iv) Aviva recruitment and retention
share plan awards

(v) Aviva Investors deferred share
award plan awards

These are conditional awards granted under the Aviva Recruitment and Retention Share Award
Plan (RRSAP) in relation to the recruitment or retention of senior managers excluding executive
directors. The awards vest in tranches on various dates and vesting is conditional upon the
participant being employed by the Group on the vesting date and not having served notice of
resignation. Some awards can be subject to performance conditions. If a participant’s
employment is terminated due to resignation or dismissal, any tranche of the award which has
vested within the 12 months prior to the termination date will be subject to clawback and any
unvested tranches of the award will lapse in full.

These awards have been made under the Aviva Investors Deferred Share Award Plan (AI
DSAP), where employees can choose to have the deferred element of their bonus deferred into
awards over Aviva shares. The awards vest in three equal tranches on the second, third and
fourth year following the year of grant.

(vi) Various all employee share plans

The Company maintains a number of active stock option and share award voluntary schemes:

a) The global matching share plan

b) Aviva Group employee share ownership scheme

No new Aviva plc ordinary shares will be issued to satisfy awards made under plans (iv), (v), (vi b).

(b) Outstanding options
The following table summarises information about options outstanding at 31 December:

Range of exercise prices

£2.20 – £3.16
£3.17 – £3.67
£3.68 – £4.19

2023

Outstanding
options
number

35,089,530
9,043,614
138,673

Weighted
average
remaining
contractual life
years

Weighted
average
exercise price
pence

Weighted
average
remaining
contractual life
years

Outstanding
options
number

2.65
2.40
0.41

260.47 32,596,283
333.38 10,898,433
470,831
387.16

2
3
1

2022

Weighted
average
exercise
price
pence

227.63
333.46
393.31

Aviva plc

3.89

Annual Report and Accounts 2023

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2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(c) Movements in the year
A summary of the status of the option and share plans as at 31 December 2023 and 2022, and changes during the years
ended on those dates, is shown below.

Outstanding at 1 January
Granted during the year
Exercised during the year
Forfeited during the year
Cancelled during the year
Expired during the year
Outstanding at 31 December
Exercisable at 31 December

Weighted
average
exercise
price
years

2023

Awards
number

Options
number

Weighted
average
exercise
price
years

2022

Awards
number

47,801,150 251.00 40,303,963
255.64 40,030,981
298.00 17,236,818
6,369,795 336.00 18,158,925
233.58 (16,024,769) (6,238,086) 298.73 (11,416,602)
(7,015,305)
301.08 (4,446,240) (2,801,326) 259.10
—
(713,427) 238.30
257.82
—
—
(452,559) 308.98
—
305.61
43,965,547 255.64 40,030,981
275.76 36,796,790
—
2,676,882 278.95
—
222.99

Options
number

43,965,547
17,123,614
(13,599,458)
(2,624,572)
(299,957)
(293,357)
44,271,817
6,917,910

(d) Expense charged to the income statement
The total expense recognised for the year arising from equity compensation plans was as follows:

Equity-settled expense

2023
£m

(61)

2022
£m

(58)

(e) Fair value of options and awards
The weighted average fair values of options and awards granted during the year, estimated by using the Binomial option
pricing model and Monte Carlo Simulation model, were £0.86 and £3.75 (2022: £0.84 and £3.95) respectively.

(i) Share options
The fair value of the options was estimated on the date of grant, based on the following weighted average assumptions:

Weighted average assumption

Share price
Exercise price
Expected volatility
Expected life
Expected dividend yield
Risk-free interest rate

2023

2022

376p
298p

388p
336p
32.13 % 31.76%
4.11 years 4.08 years
6.44%
4.23%

8.47 %
4.41 %

The expected volatility used was based on the historical volatility of the share price over a period equivalent to the
expected life of the option prior to its date of grant. The risk-free interest rate was based on the yields available on UK
government bonds as at the date of grant. The bonds chosen were those with a similar remaining term to the expected
life of the options. 13,599,458 options were exercised during the year (2022: 6,238,086).

(ii) Share awards
The fair value of the awards was estimated on the date of grant based on the following weighted average assumptions:

Weighted average assumption

2023

2022

Share price
Expected volatility1
Expected volatility of comparator companies’ share price1
Correlation between Aviva and comparator competitors’ share price1
Expected life1
Expected dividend yield
Risk-free interest rate1

1. For awards with market-based performance conditions only

393p
33 %
30 %
55 %

404p
33%
35%
51%
3.00 years 3.00 years
0.00%
1.49%

0.00 %
3.32 %

Aviva plc

3.90

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

34 – Treasury shares
The following table summarises information about treasury shares:

Shares held by employee trusts
Total treasury shares

number

21,193,467
21,193,467

2023
£m

87
87

number

19,986,626
19,986,626

2022
£m

85
85

Shares held by employee trusts
Prior to 2021, we primarily issued new shares except where it is necessary to use shares held by an employee share trust.
From 2021, we satisfy awards and options granted under the Group’s share plans primarily through shares purchased in
the market and held by employee share trusts. This note gives details of the shares held in these trusts.

Movements in the carrying value of shares held by employee trusts comprise:

At 1 January
Acquired in the year
Distributed in the year
Share consolidation
At 31 December

number

19,986,626
18,905,610
(17,698,769)

—
21,193,467

2023
£m

number

85
12,363,684
76 23,539,378
(74) (9,850,409)
(6,066,027)
—
19,986,626
87

2022
£m

51
101
(41)
(26)
85

The shares are owned by employee share trusts with an undertaking to satisfy awards of shares in the Company under
the Company’s share plans and schemes. Details of the features of the plans can be found in the directors’ remuneration
report and/or in note 33.

These shares were either purchased in the market or, in 2015, new shares were issued to the trust and are carried at
weighted average cost. At 31 December 2023, they had an aggregate nominal value of £6,971,535 (2022: £6,575,548) and a
market value of £92,128,001 (2022: £88,500,780). The trustees have waived their rights to dividends on the shares held in
the trusts.

35 – Preference share capital
The issued and paid up preference share capital of the Company at 31 December was:

100,000,000 8.375% cumulative irredeemable preference shares of £1 each
100,000,000 8.75% cumulative irredeemable preference shares of £1 each
Total preference share capital

2023
£m

100
100
200

2022
£m

100
100
200

The issued preference shares are non-voting except where their dividends are in arrears, on a winding up or where their
rights are altered.

On a winding up, they carry a preferential right of return of capital ahead of the ordinary shares. Holders are entitled to
receive dividends out of the profits available for distribution and resolved to be distributed in priority to the payment of
dividends to holders of ordinary shares. The Company does not have a contractual obligation to deliver cash or other
financial assets to the preference shareholders and therefore the directors may make dividend payments at their
discretion.

At 31 December 2023, the fair value of Aviva plc’s preference share capital was £261 million (2022: £247 million).

36 – Tier 1 notes
The carrying amount of Tier 1 notes at 31 December was:

Tier 1 notes

2023
'£m

496

2022
'£m

496

On 15 June 2022, Aviva plc issued £500 million of 6.875% fixed rate reset perpetual Restricted Tier 1 contingent
convertible notes (the RT1 notes). The RT1 notes are callable at par between 15 December 2031 and 15 June 2032 (the First
Reset Date) inclusive and thereafter every five years after the First Reset Date. If not called, the coupon from 15 June 2032
will be reset to the prevailing five year benchmark gilt yield plus 4.649%. The notes have no fixed maturity date. Optional
cancellation of coupon payments is at the discretion of Aviva plc and mandatory cancellation is upon the occurrence of
certain conditions. The RT1 notes are therefore treated as equity and the coupon payment is recognised directly in equity.
During the year coupon payments of £34 million were made (2022: £17 million). On the occurrence of certain conversion
trigger events the notes are convertible into ordinary shares of Aviva plc.

Aviva plc

3.91

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

37 – Capital reserves and retained earnings
This note analyses the movements in the consolidated capital reserves and retained earnings during the year.

At 1 January
Profit/(loss) for the year attributable to equity
shareholders

Remeasurements of pension schemes
Dividends and appropriations
Shares purchased in buyback
Capital Reductions
Return of capital to ordinary shareholders via
B share scheme

Net shares issued under equity compensation
plans

Aggregate tax effect
At 31 December

Capital reserves

2023

Restated1
2022

Share
premium
£m

Capital
redemption
reserve
£m

Note

Merger
reserve
£m

Retained
earnings
£m

Share
premium
£m

Capital
redemption
reserve
£m

Merger
reserve
£m

Retained
earnings
£m

1,263

3,855

5,224

(2,328)

1,248

8,974

4,792

—

—
—
—
(1,253)

—
—
24
(3,855)

46(b)(i)

32(b)(i)

37(b)

—

—
—
—
—

1,085

(495)
(929)
(300)
5,108

—

—
—
—
—

—

—
—
19
—

—

—
—
—
—

(1,051)

(1,542)
(862)
(336)
—

32(b)(ii)

—

3,750

(3,750)

—
17

—

—
24

—

(35)

—

—
5,224

122
2,228

—
1,263

—
3,855

—
5,224

412
(2,328)

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).

(a) Merger reserve
Prior to 1 January 2004, certain significant business combinations were accounted for using the ‘pooling of interests
method’ (or merger accounting), which treats the merged groups as if they had been combined throughout the current
and comparative accounting periods.

Merger accounting principles for these combinations gave rise to a merger reserve in the consolidated statement of
financial position, being the difference between the nominal value of new shares issued by the Parent Company for the
acquisition of the shares of the subsidiary and the subsidiary’s own share capital and share premium account.

The merger reserve is also used where more than 90% of the shares in a subsidiary are acquired and the consideration
includes the issue of new shares by the Company, thereby attracting merger relief under the Companies Act 1985 and,
from 1 October 2009, the Companies Act 2006.

(b) Capital Reductions
At a General Meeting of Aviva held on 4 May 2023, Aviva received shareholder approval to a reduction of £1,253 million in
its share premium account and to a reduction of £3,855 million in its capital redemption reserve (the Capital Reductions).
The Capital Reductions received Court approval on 23 May 2023 and were effected on 25 May 2023.

(c) Aviva plc company
Retained earnings of Aviva plc, the Company, were £10,589 million at 31 December 2023 (2022: £5,248 million) (see note H
on the Company Financial statements). The retained earnings of the Company were not impacted by the adoption of
IFRS 17.

Aviva plc

3.92

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

38 – Other reserves
This note gives details of the other reserves forming part of the Group’s consolidated equity and shows the movements
during the year net of non-controlling interests:

Currency
translation
reserve

Owner
occupied
properties
reserve

Investment
valuation
reserve

Hedging
instruments
reserve

Equity
compensation
reserve

Total Other
reserves

Currency
translation
reserve

2023

£m

(3)

(262)

£m

113

£m

355

£m

Owner
occupied
properties
reserve
P

Investment
valuation
reserve
T

Hedging
instruments
reserve
U

Equity
compensation
reserve
AB

Restated1
2022

Total Other
reserves

£m

314

(224)

101

248

£m

485

—

(111)

£m

—

Accounting policy

At 1 January

Share of other
comprehensive
income of joint
ventures and
associates

Foreign exchange rate
movements

Aggregate tax effect –
shareholders’ tax

Total other
comprehensive income
for the year

Reserves credit for
equity compensation
plans

Shares issued under
equity compensation
plans

At 31 December

—

(6)

—

(38)

—

(38)

(83)

174

—

(47)

—

127

(2)

(3)

—

(107)

—

(85)

171

—

(38)

—

378

—

(52)

—

(3)

(240)

122

279

485

—

(46)

(3)

(262)

113

355

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).

Foreign exchange rate movements recorded in the consolidated statement of comprehensive income of £(86) million
(2022 restated: £119 million) relate to foreign exchange rate movements on the currency translation reserve of
£(111) million (2022 restated: £174 million), the hedging instrument reserve of £28 million (2022: £(47) million) and
non-controlling interests (see note 39) of £(3) million (2022: £(8) million).

39 – Non-controlling interests
This note gives details of the Group’s non-controlling interests and shows the movements during the year.

At 1 January

Profit for the year attributable to non-controlling interests
Foreign exchange rate movements

Total comprehensive income attributable to non-controlling interests
Changes in non-controlling interests in subsidiaries
Non-controlling interests share of dividends declared in the year
Non-controlling interest in acquired subsidiaries
At 31 December
Comprising:
Equity shares in subsidiaries
Preference shares in subsidiaries
Total non-controlling interests

2023
£m

310
21
(3)
18
9
(21)
2
318

68
250
318

2022
£m

252
21
(8)
13
—
(21)
66
310

60
250
310

Aviva plc

3.93

Annual Report and Accounts 2023

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2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

40 – Insurance and reinsurance contracts
For the purpose of this note, all references to insurance contracts include participating investment contracts.

The Group has presented the information about insurance and reinsurance contracts using the following product groups.

Reportable product group

Products and services

Measurement model

Life risk
(see note 40(b)(i))

•Annuities (bulk purchase and individual), term assurance,

GMM

income protection and critical illness

•Includes participating pension saving contracts with
guaranteed annuity terms as these contracts are
expected to convert to annuity contracts and the
predominant characteristics are life risk

Life participating
(see note 40(b)(ii))

•With profits savings contracts, unit linked insurance and

unit linked participating contracts

Non-life
(see note 40(b)(iii))

•General insurance contracts

•Health insurance contracts

Predominantly measured using the VFA. There is
some participating business which is measured
using the GMM.

Predominantly measured using the PAA. There
is a small portion of non-life business which is
measured using the GMM.

This note analyses the following in respect of these insurance and reinsurance contracts:
(a) Carrying amount
(b) Movements in the year
(c) Assets of insurance acquisition cashflows
(d) Effect of contracts initially recognised in the year
(e) Contractual service margin emergence
(f) Non-life claims development
(g) Significant judgements, estimates and assumptions

(a) Carrying amount
Insurance and reinsurance contracts at 31 December comprised:

Note

Life risk Participating
£m

£m

Non-life
£m

2023

Total
£m

Life risk
£m

Participating
£m

Non-life
£m

Restated1
2022

Total
£m

Insurance contracts
Insurance contract liabilities
Insurance contract balances
Assets for insurance acquisition cashflows
Total insurance contract liabilities
Reinsurance contracts
Reinsurance contract assets

40(b)

40(c)

68,134
—
68,134

39,544
—
39,544

14,372

122,050

(175)

14,197

121,875

63,423 40,970
—
63,423 40,970

—

13,246
(78)
13,168

117,639
(78)
117,561

40(b)

(5,739)

—

(1,965)

(7,704)

(4,926)

—

(1,834)

(6,760)

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).

The following table sets out the carrying amounts of insurance and reinsurance contracts expected to be settled/
(recovered) more than 12 months after the reporting date.

Insurance contract and participating investment contract liabilities
Reinsurance contract assets

2023
£m

104,773

(5,501)

Restated1
2022
£m

101,953
(4,889)

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).

At 31 December 2023 , the maximum exposure to credit risk from insurance contracts is £2,664 million
(2022: £2,120 million), which primarily relates to premiums receivable for services that the Group has already provided,
and the maximum exposure to credit risk from reinsurance contracts is £6,534 million (2022: £6,308 million).

Aviva plc

3.94

Annual Report and Accounts 2023

1. Strategic Report

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3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(b) Movements in the year
The following movements have occurred in the carrying amount of insurance contract balances in the year:

Carrying amount

At 1 January
Insurance revenue
Insurance service expenses
Insurance finance expense/(income)
Foreign exchange rate movements and other charges
Premiums received
Claims and expenses paid, including investment component
Acquisition cash flows
Effect of portfolio transfers, acquisitions and disposals2
At 31 December

Note

2023
£m

Restated1
2022
£m

117,639
(18,497)
16,217
7,228
(300)

20,532

(17,628)
(3,141)
—
122,050

143,490
(16,889)
15,505
(24,499)
381
18,367
(16,615)
(3,119)
1,018
117,639

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).
2. The movement in 2022 relates to the acquisition of an additional 25% of the ordinary shares of Aviva Life Insurance Company India Limited giving Aviva a controlling interest in the entity.

Included within the carrying amounts are: the present value of expected future cashflows, representing a best estimate
view; risk adjustment for non-financial risk; and CSM representing the unearned profit for future service.

The carrying amount for reinsurance contracts are recognised separately from insurance contract balances. Detailed
movements on both are included in sections 40(b)(i) to 40(b)(iii).

The following summarises movements in CSM that have occurred during the year:

CSM in respect of insurance contracts
At 1 January
CSM recognised for services provided
Other movements in CSM
At 31 December
CSM in respect of reinsurance contracts
At 1 January
CSM recognised for services received
Other movements in CSM
At 31 December
Net CSM at 1 January
Net CSM at 31 December

Life risk

Participating

Non-life

£m

5,714
(729)

2,393
7,378

(452)
80
(798)
(1,170)
5,262
6,208

1,218

(151)
(27)

1,040

—
—
—
—
1,218
1,040

£m

—
—
—
—

—
—
—
—
—
—

2023

Total

£m

Life risk Participating

Non-life

£m

Restated1
2022

Total

£m

6,932

(880)

2,366
8,418

4,951
(578)
1,341
5,714

(452)
80
(798)
(1,170)

6,480
7,248

(100)
63
(415)
(452)
4,851
5,262

1,312
(172)
78
1,218

—
—
—
—
1,312
1,218

—
—
—
—

6,263
(750)
1,419
6,932

(100)
—
63
—
(415)
—
(452)
—
—
6,163
— 6,480

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).

Other movements in CSM include:

• Recognition of additional CSM in respect of new insurance and reinsurance contracts recognised in the year;

• Remeasurement of existing contracts (covering non-financial assumption changes and experience variances for all

contracts, plus financial assumption changes and experience variances for contracts in scope of the VFA); and

• For contracts in scope of the GMM, interest accretion on the CSM balance which is recognised within net finance

expense/income from insurance contracts.

Each of these items can be seen in more detail in the respective tables in section 40(b)(i) for life risk and 40(b)(ii) for
participating.

For insurance contracts the largest driver of the movement in CSM for both 2022 and 2023 is longevity assumption
changes on annuity contracts. These assumption changes are described in more detail in note 43.

The CSM recognised for services provided on insurance contracts in the year of £880 million (2022: £750 million) is a key
component of insurance revenue.

The CSM asset in respect of reinsurance contracts has also increased primarily reflecting lower expected reinsurance
recoveries due to longevity assumption changes in the underlying insurance contracts.

Aviva plc

3.95

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

The following summarises movements in the risk adjustment that have occurred during the year:

2023

Risk adjustment in respect of insurance contracts
At 1 January
Change in risk adjustment for risk expired
Other movements in risk adjustment
At 31 December
Risk adjustment in respect of reinsurance contracts
At 1 January
Change in risk adjustment for risk expired
Other movements in risk adjustment
At 31 December
Net risk adjustment at 1 January
Net risk adjustment at 31 December

2022 restated1

Life

Risk
£m

Participating
£m

PAA
£m

GMM
£m

1,443

(96)
16
1,363

(570)
33
(102)
(639)
873
724

62
(3)
6
65

—
—
—
—
62
65

Life

553
—
(30)
523

(72)
—
(8)
(80)
481
443

—
—
—
—

(90)
11
9
(70)
(90)
(70)

Risk
£m

Participating
£m

PAA
£m

GMM
£m

2,653
(171)
(1,039)
1,443

(1,055)
88
397
(570)
1,598
873

79
(5)
(12)
62

—
—
—
—
79
62

569
—
(16)
553

(60)
—
(12)
(72)
509
481

—
—
—
—

(104)
14
—
(90)
(104)
(90)

Non-life

Total
£m

553
—
(30)
523

(162)
11
1
(150)
391
373

Non-life

Total
£m

569
—
(16)
553

(164)
14
(12)
(162)
405
391

Total
£m

2,058
(99)
(8)
1,951

(732)
44
(101)
(789)
1,326
1,162

Total
£m

3,301
(176)
(1,067)
2,058

(1,219)
102
385
(732)
2,082
1,326

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).

The change in risk adjustment for risk expired is recognised in insurance revenue.

The net risk adjustment has decreased in the year. Other movements in risk adjustment include the risk adjustment
established on new business (details of which can be seen in note 40(d)), the impact of movements in discount rates, a
reduction in the risk adjustment due to changes in longevity assumptions, and for 2023 the impact of reforms to the
Solvency II risk margin in the UK.

During 2022, there was a significant fall in net risk adjustment, driven by the large rise in discount rates.

Movements in carrying amounts of insurance and reinsurance contracts

The following reconciliations present the movements in the carrying amounts of insurance and reinsurance contracts in
each product group.

For life risk and participating contracts each table presents a different analysis of the movements in both insurance and
reinsurance balances. The first disclosure, split by remaining coverage and incurred claims, presents the income
statement items that constitute insurance revenue, insurance service expenses and net expenses from reinsurance
contracts. The sum of these items represents the contribution to insurance service result. Movements in the balances
relating to finance expenses and cash flows are shown below the insurance service result.

In the second disclosure, split by measurement component (present value of expected future cash flows, risk adjustment
and CSM), the movements are presented by driver of change. The insurance service result and subsequent movements
have consistent totals across the two disclosure tables.

For non-life business all gross contracts are measured under the PAA so have no CSM. The movements in balances are
presented split by remaining coverage and incurred claims with the incurred claims further analysed between the cash
flow and risk adjustment components. For reinsurance contracts the same presentation is used to show total reinsurance
contracts. A further table then follows to display the results exclusively for the sub-group of reinsurance contracts
relating to adverse development cover, which are the only non-life contracts measured under the GMM and have no
CSM.

Aviva plc

3.96

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(i) Life risk
Insurance contracts
The following table shows life risk insurance contracts analysed by remaining coverage and incurred claims:

2023

Restated1
2022

Liabilities for remaining
coverage

Excluding loss
component
£m

Loss
component
£m

Note

Liabilities
for incurred
claims
£m

Excluding loss
component
£m

Loss
component
£m

Total
£m

Liabilities for
incurred
claims
£m

Total
£m

—
61,626
61,626

—
497
497

—
1,300
1,300

—
63,423
63,423

—
80,285
80,285

—
400
400

—

—
1,170 81,855
1,170 81,855

Carrying amount

Opening assets
Opening liabilities
At 1 January
Changes in comprehensive income

Insurance revenue

(6,914)

Contracts under the modified
retrospective transition approach

Contracts under the fair value transition
approach

Other contracts

Insurance service expenses

Incurred claims and other insurance
service expenses

Amortisation of insurance acquisition
cash flows

Losses and reversals of losses on
onerous contracts

Investment components and premium
refunds

Insurance service result
Net finance expenses/(income) from
insurance contracts

Effect of movements in exchange rates
Total changes in comprehensive income
Cash flows

—

(169)

(4,426)

(2,319)
301

—

(6,914)

(6,801)

—

(6,801)

—

(169)

(246)

—

(246)

—

(4,426)

(4,707)

—

—
(96) 5,937

(2,319)
6,142

(1,848)
288

—

—
88

—

(4,707)

—

(1,848)
5,718 6,094

—

(40) 5,937

5,897

—

(44)

5,718

5,674

301

—

(56)

—

301

288

—

288

(56)

—

132

—

132

(906)

—

906

—

(1,157)

—

1,157

—

(7,519)

(96) 6,843

(772)

(7,670)

6,875

(707)

4,139

(80)
(3,460)

(1)

—

(5)

4,157

(19,059)

(86)

76
(26,653)

3
97

— (19,053)

10
6,885

89
(19,671)

(79) 6,838

3,299

Premiums received

8,777

—

8,777

7,857

—

7,857

Claims and other insurance service
expenses paid, including investment
component

Insurance acquisition cash flows

Total cash flows
Effect of portfolio transfers, acquisitions and
disposals2
At 31 December
Closing assets
Closing liabilities
At 31 December

—

(470)

8,307

—

66,473
—
66,473
66,473

—

418
—
418
418

(6,895)

—

(6,755)

—

(470)

(508)

—

(508)

(6,895)

1,412

7,349

—

(6,755)

594

—

645

1,243
—
1,243
1,243

68,134
—
68,134
68,134

61,626
—
61,626
61,626

—

497
—
497
497

—

645

—

1,300 63,423
—
1,300 63,423
1,300 63,423

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).
2. The movement in 2022 relates to the acquisition of an additional 25% of the ordinary shares of Aviva Life Insurance Company India Limited giving Aviva a controlling interest in the entity.

Aviva plc

3.97

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

The following table shows life risk insurance contracts analysed by measurement component:

2023 Carrying amount

Opening assets
Opening liabilities
At 1 January
Changes in comprehensive income

CSM recognised for services provided
Change in risk adjustment for risk expired
Experience adjustments

Changes that relate to current services

Contracts initially recognised in the period
Changes in estimates that adjust the CSM
Changes in estimates that result in losses and reversal of
losses on onerous contracts

Changes that relate to future services

Insurance service result
Net finance expenses/(income) from insurance contracts
Effect of movements in exchange rates
Total changes in comprehensive income
Cash flows

Premiums received
Claims and other insurance service expense paid, including
investment components

Insurance acquisition cashflows

Total cash flows
At 31 December
Closing assets
Closing liabilities
At 31 December

Note

Estimates of
present
value of
future cash
flows
£m

—
56,266
56,266

Risk
adjustment for
non-financial
risk
£m

—
1,443
1,443

Contractual service margin (CSM)

Contracts
under
modified
retrospective
transition
approach
£m

Contracts
under fair
value
transition
approach
£m

Other
contracts
£m

CSM
Total
£m

Total
£m

—
—
—

—
3,283
3,283

—
2,431
2,431

—
5,714
5,714

—
63,423
63,423

—
—
109
109
(602)
(1,619)

(56)

(2,277)
(2,168)

6 3,959

(76)

1,715

—
(96)
—
(96)
177
(149)

—

28
(68)
(9)
(3)
(80)

8,777

(6,895)

(470)
1,412
59,393
—
59,393
59,393

—

—
—
1,363
—
1,363
1,363

—
—
—
—
—
1

—

1
1
—
—
1

—

—
—
1
—
1
1

(376)
—
—
(376)
1
598

(353)
—
—
(353)
424
1,169

(729)

—
—

(729)

425
1,768

(729)
(96)
109
(716)
—
—

—

(56)

—

599
223
150

(4)

2,193
1,464
207

1,593
1,240
57
(3)

(7)

(56)
(772)
4,157
(86)
3,299

369

1,294

1,664

—

8,777

—

(6,895)

—
—
3,652
—
3,652
3,652

—
—
3,725
—
3,725
3,725

—
—
7,378
—
7,378
7,378

(470)
1,412
68,134
—
68,134
68,134

Aviva plc

3.98

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

2022 Carrying amount - restated1

Opening assets
Opening liabilities
At 1 January
Changes in comprehensive income

CSM recognised for services provided
Change in risk adjustment for risk expired
Experience adjustments

Changes that relate to current services

Contracts initially recognised in the period
Changes in estimates that adjust the CSM
Changes in estimates that result in losses and reversal of
losses on onerous contracts

Changes that relate to future services

Insurance service result
Net finance expenses/(income) from insurance contracts
Effect of movements in exchange rates
Total changes in comprehensive income
Cash flows

Premiums received
Claims and other insurance service expense paid, including
investment components

Insurance acquisition cashflows

Total cash flows
Effect of portfolio transfers, acquisitions and disposals2
At 31 December
Closing assets
Closing liabilities
At 31 December

Note

Estimates
of present
value of
future cash
flows
£m

Risk
adjustment for
non-financial
risk
£m

—
74,251
74,251

—
2,653
2,653

Contractual service margin (CSM)

Contracts
under
modified
retrospective
transition
approach
£m

Contracts
under fair
value
transition
approach
£m

Other
contracts
£m

CSM
Total
£m

Total
£m

—

—
— — —
— 2,911 2,040 4,951 81,855
— 2,911 2,040 4,951 81,855

—
—
(90)
(90)
(570)
(677)

—
(171)
—
(171)
186
(69)

103

(5)

(1,144)
(1,234)
6 (18,053)
63
(19,224)

112
(59)
(1,159)
8
(1,210)

7,857

(6,755)

(508)
594

645

56,266
—
56,266
56,266

—

—
—

—

1,443
—
1,443
1,443

—
—
—
—
—
—

—

—
—
—
—
—

(304)
—
—
(304)
—
543

(274)

(578)
(578)
(171)
— —
(90)
— —
(839)
(578)
(274)
418
34
418
203 746 —

—

— —

543
239
124
9
372

621 1,164
347 586

132
(707)
159 (19,053)

35
9
391

89
763 (19,671)

—

— — 7,857

—

—
—

—

—
—

—

— — (6,755)

(508)
— —
— — 594

— — 645

—

— 3,283 2,431 5,714 63,423
— — —
—
— 3,283 2,431 5,714 63,423
— 3,283 2,431 5,714 63,423

Key changes that impact the income statement include the release of CSM for services provided and the release of risk
adjustment for expired risks.

Changes that relate to future service include:

• New contracts initially recognised in the year which give rise to a CSM liability representing unearned future profit on
service yet to be provided;

• Experience variances and assumption changes on profitable contracts that impact the expected fulfilment cash flows
and adjust the CSM liability; and

• Recognition of new onerous contracts and experience variances or assumption changes on onerous contracts impacting
the income statement immediately.

The changes in estimates that increase the CSM include the effect of both experience variances and assumption changes
on expected future cash flows. Assumption changes included in the changes in estimates that increases the CSM at
31 December 2023 of £1,768 million relate primarily to spouses of BPA scheme members and changes to longevity
assumptions. The changes in estimates that increase the CSM at 31 December 2022 of £746 million, primarily reflects a
change to longevity assumptions.

Assumption changes are explained in more detail in note 43.

The net finance expenses from insurance contracts of £4,157 million (2022: £19,053 million net finance income) recognised
in the income statement includes the impact of the change in financial assumptions, the unwind of discounting on the
fulfilment cash flows and interest accretion on the CSM. There were significant increases in discount rates during 2022,
with smaller changes in discount rates during 2023.

Aviva plc

3.99

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Reinsurance contracts
The following table shows life risk reinsurance contracts analysed by remaining coverage and incurred claims:

Carrying amount

Note

Opening assets
Opening liabilities
At 1 January
Changes in comprehensive income

2023

Assets for remaining coverage

Excluding
loss
recovery
component
£m

4,261
—
4,261

Loss
recovery
component
£m

Assets for
incurred
claims
£m

Excluding
loss
recovery
component
£m

Total
£m

Loss
recovery
component
£m

Assets for
incurred
claims
£m

150
—
150

515
—
515

4,926
—
4,926

5,747
—
5,747

109
—
109

479
—
479

Restated1
2022

Total
£m

6,335
—
6,335

Allocation of reinsurance premiums paid

(2,693)

—

(2,693)

(2,512)

—

(2,512)

Recoveries of incurred claims and other
insurance service expenses
Recoveries and reversals of recoveries of
losses on onerous underlying contracts

Amounts recoverable from reinsurers
Net expenses from reinsurance contracts
Net finance income/(expenses) from
reinsurance contracts

Effect of movements in exchange rates
Total changes in comprehensive income
Cash flows

Premiums paid

Amounts received

Total cash flows
At 31 December
Closing assets
Closing liabilities
At 31 December

(4) 2,576

2,572

—

(18)

2,326

2,308

—

(2,693)

(158)

—

(162) 2,576
(162) 2,576

(158)

2,414
(279)

—

—
(2,512)

530

(16)
(2,179)

—
(161)

—

(1)

2,575

531

(1,788)

(17)

235

39
(4,261)

44
44

(3)

—
41

—

2,326
2,326

2,370
(142)

—

(1,791)

3
2,329

42
(1,891)

3,163

—

3,163
5,245
5,245
—
5,245

—

—
(11)
(11)
—
(11)

—

3,163

2,775

—

2,775

(2,585)

—

(2,293)

(2,585)
505
505
—
505

578
5,739
5,739
—
5,739

2,775
4,261
4,261
—
4,261

—
150
150
—
150

(2,293)
515
515
—
515

482
4,926
4,926
—
4,926

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).

Aviva plc

3.100

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

The following table shows life risk reinsurance contracts analysed by measurement component:

Contractual service margin (CSM)

2023 Carrying amount

Opening assets
Opening liabilities
At 1 January
Changes in comprehensive income

CSM recognised for services provided
Change in risk adjustment for risk expired
Experience adjustments

Changes that relate to current services

Contracts initially recognised in the period
Changes in estimates that adjust the CSM
Changes in estimates that relate to losses and reversals of
losses on onerous underlying contracts

Changes that relate to future services

Adjustments to assets for incurred claims

Net expenses from reinsurance contracts
Net finance income/(expenses) from reinsurance contracts
Effect of movements in exchange rates
Total changes in comprehensive income
Cash flows

Premiums paid
Amounts received

Total cash flows
At 31 December
Closing assets
Closing liabilities
At 31 December

Risk
adjustment
for
non-
financial
risk
£m

Contracts
under
modified
retrospective
transition
approach
£m

Contracts
under fair
value
transition
approach
£m

Note

Estimates
of present
value of
future cash
flows
£m

3,904
—
3,904

570
—
570

—
(33)
—
(33)
155
(80)

—
—
(8)
(8)
(143)
(714)

(158)

—

(1,015)

—

(1,023)
485
(14)
(552)

75
—
42
28
(1)

3,163
(2,585)
578
3,930
3,930
—
3,930

—
—
—
639
639
—
639

Other
contracts
£m

140
—
140

CSM
Total
£m

452
—
452

Total
£m

4,926
—
4,926

(74)
—
(74)

386
—
386

11
—
—
11
—
(11)

—

(11)
—
—
(2)
—
(2)

—
—
—
(76)
(76)
—
(76)

(50)
—
—
(50)
—
105

—

105
—
55
12
(2)
65

—
—
—
451
451
—
451

(41)
—
—
(41)
(12)

700

—

688
—
647
8
—
655

—
—
—
795
795
—
795

(80)
—
—
(80)
(12)
794

—

782
—
702
18
(2)

718

(80)
(33)
(8)
(121)
—
—

(158)

(158)
—
(279)
531
(17)
235

—
—
—
1,170
1,170
—
1,170

3,163
(2,585)
578
5,739
5,739
—
5,739

Aviva plc

3.101

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

2022 Carrying amount - restated1

Opening assets
Opening liabilities
At 1 January
Changes in comprehensive income

CSM recognised for services provided
Change in risk adjustment for risk expired
Experience adjustments

Changes that relate to current services

Contracts initially recognised in the period
Changes in estimates that adjust the CSM
Changes in estimates that relate to losses and reversals of
losses on onerous underlying contracts

Changes that relate to future services
Net expenses from reinsurance contracts
Net finance income/(expenses) from reinsurance contracts
Effect of movements in exchange rates
Total changes in comprehensive income
Cash flows

Premiums paid
Amounts received

Total cash flows
At 31 December
Closing assets
Closing liabilities
At 31 December

Contractual service margin (CSM)

Estimates
of present
value of
future cash
flows
£m

Risk
adjustment
for
non-
financial
risk
£m

Contracts
under
modified
retrospective
transition
approach
£m

Contracts
under fair
value
transition
approach
£m

Note

Other
contracts
£m

CSM
Total
£m

Total
£m

5,180 1,055
—
5,180 1,055

—

—
—
(53)
(53)
(159)
(335)

—
(88)
—
(88)
155
(65)

—

(432)
(485)
6 (1,306)
33
(1,758)

90
2
(491)
4
(485)

2,775
(2,293)
482
3,904
3,904
—
3,904

—
—
—
570
570
—
570

(71)
—
(71)

12
—
—
12
—
(13)

—

(13)
(1)
(2)
—
(3)

—
—
—
(74)
(74)
—
(74)

283
—
283

(112)
—
(112)

100 6,335
—
100 6,335

—

(43)
—
—
(43)
—
133

—

133
90
9
4
103

—
—
—
386
386
—
386

(32)
—
—
(32)
4
280

(63)
—
—
(63)
4
400

(63)
(88)
(53)
(204)
—
—

—

284
252
(1)
1
252

—
—
—
140
140
—
140

404
341
6
5

62
(142)
(1,791)
42
352 (1,891)

— 2,775
— (2,293)
482
—
452 4,926
452 4,926
—
452 4,926

—

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).

The movements in the life risk reinsurance contract assets have the same key drivers as the underlying insurance
contracts and are also particularly impacted by the longevity assumption changes, as many of the reinsurance contracts
held are in respect of bulk purchase annuities.

Some gross onerous contracts do not have reinsurance in place so movements in the gross loss component occur without
a corresponding movement being seen in the reinsurance loss recovery component.

Aviva plc

3.102

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(ii) Participating
Insurance contracts
The following table shows participating insurance contracts analysed by remaining coverage and incurred claims:

Liabilities for remaining
coverage

2023

Restated1
2022

Carrying amount

Note

Opening assets
Opening liabilities
At 1 January
Changes in comprehensive income

Excluding
loss
component
£m

—
40,439
40,439

Insurance revenue

(658)

Contracts under the modified
retrospective transition approach
Contracts under the fair value transition
approach
Other contracts

Insurance service expenses

Incurred claims and other insurance
service expenses

Amortisation of insurance acquisition
cash flows

Losses and reversals of losses on
onerous contracts

Investment components and premium
refunds

Insurance service result
Net finance expenses/(income) from
insurance contracts

Effect of movements in exchange rates
Total changes in comprehensive income
Cash flows

Premiums received
Claims and other insurance service
expenses paid, including investment
component
Insurance acquisition cash flows

Total cash flows
At 31 December
Closing assets
Closing liabilities
At 31 December

(154)

(483)

(21)
6

—

(3,941)

(4,593)

6 2,493

(37)
(2,137)

391

—

(16)
375
38,677
—
38,677
38,677

Loss
component
£m

Liabilities
for incurred
claims
£m

Excluding
loss
component
£m

Loss
component
£m

Liabilities for
incurred
claims
£m

Total
£m

—
6
6

—

—
3

—
525
525

—
40,970
40,970

—
47,557
47,557

—

—
402

(658)

(39)

(154)

(483)

(21)
411

(87)

(12)
10

—
—
—

—

—
6

—

—
739 48,296
739 48,296

—

(39)

—

—
223

(87)

(12)
239

(1)

402

401

—

(1)

223

222

—

3,941

—

(3,493)

—

3,493

4,343

(247)

(3,522)

3,716

—

200

—

—
3

—

—
—
9
—
9
9

—

2,493

(4,217)

—
4,343

(37)

2,209

1
(7,738)

—

—
6

—

(4,217)

—
3,716

1
(4,016)

—

391

257

—

257

(4,010)

—

(3,930)

—

(4,010)
858
—
858
858

(16)
(3,635)

39,544
—
39,544
39,544

(10)
247
40,439
—
40,439
40,439

—
—
6
—
6
6

—
(3,930)

(10)
(3,683)
525 40,970
—
525 40,970
525 40,970

—

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).

Aviva plc

3.103

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

The following table shows participating insurance contracts analysed by measurement component:

2023 Carrying amount

Opening assets
Opening liabilities
At 1 January
Changes in comprehensive income

CSM recognised for services provided
Change in risk adjustment for risk expired
Experience adjustments
Revenue recognised for incurred policyholder tax expenses

Changes that relate to current services

Changes in estimates that adjust the CSM
Changes in estimates that result in losses and reversal of
losses on onerous contracts

Changes that relate to future services

Insurance service result

Net finance expenses/(income) from insurance contracts
Effect of movements in exchange rates
Total changes in comprehensive income
Cash flows

Premiums received
Claims and other insurance service expense paid, including
investment components

Insurance acquisition cashflows

Total cash flows
At 31 December
Closing assets
Closing liabilities
At 31 December

Contractual service margin (CSM)

Note

Estimates of
present value
of future cash
flows
£m

—
39,690
39,690

—
—
(61)
(36)
(97)
31

35
(62)

2,483

(37)

2,384

391

(4,010)

(16)
(3,635)

38,439
—
38,439
38,439

Risk
adjustment
for
non-financial
risk
£m

Contracts
under
modified
retrospective
transition
approach
£m

—
62
62

—
(3)
—
—
(3)
(3)

—

(3)
(6)
9
—
3

—

—
—
65
—
65
65

—
438
438

(58)
—
—
—
(58)
8

—

8
(50)
—
—
(50)

—

—
—
388
—
388
388

Contracts
under fair
value
transition
approach
£m

—
780
780

(93)
—
—
—
(93)
(36)

—

(36)
(129)
1
—
(128)

—

—
—
652
—
652
652

CSM
Total
£m

Total
£m

—
1,218
1,218

—
40,970
40,970

(151)
—
—
—
(151)
(28)

—

(28)
(179)
1
—
(178)
—
—

(151)
(3)
(61)
(36)
(251)
—

4
(247)
2,493
(37)
2,209
—
391

—

(4,010)

—
—
1,040
—
1,040
1,040

(16)
(3,635)
39,544
—
39,544
39,544

Aviva plc

3.104

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

2022 Carrying amount - restated1

Opening assets
Opening liabilities
At 1 January
Changes in comprehensive income

CSM recognised for services provided
Change in risk adjustment for risk expired
Experience adjustments
Revenue recognised for incurred policyholder tax expenses

Changes that relate to current services

Contracts initially recognised in the period
Changes in estimates that adjust the CSM
Changes in estimates that result in losses and reversal of
losses on onerous contracts

Changes that relate to future services

Insurance service result
Net finance expenses/(income) from insurance contracts
Effect of movements in exchange rates
Total changes in comprehensive income
Cash flows

Premiums received
Claims and other insurance service expense paid, including
investment components

Insurance acquisition cashflows

Total cash flows
Effect of portfolio transfers, acquisitions and disposals2
At 31 December
Closing assets
Closing liabilities
At 31 December

Contractual service margin (CSM)

Estimates of
present value
of future cash
flows
£m

Risk
adjustment for
non-financial
risk
£m

Note

Contracts
under
modified
retrospective
transition
approach
£m

Contracts
under fair
value
transition
approach
£m

—
46,905
46,905

—
—
(79)
449
370
—
(66)

(59)
311
(4,217)
1
(3,905)

—
79
79

—
(5)
—
—
(5)
—
(10)

—

(10)
(15)
(2)
—
(17)

—
496
496

(74)
—
—
—
(74)
—
15

—

15
(59)
1
—
(58)

—
816
816

(98)
—
—
—
(98)
—
61

—

61
(37)
1
—
(36)

CSM
Total
£m

Total
£m

—

—
1,312 48,296
1,312 48,296

(172)
—
—
—
(172)
—
76

—

76
(96)
2
—
(94)

(172)
(5)
(79)
449
193
—
—

7
200
(4,217)
1
(4,016)

257

—

257

(3,930)

(10)
(3,683)
373
39,690
—
39,690
39,690

—

—
—
—
62
—
62
62

—

—
—
—
438
—
438
438

—

—
—
—
780
—
780
780

—

(3,930)

—
—
—

(10)
(3,683)
373
1,218 40,970
—
1,218 40,970
1,218 40,970

—

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).
2. The movement in 2022 relates to the acquisition of an additional 25% of the ordinary shares of Aviva Life Insurance Company India Limited giving Aviva a controlling interest in the entity.

Key changes that impact the income statement include the release of CSM for services provided and experience variances
for the period. Other changes that relate to current services include revenue recognised for policyholder tax expenses,
representing income tax on policyholders' investment return, charged to the policyholder funds.

Net finance (income)/expenses mainly represents investment returns on the net assets held in policyholder funds.

Aviva plc

3.105

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(iii) Non-life
Insurance contracts
The following table shows non-life insurance contracts analysed by remaining coverage and incurred claims:

2023 Carrying amount

Opening assets
Opening liabilities
At 1 January
Changes in comprehensive income

Insurance revenue

Incurred claims and other insurance service expenses
Amortisation of insurance acquisition cash flows
Losses and reversals of losses on onerous contracts
Adjustments to liabilities for incurred claims

Insurance service expenses

Insurance service result
Net finance expenses/(income) from insurance contracts
Effect of movements in exchange rates
Total changes in comprehensive income
Cash flows

Premiums received
Claims and other insurance service expenses paid, including
investment component

Insurance acquisition cash flows

Total cash flows
At 31 December
Closing assets
Closing liabilities
At 31 December

Liabilities for remaining coverage

Liabilities for incurred claims

Excluding loss
component
£m

Loss
component
£m

Note

Contracts under PAA

Estimates of
present value
of future cash
flows
£m

Risk
adjustment for
non-financial
risk
£m

—
2,439
2,439

(10,925)

—
2,535
—
—
2,535
(8,390)

—
(31)
(8,421)

11,364

—

(2,655)
8,709
2,727
—
2,727
2,727

—
44
44

—
(29)
—
16
—
(13)
(13)
—
—
(13)

—

—
—
31
—
31
31

—
10,210
10,210

—
7,037
—
—
148
7,185
7,185
558
(139)

7,604

—

(6,723)

—

(6,723)
11,091
—
11,091
11,091

—
553
553

—
160
—
—
(203)
(43)
(43)
20
(7)
(30)

—

—
—
523
—
523
523

Total
£m

—
13,246
13,246

(10,925)
7,168
2,535
16
(55)
9,664
(1,261)
578
(177)
(860)

11,364

(6,723)

(2,655)
1,986
14,372
—
14,372
14,372

The £(203) million adjustment to the risk adjustment in the liability for incurred claims comprises the release of the risk
adjustment as claims are paid and also includes assumption changes in calculating the risk adjustment.

Aviva plc

3.106

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Liabilities for remaining coverage

Liabilities for incurred claims

Excluding loss
component

Loss
component

Contracts under PAA

Estimates of
present value
of future cash
flows

Risk
adjustment for
non-financial
risk

2022 Carrying amount - restated1

Opening assets
Opening liabilities
At 1 January
Changes in comprehensive income

Insurance revenue

Insurance service expenses

Insurance service result
Net finance expenses/(income) from insurance contracts
Effect of movements in exchange rates
Total changes in comprehensive income
Cash flows

Premiums received
Claims and other insurance service expenses paid, including
investment component

Insurance acquisition cash flows

Total cash flows
At 31 December
Closing assets
Closing liabilities
At 31 December

Note

£m

—
2,398
2,398

(10,049)
—
2,391
—
—
2,391
(7,658)
—
47
(7,611)

10,253

—

(2,601)
7,652
2,439
—
2,439
2,439

£m

—
27
27

—
(43)
—
59
—
16
16
—
1
17

—

—
—
44
—
44
44

£m

—
10,345
10,345

—
6,535
—
—
187
6,722
6,722
(1,160)
233
5,795

£m

—
569
569

—
110
—
—
(67)
43
43
(69)
10
(16)

Total

£m

—
13,339
13,339

(10,049)
6,602
2,391
59
120
9,172
(877)
(1,229)
291
(1,815)

—

10,253

(5,930)

—
(5,930)
10,210
—
10,210
10,210

—

(5,930)

—
—
553
—
553
553

(2,601)
1,722
13,246
—
13,246
13,246

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

The £(67) million adjustment to the risk adjustment in the liability for incurred claims is comprised of the release of the
risk adjustment as claims are paid and also includes assumption changes in calculating the risk adjustment.

