REG - Chesnara PLC - Half Yearly Report <Origin Href="QuoteRef">CSN.L</Origin> - Part 6
29/10/2014 16:08
- Part 6: For the preceding part double click ID:nRSc2947Qe
beginning of the period, other than changes in economic assumptions.
The contribution from shareholder net worth comprises the actual investment return on residual assets in excess of the
required capital.
(e) Assumption setting
There is a requirement under EEV methodology to use best estimate demographic assumptions and to review these at least
annually with the economic assumptions being reviewed at each reporting date. The current practice is detailed below.
Each year the demographic assumptions are reviewed as part of year-end processes and hence were last reviewed in December
2013.
The detailed projection assumptions, including mortality, morbidity, persistency and expenses reflect recent operating
experience. Allowance is made for future improvement in annuitant mortality based on experience and externally published
data. Favourable changes in operating experience, particularly in relation to expenses and persistency, are not
anticipated until the improvement in experience has been observed. Holding company expenses (for the Chesnara Group such
expenses relate largely to listed company functions) are allocated across the segments in proportion to the value before
tax of the in-force business. Hence the expense assumptions used for the cash flow projections include the full cost of
servicing this business.
For the Movestic business, persistency assumptions have been updated reflecting latest experience and Management's view of
future trends.
The economic assumptions are reviewed and updated at each reporting date based on underlying investment conditions at the
reporting date. The assumed discount rates and inflation rates are consistent with the investment return assumptions.
In addition, the demographic assumptions used at 31 December 2013 are considered to be best estimate and, consequently, no
further adjustments are required. In respect of the CA Business, the assumptions required in the calculation of the value
of the annuity rate guarantee on pension business have been set equal to best-estimate assumptions.
(f) Pension schemes
In Movestic, where the Group participates in a combined defined benefit and defined contribution scheme, future
contributions to the scheme are reflected in the value of in-force business.
(g) Financial reinsurance
In respect of Movestic the Group uses financial reinsurance to manage the impact of its new business strain. Whilst this
liability is valued at fair value within the IFRS statements, allowing for an option which provides the Group with the
right to settle the liability early on beneficial terms, when valuing the shareholder net worth within the EEV it is
considered more appropriate to assess this liability at a higher cost, reflecting the likelihood of the option not being
utilised.
4 Assumptions
(a) Investment Returns
Investment returns are assumed to be equal to the reference rate, as covered in Note 3(c). For linked business, the
aggregate return has been determined by the reference rate less an appropriate allowance for tax.
The rates presented below are indicative spot rates:
CA S&P PL* Movestic
Unaudited 30 June 31 Dec Unaudited 30 June 31 Dec Unaudited 30 June 31 Dec Unaudited 30 June 31 Dec
2014 2013 2013 2014 2013 2013 2014 2013 2013 2014 2013 2013
Investment Return 2.60% 2.80%
5 year 2.21% 1.57% 2.18% 2.21% 1.57% 2.18% - - - 1.35% 2.19% 2.18%
10 year 2.86% 2.66% 3.11% 2.86% 2.66% 3.11% - - - 2.07% 2.73% 2.87%
15 year 3.19% 3.17% 3.48% 3.19% 3.17% 3.48% - - - 2.40% 2.93% 3.12%
20 year 3.34% 3.41% 3.58% 3.34% 3.41% 3.58% - - - 2.55% 3.02% 3.20%
25 year 3.38% 3.52% 3.59% 3.38% 3.52% 3.59% - - - 2.55% 3.02% 3.20%
30 year 3.38% 3.56% 3.56% 3.38% 3.56% 3.56% - - - 2.55% 3.02% 3.20%
Inflation - RPI 2.90% 2.60% 3.00% 2.90% 2.60% 3.00% 2.90% - 3.00% 1.65% 1.67% 1.82%
*For PL a single rate is applied for all durations.
