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$: PrudentialAnnuitiesLimited - Investis Digitalfiles.investis.com › prudential › reports › pal_fsa99.pdf · 2006-05-08 · .;t j I,)\ Schedule 1 k Form9 Form10-j Form13Form14$
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Prudential Annuities Limited

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Returns under the Insurance Companies Act 1982 and theInsurance Companies (Accounts and Statements)

Regulations 1996 (as amended)

For the year ended 31 December 1999

SCHEDULES 1, 3, 4 AND 6

Incorporated and Registered in England and Wales Registered number 2554213Registered office 142 Holbom Bars London EC1N 2NH

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Schedule 1k Form9

Form10

-j Form 13

Form 14I

!Form 15

Form 16

Form 17


Year ended 31 8t December 1999

Contents

,.1

J

Schedule 3Form 40

Form 41

Form 42

Schedule 4

Form 46

Form 47

Form 48

Form 49

Form 51

Form 54

Form 56

Form 57

Form 58

Form 60

Schedule 6

Statement of solvency

Statementofnetasse~

Analysis of admissible asse~

Long term business liabilities and margins

Liabilities (other than long term business)

Profit and loss account (non-technical account)

Analysis of derivative contra~

Long term business: Revenue account

Long term business: Analysis of premiums and expenses

Long term business: Analysis of claims

Notes to Schedules 1 and 3 of the return

Statement of information on derivative contra~

Statement of information on shareholder controllers

Statement of information on the Appointed Actuary

Abstract of the valuation report

Long term business: Summary of changes in ordinary long term business

Long term business: Analysis of new ordinary long term business

Long term business: Expected income from admissible asse~ not held to match liabilities inrespect of linked benefi~

Long term business: Analysis of admissible fixed interest and variable yield securities not held tomatch liabilities in respect of linked benefits

Long term business: Valuation summary of non-linked contra~ (other than accumulating with-profi~ policies)

Long term business: Valuation summary of index linked contra~

Long term business: Analysis of asse~ and liabilities matching investment liabilities in respect ofindex linked benefits

Long term business: Matching rectangle

Long term business: Valuation result and distribution of surplus

Required minimum margin

Notes to Schedule 4 of the return

Directors' Certificate

Appointed Actuary's Certificate

Auditors' Report

Page

2

4

5

11

12

13

14

15

16

17

18

22

25

26

28

36

38

40

41

42

44

45

46

50

51

52

53

56

57

Required minimum margin for general business 12 12 49

Excess (defici~) of available assets over the reqUired 13minimum margin 11-12)

Long term business admissible assets 21 10128938 8667303 10 11

Otner than long term business assets aUocatea towards long22 535949 397449 See instructions

term business required minimummargin 1 and 3

Total mathematical reselVes (after distributionof surplus) 23 10069737 8604184 See instruction 4

Other insurance and non-insurance liabilities 24 59201 63119 See instruction 5

Available assets for long term business required minimum25 535949 397449margin(21+22-23-24)

Required minimum margin for long term business 41 402788 344152 60 69

Explicitrequiredmllllmummargin(1/6x 41,orminimum 42 67131 57359guarantee fundifgreatlll)

Excess (defici~ ofavailableassets overexplicitrequired 43 468818 340090minimummargin 542)Excess (defiaency) of avaDableassets and implicititems over 44 133161 53297the required minimum margin (34-41)

Quantifiable contingent liabilitiesin respect o!.other than long term business 51 See instruction 6as shown in a supplementary notlt to Form 15

Quantinable contingent liabilitiesin respect of long term business as shown52 See instruction 6in a supplementary note to Form 14

Returns under Insurance Companies Legislation

Statement of solvency

Fonn 9

Name of company Prudential Annuities Umited

Financial year ended 31st December 1999

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Global business

Companyregistrationnumber

R9 2554213\ f

GUUKlCM Units;

"£000

As at the end ofthis financial

year

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1 2CDC~

cE::J15u

GENERAL BUSINESSAvailable assets

Other than long term business assets a ted towardsgeneral business required minimummargin 11

See instructions1 and 2

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LONG TERM BUSINESSAvailable assets

Implicit Items admitted under regulation 23(5) of theInsurance Companies Regulations 1994

IF~~-Zillmerising

Hidden reselVes

Total of avaUable assets and implicit items (25+31+32+33) 34 535949 397449


CONTINGENT LIABILITIES

2


, Covering sheet to Form 9IJ Name of company

Global business

Financial year ended

Form 9


31st December 1999

.....................................

..............................................

.........

June 2000

J K Elbourne Director

DJ Belsham Director

S Windridge Secretary

3

R10I

2554213I

GLI

31 112I

1999I

£000

As at the end of As at the end of Sourcethis financial the previous year cyear

E E1 2 CD ='

.Ec (5;:j ()

Long term business - admissible assets 11 10128938 8667303 13 . 89 1

Long term business - liabilities and margins 12 10128938 8667303 14 . 59 1

Other than Long term business -admissible assets 21 535990 405322 13 . 89 1

Other than Long term business - liabilities 22 41 7873 15 . 69 1

Net admissible assets (21-22) 23 535949 397449

Unpaid amounts (includingOther assets allowed to share premium)on partly paid 24be taken into account in sharescovering the required Supplementarycontributionsminimum margin for a mutual canying on 25

general business

Liabilities allowed to be Subordinatedloan capital 26left out of account incovering the required Cumulativepreferenceshare 27minimum margin capital

Available assets (23 to 27) 29 535949 397449

Paid up share capital (other than cumulative 51 550000 400000preference share capital)

Amounts included in lines 24 to 27 above 52

Amounts representing the balance of net assets 56 (14051) (2551)

Total (51 to 56) and equal to line 29 above 59 535949 397449

Balance brought forward at the beginning of the61 (2551) (45324) 10 . 56 . 2financial year

Retained profJt/(loss) for the financial year 62 (11500) 42773 16 . 59 1

Movement in asset valuation differences 63 See instruction 2

Decrease/(increase) in the provision for adverse64 See instruction 3changes

Other movements (particulars to be specified by 65way of supplementary note)

Balance carried forward at the end of the financial year69 (14051) (2551)(61 to 65)

Retums under Insurance Companies Legislation

Statement of net assets

Form 10


Global business


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Comrr:rregl onnumber GUUKICM

Period endedday month year Units t.

f. I

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Represented by:

Movement of balance of net assets for solvencypurposes -as per line 56

4

I

R13I

2554213I

GLI

31 12I

1999I

£000I

1

As at the end of As at the end ofthis financial the previousInvestments year year

1 2

Landand buildings 11

UK insurance Shares 21dependants

22Debt securities issued by, and loans to, dependants

Other insurance Shares 23dependants

24Debt securities issued by, and loans to, dependants

Investments inShares 25group undertakings

Non-insuranceand participating dependantsinterests

Debt securities issued by, and loans to, dependants 26

Shares 27

I OthergroupDebt securities issued by, and loans to, group undertakings 28I undertakings and

I participating

I

interests Participating interests 29

Debt securities issued by, and loans to, undertakings in30which the company has a participating interest

Total sheet 1 (11 to 30) 39

Returns under Insurance Companies Legislation Form 13(Sheet 1)

[k

Analysis of admissible assets

Name of company Prudential Annuities Limited

Global business


Category of assets Total other than long term business assets

Companyregistrationnumber GUUKlCM

Period endedday month year Units

Categoryofassets

5

rR13

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2554213I

GL 31 12I

1999I

£000I

1

Investments (continued)As at the end of As at the end of

Deposits with ceding undertakingsthis financial the previous

Assets held to cover linked liabilitiesyear year

1 2

Equity shares 41

Other shares and other variable yield securities 42

Holdings in colective investment schemes 43

Rights under derivative contracts 44

Approved securities 45 61165 93735FIXedinterest

Debt securities and Other 46 158113 32540other fixed incomesecurities Approved securities 47 184486 157397

VariableinterestOther 48 30436 59145

Other financialinvestments Participation in investment pools 49

Loans secured by mortgages 50 4791

Loans to pubfic or local authorities and nationalised 51industries or undertakings

Other loansLoans secured by policies of insurance issued by the

52company

Other 53

Deposits with Withdrawal subject to a time restriction of one month or less 54 1815approved creditinstitutions andapproved financial

