Worldwide long-term savings new business – nine months to 30 September 2006
Supplement 1
Present value of life new business premiums
The present value of new business premiums (PVNBP) is derived from the single 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.
| 9 months 2006 |
9 months 2005 | ||||||
|---|---|---|---|---|---|---|---|
| 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 | 295 | 5.3 | 1,550 | 1,650 | 3,200 | 1,867 | |
| Group pensions | 69 | 5.7 | 393 | 447 | 840 | 727 | |
| Annuities | - | - | - | 1,161 | 1,161 | 1,240 | |
| Bonds | - | - | - | 2,532 | 2,532 | 1,860 | |
| Protection | 126 | 5.0 | 627 | 196 | 823 | 714 | |
| Equity release | - | - | - | 235 | 235 | 278 | |
| Total life and pensions | 490 | 5.2 | 2,570 | 6,221 | 8,791 | 6,686 | |
| France | |||||||
| Euro funds 1 | 7 | 5.3 | 37 | 1,338 | 1,375 | 1,450 | |
| Unit-linked funds | 34 | 6.3 | 213 | 1,019 | 1,232 | 1,034 | |
| Protection business | 16 | 6.8 | 108 | 2 | 110 | 109 | |
| Total life and pensions | 57 | 6.3 | 358 | 2,359 | 2,717 | 2,593 | |
| Ireland | |||||||
| Life and savings | 26 | 4.8 | 125 | 379 | 504 | 167 | |
| Pensions | 47 | 4.5 | 212 | 186 | 398 | 337 | |
| Total life and pensions | 73 | 4.6 | 337 | 565 | 902 | 504 | |
| Italy | |||||||
| Life and savings | 65 | 6.2 | 405 | 1,654 | 2,059 | 1,816 | |
| Total life and pensions | 65 | 6.2 | 405 | 1,654 | 2,059 | 1,816 | |
| Netherlands (including Belgium, Germany and Luxembourg) | |||||||
| Life | 62 | 6.9 | 429 | 268 | 697 | 976 | |
| Pensions | 51 | 8.6 | 438 | 554 | 992 | 1,032 | |
| Total life and pensions | 113 | 7.7 | 867 | 822 | 1,689 | 2,008 | |
| Poland | |||||||
| Life and savings | 21 | 5.1 | 108 | 105 | 213 | 122 | |
| Pensions | 15 | 7.5 | 112 | 60 | 172 | 100 | |
| Total life and pensions | 36 | 6.1 | 220 | 165 | 385 | 222 | |
| Spain | |||||||
| Life and savings | 50 | 6.2 | 310 | 698 | 1,008 | 1,098 | |
| Pensions | 22 | 5.6 | 124 | 162 | 286 | 255 | |
| Total life and pensions | 72 | 6.0 | 434 | 860 | 1,294 | 1,353 | |
| Other Europe | |||||||
| Life and pensions | 42 | 3.7 | 156 | 59 | 215 | 182 | |
| Total life and pensions | 42 | 3.7 | 156 | 59 | 215 | 182 | |
| Rest of the World | |||||||
| Asia | 55 | 4.6 | 251 | 204 | 455 | 250 | |
| Australia | 27 | 3.3 | 89 | 124 | 213 | 253 | |
| United States | 5 | 4.6 | 23 | 385 | 408 | 393 | |
| Total Life and pensions | 87 | 4.2 | 363 | 713 | 1,076 | 896 | |
| International total life and pensions | 545 | 5.8 | 3,140 | 7,197 | 10,337 | 9,574 | |
| Total | 1,035 | 5.5 | 5,710 | 13,418 | 19,128 | 16,260 | |
- Euro funds are savings that receive an annual bonus declaration, based on the investment performance of the underlying funds.
