Interim results 2012 - part 3 MCEV

Companies

Old Mutual Limited NPV (DI) (OMU)

UK 100

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Adjusted Group MCEV by line of business
At 30 June 2012
				£m
	Notes	At 30 June 2012	At 30 June 2011	At 31 December 2011
MCEV of the core covered business (Long Term Savings)	B3	5,875	6,147	5,713
Adjusted net worth¹		2,368	2,491	2,204
Value of in-force business		3,507	3,656	3,509
MCEV of the non-core covered business (Bermuda)	B3	141	300	66
Adjusted net worth		232	407	187
Value of in-force business		(91)	(107)	(121)
MCEV of the discontinued covered business (Nordic)²	B3	-	1,501	1,433
Adjusted net worth		-	200	285
Value of in-force business		-	1,301	1,148

Adjusted net worth of asset management and other businesses		1,847	2,127	1,955
Emerging Markets		460	483	499
Wealth Management		215	193	179
US Asset Management		1,172	1,487	1,270
Nordic²		-	(36)	7

Value of the banking business		3,517	3,847	3,286
Nedbank (market value)		3,481	3,484	2,935
Emerging Markets (adjusted net worth)		36	16	29
Nordic (adjusted net worth)²		-	347	322

Value of the general insurance business
Mutual & Federal (adjusted net worth)		292	322	294

Net other business³		1,068	379	175
Adjustment for present value of Black Economic Empowerment scheme deferred consideration		273	299	270
Adjustment for value of own shares in ESOP schemes⁴		106	113	117

Market value of perpetual preferred securities	A2(d)	(481)	(464)	(465)
Market value of perpetual preferred callable securities	A2(d)	(637)	(690)	(605)
Market value of subordinated debt	A2(d)	(1,341)	(2,041)	(1,445)
Adjusted Group MCEV⁵		10,660	11,840	10,794

Adjusted Group MCEV per share (pence)		218.1	214.1	194.1
Number of shares in issue at the end of the financial period less treasury shares - millions⁶		4,887	5,529	5,562
¹Adjusted net worth is after the elimination of inter-company loans.
²The sale of the Nordic business unit was completed during the current period.
³Includes any other business that is not included within the main lines of business, largely Old Mutual parent company IFRS equity net of Group adjustments, consolidation adjustments in respect of intercompany transactions and debt, Bermuda asset management and the proceeds from the sale of the Nordic business unit.
⁴Includes adjustment for value of excess own shares in employee share scheme trusts.
⁵The results for the six months ended 30 June 2011 have been restated to reflect the consolidation of the Rest of Africa businesses into the results of the Emerging Markets business.
⁶The Group cancelled 239 million treasury shares on 13 January 2012.
As part of the disposal of the Nordic business unit a seven for eight share consolidation was proposed and approved. For adjusted Group MCEV per share, the weighted average number of shares is effective from 23 April 2012.

Adjusted operating Group MCEV statement of earnings
For the six months ended 30 June 2012
				£m
	Notes	6 months ended 30 June 2012	6 months ended 30 June 2011	Year ended 31 December 2011
Long Term Savings
Covered business	B2	264	358	714
Asset management and other business		72	82	123
Banking		6	-	15
		342	440	852
Nedbank
Banking		406	359	755
Mutual & Federal
General insurance		34	47	89
US Asset Management
Asset management		42	39	67
Other operating segments
Finance costs¹		(88)	(74)	(155)
Corporate costs²		(18)	(21)	(43)
Other shareholders' income/(expenses)		13	5	(18)
Adjusted operating Group MCEV earnings before tax from core operations		731	795	1,547
¹This includes interest payable from Old Mutual plc to non-core operations of £13 million for 6 months ended 30 June 2012 (June 2011: £13 million; December 2011: £27 million).
²Central costs of £7 million are allocated to the covered business and provisioned in the VIF (June 2011: £7 million December 2011: £14 million). Hence net corporate costs under MCEV of £18 million (June 2011: £21 million; December 2011: £43 million) differ from the IFRS amount of £25 million (June 2011: £28 million; December 2011: £57 million).

Adjusted operating Group MCEV earnings per share
For the six months ended 30 June 2012
					£m
Six months ended 30 June 2012	Notes	Core continuing operations	Non-core continuing operations	Discontinued operations	Total
Adjusted operating Group MCEV earnings before tax		731	23	28	782
Covered business	B2	264	23	18	305
Other business		467	-	10	477
Tax on adjusted operating Group MCEV earnings		(197)	-	(3)	(200)
Covered business	B2	(60)	-	-	(60)
Other business		(137)	-	(3)	(140)

Adjusted operating Group MCEV earnings after tax		534	23	25	582
Non-controlling interests
Ordinary shares		(134)	-	-	(134)
Preferred securities		(30)	-	-	(30)
Adjusted operating MCEV earnings after tax attributable to equity holders		370	23	25	418
Adjusted operating Group MCEV earnings per share¹		7.1	0.4	0.5	8.0
Adjusted weighted average number of shares - millions					5,231

	£m
Six months ended 30 June 2011	Notes	Core continuing operations	Non-core continuing operations	Discontinued operations	Total
Adjusted operating Group MCEV earnings before tax		795	11	88	894
Covered business	B2	358	11	78	447
Other business		437	-	10	447
Tax on adjusted operating Group MCEV earnings		(195)	(2)	(17)	(214)
Covered business	B2	(76)	(2)	(15)	(93)
Other business		(119)	-	(2)	(121)

Adjusted operating Group MCEV earnings after tax		600	9	71	680
Non-controlling interests
Ordinary shares		(120)	-	-	(120)
Preferred securities		(31)	-	-	(31)
Adjusted operating MCEV earnings after tax attributable to equity holders		449	9	71	529
Adjusted operating Group MCEV earnings per share¹		8.3	0.2	1.3	9.8
Adjusted weighted average number of shares - millions					5,397

	£m
Year ended 31 December 2011	Notes	Core continuing operations	Non-core continuing operations	Discontinued operations	Total
Adjusted operating Group MCEV earnings before tax		1,547	48	173	1,768
Covered business	B2	714	48	156	918
Other business		833	-	17	850
Tax on adjusted operating Group MCEV earnings		(364)	(1)	(31)	(396)
Covered business	B2	(162)	(1)	(28)	(191)
Other business		(202)	-	(3)	(205)

Adjusted operating Group MCEV earnings after tax		1,183	47	142	1,372
Non-controlling interests
Ordinary shares		(255)	-	-	(255)
Preferred securities		(62)	-	-	(62)
Adjusted operating MCEV earnings after tax attributable to equity holders		866	47	142	1,055
Adjusted operating Group MCEV earnings per share¹		15.9	0.9	2.6	19.4
Adjusted weighted average number of shares - millions					5,435
¹Adjusted operating Group MCEV earnings per share is calculated on the same basis as adjusted operating Group MCEV earnings, but is stated after tax and non-controlling interests. It excludes income attributable to Black Economic Empowerment trusts of listed subsidiaries. The calculation of the adjusted weighted average number of shares includes own shares held in policyholders' funds and Black Economic Empowerment trusts.