Withdrawal subject to a tine restriction of more than oneinstitutions 55month

Other 56

Deposits withceding undertakings 57

Index inked 58Assets held to match linked fiabiities

Property linked 59

Provision for unearned premiums 60

Claims outstanding 61Reinsurers' share of technical provisions

Provision for unexpired risks 62

Other 63

Total sheet 2 (41 to 63) 69 440806 342817



Fonn 13(Sheet 2)

Name ofcompany Prudential Annuities Umited

Global business


Category of assets Total other than long tenn business assets


Period endeddeay '..UlltI. J't:il1 Units

Categoryofassets

,

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6

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R13I

2554213I

GL 31 112I

1999I

£000I

1

As at the end of As at the end ofDebtors this financial the previousOther assets year year

1 2

Debtorsarisingout P06cyholders 71of direct insuranceoperations

Intermediaries 72

Salvage and subrogation recoveries 73

Debtors arising outDue from ceding insurers and intermediaries under reinsurance business

74of reinsurance

accepted

operationsDue from reinsurers and intermediaries under reinsurance contracts ceded 75

Due in 12 months or less after the end of the financial year 76Due fromdependants

Due more than 12 months after the end of the financial year 77Other debtors

Due in 12 months or less after the end of the financial year 78 14381 76Other

Due more than 12 months after the end of the financial year 79

Tangible assets 80. Deposits not subject to time restriction on withdrawal, with approved credit

81 75942 59343Cash at bankand institutions and approved financial institutions and local authoritiesinhand

Cash inhand 82

Other assets (particulars to be specified by way of supplementary note) 83

Accrued interest and rent 84 4861 3086Prepaymentsand

Deferred acquisition costs 85accruedincome

Other prepayments and accrued income 86

Deductions (under regulations 57?1(b) and 57(3) of the Insurance Companies Regulations871994)fromthe aggregate value0 assets

ToIalsheet 3 (71to 86 less 87) 88 95184 62505

Grandtotalofadmissibleassets (39+69+88) 89 535990 405322

ToIaladmissille assets (as per ine 89above) 91 535990 405322Total assets in excess OTthe admissibility limitsof Schedule 12 of the Insurance Companies

92Regulations 1994. (as valued in accordance with those Regulations before applying admissibility imits)

Solvency margin deduction for insurance dependants 93

Other differences in the valuation of assets (other than for assets nol valued above) 94

Assets of a type not valued above. (as valued in accordance with the shareholder accounts rules) 95

Total assets delermined in accordance with the shareholder accounts rules (91 to 95) 99 535990 405322

Returns under Insurance Companies Legislation Fonn 13(Sheet 3)


J Name of company

Globalbusiness

Prudential Annuities Umited


Category of assets Total other than long tenn business assetsCompanyregistrationnumber GUUK/CM


Categoryofassets

I

Reconciliation to asset values determined in accordance with theshareholder accounts rules

Amounts included in line 89 allnbutable to debts due from related companies. oIher than those undercontracts of insurance or reinsurance 100 37 76

7

I

R13I

2554213I

GLI

31 12I

1999I

£000I

10

As at the end of As at the end ofthis financial the previous

Investments year year1 2

Land and buildings 11

UK insuranceShares 21

dependants

22Debt securitiesissued by,and loans to,dependants

Other InsuranceShares 23

dependants24Debt securitiesissued by,and loans to,dependants

Investments inShares 25group undertakings

Non-insuranceand participating dependantsinterests

Debt securities issued by, and loans to, dependants 26

Shares 27

Other groupDebt securitiesissued by,and loans to,group undertakings 28

undertakings and

~rticipating

29mterests Participating interests

Debt securitiesissued by,and loans to,undertakings in 30which the company has a participating interest

Total sheet 1 (11 to 30) 39

Returns under Insurance Companies Legislation Fonn 13(Sheet 1)

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Global business


Category of assets Total long tenn business assets-1

Companyregistrationnumber GUUKICM


Categoryofassets

1. 1

i

8

I

R13I

2554213I

GL 31 12I

1999I

£000I

10

Investments (continued) As at the end of As at the end of

Deposits with ceding undertakings this financial the previous

Assets held to cover linked liabilities year year1 2

Equity shares 41

Other shares and other variable yield securities 42

Holdings in coDectiveinvestment schemes 43

Rights under derivative contracts 44 30930

Approved securities 45 785944 926180rlXed interest

Debt securities and Other 46 7175632 6410029other fixed incomesecurities Approved securities 47 45323

VariableinterestOther 48 3776 26388

Other financialinvestments Participation in investment pools 49

Loans secured by mortgages 50 246167 329319Loans to public or local authorities and nationalised

51 4986 5780industries or undertakings

Other loans Loans secured by poticies of insurance issued by the52company

Other 53

Deposits with Withdrawal subject to a time restriction of one month or less 54 18702 81582approved creditinstitutions andapproved financial

Withdrawal subject to a time restriction of more than oneinstitutions55month

Other 56

Deposits withceding undertakings 57

Index linked 58 1619515 618705Assets held to match linked liabilities

Property linked 59


Claims outstanding 61Reinsurers' share of technical provisions

Provision fOrunexpired risks 62

Other 63

Totalsheet 2 (41to 63) 69 9885652 8443306

Returns under Insurance Companies Legislation Form 13(Sheet 2)


Name of company

Global business



Total long term business assetsCategory of assets

Companyregistrationnumber GUUK/CM

Period endeddd' (nuntt. YCill Units

Categoryofassets

9

I

R13I

2554213I

GL 31 /12I

1999I

£000I

10

As at the end of As at the end of

Debtors . this financial the previousOther assets year year

1 2

Debtors arising out Policyholders 71 14 22of direct insurance

operationsIntermediaries 72

Salvage and subrogation recoveries 73

Debtors arising outDue from ceding insurers and intermediaries under reinsurance business

74 364 2300of reinsurance

acoepted

operationsDue from reinsurers and intermediaries under reinsurance contracts ceded 75

Due fromDue in 12 months or less after the end of the financial year 76

dependantsDue more than 12 months after the end of the financial year 77

Other debtors

Due in 12 months or less after the end of the financial year 78 9418 23816Other

Due more than 12 months after the end of the financial year 79

Tangible assets 80

Deposits not subject to time restrictionon withdrawal, with approved credit 81Cash at bank and institutions and approved financial institutionsand local authorities

inhandCash inhand 82

Other assets (particulars to be specified by way of supplementary note) 83

Accrued interest and rent 84 233490 197859Prepayments and

Deferred acquisitioncosts 85accrued income

Other prepayments and accrued income 86

Deductions (under regulations 57~)(b) and 57(3) ofthe Insurance Companies Regulations 871994) from the aggregate value 0 assets

ToIal sheet 3 (71 to 86 less 87) 88 243286 223997

Grand total of admissible assets (39+69+88) 89 10128938 8667303

Total admissi)Je assets (as per line 89 above) 91 10128938 8667303

ToIal assets in excess ofthe admissibirrty limits of Schedule 12 ofthe Insurance Companies

92Regulations 1994, (as valued inaccordance with those Regulations beforeapplying admissibilitylimits)

Solvency margin deduction forinsurance dependants 93

Other differences in the valuation of assets (other than for assets not valued above) 94 71

Assets of a type not valued above, (as valued in accordance with the shareholder accounts rules) 95

Total assets determined in accordance with the shareholder accounts rules (91 to 95) 99 10128938 8667374



Form 13(Sheet 3)

Name of company Prudential Annuities Umited .,

Global business


Category of assets Total long term business assetsCompanyregistrationnumber GUUKlCM

Period endedday monlh

Y"'"Units

Categoryofassets

Reconciliation to asset values determined In accordance with theshareholder accounts rules

Amounts included in line 89 attributable to debts due from related companies, other than those undercontracts of insurance or reinsurance

100 216 6027

10

I

R14I

2554213I

GLI

31 /12/ 1999 £000I

10

As at the end of As at the end of Sourcethis financial the previous

year year1 2

Mathematical resetVes, after distribution of surplus 11 10069737 8604184 See Instruction2Cash bonuses lI'A1ichhad not been paid to policyholders prior to end of

12 See Instruction 3the financial year

Balance of surplU$/(valuationdeficit) 13 See Instruction 4

Long term business fund carried forward (11 to 13) 14 10069737 8604184 See Instruction 5

Claims outstanding which Gross amount 15had fallen due for payment

Reinsurers' share 16before the end of thefinancial year

Net (15-16) 17

Provisionsfor Taxation 21other risks andcharges

Other 22

Deposits received from reinsurers 23

Direct business 31 874 11Arising out ofinsurance Reinsuranceaccepted 32 6862operations

Reinsuranceceded 33Creditors and

Secured 34other Debentureliabilities loans

Unsecured 35

Amounts owed to credit instjutions 36 39836 55622

Taxation 37Other creditors

Other 38 11629 7486Accrualsand deferredincome 39

Provision for adverse changes (calculated in accordance Mth regulation4161 of the Insurance Companies Regulations 1994)

Total other insurance and non-insurance liabilities (17 to 41) 49 59201 63119

Excess of the value of net admissible assets 51 See Instruction 6

Tolalliabilities and margins 59 10128938 8667303

Amounts included in line 59 attributable to fiabilities to related companies,61 5821 7481other than those under contracts of insurance or reinsurance

Amounts included in line 59 attributable to tiabilitiesin respect of property62linked benefils

J


Long term business liabilities and marginsFonn 14


Global business


I

Category of assets Total long tenn business assets



Categoryofassets

!

