Interim results - 6 months ended 30 June 2007
Operating and financial review
Bancassurance margins - before required capital, tax and minority interests
The weighted average bancassurance new business margin before the effect of required capital in the six months was 4.5% (2006: 4.7%). This reduction mainly reflects the impact of a change in business mix in Spain and lower volumes and tighter product margins in the Netherlands; offset by increased margins in the UK, Ireland and Italy. After the effect of required capital, the bancassurance margin was 3.8% (2006: 3.9%).
| Total life and pensions | Present value of new business premiums | New business contribution(1) | New business margin(2) | |||
|---|---|---|---|---|---|---|
| 6 months 2007 £m | 6 months 2006 £m | 6 months 2007 £m | 6 months 2006 £m | 6 months 2007 % | 6 months 2006 % | |
| United Kingdom | 575 | 501 | 24 | 16 | 4.2% | 3.2% |
| France | 417 | 504 | 19 | 23 | 4.6% | 4.6% |
| Ireland | 435 | 223 | 9 | 4 | 2.1% | 1.8% |
| Italy | 1,799 | 1,559 | 49 | 37 | 2.7% | 2.4% |
| Netherlands | 199 | 258 | 7 | 11 | 3.5% | 4.3% |
| Europe | 3,862 | 3,356 | 171 | 161 | 4.4% | 4.8% |
| Asia Pacific | 820 | 816 | 178 | 167 | 178 | 167 |
| United | 104 | 101 | 10 | 10 | 9.6% | 9.9% |
| Total bancassurance channels | 4,541 | 3,958 | 205 | 187 | 4.5% | 4.7% |
(1) Before effect of required capital which amounted to £32 million (2006: £32 million)
(2) New business margin represents the ratio of new business contribution to present value of new business premiums, expressed as a percentage.
United Kingdom
New business margin from Norwich Union's bancassurance partnership with RBSG improved to 4.2% (2006: 3.2%) reflecting economies of scale from higher volumes (up 15%) and a more profitable product mix.
Europe
In France, the new business margin of our bancassurance joint venture was stable at 4.6% (2006: 4.6%). In Ireland, Ark Life's new business margin was 2.1% (2006: 1.8%) driven by new product development and pricing. The new business bancassurance margin in Italy increased to 2.7% (2006: 2.4%), reflecting a change in business mix. In Spain, our bancassurance partnerships produced a margin of 8.6% (2006: 10.6%) reflecting a change in business mix, with higher sales of lower margin savings products and lower sales of protection products linked to mortgages. Our bancassurance agreement with ABN AMRO in the Netherlands generated a margin of 3.5% (2006: 4.3%) reflecting a change in business mix and tighter product margins.
Asia Pacific
The new business bancassurance margin from our partnership with DBS in Singapore and Hong Kong remained high at 9.6% (2006: 9.9%) reflecting the profitable growth of these developing operations.
