Last checked at 9 Mar 2023 08:00
9 March 2023
GENERAL ACCIDENT PLC
2022 ANNUAL REPORT AND FINANCIAL STATEMENTS
On 9 March 2023, General Accident plc (the "Company") released its Results Announcement for the year ended 31 December 2022. The Company announces it has today issued the 2022 Annual Report and Financial Statements.
The document is available to view on the Company's website at https://www.aviva.com/investors/reports/ and copies have been submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Printed copies of the 2022 Annual Report and Financial Statements can be requested free of charge by shareholders by contacting the Company's Registrar, Computershare Investor Services PLC, on 0371 495 0105 or at AvivaSHARES@computershare.co.uk, or by writing to the Group Company Secretary, Aviva plc, St Helen's, 1 Undershaft, London EC3P 3DQ.
Enquiries:
Kirsty Cooper, Group General Counsel and Company Secretary
Telephone - 020 7662 6646
Roy Tooley, Head of Secretariat - Corporate
Telephone - +44 (0)7800 699781
Information required under Disclosure & Transparency Rule 6.3
This announcement should be read in conjunction with the Company's preliminary results announcement issued on 9 March 2023. Together these constitute the material required by DTR 6.3 to be communicated to the media in full unedited text through a Regulatory Information Service. This material is not a substitute for reading the Company's 2022 Annual report and financial statements. Page and note references in the text below refer to page numbers and notes in the 2022 Annual report and financial statements.
Statement of directors' responsibilities in respect of the financial statements
The directors are responsible for preparing the strategic report, directors' report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the financial statements in accordance with UK-adopted international accounting standards. Under company law, directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing the financial statements, the directors are required to:
- select suitable accounting policies and then apply them consistently;
- state whether applicable UK-adopted international accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;
- make judgements and accounting estimates that are reasonable and prudent; and
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006.
The directors are responsible for the maintenance and integrity of the company's financial statements published on the ultimate parent company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Directors' confirmations
Each of the directors, whose names and functions are listed in Directors and officers confirm that, to the best of their knowledge:
- the company financial statements, which have been prepared in accordance with UK-adopted international accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the company; and
- the Strategic report includes a fair review of the development and performance of the business and the position of the company, together with a description of the principal risks and uncertainties that it faces.
Corporate governance
The Company is a wholly-owned subsidiary of Aviva plc, a company with a premium listing on the London Stock Exchange, and as such is subject to Aviva plc's system of risk management, internal control and financial reporting. Aviva plc is subject to the UK Corporate Governance Code. The Aviva plc Annual Report and Accounts set out details of how the Aviva Group has applied the principles and complied with the provisions of the UK Corporate Governance Code during 2022. Further information on the Code can be found on the Financial Reporting Council's website, www.frc.org.uk.
13. Risk management
(a) Risk management framework
The Company operates a risk management framework that forms an integral part of the management and Board processes and decision-making framework, aligned to the Group's risk management framework.
The Company's risk management approach is aimed at actively identifying, measuring, managing, monitoring and reporting significant existing and emerging risks. Risks are managed considering the significance of the risk to the business and its internal and external stakeholders.
To promote a consistent and rigorous approach to risk management across all businesses, the Group has a set of risk policies and business standards which set out the risk strategy, appetite, framework and minimum requirements for the Group's worldwide operations, including the Company.
For the purposes of risk identification and measurement, and aligned to the Company's risk policies, risks are usually grouped by risk type: credit, market, liquidity and operational risk. Risks falling within these types may affect a number of metrics including those relating to statement of financial position strength, liquidity and profit.
The directors recognise the critical importance of having efficient and effective risk management systems in place and acknowledge that they are responsible for the Company's framework of internal control and of reviewing its effectiveness. The framework is designed to manage rather than eliminate the risk of failure to achieve the Company's objectives and can only provide reasonable assurance against misstatement or loss. The directors of the Company are satisfied that their adherence to this Group framework provides an adequate means of managing risk in the Company.
Further information on the types and management of specific risk types is given in sections (b) to (f) below.
(b) Credit risk
Credit risk is the risk of financial loss as a result of the default or failure of third parties to meet their payment obligations to the Company, or variations in market values as a result of changes in expectation related to these risks.
The credit quality of receivables and other financial assets is monitored by the Company, and provisions are made for expected credit losses. Expected credit losses on receivables and other assets are calculated with reference to the Company's historical experience of losses adjusted for forward looking information. Short term financial assets (where all amounts are receivable within 12 months from the reporting date) do not generally attract an expected credit loss charge.
The Company's financial assets primarily comprise loans and receivables due from its parent, Aviva plc, which has an external issuer credit rating of A (issuer credit ratings represent an issuer's ability to meet its overall financial commitments as they fall due), and as such the credit risk arising from the counterparty failing to meet all or part of their obligations is considered remote. There are no material expected credit losses recognised in relation to loans due from Aviva plc.
