8. Non-long-term business economic volatility

8 – Non-long-term business economic volatility

	Non-long-term business
	2009 £m	2008 £m
Net investment income	1,373	522
Internal charges included under other heading	(193)	(73)
	1,180	449
Analysed between:
Longer-term investment return, reported within operating profit	1,085	1,268
Short-term fluctuations in investment return, reported outside operating profit	95	(819)
	1,180	449

The longer-term investment return is calculated separately for each principal non long-term business unit. In respect of equities and properties, the return is calculated by multiplying the opening market value of the investments, adjusted for sales and purchases during the year, by the longer-term rate of investment return. The longer-term rate of investment return is determined using consistent assumptions between operations, having regard to local economic and market forecasts of investment return. The allocated longer-term return for other investments is the actual income receivable for the period. Actual income and longer-term investment return both contain the amortisation of the discount/premium arising on the acquisition of fixed income securities.

For the general insurance, health and other businesses, we have calculated the longer-term investment return using the revised economic assumptions for equities and properties as noted above. The change in the underlying reference rate results in a £18 million increase to operating profit. There is no impact on IFRS profit before tax.

For other operations, the longer-term investment return mainly reflects net interest income earned in Delta Lloyd bank and retail mortgage divisions.

The total assets supporting the non-long-term business, which contribute towards the longer-term return are:

	2009 £m	2008 £m
Debt securities	12,764	12,910
Equity securities	1,699	1,573
Properties	549	602
Cash and cash equivalents	2,634	3,028
Other	5,198	5,285
Total	22,844	23,398

The principal assumptions underlying the calculation of the longer term investment return are:

	Longer term rates of return equities		Longer term rates of return property
	2009	2008	2009	2008
United Kingdom	7.0%	9.2%	5.5%	7.7%
France	7.3%	8.3%	5.8%	6.8%
Ireland	7.3%	8.3%	5.8%	6.8%
Delta Lloyd	7.3%	8.3%	5.8%	6.8%
Canada	6.1%	7.7%	4.6%	6.2%