There are no non-life gross insurance contracts measured under the GMM.

Aviva plc

3.107

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Reinsurance contracts
The following table shows non-life reinsurance contracts analysed by remaining coverage and incurred claims (contracts
measured under the PAA or GMM):

2023 Carrying amount

Opening assets
Opening liabilities
At 1 January
Changes in comprehensive income

Allocation of reinsurance premiums paid

Recoveries of incurred claims and other insurance service expenses
Adjustments to assets for incurred claims

Amounts recoverable from reinsurers
Effect of changes in non-performance risk of reinsurers

Net expenses from reinsurance contracts
Net finance income/(expenses) from reinsurance contracts
Effect of movements in exchange rates
Total changes in comprehensive income
Cash flows

Premiums paid
Amounts received

Total cash flows
At 31 December
Closing assets
Closing liabilities
At 31 December

2022 Carrying amount - restated1

Opening assets
Opening liabilities
At 1 January
Changes in comprehensive income

Allocation of reinsurance premiums paid

Recoveries of incurred claims and other insurance service expenses
Adjustments to assets for incurred claims

Amounts recoverable from reinsurers
Effect of changes in non-performance risk of reinsurers

Net expenses from reinsurance contracts
Net finance income/(expenses) from reinsurance contracts
Effect of movements in exchange rates
Total changes in comprehensive income
Cash flows

Premiums paid
Amounts received

Total cash flows
At 31 December
Closing assets
Closing liabilities
At 31 December

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

Assets for incurred claims

Contracts under PAA

Estimates of
present
value of
future cash
flows
£m

Risk
adjustment
for non-
financial
risk
£m

Assets for
remaining
coverage
£m

Contracts
not under
PAA
£m

Note

855
—
855

(949)
34
—
34
1
(914)
73
7
(834)

823
—
823
844
844
—
844

—
—
—

—
46
—
46
—
46
—
—
46

—
(46)
(46)
—
—
—
—

907
—
907

—
261
123
384

(2)

382
33
(5)

410

—
(276)
(276)
1,041
1,041
—
1,041

72
—
72

—
16
(12)
4
—
4
4
—
8

—
—
—
80
80
—
80

Assets for incurred claims

Contracts under PAA

Estimates of
present
value of
future cash
flows
£m

Risk
adjustment
for non-
financial risk
£m

Assets for
remaining
coverage
£m

Contracts
not under
PAA
£m

Note

1,051
—
1,051

(886)
174
—
174
(5)
(717)
(221)
14
(924)

728
—
728
855
855
—
855

—
—
—

—
71
—
71
—
71
—
—
71

—
(71)
(71)
—
—
—
—

736
—
736

—
419
(32)
387
(2)
385
(95)
20
310

—
(139)
(139)
907
907
—
907

60
—
60

—
14
6
20
—
20
(3)
(5)
12

—
—
—
72
72
—
72

Total
£m

1,834
—
1,834

(949)
357
111
468
(1)
(482)
110
2
(370)

823
(322)
501
1,965
1,965
—
1,965

Total
£m

1,847
—
1,847

(886)
678
(26)
652
(7)
(241)
(319)
29
(531)

728
(210)
518
1,834
1,834
—
1,834

Aviva plc

3.108

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

The following table shows non-life reinsurance contracts reinsuring against the risk of adverse development on incurred
claims analysed by measurement component (contracts measured under the GMM):

Carrying amount

Opening assets
Opening liabilities
At 1 January
Changes in comprehensive income

Change in risk adjustment for risk expired
Experience adjustments

Changes that relate to current services

Changes in estimates for adverse development cover

Changes that relate to future services

Effect of changes in non-performance risk of reinsurers

Net expenses from reinsurance contracts

Net finance income/(expenses) from reinsurance
contracts
Effect of movements in exchange rates
Total changes in comprehensive income
Cash flows

Amounts received

Total cash flows
At 31 December
Closing assets
Closing liabilities
At 31 December

Estimates of
present value of
future cash flows

£m

809
—
809

—
8
8

(7)
118

(75)
(75)
852
852
—
852

Risk
adjustment for
non-financial
risk
£m

90
—
90

(11)
—
(11)

(15)

—

(26)

—
(20)

—
—
70
70
—
70

Estimates of
present value of
future cash flows
£m

Risk
adjustment for
non-financial
risk
£m

939
—
939

—
(34)
(34)

155

(5)

116

104
—
104

(14)
—
(14)

—

Restated1
2022

Total
£m

1,043
—
1,043

(14)
(34)
(48)

174

(5)

121

(198)

(22)

(220)

13
(69)

(61)
(61)
809
809
—
809

3
(14)

—
—
90
90
—
90

16
(83)

(61)
(61)
899
899
—
899

2023

Total
£m

899
—
899

(11)
8
(3)

(7)
98

(75)
(75)
922
922
—
922

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

(c) Assets of insurance acquisition cashflows
The following table sets out carrying amount and movement of assets for non-life insurance acquisition cash flows at
31 December:

Carrying amount

At 1 January
Amounts incurred during the year

Amounts derecognised and included in the measurement of insurance contracts

Effect of movements in exchange rates
Balance at 31 December

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

2023
£m

78
115

(18)

—
175

Restated1
2022
£m

72
8

—

(2)
78

The following table sets out when the Group expects to derecognise assets for non-life insurance acquisition cash flows
after the reporting date:

Less than one year
One to two years
Two to three years
Three to four years
Four to five years
Five to ten years
Total

2023
£m

52
42
33
24
6
18
175

Restated1
2022
£m

29
23
16
10
—
—
78

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

(d) Effect of contracts initially recognised in the year

Expected premiums from new insurance contracts

8,439

—

8,439

7,277

—

7,277

Life risk Participating
£m

£m

2023

Total
£m

Life risk Participating
£m

£m

2022

Total
£m

Aviva plc

3.109

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

The following tables summarise the effect on the measurement components arising from the initial recognition of
insurance and reinsurance contracts not measured under the PAA in the year.

(i) Life risk
Insurance contracts

Claims and other insurance service expenses payable
Insurance acquisition cash flows

Estimates of present value of cash outflows
Estimates of present value of cash inflows
Risk adjustment
CSM
Losses recognised on initial recognition

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

Reinsurance contracts

Profitable
contracts
issued
£m

Onerous
contracts
issued
£m

2023

Total
£m

Profitable
contracts
issued
£m

Onerous
contracts
issued
£m

7,073
503
7,576
(8,171)
170
425
—

257
4
261
(268)
7
—
—

7,330
507
7,837
(8,439)
177
425
—

5,487
492
5,979
(6,562)
165
418
—

712
16
728
(715)
21
—
34

Contracts
initiated
without a
loss
recovery
component
£m

Contracts
initiated
with a loss
recovery
component
£m

2023

Total
£m

Estimates of present value of cash outflows
Estimates of present value of cash inflows
Risk adjustment
CSM
Income recognised on initial recognition

5,132
(4,996)
(140)
4
—

505
(499)
(14)
8
—

5,637

(5,495)
(154)
12
—

Contracts
initiated
without a
loss
recovery
component
£m

Contracts
initiated with
a loss
recovery
component
£m

4,392
(4,233)
(155)
(4)
—

—
—
—
—
—

Restated1
2022

Total
£m

6,199
508
6,707
(7,277)
186
418
34

Restated1
2022

Total
£m

4,392
(4,233)
(155)
(4)
—

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

(ii) Participating
There were no Participating business contracts initially recognised in either the current or prior year.

(iii) Non-life
There were no non-life insurance contracts initially recognised in the current or prior year measured under the general
measurement model.

(e) Contractual service margin emergence
The following tables set out when the Group expects to recognise the remaining CSM in the income statement for
contracts measured under the GMM or VFA, after allowing for future accretion of interest on the CSM for GMM
contracts. The amounts presented represent the net impact in each period of expected release of the CSM recognised in
revenue less the accretion of interest on the CSM recognised in insurance finance expenses.

2023
Life risk
Participating
Non-life
Insurance contracts
Life risk
Participating
Non-life
Reinsurance contracts
Net CSM

Less than
one year
£m

One to two
years
£m

Two to
three years
£m

Three to
four years
£m

Four to five
years
£m

Five to ten
years
£m

483
88
—
571
45
—
—
45
526

420
85
—
505
49
—
—
49
456

378
81
—
459
47
—
—
47
412

361
76
—
437
46
—
—
46
391

346
71
—
417
45
—
—
45
372

1,499
280
—
1,779
202
—
—
202
1,577

10 to 15
years
£m

1,179
164
—
1,343
173
—
—
173
1,170

15 to 20
years
£m

917
90
—
1,007
154
—
—
154
853

Greater
than 20
years
£m

1,795
105
—
1,900
409
—
—
409
1,491

Total
£m

7,378
1,040
—
8,418
1,170
—
—
1,170
7,248

Aviva plc

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Notes to the consolidated financial statements

2022
Life risk
Participating
Non-life
Insurance contracts
Life risk
Participating
Non-life
Reinsurance contracts
Net CSM

Less than
one year
£m

One to two
years
£m

Two to three
years
£m

Three to
four years
£m

Four to five
years
£m

Five to ten
years
£m

340
86
—
426
30
—
—
30
396

325
79
—
404
12
—
—
12
392

288
77
—
365
13
—
—
13
352

276
74
—
350
13
—
—
13
337

266
71
—
337
13
—
—
13
324

1,185
301
—
1,486
60
—
—
60
1,426

10 to 15
years
£m

922
200
—
1,122
58
—
—
58
1,064

15 to 20
years
£m

Greater
than 20
years
£m

Total
£m

715
129
—
844
60
—
—
60
784

1,397
201
—
1,598
193
—
—
193

5,714
1,218
—
6,932
452
—
—
452
1,405 6,480

(f) Non-life claims development
The table illustrates how estimates of cumulative claims for the Group’s non-life business have developed over time on a
gross and net of reinsurance basis. Each table shows how the Group’s estimates of total claims for each accident year
have developed over time and reconciles the cumulative claims to the amount included in the statement of financial
position. Balances have been translated at the exchange rates prevailing at the reporting date as per note 2.

In the claims development table, the cumulative claim payments and estimates of cumulative claims for each accident
year are translated into sterling at the exchange rates that applied at the end of that accident year. The impact of using
varying exchange rates is shown at the bottom of each table. Disposals are dealt with by treating all outstanding and IBNR
claims of the disposed entity as ‘paid’ at the date of disposal.

The claims development table include information on asbestos and environmental pollution claims provisions from
business written more than 10 years ago. The undiscounted claim provisions, net of reinsurance, in respect of this
business at
31 December 2023 were £78 million (2022: £86 million). The movement in asbestos and environmental pollution liabilities
in the year reflects an decrease of £(8) million due to favourable claims development and claims payments net of
reinsurance recoveries.

Aviva plc

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Notes to the consolidated financial statements

All prior
years
£m

2014
£m

2015
£m

2016
£m

2017
£m

2018
£m

2019
£m

2020
£m

2021
£m

2022
£m

2023
£m

Total
£m

Estimates of undiscounted net cumulative claims

4,328

4,300

4,912

5,141

5,516

5,253

4,890

4,762

5,893

6,912

Effect of claims payable

—

Gross of reinsurance
Estimates of undiscounted cumulative claims

At end of accident year

One year
Two years
Three years
Four years
Five years
Six years
Seven years
Eight years
Nine years

Cumulative gross claims paid

Effect of discounting

Effect of the risk adjustment for
non-financial risk

Cumulative effect of foreign
exchange movements

Effect of acquisitions

Gross liabilities for incurred claims
included in the statement of
financial position

Net of reinsurance

At end of accident year

One year
Two years
Three years
Four years
Five years
Six years
Seven years
Eight years
Nine years

Cumulative net claims paid

Effect of discounting
Effect of the risk adjustment for
non-financial risk
Effect of non-performance risk of
reinsurers
Effect of claims payable

Cumulative effect of foreign
exchange movements

Effect of acquisitions

Reinsurance of adverse claims
development presented in net
liabilities for remaining coverage

Net liabilities for incurred claims
included in the statement of
financial position

—
—
—
—
—
—
—
—
—
—

522

—
—
—
—
—
—
—
—
—
—

4,452

4,462

5,298

5,282

5,706

5,423

5,460

4,987

6,216

7,239

4,491
4,581
4,576
4,503
4,494
4,476
4,474
4,482
4,462
—

5,334
5,362
5,312
5,286
5,305
5,307
5,319
5,298
—
—

7,239
4,460
—
4,463
—
4,514
—
4,514
—
4,460
—
4,464
—
4,448
—
4,445
—
4,449
4,452
—
(4,394) (4,388) (5,079) (5,007) (5,282) (4,738) (4,155) (3,713) (4,266) (3,423)
3,816

6,123
6,216
—
—
—
—
—
—
—
—

5,422
5,384
5,431
5,414
5,423
—
—
—
—
—

5,345
5,383
5,378
5,460
—
—
—
—
—
—

5,354
5,310
5,307
5,301
5,291
5,283
5,282
—
—
—

5,613
5,644
5,710
5,741
5,734
5,706
—
—
—
—

5,044
5,104
4,987
—
—
—
—
—
—
—

1,950

1,305

1,274

685

275

424

(25)

(37)

(56)

(77)

(108)

(176)

2,791
(1,064)

58
(8)

74
(10)

219
(23)

12,871
(273) (1,857)

160

—

(1) —

(22) —

—

1,836

210

260

408

664

1,306

1,230

1,840

3,707

11,614

4,996
5,008
4,939
4,917
4,923
4,922
4,929
4,912
—
—

4,338
4,435
4,423
4,357
4,353
4,332
4,315
4,295
4,300
—

6,912
4,351
—
4,371
—
4,410
—
4,402
—
4,346
—
4,344
—
4,329
—
4,322
—
4,327
4,328
—
(4,275) (4,207) (4,716) (4,857) (5,121) (4,636) (3,881) (3,587) (4,112) (3,378)
3,534

5,457
5,457
5,530
5,562
5,560
5,516
—
—
—
—

5,263
5,247
5,285
5,262
5,253
—
—
—
—
—

5,193
5,138
5,146
5,144
5,135
5,115
5,141
—
—
—

4,876
4,838
4,762
—
—
—
—
—
—
—

5,794
5,893
—
—
—
—
—
—
—
—

4,889
4,861
4,858
4,890
—
—
—
—
—
—

1,781

395

1,175

1,009

284

1,485

(679)

53
(8)

93
(10)

196
(20)

617
(52)

(25)

(34)

(66)

(102)

(165)

10,622
(257) (1,418)

—

143

372

—

(4)

(25)

(33)

(186)

(39)

(10)

(86)

—

(2) —

(22) —

—

922

—

922

1,781

107

245

365

355

562

788

1,186

1,631

3,414

10,492

Aviva plc

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Notes to the consolidated financial statements

(g) Significant judgements, estimates and assumptions
This note gives details of the significant judgements made in applying IFRS 17, explaining the inputs, assumptions,
methods and estimation techniques used to measure insurance, participating investment and reinsurance contracts.
Accounting policy C sets out the critical accounting judgements and the material accounting estimates that are
considered particularly susceptible to changes in estimates and assumptions. This note provides further detail of how
these are applied in the context of IFRS 17.

The Group underwrites life business primarily in the UK and Ireland. This is mainly written in the ‘Non-Profit’ funds and
in a number of ‘With-Profits’ sub-funds. In the ‘Non-Profit’ funds shareholders are entitled to 100% of the distributed
profits. In the ‘With-Profits’ sub-funds the with-profits policyholders are entitled to between 40% and 100% of
distributed profits, depending on the fund rules. There is also the Reattributed Inherited Estate External Support Account
(RIEESA) in the UK, which does not itself underwrite any business, but provides capital support to one of the 'With-
Profits' sub-funds and receives any surplus or deficit emerging from it. In the RIEESA, shareholders are entitled to 100%
of the distributed profits, but these can only be distributed in line with the criteria set by the Reattribution Scheme.

The Group underwrites non-life business in the UK, Ireland and Canada, providing individual and corporate customers
with a wide range of insurance products.

Significant judgments, estimates and assumptions associated with measuring insurance products and associated
reinsurance are outlined below.

(i) Fulfilment cash flows
Fulfilment cash flows comprise:
• estimates of future cash flows;
• an adjustment (discount rate) to reflect the time value of money and the financial risks related to future cash flows, to

the extent that the financial risks are not included in the estimates of future cash flows; and

• a risk adjustment.

The Group’s objective in estimating future cash flows is to determine the expected value of a range of scenarios that
reflects the full range of possible outcomes. A deterministic approach, producing point estimates based on best estimate
assumptions, is used for valuing most of the Group’s business. The exception is for contracts with embedded options and
guarantees, in particular with-profits participation business, where a stochastic approach based on the average of a
number of scenarios is used. Stochastic modelling involves projecting future cash flows under a large number of possible
economic scenarios for market variables such as interest rates and equity returns.

Estimates of future cash flows
In estimating future cash flows, the Group incorporates, in an unbiased way, all reasonable and supportable information
that is available without undue cost or effort at the reporting date. This information includes both internal and external
historical data about claims and other experience, updated to reflect current expectations of future events.

The estimates of future cash flows reflect the Group’s view of current conditions at the reporting date, using market
variables consistent with observable market prices, where applicable.

When estimating future cash flows, the Group takes into account current expectations of future events that might affect
those cash flows. However, expectations of future changes in legislation that would change or discharge a present
obligation or create new obligations under existing contracts are not taken into account until the change in legislation is
substantively enacted. For cash flows which are contractually linked to an index of prices or wages, the Group derives an
assumption for future RPI from RPI swap curves, and adjusts this to derive future inflation assumptions for other price
and wage indices.

Cash flows within the boundary of a contract relate directly to the fulfilment of the contract, including those for which
the Group has discretion over the amount or timing. These include payments to (or on behalf of) policyholders, insurance
acquisition cash flows and other costs that are incurred in fulfilling contracts.

Insurance acquisition cash flows arise from the activities of selling, underwriting and starting a group of contracts that
are directly attributable to the portfolio of contracts to which the group belongs. This includes initial and recurring
commissions payable on instalment premiums receivable within the contract boundary. Other costs that are incurred in
fulfilling the contracts include:
• claims handling, maintenance and administration costs;
• costs that the Group will incur in providing investment services;
• costs that the Group will incur in performing investment activities to the extent that the Group performs them to

enhance benefits from insurance coverage for policyholders by generating an investment return from which
policyholders will benefit if an insured event occurs; and

• income tax and other costs specifically chargeable to the policyholders under the terms of the contracts.

Insurance acquisition cash flows and other costs that are incurred in fulfilling contracts comprise both direct costs and
an allocation of fixed and variable overheads.

Aviva plc

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Notes to the consolidated financial statements

Cash flows are attributed to acquisition activities, other fulfilment activities and other activities at local entity level using
activity-based costing techniques. Cash flows attributable to acquisition and other fulfilment activities are allocated to
groups of contracts using methods that are systematic and rational and are consistently applied to all costs that have
similar characteristics.

Contract boundaries
The assessment of the contract boundary, which defines which future cash flows are included in the measurement of a
contract, requires judgement and consideration of the Group’s substantive rights and obligations under the contract as
follows.

Insurance contracts
Group protection policies issued by the Group have terms that are guaranteed to be renewable every two or three years.
The Group determines that the cash flows related to future renewals (i.e. the guaranteed renewable terms) of these
contracts are outside the contract boundary. This is because the premium charged for the period reflects the Group’s
expectation of its exposure to risk for that period and, on renewal, the Group can reprice the premium to reflect the
reassessed risks for the next period based on claims experience and expectations for the respective portfolio. Any
renewal of the contract is treated as a new contract and is recognised, separately from the initial contract, when the
recognition criteria are met.

Pension savings contracts with guaranteed annuity terms allow the policyholder to convert, on maturity of the stated
term, the maturity benefit into an immediately starting life-contingent annuity at a predetermined rate. The Group has
assessed the contract boundary for the entire contract, including the option, and concluded that the cash flows related to
the fulfilment of the annuity option fall within the boundary of the contract. This is because the Group does not have the
practical ability to reprice the contract on maturity of the stated term.

Reinsurance contracts
Quota share - The Group manages risks arising from Life insurance contracts through external quota share reinsurance
contracts. These reinsurance contracts cover underlying contracts issued within the term on a risk-attaching basis and
provides unilateral rights to both the Group and the reinsurer to terminate the cession of new business subject to giving
notice to the other party. Notice can usually be given at any time, with termination to new business effective three
months from notice being given, albeit a limited number of the Group’s quota share reinsurance contract currently
stipulate a different notice period. On initial recognition, the cash flows within the reinsurance contract boundary are
determined to be those arising from underlying contracts that the Group expects to issue and cede under the
reinsurance contract within the next three months. Subsequently risks expected to attach beyond the end of this initial
notice period are considered cash flows of new reinsurance contracts and are recognised, separately from the initial
contract, as they fall within the rolling three-month notice period.

Excess of loss - The Group’s non-Life excess of loss reinsurance contracts held provide coverage for claims incurred
during an accident year. Thus, all cash flows arising from claims incurred and expected to be incurred in the accident
year are included in the measurement of the reinsurance contracts held. Some of these contracts include mandatory
reinstatement premiums, which are guaranteed per the contractual arrangements and are thus within the contract
boundary. Estimated reinstatement premiums due are offset against recoveries within the liability for incurred claims.

Risk attaching reinsurance - The Group’s risk-attaching non-life treaties have varying coverage periods, ranging from
annual treaties to indefinite treaties. Such treaties provide unilateral rights to the Group and reinsurer to terminate the
cession of new business by giving notice to the other party based upon notice periods defined by the treaty. On initial
recognition, the cash flows within the reinsurance contract boundary are determined to be those arising from underlying
contracts that the Group expects to issue and cede under the reinsurance contract within the termination notice period.
Subsequently risks attaching beyond the end of the initial termination notice period are considered cash flows of new
reinsurance contracts and are recognised, separately from the initial contract, as they fall within subsequent termination
notice periods.

Adverse development cover - The Group’s non-Life adverse development cover treaties are deemed to expire when all
uncertainty associated with the ceded claims liabilities has expired. The contract boundary is based upon the best
estimate of when all obligations associated with the liabilities will be extinguished.

Life contracts
Death and other claim benefits
Death and other claim benefits are projected using decrements appropriate to each class of business, including
persistency, mortality and morbidity.

Mortality assumptions are set with regard to recent Company experience and general industry trends. Local, generally
accepted, published standard mortality tables are used for different categories of business as appropriate.

Aviva plc

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Notes to the consolidated financial statements

The mortality tables used in the valuation for the most material lines of business are summarised below:

UK business

Life protection

Pure endowments
and deferred annuities
before vesting

2023

2022

AM00/AF00 or TM16/TF16 adjusted for
smoker status and age/sex specific
factors with allowance for future
mortality improvements

AM00/AF00 adjusted with allowance
for improvements

AM00/AF00 adjusted with allowance for
improvements

Ireland business

Life protection

TMS08/TMN08/TFS08/TFN08 adjusted
plus allowance for future mortality
improvement

Annuity payments
The conventional immediate and deferred annuity business is valued by discounting future benefit payments with an
allowance for mortality, including future improvements in mortality. Mortality assumptions are set with regard to
Company experience and general industry trends.

The mortality tables used in the valuation for the most material lines of business are summarised below:

UK business

Pensions business and
general annuity business

2023

2022

PMA16_IND/PFA16_IND or
PMA16_IND_INT/PFA16_IND_INT plus
allowance for future mortality
improvement

Bulk purchase annuities

CV3 plus allowance for future mortality
improvement

Ireland business

Annuities

PMA08/PFA08 (conventional) adjusted
plus allowance for future mortality
improvement

For the largest portfolio of pensions annuity business, the underlying mortality assumptions, before risk adjustment for
males are 106.6% of PMA16_IND with base year 2016 (2022 restated: 104.1% of PMA16_IND with base year 2016). For
females the underlying mortality assumptions, before risk adjustment, are 101.3% of PFA16_IND with base year 2016
(2022 restated: 100.3% of PFA16_IND with base year 2016). The base rates on some contracts are adjusted for lifestyle,
medical, and other factors.

Improvements before risk adjustment are based on ‘CMI_2022 (S=7.25) Advanced with adjustments’
(2022 restated: ‘CMI_2021 (S=7.25) Advanced with adjustments’) with zero weight on 2022 data within the model. Instead
of placing weight on 2022 data within the CMI improvements model, a separate adjustment is made to reflect the impact
that the drivers of excess mortality in 2022 and 2023 are expected to have in future years. We use a long-term
improvement rate of 1.5% for both males and females (31 December 2022 restated: 1.5% for both males and females) . An
allowance has been made to adjust for greater mortality improvements in the annuitant population relative to the general
population on which CMI_2022 is based, using a parameter of 0.15% for males and 0.20% for females, tapering to zero
between ages 90 and 110 (for 2022 the same approach was taken with respect to CMI_2021). Long-term improvement
rates are set to taper to zero between ages 85 and 110 (2022 restated: between 85 and 110).

Expenses
Maintenance expense assumptions for life business are generally expressed as a per policy charge set with regards to an
allocation of current year expense levels by category of business, adjusted for known changes in contractual
arrangements with external suppliers and using the policy counts for in-force business. Expenses are generally charged
to with-profits funds using a fixed per policy charge in line with a memorandum of understanding between the with-
profits funds and the non-profit fund within the company. Any differential between that and the total charge for each
policy accrues to the non-profit fund and is also included in the fulfilment cash flows. The assumptions also include an
allowance for future expense inflation over the lifetime of each contract, which is assumed to be in line with RPI. An
additional liability is held if projected per policy expenses in future years are expected to exceed current assumptions.
A further allowance is made for non-discretionary project costs that typically relate to mandatory requirements.
Investment expense assumptions are generally expressed as a proportion of the assets backing the liabilities.

Aviva plc

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Notes to the consolidated financial statements

Non-life contracts
The Group establishes reserves for claim events that occurred before the valuation date, whether reported or not. When
calculating claim costs, the Group takes into account estimated future recoveries from salvage and subrogation. Where
non-Life contracts are onerous, the measurement of the loss component includes an estimate of future claims that are
expected to occur within the remaining coverage period.

The undiscounted ultimate cost of outstanding claims is estimated by using a range of standard actuarial claims
projection techniques, such as the Chain Ladder and Bornhuetter-Ferguson methods. Historical claims development
is mainly analysed by accident period, although underwriting or notification period is also used where this is
considered appropriate.

The assumptions used in most non-life actuarial projection techniques, including future rates of claims inflation or loss
ratio assumptions, are implicit in the historical claims development data on which the projections are based. Additional
qualitative judgement is used to assess the extent to which past trends may not apply in the future in order to arrive at a
point estimate for the ultimate cost of claims that represents the likely outcome. The ultimate cost of outstanding claims
includes provision for expenses associated with handling claims.

UK mesothelioma claims
The level of uncertainty associated with latent claims is considerable due to the relatively small number of claims and the
long-tail nature of the liabilities. UK mesothelioma claims account for a large proportion of the Group’s latent claims. The
key assumptions underlying the estimation of these claims include claim numbers, the base average cost per claim, future
inflation in the average cost of claims and legal fees. The best estimate of the liabilities considers the latest available
market information and studies and how these might impact Aviva’s liabilities.

Lump sums payable to bodily injury claimants
Lump sum payments in settlement of bodily injury claims are influenced by the Ogden discount rate among other factors.
The Ogden discount rate is set by the Lord Chancellor and is applied when calculating the present value of future care
costs and loss of earnings for claims settlement purposes. The Lord Chancellor's next review of the Ogden discount rate
is expected to begin by summer 2024 and its impact upon the valuation of claims has been estimated on a probability
weighted basis which considers a range of possible outcomes from the review.

Discount rates
All cash flows are discounted using risk-free yield curves adjusted to reflect the characteristics of the cash flows and the
liquidity of the insurance contracts. For the risk-free yield curves, the Group generally uses the risk-free interest rate
curves published by the PRA and EIOPA for regulatory reporting, which are based on swap rates and in the UK based on
SONIA (Sterling Over Night Index Average). In Canada, the Group uses the Bank of Canada zero-coupon bond curve.
Where necessary, yield curves are interpolated between the last available market data point and an ultimate forward rate,
which reflects long-term real interest rate and inflation expectations.

The Group uses a bottom-up discount rate for all life and non-life insurance contracts except for annuities. A top-down
discount rate is applied to annuities to reflect more appropriately the characteristics of the annuity liabilities. For other
contracts where liabilities are subject to lapse risk or where cash flows depend on underlying asset performance (such as
unit-linked and with-profits), the characteristics of the liability can be reflected using the bottom-up method which
requires the application of less judgement.

Under the top-down approach, the discount rate is determined from the yield implicit in the fair value of an appropriate
reference portfolio of assets that reflects the characteristics of the liabilities. Adjustments are made for differences
between the reference portfolio and liability cash flows, including an allowance for defaults which reflects the
compensation a market participant would require for credit risk.

For the measurement of new annuity business at inception only, the discount rates are based on assets expected to be
originated for new business at initial recognition of the contracts. On subsequent measurement of the fulfilment cash
flows the reference portfolio is based on the assets held to match the portfolio of liabilities. For recently written
contracts, an adjustment is made to liabilities where appropriate assets are yet to be sourced.

Under the bottom-up approach, the discount rate is determined as the risk-free yield, adjusted for differences in liquidity
characteristics between the financial assets used to derive the risk-free yield and the relevant liability cash flows (known
as an ‘illiquidity premium’).

For UK and Ireland business, the illiquidity premium is determined as a percentage of the current spread over the risk-
free yield on an index of covered bonds. For Canadian business, the illiquidity premium is determined with reference to a
spread of bonds available on the market. The percentage applied reflects the liquidity characteristics of the liabilities
including the propensity and ability of policyholders to lapse or surrender their contracts; for example, 100% for
structured settlements where surrenders are not possible, and 0% for unit-linked contracts where policyholders can
normally immediately surrender their contract for the unit value. An intermediate percentage is applied for other types of
business. In Canada, a single illiquidity premium is selected given the limited duration differences and similar liquidity
characteristics.

Aviva plc

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Notes to the consolidated financial statements

The tables below set out the yield curves used to discount the cash flows of insurance contracts for major currencies:

1 year

5 years

10 years

15 years

20 years

2023
40 years

1 year

5 years

10 years

15 years

20 years

Restated1
2022

40 years

Life contracts
Immediate and deferred annuities

GBP
EUR

Life protection contracts

GBP
EUR

With-profits contracts

GBP
EUR

Unit-linked contracts

GBP
EUR

Non-life contracts
Structured settlements

GBP

Latent claims

GBP
EUR

Other general insurance claims

GBP
EUR
CAD

6.5 % 5.1 % 5.0 % 5.2 % 5.2 % 4.9 % 6.1 % 5.7 % 5.3 % 5.2 % 5.1 %
4.3 % 3.2 % 3.3 % 3.4 % 3.3 % 3.6 % 3.7 % 3.7 % 3.6 % 3.6 % 3.3 %

4.7 %
3.4 %

5.1 % 3.7 % 3.6 % 3.7 % 3.8 % 3.5 % 5.0 % 4.6 % 4.2 % 4.1 % 4.0 %
3.6 % 2.5 % 2.6 % 2.7 % 2.6 % 2.8 % 3.4 % 3.3 % 3.3 % 3.2 % 3.0 %

3.6 %
3.0 %

5.2 % 3.7 % 3.8 % 3.9 % 3.9 % 3.6 % 5.2 % 4.8 % 4.5 % 4.4 % 4.3 %
3.6 % 2.5 % 2.6 % 2.7 % 2.6 % 2.8 % 3.4 % 3.3 % 3.3 % 3.2 % 3.0 %

3.9 %
3.0 %

4.7 % 3.4 % 3.3 % 3.4 % 3.4 % 3.2 % 4.5 % 4.1 % 3.7 % 3.6 % 3.5 %
3.6 % 2.5 % 2.6 % 2.7 % 2.6 % 2.8 % 3.4 % 3.3 % 3.3 % 3.2 % 3.0 %

3.2 %
3.0 %

5.4 % 4.0 % 3.9 % 4.0 % 4.1 % 3.8 % 5.5 % 5.1 % 4.7 % 4.6 % 4.5 %

4.2 %

5.2 % 3.8 % 3.8 % 3.9 % 3.9 % 3.6 % 5.2 % 4.8 % 4.5 % 4.4 % 4.3 %
3.9 % 2.8 % 2.9 % 3.0 % 2.9 % 3.2 % 3.4 % 3.3 % 3.3 % 3.2 % 3.0 %

3.9 %
3.0 %

5.1 % 3.7 % 3.6 % 3.7 % 3.8 % 3.5 % 5.0 % 4.6 % 4.2 % 4.1 % 4.0 %
3.7 % 2.7 % 2.7 % 2.8 % 2.7 % 3.1 % 3.4 % 3.3 % 3.3 % 3.2 % 3.0 %
5.4 % 3.9 % 3.9 % 3.9 % 3.9 % 3.8 % 5.6 % 4.4 % 4.3 % 4.3 % 4.4 %

3.7 %
3.0 %
4.3 %

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

The yields used are after a reduction for risk, but before allowance for investment expenses (which are included in the
expected future cash flows).

For annuity business, the allowance for risk comprises long-term assumptions for defaults or, in the case of equity release
assets, expected losses arising from the No-Negative-Equity Guarantee. These allowances vary by asset category and for
some asset classes by rating.

The risk allowances made for corporate bonds (including overseas government bonds and structured finance assets),
mortgages (including healthcare mortgages, commercial mortgages and infrastructure assets), and equity release equated
to 36bps, 25bps, and 89bps respectively at 31 December 2023 (2022 restated: 35bps, 26bps, and 83bps respectively).

For with-profits business, the liabilities associated with guarantees and options are measured using a market-consistent
stochastic model. The cash flows are discounted at scenario-specific rates calibrated, on average, to be the bottom-up
discount rates. Volatility assumptions are set with reference to implied volatility data on traded market instruments,
where available, or on a best estimate basis where not.

Equity returns
Property returns

2023

2022

17.8 %
15.0 %

19.3 %
15.0 %

The equity volatility used depends on term, moneyness and region. The figure shown is for a sample UK equity, at the
money, with a ten-year term.

Risk adjustments for non-financial risk
The risk adjustment for non-financial risk reflects the compensation required by the Group to accept the uncertainty
about the amount and timing of future cash flows that arises from non-financial risk. The calculation of the risk
adjustment is calibrated with reference to the Group’s pricing and capital allocation framework. The calibration leverages
the Solvency II view of non-financial risk, considering a lifetime view, but excludes financial risks which are included
within the Solvency II risk margin. The risk adjustment includes diversification between different portfolios of insurance
and participating investment contracts, financial and non-financial risks, non-participating investment contracts and
other non-insurance contracts using correlation matrix techniques. Diversification between entities across the Group is
not included.

For life business, the risk adjustment is allocated to individual contracts, including reinsurance contracts, using provisions
for adverse deviation (PADs) applied to the best estimate non-financial assumptions.

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For non-life business, the risk adjustment is allocated to groups of contract level based upon their capital intensity,
with a greater amount allocated to contract groups with greater valuation uncertainty. Initially the Group applies these
techniques on a net of reinsurance basis before calculating gross up factors for each group of contracts and calculating
the reinsurance risk adjustment as the difference between net and gross.

For with-profits contracts the risk adjustment reflects the shareholder’s interest in the with-profits fund. However, for
non-profit contracts in the with-profit funds, the fund is treated as the entity and the risk adjustment reflects a 100%
share of the risk, as for other non-profit business.

The Group estimates the Risk Adjustment’s corresponding confidence level by comparing the combined value of best
estimate cash flows and Risk Adjustment with a distribution of possible outcomes on an ultimate horizon. For life and
participating contracts the confidence interval, net of reinsurance corresponds to the 68th percentile (2022: 70th
percentile), for non-life contracts it corresponds to the 77th percentile (2022: 74th percentile). The percentiles disclosed
benefit from the diverse profile of entities within the Group, but not from diversification between the Group's Life and
non-Life segments and are uncertain estimates made as of 31 December, which could reasonably change within 12
months. Factors which could cause them to change include variations in the Company's risk profile or quantification
thereof, for example as might arise from economic factors such as changes in risk-free discount rates or changes in the
composition of insurance liabilities. the movements in the value of the net risk adjustment required to move the
confidence level by 2.5 percentage points can be seen in the table below. The figures assume that there are no changes in
estimate of future cashflows when in reality a lot of factors which influence the risk adjustment calibration will also
impact the estimate of future cashflows.

Life and participating business
Movement in net risk adjustment required for 2.5pp confidence level increase
Movement in net risk adjustment required for 2.5pp confidence level reduction

Non-Life business
Movement in net risk adjustment required for 2.5pp confidence level increase
Movement in net risk adjustment required for 2.5pp confidence level reduction

2023

£m

65
(65)

45
(41)

2022

£m

75
(75)

48
(46)

For Life risk and Participating contracts, this is the confidence level that the liabilities recognised and associated
reinsurance balances, excluding CSM, are sufficient to cover the ultimate cost of in-force insurance liabilities applying
period end assumptions. For non-Life contracts, this represents the confidence level that net claims liabilities recognised
are sufficient to cover the ultimate cost of claims. Net non-Life claims liabilities include the liability for incurred claims,
asset for incurred claims and the asset for remaining coverage on reinsurance contracts held that reinsure against
adverse development on incurred claims.

(ii) Contractual service margin
Determination of coverage units
The amount of CSM recognised in profit or loss to reflect services provided in each year is determined by considering, for
each group of contracts, coverage units that reflect the quantity of the benefits provided in each period and the expected
coverage period. The coverage units are reviewed and updated at each reporting date.

The coverage units used by major product lines are:

Product line

Immediate annuity

Deferred annuity

Individual and Group Protection
Individual and Group Income Protection
Unit linked insurance
With-profits

Coverage units

Annuity outgo
Annuity outgo for insurance service post retirement and weighted expected
investment return for the investment return service provided prior to retirement
Sum assured
Benefit amount payable
Sum assured including unit value
Cost of guarantees plus asset share

For deferred annuities, judgement has been applied in determining the appropriate method for measuring coverage
units and the weighting of those coverage units across the investment return service provided prior to retirement and
the insurance service provided post-retirement. That judgement was supported by evidence of market pricing of these
services, resulting in an approach that targets equivalence at retirement with the CSM for immediate annuities (when
pricing in an active market) that provide an insurance service equivalent to that provided by the deferred annuities post-
retirement.

The coverage units for the investment return service combine the expected investment return with the weighting that
produces the target CSM after allowing for expected retirement date, transfers and commutations. There is limited
estimation uncertainty arising when applying this approach, not least because the weighting of services does not directly
impact on the measurement of the CSM, instead it impacts on the pattern of CSM release over the long life of these
contracts. Expected investment return is calculated using the locked in discount rate throughout the life of the contract,
to represent the investment return that policyholders benefit from through the pricing of their contract.

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Expected rates of transfers taken by retirement date and take up rates for tax free cash (the main commutations taken at
retirement in the UK) are not typically subject to significant fluctuations.

Coverage units for reinsurance contracts held are typically consistent with the underlying gross contracts, adjusted for
differences in the services provided.

Risk mitigation option
The Group uses derivatives and financial investments to mitigate the financial risk arising from equity and interest rate
exposures in UK with-profit funds, in accordance with its documented risk management objective and strategy for
mitigating financial risk. An economic offset exists between the insurance contracts and the risk-mitigating items
(derivatives and financial investments held at FVTPL), and credit risk does not dominate the economic offset.

For the with-profit sub-fund supported by the RIEESA, the Group has chosen to apply the risk mitigation option. Certain
changes in variable fee cash flows are recognised in profit or loss, and do not adjust the CSM, as they arise from changes
in equity and interest rate risks that are mitigated by the use of derivatives and financial investments held at FVTPL.

(iii) Investment components
The Group identifies the investment component of a contract by determining the amount that it would be required to
repay to the policyholder in all scenarios with commercial substance. These include circumstances in which an insured
event occurs or the contract matures or is terminated without an insured event occurring. Investment components and
rights to withdraw are both excluded from insurance revenue and insurance service expenses, and variances between
actual and expected cash flows adjust the CSM.

Participating and some non-participating whole-life contracts have explicit surrender values. The non-distinct
investment component excluded from insurance revenue and insurance service expenses is determined as the surrender
value specified in the contractual terms.

Immediate annuities with a guarantee period contain a non-distinct investment component equal to the value of those
guaranteed payments.

Deferred annuities include a non-distinct investment component if all of the following features are present:
• transfer value in the deferral period;
• death benefit in the deferral period; and
• guarantee period once the annuity is in payment.

The investment component excluded from insurance revenue and insurance service expenses is determined as the lower
of the present value of each of those possible payments. Any amounts in excess of the investment component, or any
payments made under those features that do not qualify as an investment component, are treated as rights to withdraw.
In either case, transfer values paid during the deferral period are presented as premium refunds.

(iv) Fair value of insurance contracts and measurement of contracts on transition to IFRS 17
The Group has measured the fair value of insurance contracts when it acquired contracts in a business combination and
when it applied the fair value approach on transition to IFRS 17. The Group has also applied the modified retrospective
approach on transition to IFRS 17.

For further details on the measurement of contracts on transition to IFRS 17, see note 1(d).

41 – Non-participating investment contracts
This note analyses our gross liabilities for non-participating investment contracts by type of product and describes the
calculation of these liabilities.

(a) Carrying amount
Non-participating investment contracts as at 31 December comprised:

Liabilities for non-participating investment contracts
Reinsurance assets for non-participating investment contracts
Net non-participating investment contracts

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

2023
£m

Restated1
2022
£m

158,588
(4,713)

141,188
(5,290)
153,875 135,898

(b) Group practice
Investment contracts are those that do not transfer significant insurance risk from the contract holder to the issuer and
if they do not contain a significant discretionary participation feature they are treated as financial instruments in scope
of IFRS 9.

Many investment contracts contain a discretionary participation feature in which the contract holder has a contractual
right to receive additional benefits as a supplement to guaranteed benefits. These are referred to as participating
contracts and are measured according to the methodology as prescribed by IFRS 17 insurance contracts.

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Notes to the consolidated financial statements

Investment contracts that do not contain a discretionary participation feature are referred to as non-participating
contracts and the liability is measured at fair value. For non-participating investment contracts designated at FVTPL, the
Group elects to present the change in fair value attributable to a change in the credit risk of the contracts in the income
statement.

Of the non-participating investment contracts measured at fair value, £158,498 million at 31 December 2023
(2022: £141,160 million) are unit-linked in structure and the fair value liability is equal to the current unit fund value,
including any unfunded units, plus if required, additional non-unit reserves based on a discounted cash flow analysis.

These contracts are generally classified as Level 1 in the fair value hierarchy, as the unit reserve is calculated as the
publicly quoted unit price multiplied by the number of units in issue, and any non-unit reserve is insignificant.

For unit-linked business, a deferred acquisition cost asset and deferred income reserve liability are recognised in respect
of transaction costs and front-end fees respectively, that relate to the provision of investment management services, and
which are amortised on a systematic basis over the contract term. The amount of the related deferred acquisition cost
asset is shown in note 30 and the deferred income liability is shown in note 49.

For non-participating investment contracts acquired in a business combination, an acquired value of in-force business
asset is recognised in respect of the fair value of the investment management services component of the contracts, which
is amortised on a systematic basis over the useful lifetime of the related contracts. The amount of the acquired value of
in-force business asset is shown in note 18, which relates primarily to the acquisition of Friends Life in 2015 and Friends
First in 2018.

(c) Movements in the year
The following movements have occurred in the gross provisions for non-participating investment contracts in the year:

Carrying amount

At 1 January

Liabilities in respect of new business
Expected change in existing business
Variance between actual and expected experience
Impact of operating assumption changes
Impact of economic assumption changes
Other movements recognised as an expense

Change in liability
Effect of portfolio transfers, acquisitions and disposals
Foreign exchange rate movements
Other movements2
At 31 December

2023
£m

141,188
4,243
(3,263)
16,589
—
—
40
17,609
—
(164)
(45)

158,588

Restated1
2022
£m

151,295
4,120
(3,185)
(11,360)
(17)
(106)
28
(10,520)
—
415
(2)
141,188

The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

1.
2. Other movements relates to a reallocation between non-participating investment liabilities and non-participating reinsurance assets of £(45) million (2022: £(2) million).

For unit-linked investment contracts, movements in asset values are offset by corresponding changes in liabilities,
limiting the net impact on profit. The variance between actual and expected experience in 2023 of £16,589 million is due
to increases in global equity markets and higher bond and gilt values as a result of decreasing interest rates.

The impacts of assumption changes on profit are included in the effect of changes in assumptions and estimates during
the year shown in note 43, which combines non-participating investment contracts together with the impact of
movements in related non-financial assets.

The following movements have occurred in the reinsurance asset for non-participating investment contracts in the year:

Carrying amount

At 1 January

Assets in respect of new business
Expected change in existing business assets
Variance between actual and expected experience
Other movements recognised as an expense2

Change in asset
Other movements3
At 31 December

2023
£m

5,290
88
(261)
456
(815)
(532)
(45)

4,713

Restated1
2022
£m

5,122
409
(176)
(63)
—
170
(2)
5,290

The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

1.
2. £815 million of policyholder assets have transferred from reinsured funds to non-reinsured funds during 2023.
3.

Other movements relates to a reallocation between non-participating investment liabilities and non-participating reinsurance assets of £(45) million (2022: £(2) million).

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Notes to the consolidated financial statements

42 – Financial guarantees and options
This note details the financial guarantees and options inherent in some of our insurance and investment contracts.

For insurance and participating investment contracts, the Group’s objective in estimating future cash flows is to
determine the expected value of a range of scenarios that reflects the full range of possible outcomes. For contracts with
embedded options and guarantees, in particular with-profits business, a stochastic approach based on the average of a
number of scenarios is typically used. Stochastic modelling involves projecting future cash flows under a large number of
possible economic scenarios for market variables such as interest rates and equity returns.

