The Royal London Mutual Insurance Society Limited · Form 13 Analysis of admissible assets 7 ......

The Royal London Mutual Insurance

Society Limited

Annual PRA Insurance Returns for the year ended

31 December 2013

IPRU(INS) Appendices 9.1, 9.3, 9.4, 9.4A, 9.6

Contents

Balance Sheet and Profit and Loss Account

Form 2 Statement of solvency - long-term insurance business 1

Form 3 Components of capital resources 2

Form 11 Calculation of general insurance capital requirement - premiums

amount and brought forward amount

5

Form 12 Calculation of general insurance capital requirement - claims

amount and result

6

Form 13 Analysis of admissible assets 7

Form 14 Long term insurance business liabilities and margins 31

Form 17 Analysis of derivative contracts 39

Form 18 With-profits insurance capital component for the fund 47

Form 19 Realistic balance sheet 55

Long Term Insurance Business: Revenue Account and Additional Information

Form 40 Revenue account 71

Form 41 Analysis of premiums 79

Form 42 Analysis of claims 87

Form 43 Analysis of expenses 95

Form 44 Linked funds balance sheet 103

Form 45 Revenue account for internal linked funds 104

Form 46 Summary of new business 105

Form 47 Analysis of new business 106

Form 48 Assets not held to match linked liabilities 111

Form 49 Fixed and variable interest assets 119

Form 50 Summary of mathematical reserves 127

Form 51 Valuation summary of non-linked contracts (other than

accumulating with-profits contracts)

135

Form 52 Valuation summary of accumulating with-profits contracts 176

Form 53 Valuation summary of property linked contracts 190

Form 54 Valuation summary of index linked contracts 206

Form 55 Unit prices for internal linked funds 212

Form 57 Analysis of valuation interest rate 213

Form 58 Distribution of surplus 221

Form 59A/B With-profits payouts on maturity / surrender 229

Form 60 Long-term insurance capital requirement 245

Abstract of the Valuation Report 246

Abstract of the Realistic Report 298

Supplementary notes to the return 328

Additional information on derivative contracts 343

Additional information on controllers 344

Directors' Certificate 345

Auditor's Report 346

Statement of information on the with-profits actuary 347

Form 2

Statement of solvency - long-term insurance business

Name of insurer The Royal London Mutual Insurance Society Limited

Global business

Financial year ended 31 December 2013

Adjusted solo solvency calculation Company GL/

registration UK/ day month year Units

number CM

R2 99064 GL 31 12 2013 £000

As at end of As at end of

this financial the previous

year year

1 2

Capital resources

Capital resources arising within the long-term insurance fund 11 9103499 5416057

12

13 9103499 5416057

Guarantee fund

Guarantee fund requirement 21 764787 266001

22 8186637 5150056

Minimum capital requirement (MCR)

Long-term insurance capital requirement 31 697138 713100

Resilience capital requirement 32

Base capital resources requirement 33 2359 2238

Individual minimum capital requirement 34 697138 713100

Capital requirements of regulated related undertakings 35 532408 28301

Minimum capital requirement (34+35) 36 1229545 741401

Excess (deficiency) of available capital resources to cover 50% of MCR 37 8090097 4919217

Excess (deficiency) of available capital resources to cover 75% of MCR 38 8027864 4860006

Enhanced capital requirement

With-profits insurance capital component 39 5125294 2300397

Enhanced capital requirement 40 6354839 3041798

Capital resources requirement (CRR)

Capital resources requirement (greater of 36 and 40) 41 6354839 3041798

42 2748659 2374258

Contingent liabilities

51

Capital resources allocated towards long-term insurance business arising

outside the long-term insurance fund

Capital resources available to cover long-term insurance business capital

resources requirement (11+12)

Excess (deficiency) of available capital resources to cover guarantee fund

requirement

Excess (deficiency) of available capital resources to cover long-term

insurance business CRR (13-41)

Quantifiable contingent liabilities in respect of long-term insurance business

as shown in a supplementary note to Form 14

1

Form 3

(Sheet 1)

Components of capital resources


Global business


Company GL/

registration UK/ Units number CM

R3 GL 31 12 2013 £000

General Long-term Total as at Total as at

insurance insurance the end of the end of

business business this financial the previous

year year1 2 3 4

Core tier one capital

Permanent share capital 11

Profit and loss account and other reserves 12

13

Positive valuation differences 14 3586083 3586083 3708439

15 2937662 2937662 2647697

16 3120307 3120307 39031

Core tier one capital (sum of 11 to 16) 19 9644052 9644052 6395167

Tier one waivers

21

Implicit Items 22

Tier one waivers in related undertakings 23

24

Other tier one capital

25

26

27

28

31 9644052 9644052 6395167

32

33 879183 879183 957442

34

35

36 59999 59999 147807

37 939182 939182 1105249

39 8704870 8704870 5289918

Innovative tier one capital in related undertakings

day month year

99064

Share premium account

Fund for future appropriations

Core tier one capital in related undertakings

Unpaid share capital / unpaid initial funds and calls for

supplementary contributions

Total tier one waivers as restricted (21+22+23)

Perpetual non-cumulative preference shares as restricted

Perpetual non-cumulative preference shares in related

undertakings

Innovative tier one capital as restricted

Deductions from tier one (32 to 36)

Total tier one capital after deductions (31-37)

Total tier one capital before deductions

(19+24+25+26+27+28)

Investments in own shares

Intangible assets

Amounts deducted from technical provisions for discounting

Other negative valuation differences

Deductions in related undertakings

2

Form 3

(Sheet 2)



Global business


Company GL/


R3 GL 31 12 2013 £000




year year1 2 3 4

Tier two capital

41

42

43

44

45

46 245153 245153 398657

Upper tier two capital in related undertakings 47

Upper tier two capital (44 to 47) 49 245153 245153 398657

Fixed term preference shares 51

Other tier two instruments 52 394425 394425

Lower tier two capital in related undertakings 53

Lower tier two capital (51+52+53) 59 394425 394425

61 639578 639578 398657

Excess tier two capital 62

63

69 639578 639578 398657 Total tier two capital after restrictions, before deductions

(61-62-63)

day month year

99064

Implicit items, (tier two waivers and amounts excluded from line

22)

Perpetual non-cumulative preference shares excluded from line

25

Innovative tier one capital excluded from line 27

Tier two waivers, innovative tier one capital and perpetual non-

cumulative preference shares treated as tier two capital (41 to

43)

Perpetual cumulative preference shares

Perpetual subordinated debt and securities

Total tier two capital before restrictions (49+59)

Further excess lower tier two capital

3

Form 3

(Sheet 3)



Global business


Company GL/


R3 GL 31 12 2013 £000




year year1 2 3 4

Total capital resources

71

72 9344448 9344448 5688575

73 224743 224743 239200

74

75 16206 16206 33318

76

77

79 9103499 9103499 5416057

Available capital resources for GENPRU/INSPRU tests

81 8951424 8951424 5416057

82 8704870 8704870 5289918

83 8950023 8950023 5416057

Financial engineering adjustments

91

92

93

94

95

96

Available capital resources for guarantee fund requirement

day month year

99064

Positive adjustments for regulated non-insurance related

undertakings

Total capital resources before deductions

(39+69+71)

Inadmissible assets other than intangibles and own shares

Assets in excess of market risk and counterparty limits

Deductions for related ancillary services undertakings

Deductions for regulated non-insurance related undertakings

Deductions of ineligible surplus capital

Total capital resources after deductions

(72-73-74-75-76-77)

Any other charges on future profits

Sum of financial engineering adjustments

(91+92-93+94+95)

Available capital resources for 50% MCR requirement

Available capital resources for 75% MCR requirement

Implicit items

Financial reinsurance - ceded

Financial reinsurance - accepted

Outstanding contingent loans

4

Form 11


Global business


Long term insurance business

Company GL/registration UK/ day month year Unitsnumber CM

R11 99064 GL 31 12 2013 £000

This financial year Previous year1 2

11 81552 85215

12

13 81552 85215

14

15 4697 4985

16 78421 81892

21 81552 85215

22

23 81552 85215

24

25 4697 4985

26 78421 81892

30 78421 81892

31

32 14116 14740

33 526 649

34 13590 14091

41 168535 176860

42

43 59137 65903

44

45 63372 76911

46 164301 165852

47 113177 128509

48 51123 37343

49 0.50 0.50

50 6795 7046

51 14260 16687

52

53 6430 7524

54 6795 7524

Premiums for "actuarial health insurance" (included in line 23)

Calculation of general insurance capital requirement - premiums amount and brought forward amount

Gross premiums written

Premiums taxes and levies (included in line 11)

Premiums written net of taxes and levies (11-12)

Premiums for classes 11, 12 or 13 (included in line 13)

Premiums for "actuarial health insurance" (included in line 13)

Sub-total A (13 + 1/2 14 - 2/3 15)

Gross premiums earned

Premium taxes and levies (included in line 21)

Premiums earned net of taxes and levies (21-22)

Premiums for classes 11, 12 or 13 (included in line 23)

Claims outstanding brought

forward at the beginning of

the 3 year period

For insurance business accounted for on

an underwriting year basis


an accident year basis

Sub-total H (23 + 1/2 24 - 2/3 25)

Sub-total I (higher of sub-total A and sub-total H)

Adjusted sub-total I if financial year is not a 12 month period to produce an

annual figure

Division of gross adjusted premiums

amount sub-total I

(or adjusted sub-total I if appropriate)

x 0.18

Excess (if any) over 61.3M EURO x 0.02

Sub-total J (32-33)

Claims paid in period of 3 financial years

Claims outstanding carried

forward at the end of the 3

year period


an underwriting year basis


an accident year basis

Provision for claims outstanding (before discounting and gross of reinsurance) if

both 51.1 and 51.2 are zero, otherwise zero

Brought forward amount (See instruction 4)

Greater of lines 50 and 53

Sub-total C (41+42+43-44-45)

Amounts recoverable from reinsurers in respect of claims included

in Sub-total C

Sub-total D (46-47)

Reinsurance Ratio

(Sub-total D /sub-total C or, if more, 0.50 or, if less, 1.00)

Premiums amount (Sub-total J x reinsurance ratio)

Provision for claims outstanding (before discounting and net of

reinsurance

5

Form 12


Global business


Long term insurance businessCompany GL/

registration UK/ day month year Units

number CM

R12 99064 GL 31 12 2013 £000

This financial year Previous year1 2

11 36 36

21 168535 176860

22

23 59137 65903

24

25 63372 76911

26 164301 165852

27

28 50516 24913

29 130623 149244

31 43541 49748

32 11321 12934

33 212 455

39 11109 12480

41 5554 6240

42 6795 7524

43 6795 7524

Claims incurred for "actuarial health insurance" (included in 26)

Calculation of general insurance capital requirement - claims amount and result

Reference period (No. of months) See INSPRU 1.1.63R

Claims paid in reference period

Claims outstanding carried

forward at the end of the

reference period

For insurance business accounted for

on an underwriting year basis


on an accident year basis

Claims outstanding brought

forward at the beginning of

the reference period


on an underwriting year basis


on an accident year basis

Claims incurred in reference period (21+22+23-24-25)

Claims incurred for classes 11, 12 or 13 (included in 26)

Claims amount Sub-total G x reinsurance ratio (11.49)

Higher of premiums amount and brought forward amount (11.54)

General insurance capital requirement (higher of lines 41 and 42)

Sub-total E (26 +1/2 27 - 2/3 28)

Sub-total F - Conversion of sub-total E to annual figure (multiply by 12

and divide by number of months in the reference period)

Division of sub-total F

(gross adjusted claims

amount)

x 0.26

Excess (if any) over 42.9M EURO x 0.03

Sub-total G (32-33)

6

Form 13

(Sheet 1)

Analysis of admissible assets


Global business


Category of assets Total long term insurance business assets

Company GL/ Category

registration UK/ day month year Units of

number CM assets

R13 99064 GL 31 12 2013 £000 10

As at end of this

financial year

As at end of the

previous year

1 2

Land and buildings 11 1134299 1224418

21 23198 20800

22

23 85023

24

25 71095 54466

26 522

27 11723 11450

28 5108 6200

29

30

Other financial investments

Equity shares 41 3789601 3455215

Other shares and other variable yield participations 42 139289 144253

Holdings in collective investment schemes 43 1382632 627037

Rights under derivative contracts 44 57761 88232

45 4921591 5481709

46 2505828 2419568

47 221664 363158

48 235803 265304

Participation in investment pools 49 135050 156934

Loans secured by mortgages 50 515 610

51 31 34

52 9324 10892

Other loans 53

54 224209 389181

55 566752 526250

Other financial investments 56

Deposits with ceding undertakings 57

58

59 16323618 13875350

Investments in group undertakings and participating interests

UK insurance dependantsShares

Debts and loans

Other insurance dependantsShares

Debts and loans

Non-insurance dependantsShares

Debts and loans

Other group undertakingsShares

Debts and loans

Participating interestsShares

Debts and loans

Fixed interest securitiesApproved

Other

Assets held to match linked liabilitiesIndex linked

Property linked

Variable interest securitiesApproved

Other

Loans to public or local authorities and nationalised industries or undertakings

Loans secured by policies of insurance issued by the company

Bank and approved credit & financial

institution deposits

One month or less withdrawal

More than one month withdrawal

7

Form 13

(Sheet 2)



