EV

The following table shows the main results of the life, health and pension perimeter, in terms of EV and NBV. 

Main results at 31 December 2011 and 2010 (€ mln)

2011 2010
EV 19,372 23.927
EV earnings -4,408 -1.024
Return on EV -18.1% -4.2%
Normalised Return on EV 11.7% 9.8%
 
 
2011 2010 Change
NBV 976 1,050 -7.1%
APE 4,787 5,333 -10.2%
Profitability on APE 20.4% 19.7% +0.7 pts
IRR 12.6% 13.9% -1.3 pts

From year-end 2010 to year-end 2011 EV moves from 23,927mln to 19,372mln.

Total EV earnings (-4,408mln, corresponding to -18.1% overall return on EV) comprise solid operating EV earnings (2,815mln, leading to 11.7% normalised return on EV), offset by negative economic variances (-7,224mln).

The poor economic variances refer almost entirely to the VIF, and are mainly due to the extraordinary widening of the spreads between government bonds and swap rates in many European Countries where the Group operates, combined with higher corporate bond spreads, lower swap interest rates, poor equity market performance and higher equity and interest rate volatilities.

In particular, the disruptions on government bond spreads have a significant impact on the valuation of VIF which, according to the current methodology based on swap rates, does not benefit on the liability side from the higher returns offered by government bonds, but on the contrary is depressed on the asset side by the lower value of existing government bonds.

Had the government spreads remained at the same level as at the end of 2010, the VIF at the end of 2011 would have been 5.2bln higher.