(b) Actuarial Assumptions
The demographic assumptions used to determine the value of the in-force business have been set at levels commensurate with
the underlying operating experience identified in the periodic actuarial investigations.
Certain products contain provisions that provide for the charges in respect of mortality risk to be reviewable. In these
cases assumptions for future experience and charges are assumed to be linked and assumptions are only updated when
decisions have been made regarding product charges, so as not to capitalise any benefits that may not accrue to
shareholders.
(c) Taxation
Projected tax has been determined assuming current tax legislation and rates continue unaltered, except where future tax
rates or practices have been announced. The tax rates for the UK business allow for changes in Corporation Tax as
announced by the Chancellor in his budget speech of 20 March 2013, so reflect a reduction from the current rate of 23% to
20% from April 2015.
(d) Expenses
The expense levels are based on internal expense analysis investigations and are appropriately allocated to the new
business and policy maintenance functions.
For CA, S&P and PL, these have been determined by reference to:
(i) the outsourcing agreements in place with our third-party business process administrators;
(ii) anticipated revisions to the terms of such agreements as they fall due for renewal; and
(iii) corporate governance costs relating to the covered business.
For Movestic, these have been determined by reference to:
(i) an expense analysis in which all expenses were allocated to covered and uncovered business, with expenses for the
covered business being allocated to acquisition and maintenance activities; and
(ii) expense drivers, being, in relation to acquisition costs, the number of policies sold during the period and, in
relation to maintenance expenses, the average number of policies in force during the period.
Holding company expenses (for the Chesnara Group such expenses relate largely to listed company functions) are allocated
across the segments on a basis that reflects each segment's economic consumption of such costs.
EEV Guidance requires that no allowance is made for future productivity improvements in expense assumptions. For the UK
business, for expenses relating to policy administration this requirement is met. As the UK company is essentially closed
to new business, those governance expenses which are not immediately variable can reasonably be expected to reduce through
management control in the future, though the timing and scale of such reductions is not fixed. A prudent estimate of the
reductions has been allowed for within the expense assumptions.
(e) Discount Rate
An explicit constant margin is added to the reference rate shown in (a) above to cover any remaining risks that are
considered to be non-market, non-diversifiable risks, as there is no risk premium observable in the market. This margin,
which is 50 basis points for CA, S&P and PL (as at 30 June 2013 and 31 December 2013: 50 basis points) and 100 basis points
for Movestic (as at 30 June 2013: 70 basis points and 31 December 2013: 100 basis points), gives due recognition to the
relative sensitivity of the value of in-force business to the discount rate for the different businesses, and to the fact
that:
a) For CA:
(i) the covered business is closed to new business;
(ii) there is no significant exposure in the with-profit business, which is wholly reinsured;
(iii) expense risk is limited as a result of the outsourcing of substantially all policy administration and related
functions to third-party business process administrators; and
(iv) for much of the life business the Group has the ability to vary risk charges made to policyholders.
b) For S&P and PL:
(i) the covered business is closed to new business; and
(ii) expense risk is limited as a result of the outsourcing of substantially all policy administration and related
functions to third-party business process administrators.
c) For Movestic:
(i) the covered business remains open;
(ii) the in-force business is relatively small;
(iii) reinsurance is used to significantly reduce insurance risks; and
(iv) a number of the risks provide diversification benefits within the Chesnara Group, in relation to reinsurance
counterparties, market exposures and policyholder populations.
