Life New Business Q3 2002
Aviva PLC
24 October 2002
Aviva plc
Worldwide long-term savings new business
Nine months to 30 September 2002
24 October 2002
- Worldwide long-term new business sales of £10.6 billion (2001: £10.4
billion)
- Worldwide total bancassurance sales up 83% at £1,973 million
- Worldwide life and pensions sales up 7% on an APE* basis
- UK life and pensions sales up 4% on an APE* basis
- Continental European life and pensions sales up 9% on an APE* basis and
now represent 38% of worldwide life and pensions new business
- Worldwide new business contribution at £416 million, with new business
margin of 23.8%
* Annual premium equivalent (APE) is the UK industry's standard measure of
new regular premiums and 10% of single premiums.
All growth rates are quoted at constant rates of exchange.
Richard Harvey, Group Chief Executive, commented:
'These are solid sales in generally tough markets. Our financial strength,
broad product range and growing distribution continue to give us competitive
advantage. Our bancassurance operations in the UK, Italy and Spain have
performed particularly well.
'As the largest life and pensions provider to Europe, we are strongly
positioned to benefit from the increased need for private provision as savings
markets recover. Our outlook for long-term savings markets for the rest of the
year remains cautious as we expect consumer confidence to continue to be
affected by economic conditions and turbulent equity markets.'
Enquiries:
Analysts/Investors:
Philip Scott, Group Executive Director UK Life +44(0)20 7662 2264
Tony Wyand, Group Executive Director Continental Europe +44(0)20 7662 2285
Steve Riley, Investor Relations Director +44(0)20 7662 8115
Media:
Hayley Stimpson, Director of External Affairs +44(0)20 7662 7544
Chris Hughes, Financial Dynamics +44(0)20 7269 7200
There will be a conference call today for wire services at 7:45am on +44(0)20
8240 8243. This conference call will be hosted by Philip Scott, Group
Executive Director UK Life and Tony Wyand, Group Executive Director
Continental Europe.
There will be a conference call today for analysts and investors at 9:30am (UK
time) on +44(0)20 8240 8243. This conference call will be hosted by Philip
Scott, Group Executive Director UK Life and Tony Wyand, Group Executive
Director Continental Europe.
Replay will be available for two weeks until 7 November. The dial in number
for replay is +44(0)20 8288 4459 and the pass code is 430122.
Total new business Annual premium
sales equivalent
sales**
9 months 9 months
to Local to Local
30 September currency 30 September currency
2002 growth* 2002 growth*
Life and pensions
United Kingdom 5,269 - 954 4%
France 1,382 (6%) 168 (2%)
Ireland 279 (28%) 85 10%
Italy 772 31% 106 37%
Netherlands (including
Belgium and Luxembourg) 608 17% 117 3%
Poland 57 19% 37 (13%)
Spain 612 27% 97 28%
Other Europe 208 20% 62 1%
International 669 43% 120 30%
------ ------ ------ ------
Total life and pensions 9,856 5% 1,746 7%
Investment sales
United Kingdom 429 (40%) 55 (30%)
Netherlands 59 (14%) 6 (14%)
Poland 2 - - -
Other Europe 62 (34%) 6 (34%)
International 222 39% 22 39%
------ ------ ------ ------
Total investment sales 774 (25%) 89 (20%)
------ ------ ------ ------
Total long-term savings 10,630 2% 1,835 6%
====== ====== ====== ======
Navigator sales 669 (10%)
(not included above)
New business contribution***
9 months
to Local
30 September currency
2002 growth*
Life and pensions
United Kingdom 231 (5%)
France 52 2%
Ireland 23 4%
Italy 23 24%
Netherlands (including
Belgium and Luxembourg) 14 (12%)
Poland 9 28%
Spain 49 43%
Other Europe (5) (193%)
International 20 252%
------ ------
Total life and pensions 416 4%
====== ======
* Growth rates are calculated based on constant rates of exchange
** Annual premium equivalent (APE) is the UK industry's standard
measure of new regular premiums and 10% of single premiums
*** Stated before the effect of solvency margin
United Kingdom:
With the benefits of the breadth of our product range and multi-distribution
capability, total life and pensions sales in the UK increased 4% to £954
million (2001: £915 million) on an Annual Premium Equivalent (APE) basis. This
was despite the ongoing turbulence and low investor confidence in equity
markets which, as we indicated at the half year, persisted through the third
quarter and which we expect to continue for the rest of the year. Norwich
Union remains a leading life and pensions provider with a
share of the UK life market in excess of 12%. Total UK life and pensions
sales for the nine months were maintained at £5.3 billion (2001:
£5.3 billion).
