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Analysis of assets

In this section		Page
C	Analysis of assets
C1	Summary of total assets by fund	94
C2	Summary of total assets by valuation bases	95
C3	Analysis of financial investments by fund	97
C4	Analysis of debt securities	98
C5	Analysis of loans	104
C6	Analysis of equity securities	106
C7	Analysis of investment property	107
C8	Analysis of other financial investments	107
C9	Analysis of available for sale investments	108
C10	Summary of exposure to peripheral European countries	108
C11	Reinsurance assets	109

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As an insurance business, the Group holds a variety of assets to match the characteristics and duration of its insurance liabilities. Appropriate and effective asset liability matching (on an economic basis) is the principal way in which Aviva manages its investments. To support this, we use a variety of hedging and other risk management strategies to mitigate any residual mismatch risk that is outside of our risk appetite.

C1 - Summary of total assets by fund

2019	Policyholder assets �m	Participating fund assets �m	Shareholder assets �m	Total assets analysed �m	Less: Assets classified as held for sale �m	Balance sheet total �m
Goodwill and acquired value of in-force business and intangible assets	-	-	5,181	5,181	(526)	4,655
Interests in joint ventures and associates	93	895	551	1,539	(8)	1,531
Property and equipment	-	183	714	897	(8)	889
Investment property	7,050	3,466	687	11,203	-	11,203
Loans	2,111	5,231	31,238	38,580	(1)	38,579
Financial investments
Debt securities	42,350	100,574	56,557	199,481	(649)	198,832
Equity securities	83,035	14,959	1,832	99,826	(256)	99,570
Other investments	37,822	10,722	3,391	51,935	(6,919)	45,016
Reinsurance assets	4,003	437	7,991	12,431	(75)	12,356
Deferred tax assets	-	-	162	162	(11)	151
Current tax assets	-	-	132	132	-	132
Receivables and other financial assets	744	1,739	6,581	9,064	(69)	8,995
Deferred acquisition costs and other assets	229	646	5,282	6,157	(202)	5,955
Prepayments and accrued income	392	1,278	1,481	3,151	(8)	3,143
Cash and cash equivalents	8,353	6,096	5,855	20,304	(780)	19,524
Assets classified as held for sale	-	-	-	-	9,512	9,512
Total	186,182	146,226	127,635	460,043	-	460,043
Total %	40.5%	31.8%	27.7%	100.0%	-	100.0%
2018 Total¹	164,858	142,609	122,054	429,521	-	429,521
2018 Total %¹	38.4%	33.2%	28.4%	100.0%	-	100.0%

1�� Following a review of the Group's presentation of consolidated investment funds, comparative amounts have been restated from those previously reported. The restatement has had no impact on the profit for the year or equity. See note B2(a) for further information

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C2 - Summary of total assets by valuation bases

Total assets - 2019	Fair value �m	Amortised cost �m	Equity accounted/ tax assets¹ �m	Total �m
Goodwill and acquired value of in-force business and intangible assets	-	5,181	-	5,181
Interests in joint ventures and associates	-	-	1,539	1,539
Property and equipment	392	505	-	897
Investment property	11,203	-	-	11,203
Loans	28,319	10,261	-	38,580
Financial Investments
Debt securities	199,481	-	-	199,481
Equity securities	99,826	-	-	99,826
Other investments	51,935	-	-	51,935
Reinsurance assets	4,006	8,425	-	12,431
Deferred tax assets	-	-	162	162
Current tax assets	-	-	132	132
Receivables and other financial assets	-	9,064	-	9,064
Deferred acquisition costs and other assets	-	6,157	-	6,157
Prepayments and accrued income	-	3,151	-	3,151
Cash and cash equivalents	20,304	-	-	20,304
Total	415,466	42,744	1,833	460,043
Total %	90.3%	9.3%	0.4%	100.0%
Less: Assets classified as held for sale	(8,619)	(874)	(19)	(9,512)
Total	406,847	41,870	1,814	450,531
Total %	90.3%	9.3%	0.4%	100.0%
2018 Total²	385,133	42,609	1,779	429,521
2018 Total %²	89.7%	9.9%	0.4%	100.0%

1�� Within the Group's statement of financial position, assets are recognised for deferred tax and current tax. The valuation basis of these assets does not directly fall within any of the categories outlined above. As such, these assets have been reported together with equity accounted items within the analysis of the Group's assets.

2�� Following a review of the Group's presentation of consolidated investment funds, comparative amounts have been restated from those previously reported. The restatement has had no impact on the profit for the year or equity. See note B2(a) for further information.

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Total assets - Policyholder assets 2019	Fair value �m	Amortised cost �m	Equity accounted/ tax assets¹ �m	Total �m
Goodwill and acquired value of in-force business and intangible assets	-	-	-	-
Interests in joint ventures and associates	-	-	93	93
Property and equipment	-	-	-	-
Investment property	7,050	-	-	7,050
Loans	-	2,111	-	2,111
Financial Investments
Debt securities	42,350	-	-	42,350
Equity securities	83,035	-	-	83,035
Other investments	37,822	-	-	37,822
Reinsurance assets	3,995	8	-	4,003
Deferred tax assets	-	-	-	-
Current tax assets	-	-	-	-
Receivables and other financial assets	-	744	-	744
Deferred acquisition costs and other assets	-	229	-	229
Prepayments and accrued income	-	392	-	392
Cash and cash equivalents	8,353	-	-	8,353
Total	182,605	3,484	93	186,182
Total %	98.1%	1.9%	-	100.0%
Less: Assets classified as held for sale	(8,001)	(169)	-	(8,170)
Total	174,604	3,315	93	178,012
Total %	98.1%	1.9%	-	100.0%
2018 Total²	161,720	3,138	-	164,858
2018 Total %²	98.1%	1.9%	-	100.0%

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C2 - Summary of total assets by valuation bases continued