5 Analysis of shareholders' equity
30 June 2014 (unaudited) CA S&P PL Movestic Other Group Activities Total
£000 £000 £000 £000 £000 £000
Regulated entities
Capital required 24,730 43,328 37,050 14,514 - 119,622
Free surplus 30,310 13,899 5,352 19,320 - 68,881
Regulatory capital resource of regulated entities 55,040 57,227 42,402 33,834 - 188,503
Adjustments to shareholder net worth:
Deferred acquisition costs - - - (52,254) - (52,254)
Financial reinsurance liability - - - (4,322) - (4,322)
Software asset adjustment - - - (4,348) - (4,348)
Adjustment to provisions on insurance contracts - 3,120 - - - 3,120
Deferred tax 2,240 - - - - 2,240
Policyholder funds - (14,628) - - - (14,628)
Other asset / liability adjustments 681 (325) - 5,989 - 6,345
Adjusted shareholder net worth 57,961 45,394 42,402 (21,101) - 124,656
In-force value of covered business 74,707 36,731 24,753 143,114 - 279,305
Embedded value of regulated entities 132,668 82,125 67,155 122,013 - 403,961
Less: amount financed by borrowings - (29,747) (43,443) - - (73,190)
Embedded value of regulated entities attributable to shareholders 132,668 52,378 23,712 122,013 - 330,771
Net equity of other Group companies - - - 2,032 67,453 69,485
Total shareholders' equity 132,668 52,378 23,712 124,045 67,453 400,256
30 June 2013 (unaudited) CA S&P PL Movestic Other Group Activities Total
£000 £000 £000 £000 £000 £000
Regulated entities
Capital required 27,099 47,385 - 17,222 - 91,706
Free surplus 19,055 30,036 - 18,240 - 67,331
Regulatory capital resource of regulated entities 46,154 77,421 - 35,462 - 159,037
Adjustments to shareholder net worth:
Deferred acquisition costs - - - (57,690) - (57,690)
Financial reinsurance liability - - - (4,377) - (4,377)
Software asset adjustment - - - (5,555) - (5,555)
Adjustment to provisions on insurance contracts - 2,436 - - - 2,436
Policyholder funds - (14,608) - - - (14,608)
Other asset / liability adjustments 338 - - 5,201 - 5,539
Adjusted shareholder net worth 46,492 65,249 - (26,959) - 84,782
In-force value of covered business 72,441 17,986 - 135,842 - 226,269
Embedded value of regulated entities 118,933 83,235 - 108,883 - 311,051
Less: amount financed by borrowings - (29,747) - - - (29,747)
Embedded value of regulated entities attributable to shareholders 118,933 53,488 - 108,883 - 281,304
Net equity of other Group companies - - - 1,694 54,373 56,067
Total shareholders' equity 118,933 53,488 - 110,577 54,373 337,371
31 December 2013 CA S&P PL Movestic Other Group Activities Total
£000 £000 £000 £000 £000 £000
Regulated entities
Capital required 23,776 43,447 37,845 16,863 - 121,931
Free surplus 32,386 44,750 1,397 17,969 - 96,502
Regulatory capital resource of regulated entities 56,162 88,197 39,242 34,832 - 218,433
Adjustments to shareholder net worth:
Deferred acquisition costs - - - (54,498) - (54,498)
Financial reinsurance liability - - - (4,358) - (4,358)
Software asset adjustment - - - (5,004) - (5,004)
Adjustment to provisions on insurance contracts - 2,602 - - - 2,602
Deferred tax 2,372 - - - - 2,372
Policyholder funds - (14,807) - - - (14,807)
Other asset / liability adjustments 322 2 - 5,455 - 5,779
Adjusted shareholder net worth 58,856 75,994 39,242 (23,573) - 150,519
In-force value of covered business 67,171 30,482 25,507 139,001 - 262,161
Embedded value of regulated entities 126,027 106,476 64,749 115,428 - 412,680
Less: amount financed by borrowings - (29,699) (43,341) - - (73,040)
Embedded value of regulated entities attributable to shareholders 126,027 76,777 21,408 115,428 - 339,640
