M&G plc Half Year 2024 Results

Companies

M&G (MNG)

UK 100

Latest directors dealings

1 hour ago Savannah Energy
2 hours ago Buccaneer Energy PLC
2 hours ago Savannah Energy
2 hours ago Carclo
3 hours ago Schroder Japan Growth Fund

All directors dealings today

-	Resilient adjusted operating profit of £375 million (30 June 2023: £390 million), with a 9% improvement in Asset Management contribution, and a 7% reduction in Life and Wealth due to lower contractual service margin (CSM) amortisation rates and returns on surplus assets.
-	IFRS loss after tax of £56 million (30 June 2023: £75 million profit) was impacted by larger losses relating to short-term fluctuations in investment returns and mismatches arising on application of IFRS 17, although benefitted from lower restructuring costs.
-	Our CSM increased by 5% to £5.8 billion (31 December 2023: £5.5 billion), a meaningful improvement in the Group's stock of future value from its insurance operations. This result was supported by a positive operating change in the CSM of £99 million, and a further £180 million largely from the favourable impact from markets.
-	Operating capital generation (OCG) of £486 million (30 June 2023: £505 million) continues to be strong, taking cumulative OCG since the start of 2022 to £2.3 billion, and enabling us to increase our three-year cumulative target from £2.5 billion to £2.7 billion by the end of the year.
-	Shareholder Solvency II coverage ratio improved to 210% (31 December 2023: 203%) thanks to the resilient operating result and the reversal of £216 million capital restrictions; the ratio also reflects the 2023 final dividend and deleveraging actions announced in June.
-	Shareholder Solvency II leverage ratio improved to 32%ⁱⁱ (31 December 2023: 35%) after allowing for all the deleveraging actions announced in June totalling £461 million. These actions will reduce ongoing debt interest cost by £21 million per annum.
-	The 2024 first interim dividend of 6.6 pence per share (30 June 2023: 6.5 pence per share) is in line with our policy of stable or increasing dividends. The first interim dividend is payable on 18 October 2024.

-	Delivered good momentum on our Transformation programme at the halfway point of this three-year journey to create a leaner and more efficient organisation; continued to improve our ability to serve clients, reduce costs and unlock growth.
-	Reduced H1 2024 managed costs by 4% compared with H1 2023, more than offsetting inflationary pressures and freeing up resources to support investment in growth initiatives, thanks to cost savings of £121 million since the launch of the programme in early 2023.
-	Following a strategic review and given our commitment to operational discipline, we have decided to focus and rationalise our Wealth strategy, combining the Life and Wealth operations under the leadership of Clive Bolton. Through this change, we will better focus our efforts to serve the UK retail market, complement PruFund with life insurance solutions, reduce duplication and improve efficiency.
-	Increased the cost savings target from £200 million to £220 million by 2025, reflecting the strong progress achieved to date. This increase in the target excludes any additional benefits from the streamlining of our operating model announced today.
-	Reduced the Asset Management Cost-to-Income ratio to 77% (31 December 2023: 79%) through a 2% reduction in costs to £388 million (30 June 2023: £394 million) and a 1% increase in revenues to £499 million (30 June 2023: £496 million).
-	Since the start of our transformation journey, migrated a total of 3.9 million policies to our strategic policy administration system, improving client service levels and reducing average claim processing time in the Life business.