Amount of any additional mathematical reserves included in line 5111'A1ichhave been taken into account in the appointed actuary's certificate

See Instruction 7

11

I

R14I

2554213I

GLI

31 1121 1999 £000I

10


year year1 2

Mathematicalreserves, after distribution of surplus 11 10069737 8604184 S- Instruction2Cash bonuses voA1ichhad not been paid to policyholders prior to end of

12 See Instruction 3the financial year

Balance of surplusl(valuation deficit) 13 s- Instruction 4

Longterm business fund carried forward (11 to 13) 14 10069737 8604184 See Instruction 5

Claims outstanding whichGross amount 15

had fallen due for paymentReinsurers' share 16before the end ofthe

financial yearNet (15-16) 17

Provisions for Taxation 21other risks andcharges

Other 22


Direct business 31 874 11Arising out ofinsurance Reinsuranceaccepted 32 6862operations

Reinsuranceceded 33

Creditors andSecured 34other Debenture

liabilities loansUnsecured 35

Amounts owed to credit institutions 36 39836 55622

Taxation 37OthercreditOlS

Other 38 11629 7486

Accruals and deferred income 39

Provision for adverse changes (calculated in accordance with regulation4161ofthe InsuranceCompaniesRegulations1994)

Total other insurance and non-insurance liabilities (17 to 41) 49 59201 63119

Excess of the value of net admissible assels 51 See Instruction6

Total liabilities and margins 59 10128938 8667303

Amounts included in line 59 attributable to fiabBitiesto related companies,61 5821 7481other than those under contracts of insurance or reinsurance

Amounts included in line 59 attributable to fiabilities in respect of property 62linked benefits

J



Fonn 14


1

Global business


1




Categoryofassets

1

Amount of any additional mathematical reserves included in line 51 VItIichhave been taken into account in the appointed actuary's certificate See Instruction 7

11

IR14

I

2554213I

GLI

31 112I

1999I

£000I

10


year year1 2

Mathematical reserves, after distribution of surplus 11 10069737 8604184 See Instruction2

Cash bonuses which had not been paid to policyholders priorto end of12 See Instruction 3the financialyear

Balance of surplus/(valuation deficit) 13 See Instruction 4

Long term business fund carried forward (11 to 13) 14 10069737 8604184 See Instruction5

Claims outstanding which Grossarnount 15

had fallen due for paymentReinsurers' share 16before the end of the

financial yearNet (15-16) 17

Provisions for Taxation 21other risks andcharges

Other 22


Direct business 31 874 11Arising out ofinsurance Reinsurance accepted 32 6862operations

Reinsurance ceded 33

Creditors andSecured 34other Debenture

liabilities loansUnsecured 35

Amounts owed to credit institutions 36 39836 55622

Taxation 37Other creditors

Other 38 11629 7486


Provision for adverse changes (calculated in accordance 1Mthregulation4161 ofthe InsuranceCompaniesRegulations1994)

Total other insurance and non-insurance liabilities(17 to 41) 49 59201 63119

Excessofthe valueof net admissibleassets 51 See Instruction6

Total liabilitiesand margins 59 10128938' 8661303

Amounts included in line 59 attributable to liab~ities to related companies,61 5821 7481other than those under contracts of insurance or reinsurance

Amounts included in line 59 attributable to Iiab~iIiesin respect of property62linked benefits



Fonn 14


Global business





Categoryofassets

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7

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Amount of any additional mathematical reserves included in tine 51 whichhave been taken into account in the appointed actuary's certificate See Instruction 7

11

IR15

I

2554213I

GLI

31 /12I

1999I

£000

As at the end of As at the end ofthis financial the previous

year year1 2


Claims outstanding 12

TechnicalProvision for unexpired risks 13

provisionsCredit business 14(gross

amount) Equalisation provisionsOther than credit business 15

Other 16

Total (11 to 16) 19

Provisions for Taxation 21other risksand charges Other 22


Direct business 41

Arising out of insurance operations Reinsurance accepted 42

Reinsurance ceded 43

Secured 44Debenture loans

Creditors Unsecured 45

Amounts owed to credit institutions 46

Taxation 47 7752

Other creditors Recommended dividend 48

Other 49 41 121


Total (19 to 51) 59 41 7873

Provision for adverse changes (calculated in accordance with regulation 61 ofthe61Insurance Companies Regulations 1994)

Cumulative preference share capital 62

Subordinated loan capital 63

Total (59 to 63) 69 41 7873

Returns under Insurance Companies Legislation Fann 15

Liabilities (other than long term business)


Jij

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Global business

Financial year ended 31st December 1999Companyregistrationnumber

Period endedGUUK/CM day month year Units

,\

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1

.IJ

J J

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Amounts included in line 69 attributable to liabilitiesto related companies, other thanthose under contracts of insurance or reinsurance 41 121

12

I

R16I

2554213I

GLI

31/ 12J

1999 £000

This financial Previous Sourceyear year c:

EE

1 2 CD ::J~c: '0::J 0

Transfer (to )Jfrom the From Form 20 11 20 . 59general business technicalaccount

Equalisation provisions 12

Transfer from the long term business revenue account 13 (27575) 3014 40.26

Income 14 20985 15386

Investment incomeValue re-adjustments on

15 20557investments

Gains on the realisation of16 7498 22180investments

Investment management charges,17 257 198including interest

Investment Value re-adjustrnents oncharges investments 18 16431

Loss on the realisation or19investments

Allocated investment return transferred to the general20 20 . 51business technical account

Other income and charges (particulars to be specified b)21 (106) (75)way of supplementary note)

Profit or loss on ordinary activities before tax29 (15886) 60864(11+12+13+14+15+16-17-18-19-20+21)

Tax on profit or loss on ordinary activities 31 (4386) 18091

Profit or loss on ordinary activities after tax (29-31) 39 (11500) 42773,Extraordinary profit or loss (particulars to be specified by

41way of supplementary note)

Tax on extraordinary profit or loss 42

Other taxes not shown under the preceding items 43

Profit or loss for the financial year (39+41-(42+43» 49 (11500) 42773

Dividends (paid and proposed) 51

Profit or loss retained for the financial year (49-51) 59 (11500) 42773


Profit and loss account (non-technical account)

Fonn 16


f

Global business


~number

Period endedGUUKICM day month year Units

)

rj

f)

)!

.

13

IR17

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2554213I

GLI

31 12 /1999I

£000I

10

As at the end ofthis financial year As at the end of the previous yearDerivative contracts

Assets Liabilities Assets Liabilities1 2 3 4

Fixed-interest securities 11

Equity shares 12Futures

land 13contracts

Currencies 14

Other 15


Equity shares 22

Options land 23

Currencies 24

Other 25


Equity shares 32Contractsfor land 33differences

Currencies 34 30930

Other 35 5805

Adjustments for variation margin 41

Total (11 to 41) 49 30930 5805

Returns under Insurance Companies legislation Fonn 17

Analysis of derivative contracts


ji

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Global business


Long term

31st December 1999

I1

- .Business

Category of assets Total long term business assetsCompanyregistrationnumber GUUKlCM


Categoryofassets

}

1

J

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14

I

R40I

2554213I

GLI

31 /12 /1999I

£000I

OBI

1I

0

The financial Previous yearyear

Items to be shown net of reinsurance ceded1 2

Earned premiums 11 2064878 989450

Investment income receivable before deduction of tax 12 605397 521938

Increase (decrease) in the value of non-linked assets brought into account 13 (562505) 1000259

