REG - Chesnara PLC - Half Yearly Report <Origin Href="QuoteRef">CSN.L</Origin> - Part 4
29/10/2014 16:08
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service providers.· The supplier relationship management approach is conducive to ensuring the outsource arrangements deliver to their obligations.· Under the
terms of the contractual arrangements the Group may impose penalties and/or exercise step-in rights in the event of specified adverse circumstances.
Key man dependency The nature of the Group is such that, for both its Group-level functions and for its UK life and pensions operations, it relies on a small, professional team. There is, therefore, inevitably a concentration of experience and know how within particular key individuals and the Group is, accordingly, exposed to the sudden loss of the services of these individuals. · The Group promotes the sharing of know how and expertise to the fullest extent possible.· It periodically reviews and assesses staffing levels, and, where the
circumstances of the Group justify and permit, will enhance resource to ensure that know how and expertise is more widely embedded.· The Group maintains succession
plans and remuneration structures which comprise a retention element.· The Group complements its internal expertise with established relationships with external
specialist partners.
Adverse regulatory and legal changes The Group operates in jurisdictions which are currently subject to significant change arising from regulatory and legal requirements. These may either be of a local nature, or of a wider nature, following from EU-based regulation and law. Significant issues which have arisen and where there is currently uncertainty as to their full impact on the Group include:i) the implementation of Solvency II requirements; andii) potential change in the regulatory environment in Sweden.iii) FCA review of legacy · The current opinion is that the implementation of Solvency II will strengthen the long-term risk management environment of Chesnara (as is its intention).· The
business. Solvency II programme is covered in more detail below. The key risks are mitigated as follows:· Proposed appointment of external specialist Quality Assurance
partner;· Dedicated internal resource; and· Robust programme governance framework.· Management continually reviews the potential impact of any prospective
regulatory changes.
SOLVENCY II
Our Solvency II programme remains well on track to ensure we are ready for the planned implementation date.
Solvency II is a fundamental review of the capital adequacy regime for the European insurance industry. It aims to
establish a revised set of EU-wide capital requirements and risk management standards that will replace the current
solvency requirements. Solvency II's primary objective is to strengthen policyholder protection by aligning capital
requirements more closely with the risk profile of the company. The regime has a three pillar structure, with each pillar
governing a different aspect of the Solvency II requirements and approach. As well as requiring firms to disclose their
capital and risk frameworks, the Directive also asks firms to demonstrate how and where the requirements are embedded in
their wider activities. The planned implementation date is 01 January 2016 and interim measures have been agreed by the PRA
which require us to develop and implement various aspects of Solvency II in the lead up to the revised implementation
date.
Chesnara's approach
Pillar one
Pillar 1 considers the quantitative requirements of the system, including the calculation of technical provisions and the
rules relating to the calculation of the Minimum Capital Requirement (MCR) and the Solvency Capital Requirement (SCR).
Under Solvency II there are two prescribed methods for assessing an insurer's SCR; either a Standard Formula set by the
regulator or an Internal Model specific to that insurer and which is subject to regulatory approval. Chesnara has opted for
the Standard Formula approach for both CA and Movestic on the grounds that it is a good fit and appropriate for its
businesses at the current time. However, we will continue to monitor our position on the choice of approach as our
businesses evolve.
Progress update
Following a strategic decision to switch one of our suppliers of actuarial services, some re-work is required on the UK
Pillar 1 elements but we remain within our overall target to complete the Pillar 1 development and carry out a further dry
run on the year-end 2014 data during Q2 2015.
Pillar two
Pillar 2 deals with two main areas: firstly, that our businesses have in place effective strategies and controls to assess
and manage the risks it is exposed to and to assess and maintain its solvency capital based on its own risk profile and,
secondly, that its strategies, controls and assessment of its solvency capital are subject to supervisory review. This
pillar requires us to produce either, an Own Risk and Solvency Assessment (ORSA) for each subsidiary and one for the Group
or a single Group-wide ORSA. We will be producing an ORSA for each subsidiary and the Group ORSA. Each ORSA is subject to
review and scrutiny by the relevant regulator who will have the power to impose a higher capital requirement should it find
any inadequacies in the approach to calculating the SCR or in the risk and governance controls in operation.