Bonds sales in the third quarter were lower at £627 million (third quarter
2001: £864 million) in a challenging market, and contributed to total
year-to-date sales of £2.3 billion (2001: £2.6 billion). This reduction in
sales reflected investors' continuing preference for non-equity related
products. In response to customer demand, we continue to broaden our product
range with a series of new bonds which offer investors some capital or income
protection. We have also recently introduced a special offer Anniversary Bonus
on our with-profit bonds. Early indications are that this initiative has been
well received and we are therefore confident that we will retain our share of
the overall bond market.
Total sales through our joint venture with the Royal Bank of Scotland Group
(RBSG) were up 130% to £677 million (2001: £294 million), including single
premium with-profit bond sales of £416 million (2001: nil). We have continued
to expand our product range available through the joint venture and further
new initiatives are planned later this year and new products for 2003. These
results include sales of £131 million (2001: £147 million), representing our
50% share of sales written through the joint venture life company, and sales
of £416 million (2001: nil), representing 100% of single premium with-profit
bond sales, written through Norwich Union.
Sales of annuities increased by 33% to £731 million (2001: £549 million),
reflecting our attractive terms in the market. Mortgage product sales,
primarily protection business, were also higher at £52 million (2001:
£36 million).
Pension sales increased to £2.1 billion (2001: £1.9 billion) including
stakeholder sales of £510 million (2001: £143 million). We have created a
leading position in the stakeholder market and continue to improve our
margins, by reducing commissions and by focusing on large group schemes for
new business. We continue to monitor our commission rates.
Sales of retail investment products were £429 million (2001: £715 million)
reflecting our planned reduction in sales in the collective investment
'CAT' marked market and the general lack of investor enthusiasm for equity-
related products. We plan to launch new retail investment products in 2003.
New business contribution for the year to date was £231 million (2001: £242
million), with a new business margin (the ratio of new business contribution
to sales measured on an annual premium equivalent basis) of 24.2% (full year
2001: 25.8%). The discrete third quarter margin of 24.1% reflects lower
volumes, partially offset by the continued beneficial changes in the product
mix.
Although not included in the new business figures, our market leading Equity
Release business continued its strong growth with third quarter sales of £108
million (third quarter 2001: £58 million) and year to date sales of £230
million up 57% (2001: £146 million), benefiting from a strong brand,
innovative product design and excellent customer service.
France:
Sales of single premium fixed interest AFER products through our French life
business continued to grow, with sales up 9% at £741 million (2001: £674
million). This reflects customers' continuing preference for fixed interest
investments, and the strength of AFER's brand and its position as the
largest savings organisation in France.
Total sales of unit-linked and other savings products were 23% lower at £510
million (2001: £659 million), achieved against the background of an overall
market for unit-linked products which decreased 32% in the first eight months
of 2002. Sales of protection business were £131 million (2001: £129 million).
New business contribution was to £52 million (2001: £50 million) with
margins of 31.0% (full year 2001: 33.9%).
CGU France recently announced two deals to extend its distribution
capability. Firstly, in July, we announced discussions with Mederic, a French
mutual life company, to establish a partnership. We expect this agreement
will be finalised by the end of 2002. CGU France will offer a range of life
products to Mederic's customers through a new joint venture life company and
as part of this deal, CGU France will sell its group protection business to
Mederic.
Secondly in October, we announced an agreement in principal for a
bancassurance partnership with Credit du Nord, a French banking group and
subsidiary of Societe Generale. The agreement, which is subject to contract
and regulatory approval, will make Abeille vie, a subsidiary of CGU France,
the sole partner of Credit du Nord for all new life business sold from late
2004. At this time, Abeille vie will acquire a 50% shareholding in the life
insurance subsidiary of Credit du Nord, through which the life business is
sold.
