Download Financial assets and liabilities subject to offsetting

59 – Financial assets and liabilities subject to offsetting, enforceable master netting agreements
and similar arrangements
(a) Offsetting arrangements
Amounts subject to enforceable netting arrangements
2015
Gross
amounts
Offset under IAS 32
Net
amounts
reported
in the
statement of
Amounts
financial
offset
position
Amounts under a master netting agreement but not
offset under IAS 32
Financial
instruments
Cash
collateral
Securities
collateral
received /
pledged
Net
amount
Financial assets
Derivative financial assets
Loans to banks and repurchase arrangements
3,660
2,723
(836)
—
2,824
2,723
(1,793)
—
(640)
—
(243)
(2,723)
148
—
Total financial assets
6,383
(836)
5,547
(1,793)
(640)
(2,966)
148
Financial liabilities
Derivative financial liabilities
Other financial liabilities
(4,030)
(2,219)
836
—
(3,194)
(2,219)
1,884
—
388
—
543
2,219
(379)
—
Total financial liabilities
(6,249)
836
(5,413)
1,884
388
2,762
(379)
Amounts subject to enforceable netting arrangements
Offset under IAS 32
Amounts under a master netting agreement but not offset
under IAS 32
2014
Gross
amounts
Net amounts
reported in
the statement
Amounts
of financial
offset
position
Financial assets
Derivative financial assets
Loans to banks and repurchase arrangements
4,467
3,763
(1,065)
—
3,402
3,763
(1,846)
—
(931)
—
(404)
(3,763)
221
—
Total financial assets
8,230
(1,065)
7,165
(1,846)
(931)
(4,167)
221
Financial liabilities
Derivative financial liabilities
Other financial liabilities
(3,725)
(1,859)
1,065
—
(2,660)
(1,859)
2,108
—
338
—
146
1,859
(68)
—
Total financial liabilities
(5,584)
1,065
(4,519)
2,108
338
2,005
(68)
Financial
instruments
Cash
collateral
Securities
collateral
received /
pledged
Net
amount
Derivative assets are recognised as ‘Derivative financial instruments’ in note 26(a), while fair value liabilities are recognised as
‘Derivative liabilities’ in note 50. £504 million (2014: £686 million) of derivative assets and £687 million (2014: £821 million) of
derivative liabilities are not subject to master netting agreements and are therefore excluded from the table above.
Amounts receivable related to securities lending and reverse-repurchase arrangements totalling £2,723 million (2014: £3,763
million) are recognised within ‘Loans to banks’ in note 23(a).
Other financial liabilities presented above represent liabilities related to repurchase arrangements recognised within ‘Obligations
for repayment of cash collateral received’ in note 50.
Aviva
251
Aviva plc
plc Annual
Annual report
report and
and accounts
accounts 2015
2015 || 251
IFRS Financial statements
Financial assets and liabilities are offset in the statement of financial position when the Group has a legally enforceable right to
offset and has the intention to settle the asset and liability on a net basis, or to realise the asset and settle the liability
simultaneously.
Aviva mitigates credit risk in derivative contracts by entering into collateral agreements, where practical, and in ISDA master
netting agreements for each of the legal entities to facilitate Aviva’s right to offset credit risk exposure. The credit support
agreement will normally dictate the threshold over which collateral needs to be pledged by Aviva or its counterparty.
Derivative transactions requiring Aviva or its counterparty to post collateral are typically the result of over-the-counter derivative
trades, comprised mostly of interest rate swaps, currency swaps and credit default swaps. These transactions are conducted under
terms that are usual and customary to standard long-term borrowing, derivative, securities lending and securities borrowing
activities. The derivative assets and liabilities in the table below are made up of the contracts described in detail in note 58.
Aviva participates in a number of stock lending and repurchase arrangements. In some of these arrangements cash is
exchanged by Aviva for securities and a related receivable is recognised within ‘Loans to Banks’ (note 23). These arrangements are
reflected in the tables below. In instances where the collateral is recognised on the statement of financial position, the obligation
for its return is included within ‘Payables and other financial liabilities’.