(a) UK non-profit business
The material guarantees and options relating to non-profit business are:

(i) Guaranteed annuity options
The Group’s UK non-profit funds have written 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. Provision for these guarantees do not materially differ from a provision based on a market-consistent
stochastic model, and amounts to £24 million at 31 December 2023 (2022 restated: £29 million).

(ii) Guaranteed unit price on certain products
Certain pension products linked to long-term life insurance funds provide policyholders with guaranteed benefits at
retirement or death. No additional provision is made for this guarantee as the investment management strategy for these
funds is designed to ensure that the guarantee can be met from the fund, mitigating the impact of large falls in
investment values and interest rates.

(iii) Return of Premium guarantees
German pension products sold in Friends Life between 2006 and 2014 are subject to a return of premium guarantee
whereby the product guarantees to return the maximum of the unit fund value or total premiums paid (before
deductions). Provisions for this guarantee are calculated using a market-consistent stochastic model and amount to
£88 million at 31 December 2023 (2022 restated: £85 million).

(b) UK with-profits business
The material guarantees and options relating to with-profit business are:

(i) Maturity value and death benefit guarantees
Significant conventional and unitised with-profits business have minimum maturity (and in some cases death benefit)
values reflecting the sum assured plus declared annual bonus. For some unitised with-profits life contracts the amount
paid after the fifth policy anniversary is guaranteed to be at least as high as the premium paid increased in line with the
rise in retail price index (RPI) or consumer price index (CPI).

(ii) No market valuation reduction (MVR) guarantees
For unitised business, there are circumstances where a ‘no MVR’ guarantee is applied, for example on certain policy
anniversaries, guaranteeing that no market value reduction will be applied to reflect the difference between the
accumulated value of units and the market value of the underlying assets.

(iii) Guaranteed annuity options
The Group’s UK with-profits funds have written individual and group pension contracts which contain 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.

Liabilities for the cost of guarantees in respect of GAOs in the UK with-profits funds were £545 million at
31 December 2023 (2022 restated: £556 million). With the exception of the with-profits sub-fund supported by the
RIEESA, movements in the GAO liabilities in the with-profits funds are offset by a corresponding movement in the estate
to be distributed between policyholders and shareholders. The (immediate) impact on profit arises from the mismatch
between the remeasurement of the variable fee (using current market consistent financial assumptions) and
remeasurement of the CSM (using locked-in financial assumptions), together with the incremental amortisation of the
change to the CSM. Liabilities for GAOs in the with-profits sub-fund supported by the RIEESA were £44 million at
31 December 2023 (2022 restated: £41 million).

(iv) Guaranteed minimum pension
The Group’s UK with-profits funds also have certain policies that contain a guaranteed minimum level of pension as part
of the condition of the original transfer from state benefits to the policy.

(v) Guaranteed minimum maturity payments on mortgage endowments
The with-profits funds made promises to certain policyholders in relation to their with-profits mortgage endowments.
Top-up payments will be made on these policies at maturity to meet the mortgage value up to a maximum of the
31 December 1999 illustrated shortfall.

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Annual Report and Accounts 2023

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Notes to the consolidated financial statements

(c) Ireland
(i) Guaranteed annuity options and guaranteed maturity values
Guarantees and options in Ireland include GAOs, minimum maturity values on conventional with-profits business,
guaranteed minimum bonus rates on unitised with profits business, and a ‘no MVR’ guarantee that may apply at certain
policy anniversaries. Guarantees and options are measured using stochastic methods, and for some smaller with-profit
funds closed form solutions.

43 – Effect of changes in non-financial assumptions and estimates during the year
This note analyses the impact of changes in estimates and assumptions from 2022 to 2023, on liabilities for insurance and
investment contracts, and related assets and liabilities, such as reinsurance, deferred acquisition costs and acquired value
of in-force business and does not allow for offsetting movements in the value of backing financial assets.

2023

2022

Assumptions

Expenses
Persistency rates
Mortality and morbidity for assurance contracts
Mortality for annuity contracts
Tax and other assumptions

Long-term insurance and participating investment business

Expenses

Long-term non-participating investment business
Total

Change in
Fulfillment
Cash Flows

(FCF) Change in CSM Effect on profit
£m
£m

£m

Change in
Fulfillment Cash

Flows (FCF) Change in CSM Effect on profit
£m

£m

59
(9)
18
(456)
(98)
(486)
—
—
(486)

(63)
9
(18)
528
108
564
—
—
564

4
—
—
(72)
(10)
(78)
—
—
(78)

13
11
(65)
(486)
(26)
(553)
(18)
(18)
(571)

(65)
(6)
105
258
14
306
—
—
306

52
(5)
(40)
228
12
247
18
18
265

The impact of change in mortality and morbidity assumptions for assurance contracts for both 2023 and 2022 relates
mainly to a review of recent experience. In 2022 business also moved onto the latest CMI series tables.

Longevity assumption changes during this year are valued at £456 million reduction in FCF (valued at opening market
discount rates) and £528 million increase in CSM (discount rates locked in at the time of business inception), giving a total
loss of £72m. The three largest contributors (in order of importance) are
• introduction of an explicit adjustment for post-pandemic mortality,
• updates to the mortality improvement model moving onto the latest CMI_2022 model from CMI_2021, to incorporate

revised population data, and

• improved assumptions for the proportion of BPA customers that are married.

Longevity assumptions changes in 2022 were valued at £486 million reduction in FCF (valued at opening market discount
rates) and £258 million increase in CSM (discount rates locked in at the time of business inception), giving a total profit of
£228 million.
The three largest contributors (in order of importance) were:
• Updates to the rate of mortality improvements for a change to the long-term-rate rate used to taper improvements

at the oldest ages from between ages 90 to 115 to between ages 85 to 110

• Updates to mortality improvements moving onto the latest CMI_2021 model from CMI_2019
• Updates to base mortality to reflect methodology and process refinements on BPA business.

Tax and other assumptions in 2023 is mainly comprised of changes in provisions for risk adjustment on annuities, where
the movements in FCF and CSM largely offset.

44 – Tax assets and liabilities
This note analyses the tax assets and liabilities that appear in the statement of financial position and explains the
movements in these balances in the year.

(a) Current tax
Current tax assets recoverable and liabilities payable in more than one year are £85 million and £1 million
(2022: £116 million and £10 million), respectively.

The Group is party to the CFC & Dividend Group Litigation Order, which challenged the tax treatment of dividends
received from non-UK entities before 2009. The Group is attempting to recover claims from HMRC covered by this
judgement. A recoverable balance of £85 million (2022: £106 million) is included within current tax assets.

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(b) Deferred tax
(i) The balances at 31 December comprise:

Deferred tax assets
Deferred tax liabilities
Net deferred tax asset

2023
£m

958
(453)
505

Restated1
2022
£m

1,382
(703)
679

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17, a correction in respect of historic accounting for with-profits funds and restatement of the Succession Wealth

acquisition balance sheet (see note 1).

Deferred tax attributable to policyholder returns included above at 31 December 2023 was an asset of £89 million
(2022: asset of £340 million).

Net deferred tax assets in respect of policyholder investments arose as a result of significant market volatility in 2022.
These positions are expected to reverse as the market recovers. The deferred tax asset relates to UK tax losses which
carry forward indefinitely and is recognised based on probable future taxable investment income and gains within five
years. Assumed investment returns are consistent with actuarial assumptions used in reserving and alternative
assumptions modelled by the Group also show full recovery of the deferred tax asset over this period.

Where shareholder deferred tax assets are not supported by deferred tax liabilities, they are recognised to the extent that
it is probable that future taxable profits will be available against which the tax losses can be utilised. In assessing future
profitability, the directors have relied on board approved business plans and profit forecasts for up to five years and the
Group's history of taxable profits in the relevant jurisdictions.

(ii) The net deferred tax asset/(liability) arises on the following items:

Long-term business technical provisions and other insurance items
Deferred acquisition costs
Unrealised gains on investments
Pensions and other post-retirement obligations
Unused losses and tax credits
Intangibles and additional value of in-force long-term business
Provisions and other temporary differences
Net deferred tax asset

2023
£m

500

(6)
(245)
(145)
267
(207)
341
505

Restated1
2022
£m

362
(30)
(187)
(250)
459
(237)
562
679

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17, a correction in respect of historic accounting for with-profits funds and restatement of the Succession Wealth

acquisition balance sheet (see note 1).

(iii) The movement in the net deferred tax asset/(liability) was as follows:

Net asset/(liability) at 1 January
Acquisition and disposal of subsidiaries
Amounts (charged)/credited to income statement

Amounts credited to other comprehensive income
Foreign exchange rate movements
Net asset at 31 December

Note

14(a)

14(b)

2023
£m

679
—
(292)
119

(1)

505

Restated1
2022
£m

(941)
(57)
1,263
412
2
679

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17, a correction in respect of historic accounting for with-profits funds and restatement of the Succession Wealth

acquisition balance sheet (see note 1).

The Group has unrecognised gross tax losses (excluding capital losses) and other temporary differences of £347 million
(2022 restated: £487 million) to carry forward against future taxable income of the necessary category in the companies
concerned. Of these, trading losses of £44 million (2022: £26 million) will expire within the next eight years. The remaining
losses have no expiry date.

In addition, the Group has unrecognised gross capital losses of £577 million (2022: £579 million). These have no expiry
date.

At 31 December 2023, a potential deferred tax liability of £22 million (2022 restated: £14 million) is not recognised on
temporary differences relating to reserves of overseas subsidiaries which are not expected to be distributed.

Aviva plc

3.123

Annual Report and Accounts 2023

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4. Other Information

Notes to the consolidated financial statements

45 – Pension deficits and other provisions
This note details the non-insurance provisions that the Group holds and shows the movements in these during the year.

(a) Carrying amounts

Total IAS 19 obligations to main staff pension schemes
Restructuring provisions
Other provisions
Total provisions

Note

46(a)

2023
£m

410
44
341
795

Restated1
2022
£m

360
70
294
724

1. The 2022 comparative amounts have been restated to reduce other liabilities by £37 million following the remeasurement of the Succession Wealth acquisition balance sheet (see note 1(c)).

Restructuring provisions include lease termination penalties and costs relating to disposed entities. They comprise only
the direct expenditures arising from the restructuring, which are those that are necessarily entailed by the restructuring;
and not associated with the ongoing activities of the entity.

Other provisions are measured based upon our expectation of the value and timing of future economic outflows. Other
provisions include product governance provisions, which are measured based upon the amounts we expect to pay to
policyholders and other costs arising directly from remediation.

(b) Movements on restructuring and other provisions

At 1 January

Additional provisions
Provisions released during the year

Charge to income statement
Utilised during the year
Acquisition of subsidiaries
Foreign exchange rate movements
At 31 December

Restructuring
provisions
£m

Other
provisions
£m

70
—
(3)
(3)
(23)
—
—
44

293
174
(66)
108
(60)
—
—
341

2023

Total
£m

363
174
(69)
105
(83)
—
—
385

Restructuring
provisions
£m

Other
provisions1
£m

119
—
—
—
(49)
—
—
70

396
131
(91)
40
(162)
19
1
294

Restated1
2022

Total
£m

515
131
(91)
40
(211)
19
1
364

1. The 2022 comparative amounts have been restated to reduce other liabilities by £37 million following the remeasurement of the Succession Wealth acquisition balance sheet (see note 1(c)).

Of the total restructuring and other provisions, £88 million (2022 restated: £82 million) is expected to be settled more
than one year after the statement of financial position date.

Restructuring provisions include amounts for separation costs and onerous contracts arising as a result of disposal
transactions completed in 2020 and 2021.

46 – Pension obligations
(a) Introduction
The Group operates a number of defined benefit and defined contribution pension schemes. The material defined benefit
schemes are in the UK, Ireland and Canada. The assets and liabilities of these defined benefit schemes as at 31 December
are shown below.

Total fair value of scheme assets
Present value of defined benefit obligation
Net IAS 19 surpluses/(deficits) in the schemes

46(b)(ii)

10,678

(10,211)
467

678
(679)
(1)

190
(249)
(59)

11,546
10,877
(11,139) (10,002)
875

407

689
(670)
19

197
(259)
(62)

11,763
(10,931)
832

Note

UK
£m

Ireland
£m

Canada
£m

2023
Total
£m

UK
£m

Ireland
£m

Canada
£m

2022
Total
£m

Surpluses included in other assets
Deficits included in provisions
Net IAS 19 surpluses/(deficits) in the schemes

809
(342)
467

8
(9)
(1)

—
(59)
(59)

817
(410)
407

1,166
(291)
875

26
(7)
19

—
(62)
(62)

1,192
(360)
832

This note relates to the defined benefit pension schemes included in the table above. The charges to the income
statement for the main schemes are shown in section (b)(i) below, whilst the total charges for all pension schemes are
disclosed in section (d) below.

Under the IAS 19 valuation basis, the Group applies the principles of IFRIC 14 IAS 19 – The Limit on a Defined Benefit
Asset, Minimum Funding Requirements and their Interaction, whereby a surplus is only recognised to the extent that the
company is able to access the surplus either through an unconditional right of refund to the surplus or through reduced
future contributions relating to ongoing service, which have been substantively enacted or contractually agreed.

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The Group has determined that it can derive economic benefit from the surplus in the Aviva Staff Pension Scheme (ASPS)
via a reduction to future employer contributions for defined contribution (DC) members, which could theoretically be
paid from the surplus funds in the ASPS. In the RAC (2003) Pension Scheme and Friends Provident Pension Scheme
(FPPS), in the UK and in the Aviva Ireland Staff Pension Fund (AISPF) in Ireland, the Group has determined that the rules
set out in the schemes’ governing documentation provide for an unconditional right to a refund from any future surplus
funds in the schemes.

The assets of the UK, Irish and Canadian schemes are held in separate trustee-administered funds to meet long-term
pension liabilities to past and present employees. In all schemes, the appointment of trustees of the funds is determined
by their trust documentation and they are required to act in the best interests of the schemes’ beneficiaries. The long-
term investment objectives of the trustees and the employers are to limit the risk of the assets failing to meet the
liabilities of the schemes over the long term, and to maximise returns consistent with an acceptable level of risk so as to
control the long-term costs of these schemes.

A funding actuarial valuation of each of the defined benefit schemes is carried out at least every three years for the
benefit of scheme trustees and members. Actuarial reports have been submitted for each scheme within this period,
using appropriate methods for the respective countries on local funding bases.

The number of scheme members was as follows:

Number
Deferred members
Pensioners
Total members

UK
37,906
41,212
79,118

Ireland
2,182
975
3,157

Canada
213
1,228
1,441

2023
Total
40,301
43,415
83,716

39,843
40,501
80,344

Ireland
2,200
982
3,182

Canada

2022
Total
344 42,387
1,261 42,744
85,131
1,605

All schemes are closed to future accrual. Closure of the schemes has removed the volatility associated with additional
future accrual for active members.

(i) UK schemes
In the UK, the Group operates three main pension schemes, the ASPS, the RAC Scheme which was retained after the sale
of RAC Limited in September 2011 and the FPPS, which was acquired as part of the Friends Life acquisition in 2015. As the
defined benefit sections of the UK schemes are now closed to both new members and future accrual, existing deferred
members in active service and new entrants participate in the defined contribution section of the ASPS. The UK schemes
operate within the UK pensions’ regulatory framework.

(ii) Other schemes
In Ireland, the Group operates two main pension schemes, the Aviva Ireland Staff Pension Fund (AISPF) and the Friends
First Group Retirement and Death Benefits Scheme (FFPS) which was acquired as part of the Friends First acquisition in
June 2018. Future accruals for the AISPF and FFPS schemes ceased with effect from 30 April 2013 and 1 April 2014
respectively. The Irish schemes are regulated by the Pensions Authority in Ireland.

The Canadian defined benefit pension plan ceased accruals with effect from 31 December 2011. The Canadian pension
plan currently in force is a Defined Contribution Pension Plan that is subject to the Pensions Benefits Act (Ontario),
Income Tax Act (Canada), and oversight of the Financial Services Regulatory Authority of Ontario.

(b) IAS 19 disclosures
Disclosures under IAS 19 for the material defined benefit schemes in the UK, Ireland and Canada, are given below. Where
schemes provide both defined benefit and defined contribution pensions, the assets and liabilities shown exclude those
relating to defined contribution pensions.

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(i) Movements in the scheme surpluses and deficits
Movements in the pension schemes’ surpluses and deficits comprise:

Net IAS 19 surplus in the schemes at 1 January

Administrative expenses

Total pension cost charged to net operating expenses
Net interest credited/(charged) to investment income/(finance
costs)1

Total recognised in income statement
Actual return on these assets
Less: Interest income on scheme assets

Return on scheme assets excluding amounts in interest income
(Losses) / gains from change in financial assumptions
Gains from change in demographic assumptions
Experience losses

Total recognised in other comprehensive income
Employer contributions
Plan participant contributions
Benefits paid
Administrative expenses paid from scheme assets
Foreign exchange rate movements
Net IAS 19 surplus in the schemes at 31 December

Present
value of
defined
benefit
obligation
£m

2023

IAS 19
Pensions net
surplus/
(deficits)
£m

Fair value
of scheme
assets
£m

Present
value of
defined
benefit
obligation
£m

2022

IAS 19
Pensions net
surplus/
(deficits)
£m

(10,931)
(22)
(22)

832
(22)
(22)

19,337
—
—

(17,068)
(20)
(20)

2,269
(20)
(20)

(505)

(527)
—
—
—
(333)
104
(38)
(267)
—
(2)

546
22
20
(11,139)

352

(310)

17
316
(544)
(228)
(333)
104
(38)
(495)
53
—
—
—
—
407

352
(7,125)
(352)
(7,477)
—
—
—
(7,477)
89
2
(572)
(20)
52
11,763

(330)
—
—
—
5,724
540
(329)
5,935
—
(2)
572
20
(58)
(10,931)

22
(7,125)
(352)
(7,477)
5,724
540
(329)
(1,542)
89
—
—
—
(6)
832

Fair value
of scheme
assets

£m

11,763
—
—

544

544
316
(544)
(228)
—
—
—
(228)
53
2
(546)
(22)
(20)

11,546

1. Net interest income of £64 million (2022: £62 million) has been credited to investment income and net interest expense of £25 million (2022: £20 million) has been charged to finance costs (see note 9).

The present value of unfunded post-retirement benefit obligations included in the table above is £85 million at
31 December 2023 (2022: £88 million).

Remeasurement loss of £495 million (2022: loss of £1,542 million) recorded in the statement of comprehensive income for
the period are largely driven by:
• During the period the ASPS completed two further bulk annuity buy-in transactions with Aviva Life & Pensions UK

Limited, a Group Company. Due to different measurement bases applying for accounting purposes, the premium paid by
the scheme exceeded the valuation of the scheme asset recognised. In the table above, this has been recognised as a loss
in the actual return on assets (see note 57 for further information). The scheme assets recognised are transferable and
so have not been subject to consolidation within the Group’s financial statements.

• Economic movements, including movements in interest rates and in spreads on government and corporate bonds, and
movements impacting other assets. This has resulted in an increase in the valuation of the defined benefit obligation
(DBO) not fully offset by the increase in the fair value of fixed income securities and other assets.

• The losses were partially offset by actuarial gains relating to updated demographic assumptions (including longevity).

(ii) Scheme assets
Scheme assets are stated at their fair values at 31 December. Total scheme assets are comprised by country as follows:

Bonds
Equities
Property
Pooled investment vehicles
Derivatives
Insurance policies
Repurchase agreements
Cash and other1
Total fair value of scheme assets
Less: consolidation elimination for non-
transferable Group insurance policy2
Total IAS 19 fair value of scheme assets

UK
£m

Ireland
£m

Canada
£m

7,804
—
14
2,093
3
3,992
(2,436)

(361)

11,109

(431)

10,678

545
18
—
253
52
—
(203)

678

—

678

—
—
—
185
—
—
—

190

—

190

UK
£m

Ireland
£m

Canada
£m

2023
Total
£m

8,349
18
14
2,531
55
3,992
(2,639)

7,969
—
74
1,710
(158)
3,423
(646)

530
18
—
273
56
—
(191)

2022
Total
£m

8,562
18
74
2,115
(102)
3,423
(837)

63
—
—
132
—
—
—

(343)

(1,063)

(1,058)

11,977

11,309

689

197

12,195

(431)

(432)

—

(432)

11,546

10,877

689

197

11,763

1. Cash and other assets comprise cash at bank, receivables, payables, and longevity swaps.
2. As at 31 December 2023, the FPPS asset includes an insurance policy of £431 million (2022: £432 million) issued by a Group company that is not transferable under IAS 19 and is consequently

eliminated from the Group’s IAS 19 scheme assets. Insurance policies issued by other Group companies of £3,561 million as at 31 December 2023 (2022: £2,991 million) included in the ASPS assets
are transferable and so are not subject to consolidation.

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Notes to the consolidated financial statements

Total scheme assets are analysed by those that have a quoted market price in an active market and other as follows:

Bonds
Equities
Property
Pooled investment vehicles
Derivatives
Insurance policies
Repurchase agreements
Cash and other1
Total fair value of scheme assets
Less: consolidation elimination for non-transferable Group
insurance policy2
Total IAS 19 fair value of scheme assets

Quoted in an
active market
£m

6,889
18
—
38
34
—
—
489
7,468

2023

Total
£m

Quoted in an
active market
£m

Other
£m

1,460
—
14
2,493
21
3,992
(2,639)
(832)

8,349
18
14
2,531
55
3,992
(2,639)
(343)

4,509

11,977

7,078
18
—
31
64
—
—
(717)
6,474

2022

Total
£m

8,562
18
74
2,115
(102)
3,423
(837)
(1,058)
12,195

Other
£m

1,484
—
74
2,084
(166)
3,423
(837)
(341)
5,721

(431)

—

(432)

7,468

4,078

11,546

6,474

5,289

11,763

IAS 19 plan assets include investments in Group-managed funds of £1,124 million (2022: £1,468 million) and transferable
insurance policies with other Group companies of £3,561 million (2022: £2,991 million) in the ASPS. Where the investments
are in segregated funds with specific asset allocations, they are included in the appropriate line in the table above,
otherwise they appear in ‘Cash and other’. There are no significant judgements involved in the valuation of the scheme
assets. Insurance policies are valued on the same basis as the pension scheme liabilities, as required by IAS 19.

(iii) Assumptions on scheme liabilities
The valuations used for accounting under IAS 19 have been based on the most recent funding actuarial valuations,
updated to take account of the standard’s requirements in order to assess the liabilities of the material schemes at
31 December 2023.

The projected unit credit method
The inherent uncertainties affecting the measurement of scheme liabilities require these to be measured on an actuarial
basis. This involves discounting the best estimate of future cash flows to be paid out by the scheme using the projected
unit credit method. This is an accrued benefits valuation method which calculates the past service liability to members
and makes allowance for their projected future earnings. It is based on a number of actuarial assumptions, which vary
according to the economic conditions of the countries in which the relevant businesses are situated, and changes in these
assumptions can materially affect the measurement of the pension obligations.

Financial assumptions
The main financial assumptions used to calculate scheme liabilities under IAS 19 are:

Inflation rate1
General salary increases2
Pension increases3
Deferred pension increases3
Discount rate4, 5

Ireland
UK
2.1 %
3.1 %
5.2 %
3.6 %
3.2 % 0.6 %/0.7 %
2.1 %
2.6 %

2023
Canada
2.75 %
3.25 %
— %
— %

4.49 %/4.50 %/
4.51 %
(non-insured

Ireland
2.6 %
4.1 %
0.8 %
2.3 %

2022
Canada
2.75 %
3.25 %
— %
— %

UK
3.5 %
5.3 %
3.6 %
3.6 %

4.81 %/4.80 %/
4.78 %
(non-insured

members) 3.15 %/3.10 %

4.62 %

members) 3.65 %/3.60 %

5.05 %

4.51 %/4.48 %
(insured members)

4.79 %/4.82 %
(insured members)

Basis of discount rate

AA-rated corporate bonds

1. For the UK schemes relevant RPI/CPI swap curves are used in the calculation of the DBO; the rate shown is the equivalent single RPI rate for ASPS. In 2023, CPI is derived as RPI less 100 bps pre

2030 and RPI less 0bps post 2030 (2022: RPI less 100 bps pre 2030 and RPI less 0bps post 2030).

2. In the UK, the only remaining linkage between pension benefits and general salary increases is in respect of a small amount of Guaranteed Minimum Pension benefits, in line with National Average

Earnings.

3. For the UK schemes relevant RPI/CPI swap curves are used, adjusted to reflect the appropriate caps/floors and inflation volatility with full curves used in the calculation of the DBO. The rates

shown are the single equivalent rates for the biggest groups of pensions in payment and deferment respectively in the ASPS. The rates shown for 2022 included allowance for the impact of known
inflation experience that fell within the reference period for pension and deferred pension increases due in 2023. The rates shown for 2023 exclude this known experience - the single equivalent
increases at 2022 using a consistent methodology to derive the rates would have been 3.4% for pension increases in payment and 3.1% for increases in deferment.

4. To calculate scheme liabilities in the UK, a discount rate of 4.49 % is used for ASPS, 4.50 % for RAC and 4.51 % for FPPS members not included in annuity policies held by the scheme. A discount rate

of 4.51 % is used for ASPS members and 4.48% for FPPS members included in annuity policies held by the schemes. The different rates reflect the differences in the duration of the liabilities
between the schemes.

5. For the Irish schemes, a discount rate of 3.15 % and 3.10 % is used for AISPF and FFPS respectively, reflecting the differences in the duration of the liabilities between the two schemes.

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Notes to the consolidated financial statements

The discount rate and pension increase rate are the two assumptions that have the largest impact on the value of the
liabilities, with the difference between them being known as the net discount rate. For each country, the discount rate is
based on current average yields of high-quality debt instruments taking account of the maturities of the defined benefit
obligations.

Mortality assumptions
Mortality assumptions are material in measuring the Group’s obligations under its defined benefit schemes. The
assumptions used are summarised in the table below and have been selected to reflect the characteristics and experience
of the membership of these schemes.

The mortality tables, average life expectancy and pension duration used at 31 December 2023 for scheme members are
as follows:

UK
ASPS

SAPS tables as a proxy for Club Vita pooled experience, including an
allowance for future improvements

RAC

SAPS, including allowances for future improvement

FPPS

SAPS, including allowances for future improvement

Ireland
AISPF

89% PNA00 with allowance for future improvements

FFPS

88%/91% ILT15 with allowance for future improvements

Canada Canadian Pensioners’ Mortality 2014 Private Table, including allowance

for future improvements

Normal
retirement
age
(NRA)

Life expectancy/(pension
duration) at NRA of a male

Life expectancy/(pension
duration) at NRA of a female

Currently
aged
NRA

20 years
younger than
NRA

Currently
aged
NRA

20 years
younger than
NRA

87.8

(27.8)
86.7
(21.7)
87.6
(27.6)

88.9
(27.9)
89.0
(24.0)

87.3

(22.3)

89.2

(29.2)
88.4
(23.4)
89.5
(29.5)

90.6
(29.6)
90.5
(25.5)

88.8

(23.8)

89.4

(29.4)
88.8
(23.8)
90.0
(30.0)

91.7
(30.7)
91.6
(26.6)

89.8

(24.8)

91.3

(31.3)
90.5
(25.5)
91.7
(31.7)

93.3
(32.3)
93.2
(28.2)

91.1

(26.1)

The assumptions above are based on commonly used mortality tables. The tables make allowance for observed variations
in such factors as age, gender, pension amount, salary and postcode-based lifestyle group, and have been adjusted to
reflect recent research into mortality experience. However, the extent of future improvements in longevity is subject to
considerable uncertainty and judgement is required in setting this assumption. For the ASPS, which is the most material
scheme to the Group, the allowance for mortality improvement is per the actuarial profession’s CMI_2022 (S=7.25)
Advanced with adjustments model (2022: CMI_2021 (S=7.25) Advanced with adjustments) with zero weight on 2022 data
within the model. Instead of placing weight on 2022 data within the CMI improvements model, a separate adjustment is
made to reflect the impact that the drivers of excess mortality in 2022 and 2023 are expected to have in future years.
There is a long-term improvement rate of 1.50% for both males and females (2022: 1.50% for both males and females). The
CMI_2022 tables have been adjusted to allow for greater mortality improvements in the annuitant population relative to
the general population on which CMI_2022 is based, using a parameter of 0.15% for males and 0.20% for females,
tapering to zero between ages 90 and 110 (for 2022 the same approach was taken with respect to CMI_2021). Long-term
improvement rates are set to taper to zero between ages 85 and 110 (2022: long-term improvement rates taper to zero
between ages 85 and 110).

Illustrative sensitivity analysis
Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, inflation rate
and mortality. Movements in the defined benefit obligation are mitigated by the impact on the assets from economic
movements including interest rates and price inflation, as well as the longevity sensitivity impact due to the insurance
policy and longevity swap assets held by the UK pension schemes. The sensitivity analysis below has been determined by
changing the respective assumptions while holding all other assumptions constant.

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Notes to the consolidated financial statements

The following table illustrates how the IAS 19 surplus would have increased/(decreased) as a result of changes in interest
rates, price inflation and mortality:

Increase in
interest
rates +1%

Decrease in
interest
rates -1%

Increase in
inflation rate
+1%

Decrease in
inflation rate
-1%

£m

2023

1 year
younger1
£m

Increase in
interest rates
+1%

Decrease in
interest rates
-1%

Increase in
inflation rate
+1%

Decrease in
inflation rate
-1%

£m

2022

1 year
younger1
£m

1,301

(1,612)

(1,189)

977

(314)

1,299

(1,613)

(1,078)

872

(308)

Impact on present value of
defined benefit obligation

Impact on fair value of
scheme assets

Impact on IAS 19 surplus

(147)

216

(109)

(2)

(274)

382

238

(261)

1. The effect of assuming all members in the schemes were one year younger.

(1,448)

1,828

1,255

(1,086)

312

(1,573)

1,995

1,316

(1,133)

293

(15)

It is unlikely that the changes in assumptions would occur in isolation of one another as some of the assumptions may
be correlated. 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.

Maturity profile of the defined benefit obligation
The discounted scheme liabilities have an average duration of 13 years (2022: 13 years) in ASPS, 15 years (2022: 15 years) in
FPPS, 13 years (2022: 14 years) in the RAC scheme, 15 years (2022: 15 years) in AISPF, 22 years (2022: 23 years) in FFPS and 9
years (2022: 9 years) in the Canadian scheme.

The expected undiscounted benefits payable from the main UK defined benefit scheme, ASPS, is shown in the
chart below:

Undiscounted benefit payments (£m)

(iv) Risk management and asset allocation strategy
The investment objectives of the trustees and the employers are to limit the risk of the assets failing to meet the liabilities
of the schemes over the long-term, and to maximise returns consistent with an acceptable level of risk so as to control
the long-term costs of these schemes. To meet these objectives, the schemes’ assets are invested in a portfolio, consisting
primarily of debt securities as detailed in section (b)(ii). The investment strategy continues to evolve over time and is
expected to match the liability profile closely with swap overlays to improve interest rate and inflation matching. The
schemes are generally matched to interest rate and inflation risk relative to the funding bases.

Main UK scheme
The Company works closely with the trustee, who is required to consult with the Company on the investment strategy.

Interest rate and inflation rate risks are managed using a combination of liability-matching assets and swaps. Exposure to
equity and property risk has been reducing over time and credit risk is managed within risk appetite. Currency risk is
relatively small and is largely hedged. The other principal risk is longevity risk. This risk has reduced due to the ASPS
entering into a longevity swap in 2014 covering approximately £3.5 billion of pensioner in payment scheme liabilities.

Since October 2019 the ASPS has completed multiple bulk annuity buy-in transactions with Aviva Life & Pensions UK
Limited, a Group Company. These transactions have covered approximately £3.4 billion of liabilities related to deferred
pensioners and current pensioners, removing the investment and longevity risk for these members from the scheme.

Other schemes
The other schemes are considerably less material but their risks are managed in a similar way to those in the main UK
scheme. In 2015, the RAC pension scheme entered into a longevity swap covering approximately £0.4 billion of pensioner
in payment scheme liabilities.

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3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(v) Funding
Formal actuarial valuations normally take place every three years and where there is a deficit, the Group and the trustees
would agree a deficit recovery plan. The assumptions adopted for triennial actuarial valuations are determined by the
trustees and agreed with the Group and are normally more prudent than the assumptions adopted for IAS 19 purposes,
which are best estimate.

For the ASPS, the latest formal actuarial valuation was completed with an effective date of 31 March 2021 and showed that
the ASPS was fully funded on its technical provisions basis consistent with the requirements of the UK pension
regulations.

Contributions of around £60 million are expected to be paid during 2024. This includes cash settlements from the
non-transferable annuity policy, as well as deficit reduction contributions to the FPPS, AISPF and Canadian scheme.

(c) Defined contribution (money purchase) section of the ASPS
The trustees have responsibility for selecting a range of suitable funds in which the members can choose to invest and for
monitoring the performance of the available investment funds. Members are responsible for reviewing the level of
contributions they pay and the choice of investment fund to ensure these are appropriate to their risk appetite and their
retirement plans. Members of this section contribute at least 2% of their pensionable salaries, and depending on the
percentage chosen, the Group contributes up to a maximum 14%, together with the cost of the death-in-service benefits.
These contribution rates remained unchanged until June 2017. From 1 July 2017, for every 1% additional employee
contribution, the Group will contribute an additional 0.1% employer contribution. The amount recognised as an expense
for defined contribution schemes is shown in section (d) below.

(d) Charge to staff costs in the income statement
The total pension charge to staff costs for all of the Group’s defined benefit and defined contribution schemes were:

UK defined benefit schemes
Overseas defined benefit schemes

Total defined benefit schemes

UK defined contribution schemes
Overseas defined contribution schemes

Total defined contribution schemes
Total charge for pension schemes

Note

11(b)

2023
£m

26
1
27
171
19
190
217

2022
£m

22
1
23
152
20
172
195

There were no significant contributions payable or prepaid in the consolidated statement of financial position as at either
31 December 2023 or 2022.

47 – Borrowings
Our borrowings are classified as either core structural borrowings, which are included within the Group’s capital
employed, or operational borrowings drawn by operating subsidiaries. This note shows the carrying values of each type.

(a) Analysis of total borrowings
Total borrowings comprise:

Core structural borrowings at amortised cost
Operational borrowings at amortised cost
Operational borrowings designated at fair value

Operational borrowings
Total borrowings

Note

47(b)

47(c)

2023
£m

5,174
259
941
1,200
6,374

2022
£m

5,469
195
1,091
1,286
6,755

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Notes to the consolidated financial statements

(b) Core structural borrowings
(i) Carrying amount
The carrying amounts of these borrowings are:

6.125% £700 million subordinated notes 2036
6.875% £600 million subordinated notes 2058
6.125% €650 million subordinated notes 2043
3.875% €700 million subordinated notes 2044
5.125% £400 million subordinated notes 2050
3.375% €900 million subordinated notes 2045
4.375% £400 million subordinated notes 2049
4.000% £500 million subordinated notes 2055
4.000% $CAD450 million subordinated notes 2030
6.875% £500 million subordinated notes 2053

Subordinated debt

0.625% €500 million senior notes 2023
1.875% €750 million senior notes 2027

Senior notes
Commercial paper
Total core structural borrowings

2023
£m

697
595
—
607
397
778
396
494
265
493
4,722
—
401
401
51
5,174

2022
£m

697
595
267
619
396
793
396
493
274
—
4,530
278
409
687
252
5,469

On 5 July 2023 the Group redeemed its 6.125% €301 million Dated Tier 2 Reset Notes in full at their optional first call date.
This was the remaining part of the Group's 6.125% €650 million notes that were partially redeemed on 16 March 2021.

On 27 October 2023 the Group redeemed its 0.625% €315 million Senior Notes in full at their maturity date. This was the
remaining part of the Group's 0.625% €500 million notes that were partially redeemed on 16 March 2021.

On 27 November 2023 the Group issued £500 million of subordinated debt at 6.875%, with final maturity in November
2053 and first call in May 2033.

The outstanding commercial paper balance was reduced to £51 million (2022: £252 million) during 2023.

All borrowings are stated at amortised cost, with the exception of commercial paper.

(ii) Contractual undiscounted cash flows
The contractual maturity dates of undiscounted cash flows for these borrowings are:

Within one year
1 to 5 years
5 to 10 years
10 to 15 years
Over 15 years
Total contractual undiscounted cash flows

Principal
£m

51
402
267
700
3,787
5,207

Interest
£m

245
972
1,151
1,041
2,376
5,785

2023

Total
£m

296
1,374
1,418
1,741
6,163
10,992

Principal
£m

531
411
275
700
3,583
5,500

Interest
£m

229
912
1,077
999
2,111
5,328

2022

Total
£m

760
1,323
1,352
1,699
5,694
10,828

Borrowings are considered current if the contractual maturity dates are within a year. Where subordinated debt is
undated or loan notes are perpetual, the interest payments have not been included beyond 15 years.

Contractual undiscounted interest payments are calculated based on underlying fixed interest rates or prevailing market
floating rates as applicable. Year-end exchange rates have been used for interest projections on loans in foreign
currencies.

Amounts owed to financial institutions
Loans
Securitised mortgage loan notes
UK lifetime mortgage business
Total operational borrowings

Note

2023

£m

2022

£m

259

195

26(b)

941
1,200

1,091
1,286

Loans owed to financial institutions are stated at amortised cost and loan notes issued in connection with the IWR
lifetime mortgage business are stated at fair value. The Group designates these loan notes at FVTPL to eliminate an
accounting mismatch, as the relevant mortgages and derivatives are managed as a portfolio on a fair value basis.

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4. Other Information

Notes to the consolidated financial statements

The Group elects to present the change in fair value attributable to a change in the credit risk of the loan notes in the
income statement and the impacts are presented in note 24.

The fair values of the loan notes are modelled on risk-adjusted cash flows for defaults discounted at a risk-free rate plus a
market-determined liquidity premium, and are therefore classified as ‘Level 3’ in the fair value hierarchy. The risk
allowances are consistent with those used in the fair value asset methodology, as described in note 24.

The securitised mortgage loan notes are at various fixed, floating and index-linked rates. Further details about these
notes are given in note 26.

(ii) The contractual maturity dates of undiscounted cash flows for these borrowings are:

Within one year
1 to 5 years
5 to 10 years
10 to 15 years
Over 15 years
Total contractual undiscounted cash flows

Principal
£m

Interest
£m

331
314
350
125
20
1,140

42
138
133
66
19
398

2023

Total
£m

373
452
483
191
39
1,538

Principal
£m

Interest
£m

260
306
370
145
29
1,110

60
194
197
151
43
645

2022

Total
£m

320
500
567
296
72
1,755

The carrying value of the loan notes issued in connection with IWR lifetime mortgages is £345 million lower
(2022: £331 million lower) than the anticipated payment at maturity. The payment mirrors the repayment of the lifetime
mortgages and based on the current modelling assumptions.

(d) Description and features
(i) Subordinated debt
A description of each of the subordinated notes is set out in the table below:

Notional amount

Issue date

Redemption date

Callable at par at option
of the Company from

In the event the Company does not call the notes, the coupon
will reset at each applicable reset date to

£700 million
£600 million
€700 million
£400 million
€900 million
£400 million
£500 million
$CAD450 million
£500 million

14 Nov 2036
20 May 2058
3 July 2044
4 June 2050
4 December 2045

14 Nov 2001
20 May 2008
3 July 2014
4 June 2015
4 June 2015
12 September 2016 12 September 2049 12 September 2029 Daily Compounded SONIA + 0.1193% + 4.721%
3 June 2020
2 October 2020
27 November 2023 27 November 2053 27 May 2033

5 year Benchmark Gilt + 2.85%
Daily Compounded SONIA + 0.1193% + 3.26%
5 year EUR mid-swaps + 3.48%
Daily Compounded SONIA + 0.1193% + 4.022%
3 month Euribor + 3.55%

5 year Benchmark Gilt Rate + 4.70%
N/A
5 year Benchmark Gilt Rate + 3.85%

16 Nov 2026
20 May 2038
3 July 2024
4 June 2030
4 December 2025

3 June 2055
2 October 2030

3 March 2035
N/A

Subordinated notes issued by the Company rank below its senior obligations and ahead of its preference shares and
ordinary share capital. The fair value of notes at 31 December 2023 was £4,658 million (2022: £4,314 million), calculated
with reference to quoted prices.

(ii) Senior notes
All senior notes are at fixed rates and their total fair value at 31 December 2023 was £395 million (2022: £646 million).

(iii) Commercial paper
The commercial paper consists of £51 million issued by the Company (2022: £252 million) and is considered core
structural funding. The fair value of the commercial paper is considered to be the same as its carrying value and all
issuances are repayable within one year.

(iv) Loans
Loans owed to financial institutions comprise:

Loans to property partnerships
Other non-recourse loans
Total non-recourse loans owed to financial institutions

2023

£m

207
52
259

2022

£m

143
52
195

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4. Other Information

Notes to the consolidated financial statements

As explained in accounting policy D, the UK long-term business policyholder funds have invested in a number of property
funds and structures (the ‘Property Funds’), some of which have raised external debt, secured on the relevant Property
Fund’s property portfolio. The lenders are only entitled to obtain payment of interest and principal to the extent there are
sufficient resources in the relevant Property Fund and they have no recourse whatsoever to the policyholder or
shareholders’ funds of any companies in the Group. Loans of £207 million (2022: £143 million) included in the table above
relate to Property Funds.

Other non-recourse loans primarily include external debt raised by special purpose vehicles in the IWR long-term
business. The lenders have no recourse whatsoever to the shareholders’ funds of any companies in the Group. The
outstanding balance of these loans at 31 December2023 was £52 million (2022: £52 million).

(v) Securitised mortgage loan notes
Loan notes have been issued by special purpose securitisation companies in the UK. Details are given in note 26.

(e) Movements during the year
Movements in borrowings during the year were:

At 1 January

New borrowings drawn down, excluding commercial paper, net of
expenses

Repayment of borrowings, excluding commercial paper
Movement in commercial paper1

Net cash (outflow)/inflow
Borrowings acquired in business combinations2
Foreign exchange rate movements
Fair value movements
Amortisation of discounts and other non-cash items
At 31 December

Core
Structural
£m

Operational
£m

2023

Total
£m

Core
Structural
£m

Operational
£m

2022

Total
£m

5,469

1,286

6,755

6,133

1,211

7,344

493

(531)
(189)
(227)
—
(72)
—
4
5,174

564

—

122

(84)
—
(13)
—
(2)
(74)
3
1,200

(615)
(189)
(240)
—
(74)
(74)
7
6,374

(1,002)
189
(813)
—
150
—
(1)
5,469

(204)
—
(82)
139
2
16
—
1,286

(1,206)
189
(895)
139
152
16
(1)
6,755

1. Gross issuances of commercial paper were £377 million (2022: £537 million), offset by repayments of £566 million (2022: £348 million)
2. Borrowings acquired in business combinations relate to the acquisition of Succession Wealth on 11 August 2022. The borrowings were repaid immediately, with the repayment included in the

£204 million repayment of operational borrowings shown above.

All movements in fair value in 2023 and 2022 on securitised mortgage loan notes designated as fair value through profit or
loss were attributable to changes in market conditions.

(f) Undrawn borrowings
The Group has the following undrawn committed central borrowing facilities available to them, which are used to support
the commercial paper programme:

Expiring within one year
Expiring beyond one year
Total undrawn borrowings

48 – Payables and other financial liabilities
This note analyses our payables and other financial liabilities at the end of the year.

Payables arising out of direct insurance
Payables arising out of reinsurance operations
Deposits and advances received from reinsurers
Bank customer accounts liability
Bank overdrafts2
Derivative liabilities
Amounts due to brokers for investment purchases
Obligations for repayment of cash collateral received
Lease liabilities
Other financial liabilities
Total payables and other financial liabilities
Expected to be settled within one year
Expected to be settled in more than one year
Total payables and other financial liabilities

2023
£m

—
1,700
1,700

2022
£m

—
1,700
1,700

Note

53(c)

2023
£m

987
56
3
2
621
7,426
912
1,435
372
1,856
13,670
7,142
6,528
13,670

Restated1
2022
£m

976
17
3
2
929
9,541
539
1,991
386
1,367
15,751
11,771
3,980
15,751

Aviva plc

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Annual Report and Accounts 2023

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4. Other Information

Notes to the consolidated financial statements

All payables and other financial liabilities are carried at cost, which approximates to fair value, except for derivative
liabilities, which are carried at their fair values and lease liabilities which are carried at the present value of the
outstanding lease payments.

49 – Other liabilities
This note analyses our other liabilities at the end of the year.

Deferred income
Accruals
Interest payable
Other liabilities
Total other liabilities
Expected to be settled within one year
Expected to be settled in more than one year
Total other liabilities

2023
£m

78
820
1,246
1,145
3,289
3,062
227
3,289

2022
£m

68
816
877
806
2,567
2,311
256
2,567

50 – Contingent liabilities and other risk factors
This note sets out the main areas of uncertainty over the calculation of our liabilities.

(a) Uncertainty over claims provisions
Note 40 gives details of the estimation techniques used by the Group to determine the non-life business liability for
incurred claims provisions and of the methodology and assumptions used in determining the long-term business
provisions. These approaches are designed to produce a best estimate of the cost of settling liabilities, with a risk
adjustment reflecting the uncertainty associated with these liabilities. The actual cost of settling these liabilities may
differ, for example because experience may be worse than that assumed, or future non-life business claims inflation may
differ from that expected, and hence there is uncertainty in respect of these liabilities.

Business Interruption
There continues to be a significant degree of uncertainty in relation to business interruption claims arising from
COVID-19 and on-going test case litigation. On 17 October 2022, the High Court handed down its judgment on the
preliminary issues trial of Stonegate Pub Co Ltd vs MS Amlin Corp Member Ltd (and others) and related cases. Aviva was
not a party to the cases but is affected by the final outcome of these cases. The High Court ruled in favour of the parties
on different issues, and all parties initially appealed the majority of the preliminary decisions made by Justice Butcher.
Whilst the Greggs and Stonegate actions settled after the appeals on confidential terms the Court of Appeal heard the
remaining Various Eateries v Allianz appeals and on 16 January 2024 handed down judgment dismissing both parties
appeals. As a result the decisions of the High Court by Justice Butcher stand.

