7 New business by product1

For the year ended 31 December 2014

Annual premiums

Present value of annual premiums

Capitali­sation factor2

Single premiums

PVNBP

Contri­bution from new business3

Margin

£m

£m

 

£m

£m

£m

%

1.

Covered business only.

2.

The capitalisation factor is the present value of annual premiums divided by the amount of annual premiums.

3.

The contribution from new business is defined as the present value at the point of sale of assumed profits from new business written in the period and then rolled forward to the end of the financial period using the risk discount rate applicable at the end of the reporting period.

UK Insurance

230

1,336

5.8

1,336

112

8.4

Overseas business

41

300

7.3

394

694

7

1.0

UK Savings

654

2,448

3.7

2,738

5,186

27

0.5

Total LGAS

925

4,084

4.4

3,132

7,216

146

2.0

LGR

n/a

n/a

6,578

6,578

614

9.3

LGA

91

907

10.0

907

90

9.9

Total new business

1,016

4,991

4.9

9,710

14,701

850

5.8

Cost of capital

 

 

 

 

 

108

 

Contribution from new business before cost of capital

 

 

 

 

 

958

 

For the year ended 31 December 2013

Annual premiums

Present value of annual premiums

Capitalisation factor2

Single premiums

PVNBP

Contribution from new business3

Margin

£m

£m

 

£m

£m

£m

%

1.

Covered business only.

2.

The capitalisation factor is the present value of annual premiums divided by the amount of annual premiums.

3.

The contribution from new business is defined as the present value at the point of sale of assumed profits from new business written in the period and then rolled forward to the end of the financial period using the risk discount rate applicable at the end of the reporting period.

4.

LGR includes present value of annual premiums for longevity insurance on a net of reinsurance basis to enable a more representative margin figure. The gross of reinsurance longevity insurance annual premium is £270m. The LGR PVNBP contribution from new business and margin are also inclusive of longevity insurance.

UK Insurance

218

1,141

5.2

1,141

101

8.9

Overseas business

30

229

7.6

371

600

5

0.8

UK Savings

724

2,516

3.5

2,495

5,011

2

Total LGAS

972

3,886

4.0

2,866

6,752

108

1.6

LGR4

n/a

939

n/a

4,089

5,028

436

8.7

LGA

99

926

9.4

926

107

11.6

Total new business

1,071

5,751

5.4

6,955

12,706

651

5.1

Cost of capital

 

 

 

 

 

72

 

Contribution from new business before cost of capital

 

 

 

 

 

723