Aviva plc HY20 results - 2 of 4

RNS Number : 2924V

Aviva PLC

06 August 2020

START PART 2 of 4

Page 1

Contents

In this section
Overview	Page
Key financial metrics	02
1 Solvency II return on equity	03
2 Solvency II capital and cash	05
i Operating capital generation: Solvency II basis	05
ii Cash remittances	06
3 Solvency II position	07
i Solvency II position (shareholder view)	07
ii Movement in Solvency II surplus	08
iii Diversified SCR analysis	08
iv Solvency II sensitivities	09
v Solvency II net asset value	10
vi Solvency II regulatory own funds and debt leverage	10
4 Controllable costs	11
5 Profit and earnings per share	12
6 Divisional performance	13
i UK Life and Investments, Savings & Retirement	13
ii General Insurance	18
iii Europe Life	24
iv Asia Life	26
7 Life business profit drivers	28
Financial supplement	30
A Income & expenses and IFRS capital	31
B IFRS financial statements and notes	41
C Analysis of assets	89
Other information	98
Alternative Performance Measures	99
Shareholder services	108

As a reminder

Throughout this report we use a range of financial metrics to measure our performance and financial strength. These metrics include Alternative Performance Measures (APMs), which are non-GAAP measures that are not bound by the requirements of IFRS and Solvency II. Further guidance in respect of the APM's used by the Group, including a reconciliation to the financial statements (where possible), can be found within the Other Information section.

All references to 'Operating profit' represent 'Group adjusted operating profit'.

‡ denotes APMs which are key performance indicators. Following a review of the Group's APM's in 2019, we have made certain changes to ensure that they remain relevant and useful to shareholders. These changes are outlined within the Other Information section.

# symbol denotes key financial performance indicators used as a base to determine or modify remuneration.

All percentages, including currency movements, are calculated on unrounded numbers so minor rounding differences may exist.

Following the announcement at the November 2019 Capital Markets Day, Section 6.i - UK Life and Investments, Savings & Retirement includes additional disclosures on the Savings & Retirement business.

A glossary explaining key terms used in this report is available on www.aviva.com/glossary

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Profit

	6 months 2020 £m	Restated¹ 6 months 2019 £m	Sterling % change	Full year 2019 £m
Operating profit^2,‡#	1,225	1,386	(12)%	3,184
Operating earnings per share^2,3‡#	23.4p	26.1p	(10)%	60.5p
IFRS profit before tax attributable to shareholders	1,076	1,523	(29)%	3,374
Basic earnings per share	20.0p	28.2p	(29)%	63.8p

Capital Position

	30 June 2020	31 December 2019	Change	30 June 2019
Estimated shareholder Solvency II cover ratio^4,‡#	194%	206%	(12)pp	194%
Estimated Solvency II surplus⁴	£12.0bn	£12.6bn	(5)%	£11.8bn
Solvency II net asset value per share⁴	416p	423p	(2)%	407p
Solvency II debt leverage^‡	33%	31%	2pp	33%

Dividend

	6 months 2020
Interim dividend per share	6.00p

Solvency II basis: Operating capital generation (OCG)^‡# and Cash remittances^‡#

	Solvency II Operating capital generation				Cash Remittances
	6 months 2020 £m	6 months 2019 £m	Sterling % change	Full year 2019 £m	6 months 2020 £m	6 months 2019 £m	Sterling % change	Full year 2019 £m
Group	890	780	14%	2,259	150	1,582	(91)%	2,597

Solvency II basis: Operating own funds generation and Return on capital/equity^‡

	Solvency II Operating own funds generation				Solvency II Return on capital/equity
	6 months 2020 £m	6 months 2019 £m	Sterling % change	Full year 2019 £m	6 months 2020 %	6 months 2019 %	Change	Full year 2019 %
UK Life and Investments, Savings & Retirement	356	449	(21)%	1,314	5.0%	6.5%	(1.5)pp	9.5%
General Insurance	194	298	(35)%	628	8.0%	13.3%	(5.3)pp	14.0%
Europe Life	217	304	(29)%	574	7.1%	11.0%	(3.9)pp	10.3%
Asia Life	97	76	28%	187	12.7%	10.4%	2.3pp	12.7%
Group⁵	632	864	(27)%	2,257	7.1%	11.0%	(3.9)pp	14.3%

Controllable costs^‡

6 months
2020
£m

Restated^1,6

6 months
2019
£m

Sterling % change

Restated⁶

Full year
2019
£m

Controllable costs^‡

1,912

1,966

(3)%

4,022

Value of new business: Adjusted Solvency II basis (VNB)^‡ and Present value of new business premiums (PVNBP)

	VNB				PVNBP
	6 months 2020 £m	6 months 2019 £m	Sterling % change	Full Year 2019 £m	6 months 2020 £m	6 months 2019 £m	Sterling % change	Full Year 2019 £m
UK Life and Investments, Savings & Retirement	323	202	60%	604	14,386	12,416	16%	28,836
Europe Life	188	237	(21)%	414	5,425	7,398	(27)%	13,772
Asia Life	90	96	(6)%	206	1,403	1,477	(5)%	3,057
Total	601	535	12%	1,224	21,214	21,291	-	45,665

General insurance combined operating ratio (COR)^‡ and Net written premiums (NWP)

	COR				NWP
	6 months 2020 %	Restated¹ 6 months 2019 %	Change	Full year 2019 %	6 months 2020 £m	6 months 2019 £m	Sterling % change	Full year 2019 £m
United Kingdom	106.3%	97.2%	9.1pp	97.9%	2,140	2,158	(1)%	4,218
Canada	95.5%	98.1%	(2.6)pp	97.8%	1,502	1,458	3%	3,061
Europe	92.6%	92.9%	(0.3)pp	95.7%	1,099	1,102	-	2,017
Group⁷	99.8%	96.8%	3.0pp	97.5%	4,748	4,725	-	9,309

‡ Denotes Alternative Performance Measures (APMs) which are key performance indicators of the Group. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

# Denotes key performance indicators which are used by the Group to determine or modify remuneration. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

1 On 31 December 2019 the Group adjusted operating profit APM was revised and now includes the amortisation and impairment of internally generated intangible assets to better reflect the operational nature of these assets (see note B2). Group adjusted operating profit continues to exclude amortisation and impairment of intangible assets acquired in business combinations. Comparative amounts for the 6 month period ended 30 June 2019 have been restated resulting in a reduction in the prior period Group adjusted operating profit of £62 million. There is no impact on profit before tax attributable to shareholders' profit. Following the change in the definition of Group adjusted operating profit, COR, controllable costs and operating earnings per share were also restated to include the amortisation and impairment of internally generated intangible assets. Comparative amounts for the 6 month period ended 30 June 2019 have been restated resulting in an increase in prior period COR of 0.9%, an increase in prior period controllable costs of £62 million and a reduction in prior period operating earnings per share of 1.2 pence.

2 Group adjusted operating profit is a non-GAAP APM which is not bound by the requirements of IFRS. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

3 This measure is derived from the Group adjusted operating profit APM. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

4 The estimated Solvency II position represents the shareholder view only. See section 3 for more details.

5 Includes Group centre, debt costs and other items not allocated to the markets.

6 Following a review of the presentation of claims handling costs, to achieve consistency in our reporting, comparative amounts have been restated by £41 million for the 6 month period ended 30 June 2019 and £83 million for the year ended 31 December 2019 to include previously excluded claims handling costs attributable to the Life & Health businesses from the UK, Ireland and Poland in controllable costs.

7 Group includes Asia & Other net written premiums of £7 million (HY19: £7 million, 2019: £13 million).

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1 - Solvency II return on capital/equity^‡

Solvency II return on capital/equity was introduced at our Capital Markets Day in November 2019 to measure return generated on shareholder capital at business division and Group level and is used by the Group to assess performance and growth, as we look to deliver long-term value for our shareholders.

	Operating own funds generation
6 months 2020	New business (life) £m	Existing business (life) £m	Non-life capital generation £m	Other¹ £m	Total £m	Opening own funds £m	Return on capital/equity %
UK Life and Investments, Savings & Retirement	225	92	26	13	356	14,126	5.0%
General Insurance	-	-	191	3	194	4,827	8.0%
Europe Life	87	91	-	39	217	6,119	7.1%
Asia Life	49	56	-	(8)	97	1,524	12.7%
Group centre costs and Other	-	(4)	(90)	6	(88)	(2,048)	N/A
Solvency II return on capital (unlevered) at 30 June	361	235	127	53	776	24,548	6.3%
Less: Senior debt					(6)	-	-
Subordinated debt					(138)	(6,942)	-
Solvency II operating own funds generation at 30 June					632
Direct capital instrument and Tier 1 notes					(27)	(500)	-
Preference shares²					(19)	(450)	-
Net deferred tax assets					-	(78)	-
Solvency II return on equity at 30 June					586	16,578	7.1%
Less: Management actions and other¹					(53)	-	(0.6)%
Solvency II return on equity (excl. management actions)					533	16,578	6.5%

1 Other includes the impact of capital actions and non-economic assumption changes.

2 Preference shares includes £9 million of dividends and £250 million of capital in respect of General Accident plc.

	Operating own funds generation
6 months 2019	New business (life) £m	Existing business (life) £m	Non-life capital generation £m	Other¹ £m	Total £m	Opening own funds £m	Return on capital/equity %
UK Life and Investments, Savings & Retirement	130	76	49	194	449	13,835	6.5%
General Insurance	-	-	298	-	298	4,498	13.3%
Europe Life	116	79	-	109	304	5,548	11.0%
Asia Life	59	11	-	6	76	1,470	10.4%
Group centre costs and Other	-	7	(119)	(12)	(124)	(1,800)	N/A
Solvency II return on capital (unlevered) at 30 June	305	173	228	297	1,003	23,551	8.5%
Less: Senior debt					(6)	-	-
Subordinated debt					(133)	(6,979)	-
Solvency II operating own funds generation at 30 June					864
Direct capital instrument and Tier 1 notes					(6)	(731)	-
Preference shares²					(19)	(450)	-
Net deferred tax assets					-	(95)	-
Solvency II return on equity at 30 June					839	15,296	11.0%
Less: Management actions and other¹					(297)	-	(3.9)%
Solvency II return on equity (excl. management actions)					542	15,296	7.1%

1 Other included the impact of capital actions and non-economic assumption changes.

2 Preference shares included £9 million of dividends and £250 million of capital in respect of General Accident plc.

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1 - Solvency II return on capital/equity^‡ continued

	Operating own funds generation
Full year 2019	New business (life) £m	Existing business (life) £m	Non-life capital generation £m	Other¹ £m	Total £m	Opening own funds £m	Return on capital/equity %
UK Life and Investments, Savings & Retirement	381	194	70	669	1,314	13,835	9.5%
General Insurance	-	-	548	80	628	4,498	14.0%
Europe Life	167	240	-	167	574	5,548	10.3%
Asia Life	111	57	-	19	187	1,470	12.7%
Group centre costs and Other	-	16	(187)	9	(162)	(1,800)	N/A
Solvency II return on capital (unlevered) at 31 December	659	507	431	944	2,541	23,551	10.8%
Less: Senior debt					(12)	-	-
Subordinated debt					(272)	(6,979)	-
Solvency II operating own funds generation at 31 December					2,257
Direct capital instrument and Tier 1 notes					(34)	(731)	-
Preference shares²					(38)	(450)	-
Net deferred tax assets					-	(95)	-
Solvency II return on equity at 31 December					2,185	15,296	14.3%
Less: Management actions and other¹					(944)	-	(6.2)%
Solvency II return on equity (excl. management actions)					1,241	15,296	8.1%

1 Other included the impact of capital actions and non-economic assumption changes.

2 Preference shares included £21 million of dividends and £250 million of capital in respect of General Accident plc.

In line with targets presented at Capital Markets Day (and how capital is managed by the business), we have presented a combined Solvency II return on capital for the UK Life and Investments, Savings & Retirement business divisions.

Solvency II return on equity has decreased by 3.9pp to 7.1% (HY19: 11.0%), primarily due to:

· In UK Life and Investments, Savings & Retirement, return on capital has reduced by 1.5pp to 5.0% (HY19: 6.5%) and own funds generation has reduced by £93 million to £356 million. Improved new business operating own funds generation as a result of increased bulk purchase annuity volumes and higher margins was more than offset by less benefit from management actions on own funds in the first half of 2020 and reduced fee income from Aviva Investors.

· In the General Insurance business division, return on capital has reduced by 5.3pp to 8.0% (HY19: 13.3%) and own funds generation has reduced by £104 million to £194 million mainly due to a £153 million reduction driven by the impact of COVID-19 which resulted in additional claims on business interruption and travel lines, partly offset by reduced motor claims. In the UK there is also a reduction due to higher weather costs compared to the prior period and adverse prior year reserve developments. This is partially offset by strong underlying performance in Canada where benefits from the extensive profit remediation plan put in place towards the end of 2017 are materialising .

· In the Europe Life business division, return on capital has reduced by 3.9pp to 7.1% (HY19: 11.0%) and own funds generation has reduced by £87 million to £217 million. The reduction is primarily due to lower new business volumes reflecting managed reductions in with-profit volumes as well as a reduction due to the impacts of COVID-19 on trading and less benefit from management actions than the first half of 2019 which included favourable modelling and assumption changes in Italy.

· In the Asia Life business division, return on capital has increased by 2.3pp to 12.7% (HY19: 10.4%) and own funds generation has increased by £21 million to £97 million. The strong growth was primarily driven by improvements to morbidity experience on health business and lapse experience on protection business in Singapore.

· In addition, the return on equity has reduced by a further 0.9pp due to the higher opening own funds for 2020 which were driven by strong own funds generation in excess of dividends and debt repayments during 2019.

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2 - Solvency II capital and cash

2.i - Operating capital generation: Solvency II basis^‡#

Solvency II operating capital generation (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 business, which in turn, supports the Group's progressive dividend policy.

	Operating capital generation^‡#					Of which:
6 months 2020	Impact of new business (life) £m	Earnings from existing business (life) £m	Non-life capital generation £m	Other OCG¹ £m	Total OCG £m	Own funds OCG £m	SCR OCG £m
UK Life and Investments, Savings & Retirement	(15)	358	23	215	581	356	225
General Insurance	-	-	114	49	163	194	(31)
Europe Life	(38)	263	-	239	464	217	247
Asia Life	1	51	-	(9)	43	97	(54)
Total market Solvency II operating capital generation	(52)	672	137	494	1,251	864	387
Group centre costs and Other	-	2	(225)	(138)	(361)	(232)	(129)
Total Group Solvency II operating capital generation	(52)	674	( 88 )	356	890	632	258

1 Other includes the impact of capital actions and non-economic assumption changes.

	Operating capital generation^‡#					Of which:
6 months 2019	Impact of new business (life) £m	Earnings from existing business (life) £m	Non-life capital generation £m	Other OCG¹ £m	Total OCG £m	Own funds OCG £m	SCR OCG £m
UK Life and Investments, Savings & Retirement²	(91)	414	75	124	522	449	73
General Insurance	-	-	315	(99)	216	298	(82)
Europe Life	(37)	236	-	125	324	304	20
Asia Life	23	1	-	(6)	18	76	(58)
Total market Solvency II operating capital generation	(105)	651	390	144	1,080	1,127	(47)
Group centre costs and Other²	-	2	(259)	(43)	(300)	(263)	(37)
Total Group Solvency II operating capital generation	(105)	653	131	101	780	864	(84)

1 Other included the impact of capital actions and non-economic assumption changes.

2 Following a review of the presentation of intercompany loan interest, comparative amounts for the 6 months ended 30 June 2019 have been amended to reclassify net interest expense from UK Life and Investments, Savings & Retirement to Group centre costs and Other of £34 million as a non-operating item. The change has no impact on the Group's operating capital generation.