Total assets - Participating fund assets 2019	Fair value �m	Amortised cost �m	Equity accounted/ tax assets¹ �m	Total �m
Goodwill and acquired value of in-force business and intangible assets	-	-	-	-
Interests in joint ventures and associates	-	-	895	895
Property and equipment	168	15	-	183
Investment property	3,466	-	-	3,466
Loans	42	5,189	-	5,231
Financial Investments
Debt securities	100,574	-	-	100,574
Equity securities	14,959	-	-	14,959
Other investments	10,722	-	-	10,722
Reinsurance assets	-	437	-	437
Deferred tax assets	-	-	-	-
Current tax assets	-	-	-	-
Receivables and other financial assets	-	1,739	-	1,739
Deferred acquisition costs and other assets	-	646	-	646
Prepayments and accrued income	-	1,278	-	1,278
Cash and cash equivalents	6,096	-	-	6,096
Total	136,027	9,304	895	146,226
Total %	93.0%	6.4%	0.6%	100.0%
Less: Assets classified as held for sale	(206)	-	-	(206)
Total	135,821	9,304	895	146,020
Total %	93.0%	6.4%	0.6%	100.0%
2018 Total²	131,992	9,618	999	142,609
2018 Total %²	92.6%	6.7%	0.7%	100.0%

Total assets - Shareholder assets 2019	Fair value �m	Amortised cost �m	Equity accounted/ tax assets¹ �m	Total �m
Goodwill and acquired value of in-force business and intangible assets	-	5,181	-	5,181
Interests in joint ventures and associates	-	-	551	551
Property and equipment	224	490	-	714
Investment property	687	-	-	687
Loans	28,277	2,961	-	31,238
Financial Investments
Debt securities	56,557	-	-	56,557
Equity securities	1,832	-	-	1,832
Other investments	3,391	-	-	3,391
Reinsurance assets	11	7,980	-	7,991
Deferred tax assets	-	-	162	162
Current tax assets	-	-	132	132
Receivables and other financial assets	-	6,581	-	6,581
Deferred acquisition costs and other assets	-	5,282	-	5,282
Prepayments and accrued income	-	1,481	-	1,481
Cash and cash equivalents	5,855	-	-	5,855
Total	96,834	29,956	845	127,635
Total %	75.8%	23.5%	0.7%	100.0%
Less: Assets classified as held for sale	(412)	(705)	(19)	(1,136)
Total	96,422	29,251	826	126,499
Total %	76.2%	23.1%	0.7%	100.0%
2018 Total²	91,421	29,853	780	122,054
2018 Total %²	74.9%	24.5%	0.6%	100.0%

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C3 - Analysis of financial investments by fund

The asset allocation as at 31 December 2019 across the Group, split according to the type of the liability the assets are backing, is shown in the table below.

	Shareholder business assets				Participating fund assets
Carrying value in the statement of financial position	General insurance & �health & other¹ �m	Annuity and non-profit �m	Total shareholder assets �m	Policyholder (unit-linked assets) �m	UK style with-profits �m	Continental European-style participating funds �m	Total assets analysed �m	Less: Assets classified as held for sale �m	Carrying value in the statement of financial position �m
Debt securities (note C4)
Government bonds	6,499	17,566	24,065	18,099	13,762	33,022	88,948	(125)	88,823
Corporate bonds	3,759	21,916	25,675	16,736	11,380	34,823	88,614	(525)	88,089
Other	2,096	4,721	6,817	7,515	5,039	2,548	21,919	1	21,920
	12,354	44,203	56,557	42,350	30,181	70,393	199,481	(649)	198,832
Loans (note C5)
Mortgage loans	-	21,508	21,508	-	41	-	21,549	-	21,549
Other loans	1,329	8,401	9,730	2,111	4,071	1,119	17,031	(1)	17,030
	1,329	29,909	31,238	2,111	4,112	1,119	38,580	(1)	38,579
Equity securities (note C6)	1,292	540	1,832	83,035	11,137	3,822	99,826	(256)	99,570
Investment property (note C7)	520	167	687	7,050	1,957	1,509	11,203	-	11,203
Other investments (note C8)	1,317	2,074	3,391	37,822	5,736	4,986	51,935	(6,919)	45,016
Total	16,812	76,893	93,705	172,368	53,123	81,829	401,025	(7,825)	393,200
2018 Total²	16,673	72,556	89,229	152,158	54,549	78,806	374,742	(7,251)	367,491

1�� Of the �16,812 million of assets 26% relates to other shareholder business assets.

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C4 - Analysis of debt securities

C4.1 Fair value hierarchy

To provide further information on the valuation techniques we use to measure assets carried at fair value, we have categorised the measurement basis for assets carried at fair value into a 'fair value hierarchy' described as follows, based on the lowest level input that is significant to the valuation as a whole:

� Inputs to Level 1 fair values are quoted prices (unadjusted) in active markets for identical assets.

� Inputs to Level 2 fair values are inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly. If the asset has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset.

� Inputs to Level 3 fair values are unobservable inputs for the asset. Unobservable inputs may have been used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset at the measurement date. However, the fair value measurement objective remains the same, i.e. an exit price at the measurement date from the perspective of a market participant that holds the asset. Unobservable inputs reflect the assumptions the business unit considers that market participants would use�in pricing the asset. Examples are investment property and commercial and equity release mortgage loans.

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	Fair value hierarchy
Debt securities - Total 2019	Level 1 �m	Level 2 �m	Level 3 �m	Total �m
UK Government	24,485	2,132	629	27,246
Non-UK government	36,463	20,859	4,380	61,702
Europe	35,207	7,605	3,691	46,503
North America	308	5,811	445	6,564
Asia Pacific & Other	948	7,443	244	8,635
Corporate bonds - Public utilities	686	7,965	1,615	10,266
Other corporate bonds	6,199	61,857	10,292	78,348
Other	3	20,836	1,080	21,919
Total	67,836	113,649	17,996	199,481
Total %	34.0%	57.0%	9.0%	100.0%
Less: Assets classified as held for sale	(198)	(50)	(401)	(649)
Total	67,638	113,599	17,595	198,832
Total %	34.0%	57.2%	8.8%	100.0%
2018 Total^1,2	66,016	109,194	16,862	192,072
2018 Total %^1,2	34.3%	56.9%	8.8%	100.0%

1�� Following a review of the Group's presentation of consolidated investment funds, comparative amounts have been restated from those previously reported. The review identified amounts presented within cash and cash equivalents and other investments that are now presented as debt securities in the table above. The restatement has had no impact on the profit for the year or equity. See note B2(a) for further information.