Progress update
The format and structure of the Forward-Looking Assessment of Own Risk (FLAOR) has been agreed by the board and work
remains on target for us to produce our initial FLAOR for board review and sign-off during December 2014. This will enable
submission to the regulators in accordance with their timescales. Work to develop, enhance and further document the systems
of governance is ongoing and in-line with plans.
Pillar three
Pillar 3 seeks to enhance market discipline on regulated firms by requiring them to disclose publicly key information that
is relevant to market participants. As such, in choosing which information should be selected for disclosure under Pillar
3, supervisors will be guided by the actual needs of market participants rather than by their own information needs. The
key reporting requirements are a Solvency & Financial Condition Report (SFCR), a Regular Supervisory Report (RSR) and a set
of defined Quantitative Reporting Templates (QRT's). The SFCR is for public disclosure and will follow a prescribed
format. The RSR is not public and is only communicated to the relevant supervisor and, again, will largely follow a
prescriptive format.
Progress update
The analysis phase for the Quantitative Reporting Templates (QRT's) is complete save for the work on the Protection Life
business which is scheduled for Q4 2014. This will align it with the migration project which will transfer administration
of the Protection Life business from Direct Line Group to our outsourcers HCL. The work to develop core systems for QRT
reporting with our outsourcers in the UK and within Movestic is underway and on track. Plan remains to carry out dry run
work in Q2 and Q3 2015.
IFRS FINANCIAL STATEMENTS
Directors' responsibiliTIES statement
We confirm that to the best of our knowledge:
- the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial
Reporting';
- the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of
important events during the first six months and description of principal risks and uncertainties for the remaining six
months of the year); and
- the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of
related parties' transactions and changes therein).
By order of the Board
Peter Mason Graham Kettleborough
Chairman Chief Executive Officer
28 August 2014 28 August 2014
Independent Auditor's REVIEW Report to the Members of Chesnara plc
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report
for the six months ended 30 June 2014 which comprises the condensed consolidated statement of comprehensive income, the
condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated
statement of cash flows and related notes 1 to 7. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland)
2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state
to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are
responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by
the European Union. The condensed set of financial statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European
Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the
half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board
for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of
persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland)
and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June 2014 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
Manchester
United Kingdom
28 August 2014
condensed consolidated statement of comprehensive income (unaudited)
Unaudited Six months ended 30 June Year ended 31 December
2014 2013 2013
Note £000 £000 £000
Insurance premium revenue 66,512 55,084 109,938
Insurance premium ceded to reinsurers (26,507) (17,115) (35,469)
Net insurance premium revenue 40,005 37,969 74,469
Fee and commission income 34,873 34,867 69,990
Net investment return 199,312 239,013 567,463
Total revenue net of reinsurance payable 274,190 311,849 711,922
Other operating income 12,467 11,048 22,270
Total income net of investment return 286,657 322,897 734,192
Insurance contract claims and benefits incurred
Claims and benefits paid to insurance contract holders (152,612) (166,471) (281,800)
Net decrease/(increase) in insurance contract provisions 67,148 (23,459) (62,249)
Reinsurers' share of claims and benefits 15,412 48,362 57,004
Net insurance contract claims and benefits (70,052) (141,568) (287,045)
Change in investment contract liabilities (146,117) (123,174) (320,132)
Reinsurers' share of investment contract liabilities 647 2,508 5,568