Global business





number CM assets

R13 99064 GL 31 12 2013 £000 10

As at end of this

financial year

As at end of the

previous year

1 2

60

61

62

63

71 15665 15551

72

73

74

75 15550 16472

76 2749

77

78 334109 187545

79

80

81 342832 487614

82

83

84

85

86

87

89 32467247 29916539

Debtors and salvage

Reinsurers' share of technical provisions

Provision for unearned premiums

Claims outstanding

Provision for unexpired risks

Other

Direct insurance businessPolicyholders

Intermediaries

Salvage and subrogation recoveries

ReinsuranceAccepted

Ceded

Dependantsdue in 12 months or less

due in more than 12 months

Otherdue in 12 months or less


Deferred acquisition costs (general business only)

Other prepayments and accrued income

Deductions from the aggregate value of assets

Grand total of admissible assets after deduction of admissible assets

in excess of market risk and counterparty limits (11 to 86 less 87)

Other assets

Tangible assets

Deposits not subject to time restriction on withdrawal with approved

institutions

Cash in hand

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

Accrued interest and rent

8

Form 13

(Sheet 3)



Global business



Company GL/ Categoryregistration UK/ day month year Units ofnumber CM assets

R13 99064 GL 31 12 2013 £000 10

As at end of this

financial year

As at end of the

previous year

1 2

91 32467247 29916539

92

93 633238 710387

94 3362184 28301

95 200000

96 7564 81190

97 16206 33318

98 (3260307) 32060

99 458163 478035

100 608427 1158565

101 1840905 1337540

102 36333628 33775935

103

Ineligible surplus capital and restricted assets in regulated related

insurance undertakings

Reconciliation to asset values determined in accordance

with the insurance accounts rules or international

accounting standards as applicable to the firm for the

purpose of its external financial reporting

Total admissible assets after deduction of admissible assets

in excess of market risk and counterparty limits (as per line 89 above)

Admissible assets in excess of market and counterparty limits

Inadmissible assets directly held

Capital resources requirement deduction of regulated related

undertakings

Total assets determined in accordance with the insurance accounts

rules or international accounting standards as applicable to the firm

for the purpose of its external financial reporting (91 to 101)

Amounts included in line 89 attributable to debts due from related

insurers, other than those under contracts of insurance or reinsurance

Inadmissible assets of regulated related undertakings

Book value of related ancillary services undertakings

Other differences in the valuation of assets (other than for assets

not valued above)

Deferred acquisition costs excluded from line 89

Reinsurers' share of technical provisions excluded from line 89

Other asset adjustments (may be negative)

9

Form 13

(Sheet 1)



Global business


Category of assets Royal London IB & OB Subfund



number CM assets

R13 99064 GL 31 12 2013 £000 21

As at end of this

financial year

As at end of the

previous year

1 2


21 23198 20800

22

23 85023

24

25 69273 53301

26 522

27 4911 4916

28 1226

29

30


Equity shares 41 2028877 1915340




45 1764800 1826453

46 1016327 882824

47 156535 231757

48 148800 143731


Loans secured by mortgages 50

51

52 2608 3080

Other loans 53

54 48926 78719

55 123675 105408



58

59 15948492 13544105



Debts and loans


Debts and loans


Debts and loans


Debts and loans


Debts and loans


Other


Property linked


Other







10

Form 13

(Sheet 2)



Global business





number CM assets

R13 99064 GL 31 12 2013 £000 21

As at end of this

financial year

As at end of the

previous year

1 2

60

61

62

63

71 13085 12482

72

73

74

75 12631 14466

76 2744

77

78 219920 145455

79

80

81 128691 162272

82

83

84

85

86

87

89 23068810 20138479

Debtors and salvage



Claims outstanding


Other


Intermediaries


ReinsuranceAccepted

Ceded










Other assets

Tangible assets


institutions

Cash in hand



11

Form 13

(Sheet 3)



Global business




R13 99064 GL 31 12 2013 £000 21

As at end of this

financial year

As at end of the

previous year

1 2

91 23068810 20138479

92

93 571795 653963

94 3362172 27661

95 200000

96 7564 81190

97 16206 33318

98 (3260307) 32060

99 458163 478035

100 545274 1031633

101 1846681 1340790

102 26816357 23817129

103












undertakings









not valued above)




12

Form 13

(Sheet 1)



Global business


Category of assets Refuge Assurance IB Subfund



number CM assets

R13 99064 GL 31 12 2013 £000 23

As at end of this

financial year

As at end of the

previous year

1 2

Land and buildings 11 35285

21

22

23

24

25

26

27

28

29

30


Equity shares 41 101026 69481




45 106986 142531

46 57107 62421

47 4461 10197

48 2047 3209

Participation in investment pools 49 5366


51

52

Other loans 53

54 509 1872

55 1287 2507



58

59



Debts and loans


Debts and loans


Debts and loans


Debts and loans


Debts and loans


Other


Property linked


Other







13

Form 13

(Sheet 2)



Global business





number CM assets

R13 99064 GL 31 12 2013 £000 23

As at end of this

financial year

As at end of the

previous year

1 2

60

61

62

63

71 34 61

72

73

74

75

76

77

78 3173 1460

79

80

81 3184 2147

82

83

84

85

86

87

89 305599 340434

Debtors and salvage



Claims outstanding


Other


Intermediaries


ReinsuranceAccepted

Ceded










Other assets

Tangible assets


institutions

Cash in hand



14

Form 13

(Sheet 3)



Global business




R13 99064 GL 31 12 2013 £000 23

As at end of this

financial year

As at end of the

previous year

1 2

91 305599 340434

92

93

94

95

96

97

98

99

100

101

102 305599 340434

103












undertakings









not valued above)




15

Form 13

(Sheet 1)



Global business


Category of assets United Friendly OB Subfund



number CM assets

R13 99064 GL 31 12 2013 £000 24

As at end of this

financial year

As at end of the

previous year

1 2


21

22

23

24

25

26

27

28

29

30






45 916290 1009980

46 431909 430966

47 36409 70379

48 15532 22155



51

52 3135 3526

Other loans 53

54 925 4820

55 2338 6454



58

59



Debts and loans


Debts and loans


Debts and loans


Debts and loans


Debts and loans


Other


Property linked


Other







16

Form 13

(Sheet 2)



Global business





number CM assets

R13 99064 GL 31 12 2013 £000 24

As at end of this

financial year

As at end of the

previous year

1 2

60

61

62

63

71 45 50

72

73

74

75

76

77

78 35759 11232

79

80

81 21241 15584

82

83

84

85

86

87

89 2279017 2254486

Debtors and salvage



Claims outstanding


Other


Intermediaries


ReinsuranceAccepted

Ceded










Other assets

Tangible assets


institutions

Cash in hand



17

Form 13

(Sheet 3)



Global business




R13 99064 GL 31 12 2013 £000 24

As at end of this

financial year

As at end of the

previous year

1 2

91 2279017 2254486

92

93

94

95

96

97

98

99

100

101

102 2279017 2254486

103












undertakings









not valued above)




18

Form 13

(Sheet 1)



Global business


Category of assets United Friendly IB Subfund



number CM assets

R13 99064 GL 31 12 2013 £000 25

As at end of this

financial year

As at end of the

previous year

1 2


21

22

23

24

25

26

27

28

29

30






45 207381 262819

46 148644 141765

47 16620 32545

48 5422 7337



51

52 2303 2533

Other loans 53

54 495 2511

55 1252 3363



58

59



Debts and loans


Debts and loans


Debts and loans


Debts and loans


Debts and loans


Other


Property linked


Other







19

Form 13

(Sheet 2)



Global business





number CM assets

R13 99064 GL 31 12 2013 £000 25

As at end of this

financial year

As at end of the

previous year

1 2

60

61

62

63

71 114 143

72

73

74

75

76

77

78 11651 4757

79

80

81 9026 8689

82

83

84

85

86

87

89 1093284 1032733

Debtors and salvage



Claims outstanding


Other


Intermediaries


ReinsuranceAccepted

Ceded










Other assets

Tangible assets


institutions

Cash in hand



20

Form 13

(Sheet 3)



Global business




R13 99064 GL 31 12 2013 £000 25

As at end of this

financial year

As at end of the

previous year

1 2

91 1093284 1032733

92

93

94

95

96

97

98

99

100

101

102 1093284 1032733

103












undertakings









not valued above)




21

Form 13

(Sheet 1)



Global business


Category of assets Scottish Life Fund



number CM assets

R13 99064 GL 31 12 2013 £000 26

As at end of this

financial year

As at end of the

previous year

1 2


21

22

23

24

25

26

27

28 5108 4974

29

30






45 1016387 1141601

46 173639 345875

47 306 567

48 57628 79582

Participation in investment pools 49


51

52 345 403

Other loans 53

54 151879 256750

55 383916 343798



58

59 178890 147230



Debts and loans


Debts and loans


Debts and loans


Debts and loans


Debts and loans


Other


Property linked


Other







22

Form 13

(Sheet 2)



Global business





number CM assets

R13 99064 GL 31 12 2013 £000 26

As at end of this

financial year

As at end of the

previous year

1 2

60

61

62

63

71 98 100

72

73

74

75 13

76

77

78 8442 9355

79

80

81 125041 161703

82

83

84

85

86

87

89 2664086 2979021

Debtors and salvage



Claims outstanding


Other


Intermediaries


ReinsuranceAccepted

Ceded










Other assets

Tangible assets


institutions

Cash in hand



23

Form 13

(Sheet 3)



Global business




R13 99064 GL 31 12 2013 £000 26

As at end of this

financial year

As at end of the

previous year

1 2

91 2664086 2979021

92

93 989

94

95

96

97

98

99

100 4240 5135

101 (124) (35)

102 2669191 2984121

103












undertakings









not valued above)




24

Form 13

(Sheet 1)



Global business


Category of assets PLAL With-Profits Fund



number CM assets

R13 99064 GL 31 12 2013 £000 27

As at end of this

financial year

As at end of the

previous year

1 2

Land and buildings 11

21

22

23

24

25

26

27

28

29

30



Other shares and other variable yield participations 42



45 145752 153839

46 244372 260853

47 1

48 2470 4357



51

52

Other loans 53

54 5698 16564

55 14403 27300



58

59



Debts and loans


Debts and loans


Debts and loans


Debts and loans


Debts and loans


Other


Property linked


Other







25

Form 13

(Sheet 2)



Global business





number CM assets

R13 99064 GL 31 12 2013 £000 27

As at end of this

financial year

As at end of the

previous year

1 2

60

61

62

63

71

72

73

74

75

76

77

78 1321 2499

79

80

81 9938 12677

82

83

84

85

86

87

89 704547 721585

Debtors and salvage



Claims outstanding


Other


Intermediaries


ReinsuranceAccepted

Ceded










Other assets

Tangible assets


institutions

Cash in hand



26

Form 13

(Sheet 3)



Global business




R13 99064 GL 31 12 2013 £000 27

As at end of this

financial year

As at end of the

previous year

1 2

91 704547 721585

92

93

94

95

96

97

98

99

100

101 (43)

102 704505 721585

103












undertakings









not valued above)




27

Form 13

(Sheet 1)



Global business


Category of assets Royal Liver Assurance Fund



number CM assets

R13 99064 GL 31 12 2013 £000 28

As at end of this

financial year

As at end of the

previous year

1 2


21

22

23

24

25 1821 1166

26

27 6812 6533

28

29

30






45 763995 944487

46 433830 294864

47 7332 17712

48 3903 4934



51 31 34

52 933 1350

Other loans 53

54 15777 27945

55 39881 37419



58

59 196236 184015



Debts and loans


Debts and loans


Debts and loans


Debts and loans


Debts and loans


Other


Property linked


Other







28

Form 13

(Sheet 2)



Global business





number CM assets

R13 99064 GL 31 12 2013 £000 28

As at end of this

financial year

As at end of the

previous year

1 2

60

61

62

63

71 2290 2715

72

73

74

75 2918 1993

76 5

77

78 53843 12788

79

80

81 45710 124541

82

83

84

85

86

87

89 2351904 2449800

Debtors and salvage



Claims outstanding


Other


Intermediaries


ReinsuranceAccepted

Ceded










Other assets

Tangible assets


institutions

Cash in hand



29

Form 13

(Sheet 3)



Global business




R13 99064 GL 31 12 2013 £000 28

As at end of this

financial year

As at end of the

previous year

1 2

91 2351904 2449800

92

93 60454 56424

94 12 640

95

96

97

98

99

100 58914 121797

101 (5609) (3215)

102 2465675 2625446

103












undertakings









not valued above)




30

Form 14

Long term insurance business liabilities and margins


Global business


Total business/Sub fund Summary

Units £000 As at end of As at end of


year year

1 2

Mathematical reserves, after distribution of surplus 11 25909987 23978651

12

Balance of surplus/(valuation deficit) 13

Long term insurance business fund carried forward (11 to 13) 14 25909987 23978651

