European Embedded Value Supplementary Information
at 30 June 2006
3 Components of group embedded value
|
£m
|
|||
|
At
30 June 2006 |
At
30 June 2005 |
At
31 December 2005 |
|
| Adjusted net worth attributable to ordinary equity holders of the parent |
2,839
|
3,078
|
3,829
|
| Equity |
6,932
|
3,816
|
4,751
|
| Adjustment to include long-term business on a statutory solvency basis: |
|
||
| South Africa |
110
|
92
|
110
|
| United States |
(656)
|
(819)
|
(800)
|
| Europe* |
(3,321)
|
-
|
-
|
| Adjustment for market value of life funds' investments in Group equity and debt instruments held in life funds |
470
|
339
|
467
|
| Adjustment to remove perpetual preferred callable securities and accrued dividends |
(696)
|
(350)
|
(699)
|
| Value of in-force business |
3,837
|
1,652
|
1,979
|
| Value of in-force business before items listed below |
4,407
|
2,032
|
2,372
|
| Additional time-value of financial options and guarantees |
(49)
|
(67)
|
(49)
|
| Cost of required capital |
(492)
|
(310)
|
(340)
|
| Minority interest in value of in-force |
(29)
|
(3)
|
(4)
|
| Group embedded value |
6,676
|
4,730
|
5,808
|
* Includes £804 million of goodwill in respect of covered business.
|
£m
|
|||
|
At
30 June 2006 |
At
30 June 2005 |
At
31 December 2005 |
|
| Pro-forma adjustments to bring Group investments to market value | |||
| Group embedded value |
6,676
|
4,730
|
5,808
|
| Adjustment to bring listed subsidiaries to market value |
1,010
|
510
|
1,101
|
| Adjustment for present value of future Black Economic Empowerment Scheme deferred consideration |
172
|
-
|
206
|
| Adjusted Group embedded value |
7,858
|
5,240
|
7,115
|
| Adjusted Group embedded value per share |
143.2p
|
135.9p
|
174.0p
|
| Return on Group embedded value (ROEV) % p.a. |
13.8%
|
16.2%
|
16.5%
|
| Number of shares in issue at the end of the period including own shares held in policyholders' funds - millions |
5,488
|
3,857
|
4,090
|
The adjustments to include long-term business on a statutory solvency basis reflect the difference between the net worth of each business on the statutory basis (as required by the local regulator) and their portion of the Group's consolidated equity. In South Africa, these values exclude items that are eliminated or shown separately on consolidation (such as Nedbank, Mutual & Federal and inter-company loans).
The ROEV is calculated as the annualised adjusted operating profit after tax and minorities of £499 million less dividends declared to holders of perpetual preferred callable securities divided by the opening group embedded value plus 5/6 of the embedded value of Skandia as of 1 February 2006.