2�� Following a review of the classification of financial assets, comparative amounts have been amended from those previously reported. The effect of this change is to reclassify �2,201 million of assets from fixed maturity securities to other investments.

	Fair value hierarchy
Debt securities - Policyholder assets 2019	Level 1 �m	Level 2 �m	Level 3 �m	Total �m
UK Government	8,787	1	-	8,788
Non-UK government	3,318	5,986	7	9,311
Europe	3,076	1,526	-	4,602
North America	30	1,730	5	1,765
Asia Pacific & Other	212	2,730	2	2,944
Corporate bonds - Public utilities	10	1,370	1	1,381
Other corporate bonds	91	14,559	705	15,355
Other	2	7,513	-	7,515
Total	12,208	29,429	713	42,350
Total %	28.8%	69.5%	1.7%	100.0%
Less: Assets classified as held for sale	(39)	(26)	(401)	(466)
Total	12,169	29,403	312	41,884
Total %	29.1%	70.2%	0.7%	100.0%
2018 Total^1,2	10,674	25,881	626	37,181
2018 Total %^1,2	28.7%	69.6%	1.7%	100.0%

2�� Following a review of the classification of financial assets, comparative amounts have been amended from those previously reported. The effect of this change is to reclassify �1,444 million from other investments to fixed maturity securities.

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C4 - Analysis of debt securities continued

C4.1 Fair value hierarchy continued

	Fair value hierarchy
Debt securities - Participating fund assets 2019	Level 1 �m	Level 2 �m	Level 3 �m	Total �m
UK Government	6,451	810	115	7,376
Non-UK government	30,152	7,334	1,922	39,408
Europe	29,357	2,872	1,898	34,127
North America	204	407	24	635
Asia Pacific & Other	591	4,055	-	4,646
Corporate bonds - Public utilities	648	2,760	43	3,451
Other corporate bonds	5,836	30,713	6,203	42,752
Other	1	6,741	845	7,587
Total	43,088	48,358	9,128	100,574
Total %	42.8%	48.1%	9.1%	100.0%
Less: Assets classified as held for sale	-	-	-	-
Total	43,088	48,358	9,128	100,574
Total %	42.8%	48.1%	9.1%	100.0%
2018 Total^1,2	42,135	47,782	9,478	99,395
2018 Total %^1,2	42.4%	48.1%	9.5%	100.0%

2�� Following a review of the classification of financial assets, comparative amounts have been amended from those previously reported. The effect of this change is to reclassify �3,408 million from fixed maturity securities to other investments.

	Fair value hierarchy
Debt securities - Shareholder assets 2019	Level 1 �m	Level 2 �m	Level 3 �m	Total �m
UK Government	9,247	1,321	514	11,082
Non-UK government	2,993	7,539	2,451	12,983
Europe	2,774	3,207	1,793	7,774
North America	74	3,674	416	4,164
Asia Pacific & Other	145	658	242	1,045
Corporate bonds - Public utilities	28	3,835	1,571	5,434
Other corporate bonds	272	16,585	3,384	20,241
Other	-	6,582	235	6,817
Total	12,540	35,862	8,155	56,557
Total %	22.2%	63.4%	14.4%	100.0%
Less: Assets classified as held for sale	(159)	(24)	-	(183)
Total	12,381	35,838	8,155	56,374
Total %	22.0%	63.5%	14.5%	100.0%
2018 Total^1,2	13,207	35,531	6,758	55,496
2018 Total %^1,2	23.8%	64.0%	12.2%	100.0%

2�� Following a review of the classification of financial assets, comparative amounts have been amended from those previously reported. The effect of this change is to reclassify �237 million from fixed maturity securities to other investments.

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C4 - Analysis of debt securities continued

C4.2 External ratings continued

	External ratings
Debt securities - Total 2019	AAA �m	AA �m	A �m	BBB �m	Less than BBB �m	Non-rated �m	Total �m
Government
UK Government	-	26,510	211	-	-	323	27,044
UK local authorities	-	145	-	-	-	57	202
Non-UK Government	13,234	23,149	6,574	14,114	3,575	1,056	61,702
	13,234	49,804	6,785	14,114	3,575	1,436	88,948
Corporate
Public utilities	8	304	3,534	4,441	688	1,291	10,266
Other corporate bonds	6,353	8,585	22,311	25,197	10,732	5,170	78,348
	6,361	8,889	25,845	29,638	11,420	6,461	88,614
Certificates of deposit	-	8,257	5,264	-	-	1,020	14,541
Structured
Residential Mortgage Backed Security non-agency prime	371	3	79	65	-	-	518
	371	3	79	65	-	-	518
Commercial Mortgage Backed Security	565	151	81	110	-	27	934
Asset Backed Security	358	445	242	128	166	-	1,339
Collateralised Debt Obligation (including Collateralised Loan Obligation)	315	-	-	-	-	-	315
Asset Backed Commercial Paper	41	64	-	-	-	-	105
	1,279	660	323	238	166	27	2,693
Wrapped credit	-	13	497	104	5	39	658
Other	122	313	526	1,768	780	-	3,509
Total	21,367	67,939	39,319	45,927	15,946	8,983	199,481
Total %	10.7%	34.1%	19.7%	23.0%	8.0%	4.5%	100.0%
Less: Assets classified as held for sale	(69)	(80)	(43)	(400)	(4)	(53)	(649)
Total	21,298	67,859	39,276	45,527	15,942	8,930	198,832
Total %	10.7%	34.1%	19.8%	22.9%	8.0%	4.5%	100.0%
2018 Total^1,2	19,163	70,180	34,807	45,957	11,340	10,625	192,072
2018 Total %^1,2	10.0%	36.6%	18.1%	23.9%	5.9%	5.5%	100.0%

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C4 - Analysis of debt securities continued

