European Embedded Value Supplementary Information
for the six months ended 30 June 2006
5 Components of embedded value of the covered business
|
£m
|
|||
|
At
30 June 2006 |
At
30 June 2005 |
At
31 December 2005 |
|
| Embedded value of the covered business |
6,277
|
3,540
|
4,221
|
| Adjusted net worth |
2,440
|
1,888
|
2,242
|
| Value of in-force business |
3,837
|
1,652
|
1,979
|
| South Africa | |||
| Adjusted net worth |
1,544
|
1,437
|
1,755
|
| Required capital |
1,292
|
1,405
|
1,569
|
| Free surplus |
252
|
32
|
186
|
| Value of in-force business |
1,087
|
1,039
|
1,301
|
| Value of in-force business before items listed below |
1,323
|
1,312
|
1,565
|
| Additional time-value of financial options and guarantees* |
-
|
(37)
|
-
|
| Cost of required capital |
(232)
|
(233)
|
(260)
|
| Minority interest in value of in-force |
(4)
|
(3)
|
(4)
|
| United States | |||
| Adjusted net worth |
463
|
451
|
487
|
| Required capital |
460
|
444
|
484
|
| Free surplus |
3
|
7
|
3
|
| Value of in-force business |
661
|
613
|
678
|
| Value of in-force business before items listed below |
794
|
720
|
807
|
| Additional time-value of financial options and guarantees |
(42)
|
(30)
|
(49)
|
| Cost of required capital |
(91)
|
(77)
|
(80)
|
| Europe | |||
| Adjusted net worth |
433
|
-
|
-
|
| Required capital |
349
|
-
|
-
|
| Free surplus |
84
|
-
|
-
|
| Value of in-force business |
2,089
|
-
|
-
|
| Value of in-force business before items listed below |
2,290
|
-
|
-
|
| Additional time-value of financial options and guarantees |
(7)
|
-
|
-
|
| Cost of required capital |
(169)
|
-
|
-
|
| Minority interest in value of in-force |
(25)
|
-
|
-
|
* No additional time-value of financial options and guarantees is necessary in South Africa since 31 December 2005 due to:
a) Higher provisions for such options and guarantees held within policyholder liabilities
b) Allowance being made for reasonable management action to take place
c) A realistic proportion of policyholders who will take up guaranteed annuity option.
The adjusted net worth excludes acquired intangibles and goodwill.