Gross 15 211442 196051

Reinsurers' share 16 37278 34887

Net (15-16) 17 174163 161164

Taxation 21

Other risks and charges 22 26752 35328

Deposits received from reinsurers 23

Direct insurance business 31 59260 71352

Reinsurance accepted 32

Reinsurance ceded 33 30494 26913

Secured 34

Unsecured 35 1935

Amounts owed to credit institutions 36 32198 54906

Taxation 37 55339 56043

Other 38 1065209 528294

Accruals and deferred income 39 12108 12855

41

Total other insurance and non-insurance liabilities (17 to 41) 49 1455523 948789

Excess of the value of net admissible assets 51 5101738 4989099

Total liabilities and margins 59 32467247 29916539

61 28757 19435

62 16320751 13871166

71 27365509 24927440

Increase to liabilities - DAC related 72

Reinsurers' share of technical provisions 73 608428 1158565

Other adjustments to liabilities (may be negative) 74 5422029 5042233

Capital and reserves and fund for future appropriations 75 2937662 2647697

76 36333628 33775935

Creditors

Cash bonuses which had not been paid to policyholders prior

to end of the financial year

Claims outstanding

Provisions

Creditors

Debenture loans

Provision for "reasonably foreseeable adverse variations"

Amounts included in line 59 attributable to liabilities to related companies,

other than those under contracts of insurance or reinsurance

Amounts included in line 59 attributable to liabilities in respect of property

linked benefits

Total liabilities (11+12+49)

Total liabilities under insurance accounts rules or international accounting

standards as applicable to the firm for the purpose of its external financial

reporting (71 to 75)

31

Form 14



Global business


Total business/Sub fund Royal London IB & OB Subfund



year year

1 2


12



Gross 15 144994 143433


Net (15-16) 17 118374 116149

Taxation 21 (36725) (19404)






Secured 34

Unsecured 35 1202


Taxation 37

Other 38 938017 476759


41




61 27741 18800

62 15945624 13539921

71 20552306 17766114


Reinsurers' share of technical provisions 73

Other adjustments to liabilities (may be negative) 74

Capital and reserves and fund for future appropriations 75

76

Creditors



Claims outstanding

Provisions

Creditors

Debenture loans





linked benefits





32

Form 14



Global business


Total business/Sub fund Refuge Assurance IB Subfund



year year

1 2


12



Gross 15 3218 773

Reinsurers' share 16

Net (15-16) 17 3218 773

Taxation 21 3821 1704

Other risks and charges 22 150




Reinsurance ceded 33

Secured 34

Unsecured 35 63

Amounts owed to credit institutions 36

Taxation 37 13169 13175

Other 38 2581 804

Accruals and deferred income 39 393

41




61

62

71 159798 180466





76

Creditors



Claims outstanding

Provisions

Creditors

Debenture loans





linked benefits





33

Form 14



Global business


Total business/Sub fund United Friendly OB Subfund



year year

1 2


12



Gross 15 1349


Net (15-16) 17 1349

Taxation 21 1108 835






Secured 34

Unsecured 35 452


Taxation 37 10088 10116

Other 38 25919 5604


41




61

62

71 1513094 1521631





76

Creditors



Claims outstanding

Provisions

Creditors

Debenture loans





linked benefits





34

Form 14



Global business


Total business/Sub fund United Friendly IB Subfund



year year

1 2


12



Gross 15


Net (15-16) 17

Taxation 21 30043 16785






Secured 34

Unsecured 35 219


Taxation 37 32082 29962

Other 38 7127 1839


41




61

62

71 528981 522873





76

Creditors



Claims outstanding

Provisions

Creditors

Debenture loans





linked benefits





35

Form 14



Global business


Total business/Sub fund Scottish Life Fund



year year

1 2


12



Gross 15 20090 18230


Net (15-16) 17 20088 17657

Taxation 21 60 80





Reinsurance ceded 33 1

Secured 34

Unsecured 35


Taxation 37

Other 38 37038 28023


41




61 31

62 178890 147230

71 2109637 2284141





76

Creditors



Claims outstanding

Provisions

Creditors

Debenture loans





linked benefits





36

Form 14



Global business


Total business/Sub fund PLAL With-Profits Fund



year year

1 2


12



Gross 15


Net (15-16) 17

Taxation 21 1693

Other risks and charges 22


Direct insurance business 31



Secured 34

Unsecured 35


Taxation 37 2789

Other 38 2670 6421

Accruals and deferred income 39

41




61

62

71 488247 529626





76

Creditors



Claims outstanding

Provisions

Creditors

Debenture loans





linked benefits





37

Form 14



Global business


Total business/Sub fund Royal Liver Assurance Fund



year year

1 2


12



Gross 15 41791 33616


Net (15-16) 17 31135 26586

Taxation 21






Secured 34

Unsecured 35


Taxation 37

Other 38 51857 8844


41




61 1015 604

62 196236 184015

71 2013446 2122590





76

Creditors



Claims outstanding

Provisions

Creditors

Debenture loans





linked benefits





38

Form 17

Analysis of derivative contracts


Global business





number CM assets

R17 99064 GL 31 12 2013 £000 10

Derivative contracts

Assets Liabilities Bought / Long Sold / Short

1 2 3 4

11

Interest rates 12 32787 39861 945319 501529

Inflation 13

Credit index / basket 14

Credit single name 15 54 5000

16

Equity stock 17 137 97

Land 18

Currencies 19

Mortality 20

Other 21 4796 1563 377435 412327

31 8958 1089048

Equity index calls 32

Equity stock calls 33

Equity index puts 34 11029 63945

Equity stock puts 35

Other 36

Swaptions 41



Equity index puts 44


Other 46

Total (11 to 46) 51 57761 41424 2411899 982801

52 (59761) (41411)

53 (2000) 13

Out of the

money

options

Adjustment for variation margin

Total (51 + 52)

Value as at the end

of this financial year

Notional amount as at the end


Futures and

contracts

for

differences

Fixed-interest securities

Equity index

In the money

options

Swaptions

39

Form 17



Global business





number CM assets

R17 99064 GL 31 12 2013 £000 21



1 2 3 4

11

Interest rates 12 14587 8571 181546 153527

Inflation 13



16


Land 18

Currencies 19

Mortality 20

Other 21 401 190 15780 40946

31





Other 36

Swaptions 41





Other 46

Total (11 to 46) 51 15096 8761 197390 196500

52 (15961) (8571)

53 (865) 190

Out of the

money

options


Total (51 + 52)

Value as at the end




Futures and

contracts

for

differences


Equity index

In the money

options

Swaptions

40

Form 17



Global business





number CM assets

R17 99064 GL 31 12 2013 £000 23



1 2 3 4

11

Interest rates 12

Inflation 13



16

Equity stock 17 5 4

Land 18

Currencies 19

Mortality 20

Other 21 30 4 358 2847

31





Other 36

Swaptions 41





Other 46

Total (11 to 46) 51 36 4 362 2961

52 (1)

53 35 4

Out of the

money

options


Total (51 + 52)

Value as at the end




Futures and

contracts

for

differences


Equity index

In the money

options

Swaptions

41

Form 17



Global business





number CM assets

R17 99064 GL 31 12 2013 £000 24



1 2 3 4

11

Interest rates 12

Inflation 13



16


Land 18

Currencies 19

Mortality 20

Other 21 249 38 3142 23499

31





Other 36

Swaptions 41





Other 46

Total (11 to 46) 51 291 38 3161 24361

52 (9)

53 282 38

Out of the

money

options


Total (51 + 52)

Value as at the end




Futures and

contracts

for

differences


Equity index

In the money

options

Swaptions

42

Form 17



Global business





number CM assets

R17 99064 GL 31 12 2013 £000 25



1 2 3 4

11

Interest rates 12

Inflation 13



16


Land 18

Currencies 19

Mortality 20

Other 21 66 17 1414 6372

31





Other 36

Swaptions 41





Other 46

Total (11 to 46) 51 82 17 1424 6669

52 (3)

53 79 17

Out of the

money

options


Total (51 + 52)

Value as at the end




Futures and

contracts

for

differences


Equity index

In the money

options

Swaptions

43

Form 17



Global business





number CM assets

R17 99064 GL 31 12 2013 £000 26



1 2 3 4

11

Interest rates 12 17881 29037 749095 335267

Inflation 13



16

Equity stock 17

Land 18

Currencies 19

Mortality 20

Other 21 1 6 548 327

31 8958 1089048





Other 36

Swaptions 41





Other 46

Total (11 to 46) 51 26859 29043 1838691 337294

52 (27813) (28987)

53 (954) 56

Out of the

money

options


Total (51 + 52)

Value as at the end




Futures and

contracts

for

differences


Equity index

In the money

options

Swaptions

44

Form 17



Global business





number CM assets

R17 99064 GL 31 12 2013 £000 27



1 2 3 4

11

Interest rates 12 319 2253 14678 12735

Inflation 13


Credit single name 15

16

Equity stock 17

Land 18

Currencies 19

Mortality 20

Other 21 28 2553

31





Other 36

Swaptions 41





Other 46

Total (11 to 46) 51 359 2253 14678 21123

52 (331) (2545)

53 28 (292)

Out of the

money

options


Total (51 + 52)

Value as at the end




Futures and

contracts

for

differences


Equity index

In the money

options

Swaptions

45

Form 17



Global business





number CM assets

R17 99064 GL 31 12 2013 £000 28



1 2 3 4

11

Interest rates 12

Inflation 13


Credit single name 15

16

Equity stock 17

Land 18

Currencies 19

Mortality 20

Other 21 4021 1308 356193 335783

31





Other 36

Swaptions 41





Other 46

Total (11 to 46) 51 15038 1308 356193 393893

52 (15643) (1308)

53 (605)

Out of the

money

options


Total (51 + 52)

Value as at the end




Futures and

contracts

for

differences


Equity index

In the money

options

Swaptions

46

Form 18

With-profits insurance capital component for the fund


With-profits fund Total Long Term Insurance Business Assets


Units £000


this financial year the previous year

1 2

Regulatory excess capital

11 32467247 29916539

12

13 17151877 14618940

14 342882 334145

15

19 14972488 14963454

21 8758110 9359711

22 1455523 948789

29 10213633 10308500

31 354255 378955

32

39 10567888 10687455

Regulatory excess capital (19-39) 49 4404600 4275998

Realistic excess capital

51 2453652 2167180

Excess assets allocated to with-profits insurance business

61

62 639578 398657

63 620167 329362

64

65

66 2295518 2300397

Resilience capital requirement in respect of the fund's

with-profits insurance contracts

Regulatory value

of assets

Long-term admissible assets of the fund

Implicit items allocated to the fund

Mathematical reserves in respect of the fund's

non-profit insurance contracts


covering the LTICR of the fund's non-profit

insurance contracts


covering the RCR of the fund's non-profit

insurance contracts

Total (11+12-(13+14+15))

Regulatory value

of liabilities

Mathematical reserves (after distribution of

surplus) in respect of the fund's with-profits

insurance contracts

Regulatory current liabilities of the fund

Total (21+22)

Long-term insurance capital requirement in respect of the fund's


Present value of other future internal transfers not

already taken into account

With-profits insurance capital component for fund (if 62 exceeds

63, greater of 61+62-63-64-65 and zero, else greater of 61-64-65 and

zero)

Sum of regulatory value of liabilities, LTICR and RCR

(29+31+32)


Excess (deficiency) of assets allocated to with-profits insurance

business in fund (49-51)

Face amount of capital instruments attributed to the fund and

included in capital resources (unstressed)

Realistic amount of capital instruments attributed to the fund and

included in capital resources (stressed)

Present value of future shareholder transfers arising

from distribution of surplus

47

Form 18



With-profits fund Royal London IB & OB Subfund


Units £000



1 2


11 23068810 20138479

12

13 16118989 13618875

14 273417 256510

15

19 6676404 6263094

21 3311668 3464857

22 1121649 682382

29 4433317 4147239

31 134005 140254

32

39 4567322 4287493



51 2453652 2167180


61 (344569) (191578)

62 639578 398657

63 620167 329362

64

65

66



Regulatory value

of assets







insurance contracts



insurance contracts

Total (11+12-(13+14+15))

Regulatory value

of liabilities



insurance contracts


Total (21+22)







zero)


(29+31+32)










48

Form 18



With-profits fund Refuge Assurance IB Subfund


Units £000



1 2


11 305599 340434

12

13 25262 23428

14 1015 942

15

19 279323 316064

21 111008 139116

22 23528 17922

29 134536 157038

31 4584 5741

32

39 139120 162779



51


61 140202 153285

62

63

64

65

66 140202 153285



Regulatory value

of assets







insurance contracts



insurance contracts

Total (11+12-(13+14+15))

Regulatory value

of liabilities



insurance contracts


Total (21+22)







zero)


(29+31+32)










49

Form 18



With-profits fund United Friendly OB Subfund


Units £000



1 2


11 2279017 2254486

12

13

14

15

19 2279017 2254486

21 1469972 1499946

22 43122 21685

29 1513094 1521631

31 59367 60617

32

39 1572461 1582247



51


61 706556 672238

62

63

64

65

66 706556 672238



Regulatory value

of assets







insurance contracts



insurance contracts

Total (11+12-(13+14+15))

Regulatory value

of liabilities



insurance contracts


Total (21+22)







zero)


(29+31+32)