C4.2 External ratings continued

	External ratings
Debt securities - Policyholder assets 2019	AAA �m	AA �m	A �m	BBB �m	Less than BBB �m	Non-rated �m	Total �m
Government
UK Government	-	8,739	4	-	-	44	8,787
UK local authorities	-	1	-	-	-	-	1
Non-UK Government	2,650	684	1,854	2,335	1,742	46	9,311
	2,650	9,424	1,858	2,335	1,742	90	18,099
Corporate
Public utilities	7	35	681	479	164	15	1,381
Other corporate bonds	637	1,502	3,817	4,672	3,617	1,110	15,355
	644	1,537	4,498	5,151	3,781	1,125	16,736
Certificates of deposit	-	2,738	2,478	-	-	873	6,089
Structured
Residential Mortgage Backed Security non-agency prime	104	2	-	25	-	-	131
	104	2	-	25	-	-	131
Commercial Mortgage Backed Security	89	51	1	29	-	-	170
Asset Backed Security	104	42	11	-	26	-	183
Collateralised Debt Obligation (including Collateralised Loan Obligation)	-	-	-	-	-	-	-
Asset Backed Commercial Paper	12	40	-	-	-	-	52
	205	133	12	29	26	-	405
Wrapped credit	-	-	-	4	-	-	4
Other	31	79	133	446	197	-	886
Total	3,634	13,913	8,979	7,990	5,746	2,088	42,350
Total %	8.6%	32.8%	21.2%	18.9%	13.6%	4.9%	100.0%
Less: Assets classified as held for sale	(14)	(15)	(10)	(384)	(4)	(39)	(466)
Total	3,620	13,898	8,969	7,606	5,742	2,049	41,884
Total %	8.6%	33.2%	21.4%	18.2%	13.7%	4.9%	100.0%
2018 Total^1,2	2,096	14,121	6,534	6,772	4,495	3,163	37,181
2018 Total %^1,2	5.6%	38.0%	17.6%	18.2%	12.1%	8.5%	100.0%

2�� Following a review of the classification of financial assets, comparative amounts have been amended from those previously reported. The effect of this change is to reclassify �1,444 million from other investments to fixed maturity securities.

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C4 - Analysis of debt securities continued

C4.2 External ratings continued

	External ratings
Debt securities - Participating fund assets 2019	AAA �m	AA �m	A �m	BBB �m	Less than BBB �m	Non-rated �m	Total �m
Government
UK Government	-	7,246	2	-	-	121	7,369
UK local authorities	-	7	-	-	-	-	7
Non-UK Government	4,694	18,158	3,296	11,351	1,781	128	39,408
	4,694	25,411	3,298	11,351	1,781	249	46,784
Corporate
Public utilities	1	133	984	1,754	516	63	3,451
Other corporate bonds	3,597	4,267	10,803	15,450	6,818	1,817	42,752
	3,598	4,400	11,787	17,204	7,334	1,880	46,203
Certificates of deposit	-	2,497	1,346	-	-	134	3,977
Structured
Residential Mortgage Backed Security non-agency prime	126	1	17	39	-	-	183
	126	1	17	39	-	-	183
Commercial Mortgage Backed Security	130	25	3	24	-	11	193
Asset Backed Security	115	59	122	13	45	-	354
Collateralised Debt Obligation (including Collateralised Loan Obligation)	315	-	-	-	-	-	315
Asset Backed Commercial Paper	13	23	-	-	-	-	36
	573	107	125	37	45	11	898
Wrapped credit	-	-	33	4	-	2	39
Other	87	222	373	1,255	553	-	2,490
Total	9,078	32,638	16,979	29,890	9,713	2,276	100,574
Total %	9.0%	32.4%	16.9%	29.7%	9.7%	2.3%	100.0%
Less: Assets classified as held for sale	-	-	-	-	-	-	-
Total	9,078	32,638	16,979	29,890	9,713	2,276	100,574
Total %	9.0%	32.4%	16.9%	29.7%	9.7%	2.3%	100.0%
2018 Total^1,2	8,886	34,300	16,030	30,659	6,444	3,076	99,395
2018 Total %^1,2	8.9%	34.6%	16.1%	30.8%	6.5%	3.1%	100.0%

2�� Following a review of the classification of financial assets, comparative amounts have been amended from those previously reported. The effect of this change is to reclassify �3,408 million from fixed maturity securities to other investments.

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C4 - Analysis of debt securities continued

C4.2 External ratings continued

	External ratings
Debt securities - Shareholder assets 2019	AAA �m	AA �m	A �m	BBB �m	Less than BBB �m	Non-rated �m	Total �m
Government
UK Government	-	10,525	205	-	-	158	10,888
UK local authorities	-	137	-	-	-	57	194
Non-UK Government	5,890	4,307	1,424	428	52	882	12,983
	5,890	14,969	1,629	428	52	1,097	24,065
Corporate
Public utilities	-	136	1,869	2,208	8	1,213	5,434
Other corporate bonds	2,119	2,816	7,691	5,075	297	2,243	20,241
	2,119	2,952	9,560	7,283	305	3,456	25,675
Certificates of deposit	-	3,022	1,440	-	-	13	4,475
Structured
Residential Mortgage Backed Security non-agency prime	141	-	62	1	-	-	204
	141	-	62	1	-	-	204
Commercial Mortgage Backed Security	346	75	77	57	-	16	571
Asset Backed Security	139	344	109	115	95	-	802
Collateralised Debt Obligation (including Collateralised Loan Obligation)	-	-	-	-	-	-	-
Asset Backed Commercial Paper	16	1	-	-	-	-	17
	501	420	186	172	95	16	1,390
Wrapped credit	-	13	464	96	5	37	615
Other	4	12	20	67	30	-	133
Total	8,655	21,388	13,361	8,047	487	4,619	56,557
Total %	15.3%	37.8%	23.6%	14.2%	0.9%	8.2%	100.0%
Less: Assets classified as held for sale	(55)	(65)	(33)	(16)	-	(14)	(183)
Total	8,600	21,323	13,328	8,031	487	4,605	56,374
Total %	15.3%	37.8%	23.6%	14.2%	0.9%	8.2%	100.0%
2018 Total^1,2	8,181	21,759	12,243	8,526	401	4,386	55,496
2018 Total %^1,2	14.7%	39.2%	22.1%	15.4%	0.7%	7.9%	100.0%

2�� Following a review of the classification of financial assets, comparative amounts have been amended from those previously reported. The effect of this change is to reclassify �237 million from fixed maturity securities to other investments.

Within shareholder assets debt securities, 42.5% of exposure is in government holdings (2018 restated: 41.1%). Our corporate debt securities portfolio represents 45.4% of total shareholder debt securities (2018 restated: 47.3%). At 31 December 2019, the proportion of our shareholder debt securities that are investment grade is 90.9% (2018 restated: 91.4%). The remaining 9.1% of shareholder debt securities that do not have an external rating of BBB or higher can be split as follows:

� �0.9% are debt securities that are rated as below investment grade; and

� �8.2% are not rated by the major rating agencies.

