Preliminary results - 12 months ended 31 December 2006 01 March 2007
Segmental analysis of life and related businesses embedded value
| Net worth | Value of in-force covered business | Total | |||
|---|---|---|---|---|---|
| 31 December 2006 | Required capital1 £m | Free surplus £m | Present value of in-force £m | Cost of required capital £m | Embedded value £m |
| France | 1,143 | 250 | 1,142 | (244) | 2,291 |
| Ireland | 254 | 143 | 535 | (40) | 892 |
| Italy | 320 | 329 | 206 | (63) | 792 |
| Netherlands (including Belgium, Germany and Luxembourg) | 1,067 | 1,701 | 1,461 | (362) | 3,867 |
| Poland | 105 | 107 | 540 | (33) | 719 |
| Spain | 273 | 37 | 606 | (59) | 857 |
| Other Europe | 18 | 25 | 75 | (12) | 106 |
| Continental Europe | 3,180 | 2,592 | 4,565 | (813) | 9,524 |
| United States2 | 618 | 211 | 794 | (145) | 1,478 |
| Other | 182 | 125 | 204 | (51) | 460 |
| Rest of the World | 800 | 336 | 998 | (196) | 1,938 |
| International | 3,980 | 2,928 | 5,563 | (1,009) | 11,462 |
| United Kingdom | 1,334 | 641 | 5,103 | (442) | 6,636 |
| Total | 5,314 | 3,569 | 10,666 | (1,451) | 18,098 |
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.
- Required capital is shown net of implicit items permitted by local regulators to cover minimum solvency margins.
- AmerUs holding company debt amounting to £362 million at 31 December 2006 has been included within non-insurance.
| Net worth | Value of in-force covered business | Embedded value | ||||
|---|---|---|---|---|---|---|
| 2006 £m | 2005 £m | 2006 £m | 2005 £m | 2006 £m | 2005 £m | |
| France | 1,393 | 1,264 | 898 | 803 | 2,291 | 2,067 |
| Ireland | 397 | 286 | 495 | 353 | 892 | 639 |
| Italy | 649 | 602 | 143 | 114 | 792 | 716 |
| Netherlands (including Belgium, Germany and Luxembourg) | 2,768 | 2,204 | 1,099 | 933 | 3,867 | 3,137 |
| Poland | 212 | 214 | 507 | 445 | 719 | 659 |
| Spain | 310 | 262 | 547 | 463 | 857 | 725 |
| Other Europe | 43 | 42 | 63 | 54 | 106 | 96 |
| Continental Europe | 5,772 | 4,874 | 3,752 | 3,165 | 9,524 | 8,039 |
| United States | 829 | 254 | 649 | 77 | 1,478 | 331 |
| Other | 307 | 289 | 153 | 106 | 460 | 395 |
| Rest of the World | 1,136 | 543 | 802 | 183 | 1,938 | 726 |
| International | 6,908 | 5,417 | 4,554 | 3,348 | 11,462 | 8,765 |
| United Kingdom | 1,975 | 1,803 | 4,661 | 4,545 | 6,636 | 6,348 |
| Total | 8,883 | 7,220 | 9,215 | 7,893 | 18,098 | 15,113 |
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.
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 £5,314 million at 31 December 2006 (31 December 2005: £4,448 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 2006 by £1,451 million (31 December 2005: £1,187 million).
The embedded value at the end of 2006 includes minority interests of £1,387 million (2005: £1,000 million). This comprises minority interests in France of £162 million (2005: £148 million), Ireland £216 million (2005: nil), Italy £413 million (2005: £365 million), Netherlands £102 million (2005: £70 million), Poland £118 million (2005: £107 million), Spain £366 million (2005: £310 million) and Other £10 million (2005: nil).