In Canada, we are party to a number of litigation proceedings challenging coverage under certain policies; however,
we believe we have a strong argument that there is no pandemic coverage under these policies. In the opinion of
management, adequate provisions have been established for such claims based on information available at the reporting
date. The Group purchases reinsurance protection on its property portfolio that includes coverage for business
interruption and is collecting or seeking reinsurance recoveries of business interruption losses that are covered by
reinsurance.

For further information on our general insurance risk management see note 54(f).

(b) Asbestos, pollution and social environmental hazards
In the course of conducting insurance business, various companies within the Group receive general insurance liability
claims, and become involved in actual or threatened related litigation arising therefrom, including claims in respect of
pollution and other environmental hazards. Amongst these are claims in respect of asbestos production and handling in
the UK, Ireland and Canada. Given the significant delays that are experienced in the notification of these claims, the
potential number of incidents they cover and the uncertainties associated with establishing liability, the ultimate cost
cannot be determined with certainty. However, on the basis of current information having regard to the level of
provisions made for general insurance claims and substantial reinsurance cover now in place, the directors consider that
any additional costs arising are not likely to have a material impact on the financial position of the Group.

(c) Guarantees on long-term savings products
As a normal part of their operating activities, various Group companies have given guarantees and options, including
interest rate guarantees, in respect of certain long-term insurance and investment products. Note 42 gives details of
these guarantees and options. Interest rate guaranteed returns, such as those available on guaranteed annuity options,
are sensitive to interest rates falling below the guaranteed level. The directors continue to believe that the existing
provisions for such guarantees and options are sufficient.

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2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

(d) Regulatory compliance
The Group’s insurance and investment business is subject to local regulation in each of the countries in which it operates.
A number of the Group’s UK subsidiaries are dual regulated (directly authorised by both the PRA (for prudential
regulation) and the FCA (for conduct regulation)) while others are solo regulated (regulated solely by the FCA for both
prudential and conduct regulation). Between them, the PRA and FCA have broad powers including the authority to grant,
vary the terms of, or cancel a regulated firm’s authorisation; to investigate marketing and sales practices; and to require
the maintenance of adequate financial resources.

The Group’s regulated businesses have compliance resources to respond to regulatory enquiries in a constructive way,
and take corrective action when warranted. However, all regulated financial services companies face the risk that their
regulator could find that they have failed to comply with applicable regulations or have not undertaken corrective action
as required.

The impact of any such finding (whether in the UK or overseas) could have a negative impact on the Group’s reported
results or on its relations with current and potential customers. Regulatory action against a member of the Group could
result in adverse publicity for, or negative perceptions regarding, the Group, or could have a material adverse effect on
the business of the Group, its results, operations and/or financial condition and divert management’s attention from the
day-to-day management of the business.

(e) Structured settlements
The Group has purchased annuities from licensed Canadian life insurers to provide for fixed and recurring payments to
claimants. As a result of these arrangements, the Group is exposed to credit risk to the extent that any of the life insurers
fail to fulfil their obligations. The Group’s maximum exposure to credit risk for these types of arrangements is
approximately £537 million as at 31 December 2023 (2022: £641 million). Credit risk is managed by acquiring annuities
from a diverse portfolio of life insurers with proven financial stability. This risk is reduced to the extent of coverage
provided by Assuris, the Canadian life insurance industry compensation plan. As at 31 December 2023, no information has
come to the Group’s attention that would suggest any weakness or failure in life insurers from which it has purchased
annuities and consequently no provision for credit risk is required.

(f) Other
In the course of conducting insurance and investment business, various Group companies receive liability claims, and
become involved in actual or threatened related litigation. In the opinion of the directors, adequate provisions have been
established for such claims and no material loss will arise in this respect.

In addition, in line with standard business practice, various Group companies have given guarantees, indemnities and
warranties in connection with disposals in recent years of subsidiaries and associates to parties outside the Aviva Group.
In the opinion of the directors, no material unprovisioned loss will arise in respect of these guarantees, indemnities and
warranties.

There are a number of charges registered over the assets of Group companies in favour of other Group companies or
third parties. In addition, certain of the Company’s assets are charged in favour of certain of its subsidiaries as security for
intra-Group loans.

51 – Commitments
This note gives details of our commitments to capital expenditure. See note 23 for further information on lease
commitments.

Contractual commitments for acquisitions or capital expenditures of infrastructure loans, equity funds, investment
property and property and equipment, which have not been recognised in the financial statements, are as follows:

104
Infrastructure loan advances
191
Investment property
—
Property and equipment
193
Other investment vehicles¹
488
Total commitments
1. Represents commitments for further investment in certain private equity vehicles. Such commitments do not expose the Group to the risk of future losses in excess of its investment.

Notes 19 and 20 set out the commitments the Group has to its joint ventures and associates.

2023
£m

2022
£m

384
361
70
246
1,061

52 – Group capital management
(a) Group capital
The Group is required to measure and monitor its capital resources on a regulatory basis and to comply with minimum
capital requirements of regulators in each territory it operates in. At a Group level, we have to comply with the
requirements established by the PRA.

Aviva plc

3.135

Annual Report and Accounts 2023

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3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

The Group Solvency II capital requirements are calculated using a Partial Internal Model (PIM) which assesses the risks on
an Internal Model basis approved by the PRA. The Solvency II capital regime requires insurers to calculate regulatory
capital adequacy at both individual regulated subsidiaries and an aggregate Group level. Non-UK entities have been
included in Group solvency in line with Solvency II requirements. Other financial sector entities (including fund
management) are included at their proportional share of the capital requirement according to the relevant sectoral
values. In addition, non-UK businesses including Canada, are subject to the locally applicable capital requirements in the
jurisdictions in which they operate.

Group capital is represented by Solvency II own funds. The Solvency II position disclosed is based on a ‘shareholder view’.
The shareholder view is considered by management to be more representative of the shareholders’ risk exposure and the
Group’s ability to cover the Solvency Capital Requirement (SCR) with eligible own funds and aligns with management’s
approach to dynamically manage its capital position.

In arriving at the shareholder position, the following adjustments are made to the regulatory Solvency II own funds:
• The contribution to the Group’s SCR and own funds of the most material fully ring fenced with-profits funds of
£1,408 million at 31 December 2023 (2022: £1,369 million) and staff pension schemes in surplus of £397 million at
31 December 2023 (2022: £394 million) are excluded. These exclusions have no impact on Solvency II surplus as these
funds are self-supporting on a Solvency II capital basis with any surplus capital above SCR not recognised;

• A notional reset of the transitional measure on technical provisions (TMTP), calculated using the same method as used

for formal TMTP resets. This presentation avoids step changes to the Solvency II position that arise only when the
formal TMTP reset points are triggered. The 31 December 2023 Solvency II position is based on a formal reset of the
TMTP, in line with the requirement to reset the TMTP at least every two years and hence no adjustment is required. The
31 December 2022 Solvency II position includes a notional reset.

Estimated Solvency II regulatory own funds as at 31 December
Adjustments for:
Fully ring-fenced with-profits funds
Staff pension schemes in surplus
Notional reset of TMTP
Estimated Solvency II shareholder own funds at 31 December

2023
£m

2022
£m

18,824

18,668

(1,408)
(397)
—
17,019

(1,369)
(394)
(437)
16,468

Solvency II own funds are comprised of a combination of shareholders’ funds, preference share capital, subordinated
debt, and deferred tax assets measured on a Solvency II basis. During the year, the Group redeemed £0.3 billion of Tier 2
subordinated debt and issued £0.5 billion of of Tier 2 subordinated debt (see note 47).

Solvency II surplus at the Group level represents the excess of eligible Solvency II own funds over the Group’s solvency
capital requirements calculated in accordance with Solvency II requirements. The Group maintained capital in excess of
the SCR at all times during 2023. All regulated subsidiaries complied with their capital requirements throughout the year.

Further information on the Group’s Solvency II position, shareholder view, including a reconciliation between IFRS equity
and own funds can be found in the Other information section. This information is estimated and is therefore subject to
change. It is also unaudited.

(b) Risks and capital management objectives
The primary objective of capital management is to maintain an efficient capital structure, in a manner consistent with our
risk profile and the regulatory and market requirements of our business. Capital is a primary consideration across a wide
range of business activities, including product development, pricing, business planning, merger and acquisition
transactions and asset and liability management. A Capital Management Standard, applicable Group-wide, sets out
minimum standards and guidelines over responsibility for capital management including considerations for capital
management decisions and requirements for management information, capital monitoring, reporting, forecasting,
planning and overall governance.

The Group manages capital in conjunction with solvency capital requirements and in line with the dividend policy and
capital framework.
• We aim to deliver sustainable dividends at a level that is resilient in times of stress and is covered by the capital and cash

generated from our businesses;

• At the core of our capital framework is financial strength in accordance with risk appetite and efficient deployment of

capital. See note 54 for more information about the Group’s risk management approach;

• Key elements of our capital framework are as follows:

• Solvency II shareholder cover ratio working range of 160%-180%

• Centre liquid assets of at least £1 billion

• Solvency II debt leverage ratio below 30%

- To maintain our AA credit rating metrics;

• After the payment of our regular dividend, surplus capital is available for investment in the business to support growth
and top quartile efficiency objectives, focussed bolt-on M&A where this delivers attractive risk adjusted returns and the
opportunity is in line with our strategy, and any additional returns to shareholders releasing excess capital over time;

Aviva plc

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Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

• The Group seeks to retain financial flexibility by maintaining strong liquidity, access to a range of capital markets and

significant unutilised committed credit lines; and

• Our businesses are capitalised based on their regulatory minimum levels with further prudent volatility buffers specific

to each entity. Subsidiary capital appetites and working ranges are reviewed regularly by subsidiary boards.

Intra-group capital arrangements
Consistent with our capital management framework, the Group has in place intra-group arrangements to provide
additional capital support to its regulated subsidiaries. In the normal course of business, the Group will provide additional
capital support to its regulated subsidiaries in certain circumstances. While the Group considers it unlikely that such
support will be required, the arrangements are intended to provide additional comfort to its regulated subsidiaries and its
policyholders.

53 – Statement of cash flows
This note gives further detail behind the figures in the statement of cash flows.

(a) The reconciliation of profit/(loss) before tax to the net cash inflow from operating activities is:

Profit/(loss) before tax
Adjustments for:
Share of loss/(profit) of joint ventures and associates
Dividends received from joint ventures and associates
(Profit)/loss on sale of:
Investment property
Investments

Fair value (gains)/losses on:

Investment property
Investments
Borrowings

Depreciation of property and equipment
Equity compensation plans, equity settled expense
Impairment and expensing of:
Goodwill on subsidiaries
Financial investments, loans and other assets
Acquired value of in-force business and intangibles

Amortisation of:

Premium/discount on fixed maturity securities
Premium/discount on borrowings
Premium/discount on non-participating investment contracts
Acquired value of in-force business and intangibles

Interest expense on borrowings
Net finance income on pension schemes
Foreign currency exchange gains

(Increase)/decrease in reinsurance assets
Decrease in deferred acquisition costs
Increase/(decrease) in insurance liabilities and investment contracts
Increase in other assets2
Changes in working capital

Net purchases of investment property
Net proceeds on sale of investment property
Net (purchase)/sales of financial investments

Net purchases of operating assets
Total cash generated (used in)/from operating activities

2023
'£m

Restated1
2022
£m

1,690

(2,239)

71
81

(3,374)

(8)
47

8
(1,909)

301

(74)
67
61
3
—
3
—
489
306
6
59
118
335
(39)
(50)
(424)
70
22,222

1,150
(8,852) 48,667
16
57
58
(73)
(77)
—
4
537
328
(1)
68
142
450
(42)
(778)
1,338
49
(36,754)
(5,948)
(41,315)
(434)
408
11,493
11,467
16,093

(13,698)
(14,397)
(2,664)

21,014
(1,016)
317

(854)

1. The 2022 comparative results have been restated from those previously published to reflect the differences in measurement of insurance contracts and profit/(loss) before tax following the

adoption of IFRS 17, as described in note 1(a). There is no change in total cash generated from operating activities.

2. In 2022, increase in other assets excludes £60 million for costs relating to internally generated intangible assets under development which are presented within net cash flows (used in)/from

investing activities.

The cash flows presented in this statement cover all the Group’s activities and include flows from both policyholder and
shareholder activities. Operating cash flows reflect the movement in both policyholder and shareholder controlled cash
and cash equivalent balances.

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Notes to the consolidated financial statements

During the year the net operating cash inflow reflects a number of factors, including the level of premium income,
payments of claims, creditors and surrenders and purchases and sales of operating assets including financial investments.
It also includes changes in the size and value of consolidated cash investment funds and changes in the Group
participation in these funds.

Liabilities arising from financing activities of £7,242 million (2022: £7,637 million) include borrowings (note 47), Tier 1 notes
(Note 36) and lease liabilities (Note 23). Cash flows of £(302) million (2022: £(462) million) are presented in the Statement
of Cash Flows. Non-cash changes of £(93) million (2022: £144 million) relate primarily to foreign currency exchange gains
of £(76) million (2022: £152 million losses) and fair value gains of £(74) million (2022: £16 million losses). The increase in
liabilities due to the acquisition of a subsidiary was £nil (2022: £139 million).

(b) Cash flows in respect of the acquisition of, and additions to, subsidiaries, joint ventures and associates comprised:

Cash consideration for subsidiaries, joint ventures and associates acquired and additions1
Total cash flow on acquisitions and additions

2023
'£m

—
—

2022
'£m

(275)
(275)

In 2022, cash consideration for subsidiaries, joint ventures and associates acquired and additions relates to the acquisition of Succession Wealth and Aviva Life Insurance Company India Limited.

The above figures form part of cash flows from investing activities.

Cash at bank and in hand
Cash equivalents
Cash and cash equivalents per the statement of financial position
Bank overdrafts
Cash and cash equivalents

Note

2023
'£m

6,138
11,135
17,273

(621)

16,652

2022
'£m

5,371
17,134
22,505
(929)
21,576

54 – Risk management
Risk management is key to the Group's success. We accept the risks inherent to our core business lines of life, general
insurance and health, and asset management. We diversify these risks through our scale, geographic spread, the variety of
the products and services we offer and the channels through which we sell them. We receive premiums which we invest
to maximise risk-adjusted returns, so that we can fulfil our promises to customers while providing a return to our
shareholders. In doing so we have a preference for retaining those risks we believe we are capable of managing to
generate a return.

Our sustainability and financial strength are underpinned by an effective risk management process and risk intelligent
culture, which helps us identify major risks to which we may be exposed, establish appropriate controls and take
mitigating actions for the benefit of our customers and investors. The Group’s risk strategy is to invest its available capital
to optimise the balance between return and risk while maintaining an appropriate level of economic (i.e. risk-based) and
regulatory capital.

The key elements of our risk management framework comprise: our risk strategy and risk management forward plans;
risk governance, including risk policies and business standards, risk oversight committees and roles and responsibilities;
and the processes we use to identify, measure, manage, monitor and report risks, including the use of our risk models and
stress and scenario testing.

Risk Environment
Macroeconomic risk has been elevated throughout 2023. The expectation for 2024 is that global growth is expected to
slow. Impacts of interest rate raises have not been fully passed on (e.g. through mortgage refinancing). Analysts continue
to comment on the current increased level of gearing present across industries. Affordability remains a concern because
of the global economic climate, and will continue to impact all customers, including relatively affluent customers.
Customer experience and retention will continue to require close monitoring.

Heightened geo-political tensions continue into 2024, with the likelihood of further global social and economic
fragmentation.

We expect continued and heightened regulatory change in 2024 and beyond. In 2023, the Group’s UK business
implemented the FCA’s Consumer Duty for open products and is implementing it for closed products by July 2024. Across
the industry, we continue to see significant challenges as firms navigate the implementation across existing business,
together with embedding the regulation. The implementation of the FCA’s Consumer Duty has maintained a high-level of
regulatory scrutiny on the fair value of customer outcomes of products provided by the insurance industry.

The Group continues to maintain strong solvency and liquidity positions through a range of scenarios and stress testing.
Our capital and liquidity positions have been tested by recent market conditions and have been shown to be robust and
resilient.

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Notes to the consolidated financial statements

There has been an increased threat of malware and ransomware attacks across the world. In response we have increased
the protection level of anti-malware and cyber incident security controls. We continue to monitor threat intelligence
data and update our controls to maintain protection against new and emerging ransomware variants, including controls
in respect of our suppliers.

The Group remains committed to supporting a low carbon economy that will improve the resilience of our economy,
society and the financial system in line with the 2015 Paris Agreement target on climate change. In March 2021, we set an
ambition to become a Net Zero carbon company by 2040 and we are continuing to act to mitigate and manage the impact
of climate change on our business. We use scenario analysis as an input to our risk assessment processes to test the
resilience of our business strategy and adapt our business to ensure its longevity as an asset manager, asset owner,
insurer and pension provider. For example, we calculate a Climate Value at Risk (VaR) against Intergovernmental Panel on
Climate Change (IPCC) scenarios to assess the climate-related risks and opportunities under different emission
projections and associated temperature pathways. A range of different financial indicators and metrics are used to assess
and monitor the impact of climate change on our investments and insurance liabilities. Examples of these include:
building the possibility of extreme weather events into our general insurance pricing, reinsurance programme design and
monitoring actual weather-related losses versus expected weather losses by business. We originate assets for their
climate credentials. We have defined an Investment in Sustainable assets metric, which is implemented with reference to
external frameworks and is set out in our climate reporting policies in the Aviva plc Climate-related Financial Disclosure
report 2023.

The Group implemented IFRS 17 insurance contracts from 1 January 2023. The adoption of IFRS 17 has significantly
impacted the measurement and presentation of the contracts in scope of the standard. IFRS 17 introduces the concept of
a contractual service margin (CSM) liability that defers future unearned profit on insurance contracts. The recognition of
a CSM for our life businesses has resulted in a material reduction in the reported IFRS net asset value of the Group on
transition to IFRS 17, with a stock of future profits held on the balance sheet as a liability and released over time. The cash
flows and underlying capital generation of our businesses are unaffected by IFRS 17, and the standard has no impact on
our Solvency II performance metrics or the Group financial targets we have announced. Furthermore, we do not expect
IFRS 17 to impact on the dividend policy and dividend guidance.

(a) Risk management framework (RMF)
The Group's Risk management framework is at the heart of every business decision and is key to a robust control
environment and the Group’s sustainable success. The key components of our RMF are: risk appetite; risk governance,
including risk policies and business standards; risk oversight committees and roles and responsibilities; and the processes
we use to identify, measure, manage, monitor and report risks, including the use of our risk models and stress and
scenario testing. A risk taxonomy is maintained for a consistent approach to risk identification, measurement and
reporting, and to determine application of the Group Risk Appetite Framework and the risks for which a Risk Policy is
required. The taxonomy is arranged in a hierarchy with more granular risk types grouped into the following principal risk
categories: credit and market, liquidity, life insurance, general insurance (including health), operational and strategic risk.
Risks falling within these types may affect a number of outcomes including those relating to solvency, liquidity, profit,
reputation and conduct.

To promote a consistent and rigorous approach to risk management across all businesses we have a set of risk policies
and business standards which set out the risk strategy, appetite, framework, key controls, and minimum requirements for
the Group’s worldwide operations. The business units' chief executive officers make an annual declaration supported by
an opinion from the business units' chief risk officers that the system of governance and internal controls was effective
and fit for purpose for their business throughout the year.

The Group’s Risk Appetite Framework was refreshed during the year, with revised and new risk appetites, preferences
and tolerances considered and approved by the Risk Committee.

A regular top-down key risk identification and assessment process is carried out by the Risk function. This includes the
consideration of emerging risks and is supported by deeper thematic reviews. This process is replicated at the business
unit level. The risk assessment processes are used to generate risk reports which are shared with the relevant risk
committees.

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. For those risk types managed through the holding of capital, being our principal risk types except for liquidity
risk, we measure and monitor our risk profile based on the Solvency Capital Requirement (SCR).

Roles and responsibilities for risk management in Aviva are based around the ‘three lines of defence’ risk governance
model where ownership for risk is taken at all levels in the Group. Line management in the business is accountable for
risk ownership and management, including the implementation and embedding of the RMF. The risk function is
accountable for quantitative and qualitative oversight and challenge of the risk identification, measurement, monitoring,
management and reporting processes and for developing the RMF, as well as providing advisory support to the business
on risk innovation. Internal audit provides an independent assessment of the risk management framework and internal
control processes.

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Notes to the consolidated financial statements

Board oversight of risk and its management across the Group is maintained on a roughly quarterly basis through its
Risk Committee. The Board has overall responsibility for determining risk appetite, which is an expression of the risk the
business is willing to take.

Three Group-level management committees (Group Executive Risk Committee, Group Asset Liability Committee and the
Disclosure Committee) exist to assist members of the Aviva Executive Committee in the discharge of their delegated
authorities and their accountabilities within the Aviva Governance Framework and in relation to their defined regulatory
responsibilities.

The RMF of a small number of our joint ventures and strategic equity holdings differs from the Group RMF outlined in this
note. We work with these entities to understand how their risks are managed and to align them, where possible, with the
Group RMF so not to unduly increase the overall risk exposure of the Group.

The types of risks to which the Group is exposed have not changed significantly during the year and remain credit,
market, liquidity, life insurance, general insurance and health, asset management and operational risks. These risks are
described below.

(b) Credit risk
Credit risk is the risk of financial loss as a result of the default or failure of third parties to meet their payment obligations
to the Group, or variations in market values as a result of changes in expectations related to these risks. Credit risk is
taken so that the Group can provide the returns required to satisfy policyholder liabilities and to generate returns for our
shareholders. In general we prefer to take credit risk over equity and property risks, because of the better expected risk-
adjusted return, our credit risk analysis capability and the structural investment advantages conferred to insurers with
long-dated, relatively illiquid liabilities.

Our approach to managing credit risk recognises that there is a risk of adverse financial impact resulting from
fluctuations in credit quality of third parties including default, rating transition and credit spread movements. Our credit
risks arise principally through exposures to debt security investments, structured asset investments, bank deposits,
derivative counterparties, mortgage lending and reinsurance counterparties.

The Group manages its credit risk at business unit and Group level. All business units are required to implement credit
risk management processes (including limits frameworks), operate specific risk management committees and report and
monitor their exposures against detailed pre-established risk criteria. At Group level, we manage and monitor all
exposures across our business units on a consolidated basis and operate a Group limit framework that must be adhered
to by all.

We did not experience a material increase in credit defaults in 2023, with pro-active management of the credit portfolio
in a challenging macroeconomic environment. We continue to monitor closely any deterioration in the credit markets.
Our capital position includes an allowance for the expected potential impacts from downgrades and defaults.

A detailed breakdown of the Group’s current credit exposure by credit quality is shown below.

(i) Financial exposures by credit ratings
Financial assets are graded according to current external credit ratings issued. AAA is the highest possible rating.
Investment grade financial assets are classified within the range of AAA to BBB ratings. Financial assets with ratings
outside this range are classified as sub-investment grade. The following table provides information regarding the
aggregated credit risk exposure of the Group for financial and reinsurance contract assets with external credit ratings.
‘Not rated’ assets capture assets not rated by external ratings agencies.

AAA
%

AA
%

A
%

BBB
%

2023

Below
BBB
%

Not
rated
%

Maximum
exposure
£m

AAA
%

AA
%

A
%

BBB
%

Below
BBB
%

Not
rated
%

Restated1,2
2022

Maximum
exposure
£m

11.7 % 39.0 % 24.2 % 13.4 % 4.7 % 7.0 % 113,889

16.2 % 35.1 % 23.6 % 14.7 % 4.6 % 5.8 % 103,776

— % 76.0 % 23.1 % — % — % 0.9 % 6,534

— % 75.7 % 24.3 % — % — % — % 6,308

— % 50.7 % 45.6 % 3.7 % — % — % 4,713

— % 56.4 % 37.0 % 6.6 % — % — % 5,290

0.8 % 0.2 % 0.6 % 0.2 % — % 98.2 % 39,370
— % — % 0.2 % 0.5 % — % 99.3 % 31,685
196,191

— % — % 0.1 % — % — % 99.9 % 34,520
— % — % 0.2 % 0.4 % — % 99.4 % 29,633
179,527

Fixed maturity
securities1
Reinsurance contract
assets2

Reinsurance assets for
non-participating
investment contracts2
Other investments
Loans1, 2
Total

1. Following a review of credit risk methodology arising from the change to a new assets administration system in the UK, prior year comparatives have been restated to align classification

methodology across the Group. This has resulted in reclassifications of £1,815 million and £2,560 million of AAA and AA rated fixed maturity securities and corresponding changes of £1,706 million,
£1,795 million, £746 million and £128 million of A, BBB, less than BBB and not rated assets, along with reclassifications of £2,663 million and £250 million of AA and A rated loans to the not rated
category. These amendments have not resulted in any change to the valuation of assets or liabilities included in the statement of financial position.

2. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1). As described in note

1(a), reinsurance assets for non-participating investment contracts are presented as separate line items in the table.

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Notes to the consolidated financial statements

The majority of non-rated fixed maturity securities within shareholder assets are private placements and other corporate
bonds held by our UK IWR business, amounting to £4.9 billion (2022: £3.6 billion). Of these securities most are allocated
an investment grade internal rating using a methodology largely consistent with that adopted by an external rating
agency.

The Group’s maximum exposure to credit risk of financial assets, without taking collateral or these hedges into account,
is represented by the carrying value of the financial instruments in the statement of financial position. For reinsurance
contract assets the maximum exposure reflects the carrying value less the value of CSM.

These comprise debt securities, reinsurance assets, derivative assets, loans and receivables. The carrying values of these
assets are disclosed in the relevant notes: financial investments (note 28), reinsurance assets (note 40), loans (note 25) and
receivables (note 29). The collateral in place for these credit exposures is disclosed in note 56.

(ii) Other investments
Other investments include: unit trusts and other investment vehicles; derivative financial instruments, representing
positions to mitigate the impact of adverse market movements; and other assets, including deposits with credit
institutions and minority holdings in property management undertakings.

The credit quality of the underlying debt securities within investment vehicles is managed by the safeguards built into the
investment mandates for these funds which determine the funds’ risk profiles. At the Group level, we also monitor the
asset quality of unit trusts and other investment vehicles against Group set limits.

A proportion of the assets underlying these investments are represented by equities and so credit ratings are not
generally applicable. Equity exposures are managed against agreed benchmarks that are set with reference to overall
appetite for market risk.

(iii) Loans
The Group loan portfolio principally comprises:
• Policy loans which are generally collateralised by a lien or charge over the underlying policy;
• Loans and advances to banks which primarily relate to loans of cash collateral received in stock lending transactions.

These loans are fully collateralised by other securities;

• Healthcare, infrastructure and PFI loans secured against healthcare, education, social housing and emergency services

related premises; and

• Mortgage loans collateralised by property assets.

We use loan to value, interest and debt service cover and diversity and quality of the tenant base metrics to internally
monitor our exposures to mortgage loans. We use credit quality, based on dynamic market measures, and
collateralisation rules to manage our stock lending activities. Policy loans are loans and advances made to policyholders
and are collateralised by the underlying policies.

(iv) Credit concentration risk
The long-term and general insurance and health businesses are generally not individually exposed to significant
concentrations of credit risk due to the regulations applicable in most markets and the Group credit policy and limits
framework, which limit investments in individual assets and asset classes. Credit concentrations are monitored as part of
the regular credit monitoring process and are reported to the Group Asset Liability Committee (ALCO). With the
exception of government bonds, the largest aggregated counterparty exposure within shareholder assets is to the Swiss
Reinsurance Company Limited (including subsidiaries), representing approximately 1.4% of the total shareholder assets.

(v) Reinsurance credit exposures
The Group is exposed to concentrations of risk with individual reinsurers due to the nature of the reinsurance market
and the restricted range of reinsurers that have acceptable credit ratings. The Group operates a policy to manage its
reinsurance counterparty exposures, by limiting the reinsurers that may be used and applying strict limits to each
reinsurer. Reinsurance exposures are aggregated with other exposures to ensure that the overall risk is within appetite.
The Group Capital and Group Risk teams have an active monitoring role with escalation to the Chief Financial Officer
(CFO), Chief Risk Officer (CRO), Group ALCO and the Board Risk Committee as appropriate.

(vi) Securities finance
The Group has significant securities financing operations within the UK and smaller operations in some other businesses.
The risks within this activity are mitigated by collateralisation and minimum counterparty credit quality requirements.

(vii) Derivative credit exposures
The Group is exposed to counterparty credit risk through derivative trades. This risk is generally mitigated through
holding collateral for most trades. Residual exposures are captured within the Group’s credit management framework.

(viii) Unit-linked business
In unit-linked business the policyholder bears the direct market risk and credit risk on investment assets in the unit funds
and the shareholders’ exposure to credit risk is limited to the extent of the income arising from asset management
charges based on the value of assets in the fund.

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Notes to the consolidated financial statements

(ix) Impairment of financial assets
Impairment is calculated using an expected credit loss model for financial assets measured at amortised cost and lease
receivables, with reference to historical experience of losses adjusted for forward-looking information, as discussed in
accounting policy U.

(c) Market risk
Market risk is the risk of adverse financial impact resulting, directly or indirectly from fluctuations in interest rates,
inflation, foreign currency exchange rates, equity and property prices. Market risk arises in business units because of
fluctuations in both the value of liabilities and the value of investments held.

At Group level, it also arises in relation to the overall portfolio of international businesses and in the value of investment
assets owned directly by the shareholders. We actively seek some market risks as part of our investment and product
strategy.

The management of market risk is undertaken at business unit and at Group level. Businesses manage market risks locally
using the Group market risk framework and within local regulatory constraints. The Group Capital team is responsible for
monitoring and managing market risk at Group level and has established criteria for matching assets and liabilities to limit
the impact of mismatches because of market movements.

In addition, where the Group’s long-term savings businesses have written insurance and investment products where
most investment risks are borne by its policyholders, these risks are managed in line with local regulations and marketing
literature, so to satisfy the policyholders’ risk and reward objectives. The Group writes unit-linked business, primarily in
the UK. The shareholders’ exposure to market risk on this business is limited to the extent that income arising from asset
management charges is based on the value of assets in the fund.

In respect of IBOR, significant progress has been made, with a substantive majority of the Group's original exposure
already resolved. The Group's only remaining exposure to GBP LIBOR relates to a small number of currently fixed-rate
public bonds that would revert to LIBOR-referencing floating rates in the event of a non-call by the issuer at the next call
date. We continue to assess the likelihood of this event. The Group's exposure to CDOR relates to a small number of
interest rate swaps whose transition will be planned prior to CDOR’s termination after 28 June 2024.

At 31 December 2023, £53 million of non-derivative financial assets, £10 million of derivative financial assets and £2 million
of derivative financial liabilities had yet to transition to an alternative risk-free rate.

The most material types of market risk that the Group is exposed to are described below.

(i) Equity price risk
The Group is subject to direct equity price risk arising from changes in the market values of its equity securities portfolio.
Our most material indirect equity price risk exposures are to policyholder unit-linked funds, which are exposed to a fall in
the value of the fund thereby reducing the fees we earn on those funds, and participating contracts, which are exposed to
a fall in the value of the funds thereby increasing our costs for policyholder guarantees. We also have some equity
exposure in shareholder funds through equities held to match inflation-linked liabilities.

We continue to limit our direct equity exposure in line with our risk preferences. At a business unit level, investment
limits and local investment regulations require that business units hold diversified portfolios of assets thereby reducing
exposure to individual equities. The Group does not have material holdings of unquoted equity securities.

Equity risk is also managed using a variety of derivative instruments, including futures and options. Businesses actively
model the performance of equities through the use of risk models, in particular to understand the impact of equity
performance on guarantees, options and bonus rates. An equity hedging strategy remains in place to help control the
Group’s overall direct and indirect exposure to equities.

Sensitivity to changes in equity prices is given in section (h) Risk and capital management, below.

(ii) Property price risk
The Group is subject to property price risk directly because of holdings of investment properties in a variety of locations
worldwide and indirectly through investments in mortgages and mortgage backed securities. Investment in property is
managed at business unit level, and is subject to local regulations on investments, liquidity requirements and the
expectations of policyholders.

As at 31 December 2023, no material derivative contracts had been entered into to mitigate the effects of changes in
property prices. We maintain a conservative loan-to-value on our commercial mortgage portfolio. Exposure to property
risk on equity release mortgages from sustained underperformance in the UK House Price Index (HPI) is mitigated by
capping loan to value on origination at low levels and regularly monitoring the performance of the mortgage portfolio.

Sensitivity to changes in property prices is given in section (h) Risk and capital management, below.

(iii) Interest rate risk
Interest rate risk arises primarily from the Group’s investments in long-term debt and fixed income securities and their
movement relative to the value placed on the insurance liabilities. A number of policyholder product features have an
influence on the Group’s interest rate risk. The major features include guaranteed surrender values, guaranteed annuity
options, and minimum surrender and maturity values. Details of material guarantees and options are given in note 42.

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Notes to the consolidated financial statements

We have limited appetite for interest rate risk as we do not believe it is adequately rewarded. We manage and hedge our
interest rate exposure through setting risk tolerance levels on a Solvency II cover ratio basis. Exposure to interest rate
risk is monitored through several measures that include duration, capital modelling, sensitivity testing and stress and
scenario testing.

Increasing interest rates as a result of the monetary policy response to inflationary pressures will positively impact the
Group’s regulatory capital cover ratio. This could be offset by the negative impact of credit downgrades, counterparty
defaults, claims and maintenance expenses and lapse rates if high inflation persists and the economy stagnates or falls.
Conversely, rising credit spreads will adversely impact IFRS shareholders’ equity, see section (h)(i) Sensitivity test analysis.

The Group typically manages interest rate risk by investing in fixed interest securities which closely match the interest
rate sensitivity of the liabilities where such investments are available. In particular, a key objective is to at least match the
duration of our annuity liabilities with assets of the same duration, and in some cases where appropriate cash flow
matching has been used. These assets include corporate bonds, residential mortgages and commercial mortgages. Should
they default before maturity, it is assumed that the Group can reinvest in assets of a similar risk and return profile, which
is subject to market conditions. Interest rate risk is also managed in some business units using a variety of derivative
instruments, including futures, options, swaps, caps and floors.

Other product lines of the Group, such as protection, are not significantly sensitive to interest rate or market movements.
For unit-linked business, the shareholder margins emerging are typically a mixture of annual management fees and risk/
expense charges. Risk and expense margins are largely unaffected by low interest rates. Annual management fees could
increase if there was a move towards low interest rates which increases the value of unit funds. For the UK annuities
business interest rate exposure is mitigated by closely matching the duration of liabilities with assets of the same
duration.

The UK participating business includes contracts with features such as guaranteed surrender values, guaranteed annuity
options and minimum surrender and maturity values. These liabilities are managed through duration matching of assets
and liabilities and the use of derivatives, including swaptions. As a result, the Group’s exposure to sustained low interest
rates on this portfolio is not material. Details of material guarantees and options are given in note 42.

Profit before tax on General Insurance and Health Insurance business is generally a mixture of insurance, expense and
investment returns. The asset portfolio is invested primarily in fixed income securities. The portfolio investment yield and
average total invested assets in our General Insurance and Health business are set out in the table below.

Average assets £m

1. Before realised and unrealised gains and losses and investment expenses.

Portfolio investment yield1

2023
2.74%
13,319

2022
2.33%
13,082

The nature of the business means that prices in certain circumstances can be increased to maintain overall profitability.
This is subject to the competitive environment in each market. If there are future falls in interest rates the investment
yield would be expected to decrease in future periods.

Sensitivity to changes in interest rates is given in section (h) Risk and capital management, below.

(iv) Inflation risk
Inflation risk arises primarily from the Group’s exposure to general insurance claims inflation, to inflation linked benefits
within the defined benefit staff pension schemes and within the UK annuity portfolio and to expense inflation. Increases
in long-term inflation expectations are closely linked to long-term interest rates and so are frequently considered with
interest rate risk. Exposure to inflation risk is monitored through capital modelling, sensitivity testing and stress and
scenario testing. The Group typically manages inflation risk through its investment strategy and, in particular, by
investing in inflation linked securities and through a variety of derivative instruments, including inflation linked swaps.
Inflation risk is an ongoing concern in the current macroeconomic environment and we are monitoring the potential
impact on the profits and margins of the Group and our counterparties which could impact their credit quality.

(v) Currency risk
The Group has minimal exposure to currency risk from financial instruments held by business units in currencies other
than their functional currencies, as nearly all such holdings are backing either unit-linked or with-profits contract
liabilities or are hedged. As a result the foreign exchange gains and losses on investments are largely offset by changes in
unit-linked and with-profits liabilities and fair value changes in derivatives attributable to changes in foreign exchange
rates recognised in the income statement.

The Group operates internationally and as a result is exposed to foreign currency exchange risk arising from fluctuations
in exchange rates of various currencies. Approximately 26% of the Group’s Insurance Revenue from continuing
operations arises in currencies other than sterling.

The Group’s net assets are denominated in a variety of currencies, of which the largest are sterling, euro and Canadian
dollars ($CAD). The Group does not hedge foreign currency revenues as these are substantially retained locally to support
the growth of the Group’s business and meet local regulatory and market requirements. However, the Group does use
foreign currency forward contracts to hedge planned dividends from its subsidiaries, and specifically its currency risk
exposure from the anticipated sale proceeds of Aviva Singapore (see note 55(a)(ii)).

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Notes to the consolidated financial statements

Business units aim to maintain sufficient assets in local currency to meet local currency liabilities, however movements
may impact the value of the Group’s consolidated shareholders’ equity which is expressed in sterling. This aspect of
foreign exchange risk is monitored and managed centrally, against pre-determined limits. These exposures are managed
by aligning the deployment of regulatory capital by currency with the Group’s regulatory capital requirements by
currency. Currency borrowings and derivatives are used to manage exposures within the limits that have been set.

Except where the Group has applied net investment hedge accounting (see note 55(a)(i)), foreign exchange gains and
losses on foreign currency borrowings are recognised in the income statement, whereas foreign exchange gains and
losses arising on consolidation from the translation of assets and liabilities of foreign subsidiaries are recognised in other
comprehensive income.

At 31 December, the Group’s net assets by currency was:

Sterling
Euro
$CAD
Other
Total

2023
£m

9,821
324
565
(1,110)

9,600

Restated1
2022
£m

10,759
286
5
(836)
10,214

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

A 10% change in sterling to euro/$CAD period-end foreign exchange rates would have had the following impact on net
assets and a 10% change in sterling to euro/$CAD average foreign exchange rates applied to translate foreign currency
profits would have had the following impact on profit before tax, including resulting gains and losses on foreign exchange
hedges.

10% increase in sterling/euro
10% decrease in sterling/euro
10% increase in sterling/$CAD
10% decrease in sterling/$CAD

2023

Impact on
profit before
tax
£m

Impact on
net assets
£m

Impact on net
assets
£m

Restated1
2022

Impact on
profit before
tax
£m

(32)
32
(57)
57

22
(26)
(39)
48

(29)
29
(1)
1

17
(21)
(20)
24

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).

The balance sheet changes arise from retranslation of business unit statements of financial position from their functional
currencies into sterling, with above movements being taken through the currency translation reserve. These balance
sheet movements in exchange rates therefore have no impact on profit. Net asset and profit before tax figures are stated
after taking account of the effect of currency hedging activities.

(vi) Derivatives risk
Derivatives are used by a number of the business units. Derivatives are primarily used for efficient investment
management, risk hedging purposes, or to structure specific retail savings products. Activity is overseen by the Group
Capital and Group Risk teams, which monitor exposure levels and approve large or complex transactions.

The Group applies strict requirements to the administration and valuation processes it uses, and has a control framework
that is consistent with market and industry practice for the activity that is undertaken.

(vii) Correlation risk
The Group recognises that lapse behaviour and potential increases in consumer expectations are sensitive to and
interdependent with market movements and interest rates. These interdependencies are taken into consideration in the
internal capital model and in scenario analysis.

(d) 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 relatively illiquid nature of insurance liabilities is a potential source of additional investment return by
allowing us to invest in higher yielding, and less liquid assets such as commercial mortgages and infrastructure loans.
The Group seeks to maintain sufficient financial resources to meet its obligations as they fall due through the application
of a Group liquidity risk policy and business standard and through the development of its liquidity risk management plan.

At Group and business unit level, there is a liquidity risk appetite which requires that sufficient liquid resources be
maintained to cover net outflows in a stress scenario. In addition to the existing liquid resources and expected inflows,
the Group maintains significant undrawn committed borrowing facilities (£1,700 million) from a range of leading
international banks to further mitigate this risk.

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Notes to the consolidated financial statements

In the Group we use derivative contracts to manage interest rate, inflation and foreign-exchange risks. While interest
rates have oscillated over 2023, we have not experienced the sharp and rapid rise in interest rates seen at the end of the
third quarter of 2022. Following the experience in 2022, the liquidity buffers were strengthened and we have sufficient
liquidity to withstand a similar liquidity squeeze.

Maturity analysis
The following tables show the maturities of our insurance and investment contract liabilities, and of the financial assets
held to meet them. A maturity analysis of the contractual amounts payable for borrowings and derivative liabilities is
given in notes 47 and 55(b)(ii), respectively. Contractual obligations under leases and capital commitments are given in
note 23 and note 51.

(i) Analysis of maturity of insurance and investment contract liabilities
For insurance and participating investment contract liabilities, including reinsurance contract liabilities, the following
table shows the estimates of the present value of future cash flows at 31 December 2023 and 2022 analysed by estimated
timing.

For non-participating investment contracts, almost all may be surrendered or transferred on demand. The earliest
contractual maturity date is therefore 2023 statement of financial position date, for a surrender amount approximately
equal to the current statement of financial position liability.

However, we expect surrenders, transfers and maturities to occur over many years, and therefore the table below reflects
the expected cash flows for these contracts, rather than their contractual maturity date.

2023

Life risk
Participating
Non-life

Insurance contract and participating
investment contract liabilities
Non-participating investment contract liabilities
Total contract liabilities

Restated1 2022

Life risk
Participating
Non-life

Within 1 year

One to Two
years

Two to Three
years

Three to Four
years

Four to Five
Years

Five to 15

years Over 15 years

£m

Total

£m

3,751

3,650
4,803

12,204

1,543
13,747

2,302

2,087
2,748

7,137

1,259
8,396

2,230

1,998
1,747

5,975

2,908
8,883

2,226

1,923
1,206

5,355

4,109
9,464

2,252

20,623

26,009

59,393

2,006
828

15,612
2,048

11,163
469

38,439
13,849

5,086

38,283

37,641

111,681

4,833
9,919

52,385
90,668

91,551
129,192

158,588
270,269

Within 1 year
£m

One to Two
years
£m

Two to Three
years
£m

Three to Four
years
£m

Four to Five
Years
£m

Five to 15
years
£m

Over 15
years
£m

Total
£m

3,677
3,539
5,137

2,458
2,151
2,329

2,383
2,136
1,489

2,328
2,036
1,034

2,324
1,945
687

21,247 21,849 56,266
11,200 39,960
16,953
12,693
1,607

410

Insurance contract and participating
investment contract liabilities
Non-participating investment contract liabilities
Total contract liabilities

12,353

6,938

6,008

5,398

4,956 39,807 33,459

108,919

1,401
13,754

1,053
7,991

2,559
8,567

3,622
9,020

4,275 46,859
9,231 86,666

81,419

141,188
114,878 250,107

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).

The amounts from insurance and investment contract liabilities that are payable on demand are set out below.

Insurance contracts - Life risk
Insurance contracts - Participating
Non-participating investment contract liabilities

Amount
payable on
demand
£m

2023

Carrying
value
£m

Amount
payable on
demand
£m

2022

Carrying
value
£m

11,378
38,246
158,514
208,138

11,324
38,131
158,588
208,043

9,559
9,549
39,213 39,626
141,188
189,724 190,363

140,952

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(ii) Analysis of maturity of financial assets
The following table provides an analysis, by maturity date of the principal, of the carrying value of financial assets which
are available to fund the repayment of liabilities as they crystallise.

Fixed maturity securities
Equity securities
Other investments
Loans1
Cash and cash equivalents
Total financial assets

On demand
or within 1
year
£m

23,667
—
36,076
6,270
17,273
83,286

One to five
years
£m

Over five
years
£m

No
fixed
term
£m

2023

Total
£m

On demand
or within 1
year
£m

One to five
years
£m

Over five
years
£m

Restated1
2022

Total
£m

No
fixed
term
£m

32,154
—
429
5,205
—
37,788

58,067
—
2,383
20,390
—
80,840

—
92,572
482
19
—
93,073

113,888
92,572
39,370
31,884
17,273
294,987

18,961 33,075 51,740

— 103,776
— 85,790 85,790
—
181 34,520
30,894
— 29,633
5,388
22,505
— 22,505
77,748 38,291 74,214 85,971 276,224

—
582
4,634
—

2,863
19,611
—

1. The 2022 comparative results have been restated following the adoption of IFRS 17 (see note 1). Policy loans in scope of IFRS 17 totalling £14 million have been reallocated from loans to insurance

contract and participating investment contract liabilities.

The assets above are analysed in accordance with the earliest possible redemption date of the instrument at the initiation
of the Group. Where an instrument is transferable back to the issuer on demand, such as most unit trusts or similar types
of investment vehicle, it is included in the ‘On demand or within 1 year’ column. Debt securities with no fixed contractual
maturity date are generally callable at the option of the issuer at the date the coupon rate is reset under the contractual
terms of the instrument. The terms for resetting the coupon are such that we expect the securities to be redeemed at this
date, as it would be uneconomic for the issuer not to do so, and for liquidity management purposes we manage these
securities on this basis. The first repricing and call date is normally ten years or more after the date of issuance. Most of
the Group’s investments in equity securities and fixed maturity securities are market traded and therefore, if required,
can be liquidated for cash at short notice.

(e) Life insurance risk
Life insurance risk in the Group arises through its exposure to mortality, morbidity and longevity risk and exposure to
worse than anticipated operating experience on factors such as persistency levels, exercising of policyholder options and
management and administration expenses.

The Group chooses to take measured amounts of life insurance risk provided that the relevant business has the
appropriate core skills to assess and price the risk and adequate returns are available. The Group’s underwriting strategy
and appetite is communicated via specific policy statements, related business standards and guidelines. Life insurance
risk is managed primarily at business unit level with oversight at the Group level.