-	Successfully navigating a challenging macro environment, delivering a resilient performance while positioning the Group for long-term sustainable growth that is capital-lite across the Asset Management and Life business.
-	Continued to deliver strong investment performance to our clients. As of 30 June 2024, 62% of our mutual funds ranked in the upper two performance quartiles over three years and 66% over five years; in institutional asset management, over 70% of funds by AUMA outperformed their benchmarks on both a three and five-year basis.
-	AUMA of £346.1 billion was £2.6 billion higher than at the start of the year, due to positive markets and the consolidation of the Continuum operations offsetting net outflows.
-	Reduced net client outflows in UK Institutional Asset Management to £2.4 billion (30 June 2023: £3.8 billion), and continued net client inflows in International Institutional Asset Management of £1.9 billion (30 June 2023: £2.4 billion).
-	Delivered flat net flows in Wholesale Asset Management (30 June 2023: £1.3 billion net inflows), a good result in a challenging market for active investment solutions, where there have been £15 billionⁱⁱⁱ of net outflows in the UK and €18 billion^iv net outflows in Europe.
-	Experienced £0.9 billion net outflows in Wealth (30 June 2023: £0.6 billion net inflows) as protracted high interest rates increased the relative attractiveness of alternative solutions to PruFund, such as cash and annuities.
-	Completed the third Bulk Purchase Annuity (BPA) deal since re-entering the market in 2023 (premium of £309 million) and continued to build our capabilities to grow in this attractive market.
-	Continuing to develop our capital-lite solutions in Life. Expect to complete our first capital-lite BPA transaction by the end of the year, and to imminently launch a PruFund-like solution in the Middle East.

-	M&G is well positioned to navigate the current uncertain economic climate due to its diversified business model, international footprint, compelling products and services, investment capabilities and expertise.
-	The progress achieved in the first six months of the year underpin our continued confidence in the delivery of our strategic priorities and financial targets, as we remain focused on transforming M&G to deliver great client and shareholder outcomes.
-	Our strategic priorities are clear: Maintain our financial strength, build on the progress already achieved in simplifying the business, and deliver profitable growth in the UK and internationally.
-	We are making good progress on our financial targets, in particular on the upgraded operating capital generation target of £2.7 billion by end of 2024, and the upgraded cost savings target of £220 million by end of 2025.
-	Our dividend policy of delivering stable or growing dividends to our shareholders remains unchanged.

	For the six months ended 30 June		For the year ended 31 December
Performance highlightsⁱ	2024	2023	2023
Adjusted operating profit before tax (£m)	375	390	797
IFRS (loss)/profit after tax (£m)	(56)	75	309
Operating change in contractual service margin (CSM) (£m)	99	151	355
Operating capital generation (£m)	486	505	996
Total capital generation (£m)	813	73	358
Shareholder Solvency II coverage ratio (%)	210%	199%	203%
Dividend per share (p)	6.6	6.5	19.7
Assets under management and administration (AUMA) (£bn)	346.1	332.8	343.5
Net client flows (excluding Heritage)ⁱⁱ (£bn)	(1.5)	0.7	1.1

Media		Investors/Analysts
Irene Chambers	+44(0)7825 696815	Luca Gagliardi	+44(0)20 8162 7301
	Irene.Chambers@mandg.com		Luca.Gagliardi@mandg.com
Will Sherlock	+44(0)7786 836562
	Will.Sherlock@mandg.com
Sophie Redburn	+44(0)7391 227026
	Sophie.Redburn@mandg.com

Ex-dividend date	12 September 2024
Record date	13 September 2024
Payment of dividend	18 October 2024

	For the six months ended 30 June		For the year ended 31 December
	2024	2023	2023
	£m	£m	£m
Asset Management	129	118	242
Lifeⁱ	263	283	586
Wealthⁱ	83	91	180
Corporate Centre	(100)	(102)	(211)
Adjusted operating profit before tax	375	390	797

	As at 30 June		As at 31 December
	2024	2023	2023
	£m	£m	£m
Nominal value of subordinated debtⁱ	2,784	3,243	3,242
Shareholder Solvency II own fundsⁱ	8,714	9,086	9,143
Leverage ratio	32%	36%	35%

	Net client flows			AUMAⁱ
	For the six months ended 30 June 2024	For the six months ended 30 June 2023	For the year ended 31 December 2023	As at 30 June 2024	As at 31 December 2023
	£bn	£bn	£bn	£bn	£bn
Institutional Asset Management	(0.5)	(1.4)	(0.7)	97.8	98.2
Wholesale Asset Management	-	1.3	1.5	56.1	55.0
Other	-	-	-	1.0	1.0
Total External Asset Management	(0.5)	(0.1)	0.8	154.9	154.2
Internal Asset Management				158.7	160.3
Total Asset Management				313.6	314.5