Group market consistent embedded value statement of earnings
For the six months ended 30 June 2012
				£m
	Notes	6 months ended 30 June 2012	6 months ended 30 June 2011	Year ended 31 December 2011
Adjusted operating Group MCEV earnings before tax from core operations		731	795	1,547
Adjusted operating Group MCEV earnings before tax from non-core operations	B2	23	11	48
Adjusted operating Group MCEV earnings before tax from continuing operations¹		754	806	1,595
Adjusting items from continuing operations	C3	175	161	(437)
Total Group MCEV earnings before tax from continuing operations		929	967	1,158
Income tax attributable to shareholders		(212)	(181)	(168)
Total Group MCEV earnings after tax from continuing operations		717	786	990
Total Group MCEV earnings after tax from discontinued operations		600	(6)	(15)
MCEV earnings after tax from discontinued operations²		6	(6)	(15)
Adjusted Group MCEV uplift from sale of Nordic		202	-	-
Other Group adjustments related to the Nordic disposal		392	-	-

Total Group MCEV earnings after tax for the financial period		1,317	780	975

Total Group MCEV earnings for the financial period attributable to:
Equity holders of the parent		1,160	637	674
Non-controlling interests
Ordinary shares		127	112	239
Preferred securities		30	31	62
Total Group MCEV earnings after tax for the financial period		1,317	780	975
Basic total Group MCEV earnings per ordinary share (pence)		23.4	12.5	13.1
Weighted average number of shares - millions		4,952	5,098	5,136
¹For long-term business and general insurance businesses, adjusted operating Group MCEV earnings are based on long-term and short-term investment returns respectively, include investment returns on life fund investments in Group equity and debt instruments, and are stated net of income tax attributable to policyholder returns. For the US asset management business it includes compensation costs in respect of certain long-term incentive schemes defined as non-controlling interests in accordance with IFRS. For all businesses, adjusted operating MCEV earnings exclude goodwill impairment, the impact of acquisition accounting, option revaluations related to long-term incentive schemes, the impact of closure of unclaimed shares trusts, profit/(loss) on acquisition/disposal of subsidiaries, associated undertakings and strategic investments, dividends declared to holders of perpetual preferred callable securities, and fair value (profits)/losses on certain Group debt instruments.
²For Nordic, these are composed of earnings before tax of £28 million (June 2011: £88 million; December 2011: £173 million), adjusting items of £(20) million (June 2011: £(79) million; December 2011: £(161) million) and tax of £(2) million (June 2011: £(15) million; December 2011: £(27) million). Further detail relating to adjusting items can be found in section C3.

Reconciliation of movements in Group and Adjusted Group MCEV (after tax)
							£m
		6 months ended 30 June 2012			6 months ended 30 June 2011
	Notes	Covered business MCEV	Non-covered business IFRS	Total Group MCEV	Covered business MCEV	Non-covered business IFRS	Total Group MCEV
Opening Group MCEV		7,212	2,516	9,728	7,515	2,386	9,901
Adjusted operating MCEV earnings	B4	245	173	418	354	175	529
Non-operating MCEV earnings		164	578	742	(27)	135	108
Total Group MCEV earnings		409	751	1,160	327	310	637
Other movements in IFRS net equity	C4	(1,605)	(110)	(1,715)	106	(128)	(22)
Closing Group MCEV		6,016	3,157	9,173	7,948	2,568	10,516
Adjustments to bring Group investments to market value	B1	-	1,487	1,487	-	1,324	1,324
Adjusted Group MCEV		6,016	4,644	10,660	7,948	3,892	11,840

				£m
		Year ended 31 December 2011
	Notes	Covered business MCEV	Non-covered business IFRS	Total Group MCEV
Opening Group MCEV		7,515	2,386	9,901
Adjusted operating MCEV earnings	B4	727	328	1,055
Non-operating MCEV earnings		(331)	(50)	(381)
Total Group MCEV earnings		396	278	674
Other movements in IFRS net equity	C4	(699)	(148)	(847)
Closing Group MCEV		7,212	2,516	9,728
Adjustments to bring Group investments to market value	B1	-	1,066	1,066
Adjusted Group MCEV		7,212	3,582	10,794

Interim results 2012 - part 3 MCEV

Significant corporate activities and business changes

A1: Basis of preparation

(a) Required capital

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UK 100

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The table below shows the level of required capital expressed as a percentage of the minimum local regulatory capital requirements
										£m
		At 30 June 2012			At 30 June 2011			At 31 December 2011
	Notes	Required capital (a)	Regulatory capital (b)	Ratio (a/b)	Required capital (a)	Regulatory capital (b)	Ratio (a/b)	Required capital (a)	Regulatory capital (b)	Ratio (a/b)
Emerging Markets¹	B3	1,371	1,019	1.3	1,525	1,187	1.3	1,368	1,012	1.4
Wealth Management²	B3	310	232	1.3	336	252	1.3	314	241	1.3
Bermuda³	B3	232	136	1.7	407	-	n/a	187	77	2.4
Nordic	B3	n/a	n/a	n/a	141	140	1.0	127	127	1.0
Total		1,913	1,387	1.4	2,409	1,579	1.5	1,996	1,457	1.4
¹The required capital and regulatory capital relating to the other African life businesses is included from 31 December 2011 results for Emerging Markets.
²Local regulators within many of the Wealth Management Europe countries allow intangible assets to be included as admissible regulatory capital. In such cases the required capital reported for MCEV is net of these items, although each of the countries continues to be sufficiently capitalised on the local solvency basis. Skandia Leben in Germany is permitted under local regulations to include the unallocated policyholder profit sharing liability as admissible capital.
³During December 2011, the BMA insurance (Prudential Standards) (Class E Solvency Requirements) Rules 2011 were formally signed into Bermudan law. The regulations allow for a transition period for the new capital requirement (75% for financial year 2012, 100% for financial year 2013). The required capital calculated on this statutory basis was approximately £136 million at 30 June 2012. As of 30 June 2012, we have determined the required capital as the adjusted net worth held in the business at that date as this exceeded the transitional capital requirement. However, in July 2012 it was agreed with the BMA that Bermuda business should now directly hold capital resources of £448 million, comparable to those required under Solvency II, as calculated by the Group's existing internal capital model, which were previously held centrally (this change is not reflected in the table above as it took place after 30 June 2012). The changes to required capital held locally that have taken place in July 2012 are not expected to have any material impact on the value of in-force business.

Capital held in respect of non-hedgeable risks			£m
	At 30 June 2012	At 30 June 2011	At 31 December 2011
Emerging Markets	897	765	808
Wealth Management	833	828	831
Bermuda	275	331	335
Nordic	n/a	325	290
Total	2,005	2,249	2,264



(d) Value of debt
Senior and subordinated debt securities are marked to market (for IFRS reporting, debt is valued at either book value or fair value). The table below shows the comparison of debt on an IFRS and MCEV basis.