	Operating capital generation ^‡#					Of which:
Full year 2019	Impact of new business (life) £m	Earnings from existing business (life) £m	Non-life capital generation £m	Other OCG¹ £m	Total OCG £m	Own funds OCG £m	SCR OCG £m
UK Life and Investments, Savings & Retirement²	(45)	814	90	470	1,329	1,314	15
General Insurance	-	-	615	(41)	574	628	(54)
Europe Life	(189)	515	-	428	754	574	180
Asia Life	(7)	64	-	3	60	187	(127)
Total market Solvency II operating capital generation	(241)	1,393	705	860	2,717	2,703	14
Group centre costs and Other²	-	(5)	(419)	(34)	(458)	(446)	(12)
Total Group Solvency II operating capital generation	(241)	1,388	286	826	2,259	2,257	2

1 Other included the impact of capital actions and non-economic assumption changes.

2 Following a review of the presentation of intercompany loan interest, comparative amounts for the 12 months ended 31 December 2019 have been amended to reclassify net interest expense from UK Life and Investments, Savings & Retirement to Group centre costs and Other of £69 million as a non-operating item. The change has no impact on the Group's operating capital generation.

Solvency II OCG was £890 million for the 6 months ended 30 June 2020 (HY19: £780 million).

UK Life and Investments, Savings & Retirement OCG has increased by £59 million to £581 million for the 6 months ended 30 June 2020, primarily due to improved new business strain as a result of higher margins on annuity business and also a capital action to change the mix of business included in our internal reinsurance vehicle. The increase is partially offset by a reduction in earnings from existing business and a reduced contribution from Aviva Investors.

General Insurance OCG has reduced by £53 million to £163 million for the 6 months ended 30 June 2020, driven by the impact of COVID-19 which resulted in additional claims on business interruption and travel lines and an increase in solvency capital requirement which were partly offset by reduced motor claims. There was a further reduction to OCG due to higher weather costs compared to the prior period and adverse prior year reserves development in the UK partially offset by a strong performance in Canada as a result of rate increases and actions on indemnity management taken as part of the profit remediation plan .

Europe Life OCG has increased by £140 million to £464 million due to an increase in Other OCG in the 6 months ended 30 June 2020, primarily as a result of strategic asset allocation, de-risking and hedging activity in France, Ireland and Italy to protect the capital position against further adverse economic movements in the current market environment.

Asia Life OCG has increased by £25 million to £43 million primarily due to improvements in morbidity experience on health business and lapse experience on protection business in Singapore.

Page 6

2.ii - Cash remittances^‡#

The table below reflects actual remittances received by the Group from our businesses, comprising dividends and interest on internal loans. Cash remittances are eliminated on consolidation and hence are not directly reconcilable to the Group's IFRS statement of cash flows.

	6 months 2020 £m	6 months 2019 £m	Full year 2019 £m
UK Life and Investments, Savings & Retirement
UK Life Including Savings & Retirement¹	84	892	1,387
Aviva Investors	-	81	86
General Insurance^1,2	24	191	584
Europe Life	32	418	414
Asia Life	-	-	51
Other	10	-	75
Total	150	1,582	2,597

1 We use a wholly-owned, UK domiciled reinsurance subsidiary for internal capital and cash management purposes. Some remittances otherwise attributable to the operating businesses arise from this internal reinsurance vehicle.

2 2019 General Insurance cash remittances include £83 million received from UK General Insurance and £141 million received from Canada in February 2020 in respect of 2019 activity.

A cautious approach on cash remittances is being taken across the Group with markets retaining cash rather than remitting to the Group in the wake of the unprecedented challenges the COVID-19 pandemic presents for businesses, households and customers, and the adverse and highly uncertain impact on the global economy.

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3 - Solvency II position

3.i - Solvency II position (shareholder view)

Shareholder view	30 June 2020 £m	30 June 2019 £m	31 December 2019 £m
Own funds	24,626	24,364	24,548
Solvency capital requirement	(12,674)	(12,543)	(11,910)
Estimated Solvency II surplus at 30 June/31 December	11,952	11,821	12,638
Estimated Solvency II shareholder cover ratio^‡#	194%	194%	206%

The estimated Solvency II shareholder cover ratio is 194% at 30 June 2020. 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 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 position:

· The contribution to the Group's SCR and own funds of the most material fully ring fenced with-profits funds of £2.4 billion at 30 June 2020 (2019: £2.5 billion) and staff pension schemes in surplus of £1.1 billion at 30 June 2020 (2019: £1.2 billion) 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 change in regulations announced in December 2019 allows French insurers to place a part of the Provision pour Participation aux Excédents (PPE) into Solvency II own funds. At December 2019 PPE was included in the France local regulatory own funds but was excluded from the estimated Group regulatory and shareholder own funds, subject to confirmation of the appropriate treatment at Group level. The treatment has since been confirmed and PPE of £0.4 billion is included within Group regulatory own funds at 30 June 2020 but remains excluded from the shareholder position.

· 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 30 June 2020 Solvency II position includes a notional reset (£0.2 billion increase in surplus) while the 31 December 2019 Solvency II position included a formal, rather than notional, reset of the TMTP in line with the regulatory requirement to reset the TMTP at least every two years and hence no adjustment was required.

· The 30 June 2020 Solvency II position includes the following pro forma adjustments: the disposals of Friends Provident International Limited (FPI), Hong Kong and Indonesia (total impact of £0.1 billion increase in surplus), the potential impact of an expected change to Solvency II regulations on the treatment of equity release mortgages (£0.2 billion decrease in surplus as a result of an increase in SCR), and an adjustment for potential future corporate bond credit rating downgrades, equivalent to a full letter downgrade on 10% of BBB rated bonds and 5% on bonds rated A and above, in our UK annuity portfolio (£0.1 billion decrease in surplus as a result of an increase in SCR). Even though actual downgrades to our portfolio to date, already incorporated in our Solvency II surplus, has been minimal (£35 million reduction to surplus), this allowance reflects continued uncertainty in the external environment as a result of the COVID-19 pandemic. We will look to realign to actual observed experience within the current financial year. The 31 December 2019 Solvency II position includes the pro forma adjustments for the disposals of FPI (£nil impact on surplus) and Hong Kong (£nil impact on surplus) and the potential impact of an expected change to Solvency II regulations on the treatment of equity release mortgages (£0.2 billion reduction in surplus as a result of an increase in SCR).

	30 June 2020			30 June 2019			31 December 2019
	Own funds £m	SCR £m	Surplus £m	Own funds £m	SCR £m	Surplus £m	Own funds £m	SCR £m	Surplus £m
Estimated Solvency II regulatory surplus¹	28,376	(16,039)	12,337	27,997	(16,228)	11,769	28,347	(15,517)	12,830
Adjustments for:
Fully ring-fenced with-profit funds	(2,430)	2,430	-	(2,630)	2,630	-	(2,501)	2,501	-
Staff pension schemes in surplus	(1,085)	1,085	-	(1,078)	1,078	-	(1,181)	1,181	-
PPE	(369)	-	(369)	-	-	-	-	-	-
Notional reset of TMTP	211	-	211	208	-	208	-	-	-
Pro forma adjustments	(77)	(150)	(227)	(133)	(23)	(156)	(117)	(75)	(192)
Estimated Solvency II shareholder surplus	24,626	(12,674)	11,952	24,364	(12,543)	11,821	24,548	(11,910)	12,638

1 Regulation was introduced in France that allows French insurers to place the Provision pour Participation aux Excédents (PPE) into Solvency II own funds. At 31 December 2019 PPE was included in the France local regulatory own funds but was excluded from the estimated Group regulatory own funds, subject to confirmation of the appropriate treatment at Group level. The treatment has since been confirmed and PPE is included estimated Group regulatory own funds at 30 June 2020.

Page 8

3.ii - Movement in Solvency II surplus

	30 June 2020			30 June 2019			31 December 2019
Shareholder view	Own funds £m	SCR £m	Surplus £m	Own funds £m	SCR £m	Surplus £m	Own funds £m	SCR £m	Surplus £m
Group Solvency II surplus at 1 January	24,548	(11,910)	12,638	23,551	(11,569)	11,982	23,551	(11,569)	11,982
Opening restatements¹	78	(202)	(124)	58	6	64	58	6	64
Operating capital generation	632	258	890	864	(84)	780	2,257	2	2,259
Non-operating capital generation	(671)	(823)	(1,494)	722	(896)	(174)	120	(368)	(248)
Dividends²	(19)	-	(19)	(831)	-	(831)	(1,222)	-	(1,222)
Hybrid debt issuance/(repayment)	-	-	-	-	-	-	(210)	-	(210)
Acquired/divested business	58	3	61	-	-	-	(6)	19	13
Estimated Solvency II surplus at 30 June/31 December	24,626	(12,674)	11,952	24,364	(12,543)	11,821	24,548	(11,910)	12,638

1 Opening restatements allows for adjustments to the estimated position presented in the preliminary announcement and the final position in the SFCR.

2 Dividends includes £9 million (HY19: £9 million, 2019: £17 million) of Aviva plc preference dividends and £10 million (HY19: £10 million, 2019: £21 million) of General Accident plc preference dividends.

The estimated Solvency II surplus is £11,952 million at 30 June 2020 (2019: £12,638 million), with a shareholder cover ratio of 194% (2019: 206%). The reduction in surplus of £686 million since 31 December 2019 is mainly due to the adverse impact of £(1.5) billion from non-operating capital generation partially offset by operating capital generation of £890 million over the period.

Non-operating capital generation is primarily due to significant falls in interest rates and equity markets, as well as widening credit spreads, as a result of the global economic downturn driven by the COVID-19 pandemic.

At 30 June 2019 and 31 December 2019 we included a specific allowance for the possible adverse impacts of the UK's exit from the European Union on UK commercial and residential property, which we have now removed. Our future property growth assumptions are updated on a quarterly basis and as at 30 June 2020 they include a cumulative 5-year growth rate assumption, from 2020-24 of ‑15% for UK commercial property and a 12% reduction followed by long-term growth rate for residential property.

3.iii - Diversified SCR analysis

	30 June 2020 £bn	30 June 2019 bn	31 December 2019 £bn
Credit risk	2.8	3.3	2.7
Equity risk	1.2	1.6	1.4
Interest rate risk	1.1	1.0	0.4
Other market risk	1.7	1.5	1.7
Life insurance risk	3.1	2.7	3.1
General insurance risk	0.8	0.7	0.8
Operational risk	1.1	1.1	1.1
Other risk	0.9	0.7	0.7
Total	12.7	12.6	11.9

The SCR has increased by £0.8 billion to £12.7 billion since 31 December 2019. The change in risk profile is predominantly driven by the economic downturn as a result of the impact of the COVID-19 pandemic during 2020. Interest rate risk increased by £0.7 billion primarily due to the significant reduction in interest rates over the period. This is partly offset by equity risk which has reduced by £0.2 billion due to the reduced exposure as a result of market falls over the period.

Page 9

3.iv - Solvency II sensitivities

Sensitivity analysis of Solvency II surplus

The following sensitivity analysis of Solvency II surplus allows for any consequential impact on the assets and liability valuations. All other assumptions remain unchanged for each sensitivity, except where these are directly affected by the revised economic conditions or where a management action that is allowed for in the SCR calculation is applicable for that sensitivity. For example, future bonus rates are automatically adjusted to reflect sensitivity changes to future investment returns.

TMTP are assumed to be recalculated in all sensitivities where its impact would be material.

All sensitivities are additional to the 30 June 2020 base shareholder solvency position shown in note 3(i). The table below shows the absolute change in cover ratio under each sensitivity, e.g. a 2% positive impact would result in a cover ratio of 196%.

Sensitivities		Impact on surplus 30 June 2020 bn	Impact on cover ratio 30 June 2020 %	Impact on surplus 31 December 2019 £bn	Impact on cover ratio 31 December 2019 %
Changes in economic assumptions	25 bps increase in interest rate	0.1	2%	0.2	4%
	50 bps increase in interest rate	0.1	4%	0.2	6%
	100 bps increase in interest rate	0.1	7%	0.4	11%
	25 bps decrease in interest rate	(0.1)	(3%)	(0.2)	(5%)
	50 bps decrease in interest rate	(0.2)	(5%)	(0.6)	(11%)
	50 bps increase in corporate bond spread^1,2	(0.4)	(3%)	(0.5)	(4%)
	100 bps increase in corporate bond spread^1,2	(0.7)	(4%)	(1.1)	(10%)
	50 bps decrease in corporate bond spread^1,2	0.4	2%	0.4	3%
	Credit downgrade on annuity portfolio³	(0.3)	(4%)	(0.3)	(4%)
	10% increase in market value of equity	0.3	1%	0.3	2%
	25% increase in market value of equity	0.6	3%	0.8	5%
	10% decrease in market value of equity	(0.2)	(1%)	(0.4)	(2%)
	25% decrease in market value of equity	(0.5)	(3%)	(0.9)	(7%)
	20% increase in value of commercial property⁴	0.8	8%	0.7	7%
	20% decrease in value of commercial property⁴	(1.0)	(9%)	(0.9)	(9%)
	20% increase in value of residential property⁴	0.5	4%	0.4	4%
	20% decrease in value of residential property⁴	(0.6)	(6%)	(0.6)	(6%)
Changes in non-economic assumptions	10% increase in maintenance and investment expenses	(0.9)	(8%)	(0.9)	(9%)
	10% increase in lapse rates	(0.3)	(2%)	(0.4)	(3%)
	5% increase in mortality/morbidity rates - life assurance	(0.2)	(2%)	(0.2)	(2%)
	5% decrease in mortality rates - annuity business	(1.4)	(12%)	(1.3)	(13%)
	5% increase in gross loss ratios	(0.3)	(3%)	(0.3)	(3%)

1 Credit spread movement for corporate bonds with credit rating A at a 10 year duration, with the other ratings and durations stressed by the same proportion relative to the solvency capital requirement.

2 A modelling refinement was implemented to the corporate bond credit sensitivities in the UK following a review of the 31 December 2019 methodology.

3 An immediate full letter downgrade on 20% of the annuity portfolio bonds (e.g. from AAA to AA, from AA to A).

4 The property sensitivities are in addition to reduced property growth assumed over the next 5 years in the base solvency position.

During the first half of the year a number of de-risking actions were implemented across most of our markets in response to the global economic downturn as a result of the COVID-19 pandemic. These include a reduction in interest rate exposures, further hedging and changes to asset allocation. This has reduced our Solvency II surplus and cover ratio sensitivity to interest rates, credit risk and equity. Market falls over the period have also reduced the exposure and hence sensitivity to equities.

Limitations of sensitivity analysis

The table above demonstrates the effect of a change in a key assumption while other assumptions remain unchanged. In reality, there is a correlation between the assumptions and other factors. It should also be noted that these sensitivities are non-linear, and larger or smaller impacts should not be interpolated or extrapolated from these results.

The sensitivity analysis does not take into consideration that the Group's assets and liabilities are actively managed. Additionally, the Solvency II position of the Group may vary at the time that any actual market movement occurs. For example, the Group's financial risk management strategy aims to manage the exposure to market fluctuations.

As investment markets move past various trigger levels, management actions could include selling investments, changing investment portfolio allocations, adjusting bonuses credited to policyholders and taking other protective action.

Other limitations in the above sensitivity analysis include the use of hypothetical market movements to demonstrate potential risk that only represent the Group's view of possible near-term market changes that cannot be predicted with any certainty and the assumption that all interest rates move in an identical fashion.

Page 10

3.v - Solvency II net asset value

	30 June 2020 £m	pence per share¹	30 June 2019 £m	pence per share¹	31 December 2019 £m	pence per share¹
Solvency II shareholder unrestricted tier 1 own funds at 1 January	16,578	423p	15,296	392p	15,296	392p
Opening restatements²	78	2p	58	1p	58	1p
Operating own funds generation	632	16p	864	21p	2,257	57p
Non-operating own funds generation	(671)	(17)p	722	18p	120	3p
Dividends³	(19)	(0)p	(831)	(21)p	(1,222)	(31)p
Acquired/divested business	58	1p	-	-	(6)	-
Impact of changes to the value of subordinated liabilities	(281)	(8)p	(129)	(3)p	58	1p
Impact of changes to the value of net deferred tax assets	(29)	(1)p	(26)	(1)p	17	-
Estimated Solvency II shareholder unrestricted Tier 1 own funds at 30 June/31 December	16,346	416p	15,954	407p	16,578	423p

1 Number of shares as at 30 June 2020: 3,928 million (HY19: 3,917 million, 2019: 3,921 million).

2 Opening restatements allows for adjustments made to the estimated position presented in the preliminary announcement and the final position in the SFCR.

