Group embedded value – summary

 

Covered business

 

 

For the year ended 31 December 2014

UK business
£m

LGAS overseas business
£m

LGA
£m

Non-covered business
£m

Total
£m

1.

UK intra-group distributions primarily reflect a £675m dividend paid from LGAS to group, and dividends of €35m (2013: €16m) from LGN and £5m from Nationwide Life (2013: £10m) paid to LGAS. Dividends of $76m (2013: $69m) from LGA and €2m (2013: €2m) from LGF were paid to group.

2.

The transfer to non-covered business represents the IFRS profits arising in the year from the provisions of investment management services by LGIM to the UK covered business, which have been included in the operating profit of the covered business on the look through basis.

3.

The other reserve movements primarily reflect the effect of reinsurance arrangement transactions between UK and US covered business, pension deficit movement, movement in the savings related share options scheme, and intra-group capital contribution.

4.

The number of shares in issue at 31 December 2014 was 5,942,070,229 (31 December 2013: 5,917,066,636).

At 1 January 2014

 

 

 

 

 

Value of in-force business (VIF)

4,693

197

699

5,589

Shareholder net worth (SNW)

3,249

315

234

199

3,997

Embedded value at 1 January 2014

7,942

512

933

199

9,586

Exchange rate movements

(30)

44

(16)

(2)

Operating profit/(loss) after tax for the year

1,264

31

(68)

107

1,334

Non-operating profit/(loss) after tax for the year

709

(11)

(11)

(5)

682

Profit/(loss) for the year

1,973

20

(79)

102

2,016

Intra-group distributions1

(641)

(30)

(46)

717

Dividends to equity holders of the Company

(580)

(580)

Transfer to non-covered business2

(26)

26

Other reserve movements including pension deficit3

389

(125)

(309)

(45)

Embedded value at 31 December 2014

9,637

472

727

139

10,975

 

 

 

 

 

 

Value of in-force business

6,118

147

518

6,783

Shareholder net worth

3,519

325

209

139

4,192

 

 

 

 

 

 

Embedded value per share (p)4

 

 

 

 

185

Further analysis of the LGAS and LGR covered business can be found in Note 2.

 

Covered business

 

 

For the year ended 31 December 2013

UK business
£m

LGAS overseas business
£m

LGA
£m

Non-covered business
£m

Total
£m

1.

UK intra-group distributions reflect a £625m dividend paid from LGAS to group, and dividends of £10m paid to LGAS from subsidiaries (primarily Nationwide Life). Dividends of €16m from LGN were also paid to LGAS. Dividends of $69m from LGA and €2m from LGF were paid to group.

2.

The transfer to non-covered business represents the IFRS profits arising in the year from the provisions of investment management services by LGIM to the UK covered business, which have been included in the operating profit of the covered business on the look through basis.

3.

The other reserve movements reflect the pension deficit movement, the movement of investment project costs from covered to non-covered business and the effect of reinsurance arrangement transactions between UK and US covered business.

4.

The number of shares in issue at 31 December 2013 was 5,917,066,636.

At 1 January 2013

 

 

 

 

 

Value of in-force business (VIF)

4,402

146

735

5,283

Shareholder net worth (SNW)

3,178

296

239

(96)

3,617

Embedded value at 1 January 2013

7,580

442

974

(96)

8,900

Exchange rate movements

9

(14)

(10)

(15)

Operating profit after tax for the year

804

16

70

168

1,058

Non-operating profit/(loss) for the year

222

60

(24)

(17)

241

Profit for the year

1,026

76

46

151

1,299

Intra-group distributions1

(602)

(15)

(44)

661

Dividends to equity holders of the Company

(479)

(479)

Transfer to non-covered business2

(27)

27

Other reserve movements including pension deficit3

(35)

(29)

(55)

(119)

Embedded value at 31 December 2013

7,942

512

933

199

9,586

 

 

 

 

 

 

Value of in-force business

4,693

197

699

5,589

Shareholder net worth

3,249

315

234

199

3,997

 

 

 

 

 

 

Embedded value per share (p)4

 

 

 

 

162

Further analysis of the LGAS and LGR covered business can be found in Note 2.