(i) Analysis of investment contract liabilities
(Download XLS:)  |
|
|
Notes |
Gross |
Reinsurance |
Gross |
Reinsurance |
|---|---|---|---|---|---|
|
Participating investment contracts |
|
7,323 |
– |
7,139 |
(1) |
|
Non-participating investment contracts |
253,426 |
(233) |
234,502 |
(180) | |
|
Investment contract liabilities |
260,749 |
(233) |
241,641 |
(181) | |
|
Expected to be settled within 12 months (net of reinsurance) |
|
40,745 |
|
43,675 |
|
|
Expected to be settled after 12 months (net of reinsurance) |
|
219,771 |
|
197,785 |
|
(ii) Movement in investment contract liabilities
| (Download XLS:) |
|
|
Gross |
Reinsurance |
Gross |
Reinsurance |
|---|---|---|---|---|
|
As at 1 January |
241,641 |
(181) |
203,690 |
(138) |
|
Reserves in respect of new business |
30,088 |
(1,474) |
37,618 |
(750) |
|
Amounts paid on surrenders and maturities during the year |
(38,647) |
1,029 |
(32,382) |
571 |
|
Investment return and related benefits |
28,064 |
393 |
33,221 |
136 |
|
Management charges |
(322) |
– |
(313) |
– |
|
Foreign exchange adjustments |
(75) |
– |
(193) |
– |
|
As at 31 December |
260,749 |
(233) |
241,641 |
(181) |
Fair value movements of £(27,604)m (2009: £(24,317)m) are included within the income statement arising from movements in investment contract liabilities designated as FVTPL.
(iii) Non-participating investment contract liability fair value hierarchy
| (Download XLS:) |
|
As at 31 December 2010 |
Total |
Level 1 |
Level 2 |
Level 3 |
Amortised |
|---|---|---|---|---|---|
|
Non-participating investment contracts |
253,426 |
252,823 |
579 |
24 |
– |
|
|
|
|
|
|
|
|
As at 31 December 2009 |
Total |
Level 1 |
Level 2 |
Level 3 |
Amortised |
|
Non-participating investment contracts |
234,502 |
234,318 |
152 |
32 |
– |
The fair value of financial liabilities are, in certain circumstances, measured using valuation techniques that incorporate assumptions that are not evidenced by prices from observable current market transactions in the same instrument and are not based on observable market data.
Non-participating unit linked investment contracts include £24m (2009: £32m) valued using significant unobservable inputs and have been classified as level 3. These liabilities have limited transactions and are backed by property investments.
There have been no significant transfers between any of the levels.
(iv) Expected investment contract liability cash flows
| (Download XLS:) |
|
|
Date of undiscounted cash flow |
|
| |||
|---|---|---|---|---|---|---|
|
As at 31 December 2010 |
0-5 |
5-15 |
15-25 |
Over |
Total |
Carrying |
|
Participating investment contracts |
3,037 |
4,116 |
1,933 |
774 |
9,860 |
7,323 |
|
|
|
|
|
|
|
|
|
|
Date of undiscounted cash flow |
|
| |||
|
As at 31 December 2009 |
0-5 |
5-15 |
15-25 |
Over |
Total |
Carrying |
|
Participating investment contracts |
2,880 |
3,729 |
1,980 |
1,113 |
9,702 |
7,139 |
Investment contract undiscounted net cash flows are based on the expected date of settlement.
Amounts under unit linked contracts are generally repayable on demand and the Group is responsible for ensuring there is sufficient liquidity within the asset portfolio to enable liabilities to unit linked policyholders to be met as they fall due. However, the terms of funds investing in less liquid assets permit the deferral of redemptions for predefined periods in circumstances where there are not sufficient liquid assets within the fund to meet the level of requested redemptions. Accordingly unit linked liabilities have been excluded from the reported cash flows.
A maturity analysis based on the earliest contractual repayment date would present investment contract liabilities as due on the earliest period of the table because policyholders can exercise cancellation options at their discretion. In such a scenario, the liability would be reduced due to the application of surrender penalties.