Net equity of other Group companies - - - 1,894 34,836 36,730
Total shareholders' equity 126,027 76,777 21,408 117,322 34,836 376,370
EEV free surplus, as shown above, represents the balance of the shareholder net worth above the capital required. The
movement in free surplus is analysed as follows:
Six months ended 30 June 2014 (unaudited) CA S&P PL Movestic Total
£000 £000 £000 £000 £000
Free surplus at beginning of the period 32,386 44,750 1,397 17,969 96,502
Dividend paid to parent (17,000) (31,000) - - (48,000)
Surplus arising in the period 15,878 209 3,160 (998) 18,249
Adjustments to required capital (276) 1,366 795 2,349 4,234
Increase in policyholder funds cover for capital requirement - (179) - - (179)
Free surplus at end of the period 30,988 15,146 5,352 19,320 70,806
Six months ended 30 June 2013 (unaudited) CA S&P PL Movestic Total
£000 £000 £000 £000 £000
Free surplus at beginning of the period 37,142 27,513 - 15,127 79,782
Dividend paid to parent (22,250) (17,750) - - (40,000)
Surplus arising in the period 4,295 20,670 - 2,979 27,944
Adjustments to required capital (132) 346 - 134 348
Decrease in policyholder funds cover for capital requirement - (743) - - (743)
Free surplus at end of the period 19,055 30,036 - 18,240 67,331
Year ended 31 December 2013 CA S&P PL Movestic Total
£000 £000 £000 £000 £000
Free surplus at beginning of the year 37,142 27,513 - 15,127 79,782
Dividend paid to parent (22,250) (17,750) - - (40,000)
Surplus arising in the year 14,303 31,246 191 2,350 48,090
Adjustments to required capital 3,191 4,284 1,206 492 9,173
Decrease in policyholder funds cover for capital requirement - (543) - - (543)
Free surplus at end of the year 32,386 44,750 1,397 17,969 96,502
The movement in the in-force value of covered business comprises:
Six months ended 30 June 2014 (unaudited)
CA S&P PL Movestic Total
£000 £000 £000 £000 £000
Value at beginning of period 67,171 30,482 25,507 139,001 262,161
Amount charged to foreign exchange reserve - - - (11,591) (11,591)
Amount credited/(charged) to operating profit 7,536 6,249 (754) 15,704 28,735
Value at end of period 74,707 36,731 24,753 143,114 279,305
Six months ended 30 June 2013 (unaudited)
CA S&P PL Movestic Total
£000 £000 £000 £000 £000
Value at beginning of period 67,040 18,537 - 124,503 210,080
Amount charged to foreign exchange reserve - - - 3,570 3,570
Amount credited/(charged) to operating profit 5,401 (551) - 7,769 12,619
Value at end of period 72,441 17,986 - 135,842 226,269
Year ended 31 December 2013
CA S&P PL Movestic Total
£000 £000 £000 £000 £000
Value at beginning of year 67,040 18,537 - 124,503 210,080
Amount arising on acquisition - - 25,646 - 25,646
Amount charged to foreign exchange reserve - - - (1,491) (1,491)
Amount credited/(charged) to operating profit 131 11,945 (139) 15,989 27,926
Value at end of year 67,171 30,482 25,507 139,001 262,161
S&P and PL
EEV shareholders equity for the S&P and PL segments is presented net of the borrowings that were used to fund their
respective acquisitions.
Movestic
The adjusted shareholder net worth of Movestic is that of the regulated entity, which includes also the net worth
attributable to the non-covered business within the regulated entity. Accordingly, for Movestic, the embedded value of
regulated entities comprises the embedded value of covered business and the value of the non-covered business of the
regulated entity, the latter component being valued on an IFRS basis.