		At 30 June 2012		At 30 June 2011		At 31 December 2011
Debt securities	Notes to the Consolidated Financial Statements	Book value	MCEV	Book value	MCEV	Book value	MCEV
£350 million perpetual preferred callable securities	E1	350	282	350	299	350	263
€500 million perpetual preferred callable securities	E1	338	355	338	391	338	342
US$750 million cumulative preference securities	E1	458	481	458	464	458	465
R3.0 billion repayable 27 October 2015 (8.9%)	E1 (e)	234	248	276	277	239	249
€2 million fixed rate note repayable December 2013		-	-	2	2	2	2
US$16.5 million secured senior debt repayable August 2014 (5.23%)	E1 (b)	11	11	10	10	11	11
€200 million (2010: €750 million) (4.5% to January 2012 and 6 month EURIBOR plus 0.96% thereafter)¹	E1 (e)	-	-	671	670	166	166
£500 million repayable 3 June 2021 (8.0%)²	E1 (e)	513	513	500	500	471	471
£500 million euro bond repayable October 2016 (7.125%)³	E1 (b)	504	569	503	551	504	546
US$50 million floating rate note repayable September 2011 (3 month LIBOR plus 0.35%) - repaid	E1 (a)	-	-	31	31	-	-
Value of debt		2,408	2,459	3,139	3,195	2,539	2,515
¹The principal and coupon on the bond were swapped at issue equally into Sterling and US dollars with coupons of six month GBP LIBOR plus 0.34% and six month USD LIBOR plus 0.31% respectively. During 2011 a €550 million partial repayment, together with settlements of associated currency swaps, was made. On 18 January 2012 the remaining €200 million was repaid on the first call date.
²The principal and coupon on the bond were initially swapped into floating rate Swedish Kroner, at three month STIBOR plus 5.46%. Following the Nordic sale, £375 million of the coupon is now swapped into floating rate sterling at six month GBP LIBOR plus 4.15% and £125 million of principal and coupon is swapped into US dollars at six month USD LIBOR plus 5.49%.
³This differs from the value in the Borrowed Funds note E1 (b) by the accrued interest at the end of the year, which is included within the book value of the debt in determining the MCEV market value uplift to maintain consistency and comparability with the market value.

Group holding Company expenses attributable to long-term business			%
	At 30 June 2012	At 30 June 2011	At 31 December 2011
Emerging Markets	18	17	17
Wealth Management	9	8	8
Nordic	-	4	3
Total	27	29	28

Risk free reference spot yields (excluding any applicable liquidity adjustments)
					%
	GBP	EUR	USD	ZAR	SEK
At 30 June 2012
1 year	1.0	0.9	0.5	5.5	-
5 years	1.4	1.3	1.0	6.5	-
10 years	2.2	2.0	1.8	7.6	-
20 years	3.0	2.4	2.5	7.8	-
At 30 June 2011
1 year	0.9	2.0	0.4	6.2	2.8
5 years	2.4	2.8	2.1	8.0	3.3
10 years	3.5	3.4	3.5	8.6	3.6
20 years	4.0	3.9	4.3	8.2	3.8
At 31 December 2011
1 year	1.4	1.4	0.7	5.7	2.1
5 years	1.6	1.7	1.2	7.1	2.3
10 years	2.4	2.4	2.1	8.1	2.5
20 years	3.0	2.7	2.6	8.1	2.1

Expense inflation
					%
	GBP	EUR	USD	ZAR	SEK
At 30 June 2012
1 year	3.0	2.5	3.0	5.9	-
5 years	3.2	2.5	3.0	6.3	-
10 years	3.5	2.5	3.0	7.1	-
20 years	4.1	2.5	3.0	7.1	-
At 30 June 2011
1 year	3.0	2.5	3.0	5.7	2.3
5 years	3.9	2.5	3.0	7.0	2.9
10 years	4.3	2.5	3.0	7.5	3.2
20 years	4.8	2.5	3.0	7.1	3.1
At 31 December 2011
1 year	3.0	2.5	3.0	6.1	1.3
5 years	3.4	2.5	3.0	7.0	2.2
10 years	3.8	2.5	3.0	7.7	2.5
20 years	4.3	2.5	3.0	7.5	2.6


(b) Volatilities and correlations

The at-the-money annualised asset volatility assumptions of the asset classes incorporated in the stochastic models are detailed below.

ZAR volatilities¹
					%
Option term	1 year swap	5 year swap	10 year swap	20 year swap	Equity (total return index)²
At 30 June 2012
1 year	31.9	26.0	23.1	22.9	23.3
5 years	22.0	21.3	21.5	22.3	28.2
10 years	21.0	22.2	23.1	23.0	26.8
20 years	25.1	24.9	24.7	23.6	28.9
At 30 June 2011
1 year	18.3	16.8	15.9	15.5	23.0
5 years	16.7	16.0	15.6	15.2	26.0
10 years	16.2	15.8	15.4	14.7	27.4
20 years	14.5	14.1	13.5	12.5	28.3
At 31 December 2011
1 year	30.6	25.0	23.1	23.3	26.2
5 years	21.9	21.5	22.4	23.0	28.4
10 years	22.9	23.8	24.0	23.5	26.8
20 years	25.8	25.7	25.1	23.7	29.0
¹Due to limited liquidity in the ZAR swaption market, the market consistent asset model has been calibrated by extrapolating swaption and equity implied volatility data beyond a term of one year and 5 years respectively for assumptions at 30 June 2012 and 31 December 2011 June 2011: (2 year and 3 years respectively).
²December 2011 Equity implied volatilities were restated for comparability following ESG enhancements.

USD volatilities
					%
Option term		1 year swap	5 year swap	10 year swap	20 year swap
At 30 June 2012
1 year		60.0	48.9	43.1	37.1
5 years		42.3	34.8	31.7	30.4
10 years		30.0	27.9	27.7	26.8
20 years		26.0	25.8	25.0	24.3
At 30 June 2011
1 year		72.3	43.3	33.8	26.4
5 years		25.0	23.4	21.4	18.0
10 years		20.1	20.3	18.7	15.5
20 years		17.2	17.8	16.1	14.1
At 31 December 2011
1 year		71.8	49.1	45.1	41.8
5 years		42.1	36.8	34.6	33.8
10 years		32.7	31.2	31.1	29.9
20 years		29.8	29.3	27.9	27.5