3 Dividends includes £9 million (HY19: £9 million, 2019: £17 million) of Aviva plc preference dividends and £10 million (HY19: £10 million, 2019: £21 million) of General Accident plc preference dividends.

Solvency II net asset value per share decreased by 7 pence to 416 pence per share (HY19: 407 pence, 2019: 423 pence) mainly as a result of the impact of adverse market movements on non-operating capital generation and an increase in the value of subordinated liabilities due to interest falls and sterling depreciation against the Euro partly offset by operating own funds generation during the period.

3.vi - Solvency II regulatory own funds and debt leverage^‡

Regulatory view	30 June 2020 £m	30 June 2019 m	31 December 2019 £m
Solvency II regulatory debt¹	8,173	8,289	7,892
Senior notes	1,129	1,110	1,052
Commercial paper	365	251	238
Direct capital instrument	499	-	-
Total debt	10,166	9,650	9,182
Unrestricted Tier 1	20,096	19,588	20,377
Restricted Tier 1	1,335	2,084	1,839
Tier 2	6,569	5,937	5,794
Tier 3²	376	388	337
Estimated total regulatory own funds³	28,376	27,997	28,347
Solvency II debt leverage⁴	33%	33%	31%
Solvency II debt leverage excluding direct capital instrument⁵	32%	N/A	N/A

1 Solvency II regulatory debt consists of Restricted Tier 1 and Tier 2 regulatory own funds, and Tier 3 subordinated debt.

2 Tier 3 regulatory own funds at 30 June 2019 consists of £269 million subordinated debt (HY19: £268 million, 2019: £259 million) plus £107 million net deferred tax assets (HY19: £120 million, 2019: £78 million).

3 Regulation was introduced in France that allows French insurers to place the Provision pour Participation aux Excédents (PPE) into Solvency II own funds. At December 2019 PPE was included in the France local regulatory own funds but was excluded from the estimated Group regulatory own funds, subject to confirmation of the appropriate treatment at Group level. The treatment has since been confirmed and PPE is included in the estimated Group regulatory own funds at 30 June 2020.

4 Solvency II debt leverage is calculated as the total debt as a proportion of total regulatory own funds plus commercial paper and senior notes.

5 The direct capital instrument was redeemed in full at first call date on 27 July 2020.

Solvency II debt leverage has increased by 2pp to 33% (2019: 31%). This was due to an increase in debt in 2020. The increase was driven by the refinancing of the direct capital instrument prior to redemption in July, a larger holding of short-term commercial paper and adverse foreign exchange movements increasing the value of the Group's EUR and CAD denominated borrowings. Excluding the direct capital instrument solvency II debt leverage was 32%.

Page 11

4 - Controllable costs ^‡

	6 months 2020 £m	Restated^1,2 6 months 2019 £m	Restated² Full year 2019 m
UK Life and Investments, Savings & Retirement
UK Life including Savings & Retirement	506	534	1,123
Aviva Investors	207	204	446
General Insurance	693	705	1,420
Europe Life	280	281	553
Asia Life	89	93	198
Other Group activities	137	149	282
Controllable costs	1,912	1,966	4,022

1 Following the change in the definition of Group adjusted operating profit on 31 December 2019 (see note B2), controllable costs now include the amortisation and impairment of internally generated intangible assets to better reflect the operational nature of these assets. Comparative amounts for the 6 month period ended 30 June 2019 have been restated resulting in an increase in the prior period controllable costs of £62 million.

2 Following a review of the presentation of claims handling costs, to achieve consistency in our reporting, comparative amounts have been restated by £41 million for the 6 month period ended 30 June 2019 and £83 million for the year ended 31 December 2019 to include previously excluded claims handling costs attributable to the Life & Health businesses from the UK, Ireland and Poland in controllable costs.

Controllable costs have decreased by 3% to £1,912 million (HY19 restated: £1,966 million) reflecting our focus on cost savings primarily driven by lower staff costs following a reduction in global headcount, partially offset by charitable donations made by Aviva to help those most affected by COVID-19.

The decrease in controllable costs in UK Life and General Insurance is mainly due to lower staff costs and lower project activity, partially offset by operational costs related to COVID-19 and continued investment in our IT infrastructure. The decrease in Other Group activities is mainly due to lower project spend following completion of a number of projects and deferral of certain project activities to the second half of 2020, partially offset by charitable contributions which includes a £10 million donation to our long-standing partner, the British Red Cross; a £5 million contribution to NHS Charities Together; and a £18.5 million contribution to the COVID-19 support fund established by the Association of British Insurers.

The reported controllable costs decrease of £54 million from HY19 has contributed towards £143 million of cumulative savings delivered against our 2018 baseline (£147 million on a constant currency basis).

Page 12

5 - Profit and earnings per share

	6 months 2020 £m	Restated¹ 6 months 2019 £m	Full year 2019 £m
Operating profit before tax
UK Life and Investments, Savings & Retirement
UK Life including Savings & Retirement²	817	752	1,920
Aviva Investors	35	60	96
General Insurance	167	332	594
Europe Life	367	392	827
Asia Life	140	152	276
Other Group operations (note A3)	(6)	(44)	(26)
Market operating profit	1,520	1,644	3,687
Corporate centre (note A4)	(116)	(97)	(183)
Group debt costs and other interest (note A5)²	(179)	(161)	(320)
Operating profit before tax^‡#	1,225	1,386	3,184
Tax attributable to shareholders' profit	(224)	(306)	(668)
Non-controlling interests	(48)	(47)	(98)
Preference dividends and other³	(36)	(15)	(51)
Operating profit attributable to ordinary shareholders	917	1,018	2,367
Operating earnings per share^‡#	23.4p	26.1p	60.5p

1 On 31 December 2019 the Group adjusted operating profit APM was revised and now includes the amortisation and impairment of internally generated intangible assets to better reflect the operational nature of these assets (see note B2). Group adjusted operating profit continues to exclude amortisation and impairment of intangible assets acquired in business combinations. Comparative amounts for the 6 month period ended 30 June 2019 have been restated resulting in a reduction in the prior period Group adjusted operating profit of £62 million. There is no impact on profit before tax attributable to shareholders' profit. Following the change in the definition of Group adjusted operating profit, the comparative amount for operating earnings per share for the 6 month period ended 30 June 2019 was also restated resulting in a reduction in prior period operating earnings per share of 1.2 pence.

3 Other includes coupon payments in respect of the direct capital instrument (DCI) (net of tax). On 23 June 2020, notification was given that the Group would redeem the 5.9021% £500 million DCI at its principal amount together with accrued interest to (but excluding) 27 July 2020. Interest payable up to 23 June 2020 has been recorded as an appropriation of retained profits with the remaining interest payable from 24 June 2020 to 30 June 2020 recorded within Group debt costs and other interest. In prior periods, the interest on the DCI and tier 1 notes was treated as an appropriation of retained profits and accordingly, accounted for when paid.

IFRS profit after tax	874	1,180	2,663
Basic earnings per share	20.0p	28.2p	63.8p

Operating profit decreased by 12% to £1,225 million (HY19 restated: £1,386 million), as the COVID-19 pandemic resulted in higher claims within the general insurance business from business interruption, travel, and other commercial insurance lines, and we experienced lower trading volumes due to disruption arising from the implementation of lockdown restrictions in the second quarter of 2020.

UK Life operating profit increased by 9% to £817 million (HY19 restated: £752 million), following BPA volume growth at higher margins, and stronger returns in Savings & Retirement reflecting improved revenue due to a higher asset base. This was partially offset by lower profitability in protection and individual annuities, and there was a net negative overall impact on claims from the COVID-19 pandemic.

Aviva Investors operating profit decreased by 42% to £35 million (HY19 restated: £60 million) due to lower fee income which was impacted by changes in the mix of assets under management, caused by market volatility in the underlying asset classes and de-risking by some clients towards assets which attract lower fees.

In our General Insurance businesses operating profit decreased by 50% to £167 million (HY19 restated: £332 million), primarily reflecting COVID-19 related claims of £165 million, net of reinsurance. This impact is based on estimated claims in business interruption insurance, other commercial lines and travel insurance and allows for favourable impacts in other product lines. In the UK the general insurance business recorded an operating loss of £66 million (HY19 restated: profit of £141 million) with £138 million attributable to COVID-19 related net claims experience. Higher weather costs relative to a benign first half of 2019 also had an adverse impact, along with less favourable prior year development. In Canada, operating profit increased to £129 million (HY19 restated: £89 million) as a favourable contribution from pricing, indemnity management and risk selection actions more than offset the adverse effect of COVID-19. E urope general insurance operating profit was broadly level at £104 million (HY19: 103 million).

Europe Life operating profit decreased by 7% to £367 million (HY19 restated: £392 million), as trading was disrupted by lockdown restrictions. In France, operating profit of £165 million (HY19 restated: £195 million) was also adversely affected by higher protection claims. In Italy, operating profit increased to £100 million (HY19 restated: £82 million) as strong fee generation from a higher asset base offset the impact from the trading disruption, and in Poland actions were taken to reduce costs increasing operating profit to £88 million (HY19 restated: 85 million). In Ireland, operating profit reduced to £8 million (HY19 restated: £24 million), including the impact of de-risking actions taken to improve our solvency cover ratio.

In our Asia Life businesses, operating profit has decreased by 8% to £140 million (HY19: £152 million ) . Excluding held for sale entities, operating profit was £67 million (HY19 restated: £68 million) despite a difficult trading environment primarily driven by the COVID-19 pandemic.

Other Group operations include investment return on centrally held assets, the results of our internal reinsurance business and the results of other operations. The reduced operating loss of £ 6 million (HY19: operating loss of £44 million) reflects lower project spend and the alignment of the UK digital business with the UK Life and UK General insurance businesses during 2019.

Operating earnings per share decreased by 2.7p to 23.4p (HY19 restated: 26.1p) reflecting the decrease in operating profit.

Page 13

6 - Divisional performance

6.i - UK Life and Investments, Savings & Retirement

£m (unless otherwise stated)	6 months 2020 £m	6 months 2019 £m	Sterling % change	Constant currency %	Full year 2019 £m	6 months 2020 £m	Restated^1,3 6 months 2019 £m	Sterling % change	Constant currency %	Restated³ Full year 2019 m
UK Life and Investments, Savings & Retirement
Solvency II operating own funds generation and return on capital^‡	Solvency II operating own funds generation					Solvency II return on capital
UK Life including Savings & Retirement	330	399	(17)%	(17)%	1,244	4.8%	6.0%	(1.2)pp	(1.2)pp	9.3%
Aviva Investors	26	50	(47)%	(47)%	70	10.7%	19.5%	(8.8)pp	(8.8)pp	13.7%
	356	449	(21)%	(21)%	1,314	5.0%	6.5%	(1.5)pp	(1.5)pp	9.5%

Solvency II operating capital generation^2,‡# and cash remittances^‡#	Solvency II operating capital generation					Cash remittances
UK Life including Savings & Retirement	558	447	25%	25%	1,239	84	892	(91)%	(91)%	1,387
Aviva Investors	23	75	(70)%	(70)%	90	-	81	(100)%	(100)%	86
	581	522	11%	11%	1,329	84	973	(91)%	(91)%	1,473

UK Life including Savings & Retirement
Operating profit^1,2,‡#						817	752	9%	9%	1,920
Controllable costs^3,‡						506	534	(5)%	(5)%	1,123
New business
PVNBP						13,706	11,831	16%	16%	27,570
VNB^‡						316	196	61%	61%	592

Of which: UK Life contribution
Operating profit^1,2,‡#						741	732	1%	1%	1,827
Controllable costs^‡						336	369	(9)%	(9)%	787
New business
PVNBP						5,166	3,401	52%	52%	8,650
VNB^‡						253	125	103%	103%	438

Of which: Savings & Retirement contribution
Operating profit^1,2,‡#						76	20	280%	280%	93
Controllable costs^‡						170	165	3%	3%	336
New business
PVNBP						8,540	8,430	1%	1%	18,920
VNB^‡						63	71	(11)%	(11)%	154

Aviva Investors
Revenue						242	264	(8)%	(8)%	542
Controllable costs^‡						207	204	1%	1%	446
Operating profit^1,2,‡#						35	60	(42)%	(42)%	96
Assets under management						£355bn	£346bn	3%	3%	£346bn

2 Following a review of the presentation of intercompany loan interest, to achieve consistency in our reporting, comparative amounts have been restated to reclassify net interest expense from UK Life including Savings & Retirement to Group debt costs and other interest of £32 million for the 6 month period ended 30 June 2019 and £65 million for the year ended 31 December 2019 as a non-operating item. The change has no impact on the Group's operating profit. In addition, comparative amounts for operating capital generation of £34 million for the 6 month period ended 30 June 2019 and £69 million for the year ended 31 December 2019 have been restated. The change has no impact on the Group's operating capital generation.

3 Following a review of the presentation of claims handling costs, to achieve consistency in our reporting, comparative amounts have been restated by £39 million for the 6 month period ended 30 June 2019 and £78 million for the year ended 31 December 2019 to include previously excluded claims handling costs attributable to UK Life in controllable costs .

Overview

Aviva is one of the UK's largest insurers in the UK life and savings market. We are uniquely positioned to help our customers and are a trusted provider of a broad range of products to both individual and corporate customers covering their savings, retirement, insurance and health needs. Our UK Life division incorporates three lines of business: annuities & equity release, protection & health and heritage. This division is key in generating sustainable cash flows. Our Savings & Retirement business is a leading provider of mass market savings and retirement solutions in the UK which is maintaining its strong growth in the savings market through our workplace and retail platforms. Aviva Investors, our international asset management business, leverages its existing investment capabilities to provide active solutions to both retail and institutional clients. The trading environment during the first half of 2020 was impacted by the movement restrictions imposed by the UK Government from early March together with customer caution in the face of the significant uncertainty. UK Life including Savings & Retirement took actions during the first half of 2020 to protect its balance sheet from the impacts of volatile financial markets.

Page 14

6.i - UK Life and Investments, Savings & Retirement continued

Operating and financial performance

Solvency II operating own funds generation and return on capital

UK Life and Investments, Savings & Retirement Solvency II return on capital decreased by 1.5pp to 5.0% (HY19: 6.5%) and Solvency II own funds generation decreased by 21% to £356 million (HY19: £449 million). This is due to capital management actions taken in the first half of 2020 including back book de-risking, which have benefitted our solvency capital requirement, whereas actions taken in the prior period largely increased own funds generation.

Operating capital generation^‡#

UK Life and Investments, Savings & Retirement Solvency II operating capital generation (OCG) has increased by 11% to £581 million (HY19: 522 million) due to higher margins and improved capital efficiency on our BPA business, capital optimisation actions relating to our back book, and an action to change the mix of business included in our internal reinsurance vehicle. The increase is partially offset by a reduction on earnings from existing business, including a reduced contribution from Aviva Investors as a result of lower fee income which was impacted by changes in the mix of assets under management.

Cash^‡#

Cash remittances to Group during the period were £84 million (HY19: £973 million). While our solvency position remains strong, we have adopted a cautious approach and delayed cash remittances to Group in light of economic uncertainty created by the COVID-19 pandemic.

UK Life

Operating profit^‡#, new business and net flows

Operating profit^‡#	6 months 2020 £m	Restated¹ 6 months 2019 £m	Sterling % change	Full Year 2019 £m
Annuities and equity release	365	329	11%	866
Protection	70	99	(29)%	166
Heritage³	226	225	-	389
Health	11	15	(23)%	35
Other^2,4	69	64	8%	371
Total UK Life (excluding Savings & Retirement) operating profit^‡#	741	732	1%	1,827

3 Heritage represents products no longer actively marketed. This includes with-profits and bonds formerly shown in legacy, and non-profit legacy pensions which were formerly shown in long-term savings .

4 Other life represents changes in assumptions and modelling, non-recurring items and non-product specific overheads.

UK Life operating profit increased by 1% to £741 million (HY19: 732 million). Strong growth in BPA was offset by lower profits in our individual annuity, equity release, and protection businesses. UK Life operating profit includes a net provision of £25 million to cover expected COVID-19 related claims within our protection business, net of expected favourable experience variances in our annuity business.

