Sup I. Actuary Report - Aviva

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Supplemental Independent Actuary's Report on Proposed Insurance Business Transfer of Aviva Insurance Europe SE to Aviva Insurance Limited Findings 2.3 Having considered the additional information requested from Aviva and developments occurring in the wider economic and insurance industry environment I find that: Conclusion • Both the economic and financial condition of the Scheme Companies as at 30 th June 2012, being the most recent information available, is, for the purposes of analysing the impact of the Scheme on each affected policyholder group, substantially the same as that considered in the IA Report. I identify no significant impact on the overall conclusion within the IA Report arising from such changes as have occurred. • I have considered the results of updated scenario testing which assesses the potential impact on the financial security of Irish policyholders before and after their transfer to AIL from AIESE. This analysis was carried out as at 30 June 2012 and is described in more detail in section 3.4. As a consequence of this additional testing I have not identified any significant changes to the findings set out in section 6 of the IA Report which would cause me to revise my opinion on the impact of the transfer on AIESE or AIL policyholders. • Since issuing my IA Report, there are no matters arising from the nature of business underwritten by the Scheme Companies. • Aviva continues to refine its intentions around the levels of capital, operation, structure and business mix of the Scheme Companies and I have considered these when constructing this Supplemental Report in section 3.5. I have not identified any intentions that would cause me to revise the conclusions of my analysis of the effects of the Scheme. • No matters have been drawn to my attention as a result of communications received from policyholders or other relevant parties that would cause me to revise my analysis of the effects of the Scheme. Prior to the Court hearing to approve the Scheme, I will review any relevant, recently produced information including significant market or business developments that may impact AIL or AIESE. As appropriate, I will communicate to the Court should these require adjustments to my findings. Further detail on the reasoning supporting my findings above is contained in section 3 of this report. 2.4 I have considered the Scheme and its likely effect on each of the affected policyholder groups. I have concluded that the risk of any policyholder being adversely affected by the proposed transfer is sufficiently remote for it to be appropriate to proceed with the proposed Scheme as described in this report. Actuary’s declaration 2.5 I confirm that I have made clear which facts and matters referred to in this report are within my own knowledge and which are not. Those that are within my own knowledge I confirm to be true. The opinions I have expressed represent my true and complete professional opinions on the matters to which they refer. Stuart Shepley Fellow of the Institute and Faculty of Actuaries Partner, KPMG LLP © KPMG LLP. All rights reserved Page 5 of 10 10/10/2012
Supplemental Independent Actuary's Report on Proposed Insurance Business Transfer of Aviva Insurance Europe SE to Aviva Insurance Limited 3. Further information considered Consideration of capital and risk 3.1 In preparing the IA Report I considered the impact of the Scheme on the capital and risk position of the Scheme Companies, and the consequent impact on the levels of security experienced by each affected policyholder group. As described in section 5.9 of the IA Report, my analysis is in part based on the economic capital position of the Scheme Companies as at 31 st December 2010, rolled forward to reflect changes in exposure through to 31 st December 2011. I have now received refreshed economic capital information for the Scheme Companies as at 30 th June 2012. I have compared the results of this new information with that used in my original analysis in order to identify if my conclusions in the IA Report would change. I note that: • The updated economic capital position is consistent with my understanding of the financial and economic circumstances of the Scheme Companies. • The updated economic capital positions and consequent implied probability of policyholder deficiency assuming the Scheme proceeds are substantially the same as those I considered in preparing the IA Report. • The implied probability of deficiency experienced by each policyholder group prior to the Scheme proceeding is substantially the same as that considered within the IA Report for all policyholder groups. Given the above facts I identify no matters arising from the updated economic capital information which would cause me to change my conclusion on the impact of the Scheme on the levels of security of each affected policyholder group. Market developments 3.2 I have considered market developments in the insurance sector since the issue of the IA Report. I note that there have been no material market developments that were not considered within the initial IA Report. In light of the above I identify no matters arising from recent market developments which would cause me to change my conclusion on the impact of the Scheme on the levels of security of each affected policyholder group. Trading performance of Scheme Companies to 30 th June 2012 3.3 I have been provided with the financial results and updated balance sheet information for each of the Scheme Companies for the 6 month period to 30 th June 2012. I have reviewed this information in order to identify if there has been a material change in the financial position of any of the Scheme Companies, and to satisfy myself that the financial information I have used in my consideration of the impact of the Scheme continues to be an appropriate base on which to form an opinion. I note that: • In aggregate the profitability across the Scheme Companies continues to be broadly in line with Aviva’s previous business plan. • The financial performance of each of the Scheme Companies is consistent with my understanding of those businesses, and no Scheme Company has reported a financial performance that would significantly affect the financial analysis I performed in preparing the IA Report. I have considered the impact of the recent trading performance of the Scheme Companies and have identified no matters arising which would materially change the findings of the analysis which support the conclusions contained in the IA Report. © KPMG LLP. All rights reserved Page 6 of 10 10/10/2012
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