International equity volatilities (applicable to Bermuda)¹
									%
Option term	SPX	EWZ	TPX	HSCEI	TWY	KOSP12	NIFTY	SX5E	UKX
At 30 June 2012
1 year	22.9	31.7	25.9	26.5	21.4	21.9	20.4	24.7	22.0
5 years	26.0	31.5	27.0	28.8	23.3	22.8	26.0	24.3	24.6
10 years	26.0	31.5	27.0	28.8	23.3	22.8	26.0	24.3	24.6
At 30 June 2011
1 year	20.8	27.6	25.8	24.8	20.3	21.4	21.1	23.0	20.6
5 years	23.4	28.0	26.7	27.2	23.2	22.7	25.1	23.7	23.2
10 years	23.4	28.0	26.7	27.2	23.2	22.7	25.1	23.7	23.2
At 31 December 2011
1 year	25.0	35.9	26.7	31.5	26.1	25.1	25.6	27.2	23.9
5 years	27.8	34.8	28.0	32.3	25.0	24.6	25.2	25.3	25.0
10 years	27.8	34.8	28.0	32.3	25.0	24.6	25.2	25.3	25.0


International equity volatilities (applicable to Bermuda)¹
									%
Option term						EEM	USAgg	EUAgg	APAgg
At 30 June 2012
1 year						29.4	5.5	13.0	12.3
5 years						30.5	5.5	13.0	12.3
10 years						30.5	5.5	13.0	12.3
At 30 June 2011
1 year						26.4	5.4	12.9	12.5
5 years						28.0	5.4	12.9	12.5
10 years						28.0	5.4	12.9	12.5
At 31 December 2011
1 year						33.9	5.5	13.0	12.3
5 years						33.0	5.5	13.0	12.3
10 years						33.0	5.5	13.0	12.3
¹Long-term option implied volatility has been calibrated assuming a flat volatility term structure beyond 5 years due to limited data availability for some indices. The assumptions are shown as the annualised volatilities applicable over the entire option term specified, consistent with the disclosure of volatilities for other regions. These volatilities, as represented by their Bloomberg codes, refer to the price indices.

(e) Tax
The weighted average effective tax rates that apply to the cash flow projections at 30 June 2012 are set out below:

Weighted average effective tax rates			%
	At 30 June 2012	At 30 June 2011	At 31 December 2011
OMLAC(SA)¹	28	33	28
Wealth Management	12	15	13
Bermuda	-	-	-
Nordic	n/a	4	4
¹The reduction in weighted average effective tax rate for OMLAC(SA) from 30 June 2011 to 30 June 2012 is as a result of the new dividend withholding tax effective from 1 April 2012 as detailed in Note A2 (c).


B: Segment information
B1: Components of Group MCEV and Adjusted Group MCEV
				£m
	Notes	At 30 June 2012	At 30 June 2011	At 31 December 2011
Adjusted net worth attributable to ordinary equity holders of the parent		5,757	5,666	5,193
Equity		7,965	9,266	8,488
Adjustment to IFRS net asset value	C5	(1,520)	(2,912)	(2,607)
Adjustment to remove perpetual preferred callable securities		(688)	(688)	(688)
Value of in-force business		3,416	4,850	4,535
Present value of future profits		4,042	5,602	5,248
Additional time value of financial options and guarantees		(100)	(163)	(136)
Frictional costs		(245)	(268)	(243)
Cost of residual non-hedgeable risks		(281)	(321)	(334)

Group MCEV		9,173	10,516	9,728
Adjustments to bring Group investments to market value
Adjustment to bring listed subsidiary (Nedbank) to market value		1,159	969	655
Adjustment for value of own shares in ESOP schemes¹		106	113	117
Adjustment for present value of Black Economic Empowerment scheme deferred consideration¹		273	299	270
Adjustment to bring external debt to market value		(51)	(57)	24
Adjusted Group MCEV		10,660	11,840	10,794

Group MCEV value per share (pence)		187.7	190.2	174.9
Adjusted Group MCEV per share (pence)		218.1	214.1	194.1
Number of shares in issue at the end of the financial period less treasury shares - millions		4,887	5,529	5,562

Return on Group MCEV (ROEV) per annum from core operations		8.0%	9.2%	8.8%
Return on Group MCEV (ROEV) per annum from continuing non-core operations		0.5%	0.3%	0.5%
Return on Group MCEV (ROEV) per annum from discontinued operations		0.5%	1.5%	1.4%
Return on Group MCEV (ROEV²) per annum		9.0%	11.0%	10.7%
¹Includes adjustment for value of excess own shares in employee share scheme trusts. The movement in value between 31 December 2011 and 30 June 2012 is the net effect of the increase in the Old Mutual plc share price, the reduction in excess own shares following employee share grants in March 2011 and the reduction in overall shares held due to exercises of rights to take delivery of, or net settle, share grants during the financial period.
²The ROEV is calculated as the adjusted operating Group MCEV earnings after tax and non-controlling interests of £418 million (June 2011:£529 million; December 2011: £1,055 million) divided by the opening Group MCEV.

B: Segment information continued
B2: Adjusted operating MCEV earnings for the covered business
	£m
	Total covered business	Long Term Savings	Emerging Markets	Wealth Management	Bermuda	Nordic

Six months ended 30 June 2012
Adjusted operating Group MCEV earnings before tax	305	264	198	66	23	18
Tax on adjusted operating Group MCEV earnings	(60)	(60)	(54)	(6)	-	-
Adjusted operating Group MCEV earnings after tax	245	204	144	60	23	18

	£m
	Total covered business	Long Term Savings	Emerging Markets	Wealth Management	Bermuda	Nordic

Six months ended 30 June 2011
Adjusted operating Group MCEV earnings before tax	447	358	241	117	11	78
Tax on adjusted operating Group MCEV earnings	(93)	(76)	(53)	(23)	(2)	(15)
Adjusted operating Group MCEV earnings after tax	354	282	188	94	9	63

	£m
	Total covered business	Long Term Savings	Emerging Markets	Wealth Management	Bermuda	Nordic

Year ended 31 December 2011
Adjusted operating Group MCEV earnings before tax	918	714	468	246	48	156
Tax on adjusted operating Group MCEV earnings	(191)	(162)	(119)	(43)	(1)	(28)
Adjusted operating Group MCEV earnings after tax	727	552	349	203	47	128



										£m




	6 months ended 30 June 2011					Year ended 31 December 2011
	Free surplus	Required capital	Adjusted net worth	Value of in-force	MCEV	Free surplus	Required capital	Adjusted net worth	Value of in-force	MCEV
Opening MCEV	507	2,844	3,351	4,164	7,515	507	2,844	3,351	4,164	7,515
New business value	(231)	82	(149)	257	108	(444)	187	(257)	490	233
Expected existing business contribution (reference rate)	7	36	43	92	135	17	65	82	179	261
Expected existing business contribution (in excess of reference rate)	3	18	21	44	65	7	34	41	87	128
Transfers from VIF and required capital to free surplus	496	(119)	377	(377)	-	943	(236)	707	(707)	-
Experience variances	19	13	32	48	80	10	30	40	111	151
Assumption changes	2	-	2	(6)	(4)	23	4	27	1	28
Other operating variance	(21)	24	3	(33)	(30)	188	(205)	(17)	(57)	(74)
Operating MCEV earnings	275	54	329	25	354	744	(121)	623	104	727
Economic variances	38	(8)	30	(63)	(33)	(221)	(22)	(243)	(214)	(457)
Other non-operating variance	-	-	-	6	6	32	1	33	93	126
Total MCEV earnings	313	46	359	(32)	327	555	(142)	413	(17)	396
Closing adjustments	(131)	(481)	(612)	718	106	(382)	(706)	(1,088)	389	(699)
Capital and dividend flows	(56)	69	13	-	13	(243)	55	(188)	-	(188)
Foreign exchange variance	(11)	(101)	(112)	23	(89)	(75)	(312)	(387)	(306)	(693)
MCEV of acquired/sold business	(64)	(449)	(513)	695	182	(64)	(449)	(513)	695	182