As a separate transaction, Credit du Nord transferred the management of its
pension scheme to Abeille vie during the third quarter. New business premiums
for this transfer amounted to Euro 33 million and are reflected in unit-linked
and other savings business.
Ireland:
New business sales at Hibernian Life & Pensions, our top-five provider of life
and pensions products, increased by 10% to £85 million (2001: £76 million)
measured on an APE basis.
Total regular premiums increased 48% to £63 million (2001: £42 million).
Regular premium life product sales, up 89% to £31 million (2001: £16 million),
benefited from the Government's Special Savings Incentive Account (SSIA),
adding one-off sales of £23 million before closure on 30 April 2002.Sales of
regular premium pensions, up 22% to £32 million (2001: £26 million) reflected
continuing success in the executive and group pensions markets.
Continuing the trend of the first half of the year, new single premium life
sales were £138 million (2001: £230 million), as investors continued to adopt
a cautious approach to unit-linked and with-profit bond investments.
Single premium pension sales were £78 million (2001: £110 million), due to
limited opportunities for new group scheme mandates as a result of difficult
investment conditions. Uncertainty remains in the individual pensions
market ahead of the introduction of the Government's new pension plan, the
Personal Retirement Savings Account (PRSA), now expected in March 2003. In
preparation for this launch, we are leveraging Norwich Union's experience in
the UK stakeholder market and developing a market-leading product for the new
scheme.
Total new business contribution amounted to £23 million (2001: £22 million)
with margins of 27.2% (full year 2001: 28.5%).
Italy:
In Italy, total sales rose by 31% to £772 million (2001: £585 million)
underlining the strength of our distribution through our bancassurance
partners. Sales through our agreement with UniCredito Italiano's (UCI)
subsidiary, Cassa di Risparmio di Torino increased by 35% to £545 million
(2001: £402 million). UCI's branch reorganisation, reported at the
half year is now underway. While this has not had a significant adverse effect
on sales to date, we expect a challenge in maintaining our sales momentum to
continue for the rest of 2002. We are confident that the reorganised branch
network will offer us enhanced opportunities over the longer term.
Sales at Banca Popolare di Lodi, where more branches have now come on stream,
increased strongly to £173 million (2001: £34 million), following new product
launches. Sales through Banca delle Marche were £28 million (2001:
£36 million).
As announced in July 2002, our new bancassurance partnership with Banca
Popolare Commercio e Industria, an agreement which we have reached together
with UCI, is expected to complete by the end of 2002.
Total new business contribution for the period amounted to £23 million (2001:
£19 million) with margins of 21.7% (full year 2001: 22.2%).
Netherlands (including Belgium and Luxembourg):
Delta Lloyd, our top-five life and pensions business in the Netherlands,
reported total sales of £667 million (2001: £584 million).
We have seen the adverse impact of taxation changes dampened down by the
effects of increased increments on existing annuity contracts as investors
make further provision for retirement savings. As a result, Delta Lloyd
increased its market share with single premium sales of £329 million
(2001: £158 million). Total pension sales were £242 million (2001:£309
million) but further increments on existing business are expected in the
fourth quarter.
In Belgium we are beginning to see the benefits of our distribution channel
with Bank Nagelmackers. Following the integration of the bank network in the
first half of the year, we have launched new products, which coupled with an
advertising campaign has resulted in sales increasing to £98 million (2001:
£55 million).
Investment sales were £59 million (2001: £69 million) reflecting
continuing investor caution.
New business contribution was £14 million (2001: £16 million) with a new
business margin of 12.0% (full year 2001: 22.3%).
Poland:
CU Polska is the leading provider of individual life and private pensions,
with a 19% share of the life market measured by total premium income
and a 29% share of the private pensions market measured by total assets under
management.
New life and savings business increased by 12% to £33 million (2001: £30
million) despite continuing difficult economic conditions. Pension sales
increased to £24 million (2001: £19 million), against a background of a
relatively low number of new entrants to the employment market who are
eligible to buy private pensions.
