Time value of options and guarantees
The following table sets out the time value of options and guarantees relating to covered business by territory at 30 June 2005, 30 June 2004 and 31 December 2004.
| 30 June 2005 £m |
30 June 2004 £m |
31 December 2004 £m |
|
|---|---|---|---|
| United Kingdom | 44 | 35 | 44 |
| Continental Europe | |||
| France | 81 | 66 | 79 |
| Ireland | 2 | 6 | 4 |
| Italy | 12 | 11 | 14 |
| Netherlands (including Belgium and Luxembourg) | 97 | 72 | 92 |
| Poland | 4 | 4 | 5 |
| Spain | 8 | 10 | 9 |
| Other Europe | 16 | 10 | 18 |
| International | 12 | 8 | 9 |
| 276 | 222 | 274 |
The time value of options and guarantees (TVOG) is most significant in the United Kingdom, France and the Netherlands. In the United Kingdom, this relates mainly to non-market value adjustment (MVA) guarantees on unitised with-profit business and guaranteed annuity rates. In France, this relates mainly to guaranteed crediting rates and surrender values on traditional business including the AFER fund. In the Netherlands, this relates mainly to maturity guarantees on unit linked products and interest rate guarantees on traditional individual and group profit sharing business.
The TVOG has largely remained unchanged over the period. The total movement in the period from 31 December 2004 includes an increase of £12 million due to the 50 basis points fall in bond yields in continental Europe during 2005 together with the allowance included in new business contribution of £12 million which have largely been offset by the favourable impacts of investment returns and exchange rates.