Increase (decrease) in the value of linked assets 14

Other income 151

Total income (11 to 15) 19 2107770 2511647

Claims incurred 21 634096 539195

Expenses payable 22 34610 27224

Interest payable before deduction of tax 23 1086 1241

Taxation 24 651

Other expenditure 25

Transfer to (from) non technical account 26 (27575) 3014

Total expenditure (21 to 26) 29 642217 571325

Increase (decrease) in fund in financial year (19-29) 39 1465553 1940322

Fund brought forward 49 8604184 6663862

Fund carried forward (39+49) 59 10069737 8604184

iJ Returns under Insurance Companies Legislation Form 40

Long term business: Revenue account


Global business

)

J

Ordinary business


Ordinary Branch Long Term 1Name and number of fund

Companyregistrationnumber GUUK/CM

Period endedday month year Units OBIIB

Hoof No offwldf part ofSummary Fund

y

1

15

I

R41I

2554213I

GL 31 12I

1999I

£000I

OB 1I

0

GrossI

Payable to or Net ofrecoverable from reinsurance

reinsurers (1-2)1 2 3

Lifeassurance and Single premium 11generalannuitycontracts Regular premium 12

Pension business Single premium 13 2064878 2064878contracts

Regular premium 14

Permanenthealth Single premium 15

Earned contracts

premiums inRegular premium 16

the financialSingle premium 17year

Other contractsRegular premium 18

Single premium 19 2064878 2064878Totalpremiums

Regular premium 29

Totalpremiumsat UK contracts 31 2064878 2064878lines 19and 29attributable to OVerseas contracts 32

Commission payable in connection with 41 1211 1211acquisition of business

Other commission payable 42

Management expenses in connection with 43 8203 8203Expenses acquisition of business

payable in Management expenses in connection withthe financial maintenance of business

44 13436 13436year

Other management expenses 45 11760 11760

Total expenses (41 to 45) 49 34610 34610

Totalexpenses at UK contracts 51 34610 34610line 49 attributableto

OVerseas contracts 52


Long term business: Analysis of premiums and expenses

Fonn 41


Global business


]')

Ordinary business

Name and number of fund Ordinary Branch Long Term 1



No of No offundi part ofSummary Fund

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1

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16

I R42 I 2554213I

GL 31 12 I 1999I

£000I

OB I 1 0

Gross J-<ecoverable l'Jet ofClaims incurred in the financial year

from reinsurers reinsurance(1-2)

1 2 3

On death 11

By way of lump sums on maturity 12

By way of annuity payments 13Ufeassurance By way of payments arising from other

14and annuity insured eventscontracts

On surrender or partial surrender 15

Total life assurance and annuity19claims (11 to 15)

On death 21 1469 1469

By way of lump sums on vesting 22 2142 2142Pensionbusiness By way of vested annuity payments 23 624879 132 624747contracts

On surrender or partial surrender 24 5738 5738

Total pension business claims (21 to 24) 29 634228 132 634096

By way of lump sums 31Permanenthealth By way of periodical payments 32contracts

Total permanent health claims (31+32) 39

By way of lump sums 41Other By way of periodical payments 42contracts

Total claims (41+42) 49

Total claims (19+29+39+49) 59 634228 132 634096

Total claims at line UK contracts 61 634228 132 63409659 attributable to

Overseas contracts 62

il Retums under Insurance Companies Legislation

Long term business: Analysis of claims

Fonn 42


Global business

Ordinary business

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Name and number of fund Ordinary Branch Long Tenn 1

jCompanyregistrationnumber GUUKlCM


No of No offundf part ofSummary FI8'Id

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17

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PRUDENTIAL ANNUITIES LIMITED

Returns for the year ended 31 December 1999

Supplementary notes to the returns

Form 9

1j

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0903 Other orders under Section 68, Insurance Companies Act 1982 (as amended)

(a)

(b)

Form 10

The Secretary of State, on the application of the Company, made an order on 1August 1992 pursuant to section 68 of the Insurance Companies Act 1982directing that section 31 of the Insurance Companies Act 1982 should notapply to the Company in respect of transactions entered into by the Companywith The Prudential Assurance Company Limited, Prudential HolbomPensions Limited and Prudential Pensions Limited pursuant to the reassuranceagreements dated 1 August 1992.

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1

The Secretary of State, on the application of the Company, issued to theCompany in December 1995 an Order under section 68 of the InsuranceCompanies Act 1982 requiring the Company to calculate the rates of interestto be used in calculating the present value of future payments by or to theCompany on the aggregate yield basis defined as that rate of interest whichequates the discounted value of the aggregate cash flows on the relevant assetportfolio with the total market value of that portfolio.

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1001 Reconciliation to shareholder accounts1999

£'ooos1998

£'ooos

Net assets per FSA returnLine 99 on form 13 (OLTB)Line 59 on form 15

535,990(41)

535,949

405,322(7,873)

397,449

Per shareholder accountsCapital and reserves 818,825 612,179

DifferenceAdditional reserves held in long term fund 282,876 214,730

18

JSupplementary notes to the returns (continued)

Form 13

.)Ij Notes 1301 to 1306 apply to the other than long term business fund.

r

1301 The Company held £83m in unlisted securities.

""I)

1302 The Company held £27m in hybrid securities.

1

1304 Amounts due to or from the Company have been set off to the extent permitted bygenerally accepted accounting principles.

1305 The maximum permitted exposure to anyone counterparty other than short termdeposits with an approved credit institution is set at 5 % of the long term businessamount. Maximum permitted exposure to anyone approved credit institution is setat 20%. There were no breaches of these limits during the year.

..

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1306 No counterparty exposure at the year end exceeded 5% of the long term businessamount. Counterparty limits set were not exceeded during the year.

i\

Notes 1308 to 1313 apply to the long term business fund.

1308 The Company held £667m in unlisted securities.

1309 The Company held £1,755m in hybrid securities.

1310 Amounts due to or from the Company have been set off to the extent permitted bygenerally accepted accounting principles.

1311 The maximum permitted exposure to anyone counterparty other than short termdeposits with an approved credit institution is set at 5 % of the long term businessamount. Maximum permitted exposure to anyone approved credit institution is setat 20%. There were no breaches of these limits throughout the year.

1312 No counterparty exposure at the year end exceeded 5% of the long term businessamount. Counterparty limits set were not exceeded during the year.

1313 At the year end the Company had £9m of secured obligations.

19

Supplementary notes to the returns (continued)I

j

1401 The long tenn fund held a number of interest rate and foreign currency swapsduring the year. The swaps involved the exchange of cash flows and not of theunderlying principle amount. No provision for adverse change is required, as allderivatives that impose an obligation on the fund are strictly covered.

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Fonn 14

1402 (a) There were no charges attributable to the long tenn business assets.

(b) The long tenn fund does not attract tax, and therefore no provision, potential orotherwise, has been made for any liability to tax which might arise if the companydisposed of its assets at the values stated in this return.

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(c) There were no contingent liabilities at the year end.

(d) There were no guarantees, indemnities or other contractual commitments otherthan in the ordinary course of insurance business and in respect of relatedcompanies.

,Ji

Fonn 15

1501 No derivatives were held by the other than long tenn fund at any time during theyear and therefore no provision for adverse changes is required.

1502 (a) There were no charges attributable to the other than long tenn business assets.

(b) The total potential liability to taxation on capital gains which might arise if thecompany disposed of its assets was £1, lOOk. No provision has been made at theyear end.

(c) There were no contingent liabilities at the year end.

(d) There were no guarantees, indemnities or other contractual commitments otherthan in the ordinary course of insurance business and in respect of relatedcompanies.

Fonn 16

1601 Revenue account items are translated at rates ruling on the transaction date.

1603 Balances in line 21 relate to management expenses.

20

,1! I,j

Supplementary notes to the returns (continued)

Form 17

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1700 As all figures, including comparatives, are zero for the other than long term form 17,this form has been omitted.

Form 40

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4008 Management services are provided to the Company for day to day administrationfrom The Prudential Assurance Company Ltd (the immediate holding company),Prudential Financial Services Ltd, Prudential Portfolio Managers Ltd and PrudentialServices Ltd, all being group companies.

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21

(ii)

(iii)

(b)

PRUDENTIAL ANNUITIES LIMITED : '\\

,-,Returns for the year ended 31 December 1999

Statement required by Regulation 23 of the Insurance Companies (Accounts andStatements) Regulations 1996

(a)

, ,1

.1Investment guidelines

As requested by Regulation 23 of the Insurance Companies (Accounts andStatements) Regulations 1996, the investment guidelines for the use of derivativecontracts for both long tenn and other than long tenn funds are set out below. Theseare fully explained in the Company's Investment Management Agreement with itsfund manager and are consistent with the investment strategy.

