Preliminary results - 12 months ended 31 December 2005
Segmental analysis of life and related businesses embedded value
| 31 December 2005 | Net worth | Value of in-force covered business | Total | ||||
|---|---|---|---|---|---|---|---|
| Required capital1 £m |
Free surplus £m |
Present value of in-force £m |
Cost of required capital £m |
Embedded value £m |
|||
| |||||||
| United Kingdom | 1,120 | 673 | 4,916 | (396) | 6,313 | ||
| Continental Europe | |||||||
| France | 1,131 | 133 | 1,009 | (206) | 2,067 | ||
| Ireland | 144 | 142 | 372 | (19) | 639 | ||
| Italy | 285 | 317 | 170 | (56) | 716 | ||
| Netherlands (including Belgium and Luxembourg) | 1,024 | 1,068 | 1,253 | (321) | 3,024 | ||
| Poland | 104 | 109 | 464 | (30) | 647 | ||
| Spain | 243 | 19 | 515 | (52) | 725 | ||
| Other | 90 | 75 | 116 | (25) | 256 | ||
| International | 307 | 236 | 265 | (82) | 726 | ||
| 4,448 | 2,772 | 9,080 | (1,187) | 15,113 | |||
| Net worth | Value of in-force covered business | Embedded value | ||||||
|---|---|---|---|---|---|---|---|---|
| 2005 £m |
2004 £m |
2005 £m |
2004 £m |
2005 £m |
2004 £m |
|||
| United Kingdom | 1,793 | 1,933 | 4,520 | 3,681 | 6,313 | 5,614 | ||
| Continental Europe | ||||||||
| France | 1,264 | 1,121 | 803 | 698 | 2,067 | 1,819 | ||
| Ireland | 286 | 281 | 353 | 334 | 639 | 615 | ||
| Italy | 602 | 424 | 114 | 114 | 716 | 538 | ||
| Netherlands (including Belgium and Luxembourg) | 2,092 | 1,454 | 932 | 1,023 | 3,024 | 2,477 | ||
| Poland | 213 | 188 | 434 | 369 | 647 | 557 | ||
| Spain | 262 | 222 | 463 | 362 | 725 | 584 | ||
| Other | 165 | 149 | 91 | 64 | 256 | 213 | ||
| International | 543 | 484 | 183 | 113 | 726 | 597 | ||
| 7,220 | 6,256 | 7,893 | 6,758 | 15,113 | 13,014 | |||
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 £4,448 million at 31 December 2005 (31 December 2004: £4,362 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 2005 by £1,187 million (31 December 2004: £1,195 million).
The embedded value at the end of 2005 includes minority interests of £1,000 million (2004: £796 million). This comprises minority interests in France of £148 million (2004: £120 million), Italy £365 million (2004: £276 million), Netherlands £70 million (2004: £59 million), Poland £106 million (2004: £90 million), Spain £310 million (2004: £244 million) and Other Europe £1 million (2004: £7 million).