Closing MCEV	689	2,409	3,098	4,850	7,948	680	1,996	2,676	4,536	7,212
Return on MCEV (RoEV)% per annum					9.9%					9.7%







										£m
	6 months ended 30 June 2011					Year ended 31 December 2011
	Free surplus	Required capital	Adjusted net worth	Value of in-force	MCEV	Free surplus	Required capital	Adjusted net worth	Value of in-force		MCEV
Opening MCEV	390	1,838	2,228	3,685	5,913	390	1,838	2,228	3,685		5,913
New business value	(202)	78	(124)	204	80	(390)	179	(211)	388		177
Expected existing business contribution (reference rate)	5	34	39	71	110	14	60	74	137		211
Expected existing business contribution (in excess of reference rate)	3	6	9	20	29	7	10	17	40		57
Transfers from VIF and required capital to free surplus	397	(91)	306	(306)	-	748	(179)	569	(569)		-
Experience variances	17	10	27	61	88	(5)	32	27	103		130
Assumption changes	1	-	1	(3)	(2)	9	4	13	27		40
Other operating variance	11	(8)	3	(26)	(23)	33	(28)	5	(68)		(63)
Operating MCEV earnings	232	29	261	21	282	416	78	494	58		552
Economic variances	39	(2)	37	(13)	24	23	(6)	17	(24)		(7)
Other non-operating variance	4	-	4	6	10	(7)	-	(7)	96		89
Total MCEV earnings	275	27	302	14	316	432	72	504	130		634
Closing adjustments	(35)	(4)	(39)	(43)	(82)	(300)	(228)	(528)	(306)		(834)
Capital and dividend flows	(25)	69	44	-	44	(232)	55	(177)	-		(177)
Foreign exchange variance	(10)	(73)	(83)	(43)	(126)	(68)	(283)	(351)	(306)		(657)
MCEV of acquired/sold business	-	-	-	-	-	-	-	-	-		-

Closing MCEV	630	1,861	2,491	3,656	6,147	522	1,682	2,204	3,509		5,713
Return on MCEV (RoEV)% per annum					10.0%						9.3%

										£m
	6 months ended 30 June 2011					Year ended 31 December 2011
	Free surplus	Required capital	Adjusted net worth	Value of in-force	MCEV	Free surplus	Required capital	Adjusted net worth	Value of in-force		MCEV
Opening MCEV	306	1,498	1,804	1,509	3,313	306	1,498	1,804	1,509		3,313
New business value	(93)	66	(27)	65	38	(189)	155	(34)	133		99
Expected existing business contribution (reference rate)	6	31	37	54	91	11	58	69	105		174
Expected existing business contribution (in excess of reference rate)	1	6	7	9	16	2	10	12	18		30
Transfers from VIF and required capital to free surplus	193	(75)	118	(118)	-	359	(150)	209	(209)		-
Experience variances	35	6	41	33	74	28	24	52	50		102
Assumption changes	-	-	-	-	-	1	4	5	1		6
Other operating variance	(21)	(2)	(23)	(8)	(31)	(7)	(11)	(18)	(44)		(62)
Operating MCEV earnings	121	32	153	35	188	205	90	295	54		349
Economic variances	29	4	33	(25)	8	1	8	9	23		32
Other non-operating variance	4	-	4	-	4	(7)	-	(7)	100		93
Total MCEV earnings	154	36	190	10	200	199	98	297	177		474
Closing adjustments	10	(9)	1	(79)	(78)	(105)	(228)	(333)	(287)		(620)
Capital and dividend flows	25	69	94	-	94	(39)	51	12	-		12
Foreign exchange variance	(15)	(78)	(93)	(79)	(172)	(66)	(279)	(345)	(287)		(632)
MCEV of acquired/sold business	-	-	-	-	-	-	-	-	-		-

Closing MCEV	470	1,525	1,995	1,440	3,435	400	1,368	1,768	1,399		3,167
Return on MCEV (RoEV)% per annum					13.3%						11.9%

										£m
	6 months ended 30 June 2011					Year ended 31 December 2011
	Free surplus	Required capital	Adjusted net worth	Value of in-force	MCEV	Free surplus	Required capital	Adjusted net worth	Value of in-force		MCEV
Opening MCEV	84	340	424	2,176	2,600	84	340	424	2,176		2,600
New business value	(109)	12	(97)	139	42	(201)	24	(177)	255		78
Expected existing business contribution (reference rate)	(1)	3	2	17	19	3	2	5	32		37
Expected existing business contribution (in excess of reference rate)	2	-	2	11	13	5	-	5	22		27
Transfers from VIF and required capital to free surplus	204	(16)	188	(188)	-	389	(29)	360	(360)		-
Experience variances	(18)	4	(14)	28	14	(33)	8	(25)	53		28
Assumption changes	1	-	1	(3)	(2)	8	-	8	26		34
Other operating variance	32	(6)	26	(18)	8	40	(17)	23	(24)		(1)
Operating MCEV earnings	111	(3)	108	(14)	94	211	(12)	199	4		203
Economic variances	10	(6)	4	12	16	22	(14)	8	(47)		(39)
Other non-operating variance	-	-	-	6	6	-	-	-	(4)		(4)
Total MCEV earnings	121	(9)	112	4	116	233	(26)	207	(47)		160
Closing adjustments	(45)	5	(40)	36	(4)	(195)	-	(195)	(19)		(214)
Capital and dividend flows	(50)	-	(50)	-	(50)	(193)	4	(189)	-		(189)
Foreign exchange variance	5	5	10	36	46	(2)	(4)	(6)	(19)		(25)
MCEV of acquired/sold business	-	-	-	-	-	-	-	-	-		-

Closing MCEV	160	336	496	2,216	2,712	122	314	436	2,110		2,546
Return on MCEV (RoEV)% per annum					7.0%						7.8%


B3: Components of MCEV of the covered business
	£m
	Total covered business	Long Term Savings	Emerging Markets	Wealth Management	Bermuda	Nordic