}J

(i) Derivatives may be used for the purpose of efficient portfolio management or toreduce risk, specific examples being to implement tactical asset allocation changesaround the strategic benchmark, hedge cash flows, or control the risk profile of anidentified strategy.

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(1

A number of restrictions on the use of derivatives have been agreed with theCompany's fund managers and can only be overruled by prior agreement between thetwo parties:

I

all derivatives that impose obligations on the fund must be strictly covered.

all derivative contracts must satisfy the definition of approved underRegulation 55 of the Insurance Companies Regulations 1994 (as amended).

the maximum allowable exposure to counterparties should not be exceeded.

only certain permitted exchanges and contracts can be used.

During the year the Company ha$-only used Currency and Interest Rate swaps andredeemable convertible corporate bonds. The convertible bonds have not beencategorised as derivative contracts as the derivative element is minimal and havetherefore not been reported on Fonn 17. The total value of these bonds on Fonn 13 is£99,104,000.

Derivatives where exercise is unlikely

There are no specific guidelines for the use of contracts not reasonably likely to beexercised. However the Investment Management Agreement only allows the use ofderivatives for the purpose of efficient portfolio management or to reduce risk and theCompany's investment managers work within these constraints.

22

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(g)

(c) Quantification of derivatives in (b) above

No such contracts were used.

(d) Effect on Form 13 at 31 December 1999 of exercising derivatives where it wouldbe prudent to assume options would be exercised. Decreases are shown inbrackets

Form 13 line 44/58 (£36,093,000)Form 13 line 54/55/81 £29,596,000

(e) Effect on Form 13 at 31 December 1999 of exercising all derivatives. Decreasesare shown in brackets

Form 13 line 44/58 (£36,093,000)Form 13 line 54/55/81 £29,596,000

(t) Effect on Form 13 under the conditions noted in (d) and (e) above at any othertime during the year. Decreases are shown in brackets

Conditions noted in (d)

Form 13 line 44/58 (£2,279,000)Form 13 line 54/55/81 £931,000

Conditions noted in (e)

Form 13 line 44/58 (£2,279,000)Form 13 line 54/55/81 £931,000

The above figures are the maximum impact on the individual line items of exercisingderivatives at any time during the year. The maximum impacts for each line will notnecessarily occur on the same day.

Maximum exposure

The maximum loss which would have been incurred by the Company on the failure byany other person to fulfil its obligations under derivative contracts at the end of theyear was £15,343,000.

Under foreseeable market conditions this exposure would not increase because timelyactions would be taken in line with our risk management policies to prevent anyincrease. This would most likely be a call on collateral to cover that increase.

The maximum loss at any other time during the year would have been £12,704,000.

23

(h)

(i)

Derivatives not covered by paragraph (2) of regulation SS of, or paragraph ISof Schedule 10 to, the Insurance Company Regulations

No such contracts have been entered into during 1999.

Consideration for granting rights under derivative contracts, ,

No rights under derivative contracts have been granted. . j

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24

ID the case of each persoD who was a shareholder cODtroller ofthe CompaDY at 31 December 1999:

The perceDtage of the VOtiDgpower which he was eDtitled

The perceDtage of shares he at that time to exercise, orheld at that time iD the cODtrol the exercise of, at aDY

PersoDS who, to the kDowledge of the CompaDY, have beeD, at CompaDY, or iD aDother geDeral meeting of theaDY time duriDg the year eDded 31 December 1999, a compaDY of which the CompaDY, or anothershareholder cODtroller ofthe Company. Company was a subsidiary compaDY of which it was a

uDdertaking, either alone or subsidiary uDdertakiDg,(shfIWn sepll1'ately) with any either aloDe or (shfIWnassociate or associates separately) with aDYassociate

or associates

The Prudential Assurance Company Limited, being its immediateholding company 100"/0 100"/0

Prudential plc, being its ultimate holding company 100"/0 100"/0

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Statement in accordance with Regulation 24 of The Insurance Companies (Accountsand Statements) Regulations 1996

Additional infonnation on shareholder controllers

We confInn that the following is a list of:

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(a) Persons who, to the knowledge of Prudential Annuities Limited ("the Company''), havebeen, at any time during the year ended 31 December 1999, a shareholder controller of theCompany; and

(b) In the case of each person who was a shareholder controller of the Company at 31December 1999:

IiJ

(i) the percentage of shares he held at that time in the Company, or in another companyof which the Company was a subsidiary undertaking; and

.;I\

(ii) the percentage of the voting power which he was entitled at that time to exercise, orcontrol the exercise of, at any general meeting of the Company, or another companyof which it was a subsidiary undertaking;

in each case, either alone or with any associate or associates.

25



Statement of information on the Appointed Actuary pursuant to Regulation 31 of theInsurance Companies (Accounts and Statements) Regulations 1996

In accordance with Regulation 31 of the above Regulations, David Belsham, the AppointedActuary of the Company, was requested to furnish and has provided the followinginformation:

(a)

(b)

(c)

(d)

(e)

(t)

The Appointed Actuary had an interest in 24,761 and 25,736 shares in Prudential plcat the beginning and at the end of the year respectively.

The Appointed Actuary had an interest in shares in Prudential plc held in trust,representing the maximum award that could be made if performance requirementsunder the Prudential Restricted Share Plan were met, of 33,593 and 33,382 shares atthe beginning and at the end of the year respectively. During the year 9,527 shareswere released to him under the 1996 scheme and 9,316 shares were conditionallyawarded to him under the 1999 scheme.

Throughout the year the Appointed Actuary held options granted under the PrudentialExecutive Share Option Scheme to subscribe for shares in Prudential plc as follows:

Number of Shares Exercise Price Exercise Dates

25,000 256p Between October 1997 and October 2002

Throughout the year the Appointed Actuary held options granted under the PrudentialSavings-Related Share Option Scheme to subscribe for shares in Prudential plc asfollows:

Number of Shares Exercise Price Exercise Dates

2,0051,922454

344p359p759p

Between June 2001 and December 2001Between December 2001 and May 2002Between June 2003 and December 2003

The Appointed Actuary had no interest in shares in or debentures of any other groupcompany.

The Appointed Actuary received aggregate remuneration from the Prudential Groupof £183,534.

Additionally, the Appointed Actuary is a member of the Prudential Staff PensionScheme and contributions in respect of the year were paid by the Prudential Group.

26

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1 Statement required by Regulation 31 (continued)

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(g) The following life and general insurance policies issued by the Prudential Groupsubsisted throughout the year:

(i) three endowment assurance with-profits policies maturing between 2009 and2011 with participating sums assured totalling £18,720, non-participatingminimum death benefits of £48,000 and annual premiums of £776.

(ii) two without-profits term assurance policies on the lives of the AppointedActuary and his partner expiring in 2011 with sums assured totalling £202,000and annual premiums of £457.

(iii) a home insurance policy covering buildings, household contents and personaleffects.

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(iv) a motor insurance policy.

27

IIL-



Schedule 4

Valuation Report on Prudential Annuities Limited as at 31 December 1999

1. Date of investigation1

,

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The investigation relates to 31 December 1999.

2. Date of previous investigation

The previous investigation related to 31 December 1998.

3. Conformity with Regulation 64

The valuation of long tenn business liabilities shown in this report conforms withRegulation 64 of the Insurance Companies Regulations 1994 (as amended).

4. Description of non-linked contracts

(1) (c) Categories of in force non-linked business are as follows: .\II

(i) Annuities in payment

These are non-profit annuities, written on either a single life or joint life andlast survivor basis, which provide a level series of payments throughout thelife of the annuitant(s), or incorporate a provision for payments to increaseannually at a guaranteed rate. The annuity may incorporate a minimumguaranteed period of payment.

(ii) Deferred annuities

These are non-profit deferred annuities, written on either a single life or jointlife and last survivor basis, which are either single premium or fully paid-upcontracts. Benefits are expressed as amounts of deferred annuity per annumpayable at retirement. The benefit at retirement may be a level series ofpayments throughout the life of the annuitant(s), or incorporate a provisionfor payments to increase annually at a guaranteed rate. The annuity mayincorporate a minimum guaranteed period of payment starting at retirement.On death before the end of the deferred period, a lump sum or dependant'sannuity may be payable.

5. Description of linked contracts

(1) (a) RPI-linked annuities.

