Reference note · follow-up to the investment variance ledger
Should the £543m Life loss be checked against CSM?
Whether Aviva's HY26 investment variance hit P&L or quietly ate into the Contractual Service Margin — the stock of future unearned profit.
Question asked
Should this loss in IFRS profit be compared against any changes to the CSM?
Yes — that's the right cross-check to run, and it's arguably the single best way to tell whether the £543m Life loss is real damage to Aviva's future earning power or just noise.
Why the comparison matters
Under IFRS 17, not all market or assumption movements hit P&L the same way:
- For business measured under the Variable Fee Approach (with-profits, unit-linked — where the insurer's margin is a variable fee off underlying assets), most changes in financial assumptions get absorbed into the CSM instead of hitting P&L immediately. The CSM is the stock of unearned future profit, so an absorption there means the hit shows up gradually over future periods, not today.
- For business under the General Measurement Model (protection, annuities/BPA) and for hedging instruments held outside the insurance contract boundary (derivatives Aviva holds specifically to protect its Solvency II capital position), financial variances typically flow straight through P&L, not through CSM.
So the real question: did the £543m come out of the CSM (meaning future profit emergence is now smaller too), or did it bypass CSM entirely (meaning it's a pure in-period mark, and the future profit stock is untouched)?
What the CSM actually shows
| £m | HY26 | HY25 | FY25 |
|---|
| Total CSM (excl. Heritage) | 6,445 | 6,513 | 6,458 |
| Heritage | 1,262 | 1,265 | 1,245 |
| Total CSM | 7,707 | 7,778 | 7,703 |
CSM excl. Heritage fell £68m HY25→HY26 — but Aviva's own explanation for that movement is normal mechanics, not the investment variance:
"Total CSM excluding Heritage decreased to £6,445 million (HY25: £6,513 million) with CSM releases exceeding new business and interest accretion over the period."
Reading
The £543m Life loss appears to have largely
bypassed the CSM and hit P&L directly — consistent with note B7's explanation that it was driven by rate moves and hedging losses on instruments sitting outside the insurance contract boundary, which by construction can't adjust CSM. That's a meaningfully positive read: Aviva's stock of future unearned profit looks intact. This wasn't a write-down of expected future earnings — it was a one-period P&L mark from hedge and rate mechanics.
Caveat
The Results Pack section reviewed (B — IFRS results) doesn't give an explicit CSM roll-forward bridge (opening CSM → new business → accretion → releases → assumption changes → closing CSM). That level of granularity likely sits in section E, "Condensed IFRS financial statements and notes" (from p.23), which hasn't been pulled yet. The reading above is an inference from the absence of any mention of investment variance in the CSM movement text, not a confirmed reconciliation.