At 30 June 2012
Adjusted net worth	2,600	2,368	1,891	477	232	-
Free surplus	687	687	520	167	-	-
Required capital	1,913	1,681	1,371	310	232	-
Value of in-force	3,416	3,507	1,440	2,067	(91)	-
Present value of future profits	4,042	4,020	1,799	2,221	22	-
Additional time value of financial options and guarantees	(100)	(15)	-	(15)	(85)	-
Frictional costs	(245)	(243)	(227)	(16)	(2)	-
Cost of residual non-hedgeable risks	(281)	(255)	(132)	(123)	(26)	-

MCEV	6,016	5,875	3,331	2,544	141	-

	£m
	Total covered business	Long Term Savings	Emerging Markets	Wealth Management	Bermuda	Nordic

At 30 June 2011
Adjusted net worth	3,098	2,491	1,995	496	407	200
Free surplus	689	630	470	160	-	59
Required capital	2,409	1,861	1,525	336	407	141
Value of in-force	4,850	3,656	1,440	2,216	(107)	1,301
Present value of future profits	5,602	4,146	1,778	2,368	79	1,377
Additional time value of financial options and guarantees	(163)	(8)	-	(8)	(155)	-
Frictional costs	(268)	(260)	(238)	(22)	(2)	(6)
Cost of residual non-hedgeable risks	(321)	(222)	(100)	(122)	(29)	(70)

MCEV	7,948	6,147	3,435	2,712	300	1,501

	£m
	Total covered business	Long Term Savings	Emerging Markets¹	Wealth Management	Bermuda	Nordic

At 31 December 2011
Adjusted net worth	2,676	2,204	1,768	436	187	285
Free surplus	680	522	400	122	-	158
Required capital	1,996	1,682	1,368	314	187	127
Value of in-force	4,536	3,509	1,399	2,110	(121)	1,148
Present value of future profits	5,248	4,001	1,740	2,261	36	1,211
Additional time value of financial options and guarantees	(136)	(14)	-	(14)	(122)	-
Frictional costs	(243)	(236)	(218)	(18)	(2)	(5)
Cost of residual non-hedgeable risks	(333)	(242)	(123)	(119)	(33)	(58)

MCEV	7,212	5,713	3,167	2,546	66	1,433
¹The required capital in respect of Emerging Markets is partially covered by the market value of the Group's investments in banking and general insurance in South Africa. On consolidation these investments are shown separately.

B: Segment information continued
B4: Analysis of covered business MCEV earnings (after tax)

					£m
Total covered business	6 months ended 30 June 2012
	Free surplus	Required capital	Adjusted net worth	Value of in-force	MCEV
Opening MCEV	680	1,996	2,676	4,536	7,212
New business value	(154)	74	(80)	154	74
Expected existing business contribution (reference rate)	11	36	47	79	126
Expected existing business contribution (in excess of reference rate)	2	18	20	24	44
Transfers from VIF and required capital to free surplus	379	(113)	266	(266)	-
Experience variances	8	17	25	13	38
Assumption changes	(5)	-	(5)	-	(5)
Other operating variance	(44)	48	4	(36)	(32)
Operating MCEV earnings	197	80	277	(32)	245
Economic variances	86	5	91	108	199
Other non-operating variance	(32)	-	(32)	(3)	(35)
Total MCEV earnings	251	85	336	73	409
Closing adjustments	(244)	(168)	(412)	(1,193)	(1,605)
Capital and dividend flows	(70)	(1)	(71)	-	(71)
Foreign exchange variance	(15)	(40)	(55)	(45)	(100)
MCEV of acquired/sold business	(159)	(127)	(286)	(1,148)	(1,434)

Closing MCEV	687	1,913	2,600	3,416	6,016
Return on MCEV (RoEV)% per annum					7.3%

Return on MCEV for total covered business is calculated as the operating MCEV earnings after tax divided by opening MCEV in sterling. The operating assumption changes and other operating variances are not annualised.

The Long Term Savings segment consists of Emerging Markets and Wealth Management.

				£m
Long Term Savings (LTS)	6 months ended 30 June 2012
	Free surplus	Required capital	Adjusted net worth	Value of in-force	MCEV
Opening MCEV	522	1,682	2,204	3,509	5,713
New business value	(154)	74	(80)	154	74
Expected existing business contribution (reference rate)	11	35	46	76	122
Expected existing business contribution (in excess of reference rate)	2	6	8	19	27
Transfers from VIF and required capital to free surplus	386	(97)	289	(289)	-
Experience variances	(27)	17	(10)	23	13
Assumption changes	-	-	-	-	-
Other operating variance	8	(1)	7	(39)	(32)
Operating MCEV earnings	226	34	260	(56)	204
Economic variances	39	5	44	102	146
Other non-operating variance	(14)	-	(14)	(3)	(17)
Total MCEV earnings	251	39	290	43	333
Closing adjustments	(86)	(40)	(126)	(45)	(171)
Capital and dividend flows	(70)	(1)	(71)	-	(71)
Foreign exchange variance	(16)	(39)	(55)	(45)	(100)
MCEV of acquired/sold business	-	-	-	-	-

Closing MCEV	687	1,681	2,368	3,507	5,875
Return on MCEV (RoEV)% per annum					7.7%

Return on MCEV is calculated as the operating MCEV earnings after tax divided by opening MCEV in sterling. The operating assumption changes and other operating variances are not annualised.


				£m
Emerging Markets ¹	6 months ended 30 June 2012
	Free surplus	Required capital	Adjusted net worth	Value of in-force	MCEV
Opening MCEV	400	1,368	1,768	1,399	3,167
New business value	(84)	63	(21)	73	52
Expected existing business contribution (reference rate)	9	34	43	56	99
Expected existing business contribution (in excess of reference rate)	2	6	8	7	15
Transfers from VIF and required capital to free surplus	196	(76)	120	(120)	-
Experience variances	(2)	7	5	8	13
Assumption changes	-	-	-	-	-
Other operating variance	5	-	5	(40)	(35)
Operating MCEV earnings	126	34	160	(16)	144
Economic variances	24	3	27	94	121
Other non-operating variance	(14)	-	(14)	(7)	(21)
Total MCEV earnings	136	37	173	71	244
Closing adjustments	(16)	(34)	(50)	(30)	(80)
Capital and dividend flows	(1)	-	(1)	-	(1)
Foreign exchange variance	(15)	(34)	(49)	(30)	(79)
MCEV of acquired/sold business	-	-	-	-	-

Closing MCEV	520	1,371	1,891	1,440	3,331
Return on MCEV (RoEV)% per annum					10.2%

¹ The MCEV for Emerging Markets is presented after the adjustment for market value of life fund investments in Group equity and debt instruments.
Return on MCEV is calculated as the operating MCEV earnings after tax divided by opening MCEV in rand. The operating assumption changes and other operating variances are not annualised.