28

Valuation Report (continued)

i

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iI

.1

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(2)

(3)

(4)

(5)

(6)

6.

(1)

(b) These contracts are classified as:United Kingdom pension business;Business is written directly, and reassurance is accepted and ceded;Non-profit annuities in payment and in deferment.

(c) These are all single premium contracts.

(d) These are non-profit annuities, written on either a single life or joint life andlast survivor basis, which provide a series of payments throughout the life ofthe annuitant(s) which are revalued, annually, in line with the Retail PriceIndex. The annuity may incorporate a minimum guaranteed period ofpayment. In some cases, the revaluation may have a maximum and/orminimum percentage increase.

(e) There are no guaranteed investment returns other than those implicit in theguaranteed annuity benefit.

(t) The guaranteed annuity benefit is calculated incorporating an allowance forinitial and renewal expenses and commission.

(g) Not applicable.

(h) Not applicable.

(i) See (d) above.

(j) None.

(k) The contract was open to new business during the year to the valuation date.

(1) Not applicable.

No linked contract contains a with-profits option.

Not applicable.

Not applicable.

Not applicable.

Not applicable.

Valuation principles and methods

The mathematical reserve for annuities in payment is the present value of theannuities, calculated on the assumption that they are payable monthly in advance.

29


The mathematical reserve for RPI-linked annuities is, in general, determinedwithout an explicit allowance for future increases in annuity payments, which isconsistent with the treatment of the matching assets. The treatment ofRPI-linkedannuities which are. subject to maximum and minimum percentage increases isdescribed in 6 (1) (h) below.

The mathematical reserve for non-profit deferred annuities is the present value ofthe annuity secured to date.

!!!j

In particular, the following principles have been observed: \)(a) Derivative contracts as at 31 December 1999 comprised: .~

j

(i) A contract to swap US Dollars for UK sterling at a variable rate (£LIBOR)plus a fixed margin

(ii) A contract to swap the £LIBOR for fixed UK sterling(iii) Contracts to swap future income increasing at a fixed rate each year for

income varying in line with changes in RPI.

.\

The effect of the contracts under (i) and (ii) is to convert cashflows from US $denominated bonds into fixed UK sterling cashflows. The cashflows involvedin these arrangements were included in the aggregate cashflows from theportfolio, in order to derive the aggregate yield on the portfolio. This is inaccordance with the section 68 order issued in December 1995.

\rj

An additional reserve of £10,000,000 is held in respect of counterparty risks inconnection with derivative contracts. This reserve is assessed based oncounterparty exposure limits and arrangements for the use of collateral. Theadditional reserve also includes allowance for general contingencies.

Cb) Not applicable.

(c) The net premium method has not been used.

(d) There are no contracts where negative values could arise.

(e) No reserve for future bonuses is required.

(t) No provision for any prospective liability for tax on unrea1ised capital gainshas been included in the mathematical reserves since the Company transactspension business only and no capital gains tax liability is expected to arise.

(g) Not applicable.

(h) As described in 5(1)(d), some RPI-linked annuities are subject to maximumand minimum percentage increases. These fall into two categories:

30

(2)

7.

(1)

(2)

(3)

(4)

1 Valuation Report (continued)

j

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1

(5)

(6)

(1) RPI-linked annuities subject to a minimum annual increase of 0% and amaximum annual increase of 5%. For valuation purposes these are treatedas being identical to normal RPI-linked annuities.

(2) RPI-linked annuities subject to a minimum annual increase of 2.5% and amaximum annual increase of 5%. For valuation purposes these are treatedas annuities with fixed 5% annual increases. However, they are included inthese returns as linked business. Thus, in particular, Form 56 includessufficient fixed interest assets to match the corresponding liabilities.

Not applicable.

Interest, mortality bases, resilience, etc.

See Forms 51 and 54.

The mortality tables used are published tables.

All business is written in the UK, and UK-based mortality tables have been used.

The mortality assumptions for annuities in payment allow for future mortalityimprovement at the rates assumed in the published mortality tables used. Ingeneral, year of birth mortality tables are used. However, for some annuitycontracts in deferment, a calendar year table is used. For these contracts a furtherdeduction of 0.35% from the valuation rate of interest of 6.1% is made during thedeferred period to allow for expected mortality improvements prior to vesting.

No allowance is made or reserve is held, in addition to the assumptions in 7 (4)above, in respect of possible changes in the incidence of disease or developmentin medical science.

The scenarios tested were:

(a) an immediate decrease of 20% in the rates of interest obtainable on fixedinterest securities, and an immediate decrease of 25% in the real yields onindex-linked stocks.

(b) an immediate increase of 3 percentage points in the rates of interestobtainable on fixed interest securities, and an immediate increase of 25% inthe real yields on index-linked stocks.

As the effect of the derivatives described in 6(1)(a) is to produce fixed UKsterling cashflows, irrespective of future exchange rates, the scenarios have beentested using the aggregate yield of the US$ assets and their associated derivatives,using the methodology of the section 68 order issued in December 1995.

Scenario (a) was the more onerous.

31

(7)

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(9)

8.

(a)

(b)

(c)

(d)

The reserve required under Regulation 75(a) of the Insurance CompanyRegulations is calculated by projecting the cashflows from the assets backing thelong term business liabilities (including the mismatching reserve) and futureliability payments. The projection shows an excess of income over outgo in theearlier years, and these excess amounts are assumed to be invested in cash andaccumulated to meet any shortfall of asset income in later years. The cashinvestment rate is assumed to be 4.1 %.

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The reserve is calculated, by an iterative method, to be sufficient to ensure thatthere are no outstanding borrowings at the end of the projection period.

A total reserve of £218,082,000 was held at 31 December 1999.

(8) (a) Valuation interest rates are adjusted as shown in Form 57. No otherassumptions are changed. \

J(b) Assets are hypothecated to liabilities as shown in Form 57. Yields on assets

are adjusted by 0.35% and 0.2% to allow for potential defaults on fixedinterest and RPI-linked assets (other than government securities)respectively.

'1

if'(c) Under the scenario which produces the most onerous requirement:

(i) the aggregate amount of the long term liabilities increased by£1,145,125,000 after allowing for the release of the cashflowmismatching reserve described in 7(7) above.

(ii) the aggregate amount of the assets backing these liabilities increased by£1,320,455,000.

Hence the reserve shown in 7(7) is adequate to cover the provision requiredin respect of Regulations 75(a) and 75(b).

Liabilities are all in sterling. There are some US$ denominated assets. Theseassets with their associated derivatives produce income in UK sterling. See6(1)(a) for details.

Valuation of non-linked business

Not applicable.

See Forms 51.

Not applicable.

Not applicable.

32

9.

(a)

(b)

10.

(1)


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(2)

(3)

(4)

11.

(1)

(2)

Valuation of linked business

See Form 54 and 6 (1) above.

The annuity loadings in 10 (1) are calculated without assuming any contributionfrom the loadings in new business written after the valuation date.

Expenses

A real discount rate of 2% p.a. is used to convert prudent per policy renewalexpenses into percentage of annuity loadings.

For immediate annuities, the implicit per policy loadings at the end of 1999 wereapproximately:

Fixed -IFA/GroupFixed -Direct SalesLinked

£27 p.a.£24 p.a.£44 p.a.

Deferred annuities costs were assumed to be £1 p.a. per life during deferment andthen as for IFA/Group lA's in possession. Explicit allowance is made for currentsystems development.

Investment expenses are allowed for by deducting 0.1% p.a. from the valuationrates of interest. The valuation rates of interest in Forms 51, 54 and 57 (and theasset yields in Forms 48 and 57) are shown before this deduction.

Based on the annualised annuity amounts in payment and deferment at 31December 1999, the amount released to meet renewal expenses over 2000 will be£14,875,000. In addition, £10,070,000 will be released to meet investmentexpenses.

New business premium rates incorporate a charge to cover acquisition and set-upcosts. The annuity loadings in 10 (1) are calculated without assuming anycontribution from the loadings in new business written after the valuation date.

An allowance for expenses arising from the closure to new business, if closureoccurred twelve months after the valuation date, has been compared with themargins in expense loadings arising from the in force business. As the costs arecovered by the margins, no additional reserve is required.

Currency matching

Not applicable.

Not applicable.

33

Form 48 Column 1 Column 2 Column 3£'000 £'000 %

Line 18 (5,805) 2,054 0.23

Form 48 Column 1 Column 2 Column 3£'000 £'000 %

Line 18 (5,805) 2,054 0.23


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12. Reinsurance

Long term business is reassured on a facultative basis to a reinsurer, who isauthorised to carry on business in the UK.