50

Form 18



With-profits fund United Friendly IB Subfund


Units £000



1 2


11 1093284 1032733

12

13

14

15

19 1093284 1032733

21 457092 471395

22 71889 51478

29 528981 522873

31 18856 19489

32

39 547837 542361



51


61 545447 490372

62

63

64

65

66 545447 490372



Regulatory value

of assets







insurance contracts



insurance contracts

Total (11+12-(13+14+15))

Regulatory value

of liabilities



insurance contracts


Total (21+22)







zero)


(29+31+32)










51

Form 18



With-profits fund Scottish Life Fund


Units £000



1 2


11 2664086 2979021

12

13 382636 361762

14 15917 15471

15

19 2265533 2601788

21 1658548 1865836

22 68453 56543

29 1727000 1922379

31 66995 75318

32

39 1793996 1997698



51


61 471537 604091

62

63

64

65

66 471537 604091



Regulatory value

of assets







insurance contracts



insurance contracts

Total (11+12-(13+14+15))

Regulatory value

of liabilities



insurance contracts


Total (21+22)







zero)


(29+31+32)










52

Form 18



With-profits fund PLAL With-Profits Fund


Units £000



1 2


11 704547 721585

12

13

14

15

19 704547 721585

21 483884 520415

22 4364 9211

29 488247 529626

31 19355 20817

32

39 507603 550442



51


61 196945 171143

62

63

64

65

66 196945 171143



Regulatory value

of assets







insurance contracts



insurance contracts

Total (11+12-(13+14+15))

Regulatory value

of liabilities



insurance contracts


Total (21+22)







zero)


(29+31+32)










53

Form 18



With-profits fund Royal Liver Assurance Fund


Units £000



1 2


11 2351904 2449800

12

13 624990 614875

14 52534 61222

15

19 1674380 1773703

21 1265938 1398146

22 122518 109569

29 1388456 1507715

31 51093 56720

32

39 1439549 1564435



51


61 234831 209268

62

63

64

65

66 234831 209268



Regulatory value

of assets







insurance contracts



insurance contracts

Total (11+12-(13+14+15))

Regulatory value

of liabilities



insurance contracts


Total (21+22)







zero)


(29+31+32)










54

Form 19

Realistic balance sheet (Sheet 1)




Units £000



1 2

Realistic value of assets available to the fund

11 14972488 14963454

12

13 3771 86154

21

22 1861037 1561806

23 1112 3708

24 203771 194577

25

26 17034638 16637391

27

29 17034638 16637391

Realistic value of liabilities of fund

31 11090462 11358362

32 113492

33

34 970556 1045090

35 55383 121869

36 109349 100908

41 450468 728180

42

43 489364 496536

44 87140 54418

45

46

47 109109 107130

49 2055397 2208577

Realistic current liabilities of the fund 51 1435127 864401

59 14580986 14431341

With-profits benefit reserve

Regulatory value of assets


Value of shares in subsidiaries held in fund (regulatory)

Excess admissible assets

Present value of future profits (or losses) on non-profit insurance contracts written

in the fund

Value of derivatives and quasi-derivatives not already reflected in lines

11 to 22

Value of shares in subsidiaries held in fund (realistic)

Prepayments made from the fund

Realistic value of assets of fund (11+21+22+23+24+25-(12+13))

Support arrangement assets

Assets available to the fund (26+27)

Financing costs

Any other liabilities related to regulatory duty to treat

customers fairly

Other long-term insurance liabilities

Total (32+34+41+42+43+44+45+46+47-(33+35+36))

Realistic value of liabilities of fund (31+49+51)

Future policy

related liabilities

Past miscellaneous surplus attributed to with-profits

benefits reserve

Past miscellaneous deficit attributed to with-profits

benefits reserve

Planned enhancements to with-profits benefits

reserve

Planned deductions for the costs of guarantees, options

and smoothing from with-profits benefits reserve

Planned deductions for other costs deemed chargeable

to with-profits benefits reserve

Future costs of contractual guarantees (other than

financial options)

Future costs of non-contractual commitments

Future costs of financial options

Future costs of smoothing (possibly negative)

55

Form 19

(Sheet 2)

Realistic balance sheet




Units £000



1 2

Realistic excess capital and additional capital available

62 14580986 14470211

63

64 14580986 14470211

65 38870

66 2453652 2167180

67 2453652 2167180

68 2453652 2206050

69 14.40 13.26

Other assets potentially available if required to cover the fund's risk capital margin

81

82

Working capital for fund (29-59)

Working capital ratio for fund (68/29)

Additional amount potentially available for inclusion in line 62


Value of relevant assets before applying the most adverse scenario

other than the present value of future profits arising from business

outside with-profits funds

Amount of present value of future profits (or losses) on long-term

insurance contracts written outside the fund included in the value

of relevant assets before applying most adverse scenario


(62+63)

Risk capital margin for fund (62-59)

Realistic excess capital for fund (26-(59+65))

Realistic excess available capital for fund (29-(59+65))

56

Form 19





Units £000



1 2


11 6676404 6263094

12

13 3771 86154

21

22 1712372 1415909

23 1112 3708

24 203771 194577

25

26 8589889 7791133

27

29 8589889 7791133


31 4663011 4523878

32

33

34

35

36 51148 49738

41 197117 282525

42

43 149886 164952

44 2848 (12261)

45

46

47 73271 77734

49 371973 463212


59 6136237 5585083







in the fund


11 to 22






Financing costs


customers fairly


Total (32+34+41+42+43+44+45+46+47-(33+35+36))


Future policy

related liabilities


benefits reserve


benefits reserve


reserve






financial options)




57

Form 19

(Sheet 2)





Units £000



1 2


62 6136237 5623954

63

64 6136237 5623954

65 38870

66 2453652 2167180

67 2453652 2167180

68 2453652 2206050

69 28.56 28.31


81

82












(62+63)




58

Form 19





Units £000



1 2


11 279323 316064

12

13

21

22 909 (1062)

23

24

25

26 280232 315002

27

29 280232 315002


31 188305 226406

32

33

34 53763 54865

35

36

41 10169 10210

42

43

44 4467 5599

45

46

47

49 68399 70673


59 280232 315002







in the fund


11 to 22






Financing costs


customers fairly


Total (32+34+41+42+43+44+45+46+47-(33+35+36))


Future policy

related liabilities


benefits reserve


benefits reserve


reserve






financial options)




59

Form 19

(Sheet 2)





Units £000



1 2


62 280232 315002

63

64 280232 315002

65

66

67

68

69


81

82












(62+63)




60

Form 19





Units £000



1 2


11 2279017 2254486

12

13

21

22

23

24

25

26 2279017 2254486

27

29 2279017 2254486


31 2028660 2036690

32

33

34 126511 70258

35

36

41 82930 120687

42

43

44 (2890) 4483

45

46

47 683 683

49 207235 196111


59 2279017 2254486







in the fund


11 to 22






Financing costs


customers fairly


Total (32+34+41+42+43+44+45+46+47-(33+35+36))


Future policy

related liabilities


benefits reserve


benefits reserve


reserve






financial options)




61

Form 19

(Sheet 2)





Units £000



1 2


62 2279017 2254486

63

64 2279017 2254486

65

66

67

68

69


81

82












(62+63)




62

Form 19





Units £000



1 2


11 1093284 1032733

12

13

21

22

23

24

25

26 1093284 1032733

27

29 1093284 1032733


31 827482 791853

32

33

34 183965 163177

35

36

41 20266 29314

42

43

44 (10318) (3513)

45

46

47 424

49 193913 189402


59 1093284 1032733







in the fund


11 to 22






Financing costs


customers fairly


Total (32+34+41+42+43+44+45+46+47-(33+35+36))


Future policy

related liabilities


benefits reserve


benefits reserve


reserve






financial options)




63

Form 19

(Sheet 2)





Units £000



1 2


62 1093284 1032733

63

64 1093284 1032733

65

66

67

68

69


81

82












(62+63)




64

Form 19





Units £000



1 2


11 2265533 2601788

12

13

21

22 61922 65513

23

24

25

26 2327455 2667302

27

29 2327455 2667302


31 1526256 1797980

32

33

34 321029 411961

35

36 32841 32409

41 32587 56799

42

43 318089 305200

44 84129 61739

45

46

47 9752 9488

49 732746 812778


59 2327455 2667302







in the fund


11 to 22






Financing costs


customers fairly


Total (32+34+41+42+43+44+45+46+47-(33+35+36))


Future policy

related liabilities


benefits reserve


benefits reserve


reserve






financial options)




65

Form 19

(Sheet 2)





Units £000



1 2


62 2327455 2667302

63

64 2327455 2667302

65

66

67

68

69


81

82












(62+63)




66

Form 19





Units £000



1 2


11 704547 721585

12

13

21

22

23

24

25

26 704547 721585

27

29 704547 721585


31 666354 684315

32

33

34 30853 19697

35

36

41 2828 8252

42

43

44

45

46

47 148 111

49 33829 28060


59 704547 721585







in the fund


11 to 22






Financing costs


customers fairly


Total (32+34+41+42+43+44+45+46+47-(33+35+36))


Future policy

related liabilities


benefits reserve


benefits reserve


reserve






financial options)




67

Form 19

(Sheet 2)





Units £000



1 2


62 704547 721585

63

64 704547 721585

65

66

67

68

69


81

82












(62+63)




68

Form 19





Units £000



1 2


11 1674380 1773703

12

13

21

22 85834 81447

23

24

25

26 1760214 1855150

27

29 1760214 1855150


31 1190394 1297240

32 113492

33

34 254435 325134

35 55383 121869

36 25360 18760

41 104571 220393

42

43 21389 26383

44 8903 (1629)

45

46

47 25256 18690

49 447302 448341


59 1760214 1855150







in the fund


11 to 22






Financing costs


customers fairly


Total (32+34+41+42+43+44+45+46+47-(33+35+36))


Future policy

related liabilities


benefits reserve


benefits reserve


reserve






financial options)




69

Form 19

(Sheet 2)





Units £000



1 2


62 1760214 1855150

63

64 1760214 1855150

65

66

67

68

69


81

82












(62+63)




70

Form 40

Long-term insurance business : Revenue account


Total business / subfund Summary


Units £000

Financial year Previous year

1 2

Income

Earned premiums 11 2529095 2464950

12 1072269 1062899

13 66207 (206529)

14 1637436 830841

Other income 15 43675 17088

Total income 19 5348681 4169250

Expenditure

Claims incurred 21 2958776 2938671

22 400205 471594

23 32216 28586

24 1991 1108

Other expenditure 25 24157 5590

Transfer to (from) non technical account 26

Total expenditure 29 3417345 3445549

Business transfers - in 31 3294

Business transfers - out 32

Increase (decrease) in fund in financial year (19-29+31-32) 39 1931336 726995

Fund brought forward 49 23978651 23251656

Fund carried forward (39+49) 59 25909987 23978651

Taxation

Investment income receivable before deduction of tax

Increase (decrease) in the value of non-linked assets brought

into account

Increase (decrease) in the value of linked assets

Expenses payable

Interest payable before the deduction of tax

71

Form 40



Total business / subfund Royal London IB & OB Subfund


Units £000


1 2

Income


12 741268 701658

13 (26751) (191702)

14 1580466 800547

Other income 15 100070 75575

Total income 19 4847394 3673908

Expenditure


22 344314 405253

23 31558 27785

24 (18757) (14314)




Business transfers - in 31 37559 40909

Business transfers - out 32 177

Increase (decrease) in fund in financial year (19-29+31-32) 39 2346925 1188900



Taxation



into account


Expenses payable


72

Form 40



Total business / subfund Refuge Assurance IB Subfund


Units £000


1 2

Income


12 11845 14477

13 18266 3288

14


Total income 19 35221 24746

Expenditure


22 2973 3273

23 69 72

24 2168 1037




Business transfers - in 31


Increase (decrease) in fund in financial year (19-29+31-32) 39 (26274) (29243)



Taxation



into account


Expenses payable


73

Form 40



Total business / subfund United Friendly OB Subfund


Units £000


1 2

Income


12 92074 90778

13 (36378) (24901)

14


Total income 19 63182 142541

Expenditure


22 7486 6906

23 107 204

24 431 591






Increase (decrease) in fund in financial year (19-29+31-32) 39 (29974) 52637



Taxation



into account


Expenses payable


74

Form 40



Total business / subfund United Friendly IB Subfund


Units £000


1 2

Income


12 41110 42273

13 12712 (7059)

