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 below presents an analysis of the balance sheet by category. All of the quantitative risk disclosures in Note 17 and Note 18 have been provided using this categorisation.

As at 31 December 2014

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 £nil (2013: £17m) as a deduction to non profit non-unit linked investments and other liabilities.

Assets

 

 

 

 

 

Goodwill and Purchased interests in long term business

337

14

70

421

Investment in associates and joint ventures

149

149

Property, plant and equipment

132

14

146

Investments1

9,590

47,379

15,242

319,264

391,475

Reinsurers’ share of contract liabilities

332

2,238

(13)

349

2,906

Other operational assets

2,216

944

313

983

4,456

Total assets

12,756

50,575

15,626

320,596

399,553

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Core borrowings

3,053

(76)

2,977

Operational borrowings

367

2

205

141

715

Participating contract liabilities

14

14,336

671

15,021

Non-participating contract liabilities

2,087

45,786

404

290,157

338,434

Other liabilities1

3,318

3,370

661

28,754

36,103

Total liabilities

8,825

49,172

15,606

319,647

393,250

As at 31 December 2013

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 £nil (2013: £17m) as a deduction to non profit non-unit linked investments and other liabilities.

2.

Total assets and total liabilities have been restated to reflect the adoption by the group of IFRS 10, ‘Consolidated Financial Statements’. Further details are contained in Note 1.

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

9,290

34,184

17,391

297,489

358,354

Reinsurers’ share of contract liabilities

312

2,271

1

313

2,897

Other operational assets

2,035

975

289

1,094

4,393

Total assets2

12,099

37,479

17,781

298,896

366,255

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Core borrowings

2,513

(60)

2,453

Operational borrowings

448

2

194

131

775

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

2,742

1,716

495

17,702

22,655

Total liabilities2

7,781

36,117

17,759

298,691

360,348