6 Summarised statement of changes in equity and analysis of profit/(loss)
(a) Changes in equity may be summarised as:
Statement of changes in equity Six months ended30 June (unaudited) Year ended31 December
2014 2013 2013
£000 £000 £000
Shareholders' equity at beginning of the period 376,370 311,145 311,145
Profit for the period attributable to shareholders before modelling adjustments 47,287 35,429 82,694
Effect of modelling adjustments - 848 4,073
Profit for the period 47,287 36,277 86,767
Issue of new shares
Share premium - 2 3
Sale of treasury shares - 4 5
Foreign exchange reserve movement (10,044) 2,864 (1,451)
Dividends paid (13,357) (12,921) (20,099)
Shareholders' equity at end of the period 400,256 337,371 376,370
Effect of modelling adjustments
Year ended 31 December 2013
Positive modelling adjustments this period of £4.1m relate entirely to the Movestic business. These have arisen due to
refinements being made to the way in which modelling of commission is performed, which is now performed at a more granular
level.
UK
The CA and CWA EEV models previously assumed a single average rate of investment return for all durations as opposed to the
use of a full yield curve. This approximation was reported in the EEV assumptions section 4(a) of the Supplementary
Information within the Interim Financial Statements for the six months ended 30 June 2013.
The effect of modelling adjustments is classified as an exceptional item in the consolidated income statement and is
presented after operating profit.
(b) The profit/(loss) for the period before modelling adjustments is analysed as:
Six months ended 30 June 2014 (unaudited) CA S&P PL UKTotal Movestic Other GroupActivities Total
£000 £000 £000 £000 £000 £000 £000
Covered business
New business contribution 378 6 - 384 5,787 - 6,171
Return from in-force business
Expected return 745 129 470 1,344 2,582 - 3,926
Experience variances 2,422 1,842 1,065 5,329 601 - 5,930
Operating assumption changes 22,719 (3,095) 1,383 21,007 (3,885) - 17,122
Return on shareholder net worth 804 3,215 - 4,019 - - 4,019
Operating profit of covered business 27,068 2,097 2,918 32,083 5,085 - 37,168
Variation from longer-term investment return 7,467 7,600 206 15,273 10,572 - 25,845
Effect of economic assumption changes (1,311) (3,048) - (4,359) (253) - (4,612)
Profit of covered business before tax 33,224 6,649 3,124 42,997 15,404 - 58,401
Tax thereon (10,306) - - (10,306)
Profit of covered business after tax 32,691 15,404 - 48,095
Results of non-covered business and of other group companies
Profit/(loss) before tax - 2,092 (2,765) (673)
Tax - (730) 595 (135)
Profit after tax 32,691 16,766 (2,170) 47,287
Six months ended 30 June 2013 (unaudited) CA S&P PL UKTotal Movestic Other GroupActivities Total
£000 £000 £000 £000 £000 £000 £000
Covered business
New business contribution 386 7 - 393 2,336 - 2,729
Return from in-force business
Expected return 592 79 - 671 1,919 - 2,590
Experience variances 3,224 2,999 - 6,223 (4,693) - 1,530
Operating assumption changes 1,217 768 - 1,985 (1,796) - 189
Return on shareholder net worth 199 (2,483) - (2,284) - - (2,284)
Operating profit of covered business 5,618 1,370 - 6,988 (2,234) - 4,754
Variation from longer-term investment return 6,867 6,939 - 13,806 7,007 - 20,813
Effect of economic assumption changes (392) 11,196 - 10,804 1,513 - 12,317
Profit of covered business before tax 12,093 19,505 - 31,598 6,286 - 37,884
Tax thereon (2,450) - - (2,450)
Profit of covered business after tax 29,148 6,286 - 35,434
Results of non-covered business and of other group companies
Profit/(loss) before tax - 1,046 (1,186) (140)
Exceptional profit arising on purchase of Protection Life - - - -
Tax - (142) 277 135
Profit after tax 29,148 7,190 (909) 35,429
Six months ended 31 December 2013 CA S&P PL UKTotal Movestic Other GroupActivities Total
£000 £000 £000 £000 £000 £000 £000
Covered business
New business contribution 704 13 - 717 7,196 - 7,913
Return from in-force business
Expected return 1,389 151 61 1,601 3,929 - 5,530
Experience variances 7,590 4,695 - 12,285 (6,490) - 5,795
Operating assumption changes (4,295) 4,458 - 163 (10,233) - (10,070)
Return on shareholder net worth 185 (452) - (267) - - (267)
Operating profit of covered business 5,573 8,865 61 14,499 (5,598) - 8,901
Variation from longer-term investment return 22,394 11,414 - 33,808 20,838 - 54,646
Effect of economic assumption changes (3,596) 22,463 - 18,867 (2,420) - 16,447
Profit of covered business before tax 24,371 42,742 61 67,174 12,820 - 79,994
Tax thereon (7,639) - - (7,639)
Profit of covered business after tax 59,535 12,820 - 72,355
Results of non-covered business and of other group companies
Profit/(loss) before tax - 2,677 (4,953) (2,276)
Exceptional profit arising on purchase of Protection Life - - 12,283 12,283
Tax - (468) 800 332
Profit after tax 59,535 15,029 8,130 82,694
The results of the non-covered business and of other group companies before tax and before exceptional item are presented
as 'other operational result' in the consolidated income statement.
