4 Analysis of experience variances and operating assumption changes.

(XLS:) Notes to the Supplementary Financial Statements – analysis of experience variances and operating assumption changes 2012

 

P&A and Savings

US Protection

For the year ended 31 December 2012

Experience variances
£m

Operating assumption changes
£m

Total
£m

Experience variances
£m

Operating assumption changes
£m

Total
£m

Persistency

(18)

(6)

(24)

(14)

(14)

Mortality/morbidity

12

(15)

(3)

(4)

(18)

(22)

Expenses

(11)

(17)

(28)

Other

29

27

56

(41)

(41)

 

12

(11)

1

(59)

(18)

(77)

2012 P&A and Savings negative persistency experience reflects higher than expected lapses in unit linked bonds.

2012 operating assumption changes in P&A and Savings have been driven by negative mortality and demorgraphic assumption changes in the annuity business and higher investment expense assumptions, largely offset by positive impacts reflecting changes in UK tax legislation.

2012 US Protection modelling and other experience variances mostly relate to additional reserving associated with the introduction of AG38 regulatory requirements.

2012 operating assumption changes in US Protection mostly relate to higher mortality assumptions on unit linked secondary guarantee business.

(XLS:) Notes to the Supplementary Financial Statements – analysis of experience variances and operating assumption changes 2011

 

P&A and Savings

US Protection

For the year ended 31 December 2011

Experience variances
£m

Operating assumption changes
£m

Total
£m

Experience variances
£m

Operating assumption changes
£m

Total
£m

Persistency

(1)

6

5

9

(21)

(12)

Mortality/morbidity

(35)

(10)

(45)

(17)

(52)

(69)

Expenses

(7)

56

49

Other

130

43

173

158

11

169

 

87

95

182

150

(62)

88

2011 P&A and Savings mortality experience variances primarily relates to our group protection business which was impacted by a number of high value claims which predominantly occurred during H1 11.

2011 P&A and Savings expense operating assumption changes reflects the change in long term expense assumptions in protection business and changes in the modelled long term unit cost and investment expenses assumptions in non profit savings and pensions.

Adverse US Protection persistency and mortality operating assumptions changes mainly relate to term assurances in the period after the end of the guaranteed level premium period when premiums increase.

The domicile of a US captive structure was moved from Bermuda to Vermont which results in an acceleration of the emergence of surplus, and as a consequence increases the present value of the in-force business.