Net change in investment contract liabilities (145,470) (120,666) (314,564)
Fees, commission and other acquisition costs (11,126) (9,374) (19,450)
Administrative expenses (19,981) (18,718) (38,761)
Other operating expenses
Charge for amortisation of acquired value of in-force business (4,721) (3,724) (7,530)
Charge for amortisation of acquired value of customer relationships (136) (153) (301)
Other (6,487) (4,863) (6,483)
Total expenses net of change in insurance contract provisions and investment contract liabilities (257,973) (299,066) (674,134)
Total income less expenses 28,684 23,831 60,058
Share of profit of associate 608 417 1,252
Profit recognised on business combination - - 2,807
Financing costs (1,914) (2,438) (3,527)
Profit before income taxes 4 27,378 21,810 60,590
Income tax expense (4,558) (4,567) (11,227)
Profit for the period 3,4 22,820 17,243 49,363
Foreign exchange translation differences arising on the revaluation of foreign operations (4,645) 1,632 (516)
Total comprehensive income for the period 18,175 18,875 48,847
Basic earnings per share (based on profit for the period) 2 19.87p 15.01p 42.98p
Diluted earnings per share (based on profit for the period) 2 19.87p 15.01p 42.98p
CONDENSED CONSOLIDATED BALANCE SHEET(unaudited)
Unaudited 30 June 31 December
2014 2013 2013
Note £000 £000 £000
Assets
Intangible assets
Deferred acquisition costs 29,539 26,565 28,162
Acquired value of in-force business 80,313 73,968 88,615
Acquired value of customer relationships 1,336 1,788 1,583
Software assets 4,348 5,555 5,004
Property and equipment 610 576 673
Investment in associates 4,367 3,392 4,088
Investment properties 5,173 71,303 20,387
Deferred tax assets - 388 -
Reinsurers' share of insurance contract provisions 356,432 285,288 379,894
Amounts deposited with reinsurers 34,224 31,998 34,293
Financial assets
Equity securities at fair value through income 475,344 451,639 479,617
Holdings in collective investment schemes at fair value through income 3,463,411 3,205,255 3,440,992
Debt securities at fair value through income 344,115 349,525 370,666
Policyholders' funds held by the Group 158,461 95,499 130,237
Insurance and other receivables 47,201 34,849 46,382
Prepayments 5,155 3,663 4,889
Derivative financial instruments 2,424 2,032 2,956
Total financial assets 4,496,111 4,142,462 4,475,739
Reinsurers' share of accrued policyholder claims 12,457 8,017 11,399
Income taxes 1,917 2,413 2,608
Cash and cash equivalents 219,290 200,891 184,263
Total assets 4 5,246,117 4,854,604 5,236,708
Liabilities
Insurance contract provisions 2,290,815 2,226,729 2,362,063
Other provisions 4,052 4,669 5,348
Financial liabilities
Investment contracts at fair value through income 2,337,862 2,152,673 2,283,403
Liabilities relating to policyholders' funds held by the Group 158,461 95,499 130,237
Borrowings 5 95,220 50,100 94,377
Derivative financial instruments 525 601 387
Total financial liabilities 2,592,068 2,298,873 2,508,404
Deferred tax liabilities 9,392 7,754 11,007
Reinsurance payables 9,978 15,254 11,539
Payables related to direct insurance and investment contracts 47,425 38,692 47,137
Deferred income 7,377 8,372 7,865
Income taxes 10,756 2,482 8,012
Other payables 20,631 25,838 27,104
Bank overdrafts 1,703 1,635 1,127
Total liabilities 4 4,994,197 4,630,298 4,989,606
Net assets 251,920 224,306 247,102
Shareholders' equity
Share capital 42,024 42,024 42,024
Share premium 42,526 42,525 42,526
Treasury shares (212) (213) (212)
Other reserves 2,558 9,351 7,203
Retained earnings 3 165,024 130,619 155,561
Total shareholders' equity 251,920 224,306 247,102
condensed consolidated statement of cash flows(unaudited)
Unaudited Six months ended 30 June Year ended 31 December
2014 2013 2013
£000 £000 £000
Profit for the period 22,820 17,243 49,363
Adjustments for:
Depreciation of property and equipment 109 84 177
Amortisation of deferred acquisition costs 5,063 4,119 9,386
Amortisation of acquired value of in-force business 4,720 3,725 7,530
Amortisation of acquired value of customer relationships 136 153 301
Amortisation of software assets 982 2,341 2,580
Tax paid 4,558 4,567 11,227
Interest receivable (13,270) (8,562) (19,256)
Dividends receivable (13,152) (6,340) (19,049)
Interest expense 1,914 2,438 3,527
Change in fair value of investment properties (2,265) 6,916 6,197
Fair value gains on financial assets (170,200) (225,392) (523,938)
Profits on sale of property and equipment - - (10)
Profit arising on business combination - - (2,807)
