Aviva PLC Lord Chancellors Review of the Ogden Discount Rate (0914Y)

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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 GBP385 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 GBP9.5 billion. In 2015, operating profit before tax was GBP2.7 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]

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-- 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 GBP319 billion in assets.

-- Aviva helps people save for the future and manage the risks of everyday life; we paid out GBP30.7 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.

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February 28, 2017 09:05 ET (14:05 GMT)