The majority of non-rated corporate bonds are held by our businesses in the UK. Of the securities not rated by an external rating agency most are allocated an internal rating using a methodology largely consistent with that adopted by an external rating agency, and are considered to be of investment grade credit quality; these include �3.2�billion (2018: �3.0 billion) of debt securities held in our UK Life business, predominantly made up of private placements and other corporate bonds, which have been internally rated as investment grade.

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C5 - Analysis of loans

(a)� Overview

The Group's loan portfolio of �38,579 million (2018 restated: �36,184 million) is principally made up of the following:

� Policy loans of �684 million (2018: �770 million), which are generally collateralised by a lien or charge over the underlying policy;

� Loans and advances to banks of �8,830 million (2018 restated: �9,322 million), which primarily relate to loans of cash collateral received in stock lending transactions and are therefore fully collateralised by other securities. Following a review of the Group's presentation of consolidated investment funds, comparative amounts have been restated from those previously reported to reclassify certain stock lending transactions from cash and cash equivalents to loans and advances to banks. The restatement has had no impact on the profit for the year or equity. See note B2(a) for further information;

� Mortgage loans collateralised by property assets of �21,549 million (2018: �19,864 million); and

� Healthcare, infrastructure and private financial initiative (PFI) loans of �6,467 million (2018: �5,358 million).

Loans with fixed maturities, including policy loans and loans and advances to banks, are recognised when cash is advanced to borrowers. These loans are carried at their unpaid principal balances and adjusted for amortisation of premium or discount, non-refundable loan fees and related direct costs. These amounts are deferred and amortised over the life of the loan using the effective interest rate method.

For certain mortgage loans, the Group has taken advantage of the fair value option under IAS 39 Financial Instruments: Recognition Measurement to present the mortgages, associated borrowings, other liabilities and derivative financial instruments at fair value, since they are managed together on a fair value basis. These mortgage loans are not traded in active markets and are classified within level 3 of the fair value hierarchy as the significant valuation assumptions and inputs are not deemed to be market observable. Of the Group's total loan portfolio, 55.8% (2018 restated: 54.9%) is invested in mortgage loans. The shareholder risk relating to these loans is discussed further below.

Healthcare, infrastructure and PFI loans included within shareholder assets are �6,467 million (2018: �5,358 million). These loans are secured against the income from healthcare and education premises and as such are not considered further in this section.

Loans - Shareholder assets 2019	United Kingdom �m	Canada �m	Europe �m	Asia �m	Total �m
Policy loans	5	-	2	1	8
Loans and advances to banks	3,129	-	-	-	3,129
Healthcare, Infrastructure and PFI other loans	6,248	-	219	-	6,467
Mortgage loans	21,508	-	-	-	21,508
Other loans	-	125	1	-	126
Total	30,890	125	222	1	31,238
Total %	98.9%	0.4%	0.7%	-	100.0%
Less: Assets classified as held for sale	-	-	-	-	-
Total	30,890	125	222	1	31,238
Total %	98.9%	0.4%	0.7%	-	100.0%
2018 Total¹	27,901	164	252	2	28,319
2018 Total %¹	98.5%	0.6%	0.9%	-	100.0%

1�� Following a review of the Group's presentation of consolidated investment funds, comparative amounts have been restated from those previously reported. The review identified amounts presented within cash and cash equivalents and other investments that are now presented as loans and advances to banks in the table above. The restatement has had no impact on the profit for the year or equity. See note B2(a) for further information.

(b) Analysis of shareholder mortgage loans��

Mortgage loans included within shareholder assets are �21,508 million (2018: �19,813 million) and are almost entirely held in the UK. The narrative below focuses on explaining the risks arising as a result of these exposures.

2019	Total �m
Non-securitised mortgage loans
- Residential (Equity release)	8,558
- Commercial	7,640
- Healthcare, Infrastructure and PFI mortgage loans	2,878
	19,076
Securitised mortgage loans	2,432
Total	21,508
Less: Assets classified as held for sale	-
Total	21,508
2018 Total	19,813

Non-securitised mortgage loans

Residential

The UK non-securitised residential mortgage portfolio has a total value as at 31 December 2019 of �8,558 million�(2018: �7,315 million). The movement in the year is due to �782 million of new lending and an increase in the fair value of �502 million. Additional accrued interest in the year is offset by the value of redemptions. These mortgages are all in the form of equity release, whereby homeowners mortgage their property to release cash equity. Due to the structure of equity release mortgages, whereby interest amounts due are not paid in cash but instead rolled into the amount outstanding, they predominantly have a current Loan to Value (LTV) of below 70%. The average LTV across the portfolio is 28.2% (2018: 26.8%).

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C5 - Analysis of loans continued

(b)� Analysis of shareholder mortgage loans continued

Non-securitised mortgage loans continued

Commercial

Gross exposure by loan to value and arrears of UK non-securitised commercial mortgages is shown in the table below.

2019	>120% �m	115-120% �m	110-115% �m	105-110% �m	100-105% �m	95-100% �m	90-95% �m	80-90% �m	70-80% �m	<70% �m	Total �m
Not in arrears	-	-	-	-	302	144	-	65	913	6,216	7,640
Total	-	-	-	-	302	144	-	65	913	6,216	7,640

Of the �7,640 million (2018: �7,232 million) of mortgage loans within shareholder assets, �6,877 million are used to back annuity liabilities and are stated on a fair value basis. The UK loan exposures are calculated on a discounted cash flow basis, and include a risk adjustment through the use of a Credit Risk Adjusted Value (CRAV).

For commercial mortgages, loan service collection ratios, a key indicator of mortgage portfolio performance, improved to 2.56x (2018: 2.43x). Loan Interest Cover (LIC), which is defined as the annual net rental income (including rental deposits less ground rent) divided by the annual loan interest service, also improved to 2.9x (2018: 2.75x). Average mortgage LTV increased from 54.9% in 2018 to 55.6%. There are no loans in arrears (2018: nil).