	Net client flows			AUMA
	For the six months ended 30 June 2024	For the six months ended 30 June 2023	For the year ended 31 December 2023	As at 30 June 2024	As at 31 December 2023
	£bn	£bn	£bn	£bn	£bn
Traditional with-profits	(2.3)	(2.3)	(4.2)	63.7	65.0
Shareholder annuities	(0.2)	(0.5)	(0.4)	15.2	15.8
Europe	(0.1)	0.2	0.1	6.5	6.4
Other	(0.7)	(0.4)	(1.2)	13.5	13.7
Total Life	(3.3)	(3.0)	(5.7)	98.9	100.9

	For the six months ended 30 June		For the year ended 31 December
	2024	2023	2023
	£m	£m	£m
CSM release	90	111	238
Expected return on excess assets	18	17	35
Other	-	1	(10)
Traditional with-profits	108	129	263

-	The investment and economic landscape remains challenging as a result of geopolitical and macro-economic uncertainty. Recent global events have introduced a new level of macro-economic risk, which makes saving for the future more challenging. The drivers include the rising costs from disruption to supply chain and energy security; market volatility; and from factors including monetary policy and geopolitics.
-	Geopolitical risk remains elevated with the conflicts in the Middle East and Ukraine, and ongoing tensions between China and the US. The impact of the recent UK election result on the savings and investment environment in the UK remains to be seen. Furthermore, the outcomes of the upcoming US election have the potential to impact the future global economic, pathway for climate change policy and geopolitical outlook.
-	The external sustainability risk environment continues to evolve. Climate change physical and transition risks are accelerating, biodiversity risks are emerging, and social issues continue to be important. The importance of robust sustainability risk management and controls will continue to grow as the industry develops its approach to sustainability. This includes addressing issues such as: the quality of sustainability data; greenwashing; enhancement of climate change methodologies; and the implementation of regulatory requirements.
-	With respect to technology and artificial intelligence, there are a range of emerging risks driven by the fast pace of technological advancement, including AI-enhanced malicious cyber-attacks, AI-assisted disinformation, and the opportunity costs of failing to optimise new technology to drive better outcomes for our clients and operational efficiency.
-	The quantum of regulatory change continues across our businesses and we remain focused on adapting to meet the expectations of our regulators. This includes Group-wide programmes on Consumer Duty and Financial Crime. Our Consumer Duty programme strengthens the framework in place to deliver good outcomes to retail customers. We continued our focus to monitor and embed compliance for open products and services; and to implement closed book requirements to achieve substantive compliance by 31 July 2024. Our Financial Crime programme continues to enhance and strengthen processes and controls across all of our products and markets. Our approach to delivering good customer outcomes and preventing and mitigating financial crime, and how we manage these risks is expected to evolve in accordance with regulatory expectations.

-	an indication of important events that have occurred during the first six months and their impact on the condensed consolidated interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
-	material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.

Andrea Rossi	Kathryn McLeland
Group Chief Executive Officer	Chief Financial Officer
3 September 2024	3 September 2024

	For the six months ended 30 June		For the year ended 31 December
	2024	2023	2023
	£m	£m	£m
Opening cash and liquid assets at the beginning of the period	977	986	986
Cash remittances from subsidiaries	541	333	725
Corporate costs	(59)	(80)	(129)
Interest paid on core structural borrowings	(98)	(94)	(189)
Debt repurchaseⁱ	(150)	-	-
Cash dividends paid to equity holders	(311)	(310)	(462)
Shares purchased by employee benefits trust	-	(5)	(5)
Acquisition of and capital injections to subsidiaries	(62)	(46)	(66)
Interest income on intercompany loans	21	19	42
Other	32	28	75
Closing cash and liquid assets at the end of the periodⁱⁱ	891	831	977