CU Polska commenced a new operation selling mutual funds late in the second
quarter of the year. Sales of £2 million (2001: nil) have been recorded to
date.
Spain:
In Spain, where Aviva has a top-five life business, total sales grew by 27% to
£612 million (2001: £479 million) as our new bancassurance partnerships
continue to develop. New business contribution amounted to £49 million (2001:
£34 million) with margins of 50.4% (full year 2001: 46.5%).
New business sales through Bancaja were £433 million (2001: £441 million)
reflecting a continuing competitive market for savings products. Total new
business sales through our agreements with Unicaja, Caixa Galicia and Caja
Espana, grew encouragingly to £139 million (2001: nil). Further new products
are planned during the coming months, based on the success of products sold
through the Bancaja network.
In September 2002, we announced a new bancassurance partnership with Caja de
Granada and our existing bancassurance partner, Unicaja. This new
bancassurance partnership is expected to complete shortly. This consolidates
our position as the fourth largest bank network which will have some 3,500
branches and access to approximately nine million potential customers.
Other Europe:
Total life and pensions sales from our other European businesses increased by
20% to £208 million (2001: £172 million). In Germany, total new business
premiums grew strongly by 50% to £105 million (2001: £69 million), including
an increase of 101% in single premiums to £82 million (2001: £40 million)
driven by an extension of our distribution reach.
In Turkey total new business premiums were at £16 million (2001: £16 million).
Single premium sales from our Dublin-based offshore life and savings business
were £63 million (2001: £68 million) while investment sales of our Luxembourg
UCITS were £62 million (2001: £93 million), reflecting the continuing
challenging conditions in investment markets.
International:
In our International business life and pension sales grew by 43% to £669
million (2001: £473 million). Our United States business contributed total
life and pension sales of £377 million (2001: £250 million), up 55%,
reflecting continuing demand for fixed annuity products.
In Australia, total life and pension sales amounted to £181 million (2001:
£202 million). Year to date sales of unit trusts were up 39% to £222 million
(2001: £157 million). However investor confidence in equity-related products
held back sales in the third quarter. Although not included in the new
business figures, sales of Navigator, a market-leading master trust, were also
impacted by lower investor confidence in equity markets and were lower at
£669 million (2001: £733 million).
In Singapore, our bancassurance partnership with DBS Group Holdings Limited
(DBS) generated total sales of £108 million (2001: £11 million). Sales from
our bancassurance partnership with DBS in Hong Kong are expected to commence
in the fourth quarter 2002. We also launched our Navigator master trust in
Singapore at the start of the fourth quarter and expect it to be fully
operational by mid-2003.
In India, our new partnership with Dabur Group, where we own 26% of the joint
venture, was launched in June 2002 and has now sold over 3,000 policies,
mainly through our direct sales force. We recently announced agreements
to distribute our products through ABN AMRO Bank and to customers of American
Express.
In China, we own 50% of our new life joint venture with COFCO, a
state owned export and import business and we anticipate this becoming
operational in early 2003, subject to final regulatory approval.
Notes to Editors
1. Aviva is the UK's largest insurer and one of the top-five life companies
in Europe with substantial positions in other markets around the world,
making it the world's seventh-largest insurance group based on gross
worldwide premiums. In the UK Aviva operates under the Norwich Union
brand.
Aviva's principal business activities are long-term savings, fund
management and general insurance, with worldwide premium income and
retail investment sales from continuing operations of more than £28
billion for the year ended 31 December 2001, and assets under management
of £214 billion at 30 June 2002.
2. New business figures have been translated at average exchange rates
applying for the period. The average euro rates employed in this
announcement are 1 euro = £0.63 (nine months to 30 September 2001: 1
euro = £0.62; year to 31 December 2001: 1 euro = £0.62).
3. All growth rates are quoted in local currency.
4. Definitions:
Annual premium equivalent (APE) is a UK industry standard for
calculating life, pensions and investments new business levels. It is
the total of new regular premiums and 10% of single premiums.
