Lord Chancellors Review of the Ogden Discount Rate

RNS Number : 0914Y

Aviva PLC

28 February 2017

 

28 February 2017

LORD CHANCELLOR'S REVIEW OF THE OGDEN DISCOUNT RATE IN THE UK

Aviva plc ("Aviva") notes the decision of the Lord Chancellor to lower the Ogden discount rate to minus 0.75%, from the current level of 2.5%. In her statement, the Lord Chancellor indicated she will bring forward a consultation in the coming weeks that will allow the Government to consider the methodology for setting the discount rate. Aviva supports this review process and recognises the minus 0.75% rate announced by the Lord Chancellor may be revised.

After careful consideration given the uncertainty of the ultimate outcome, Aviva expects to take an exceptional charge to its 2016 IFRS profit after tax of approximately £385 million, representing the full impact of the move to minus 0.75% as at year end. The estimated impact on the Group Solvency II capital ratio is approximately 2 percentage points.

Reflecting this charge as an exceptional item recognises the magnitude of the change in policy and the potential for future revisions to the discount rate to cause unnecessary volatility in Aviva's results. Accordingly, it will not affect Aviva's operating profit and there will be no change to our dividend policy.

At 30 June 2016, the Solvency II ratio was 174%, with a capital surplus of £9.5 billion. In 2015, operating profit before tax was £2.7 billion. Aviva will report its 2016 results on 9 March, 2017.

Enquiries:

Analysts

Chris Esson                                                                            [phone]

Diane Michelberger                                                                 [phone]

Media

Nigel Prideaux                                                                         [phone]

Andrew Reid                                                                           [phone]

·     Aviva's LEI code is YF0Y5B0IB8SM0ZFG9G81

·     Aviva provides life insurance, general insurance, health insurance and asset management to 33 million customers, across 16 markets worldwide

·     In the UK we are the leading insurer serving one in every four households and have strong businesses in selected markets in Europe, Asia and Canada. Our shares are listed on the London Stock Exchange and we are a member of the FTSE100 index.  

·     Aviva's asset management business, Aviva Investors, provides asset management services to both Aviva and external clients, and currently manages over £319 billion in assets.

·     Aviva helps people save for the future and manage the risks of everyday life; we paid out £30.7 billion in benefits and claims in 2015.

·     By serving our customers well, we are building a business which is strong and sustainable, which our people are proud to work for, and which makes a positive contribution to society.

·     The Aviva media centre at http://www.aviva.com/media/ includes company information, images, and a news release archive.

·     For an introduction to what we do and how we do it, please click here http://www.aviva.com/about-us/aviva/

·     For broadcast-standard video, please visit http://www.aviva.com/media/b-roll-library/

·     Follow us on twitter: www.twitter.com/avivaplc/ 

·     Follow us on LinkedIn: www.linkedin.com/company/aviva-plc

·    For the latest corporate films from around our business, subscribe to our YouTube channel: www.youtube.com/user/aviva

·     We have a Globelynx system for broadcast interviews. Please contact the Press Officer noted above if you would like to make a booking.

 

END

 

 

MSCEALAPAEDXEFF