9 Assets analysis.

9 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 Long term fund (LTF) and in the LTF of Legal & General Assurance (Pensions Management) Limited. 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, which comprise of Annuities, Protection and Non profit savings products in UK business.

  • 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 and general insurance.

The table overleaf presents an analysis of the balance sheet by category. All of the quantitative risk disclosures in Note 16 and 17 have been provided using this categorisation.

(XLS:) Assets analysis – balance sheet analysis by category 2013

As at 31 December 2013

Share­holder
£m

Non profit non-unit linked
£m

With-profits
£m

Unit linked
£m

Total
£m

Assets

 

 

 

 

 

Goodwill and Purchased interests in long term business

287

18

76

381

Investment in associates and joint ventures

89

12

101

Property, plant and equipment

86

31

12

129

Investments1

9,107

34,184

17,380

294,581

355,252

Reinsurers’ share of contract liabilities

312

2,271

1

313

2,897

Other operational assets

2,035

975

289

1,088

4,387

Total assets

11,916

37,479

17,770

295,982

363,147

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Core borrowings

2,513

(60)

2,453

Operational borrowings

447

2

185

70

704

Participating contract liabilities

15

14,847

576

15,438

Non-participating contract liabilities

2,078

34,384

2,223

280,342

319,027

Other liabilities1

2,560

1,716

493

15,056

19,825

Total liabilities

7,598

36,117

17,748

295,984

357,447

(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 £17m (2012: £102m) as a deduction to non profit non-unit linked investments and other liabilities.

Assets

 

 

 

 

 

Goodwill and Purchased interests in long term business

104

20

87

211

Investment in associates and joint ventures

60

27

87

Property, plant and equipment

64

17

11

92

Investments1

9,323

33,364

18,605

277,149

338,441

Reinsurers’ share of contract liabilities

310

1,961

3

225

2,499

Other operational assets

2,198

971

340

1,360

4,869

Total assets

12,059

36,333

19,073

278,734

346,199

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Core borrowings

2,515

(70)

2,445

Operational borrowings

620

2

173

125

920

Participating contract liabilities

19

16,097

314

16,430

Non-participating contract liabilities

2,051

31,763

2,378

266,494

302,686

Other liabilities1

2,559

3,447

449

11,783

18,238

Total liabilities

7,745

35,231

19,097

278,646

340,719

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