New business contribution is the present value of the projected stream
of after-tax distributable earnings from new life and pensions sales.
New business contribution before tax is calculated by grossing up the
new business contribution after-tax at the full corporation tax rate for
UK business and at appropriate rates of tax for other countries.
New business margin is a UK industry standard calculation based on new
business contribution (before the effect of solvency margin) divided by
sales measured on an APE basis.
5. Cautionary statements
The cautionary statements identify important factors that could cause
our actual results to differ materially from those projected in forward
looking statements made in this press release. Forward looking
statements are based on management's current views and assumptions and
involve known and unknown risks and uncertainties that could cause
actual results, performance or events to differ materially from those
expressed.
Aviva plc is a company registered in England No. 2468686.
Registered office St Helen's 1 Undershaft London EC3P 3DQ
Statistical supplement
CONTENTS
Analyses
1 Detailed worldwide long-term savings new business analysis
2 Analysis of UK long-term savings by distribution channel - sales and
APE
3 Detailed analysis of new business contribution
4 Principal economic assumptions
SUPPLEMENT 1
Detailed worldwide long-term savings new business analysis
Single
9 months 9 months
to to Local
30 September 30 September currency
2002 2001 growth
£m £m
United Kingdom
Individual pensions 1,179 1,117 6%
Group pensions 544 404 35%
Mortgage - - -
Annuities 731 549 33%
Bonds 2,251 2,637 (15%)
Other life 89 140 (36%)
------ ------ ------
Total life and pensions 4,794 4,847 (1%)
Peps/Isas/Unit trusts/Oeics 416 707 (41%)
------ ------ ------
5,210 5,554 (6%)
France
AFER (excluding unit-linked) 741 674 9%
Unit-linked & other savings 489 648 (25%)
Protection business 119 114 4%
------ ------ ------
1,349 1,436 (7%)
Ireland
Life & savings 138 230 (41%)
Pensions 78 110 (30%)
------ ------ ------
216 340 (37%)
Italy
Life & savings 740 565 30%
------ ------ ------
740 565 30%
Netherlands (including
Belgium and Luxembourg)
Pensions 217 290 (26%)
Life 329 158 107%
------ ------ ------
Total life and pensions 546 448 21%
Unit trusts 59 69 (14%)
------ ------ ------
605 517 16%
Poland
Life & savings 14 5 171%
Pensions 8 - -
------ ------ ------
Total life and pensions 22 5 309%
Mutual funds 2 - -
------ ------ ------
24 5 356%
Spain
Life & savings 523 418 24%
Pensions 49 31 60%
------ ------ ------
572 449 27%
Other Europe
Life & pensions 162 123 30%
UCITS and other 62 93 (34%)
------ ------ ------
224 216 3%
International
Life & pensions 610 421 46%
Unit trusts 222 157 39%
------ ------ ------
832 578 44%
------ ------ ------
Total long-term savings 9,772 9,660 1%
====== ====== ======
Analysed:
Life & pensions 9,011 8,634 4%
Investment sales 761 1,026 (26%)
------ ------ ------
Total long-term savings 9,772 9,660 1%
====== ====== ======
Navigator sales (not included above) 669 733 (10%)
Regular Total
9 months 9 months
to to Local Local
30 September 30 September currency currency
2002 2001 growth growth
£m £m
United Kingdom
Individual pensions 83 98 (15%) 4%
Group pensions 255 231 10% 26%
Mortgage 52 36 44% 44%
Annuities - - - 33%
Bonds - 1 (100%) (15%)
Other life 85 64 33% (15%)
------ ------ ------ ------
Total life and pensions 475 430 10% -
Peps/Isas/Unit trusts/Oeics 13 8 63% (40%)
------ ------ ------ ------
488 438 11% (5%)
France
AFER (excluding unit-linked) - - - 9%
Unit-linked & other savings 21 11 78% (23%)
Protection business 12 15 (19%) 1%
------ ------ ------ ------
33 26 23% (6%)
Ireland
Life & savings 31 16 89% (32%)
Pensions 32 26 22% (20%)
------ ------ ------ ------
63 42 48% (28%)
Italy
Life & savings 32 20 56% 31%