The Group's life insurance risk continues to be dominated by exposure from our UK business. Longevity risk remains the
most significant life insurance risk due to the Group’s annuity portfolio. We are also exposed to longevity risk through the
Aviva Staff Pension Scheme, to which our economic exposure has been reduced since 2014 by entering into a longevity
swap covering the majority of pensioner in-payment scheme liabilities in force at the time. We purchase reinsurance for
some of the longevity risk relating to our annuity business and this also includes the bulk annuity buy-in transactions
with the Aviva Staff Pension Scheme that have been carried out since 2019, including two tranches in 2023.

We have reinsurance in place across all our businesses to reduce our net exposure to potential losses. In the UK we have
extensive quota share reinsurance in place on Individual Life Protection business and for UK Group Life Protection we
use surplus reinsurance for very large individual claims.

More generally, life insurance risks are believed to provide a significant diversification against other risks in the portfolio.
Life insurance risks are modelled within the internal capital model and are subject to sensitivity and stress and scenario
testing. COVID-19 has continued to present uncertainty, but overall we expect limited future impact to our business. The
potential impacts of climate change also present uncertainty regarding future insurance risk experience, and these are
considered when setting assumptions for future experience.

Recent persistency experience has been generally resilient to cost-of-living pressures and has not shown significant
deterioration in the short term. There remains some uncertainty about the potential for this to continue, which is being
monitored closely. External factors that may impact future persistency experience include prolonged high inflation and
interest rates, increased stock-market volatility and changes in legislation.

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The assumption setting and management of life insurance risks is governed by the Group-wide business standards
covering underwriting, pricing, product design and management, in-force management, claims handling and reinsurance.
The individual life insurance risks are managed as follows:

• Mortality and morbidity risks are managed through comprehensive medical underwriting, input and advice from

medical experts, as well as frequent monitoring and analysis of company experience. Reinsurance treaties are in place to
provide further mitigation.

• Longevity risk is managed through monitoring and analysis of the Group’s experience, as well as considering the latest
external industry data and emerging trends. While individual businesses are responsible for reserving and pricing for
annuity business, the Group monitors the exposure to this risk and any associated capital implications. The Group has
used reinsurance solutions to reduce the risks from longevity and continually monitors and evaluates emerging market
solutions to mitigate this risk further.

• Persistency risk is managed at a business unit level through frequent monitoring of company experience and

benchmarking against local market information. Generally, persistency risk arises from customers lapsing their policies
earlier than has been assumed. Lapses and their associated financial impact are reduced through appropriate design of
products to meet current and, where possible, future customer needs. Businesses also implement specific initiatives to
improve the retention of policies which may otherwise lapse.

• Expense risk is primarily managed by the business units through robust cost controls and efficiency targets, together

with frequent monitoring of expense levels.

Embedded derivatives
The Group is exposed to the risk of changes in policyholder behaviour due to the exercise of options, guarantees and
other product features embedded in its long-term savings products. These product features offer policyholders varying
degrees of guaranteed benefits at maturity or on early surrender, along with options to convert their benefits into
different products on pre-agreed terms. The extent of the impact of these embedded derivatives differs considerably
between business units and exposes Aviva to changes in policyholder behaviour in the exercise of options as well as
market risk.

Examples of each type of embedded derivative affecting the Group are:
• Options: call, put, surrender and maturity options, guaranteed annuity options, options to cease premium payment,

options for withdrawals free of market value adjustment, annuity options and guaranteed insurability options.

• Guarantees: embedded floor (guaranteed return), maturity guarantee, guaranteed death benefit, guaranteed minimum

rate of annuity payment and the 'no negative equity' associated with the Equity Release business; and

• Other: indexed interest or principal payments, maturity value, loyalty bonus.

The impact of these is reflected in the capital model and managed as part of the asset liability framework. Further
disclosure on financial guarantees and options embedded in contracts and their inclusion in insurance and investment
contract liabilities is provided in note 42.

(f) General insurance risk and health risk
The Group writes a balanced portfolio of general insurance risk (including personal motor, household, commercial motor,
property and liability), as well as global exposure to corporate specialty risks. This risk is taken on, in line with our
underwriting and pricing expertise, to provide an appropriate level of return for an acceptable level of risk. Underwriting
discipline and a robust governance process is at the core of the Group’s underwriting strategy.

The Group’s Health Insurance business (including private health insurance, critical illness cover, income protection and
personal accident insurance, as well as a range of corporate healthcare products) exposes the Group to morbidity risk
(the proportion of our customers falling sick) and medical expense inflation.

Provisions made for insurance liabilities are inherently uncertain. Due to this uncertainty, general and health insurance
reserves are regularly reviewed by qualified and experienced actuaries at the business unit and Group level in accordance
with the Group’s reserving framework. These and other key risks, including the occurrence of unexpected claims from a
single source or cause and inadequate reinsurance protection/risk transfer, are subject to an overarching risk
management framework and various mechanisms to govern and control our risks and exposures.

We recognise that the severity and frequency of weather-related events has the potential to adversely impact provisions
for insurance liabilities and our earnings, with the result that there is some seasonality in our results from period to
period. Large catastrophic (CAT) losses arising as a result of these events are explicitly considered in our economic capital
modelling to ensure we are resilient to such CAT scenarios, and this modelling considers the impact of climate change on
the frequency and severity of potential future events. The impact of actual weather-related losses compared to the
expected losses based on the long-term average was 2% worse (2022: 12% worse) for UK & Ireland General Insurance and
17% worse (2022: 35% worse) for Canada General Insurance.

More broadly, the materiality and time horizon over which climate-related risks and opportunities affect our business
depend on the specific insurance products, geographies and investments being considered. Notwithstanding that the
impact on general insurance liabilities is mitigated by the short-term nature of the business, the ability to re-price
annually, and by the Company’s reinsurance programmes, the physical effects of climate change will most likely result in
more risks and perils becoming either uninsurable or unaffordable over the longer term and the need for more urgent
action increases.

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Furthermore, as an insurer, the Company is able to influence customer behaviour through the coverage of products and
services provided and continues to develop climate-conscious products and services to incentivise climate-positive
behaviours.

There continues to be a significant degree of uncertainty in relation to business interruption claims arising from
COVID-19 and on-going test case litigation. On 17 October 2022, the High Court handed down its judgment on the
preliminary issues trial of Stonegate Pub Co Ltd vs MS Amlin Corp Member Ltd (and others) and related cases. Aviva was
not a party to the cases but is affected by the final outcome of these cases. The High Court ruled in favour of the parties
on different issues, and all parties initially appealed the majority of the preliminary decisions made by Justice Butcher.
Whilst the Greggs and Stonegate actions settled after the appeals on confidential terms the Court of Appeal heard the
remaining Various Eateries v Allianz appeals and on 16 January 2024 handed down judgment dismissing both parties
appeals. As a result the decisions of the High Court by Justice Butcher stand.

In Canada, we are party to a number of litigation proceedings, including class actions that challenge coverage under our
commercial property policies; however, we believe we have a strong argument that there is no pandemic coverage under
these policies.

The Group purchases reinsurance protection on its property portfolio that includes coverage for business interruption
and is collecting or seeking reinsurance recoveries of business interruption losses that are covered by reinsurance. The
Group's general insurance business does not have material underwriting exposure to Israel, Palestine, Russia or Ukraine,
and does not conduct operations in the affected regions.

The conflicts in Ukraine and Palestine and ongoing disruption to global supply chains have the potential to lead to
heightened claims inflation in 2024 and may increase the uncertainty associated with the cost of settling general
insurance claims. While the impacts of heightened claims inflation can be mitigated via new business pricing actions, our
ability to price for inflation is dependent on market, competitor and customer behaviour. The time lag between premium
earning and claims emergence means that some adverse impact on profitability could be expected.

Reinsurance strategy
Significant reinsurance purchases are reviewed annually at both business unit and Group level to verify that the levels of
protection being bought reflect any developments in exposure and the risk appetite of the Group. The basis of these
purchases is underpinned by analysis of capital, earnings and capital volatility, cash flow and liquidity and the Group’s
franchise value.

Detailed actuarial analysis is used to calculate the Group’s extreme risk profile and then design cost and capital efficient
reinsurance programmes to mitigate these risks to within agreed appetites. For businesses writing general insurance we
analyse the natural catastrophe exposure using various probabilistic catastrophe models which are benchmarked against
external catastrophe models widely used by the rest of the (re)insurance industry.

The Group cedes much of its worldwide catastrophe risk to third-party reinsurers. The Group purchases a Group-wide
catastrophe reinsurance programme to protect against its peak catastrophe losses in excess of a 1 in 250 year return
period (1 in 500 year return period in Canada). The total Group potential retained loss from its most concentrated
catastrophe exposure peril (Northern Europe Windstorm) is approximately £200 million on a per occurrence basis. The
Group purchases a number of general insurance business line specific reinsurance programmes with various retention
levels to protect both capital and earnings, and has reinsured 100% of its latent exposures to its historic UK employers’
liability and public liability business written prior to 31 December 2000.

(g) Operational risk (including conduct risk)
Operational risk is the risk of direct or indirect loss, arising from inadequate or failed internal processes, people and
systems, or external events including changes in the regulatory environment. We have limited appetite for operational
risk and aim to reduce these risks as far as is commercially sensible.

The Group continues to operate, validate and enhance its key operational controls and purchase insurance to minimise
losses arising from inadequate or ineffective internal processes, people and systems or from external events. The Group
maintains constructive relationships with its regulators around the world and responds appropriately to developments in
relation to key regulatory changes. The Operational Risk Appetite framework enables management and the Board to
assess the overall quality of the operational risk environment relative to risk appetite and where a Business Unit (or the
Group) are outside of appetite, require clear and robust plans to be put in place in order to return to appetite. As part of
our continual improvements of our risk management approach to keep pace with the business, increasing regulatory
expectations, and the macroeconomic and geo-political environment, we continue to implement risk and control
improvements throughout the organisation and across all three lines of defence. Those improvements continue to
strengthen and enhance our risk management capabilities and enable us to operate a stronger control environment,
improve understanding and accountabilities of risks, reduce the complexity of how the business thinks about and
manages risks and create greater collaboration across the first and second lines of defence to provide higher quality
advice and challenge.

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We continue to implement measures to improve and embed the Group's operational resilience in response to new PRA
and FCA operational resilience regulations (including outsourcing and critical third-party risk management) which will
come into effect on 31 March 2025. This includes a programme of resilience and crisis response testing to ensure
customer harm is minimised and the continued financial safety and soundness of Aviva’s business. Operational resilience
disciplines and assessments have been used in response to global events, including: changes to the geo-political
environment, financial market instability and the continuity of winter power supplies.

We rely on several outsourcing providers for critical business processes, customer servicing, investment operations and
IT support. To manage the risk of failure of a critical outsourcing provider, businesses are required to identify business
critical outsourced functions (internal and external) and for each to have exit and termination plans, and business
continuity and disaster recovery plans in place in the event of supplier failure, which are reviewed annually. We also carry
out supplier financial stability reviews at least annually.

Increasing geo-political tensions more generally have heightened the risk of cyber security attacks on the Group or its
suppliers, with the potential to cause business service interruption and/or data or intellectual property theft. In response
Aviva continues to actively monitor the threat environment and enhance its IT infrastructure and cyber controls to
identify, detect and prevent attacks. Aviva’s cyber defences are regularly tested using our own ‘ethical hacking’ team and
we have engaged our suppliers to put in place all reasonable measures so that services to Aviva and our customers are
protected.

Action is in hand to strengthen the control framework for the current risks Generative Artificial Intelligence presents as
well as exploit the opportunities for process efficiency, better pricing and underwriting, product personalisation and
improved customer service.

The Group actively monitors social and other media in order to manage misinformation about our business, products,
colleagues and customers should we be targeted by a hostile actor, taking corrective media action if necessary.

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, as well as wider geo-political and economic external events or trends, 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 of the product change.

The UK Prime Minister has indicated that a general election is going to take place in the second half of 2024, most likely in
the autumn. There will be heightened sensitivity around policy and associated risks during this period as a high profile
company.

We have designed our products and business processes so that we treat our customers fairly and we make use of various
metrics to assess our own performance, including customer advocacy, retention and complaints. Failure to treat our
customers fairly is counter to our purpose, values and culture and could result in regulatory action and penalties, as well
as impact our brands and/or reputation.

The FCA Consumer Duty ("the Duty") requires firms to ‘act to deliver good customer outcomes’ by managing the risks
posed to those good outcomes; these are our customer conduct risks. Achieving the expectations of the Duty aligns with
our strategic priority of becoming the go-to customer brand for Insurance, Wealth and Retirement. To meet the July 2023
implementation deadline, we enhanced our Group-wide conduct risk policy to strengthen the definition and scope to
reflect the Duty. We refreshed the conduct risk appetite and sharpened guidance around good customer outcomes and
foreseeable harm. Senior Manager role profiles and their statements of responsibility have been refreshed and we revised
strategy agendas to enhance the focus on customer outcomes and reviewed coverage of customer outcomes in
monitoring. We have updated our policies and business standards (including those relating to people and reward)
where needed.

The Group is directly exposed to the risks associated with operating an asset management business through its
ownership of Aviva Investors. The underlying risk profile of our asset management risk is derived from investment
performance, specialist investment professionals and leadership, product development capabilities, fund liquidity, margin,
client retention, regulatory developments, fiduciary and contractual responsibilities. Funds invested in illiquid assets such
as commercial property are particularly exposed to liquidity risk. The risk profile is regularly monitored.

A client relationship team is in place to manage client retention risk, while all new asset management products undergo a
review and approval process at each stage of the product development process, including approvals from legal,
compliance and risk functions. Investment performance against client objectives relative to agreed benchmarks is
monitored as part of our investment performance and risk management process, and subject to further independent
oversight and challenge by a specialist risk team, reporting directly to the Aviva Investors’ Chief Risk Officer.

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(h) Risk and capital management
(i) Sensitivity test analysis
The Group uses a number of sensitivity tests to understand the volatility of earnings, the volatility of its capital
requirements, and to manage its capital more efficiently. Sensitivities to economic and operating experience are regularly
produced on the Group’s key financial performance metrics to inform the Group’s decision making and planning
processes, and as part of the framework for identifying and quantifying the risks to which each of its business units, and
the Group as a whole, are exposed.

(ii) Life insurance and investment contracts
The nature of long-term business is such that a number of assumptions are made in compiling these financial statements.
Assumptions are made about investment returns, expenses, mortality rates and persistency in connection with the in-
force policies for each business unit. Assumptions are best estimates based on historic and expected experience of the
business. A number of the key assumptions for the Group’s central scenario are disclosed elsewhere in these statements.

(iii) General insurance and health business
General insurance and health claim liabilities are estimated by using standard actuarial claims projection techniques.
These methods extrapolate the claims development for each accident year based on the observed development of
earlier years. In most cases, no explicit assumptions are made as projections are based on assumptions implicit in
the historic claims.

(iv) Sensitivity test results
Illustrative results of sensitivity testing for long-term business, general insurance and health business and the fund
management and non-insurance business are set out below. For each sensitivity test the impact of a reasonably possible
change in a single factor is shown, with other assumptions left unchanged. See below for further details on the limitations
of the sensitivity analysis. The sensitivity of the net IAS 19 surplus to discount rates is provided in note 46(b)(iii).

Sensitivity factor

Description of sensitivity factor applied

Market risk variables

Interest rate and investment return

Credit spreads

The impact of a change in market interest rates by a 1% increase or decrease. The test allows
consistently for similar changes to investment returns and movements in the market value of
backing fixed interest securities.

The impact of a 0.5% increase or decrease in credit spreads over risk-free interest rates on
corporate bonds and other non-sovereign credit assets, also allowing for the consequential
impact on liability valuations. Commercial mortgages and equity release mortgages are included
in this sensitivity.

Equity market values
Property market values

The impact of a 10% increase or decrease in equity market values.
The impact of a 10% increase or decrease in property market values.

Underwriting risk variables

Expenses
Lapses/surrenders
Assurance mortality/morbidity
Annuitant mortality
Gross loss ratios

The impact of an increase in maintenance expenses by 10%.
The impact of an increase in lapse or surrender rates by 10%.
The impact of an increase in mortality/morbidity rates for assurance contracts by 2%.
The impact of a reduction in mortality rates for annuity contracts by 2%.
The impact of an increase in gross loss ratios for general insurance and health business by 5%.

Market risk variables
For business where the change in market risk variables could impact on profit, the following table presents how a possible
shift in those variables might impact insurance and investment contract balances, the corresponding investment assets,
profit before tax and shareholders' equity after tax, all net of reinsurance. For business (including with-profits funds and
unit-linked contracts) where changes in the market risk variables result in movements that offset to nil, having no overall
impact on profit or shareholders' equity, the offsetting movements in the insurance and investment contract balances
and investment assets are excluded from this sensitivity analysis. Impacts on the Group's pension schemes are also
excluded:

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Net insurance/
investment contracts

balances Investment
assets
profit or
loss
£m

Profit or
loss
£m

CSM
£m

2023

2022

Total profit
before tax
£m

Shareholder’s
equity after
tax
£m

Net insurance
/investment contracts
balances

CSM
£m

Profit or
loss
£m

Investment
assets
profit or
loss
£m

Total profit
before tax
£m

Shareholder’s
equity after
tax
£m

—
—

4,844
(5,734) 7,056

(5,964)

(1,120)
1,322

(843)
996

— 4,847
(5,779)
—

(6,014)
7,136

(1,167)
1,357

(931)
1,084

1,438

(2,151)

(713)

(533)

1,407

(1,976)

(569)

(463)

(9)

(1,808) 2,579

771

573

(10)

(1,810)

2,414

604

492

(39)

(380)

194

(186)

(135)

(34)

(377)

191

(186)

(148)

100 bps increase in interest rate
100 bps decrease in interest rate
50 bps increase in corporate bond
spread

50 bps decrease in corporate bond
spread

10% increase in market value of
equity

10% decrease in market value of
equity

10% increase in value of property

(17)

(82)

102

(20)

(104)

128

10% decrease in value of property

(102)

(20)

(16)

105

(128)

378

(188)

388

(185)

203

190

142

(23)

162

(19)

Underwriting risk variables
The following table presents information on how reasonably possible changes in assumptions made by the Group with
regard to underwriting risk variables impact insurance and reinsurance contract balances, profit before tax and
shareholders’ equity after tax. The affected underlying insurance contracts and related reinsurance contracts are
measured under IFRS 17 and the impacts on fulfilment cash flows (FCF) and on the CSM are shown separately as these
components are not fully symmetrically impacted by possible changes in assumptions.

2023

Life insurance business

10% increase in expenses
10% increase in lapse rates
2% increase in assurance mortality
2% decrease in annuitant mortality
General insurance and health business

10% increase in expenses
5% increase in gross loss ratios

2022

Life insurance business

10% increase in expenses
10% increase in lapse rates
2% increase in assurance mortality
2% decrease in annuitant mortality
General insurance and health business

10% increase in expenses
5% increase in gross loss ratios

Insurance contracts balances

Reinsurance contracts balances

FCF
£m

CSM Profit or loss
£m

£m

FCF
£m

CSM Profit or loss
£m

£m

Total profit
before tax
£m

Shareholder’s
equity after
tax
£m

(243)
(16)
(212)
(357)

(126)
(300)

273
(13)
243
461

30
(29)
31
104

—
—

(126)
(300)

3
(38)
138
169

—
14

(6)
56
(164)
(258)

(3)
18
(26)
(89)

27
(11)
5
15

21
(8)
4
11

—
—

—
14

(126)
(286)

(53)
(217)

Insurance contracts balances

Reinsurance contracts balances

FCF
£m

CSM Profit or loss
£m

£m

FCF
£m

CSM Profit or loss
£m

£m

Total profit
before tax
£m

Shareholder’s
equity after
tax
£m

(233)
(12)
(179)
(347)

(129)
(291)

263
(8)
201
440

30
(20)
22
93

—
—

(129)
(291)

3
(43)
123
142

—
20

(6)
61
(140)
(214)

—
—

(3)
18
(17)
(72)

—
20

27
(2)
5
21

21
(2)
4
16

(129)
(271)

(53)
(213)

For general insurance and health, the impact of the expense sensitivity on profit also includes the increase in ongoing
administration expenses, in addition to the increase in the claims handling expense provision.

Limitations of sensitivity analysis
The tables above demonstrate the effect of an instantaneous change in a key assumption while other assumptions remain
unchanged. In reality, changes may occur over a period of time and 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 financial 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 allocations and taking other protective action.

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Notes to the consolidated financial statements

Other limitations in the above sensitivity analysis include the use of hypothetical market movements to demonstrate
potential risks 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 parameters move in an identical fashion.

Specific examples:

a. The sensitivity analysis assumes a parallel shift in interest rates at all terms. These results should not be used to

calculate the impact of non-parallel yield movements.

b. The sensitivity analysis assumes equivalent assumption changes across all markets i.e. UK and non-UK yield curves

move by the same amounts, equity markets across the world rise or fall identically

Additionally, the movements observed by assets held by Aviva will not be identical to market indices so caution is required
when applying the sensitivities to observed index movements.

55 – Derivative financial instruments and hedging
This note gives details of the various financial instruments the Group uses to mitigate risk.

The Group uses a variety of derivative financial instruments, including both exchange traded and over-the-counter
instruments, in line with the Group’s 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.

In the narrative and tables below, figures are given for both the notional amounts and fair values of these instruments.
The notional amounts reflect the aggregate of individual derivative positions on a gross basis and so give an indication of
the overall scale of the derivative transaction. The fair values represent the gross carrying values at the year end for each
class of derivative contract held (or issued) by the Group.

The fair values do not provide an indication of credit risk, as many over-the-counter transactions are contracted and
documented under ISDA (International Swaps and Derivatives Association, Inc.) master agreements or their equivalent.
Such agreements are designed to provide a legally enforceable set-off in the event of default, which reduces credit
exposure. In addition, the Group has collateral agreements in place between the individual Group entities and relevant
counterparties. See note 56 for further information on collateral and net credit risk of derivative instruments.

(a) Instruments qualifying for hedge accounting
The Group adopted IFRS 9 from 1 January 2023 and it has formally assessed and documented the hedge effectiveness for
financial instruments designated as hedge instruments in accordance with IFRS 9. For the 2022 comparatives, the Group
applied the requirements of IAS 39 Financial Instruments: Recognition and Measurement for hedge accounting.

(i) Net investment hedges
To reduce its exposure to foreign currency risk, the Group has designated a portion of its Euro and Canadian dollar
denominated debt as hedging instruments to hedge the currency components of its net investments in foreign subsidiaries.
The matching currency denomination of the assets and liabilities of the subsidiaries and the loan liabilities in the Group
leads to an economic relationship, where a change in the value of the asset as a result of changes in the foreign exchange
rate will be offset directly by an opposite change in the value of the liability. The maturity analysis of the liabilities is
presented in note 47. The Group’s net investments are designated into a hedge relationship in Canada such that the value
hedged matches exactly the nominal amounts of the hedging instrument being used. The Group has applied a hedge ratio
of 1:1 (2022: 1:1) for the net investment hedge in Canada. The Group applied a hedge ratio of 0.54:1 (2022: 1:1) to the net
investment hedge for Ireland. During 2023, €900 million subordinated notes were designated into the net investment
hedge to replace the €500 million senior notes that matured in the year. The hedge ratio has reduced as a result.

At inception, the nature of the economic relationship is such that the net investment hedge is expected to be highly
effective, however, ineffectiveness or discontinuation of the hedging relationship may arise should a disposal of a foreign
subsidiary included in the net investment hedge occur during the period.

Other risks except for currency risk associated with the Group's net investments in its foreign subsidiaries are not
covered by these hedging arrangements.

(ii) Cash flow hedges
The Group applies cash flow hedging to a highly probable forecast transaction. The currency component of the
derivatives used to hedge currency risk from the expected $SGD 1.4 billion sales proceeds of Aviva Singapore
(2022: no cash flow hedging) is designated in cash flow hedge. The currency derivatives convert the $SGD proceeds to
Sterling at predetermined rate at maturity, and there is an economic relationship between the hedged item and the
hedging instrument due to the matching currency.

The Group has established a hedge ratio of 1:1 since the notional of the currency derivatives match the expected proceeds
from the disposal. No ineffectiveness is expected from the cash flow hedge. The forward element of the currency
derivatives of £0.7 million, representing the time value of money, is excluded from the hedge relationship and deferred in
the hedge instruments reserve until disposal.

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Notes to the consolidated financial statements

(iii) Financial impacts of hedge accounting
The following hedging instruments for the net investment hedges and cash flow hedge are included within borrowings
and financial investments respectively in the statement of financial position.

Net investment hedges

0.625% €500 million senior notes 20231
1.875% €750 million senior notes 20272
3.375% €900 million subordinated notes 20453
4.000% C$450 million subordinated notes 2030

Cash flow hedge

SGD1,444 million currency derivatives4

Total hedging instruments

2023

Change as a
result of
foreign
currency
movement
£m

2022

Change as a
result of
foreign
currency
movement
£m

Carrying
amount
£m

—
(6)
(6)
(6)
(18)

(4)
(22)

278
409
—
274
961

—
961

12
17
—
9
38

—
38

Carrying
amount
£m

Note

47
47
47
47

—
401
378
265
1,044

(4)

1,040

1. Of the €500 million senior notes, a nominal amount of €315 million was designated in a net investment hedge in 2022.
2. Of the €750 million senior notes, a nominal amount of €464 million has been placed in a net investment hedge.
3. Of the €900 million subordinated notes, a nominal amount of €436 million has been placed in a net investment hedge.
4. The maturity date of the currency derivatives is 27 March 2024, with an average forward of 1.66. The change as a result of foreign currency movement includes £0.7 million for the forward element

of the currency derivatives.

The following hedged items were placed in a net investment hedges and cash flow hedge as at the year end:

Net investment hedges

Ireland
Canada

Cash flow hedge
Total hedged items

Cumulative
foreign
currency
movement
£m

Carrying
amount
£m

2023

Change as a
result of
foreign
currency
movement
£m

Cumulative
foreign
currency
movement
£m

Carrying
amount
£m

2022

Change as a
result of
foreign
currency
movement
£m

779
265
1,044

(4)

1,040

(237)
(7)
(244)
4
(240)

12
6
18
4
22

687
274
961
—
961

(249)
(13)
(262)
—
(262)

(29)
(9)
(38)
—
(38)

Currency

EUR
CAD

SGD

The effects of hedge accounting on the Group's financial performance can be summarised as follows:

Net investment hedges

Ireland
Canada

Cash flow hedge
Total hedged items

Currency

EUR
CAD

SGD

2023

Translation
gain/(loss)
recognised in
currency
translation
reserve
£m

Change in
value of
hedging
instrument
recognised in
OCI
£m

Hedge
ineffectiveness
recognised in
profit or loss
£m

Amount
reclassified
from hedging
instrument
reserve to
profit or loss
£m

Translation
gain/(loss)
recognised in
currency
translation
reserve
£m

Change in
value of
hedging
instrument
recognised in
OCI
£m

Hedge
ineffectiveness
recognised in
profit or loss
£m

2022

Amount
reclassified
from hedging
instrument
reserve to
profit or loss
£m

(12)
(6)
(18)
(4)
(22)

12
6
18
4
22

—
—
—
—
—

29
9
38
—
38

(29)
(9)
(38)
—
(38)

—
—
—
—
—

(b) Derivatives
Except for the currency derivatives described in note 55(a), the Group did not apply hedge accounting to derivatives at
31 December 2023 or 2022.

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Notes to the consolidated financial statements

(i) The Group’s derivatives at 31 December were as follows:

OTC Forwards
OTC Interest rate and currency swaps

Foreign exchange contracts

OTC Forwards
OTC Swaps
OTC Options
OTC Swaptions
Exchange traded Futures

Interest rate contracts

OTC Options
Exchange traded Futures
Exchange traded Options

Equity/Index contracts
Credit contracts
Other
Total derivatives

Contract/
notional
amount
£m

53,262
11,894
65,156
—
50,647
142
—
9,643
60,432
2,222
9,708
1,391
13,321
1,158
16,405
156,472

2023

2022

Fair value
asset
£m

Fair value
liability
£m

Contract/
notional
amount
£m

Fair value
asset
£m

Fair value
liability
£m

465
369
834
—
2,129
—
—
219
2,348
82
150
137
369
39
402
3,992

—

—
—
(40)

(341) 44,705
11,316
(694)
56,021
(1,035)
—
(4,618) 53,758
150
842
8,829
(4,658) 63,579
6,707
11,527
1,469
19,703
5,418
14,770
159,491

(39)
(68)
(10)
(117)
(29)
(1,587)
(7,426)

1,027
200
1,227
—
2,483
1
41
89
2,614
162
180
158
500
30
545
4,916

(561)
(1,223)
(1,784)
—
(6,053)
—
(8)
(141)
(6,202)
(90)
(55)
(6)
(151)
(74)
(1,330)
(9,541)

Fair value assets of £3,992 million (2022: £4,916 million) are recognised as ‘Derivative financial instruments’ in note 28(a),
while fair value liabilities of £7,426 million (2022: £9,541 million) are recognised as ‘Derivative liabilities’ in note 48.

The Group’s derivative risk management policies are outlined in note 54.

(ii) The contractual undiscounted cash flows in relation to derivative liabilities have the following maturities:

Within one
year
£m

One to two
years
£m

Two to
three years
£m

Three to
four years
£m

Four to five
years
£m

2023

After five
years
£m

Within one
year
£m

One to two
years
£m

Two to
three years

Three to
four years
£m

Four to five
years
£m

2022

After five
years
£m

Derivative liabilities

1,046

631

597

569

567

5,721

1,973

965

747

693

658 8,009

(c) Collateral
Certain derivative contracts, primarily interest rate and currency swaps, involve the receipt or pledging of cash and non-
cash collateral. The amounts of cash collateral receivable or repayable are included in notes 29 and 48 respectively.
Collateral received and pledged by the Group is detailed in note 56.

56 – Financial assets and liabilities subject to offsetting, enforceable master netting agreements and similar
arrangements
(a) Offsetting arrangements
Financial assets and liabilities are offset in the statement of financial position when the Group has a legally enforceable
right to offset and has the intention to settle the asset and liability on a net basis, or to realise the asset and settle the
liability simultaneously.

Aviva mitigates credit risk in derivative contracts by entering into collateral agreements, where practical, and into ISDA
master netting agreements for each of the legal entities to facilitate its right to offset credit risk exposure. The credit
support agreement will normally dictate the threshold over which collateral needs to be pledged by Aviva or its
counterparty.

Derivative transactions requiring Aviva or its counterparty to post collateral are typically the result of over-the-counter
derivative trades, comprised mostly of interest rate swaps, currency swaps and credit default swaps. These transactions
are conducted under terms that are usual and customary to standard long-term borrowing, derivative, securities lending
and securities borrowing activities. The derivative assets and liabilities in the table below are made up of the contracts
described in detail in note 55.

Aviva participates in a number of stock lending and repurchase arrangements. In some of these arrangements cash is
exchanged by Aviva for securities and a related receivable is recognised within Loans to banks in note 25. These
arrangements are reflected in the tables below. In instances where the collateral is recognised in the statement of
financial position, the obligation for its return is included within Payables and other financial liabilities in note 48.

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Notes to the consolidated financial statements

In other arrangements, securities are exchanged for other securities. The collateral received must be in a readily
realisable form, such as listed securities, and is held in segregated accounts. Transfer of title always occurs for the
collateral received. In many instances, however, no market risk or economic benefit is exchanged and these transactions
are not recognised in the statement of financial position in accordance with our accounting policies, and accordingly not
included in the following tables.

Amounts subject to enforceable netting arrangements

Derivative financial assets
Loans to banks and repurchase arrangements
Total financial assets
Derivative financial liabilities
Other financial liabilities
Total financial liabilities

Amounts subject to enforceable netting arrangements

Derivative financial assets
Loans to banks and repurchase arrangements
Total financial assets
Derivative financial liabilities
Other financial liabilities
Total financial liabilities

Offset under IAS 32

Net amounts
reported in the
statement of
financial
position
£m

Amounts
offset
£m

—
—
—
—
—
—

2,618
4,850
7,468
(5,428)
—
(5,428)

Offset under IAS 32

Net amounts
reported in the
statement of
financial
position
£m

Amounts
offset
£m

—
—
—
—
—
—

3,404
4,481
7,885
(6,404)
—
(6,404)

Gross
amounts
£m

2,618
4,850
7,468
(5,428)

—

(5,428)

Gross
amounts
£m

3,404
4,481
7,885
(6,404)
—
(6,404)

Amounts under a master netting agreement
but not offset under IAS 32

2023

Financial

instruments Cash collateral
£m

£m

(1,505)

—

(1,505)
2,078
—
2,078

(173)
(300)
(473)
68
—
68

Securities
collateral
received/
pledged
£m

(82)
(4,550)
(4,632)
2,477
—
2,477

Net amount
£m

858
—
858
(805)
—
(805)

2022

Amounts under a master netting agreement
but not offset under IAS 32

Financial

instruments Cash collateral
£m

£m

(1,797)
—
(1,797)
2,281
—
2,281

(272)
(300)
(572)
72
—
72

Securities
collateral
received/
pledged
£m

(55)
(4,181)
(4,236)
3,358
—
3,358

Net amount
£m

1,280
—
1,280
(693)
—
(693)

Derivative assets are recognised as Derivative financial instruments in note 28(a), while fair value liabilities are recognised
as Derivative liabilities in note 48. £1,374 million (2022: £1,512 million) of derivative assets and £1,998 million
(2022: £3,137 million) of derivative liabilities are not subject to master netting agreements and are therefore excluded from
the table above.

Amounts receivable related to securities lending and reverse-repurchase arrangements totalling £4,865 million
(2022: £4,481 million) are recognised within Loans to banks in note 25.

Other financial liabilities presented above represent liabilities related to repurchase arrangements recognised within
Obligations for repayment of cash collateral received in note 48.

(b) Collateral
In the tables above, the amounts of assets or liabilities presented in the consolidated statement of financial position are
offset first by financial instruments that have the right to offset under master netting or similar arrangements with any
remaining amount reduced by the amount of cash and securities collateral. The actual amount of collateral may be
greater than amounts presented in the tables above in the case of over-collateralisation.

The total amount of collateral received which the Group is permitted to sell or repledge in the absence of default,
excluding collateral related to balances recognised within Loans to banks disclosed in note 25, was £6,827 million
(2022: £4,877 million), all of which other than £245 million (2022: £322 million) is related to securities lending
arrangements. Collateral of £1,050 million (2022: £1,568 million) has been received related to balances recognised within
Loans to banks in note 25. £77 million (2022: £56 million) included within cash and cash equivalents has been pledged as
collateral in respect of the Group’s UK pension schemes. Under the agreements, cash is only transferred to the pension
schemes to fund bulk annuity buy-in transactions with Aviva Life & Pensions UK Limited or in the event of the Group
defaulting on its pension obligations. The value of collateral that was actually sold or repledged in the absence of default
was £nil (2022: £nil).

The level of collateral held is monitored regularly, with further collateral obtained where this is considered necessary to
manage the Group’s risk exposure. The fair values of collateral received approximate to their carrying amounts.

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Notes to the consolidated financial statements

57 – Related party transactions
This note gives details of the transactions between Group companies and related parties which comprises our joint
ventures, associates and staff pension schemes.

The Group undertakes transactions with related parties in the normal course of business. Loans to related parties are
made on normal arm’s-length commercial terms.

(a) Services provided to, and by related parties

Associates
Joint ventures
Employee pension schemes
Total services

Income
earned
in the year
£m

Expenses
incurred in
the year
£m

Payable at
year end
£m

59
56
15
130

—
—
—
—

2023

Receivable
at
year end
£m

3
137
4
144

Income
earned
in the year
£m

Expenses
incurred in
the year
£m

Payable at
year end
£m

39
34
10
83

—
—
—
—

2022

Receivable
at
year end
£m

9
135
5
149

Transactions with joint ventures in the UK relate to the property management undertakings, the most material of which
are listed in note 19(a)(iii). The Group has equity interests in these joint ventures, together with the provision of
administration services and financial management to many of them. Our fund management companies also charge fees to
these joint ventures for administration services and for arranging external finance.

Key management personnel of the Company may from time to time purchase insurance, savings, asset management or
annuity products marketed by group companies on equivalent terms to those available to all employees of the Group. In
2023, other transactions with key management personnel were not deemed to be significant either by size or in the
context of their individual financial positions.

Our UK fund management companies manage most of the assets held by the Group’s main UK staff pension scheme, for
which they charge fees based on the level of funds under management. The main UK scheme holds investments in
Group-managed funds and insurance policies with other group companies, as explained in note 46(i). As at
31 December 2023, the Friends Provident Pension Scheme (FPPS), acquired in 2015 as part of the acquisition of the
Friends Life business, held an insurance policy of £431 million (2022: £432 million) issued by a group company, which
eliminates on consolidation. In 2022, Aviva Group Holdings Limited provided a short term loan of £88 million to FPPS.
During the year to 31 December2023 the remaining balance was settled.

The related parties’ receivables are not secured and no guarantees were received in respect thereof. The receivables will
be settled in accordance with normal credit terms.

During the year, the Aviva Staff Pension Scheme (ASPS) completed two (2022: two) bulk annuity buy-in transactions with
Aviva Life & Pensions UK Limited (AVLAP), a group company. Total premiums of £482 million (2022: £1,324 million) were
paid by the scheme to AVLAP, with AVLAP recognising best estimate liabilities of £427 million
(2022 restated: £1,130 million). After allowing for initial expenses, risk adjustment and CSM, no profit or loss was
recognised on initial recognition (2022 restated: £nil).

The ASPS recognised total plan assets of £368 million (2022: £891 million), with the difference between the plan assets
recognised and the premiums paid being recognised as an actuarial loss through Other Comprehensive Income. As at
31 December 2023, AVLAP recognised cumulative best estimate liabilities of £3,535 million (2022 restated: £3,155 million)
in relation to buy-in transactions with the ASPS which have been included within the Group's insurance contract
liabilities, and the ASPS held a transferable plan asset of £3,448 million (2022: £2,875 million) which does not eliminate on
consolidation. The AVLAP 2022 liabilities comparative results have been restated from those previously published
following the adoption of IFRS 17, as described in note 1.

(b) Key management compensation
The total compensation to those employees classified as key management, being those having authority and responsibility
for planning, directing and controlling the activities of the Group, including the executive and non-executive directors is
as follows:

Salary and other short-term benefits1
Post-employment benefits
Equity compensation plans1
Total key management compensation

2023
£m

9.7
0.6
11.8
22.1

2022
£m

12.8
0.9
14.4
28.1

1. The cash component of 2022 bonus has been reallocated to salary and other short-term benefits from equity compensation plans

In 2022, roles within the management structure were reviewed and certain positions were determined to no longer be
persons with decision making responsibility. As a result, the number of individuals classified as key management
personnel reduced as at 31 December 2022. Information concerning individual directors’ emoluments, interests and
transactions is given in the Directors’ Remuneration Report.

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Notes to the consolidated financial statements

58 – Organisational structure
The following chart shows a simplified form of the organisational structure of the Group as at 31 December 2023. Aviva
plc is the holding company of the Group.

Parent company
Aviva plc

Subsidiaries
The principal subsidiaries of the Company as at 31 December 2023 are listed below by country of incorporation.

A complete list of the Group’s related undertakings. which comprises of subsidiaries, joint ventures, associates and other
significant holdings is contained within note 59.

Aviva plc

Aviva - COFCO
Life Insurance Company
Ltd2

Aviva Group
Holdings Ltd1

General
Accident plc3

Aviva Life
Holdings UK Ltd1

Aviva Investors
Holdings Ltd1

Aviva Central
Services UK Ltd1

Aviva
International
Holdings Ltd1

Aviva
Insurance Ltd3

Aviva
International
Insurance Ltd1

Singapore Life
Holdings Pte
Ltd5 and other
subsidiaries

UK & Ireland Life
subsidiaries

Investment
Management
subsidiaries

Aviva
Employment
Services Ltd1

Aviva Life
Insurance
Company India
Ltd4

Aviva UK
Digital Ltd1

UK & Ireland
General
Insurance
subsidiaries

Canada
General
Insurance
subsidiaries

Incorporated in England and Wales

1.
2. Incorporated in People's Republic of China
3. Incorporated in Scotland
4. Incorporated in India
5. Incorporated in Singapore

United Kingdom
Aviva Administration Limited
Aviva Central Services UK Limited
Aviva Employment Services Limited
Aviva Equity Release UK Limited
Aviva Health UK Limited
Aviva Insurance Limited
Aviva International Insurance Limited
Aviva Investors Global Services Limited
Aviva Investors UK Fund Services Limited
Aviva Life & Pensions UK Limited
Aviva Life Services UK Limited
Aviva Pension Trustees UK Limited
Aviva UK Digital Limited
Aviva Wrap UK Limited
Gresham Insurance Company Limited
Sesame Bankhall Group Limited
Succession Holdings Limited
The Ocean Marine Insurance Company Limited
Wealthify Group Limited

Canada
Aviva Canada Inc. and its principal subsidiaries:
Aviva Insurance Company of Canada
Aviva General Insurance Company
Elite Insurance Company
Pilot Insurance Company
Scottish & York Insurance Co. Limited
S&Y Insurance Company
Traders General Insurance Company

Ireland
Aviva Life and Pensions Ireland Designated Activity
Company
Aviva Insurance Ireland Designated Activity Company

Associates and Joint Ventures
The Group has ongoing interests in the following operations that are classified as joint ventures or associates, as a
complete list of the Group’s related undertakings comprising of subsidiaries, joint ventures, associates and other
significant holdings is contained within note 59. Further details of those operations that were most significant in 2023 are
set out in notes 19 and 20 to the financial statements.

China
Aviva-COFCO Life Insurance Company Limited 50%

Singapore
Singapore Life Holdings Pte Limited (24%) (entity held for
sale)

United Kingdom
The Group has interests in several property limited
partnerships. Further details are provided in notes 19, 20
and 27 to the financial statements.

Aviva plc

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Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

59 – Related undertakings
We are required to disclose certain information about the Group’s related undertakings which is set out in this note.

The definition of a subsidiary undertaking in accordance with the Companies Act 2006 is different from the definition
under IFRS. As a result, the related undertakings included within the list below may not be the same as the undertakings
consolidated in the Group IFRS financial statements. See accounting policies (D) Consolidation principles for further
detail on principles of consolidation and definition of joint ventures.

This note contains real asset fund entities that are owned by an external unit trust and managed by Aviva Investors. The
Group does not own equity in these entities and therefore a share class and ownership percentage are not disclosed.

The Group’s related undertakings along with the country of incorporation, the registered address, the classes of shares
held and the effective percentage of equity owned as at 31 December 2023 are disclosed below.

(a) Direct
The direct related undertakings of the Company as at 31 December 2023 are listed below:

Name of undertaking

Aviva-COFCO Life Insurance
Company Limited

Country of
incorporation

China

Registered address

Share class

% held

12/F & 15/F & 01, 06-09 Unit of 10F of Building No.20,
27/F of Building No.24, Middle East Third Ring Road,
Chaoyang District, Beijing, 100022, China

Ordinary shares

General Accident plc
Aviva Group Holdings Limited

United Kingdom Pitheavlis, Perth, Perthshire, PH2 0NH
United Kingdom St Helen’s, 1 Undershaft, London, EC3P 3DQ

Ordinary shares
Ordinary shares

100
100

(b) Indirect
The indirect related undertakings of the Company as at 31 December 2023 are listed below:

Company name

Australia

Share Class1 % held

Company name

Prolink Insurance Inc.

Share Class1 % held

Common

c/o TMF Corporate Services (Aust) Pty Limited, Suite 1 Level 11,
66 Goulburn Street, Sydney NSW 2000, Australia

555 Chabanel Ouest, Bureau 900, Montreal, QC H2N 2H8,
Canada

Aviva Investors Pacific Pty Limited

Ordinary

100

Aviva Agency Services Inc.

Common

100

Barbados

c/o USA Risk Group (Barbados) Limited, 6th Floor, CGI Tower,
Warrens, St. Michael, BB22026, Barbados

Victoria Reinsurance Company Limited.

Common

100

Canada

10 Aviva Way, Suite 100, Markham, ON, L6G0G1, Canada

2161605 Ontario Inc

9543864 Canada Inc.

Aviva Canada Inc.

Aviva General Insurance Company

Aviva Insurance Company of Canada

Aviva Warranty Services Inc.

Bay-Mill Specialty Insurance
Adjusters Inc.

Elite Insurance Company

Insurance Agent Service Inc.

Nautimax Limited

OIS Ontario Insurance Service Limited

Pilot Insurance Company

S&Y Insurance Company

Scottish & York Insurance Co. Limited

Traders General Insurance Company

Common

Ordinary

Common

100

Suite 1600, 925 W Georgia St, Vancouver, BC, V6C 3L2, Canada

Westmount West Services Inc

Ordinary

China

Units 1805-1807, 18th Floor, Block H Office Building, Phoenix
Land Plaza, No. A5 Yard, Shuguangxili, Chaoyang District,
Beijing, China

Aviva-Cofco Yi Li Asset Management
Co Limited

Ordinary

Czech Republic

5/482, Ve Svahu, Prague 4, 147 00, Czech Republic

AIEREF Renewable Energy s.r.o.

Ordinary

100

Denmark

c/o TMF Denmark, H.C. Andersens Boulevard 38, 3. th, 1553,
Copenhagen V, Denmark

AICT EUR Real Estate (DS) GP ApS

AICT EUR Real Estate (DS) LP K/S

Ordinary

100

France

20 PL Vendôme, Paris 75001, France

AXA LBO Fund IV Feeder

Private Equity
Fund

47 Rue du Faubourg Saint-Honoré, 75008, France

CGU Equilibre

Germany

FCP

100

100 King Street West, Floor 49, Toronto, ON, M5X 2A2, Canada

Aviva Investors Canada Inc.