14

Other income 15 (162) 35


Expenditure


22 7052 6904

23

24 15665 6842









Taxation



into account


Expenses payable


75

Form 40



Total business / subfund Scottish Life Fund


Units £000


1 2

Income


12 76545 99300

13 98905 11029

14 28550 16963


Total income 19 218558 150430

Expenditure


22 3829 8051

23 8 30

24 379 1383




Business transfers - in 31 158 210

Business transfers - out 32 34777 38649




Taxation



into account


Expenses payable


76

Form 40



Total business / subfund PLAL With-Profits Fund


Units £000


1 2

Income


12 27666 29783

13 1842 1079

14

Other income 15


Expenditure


22 174 145

23 29

24 1780 5057





Business transfers - out 32 2782 2470




Taxation



into account


Expenses payable


77

Form 40



Total business / subfund Royal Liver Assurance Fund


Units £000


1 2

Income


12 81761 84630

13 (2389) 1737

14 28420 13331


Total income 19 170424 179056

Expenditure


22 34377 41062

23 474 466

24 325 512









Taxation



into account


Expenses payable


78

Form 41

Long-term insurance business : Analysis of premiums




Units £000

UK Life UK Pension OverseasTotal Financial

year

Total Previous

year

1 2 3 4 5

Gross

Regular premiums 11 650263 658062 63093 1371418 1333163

Single premiums 12 2058 1804483 2331 1808872 1720669

Reinsurance - external


Single premiums 14 73 391883 391957 336445

Reinsurance - intra-group

Regular premiums 15

Single premiums 16

Net of reinsurance


Single premiums 18 1984 1412600 2331 1416915 1384224

Total

Gross 19 652321 2462545 65424 3180290 3053832

Reinsurance 20 235993 392117 23085 651196 588882

Net 21 416328 2070428 42338 2529095 2464950

79

Form 41





Units £000


year

Total Previous

year

1 2 3 4 5

Gross


Single premiums 12 2058 1836636 1838693 1678601



Single premiums 14 53 391883 391937 336445


Regular premiums 15

Single premiums 16

Net of reinsurance


Single premiums 18 2004 1444752 1446757 1342156

Total

Gross 19 575104 2476111 12967 3064182 2840653

Reinsurance 20 215286 392114 4441 611841 552824

Net 21 359818 2083997 8526 2452341 2287830

80

Form 41





Units £000


year

Total Previous

year

1 2 3 4 5

Gross

Regular premiums 11 4773 4773 6947

Single premiums 12


Regular premiums 13

Single premiums 14


Regular premiums 15

Single premiums 16

Net of reinsurance


Single premiums 18

Total

Gross 19 4773 4773 6947

Reinsurance 20

Net 21 4773 4773 6947

81

Form 41





Units £000


year

Total Previous

year

1 2 3 4 5

Gross

Regular premiums 11 3030 2448 5478 6589

Single premiums 12 654 654 68139


Regular premiums 13

Single premiums 14


Regular premiums 15

Single premiums 16

Net of reinsurance



Total

Gross 19 3030 3102 6133 74728

Reinsurance 20

Net 21 3030 3102 6133 74728

82

Form 41





Units £000


year

Total Previous

year

1 2 3 4 5

Gross


Single premiums 12


Regular premiums 13

Single premiums 14


Regular premiums 15

Single premiums 16

Net of reinsurance


Single premiums 18

Total

Gross 19 12663 12663 14293

Reinsurance 20

Net 21 12663 12663 14293

83

Form 41





Units £000


year

Total Previous

year

1 2 3 4 5

Gross





Single premiums 14 20 20


Regular premiums 15

Single premiums 16

Net of reinsurance


Single premiums 18 (20) 371 351 3324

Total

Gross 19 4727 8177 12904 21721

Reinsurance 20 51 3 54 29

Net 21 4676 8173 12850 21691

84

Form 41





Units £000


year

Total Previous

year

1 2 3 4 5

Gross


Single premiums 12


Regular premiums 13

Single premiums 14


Regular premiums 15

Single premiums 16

Net of reinsurance


Single premiums 18

Total

Gross 19 11984 3746 15730 17912

Reinsurance 20

Net 21 11984 3746 15730 17912

85

Form 41





Units £000


year

Total Previous

year

1 2 3 4 5

Gross


Single premiums 12 743 2331 3074 5377



Single premiums 14


Regular premiums 15

Single premiums 16

Net of reinsurance


Single premiums 18 743 2331 3074 5377

Total

Gross 19 40040 5331 52456 97827 112351

Reinsurance 20 20656 18644 39300 36029

Net 21 19384 5331 33812 58526 76322

86

Form 42

Long-term insurance business : Analysis of claims




Units £000


year

Total Previous

year

1 2 3 4 5

Gross

Death or disability lump sums 11 339453 53107 22513 415072 424856

Disability periodic payments 12 37365 1396 38762 41710

Surrender or partial surrender 13 161147 1512974 108522 1782643 1620835

Annuity payments 14 352 50127 4684 55164 73158

Lump sums on maturity 15 582574 248305 61870 892749 1023596

Total 16 1120892 1864512 198985 3184390 3184156



Disability periodic payments 22 5211 5211 5533

Surrender or partial surrender 23 510 510 829

Annuity payments 24 34215 34215 49205

Lump sums on maturity 25 88 88 776

Total 26 181827 34237 9550 225614 245485


Death or disability lump sums 31

Disability periodic payments 32

Surrender or partial surrender 33

Annuity payments 34

Lump sums on maturity 35

Total 36

Net of reinsurance






Total 46 939065 1830275 189435 2958776 2938671

87

Form 42





Units £000


year

Total Previous

year

1 2 3 4 5

Gross




Annuity payments 14 0 46299 46299 64403

Lump sums on maturity 15 269916 218372 488288 608990

Total 16 663055 1634071 23043 2320169 2286508







Total 26 167633 34237 719 202590 220224





Annuity payments 34


Total 36

Net of reinsurance




Annuity payments 44 0 12083 12083 15198


Total 46 495422 1599834 22323 2117580 2066284

88

Form 42





Units £000


year

Total Previous

year

1 2 3 4 5

Gross

Death or disability lump sums 11 13298 13298 12261



Annuity payments 14


Total 16 54425 54425 48157





Annuity payments 24


Total 26





Annuity payments 34


Total 36

Net of reinsurance




Annuity payments 44


Total 46 54425 54425 48157

89

Form 42





Units £000


year

Total Previous

year

1 2 3 4 5

Gross

Death or disability lump sums 11 2848 4326 7174 5562


Surrender or partial surrender 13 1982 47213 49195 46635

Annuity payments 14


Total 16 19528 64313 83841 81084





Annuity payments 24


Total 26





Annuity payments 34


Total 36

Net of reinsurance




Annuity payments 44


Total 46 19528 64313 83841 81084

90

Form 42





Units £000


year

Total Previous

year

1 2 3 4 5

Gross




Annuity payments 14


Total 16 55588 55588 65540





Annuity payments 24


Total 26





Annuity payments 34


Total 36

Net of reinsurance




Annuity payments 44


Total 46 55588 55588 65540

91

Form 42





Units £000


year

Total Previous

year

1 2 3 4 5

Gross






Total 16 187329 166099 353428 391621


Death or disability lump sums 21 163



Annuity payments 24

Lump sums on maturity 25 539

Total 26 771 771 1509





Annuity payments 34


Total 36

Net of reinsurance






Total 46 186558 166099 352657 390112

92

Form 42





Units £000


year

Total Previous

year

1 2 3 4 5

Gross




Annuity payments 14


Total 16 63341 8593 71935 71256





Annuity payments 24


Total 26





Annuity payments 34


Total 36

Net of reinsurance




Annuity payments 44


Total 46 63341 8593 71935 71256

93

Form 42





Units £000


year

Total Previous

year

1 2 3 4 5

Gross






Total 16 77625 25357 175943 278925 274763





Annuity payments 24


Total 26 13423 8831 22253 23753





Annuity payments 34


Total 36

Net of reinsurance

Death or disability lump sums 41 (788) 1318 10304 10834 20069





Total 46 64203 25357 167112 256672 251010

94

Form 43

Long-term insurance business : Analysis of expenses




Units £000


year

Total Previous

year

1 2 3 4 5

Gross

Commission - acquisition 11 69810 16389 901 87100 141822

Commission - other 12 8521 28042 2494 39057 36827

Management - acquisition 13 62017 52977 811 115805 119074

Management - maintenance 14 59638 65841 15350 140829 160391

Management - other 15 1930 15484 17414 13481

Total 16 201915 178733 19556 400205 471594


Commission - acquisition 21

Commission - other 22

Management - acquisition 23

Management - maintenance 24

Management - other 25

Total 26







Total 36

Net of reinsurance


Commission - other 42 8521 28042 2494 39057 36827




Total 46 201915 178733 19556 400205 471594

95

Form 43





Units £000


year

Total Previous

year

1 2 3 4 5

Gross


Commission - other 12 7794 28023 35818 33772




Total 16 177083 165063 2168 344314 405253







Total 26







Total 36

Net of reinsurance






Total 46 177083 165063 2168 344314 405253

96

Form 43





Units £000


year

Total Previous

year

1 2 3 4 5

Gross




Management - maintenance 14 2973 2973 3273


Total 16 2973 2973 3273







Total 26







Total 36

Net of reinsurance






Total 46 2973 2973 3273

97

Form 43





Units £000


year

Total Previous

year

1 2 3 4 5

Gross




Management - maintenance 14 1185 6301 7486 6906


Total 16 1185 6301 7486 6906







Total 26







Total 36

Net of reinsurance






Total 46 1185 6301 7486 6906

98

Form 43





Units £000


year

Total Previous

year

1 2 3 4 5

Gross






Total 16 7052 7052 6904







Total 26







Total 36

Net of reinsurance






Total 46 7052 7052 6904

99

Form 43





Units £000


year

Total Previous

year

1 2 3 4 5

Gross

Commission - acquisition 11 1 24 25 27

Commission - other 12 (47) 18 (28) 113




Total 16 521 3308 3829 8051







Total 26







Total 36

Net of reinsurance

Commission - acquisition 41 1 24 25 27

Commission - other 42 (47) 18 (28) 113




Total 46 521 3308 3829 8051

100

Form 43





Units £000


year

Total Previous

year

1 2 3 4 5

Gross






Total 16 113 61 174 145







Total 26







Total 36

Net of reinsurance






Total 46 113 61 174 145

101

Form 43





Units £000


year

Total Previous

year

1 2 3 4 5

Gross

Commission - acquisition 11 3 3 (32)


Management - acquisition 13 11 0 11 655


Management - other 15 (4180) (4180) (4131)

Total 16 12988 4000 17389 34377 41062







Total 26







Total 36

Net of reinsurance

Commission - acquisition 41 3 3 (32)


Management - acquisition 43 11 0 11 655


Management - other 45 (4180) (4180) (4131)

Total 46 12988 4000 17389 34377 41062

102

Form 44

Long-term insurance business : Linked funds balance sheet


Total business


Units £000


1 2

Internal linked funds (excluding cross investment)

11 5567790 6337496

12 8880392 7696494

13 2091124 64551

14 16539306 14098541

Provision for tax on unrealised capital gains 15 22554 2555

Secured and unsecured loans 16

Other liabilities 17 92827 71001

Total net assets (14-15-16-17) 18 16423925 14024985

Directly held linked assets

Value of directly held linked assets 21 1755

Total

31 16423925 14026740

Surplus units 32 100307 151390

Deficit units 33

Net unit liability (31-32+33) 34 16323618 13875350

Directly held assets (excluding collective investment

schemes)

Directly held assets in collective investment schemes of

connected companies

Directly held assets in other collective investment

schemes

Total assets (excluding cross investment) (11+12+ 13)

Value of directly held linked assets and units held (18+21)

103

Form 45

Long-term insurance business : Revenue account for internal linked funds


Total business


Units £000


1 2

Income

11 1755065 1192389

12 417000 333587

13 1637436 830841

14 1288 3602

Total income 19 3810789 2360419

Expenditure

21 1302534 728432

22 97660 24379

23 (17165) 3765

24 6266 712

25 22553 694

26 3283


39 2398941 1599154

49 14024985 12425831

59 16423926 14024985

Charges for management

Value of total creation of units

Investment income attributable to the funds before

deduction of tax

Increase (decrease) in the value of investments

in the financial year

Other income

Value of total cancellation of units

Internal linked funds carried forward (39+49)

Charges in respect of tax on investment income

Taxation on realised capital gains

Increase (decrease) in amount set aside for tax on

capital gains not yet realised

Other expenditure

Increase (decrease) in funds in financial year (19-29)

Internal linked fund brought forward

104

Form 46

Long-term insurance business : Summary of new business


Total business


Units £000


year

Total Previous

year

1 2 3 4 5

Regular premium business 11 65930 71956 17354 155240 148444

Single premium business 12 112 21564 72 21748 19771

Total 13 66042 93520 17426 176988 168215

Amount of new regular

premiums

Direct insurance business 21 50575 196743 6124 253443 212457

External reinsurance 22

Intra-group reinsurance 23

Total 24 50575 196743 6124 253443 212457

Amount of new single

premiums

Direct insurance business 25 2058 1838404 2331 1842793 1755441

External reinsurance 26

Intra-group reinsurance 27

Total 28 2058 1838404 2331 1842793 1755441

Number of new policyholders/

scheme members for direct

insurance business

105

Form 47

Long-term insurance business : Analysis of new business (Sheet 1)