------ ------ ------ ------
32 20 56% 31%
Netherlands (including
Belgium and Luxembourg)
Pensions 25 19 29% (22%)
Life 37 48 (24%) 77%
------ ------ ------ ------
Total life and pensions 62 67 (9%) 17%
Unit trusts - - - (14%)
------ ------ ------ ------
62 67 (9%) 14%
Poland
Life & savings 19 25 (22%) 12%
Pensions 16 19 (10%) 32%
------ ------ ------ ------
Total life and pensions 35 44 (17%) 19%
Mutual funds - - - -
------ ------ ------ ------
35 44 (17%) 25%
Spain
Life & savings 24 20 15% 24%
Pensions 16 10 64% 61%
------ ------ ------ ------
40 30 31% 27%
Other Europe
Life & pensions 46 49 (7%) 20%
UCITS and other - - - (34%)
------ ------ ------ ------
46 49 (7%) 1%
International
Life & pensions 59 52 17% 43%
Unit trusts - - - 39%
------ ------ ------ ------
59 52 17% 42%
------ ------ ------ ------
Total long-term savings 858 768 12% 2%
====== ====== ====== ======
Analysed:
Life & pensions 845 760 11% 5%
Investment sales 13 8 65% (25%)
------ ------ ------ ------
Total long-term savings 858 768 12% 2%
====== ====== ====== ======
Navigator sales
(not included above) - - - (10%)
SUPPLEMENT 2
Analysis of UK long-term savings by distribution channel
Sales
Single
9 months 9 months
to to Local
30 September 30 September currency
2002 2001 growth
£m £m
IFA
- life and pensions products 3,324 3,579 (7%)
- investment products 248 451 (45%)
------ ------ ------
3,572 4,030 (11%)
Bancassurance partnership
with RBSG
- life and pensions products 536 139 286%
Other partnerships/Direct
- life and pensions products 934 1,129 (17%)
- investment products 168 256 (34%)
------ ------ ------
1,102 1,385 (20%)
------ ------ ------
Total UK long-term savings 5,210 5,554 (6%)
====== ====== ======
Regular Total
9 months 9 months
to to Local Local
30 September 30 September currency currency
2002 2001 growth growth
£m £m
IFA
- life and pensions products 369 354 4% (6%)
- investment products 7 5 40% (44%)
------ ------ ------ ------
376 359 5% (10%)
Bancassurance partnership
with RBSG
- life and pensions products 11 8 38% 272%
Other partnerships/Direct
- life and pensions products 95 68 40% (14%)
- investment products 6 3 100% (33%)
------ ------ ------ ------
101 71 42% (17%)
------ ------ ------ ------
Total UK long-term savings 488 438 11% (5%)
====== ====== ====== ======
Annual premium equivalent
Life and pensions
9 months
to
30 September Local
2002 currency
£m growth
IFA 701 (2%)
Bancassurance partnership
with RBSG 65 195%
Other partnerships/Direct 188 4%
----- -----
Total UK long-term savings 954 4%
===== =====
Investment sales Total sales
9 months 9 months
to to
30 September Local 30 September Local
2002 currency 2002 currency
£m growth £m growth
IFA 32 (36%) 733 (4%)
Bancassurance partnership
with RBSG - - 65 195%
Other partnerships/Direct 23 (21%) 211 -
----- ----- ----- -----
Total UK long-term savings 55 (30%) 1,009 2%
===== ===== ===== =====
SUPPLEMENT 3
Detailed analysis of new business contribution
(a) Before the effect of solvency margin
New business
Annual premium contribution New business
Equivalent* **/*** margin****
9 9 9 9 9 9 Full
months months months months months months year
2002 2001 2002 2001 2002 2001 2001
£m £m £m £m
Life and pensions
business
United Kingdom 954 915 231 242 24.2% 26.5% 25.8%
Europe (excluding UK)
France 168 170 52 50 31.0% 29.5% 33.9%
Ireland 85 76 23 22 27.2% 28.9% 28.5%
Italy 106 76 23 19 21.7% 24.8% 22.2%
Netherlands (including
Belgium and Luxembourg) 117 112 14 16 12.0% 14.3% 22.3%
Poland 37 44 9 8 24.2% 18.0% 18.4%
Spain 97 75 49 34 50.4% 45.4% 46.5%
Other 62 61 (5) 2 (8.0%) 3.3% -
International 120 94 20 6 16.7% 6.4% 12.1%
----- ----- ----- ----- ----- ----- -----
1,746 1,623 416 399 23.8% 24.6% 25.5%
===== ===== ===== ===== ===== ===== =====
* Annual premium equivalent represents regular premiums plus 10% of
single premiums.