		For the six months ended 30 June		For the year ended 31 December
		2024	Restatedⁱ 2023	2023
	Note	£m	£m	£m
Insurance revenue	4	1,978	1,834	3,887
Insurance service expenses		(1,425)	(1,495)	(2,834)
Net expenses from reinsurance contracts held		(15)	(5)	(95)
Insurance service result		538	334	958
Interest revenue from financial assets not measured at fair value through profit or loss (FVTPL)		340	318	672
Interest revenue from financial assets measured at FVTPL		1,272	1,155	2,446
Net change in investment contract liabilities without discretionary participation features (DPF)		(224)	(204)	(700)
Net credit impairment (losses)/reversal		(11)	(6)	2
Other investment return		3,097	(125)	6,214
Investment return		4,474	1,138	8,634
Finance expenses from insurance contracts issued		(4,196)	(673)	(7,318)
Finance (expenses)/income from reinsurance contracts held		(50)	(19)	39
Net insurance finance expenses		(4,246)	(692)	(7,279)
Net insurance and investment result		766	780	2,313
Fee income	5	508	508	1,003
Other income		25	30	37
Administrative and other expenses	6	(1,147)	(1,053)	(2,241)
Finance costs	6	(50)	(79)	(160)
Movements in third party interest in consolidated funds		96	(94)	(226)
Share of profit from joint ventures and associates		11	36	23
Profit before taxⁱⁱ		209	128	749
Tax charge attributable to policyholders' returns	7	(266)	(27)	(328)
(Loss)/profit before tax attributable to equity holders		(57)	101	421
Total tax charge		(265)	(53)	(440)
Less tax charge attributable to policyholders' returns	7	266	27	328
Tax credit/(charge) attributable to equity holders	7	1	(26)	(112)
(Loss)/profit for the period		(56)	75	309

Attributable to equity holders of M&G plc		(62)	68	297
Attributable to non-controlling interests		6	7	12
(Loss)/profit for the period		(56)	75	309

Earnings per share:
Basic (pence per share)	8	(2.6)	2.9	12.7
Diluted (pence per share)	8	(2.6)	2.9	12.4

	For the six months ended 30 June		For the year ended 31 December
	2024	2023	2023
	£m	£m	£m
(Loss)/profit for the period	(56)	75	309

Items that may be reclassified subsequently to profit or loss:
Exchange movements arising on foreign operationsⁱ	(10)	(28)	(12)
Other comprehensive loss on items that may be reclassified subsequently to profit or loss	(10)	(28)	(12)

Items that will not be reclassified to profit or loss:
Gain/(loss) on remeasurement of defined benefit pension scheme	30	(34)	(124)
Tax on remeasurement of defined benefit pension scheme	(8)	8	28
Other comprehensive income/(loss) on items that will not be reclassified to profit or loss	22	(26)	(96)

Other comprehensive income/(loss) for the period, net of related tax	12	(54)	(108)

Total comprehensive (loss)/income for the period	(44)	21	201

Attributable to equity holders of M&G plc	(50)	21	193
Attributable to non-controlling interests	6	-	8
Total comprehensive (loss)/income for the period	(44)	21	201

