Preliminary results - 12 months ended 31 December 2005
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.
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 contribution is shown before and after the effect of required capital, calculated on the same basis as for in-force covered business.
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.
| Annual premium equivalent1 | Present value of new business premiums | New business contribution before the effect of required capital | New business margin before the effect of required capital2 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2005 £m |
2004 £m |
2005 £m |
2004 £m |
2005 £m |
2004 £m |
2005 % |
2004 % |
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|
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| Life and pensions | |||||||||||
| United Kingdom | 1,142 | 1,166 | 9,053 | 9,172 | 265 | 269 | 2.9% | 2.9% | |||
| France | 384 | 307 | 3,530 | 2,782 | 135 | 95 | 3.8% | 3.4% | |||
| Ireland | 100 | 86 | 665 | 561 | 16 | 19 | 2.4% | 3.4% | |||
| Italy | 252 | 198 | 2,294 | 1,799 | 59 | 48 | 2.6% | 2.7% | |||
| Netherlands (including Belgium and | |||||||||||
| Luxembourg) | 271 | 261 | 2,407 | 2,168 | 88 | 80 | 3.7% | 3.7% | |||
| Poland | 42 | 37 | 285 | 241 | 14 | 11 | 4.9% | 4.6% | |||
| Spain | 240 | 248 | 2,013 | 2,110 | 175 | 143 | 8.7% | 6.8% | |||
| Other Europe | 121 | 124 | 739 | 804 | 7 | 5 | 0.9% | 0.6% | |||
| Continental Europe | 1,410 | 1,261 | 11,933 | 10,465 | 494 | 401 | 4.1% | 3.9% | |||
| International | 193 | 171 | 1,260 | 1,024 | 49 | 36 | 3.9% | 3.4% | |||
| Total (before the effect of required capital) | 2,745 | 2,598 | 22,246 | 20,661 | 808 | 706 | 3.6% | 3.4% | |||
New business contribution before the effect of required capital includes minority interests in 2005 of £156 million (2004: £121 million). This comprises minority interests in France of £19 million (2004: £7 million), Italy £35 million (2004: £27 million), Netherlands £10 million (2004: £10 million), Poland £2 million (2004: £2 million), Spain £89 million (2004: £75 million) and Other Europe £1 million (2004: nil).
| Life and pensions | Present value of new business premiums | New business contribution after the effect of required capital | New business margin after the effect of required capital1 | |||||
|---|---|---|---|---|---|---|---|---|
| 2005 £m |
2004 £m |
2005 £m |
2004 £m |
2005 % |
2004 % |
|||
|
||||||||
| United Kingdom2 | 9,053 | 9,172 | 213 | 215 | 2.4% | 2.3% | ||
| France | 3,530 | 2,782 | 91 | 54 | 2.6% | 1.9% | ||
| Ireland | 665 | 561 | 13 | 16 | 2.0% | 2.9% | ||
| Italy | 2,294 | 1,799 | 36 | 34 | 1.6% | 1.9% | ||
| Netherlands (including Belgium and Luxembourg) | 2,407 | 2,168 | 57 | 43 | 2.4% | 2.0% | ||
| Poland | 285 | 241 | 13 | 9 | 4.6% | 3.7% | ||
| Spain | 2,013 | 2,110 | 155 | 121 | 7.7% | 5.7% | ||
| Other Europe | 739 | 804 | 2 | – | 0.3% | – | ||
| Continental Europe | 11,933 | 10,465 | 367 | 277 | 3.1% | 2.6% | ||
| International | 1,260 | 1,024 | 32 | 24 | 2.5% | 2.3% | ||
| Total (after the effect of required capital) | 22,246 | 20,661 | 612 | 516 | 2.8% | 2.5% | ||
New business contribution after the effect of required capital includes minority interests in 2005 of £120 million (2004: £94 million). This comprises minority interests in France of £10 million (2004: £1 million), Italy £21 million (2004: £19 million), Netherlands £7 million (2004: £8 million), Poland £2 million (2004: £2 million), Spain £79 million (2004: £64 million) and Other Europe £1 million (2004: nil).
