A13 Unallocated divisible surplus

A13 – Unallocated divisible surplus

An unallocated divisible surplus (UDS) is established where the nature of policy benefits is such that the division between shareholder reserves and policyholder liabilities is uncertain. This note shows the movements in this surplus during the year.

The following movements have occurred in the year:

	2009 £m	2008 £m
Carrying amount at 1 January	2,325	6,785
Change in participating contract assets	(1,314)	(12,022)
Change in participating contract liabilities	3,836	7,699
Effect of special bonus to with-profit policyholders (see note A14)	(69)	(89)
Effect of reattribution of inherited estate (see note A14)	(881)	—
Other movements	(25)	(70)
Change in liability recognised as an expense	2,428	(4,482)
Effect of portfolio transfers, acquisitions and disposals	(4)	—
Movement in respect of change in pension scheme deficit	(24)	(78)
Foreign exchange rate movements	43	88
Other movements	(21)	12
Carrying amount at 31 December	3,866	2,325

In Italy the UDS balances were £92 million negative in total at 31 December 2009 (2008: France, Italy and Spain £924 million negative, 2007: Italy £116 million negative) because of an accounting mismatch between participating assets carried at market value and participating liabilities measured using local practice. In each case, the negative balance is considered to be recoverable from margins in the existing participating business liabilities.