Commercial mortgages and Healthcare, Infrastructure and PFI loans are held at fair value on the asset side of the statement of financial position. The related insurance liabilities are valued using a discount rate derived from the gross yield on assets, with adjustments to allow for risk. �15,910 million of shareholder loan assets are backing annuity liabilities and comprise of commercial mortgage loans (�6,877 million), Healthcare, Infrastructure and PFI mortgage loans (�2,878 million) and Healthcare, Infrastructure and PFI other loans (�6,155 million).

The Group carries a valuation allowance within insurance liabilities against the risk of default of commercial mortgages of �500 million which equates to 34 bps at 31 December 2019 (2018: 41 bps). The total valuation allowance held on business transferred in from Aviva Annuity UK Limited in respect of corporate bonds and mortgages is �1,300 million (2018: �1,300 million) over the remaining term of the UK corporate bond and mortgage portfolio.

The UK portfolio remains well diversified in terms of property type, location and tenants as well as the spread of loans written over time. The risks in commercial mortgages are addressed through several layers of protection with the mortgage risk profile being primarily driven by the ability of the underlying tenant rental income to cover loan interest and amortisation. Should any single tenant default on their rental payment, rental from other tenants backing the same loan often ensures the loan interest cover does not fall below 1.0x. Where there are multiple loans to a single borrower further protection may be achieved through cross-charging (or pooling) such that any single loan is also supported by rents received within other pool loans. Additionally, there may be support provided by the borrower of the loan itself and further loss mitigation from any general floating charge held over assets within the borrower companies.

If the LIC cover falls below 1.0x and the borrower defaults then Aviva retains the option of selling the security or restructuring the loans and benefiting from the protection of the collateral. A combination of these benefits and the high recovery levels afforded by property collateral (compared to corporate debt or other uncollateralised credit exposures) results in the economic exposure being significantly lower than the gross exposure reported above. The Group continues to actively manage this position.

Healthcare, Infrastructure and PFI

Healthcare, Infrastructure and PFI mortgage loans included within shareholder assets of �2,878 million (2018: �2,829 million) are secured against healthcare premises, education, social housing and emergency services related premises. For all such loans, Government support is provided through either direct funding or reimbursement of rental payments to the tenants to meet income service and provide for the debt to be reduced substantially over the term of the loan. Although the loan principal is not Government guaranteed, the nature of these businesses provides considerable comfort of an ongoing business model and low risk of default.

On a market value basis, we estimate the average LTV of these mortgages to be 72.6% (2018: 72.3%), although this is not considered to be a key risk indicator due to the Government support noted above and the social need for these premises. The Group therefore consider these loans to be lower risk relative to other mortgage loans.

Securitised mortgage loans

As at 31 December 2019, the Group has �2,432 million�(2018: �2,437 million) of securitised mortgage loans within shareholder assets. Funding for the securitised residential mortgage assets was obtained by issuing loan note securities. Of these loan notes approximately �224 million (2018: �239 million) are held by Group companies. The remainder is held by third parties external to Aviva. As any cash shortfall arising once all mortgages have been redeemed is borne by the loan note holders, the majority of the credit risk of these mortgages is borne by third parties rather than by shareholders. The average LTV across the securitised mortgage loans is 49.0% (2018: 45.2%).

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C6 - Analysis of equity securities

				2019				Restated¹ 2018
	Fair value hierarchy				Fair value hierarchy
Equity securities - Total assets	Level 1 �m	Level 2 �m	Level 3 �m	Total �m	Level 1 �m	Level 2 �m	Level 3 �m	Total �m
Public utilities	2,883	-	-	2,883	2,369	-	-	2,369
Banks, trusts and insurance companies	20,476	-	160	20,636	19,571	-	172	19,743
Industrial miscellaneous and all other	75,496	-	600	76,096	65,860	-	269	66,129
Non-redeemable preferred shares	211	-	-	211	196	-	-	196
Total	99,066	-	760	99,826	87,996	-	441	88,437
Total %	99.2%	-	0.8%	100.0%	99.5%	-	0.5%	100.0%
Less: Assets classified as held for sale	(216)	-	(40)	(256)	(183)	-	(27)	(210)
Total	98,850	-	720	99,570	87,813	-	414	88,227
Total %	99.3%	-	0.7%	100.0%	99.5%	-	0.5%	100.0%

1�� Following a review of the Group's presentation of consolidated investment funds, comparative amounts have been restated from those previously reported. The review identified amounts presented within cash and cash equivalents and other investments that are now presented as equity securities in the table above. The restatement has had no impact on the profit for the year or equity. See note B2(a) for further information.

				2019				Restated¹ 2018
	Fair value hierarchy				Fair value hierarchy
Equity securities - Policyholder assets	Level 1 �m	Level 2 �m	Level 3 �m	Total �m	Level 1 �m	Level 2 �m	Level 3 �m	Total �m
Public utilities	2,549	-	-	2,549	2,072	-	-	2,072
Banks, trusts and insurance companies	17,070	-	6	17,076	15,897	-	6	15,903
Industrial miscellaneous and all other	63,210	-	189	63,399	55,068	-	167	55,235
Non-redeemable preferred shares	11	-	-	11	19	-	-	19
Total	82,840	-	195	83,035	73,056	-	173	73,229
Total %	99.8%	-	0.2%	100.0%	99.8%	-	0.2%	100.0%
Less: Assets classified as held for sale	(216)	-	(40)	(256)	(183)	-	(26)	(209)
Total	82,624	-	155	82,779	72,873	-	147	73,020
Total %	99.8%	-	0.2%	100.0%	99.8%	-	0.2%	100.0%

1�� Following a review of the Group's presentation of consolidated investment funds, comparative amounts have been restated from those previously reported. The review identified amounts presented within cash and cash equivalents and other investments that are now presented as equity securities in the table above. The restatement has had no impact on the profit for the year or equity. See note B2(a) for further information.

