Components of life EEV return

The life EEV return comprises the following components:

• new business contribution written during the period including value added between the point of sale and end of the period;
• profit from existing business equal to:
  • the expected return on the value of the in-force covered business at the beginning of the period,
  • experience variances caused by the differences between the actual experience during the period and expected experience based on the operating assumptions used to calculate the start of year value, and
  • the impact of changes in operating assumptions including risk margins;
• expected investment return on the shareholders' net worth, based upon assumptions applying at the start of the year;
• investment return variances caused by differences between the actual return in the period and the expected return based on economic assumptions used to calculate the start of year value; and
• the impact of changes in economic assumptions in the period.

The life EEV operating return comprises the first three of these components and is calculated using economic assumptions as at the start of the year and operating (demographic, expenses and other) assumptions as at the end of the year.

There were no separate development costs reported in either period.

* Restated for the effect of implementing European Embedded Value principles.

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