B: Segment Information continued B4: Analysis of covered business MCEV earnings (after tax) continued
B4: Analysis of covered business MCEV earnings (after tax) continued




										£m
US Life	Six months ended 30 June 2011					Year ended 31 December 2011
	Free surplus	Required capital	Adjusted net worth	Value of in-force	MCEV	Free surplus	Required capital	Adjusted net worth	Value of in-force		MCEV
Opening MCEV	66	468	534	(723)	(189)	66	468	534	(723)		(189)
New business value	-	-	-	-	-	-	-	-	-		-
Expected existing business contribution (reference rate)	-	-	-	-	-	-	-	-	-		-
Expected existing business contribution (in excess of reference rate)	-	-	-	-	-	-	-	-	-		-
Transfers from VIF and required capital to free surplus	-	-	-	-	-	-	-	-	-		-
Experience variances	-	-	-	-	-	-	-	-	-		-
Assumption changes	-	-	-	-	-	-	-	-	-		-
Other operating variance	-	-	-	-	-	-	-	-	-		-
Operating MCEV earnings	-	-	-	-	-	-	-	-	-		-
Economic variances	-	-	-	-	-	-	-	-	-		-
Other non-operating variance	-	-	-	-	-	-	-	-	-		-
Total MCEV earnings	-	-	-	-	-	-	-	-	-		-
Closing adjustments	(66)	(468)	(534)	723	189	(66)	(468)	(534)	723		189
Capital and dividend flows	-	-	-	-	-	-	-	-	-		-
Foreign exchange variance	(2)	(19)	(21)	28	7	(2)	(19)	(21)	28		7
MCEV of acquired/sold business	(64)	(449)	(513)	695	182	(64)	(449)	(513)	695		182

Closing MCEV	-	-	-	-	-	-	-	-	-		-
Return on MCEV (RoEV)% per annum					-						-


Six months ended 30 June 2012								£m
	Annualised recurring premiums	Single premiums	PVNBP	PVNBP capitalisation factors¹	APE	VNB	PVNBP margin	APE margin


Long Term Savings	259	2,836	4,122	5.0	542	74	1.8%	14%
Emerging Markets	177	593	1,498	5.1	235	52	3.5%	22%
Wealth Management	82	2,243	2,624	4.6	307	22	0.8%	7%
Nordic	-	-	-	-	-	-	-	-
Total covered business	259	2,836	4,122	5.0	542	74	1.8%	14%


Six months ended 30 June 2011								£m
	Annualised recurring premiums	Single premiums	PVNBP	PVNBP capitalisation factors¹	APE	VNB	PVNBP margin	APE margin


Long Term Savings	292	3,455	4,909	5.0	637	80	1.6%	13%
Emerging Markets	176	797	1,656	4.9	255	38	2.3%	15%
Wealth Management	116	2,658	3,253	5.1	382	42	1.3%	11%
Nordic	83	420	736	3.8	126	28	3.9%	23%
Total covered business	375	3,875	5,645	4.7	763	108	1.9%	14%


Year ended 31 December 2011								£m
	Annualised recurring premiums	Single premiums	PVNBP	PVNBP capitalisation factors¹	APE	VNB	PVNBP margin	APE margin


Long Term Savings	569	6,211	9,113	5.1	1,189	177	1.9%	15%
Emerging Markets	363	1,441	3,295	5.1	506	99	3.0%	20%
Wealth Management	206	4,770	5,818	5.1	683	78	1.3%	11%
Nordic	153	753	1,347	3.9	229	56	4.2%	25%
Total covered business	722	6,964	10,460	4.8	1,418	233	2.2%	16%

¹The PVNBP capitalisation factors are calculated as follows: (PVNBP - single premiums)/annualised recurring premiums.



C: Other key performance information continued

C2: Drivers of new business value for covered business (PVNBP margin)¹
					%
12 months ended 30 June 2012	Total covered business	Long Term Savings	Emerging Markets	Wealth Management		Nordic


Margin at the end of comparative period	1.6	1.6	2.3	1.3		-
Change in volume	(0.4)	(0.4)	-	(0.6)		-
Change in country and product mix	0.2	0.2	0.2	-		-
Change in operating assumptions	0.2	0.2	0.6	-		-
Change in economic assumptions	0.1	0.1	0.2	0.1		-
Change in tax/regulation	0.1	0.1	0.2	-		-
Exchange rate movements	-	-	-	-		-

Margin at the end of the period	1.8	1.8	3.5	0.8		-

¹The PVNBP margin changes are calculated in the business unit reporting currency.
					%
12 months ended 31 December 2011	Total covered business	Long Term Savings	Emerging Markets	Wealth Management		Nordic


Margin at the end of comparative period	1.8	1.6	2.6	1.1		3.7
Change in volume	0.2	0.1	0.3	-		0.1
Change in country and product mix	(0.2)	(0.2)	(0.6)	(0.1)		0.4
Change in operating assumptions	0.2	0.2	0.4	0.1		(0.1)
Change in economic assumptions	0.2	0.2	0.4	0.1		0.1
Change in tax/regulation	-	-	(0.1)	0.1		-

Margin at the end of the period	2.2	1.9	3.0	1.3		4.2

C3: Adjustments applied in determining total Group MCEV earnings before tax

						£m
		6 months ended 30 June 2012			6 months ended 30 June 2011
		Covered business MCEV	Non- covered business IFRS	Total Group MCEV	Covered business MCEV	Non- covered business IFRS	Total Group MCEV
Income/(expense)
Goodwill impairment and amortisation of non-covered business acquired intangible assets and impact of acquisition accounting		-	(5)	(5)	-	(11)	(11)
Economic variances		214	(5)	209	(49)	(11)	(60)
Other non-operating variances		(54)	-	(54)	1	-	1
Acquired/divested business		-	20	20	-	180	180
Other Group adjustments related to Nordic disposal		-	392	392	-	-	-
Adjusted Group MCEV uplift from sale of Nordic		-	202	202	-	-	-
Dividends declared to holders of perpetual preferred callable securities		-	21	21	-	22	22
Adjusting items relating to US Asset Management equity plans and non-controlling interests		-	-	-	-	-	-
Fair value gains on Group debt instruments		-	(36)	(36)	-	(50)	(50)
Adjusting items		160	589	749	(48)	130	82
Adjusting items from continuing operations		178	(3)	175	28	133	161
Adjusting items from discontinued operations		(18)	592	574	(76)	(3)	(79)
Total MCEV adjusting items		160	589	749	(48)	130	82




				£m
		Year ended 31 December 2011
		Covered business MCEV	Non- covered business IFRS	Total Group MCEV
Income/(expense)
Goodwill impairment and amortisation of non-covered business acquired intangible assets and impact of acquisition accounting		-	(283)	(283)
Economic variances		(554)	(28)	(582)
Other non-operating variances		22	-	22
Acquired/divested business¹		-	182	182
Dividends declared to holders of perpetual preferred callable securities		-	44	44
Adjusting items relating to US Asset Management equity plans and non-controlling interests		-	(3)	(3)
Fair value gains on Group debt instruments		-	22	22
Adjusting items		(532)	(66)	(598)
Adjusting items from continuing operations		(378)	(59)	(437)
Adjusting items from discontinued operations		(154)	(7)	(161)
Total MCEV adjusting items		(532)	(66)	(598)

¹	This relates to the non-covered businesses in Kenya, Malawi, Nigeria, Swaziland, and Zimbabwe that were included for the first time during 2011.