In other arrangements, securities are exchanged for other securities. The collateral received must be in a readily realisable form
such as listed securities and is held in segregated accounts. Transfer of title always occurs for the collateral received. In many
instances, however, no market risk or economic benefit is exchanged and these transactions are not recognised on the statement
of financial position in accordance with our accounting policies, and accordingly not included in the tables below.
Notes to
financial
statements
continued
Notes
tothe
theconsolidated
consolidated
financial
statements
continued
59 – Financial assets and liabilities subject to offsetting, enforceable master netting agreements
and similar arrangements continued
(b) Collateral
In the tables above, the amounts of assets or liabilities presented in the consolidated statement of financial position are offset first
by financial instruments that have the right of offset under master netting or similar arrangements with any remaining amount
reduced by the amount of cash and securities collateral. The actual amount of collateral may be greater than amounts presented in
the tables above in the case of over collateralisation.
The total amount of collateral received which the Group is permitted to sell or repledge in the absence of default was £22,424
million (2014: £20,566 million), all of which other than £2,588 million (2014: £2,896 million) is related to securities lending
arrangements. £2,915 million (2014: £4,036 million) of collateral has been received related to balances recognised within ‘Loans to
banks’ (refer to note 23). The value of collateral that was actually sold or repledged in the absence of default was £nil (2014: £nil).
The level of collateral held is monitored regularly, with further collateral obtained where this is considered necessary to manage
the Group’s risk exposure.
60 – Related party transactions
This note gives details of the transactions between Group companies and related parties which comprise our joint ventures,
associates and staff pension schemes.
The Group undertakes transactions with related parties in the normal course of business. Loans to related parties are made on
normal arm’s-length commercial terms.
Services provided to, and by related parties
2015
Income
earned in
the year
£m
Associates
Joint ventures
Employee pension schemes
Expenses
incurred in
the year
£m
2014
Payable at
year end
£m
Receivable
at year end
£m
Income
earned in the
year
£m
Expenses
incurred in
the year
£m
Payable at
year end
£m
Receivable at
year end
£m
9
27
13
(7)
—
—
—
—
—
—
192
3
7
28
11
(2)
—
—
—
—
—
—
154
3
49
(7)
—
195
46
(2)
—
157
Transactions with joint ventures in the UK relate to the property management undertakings, the most material of which are listed
in note 18(a)(iii). Our interest in these joint ventures comprises a mix of equity and loans, together with the provision of
administration services and financial management to many of them. Our UK life insurance companies earn interest on loans
advanced to these entities, movements in which may be found in note 18(a)(i). Our fund management companies also charge fees
to these joint ventures for administration services and for arranging external finance.
Key management personnel of the Company may from time to time purchase insurance, savings, asset management or annuity
products marketed by Group Companies on equivalent terms to those available to all employees of the Group. In 2015 and 2014,
other transactions with key management personnel were not deemed to be significant either by size or in the context of their
individual financial positions.
Our UK fund management companies manage most of the assets held by the Group’s main UK staff pension scheme, for
which they charge fees based on the level of funds under management. The main UK scheme holds investments in Groupmanaged funds and insurance policies with other Group companies, as explained in note 48(b)(ii). As at 31 December 2015, the
Friends Provident Pension Scheme (“FPPS”), acquired during the year as part of the acquisition of the Friends Life business, held an
insurance policy of £546 million issued by a Group Company, which eliminates on consolidation.
The related parties’ receivables are not secured and no guarantees were received in respect thereof. The receivables will be
settled in accordance with normal credit terms. Details of guarantees, indemnities and warranties provided on behalf of related
parties are given in note 52(f).
Key management compensation
The total compensation to those employees classified as key management, being those having authority and responsibility for
planning, directing and controlling the activities of the Group, including the executive and non-executive directors is as follows:
Salary and other short-term benefits
Other long-term benefits
Post-employment benefits
Equity compensation plans
Termination benefits
Total
2015
£m
2014
£m
13.3
5.2
1.7
10.6
2.0
32.8
8.9
4.1
1.0
1.9
—
15.9
The increase in total key management compensation in 2015 mainly reflects the effect of an increase in the number of employees
classified as key management compared to 2014.
Information concerning individual directors’ emoluments, interests and transactions is given in the Directors’ Remuneration Report.
252 | Aviva
Aviva plc
plc Annual
Annual report
report and
and accounts
accounts 2015
2015
252 |