				2019				Restated¹ 2018
	Fair value hierarchy				Fair value hierarchy
Equity securities - Participating fund assets	Level 1 �m	Level 2 �m	Level 3 �m	Total �m	Level 1 �m	Level 2 �m	Level 3 �m	Total �m
Public utilities	319	-	-	319	283	-	-	283
Banks, trusts and insurance companies	3,239	-	48	3,287	3,525	-	65	3,590
Industrial miscellaneous and all other	10,973	-	380	11,353	9,724	-	95	9,819
Non-redeemable preferred shares	-	-	-	-	-	-	-	-
Total	14,531	-	428	14,959	13,532	-	160	13,692
Total %	97.1%	-	2.9%	100.0%	98.8%	-	1.2%	100.0%
Less: Assets classified as held for sale	-	-	-	-	-	-	-	-
Total	14,531	-	428	14,959	13,532	-	160	13,692
Total %	97.1%	-	2.9%	100.0%	98.8%	-	1.2%	100.0%

1�� Following a review of the Group's presentation of consolidated investment funds, comparative amounts have been restated from those previously reported. The review identified amounts presented within cash and cash equivalents and other investments that are now presented as equity securities in the table above. The restatement has had no impact on the profit for the year or equity. See note B2(a) for further information.

				2019				Restated¹ 2018
	Fair value hierarchy				Fair value hierarchy
Equity securities - Shareholder assets	Level 1 �m	Level 2 �m	Level 3 �m	Total �m	Level 1 �m	Level 2 �m	Level 3 �m	Total �m
Public utilities	15	-	-	15	14	-	-	14
Banks, trusts and insurance companies	167	-	106	273	149	-	101	250
Industrial miscellaneous and all other	1,313	-	31	1,344	1,068	-	7	1,075
Non-redeemable preferred shares	200	-	-	200	177	-	-	177
Total	1,695	-	137	1,832	1,408	-	108	1,516
Total %	92.5%	-	7.5%	100.0%	92.9%	-	7.1%	100.0%
Less: Assets classified as held for sale	-	-	-	-	-	-	(1)	(1)
Total	1,695	-	137	1,832	1,408	-	107	1,515
Total %	92.5%	-	7.5%	100.0%	92.9%	-	7.1%	100.0%

1�� Following a review of the Group's presentation of consolidated investment funds, comparative amounts have been restated from those previously reported. The review identified amounts presented within cash and cash equivalents and other investments that are now presented as equity securities in the table above. The restatement has had no impact on the profit for the year or equity. See note B2(a) for further information.

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C7 - Analysis of investment property

The Group's total investment property value is �11,203 million (2018: �11,482 million).

Within total investment properties by value 93.9% (2018: 93.6%) are held in policyholder or participating fund assets. Shareholder exposure to investment properties is principally through investments in UK and French commercial property.

Investment properties are stated at their market values as assessed by qualified external independent valuers. The properties are valued on an income basis that is based on current rental income plus anticipated uplifts at the next rent review, lease expiry, or break option taking into consideration lease incentives and assuming no further growth in the estimated rental value of the property. This uplift and the discount rate are derived from rates implied by recent market transactions on similar property. These inputs are deemed unobservable.

Within total investment properties by value 97.6% (2018: 97.3%) are leased to third parties under operating leases, with the remainder either being vacant or held for capital appreciation.

Within shareholder investment properties by value 100% (2018: 100%) are leased to third parties under operating leases.

C8 - Analysis of other financial investments

				2019				Restated^1,2 2018
	Fair value hierarchy				Fair value hierarchy
Other investments - Total	Level 1 �m	Level 2 �m	Level 3 �m	Total �m	Level 1 �m	Level 2 �m	Level 3 �m	Total �m
Unit trusts and other investment vehicles	37,004	438	4,394	41,836	33,930	365	4,309	38,604
Derivative financial instruments	240	6,365	492	7,097	448	4,377	532	5,357
Deposits with credit institutions	156	13	-	169	155	-	-	155
Minority holdings in property management undertakings	1	62	2,332	2,395	-	28	1,947	1,975
Other	438	-	-	438	476	-	-	476
Total	37,839	6,878	7,218	51,935	35,009	4,770	6,788	46,567
Total %	72.9%	13.2%	13.9%	100.0%	75.2%	10.2%	14.6%	100.0%
Less: Assets classified as held for sale	(5,374)	-	(1,545)	(6,919)	(5,038)	-	(1,606)	(6,644)
Total	32,465	6,878	5,673	45,016	29,971	4,770	5,182	39,923
Total %	72.1%	15.3%	12.6%	100.0%	75.1%	11.9%	13.0%	100.0%

1�� Following a review of the Group's presentation of consolidated investment funds, comparative amounts have been restated from those previously reported. The review identified amounts presented within cash and cash equivalents and other investments that are now presented as loans, equity securities and fixed maturity securities. The restatement has had no impact on the profit for the year or equity. See note B2(a) for further information.

				2019				Restated^1,2 2018
	Fair value hierarchy				Fair value hierarchy
Other investments - Policyholder assets	Level 1 �m	Level 2 �m	Level 3 �m	Total �m	Level 1 �m	Level 2 �m	Level 3 �m	Total �m
Unit trusts and other investment vehicles	33,698	390	1,549	35,637	29,382	259	1,611	31,252
Derivative financial instruments	17	828	-	845	44	619	2	665
Deposits with credit institutions	125	13	-	138	125	-	-	125
Minority holdings in property management undertakings	1	-	775	776	-	-	370	370
Other	426	-	-	426	460	-	-	460
Total	34,267	1,231	2,324	37,822	30,011	878	1,983	32,872
Total %	90.6%	3.3%	6.1%	100.0%	91.3%	2.7%	6.0%	100.0%
Less: Assets classified as held for sale	(5,166)	-	(1,545)	(6,711)	(5,022)	-	(1,606)	(6,628)
Total	29,101	1,231	779	31,111	24,989	878	377	26,244
Total %	93.5%	4.0%	2.5%	100.0%	95.3%	3.3%	1.4%	100.0%

1�� Following a review of the Group's presentation of consolidated investment funds, comparative amounts have been restated from those previously reported. The review identified amounts presented within cash and cash equivalents and other investments that are now presented as loans, equity securities and fixed maturity securities. The restatement has had no impact on the profit for the year or equity. See note B2(a) for further information.

2�� Following a review of the classification of financial assets, comparative amounts have been amended from those previously reported. The effect of this change is to reclassify �1,444 million from other investments to fixed maturity securities.

