8 Assets analysis.

The Group has categorised its assets and liabilities in the following disclosure in accordance with the level of shareholder exposure to market and credit risks. The four categorisations presented are:

  • Unit linked

For unit linked contracts, there is a direct link between the investments and the obligations. Unit linked business is written in both the Society LTF and in the LTF of PMC. The financial risk on these contracts is borne by the policyholders. The Group is, therefore, not directly exposed to any market risk, currency risk or credit risk for these contracts. As a result, risk disclosures have not been presented for unit linked assets and liabilities.

  • With-profits

Policyholders and shareholders share in the risks and returns of the with-profits part of the Society LTF. The return to shareholders on virtually all participating products is in the form of a transfer to shareholders’ equity, which is analogous to a dividend from the Society LTF and is dependent upon the bonuses credited or declared on policies in that year. The bonuses are broadly based on historic and current rates of return on equity, property and fixed income securities, as well as expectations of future investment returns. With-profits also includes participating business in the LGF operation which shares similar characteristics. The with-profits classification excludes unit linked contracts.

  • Non profit non-unit linked

Shareholders are exposed to the risk and rewards of ownership of assets backing non profit non-unit linked business held within UK LTFs.

  • Shareholder

All other assets are classified as shareholder assets. Shareholders of the Group are directly exposed to market and credit risk on these assets. This includes the assets and liabilities of our overseas insurance operations.

The table below presents an analysis of the balance sheet by category. All of the quantitative risk disclosures in Note 7 (Asset risk) have been provided using this categorisation.

(XLS:) Assets analysis – balance sheet analysis by category 2012

As at 31 December 2012

Share­holder
£m

Non profit non–unit linked
£m

With–profits
£m

Unit linked
£m

Total
£m

1.

For risk management purposes, bespoke consolidated CDOs are considered on a net basis. Accordingly, the table above presents derivative liabilities of £102m (2011: £203m) as a deduction to non profit non–unit linked investments and other liabilities.

Assets

 

 

 

 

 

Purchased interests in long term business

104

20

87

211

Investment in associates

60

27

87

Plant and equipment

64

17

11

92

Investments1

9,323

33,364

18,605

277,149

338,441

Reinsurers’ share of participating insurance contracts

1

1

Reinsurers’ share of non-participating insurance contracts

310

1,961

14

2,285

Reinsurers’ share of participating investment contracts

2

2

Reinsurers’ share of non-participating investment contracts

211

211

Other operational assets

2,198

971

340

1,360

4,869

Total assets

12,059

36,333

19,073

278,734

346,199

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Subordinated borrowings

1,907

(17)

1,890

Participating contract liabilities

19

16,097

314

16,430

Non-participating contract liabilities

2,051

31,763

2,378

266,494

302,686

Senior borrowings

1,228

2

173

72

1,475

Other liabilities1

2,559

3,447

449

11,783

18,238

Total liabilities

7,745

35,231

19,097

278,646

340,719

(XLS:) Assets analysis – balance sheet analysis by category 2011

As at 31 December 2011 (Restated)

Share­holder
£m

Non profit non–unit linked
£m

With–profits
£m

Unit linked
£m

Total
£m

1.

For risk management purposes, bespoke consolidated CDOs are considered on a net basis. Accordingly, the table above presents derivative liabilities of £102m (2011: £203m) as a deduction to non profit non–unit linked investments and other liabilities.

Assets

 

 

 

 

 

Purchased interests in long term business

107

4

37

148

Investment in associates

60

60

Plant and equipment

69

9

78

Investments1

9,104

30,314

18,927

261,063

319,408

Reinsurers’ share of participating insurance contracts

1

1

Reinsurers’ share of non-participating insurance contracts

311

1,788

8

8

2,115

Reinsurers’ share of non-participating investment contracts

11

162

173

Other operational assets

2,190

965

279

879

4,313

Total assets

11,841

33,071

19,272

262,112

326,296

  

  

  

  

  

  

Liabilities

 

 

 

 

 

Subordinated borrowings

1,934

(13)

1,921

Participating contract liabilities

1

23

16,583

215

16,822

Non-participating contract liabilities

2,368

27,966

2,110

252,907

285,351

Senior borrowings

1,147

97

85

1,329

Other liabilities1

2,788

3,631

450

8,882

15,751

Total liabilities

8,238

31,620

19,240

262,076

321,174