7 Sensitivities to alternative assumptions
The following tables show the sensitivity of the embedded value as reported at 30 June 2014 and of the new business
contribution of Movestic, to variations in the assumptions adopted in the calculation of the embedded value. Sensitivity
analysis is not provided in respect of the new business contribution of CA for the six months ended 30 June 2014 as the
reported level of new business contribution is not considered to be material (see Note 3(a)).
Embedded Value New business contribution
UK business Swedish business Swedish business
CA Pre-tax S&PPre-tax PLPre-tax Tax UKPost-tax Post-tax
£m £m £m £m £m £m £m
Published value as at 30 June 2014 158.7 82.1 67.2 26.0 282.0 122.0 2.3
Changes in embedded value/new business contribution arising from:
Economic sensitivities
100 basis point increase in yield curve (4.0) 11.7 (3.1) (0.4) 4.1 0.1 (0.1)
100 basis point reduction in yield curve 4.3 (13.4) 3.4 0.3 (5.4) (0.4) 0.1
10% decrease in equity and property values (13.5) (11.6) - 2.6 (22.4) (12.5) (0.1)
Operating sensitivities
10% decrease in maintenance expenses 2.5 4.7 1.2 (0.7) 7.7 6.6 0.4
10% decrease in lapse rates 2.2 (0.7) 0.4 (0.3) 1.6 8.8 0.9
5% decrease in mortality/morbidity rates:
Assurances 0.8 0.6 1.5 (0.4) 2.6 0.1 -
Annuities (1.4) (0.3) n/a (0.3) (1.9) n/a n/a
Reduction in the required capital to statutory minimum 0.4 0.8 1.2 (0.2) 2.1 - -
The key assumption changes represented by each of these sensitivities are as follows:
Economic sensitivities
(i) 100 basis point increase in the yield curve: The reference rate is increased by 1% and the rate of future
inflation has also been increased by 1% so that real yields remain constant;
(ii) 100 basis point reduction in the yield curve: The reference rate is reduced by 1% (with a minimum of zero to
avoid negative yields where relevant) and the rate of future inflation has also been reduced by 1% so that real yields
remain constant; and
(iii) 10% decrease in the equity and property values. This gives rise to a situation where, for example, a Managed Fund
unit liability with a 60% equity holding would reduce by 6% in value.
Operating sensitivities
(i) 10% decrease in maintenance expenses, giving rise to, for example, a base assumption of £20 per policy pa reducing
to £18 per policy pa;
(ii) 10% decrease in persistency rates giving rise to, for example, a base assumption of 10% of policy base lapsing pa
reducing to 9% pa;
(iii) 5% decrease in mortality/morbidity rates giving rise to, for example, a base assumption of 95% of the parameters
in a selected mortality/morbidity table reducing to 90.25% of the parameters in the same table, assuming no changes are
made to policyholder charges or any other management actions; and
(iv) the sensitivity to the reduction in the required capital to the statutory minimum shows the effect of reducing the
required capital from that defined in Note 3(b) to the minimum requirement prescribed by regulation.