Common

100

c/o TMF Deutschland AG, Wiesenhüttenstrasse 11, 60329,
Frankfurt am Main, Germany

150 King Street West, Suite #2401, P.O. Box 16, Toronto, ON,
M5H 1J9, Canada

Reschop Carré Hattingen GmbH

Ordinary

Aviva plc

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2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Company name

Share Class1 % held

Company name

Share Class1 % held

c/o WSWP Weinert GmbH, Theatinerstr. 31, 80333, Munich,
Germany

Georges Court, 54-62 Townsend Street, Dublin, DO2 R156,
Ireland

FPB Holdings GmbH

Ordinary

100

FPPE Fund Public Limited Company

Ordinary

100

Kapitalanlagegesellschaft MHB, Ferdinandstrasse 75, Hamburg,
DE-HH, 20095, DE, Germany

IFSC House, Custom House Quay, International Financial
Services Centre, Dublin, D01 R2P9, Ireland

Warburg Total Return Global

Unit Trust

Aviva Investors Euro Liquidity Fund

Liquidity Fund

Guernsey

PO Box 155 Mill Court, La Charroterie, St Peter Port, GY1 4ET,
Guernsey

Paragon Insurance Company
Guernsey Limited

Ordinary

PO Box 255, Trafalgar Court, Les Banques, St Peter Port, GY1
3QL, Guernsey

Aviva Investors Sterling Government
Liquidity Fund

Liquidity Fund

Aviva Investors Sterling Liquidity Fund

Liquidity Fund

Aviva Investors Sterling Liquidity
Plus Fund

Aviva Investors Sterling Standard
Liquidity Fund

Liquidity Fund

100

Balanced Commercial Property Trust
Limited

Ordinary

Aviva Investors US Dollar Liquidity Fund

Liquidity Fund

International House, 3 Harbourmaster Place, Dublin 1, Ireland

India

2nd Floor, Prakash Deep Building, 7 Tolstoy Marg, New Delhi,
110001, India

Merrion Managed Fund

Merrion Multi-Asset 30 Fund

Merrion Multi-Asset 50 Fund

Unit Trust

100

Aviva Life Insurance Company India
Limited

Ordinary

Italy

A-47 (L.G.F), Hauz Khas, New Delhi, Delhi, India

Sesame Group India Private Limited

Ordinary

100

Pune Office, Addresses 103/P3, Pentagon, Magarpatta City,
Hadapsar, Pune – 411013, India

Corse Vercelli, 40 - 20145, Milan, Italy

AICT EUR Infra Swift S.R.L.

Ordinary

100

Piazza della Repubblica 32, Milan, 20124, Italy

Innovo Renewables S.p.A.

Ordinary

100

Via Scarsellini 14, Milan, 20161, Italy

Aviva Italia Holding S.p.A

Ordinary

100

A.G.S. Customer Services (India)
Private Limited

Ireland

13-18 City Quay, Dublin 2, Ireland

Atrium Nominees Limited

Ordinary

100

Building 12, Cherrywood Business Park, Loughlinstown, Co
Dublin, D18 W2P5, Ireland

Jersey

11–15 Seaton Place, St Helier, JE4 0QH, Jersey

1 Liverpool Street Unit Trust

101 Moorgate Unit Trust

Unit Trust

22 Grenville Street, St. Helier, JE4 8PX, Jersey

Ordinary

100

Ordinary

100

Ordinary

100

Axa Sun Life Private Equity

Lekker Bolt Unit Trust

Slas Axa Private Equity

26 New Street, St Helier, JE2 3TE, Jersey

Succession Finance Jersey Limited

Succession Jersey Limited

Private Equity
Fund

Unit Trust

Private Equity
Fund

Ordinary

100

Succession Newco1 Jersey Limited

Succession Newco2 Jersey Limited

Ordinary

100

Ordinary

100

3rd Floor, One The Esplanade, St Helier, JE2 3QA, Jersey

Crieff Road Limited

FF UK Select Limited

Ordinary

100

Gaspé House, 66-72 Esplanade, St Helier, JE1 3PB, Jersey

Aviva DB Trustee Company Ireland
Designated Activity Company

Aviva DC Trustee Company Ireland
Designated Activity Company

Aviva Direct Ireland Limited

Aviva Driving School Ireland Limited

Aviva Group Services Ireland Limited

Aviva Insurance Ireland Designated
Activity Company

Aviva Life & Pensions Ireland Designated
Activity Company

Aviva Master Trust Ireland Designated
Activity Company

Aviva Retail Master Trust Ireland
Designated Activity Company

Aviva Undershaft Six Designated Activity
Company

Peak Re Designated Activity Company

Ordinary

100

Charlotte House, Charlemont Street, Dublin 2, Ireland

Mercer Diversified Retirement Fund

MGI UK Equity

OEIC

Friends First House, Cherrywood Science & Technology Park,
Loughlinstown, Dublin, Co. Dublin, Ireland

Ashtown Management Company Limited

Ordinary

100

1 Fitzroy Place Unit Trust

2 Fitzroy Place Unit Trust

10 Station Road Unit Trust

11-12 Hanover Square Unit Trust

20 Gracechurch Unit Trust

20 Station Road Unit Trust

30 Station Road Unit Trust

Unit Trust

Aviva plc

3.159

Annual Report and Accounts 2023

100

Aviva Investors E-RELI SCSp

Ordinary

100

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Company name

Share Class1 % held

Company name

30-31 Golden Square Unit Trust

50-60 Station Road Unit Trust

130 Fenchurch Street Unit Trust

Aviva Investors Jersey Unit Trusts
Management Limited

Barratt House Unit Trust

Bermondsey Yards Unit Trust

CCPF No.4 Unit Trust

Gracechurch Investment Unit Trust

Hams Hall Unit Trust

Irongate House Unit Trust

Lime Mayfair Unit Trust

Lime Property Fund Unit Trust

Longcross Jersey Unit Trust

New Broad Street House Unit Trust

Pegasus House and Nuffield House
Unit Trust

Southgate Property Unit Trust

The Designer Retail Outlet Centres
(Mansfield) Unit Trust

Unit Trust

Ordinary

Unit Trust

100

The Designer Retail Outlet Centres (York)
Unit Trust

Unit Trust

100

Unit Trust

100

The Designer Retail Outlet Centres
Unit Trust

IFC 5, St Helier, JF11ST, Jersey

Aviva Investors REaLM Social Housing
Unit Trust

Cannock Designer Outlet Unit Trust
(Jersey)

Lime Grove House, Green Street, St Helier, JE1 2ST, Jersey

The Southgate Unit Trust

Unit Trust

Luxembourg

1c Rue Gabriel Lippmann l-5365, Munsbach, Luxembourg

Patriarch Classic B&W Global Freestyle

FCP

2 Rue du Fort Bourbon, L1249, Luxembourg

AICT EUR Real Estate (DS) SARL

AICT EUR Real Estate (Foz) SARL

Aviva Investors Alternative Income
Solutions Investments S.A.

Aviva Investors Alternative Income
Solutions Limited Partnership

Aviva Investors Alternative Income
Solutions SCSP

Aviva Investors Asian Equity Income

Aviva Investors Climate Transition EUR
Infra SARL

Aviva Investors Climate Transition EUR
Infrastructure Fund

Aviva Investors Climate Transition EUR
Real Estate Fund

Aviva Investors Climate Transition EUR
Real Estate SARL

Ordinary

100

Partnership

100

Fund

100

SICAV

Ordinary

100

Fund

100

Fund

100

Aviva Investors Climate Transition GBP
Infrastructure Fund

Aviva Investors Climate Transition GBP
Real Estate Fund

Aviva Investors Climate Transition
Global Credit

Aviva Investors Climate Transition
Global Equity

Aviva Investors Emerging Markets Bond

Aviva Investors Emerging Markets
Corporate Bond

Aviva Investors Emerging Markets Local
Currency Bond

Aviva Investors Eur Returnplus

Aviva Investors European Corporate
Bond

Aviva Investors GBP Returnplus

Aviva Investors Global Convertibles
Absolute Return

Aviva Investors Global Emerging
Markets Core

Aviva Investors Global Emerging
Markets Equity Unconstrained

Aviva Investors Global Emerging
Markets Index

Aviva Investors Global Sovereign Bond

Aviva Investors Infrastructure Debt
Europe I S.A.

Aviva Investors Luxembourg

Aviva Investors Multi Strategy Target
Return

Aviva Investors Multi-Asset Alternative
Income S.A.

Aviva Investors Natural Capital
Transition Global Equity

Aviva Investors Perpetual Acht NL SARL

Aviva Investors Social Transition Global
Equity

Xtrackers II Eurozone Government Bond
15-30 UCITS ETF

16 Avenue de la Gare, L-1610, Luxembourg

AIEREF Holding 1 S.à.r.l.

AIEREF Holding 2 S.à.r.l.

Aviva Investors Alternative Income
Solutions General Partner S.à.r.l.

Aviva Investors Global Equity Endurance

Unit Trust

Aviva Investors Global High Yield Bond

Unit Trust

Aviva Investors Global Investment Grade
Corporate Bond

Ordinary

100

Aviva Investors EBC S.à.r.l.

Aviva Investors E-RELI (GP) SARL

Share Class1 % held

Fund

100

Fund

100

SICAV

100

SICAV

100

SICAV

100

SICAV

100

SICAV

Ordinary

SICAV

100

Ordinary

100

SICAV

Ordinary

SICAV

100

SICAV

Ordinary

100

Aviva Investors UK Equity Unconstrained

SICAV

2, Boulevard Konrad Adenauer, L1115 Luxembourg

Aviva plc

3.160

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1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Company name

Share Class1 % held

Company name

Aviva Investors European Renewable
Energy S.A.

Aviva Investors Luxembourg Services
S.à r.l.

Aviva Investors Perpetual Capital (GP)
SARL

Ordinary

100

Ordinary

100

Aviva Global Services (Management
Services) Private Ltd.

1 Raffles Quay, #27-13, South Tower, Singapore, 048583,
Singapore

Ordinary

100

Aviva Investors Asia Pte. Limited

Ordinary

100

4 Shenton Way, 01 SGX Centre 2, 068807, Singapore

Share Class1 % held

Ordinary

100

European Properties Sarl

Victor Hugo 1 S.à r.l.

Ordinary

100

24-26, Avenue de la Liberte, L-1930 Luxembourg

Greenman Open Fund

SICAV

37A Avenue JF Kennedy, L-1855, Luxembourg

Singapore Life Holdings Pte Ltd.

Singapore Life Ltd.

Spain

Ordinary

1D, 13 Edificio América Av. de Bruselas, 28108, Alcobendas,
Madrid, Spain

Abrdn SICAV II - European Smaller
Companies Fund

Invesco Funds - Invesco Sustainable
Global Structured Equity Fund

SICAV

Eólica Almatret S.L.

Ordinary

100

SICAV

c/o TMF Spain, calle Principe de Vergara 112, Planta 4a, 28002,
Madrid, Spain

46a Avenue John F Kennedy, L-1855, Luxembourg

Aviva Investors Polish Retail S.à r.l.

Ordinary

100

80, route d'Esch, L-1470, Luxembourg

Allspring (Lux) Worldwide Fund

SICAV

562, rue de Neudorf, L-2220, Luxembourg

Nordea 1 - Swedish Bond Fund

Nordea 1 - Swedish Short-Term Bond
Fund

SICAV

c/o Apex Fund Services, 3, rue Gabriel Lippmann, Munsbach,
L-5365, Luxembourg

Aviva Investors Debt Europe I S.A.

Ordinary

100

Mauritius

Les Cascades, Edith Cavell Street, Port Louis, Mauritius

Actis China Investment Company Limited

Ordinary

Netherlands

ASR Vermogensbeheer N.V., Archimedeslaan 10, 3584 BA
Utrecht, Netherlands

ASR Separate Account Mortgage Fund

Mutual Fund

Norway

c/o TMF Norway AS, Hagalokkveien 26, 1383, Asker, Norway

Kongsgard Alle 20 AS

Ordinary

100

Poland

AI Jana Pawla II 25, 00-854, Warsaw, Poland

Focus Park Piotrków Trybunalski sp.z
o.o.

Focus Mall Zielona Gora

Wroclaw BC sp. z.o.o

Inflancka 4b, 00-189, Warsaw, Poland

Aviva Services Spółka z ograniczoną
odpowiedzialnością

Ordinary

100

Ordinary

100

Ordinary

100

Plac Piłsudskiego 1 Warsaw, Mazowieckie, 00-078 Poland

Berryway Invest SL

Banbury Invest SL

Browhead Invest SL

Switzerland

Ordinary

100

Leutschenbachstrasse 45, 8050 Zurich, Switzerland

Aviva Investors Schweiz GmbH

Ordinary

100

United Kingdom

1 Filament Walk, Suite 203, London, SW18 4GQ, United Kingdom

Freetricity South East Limited

—

1 London Wall Place, London, EC2Y 5AU, United Kingdom

Schroder Dynamic Multi Asset Z Acc.

Schroder QEP US Core Fund

Unit Trust

1st Floor, Finlay House, 10-14 West Nile Street, Glasgow, G1 2PP,
United Kingdom

MacKenzie Investment Strategies Ltd.

Spence and Spence (Scotland) Limited

Ordinary

100

2nd Floor, 36 Broadway, London, SW1H 0BH, United Kingdom

Fred. Olsen CBH Limited

—

3a Dublin Meuse, Edinburgh, EH3 6NW, United Kingdom

PAR Forestry IV L.P.

Partnership

100

4th Floor, New London House, 6 London Street, London, EC3R
7LP, United Kingdom

Polaris U.K. Limited

Ordinary

4th Floor Pountney Hill House, 6 Laurence Pountney Hill,
London EC4R 0BL, United Kingdom

ES Alliance Bernstein Low Volatility
Global Equity Fund

OEIC

5 Lister Hill, Horsforth, Leeds, LS18 5AZ, United Kingdom

Astute Financial Advisers Limited

Tenet & You Limited

Tenet Business Solutions Limited

Tenet Client Services Limited

Ordinary

PBC Lodz SP zoo

Singapore

Unit Trust

100

Tenet Compliance Services Limited

Tenet Financial Services Limited

1 Harbourfront Avenue, #14-08 Keppel Bay Tower, 098632,
Singapore

Tenet Group Limited

Tenet Limited

Aviva Asia Management Pte. Ltd.

Ordinary

100

Tenet Mortgage Solutions

Aviva plc

3.161

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Share Class1 % held

Company name

Share Class1 % held

Company name

TenetConnect Limited

TenetConnect Services Limited

TenetLime Limited

Ordinary

8 Surrey Street, Norwich, NR1 3NG, United Kingdom

Aviva Central Services UK Limited

Aviva Health UK Limited

Aviva Insurance UK Limited

Aviva UKGI Investments Limited

Gresham Insurance Company Limited

Healthcare Purchasing Alliance Limited

London and Edinburgh Insurance
Company Limited

RAC Pension Trustees Limited

Solus (London) Limited

Synergy Sunrise (Broadlands) Limited

Ordinary

9-10 St Andrew Square, Edinburgh, EH2 2AF, United Kingdom

Criterion Tec Holdings Ltd

Criterion Tec Ltd

Ordinary

12 Throgmorton Avenue, London EC2N 2DL, United Kingdom

100

Blackrock ACS World ESG Insights
Equity Fund

BlackRock Growth Allocation Fund

BlackRock Market Advantage Fund

BlackRock Retirement Allocation Fund

OEIC

Unit Trust

OEIC

100

17-18 Hardgate, Haddington, EH41 3JS, United Kingdom

Forth Financial Services Limited

Ordinary

22 Bishopsgate, London, EC3A 6HX, United Kingdom

AXA Ethical Distribution Fund

AXA Framlington Global Sustainable
Managed Fund

OEIC

25 Cabot Square, Canary Wharf, London E14 4QA, United
Kingdom

MSIF Japanese Equity Fund

SICAV

100

45 Gresham Street, London, EC2V 7BG, United Kingdom

SVS BambuBlack Asia ex-Japan All-Cap
Fund

OEIC

50 Stratton Street, London, W1J 8LT, United Kingdom

Lazard Multicap UK Income Fund

OEIC

57-59 St James’s Street, London, SW1A 1LD, United Kingdom

Artemis UK Special Situations Fund

Unit Trust

180 Great Portland Street, London, W1W 5QZ, United Kingdom

Quantum Property Partnership (General
Partner) Limited

Quantum Property Partnership
(Nominee)

Ordinary

6600 Cinnabar Court, Daresbury Park, Daresbury, Warrington,
WA4 4GE, United Kingdom

BNet Ultra Ltd

ITS (Holdco) Limited

—

ITS Hammersmith & Fulham Ltd

ITS (MidCo) Limited

ITS Nottingham Ltd

ITS Technology Group

ITS Technology Group HoldCo

ITS Telecom Solutions Ltd

NextGenAccess Ltd

—

Building 1063 Cornforth Drive, Kent Science Park, Sittingbourne,
ME9 8PX, United Kingdom

Digital Greenwich Connect Ltd

—

Calton Square, 1 Greenside Row, Edinburgh, EH13AN, United
Kingdom

Baillie Gifford Investment Funds II ICVC-
Baillie Gifford UK Equity Core Fund

Baillie Gifford UK & Balanced Funds
ICVC-Baillie Gifford International Fund

OEIC

c/o Anseco Limited, The Green Easter Park, Benyon Road,
Reading, RG7 2PQ , United Kingdom

Homesun 2 Limited

Homesun 3 Limited

Homesun 4 Limited

Homesun 5 Limited

Homesun Limited

—

c/o Harper MacLeod LLP, The Cadoro, 45 Gordon Street,
Glasgow, G1 3PE, United Kingdom

c/o Innovus Whittington Hall, Whittington Road, Worcester,
WR5 2ZX, United Kingdom

Aviva Investors GR SPV1 Limited

Aviva Investors GR SPV3 Limited

Aviva Investors GR SPV 4 Limited

Aviva Investors GR SPV 5 Limited

Aviva Investors GR SPV 6 Limited

Aviva Investors GR SPV 7 Limited

Aviva Investors GR SPV 8 Limited

Aviva Investors GR SPV 9 Limited

Aviva Investors GR SPV 10 Limited

Aviva Investors GR SPV 11 Limited

Aviva Investors GR SPV 12 Limited

Aviva Investors GR SPV 13 Limited

Aviva Investors GR SPV 14 Limited

Aviva Investors GR SPV 15 Limited

Aviva Investors GR SPV16 Limited

Aviva Investors GR SPV17 Limited

Ordinary

c/o Interpath Ltd, 10 Fleet Place, London, EC4M 7RB, United
Kingdom

Plan 4 Wealth Limited

TMS Financial Solutions Limited

Ordinary

100

Exchange House, Primrose Street, London, EC2A 2HS, United
Kingdom

CT (Lux) Diversified Growth Fund

SICAV

100

—

100

15th Floor, 140 London Wall, EC2Y 5DN, United Kingdom

Brockloch Rig Windfarm Limited

Houghton Regis Management
Company Limited

Ordinary

100

Crystal Rig III Limited

—

Aviva plc

3.162

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Company name

Share Class1 % held

Company name

CT (Lux) European Growth & Income
Fund

CT Global Total Return Bond Fund

CT North American Equity Fund

SICAV

100

OEIC

Exchange Tower, 19 Canning Street, Edinburgh, EH3 8EH, United
Kingdom

Hoxton Campus LP

Hoxton General Partner LLP

Partnership

Share Class1 % held

Partnership

Cannock Designer Outlet Limited
Partnership

Old Bourchiers Hall New Road, Aldham, Colchester, C06 3QU,
United Kingdom

County Broadband Holdings Limited

County Broadband Limited

—

One Coleman Street, London, EC2R 5AA, United Kingdom

L&G Diversified Fund

Unit Trust

Forum 4 Solent Business Park Parkway, Whiteley, Fareham,
PO15 7AD, United Kingdom

Perpetual Park, Perpetual Park Drive, Henley-on-Thames, RG9
1HH, United Kingdom

1 Liverpool Street GP Limited

Ordinary

1 Liverpool Street Limited Partnership

Partnership

1 Liverpool Street Nominee 1 Limited

1 Liverpool Street Nominee 2 Limited

101 Moorgate GP Limited

101 Moorgate Limited Partnership

101 Moorgate Nominee 1 Limited

101 Moorgate Nominee 2 Limited

Midlands Regen I GP Limited

Ordinary

100

Grant Thornton UK LLP, 30 Finsbury Square, London, EC2P 2YU,
United Kingdom

Defined Returns Limited

NDF Administration Limited

Ordinary

100

Legal & General (Unit Trust Managers) Limited, PO Box 6080,
Wolverhampton, WV1 9RB, United Kingdom

L&G Multi-Index Eur III-NEA

L&G Multi-Index Eur IV-NEA

L&G Multi-Index Eur V-NEA

OEIC

100

Invesco Summit Responsible 2 Fund (UK)

Invesco Summit Responsible 5 Fund (UK)

OEIC

Pinesgate West, Lower Bristol Road, Bath, BA2 3DP, United
Kingdom

Truespeed Communications Limited

—

Pitheavlis, Perth, Perthshire, PH2 0NH, United Kingdom

AICT GBP Real Estate (Curtain House)
General Partner Limited

AICT GBP Real Estate (Curtain House)
Limited Partnership

Aviva (Peak No.1) UK Limited

Aviva Insurance Limited

Aviva Investors (FP) Limited

Aviva Investors (FP) LP

Aviva Investors (GP) Scotland Limited

Aviva Investors Climate Transition GBP
Real Estate General Partner Limited

Aviva Investors Climate Transition GBP
Real Estate Limited Partnership

Ordinary

100

Partnership

100

Ordinary

Partnership

Ordinary

100

Partnership

100

Partnership

100

Liontrust Fund Partners LLP, 2 Savoy Court, London, WC2R 0EZ,
United Kingdom

Aviva Investors Private Equity
Programme 2008 Partnership

Liontrust Sustainable Future Corporate
Bond Fund

Liontrust Sustainable Future European
Growth Fund

Liontrust Sustainable Future Global
Growth Fund

Liontrust Sustainable Future
Managed Fund

Liontrust Sustainable Future Managed
Growth Fund

Liontrust Sustainable Future UK
Growth Fund

Liontrust UK Ethical Fund

Cannock Consortium LLP

Cannock Designer Outlet (GP Holdings)
Limited

Cannock Designer Outlet (GP) Limited

Cannock Designer Outlet (Nominee 1)
Limited

Cannock Designer Outlet (Nominee 2)
Limited

OEIC

Partnership

Ordinary

Nations House, 3rd Floor, 103 Wigmore Street, London, W1U 1QS,
United Kingdom

Cannock Consortium Holdings Limited

Ordinary

OEIC

Medium Scale Wind No.2 Limited

Shakespeare House, 42 Newmarket Road, Cambridge, CB5 8EP,
United Kingdom

Hillswood Management Limited

Ordinary

St Helen’s, 1 Undershaft, London, EC3P 3DQ, United Kingdom

1 Fitzroy Place Limited Partnership

2 Fitzroy Place Limited Partnership

OEIC

2-10 Mortimer Street (GP No 1) Limited

2-10 Mortimer Street GP Limited

Partnership

Ordinary

2-10 Mortimer Street Limited Partnership

Partnership

10 Station Road LP

10 Station Road Nominee 1 Limited

10 Station Road Nominee 2 Limited

10-11 GNS Limited

Partnership

Ordinary

11-12 Hanover Square LP

Partnership

11-12 Hanover Square Nominee 1 Limited

11-12 Hanover Square Nominee 2 Limited

20 Gracechurch (General Partner)
Limited

20 Gracechurch Limited Partnership

Ordinary

Partnership

Ordinary

20 Station Road LP

100

Aviva plc

3.163

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Company name

Share Class1 % held

Company name

20 Station Road Nominee 1 Limited

20 Station Road Nominee 2 Limited

30 Station Road LP

30 Station Road Nominee 1 Limited

30 Station Road Nominee 2 Limited

30-31 Golden Square LP

30-31 Golden Square Nominee 1 Limited

30-31 Golden Square Nominee 2 Limited

41-42 Lowndes Square Management
Company Limited

50-60 Station Road LP

50-60 Station Road Nominee 1 Limited

50-60 Station Road Nominee 2 Limited

130 Fenchurch Street General
Partner Limited

Ordinary

Partnership

Ordinary

Partnership

Ordinary

Partnership

Ordinary

130 Fenchurch Street LP

Partnership

130 Fenchurch Street Nominee 1 Limited

130 Fenchurch Street Nominee 2 Limited

2015 Sunbeam Limited

AI Special PFI SPV Limited

ALPF Single Family Homes General
Partner Ltd

Ordinary

—

Ordinary

100

—

100

ALPF Single Family Homes LP

Partnership

100

Ascot Real Estate Investments GP LLP

Partnership

Ascot Real Estate Investments LP

Partnership

Aviva Investors Cautious Pension Fund

Aviva Investors Climate Transition
Global Equity Fund

Aviva Investors Climate Transition Real
Assets Fund

Aviva Investors Commercial Assets
GP Limited

Aviva Investors Commercial Assets
Nominee Limited

Aviva Investors Continental Euro Equity
Index Fund

Aviva Investors Corporate Bond Fund

Aviva Investors CTF Holdco1 Limited

Aviva Investors CTF Infrastructure
Midco 1 Limited

Aviva Investors Developed Asia Pacific
Ex Japan Equity Index Fund

Aviva Investors Developed Euro Ex UK
Equity Index Fund

Aviva Investors Developed Overseas
Gov BD Ex UK Ind Fund

Aviva Investors Developed World Ex UK
Equity Index Fund

Aviva Investors Distribution Life Fund

Aviva Investors EBC GP Limited

TTF

Ordinary

Aviva Investors EBC Limited Partnership

Partnership

Aviva Investors Emerging Market Equity
Core Fund

TTF

100

Company
limited by
guarantee

Ordinary

TTF

Aviva Investors Energy Centres
No.1 GP Limited

Aviva Investors Energy Centres No.1
Limited Partnership

Aviva Investors EPF ICVC

Aviva Investors Europe Equity Ex UK
Core Fund

Aviva Investors Europe Equity Ex UK
Fund

Aviva Investors European Property Fund

Aviva Investors Global Equity Alpha Fund

Aviva Investors Global Equity
Endurance Fund

Aviva Investors Global Equity Fund

Aviva Investors Global Equity
Income Fund

TTF

100

Aviva Investors Global Services Limited

Aviva Investors Ground Rent GP Limited

Ordinary

100

Aviva Investors Ground Rent
Holdco Limited

TTF

100

Aviva Investors Holdings Limited

Ordinary

TTF

100

TTF

100

TTF

100

Aviva Investors Index Linked Gilt Fund

Aviva Investors Index Linked Gilts Over
5 Years Index Fund

Aviva Investors Infrastructure GP
Limited

Aviva Investors Infrastructure Income B
Limited

Atlas Park Management Company
Limited

Aviva Brands Limited

Aviva Capital Partners Limited

Aviva Commercial Finance Limited

Aviva Company Secretarial Services
Limited

Aviva Credit Services UK Limited

Aviva Employment Services Limited

Aviva Europe UK Societas

Aviva Insurance Services UK Limited

Aviva International Holdings Limited

Aviva International Insurance Limited

Aviva Investors 30 70 Global Eq Ccy
Hedged Ind Fund

Aviva Investors 40 60 Global Equity
Index Fund

Aviva Investors 40 Spring Gardens
(General Partner) Limited

Aviva Investors 50 50 Global Equity
Index Fund

Aviva Investors 60 40 Global Equity
Index Fund

Aviva Investors Asia Pacific Ex Japan
Fund

Aviva Investors Balanced Life Fund

Aviva Investors Balanced Pension Fund

Share Class1 % held

TTF

OEIC

100

TTF

100

Ordinary

100

Ordinary

100

TTF

100

OEIC

—

TTF

100

TTF

100

TTF

100

TTF

100

Ordinary

100

Partnership

100

Fund

TTF

100

OEIC

TTF

OEIC

TTF

OEIC

Ordinary

TTF

100

Ordinary

100

—

Aviva plc

3.164

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Company name

Share Class1 % held

Company name

Aviva Investors Infrastructure Income C
Limited

Aviva Investors Infrastructure Income C
No.4E Limited

Aviva Investors Infrastructure Income C
No.4F Limited

Aviva Investors Infrastructure Income
Limited Partnership

Aviva Investors Infrastructure Income M
Limited

Aviva Investors Infrastructure Income M
No.4C Limited

Aviva Investors Infrastructure Income M
No.4D Limited

Aviva Investors Infrastructure Income
No.1 Limited

Aviva Investors Infrastructure Income
No.2 Limited

Aviva Investors Infrastructure Income
No.2B Limited

Aviva Investors Infrastructure Income
No.3 Limited

Aviva Investors Infrastructure Income
No.3B Limited

Aviva Investors Infrastructure Income
No.4A Limited

Aviva Investors Infrastructure Income
No.4B Limited

Aviva Investors Infrastructure Income
No.5 Limited

Aviva Investors Infrastructure Income
No.6 Limited

Aviva Investors Infrastructure Income
No.6a1 Limited

Aviva Investors Infrastructure Income
No.6B Limited

Aviva Investors Infrastructure Income
No.6B1 Limited

Aviva Investors Infrastructure Income
No.6c Limited

Aviva Investors Infrastructure Income
No.6c1 Limited

Aviva Investors Infrastructure Income
No.7 Limited

Aviva Investors Infrastructure Income
No.8 Limited

Aviva Investors International Index
Tracking Fund

Aviva Investors Japan Equity Core Fund

Aviva Investors Japan Equity Fund

Aviva Investors Japan Equity Growth
Fund

Aviva Investors Japanese Equity Index
Fund

Aviva Investors Managed High
Income Fund

Aviva Investors Money Market VNAV
Fund

—

OEIC

TTF

OEIC

100

TTF

100

OEIC

TTF

100

Aviva Investors Multi-Asset 40 85
Shares Index Fund

Aviva Investors Multi-Asset Core Fund I

Aviva Investors Multi-Asset Core Fund II

Aviva Investors Multi-Asset Core Fund
III

Aviva Investors Multi-Asset Core Fund
IV

Aviva Investors Multi-asset Plus III Fund

Aviva Investors Multi-asset Plus IV Fund

Aviva Investors Multi-asset Plus V Fund

Aviva Investors Multi-asset Sustainable
Stewardship Fund I

Aviva Investors Multi-asset Sustainable
Stewardship Fund II

Aviva Investors Multi-asset Sustainable
Stewardship Fund III

Aviva Investors Multi-asset Sustainable
Stewardship Fund IV

Aviva Investors Multi-Manager 20-60%
Shares Fund

Aviva Investors Multi-Manager 40-85%
Shares Fund

Aviva Investors Multi-Manager
Flexible Fund

Aviva Investors Multi-Strategy Target
Return Fund

Aviva Investors Non-Gilt Bond All Stocks
Index Fund

Aviva Investors Non-Gilt Bond over 15
Yrs Index Fund

Aviva Investors Non-Gilt Bond up to 5
Years Index Fund

Aviva Investors North American Equity
Core Fund

Aviva Investors North American Equity
Fund

Aviva Investors North American Equity
Index Fund

Aviva Investors Pacific Equity Ex Japan
Core Fund

Aviva Investors Pacific Ex Japan Equity
Index Fund

Share Class1 % held

TTF

100

OEIC

100

OEIC

100

OEIC

100

OEIC

100

OEIC

TTF

100

TTF

100

TTF

100

TTF

100

TTF

100

TTF

100

Aviva Investors Pensions Limited

Ordinary

100

Aviva Investors PIP Solar PV (General
Partner) Limited

Aviva Investors PIP Solar PV N0.1
Limited

—

Aviva Investors Polish EBC LP

Partnership

Aviva Investors Polish Retail GP Limited

Ordinary

Aviva Investors Polish Retail LP

Partnership

Aviva Investors Pre-Annuity Interest
Fund

TTF

—

100

Aviva Investors Property Fund
Management Limited

Ordinary

100

Aviva Investors Property Funds ICVC

Partnership

100

Aviva plc

3.165

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Company name

Share Class1 % held

Company name

Aviva Investors Real Estate Active LTAF

Aviva Investors Real Estate Limited

Aviva Investors REALM Ground Rent
Limited Partnership

Fund

Ordinary

Partnership

100

Aviva Investors REALM Social Housing
Limited Partnership

Partnership

Aviva Investors REALTAF Holdco Limited

Aviva Investors Secure Income
REIT Limited

Aviva Investors Social Housing GP
Limited

Ordinary

100

Aviva Investors Social Housing Limited

Ordinary

Aviva Investors Sterling Corporate Bond
Fund

TTF

100

Ordinary

100

Aviva Public Private Finance Limited

Aviva Investors UK Listed Equity Ex
Tabacco Fund

Aviva Investors UK Listed Equity Fund

Aviva Investors UK Listed Equity Income
Fund

Aviva Overseas Holdings Limited

Aviva RELI 1 GP Limited

Aviva RELI 1 LP

Aviva RELI 1 Nominee Limited

Aviva RELI 1 Unit Trust

Aviva Reli GP Limited

Aviva Special PFI GP Limited

Share Class1 % held

TTF

100

TTF

OEIC

100

TTF

100

OEIC

Ordinary

Partnership

Ordinary

Unit Trust

Ordinary

Aviva Special PFI Limited Partnership

Partnership

Aviva Staff Pension Trustee Limited

Aviva UK Digital Limited

Axcess 10 Management Company
Limited

Barwell Business Park Nominee Limited

Bermondsey Yards General Partner
Limited

Ordinary

Company
Limited by
Guarantee

Ordinary

Bermondsey Yards Limited Partnership

Partnership

Bermondsey Yards Nominee 1 Limited

Bermondsey Yards Nominee 2 Limited

Bersey Warehouse Nominee 1 Limited

TTF

100

OEIC

TTF

100

OEIC

TTF

100

OEIC

Ordinary

—

TTF

100

Bersey Warehouse Nominee 2 Limited

TTF

100

TTF

100

Biomass UK No.1 LLP

Biomass UK No.2 Limited

Biomass UK No. 3 Limited

Biomass UK No.4 Limited

Boston Biomass Limited

Partnership

Boston Wood Recovery Limited

TTF

100

Building a Future (Newham Schools)
Limited

Ordinary

100

Cara Renewables Limited

CCPF No.4 LP

CGU International Holdings BV

Chesterford Park (General Partner)
Limited

—

Partnership

Ordinary

100

Chesterford Park (Nominee) Limited

Ordinary

Chesterford Park Limited Partnership

Partnership

TTF

100

TTF

100

Commercial Union Corporate
Member Limited

Commercial Union Life Assurance
Company Limited

TTF

100

Den Brook Energy Limited

Digital Garage Nominee 1 Limited

Digital Garage Nominee 2 Limited

Ordinary

100

—

Ordinary

—

100

—

100

Aviva Investors Sterling Gilt Fund

Aviva Investors Strategic Bond Fund

Aviva Investors Strategic Global Equity
Fund

Aviva Investors Sustainable Stewardship
Fixed Interest Fund

Aviva Investors Sustainable Stewardship
Fixed International Feeder Acc Fund

Aviva Investors Sustainable Stewardship
International Equity Fund

Aviva Investors Sustainable Stewardship
International Equity Feeder Acc Fund

Aviva Investors Sustainable Stewardship
UK Eq Feeder Acc Fund

Aviva Investors Sustainable Stewardship
UK EqInc Feeder Acc Fund

Aviva Investors Sustainable Stewardship
UK Equity Fund

Aviva Investors Sustainable Stewardship
UK Equity Income Fund

Aviva Investors US Equity Index Fund

Aviva Investors US Large Cap Equity
Fund

Aviva Investors UK Commercial Real
Estate Senior Debt LP

Aviva Investors UK Equity Alpha Fund

Aviva Investors UK Equity Core Fund

Aviva Investors UK Equity Dividend Fund

Aviva Investors UK Equity Index Fund

Aviva Investors UK EX Aviva
Investments Trusts Index Fund

Aviva Investors UK Fund Services
Limited

Aviva Investors UK Gilts All Stock Index
Fund

Aviva Investors UK Gilts Over 15 Years
Index Fund

Aviva Investors UK Gilts Up To 5 Years
Index Fund

Aviva Investors UK Cresd LP Limited

Ordinary

100

Aviva Investors UK Index Tracking Fund

OEIC

Aviva plc

3.166

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Company name

Share Class1 % held

Company name

Share Class1 % held

EES Operations 1 Limited

Electric Avenue Ltd

Free Solar (Stage 2) Limited

Fitzroy Place GP 2 Limited

Fitzroy Place Management Co Limited

Fitzroy Place Residential Limited

GES Solar2 Limited

GES Solar3 Limited

Gobafoss General Partner Limited

Gobafoss Partnership Nominee
No 1 Limited

—

Ordinary

—

Ordinary

100

Heritage FL Single Family Homes Limited

Ordinary

100

Mortimer Street Nominee 3 Limited

Ordinary

NCH Solar1 Limited

New Broad Street House LP

New Broad Street House Nominee 1
Limited

New Broad Street House Nominee 2
Limited

—

Partnership

Ordinary

Norwich Union (Shareholder GP) Limited

Ordinary

Norwich Union Public Private Partnership
Fund

Partnership

NU 3PS Limited

NU Developments (Brighton) Limited

NU Library For Brighton Limited

NU Local Care Centres (Bradford)
Limited

NU Local Care Centres (Chichester No.1)
Limited

NU Local Care Centres (Chichester No.2)
Limited

NU Local Care Centres (Chichester No.3)
Limited

NU Local Care Centres (Chichester No.4)
Limited

NU Local Care Centres (Chichester No.5)
Limited

NU Local Care Centres (Chichester No.6)
Limited

NU Local Care Centres (Farnham)
Limited

NU Offices for Redcar Limited

NU Schools for Redbridge Limited

NU Technology and Learning Centres
(Hackney) Limited

NUPPP (Care Technology and Learning
Centres) Limited

—

100

—

Company
Limited by
Guarantee
Company
Limited by
Guarantee

Company
Limited by
Guarantee

Ordinary

—

Ordinary

100

NUPPP (GP) Limited

NUPPP Nominees Limited

Opus Park Management Limited

Hooton Bio Power Limited

Houlton Commercial Management
Company 2 Limited

Houlton Commercial Management
Company

Houlton Community Management
Company Limited

Igloo Regeneration (General Partner)
Limited

Igloo Regeneration (Nominee) Limited

Igloo Regeneration Developments
(General Partner) Limited

Igloo Regeneration Developments LP

Partnership

Igloo Regeneration Partnership

Partnership

Igloo Regeneration Property Unit Trust

Unit Trust

Irongate House LP

Irongate House Nominee 1 Limited

Irongate House Nominee 2 Limited

Jacks Lane Energy Limited

Lime Property Fund (General Partner)
Limited

Partnership

Ordinary

—

Lime Property Fund (Nominee) Limited

Ordinary

Lime Property Fund Limited Partnership

Partnership

Lombard (London) 1 Limited

Lombard (London) 2 Limited

Longcross General Partner Limited

Ordinary

Longcross Limited Partnership

Partnership

Longcross Nominee 1 Limited

Longcross Nominee 2 Limited

Mamhilad Solar Limited

Medium Scale Wind No.1 Limited

Middlesex Hospital Site Property Unit
Trust

Minnygap Energy Limited

Mortimer Street Associated Co 1 Limited

Mortimer Street Associated Co 2 Limited

Mortimer Street Nominee 1 Limited

Mortimer Street Nominee 2 Limited

Ordinary

—

Unit Trust

—

Ordinary

100

—

Pegasus House and Nuffield House LP

Partnership

Pegasus House and Nuffield House
Nominee 1 Limited

Pegasus House and Nuffield House
Nominee 2 Limited

Porth Teigr Management
Company Limited

Quarryvale One Limited

RDF Energy No.1 Limited

Renewable Clean Energy 3 Limited

Renewable Clean Energy Limited

Riley Factory Nominee 1 Limited

Riley Factory Nominee 2 Limited

Rugby Radio Station (General Partner)
Limited

—

100

Ordinary

100

Ordinary

100

Ordinary

100

Ordinary

100

Ordinary

100

Ordinary

100

Ordinary

100

Ordinary

100

Ordinary

100

Ordinary

Company
Limited by
Guarantee

Ordinary

100

Ordinary

100

—

Ordinary

—

100

Aviva plc

3.167

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Company name

Share Class1 % held

Company name

Share Class1 % held

Rugby Radio Station (Nominee) Limited

Ordinary

Rugby Radio Station Limited Partnership

Partnership

SHR Bordon Limited

SHR Coventry Limited

SHR Ipswich Limited

SHR Ipswich OpCo Limited

SHR Linmere Limited

SHR Swindon Limited

SHR Telford Limited

SHR Telford OpCo Limited

Solar Clean Energy Limited

Southgate General Partner Limited

Southgate LP (Nominee 1) Limited

Southgate LP (Nominee 2) Limited

Spire Energy Ltd

Station Road Cambridge LP

Station Road General Partner LLP

Station Road GP Limited

Stonebridge Cross Management Limited

SUE Developments LP

SUE GP LLP

SUE GP Nominee Limited

Sustainable Housing Holdco Limited

Sustainable Housing Topco Limited

Sustainable Storage HoldCo Limited

Sustainable Storage Portfolio SPV
Limited

Sustainable Storage Topco Limited

Swan Valley Management Limited

The Designer Retail Outlet Centres
(Mansfield) General Partner Limited

The Designer Retail Outlet Centres
(Mansfield) Limited Partnership

100

—

100

Ordinary

—

Ordinary

—

Partnership

Ordinary

Company
Limited by
Guarantee

Partnership

Ordinary

Westcountry Solar Solutions Limited

Woolley Hill Electrical Energy Limited

WR 11 Solar Limited

—

Yorkshire Insurance Company Limited

Ordinary

100

Swan Court Waterman’s Business Park, Kingsbury Crescent,
Staines, TW18 3BA, United Kingdom

Healthcode Limited

Ordinary

Tec Marina Terra Nova Way, Penarth, Cardiff, CF64 1SA, United
Kingdom

Wealthify Group Limited

Wealthify Limited

Ordinary

100

The Apex, Brest Road, Derriford Business Park, Derriford,
Plymouth, PL6 5FL, United Kingdom

Bankhouse Financial Management
Limited

G&E Private Wealth Limited

G&E Wealth Management (Holdings) Ltd

G&E Wealth Management Limited

HKA (F S) Limited

HKA Holdings Limited

Investors Planning Associates Limited

JCF Financial Services Limited

KF Consulting

Oaklea Wealth Management Limited

Pannells Financial Planning Ltd

Pannells Holdings Limited

Succession Advisory Services Limited

Succession Employee Benefit Solutions
Limited

Succession Financial Management
Limited

Succession Group Ltd

Succession Holdings Ltd

Ordinary

100

Ordinary

100

Ordinary

100

Ordinary

100

Partnership

Succession Wealth Management Limited

The Oxford Advisory Partnership Limited

The Designer Retail Outlet Centres (York)
General Partner Limited

Ordinary

100

The Designer Retail Outlet Centres (York)
Limited Partnership

Partnership

The Gobafoss Partnership

The Ocean Marine Insurance
Company Limited

The Rutherford Nominee 1 Limited

The Rutherford Nominee 2 Limited

Partnership

Ordinary

The Southgate Limited Partnership

Partnership

The Square Brighton Limited

Turncole Wind Farm Limited

Tyne Assets (No 2) Limited

Tyne Assets Limited

Undershaft Limited

Welsh Insurance Corporation Limited

Ordinary

—

Ordinary

100

—

100

The Green, Easter Park, Benyon Road, Reading, RG7 2PQ, United
Kingdom

ANESCO Mid Devon Limited

ANESCO South West Limited

Free Solar (Stage 1) Limited

New Energy Residential Solar Limited

Norton Energy SLS Limited

TGHC Limited

—

Unit 2, Arabesque House, Monks Cross Drive, Huntington, York,
YO32 9GW, United Kingdom

A P Associates Financial Services
Limited

Ordinary

Wellington Row, York, YO90 1WR, United Kingdom

Aviva (Peak No.2) UK Limited

Aviva Administration Limited

Aviva Client Nominees UK Limited

Aviva Equity Release UK Limited

Ordinary

100

Aviva plc

3.168

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Share Class1 % held

Company name

Share Class1 % held

Ordinary

100

Sesame Services Limited

Suntrust Limited

Lancashire and Yorkshire Reversionary
Interest Company Limited

Undershaft (NULLA) Limited

Undershaft FAL Limited

Ordinary

100

Undershaft FPLLA Limited

Undershaft SLPM Limited

Voyager Park South Management
Company Limited

Ordinary

100

Aviva Life Investments International L.P.

Partnership

Wealth Limited

Ordinary

100

Zetland House, 5-25 Scrutton Street Units, E-G 4th Fl, London
EC2A 4HJ, United Kingdom

Acre Platforms Limited

Ordinary

United States

251 Little Falls Drive, Wilmington, DE, 19808, United States

AI-RECAP Carry I, LP

AI-RECAP GP I, LLC

UKP Holdings Inc.

Partnership

Sole Member

Common

1209 Orange Street, Wilmington, DE, 19801, United States

AI-RECC I GP, LLC

Aviva Investors Americas LLC

Sole Member

2222 Grand Avenue, Des Moines, IA, 50312, United States

100

Aviva Investors North America Holdings,
Inc

Common

100

Cogency Global Inc., 850 New Burton Road, Suite 201, Dover,
Delaware, Kent County, 19904, United States

Exeter Properties Inc.

Winslade Investments Inc.

Common

100

1.
•
•
•
•

Definitions
Fond Common de Placement (‘FCP’)
Société d ‘Investment à Capital Variable (‘SICAV’)
Tax Transparent Fund ('TTF')
Open Ended Investment Companies (‘OEIC’)

Company name

Aviva ERFA 15 UK Limited

Aviva Investment Solutions UK Limited

Aviva Life & Pensions UK Limited

Aviva Life Holdings UK Limited

Aviva Life Investments International
(General Partner) Limited

Aviva Life Investments International
(Recovery) Limited

Aviva Life Services UK Limited

Aviva Management Services UK Limited

Aviva Master Trust Trustees UK Limited

Aviva Pension Trustees UK Limited

Aviva Savings Limited

Aviva Trustees UK Limited

Aviva UKLAP De-risking Limited

Aviva Wealth Holdings UK Limited

Aviva Wrap UK Limited

Bankhall Support Services Limited

CGNU Life Assurance Limited

FF Fabric Limited

Friends AEL Trustees Limited

Friends AELLAS Limited

Friends AELRIS Limited

Friends Life and Pensions Limited

Friends Life Assurance Society Limited

Friends Life Company Limited

Friends Life FPL Limited

Friends Life FPLMA Limited

Friends Life Holdings Limited

Friends Life Limited

Friends Life WL Limited

Friends Provident Investment
Holdings Limited

Friends Provident Life Assurance Limited

Friends’ Provident Managed Pension
Funds Limited

Friends Provident Pension Scheme
Trustees Limited

Friends SLUA Limited

Gateway Specialist Advice
Services Limited

London and Manchester Group Limited

Premier Mortgage Service Limited

Sesame Bankhall Group Limited

Sesame Bankhall Valuation
Services Limited

Sesame General Insurance
Services Limited

Sesame Limited

Sesame Regulatory Services Limited

Ordinary

100

Ordinary

100

Ordinary

100

Ordinary

100

Ordinary

100

Aviva plc

3.169

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the consolidated financial statements

Audit exemptions
The subsidiary undertakings of the Company listed below
are to take advantage of s479A Companies Act 2006
(s479A) audit exemption for the year ended 31 December
2023. Aviva plc will issue a guarantee pursuant to s479A in
relation to the liabilities of the entity:

Company name

Company number

Aviva Insurance Services UK Limited

Aviva Management Services UK Limited

Aviva Savings Limited

Aviva Wealth Holdings UK Limited

FF Fabric Limited

Friends AELRIS Limited

Lancashire and Yorkshire Reversionary
Interest Company Limited /The

London and Manchester Group Limited

Suntrust Limited

Undershaft Limited

2180191

983330

4384512

6861305

13392040

16807

19770

1594941

1460956

4075935

60 – Subsequent events

For details of subsequent events relating to:
• acquisitions and disposals, see note 3(a) and 3(b).
• share buybacks see note 32(c).