Share of profit of associate (608) (417) (1,252)
Interest received 13,333 8,529 18,701
Dividends received 5,859 5,875 19,252
Increase in intangible assets related to insurance and investment contracts (8,354) (7,712) (19,397)
Changes in operating assets and liabilities:
Decrease in financial assets 34,128 44,217 46,539
Decrease/(increase) in reinsurers share of insurance contract provisions 18,885 (8,852) (14,596)
Decrease/(increase) in amounts deposited with reinsurers 69 (1,753) (4,048)
Decrease/(increase) in insurance and other receivables 4,245 (10,282) (5,267)
Increase in prepayments (482) (462) (1,792)
(Decrease)/increase in insurance contract provisions (65,929) 17,760 51,570
Increase in investment contract liabilities 216,853 128,717 351,630
Decrease in provisions (1,290) (516) (1,829)
Decrease in reinsurance payables (847) (1,819) (5,182)
Increase/(decrease) in payables related to direct insurance and investment contracts 639 (368) 2,110
(Decrease)/increase in other payables (4,928) 8,810 3,690
Cash generated from/(utilised by) operations 52,988 (16,981) (34,643)
Income tax (paid)received (2,471) 3,614 1,405
Net cash generated from/(utilised by) operating activities 50,517 (13,367) (33,238)
Cash flows from investing activities
Business combinations - (2,017) (31,924)
Development of software (680) - (1,882)
Purchases of property and equipment (81) (293) (485)
Net cash utilised by investing activities (761) (2,310) (34,291)
Cash flows from financing activities
Proceeds from issue of share capital - 2 3
Proceeds from borrowings 2,375 1,213 46,728
Sale of treasury shares - 4 5
Dividends paid (13,357) (12,921) (20,099)
Interest paid (1,764) (2,379) (3,975)
Net cash (utilised by)/generated from financing activities (12,746) (14,081) 22,662
Net increase/(decrease) in cash and cash equivalents 37,010 (29,758) (44,867)
Cash and cash equivalents at beginning of period 183,136 228,074 228,074
Effect of exchange rate changes on cash and cash equivalents (2,559) 940 (71)
Cash and cash equivalents at end of the period 217,587 199,256 183,136
CONDENSED consolidated statement of changes in equity(unaudited)
Unaudited six months ended 30 June 2014
Share capital Share premium Other reserves Treasury shares Retained earnings Total
£000 £000 £000 £000 £000 £000
Equity shareholders' funds at 1 January 2014 42,024 42,526 7,203 (212) 155,561 247,102
Profit for the period - - - - 22,820 22,820
Dividends paid - - - - (13,357) (13,357)
Foreign exchange translation differences - - (4,645) - - (4,645)
Equity shareholders' funds at 30 June 2014 42,024 42,526 2,558 (212) 165,024 251,920
Unaudited six months ended 30 June 2013
Share capital Share premium Other reserves Treasury shares Retained earnings Total
£000 £000 £000 £000 £000 £000
Equity shareholders' funds at 1 January 2013 42,024 42,523 7,719 (217) 126,297 218,346
Profit for the period - - - - 17,243 17,243
Dividends paid - - - - (12,921) (12,921)
Foreign exchange translation differences - - 1,632 - - 1,632
Sale of treasury shares - 2 - 4 - 6
Equity shareholders' funds at 30 June 2013 42,024 42,525 9,351 (213) 130,619 224,306
Year ended 31 December 2013
Share capital Share premium Other reserves Treasury shares Retained earnings Total
£000 £000 £000 £000 £000 £000
Equity shareholders' funds at 1 January 2013 42,024 42,523 7,719 (217) 126,297 218,346
Profit for the year - - - - 49,363 49,363
Dividends paid - - - - (20,099) (20,099)
Foreign exchange translation differences - - (516) - - (516)
Sale of treasury shares - 3 - 5 - 8
Equity shareholders' funds at 31 December 2013 42,024 42,526 7,203 (212) 155,561 247,102
notes to the CONDENSED consolidated financial statements (unaudited)
1 Basis of preparation
This condensed set of consolidated financial statements has been prepared in accordance with IAS 34 'Interim Financial
Reporting' as adopted by the EU. As required by the Disclosure and Transparency Rules of the Financial Conduct Authority,
the condensed set of consolidated financial statements has been prepared applying the accounting policies and presentation
which were applied in the preparation of the Group's published consolidated financial statements for the year ended 31
December 2013 except for the application of the following additional accounting policies, which were not applicable for
reporting periods up to and including 31 December 2013:
IAS 1 'Presentation of Items of Other Comprehensive Income'; and
IAS 19 (revised 2011) 'Employee Benefits'.