		As at 30 June 2024	As at 31 December 2023
	Note	£m	£m
Assets
Goodwill and intangible assets		1,801	1,815
Deferred acquisition costs		19	23
Defined benefit pension asset	10	36	19
Investment in joint ventures and associates accounted for using the equity method		274	287
Property, plant and equipment		2,303	2,065
Investment property		14,875	15,422
Deferred tax assets	7	444	443
Insurance contract assets	11	41	44
Reinsurance contract assets	11	1,030	1,099
Equity securities and pooled investment funds		65,001	66,248
Loans		4,065	3,908
Debt securities		70,396	70,683
Derivative assets		1,154	1,693
Deposits		17,793	16,324
Current tax assets	7	67	67
Accrued investment income and other debtors		2,700	2,536
Assets held for saleⁱ		1,284	1,356
Cash and cash equivalents		5,400	5,590
Total assets		188,683	189,622
Equity
Share capital		119	119
Share premium reserve		381	379
Shares held by employee benefit trust		(12)	(26)
Treasury shares		(5)	(21)
Retained earnings		14,873	15,223
Other reserves		(11,655)	(11,633)
Equity attributable to equity holders of M&G plc		3,701	4,041
Non-controlling interests		38	43
Total equity		3,739	4,084
Liabilities
Insurance contract liabilities	11	141,681	142,135
Reinsurance contract liabilities	11	339	357
Investment contract liabilities without discretionary participation features (DPF)	12	12,684	12,535
Third party interest in consolidated funds		9,712	9,893
Subordinated liabilities and other borrowings	13	8,094	8,089
Defined benefit pension liability	10	271	294
Deferred tax liabilities	7	706	682

-	the condensed consolidated statement of financial position as at 30 June 2024;
-	the condensed consolidated income statement and condensed consolidated statement of comprehensive income for the period then ended;
-	the condensed consolidated statement of cash flows for the period then ended;
-	the condensed consolidated statement of changes in equity for the period then ended; and
-	the explanatory notes to the interim financial statements.

	Share capital	Share premium	Shares held by employee benefit trust	Treasury shares	Retained earnings	Other reserves	Total equity attributable to equity holders of M&G plc	Non-controlling interests	Total equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m
As at 1 January 2024	119	379	(26)	(21)	15,223	(11,633)	4,041	43	4,084
Loss for the period	-	-	-	-	(62)	-	(62)	6	(56)
Other comprehensive income for the period	-	-	-	-	22	(10)	12	-	12
Total comprehensive loss for the period	-	-	-	-	(40)	(10)	(50)	6	(44)
Dividends paid to equity holders of M&G plc	-	-	-	-	(311)	-	(311)	-	(311)
Dividends paid to non-controlling interests	-	-	-	-	-	-	-	(11)	(11)
Proceeds from shares issued to settle employee share option schemes	-	2	-	-	-	-	2	-	2
Shares distributed by employee trusts or from treasury shares	-	-	30	-	(30)	-	-	-	-
Vested employee share-based payments	-	-	-	-	30	(30)	-	-	-
Expense recognised in respect of share-based payments	-	-	-	-	-	21	21	-	21
Shares acquired by and transferred to employee trusts	-	-	(16)	16	-	-	-	-	-
Tax effect of items recognised directly in equity	-	-	-	-	1	(3)	(2)	-	(2)
Net increase/(decrease) in equity	-	2	14	16	(350)	(22)	(340)	(5)	(345)
As at 30 June 2024	119	381	(12)	(5)	14,873	(11,655)	3,701	38	3,739

-	20% fall in equity prices;
-	20% fall in property prices;
-	(50bps) parallel shift in nominal yields;
-	20% of the credit portfolio downgrading by one full letter; and
-	+100bps spread widening (A-rated assets).

-	Classification of Liabilities as Current or Non-current (Amendments to IAS 1), issued in January 2020;
-	Lease Liability in a Sale and Leaseback (Amendments to IFRS 16), issued in September 2022;
-	Non-current Liabilities with Covenants (Amendments to IAS 1), issued in October 2022; and
-	Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7), issued in May 2023.

-	categories and subtotals to be used in the statement of profit or loss;
-	specific disclosures for management-defined performance measures (MPMs); and
-	location, aggregation and disaggregation of financial information.