	PVNBP				VNB^‡				New Business Margin
Gross of tax and non controlling interests	6 months 2020 £m	6 months 2019 £m	Sterling % change	Full Year 2019 £m	6 months 2020 £m	6 months 2019 m	Sterling % change	Full Year 2019 £m	6 Months 2020 %	6 months 2019 %	Full Year 2019 %
Annuities and equity release	3,838	2,218	73%	6,182	173	33	418%	284	4.5%	1.5%	4.6%
Protection	962	914	5%	1,875	67	76	(11)%	126	7.0%	8.3%	6.7%
Health and Other	366	269	36%	593	13	16	(18)%	28	3.6%	5.9%	4.7%
Total	5,166	3,401	52%	8,650	253	125	103%	438	5.0%	3.9%	5.2%

PVNBP increased by 52% to £5,166 million (HY19: 3,401 million) due to strong growth in BPA and health volumes, partly offset by a reduction in individual annuity and equity release sales. VNB increased by 103% to £253 million (HY19: 125 million), mainly reflecting growth in BPA volumes at improved margins, benefitting from higher asset yields as corporate bond spreads widened and efficiently deployed capital.

Managed assets and net flows	Annuities and equity release £m	Other UK non-profit £m	With profits and other m	Total £m
Managed assets at 1 January 2020	67,143	48,425	47,471	163,039
Premiums and deposits, net of reinsurance	2,511	806	97	3,414
Claims and redemptions, net of reinsurance	(1,402)	(1,895)	(1,926)	(5,223)
Net flows	1,109	(1,089)	(1,829)	(1,809)
Market and other movements	3,142	(1,284)	1,427	3,285
Managed assets at 30 June 2020	71,394	46,052	47,069	164,515

Page 15

6.i - UK Life and Investments, Savings & Retirement continued

Operating and financial performance continued

UK Life continued

Annuities and equity release

Annuities and equity release operating profit increased by 11% to £365 million (HY19 restated: £329 million). Growth in BPA volumes more than offset the impact of lower individual annuity and equity release volumes. In the first half of 2020 BPA delivered new scheme wins of £3,083 million (HY19: 1,177 million) with margins benefitting from higher asset yields as corporate bonds spreads widened, and efficient deployment of capital. Individual annuity and equity release profit fell due to lower volumes as both businesses were adversely impacted by the COVID-19 driven market disruption, including advisers' inability to meet clients during lockdown.

Annuities and equity release VNB increased over 400% to £173 million (HY19: £33 million) driven by growth in BPA volumes. VNB margin strengthened to 4.5% (HY19: 1.5%) due to improved spreads on corporate bonds held to back our new business and our continued focus on capital efficiency.

Protection

Overall protection PVNBP grew 5% to £962 million (HY19: £914 million). We saw growth in both our individual and group protection businesses, where a strong first quarter offset the impact of slower trading in the second quarter following the implementation of lockdown restrictions . VNB decreased by 11% to £67 million (HY19: £76 million) as margins fell compared to the first half of 2019 due to a highly competitive marketplace.

Protection operating profit reduced by 29% to £70 million (HY19 restated: £99 million) due to lower new business margins, and adverse claims experience during the first quarter.

Heritage

Heritage operating profit was stable at £226 million (HY19: £225 million) and contained a net benefit from non-recurring items and other gains. The expected impact of the portfolio run off was offset by cost savings in the first half of 2020.

Health

UK Health operating profit decreased by 23% to £11 million (HY19: 15 million). This includes the expected impact of the fair value pledge provided to policyholders, which reflects the extent to which claims levels were lower in the first half of 2020 as a result of the COVID-19 pandemic. Health and Other PVNBP increased to £366 million (HY19: 269 million) driven by higher large corporate business sales.

Other

Other operating profit increased by £5 million to £69 million (HY19: £64 million). We have recognised a provision of £25 million to meet expected COVID-19 related claims for our individual and group protection businesses, net of expected favourable experience variances on our annuity book. The provision represents our total expected net liabilities on in-force policies from the COVID-19 pandemic over the next two years. During the first half of 2020, COVID-19 related individual and group protection claims amounted to £16 million, net of reinsurance.

Controllable costs^‡

UK Life controllable costs decreased by 9% to £336 million (HY19: £369 million) mainly due to reduced spending on project activity as well as the impact of cost reduction.

Investment, Savings & Retirement

The Investment, Savings & Retirement business consists of our long-term Savings & Retirement business (excluding legacy pensions) and Aviva Investors, our international asset management business.

£m (unless otherwise stated)	6 months 2020 £m	Restated¹ 6 months 2019 £m	Sterling % change	Constant currency %	Full year 2019 £m
Investment, Savings & Retirement
Operating profit^‡#	111	80	39%	39%	189
Controllable costs^‡	377	369	2%	2%	782
New business²
PVNBP	9,220	9,015	2%	2%	20,186
VNB^‡	70	77	(9)%	(9)%	166

Savings & Retirement contribution
Operating profit^‡#	76	20	280%	280%	93
Controllable costs^‡	170	165	3%	3%	336

Aviva Investors contribution
Revenue	242	264	(8)%	(8)%	542
Controllable costs^‡	207	204	1%	1%	446
Operating profit^‡#	35	60	(42)%	(42)%	96
Assets under management	£355bn	£346bn	3%	3%	£346bn

2 Investments, Savings & Retirement new business figures include Aviva Investors PVNBP of £680 million (HY19: £585 million, 2019: £1,266 million) and VNB of £7 million (HY19: £6 million, 2019: £12 million).

Page 16

6.i - UK Life and Investments, Savings & Retirement continued

Operating and financial performance continued

Investment, Savings & Retirement continued

UK Savings & Retirement

Managed assets and net flows	Platform £m	Pensions and other savings & retirement £m	Total savings and retirement £m
Managed assets at 1 January 2020	29,085	84,153	113,238
Premiums and deposits, net of reinsurance	2,932	4,636	7,568
Claims and redemptions, net of reinsurance	(1,020)	(2,382)	(3,402)
Net flows	1,912	2,254	4,166
Market and other movements	(816)	(3,214)	(4,030)
Managed assets at 30 June 2020	30,181	83,193	113,374

UK Savings & Retirement net flows increased by 28% to £4.2 billion (HY19: £3.2 billion) due to higher group pension net flows driven by regular premiums on group pension business, where we saw the benefit of higher levels of auto-enrolment contributions. Inflows onto our platform increased to £2.9 billion (HY19: £2.7 billion), where our flexible pension drawdown capability and comprehensive range of investments saw us increase our share of the advised market on both a gross and net flows basis in the first quarter of 2020.

Controllable costs increased by 3% to £170 million (HY19: £165 million) as we continue to invest in our growth strategy.

Operating profit grew strongly to £76 million (HY19: £20 million), driven by growing revenue from an asset base which has increased to £113 billion (HY19: £103 billion).

Aviva Investors

Considerable market volatility and investor activity was experienced in the first half as concerns over the economic disruption caused by COVID-19 impacted financial markets. Our investment performance was not immune from the turbulence, but as at the end of June 2020 55% of our funds were ahead of benchmark over three years, and 56% over five years. Fund performance compared to targets have been maintained, with 31% of assets under management exceeding targets over one year, consistent with the position at 31 December 2019. In terms of external client flows, our business has maintained the positive momentum experienced in the second half of 2019, with net positive external clients flows of £1.3 billion in the period, with significant new business wins in the UK and North America in the first half of 2020 demonstrating success in our diversification strategy.

Revenue

Revenue decreased by 8% to £242 million (HY19: 264 million) mainly driven by lower fee income as a result of changes in underlying asset mix towards lower margin assets arising from the widespread impact of COVID-19, de-risking by internal clients, the legacy internal client run off, and the impact of the expiry of a distribution agreement in the prior year resulting in lower revenue this year.

Controllable costs^‡

Aviva Investors controllable costs increased by 1% to £207 million (HY19: 204 million), reflecting the impact of inflation and phasing of costs in the first half of the year compared to the prior period.

Operating profit^‡#

Aviva Investors operating profit decreased by 42% to £35 million (HY19: 60 million restated) mainly due to the lower fee income during the first half of 2020.

Page 17

6.i - UK Life and Investments, Savings & Retirement continued

Operating and financial performance continued

Investment, Savings & Retirement continued

Aviva Investors continued

Net flows and assets under management and under administration

Assets under management represent all assets managed by Aviva Investors. These comprise assets which are included within the Group's statement of financial position and those belonging to external clients outside the Group which are not included in the statement of financial position. Internal assets are managed by Aviva Investors on behalf of Group companies, and includes assets managed for the UK Savings & Retirement business. Internal legacy relates to products that are no longer actively marketed.

	Internal legacy £m	Internal core £m	External m	Total m
Assets under management at 1 January 2020	84,927	194,693	66,512	346,132
Total inflows	6,702	16,352	4,655	27,709
Total outflows	(9,864)	(15,639)	(3,388)	(28,891)
Net flows	(3,162)	713	1,267	(1,182)
Net flows into liquidity funds and cash	(435)	2,579	3,124	5,268
Market and foreign exchange movements	4,808	(1,348)	1,249	4,709
Assets under management at 30 June 2020	86,138	196,637	72,152	354,927
Externally managed assets under administration at 1 January 2020				36,292
Externally managed assets under administration net flows and other movements				(501)
Externally managed assets under administration at 30 June 2020				35,791
Assets under management and administration at 1 January 2020				382,424
Assets under management and administration at 30 June 2020				390,718

Assets under management increased by £8.8 billion to £354.9 billion (2019: 346.1 billion). This is due to £1.3 billion of external net inflows, £5.3 billion of net inflows into liquidity funds and cash and £4.7 billion of positive market and foreign exchange movements, offset by £2.4 billion of net outflows on our internal client. Assets under management and administration at 30 June 2020 were £390.7 billion (2019: 382.4 billion).

Page 18

6.ii - General Insurance

£m (unless otherwise stated)	6 months 2020 £m	Restated^1,2 6 months 2019 £m	Sterling % change	Constant currency %	Full year 2019 £m	6 months 2020 £m	Restated^1,2 6 months 2019 £m	Sterling % change	Constant currency %	Full year 2019 £m
Operating profit^‡# and controllable costs^‡	Operating profit					Controllable costs
UK	(66)	141	(147)%	(147)%	250	341	361	(6)%	(6)%	726
Canada	129	89	45%	43%	191	194	195	(1)%	(1)%	402
Europe	104	103	1%	2%	154	156	147	6%	6%	288
Asia	-	(1)	(100)%	(100)%	(1)	2	2	-	-	4
	167	332	(50)%	(50)%	594	693	705	(2)%	(2)%	1,420

NWP and COR^‡	NWP					COR
UK	2,140	2,158	(1)%	(1)%	4,218	106.3%	97.2%	9.1pp		97.9%
Canada	1,502	1,458	3%	2%	3,061	95.5%	98.1%	(2.6)pp		97.8%
Europe	1,099	1,102	-	-	2,017	92.6%	92.9%	(0.3)pp		95.7%
Asia	7	7	-	-	13	N/A	N/A	N/A		N/A
	4,748	4,725	-	-	9,309	99.8%	96.8%	3.0pp		97.5%

Solvency II operating own funds generation						194	298	(35)%	(39)%	628
Solvency II return on capital^‡						8.0%	13.3%	(5.3)pp	(5.3)pp	14.0%

Solvency II operating capital generation^‡#						163	216	(25)%	(24)%	574
Cash remittances^‡#						24	191	(87)%	(87)%	584

2 Comparative amounts for the 6 month period ended 30 June 2019 have been restated to reallocate non-insurance operations of Europe and Asia to their respective market segments to better reflect the management of the underlying businesses.

Overview

Aviva's General Insurance business operates at scale in the UK and Canada. We have a European business that operates in France, Ireland, Poland and Italy, and an Asian business that operates in Singapore. In the first half of 2020 we have focussed on executing our market strategies, with disruption from a slowdown in trading activity during the second quarter of 2020 due to the global COVID-19 pandemic.

Our estimate for the impact of the COVID-19 pandemic incorporates estimated claims net of reinsurance in business interruption insurance, other commercial lines and travel insurance, and allows for favourable impacts in other product lines. The continuing nature of COVID-19 related events means that these figures are subject to a significant degree of uncertainty. Excluding these COVID-19 related impacts, higher weather costs and prior year reserve strengthening, General Insurance has delivered an improved performance compared to HY19. General Insurance operating profit decreased to £167 million (HY19 restated: £332 million), which translated to a COR of 99.8% (HY19 restated: 96.8%) due to the £165 million impact of the COVID-19 pandemic as defined above, a £10 million prior year reserve strengthening net of COVID-19 impact compared to a £21 million release at HY19, and weather costs £87 million higher than at HY19.

Net written premiums increased marginally to £4,748 million (HY19: £4,725 million), reflecting volume and rate increases in Global Corporate and Speciality commercial lines offset by a decline in personal lines due to worldwide government enforced lockdown measures.

All percentage movements below are quoted in constant currency unless otherwise stated.

Operating and financial performance

United Kingdom General Insurance

Operating profit ^‡#

The UK recorded an operating loss of £66 million (HY19 restated: £141 million operating profit), with the decrease primarily reflecting COVID‑19 related claims, as defined above, higher weather costs and prior year reserve strengthening.

The impact of COVID-19 related claims was £138 million, weather costs were £47 million higher due to storms Ciara, Dennis and Jorge in February compared to a benign 2019, and there was a £21 million prior year reserve strengthening at HY20 (excluding the impact of COVID‑19) compared to a £16 million release at HY19. Long-term investment return was also £11 million lower due to reduced yields.

Excluding these impacts, the UK delivered an improved performance compared to HY19. Personal Lines benefited from the continued simplification of our business and remediation or exit of poor performing segments and Commercial Lines benefited from above inflation rate increases and targeted volume growth.

NWP and COR^‡

UK Commercial Lines NWP grew 8% to £1,005 million (HY19: £929 million), reflecting a combination of above inflation rate increases and targeted volume growth in Specialty Lines and SME Digital. UK Personal Lines saw 4% growth in the first quarter of 2020 in Retail own brands, offset by targeted exits and the continued run-off of the Creditor book. Growth slowed in the second quarter primarily due to COVID-19 impacts, with Retail own brands proving most resilient, resulting in an 8% reduction in NWP to £1,135 million (HY19: £1,229 million). Overall NWP was 1% lower at £2,140 million (HY19: £2,158 million). Although NWP for the year will be below planned levels, we are starting to see increased activity levels as we support distributors and customers.

Page 19

6.ii - General Insurance continued

Operating and financial performance continued

UK General Insurance continued

NWP and COR continued

UK GI COR improved by 1.5pp excluding the impacts of COVID-19 claims as previously defined, weather and prior year reserve strengthening . The adverse net impact of 6.6pp COVID-19 claims related impacts, 2.2pp higher weather costs and 1.8pp adverse movement in prior year reserves resulted in a COR of 106.3% (HY19 restated: 97.2%) . Personal lines COR of 97.8% (HY19: 98.9%) was 1.1pp lower year-on-year, reflecting an improvement in underlying performance as we continue to simplify our Personal Lines business and remediate or exit poor performing segments. Commercial lines saw an improvement in underlying performance driven by above inflation rate increases and targeted volume growth but the COR of 116.6% (HY19: 94.8%) was 22.2pp higher year-on-year, reflecting COVID-19 claims impacts, higher prior year reserve strengthening and higher weather costs.

Controllable costs^‡

Controllable costs decreased 6% to £341 million (HY19: £361 million), reflecting the simplification of our Personal Lines business and a reduction in project spend, while continuing to invest in our IT infrastructure and support growth in our Commercial lines business.

Canada

Operating profit^‡#

During the first half of 2020, operating profit of £129 million (HY19 restated: £89 million) improved due to actions around pricing, indemnity management and risk selection. However, within this, Personal lines performed significantly better than expected while Commercial lines were impacted by COVID-19 claims. The economic shutdown due to COVID-19 has created significant disruption to our business but our financial stability and profitability has held up. Long-term investment return worsened by 1.4% due to lower short-term reinvestment yields, increased broker loan paybacks in late 2019, and reduced preferred shares dividend income.

