REG - Legal & General Grp - L&G FY 2014 results part 3 <Origin Href="QuoteRef">LGEN.L</Origin> - Part 6

Legal & GeneralAnnouncement

04/03/2015 07:12

- Part 6: For the preceding part double click  ID:nRSD4570Ge 

                                                                                                                 218       1,141     5.2       -         1,141   101         8.9     
 Overseas business                                                                                                                                                                                                                                                                                                                   30        229       7.6       371       600     5           0.8     
 UK Savings                                                                                                                                                                                                                                                                                                                          724       2,516     3.5       2,495     5,011   2           -       
                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                                                                                         
 Total LGAS                                                                                                                                                                                                                                                                                                                          972       3,886     4.0       2,866     6,752   108         1.6     
                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                                                                                         
 LGR4                                                                                                                                                                                                                                                                                                                                n/a       939       n/a       4,089     5,028   436         8.7     
                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                                                                                         
 LGA                                                                                                                                                                                                                                                                                                                                 99        926       9.4       -         926     107         11.6    
                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                                                                                         
 Total new business                                                                                                                                                                                                                                                                                                                  1,071     5,751     5.4       6,955     12,706  651         5.1     
 Cost of capital                                                                                                                                                                                                                                                                                                                                                                     72                  
                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                                                                                         
 Contribution from new business before cost of capital                                                                                                                                                                                                                                                                                                             723               
                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                                                                                         
 1. Covered business only.                                                                                                                                                                                                                                                                                                       
 2. The capitalisation factor is the present value of annual premiums divided by the amount of annual premiums.                                                                                                                                                                                                                  
 3. The contribution from new business is defined as the present value at the point of sale of assumed profits from new business written in the period and then rolled forward to the end of the financial period using the risk discount rate applicable at the end of the reporting period.                                    
 4. LGR includes present value of annual premiums for longevity insurance on a net of reinsurance basis to enable a more representative margin figure. The gross of reinsurance longevity insurance annual premium is £270m. The LGR PVNBP contribution from new business and margin are also inclusive of longevity insurance.  
 
 
European Embedded Value                                                                                                    
                                           88 
 
 5.07 Sensitivities                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
 In accordance with the guidance issued by the European Insurance CFO Forum in October 2005 the table below shows the effect of alternative assumptions on the long term embedded value and new business contribution.                                                                                                                                                                                                          
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 Effect on embedded value as at 31 December 2014                                                                                                                                                                                                                                                                                                                                                                                                                                     
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                                                                                            1%        1%                             1%         
                                                                                                                                                                                                                                                                                                                                                                                                                                            lower     higher    1%        1%         higher     
                                                                                                                                                                                                                                                                                                                                                                                                                                    As      risk      risk      lower     higher     equity/    
                                                                                                                                                                                                                                                                                                                                                                                                                                    pub-    discount  discount  interest  interest   property   
                                                                                                                                                                                                                                                                                                                                                                                                                                    lished  rate      rate      rate      rate       yields     
                                                                                                                                                                                                                                                                                                                                                                                                                                    £m      £m        £m        £m        £m         £m         
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 LGAS and LGR1                                                                                                                                                                                                                                                                                                                                                                                                                      10,109  855       (724)     628       (488)      175        
 LGA                                                                                                                                                                                                                                                                                                                                                                                                                                727     103       (85)      22        (21)       -          
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 Total covered business                                                                                                                                                                                                                                                                                                                                                                                                             10,836  958       (809)     650       (509)      175