	£m
Total consideration	49
Net assets acquired:
Accrued investment income and other debtors	1
Cash and cash equivalents	3
Total assets	4
Accruals, deferred income and other liabilities	(2)
Total liabilities	(2)
Goodwill and intangible assets	47

-	Difference between actual CSM release for the period and expected CSM release for the period for with-profit contracts;
-	Movements in the fair value of instruments held to mitigate equity risk in the future with-profits shareholder transfer and to optimise the Group's capital position on a Solvency II basis;
-	Difference between actual and long-term expected investment return on surplus assets backing the shareholder annuity capital and shareholders' share of excess assets in the With-Profits Fund measured on an IFRS basis;
-	Foreign exchange movements on the US dollar subordinated debt held in the Corporate Centre;
-	Fair value movements on strategic investments; and
-	Impact of short term credit risk provisioning and experience variances on the measurement of best estimate liabilities, specifically:
	-	The impact of credit risk provisioning for short-term adverse credit risk experience;
	-	The impact of credit risk provisioning for actual upgrade and downgrade experience during the year. This is calculated by reference to current interest rates;
	-	Credit experience variance relative to long-term assumptions, reflecting the impact of defaults and other similar experience, such as asset exchanges arising from debt restructuring; and
	-	The impact of market movements on bond portfolio weightings and the subsequent impact on credit provisions.

-	Difference between the value under IFRS 17 General Measurement Model for non-profit contracts (primarily annuities) written in the With-Profits Fund and how these contracts are treated in determining their fair value when assessing current and future with-profits contracts under the VFA; and
-	Mismatch resulting from measurement of fulfilment cashflows for shareholder non-profit business (primarily annuities) using current interest rates while related changes to the CSM are measured using locked-in rates.

	For the six months ended 30 June 2024
	With-profits sub-funds	Unit-linked liabilities	Annuity and other long-term business	Total
	£m	£m	£m	£m
Amounts relating to the changes in the liability for remaining coverage:
Expected incurred claims and other expenses	769	19	581	1,369
Change in the risk adjustment for non-financial risk for the risk expired	11	-	17	28
CSM recognised in profit or loss for the services provided	266	4	71	341
Revenue recognised for incurred policyholder tax	202	3	-	205
Amounts relating to the recovery of insurance acquisition cash flows:
Allocation of premium	19	-	16	35
Total insurance revenue	1,267	26	685	1,978

	For the six months ended 30 June 2024	For the year ended 31 December 2023
	£m	£m
Unrealised gains on investments	(706)	(673)
Balance relating to insurance and investments contracts	(239)	(243)
Other short-term timing differences	99	123
Deferred acquisition costs	22	26
Defined benefit pensions	(25)	(21)
Capital allowances	20	21
Tax losses carried forward	547	505
Share based payments and deferred compensation	20	23
Net deferred tax liability	(262)	(239)
Assets	981	999
Liabilities	(1,243)	(1,238)
Net deferred tax liability	(262)	(239)

	As at 30 June 2024
	PSPS	SASPS	M&GGPS	Total
	£m	£m	£m	£m
Fair value of plan assets	4,330	559	288	5,177
Present value of defined benefit obligation	(3,983)	(533)	(274)	(4,790)
Effect of restriction on surplus	(337)	-	-	(337)
Net economic pension surplusⁱ	10	26	14	50
Non-qualifying insurance policies	-	-	(11)	(11)
Elimination of reimbursement right asset on consolidation	-	-	(274)	(274)
Net pension surplus/(deficit)	10	26	(271)	(235)

	1 year	5 years	10 years	15 years	20 years	25 years	30 years
With-profits contracts	5.27%	4.34%	4.24%	4.33%	4.37%	4.35%	4.29%
Unit-linked contracts	4.89%	3.96%	3.86%	3.96%	3.99%	3.97%	3.92%
Non-profit annuities - shareholder-backed	6.49%	5.56%	5.46%	5.55%	5.59%	5.57%	5.51%
Non-profit annuities - in the With-Profits Fund	6.36%	5.42%	5.32%	5.42%	5.45%	5.44%	5.38%

	Shareholder-backed annuities	Annuities in the With-Profits Fund
Credit risk allowance	56 bps	57 bps
Credit risk allowance as proportion of spread over swaps	25.10%	25.90%
Net of reinsurance credit reserve (£m)	483	179