In addition, the loan amounting to £9,439 million (2021: £9,484 million) is secured by a legal charge against the ordinary share capital of Aviva Group Holdings Limited. Due to the nature of the financial assets, and the fact that the loans are intended to be held until settled, by the issuer (on maturity or earlier if redeemed before maturity), and not traded, the Company is not exposed to the risk of changes to the market value caused by changing perceptions of the credit worthiness of Aviva plc. Expected credit losses at 31 December 2022 were £nil (2021: £nil).
(c) Market risk
Market risk is the risk of an adverse financial impact resulting directly or indirectly from fluctuations in interest rates, inflation, foreign currency exchange rates, equity prices and property values. At the statement of financial position date, the Company did not have any material exposure to interest rates, inflation, currency exchange rates, equity prices or property values.
The inter-company loan receivable (see note 8) was on a fixed interest rate during 2022 and 2021. Effective from 1 January 2023, interest rate risk arises as the loan receivable is subject to a floating interest rate based on the SONIA swap rate. The net asset value of the Company's financial resources is not anticipated to be materially affected by fluctuations in interest rates.
(d) Liquidity risk
Liquidity risk is the risk of not being able to make payments as they become due because there are insufficient assets in cash form.
The Company does not hold any material assets in cash form. Cash settlements of its dividend obligations to holders of preference shares, which are discretionary and subject to director resolution, pass through an intercompany account.
(e) Operational risk
Operational risk is the risk of a direct or indirect loss, arising from inadequate or failed internal processes, people and systems, or external events, including changes in the regulatory environment.
Given its limited activities, the key operational risks to the Company are inadequate governance and lack of sufficiently robust financial controls. The risks are mitigated by the Company's implementation of the Group's risk management policies and framework and compliance with the Group's Financial Reporting Control Framework.
(f) Capital management
The Company's capital risk is determined with reference to the requirements of the Company's stakeholders. In managing capital, the Company seeks to maintain sufficient, but not excessive, financial strength to support the payment of preference dividends and the requirements of other stakeholders. The sources of capital used by the Company are equity shareholders' funds and preference shares. At 31 December 2022 the Company had £13,932 million (2021: £13,932 million) of total capital employed.
14. Related party transactions
The Company had the following transactions with related parties, which include parent companies, subsidiaries, and fellow Group companies in the normal course of business.
(a) Loans due from parent company
On 14 December 2017, the Company provided a loan to Aviva plc, its parent company, of £9,990 million with a maturity date of 31 December 2022. From January 2021, as a result of LIBOR being abolished, this loan was reset at a fixed interest rate. This rate was set as follows; 5- year Gilt (-0.105% as of 1 January 2021) + Basis adjustment 0.15% + 0.65% floor. A subsequent loan amendment in December 2022 extended the loan maturity to 31 December 2027 and changed the interest rate to a floating rate based on the SONIA swap rate effective from 1 January 2023.
As at the statement of financial position date, the loan balance outstanding was £9,439 million (2021: £9,484 million). This facility has been secured against the ordinary share capital of Aviva Group Holdings Limited. The loan agreement also includes a penalty interest charge of 1% above the interest rate if any amounts payable under the loan agreement remain outstanding. As at 31 December 2022, no amounts remain outstanding.
Loans from parent are made on normal arm's length commercial terms. The maturity analysis of the related party loans receivable is as follows:
2022 | 2021 | ||
£m | £m | ||
1-5 years | 9,439 | - | |
Over 5 years | - |
| 9,484 |
9,439 | 9,484 | ||
Effective interest rate | 0.70% | 0.70% |
The interest received on these loans shown in the income statement is £66 million (2021: £66 million). See note 1.
(b) Other transactions
(i) Services provided to related parties
Services provided to related parties | 2022 | 2021 | ||
Expenses incurred in the year | Receivable at year end | Expenses incurred in the year | Receivable at year end | |
£'000 | £m | £'000 | £m | |
Immediate parent | 44 | 4,493 | 40 | 4,448 |
44 | 4,493 | 40 | 4,448 |
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.
(ii) Audit fees
Expenses incurred in the year represents audit fees. There were no non-audit fees paid to the Company's auditors during the year (2021: £nil). Audit fees as described in note 4 are borne by the Company's ultimate parent, Aviva plc.
(iii) Dividends paid
Dividends paid relates to an intercompany transaction of £45 million (2021: £45 million) with the Company's parent, Aviva plc. Preference dividends of £21 million (2021: £21 million) were approved on behalf of the Company by its parent, Aviva plc. Refer to note 6.
(c) Key management compensation
Key management, which comprises the directors of the Company, are not remunerated directly for their services as directors of the Company and the amount of time spent performing their duties is incidental to their role across the Group. All such costs are borne by Aviva plc and are not recharged to the Company. See note 3 for details of directors' remuneration.
(d) Ultimate parent entity
The ultimate parent entity and controlling party is Aviva plc, a public limited Group incorporated and domiciled in the United Kingdom. This is the parent undertaking of the smallest and largest Group to consolidate these financial statements. Copies of Aviva plc consolidated financial statements are available on application to the Group Company Secretary, Aviva plc, St Helen's, 1 Undershaft, London EC3P 3DQ, and on the Aviva plc website at www.aviva.com.
15. Subsequent events
There are no subsequent events to report.