Total business


Units £000

UK Life / Direct Insurance Business

Number of

policyholders /

scheme members

Amount of premiums

Number of

policyholders /

scheme members

Amount of premiums

1 2 3 4 5 6

300 Regular premium non-profit WL/EA OB 3417 3525

325 Level term assurance 27174 15589

330 Decreasing term assurance 14636 5812

340 Accelerated critical illness (guaranteed premiums) 14788 15809

345 Accelerated critical illness (reviewable premiums) 1875 2081

350 Stand-alone critical illness (guaranteed premiums) 741 1839

355 Stand-alone critical illness (reviewable premiums) 143 412

360 Income protection non-profit (guaranteed premiums) 1885 1942

365 Income protection non-profit (reviewable premiums) 56 80

380 Miscellaneous protection rider 372

500 Life UWP single premium 63 1783

505 Life UWP whole life regular premium 180 163

506 Life UWP whole life regular premium (ISA) 127

515 Life UWP endowment regular premium - target cash 1

575 Miscellaneous UWP (single premium ISA) 44 271

Product

code

number

Product description

Regular premium business Single premium business

10

6

Form 47



Total business


Units £000

UK Life / Direct Insurance Business

Number of

policyholders /

scheme members

Amount of premiums

Number of

policyholders /

scheme members

Amount of premiums

1 2 3 4 5 6

700 Life property linked single premium 5 3

710 Life property linked whole life regular premium 12 2195

715 Life property linked endowment regular premium - savings 29

720 Life property linked endowment regular premium - target cash 6


910 Miscellaneous index linked 1023 593

Product

code

number

Product description


10

7

Form 47



Total business


Units £000

UK Pension / Direct Insurance Business

Number of

policyholders /

scheme members

Amount of premiums

Number of

policyholders /

scheme members

Amount of premiums

1 2 3 4 5 6

160 Conventional pensions endowment with-profits - increments 5 654

390 Deferred annuity non-profit 75

400 Annuity non-profit (CPA) 5739 151364

410 Group life 5

420 Group income protection 1

525 Individual pensions UWP 127 364

530 Individual pensions UWP- increments 2 501 541

535 Group money purchase pensions UWP 65 242

540 Group money purchase pensions UWP - increments 77 70

550 Individual deposit administration with-profits - increments 10

555 Group deposit administration with-profits 2 19 291

560 Group deposit administration with-profits - increments 51

565 DWP National Insurance rebates UWP 346

580 Term assurance rider 177


Product

code

number

Product description


10

8

Form 47



Total business


Units £000

UK Pension / Direct Insurance Business

Number of

policyholders /

scheme members

Amount of premiums

Number of

policyholders /

scheme members

Amount of premiums

1 2 3 4 5 6

725 Individual pensions property linked 70369 153918 12955 856046

730 Individual pensions property linked - increments 37029 734028

735 Group money purchase pensions property linked 1583 3740 2805 63418

740 Group money purchase pensions property linked - increments 729 27877

745 DWP National Insurance rebates property linked 325

750 Income drawdown property linked 40 2158

905 Index linked annuity 25 606

Product

code

number

Product description


10

9

Form 47

Long-term insurance business : Analysis of new business


Total business


Units £000

Overseas / Direct Insurance Business

Number of

policyholders /

scheme members

Amount of premiums

Number of

policyholders /

scheme members

Amount of premiums

1 2 3 4 5 6

325 Level term assurance 3438 1485

330 Decreasing term assurance 6567 1758

340 Accelerated critical illness (guaranteed premiums) 2952 1253

345 Accelerated critical illness (reviewable premiums) 17 21

350 Stand-alone critical illness (guaranteed premiums) 997 460

355 Stand-alone critical illness (reviewable premiums) 1 5

360 Income protection non-profit (guaranteed premiums) 10 8


400 Annuity non-profit (CPA) 72 2331

435 Miscellaneous non-profit 3359 1121

910 Miscellaneous index linked 13 11

Product

code

number

Product description


11

0

Form 48

Long-term insurance business : Assets not held to match linked liabilities




Units £000

Unadjusted

assets

Economic

exposure

Expected

income from

assets in

column 2

Yield before

adjustment

Return on

assets in

financial year

1 2 3 4 5

Land and buildings 11 24783 25139 2168 8.62

Approved fixed interest securities 12 469684 469626 16832 3.08

Other fixed interest securities 13 412876 448652 22331 4.27

Variable interest securities 14 168207 168202 764 3.23

UK listed equity shares 15 60079 52388 1389 3.56

Non-UK listed equity shares 16 37102 103438 1132 3.81

Unlisted equity shares 17 (10663) (12490)

Other assets 18 11940 (80945) 111 4.39

Total 19 1174008 1174008 44728 3.70

Land and buildings 21 1109516 1306448 68863 5.27 11.11

Approved fixed interest securities 22 4451906 4459011 164676 3.29 (4.18)

Other fixed interest securities 23 2092952 2398387 119775 4.58 1.93

Variable interest securities 24 289261 291734 2451 2.29 1.34

UK listed equity shares 25 3290391 3339471 111598 4.96 22.36

Non-UK listed equity shares 26 402028 1054635 10435 3.68 24.27

Unlisted equity shares 27 116679 257794 2153 0.77 4.92

Other assets 28 3216887 1862140 2882 0.53 2.95

Total 29 14969620 14969620 482833 3.66 7.80

Overall return on with-profits assets

Post investment costs but pre-tax 31

Return allocated to non taxable 'asset shares' 32

Return allocated to taxable 'asset shares' 33

Assets backing non-profit liabilities

and non-profit capital requirements

Assets backing with-profits liabilities

and with-profits capital requirements

111

Form 48





Units £000

Unadjusted

assets

Economic

exposure

Expected

income from

assets in

column 2

Yield before

adjustment

Return on

assets in

financial year

1 2 3 4 5

Land and buildings 11 (8233) (8764) (454) 5.18




UK listed equity shares 15 (15563) (23100) (1177) 8.00


Unlisted equity shares 17 (10663) (13127)

Other assets 18 (103354) (142324) (1) 2.76

Total 19 446781 446781 17758 3.94







Unlisted equity shares 27 108045 133008 9.31

Other assets 28 1462047 847446 1482 0.72 0.47

Total 29 6673536 6673536 206172 3.80 11.11


Post investment costs but pre-tax 31 11.02

Return allocated to non taxable 'asset shares' 32 11.02

Return allocated to taxable 'asset shares' 33 9.46





112

Form 48





Units £000

Unadjusted

assets

Economic

exposure

Expected

income from

assets in

column 2

Yield before

adjustment

Return on

assets in

financial year

1 2 3 4 5


Approved fixed interest securities 12


Variable interest securities 14



Unlisted equity shares 17

Other assets 18

Total 19 26276 26276 1090 4.81







Unlisted equity shares 27 1552 9.31

Other assets 28 33972 8345 25 0.30 0.47

Total 29 279323 279323 9415 3.92 5.56









113

Form 48





Units £000

Unadjusted

assets

Economic

exposure

Expected

income from

assets in

column 2

Yield before

adjustment

Return on

assets in

financial year

1 2 3 4 5



Other fixed interest securities 13


UK listed equity shares 15

Non-UK listed equity shares 16


Other assets 18

Total 19








Other assets 28 165576 63248 181 0.29 0.46

Total 29 2279017 2279017 88650 4.06 4.08









114

Form 48





Units £000

Unadjusted

assets

Economic

exposure

Expected

income from

assets in

column 2

Yield before

adjustment

Return on

assets in

financial year

1 2 3 4 5








Other assets 18

Total 19








Other assets 28 114072 24616 97 0.39 0.46

Total 29 1093284 1093284 38680 4.25 10.66









115

Form 48





Units £000

Unadjusted

assets

Economic

exposure

Expected

income from

assets in

column 2

Yield before

adjustment

Return on

assets in

financial year

1 2 3 4 5







Unlisted equity shares 17 637

Other assets 18 57150 46676 32 0.35

Total 19 219663 219663 6523 3.38







Unlisted equity shares 27 8180

Other assets 28 846214 724961 512 0.36 0.35

Total 29 2265533 2265533 56732 2.84 4.25









116

Form 48





Units £000

Unadjusted

assets

Economic

exposure

Expected

income from

assets in

column 2

Yield before

adjustment

Return on

assets in

financial year

1 2 3 4 5








Other assets 18

Total 19

Land and buildings 21 2184 72 3.30 15.64



Variable interest securities 24 2470 2470 3.90 2.44




Other assets 28 80447 31883 150 0.47 0.48

Total 29 704547 704547 27670 3.95 7.69









117

Form 48





Units £000

Unadjusted

assets

Economic

exposure

Expected

income from

assets in

column 2

Yield before

adjustment

Return on

assets in

financial year

1 2 3 4 5




Variable interest securities 14 766 766 2.66




Other assets 18 58144 14703 79 1.40

Total 19 481288 481288 19356 3.57


Approved fixed interest securities 22 572029 572110 18875 2.35 0.69





Unlisted equity shares 27 8634 97539 2153 2.04 3.20

Other assets 28 514559 161641 434 0.40 15.02

Total 29 1674380 1674380 55513 3.16 5.23









118

Form 49

Long-term insurance business : Fixed and variable interest assets




Units £000

Value of assets Mean termYield before

adjustment

Yield after

adjustment

1 2 3 4

11 4286694 16.50 3.39 3.39

Other approved fixed interest

securities21 641942 9.82 2.44 2.44

Other fixed interest securities

AAA/Aaa 31 275390 5.78 2.83 2.72

AA/Aa 32 346033 8.33 3.87 3.54

A/A 33 864171 9.58 4.21 3.75

BBB/Baa 34 943420 7.57 4.80 4.05

BB/Ba 35 110648 5.74 6.23 4.10

B/B 36 8217 4.61 7.39 3.59

CCC/Caa 37 3119 3.04 15.85 4.53

Other (including unrated) 38 296042 7.94 6.16 4.32

Total other fixed interest

securities 39 2847039 8.05 4.54 3.80

Approved variable interest

securities41 224132 17.62 (0.08) (0.08)

Other variable interest securities 51 235803 3.60 5.21 1.84

Total (11+21+39+41+51) 61 8235611 12.72 3.67 3.32

UK Government approved fixed

interest securities

119

Form 49





Units £000


adjustment

Yield after

adjustment

1 2 3 4

11 1619287 17.25 3.54 3.54


securities21 152377 8.73 2.40 2.40


AAA/Aaa 31 152771 4.31 2.49 2.40

AA/Aa 32 143053 7.25 3.74 3.42

A/A 33 314344 9.77 4.45 3.98

BBB/Baa 34 346497 7.49 5.05 4.26

BB/Ba 35 52260 5.69 6.52 4.32

B/B 36 3288 3.66 7.69 3.71

CCC/Caa 37 1465 3.25 17.45 5.05



securities 39 1134025 7.43 4.66 3.86


securities41 157492 18.26 (0.09) (0.09)


Total (11+21+39+41+51) 61 3211982 12.66 3.77 3.30


interest securities

120

Form 49





Units £000


adjustment

Yield after

adjustment

1 2 3 4

11 101445 16.43 3.52 3.52


securities21 5541 11.39 3.07 3.07


AAA/Aaa 31 5222 7.02 3.25 3.13

AA/Aa 32 6666 8.68 4.20 3.86

A/A 33 17596 9.80 4.46 4.00

BBB/Baa 34 19451 7.50 5.06 4.27

BB/Ba 35 2937 5.69 6.53 4.32

B/B 36 185 3.66 7.70 3.71

CCC/Caa 37 82 3.25 17.44 5.04



securities 39 58851 8.03 4.94 4.07


securities41 4461 18.42 (0.09) (0.09)


Total (11+21+39+41+51) 61 172345 13.28 3.92 3.60


interest securities

121

Form 49





Units £000


adjustment

Yield after

adjustment

1 2 3 4

11 869801 16.43 3.52 3.52


securities21 46488 11.33 3.03 3.03


AAA/Aaa 31 39493 7.02 3.25 3.13

AA/Aa 32 50416 8.68 4.20 3.86

A/A 33 133098 9.80 4.46 4.00

BBB/Baa 34 147100 7.50 5.06 4.27

BB/Ba 35 22213 5.69 6.53 4.32

B/B 36 1400 3.66 7.70 3.71

CCC/Caa 37 624 3.25 17.44 5.04



securities 39 445101 8.03 4.94 4.07


securities41 36409 18.39 (0.09) (0.09)


Total (11+21+39+41+51) 61 1413332 13.51 3.88 3.58


interest securities

122

Form 49





Units £000


adjustment

Yield after

adjustment

1 2 3 4

11 190951 16.40 3.51 3.51


securities21 16430 10.08 2.76 2.76


AAA/Aaa 31 13590 7.02 3.25 3.13

AA/Aa 32 17348 8.68 4.20 3.86

A/A 33 45820 9.79 4.46 3.99

BBB/Baa 34 50618 7.50 5.06 4.27

BB/Ba 35 7644 5.69 6.53 4.32

B/B 36 482 3.66 7.70 3.71

CCC/Caa 37 215 3.25 17.44 5.04



securities 39 153183 8.03 4.94 4.07


securities41 16620 18.40 (0.09) (0.09)


Total (11+21+39+41+51) 61 382607 12.67 3.93 3.54


interest securities

123

Form 49





Units £000


adjustment

Yield after

adjustment

1 2 3 4

11 1006976 19.45 3.54 3.54


securities21 9512 10.10 3.29 3.29


AAA/Aaa 31 15922 8.95 3.78 3.64

AA/Aa 32 20514 10.28 4.50 4.14

A/A 33 52222 10.09 4.46 3.99

BBB/Baa 34 61388 10.26 5.04 4.33

BB/Ba 35 1569 12.52 6.01 4.29

B/B 36 6 2.71 5.69 2.74

CCC/Caa 37 232 3.03 20.26 7.67



securities 39 208084 11.36 4.54 3.93


securities41 1688 8.51 (0.61) (0.62)