In each sensitivity calculation all other assumptions remain unchanged except where they are directly affected by the
revised economic conditions: for example, as stated, changes in interest rates will directly affect the reference rate.
8 Reconciliation of shareholders' equity on the IFRS basis to shareholders' equity on the EEV basis
30 June 2014 (unaudited) CA S&P PL Movestic Other Group Activities Total
£000 £000 £000 £000 £000 £000
Shareholders' equity on the IFRS basis 71,712 69,331 57,463 59,405 (5,991) 251,920
Reclassifications
Debt finance - (29,747) (43,443) - 73,190 -
Other (254) - - - 254 -
Adjustments
Deferred acquisition costs (3,763) - - (24,964) - (28,727)
Deferred income 6,804 - - - - 6,804
Adjustment to provisions on investment contracts, net of amounts deposited with reinsurers (9,290) - - - - (9,290)
Adjustments to provisions on insurance contracts, net of reinsurers' share 31 (19,107) - - - (19,076)
Acquired in-force value (8,812) (4,830) (15,061) (44,317) - (73,020)
Acquired value of customer relationships - - - (1,013) - (1,013)
Software assets - - - (4,348) - (4,348)
Adjustment to borrowings - - - (5,864) - (5,864)
Deferred tax 1,533 - - 2,032 - 3,565
Shareholder net worth 57,961 15,647 (1,041) (19,069) 67,453 120,951
Value of in-force business 74,707 36,731 24,753 143,114 - 279,305
Shareholders' equity on the EEV basis 132,668 52,378 23,712 124,045 67,453 400,256
Shareholder net worth comprises:
Shareholder net worth in regulated entities 57,961 45,394 42,402 (21,101) - 124,656
Shareholders' net equity in other Group companies - - - 2,032 67,453 69,485
Debt finance - (29,747) (43,443) - - (73,190)
Total 57,961 15,647 (1,041) (19,069) 67,453 120,951
30 June 2013 (unaudited) CA S&P PL Movestic Other Group Activities Total
£000 £000 £000 £000 £000 £000
Shareholders' equity on the IFRS basis 65,073 74,770 - 60,092 24,371 224,306
Reclassifications ?
Debt finance - (29,747) - - 29,747 -
Other (255) - - - 255 -
Adjustments -
Deferred acquisition costs (4,332) - - (21,029) - (25,361)
Deferred income 7,738 - - - - 7,738
Adjustment to provisions on investment contracts, net of amounts deposited with reinsurers (13,145) - - - - (13,145)
Adjustments to provisions on insurance contracts, net of reinsurers' share 394 (4,245) - - - (3,851)
Acquired in-force value (10,472) (5,276) - (53,712) - (69,460)
Acquired value of customer relationships - - - (1,282) - (1,282)
Software assets - - - (5,555) - (5,555)
Adjustment to borrowings - - - (5,939) - (5,939)
Deferred tax 1,491 - - 2,160 - 3,651
Shareholder net worth 46,492 35,502 - (25,265) 54,373 111,102
Value of in-force business 72,441 17,986 - 135,842 - 226,269
Shareholders' equity on the EEV basis 118,933 53,488 - 110,577 54,373 337,371
Shareholder net worth comprises: -
Shareholder net worth in regulated entities 46,492 65,249 - (26,959) - 84,782
Shareholders' net equity in other Group companies - - - 1,694 54,373 56,067
Debt finance - (29,747) - - - (29,747)
Total 46,492 35,502 - (25,265) 54,373 111,102
31 December 2013 CA S&P PL Movestic Other Group Activities Total
£000 £000 £000 £000 £000 £000
Shareholders' equity on the IFRS basis 74,994
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