NWP and COR^‡

Net written premiums were £1,502 million (HY19: £1,458 million). In Personal lines, NWP reduced to £1,012 million (HY19: £1,018 million) primarily as a result of the impact of COVID-19, as we offered more consumer relief in motor insurance. Commercial lines NWP increased to £490 million (HY19: £440 million) due to growth in Global Corporate and Specialty new business and rate increases put through during renewals.

The COR has improved to 95.5% at HY20 (HY19 restated: 98.1%) for the reasons described in relation to operating profit above . Personal lines COR of 86.4% was 11.2pp lower year-on-year, mainly driven by a milder winter, lower motor frequency before and after the COVID-19 shutdown and better pricing and underwriting. Commercial lines COR of 115.0% was 15.3pp higher year-on-year due to increased claims, mostly as a result of COVID-19.

Controllable costs^‡

Controllable costs were broadly level at £194 million (HY19: £195 million) and reflect investment in claims personnel and processes, investment in our pricing capabilities and the Global Corporate and Specialty business, and continued investment in our IT infrastructure.

Europe

Operating profit^‡#

Europe general insurance operating profit remained broadly level at £104 million (HY19 restated: £103 million) . In France, operating profit was £55 million (HY19 restated: £55 million) with operating profit growth from underlying activities offset by unfavourable prior year development and higher weather claims compared to HY19. In France the impact of the COVID-19 pandemic on commercial lines is expected to manifest in the second half of 2020. In Italy operating profit increased to £20 million (HY19 restated: £12 million) primarily driven by strong investment performance in the period. Operating profit was lower in Ireland in part due to COVID-19 claims and adverse large losses, partially offset by prior year development. In Ireland weather claims were favourable against longer term expectations, however this benefit was lower than at HY19.

NWP and COR^‡

NWP remained stable at £1,099 million (HY19: £1,102 million) with growth in France, particularly in Commercial lines, offset by lower premiums in Poland and Ireland primarily due to the impact of the COVID-19 pandemic on new business, in addition to a soft Personal lines market in Ireland.

COR decreased by 0.3pp to 92.6% (HY19: 92.9%) for the reasons described in the operating profit section above.

Controllable costs ^‡

Controllable costs increased 6% to £156 million (HY19: £147 million), including charitable contributions to the France solidarity fund and increased project implementation costs in Ireland, offset by BAU cost savings and asset levy refunds in Poland .

Page 20

6.ii - General Insurance continued

Solvency II and cash remittances

Solvency II operating own funds generation and return on capital^‡

General Insurance delivered improved own funds generation and Solvency II return on capital in HY20 compared to prior year after excluding the impacts of COVID-19 related claims, adverse prior year development and higher weather costs. Including these impacts, Solvency II own funds generation decreased to £194 million (HY19: £298 million), which translated to a Solvency II return on capital of 8% (HY19: 13.3%).

Operating capital generation^‡#

General Insurance Solvency II operating capital generation reduced to £163 million (HY19: £216 million) reflecting the reduction in own funds generation described above, partially offset by the non-repeat of the one-off impact of the alignment of UK Digital costs which increased the Solvency II capital requirement at HY19.

Cash^‡#

Cash remittances to Group are £24 million (HY19: £191 million). Cash remittances in HY20 relate to interest payments as dividends were not received from our GI businesses, as we look to maintain balance sheet strength during the period of uncertainty as a result of the COVID-19 pandemic.

Page 21

6.ii - General Insurance continued

6 months 2020	UK Personal £m	UK Commercial £m	Total UK £m	Canada Personal £m	Canada Commercial £m	Total Canada £m	Europe £m	Asia m	Total £m
General insurance
Gross written premiums	1,172	1,143	2,315	1,029	551	1,580	1,152	7	5,054
Net written premiums	1,135	1,005	2,140	1,012	490	1,502	1,099	7	4,748
Net earned premiums	1,150	942	2,092	1,027	481	1,508	1,008	6	4,614
Net claims incurred	(695)	(788)	(1,483)	(565)	(372)	(937)	(633)	(4)	(3,057)
Of which claims handling costs			(69)			(56)	(33)	-	(158)
Earned commission	(278)	(189)	(467)	(210)	(109)	(319)	(190)	(1)	(977)
Earned expenses	(152)	(122)	(274)	(112)	(72)	(184)	(109)	(1)	(568)
Underwriting result	25	(157)	(132)	140	(72)	68	76	-	12
Long-term investment return (LTIR)			72			64	37	-	173
Other¹			(6)			(3)	(9)	-	(18)
Operating profit			(66)			129	104	-	167
General insurance combined operating ratio²
Claims ratio	60.5%	83.6%	70.9%	55.0%	77.3%	62.1%	62.8%		66.3%
Of which:
Prior year reserve development (%)			2.7%			(0.5)%	(0.3)%		1.0%
Weather claims (under)/over long-term average (%)			(0.6)%			1.6%	(0.3)%		0.2%
Commission ratio	24.1%	20.1%	22.3%	20.4%	22.7%	21.2%	18.9%		21.2%
Expense ratio	13.2%	12.9%	13.1%	11.0%	15.0%	12.2%	10.9%		12.3%
Combined operating ratio	97.8%	116.6%	106.3%	86.4%	115.0%	95.5%	92.6%		99.8%
Assets supporting general insurance business
Debt securities			2,264			5,026	2,358	99	9,747
Equity securities			559			220	15	-	794
Investment property			406			-	186	-	592
Cash and cash equivalents			1,481			161	308	35	1,985
Other³			1,577			186	423	-	2,186
Assets at 30 June 2020			6,287			5,593	3,290	134	15,304
Debt securities			2,323			4,633	2,209	81	9,246
Equity securities			744			231	161	-	1,136
Investment property			414			-	170	-	584
Cash and cash equivalents			609			158	160	23	950
Other³			1,882			150	387	-	2,419
Assets at 31 December 2019			5,972			5,172	3,087	104	14,335
Average assets			6,130			5,383	3,189	119	14,821
LTIR as % of average assets			2.3%			2.4%	2.3%	-	2.3%

1 Includes the result of non-insurance operations, unwind of discount rate, pension scheme net finance costs and IFRS 16 leases expense interest.

2 General Insurance ratios include Aviva Re.

3 Includes loans and other financial investments.

Page 22

6.ii - General insurance continued

Restated^1,2,36 months 2019	UK Personal £m	UK Commercial £m	Total UK £m	Canada Personal £m	Canada Commercial £m	Total Canada m	Europe £m	Asia £m	Total £m
General insurance
Gross written premiums	1,266	1,072	2,338	1,035	490	1,525	1,151	7	5,021
Net written premiums	1,229	929	2,158	1,018	440	1,458	1,102	7	4,725
Net earned premiums	1,233	851	2,084	1,033	416	1,449	992	7	4,532
Net claims incurred	(775)	(514)	(1,289)	(707)	(254)	(961)	(629)	(5)	(2,884)
Of which claims handling costs			(78)			(58)	(34)	2	(168)
Earned commission	(298)	(178)	(476)	(186)	(93)	(279)	(186)	-	(941)
Earned expenses	(146)	(114)	(260)	(115)	(67)	(182)	(107)	(2)	(551)
Underwriting result	14	45	59	25	2	27	70	-	156
Long-term investment return (LTIR)			83			65	36	-	184
Other⁴			(1)			(3)	(3)	(1)	(8)
Operating profit			141			89	103	(1)	332
General insurance combined operating ratio⁵
Claims ratio	62.9%	60.4%	61.9%	68.4%	61.2%	66.3%	63.3%		63.8%
Of which:
Prior year reserve development (%)			(0.8)%			(0.3)%	(0.3)%		(0.3)%
Weather claims (under)/over long-term average (%)			(2.8)%			(0.4)%	(1.3)%		(1.7)%
Commission ratio	24.2%	20.9%	22.8%	18.0%	22.3%	19.2%	18.8%		20.8%
Expense ratio	11.8%	13.5%	12.5%	11.2%	16.2%	12.6%	10.8%		12.2%
Combined operating ratio	98.9%	94.8%	97.2%	97.6%	99.7%	98.1%	92.9%		96.8%
Assets supporting general insurance business
Debt securities			2,428			4,755	2,218	72	9,473
Equity securities			720			236	23	-	979
Investment property			407			-	153	-	560
Cash and cash equivalents			478			139	308	22	947
Other⁶			1,859			174	596	-	2,629
Assets at 30 June 2019			5,892			5,304	3,298	94	14,588
Debt securities			2,367			4,445	2,179	72	9,063
Equity securities			568			208	90	-	866
Investment property			380			-	148	-	528
Cash and cash equivalents			700			130	371	15	1,216
Other⁶			1,776			207	615	-	2,598
Assets at 31 December 2018			5,791			4,990	3,403	87	14,271
Average assets			5,842			5,147	3,351	91	14,431
LTIR as % of average assets			2.8%			2.5%	2.1%	-	2.6%

1 Following a review of the Group's presentation of consolidated investment funds, comparative amounts as at 30 June 2019 have been restated from those previously reported. The restatement has had no impact on the profit for the year or equity. See note B2 for further information.

2 On 31 December 2019 the Group adjusted operating profit APM was revised and now includes the amortisation and impairment of internally generated intangible assets to better reflect the operational nature of these assets (see note B2). Group adjusted operating profit continues to exclude amortisation and impairment of intangible assets acquired in business combinations. Comparative amounts for the 6 month period ended 30 June 2019 have been restated. There is no impact on profit before tax attributable to shareholders' profit.

3 Comparative amounts for the 6 month period ended 30 June 2019 have been restated to reallocate non-insurance operations for Europe and Asia to their respective market segments to better reflect the management of the underlying businesses.

4 Includes the result of non-insurance operations, unwind of discount rate, pension scheme net finance costs and IFRS 16 leases expense interest.

5 General Insurance ratios include Aviva Re.

6 Includes loans and other financial investments.

Page 23

6.ii - General insurance continued

Full year 2019	UK Personal £m	UK Commercial £m	Total UK m	Canada Personal £m	Canada Commercial £m	Total Canada £m	Europe £m	Asia £m	Total £m
General insurance
Gross written premiums	2,470	2,154	4,624	2,134	1,070	3,204	2,121	15	9,964
Net written premiums	2,399	1,819	4,218	2,100	961	3,061	2,017	13	9,309
Net earned premiums	2,440	1,721	4,161	2,078	884	2,962	1,982	15	9,120
Net claims incurred	(1,545)	(1,049)	(2,594)	(1,421)	(531)	(1,952)	(1,306)	(12)	(5,864)
Of which claims handling costs			(155)			(116)	(64)	-	(335)
Earned commission	(599)	(364)	(963)	(378)	(194)	(572)	(365)	(2)	(1,902)
Earned expenses	(279)	(239)	(518)	(233)	(140)	(373)	(225)	(3)	(1,119)
Underwriting result	17	69	86	46	19	65	86	(2)	235
Long-term investment return (LTIR)			166			133	76	1	376
Other¹			(2)			(7)	(8)	-	(17)
Operating profit (GI)			250			191	154	(1)	594
General insurance combined operating ratio²
Claims ratio	63.3%	60.9%	62.3%	68.4%	60.0%	65.9%	65.9%		64.4%
Of which:
Prior year reserve development (%)			(2.6)%			(0.6)%	(1.8)%		(1.7)%
Weather claims (under)/over long-term average (%)			(2.4)%			(0.7)%	1.2%		(1.0)%
Commission ratio	24.6%	21.2%	23.1%	18.2%	22.0%	19.3%	18.4%		20.8%
Expense ratio	11.4%	13.9%	12.5%	11.2%	15.8%	12.6%	11.4%		12.3%
Combined operating ratio	99.3%	96.0%	97.9%	97.8%	97.8%	97.8%	95.7%		97.5%
Assets supporting general insurance business
Debt securities			2,323			4,633	2,209	81	9,246
Equity securities			744			231	161	-	1,136
Investment property			414			-	170	-	584
Cash and cash equivalents			609			158	160	23	950
Other³			1,882			150	387	-	2,419
Assets at 31 December 2019			5,972			5,172	3,087	104	14,335
Debt securities			2,367			4,445	2,179	72	9,063
Equity securities			568			208	90	-	866
Investment property			380			-	148	-	528
Cash and cash equivalents			700			130	371	15	1,216
Other³			1,776			207	615	-	2,598
Assets at 31 December 2018			5,791			4,990	3,403	87	14,271
Average assets			5,882			5,081	3,245	96	14,304
LTIR as % of average assets			2.8%			2.6%	2.3%	1.0%	2.6%

1 Includes the result of non-insurance operations, unwind of discount rate, pension scheme net finance costs and IFRS 16 leases expense interest.

2 General Insurance ratios include Aviva Re.

2 Includes loans and other financial investments.

Page 24

6.iii - Europe Life

£m (unless otherwise stated)	6 months 2020 £m	6 months 2019 £m	Sterling % change	Constant currency %	Full year 2019 £m	6 months 2020 £m	Restated^1,2 6 months 2019 m	Sterling % change	Constant currency %	Restated³ Full year 2019 £m
Solvency II operating own funds generation						217	304	(29)%	(28)%	574
Solvency II return on capital^‡						7.1%	11.0%	(3.9)pp	(4.4)pp	10.3%

Solvency II operating capital generation^‡#						464	324	43%	45%	754
Cash remittances^‡#						32	418	(92)%	(92)%	414

Operating profit^‡#
France						165	195	(16)%	(16)%	408
Poland						88	85	2%	5%	174
Italy						100	82	20%	20%	173
Other Europe						14	30	(54)%	(53)%	72
						367	392	(7)%	(6)%	827

Controllable costs^3,‡						280	281	1%	2%	553

New business	PVNBP					VNB^‡
France	2,158	2,710	(20)%	(20)%	5,702	100	95	6%	6%	168
Poland	234	307	(24)%	(23)%	624	26	31	(16)%	(14)%	64
Italy	2,142	3,468	(38)%	(38)%	5,537	51	99	(49)%	(49)%	147
Other Europe	891	913	(2)%	-	1,909	11	12	(10)%	(1)%	35
	5,425	7,398	(27)%	(26)%	13,772	188	237	(21)%	(20)%	414

2 Comparative amounts for the 6 month period ended 30 June 2019 have been restated to reallocate non-insurance operations to their respective market segments to better reflect the management of the underlying businesses.

3 Following a review of the presentation of claims handling costs, to achieve consistency in our reporting, comparative amounts have been restated by £2 million for the 6 month period ended 30 June 2019 and £5 million for the year ended 31 December 2019 to include previously excluded claims handling costs attributable to Ireland and Poland, in controllable costs.

Overview

Aviva operates in a number of markets in Europe with life insurance operations in France, Italy, Poland, and Other Europe markets (Ireland and Turkey). In the first half of 2020 we have focused on the development and implementation of our market strategies for organic growth while we navigated the operational and financial challenges presented by government responses to the COVID-19 pandemic across Europe. Operating profit decreased by 6% to £367 million(HY19 restated: £392 million) with growth in Italy and Poland offset by lower profits in other markets. The volatility in financial markets adversely impacted operating profit either directly through reduced assets under management and fee income or indirectly as a result of the balance sheet de-risking actions taken in most markets which has reduced investment return. In addition, France has seen an increase in protection claims.

Europe Life experienced lower trading volumes as a result of the movement restrictions imposed from early March together with customer caution in the face of the significant uncertainty, while we also actively sought to reduce with-profit inflows in France and Italy all of which resulted in a decrease in PVNBP by 26% to £5,425 million (HY19: £7,398 million) during the first half of 2020. Savings new business mix continued to shift towards unit-linked products in line with our strategy to shift new business towards capital-light products.

All percentage movements are quoted in constant currency unless otherwise stated.

Operating and financial performance

Solvency II operating own funds generation and return on capital^‡

Europe Life Solvency II return on capital has decreased by 3.9pp to 7.1% (HY19: 11.0%), on a sterling basis, and Solvency II operating own funds generation has reduced to £217 million (HY19: £304 million). This was primarily due to lower new business volumes over the period reflecting managed reductions in with-profit volumes and impacts of the COVID-19 pandemic on trading, and a lower contribution from management actions than the first half of 2019 which included favourable modelling and assumption changes in Italy.