Total (11+21+39+41+51) 61 1283888 17.73 3.80 3.61


interest securities

124

Form 49





Units £000


adjustment

Yield after

adjustment

1 2 3 4

11 142371 8.29 2.27 2.27


securities21 3381 14.64 4.03 4.03


AAA/Aaa 31 19470 7.27 3.38 3.25

AA/Aa 32 28057 8.58 4.33 4.00

A/A 33 71637 9.73 4.49 4.02

BBB/Baa 34 94363 7.23 4.95 4.25

BB/Ba 35 7439 6.61 6.59 4.71

B/B 36 1634 6.16 7.25 3.63

CCC/Caa 37 94 3.38 15.65 3.29



securities 39 247596 8.01 4.77 4.14


securities41


Total (11+21+39+41+51) 61 395818 8.12 3.86 3.46


interest securities

125

Form 49





Units £000


adjustment

Yield after

adjustment

1 2 3 4

11 355863 8.26 2.36 2.36


securities21 408212 9.98 2.33 2.33


AAA/Aaa 31 28922 8.28 2.86 2.73

AA/Aa 32 79978 9.34 3.47 3.14

A/A 33 229454 8.99 3.54 3.09

BBB/Baa 34 224003 7.15 4.05 3.35

BB/Ba 35 16587 4.95 4.58 2.66

B/B 36 1223 6.68 6.24 3.05

CCC/Caa 37 407 1.75 4.05 (0.00)



securities 39 600199 8.12 3.76 3.20


securities41 7461 0.21 0.46 0.46


Total (11+21+39+41+51) 61 1375638 8.64 2.95 2.71


interest securities

126

Form 50

Long-term insurance business : Summary of mathematical reserves




Units £000


year

Total Previous

year

1 2 3 4 5

Gross

Form 51 - with-profits 11 1521766 2953664 333067 4808496 5264506

Form 51 - non-profit 12 215039 871440 156209 1242687 1760559

Form 52 13 540742 2816141 540446 3897329 4049121

Form 53 - linked 14 1512172 16655113 17771 18185056 15241776

Form 53 - non-linked 15 50497 102130 1605 154232 104946

Form 54 - linked 16 (11942) 11067 (438) (1313) 5854

Form 54 - non-linked 17

Total 18 3828274 23409553 1048660 28286487 26426762


Form 51 - with-profits 21 116 116 56

Form 51 - non-profit 22 270037 270882 17691 558610 1111253

Form 52 23 6 3 9 9

Form 53 - linked 24 1863519 1863519 1370583

Form 53 - non-linked 25 12910 (5727) 7183 6479

Form 54 - linked 26 (3671) 3290 (146) (527) 5881


Total 28 279398 2131967 17544 2428910 2494260


Form 51 - with-profits 31

Form 51 - non-profit 32

Form 52 33

Form 53 - linked 34


Form 54 - linked 36


Total 38

Net of reinsurance


Form 51 - non-profit 42 (54999) 600557 138518 684077 649306

Form 52 43 540736 2816138 540446 3897320 4049112

Form 53 - linked 44 1512172 14791593 17771 16321536 13871193

Form 53 - non-linked 45 37587 107857 1605 147049 98467

Form 54 - linked 46 (8272) 7777 (291) (786) (27)


Total 48 3548876 21277586 1031116 25857577 23932502

127

Form 50





Units £000


year

Total Previous

year

1 2 3 4 5

Gross

Form 51 - with-profits 11 657108 614512 (10135) 1261485 1358305

Form 51 - non-profit 12 (21078) 599892 (31002) 547811 986257

Form 52 13 194865 1728577 94492 2017934 2080094

Form 53 - linked 14 1472683 16328467 8779 17809930 14910531

Form 53 - non-linked 15 48349 90914 (294) 138969 91159

Form 54 - linked 16 (11942) 11067 (438) (1313) 5854


Total 18 2339986 19373428 61402 21774816 19432200



Form 51 - non-profit 22 229438 264652 12143 506233 991983

Form 52 23 6 6 6

Form 53 - linked 24 1863519 1863519 1370583

Form 53 - non-linked 25 12910 (5727) 7183 6479

Form 54 - linked 26 (3671) 3290 (146) (527) 5881


Total 28 238684 2125734 11997 2376414 2374932




Form 52 33

Form 53 - linked 34


Form 54 - linked 36


Total 38

Net of reinsurance

Form 51 - with-profits 41 657108 614512 (10135) 1261485 1358305

Form 51 - non-profit 42 (250516) 335240 (43146) 41578 (5726)

Form 52 43 194859 1728577 94492 2017928 2080087

Form 53 - linked 44 1472683 14464948 8779 15946410 13539948

Form 53 - non-linked 45 35439 96641 (294) 131786 84680

Form 54 - linked 46 (8272) 7777 (291) (786) (27)


Total 48 2101302 17247694 49405 19398401 17057268

128

Form 50





Units £000


year

Total Previous

year

1 2 3 4 5

Gross


Form 51 - non-profit 12 25262 25262 23428

Form 52 13

Form 53 - linked 14


Form 54 - linked 16


Total 18 135753 135753 161879




Form 52 23

Form 53 - linked 24


Form 54 - linked 26


Total 28




Form 52 33

Form 53 - linked 34


Form 54 - linked 36


Total 38

Net of reinsurance


Form 51 - non-profit 42 25262 25262 23428

Form 52 43

Form 53 - linked 44


Form 54 - linked 46


Total 48 135753 135753 161879

129

Form 50





Units £000


year

Total Previous

year

1 2 3 4 5

Gross

Form 51 - with-profits 11 88307 1381414 1469720 1499774


Form 52 13

Form 53 - linked 14


Form 54 - linked 16


Total 18 88307 1381414 1469720 1499774




Form 52 23

Form 53 - linked 24


Form 54 - linked 26


Total 28




Form 52 33

Form 53 - linked 34


Form 54 - linked 36


Total 38

Net of reinsurance



Form 52 43

Form 53 - linked 44


Form 54 - linked 46


Total 48 88307 1381414 1469720 1499774

130

Form 50





Units £000


year

Total Previous

year

1 2 3 4 5

Gross



Form 52 13

Form 53 - linked 14


Form 54 - linked 16


Total 18 455234 455234 470284




Form 52 23

Form 53 - linked 24


Form 54 - linked 26


Total 28




Form 52 33

Form 53 - linked 34


Form 54 - linked 36


Total 38

Net of reinsurance



Form 52 43

Form 53 - linked 44


Form 54 - linked 46


Total 48 455234 455234 470284

131

Form 50





Units £000


year

Total Previous

year

1 2 3 4 5

Gross


Form 51 - non-profit 12 4615 197852 202467 213823

Form 52 13 16766 629488 646254 653035

Form 53 - linked 14 11 178880 178890 147230

Form 53 - non-linked 15 4 5394 5398 5212

Form 54 - linked 16


Total 18 73904 1957480 2031384 2217913



Form 51 - non-profit 22 4114 5 4119 4503

Form 52 23 3 3 3

Form 53 - linked 24


Form 54 - linked 26


Total 28 4230 8 4238 4562




Form 52 33

Form 53 - linked 34


Form 54 - linked 36


Total 38

Net of reinsurance


Form 51 - non-profit 42 501 197847 198348 209320

Form 52 43 16766 629485 646251 653033

Form 53 - linked 44 11 178880 178890 147230

Form 53 - non-linked 45 4 5394 5398 5212

Form 54 - linked 46


Total 48 69674 1957473 2027147 2213352

132

Form 50





Units £000


year

Total Previous

year

1 2 3 4 5

Gross



Form 52 13 317914 165969 483884 520415

Form 53 - linked 14


Form 54 - linked 16


Total 18 317914 165969 483884 520415




Form 52 23

Form 53 - linked 24


Form 54 - linked 26


Total 28




Form 52 33

Form 53 - linked 34


Form 54 - linked 36


Total 38

Net of reinsurance



Form 52 43 317914 165969 483884 520415

Form 53 - linked 44


Form 54 - linked 46


Total 48 317914 165969 483884 520415

133

Form 50





Units £000


year

Total Previous

year

1 2 3 4 5

Gross


Form 51 - non-profit 12 206240 73696 187211 467147 537051

Form 52 13 11197 292107 445954 749257 795577

Form 53 - linked 14 39479 147766 8991 196236 184015

Form 53 - non-linked 15 2144 5821 1900 9865 8575

Form 54 - linked 16


Total 18 417176 531262 987258 1935696 2124297



Form 51 - non-profit 22 36485 6226 5548 48258 114767

Form 52 23

Form 53 - linked 24


Form 54 - linked 26


Total 28 36485 6226 5548 48258 114767




Form 52 33

Form 53 - linked 34


Form 54 - linked 36


Total 38

Net of reinsurance


Form 51 - non-profit 42 169755 67470 181664 418889 422285

Form 52 43 11197 292107 445954 749257 795577

Form 53 - linked 44 39479 147766 8991 196236 184015

Form 53 - non-linked 45 2144 5821 1900 9865 8575

Form 54 - linked 46


Total 48 380691 525036 981711 1887438 2009530

134

Form 51

Long-term insurance business : Valuation summary of non-linked contracts (other than accumulating with-profits contracts) (Sheet 1)




Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted

value of unitsOther liabilities

Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

100 Ex RA Conventional whole life with-profits OB 3799 15431 514 9489

100 RL Conventional whole life with-profits OB 5632 26289 387 16056

100 RL Conventional whole life with-profits OB (with critical illness) 88 878 28 293

105 RL Conventional whole life with-profits IB 228404 167138 4080 120491

120 Ex RA Conventional endowment with-profits OB savings 6746 49791 2373 41062

120 RL Conventional endowment with-profits OB savings 9137 101305 3874 77620

125 Ex RA Conventional endowment with-profits OB target cash 4558 126446 2509 58224

125 RL Conventional endowment with-profits OB target cash 14942 331739 10682 267842

130 RL Conventional endowment with-profits IB 30786 92608 3548 73308

210 Ex RA Additional reserves with-profits OB (options and guarantees) 250

210 Ex RLA Additional reserves with-profits OB (expenses) 6594

210 Ex RLA Additional reserves with-profits OB (rate card charges) (11493)

210 RL Additional reserves with-profits OB (options and guarantees) 190

215 Ex RLA Additional reserves with-profits IB (expenses) 3631

215 Ex RLA Additional reserves with-profits IB (rate card charges) (6449)

135

Form 51





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

300 Ex CL Regular premium non-profit WL/EA OB 707 5550 52 2059

300 Ex RA Regular premium non-profit WL/EA OB 6283 13711 55 11462

300 Ex SL Regular premium non-profit WL/EA OB 5105 10386 119 8253

300 Ex UFI regular premium non-profit WL/EA OB 13281 33701 470 17132

300 RL Regular premium non-profit WL/EA OB 2464 10169 37 7943

300 RL Regular premium non-profit WL/EA OB (Bancassurance) 15228 70116 4014 (9450)

300 RL Regular premium non-profit WL/EA OB (GRB) (Bancassurance) 1780 6084 381 (1098)

300 RL Regular premium non-profit WL/EA OB (GRB) (Scottish

Provident) 1604 744290 2216 (5544)

305 RL Single premium non-profit WL/EA OB 1 60 40

310 RL Non-profit IB 356065 34439 501 36752

325 Ex CL Level term assurance 13 346 1 1

325 Ex PLAL Level term assurance 25918 1584896 6383 1218

325 Ex RA Level term assurance 2005 73890 246 103

325 Ex SL Level term assurance 817 32234 122 256

325 Ex SMA Level term assurance 48481 6915397 15087 5051

136

Form 51





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

325 Ex SMA Level term assurance (per annum) 2393 56065 1072 (3555)

325 Ex SPL Level term assurance 16084 2094083 4773 2573

325 Ex SPL Level term assurance (per annum) 1421 28705 604 (1864)

325 Ex UFI Level term assurance 472 18124 100 61

325 Ex UFLA Level term assurance 5 157 0 0

325 RL Level term assurance 9978 341477 1277 1500

325 RL Level term assurance (Bancassurance) 5969 533655 1880 (2337)

325 RL Level term assurance (Bright Grey) 133392 24398302 53512 11912

325 RL Level term assurance (GRB) (Bright Grey) 15837 3454479 7101 (8070)

325 RL Level term assurance (GRB) (Scottish Provident) 4744 1629737 2720 (2336)

325 RL Level term assurance (per annum) (GRB) (Scottish Provident) 1551 48473 686 (1517)

325 RL Level term assurance (per annum) (Scottish Provident) 12747 406010 5370 (5131)

325 RL Level term assurance (Scottish Provident) 26890 7939806 13594 7060

330 Ex CL Decreasing term assurance 1 3 0

330 Ex PLAL Decreasing term assurance 35454 1845679 9812 (13085)

137

Form 51





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

330 Ex RA Decreasing term assurance 269 5307 26 39

330 Ex SL Decreasing term assurance 662 9671 76 13

330 Ex SMA Decreasing term assurance 24866 1924222 6376 (5126)

330 Ex SPL Decreasing term assurance 6830 415449 1630 (1218)

330 Ex UFI Decreasing term assurance 171 1987 9 16

330 RL Decreasing term assurance 1636 56438 217 184

330 RL Decreasing term assurance (Bancassurance) 9870 817717 3307 (6418)

330 RL Decreasing term assurance (Bright Grey) 64704 8795389 20856 (11381)

330 RL Decreasing term assurance (GRB) (Bright Grey) 9691 1813447 3192 (3909)

330 RL Decreasing term assurance (GRB) (Scottish Provident) 2730 658319 1037 (1142)

330 RL Decreasing term assurance (Scottish Provident) 13278 2647594 4745 540

335 Ex RA Decreasing term assurance (rider benefits) 0

335 Ex UFI Decreasing term assurance (rider benefits) 247 4 0

335 RL Decreasing term assurance (rider benefits) 117788 437 584

340 Ex PLAL Accelerated critical illness (guaranteed premiums) 49115 2696517 21988 (11230)

138

Form 51





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

340 Ex SMA Accelerated critical illness (guaranteed premiums) 107326 10474942 59340 48273

340 Ex SMA Accelerated critical illness (guaranteed premiums) (per

annum) 1099 22706 1122 (2959)