	30 June 2024	31 December 2023
With-profits contracts	0% - 30%	0% - 30%
Unit-linked contracts	0% - 16%	0% - 16%
Non-profit annuities - shareholder-backed	N/A	N/A
Non-profit annuities - in the With-Profits Fund	N/A	N/A

	30 June 2024	31 December 2023
	£ pa	£ pa
With-profits contracts	7 - 239	7 - 239
Unit-linked contracts	43 - 239	43 - 239
Non-profit annuities - shareholder-backed	35 - 57	35 - 57
Non-profit annuities - in the With-Profits Fund	36	36

-	the fair value of the underlying items for in-force contracts, ie the value of the asset shares and the expected future additions to asset shares, plus the present value of future costs less charges;
-	the allowance for 'mutualisation' on in-force business;
-	the risk adjustment for non-financial risk;
-	the CSM; and
-	the historical allowance for 'mutualisation' (based on the underlying items for the additional amounts expected to be paid to current or future policyholders).

-	Assumptions relating to persistency (see Note 11.1.2) and the take-up of options offered on certain with-profits contracts are set based on the results of the most recent experience analysis looking at the experience over recent years of the relevant business, and supplemented by expert judgement within the business. In line with legislative changes, including pension freedoms, the Group expects all policyholders of pension contracts to choose alternative post-vesting options;
-	Management actions under which the Fund is managed in different scenarios;
-	Maintenance and, for some classes of business, termination expense assumptions are expressed as per policy amounts (see Note 11.1.2). They are set based on forecast expense levels, including an allowance for ongoing investment management expenses, and are allocated between entities and product groups in accordance with the Group's internal cost allocation model. They reflect the costs incurred by the Group which may differ from the internal charges to companies within the Group;
-	Expense inflation assumptions are set consistent with the economic basis and based on the inflation swap spot curve;
-	The contract liabilities for with-profits business also require assumptions for mortality. These are set based on the results of recent experience analysis. Mortality experience over 2020 and 2021 was significantly higher than previous years as a result of the COVID-19 pandemic. In line with broader industry approach, no weight has been given to pandemic experience; and
-	Future investment return assumptions and discount rates are set at a risk-free yield curve plus an illiquidity premium (as set out in Note 11.1.1).

-	the discounted value of the amounts that will be charged to policies;
-	less: the discounted value of future shareholder transfers, gross of tax;
-	less: the discounted value of other costs directly attributable to the group of insurance contracts; and
-	less: the amount of any additional tax attributable to the above items.

-	For conventional with-profits contracts, including endowment assurance contracts and whole of-life assurance contracts, payouts are guaranteed at the sum assured together with any declared regular bonus;
-	Conventional with-profits deferred annuity contracts have a basic annuity per annum to which bonuses are added. At maturity, the cash claim value will reflect the current cost of providing the deferred annuity. Regular bonuses when added to with-profits contracts usually increase the guaranteed amount;
-	For unitised with-profits contracts and cash accumulation contracts the guaranteed payout is the initial investment (adjusted for any withdrawals, where appropriate), less charges, plus any regular bonuses declared. If benefits are taken at a date other than when the guarantee applies, a market value reduction may be applied to reflect the difference between the accumulated value of the units and the market value of the underlying assets;
-	For certain unitised with-profits contracts and cash accumulation contracts, policyholders have the option to defer their retirement date when they reach maturity, and the terminal bonus granted at that point is guaranteed;
-	For with-profits annuity contracts, there is a guaranteed minimum annuity payment below which benefit payments cannot fall over the lifetime of the policies; and
-	Certain pensions products have guaranteed annuity options at retirement, where the policyholder has the option to take the benefit in the form of an annuity at a guaranteed conversion rate.

	30 June 2024	31 December 2023
Confidence level (percentile of the Group's one year risk distributions)	75th	75th
Confidence level (percentile of the risk distributions over the remaining lifetime)	60th	60th