Operating capital generation (OCG) ^‡#

Europe Life Solvency II operating capital generation has increased by £140 million to £464 million (HY19: £324 million), primarily as a result of strategic asset allocation, de-risking and hedging activity in France, Ireland and Italy to protect the capital position against further adverse economic movements in the current market environment.

Cash^‡#

Cash remitted to Group was £32 million(HY19: £418 million), the first half of 2019 included a France dividend of £240 million and a Poland dividend of £144 million, neither market has paid dividends during the first half of 2020 as we maintain balance sheet strength during this period of uncertainty.

Operating profit^‡#

The operating profit of our life and health businesses reduced by 6% to £367 million (HY19 restated: 392 million). Dealing with each of the markets in turn:

· In France, operating profit decreased by 16% to £165 million (HY19 restated: £195 million) with improved product mix during the first half of the year more than offset by adverse protection claims experience . The operating profit in our health business was £11 million (HY19: 6 million) following low claims experience during the lockdown period.

Page 25

6.iii - Europe Life continued

Operating and financial performance continued

Operating profit^‡# continued

· In Poland, operating profit increased by 5% to £88 million(HY19 restated: 85 million) with actions taken to reduce operating expenses offsetting trading disruption arising from lockdown restrictions which particularly affected our Bancassurance channels

· In Italy, operating profit increased by 20% to £100 million (HY19 restated: 82 million) as a result of higher fee income from assets under management that had grown strongly in previous periods offsetting the trading disruption experienced during the first half of 2020.

· Within Other Europe markets, Ireland operating profit reduced to £8 million (HY19 restated: £24 million), a decrease of 68% mainly driven by adverse income protection claims experience, the impact of balance sheet de-risking actions during the first half of 2020, and the absence of positive one-off methodology changes included in half-year 2019 result. In Turkey, operating profit was £6 million (HY19 restated: £6 million).

Managed assets and net flows

	6 months 2020 £m	6 months 2019 £m	Full year 2019 m
Managed assets at 1 January	125,580	118,502	118,502
Premiums and deposits, net of reinsurance	4,929	6,449	12,474
Claims and redemptions, net of reinsurance	(4,162)	(4,040)	(7,992)
Net flows	767	2,409	4,482
Market and other movements	6,224	7,209	2,596
Managed assets at 30 June/31 December	132,571	128,120	125,580

Net inflows in Europe of £0.8 billion (HY19: £2.4 billion) decreased mainly due to lower trading volumes as a result of the movement restrictions imposed in all markets from early March and our active reduction of with-profit inflows in France and Italy. Europe managed assets have benefitted from positive market and other movements of £6.2 billion (HY19: £7.2 billion) during the first half of 2020.

Controllable costs^‡

Controllable costs for Europe Life were stable at £280 million (HY19 restated: £281 million) reflecting a reduction in run-rate expenses and change spend as a result of our cost saving programme, offset by inflationary increases and one-off costs incurred as a result of changes in operating environment during the first half of 2020 due to the COVID-19 pandemic.

New business

Europe Life PVNBP decreased by 26% to £5,425 million (HY19: £7,398 million) and VNB decreased by 20% to £188 million (HY19: 237 million). New business margin improved overall as a result of favourable business mix as we significantly increased our mix of unit-linked business.

In France, PVNBP was down by 20% to £2,158 million (HY19: £2,710 million) reflecting managed reductions in with-profit volumes and lower volumes due to the trading disruption caused by the lockdown in France from April onwards, which partially offsets strong growth in our unit-linked pension product. VNB increased by 6% to £100 million (HY19: £95 million) with an improvement in margin driven largely by a higher mix of more profitable unit-linked inflows.

In Poland PVNBP decreased by 23% to £234 million (HY19: £307 million) driven by lower volume due to the trading disruption in our distribution channels arising from movement restrictions and the closure of branches by our bancassurance partners. VNB margins improved slightly compared to the first half of 2019 as a result of favourable mix of business.

In Italy, PVNBP was down by 38% to £2,142 million (HY19: £3,468 million) due to a managed reduction in standalone with-profits volumes together with lower volume due to trading disruption from March onwards arising from movement restrictions. VNB margins were lower due to the impact of unfavourable interest rates movements partially offset by the introduction of our higher margin Formula 5 savings product.

Within Other Europe markets, Ireland PVNBP was up by 2% to £770 million (HY19: £753 million) as strong pension sales during the first half of 2020 was offset by the lower volumes due to the impact of trading disruption arising from lockdowns from April onwards. In Turkey PVNBP reduced by 14% to £121 million (HY19: £160 million) as a result of lower volumes due to the trading disruption from bank branch closures.

Page 26

6.iv - Asia Life

£m (unless otherwise stated)	6 months 2020 £m	6 months 2019 m	Sterling % change	Constant currency %	Full year 2019 £m	6 months 2020 m	Restated^1,2 6 months 2019 £m	Sterling % change	Constant currency %	Full year 2019 £m
Solvency II operating own funds generation						97	76	28%	28%	187
Solvency II return on capital^‡						12.7%	10.4%	2.3pp	2.0pp	12.7%

Solvency II operating capital generation^‡#						43	18	139%	124%	60
Cash remittances^‡#						-	-	-	-	51

Operating profit^‡#
Singapore						53	52	2%	3%	145
China						19	25	(24)%	(22)%	25
Other Asia (excl FPI, Hong Kong & Indonesia)						(5)	(9)	(44)%	44%	(12)
						67	68	(1)%	1%	158
Held for Sale (FPI, Hong Kong & Indonesia)						73	84	(13)%	(13)%	118
						140	152	(8)%	(7)%	276

Controllable costs^‡						89	93	(3)%	(3)%	198

New business	PVNBP					VNB^‡
Singapore	693	724	(4)%	(4)%	1,580	72	71	1%	2%	159
China	355	419	(15)%	(14)%	718	13	29	(55)%	(55)%	43
Other Asia (excl FPI, Hong Kong & Indonesia)	162	102	59%	58%	300	6	(1)	849%	1,231%	3
	1,210	1,245	(3)%	(2)%	2,598	91	99	(8)%	(7)%	205
Held for Sale (FPI, Hong Kong & Indonesia)	193	232	(17)%	(16)%	459	(1)	(3)	67%	68%	1
	1,403	1,477	(5)%	(4)%	3,057	90	96	(6)%	(6)%	206

Overview

Our businesses in Asia provide access to a combined population of over 2.8 billion people, with relatively low insurance penetration compared to Western markets. We provide life and health insurance solutions in Singapore, China, Vietnam and India. Across our markets we operate a multi-distribution channel strategy which includes tied-agency, financial advisers, bancassurance, affinity partnerships, telemarketing and direct sales force.

Our core strategy is to leverage strong partnerships and our distribution capability to grow long term value. We continue to place emphasis on earning customers' trust and delivering great customer outcomes. Investment in enhancing Asia's distribution, digital and analytics capabilities will continue throughout 2020.

In Singapore, as one of the biggest providers of employee benefits and healthcare insurance, we continued to grow our distribution networks. Our financial advisory subsidiaries, Aviva Financial Advisers and Professional Investment Advisory Services, now have a combined total of 1,901 advisers (HY19: 1,653 advisers). In China, building upon our excellent relationships with COFCO, our joint venture partner, we continued to invest in our core agency channel and further digitizing customer journeys and touch points.

As a result of the COVID-19 pandemic, many governments took rapid actions against the outbreak. Our businesses have implemented safeguards to ensure business continuity and support the wellbeing of our customers and communities. Looking ahead, we believe Asia's macro fundamentals remain sound, and regional insurance markets can recover relatively quickly post-COVID-19.

Our businesses in Friends Provident International (FPI), Hong Kong and Indonesia are classified as held for sale at 30 June 2020. We announced the disposal of our 76% stake in FPI was completed on 16 July 2020.

All percentage movements are quoted in constant currency unless otherwise stated.

Operating and financial performance

Operating own funds generation, return on capital and operating capital generation^‡

Asia Life Solvency II return on capital has improved by 2.3pp to 12.7% (HY19: 10.4%) on a sterling basis, and Solvency II operating capital generation has increased by £25 million to £43 million (HY19: £18 million), mainly attributable to improved persistency in Singapore, a strong back book in China and more capital efficient products sold in Vietnam.

Cash^‡#

Cash remittances to Group were £nil during HY20 (HY19: £nil).

Operating profit^‡#

Operating profit from our life and health businesses was £140 million (HY19 restated: £152 million). Excluding profit from held for sale entities, operating profit was £67 million (HY19 restated: £68 million). Within this, Singapore's operating profit remained stable at £53 million (HY19 restated: £52 million) reflecting improved claims experience and favourable modelling refinements, offset by lower new business volume due to the COVID-19 pandemic and expenses related to distribution channel development. Despite being the initial epicentre of the COVID-19 pandemic, China's operating profit remained resilient at £19 million (HY19 restated: £18 million, excluding £7 million one-off tax credit).

Page 27

6.iv - Asia Life continued

Operating and financial performance continued

Managed assets and net flows

	6 months 2020 £m	6 months 2019 £m	Full year 2019 £m
Managed assets at 1 January	15,138	14,775	14,775
Premiums and deposits, net of reinsurance	527	356	927
Claims and redemptions, net of reinsurance	(321)	(401)	(838)
Net flows	206	(45)	89
Market and other movements	87	87	274
Managed assets at 30 June/31 December	15,431	14,817	15,138

Asia's managed assets increased to £15,431 million (HY19: £14,817 million). Net inflows of £206 million (HY19: £45 million outflow) were mainly attributable to Singapore's higher premium collections and improved claims experience.

Controllable costs^‡

Total controllable costs were £89 million (HY19: £93 million). Excluding held for sale entities, controllable costs increased to £70 million (HY19: 68 million), as disciplined distribution development and investment in digital capabilities continued across the region.

New business

Excluding held for sale entities, PVNBP decreased by 2% to £1,210 million (HY19: £1,245 million). Sales volumes were impacted by lockdown measures imposed due to the COVID-19 pandemic, severely restricting sales activities across most channels.

Excluding held for sale entities, VNB decreased by 7% to £91 million (HY19: £99 million). Singapore and China sales were focussed towards lower margin savings products in early 2020 as we looked to boost sales volumes. Higher margin protection product sales planned for Q2 in Singapore and China were subsequently disrupted by the COVID-19 pandemic. Furthermore, as investment markets remained volatile during the COVID-19 outbreak, lower interest rates and dampened investor confidence negatively impacted VNB.

Page 28

7 - Life business profit drivers

	UK Life including Savings & Retirement			Europe Life			Asia Life			Total
	6 months 2020 £m	Restated¹ 6 months 2019 £m	Full year 2019 m	6 months 2020 £m	Restated¹ 6 months 2019 £m	Full year 2019 £m	6 months 2020 £m	Restated¹ 6 months 2019 £m	Full year 2019 £m	6 months 2020 £m	Restated¹ 6 months 2019 m	Full year 2019 £m
New business income	414	297	919	116	148	299	144	161	317	674	606	1,535
Underwriting margin	148	165	287	90	98	250	54	41	97	292	304	634
Investment return³	695	661	1,346	652	607	1,231	118	119	251	1,465	1,387	2,828
Total income	1,257	1,123	2,552	858	853	1,780	316	321	665	2,431	2,297	4,997
Acquisition expenses	(210)	(192)	(407)	(134)	(171)	(302)	(117)	(121)	(250)	(461)	(484)	(959)
Administration expenses^1,3	(398)	(431)	(898)	(317)	(289)	(588)	(60)	(54)	(115)	(775)	(774)	(1,601)
Total expenses	(608)	(623)	(1,305)	(451)	(460)	(890)	(177)	(175)	(365)	(1,236)	(1,258)	(2,560)
Other^2,3,4	157	237	638	(51)	(7)	(84)	(15)	5	(17)	91	235	537
Life business operating profit	806	737	1,885	356	386	806	124	151	283	1,286	1,274	2,974
Health business operating profit	11	15	35	11	6	21	16	1	(7)	38	22	49
Total divisional operating profit	817	752	1,920	367	392	827	140	152	276	1,324	1,296	3,023

3 Following a review of the presentation of claims handling costs, to achieve consistency in our reporting, comparative amounts for administration expenses have been restated by £30 million for the 6 month period ended
30 June 2019 and £59 million for the year ended 31 December 2019 to include claims handling costs attributable to the UK Life business. Previously these costs were included as a reduction to investment return (£13 million for the 6 month period ended 30 June 2019 and £25 million for the year ended 31 December 2019) and other (£17 million for the 6 month period ended 30 June 2019 and £34 million for the year ended 31 December 2019). Additionally, as part of this review the comparative amount for administration expenses for the year ended 31 December 2019 has been restated to include £42 million of amortisation of intangible assets, previously included in other.

4 Other represents DAC, changes in assumptions and modelling, non-recurring items and non-product specific items and excludes the total profit of £nil (HY19: loss of £4 million, 2019: profit of £27 million) for Aviva Investors' Pooled Pensions and Aviva Life Reinsurance. Additionally, comparative amounts for the 6 month period ended 30 June 2019 have been restated to reallocate non-insurance operations for Europe and Asia to their respective market segments to better reflect the management of the underlying businesses.

Income: New business income and underwriting margin

	UK Life including Savings & Retirement			Europe Life			Asia Life			Total
	6 months 2020 £m	6 months 2019 £m	Full year 2019 £m	6 months 2020 m	6 months 2019 m	Full year 2019 £m	6 months 2020 £m	6 months 2019 m	Full year 2019 m	6 months 2020 £m	6 months 2019 £m	Full year 2019 m
New business income	414	297	919	116	148	299	144	161	317	674	606	1,535
Acquisition expenses	(210)	(192)	(407)	(134)	(171)	(302)	(117)	(121)	(250)	(461)	(484)	(959)
Net contribution	204	105	512	(18)	(23)	(3)	27	40	67	213	122	576
APE (£m)¹	1,862	1,798	4,056	594	796	1,495	210	217	429	2,666	2,811	5,980
As margin on APE (%)	11%	6%	13%	(3)%	(3)%	-	13%	18%	16%	8%	4%	10%
Underwriting margin (£m)	148	165	287	90	98	250	54	41	97	292	304	634
Analysed by:
Expenses	32	32	62	22	27	64	43	42	77	97	101	203
Mortality and longevity	116	133	225	58	60	157	15	6	34	189	199	416
Persistency	-	-	-	10	11	29	(4)	(7)	(14)	6	4	15

1 APE excludes Retail Fund Management and Health business in Asia.

Income: Investment return

	UK Life including Savings & Retirement			Europe Life			Asia Life			Total
	6 months 2020 £m	6 months 2019 £m	Full year 2019 £m	6 months 2020 £m	6 months 2019 £m	Full year 2019 £m	6 months 2020 £m	6 months 2019 £m	Full year 2019 m	6 months 2020 m	6 months 2019 £m	Full year 2019 £m
Unit-linked margin (£m)¹	466	418	844	316	301	592	100	108	213	882	827	1,649
As annual management charge on average reserves (bps)	60	60	58	142	140	136	231	248	245	85	86	83
Average reserves (£bn)²	154.5	140.3	146.1	44.5	42.9	43.6	8.7	8.7	8.7	207.7	191.9	198.4
Participating business (£m)³	59	68	132	295	257	549	(1)	(4)	4	353	321	685
As bonus on average reserves (bps)	29	35	33	81	72	77	(5)	(19)	9	60	56	59
Average reserves (£bn)²	40.8	39.0	40.4	73.2	71.2	71.3	4.3	4.3	4.3	118.3	114.5	116.0
Spread margin (£m)¹	147	157	302	1	4	2	3	3	7	151	164	311
As spread margin on average reserves (bps)	42	46	45	4	16	4	22	30	33	39	44	42
Average reserves (£bn)²	69.8	68.1	67.7	5.0	4.9	4.9	2.7	2.0	2.1	77.5	75.0	74.7
Expected return on shareholder assets (£m)⁴	23	18	68	40	45	88	16	12	27	79	75	183
Total (£m)	695	661	1,346	652	607	1,231	118	119	251	1,465	1,387	2,828
Total average reserves (£bn)²	265.1	247.4	254.2	122.7	119.0	119.8	15.7	15.0	15.1	403.5	381.4	389.1

1 Following a review of the presentation of claims handling costs, to achieve consistency in our reporting, comparative amounts have been restated to reclassify all claims handling costs attributable to the UK Life business as administration expenses. For the 6 month period ended 30 June 2019, £5 million of these costs were previously included in unit-linked margin and £8 million in spread margin, and for the year ended 31 December 2019, £9 million were included in unit-linked margin and £16 million in spread margin.