C: Other key performance information continued

C4: Other movements in IFRS net equity impacting Group MCEV

						£m
		6 months ended 30 June 2012			6 months ended 30 June 2011
		Covered business MCEV	Non- covered business IFRS	Total Group MCEV	Covered business MCEV	Non- covered business IFRS	Total Group MCEV
Fair value movements¹		-	(347)	(347)	-	1	1
Net investment hedge		-	123	123	-	(25)	(25)
Currency translation/ exchange differences and other movements		(100)	(326)	(426)	(89)	(207)	(296)
Aggregate tax effects of items taken directly to or transferred from equity		-	4	4	-	6	6
Other movements²		(1,434)	1,434	-	182	18	200
Net income recognised directly into equity		(1,534)	888	(646)	93	(207)	(114)
Capital and dividend flows for the year		(71)	(1,044)	(1,115)	(56)	(19)	(75)
Inclusion of other African life businesses		-	-	-	69	-	69
Net purchase of treasury shares		-	(2)	(2)	-	(18)	(18)
Shares issued in lieu of cash dividends		-	-	-	-	91	91
Other shares issued		-	25	25	-	4	4
Change in share based payment reserve		-	23	23	-	21	21
Other movements in net equity		(1,605)	(110)	(1,715)	106	(128)	(22)

				£m
		Year ended 31 December 2011
		Covered business MCEV	Non- covered business IFRS	Total Group MCEV
Fair value gains		-	24	24
Net investment hedge		-	28	28
Currency translation/ exchange differences and other movements		(693)	(498)	(1,191)
Aggregate tax effects of items taken directly to or transferred from equity		-	11	11
Other movements		182	128	310
Net income recognised directly into equity		(511)	(307)	(818)
Capital and dividend flows for the year		(257)	(8)	(265)
Inclusion of other African life businesses		69	-	69
Net purchase of treasury shares		-	(17)	(17)
Shares issued in lieu of cash dividends		-	124	124
Other shares issued		-	10	10
Change in share based payment reserve		-	50	50
Other movements in net equity		(699)	(148)	(847)

¹	Fair value movements include realisation of foreign exchange reserve on disposal of £(350) million and a fair value movement of £3 million
²	The June 2012 amount relates to the transfer of Nordic covered MCEV balance on disposal. June 2011 reflects movements in respect of the disposal of US Life.

C5: Reconciliation of MCEV adjusted net worth to IFRS net asset value for the covered business

The table below provides a reconciliation of the MCEV adjusted net worth (ANW) to the IFRS net asset value (NAV) for the covered business.
					£m
At 30 June 2012	Total covered business	Long Term Savings	Emerging Markets	Wealth Management	Bermuda	Nordic


IFRS net asset value¹	4,062	3,813	1,355	2,458	249	-
Adjustment to include long-term business on a statutory solvency basis	(1,024)	(1,007)	187	(1,194)	(17)	-
Inclusion of Group equity and debt instruments held in life funds²	353	353	356	(3)	-	-
Goodwill	(791)	(791)	(7)	(784)	-	-
Adjusted net worth attributable to ordinary equity holders of the parent	2,600	2,368	1,891	477	232	-
¹ IFRS net asset value is after elimination of inter-company loans.
²A further £(58) million (June 2011: £(82) million; December 2011: £(69) million) relates to the non-covered business.

					£m
At 30 June 2011	Total covered business	Long Term Savings	Emerging Markets	Wealth Management	Bermuda	Nordic


IFRS net asset value¹	5,859	3,995	1,339	2,656	441	1,423
Adjustment to include long-term business on a statutory solvency basis	(2,201)	(1,155)	199	(1,354)	(34)	(1,012)
Inclusion of Group equity and debt instruments held in life funds²	396	396	396	-	-	-
Goodwill	(1,025)	(814)	(8)	(806)	-	(211)
Adjusted net worth attributable to ordinary equity holders of the parent	3,029	2,422	1,926	496	407	200

					£m
At 31 December 2011	Total covered business	Long Term Savings	Emerging Markets	Wealth Management	Bermuda	Nordic


IFRS net asset value¹	5,214	3,744	1,230	2,514	201	1,269
Adjustment to include long-term business on a statutory solvency basis	(1,905)	(1,108)	182	(1,290)	(14)	(783)
Inclusion of Group equity and debt instruments held in life funds²	365	365	365	-	-	-
Goodwill	(998)	(797)	(9)	(788)	-	(201)
Adjusted net worth attributable to ordinary equity holders of the parent	2,676	2,204	1,768	436	187	285

Sensitivity tests: MCEV
				£m
	Total covered business	Long Term Savings	Emerging Markets	Wealth Management	Bermuda

At 30 June 2012
Central assumptions	6,016	5,875	3,331	2,544	141
Effect on MCEV of:
Increasing all pre-tax investment and economic assumptions by 1%, with credited rates and discount rates changing commensurately	5,881	5,688	3,226	2,462	193
Decreasing all pre-tax investment and economic assumptions by 1%, with credited rates and discount rates changing commensurately	6,135	6,042	3,419	2,623	93
Recognising the present value of an additional 10bps of liquidity spreads assumed on corporate bonds over the lifetime of the liabilities, with credited rates and discount rates changing commensurately	6,025	5,884	3,340	2,544	141


Sensitivity tests: Value of in-force business
				£m
At 30 June 2012	Total covered business	Long Term Savings	Emerging Markets	Wealth Management	Bermuda


Central assumptions	3,416	3,507	1,440	2,067	(91)
Effect on value of in-force business of:
Increasing all pre-tax investment and economic assumptions by 1%, with credited rates and discount rates changing commensurately	3,299	3,397	1,392	2,005	(98)
Decreasing all pre-tax investment and economic assumptions by 1%, with credited rates and discount rates changing commensurately	3,513	3,597	1,475	2,122	(84)
Recognising the present value of an additional 10bps of liquidity spreads assumed on corporate bonds over the lifetime of the liabilities, with credited rates and discount rates changing commensurately	3,425	3,516	1,449	2,067	(91)


Sensitivity tests: Value of new business
				£m
At 30 June 2012	Total covered business	Long Term Savings	Emerging Markets	Wealth Management	Bermuda


Central assumptions	74	74	52	22	-
Effect on value of new business of:
Increasing all pre-tax investment and economic assumptions by 1%, with credited rates and discount rates changing commensurately	67	67	48	19	-
Decreasing all pre-tax investment and economic assumptions by 1%, with credited rates and discount rates changing commensurately	82	82	56	26	-
Recognising the present value of an additional 10bps of liquidity spreads assumed on corporate bonds over the lifetime of the liabilities, with credited rates and discount rates changing commensurately	74	74	52	22	-