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C8 - Analysis of other financial investments continued

				2019				Restated^1,2 2018
	Fair value hierarchy				Fair value hierarchy
Other investments - Participating fund assets	Level 1 �m	Level 2 �m	Level 3 �m	Total �m	Level 1 �m	Level 2 �m	Level 3 �m	Total �m
Unit trusts and other investment vehicles	2,767	47	2,661	5,475	3,729	105	2,585	6,419
Derivative financial instruments	183	3,656	42	3,881	248	2,408	69	2,725
Deposits with credit institutions	26	-	-	26	17	-	-	17
Minority holdings in property management undertakings	-	28	1,312	1,340	-	-	1,366	1,366
Other	-	-	-	-	-	-	-	-
Total	2,976	3,731	4,015	10,722	3,994	2,513	4,020	10,527
Total %	27.8%	34.8%	37.4%	100.0%	37.9%	23.9%	38.2%	100.0%
Less: Assets classified as held for sale	(206)	-	-	(206)	-	-	-	-
Total	2,770	3,731	4,015	10,516	3,994	2,513	4,020	10,527
Total %	26.3%	35.5%	38.2%	100.0%	37.9%	23.9%	38.2%	100.0%

1�� Following a review of the Group's presentation of consolidated investment funds, comparative amounts have been restated from those previously reported. The review identified amounts presented within cash and cash equivalents and other investments that are now presented as loans, equity securities and fixed maturity securities. The restatement has had no impact on the profit for the year or equity. See note B2(a) for further information.

2�� Following a review of the classification of financial assets, comparative amounts have been amended from those previously reported. The effect of this change is to reclassify �3,408 million from fixed maturity securities to other investments.

				2019				Restated^1,2 2018
	Fair value hierarchy				Fair value hierarchy
Other investments - Shareholder assets	Level 1 �m	Level 2 �m	Level 3 �m	Total �m	Level 1 �m	Level 2 �m	Level 3 �m	Total �m
Unit trusts and other investment vehicles	539	1	184	724	819	1	113	933
Derivative financial instruments	40	1,881	450	2,371	156	1,350	461	1,967
Deposits with credit institutions	5	-	-	5	13	-	-	13
Minority holdings in property management undertakings	-	34	245	279	-	28	211	239
Other	12	-	-	12	16	-	-	16
Total	596	1,916	879	3,391	1,004	1,379	785	3,168
Total %	17.6%	56.5%	25.9%	100.0%	31.7%	43.5%	24.8%	100.0%
Less: Assets classified as held for sale	(2)	-	-	(2)	(16)	-	-	(16)
Total	594	1,916	879	3,389	988	1,379	785	3,152
Total %	17.5%	56.6%	25.9%	100.0%	31.3%	43.8%	24.9%	100.0%

1�� Following a review of the Group's presentation of consolidated investment funds, comparative amounts have been restated from those previously reported. The review identified amounts presented within cash and cash equivalents and other investments that are now presented as loans, equity securities and fixed maturity securities. The restatement has had no impact on the profit for the year or equity. See note B2(a) for further information.

2�� Following a review of the classification of financial assets, comparative amounts have been amended from those previously reported. The effect of this change is to reclassify �237 million from fixed maturity securities to other investments.

C9 - Analysis of available for sale investments

There were no impairment expenses during 2019 relating to AFS debt securities and other investments.

Total unrealised losses on AFS debt securities at 31 December 2019 were �2 million (2018: �5 million). There were no other unrealised losses on AFS investments.

C10 - Summary of exposure to peripheral European countries

The Group's direct sovereign exposures to Greece, Ireland, Portugal, Italy and Spain (net of non-controlling interests, excluding policyholder assets) is summarised below:

		Participating		Shareholder		Total
	2019 �bn	Restated¹ 2018 �bn	2019 bn	Restated¹ 2018 �bn	2019 �bn	Restated¹ 2018 �bn
Greece	-	-	-	-	-	-
Ireland	0.8	0.9	0.3	0.2	1.1	1.1
Portugal	0.2	0.2	0.1	-	0.3	0.2
Italy	7.7	7.1	0.2	0.6	7.9	7.7
Spain	0.6	0.8	0.2	0.1	0.8	0.9
Total	9.3	9.0	0.8	0.9	10.1	9.9

1�� Following a review of the Group's presentation of consolidated investment funds, comparative amounts have been restated from those previously reported. The review identified amounts presented within cash and cash equivalents and other investments that are now presented as sovereign exposures in the table above. The restatement has had no impact on the profit for the year or equity. See note B2(a) for further information.

Included in our debt securities and other financial assets are exposures to peripheral European countries. All of these assets are valued on a mark-to-market basis under IAS 39, and therefore our statement of financial position and income statement already reflect any reduction in value between the date of purchase and the balance sheet date.

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C11 - Reinsurance assets

The Group assumes and cedes reinsurance in the normal course of business, with retention limits varying by line of business. Reinsurance assets primarily include balances due from both insurance and reinsurance companies for ceded insurance liabilities. Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provisions or settled claims associated with the reinsured policies and in accordance with the relevant reinsurance contract.

If a reinsurance asset is impaired, the Group reduces the carrying amount accordingly and recognises that impairment loss in the income statement. A reinsurance asset is impaired if there is objective evidence, as a result of an event that occurred after initial recognition of the reinsurance asset, that the Group may not receive all amounts due to it under the terms of the contract, and the event has a reliably measurable impact on the amounts that the Group will receive from the reinsurer.

For the table below, reinsurance asset credit ratings are stated in accordance with information from leading rating agencies.

					Ratings
2019	AAA �m	AA �m	A �m	BBB �m	Less than BBB �m	Not rated �m	Total �m
Policyholder assets	-	3,054	149	449	-	351	4,003
Participating fund assets	-	180	255	2	-	-	437
Shareholder assets	412	6,194	735	521	-	129	7,991
Total	412	9,428	1,139	972	-	480	12,431
Total %	3.3%	75.8%	9.2%	7.8%	-	3.9%	100.0%
Less: Assets classified as held for sale	-	(54)	(14)	-	-	(7)	(75)
Total	412	9,374	1,125	972	-	473	12,356
Total %	3.3%	75.9%	9.1%	7.9%	-	3.8%	100.0%
2018 Total	-	9,796	1,183	322	1	498	11,800
2018 Total %	-	83.1%	10.0%	2.7%	-	4.2%	100.0%

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END PART 4 of 5

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