2 An average of the insurance or investment contract liabilities over the reporting period, including managed pension business which is not consolidated within the statement of financial position.

3 The shareholders' share of the return on with- profits and other participating business.

4 The expected investment return based on opening economic assumptions applied to expected surplus assets over the reporting period that are not backing policyholder liabilities.

Page 29

7 - Life business profit drivers continued

Expenses

	UK Life including Savings & Retirement			Europe Life			Asia Life			Total
	6 months 2020 m	Restated¹ 6 months 2019 £m	Full year 2019 £m	6 months 2020 m	Restated¹ 6 months 2019 £m	Full year 2019 m	6 months 2020 m	Restated¹ 6 months 2019 £m	Full year 2019 £m	6 months 2020 £m	Restated¹ 6 months 2019 m	Full year 2019 £m
Acquisition expenses (£m)	(210)	(192)	(407)	(134)	(171)	(302)	(117)	(121)	(250)	(461)	(484)	(959)
APE (£m)²	1,862	1,798	4,056	594	796	1,495	210	217	429	2,666	2,811	5,980
As acquisition expense ratio on APE (%)	11%	11%	10%	23%	21%	20%	56%	56%	58%	17%	17%	16%
Administration expenses (£m)³	(398)	(431)	(898)	(317)	(289)	(588)	(60)	(54)	(115)	(775)	(774)	(1,601)
As existing business expense ratio on average reserves (bps)	30	35	35	52	49	49	76	72	76	38	41	41
Total average reserves (£bn)⁴	265.1	247.4	254.2	122.7	119.0	119.8	15.7	15.0	15.1	403.5	381.4	389.1

2 APE excludes Retail Fund Management and Health business in Asia.

4 An average of the insurance or investment contract liabilities over the reporting period, including managed pension business which is not consolidated within the statement of financial position.

Page 30

Financial supplement

		Page
A	Income & expenses and IFRS capital	31
B	IFRS financial statements and notes	41
C	Analysis of assets	89
	In this section
A	Income & expenses and IFRS capital	31
A1	Group adjusted operating profit	31
A2	Reconciliation of Group adjusted operating profit to profit for the period	32
A3	Other Group operations	33
A4	Corporate centre	33
A5	Group debt costs and other interest	33
A6	Life business: Investment variances and economic assumption changes	34
A7	Non-life business: Short-term fluctuation in return on investments	35
A8	General insurance and health business: Economic assumption changes	36
A9	Impairment of goodwill, joint ventures, associates and other amounts expensed	36
A10	Amortisation and impairment of intangibles	36
A11	Amortisation and impairment of acquired value of in-force business	36
A12	Profit/loss on the disposal and remeasurement of subsidiaries, joint ventures and associates	36
A13	Other	36
A14	Net asset value	37
A15	Analysis of return on equity	38
A16	Group capital under IFRS basis	40

Page 31

A1 - Group adjusted operating profit^‡#

The tables below reconcile Group adjusted operating profit as presented in section 6 Divisional performance to the IFRS presentation of Group adjusted operating profit in note B6(a) Segmental information.

	United Kingdom			Europe
6 months 2020	UK Life £m	UK GI £m	Canada m	France £m	Poland £m	Italy, Ireland & Other £m	Asia £m	Aviva Investors £m	Other Group activities £m	Total m
UK Life and Investments, Savings & Retirement	817	-	-	-	-	-	-	35	-	852
General Insurance	-	(66)	129	55	13	36	-	-	-	167
Europe Life	-	-	-	165	88	114	-	-	-	367
Asia Life	-	-	-	-	-	-	140	-	-	140
Other Group operations (note A3)	-	-	-	-	-	-	-	-	(6)	(6)
	817	(66)	129	220	101	150	140	35	(6)	1,520
Corporate centre (note A4)										(116)
Group debt costs and other interest (note A5)										(179)
Group adjusted operating profit before tax attributable to shareholders' profits										1,225

	United Kingdom			Europe
Restated^1,2 6 months 2019	UK Life³ £m	UK GI £m	Canada m	France m	Poland £m	Italy, Ireland & Other m	Asia £m	Aviva Investors £m	Other Group activities £m	Total £m
UK Life and Investments, Savings & Retirement	752	-	-	-	-	-	-	60	-	812
General Insurance	-	141	89	55	9	39	(1)	-	-	332
Europe Life	-	-	-	195	85	112	-	-	-	392
Asia Life	-	-	-	-	-	-	152	-	-	152
Other Group operations (note A3)	-	-	-	-	-	-	-	-	(44)	(44)
	752	141	89	250	94	151	151	60	(44)	1,644
Corporate centre (note A4)										(97)
Group debt costs and other interest (note A5)³										(161)
Group adjusted operating profit before tax attributable to shareholders' profits										1,386

2 C omparative amounts for the 6 month period ended 30 June 2019 have been restated to reallocate non-insurance operations of Europe and Asia to their respective market segments to better reflect the management of the underlying businesses.

3 Following a review of the presentation of intercompany loan interest, to achieve consistency in our reporting, comparative amounts for the 6 month period ended 30 June 2019 have been amended to reclassify net interest expense from UK Life to Group debt costs and other interest of £32 million as a non-operating item. The change has no impact on the Group's adjusted operating profit before tax attributable to shareholders' profits.

	United Kingdom			Europe
Full year 2019	UK Life¹ £m	UK GI £m	Canada £m	France £m	Poland £m	Italy, Ireland & Other £m	Asia £m	Aviva Investors £m	Other Group activities £m	Total £m
UK Life and Investments, Savings & Retirement	1,920	-	-	-	-	-	-	96	-	2,016
General Insurance	-	250	191	65	20	69	(1)	-	-	594
Europe Life	-	-	-	408	174	245	-	-	-	827
Asia Life	-	-	-	-	-	-	276	-	-	276
Other Group operations (note A3)	-	-	-	-	-	-	-	-	(26)	(26)
	1,920	250	191	473	194	314	275	96	(26)	3,687
Corporate centre (note A4)										(183)
Group debt costs and other interest (note A5)¹										(320)
Group adjusted operating profit before tax attributable to shareholders' profits										3,184

1 Following a review of the presentation of intercompany loan interest, to achieve consistency in our reporting, comparative amounts for the year ended 31 December 2019 have been amended to reclassify net interest expense from UK Life to Group debt costs and other interest of £65 million as a non-operating item. The change has no impact on the Group's adjusted operating profit before tax attributable to shareholders' profits.

Page 32

A2 - Reconciliation of Group adjusted operating profit^‡# to profit for the period

	6 months 2020 £m	Restated¹ 6 months 2019 £m	Full year 2019 £m
Group adjusted operating profit before tax attributable to shareholders' profits	1,225	1,386	3,184
Adjusted for the following:
Life business: Investment variances and economic assumption changes (note A6)	305	372	654
Non-life business: Short-term fluctuation in return on investments (note A7)	(171)	145	167
General insurance and health business: Economic assumption changes (note A8)	(45)	(73)	(54)
Impairment of goodwill, joint ventures, associates and other amounts expensed (note A9)	(17)	(11)	(15)
Amortisation and impairment of intangibles acquired in business combinations (note A10)	(44)	(45)	(87)
Amortisation and impairment of acquired value of in-force business (note A11)	(165)	(191)	(406)
Loss on the disposal and remeasurement of subsidiaries, joint ventures and associates (note A12)	(12)	(13)	(22)
Other (note A13)	-	(47)	(47)
Adjusting items before tax	(149)	137	190
Profit before tax attributable to shareholders' profits	1,076	1,523	3,374
Tax on group adjusted operating profit	(224)	(306)	(668)
Tax on other activities	22	(37)	(43)
	(202)	(343)	(711)
Profit for the period	874	1,180	2,663

Page 33

Other Group adjusted operating profit items

A3 - Other Group operations

6 months
2020
£m

Restated^1,2

6 months
2019
£m

Full year
2019
£m

Other Group operations

(6)

(44)

(26)

Total

(6)

(44)

(26)

2 Comparative amounts for the 6 month period ended 30 June 2019 have been restated to reallocate non-insurance operations of Europe Life, Asia Life and General Insurance to their respective market segments to better reflect the management of the underlying businesses.

Other Group operations includes investment return on centrally held assets, the results of our internal reinsurance businesses and the results of other operations. Total loss in relation to other operations was £6 million (HY19 restated: £44 million).

The reduction of £38 million mainly reflects lower project spend and the alignment of the UK digital business with the UK Life and UK General insurance businesses during 2019.

A4 - Corporate centre

	6 months 2020 £m	6 months 2019 £m	Full year 2019 £m
Project spend	(18)	(30)	(30)
Central spend and share award costs¹	(98)	(67)	(153)
Total	(116)	(97)	(183)

1 HY20 central spend and share award costs includes £34 million of charitable donations (HY19: £nil) in response to the COVID-19 pandemic. Excluding these costs, underlying central spend and share award costs are £64 million (HY19: £67 million).

Corporate centre costs of £116 million (HY19: £97 million) increased by £19 million mainly due to Aviva's commitment to help those most affected by COVID-19, including a £10 million donation to our long-standing partner, the British Red Cross; a £5 million contribution to NHS Charities Together and a £18.5 million contribution to the COVID-19 support fund established by the Association of British Insurers, partially offset by lower project spend following completion of a number of projects and deferral of certain project activities to the second half of 2020.

A5 - Group debt costs and other interest

	6 months 2020 £m	6 months 2019 m	Full year 2019 £m
External debt
Subordinated debt	(170)	(165)	(336)
Other	(7)	(8)	(15)
Total external debt	(177)	(173)	(351)
Internal lending arrangements¹	(25)	(26)	(49)
Net finance income on main UK pension scheme	23	38	80
Total	(179)	(161)	(320)

1 Following a review of the presentation of intercompany loan interest, to achieve consistency in our reporting, comparative amounts have been amended to reclassify net interest expense from UK Life including Savings & Retirement to Group debt costs and other interest, of £32 million for the 6 month period ended 30 June 2019 and £65 million for the year ended 31 December 2019 as a non-operating item. The change has no impact on the Group's operating profit.

The reduction in net finance income on the main UK pension scheme is driven by the lower opening scheme surplus arising from the bulk annuity buy-in transaction in 2019 which was recognised as an actuarial loss (see note B17(b)).

Page 34

Non- operating profit items

A6 - Life business: Investment variances and economic assumption changes

(a) Definitions

Group adjusted operating profit for life business is based on expected long-term investment returns on financial investments backing shareholder funds over the period, with consistent allowance for the corresponding expected movements in liabilities. Group adjusted operating profit includes the effect of variance in experience for operating items, such as mortality, persistency and expenses, and the effect of changes in operating assumptions. Changes due to economic items, such as market value movements and interest rate changes, which give rise to variances between actual and expected investment returns, and the impact of changes in economic assumptions on liabilities, are disclosed separately outside Group adjusted operating profit, in investment variances and economic assumption changes.

(b) Methodology

The expected investment returns and corresponding expected movements in life business liabilities are calculated separately for each principal life 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. Expected investment return assumptions are derived actively, based on market yields on risk-free fixed interest assets at the end of each financial year. The same margins are applied on a consistent basis across the Group to gross risk-free yields, to obtain investment return assumptions for equity and property. Expected funds under management are equal to the opening value of funds under management, adjusted for sales and purchases during the period 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 movements in interest rates. To the extent that these differences arise from the operating experience of the life business, or management decisions to change asset mix, the effect is included in the Group adjusted operating profit. The residual difference between actual and expected investment return is included in investment variances, outside Group adjusted operating profit but included in profit before tax.

The movement in liabilities included in Group adjusted operating profit reflects both the change in liabilities due to the expected return on investments and the impact of experience variances and assumption changes for non-economic items. This would include movements in liabilities due to changes in the discount rate arising from discretionary management decisions that impact on product profitability over the lifetime of products.

The effect of differences between actual and expected economic experience on liabilities, and changes to economic assumptions used to value liabilities, are taken outside Group adjusted operating profit. 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 life business depends on the degree of matching of assets and liabilities, and exposure to financial options and guarantees.

The expected rate of investment return is determined using consistent assumptions at the start of the period between operations, having regard to local economic and market forecasts of investment return and asset classification under IFRS.

The principal assumptions underlying the calculation of the expected investment return for equity and property are:

	Equity			Property
	6 months 2020	6 months 2019	Full year 2019	6 months 2020	6 months 2019	Full year 2019
United Kingdom	4.5%	4.9%	4.9%	3.0%	3.4%	3.4%
France¹	4.5%	4.3%	4.3%	3.5%	2.8%	2.8%
Other Eurozone	3.7%	4.3%	4.3%	2.2%	2.8%	2.8%

1 In light of the current unprecedented low interest rates, the expected investment return on equity and property in France have been determined taking into account local economic and market forecasts of the long-term return. The impact of this change is an increase of £5 million to the expected return on the life business over the first six months of 2020.

The expected return on equity and property has been calculated by reference to the ten-year mid-price swap rate for an AA rated bank in the relevant currency plus a risk premium. The use of risk premium reflects management's long-term expectations of asset return in excess of the swap yield from investing in different asset classes. The asset risk premiums are set out in the table below:

All territories	6 months 2020	6 months 2019	Full year 2019
Equity risk premium	3.5%	3.5%	3.5%
Property risk premium	2.0%	2.0%	2.0%

The ten-year mid-price swap rates at the start of the period are set out in the table below:

Territories	6 months 2020	6 months 2019	Full year 2019
United Kingdom	1.0%	1.4%	1.4%
Eurozone	0.2%	0.8%	0.8%

For fixed interest securities classified as fair value through profit or loss, the expected investment returns are based on average prospective yields for the actual assets held less an adjustment for credit risk (assessed on a best estimate basis). This includes an adjustment for credit risk on all eurozone sovereign debt. Where such securities are classified as available for sale, the expected investment return comprises the expected interest or dividend payments and amortisation of the premium or discount at purchase.

Page 35

A6 - Life business: Investment variances and economic assumption changes continued

(d) Investment variances and economic assumption changes

The investment variances and economic assumption changes excluded from the life adjusted operating profit are as follows:

Life business	6 months 2020 £m	6 months 2019 £m	Full year 2019 £m
Investment variances and economic assumptions	305	372	654

Investment variances and economic assumption changes were £305 million (HY19: £372 million). This is primarily due to the UK where there was a positive variance as a result of a reduction in yields and decreases in equity markets, partially offset by the adverse impact of a widening of fixed income spreads in the UK and falls in interest rates in France and Asia. The impact of yields and equities reflect the fact that we hedge on an economic rather than on an IFRS basis.

At 30 June 2019 and 31 December 2019, we included a specific allowance for the possible adverse impacts of the UK's exit from the European Union on UK commercial and residential property, which we have now removed. Our future property growth assumptions are updated on a quarterly basis and as at 30 June 2020 they include a cumulative 5-year growth rate assumption, from 2020-24 of -15% for commercial property and a 12% reduction followed by long-term growth rate for residential property.

The variance in the period to 30 June 2019 was primarily due to reductions in yields and a narrowing of fixed income spreads, partially offset by the impact of increases in equities that reflects the fact that we hedge on an economic rather than on an IFRS basis .

A7 - Non-life business: Short-term fluctuation in return on investments

(a) Definitions

Group adjusted operating profit for non-life business is based on an expected long-term investment return over the period. Any variance between the total investment return (including realised and unrealised gains) and the expected return over the period is disclosed separately outside Group adjusted operating profit, in short-term fluctuations.

(b) Methodology

The long-term investment return is calculated separately for each principal non-life market. In respect of equities and investment properties, the return is calculated by multiplying the opening market value of the investments, adjusted for sales and purchases during the year, by the long-term rate of investment return.

The long-term rate of investment return is determined using consistent assumptions between operations, having regard to local economic and market forecasts of investment return. The allocated long-term return for other investments (including debt securities) is the actual income receivable for the year. Actual income and long-term investment return both contain the amortisation of the discounts/premium arising on the acquisition of fixed income securities. For other operations, the long‑term return reflects assets backing non‑life business held in Group centre investments.

