New business contribution
The following tables set out the premium volumes and contribution from new business written by the life and related businesses, consistent with the definition of new business set out in Basis of preparation – EEV basis.
The contribution generated by new business written during the period is the present value of the projected stream of after tax distributable profit from that business. New business contribution before tax is calculated by grossing up the contribution after tax at the full corporation tax rate for UK business and at appropriate rates of tax for other countries. New business contribution has been calculated using the same economic assumptions as those used to determine the embedded value as at the start of the year and operating assumptions used to determine the embedded value as at the end of the year, and is rolled forward to the end of the financial period.
New business sales are expressed on two bases: annual premium equivalent (APE) and the present value of future new business premiums (PVNBP). The PVNBP calculation is equal to total single premium sales received in the year plus the discounted value of regular premiums expected to be received over the term of the new contracts, and is expressed at the point of sale. The premium volumes and projection assumptions used to calculate the present value of regular premiums for each product are the same as those used to calculate new business contribution, so the components of the new business margin are on a consistent basis.
New business contribution is shown before and after the effect of required capital, calculated on the same basis as for in-force covered business.
| Annual premium equivalent1 | Present value of new business premiums | New business contribution before the effect of required capital |
New business contribution after the effect of required capital |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 6 months 2005 £m |
Restated* 6 months 2004 £m |
6 months 2005 £m |
6 months 2004 £m |
6 months 2005 £m |
Restated* 6 months 2004 £m |
6 months 2005 £m |
Restated* 6 months 2004 £m |
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| Life and pensions business | |||||||||||
| United Kingdom | 536 | 567 | 4,244 | 4,299 | 135 | 127 | 105 | 106 | |||
| Continental Europe | |||||||||||
| France | 202 | 145 | 1,854 | 1,337 | 71 | 46 | 48 | 27 | |||
| Ireland | 51 | 44 | 349 | 267 | 9 | 13 | 8 | 11 | |||
| Italy | 145 | 89 | 1,333 | 811 | 33 | 22 | 20 | 14 | |||
| Netherlands (including Belgium and Luxembourg) | 138 | 119 | 1,241 | 981 | 39 | 40 | 18 | 25 | |||
| Poland | 17 | 18 | 112 | 121 | 5 | 5 | 5 | 4 | |||
| Spain | 113 | 130 | 965 | 1,122 | 80 | 68 | 70 | 55 | |||
| Other Europe | 55 | 58 | 364 | 388 | 3 | 1 | 2 | (2) | |||
| International | 89 | 74 | 554 | 427 | 18 | 16 | 10 | 11 | |||
| Total (before the effect of required capital) | 1,346 | 1,244 | 11,016 | 9,753 | 393 | 338 | |||||
| Effect of required capital | (107) | (87) | |||||||||
| Total (after the effect of required capital) | 286 | 251 | 286 | 251 | |||||||
| 1 United Kingdom APE has been restated to include NUER APE volumes of £18 million (six months 30 June 2004: £20 million) | |||||||||||
| * Restated for the effect of implementing European Embedded Value Principles. | |||||||||||
New business contribution before the effect of required capital includes minority interests for the six months to 30 June 2005 of £77 million (six months to 30 June 2004: £56 million). This comprises minority interests in France of £11 million (six months to 30 June 2004: £2 million), Italy £20 million (six months to 30 June 2004: £13 million), Netherlands £5 million (six months to 30 June 2004: £5 million), Poland £1 million (six months to 30 June 2004: £1 million) and Spain £40 million (six months to 30 June 2004: £35 million).
New business contribution after the effect of required capital includes minority interests for the six months to 30 June 2005 of £58 million (six months to 30 June 2004: £42 million). This comprises minority interests in France of £6 million (six months to 30 June 2004: nil), Italy £12 million (six months to 30 June 2004: £8 million), Netherlands £4 million (six months to 30 June 2004: £4 million), Poland £1 million (six months to 30 June 2004: £1 million) and Spain £35 million (six months to 30 June 2004: £29 million).