General Insurance Article - Aviva expect £385m profit charge after discount rate change

 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.