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13. to 16. Not applicable.

17.

18.

19.

(3)

Changes in long term business

See Form 46.\IiJ

Group non-profit deferred annuities are not included in Form 46. These consist of1,422 schemes covering an estimated 85,135 lives, and 23,865 individualarrangements for non-linked contracts and 15,225 individual arrangements forlinked contracts at 31 December 1999.

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New business

See Form 47.

Assets covering long term liabilities

(1)

(2)


Changes in the amounts reported on Form 48 at 31 December 1999 which wouldresult from the exercise of rights or obligations under derivative contracts orcontracts having the effects of derivative contracts (assuming that options wouldbe exercised only if it would be prudent to do so) are as follows:

Corresponding changes which would result from the exercise of all rights orobligations under derivative contracts, or contracts having the effect of derivativecontracts are as follows:

34

Form 48 Column 1 Column 1Conditions noted in (2) Conditions noted in (3)

£'000 £'000

Line 18 (3,159) (3,159)

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22.

23.

20.

21.

(3)

(4) The maximum changes to the amounts if the conditions in (2) and (3) above hadapplied at any time during the year are as follows:

Valuation summaries


On Form 54 the figures shown in column 7 are the amounts of annuity per annumin payment; the figures in columns 11 and 12 are the total net liability includingallowance for future mortality and expenses.

Matching rectangle

(1)

(2)

See Form 57.

Yields have been adjusted by 0.35% and 0.2% to allow for potential defaults onfixed-interest and RPI-linked assets (other than government securities)respectively. This adjustment has been determined having regard to the nature ofthe portfolio and credit rating agency default probabilities. Regard is also paid tothe yield differential between risk free corporate and government bonds, andprevailing economic circumstances. Additional allowance for counterparty risk inconnection with derivative contracts is included in the additional reservedescribed in 6(l)(i). The yields shown in Form 48 Column 3 were calculatedusing the method of the December 1995 section 68 order. The aggregate yields onthe portfolio using the method of the section 68 order were also used to derive thevaluation rates of interest in Form 57 Row 31.

No such assets were held.

Valuation results

See Form 58.


See Form 60.

D J Belsham, Appointed Actuary

35

IR46

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2554213I

GL /31 /12I

1999I

£000I

UKI

NL

Ufe assurance and general Pensions business Permanent health Other businessannuity (

No of Annual No of Annual No of Annual No of Annualcontracts premiums contracts premiums contracts premiums contracts premiums

1 2 3 4 6 6 7 8

In force at beginning of year 11 364995 1

New business and increases 12 68509

Net transfers and other13alterations 'on'

Total 'on' (12+13) 19 68509I :

Deaths 21 22413

Other insuredevents 22

Maturities 23 5

Surrenders 24 1

Forfeitures 25

Conversionsto paid-up26policies for reducedbenefits

Net transfers, eXp!riesand27 227 1other alterations off'

Total 'off' (21 to 27) 29 22646 1

In force at end of year39 410858(11+19-29)



Form 4t..


Global business

United Kingdom business

Non-linked


Com:-:rregi onnumber GUUK/CM

Period endedday month year Units . UKlOS NLILN

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l R46I

2554213I

GLI

31 112 11999I

£000I

UKI

LN

Lifeassurance and general Pensions business Permanent hea"h Other businessannuity

No of Annual No of Annual No of Annual No of Annualcontracts premiums contracts premiums contracts premiums contracts premiums

1 2 3 4 5 6 7 8

In force at beginning of year 11 3136

New business and increases 12 16557

Net transfers and other13alterations 'on'

Total 'on' (12+13) 19 16557

Deaths 21 133

Other insured events 22

Maturities 23

Surrenders 24

Forfeitures 25

Conversionsto paid-up26policies for reducedbenefits

Net transfers, exp-iriesand27 4other alterations off

Total 'off (21 to 27) 29 137

In force at end of year39 19556(11+19-29)

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Fonn 46


Global business


Linked


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registrationnumber GUUKlCM

Period endedday month year Units UK/OS NLILN

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39

Returns under Insurance Companies Legislation Fonn 48

Long term business: Expected income from admissible assets not held to match liabilities in respect of linkedbenefits

Name of company

Global business


Category of assets

Type of asset

Land and buildings

Fixed interestsecurities


31st December 1999

Total long term business assets

Approved securities

Other

Variable interest and Approved securitiesvariable yield securities(excluding items shownat line 16)

Other

Equity shares and holdings in collective investmentschemes

Loans secured by mortgages

All other assets

Total (11 to 19)

Producing income

Not producing income


2554213

GLJUKlCM

GL

Value ofadmissible

assets as shownon Form 13

1

11

12 805389

13 7360432

14

15 3819

16

17 249111

18 54618

19 36054

29 8509423

40

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10

1,J3

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J517817 6.72

233 7.08

19974 6.88

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Sub total assets

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664797

4472 4472

13322

270

1298

1619515

Retums under Insurance Companies Legislation Form 56(Sheet 1)Long term business: Analysis of assets and liabilities matching Investment liabilities In respect of Index linked

benefits


Global business



11: Global Business (Issued in the United Kingdom)Category of surplus


2554213 11

GUUKICM UnitsCategory

UKlOS of Surplus

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1619515

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~49

ategory 0 surp us 12: Ordinary Branch

I

R58I I I

31 /12 1999I I

Long Tenn 2554213 GL £000 12

Fund carried forward 11 10069737

Bonus payments made to policyholders in anticipation of a surplus 12

Transfers out of fund/ Transfer to non-technical account 13 (27575)parts of fund

Transfer to other funds/parts of funds 14

Net transfer out of funds/parts of funds (13+14) 15 (27575)

Valuation result Total (11+12+15) 16 10042162

Mathematical reserves for accumulating with profit policies 17

Mathematical reserves for other non linked contracts 18 8384222

Mathematical reserves for property linked contracts 19

Mathematical reserves for index linked contracts 20 1685515

Total (17 to 20) 21 10069737;:SUrplUSInCluolngconungency a~ncJoUler reserves nela 10waras Ule 29 (27575)solvencymargin(deficiency)(16-21)

Balance of surplus brought forward unappropriated from last valuation 31

Transfers into fund/part Transfer from non-technical account 32of fund

Transfer from other funds/parts of fundComposition of 33

surplus Net transfer into fund/part of fund (32+33) 34

Surplus arising since the last valuation 35 (27575)

Total (31+34+35) 39 (27575)

Bonus payments made to policyholders in anticipation of a surplus 41

Cash bonuses 42

Allocated to Reversionary bonuses 43policyholders by way of

Other bonuses 44

Distribution of Premium reductions 45surplus

Total allocated to policyholders (41 to 45) 46

Net transfer out of fund/part of fund 47 (27575)

Total distributed surplus (46+47) 48 (27575)

Balance of surplus (including contingency and other reserves held 49towards the solvency margin) carried forward unappropriated

Total (48+49) 59 (27575)

Percentage ofdistributed surplus allocated to policyholders of fund/part of fund 61

Corresponding Latest (year of valuation 1999 ) 62percentage atthreE! immediately Earlier (year of valuation 1998 ) 63prevIousvaluations

Earliest (year of valuation 1997 ) 64


Long term business: Valuation result and distribution of surplus

Fonn 58

Name of company

Global business


Financial year ended 31st December 1999 Companyregistrationnumber GUUK/CM


Categoryof surplus

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51


Returns for the year ended 31 December 1999J

Supplementary notes to Schedule 4

Form 48

4801 The amounts of accrued interest included in the value of admissible assets is :

1i;

. )

Line12131517

DescriptionFixed interest - approved securitiesFixed interest - other securitiesVariable interest - other securitiesLoans secured by mortgages

1999£'000

19,445184,800

432,944

.i

Ij

These amounts are included in line 84 on form 13.