** Before effect of solvency margin.
*** New business contribution before the effect of solvency margin
includes minority interests in 2002 of £41 million (nine months to 30
September 2001: £31 million). This comprises minority interests in
France of £3 million (nine months to 30 September 2001: £3 million),
Italy £11 million (nine months to 30 September 2001: £8 million),
Spain £26 million (nine months to 30 September 2001: £19 million) and
Poland £1 million (nine months to 30 September 2001: £1 million).
**** New business margin represents the ratio of new business contribution
to annual premium equivalent, expressed as a percentage.
(b) Including the effect of solvency margin*
9 months 9 months
2002 2001
Life and pensions business £m £m
United Kingdom 218 233
Europe (excluding UK)
France 27 29
Ireland 21 22
Italy 18 14
Netherlands (including Belgium and Luxembourg) (1) 1
Poland 7 5
Spain 41 28
Other (9) 1
International 12 -
----- -----
334 333
===== =====
* The effect of solvency margin represents the impact of holding the
minimum European Union (EU) solvency margin (or equivalent for non-EU
operations) and discounting to present value the projected future
releases from the solvency margin to shareholders.
SUPPLEMENT 4
Principal economic assumptions
New business contribution has been calculated using the economic assumptions
set at the end of the previous year, as shown in the tables below.
United Kingdom France
31 31 31 31
December December December December
2001 2000 2001 2000
Risk discount rate 7.7% 7.4% 8.6% 8.5%
Pre-tax investment returns:
Base government fixed interest 5.0% 4.7% 5.1% 5.0%
Ordinary shares 7.5% 7.2% 7.1% 7.0%
Property 6.5% 6.2% 6.6% 6.5%
Future expense inflation 3.7% 3.7% 2.5% 2.5%
Tax rate 30.0% 30.0% 36.4% 37.8%
Ireland Italy
31 31 31 31
December December December December
2001 2000 2001 2000
Risk discount rate 9.3% 9.1% 7.6% 7.5%
Pre-tax investment returns:
Base government fixed interest 5.3% 5.3% 5.3% 5.3%
Ordinary shares 8.3% 8.3% 8.3% 8.3%
Property 6.8% 6.8% 6.8% 6.8%
Future expense inflation 4.0% 5.0% 3.3% 3.3%
Tax rate 16.0% 20.0% 41.0% 43.0%
Netherlands Poland - Life
31 31 31 31
December December December December
2001 2000 2001 2000
Risk discount rate 8.0% 8.0% 18.5% 20.0%
Pre-tax investment returns:
Base government fixed interest 5.1% 5.0% 12.5% 12.5%
Ordinary shares 8.1% 7.9% 12.5% 12.5%
Property 6.6% 6.5% n/a n/a
Future expense inflation 2.5% 2.5% 9.2% 9.2%
Tax rate 25.0% 25.0% 28.0% 28.0%
Poland - Pensions Spain
31 31 31 31
December December December December
2001 2000 2001 2000
Risk discount rate 16.9% 17.3% 8.3% 8.4%
Pre-tax investment returns:
Base government fixed interest 12.5% 12.5% 5.3% 5.4%
Ordinary shares 12.5% 12.5% 8.3% 8.4%
Property n/a n/a 6.8% 6.9%
Future expense inflation 9.2% 9.2% 3.2% 4.0%
Tax rate 28.0% 28.0% 35.0% 35.0%
This information is provided by RNS
The company news service from the London Stock Exchange
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