The amendments to IAS 1 require items of other comprehensive income to be grouped by those items that will be reclassified
subsequently to profit or loss and those that will never be reclassified, together with their associated income tax. The
adoption of this accounting standard does not materially impact these financial statements.
IAS 19 (revised 2011) and the related consequential amendments have had no impact upon the Movestic defined benefit pension
scheme, as due to the multi-employer pooling of the scheme's assets and liabilities, it is accounted for as a defined
contribution scheme.
The adoption of IFRS 13 has had no material impact upon the measurement of fair value for financial assets and financial
liabilities, as the application of the credit risk of the Group has no material impact upon the associated fair values of
the financial liabilities it holds. However, this adoption has introduced additional new disclosures, as set out in note
6.
The Group's published consolidated financial statements for the year ended 31 December 2013 were prepared in accordance
with IFRS as adopted by the EU. Any judgements and estimates applied in the condensed set of financial statements are
consistent with those applied in the preparation of the Group's published consolidated financial statements for the year
ended 31 December 2013.
The financial information shown in this half-year review is unaudited and does not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006.
The comparative figures for the financial year ended 31 December 2013 are not the Company's statutory accounts for that
financial year. Those accounts have been reported on by the Company's auditor and delivered to the Registrar of Companies.
The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report and (iii) did not contain a statements under section 498(2) or
(3) of the Companies Act 2006.
2 Earnings per share
Earnings per share are based on the following:
Unaudited Six months ended 30 June Year ended 31 December
2014 2013 2013
Profit for the period attributable to shareholders (£000) 22,820 17,243 49,363
Weighted average number of ordinary shares 114,851,282 114,849,115 114,851,282
Basic earnings per share 19.87p 15.01p 42.98p
Diluted earnings per share 19.87p 15.01p 42.98p
The weighted average number of ordinary shares in respect of the six months ended 30 June 2014 is based upon 115,047,662
shares in issue, less 196,380 own shares held in treasury at the beginning of the period, and 115,047,662 shares in issue
less 196,380 own shares held in treasury at the end of the period.
The six months ended 30 June 2013 is based upon 115,047,662 shares in issue at the beginning and end of the periods, less
199,011 own shares held in treasury at the beginning.
The weighted average number of ordinary shares in respect of the year ended 31 December 2013 is based upon 115,047,662
shares in issue, less 196,380 own shares held in treasury.
There were no share options outstanding during these periods. Accordingly, there is no dilution of the average number of
ordinary shares in issue in respect of these periods.
3 Retained earnings
Unaudited Six months ended 30 June Year ended 31 December
2014 2013 2013
£000 £000 £000
Retained earnings attributable to equity holders of the parent company comprise:
Balance at 1 January 155,561 126,297 126,297
Profit for the period 22,820 17,243 49,363
Dividends
Final approved and paid for 2012 - (12,921) (12,921)
Interim approved and paid for 2013 - - (7,178)
Final approved and paid for 2013 (13,357) - -
Balance at 31 December 165,024 130,619 155,561
The interim dividend in respect of 2013, approved and paid in 2013 was paid at the rate of 6.25p per share.
The final dividend in respect of 2013, approved and paid in 2014, was paid at the rate of 11.63p per share so that the
total dividend paid to the equity shareholders of the Parent Company in respect of the year ended 31 December 2013 was made
at the rate of 17.88p per share.