4802 There are two assets where the payment of interest is in default. The expectedincome from these assets has been reduced to nil.

i. i

)

52



Directors' Certificate pursuant to Regulation 28(a) of the Insurance Companies(Accounts and Statements) Regulations 1996

We certify that:

1. (a) in relation to the part of this return comprising Forms 9, 10, 13 to 17 and 40 to42 (and the supplementary notes thereto) and statements required byRegulations 23 and 24 of the Insurance Companies (Accounts and Statements)Regulations 1996:

(i) the return has been prepared in accordance with the Regulations asmodified by the orders referred to in supplementary note 0903 on Page18 issued under Section 68 of the Insurance Companies Act 1982;

(ii) proper accounting records have been maintained and adequateinformation has been obtained by the Company; and

(iii) an appropriate system of control has been established and maintainedby the Company over its transactions and records;

(b) in respect of the Company's business which is not excluded by Regulation 32of the Insurance Companies Regulations 1994, the assets held throughout thefinancial year enabled the company to comply with regulations 27 to 31(matching and localisation) of those Regulations; and

(c) in relation to the statement required by regulation 31 of the InsuranceCompanies (Accounts and Statements) Regulations 1996 that:

(i) for the purpose of preparing the statement, proper accounts and recordshave been maintained; and

(ii) the information given has been ascertained in conformity with thatRegulation.

2. the margin of solvency required by section 32 of the Insurance Companies Act 1982has been maintained throughout the financial year.

53

Certificate required by Regulation 28(a) (continued)

!- ijJ

3.

(c)

(d)

(e)

(t)

(a) the requirements of sections 28 to 31 of the Insurance Companies Act 1982have been fully complied with and in particular that, subject to the provisionsof section 29(2) to (4) and section 30, assets attributable to long term business,the income arising therefrom, the proceeds of any realisation of such assets andany other income or proceeds allocated to the long term business funds havenot been applied otherwise than for the purpose of the long term business;

i. !,}

(b) any amount payable from or receivable by the long term business funds inrespect of services rendered by or to any other business carried on by theCompany or by a person who, for the purposes of section 31 of the InsuranceCompanies Act 1982, is connected with it or is a subordinate company of ithas been determined and where appropriate apportioned on terms which arebelieved to be no less than fair to those funds, and any exchange of assetsrepresenting such funds for other assets of the Company has been made at fairmarket value;

no guarantees have been given by the Company of the performance by arelated company of a contract binding on the related company which wouldfall to be met by any long term business fund;

no internal linked funds are maintained;

the return in respect of long term business is not distorted by agreements withany other company carrying on insurance business with which the Companyhas financial, commercial or administrative links or by any arrangementswhich could affect the apportionment of expenses and income; and

the Company has fully complied with the requirement of section 31A of theInsurance Companies Act 1982.

54

(IAjJ Certificate required by Regulation 28(a) (continued)

4. (a)

(b)

.................

J K ElbourneDirector

June 2000

the systems of control established and maintained by the Company in respectof its business complied at the end of the financial year with the followingpublished guidance:

(i) Prudential Guidance Note 1994/6 - Systems of control over theinvestments (and counterparty exposure) of insurance companies withparticular reference to the use of derivatives; and

(ii) Money Laundering -Guidance Notes for the Financial Sector (revisedand consolidated June 1997)

and it is reasonable to believe that those systems continued to so complysubsequently and will continue to so comply in future;

the return has been prepared in accordance with the following publishedguidance:

(i) Prudential Guidance Note 1995/1 - Guidance for insurance companiesand auditors on the Valuation of Assets Regulations;

(ii) Prudential Guidance Note 1995/3 - The use of derivatives in insurancefunds; and

(iii) Prudential Guidance Note 1998/1 -The preparation of annual returns tothe Insurance Directorate of the FSA.

.............................. . ............

D J BelshamDirector

S WindridgeSecretary

55

.J



Appointed Actuary's Certificate pursuant to Regulation 28(b) of the InsuranceCompanies (Accounts and Statements) Regulations 1996

.'J

I certify that:

(a) (i) in my opinion proper records have been kept by the Company adequate for thepurpose of the valuation of the liabilities of its long term business;

I\

(ii) the mathematical reserves as shown in Form 14 constitute proper provision at31 December 1999 for the liabilities (other than the liabilities which had fallendue before 31 December 1999) arising under or in connection with contracts forlong term business including the increase in those liabilities arising from thedistribution of surplus as a result of the investigation as at 31 December 1999 intothe financial condition of the long term business;

11

1

j(iii) for the purposes of sub-paragraph (ii) above, the liabilities have been assessed in

accordance with Part IX of The Insurance Companies Regulations 1994 (asamended) in the context of assets valued in accordance with Part VIII of thoseRegulations, as shown in Form 13;

(iv) the valuation complies with the guidance notes "GN1: Actuaries and Long TermInsurance Business" issued by the Faculty and InstitUte of Actuaries dated 1December 1998 and "GN8: Additional Guidance for Appointed Actuaries andAppropriate Actuaries" issued by the Faculty and Institute of Actuaries, dated 1September 1996;

(v) in my opinion, premiums for contracts entered into during the fmancial year andthe income earned thereon are sufficient, on reasonable actuarial assumptions, andtaking into account the other financial resources of the Company that areavailable for the purpose, to enable the Company to meet its commitments inrespect of these contracts and, in particular, to establish adequate mathematicalreserves.

(b) the amount of the required minimum solvency margin applicable to the Company'slong term business immediately following 31 December 1999 (including the amountresulting from any increase in liabilities arising from a distribution of surplus as a resultof the investigation into the financial condition of the long term business) is£402,788,000.

D J BelshamAppointed Actuary

June 2000

56

;

. J

1I

.J PRUDENTIAL ANNUITIES LIMITED

JJ

Financial Year ended 31 December 1999

J

I

I

j

J

I

I

Report of the auditors to the directors pursuant to Regulation 29 of the InsuranceCompanies (Accounts and Statements) Regulations 1996

We have examined the documents prepared by the Company pursuant to section 17 of theInsurance Companies Act 1982 (the Act) and the Insurance Companies (Accounts andStatements) Regulations 1996 (the Regulations);

. Forms 9, 10, 13 to 17 and 40 to 42 (including the supplementary notes thereto) (''theForms'');

. the statement required by Regulation 23 on pages 22 to 24 ("the statement"); and

. the certificate signed in accordance with Regulation 28(a) on pages 53 to 55 ("thecertificate").

In the case of the certificate, our examination did not extend to:

(a) Paragraph 1 in relation to the statements required by Regulations 24 and 31;concerning shareholder controllers and the Appointed Actuary;

(b) Paragraph 5 to Schedule 6 in so far as it relates to controls with respect to MoneyLaundering.

Respective responsibilities of the Company and its auditors

The Company is responsible for the preparation of an annual return (including the forms,statements and the certificate) under the provisions of the Act and the Regulations. Therequirements of the Regulations have been modified by Orders issued under section 68 of theAct in August 1992 and December 1995, referred to in supplementary note 0903 on page 18.Under regulation 5 the Forms and statements are required to be prepared in the mannerspecified by the Regulations and to state fairly the information provided on the basis requiredby the Regulations.

It is our responsibility to form an independent opinion as to whether the Forms andstatements meet these requirements, and in the case of the certificate whether it was or wasnot unreasonable for the persons giving the certificate to have made the statements therein,and to report our opinions to you.

Basis of opinions

We conducted our audit in accordance with Bulletin 1998/3 "Auditors reports on regulatoryreturns made under the Insurance Companies Act 1982" issued by the Auditing PracticesBoard. Our work included examination, on a test basis, of evidence relevant to the amountsand disclosures in the Forms and statements. The evidence included that previously obtained

57

by us relating to the audit of the financial statements of the company for the financial year onwhich we reported on 7 March 2000. It also included an assessment of the significantestimates and judgements made by the Company in the preparation of the Fonns andstatements.

We planned and perfonned our work so as to obtain all the infonnation and explanationswhich we considered necessary in order to provide us with sufficient evidence to givereasonable assurance that the Fonns and statements are free from material misstatement,whether caused by fraud or other irregularity or error, and comply with Regulation 5.

In the case of the certificate, the work perfonned involved a review of the proceduresundertaken by the signatories to enable them to make the statements therein, and does notextend to an evaluation of the effectiveness of the company's internal control systems.

In giving our opinion we have relied on the certificate of the appointed actuary on page 56with respect to the mathematical reserves and the required minimum margin.

Opinions

In our opinion:

(a) the Fonns and statements fairly state the infonnation provided on the basis requiredby the Regulations as modified and have been properly prepared in accordance withthe provisions of those Regulations; and

(b) according to the infonnation and explanations received by us:

(i) the certificate has been properly prepared in accordance with the provisions ofthe Regulations; and

(ii) it was not unreasonable for the persons giving the certificate to have made thestatements therein.

KPMG Audit plcChartered AccountantsRegistered Auditor8 Salisbury SquareLondon EC4Y 8BB

June 2000

58

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