Interim results for 6 months ended 30 June 2006
Sensitivity analysis – non-economic assumptions
The tables below show the sensitivity of the embedded value as at 30 June 2006 and the new business contribution before the effect of required capital for the six months to 30 June 2006 to the following changes in non-economic assumptions:
- 10% decrease in maintenance expenses (a 10% sensitivity on a base expense assumption of £10pa would represent an expense assumption of £9pa). Where there is a “look through” into service company expenses, the fee charged by the service company is unchanged while the underlying expense decreases;
- 10% decrease in lapse rates (a 10% sensitivity on a base assumption of 5%pa would represent a lapse rate of 4.5%pa);
- 10% decrease in both mortality and morbidity rates.
No future management actions are modelled in reaction to the changing non-economic assumptions. In each sensitivity calculation, all other assumptions remain unchanged.
| Embedded value (net of tax) 30 June 2006 |
As reported in the Segmental analysis £m |
10% decrease in maintenance expenses £m |
10% decrease in lapse rates £m |
10% decrease in mortality/ morbidity rates £m |
|---|---|---|---|---|
| France | 2,181 | 30 | 25 | 35 |
| Ireland | 956 | 20 | 15 | - |
| Italy | 765 | 5 | - | 5 |
| Netherlands (including Belgium, Germany and Luxembourg) | 3,343 | 65 | 15 | (45) |
| Poland | 599 | 20 | 35 | 15 |
| Spain | 749 | 10 | 35 | 15 |
| Other | 98 | - | 5 | - |
| Continental Europe | 8,691 | 150 | 130 | 25 |
| Rest of the World | 710 | 10 | 10 | 20 |
| International | 9,401 | 160 | 140 | 45 |
| United Kingdom | 6,131 | 195 | 75 | (125) |
| Total | 15,532 | 355 | 215 | (80) |
| New business contribution before required capital (gross
of tax) 6 months to 30 June 2006 |
As reported in the New business contribution £m |
10% decrease in maintenance expenses £m |
10% decrease in lapse rates £m |
10% decrease in mortality/ morbidity rates £m |
|---|---|---|---|---|
| France | 87 | 3 | 4 | 4 |
| Ireland | 11 | 1 | 1 | - |
| Italy | 38 | 1 | 1 | 1 |
| Netherlands (including Belgium, Germany and Luxembourg) | 34 | 5 | 2 | 1 |
| Poland | 14 | 1 | 2 | 2 |
| Spain | 88 | 2 | 9 | 5 |
| Other | (4) | - | (1) | - |
| Continental Europe | 268 | 13 | 18 | 13 |
| Rest of the World | 24 | 1 | 2 | 1 |
| International | 292 | 14 | 20 | 14 |
| United Kingdom | 167 | 17 | 12 | 14 |
| Total | 459 | 31 | 32 | 28 |