An interim dividend of 6.42p per share in respect of the year ended 31 December 2014 payable on 15 October 2014 to equity
shareholders of the Parent Company registered at the close of business on 12 September 2014, the dividend record date, was
approved by the Directors after the balance sheet date. The resulting total final dividend of £7.4m has not been provided
for in these financial statements and there are no income tax consequences.
The following table summarises dividends per share in respect of the six month period ended 30 June 2014 and the year ended
31 December 2013:
Year ended 31 December 2014 2013
p p
Interim - approved and paid 6.42 6.25
Final - proposed/paid - 11.63
Total 6.42 17.88
4 Operating segments
The Group considers that it has no product or distribution-based business segments. It reports segmental information on the
same basis as reported internally to the Chief Operating Decision Maker, which is the Board of Directors of Chesnara plc.
The segments of the Group as at 30 June 2014 comprise:
CA: This segment is part of the Group's UK life insurance and pensions run-off portfolio and comprises the original
business of Countrywide Assured plc, the Group's principal UK operating subsidiary, and of City of Westminster Assurance
Company Limited which was acquired in 2005 and the long-term business of which was transferred to Countrywide Assured plc
during 2006. It is responsible for conducting unit-linked and non-linked business.
S&P: This segment, which was acquired on 20 December 2010, comprises the business of Save & Prosper Insurance Limited and
its subsidiary Save & Prosper Pensions Limited. It is responsible for conducting both unit-linked and non-linked business,
including a with-profits portfolio, which carries significant additional market risk, as described in Note 6 'Management of
financial risk'. On 31 December 2011 the whole of the business of this segment was transferred to Countrywide Assured plc
under the provisions of Part VII of the Financial Services and Markets Act 2000.
PL: This segment represents the business of Protection Life, which was purchased on 28 November 2013. PL is included
within the Group's UK business.
Movestic: This segment comprises the Group's Swedish life and pensions business, Movestic Livförsäkring AB ('Movestic')
and its subsidiary and associated companies, which are open to new business and which are responsible for conducting both
unit-linked and non-linked business.
Other Group Activities: The functions performed by the parent company, Chesnara plc, are defined under the operating
segment analysis as Other Group Activities. Also included therein are consolidation and elimination adjustments.
There were no changes to the basis of segmentation during the six months ended 30 June 2014.
The accounting policies of the segments are the same as those for the Group as a whole. Any transactions between the
business segments are on normal commercial terms in normal market conditions. The Group evaluates performance of operating
segments on the basis of the profit before tax attributable to shareholders and on the total assets and liabilities of the
reporting segments and the Group. There were no changes to the measurement basis for segment profit during the six months
ended 30 June 2014.
(i) Segmental income statement for the six months ended 30 June 2014
CA S&P PL UK Total Movestic Other Group Activities Total
£000 £000 £000 £000 £000 £000 £000
Net insurance premium revenue 21,463 3,411 7,164 32,038 7,967 - 40,005
Fee and commission income 15,968 1,152 - 17,120 17,753 - 34,873
Net investment return 35,664 28,975 343 64,982 134,106 224 199,312
Total revenue (net of reinsurance payable) 73,095 33,538 7,507 114,140 159,826 224 274,190
Other operating income 1,542 5,779 - 7,321 5,146 - 12,467
Segmental income 74,637 39,317 7,507 121,461 164,972 224 286,657
Net insurance contract claims and benefits incurred (38,893) (26,498) (1,048) (66,439) (3,613) - (70,052)
Net change in investment contract liabilities (10,851) (802) - (11,653) (133,817) - (145,470)
Fees, commission and other acquisition costs (331) (16) (603) (950) (10,176) - (11,126)
Administrative expenses
Amortisation charge on software assets - - - - (2,188) - (2,188)
Depreciation charge on property and equipment (22) - - (22) (187) - (209)
Other (4,155) (4,721) (983) (9,859) (5,921) (1,804) (17,584)
Other operating expenses
Charge for amortisation of acquired value of in-force business (1,181) (350) (1,216) (2,747) (1,974) - (4,721)
Charge for amortisation of acquired value of customer relationships - - - - (136) - (136)
Other (84) (467) (844) (1,395) (5,092) - (6,487)
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