Market value movements which give rise to variances between actual and long‑term investment returns are disclosed separately in short‑term fluctuations outside Group adjusted operating profit.

The impact of realised and unrealised gains and losses on Group centre investments, including the centre hedging programme which is designed to economically protect the total Group's capital against adverse equity and foreign exchange movements, is included in short‑term fluctuations on other operations.

The principal assumptions underlying the calculation of the long-term investment return are:

	Long-term rates of return on equities			Long-term rates of return on property
	6 months 2020	6 months 2019	Full year 2019	6 months 2020	6 months 2019	Full year 2019
United Kingdom	4.5%	4.9%	4.9%	3.0%	3.4%	3.4%
France¹	4.5%	4.3%	4.3%	3.5%	2.8%	2.8%
Other Eurozone	3.7%	4.3%	4.3%	2.2%	2.8%	2.8%
Canada	5.7%	6.0%	6.0%	4.2%	4.5%	4.5%

1 In light of the current unprecedented low interest rates, the expected investment return on equity and property in France have been determined taking into account local economic and market forecasts of the long-term return. The impact of this change is an increase of £2 million to the expected return on the general insurance business over the first six months of 2020.

The long-term rates of return on equities and properties have been calculated by reference to the ten-year mid-price swap rate for an AA rated bank in the relevant currency plus a risk premium. The underlying reference rates and risk premiums for the United Kingdom and Eurozone are shown in note A6(c).

Page 36

A7 - Non-life business: Short -term fluctuation in return on investments continued

(d) Analysis of investment return

The total investment income on our non-life business, including short-term fluctuations, are as follows:

General Insurance and health	6 months 2020 £m	6 months 2019 £m	Full year 2019 m
Analysis of investment income:
- Net investment income	113	427	622
- Foreign exchange (losses)/gains and other charges	(47)	(4)	55
	66	423	677
Analysed between:
- Long-term investment return, reported within Group adjusted operating profit	175	186	381
- Short-term fluctuations in investment return, reported outside Group adjusted operating profit	(109)	237	296
	66	423	677
Short-term fluctuations:
- General insurance and health	(109)	237	296
- Other operations¹	(62)	(92)	(129)
Total short-term fluctuations	(171)	145	167

1 Other operations represents short-term fluctuations on assets backing non-life business in Group centre investments, including the centre hedging programme.

The short-term fluctuations during the first half of 2020 of £171 million adverse is primarily due to falling equity markets and foreign exchange losses. These losses are partly offset by an increase in the value of fixed income securities, as a result of falls in interest rates outweighing widening credit spreads, and gains on hedges held by the Group, including the Group centre hedging programme.

The short-term fluctuations during the first half of 2019 of £145 million favourable were driven by falling interest rates increasing the value of fixed income securities and rising equity markets. These fluctuations were partly offset by losses on hedges held by the Group, including the centre hedging programme.

A8 - General insurance and health business: Economic assumption changes

In the general insurance and health business, there is a negative impact of £45 million (HY19: £73 million negative) primarily as a result of a decrease in interest rates used to discount claims reserves for both periodic payment orders (PPOs) and latent claims, partly offset by a decrease in the estimated future inflation rate used to value PPOs.

A9 - Impairment of goodwill, joint ventures, associates and other amounts expensed

Impairment of goodwill, associates and joint ventures and other amounts expensed in the year is a charge of £17 million (HY19: £11 million charge).

A10 - Amortisation and impairment of intangibles acquired in business combinations

Following a change in the definition of the Group adjusted operating profit APM in the second half of 2019, the comparative for the six-month period to 30 June 2019 has been restated to only include amortisation and impairment of intangible assets acquired in business combinations. Amortisation and impairment of intangible assets acquired in business combinations is a charge of £44 million (HY19: 45 million charge).

A11 - Amortisation and impairment of acquired value of in-force business

Amortisation of acquired value of in-force business (AVIF) is a charge of £165 million (HY19: £191 million charge), which relates solely to amortisation in respect of the Group's subsidiaries and joint ventures. Impairment charges of £19 million in relation to Friends Provident International Limited (FPI) remeasurement losses are recorded within loss on disposal and remeasurement of subsidiaries, joint ventures and associates. See note A12.

A12 - Loss on the disposal and remeasurement of subsidiaries, joint ventures and associates

The total Group loss on disposal and remeasurement of subsidiaries, joint ventures and associates is £12 million (HY19: £13 million loss). This consists of £7 million of gains relating to small disposals and a £19 million remeasurement loss relating to FPI. Further details of these items are provided in note B5.

A13 - Other

Other items are those items that, in the directors' view, are required to be separately disclosed by virtue of their nature or incidence to enable a full understanding of the Group's financial performance. In the period to 30 June 2020, there are no other items (HY19: charge of £47 million).

Page 37

IFRS capital

A14 - Net asset value

	6 months 2020 £m	pence per share^‡,2	Restated³ 6 months 2019 £m	Restated³ pence per share^‡	Full year 2019 £m	pence per share^‡,2
Equity attributable to shareholders of Aviva plc at 1 January¹	17,008	434p	16,558	424p	16,558	424p
Adjustment at 1 January 2019 for adoption of IFRS 16⁴	-	-	(110)	(3)p	(110)	(3)p
Equity attributable to shareholders of Aviva plc at 1 January restated¹	17,008	434p	16,448	421p	16,448	421p
Group adjusted operating profit	1,225	31p	1,386	35p	3,184	80p
Investment return variances and economic assumption changes on life and non-life business	89	2p	444	11p	767	19p
Loss on the disposal and remeasurements of subsidiaries, joint ventures and associates	(12)	-	(13)	-	(22)	(1)p
Goodwill impairment and amortisation of intangibles	(61)	(2)p	(56)	(1)p	(102)	(3)p
Amortisation and impairment of acquired value of in-force business	(165)	(4)p	(191)	(5)p	(406)	(10)p
Other⁵	-	-	(47)	(1)p	(47)	(1)p
Tax on operating profit and on other activities	(202)	(5)p	(343)	(10)p	(711)	(18)p
Non-controlling interests	(53)	(1)p	(64)	(2)p	(115)	(3)p
Profit after tax attributable to shareholders of Aviva plc	821	21p	1,116	27p	2,548	63p
AFS securities fair value and other reserve movements	11	-	40	1p	41	1p
Ordinary dividends	-	-	(812)	(21)p	(1,184)	(30)p
Direct capital instrument and tier 1 notes interest and preference share dividend⁶	(36)	(1)p	(15)	-	(51)	(1)p
Foreign exchange rate movements	248	6p	76	2p	(170)	(4)p
Remeasurements of pension schemes (net of tax)	511	13p	50	1p	(763)	(19)p
Other net equity movements	13	-	37	1p	139	3p
Equity attributable to shareholders of Aviva plc at 30 June/31 December¹	18,576	473p	16,940	432p	17,008	434p

1 Excluding preference shares of £200 million (HY19: £200 million, 2019: £200 million).

2 Number of shares as at 30 June 2020: 3,928 million (HY19: 3,917 million, 2019: 3,921 million).

3 On 31 December 2019 the Group adjusted operating profit APM was revised and now includes the amortisation and impairment of internally generated intangible assets to better reflect the operational nature of these assets (see note B2). Group adjusted operating profit continues to exclude amortisation and impairment of intangible assets acquired in business combinations. Comparative amounts for 6 month period ended 30 June 2019 have been restated resulting in a reduction in the prior period Group adjusted operating profit of £62 million. There is no impact on profit before tax attributable to shareholders' profit.

4 The Group has adopted IFRS 16 Leases from 1 January 2019. In line with the transition options available, impact of the adoption has been shown as an adjustment to opening retained earnings in 2019. See note B1 for further information.

5 Other in 2019 relates to a charge of £45 million in relation to a change in the discount rate used for estimating lump sum payments in settlement of bodily injury claims and a charge of £2 million relating to negative goodwill which arose on the acquisition of Friends First.

6 On 23 June 2020, notification was given that the Group would redeem the 5.9021% £500 million DCI at its principal amount together with accrued interest to (but excluding) 27 July 2020. Interest payable up to 23 June 2020 has been recorded as an appropriation of retained profits with the remaining interest payable from 24 June 2020 to 30 June 2020 recorded within Group adjusted operating profit. In prior periods, the interest on the DCI and tier 1 notes was treated as an appropriation of retained profits and accordingly, accounted for when paid.

At 30 June 2020, IFRS net asset value per share was 473 pence (HY19: 432 pence, 2019: 434 pence). The increase from 31 December 2019 is mainly due to operating profit and remeasurement of pension schemes (net of tax) (see note B17).

Page 38

A15 - Analysis of return on equity

	Operating profit		Weighted average shareholders' funds including non-controlling interests £m
6 months 2020	Before tax £m	After tax £m		Return on equity %
UK Life and Investments, Savings & Retirement
UK Life including Savings & Retirement	817	655	11,274	11.6%
Aviva Investors	35	24	511	9.4%
General Insurance	167	128	3,545	7.2%
Europe Life	367	287	3,833	15.0%
Asia Life	140	136	1,744	15.6%
Other Group activities¹	(124)	(85)	6,489	N/A
Return on total capital employed	1,402	1,145	27,396	8.4%
Subordinated debt	(170)	(138)	(6,767)	4.1%
Senior debt	(7)	(6)	(1,392)	0.9%
Return on total equity	1,225	1,001	19,237	10.4%
Less: Non-controlling interests		(48)	(995)	9.6%
Direct capital instrument and tier 1 notes		(27)	(250)	5.4%
Preference shares		(9)	(200)	9.0%
Return on equity shareholders' funds		917	17,792	10.5%

1 The other Group activities operating loss before tax of £124 million comprises corporate costs of £116 million and other business operating loss of £6 million, interest on internal lending arrangements of £25 million, partly offset by finance income on the main UK pension scheme of £23 million.

	Operating profit		Weighted average shareholders' funds including non-controlling interests £m
Restated¹ 6 months 2019	Before tax £m	After tax £m		Return on equity %
UK Life and Investments, Savings & Retirement
UK Life including Savings & Retirement²	752	606	10,227	11.8%
Aviva Investors	60	44	522	16.9%
General Insurance	332	254	3,709	13.7%
Europe Life	392	276	3,697	14.9%
Asia Life	152	140	1,757	15.9%
Other Group activities^2,3	(129)	(101)	6,438	N/A
Return on total capital employed	1,559	1,219	26,350	9.3%
Subordinated debt	(165)	(133)	(6,334)	4.2%
Senior debt	(8)	(6)	(1,363)	0.9%
Return on total equity	1,386	1,080	18,653	11.6%
Less: Non-controlling interests		(47)	(972)	9.7%
Direct capital instrument and tier 1 notes		(6)	(730)	4.9%
Preference shares		(9)	(200)	8.5%
Return on equity shareholders' funds		1,018	16,751	12.0%

2 Following a review of the presentation of intercompany loan interest, to achieve consistency in our reporting, comparative amounts for the 6 month period ending 30 June 2019 have been amended to reclassify net interest expense from UK Life including Savings & Retirement to Other Group activities, of before tax £32 million (after tax £26 million) as a non-operating item. The change has no impact on the Group's operating profit.

3 The other Group activities operating loss before tax of £129 million comprises corporate costs of £97 million and other business operating loss of £44 million, interest expense on internal lending arrangements of £26 million (restated), partly offset by finance income on the main UK pension scheme of £38 million.

Page 39

A15 - Analysis of return on equity continued

	Operating profit		Weighted average shareholders' funds including non-controlling interests £m
Full year 2019	Before tax £m	After tax £m		Return on equity %
UK Life and Investments, Savings & Retirement
UK Life including Savings & Retirement¹	1,920	1,606	10,318	15.6%
Aviva Investors	96	66	514	12.8%
General Insurance	594	447	3,674	12.2%
Europe Life	827	568	3,698	15.4%
Asia Life	276	245	1,769	13.8%
Other Group activities^1,2	(178)	(132)	6,386	N/A
Return on total capital employed	3,535	2,800	26,359	10.6%
Subordinated debt	(336)	(272)	(6,303)	4.3%
Senior debt	(15)	(12)	(1,345)	0.9%
Return on total equity	3,184	2,516	18,711	13.4%
Less: Non-controlling interests		(98)	(975)	10.1%
Direct capital instrument and tier 1 notes		(34)	(674)	5.0%
Preference shares		(17)	(200)	8.5%
Return on equity shareholders' funds		2,367	16,862	14.0%

1 Following a review of the presentation of intercompany loan interest, comparative amounts for the year ended 31 December 2019 have been amended to reclassify net interest expense from UK Life including Savings & Retirement to Other Group Activities, of before tax £65 million (after tax £53 million) as a non-operating item. The change has no impact on the Group's operating profit.

2 The other Group activities operating loss before tax of £178 million comprises corporate costs of £183 million and other business operating loss of £26 million, interest expense on internal lending arrangements of £49 million (restated), partly offset by finance income on the main UK pension scheme of £80 million.

Page 40

A16 - Group capital under IFRS basis

The table below shows how our capital is deployed by market and how that capital is funded.

	30 June 2020 £m	30 June 2019 £m	31 December 2019 £m
UK Life and Investments, Savings & Retirement
UK Life including Savings & Retirement	11,799	10,066	10,751
Aviva Investors	510	502	512
General Insurance¹	3,487	3,668	3,603
Europe Life	4,003	3,727	3,663
Asia Life	1,737	1,811	1,749
Other Group activities^1,2	7,074	6,770	5,903
Total capital employed	28,610	26,544	26,181
Financed by
Equity shareholders' funds	18,576	16,940	17,008
Non-controlling interests	1,012	979	977
Direct capital instrument and tier 1 notes	-	731	500
Preference shares	200	200	200
Subordinated debt	7,328	6,333	6,206
Senior debt	1,494	1,361	1,290
Total capital employed³	28,610	26,544	26,181

1 Capital employed for United Kingdom General Insurance excludes £0.9 billion (HY19: £0.9 billion, 2019: £0.9 billion) of goodwill which does not support the general insurance business for capital purposes and is included in other Group activities.

2 Other Group activities include centrally held tangible net assets, the main UK staff pension scheme surplus and internal lending arrangements. These internal lending arrangements, which net out on consolidation, include the formal loan arrangement between Aviva Group Holdings Limited and Aviva Insurance Limited.

3 Goodwill, AVIF and other intangibles are maintained within the capital base. Goodwill includes goodwill in subsidiaries of £1,850 million (HY19: £1,871 million, 2019: £1,855 million) and goodwill in joint ventures of £10 million (HY19: £12 million, 2019: £11 million). AVIF and other intangibles comprise £2,649 million (HY19: £3,024 million, 2019: £2,800 million) of intangibles in subsidiaries and £25 million (HY19: £30 million, 2019: £27 million) of intangibles in joint ventures, net of deferred tax liabilities of £(437) million (HY19: £(445) million, 2019: (413) million) and the non-controlling interest share of intangibles of £(26) million (HY19: £(32) million, 2019: £(28) million).

Total capital employed is financed by a combination of equity shareholders' funds, preference capital, subordinated debt and other borrowings.

On 21 November 2019, the Group redeemed its £210 million 6.875% Step-up Tier One Capital Securities (STICS) in full at the first call date.

On 23 June 2020, notification was given that the Group would redeem 5.9021% £500 million direct capital instrument (DCI) at its principal amount together with accrued interest to (but excluding) 27 July 2020. At that date, the instrument was reclassified as a financial liability of £499 million, representing its fair value (see note B16). The difference of £1 million has been charged to retained earnings. On 27 July 2020, the instrument was redeemed in full at a cost of £500 million.

At 30 June 2020 the market value of our external debt (subordinated debt and senior debt) and preference shares (including both Aviva plc preference shares of £200 million and General Accident plc preference shares, within non-controlling interests, of £250 million) was £10,307 million. The market value of our external debt (subordinated debt and senior debt), preference shares (including both Aviva plc preference shares of £200 million and General Accident plc preference shares, with non-controlling interests, of £250 million), and direct capital instrument and Tier 1 notes was £9,111 million at 30 June 2019 and £9,763 million at 31 December 2019.

END PART 2 of 4

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