There are no other material subsequent events to report.

Aviva plc

3.170

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Financial statements of the company

Income statement
For the year ended 31 December 2023

Income
Net investment income

Expenses
Operating expenses
Finance costs

Profit for the year before tax
Tax credit
Profit for the year after tax

Statement of comprehensive income
For the year ended 31 December 2023

Profit for the year

Items that will not be reclassified to income statement
Remeasurements of pension schemes
Other comprehensive income, net of tax
Total comprehensive income for the year

Note

2023
£m

2022
£m

B
C

2,518
2,518

(366)
(792)
(1,158)
1,360
137
1,497

2,133
2,133

(325)
(351)
(676)
1,457
132
1,589

2023

£m

2022

£m

1,497

1,589

—
—
1,497

8
8
1,597

Where applicable, the accounting policies of the Company are the same as those of the Group. The Company notes
identified alphabetically are an integral part of these separate financial statements. Where the same items appear in the
Group financial statements, reference is made to the Group notes identified numerically.

Aviva plc

3.171

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Financial statements of the company

Statement of changes in equity
For the year ended 31 December 2023

Ordinary
share
capital
£m

Preference
share
capital
£m

Note

Balance at 1 January
Profit for the year
Other comprehensive income
Total comprehensive income for
the year

Dividends and appropriations
Shares purchased in buyback1
Capital reductions2
Reserves credit for equity
compensation plans

Shares issued under equity
compensation plans

Issue of tier 1 notes
Return of capital to ordinary
shareholders via B share scheme

Balance at 31 December

32(b)(i)

33(d)

924
—
—

—

—
(24)
—

—

901

200
—
—

—

—
—
—

—

200

reclassified as retained earnings.

For the year ended 31 December 2022

Ordinary
share
capital
£m

Preference
share
capital
£m

Note

Share
premium
£m

1,263
—
—

Capital
redemption
reserve
£m

3,855
—
—

Merger
reserve
£m

2,688
—
—

—

—
—

—

—
24

(1,253)

(3,855)

—

Equity
compensation
reserve
£m

113
—
—

—

—
—
—

Retained
earnings
£m

5,248
1,497
—

1,497

(929)
(300)
5,108

—

(52)

(35)

—

Tier 1 notes
£m

Total equity
£m

496
—
—

14,787
1,497
—

—

—
—
—

—

1,497

(929)
(300)
—

(79)

—

—
—
—

—

2,688

122

10,589

496

15,037

In the year ended 31 December 2023, £300 million of shares were purchased and shares with a nominal value of £24 million have been cancelled as part of the share buyback programme

1.
2. In the year ended 31 December 2023, a capital reduction took place which reduced share premium by £1,253 million and the capital redemption reserve by £3,855 million. These amounts were

Balance at 1 January
Profit for the year
Other comprehensive income
Total comprehensive income for
the year

Dividends and appropriations
Shares purchased in buyback1
Reserves credit for equity
compensation plans

Shares issued under equity
compensation plans
Issue of tier 1 notes2
Return of capital to ordinary
shareholders via B share scheme3
Balance at 31 December

16
32

Share
premium
£m

1,248
—
—

—

—
—

Capital
redemption
reserve
£m

86
—
—

—

—
19

Merger
reserve
£m

6,438
—
—

—

—
—

Equity
compensation
reserve
£m

101
—
—

—

—
—

Retained
earnings
£m

8,591
1,589
8

1,597

(862)
(336)

Tier 1 notes
£m

Total equity
£m

—
—
—

—

—
—

17,605
1,589
8

1,597

(862)
(336)

941
—
—

—

—
(19)

200
—
—

—

—
—

—

(46)

—

(21)

496

—

3,750

(3,750)

—

(3,750)

—

(3,750)

924

200

1,263

3,855

2,688

113

5,248

496

14,787

In the year ended 31 December 2022, £336 million of shares were purchased and shares with a nominal value of £19 million have been cancelled as part of the share buyback programme

1.
2. On 15 June 2022, the Group issued £500 million of 6.875% fixed rate reset perpetual Restricted Tier 1 contingent convertible notes (the RT1 notes). These RT1 notes are treated as equity and any

coupon payments are recognised directly in equity as they arise (see note 36).

3. On 2 March 2022, Aviva announced a proposed return of capital, via a £3,750 million B Share Scheme for the holders of ordinary shares. 3,687,322,000 B shares were issued for nil consideration

with a nominal value of 101.69 pence per share on 16 May 2022, resulting in a total of £3,750 million being credited to the B share capital account. At the same time, the merger reserve was reduced
by £3,750 million. On 17 May 2022, the B shares were redeemed at 101.69 pence per share, which resulted in a £3,750 million reduction in the B share capital account and a corresponding increase in
the capital redemption reserve. Retained earnings reduced by £3,750 million on payment of the return of capital to ordinary shareholders.

Aviva plc

3.172

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Financial statements of the company

Statement of financial position
As at 31 December 2023

Note

2023
£m

2022
£m

Assets
Non-current assets
Investments in subsidiaries
Investment in joint venture
Receivables and other financial assets
Deferred tax assets
Current tax assets

Current assets
Financial investments
Receivables and other financial assets
Prepayments and accrued income
Cash and cash equivalents
Total assets
Equity

Ordinary share capital
Preference share capital

Called up capital
Share premium
Capital redemption reserve
Merger reserve
Equity compensation reserve
Retained earnings
Tier 1 notes
Total equity
Liabilities
Non-current liabilities
Borrowings
Payables and other financial liabilities
Pension deficits and other provisions

Current liabilities
Borrowings
Payables and other financial liabilities
Other liabilities
Total liabilities
Total equity and liabilities

Approved by the Board on 6 March 2024

Charlotte Jones
Chief Financial Officer

Company number: 02468686

31,793
123
2,118
142
—
34,176

1
822
112
320
35,431

924
200
1,124
1,263
3,855
2,688
113
5,248
496
14,787

E
E
F
G
G

31,801
123
1,473
114
167
33,678

—
779
114
48
34,619

901
200
1,101
17
24
2,688
122
10,589
496
15,037

32
35

37
37
H

H
L

J
K

5,123
9,695
33
14,851

4,939
10,470
34
15,443

J
K

51
4,581
99
19,582
34,619

530
4,582
88
20,643
35,430

Aviva plc

3.173

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Financial statements of the company

Statement of cash flows
For the year ended 31 December 2023

All the Company’s operating cash requirements are met by subsidiary companies and settled through intercompany loan
accounts. As the direct method of presentation has been adopted for these activities, no further disclosure is required. In
respect of financing and investing activities, the following items pass through the Company’s own bank accounts.

Cash flows from investing activities
Dividends received from joint venture
Net cash from investing activities
Cash flows from financing activities
Proceeds from issue of ordinary shares
Return of capital to ordinary shareholders via B share scheme
Shares purchased in buyback
Treasury shares purchased for employee trusts

New borrowings drawn down, net of expenses
Repayment of borrowings
Net repayment of borrowings
Interest paid on borrowings
Preference dividends paid
Ordinary dividends paid
Coupon payments on tier 1 notes
Issue of tier 1 notes
Funding provided from subsidiaries
Other1
Net cash used in financing activities
Total net decrease in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents 31 December

2023
£m

14
14

8
—
(300)
(76)
870
(1,097)
(227)
(230)
(17)
(878)
(34)
—
1,508

(40)
(286)
(272)
320
48

2022
£m

18
18

17
(3,750)
(336)
(75)
536
(849)
(313)
(264)
(17)
(828)
(17)
496
4,691
(4)
(400)
(382)
702
320

1. 2023 includes £32 million (2022: £21 million) in respect of payments relating to equity compensation plans and £nil million (2022: £10 million) receipt of forfeited shareholder distributions to be

donated to a charitable foundation

Aviva plc

3.174

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the company financial statements

A – Net investment income

Dividends received from subsidiaries1
Dividends received from joint venture
Interest receivable from group company loans held at amortised cost
Other income
Unrealised gains on foreign exchange contracts
Net foreign exchange gains
Net investment income

2023
£m

2,425
15
73
—
—
5
2,518

2022
£m

2,045
19
67
1
1
—
2,133

Includes £2,000 million (2022: £2,000 million) dividend income from Aviva Group Holdings Limited and £425 million (2022: £45 million) dividend income from General Accident plc

B – Operating expenses
(a) Operating expenses
Operating expenses comprise:

Equity compensation plans
Other operating costs
Realised loss on foreign exchange contracts
Net foreign exchange losses
Operating expenses

b) Equity compensation plans

Note

B(b)

2023
£m

16
348
2
—
366

2022
£m

18
301
—
6
325

All transactions in the Group’s equity compensation plans, which involve options and awards for ordinary shares of the
Company, are included in other operating costs. Full disclosure of these plans is given in the Group consolidated financial
statements, note 33. The cost of such options and awards is borne by all participating businesses and, where relevant, the
Company bears an appropriate charge. As the majority of the charge to the Company relates to directors’ options and
awards, for which full disclosure is made in the directors’ remuneration report, no further disclosure is given here.

C – Finance costs

Interest payable on borrowings
Interest payable on group loans held at amortised cost
Fees and charges on share buyback and return of capital
Premium payments on external borrowings
Finance costs

D – Tax
(a) Tax credited/(charged) to the income statement
The total tax credit comprises:

For the period
Prior year adjustments

Current tax

Origination and reversal of temporary differences

Deferred tax
Total tax credited to income statement

The tax credit above, comprising current and deferred tax, can be analysed as follows:

UK tax
Overseas tax
Total

Note

O(b)

2023
£m

237
460
3
92
792

2023
£m

167

(2)

165
(28)
(28)
137

2023
£m

138

(1)

137

2022
£m

261
80
10
—
351

2022
£m

(1)
—
(1)
133
133
132

2022
£m

133
(1)
132

Aviva plc

3.175

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the company financial statements

(b) Tax charged to other comprehensive income
Tax charged to other comprehensive income in the year amounted to £nil million (2022: £3 million charged) in respect of
obligations under pension and post-retirement benefit schemes.

(c) Tax reconciliation
The tax on the Company’s profit before tax differs from the theoretical amount that would arise using the tax rate in the
United Kingdom as follows:

Total profit before tax

Tax calculated at standard UK corporation tax rate of 23.5% (2022: 19.00%)
Reconciling items
Adjustment to tax charge in respect of prior years
Non-assessable dividend income
Disallowable expenses
Movement in valuation of deferred tax
Different local basis of tax on overseas profits
Losses surrendered intra-group for nil value
Tax on interest amounts charged directly to equity
Total tax credited to income statement

2023
£m
1,360

2022
£m
1,457

(320)

(277)

(8)

573

(3)
(1)
(1)
(111)
8
137

—
392
(3)
32
(1)
(14)
3
132

The UK Government has enacted an increase in the UK corporation tax rate to 25% to take effect from 1 April 2023. This
rate has been used in the calculation of the Company's deferred tax assets as at 31 December 2023 and 31 December 2022.

During 2023, legislation on The Organisation for Economic Co-operation and Development proposals to reform the
international tax system and introduce a global minimum effective rate of corporation tax of 15% was enacted in the UK,
to take effect from 31 December 2023. The Company (as part of the Aviva Group) has assessed its potential exposure,
based on the available information, and expects to be exposed to no greater than £1 million of additional tax under these
provisions. In accordance with the amendments to IAS 12, endorsed in the UK on 19 July 2023, the Company has applied
the exemption and not provided for deferred tax in respect of these reforms.

E – Investments in subsidiaries and joint venture
(a) Subsidiaries
At 31 December 2023, the Company has two wholly owned subsidiaries, both incorporated in the UK. These are General
Accident plc and Aviva Group Holdings Limited. Aviva Group Holdings Limited is an intermediate holding company, while
General Accident plc has preference shares listed on the London Stock Exchange. At 31 December 2023 the Company’s
investments in subsidiaries have a cost of £31,801 million (2022: £31,793 million). The principal subsidiaries of the Aviva
Group at 31 December 2023 are set out in note 58 to the Group consolidated financial statements.

(b) Joint venture
At 31 December 2023 the Company’s investment in the joint venture, Aviva-COFCO Life Insurance Co. Limited has a cost
of £123 million (2022: £123 million).

F – Receivables and other financial assets

Loans due from subsidiaries held at amortised cost
Amounts due from subsidiaries held at amortised cost
Total receivables and other financial assets
Expected to be recovered in less than one year
Expected to be recovered in more than one year
Total receivables and other financial assets

Fair value of these assets approximate to their carrying amounts.

Note

O(a)

O(c)(i)

2023
£m

2,080
172
2,252
779
1,473
2,252

2022
£m

2,664
276
2,940
822
2,118
2,940

G – Tax assets and liabilities
(a) Current tax
Current tax assets recoverable in more than one year are £167 million (2022: £nil).

Assets for prior years’ tax settled by group relief of £nil million (2022: £137 million) are included within Receivables and
other financial assets (note F), of which £nil million are recoverable in less than one year.

Aviva plc

3.176

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the company financial statements

(b) Deferred tax
(i) The net deferred tax asset arises on the following items:

Pensions and other post retirement obligations
Unused losses and tax credits
Net deferred tax assets

(ii) The movement in the net deferred tax asset was as follows:

Net deferred tax assets at 1 January
Amounts (charged)/credited to income statement
Amounts charged to other comprehensive income
Net deferred tax assets at 31 December

2023
£m

9
105
114

2023
£m

142
(28)
—
114

2022
£m

9
133
142

2022
£m

12
133
(3)
142

Note

D(a)

D(b)

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against
which the temporary differences can be utilised. In assessing future profitability, the directors have relied on board
approved business plans and profit forecasts for the UK Group for up to 5 years. In entities where there is a history of tax
losses, deferred tax assets are only recognised in excess of deferred tax liabilities if there is convincing evidence that
future taxable profits will be available.

H – Reserves

At 1 January
Profit for the year
Remeasurement of pension schemes
Dividends and appropriations
Capital reductions1
Shares purchased in buyback
Return of capital to ordinary shareholders via B share schemes
Issue of share capital under equity compensation scheme
At 31 December

Merger
reserve

£m

2,688
—
—
—
—
—
—
—
2,688

2023

Retained
earnings

£m

5,248
1,497
—
(929)
5,108
(300)
—
(35)

10,589

Merger
reserve

£m

6,438
—
—
—
—
—
(3,750)
—
2,688

2022

Retained
earnings

£m

8,591
1,589
8
(862)
—
(336)
(3,750)
8
5,248

1. At a General Meeting of Aviva held on 4 May 2023, Aviva received shareholder approval to a reduction of £1,253 million in its share premium account and to a reduction of £3,855 million in its capital

redemption reserve (the Capital Reductions). The Capital Reductions received Court approval on 23 May 2023 and were effected on 25 May 2023.

The vast majority of the retained earnings of the Company are distributable.

I – Pension deficits and other provisions

Total IAS 19 obligations to staff pension schemes
Total pension deficits and other provisions

J – Borrowings
The Company’s borrowings comprise:

Subordinated debt
Senior notes
Commercial paper
Total borrowings
Expected to be paid in less than one year
Expected to be paid in more than one year
Total borrowings

2023
£m

33
33

2022
£m

34
34

2023
£m

4,722
401
51
5,174
51
5,123
5,174

2022
£m

4,530
687
252
5,469
530
4,939
5,469

All the above borrowings are stated at amortised cost with the exception of commercial paper.

Aviva plc

3.177

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the company financial statements

Maturity analysis of contractual undiscounted cash flows:

Within one year
One to five years
Five to ten years
10 to 15 years
Over 15 years
Total contractual undiscounted cash flows

Principal
£m

51
402
267
700
3,787
5,207

Interest
£m

245
972
1,151
1,041
2,376
5,785

2023

Total
£m

296
1,374
1,418
1,741
6,163
10,992

Principal
£m

531
411
275
700
3,583
5,500

Interest
£m

229
912
1,077
999
2,111
5,328

2022

Total
£m

760
1,323
1,352
1,699
5,694
10,828

Where subordinated debt is undated, the interest payments have not been included beyond 15 years.

The fair value of the subordinated debt at 31 December 2023 was £4,658 million (2022: £4,314 million), calculated with
reference to quoted prices. The fair value of the senior debt as at 31 December 2023 was £395 million (2022: £646 million),
calculated with reference to quoted prices. The fair value of the commercial paper is considered to be the same as its
carrying value.

Further details of these borrowings and undrawn committed facilities can be found in the Group consolidated financial
statements in note 47 where the details of the fair value hierarchy in relation to these borrowings in note 24.

K – Payables and other financial liabilities

Loans due to subsidiaries held at amortised cost
Amounts due to subsidiaries held at amortised cost
Total payables and other financial liabilities
Expected to be paid in less than one year
Expected to be paid in more than one year
Total payables and other financial liabilities

Note

O(b)

O(c)(ii)

2023
£m

9,695
4,581
14,276
4,581
9,695
14,276

2022
£m

10,470
4,582
15,052
4,582
10,470
15,052

L – Tier 1 notes
On 15 June 2022, the Company issued £500 million of 6.875% fixed rate reset perpetual Restricted Tier 1 contingent
convertible notes (the RT1 Notes), see details in note 36. During the year coupon payments of £34 million were made
(2022: £17 million).

M – Contingent liabilities
Details of the Company’s contingent liabilities are given in the Group consolidated financial statements, note 50.

N – Risk management
Risk and capital management in the context of the Group is considered in the Group consolidated financial statements,
notes 52 and 54.

The business of the Company is managing its investments in subsidiaries and joint venture operations. Its risks are
considered to be the same as those in the operations themselves, and full details of the major risks and the Group’s
approach to managing these are given in the Group consolidated financial statements, note 54. Such investments are held
by the Company at cost in accordance with accounting policy D.

Financial assets, other than investments in subsidiaries and joint ventures, largely consist of amounts due from
subsidiaries. As at the balance sheet date, these receivable amounts were neither past due nor impaired. The credit
quality of receivables and other financial assets is monitored by the Company and provisions are made for expected
credit losses. There are no material expected credit losses over the lifetime of the financial assets.

Financial liabilities owed by the Company as at the balance sheet date are largely in respect of borrowings (details of
which are provided in note J and the Group consolidated financial statements, note 47) and loans owed to subsidiaries.
Loans owed to subsidiaries were within agreed credit terms as at the balance sheet date.

(a) Interest rate risk
Loans to and from subsidiaries are at either fixed or floating rates of interest, with the latter being exposed to fluctuations
in these rates. The choice of rates is designed to match the characteristics of financial investments (which are also
exposed to interest rate fluctuations) held in both the Company and the relevant subsidiary, to mitigate as far as possible
each company’s net exposure.

Aviva plc

3.178

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the company financial statements

All of the Company’s long-term external borrowings are at fixed rates of interest and are therefore not exposed to
changes in these rates. However, for short-term commercial paper, the Company is affected by changes in these rates to
the extent the redemption of these borrowings is funded by the issuance of new commercial paper or other borrowings.
Further details of the Company’s borrowings are provided in note J and the Group consolidated financial statements,
note 47.

The effect of a 100 basis point increase/decrease in interest rates on floating rate loans due to and from subsidiaries
and on refinancing short-term commercial paper as it matures would be a decrease/increase in profit before
tax of £90 million (2022: decrease/increase of £92 million). We manage and hedge our interest rate exposure through
setting risk tolerance levels on a Solvency II cover ratio basis. Exposure to interest rate risk is monitored through several
measures that include duration, capital modelling, sensitivity testing and stress and scenario testing.

(b) Currency risk
The Company’s direct subsidiaries are exposed to foreign currency risk arising from fluctuations in exchange rates during
the course of providing insurance and asset management services around the world. The exposure of the subsidiaries to
currency risk is considered from a Group perspective in the Group consolidated financial statements, note 54(c)(v).

The Company faces exposure to foreign currency risk through some of its borrowings which are denominated in Euros
and Canadian dollars.

(c) 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 subsidiary Aviva
Group Holdings Limited and dividends received from the Group’s insurance and asset management businesses.

Sources of liquidity in normal markets also include 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 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 J, K and F
respectively.

(d) Intra-group capital arrangement
Consistent with our capital management framework, the Group has in place intra-group arrangements to provide
additional capital support to its regulated subsidiaries. In the normal course of business, the Group will provide additional
capital support to its regulated subsidiaries in certain circumstances. While the Group considers it unlikely that such
support will be required, the arrangements are intended to provide additional comfort to its regulated subsidiaries and its
policyholders. See note 52 for more detail on risks and capital management objectives.

O – Related party transactions
The Company had the following related party transactions.

Loans to and from subsidiaries are made on normal arm’s-length commercial terms. The maturity analysis of the related
party loans is as follows:

(a) Loans owed by subsidiaries

Within one year
One - five years
Over five years
Total loans owed by subsidiaries

2023

£m

607
992
481
2,080

2022

£m

546
1,624
494
2,664

The interest received on these loans is £73 million (2022: £67 million). See note A.

On 1 January 2013, Aviva International Holdings Limited, an indirect subsidiary, transferred an unsecured loan with the
Company of €250 million to Aviva Group Holdings Limited, its direct subsidiary. The loan, originally entered into on 7 May
2003, accrues interest at a fixed rate of 5.5% with settlement to be paid at maturity in May 2033. As at the statement of
financial position date, the total amount drawn down on the loan was £217 million (2022: £221 million).

On 23 December 2014, the Company provided an unsecured revolving credit facility of £2,000 million to Aviva Group
Holdings Limited, its subsidiary, with an initial maturity date of 3 September 2018, which was subsequently extended to
31 December 2023. The company has renewed this facility on 1 January 2024 to further extend the maturity date to
31 December 2028. The loan has to date accrued interest at a fixed rate of 0.895% but from 1 January 2024 will accrue
interest at the GBP Sonia Swap Rate plus the Five Year Credit Default Swap Spread. As at the statement of financial
position date, the total amount drawn down on the facility was £nil (2022: £nil).

Aviva plc

3.179

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the company financial statements

On 27 June 2016, the Company provided an unsecured loan of $CAD446 million to Aviva Group Holdings Limited, its
subsidiary, with a maturity date of 27 June 2046. The loan accrues interest at 348 basis points above 6 month CORRA with
a basis compensation adjustment of 49 basis points. As at the statement of financial position date, the total amount drawn
on the loan was £264 million (2022: £273 million).

On 30 September 2016, the Company provided the following loans to Aviva Group Holdings Limited, its subsidiary:
• An unsecured loan of €850 million with a maturity date of 30 September 2021 which was subsequently extended to
30 September 2026. The loan accrues interest at 49 basis points above 12 month EURIBOR with settlement to be
paid at maturity. As at the statement of financial position date, the total amount drawn on the loan was £212 million
(2022: £207 million).

• An unsecured loan of €650 million with a maturity date of 5 July 2023. The loan was redeemed in full on its maturity

date of 5 July 2023 and therefore at the statement of financial position date, the total amount drawn down on the loan
was £— million (2022: £267 million). The loan accrued interest at a fixed rate of 1.54% with settlement paid at maturity.
• An unsecured loan of €700 million with a maturity date of 3 July 2024. The loan accrues interest at a fixed rate of 1.64%
with settlement to be paid at maturity. As at the statement of financial position date, the total amount drawn down on
the loan was £607 million (2022: £620 million).

• An unsecured loan of €900 million with a maturity date of 4 December 2025. The loan accrues interest at a fixed rate of

1.74% with settlement to be paid at maturity. As at the statement of financial position date, the total amount drawn down
on the loan was £780 million (2022: £797 million).

On 21 November 2016, the Company provided an unsecured loan of €500 million to Aviva Group Holdings Limited,
its subsidiary, with a maturity date of 27 October 2023. The loan was redeemed in full on its maturity date of
27 October 2023 and therefore at the statement of financial position date, the total amount drawn on the loan was
£nil million (2022: £279 million). The loan accrued interest at a fixed rate of 1.75% with settlement paid at maturity.

(b) Loans owed to subsidiaries
Maturity analysis of contractual undiscounted cash flows:

Within one year
One to five years
Over five years
Total contractual undiscounted cash flows

Principal
£m

—
9,695
—
9,695

Interest
£m

446
1,786
—
2,232

2023

Total
£m

446
11,481
—
11,927

Principal
£m

—
9,439
1,031
10,470

Interest
£m

453
1,811
9
2,273

2022

Total
£m

453
11,250
1,040
12,743

The interest paid on these loans is £460 million (2022: £80 million). See note C.

On 3 September 2013 Aviva Group Holdings Limited, its subsidiary, provided an unsecured rolling credit facility of
£1,000 million to the Company. On 6 October 2016, the facility increased to £5,000 million. This facility had a maturity
date of 31 December 2023 and the Company has renewed this facility on 1 January 2024 to further extend the maturity
date to 31 December 2028. The loan has to date accrued interest at a fixed rate of 0.895% but from 1 January 2024 will
accrue interest at the 12 month SONIA Swap Rate plus 0.648%. The total amount drawn down on the facility at
31 December 2023 was £256 million (2022: £1,031 million).

On 14 December 2017, the Company renewed its facility with General Accident plc, its subsidiary, of £9,990 million and
the Board approved the extension of the maturity of the loan by five years from 31 December 2017 to 31 December 2022.
A subsequent loan amendment in December 2022 extended the loan maturity to 31 December 2027 and changed the
interest rate to a floating rate based on the 12 month SONIA swap rate effective from 1 January 2023. As at 31 December
2023, the loan balance outstanding was £9,439 million (2022: £9,439 million). This loan is secured against the ordinary
share capital of Aviva Group Holdings Limited.

Subsidiaries and joint ventures

Income
earned
in year
£m

2,440

2023

2022

Receivable
at year end
£m

Income
earned
in year
£m

Receivable
at year end
£m

172

2,064

276

Income earned relates to dividends. The Company incurred expenses in the year of £0.8 million (2022: £0.8 million)
representing audit fees paid by the Company on behalf of subsidiaries. The Company did not recharge subsidiaries for
these expenses.

The related parties’ receivables are not secured and no guarantees were received in respect thereof. The receivables will
be settled in accordance with normal credit terms.

Aviva plc

3.180

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Notes to the company financial statements

(ii) Services provided by related parties

Subsidiaries

2023

2022

Expense
incurred
in year
£m

Payable
at year end
£m

Expense
incurred
in year
£m

Payable
at year end
£m

348

4,581

301

4,582

Expenses incurred relates to operating expenses. All the Company’s operating cash requirements are met by subsidiary
companies and settled through intercompany loans.

The Company has a prepayment of £87 million (2022: £85 million) relating to shares owned by an employee share trust to
satisfy the Company’s share awards.

The related parties’ payables and receivables are not secured and no guarantees were given or received in respect
thereof. The payables will be settled in accordance with normal credit terms. Details of guarantees, indemnities and
warranties given by the Company on behalf of related parties are given in note 50(f).

(d) Key management
The directors and key management of the Company are considered to be the same as for the Group. Information on both
the Company and Group key management compensation can be found in note 57.

P – Subsequent events
On 1 January 2024 the Company renewed two facilities, one from Aviva Group Holdings Limited and one to Aviva Group
Holdings Limited:

• The Company has renewed its £5,000 million unsecured rolling credit facility from Aviva Group Holdings Limited,
extending the maturity date to 31 December 2028. From 1 January 2024 this facility will accrue interest at the GBP
SONIA Swap Rate plus the Five Year Credit Default Swap Spread.

• The Company has renewed its £2,000 million unsecured revolving credit facility to Aviva Group Holdings Limited,
extending the maturity date to 31 December 2028. From 1 January 2024 this facility will accrue interest at the GBP
SONIA Swap Rate plus the Five Year Credit Default Swap Spread.

These relate to intragroup transactions and therefore are not subsequent events for the Group.

For Group subsequent events please see note 60.

Aviva plc

3.181

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Other
information

In this section

4.02
4.19
4.20

Alternative performance measures
Shareholder services
Cautionary Statement

Aviva plc

4.01

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Alternative performance measures

Overview
In order to fully explain the performance of our business, we discuss and analyse our results in terms of financial
measures which include a number of Alternative Performance Measures (APMs). APMs are non-GAAP measures which are
used to supplement the disclosures prepared in accordance with other regulations, such as International Financial
Reporting Standards (IFRS) and Solvency II. We believe these measures provide useful information to enhance the
understanding of our financial performance. However, APMs should be viewed as complementary to, rather than as a
substitute for, the amounts determined according to other regulations.

The APMs utilised by Aviva may not be the same as those used by other insurers and may change over time. The
calculation of APMs is consistent with previous periods unless otherwise stated.

Changes in APMs:
New APMs introduced following the adoption of IFRS 17
The Group has applied IFRS 17 Insurance Contracts retrospectively from 1 January 2023. This standard has brought
significant changes to the measurement and presentation for insurance, participating investment and reinsurance
contracts. Consequently, we have introduced new APMs in 2023 that provide useful information under the standard:
• Operating value added;
• Stock of future profit;
• Gross written premiums (GWP);
• Adjusted IFRS Shareholders' equity; and
• Adjusted IFRS Shareholders' equity per share.

APMs amended following the adoption of IFRS 17
In addition, we have made certain changes to existing APMs to ensure that they remain relevant and useful for
stakeholders. The Group adjusted operating profit and combined operating ratio, claims, commission, and expense ratios
APM disclosures have all been updated to reflect the implementation of IFRS 17.

Value of new business on an adjusted Solvency II basis (VNB) has also been amended following a review of the basis of
preparation. The revised APM is considered more useful as it avoids distortions in the value of new business due to timing
differences in asset origination or temporary reinsurance gaps.

Solvency II return on equity is now presented both with and without an adjustment for excess capital, now that we have
completed our capital return initiatives over the last two years.

Group adjusted operating profit, controllable costs, Solvency II operating own funds generation and Solvency II operating
capital generation now exclude integration and restructuring costs that relate to a well-defined programme that
materially changes the scope of our business or manner in which its conducted. There is no impact on 2022 comparatives.

Further details on these changes are provided in the relevant sections below.

Other changes to APMs
Methodology has been updated in two areas that impact operating APMs, unrelated to the adoption of IFRS 17. The
changes relate to:

(i) an update to the methodology to report the volatility from the impact of market movements on policyholder tax in the
Heritage business in non-operating investment variances and economic assumption changes; and

(ii) a change in the calculation of general insurance investment return from a long-term investment return (LTIR) to an
expected return approach as used for life business, with variances between expected and actual return being reported in
non-operating investment variances and economic assumption changes.

2022 comparatives have been restated to reflect these changes.

Both of the methodology changes impact the following APMs:
• Group adjusted operating profit
• Operating earnings per share
• IFRS return on equity

The second methodology change impacts the following APMs:
• Solvency II operating own funds generation
• Solvency II operating capital generation
• Solvency II return on equity
• Solvency II return on capital

In addition, following a review of the presentation of Solvency II operating own funds generation and Solvency II
operating capital generation, management actions and other are now only separately disclosed for life business.

IFRS net asset value (NAV) and IFRS NAV per share have been renamed to IFRS Shareholders' equity and
IFRS Shareholders' equity per share to better reflect the descriptions within the consolidated statement of financial
position.

Aviva plc

4.02

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Alternative performance measures

The Group has introduced two new APMs: the distribution ratio for GI business, and the Cost Asset Ratio for the
Insurance, Wealth and Retirement (IWR) and Aviva Investors businesses. These measures provide useful information
regarding the ongoing efficiency of these businesses following the achievement of the Group's 2018 cost saving target.

Further details on APMs derived from IFRS measures and APMs derived from Solvency II measures are provided in the
following sections. A further section describes other APMs.

APMs derived from IFRS measures
A number of APMs relating to IFRS are utilised to measure and monitor the Group’s performance.
• Group adjusted operating profit
• Operating value added
• Stock of future profit
• Gross written premiums (GWP)
• Combined operating ratio (COR)
• Claims, commission, expense and distribution ratios
• Operating earnings per share (Operating EPS)
• Controllable costs
• IFRS return on equity (RoE)
• IFRS Shareholders' equity per share
• Adjusted IFRS Shareholders' equity per share
• Assets Under Management (AUM) and Assets Under Administration (AUA)
• Net flows
• Aviva Investors revenue
• Cost income ratio (CIR)
• Cost asset ratio

Definitions and additional information, including reconciliation to the relevant amounts in the IFRS financial statements
and, where appropriate, commentary on the material reconciling items are included within this section.

Group adjusted operating profit
Group operating profit is an APM that supports decision making and internal performance management of the Group’s
operating segments that incorporates an expected return on investments supporting the life and non-life insurance
businesses. The Group considers this measure meaningful to stakeholders as it enhances the understanding of the
Group’s operating performance over time by separately identifying non-operating items. The various items excluded from
Group adjusted operating profit, but included in IFRS profit before tax, are:

(a) Investment variances and economic assumption changes
Group adjusted operating profit for life and non-life business is based on expected investment returns on financial
investments backing shareholder and policyholder funds over the reporting period, with allowance for the corresponding
expected movements in liabilities. This includes movements in the liabilities to with-profit policyholders that offset the
operating result of non-profit contracts written in the with-profit funds. Group adjusted operating profit also includes
the effect of the mismatch between movements in expected future insurance contract cash flows measured at current
discount rates and the corresponding adjustment to the contractual service margin (CSM) measured at locked in rates.
The expected rate of return is determined using consistent assumptions between operations, having regard to local
economic and market forecasts of investment return and asset classification.

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. The expected return on equities
and properties is calculated by reference to the opening 10-year swap rate in the relevant currency plus an appropriate
risk margin.

Group adjusted operating profit includes the effect of variances in experience for non-economic items, such as mortality,
persistency and expenses, and the effect of changes in non-economic assumptions such as changes in expected
cashflows for non-life claims. Changes due to economic items such as market value movement 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 Group adjusted operating profit.

The exclusion of short-term investment variances from this APM reflects the long-term nature of much of our business.
The Group adjusted operating profit, which is used in managing the performance of our operating segments, excludes the
impact of economic variances to provide a comparable measure year-on-year.

Aviva plc

4.03

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Alternative performance measures

(b) Impairment, amortisation and profit or loss on disposal
Group adjusted operating profit also excludes impairment of goodwill, associates and joint ventures; amortisation and
impairment of other intangible assets acquired in business combinations; amortisation and impairment of acquired value
of in-force business on non-participating investment contracts; and the profit or loss on disposal and remeasurement of
subsidiaries, joint ventures and associates.

These items principally relate to merger and acquisition activity which we view as strategic in nature, hence they are
excluded from the Group adjusted operating profit APM as this is principally used to manage the performance of our
operating segments when reporting to the Group chief operating decision maker.

(c) Integration and restructuring costs
Group adjusted operating profit excludes integration and restructuring (I&R) costs that relate to a well-defined
programme that materially changes the scope of our business or the manner in which it is conducted, with the exception
of expected future I&R costs directly attributable to insurance contracts. Directly attributable I&R costs will be reflected
in the CSM and the impact recognised in Group adjusted operating profit as CSM is amortised.

At the beginning of 2024, IWR announced a 15-year extension to our key strategic partnerships with Diligenta and FNZ to
simplify our operations and support our growth ambitions, with further changes improving how we serve our customers.
Integration and restructuring costs of £61 million have been incurred during 2023 in relation to this simplification, with
additional costs expected to be incurred over the period 2024-2028. This programme will rationalise our administration
platforms to remove complexity and improve customer outcomes. The costs will cover changes to data and systems and
expenditure to deliver associated efficiency savings. Benefits of this restructuring programme will include a reduction in
the operating cost base of the IWR business, resulting in higher cash generation and cash remittances.

(d) Other items
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. At 31 December 2023, other items are a net
loss of £176 million (2022: £41 million gain) which comprises:

• A charge of £92 million relating to fees paid to bondholders in respect of certain modifications to the terms and
conditions of the Group’s £600 million Tier 2 Fixed to Floating notes. This is disclosed outside of Group adjusted
operating profit as the costs arise from a strategic decision relating to the financing of the group as a whole and not to
the operating performance of the Group or its operating segments;

• A charge of £71 million relating to provisions for indemnities entered into through acquisition and disposal activity. This
is disclosed outside of Group adjusted operating profit as the acquisition and disposal activity is considered strategic in
nature;

• A charge of £2 million relating to costs directly associated with the acquisition of Optiom O2 Holdings Inc by Aviva

Canada; and

• Charges totalling £11 million relating to the cost of the employee free share award announced in 2022, and fees and

charges associated with the 2023 share buyback programme.

Other items at 2022 comprised :

• The following items which are disclosed outside of Group adjusted operating profit as they relate to acquisition and

disposal activity that we consider to be strategic in nature:
–A gain of £77 million relating to negative goodwill on the acquisition of Aviva India, which is excluded from Group

adjusted operating profit for consistency with the treatment of impairment of goodwill;

–A charge of £15 million arising from third party reinsurance, accepted by Aviva from the former Aviva France general

insurance entity, which was terminated on 31 December 2021;

–A net release of provisions relating to acquisition and disposal activity of £1 million;

–A charge of £7 million relating to costs directly associated with the acquisition of Succession Wealth; and

• Charges of £15 million relating to the cost of the employee free share award, and fees and charges associated with the

share buyback and return of capital to ordinary shareholders.

Aviva plc

4.04

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Alternative performance measures

The table below presents a reconciliation between our consolidated group adjusted operating profit and profit before tax
attributable to shareholders’ profits.

Insurance, Wealth & Retirement (IWR)
UK & Ireland General Insurance
Canada General Insurance
Aviva Investors
International investments (India, China and Singapore)

Business unit operating profit
Corporate centre costs and Other operations
Group debt costs and other interest
Group adjusted operating profit before tax attributable to shareholders' profits
Adjusted for the following:

Adjusting items before tax

Tax on Group adjusted operating profit
Tax on other activities

Tax attributable to shareholders' profits
Profit/(loss) for the year

1. The 2022 comparative amounts have been restated for methodology changes described in the 'Other Information - overview' section.

2023

£m

994
452
399
21
63
1,929

(215)
(247)
1,467

322
—
(52)
(59)
(61)
(176)
(26)
(289)
(46)
(335)
1,106

Restated1
2022

£m

1,199
278
352
25
39
1,893
(297)
(246)
1,350

(2,736)
(8)
(54)
(68)
—
41
(2,825)
(178)
623
445
(1,030)

Operating value added
Operating value added represents the increase in "value" in the period on an IFRS 17 basis. This is defined as the operating
profit in the period plus the operating change in the contractual service margin (CSM) (gross of tax). Operating changes in
the CSM include new business, interest accretion, expected return, experience variances, assumption changes and
release of CSM and exclude economic variances and economic assumption changes.

Non-operating changes in the CSM consist of investment variances, economic assumption changes, and integration and
restructuring costs that are directly attributable to insurance contracts. This includes integration and restructuring costs
(gross of tax) of £95 million (2022: £nil) representing the present value of the costs expected to be incurred in relation to
simplification of the infrastructure of our IWR business and improvements to how we serve our customers. £143 million
has been recognised in operating changes in CSM reflecting lower expense assumptions. Additional benefits in excess of
the costs are expected to be recognised in future years as contracts are migrated and the programme delivers the
expected efficiencies.

For business measured using the general measurement model (GMM) the CSM is calculated using locked-in rates, so
investment variances and economic assumption changes will be limited to changes in expenses due to inflation. For
contracts measured under the variable fee approach (VFA), variance between the expected return on the shareholder
share of underlying assets and the actual return are reported as non-operating changes in CSM.

This APM is relevant for the life insurance business and is a more complete and useful measure of the value generated in
the period, reflecting the benefit of writing new business and assumption changes in the period. No adjustment is made
for the future value of the businesses for which no CSM liability has been established and operating value added is equal
to operating profit.

Group adjusted operating profit before tax attributable to shareholders’ profits (restated1)
Operating changes in CSM
Operating value added

1. The 2022 comparative amounts have been restated for methodology changes described in the 'Other Information - overview' section.

2023
£m

1,467
851
2,318

2022
£m

1,350
426
1,776

Aviva plc

4.05

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Alternative performance measures

Insurance, Wealth & Retirement (IWR)1
UK & Ireland General Insurance
Canada General Insurance
Aviva Investors
International investments (India, China and Singapore)
Business unit operating value added
Corporate centre costs and Other operations1
Group debt costs and other interest
Group operating value added

2023

£m

1,849
452
399
21
63
2,784

(219)
(247)
2,318

IWR operating value added excludes the impact of intra-group reinsurance of Periodic Payment Orders (PPOs). This intra-group reinsurance is reported under ‘Other operations’.

Opening CSM1
New business
Interest accretion and expected return
Experience variance and other
Assumption changes
Release of CSM
Operating changes in CSM
Non-operating changes2
Closing CSM1,3

Note

40(b)

2023
£m

6,480
437
257
393
564
(800)
851
(83)

7,248

2022

£m

1,635
278
352
25
39
2,329
(307)
(246)
1,776

2022
£m

6,163
414
215
178
306
(687)
426
(109)
6,480

1. The 2022 opening and closing CSM has been restated by £17 million following a correction in respect of historic accounting for with-profits business (see note 1(b)).
2. Non-operating changes in CSM consists of investment variances, economic assumption changes, and integration and restructuring costs that are directly attributable to insurance contracts. This

includes integration and restructuring costs (gross of tax) of £95 million (2022: £nil) representing the present value of the costs expected to be incurred over the period 2024-2028 in relation to the
extension of two key strategic partnerships. Benefits of this restructuring programme will include a reduction in the operating cost base of the IWR business, of which £143 million has been
recognised in operating changes in CSM in the year reflecting lower expense assumptions. Additional benefits in excess of the costs are expected to be recognised in future years as contracts are
migrated and the programme delivers the expected efficiencies.

3. The CSM is included within Insurance contract and participating investment contract liabilities on the Consolidated statement of financial position. See note 40 for more detailed information on

these balances.

Stock of future profit
Stock of future profit is the addition of the CSM and the risk adjustment, which represents the future profit recognised in
the statement of financial position to unwind into profit over time. It is presented at the Group total. The releases from
the stock of future profit are a key driver of profit for our life insurance business and these releases are provided for our
IWR Protection, Annuities, Heritage and Ireland businesses.

Gross written premiums (GWP)
GWP is a measure of volumes written in the period for the general Insurance business. It was previously reported under
the IFRS 4 income statement and therefore was a GAAP measure. Following adoption of IFRS 17, GWP is classified as an
APM. GWP is useful for understanding the growth of the business. Reconciliations of GWP to insurance revenue is set out
below. Reconciling items arise from presentational differences between IFRS 4 and IFRS 17, and timing differences
between writing premiums and recognising insurance revenue.

Gross written premiums
Movement in unearned premiums on contracts measured under the premium allocation approach (PAA)
Instalment income
Reclassification resulting from the adoption of IFRS 17

Insurance revenue from general insurance business
Insurance revenue from other segments
Insurance revenue

Note

4(a)

2023
£m

10,888

(668)
69
—
10,289
8,208
18,497

2022
£m

9,749
(359)
67
34
9,491
7,398
16,889

Aviva plc

4.06

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Alternative performance measures

Combined operating ratio (COR)
COR is a useful financial measure of general insurance (GI) underwriting profitability calculated as total underwriting
costs in our insurance entities expressed as a percentage of net insurance revenue. It is used to monitor the profitability
of lines of business. A COR below 100% indicates profitable underwriting.

The COR presentation has been updated for IFRS 17. The main differences in the calculation relate to using a risk
adjustment rather than reserve margins, specific allowances for onerous business and reallocations between the
numerator and denominator of the calculation. COR continues to be presented on a net of reinsurance basis, but now
includes the impact of discounting as aligned to IFRS 17 requirements (discounted COR).

The Group considers COR with claims measured on an undiscounted basis (undiscounted COR) to align more closely to
the way in which the business is managed, and undiscounted COR is disclosed alongside discounted COR.

The Group discounted and undiscounted COR are shown below.

Total claims and benefits – GI and Health
Adjusted for the following:

Claims and benefits – Health
Claims recoverable from reinsurers
Losses on onerous contracts (including recoveries) and other

Total incurred claims (included in COR)
Insurance service expense – GI and Health
Adjusted for the following:

Insurance service expenses- Health
Insurance service expenses recoverable from reinsurers
Remove incurred claims
Include non attributable expenses and other

Total commission and expenses (included in COR)2
Total underwriting costs - discounted
Remove discounting benefit
Underwriting costs - undiscounted
Insurance Revenue – GI and Health
Adjusted for the following:

Insurance Revenue – Health
Allocation of reinsurance premiums
Net insurance revenue (included in COR)
Discounted Combined operating ratio (COR)
Undiscounted Combined operating ratio (COR)

Note

2023
£m

Restated1
2022
£m

(6,557)

(6,237)

4(b)

454
474
(16)
(5,645)
(9,664)

582
473
5,645

(35)
(2,999)
(8,644)
(327)
(8,971)
10,925

(637)
(963)

9,325
92.7 %
96.2 %

371
652
(48)
(5,262)
(9,172)

435
650
5,262
(20)
(2,845)
(8,107)
(75)
(8,182)
10,049

(558)
(896)
8,595
94.3 %
95.2 %

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1).
2. Commission and expenses (included in COR) is comprised of £(1,857) million incurred commission (2022: £(1,732) million) and £(1,142) million incurred expenses (2022: £(1,113) million).

Claims, commission, expense and distribution ratios
Financial measures of the performance of our general insurance business which are calculated as incurred claims, earned
commission or earned expenses expressed as a percentage of net insurance revenue, which can be derived from the COR
table above. The ratios are meaningful to stakeholders because they enhance understanding of the profitability of the
business sold. The commission ratio and expense ratio are aggregated together to calculate the distribution ratio, which
is the key efficiency metric for general insurance business.

