Segmental analysis of life and related businesses embedded value
| Net worth | Value of in-force covered business | ||||||
|---|---|---|---|---|---|---|---|
| Required capital1 £m |
Free surplus £m |
Present value of in-force £m |
Cost of required capital £m |
Embedded value £m |
|||
| 31 December 2004 | |||||||
| United Kingdom | 1,360 | 573 | 4,084 | (403) | 5,614 | ||
| Continental Europe | |||||||
| France | 1,064 | 57 | 908 | (210) | 1,819 | ||
| Ireland | 86 | 195 | 352 | (18) | 615 | ||
| Italy | 237 | 187 | 166 | (52) | 538 | ||
| Netherlands (including Belgium and Luxembourg) | 945 | 509 | 1,355 | (332) | 2,477 | ||
| Poland | 99 | 89 | 401 | (32) | 557 | ||
| Spain | 194 | 28 | 415 | (53) | 584 | ||
| Other | 97 | 52 | 92 | (28) | 213 | ||
| International | 280 | 204 | 180 | (67) | 597 | ||
| 4,362 | 1,894 | 7,953 | (1,195) | 13,014 | |||
| 1 Required capital is shown net of implicit items permitted by local regulators to cover minimum solvency margins. | |||||||
| Net worth | Value of in-force
covered business |
Embedded value | ||||||
|---|---|---|---|---|---|---|---|---|
| 31 December 2004 £m |
Restated* 31 December 2003 £m |
31 December 2004 £m |
Restated* 31 December 2003 £m |
31 December 2004 £m |
Restated* 31 December 2003 £m |
|||
| United Kingdom1 | 1,933 | 1,995 | 3,681 | 3,205 | 5,614 | 5,200 | ||
| Europe (excluding UK) | ||||||||
| France | 1,121 | 1,012 | 698 | 547 | 1,819 | 1,559 | ||
| Ireland | 281 | 270 | 334 | 307 | 615 | 577 | ||
| Italy | 424 | 348 | 114 | 87 | 538 | 435 | ||
| Netherlands (including Belgium and Luxembourg) | 1,454 | 1,267 | 1,023 | 1,087 | 2,477 | 2,354 | ||
| Poland | 188 | 148 | 369 | 306 | 557 | 454 | ||
| Spain | 222 | 187 | 362 | 259 | 584 | 446 | ||
| Other | 149 | 140 | 64 | 44 | 213 | 184 | ||
| International | 484 | 468 | 113 | 74 | 597 | 542 | ||
| 6,256 | 5,835 | 6,758 | 5,916 | 13,014 | 11,751 | |||
| * Restated for the effect of implementing European Embedded Value principles. | ||||||||
| 1 The UK net worth shown above is £146 million lower than that previously reported under achieved profits and relates to the reclassification of NUER’s VIF from net worth to the present value of future in-force. | ||||||||
The shareholders’ net worth is the market value of the shareholders’ funds and the shareholders’ interest in the surplus held in the non-profit component of the long-term business funds, determined on a statutory solvency basis and adjusted to add back any non-admissible assets. Required capital, net of implicit items, of £4,362 million at 31 December 2004 (31 December 2003: £4,114 million) is included within the net worth.
The value of in-force covered business includes the effect of holding shareholders’ capital to support the level of required capital and allowing for projected future releases. This impact reduces the value of in-force covered business at 31 December 2004 by £1,195 million (31 December 2003: £1,049 million).
