Worldwide long-term savings new business – twelve months to 31 December 2005
Supplement 1
Present value of life new business premiums
The present value of new business premiums (PVNBP) is derived from the single premiums and regular premiums of the products sold during the financial period and is expressed at the point of sale.
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. 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.
The discounted value of regular premiums is also expressed as annualised regular premiums multiplied by a Weighted Average Capitalisation Factor (WACF). The WACF will vary over time depending on the mix of new products sold, the average outstanding term of the new contracts and the projection assumptions. The table below sets out the factors required to derive the present value of regular premiums by business units, and combined with single premium sales derives the present value of future new business premiums.
| 31 December 2005 | 31 December 2004 | ||||||
|---|---|---|---|---|---|---|---|
| Regular premiums £m |
Weighted average capitalisation factor |
Present value of regular premiums £m |
Single premiums £m |
Present value of new business premiums £m |
Present value of new business premiums £m |
||
| United Kingdom | |||||||
| Individual pensions | 257 | 5.0 | 1,290 | 1,307 | 2,597 | 3,115 | |
| Group pensions | 80 | 5.5 | 441 | 578 | 1,019 | 980 | |
| Annuities | - | - | - | 1,585 | 1,585 | 1,278 | |
| Bonds | - | - | - | 2,483 | 2,483 | 2,260 | |
| Protection1 | 148 | 5.1 | 749 | 620 | 1,369 | 1,539 | |
| Total life and pensions | 485 | 5.1 | 2,480 | 6,573 | 9,053 | 9,172 | |
| France | |||||||
| Euro funds2 | 14 | 5.0 | 70 | 1,899 | 1,969 | 1,820 | |
| Unit-linked funds | 41 | 6.0 | 247 | 1,176 | 1,423 | 818 | |
| Protection business | 21 | 6.5 | 136 | 2 | 138 | 144 | |
| Total life and pensions | 76 | 6.0 | 453 | 3,077 | 3,530 | 2,782 | |
| Ireland | |||||||
| Life and savings | 15 | 5.3 | 80 | 136 | 216 | 168 | |
| Pensions | 48 | 4.4 | 213 | 236 | 449 | 393 | |
| Total life and pensions | 63 | 4.7 | 293 | 372 | 665 | 561 | |
| Italy | |||||||
| Life and savings | 58 | 6.1 | 354 | 1,940 | 2,294 | 1,799 | |
| Total life and pensions | 58 | 6.1 | 354 | 1,940 | 2,294 | 1,799 | |
| Netherlands (including Belgium and Luxembourg) | |||||||
| Life | 70 | 7.5 | 528 | 406 | 934 | 1,118 | |
| Pensions | 76 | 8.3 | 634 | 839 | 1,473 | 1,050 | |
| Total life and pensions | 146 | 8.0 | 1,162 | 1,245 | 2,407 | 2,168 | |
| Poland | |||||||
| Life and savings | 17 | 4.3 | 73 | 74 | 147 | 106 | |
| Pensions | 13 | 7.1 | 92 | 46 | 138 | 135 | |
| Total life and pensions | 30 | 5.3 | 165 | 120 | 285 | 241 | |
| Spain | |||||||
| Life and savings | 64 | 6.5 | 414 | 1,085 | 1,499 | 1,358 | |
| Pensions | 36 | 5.7 | 204 | 310 | 514 | 752 | |
| Total life and pensions | 100 | 6.2 | 618 | 1,395 | 2,013 | 2,110 | |
| Other Europe | |||||||
| Life and pensions | 80 | 4.2 | 333 | 406 | 739 | 804 | |
| Rest of the World | |||||||
| Life and pensions | 113 | 4.1 | 462 | 798 | 1,260 | 1,024 | |
| Total | 1,151 | 5.5 | 6,320 | 15,926 | 22,246 | 20,661 | |
- United Kingdom includes single premiums of £374 million (2004: £478 million) in respect of NUER included in Protection business.
- Euro funds are savings that receive an annual bonus declaration, based on the investment performance of the underlying funds.