Operating earnings per share (Operating EPS)
Operating EPS is calculated based on the Group adjusted operating profit attributable to ordinary shareholders net of tax,
deducting non-controlling interests, preference dividends and direct capital instrument coupons divided by the weighted
average number of ordinary shares in issue, after deducting treasury shares. Operating EPS is considered meaningful to
stakeholders because it enhances the understanding of the Group’s operating performance over time by adjusting for the
effects of non-operating items. A reconciliation between operating EPS and basic EPS can be found in note 15.

Aviva plc

4.07

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Alternative performance measures

Controllable costs
Controllable costs is a useful measure of the controllable operational overheads associated with maintaining our
businesses. These predominantly consist of staff costs, central costs, property and IT related costs and other expenses.
Controllable costs also include indirect acquisition costs, such as underwriting overheads, and claims handling costs.
These are considered to be controllable by the operating segments.

Controllable costs excludes:
• Impairment of goodwill, associates and joint ventures; amortisation and impairment of other intangible assets acquired

in business combinations; and amortisation and impairment of acquired value of in-force business. These items relate to
merger, acquisition and disposal activity which we view as strategic in nature, hence they are excluded from
controllable costs which is principally used to manage the performance of our operating segments;

• Costs in relation to product governance and mis-selling. These costs represent compensation and redress payments

made to policyholders and are excluded from controllable costs because they have characteristics of claims payments;

• Premium based taxes, fees and levies that vary directly with premiums. These costs are by their nature a direct cost

incurred as a result of generating premium income, and therefore not a controllable operational overhead;

• Integration and restructuring costs recognised in 'other expenses' that relate to a well-defined programme that

materially changes the scope of our business or the manner in which it is conducted; and

• Other amounts that, in management’s view, are not representative of underlying day-to-day expenses involved in

running the business, and that would distort the year-on-year controllable costs trend. In 2023 these primarily include;

–A charge of £92 million relating to fees paid to bondholders in respect of certain modifications to the terms and
conditions of the Group’s £600 million Tier 2 Fixed to Floating notes. This is disclosed outside of Group adjusted
operating profit as the costs arise from a strategic decision relating to the financing of the group as a whole and not to
the operating performance of the Group or its operating segments;

–£78 million of costs where the implementation of IFRS 17 has required a change in income statement classification but

not within the boundary of controllable costs;

–A charge of £71 million relating to provisions for indemnities entered into through acquisition and disposal activity. This
is disclosed outside of Group adjusted operating profit as the acquisition and disposal activity is considered strategic in
nature; and

–Charges totalling £11 million relating to the cost of the employee free share award announced in 2022, and fees and

charges associated with the 2023 share buyback programme.

A reconciliation of other expenses in the IFRS consolidated income statement to controllable costs is set out below:

Other expenses1
Add: other acquisition costs1
Add: claims handling costs1
Less: amortisation and impairment of intangibles acquired in business combinations
Less: amortisation and impairment of acquired value of in-force business on investment contracts1
Add/(less): foreign exchange gains/(losses)1
(Less)/add: product governance and mis-selling costs
Less: integration and restructuring costs
Less: premium based income taxes, fees and levies
Less: other costs1
Controllable costs

Note

8
8

2023
£m

2,443
1,055
239
(52)
(59)
146
(63)
(61)
(220)
(256)
3,172

2022
£m

2,225
999
330
(54)
(68)
(73)
12
—
(216)
(3)
3,152

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 (see note 1). Total controllable costs are unchanged as a result of IFRS 17 adoption.

Baseline controllable costs are controllable costs included in the scope of the 2018 cost saving target baseline. Baseline
controllable costs excludes:
• Cost reduction implementation and IFRS 17 costs. These programmes have been substantially completed in 2023 and

excluded from baseline controllable costs.

• Strategic investment on significant programmes supporting growth, customer experience, efficiency or agility to

transform Group performance.

• Other costs relating to recently acquired entities, non-insurance operations relating to Europe and Asia and the impact

of foreign exchange movements which were not included in the 2018 cost savings target baseline.

Controllable costs
Less: Cost reduction implementation, IFRS 17 costs and other
Less: Strategic investment
Baseline controllable costs

2023
£m

3,172
(332)
(106)

2,734

2022
£m

3,152
(287)
(94)
2,771

Aviva plc

4.08

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Alternative performance measures

IFRS return on equity (RoE)
IFRS RoE is a useful measure of growth and performance of the business on an IFRS basis. The IFRS RoE calculation is
based on Group adjusted operating profit after tax attributable to ordinary shareholders expressed as a percentage of
weighted average ordinary shareholders’ equity (excluding preference share capital, tier 1 notes and non-controlling
interests).

For the full year reporting period, the weighted average is calculated as 25% weighting to closing equity, 25% weighting to
opening equity and 50% weighting to equity as at the half year reporting date. For the half year reporting period, the
weighted average is calculated as 50% weighting to opening equity and 50% weighting to closing equity.

Group adjusted operating profit after tax attributable to ordinary shareholders (£m)
Weighted average ordinary shareholders’ equity (excluding preference share capital, tier 1 notes and non-
controlling interests) (£m)

IFRS RoE (%)

Note

2023

Restated1
2022

1,106

1,117

8,705

12.7 %

11,919

9.4 %

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).

IFRS Shareholders' equity per share
IFRS Shareholders' equity per share is calculated as the equity attributable to shareholders of Aviva plc, less preference
share capital (both within the consolidated statement of financial position), divided by the actual number of shares in
issue at the balance sheet date. IFRS Shareholders' equity per share is meaningful as a measure of the value generated by
the Group in terms of the equity shareholders’ face value per share investment. This APM has been renamed from IFRS
NAV per share to better reflect the descriptions within the consolidated statement of financial position.

IFRS Shareholders' equity1 at 31 December (£m)2
Number of shares in issue at 31 December (in millions)
IFRS Shareholders' equity per share2

Note

2023

2022

8,586
2,739
313 p

9,208
2,808
328 p

1. Excluding preference shares of £200 million (2022: £200 million).
2. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).

Adjusted IFRS Shareholders' equity per share
Adjusted IFRS Shareholders' equity per share is calculated as the equity attributable to shareholders of Aviva plc, less
preference share capital (both within the consolidated statement of financial position), plus CSM (see note 40(b)) net of
tax, divided by the actual number of shares in issue at the balance sheet date. Adjusted IFRS Shareholders' equity per
share is meaningful as a measure of the value generated by the Group, including the value held in CSM, in terms of the
equity shareholders’ face value per share investment.

IFRS Shareholders' equity1 at 31 December (£m)2
Add: CSM (£m)
Less: Tax on CSM (£m)
Adjusted IFRS Shareholders’ equity1
Number of shares in issue at 31 December (in millions)
Adjusted IFRS Shareholders' equity per share

Note

2023

2022

40(c)

8,586
7,248
(1,779)
14,055
2,739
513 p

9,208
6,480
(1,585)
14,103
2,808
502 p

Aviva plc

4.09

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Alternative performance measures

Assets Under Management (AUM) and Assets Under Administration (AUA)
AUM represent all assets managed or administered by or on behalf of the Group's subsidiaries, including those assets
managed by Aviva Investors and by third parties. AUM include managed assets that are reported within the Group’s
statement of financial position and those assets belonging to external clients outside the Aviva Group which are therefore
not included in the Group’s statement of financial position.

Consistent with previous years, Aviva Investors AUA comprises AUM plus £40,628 million (2022: £37,501 million) of assets
managed by third parties on platforms administered by Aviva Investors. Both AUM and AUA are monitored as they reflect
the potential earnings arising from investment returns and fee and commission income and measure the size and scale of
the Group’s fund management business.

A reconciliation of amounts appearing in the Group’s statement of financial position to AUM is shown below:

2023
£m

Restated1
2022
£m

Financial investments
Investment property
Loans1,2
Cash and cash equivalents
Other

Assets included in statement of financial position
Less: third-party funds and UK Platform included above

Assets managed on behalf of the Group's subsidiaries3

Aviva Investors external AUM
UK Platform4
Other

Assets managed on behalf of third parties5
Total AUM6

245,831
6,232
31,884
17,273
5,678
306,898

287,077
38,191
50,555
637
89,383
376,460

224,086
5,899
29,633
22,505
6,408
288,531
(19,511)
269,020
37,834
44,603
677
83,114
352,134

(19,821)

1. The 2022 comparative results have been restated following the adoption of IFRS 17, as described in note 1. Policy loans in scope of IFRS 17 totalling £13 million have been reallocated from loans to

insurance contract and participating investment contract liabilities.

2. Includes £199 million of loans classified as held for sale.
3. Includes investments in sustainable assets, capturing green assets, sustainability assets, social bonds, and transition and climate-related funds. Definitions for this Climate-related measure can be

found within the Reporting Criteria section of the Aviva plc Climate-related Financial Disclosure 2023.

4. UK Platform relates to the assets under management in the UK Wealth business.
5. AUM managed on behalf of third parties cannot be directly reconciled to the financial statements.
6. Includes AUM of £227,022 million (2022: £222,671 million) managed by Aviva Investors.

Net flows
Net flows is used by management as a key measure of growth in AUM, from which income is generated through asset
management charges (AMCs). This measure is predominantly used in Aviva Investors and the Wealth business within
Insurance, Wealth and Retirement (IWR).

It is the net position of inflows and outflows. Inflows include net premiums received for insurance and participating
investment contracts, deposits made under non-participating investment contracts, and other funds received from
customers included in AUM. Outflows include net claims paid for insurance and participating investment contracts,
redemptions and surrenders under non-participating investment contracts, and other funds withdrawn by customers
from AUM.

Aviva Investors net flows includes flows on internal assets which are managed on behalf of Group companies, and
external flows on assets belonging to clients outside the Group which are not included in the Group's statement of
financial position.

Net flows excludes market and other movements. Net flows when positive in the period can be referred to as net inflows
and when negative as net outflows.

Aviva Investors revenue
Aviva Investors revenue includes AMCs received, plus transaction fees and other related income, and is stated net of fees
and commissions paid. It is a useful measure of revenue earned from fund management activities. Aviva Investors
recognises fee income in the segmental income statement within both fee and commission income and inter-segment
revenue. Fees and commissions paid are classified in other operating expenses.

Aviva plc

4.10

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Alternative performance measures

Cost income ratio (CIR)
Cost income ratio is used to monitor profitable growth in Aviva Investors and is useful as it gives a simple view of how
efficiently the business is being run, allowing management to clearly see how costs are moving in relation to income.

Cost income ratio is calculated as Aviva Investors' baseline controllable costs divided by Aviva Investors revenue.

Aviva Investors revenue
Aviva Investors baseline controllable costs
Cost income ratio

2023
£m

346
(311)
90 %

2022
£m

379
(331)
87 %

Cost asset ratio
Cost asset ratio is used to monitor efficiency in the Insurance, Wealth & Retirement (IWR) and Aviva Investors businesses
and is calculated in basis points (bps) as controllable costs divided by average assets under management (AUM). It is a
useful measure as it allows management to see the trend of costs compared with business volumes.

Insurance, Wealth & Retirement (IWR) controllable costs

Insurance, Wealth & Retirement (IWR) average AUM

Insurance, Wealth & Retirement (IWR) cost asset ratio

Aviva Investors controllable costs

Aviva Investors average AUM

Aviva Investors cost asset ratio

2023

£m

2022

£m

1,259

1,243

304,363

309,332

41.4 bps 40.2 bps

2023

£m

325

2022

£m

354

224,847

245,226

14.5 bps 14.4 bps

There is significant overlap between the AUM balances of the Insurance, Wealth & Retirement and the Aviva Investors
businesses, while some of the Group’s AUM is attributable to other business units. The internal allocation of AUM and
AUA to Insurance, Wealth & Retirement and Aviva Investors provides the most relevant information to assess the
efficiency of these businesses.

APMs derived from Solvency II measures
The Group is a regulated entity under the Solvency II regulatory framework and therefore uses a number of APMs that
are derived from Solvency II measures in addition to those that are derived from IFRS based measures.

A number of key performance measures relating to Solvency II are utilised to measure and monitor the Group’s
performance and financial strength
• Solvency II shareholder cover ratio
• Value of new business on an adjusted Solvency II basis (VNB)
• Solvency II Present Value of New Business Premium (PVNBP)
• Annual premium equivalent (APE)
• Solvency II operating own funds generation (Solvency II OFG)
• Solvency II operating capital generation (Solvency II OCG)
• Solvency II future surplus emergence
• Solvency II return on capital (Solvency II RoC)
• Solvency II return on equity (Solvency II RoE)
• Solvency II net asset value per share (Solvency II NAV per share)
• Solvency II debt leverage ratio

The Solvency II regulatory framework requires insurers to hold own funds in excess of the Solvency Capital Requirement
(SCR). Own funds are available capital resources determined under Solvency II. This includes the excess of assets over
liabilities in the Solvency II balance sheet, calculated on best estimate, market consistent assumptions and includes
transitional measures on technical provisions (TMTP), subordinated liabilities that qualify as capital under Solvency II, and
off-balance sheet own funds.

Aviva plc

4.11

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Alternative performance measures

The SCR is calculated at Group level using a risk-based capital model which is calibrated to reflect the cost of mitigating
the risk of insolvency to a 99.5% confidence level over a one-year time horizon – equivalent to a 1 in 200 year event –
against financial and non-financial shocks. As a number of subsidiaries utilise the standard formula rather than a risk-
based capital model to assess capital requirements, the overall Group SCR is calculated using a partial internal model, and
it is shown after the impact of diversification benefit.

The ‘shareholder view’ of Solvency II is 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 and aligns with management’s approach to
dynamically manage its capital position. In arriving at the shareholder view, the following adjustments may be made to the
regulatory Solvency II position:
• The contribution to the Group’s SCR and own funds of the most material fully ring-fenced with-profits funds and staff
pension schemes in surplus are excluded. These exclusions have no impact on Solvency II surplus as these funds are
self-supporting on a Solvency II capital basis with any surplus capital above SCR not recognised.

• A notional reset of the TMTP, calculated using the same method as used for formal TMTP resets. This presentation
avoids step changes to the Solvency II position that arise only when the formal TMTP reset points are triggered.

• Adjustments for future regulatory changes that are finalised but not yet implemented at the reporting date in order to

show a more representative view of the Group’s solvency position.

The reconciliation presented below shows the key differences between Group equity on an IFRS basis and Solvency II
own funds on a shareholder view. Additional items bridging from Solvency II shareholder own funds to Solvency II
regulatory own funds are presented subsequently.

Total Group equity on an IFRS basis
Exclude preference shares and tier 1 notes
Exclude non-controlling interests
Add back CSM
Exclude tax on CSM
IFRS adjusted shareholders' equity

Goodwill
Acquired value of in-force business
Deferred acquisition costs (net of deferred income)
Other intangibles

Elimination of goodwill and other intangible assets
Removal of IFRS risk adjustment
Inclusion of Solvency II risk margin
TMTP (on a notional reset basis)
Revaluation of subordinated liabilities
Asset, liability and other accounting valuation differences2
Tax differences
Exclude staff pension schemes in surplus (net of tax)
Solvency II unrestricted shareholder tier 1 own funds
Restricted tier 1
Tier 2
Tier 3
Estimated Solvency II shareholder own funds
Adjustments for:

Fully ring-fenced with-profit funds
Staff pension schemes in surplus
Regulatory vs. notional TMTP valuation differences

Estimated Solvency II regulatory own funds

Note

40(c)

17
18
30, 49
18

40(b)

52
52
52

2023
£m

9,600

(696)
(318)

7,248
(1,779)
14,055
(2,100)
(461)
(710)
(507)
(3,778)
1,162
(1,278)
1,407
196
682
(403)
(669)

11,374
946
4,526
173
17,019

1,408
397
—
18,824

Restated1
2022
£m

10,214
(696)
(310)
6,480
(1,585)
14,103
(2,102)
(521)
(783)
(419)
(3,825)
1,326
(2,922)
2,319
265
1,323
(631)
(996)
10,962
946
4,264
296
16,468

1,369
394
437
18,668

1. The 2022 comparative amounts have been restated following the adoption of IFRS 17 and for a correction in respect of historic accounting for with-profits funds (see note 1).
2. In 2022, asset, liability and other accounting valuation differences includes £241 million relating to the correction of historic accounting for with-profits funds (see note 1(a)(ii)), which is required to be
adjusted as a restatement of prior year comparatives for IFRS but not for Solvency II. The 2022 comparative amounts for Solvency II own funds are unchanged from those previously published.

Estimated Solvency II regulatory own funds of £18,824 million (2022: £18,668 million) is £2,016 million(2022: £1,838 million)
greater than estimated Solvency II regulatory net assets of £16,808 million (2022: £16,830 million), primarily due to
recognition of eligible subordinated debt capital less adjustments for ring-fenced funds restrictions.

Aviva plc

4.12

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Alternative performance measures

Solvency II shareholder cover ratio
The estimated Solvency II shareholder cover ratio, which is derived from own funds divided by the SCR using the
‘shareholder view’, is one of the indicators of the Group’s balance sheet strength.

A reconciliation of the Solvency II regulatory surplus to the Solvency II shareholder surplus is provided below:

Estimated Solvency II regulatory surplus
Adjustments for:

Fully ring-fenced with-profit funds
Staff pension schemes in surplus
Notional reset of TMTP

Estimated Solvency II shareholder surplus

Own funds
£m

SCR
£m

2023

Surplus
£m

Own funds
£m

SCR
£m

2022

Surplus
£m

18,824

(10,011)

8,813

18,668

(9,441)

9,227

(1,408)
(397)
—
17,019

1,408
397
—

(8,206)

—
—
—
8,813

(1,369)
(394)
(437)
16,468

1,369
394
(96)
(7,774)

—
—
(533)
8,694

A summary of the shareholder view of the Group’s Solvency II position is shown in the table below:

Own Funds
Solvency Capital Requirement
Estimated Solvency II shareholder surplus
Estimated shareholder cover ratio

2023
£m

17,019
(8,206)
8,813
207 %

2022
£m

16,468
(7,774)
8,694
212 %

Value of new business on an adjusted Solvency II basis (VNB)
VNB measures the additional value to shareholders created through the writing of new life business in the period. It
reflects Solvency II assumptions and allowance for risk, and is defined as the increase in Solvency II own funds resulting
from life business written in the period, including the impact of interactions between in-force and new business, adjusted
to:
• Remove the impact of the contract boundary restrictions under Solvency II;
• Include businesses which are not within the scope of Solvency II own funds (e.g. UK non-life Retail business and UK

Equity Release); and

• Reflect a gross of tax and non-controlling interests basis, and other differences as set out in the footnote to the table

below.

• For annuities the VNB methodology has changed in 2023 to use pricing target asset mix and target reinsurance (where

actual reinsurance is not in place rather than the actual asset mix and reinsurance). The revised APM is considered more
useful as it avoids distortions in the value of new business due to timing differences in asset origination or temporary
reinsurance gaps. Comparatives for prior year have been restated.

Protection and Health (Insurance)
Wealth and Other
Retirement (Annuities and Equity Release)
Ireland
Insurance, Wealth & Retirement (IWR)
International investments (India, China and Singapore)
Group value of new business on an adjusted Solvency II basis (VNB)

2023

£m

214
239
286
42
781
93
874

Restated1
2022

£m

221
229
264
36
750
84
834

1. The 2022 comparative results have been restated for annuities following a VNB methodology change in 2023 to use pricing target asset mix and target reinsurance (where actual reinsurance is not

in place rather than the actual asset mix and reinsurance).

Aviva plc

4.13

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Alternative performance measures

A reconciliation between VNB and the Solvency II own funds impact of new business is provided below:

Insurance,
Wealth &
Retirement
(IWR)

£m

International
investments
(India, China
and Singapore)
£m

VNB (gross of tax and non-controlling interests)
Solvency II contract boundary restrictions – new business
Solvency II contract boundary restrictions – increments /
renewals on in-force business
Businesses which are not in the scope of Solvency II own funds
Actual vs target asset mix/expected reinsurance
Tax and other2

781
(90)

115

(182)
23
(259)

93
—

—

—
—
(20)

2023

Total
£m

874
(90)

115

(182)
23
(279)

Insurance,
Wealth &
Retirement
(IWR)
£m

International
investments
(India, China
and Singapore)
£m

750
(94)

128

(252)
17
(159)

84
—

—

—
—
(17)

Restated1
2022

Total
£m

834
(94)

128

(252)
17
(176)

Solvency II own funds impact of life new business

388

461

390

457

1. The 2022 comparative results for have been restated for annuities following a VNB methodology change in 2023 to use pricing target asset mix and target reinsurance (where actual reinsurance is

not in place rather than the actual asset mix and reinsurance).

2. Other includes the impact of 'look through profits’ in service companies (where not included in Solvency II) of £(29) million (2022: £(20) million) and the surplus from members options including

transfers, early/late retirement and take up of tax-free lump sum payments at retirement (not included in Solvency II Own Funds) on BPAs of £(90) million (2022 restated: £(49) million).

VNB is calculated using economic assumptions as at the point of sale, taken as those appropriate to the start of each
quarter. For contracts that are repriced more frequently, weekly or monthly economic assumptions have been used. The
economic assumptions follow Solvency II rules for risk-free rates, volatility adjustment and matching adjustment.

The operating assumptions are consistent with the Solvency II balance sheet. When these assumptions are updated, the
year-to-date VNB will capture the impact of the assumption change on all business sold that year.

Aviva applies a Matching Adjustment (MA) to certain obligations in IWR, using methodology which is set out in the
Solvency and Financial Condition Report (SFCR). The MA used for 2023 UK new business (where applicable) was 133 bps
(2022 restated: 123 bps). The MA is an addition to the rate used to discount Solvency II best-estimate liabilities, to reflect
the return on the matching assets used. In the calculation of VNB, an MA is applied based on the target allocation of
assets backing new business. This allocation will be different to the MA applied at the portfolio level.

New business margin
New business margin (VNB margin) is calculated as value of new business on an adjusted Solvency II basis (VNB) divided
by the present value of new business premiums (PVNBP) and expressed as a percentage.

Present value of new business premiums (PVNBP)
PVNBP measures sales in the Group’s life insurance business. PVNBP is derived from the present value of new regular
premiums expected to be received over the term of the new contracts plus 100% of single premiums from new business
written in the financial period and is expressed at the point of sale. The discounted value of regular premiums is
calculated using the same methodology as for VNB. PVNBP also includes any changes to existing contracts which were
not anticipated at the outset of the contract that generate additional shareholder risk and associated premium income of
the nature of a new policy.

Protection and Health (Insurance)
Wealth and Other
Retirement (Annuities and Equity Release)
Ireland
Insurance, Wealth & Retirement
International investments (India, China and Singapore)
Group present value of new business premiums (PVNBP)

2023

£m

2022

£m

3,006
23,470
7,088
1,934
35,498
2,048
37,546

2,507
22,877
6,238
1,657
33,279
1,172
34,451

Aviva plc

4.14

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Alternative performance measures

The table below presents a reconciliation of IFRS expected premiums from new insurance contracts to PVNBP:

Expected premiums (including investment components) from new insurance contracts
Contract boundary and other measurement differences between IFRS 17 and PVNBP

Expected premiums from new non-participating investment contracts, other retail business, equity
release loans and increments on existing policies
Expected premiums from insurance contracts not in scope of Insurance and reinsurance contracts1

Additions
Premiums from share of joint ventures, associates and other
Present value of new business premiums (PVNBP)

Note

40(d)

2023
£m

8,439

(18)

2022
£m

7,277
(161)

25,409

24,950

1,668
27,077
2,048
37,546

1,213
26,163
1,172
34,451

Includes premiums from Health business measured under PAA and the cash flows arising from guaranteed annuity options which are within the contract boundary of existing contracts under IFRS,
whilst the non-GAAP measure of PVNBP recognises a contract boundary at the date of vesting and therefore includes the premium paid by with profit funds to shareholder owned funds to establish
the annuities at vesting.

Annual premium equivalent (APE)
APE is calculated as the sum of new regular premiums plus 10% of new single premiums written in the period (where
relevant). APE is used as a new business measure, in particular for Protection and Health, part of our Insurance, Wealth &
Retirement business. This provides useful information on sales and new business when considered alongside VNB.

Protection and Health

Present value of new business premiums (PVNBP)
Remove capitalised value of future regular premiums
Annual premium equivalent (APE)

2023
£m

3,006
(2,591)
415

2022
£m

2,507
(2,148)
359

Solvency II operating own funds generation (Solvency II OFG)
Solvency II operating own funds generation measures the amount of Solvency II own funds generated from operating
activities and incorporates an expected return on investments supporting the life and non-life insurance businesses.
Solvency II operating own funds generation is used to assess sustainable growth. The Group considers this measure
meaningful to stakeholders as it enhances the understanding of the Group’s operating performance over time by
separately identifying non-operating items.

The expected investment returns assumed within Solvency II OFG are consistent with the returns used for Group
adjusted operating profit. Solvency II OFG includes the effect of variances in experience for non-economic items, such as
mortality, persistency and expenses, the effect of changes in non-economic assumptions (for example, longevity) and
model changes that are non-economic in nature.

Consistent with the Group adjusted operating profit APM, Solvency II OFG and Solvency II OCG exclude investment
variances, economic assumption changes, and integration and restructuring costs.

Solvency II operating own funds generation is the own funds component of Solvency II OCG (see next section).

Solvency II operating capital generation (Solvency II OCG)
Solvency II operating capital generation (Solvency II 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 support
sustainable cash remittances from our businesses, which in turn, supports the Group’s dividend as well as funding further
investment to provide sustainable growth.

Solvency II OCG reflects Solvency II OFG and operating movements in the SCR including the impact of capital actions, for
example, strategic changes in asset mix including changes in hedging exposure.

Aviva plc

4.15

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Alternative performance measures

An analysis of the components of Solvency II OCG is presented below:

Solvency II own funds impact of life new business
Operating own funds generation from life existing business
Operating own funds generation from life management actions and other 2
Operating own funds generation from non-life
Corporate centre costs and Other
Group external debt costs
Group Solvency II OFG
Solvency II operating SCR impact
Group Solvency II OCG

2023

£m

461
541
451
673
(219)
(178)

1,729
(274)
1,455

Restated1
2022

£m

457
475
542
559
(279)
(214)
1,540
(188)
1,352

1. The 2022 comparatives have been restated for methodology changes described in the 'Other information' overview section.
2. Management actions and other includes the impact of capital actions, non-economic assumption changes and other non-recurring items.

Solvency II OCG is a key component of the movement in Solvency II shareholder surplus. The tables below provide an
analysis of the change in Solvency II shareholder surplus.

Shareholder view

Group Solvency II surplus at 1 January
Operating capital generation1
Non-operating capital generation1,2,3
Dividends4
Debt issue / (repayment)
Share buyback / capital return
Acquisitions / Disposals
Estimated Group Solvency II surplus at 31 December

2023

Own funds
£m

SCR
£m

Surplus Own funds
£m

£m

SCR
£m

2022

Surplus
£m

16,468
1,729
(214)
(917)
241
(300)
12
17,019

(7,774) 8,694
1,455
(372)
(917)
241

(274)
(158)
—
—
—
—

1,540
(1,744)
(866)
(502)
(300) (3,750)
(360)

22,150 (9,076) 13,074
1,352
(188)
(243)
1,501
(866)
—
—
(502)
— (3,750)
(371)
(11)
16,468 (7,774) 8,694

12
(8,206) 8,813

1. The 2022 comparatives have been restated for methodology changes described in the 'Other information' overview section.
2. Non-operating capital generation includes integration and restructuring costs (net of tax) of £(356) million (2022: £nil) of which £(47) million was incurred during the year, with the remaining £(309)

million representing the present value of the costs expected to be incurred over the period 2024-2028 in relation to the extension of two key strategic partnerships. £208 million has been
recognised in operating own funds generation in the year reflecting lower expense assumptions. Additional benefits significantly in excess of the costs are expected to be recognised in future years
as contracts are migrated and the programme delivers the expected efficiencies.

3. Non-operating capital generation also includes £(241) million (2022: £nil) for the correction in respect of historic accounting for with-profits funds (see note 1 for further details).
4. Dividends includes £17 million (2022: £17 million) of Aviva plc preference dividends and £21 million (2022: £21 million) of General Accident plc preference dividends.

Solvency II future surplus emergence
Solvency II future surplus emergence is a projection of the capital generation from existing long-term in-force life
business and provides an indication of our expected Solvency II OCG from this business in future periods.

The projection is a static analysis as at a point in time and hence it does not include the potential impact of future new
business or the potential impact of active management of the business (for example, active management of market,
demographic and expense risk through investment, hedging, risk transfer, operational risk and expense management). It
is also based on a linear run-off of the TMTP. These items may affect the actual amount of Solvency II OCG earned from
existing business in future periods.

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 projected surplus, which is primarily expected to arise from the release of risk margin (including transitional
measures) and solvency capital requirement as the business runs off over time, is expected to emerge through Solvency II
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 methodology used in the Group adjusted operating profit.

Solvency II return on equity (Solvency II RoE)
Solvency II RoE is used as an economic value measure by the Group to assess growth and performance.
Solvency II RoE is calculated as:
• Operating own funds generation less preference dividends, equity RT1 note coupons, adjusted to replace the run-off of
TMTP with the economic cost of holding TMTP (calculated as Group Weighted Average Cost of Capital plus 1-yr swap
rate, multiplied by the opening TMTP on a shareholder basis), divided by:

• Opening unrestricted tier 1 shareholder Solvency II own funds.

Aviva plc

4.16

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Alternative performance measures

To remove distortions in the evaluation of growth and performance whilst we temporarily held excess capital an
adjustment was made to exclude excess capital from the denominator (and the return on excess capital from Solvency II
operating own funds generation). Excess capital is derived as Solvency II shareholder own funds in excess of our target
shareholder cover ratio (currently 180%). Now that we have completed our capital return initiatives over the last two
years, we have reported Solvency II RoE with and without adjustment for excess capital.

Solvency II RoE is calculated on an annualised basis and is shown below:

Solvency II operating own funds generation (Solvency II OFG)
Adjustment to replace TMTP run-off with economic cost of TMTP
Less preference share dividends
Less RT1 note coupons
Adjusted Solvency II OFG (less preference share dividends & RT1 note coupons)

Opening unrestricted tier 1 shareholder Solvency II own funds

Solvency II return on equity

1. The 2022 comparatives have been restated for methodology changes described in the 'Other information' overview section.

2023
£m

Restated1
2022
£m

1,729

(41)
(38)
(34)

1,616

1,540
64
(38)
(17)
1,549

10,962

15,697

14.7 %

9.9 %

Solvency II RoE (adjusted for excess capital) has increased by 2.7pp to 18.3% (2022: 15.6%). The excess capital at 1 January
2023 was £2,474 million and this included capital set aside for further debt reduction, pension scheme payment, final 2022
dividend and share buyback. The excess capital as at 1 January 2022 was £5,813 million and this included capital set aside
for the £3.75 billion capital return, £1 billion further debt reduction over time, pension scheme payment, Succession
Wealth acquisition and final 2021 dividend.

Solvency II return on capital (Solvency II RoC)
Solvency II return on capital is an unlevered economic value measure as it is used to assess growth and performance in
our businesses before taking debt into account. It is calculated on an annualised basis.

Solvency II RoC is calculated as:
• Operating own funds generation adjusted to replace the run-off of TMTP with the economic cost of holding TMTP
(calculated as Group Weighted Average Cost of Capital plus 1-yr swap rate multiplied by the opening TMTP on a
shareholder basis), divided by:

• Opening shareholder Solvency II own funds.

For UK general insurance only, capital held for internal risk appetite purposes is used instead of opening shareholder
Solvency II own funds. This removes any distortions arising from our general insurance legal entity structure and
therefore ensures consistency in measuring performance across markets. This is only applicable to UK general insurance
Solvency II return on capital and not to the aggregated Group Solvency II return on equity measure.

A reconciliation of Solvency II return on capital by market to Group return on equity is provided below.

Insurance, Wealth & Retirement (IWR)
UK & Ireland General Insurance2
Canada General Insurance
Aviva Investors
International investments (India, China and Singapore)
Corporate centre costs and Other2
Less: Senior and subordinated debt
Less: RT1 coupon and preference shares3
Less: Net deferred tax assets
Solvency II return on equity at 31 December

2023

Restated1
2022

Solvency II OFG
(post TMTP
adjustment)
£m

Opening
shareholder own
funds
£m

Solvency II
return on
capital/equity
%

Solvency II OFG
(post TMTP
adjustment)
£m

Opening
shareholder own
funds
£m

Solvency II return
on capital/equity
%

1,256
315
339
19
156
(219)
(178)
(72)
—
1,616

12,564
2,491
1,800
387
1,187
(1,961)
(4,264)
(946)
(296)
10,962

10.0 %
12.6 %
18.8 %
4.9 %
13.1 %
N/A
N/A
N/A
N/A
14.7 %

1,432
261
274
24
106
(279)
(214)
(55)
—
1,549

13,830
2,339
1,746
400
982
2,853
(5,880)
(450)
(123)
15,697

10.4 %
11.2 %
15.7 %
6.0 %
10.8 %
N/A
N/A
N/A
N/A
9.9 %

1. The 2022 comparatives have been restated for methodology changes described in the 'Other information' overview section.
2. For UK general insurance only, capital held for internal risk appetite purposes is used instead of opening shareholder Solvency II own funds to ensure consistency in measuring performance across
markets. This is only applicable to UK general insurance Solvency II return on capital and not to the aggregated Group Solvency II return on equity measure, with the reversal of the impact included
in Corporate centre costs and Other opening own funds.

3. Preference shares includes £21 million (2022: £21 million) of dividends and £250 million (2022: £250 million) of capital in respect of General Accident plc.

Aviva plc

4.17

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Alternative performance measures

Solvency II net asset value per share (Solvency II NAV per share)
Solvency II NAV per share is used to monitor the value generated by the Group in terms of the equity shareholders’ face
value per share investment. This is calculated as the closing unrestricted tier 1 Solvency II shareholder own funds, divided
by the actual number of shares in issue as at the balance sheet date. Consistent with Solvency II RoE, it is an economic
value measure used by the Group to assess growth.

The Solvency II NAV per share is shown below:

Unrestricted tier 1 shareholder Solvency II own funds (£m)
Number of shares in issue at 31 December (in millions)
Solvency II NAV per share

Note

2023

2022

11,374
2,739
415 p

10,962
2,808
390 p

Solvency II debt leverage ratio
Solvency II debt leverage ratio is calculated as total debt expressed as a percentage of Solvency II regulatory own funds
plus senior debt and commercial paper. Solvency II regulatory debt includes subordinated debt and preference share
capital. The Solvency II debt leverage ratio provides a measure of the Group’s financial strength. The Solvency II debt
leverage ratio is as follows:

Solvency II regulatory debt
Senior notes
Commercial paper
Total debt
Estimated Solvency II regulatory own funds, senior debt and commercial paper
Solvency II debt leverage ratio

A reconciliation from IFRS subordinated debt to Solvency II regulatory debt is provided below:

IFRS borrowings
Senior notes
Commercial paper
Operational borrowings

Less: Borrowings not classified as Solvency II regulatory debt
IFRS subordinated debt
Revaluation of subordinated liabilities
Other movements
Solvency II subordinated debt
Preference share capital and tier 1 notes
Solvency II regulatory debt

Other APMs

2023
£m

5,472
401
51
5,924
19,276
30.7 %

Note

2023

£m

6,374

(401)
(51)
(1,200)
(1,652)
4,722

(196)
—
4,526
946
5,472

2022
£m

5,210
687
252
6,149
19,607
31.4 %

2022

£m

6,755
(687)
(252)
(1,286)
(2,225)
4,530
(265)
(1)
4,264
946
5,210

Cash remittances
Cash paid by our operating businesses to the Group, for the period between March and the end of the month preceding
the results announcement comprised of dividends and interest on internal loans. Dividend payments by operating
businesses may be subject to insurance regulations that restrict the amount that can be paid. The business monitors total
cash remittances at a Group level and in each of its businesses. Cash remittances are considered a useful measure as they
support the payments of external dividends. Cash remittances eliminate on consolidation and hence are not directly
reconcilable to the Group’s IFRS consolidated statement of cash flows.

Excess centre cash flow
This represents the cash remitted by business units to the Group centre less central operating expenses and debt
financing costs. Excess centre cash flow is a measure of the cash available to pay dividends, reduce debt or invest back
into our business. Excess centre cash flow does not include cash movements such as disposal proceeds or capital
injections. Excess centre cash flow when positive in the period can be referred to as excess centre cash inflows and when
negative as excess centre cash outflows.

Aviva plc

4.18

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Alternative performance measures

Centre liquidity
Centre liquidity comprises cash and liquid assets and represents amounts as at the end of the month preceding results
announcements. It provides meaningful information because it shows the liquidity at the Group centre available to meet
debt interest and central costs and to pay dividends to shareholders.

Shareholder services

2024 Financial Calendar
Ordinary dividend timetable:

Final

Interim2

Ex-dividend date

11 April 2024

5 September 2024

Record date

12 April 2024

6 September 2024

Annual General Meeting (AGM)
The 2024 AGM will be held at York Racecourse,
Knavesmire Road, York YO23 1EX, on Thursday, 2 May
2024, at 10:30am with facilities to attend electronically.

Last day for Dividend
Reinvestment Plan and
currency election
Dividend payment date1

Other key dates:

Annual General Meeting
Quarter one market update2

2023 interim results
announcement2

Quarter three market
update2

1 May 2024 26 September 2024

23 May 2024

17 October 2024

10:30am on 2 May 2024

23 May 2024

14 August 2024

14 November 2024

1. Please note that the ADR local payment date will be approximately four business days after

the proposed dividend date for ordinary shares
2. These dates are provisional and subject to change

Dividend payment options
Shareholders can receive their dividends in the
following ways:
• Directly into a nominated UK bank account
• Directly into a nominated Eurozone bank account
• Shareholders living outside of the UK and the Single

Euro Payments Area can elect to receive their dividends
or interest payments in a choice of over 125 international
currencies via our Registrar, Computershare; or
• The Dividend Reinvestment Plan enables eligible
shareholders to reinvest their cash dividend in
additional Aviva ordinary shares

You can find further details regarding these payment
options at www.aviva.com/dividends and register your
choice by contacting Computershare using the contact
details opposite, online at www.computershare.com/
AvivaInvestorCentre or by returning a dividend mandate
form. You must register for one of these payment options
to receive any dividend payments from Aviva.

Manage your shareholding online
www.aviva.com/shareholders:
General information for shareholders.

www.computershare.com/AvivaInvestorCentre:
• Change your address
• Change payment options
• Switch to electronic communications
• View your shareholding
• View any outstanding payments

Details of each resolution to be considered at the meeting
and voting instructions are provided in the Notice of AGM,
which will be made available on the Company’s website at
www.aviva.com/agm in March 2024.

The voting results of the 2024 AGM will be accessible on
the Company’s website at www.aviva.com/agm shortly
after the meeting.

Shareholder contacts:
Ordinary and preference shares:
For any queries regarding your shareholding, please
contact Computershare:

• By telephone: 0371 495 0105

We’re open Monday to Friday, 8.30am to 5.30pm UK
time, excluding public holidays. Please call +44 117 378
8361 if calling from outside of the UK

• By email: AvivaSHARES@computershare.co.uk

• In writing: Computershare Investor Services PLC, The

Pavilions, Bridgwater Road, Bristol, BS99 6ZZ

American Depositary Receipts (ADRs):
For any queries regarding Aviva ADRs, please contact
Citibank Shareholder Services (Citibank):

• By telephone: 1 877 248 4237 (1 877-CITI-ADR)

We are open Monday to Friday, 8.30am to 6pm US
Eastern Standard Time, excluding public holidays. Please
call +1 781 575 4555 if calling from outside of the US

• By email: Citibank@shareholders-online.com

• In writing: Citibank Shareholder Services, PO Box 43077,

Providence, Rhode Island, 02940-3077 USA

Group Company Secretary
Shareholders may contact the Group Company Secretary:

• By email: Aviva.shareholders@aviva.com

• In writing: Susan Adams, Group Company Secretary, 80

Fenchurch Street, London, EC3M 4AE

• By telephone: +44 (0)20 7283 2000

Aviva plc

4.19

Annual Report and Accounts 2023

1. Strategic Report

2. Governance

3. IFRS Financial Statements

4. Other Information

Cautionary statement

This document should be read in conjunction with the
documents distributed by Aviva plc (the ‘Company’ or ‘Aviva’)
through The Regulatory News Service (RNS).This
announcement contains, and we may make other verbal or
written ‘forward-looking statements’ with respect to certain
of Aviva’s plans and current goals and expectations relating to
future financial condition, performance, results, strategic
initiatives and objectives (including, without limitation,
climate-related plans and goals). Statements containing the
words ‘believes’, ‘intends’, ‘expects’, ‘projects’, ‘plans’, ‘will’,
‘seeks’, ‘aims’, ‘may’, ‘could’, ‘outlook’, ‘likely’, ‘target’, ‘goal’,
‘guidance’, ‘trends’, ‘future’, ‘estimates’, ‘potential’, ‘objective’,
‘predicts’, ‘ambition’ and ‘anticipates’, and words of similar
meaning, are forward-looking. By their nature, all forward-
looking statements involve risk and uncertainty. Accordingly,
there are or will be important factors that could cause actual
results to differ materially from those indicated in these
statements. Aviva believes factors that could cause actual
results to differ materially from those indicated in forward-
looking statements in the announcement include, but are not
limited to: the impact of ongoing uncertain conditions in the
global financial markets and the national and international
political and economic situation generally (including those
arising from the escalation of Russia-Ukraine and Israel-
Palestine conflicts into wider regional conflicts); market
developments and government actions; the effect of credit
spread volatility on the net unrealised value of the investment
portfolio; the effect of losses due to defaults by
counterparties, including potential sovereign debt defaults or
restructurings, on the value of our investments; the impact of
changes in short or long-term interest rates and inflation
reduce the value or yield of our investment portfolio and
impact our asset and liability matching; the impact of
changes in equity or property prices on our investment
portfolio; fluctuations in currency exchange rates; the effect
of market fluctuations on the value of options and guarantees
embedded in some of our life insurance products and the
value of the assets backing their reserves; the amount of
allowances and impairments taken on our investments; the
effect of adverse capital and credit market conditions on our
ability to meet liquidity needs and our access to capital;
changes in, or restrictions on, our ability to initiate capital
management initiatives; changes in or inaccuracy of
assumptions in pricing and reserving for insurance business
(particularly with regard to mortality and morbidity trends,
lapse rates and policy renewal rates), longevity and
endowments; a cyclical downturn of the insurance industry;
the impact of natural and man-made catastrophic events
(including the longer-term impact of COVID-19) on our
business activities and results of operations; the transitional,
litigation and physical risks associated with climate change;
failure to understand and respond effectively to the risks
associated with environmental, social or governance (‘ESG’)
factors; our reliance on information and technology and
third-party service providers for our operations and systems;
the impact of the Group’s risk mitigation strategies proving
less effective than anticipated, including the inability of
reinsurers to meet obligations or unavailability of reinsurance
coverage; poor investment performance of the Group’s asset
management business; the withdrawal by customers at short
notice of assets under the Group’s management; failure to
manage risks in operating securities lending of Group and
third-party client assets; increased competition in the UK
and in other countries where we have significant operations;
regulatory approval of changes to the Group’s internal model
for calculation of regulatory capital under the UK’s version of
Solvency II rules; the impact of recognising an impairment of
our goodwill or intangibles with indefinite lives; changes in
valuation methodologies, estimates and assumptions used in

the valuation of investment securities; the effect of legal
proceedings and regulatory investigations; the impact of
operational risks, including inadequate or failed internal and
external processes, systems and human error or from
external events and malicious acts (including cyber attack
and theft, loss or misuse of customer data); risks associated
with arrangements with third parties, including joint
ventures; our reliance on third-party distribution channels to
deliver our products; funding risks associated with our
participation in defined benefit staff pension schemes; the
failure to attract or retain the necessary key personnel,
including quality financial advisers; the failure to act in good
faith, resulting in customers not achieving good outcomes
and avoiding foreseeable harm; the effect of systems errors
or regulatory changes on the calculation of unit prices or
deduction of charges for our unit-linked products that may
require retrospective compensation to our customers; the
effect of a decline in any of our ratings by rating agencies on
our standing among customers, broker-dealers, agents,
wholesalers and other distributors of our products and
services; changes to our brand and reputation; changes in tax
laws and interpretation of existing tax laws in jurisdictions
where we conduct business; changes to International
Financial Reporting Standards relevant to insurance
companies and their interpretation; the inability to protect
our intellectual property; the effect of undisclosed liabilities
and other risks associated with our business disposals; and
other uncertainties, such as diversion of management
attention and other resources, relating to recent and future
acquisitions, combinations or disposals within relevant
industries; the policies, decisions and actions of government
or regulatory authorities in the UK, the EU, the US, Canada or
elsewhere, including changes to and the implementation of
key legislation and regulation (for example, FCA Consumer
Duty and Solvency II). Please see Aviva's most recent Annual
Report and Accounts for further details of risks, uncertainties
and other factors relevant to the business and its securities.
Aviva undertakes no obligation to update the forward looking
statements in this announcement or any other forward-
looking statements we may make. Forward-looking
statements in this report are current only as of the date on
which such statements are made. The climate metrics,
projections, forecasts and other forward-looking statements
used in this document should be treated with special caution,
as they are more uncertain than, for example, historical
financial information and given the wider uncertainty around
the evolution and impact of climate change. Climate metrics
include estimates of historical emissions and historical
climate change and forward-looking climate metrics (such as
ambitions, targets, climate scenarios and climate projections
and forecasts). Our understanding of climate change and its
impact continue to evolve. Accordingly, both historical and
forward-looking climate metrics are inherently uncertain
and, therefore, less decision-useful than metrics based on
historical financial statements.
This report has been prepared for, and only for, the members
of the Company, as a body, and no other persons. The
Company, its directors, employees, agents or advisers do not
accept or assume responsibility to any other person to who
this document is shown or into whose hands it may come,
and any such responsibility or liability is expressly disclaimed

Aviva plc is a company registered in England No. 2468686.

Registered office
80 Fenchurch Street
London
EC3M 4AE

Aviva plc

4.20

Annual Report and Accounts 2023

Aviva plc
80 Fenchurch Street,
London, EC3M 4AE
+44 (0)20 7283 2000
www.aviva.com

Registered in England
Number 2468686

Search for Aviva plc:

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