Preliminary results - 12 months ended 31 December 2006 01 March 2007
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 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 equivalent | Present value of new business premiums | New business contribution before the effect of required capital | New business margin before the effect of required capital1 | |||||
|---|---|---|---|---|---|---|---|---|
| 2006 £m | 2005 £m | 2006 £m | 2005 £m | 2006 £m | 2005 £m | 2006 % | 2005 % | |
| Life and pensions | ||||||||
| France | 391 | 384 | 3,552 | 3,530 | 153 | 135 | 4.3% | 3.8% |
| Ireland | 190 | 100 | 1,273 | 665 | 15 | 16 | 1.2% | 2.4% |
| Italy | 323 | 252 | 2,768 | 2,294 | 70 | 59 | 2.5% | 2.6% |
| Netherlands (including Belgium, Germany and Luxembourg) | 270 | 323 | 2,346 | 2,739 | 56 | 90 | 2.4% | 3.3% |
| Poland | 72 | 47 | 534 | 320 | 28 | 16 | 5.2% | 5.0% |
| Spain | 248 | 240 | 2,059 | 2,013 | 184 | 175 | 8.9% | 8.7% |
| Other Europe | 63 | 51 | 308 | 240 | (4) | (1) | (1.3)% | (0.4)% |
| Continental Europe | 1,557 | 1,397 | 12,840 | 11,801 | 502 | 490 | 3.9% | 4.2% |
| Asia | 107 | 63 | 685 | 396 | 26 | 20 | 3.8% | 5.1% |
| Australia | 58 | 64 | 297 | 337 | 17 | 16 | 5.7% | 4.7% |
| United States | 97 | 66 | 884 | 527 | 20 | 13 | 2.3% | 2.5% |
| Rest of the World | 262 | 193 | 1,866 | 1,260 | 63 | 49 | 3.4% | 3.9% |
| International | 1,819 | 1,590 | 14,706 | 13,061 | 565 | 539 | 3.8% | 4.1% |
| United Kingdom | 1,439 | 1,155 | 11,146 | 9,185 | 327 | 269 | 2.9% | 2.9% |
| Total (before the effect of required capital) | 3,258 | 2,745 | 25,852 | 22,246 | 892 | 808 | 3.5% | 3.6% |
Germany has been reclassified from Other Europe to the Netherlands, Lithuania has been reclassified from Other Europe to Poland and Norwich Union’s Dublin-based offshore life and savings business has been reclassified from Other Europe to the United Kingdom.
- New business margin represents the ratio of new business contribution before the effect of required capital to PVNBP, expressed as a percentage.
New business contribution before the effect of required capital includes minority interests in 2006 of £175 million (2005: £156 million). This comprises minority interests in France of £24 million (2005: £19 million), Ireland £3 million (2005: nil), Italy £41 million (2005: £35 million), Netherlands £9 million (2005: £10 million), Poland £4 million (2005: £2 million), Spain £93 million (2005: £89 million), Other Europe nil (2005: £1 million) and Asia £1 million (2005: 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 | |||
|---|---|---|---|---|---|---|
| 2006 £m | 2005 £m | 2006 £m | 2005 £m | 2006 % | 2005 % | |
| France | 3,552 | 3,530 | 110 | 91 | 3.1% | 2.6% |
| Ireland | 1,273 | 665 | 9 | 13 | 0.7% | 2.0% |
| Italy | 2,768 | 2,294 | 50 | 36 | 1.8% | 1.6% |
| Netherlands (including Belgium, Germany and Luxembourg) | 2,346 | 2,739 | 25 | 58 | 1.1% | 2.1% |
| Poland | 534 | 320 | 25 | 14 | 4.7% | 4.4% |
| Spain | 2,059 | 2,013 | 168 | 155 | 8.2% | 7.7% |
| Other Europe | 308 | 240 | (6) | (4) | (1.9)% | (1.7)% |
| Continental Europe | 12,840 | 11,801 | 381 | 363 | 3.0% | 3.1% |
| Asia | 685 | 396 | 22 | 16 | 3.2% | 4.0% |
| Australia | 297 | 337 | 9 | 9 | 3.0% | 2.7% |
| United States | 884 | 527 | 8 | 7 | 0.9% | 1.3% |
| Rest of the World | 1,866 | 1,260 | 39 | 32 | 2.1% | 2.5% |
| International | 14,706 | 13,061 | 420 | 395 | 2.9% | 3.0% |
| United Kingdom | 11,146 | 9,185 | 263 | 217 | 2.4% | 2.4% |
| Total (after the effect of required capital) | 25,852 | 22,246 | 683 | 612 | 2.6% | 2.8% |
Germany has been reclassified from Other Europe to the Netherlands, Lithuania has been reclassified from Other Europe to Poland and Norwich Union's Dublin-based offshore life and savings business has been reclassified from Other Europe to the United Kingdom.
- New business margin represents the ratio of new business contribution after deducting the effect of required capital to PVNBP, expressed as a percentage.
New business contribution after the effect of required capital includes minority interests in 2006 of £142 million (2005: £120 million). This comprises minority interests in France of £15 million (2005: £10 million), Ireland £1 million (2005: nil), Italy £29 million (2005: £21 million), Netherlands £7 million (2005: £7 million), Poland £3 million (2005: £2 million), Spain £86 million (2005: £79 million), Other Europe nil (2005: £1 million) and Asia £1 million (2005: nil).