340 Ex SPL Accelerated critical illness (guaranteed premiums) 21678 1545614 9605 14199

340 Ex SPL Accelerated critical illness (guaranteed premiums) (per

annum) 283 4899 218 (468)

340 RL Accelerated critical illness (guaranteed premiums)

(Bancassurance) 13866 801446 7050 (16799)

340 RL Accelerated critical illness (guaranteed premiums) (Bright Grey) 39311 6067706 29817 (13948)

340 RL Accelerated critical illness (guaranteed premiums) (GRB) (Bright

Grey) 4917 822384 4368 (6436)

340 RL Accelerated critical illness (guaranteed premiums) (GRB)

(Scottish Provident) 7133 1066940 5327 (6532)

340 RL Accelerated critical illness (guaranteed premiums) (per annum)

(GRB) (Scottish Provident) 99 2802 151 (278)



340 RL Accelerated critical illness (guaranteed premiums) (Scottish

Provident) 35282 5118470 27090 (14923)

340 RL Accelerated critical illness (guaranteed premiums) (Swiss Life) 433 13479 119 523

345 Ex SMA Accelerated critical illness (reviewable premiums) 9717 1079302 6391 5504

345 Ex SMA Accelerated critical illness (reviewable premiums) (per

annum) 55 1150 64 (194)

345 Ex SPL Accelerated critical illness (reviewable premiums) 318 24288 168 230

139

Form 51





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

345 Ex SPL Accelerated critical illness (reviewable premiums) (per

annum) 7 106 4 (7)

345 RL Accelerated critical illness (reviewable premiums) (Bright Grey) 23518 2676268 14851 172

345 RL Accelerated critical illness (reviewable premiums) (GRB) (Bright

Grey) 436 57111 429 (554)

345 RL Accelerated critical illness (reviewable premiums) (GRB)


345 RL Accelerated critical illness (reviewable premiums) (per annum)




345 RL Accelerated critical illness (reviewable premiums) (Scottish

Provident) 5174 710823 3771 (944)

345 RL Accelerated critical illness (reviewable premiums) (Swiss Life) 2 67 1 4

350 Ex PLAL Stand-alone critical illness (guaranteed premiums) 646 36260 212 512

350 Ex SMA Stand-alone critical illness (guaranteed premiums) 8665 1832602 10112 13121

350 Ex SMA Stand-alone critical illness (guaranteed premiums) (per

annum) 165 5151 232 (506)

350 Ex SPL Stand-alone critical illness (guaranteed premiums) 3883 928211 4134 13571

350 Ex SPL Stand-alone critical illness (guaranteed premiums) (per

annum) 44 1940 72 (124)

350 RL Stand-alone critical illness (guaranteed premiums) (GRB)


350 RL Stand-alone critical illness (guaranteed premiums) (per annum)


140

Form 51





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9



350 RL Stand-alone critical illness (guaranteed premiums) (Scottish

Provident) 3283 816607 5079 (1418)

350 RL Stand-alone critical illness (guaranteed premiums) (Swiss Life) 358 12817 93 649

355 Ex SMA Stand-alone critical illness (reviewable premiums) 477 83407 502 552

355 Ex SMA Stand-alone critical illness (reviewable premiums) (per

annum) 8 161 8 (18)

355 Ex SPL Stand-alone critical illness (reviewable premiums) 97 14342 71 267

355 Ex SPL Stand-alone critical illness (reviewable premiums) (per

annum) 2 64 3 (3)

355 RL Stand-alone critical illness (reviewable premiums) (Bright Grey) 1094 469968 2646 (2904)

355 RL Stand-alone critical illness (reviewable premiums) (GRB)


355 RL Stand-alone critical illness (reviewable premiums) (per annum)




355 RL Stand-alone critical illness (reviewable premiums) (Scottish

Provident) 250 52511 295 25

355 RL Stand-alone critical illness (reviewable premiums) (Swiss Life) 6 108 1 8

360 Ex SMA Income protection non-profit (guaranteed premiums) 14471 423662 11327 (43701)

360 Ex SPL Income protection non-profit (guaranteed premiums) 1059 48385 1156 (4127)

141

Form 51





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

360 RL Income protection non-profit (guaranteed premiums) 167 1203 33 281

360 RL Income protection non-profit (guaranteed premiums) (Bright

Grey) 6678 151995 3932 (13578)

360 RL Income protection non-profit (guaranteed premiums) (Scottish

Provident) 5029 190138 4877 (19108)

360 RL Income protection non-profit (guaranteed premiums) (Swiss

Life) 45 380 14 32

365 Ex SMA Income protection non-profit (reviewable premiums) 905 25133 632 (2250)

365 Ex SPL Income protection non-profit (reviewable premiums) 56 1682 40 (125)

365 RL Income protection non-profit (reviewable premiums) (Scottish

Provident) 407 14086 365 (1316)

380 Ex RA Miscellaneous protection rider 1347 1 1

380 Ex SMA Miscellaneous protection rider 97 3688 366

380 Ex SMA Miscellaneous protection rider (per annum) 59453 2973

380 Ex SPL Miscellaneous protection rider (per annum) 12711 636

380 RL Miscellaneous protection rider (Bright Grey) 44682 1814

380 RL Miscellaneous protection rider (per annum) (Scottish Provident) 14676 734

380 RL Miscellaneous protection rider (Swiss Life) 473 156 6 2

385 Ex PLAL Income protection claims in payment 195 1072

142

Form 51





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

385 Ex SMA Income protection claims in payment 121 13481

385 Ex SPL Income protection claims in payment 3998

385 RL Income protection claims in payment 8 309

385 RL Income protection claims in payment (Bright Grey) 2990

395 Ex RA Annuity non-profit (PLA) 193 107 690

395 Ex SL Annuity non-profit (PLA) (individual) 88 213 1870

395 RL Annuity non-profit (PLA) 145 88 560

395 RL Annuity non-profit (PLA) (Intermediary) (individual) 4 5 39

400 Ex SL Annuity non-profit (CPA) (group) 68 47 505

400 Ex SL Annuity non-profit (CPA) (individual) 95 691 4417

400 RL Annuity non-profit (CPA) (Intermediary) (group) 6 6 65

400 RL Annuity non-profit (CPA) (Intermediary) (individual) 4 13 111

410 Ex SL Group life 1721 5 1

420 Ex SL Group income protection 1 979 181 81

425 Ex SL Group income protection claims in payment 13255

143

Form 51





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

435 Ex SMA Miscellaneous non-profit 210 437 55 163

435 Ex SPL Miscellaneous non-profit 12 1 1

440 Ex CL Additional reserves non-profit OB (extra premiums) 0

440 Ex CL Additional reserves non-profit OB (LAPR) 1

440 Ex RLA Additional reserves non-profit OB (expenses) 7136

440 Ex RLA Additional reserves non-profit OB (rate card charges) (11132)

440 Ex UFI Additional reserves non-profit OB (options and guarantees) 8

445 Ex RLA Additional reserves non-profit IB (expenses) 60495

445 Ex RLA Additional reserves non-profit IB (rate card charges) (81844)

144

Form 51





Units £000

UK Life / Reinsurance ceded external

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

300 Ex SL Regular premium non-profit WL/EA OB 155 4 99

300 RL Regular premium non-profit WL/EA OB (Bancassurance) 63104 1107 (628)

300 RL Regular premium non-profit WL/EA OB (GRB) (Bancassurance) 5476 12 34

300 RL Regular premium non-profit WL/EA OB (GRB) (Scottish

Provident) 708815 321 2988

325 Ex PLAL Level term assurance 761401 2385 4109

325 Ex SL Level term assurance 616 5 5

325 Ex SMA Level term assurance 2437568 4425 9672

325 Ex SMA Level term assurance (per annum) 21887 362 (958)

325 Ex SPL Level term assurance 1593689 3005 5229

325 Ex SPL Level term assurance (per annum) 22342 398 (1063)

325 Ex UFLA Level term assurance 126

325 RL Level term assurance (Bancassurance) 400199 523 757

325 RL Level term assurance (Bright Grey) 22156653 24352 43692

325 RL Level term assurance (GRB) (Bright Grey) 3151343 1770 5914

330 Ex PLAL Decreasing term assurance 1159766 4127 (520)

145

Form 51





Units £000


Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

330 Ex SL Decreasing term assurance 516 3 0

330 Ex SMA Decreasing term assurance 455734 1430 558

330 Ex SPL Decreasing term assurance 298945 975 61

330 RL Decreasing term assurance (Bancassurance) 613287 1018 779

330 RL Decreasing term assurance (Bright Grey) 7691145 11130 9083

330 RL Decreasing term assurance (GRB) (Bright Grey) 1639863 1125 2944

336 Ex SMA Mortality risk premium reinsurance 4427193 6933 6793

336 Ex SMA Mortality risk premium reinsurance (per annum) 24358 235 97

336 Ex SPL Mortality risk premium reinsurance 54350 100 76

336 Ex SPL Mortality risk premium reinsurance (per annum) 411 4 (2)

336 RL Mortality risk premium reinsurance (GRB) (Scottish Provident) 2094646 813 3932

336 RL Mortality risk premium reinsurance (per annum) (GRB) (Scottish

Provident) 44297 184 416

336 RL Mortality risk premium reinsurance (per annum) (Scottish

Provident) 364295 2649 4628

336 RL Mortality risk premium reinsurance (Scottish Provident) 9644400 8131 24578

340 Ex PLAL Accelerated critical illness (guaranteed premiums) 1958973 13173 (11015)

146

Form 51





Units £000


Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

340 Ex SMA Accelerated critical illness (guaranteed premiums) 6777426 30921 45181

340 Ex SMA Accelerated critical illness (guaranteed premiums) (per

annum) 16748 616 (690)

340 Ex SPL Accelerated critical illness (guaranteed premiums) 1205317 6545 16295

340 Ex SPL Accelerated critical illness (guaranteed premiums) (per

annum) 4213 169 (276)

340 RL Accelerated critical illness (guaranteed premiums)

(Bancassurance) 601094 2091 (1839)

340 RL Accelerated critical illness (guaranteed premiums) (Bright Grey) 4995269 11796 16202

340 RL Accelerated critical illness (guaranteed premiums) (GRB) (Bright

Grey) 740657 1123 2827

340 RL Accelerated critical illness (guaranteed premiums) (GRB)

(Scottish Provident) 961608 1580 4578


(GRB) (Scottish Provident) 2550 64 121



340 RL Accelerated critical illness (guaranteed premiums) (Scottish

Provident) 4137281 11295 10878

340 RL Accelerated critical illness (guaranteed premiums) (Swiss Life) 13479 119 523

345 Ex SMA Accelerated critical illness (reviewable premiums) 646654 3061 1139

345 Ex SMA Accelerated critical illness (reviewable premiums) (per

annum) 770 30 (11)

345 Ex SPL Accelerated critical illness (reviewable premiums) 19037 118 257

147

Form 51





Units £000


Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

345 Ex SPL Accelerated critical illness (reviewable premiums) (per

annum) 91 3 (4)

345 RL Accelerated critical illness (reviewable premiums) (Bright Grey) 2092952 9457 6782

345 RL Accelerated critical illness (reviewable premiums) (GRB) (Bright

Grey) 51496 232 192

345 RL Accelerated critical illness (reviewable premiums) (GRB)






345 RL Accelerated critical illness (reviewable premiums) (Scottish

Provident) 579693 1605 2063

345 RL Accelerated critical illness (reviewable premiums) (Swiss Life) 67 1 4

350 Ex PLAL Stand-alone critical illness (guaranteed premiums) 18130 103 (8)

350 Ex SMA Stand-alone critical illness (guaranteed premiums) 1070805 4588 12616

350 Ex SMA Stand-alone critical illness (guaranteed premiums) (per

annum) 3447 112 (33)

350 Ex SPL Stand-alone critical illness (guaranteed premiums) 728316 2908 13042

350 Ex SPL Stand-alone critical illness (guaranteed premiums) (per

annum) 1654 57 (67)

350 RL Stand-alone critical illness (guaranteed premiums) (GRB)




148

Form 51





Units £000


Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9



350 RL Stand-alone critical illness (guaranteed premiums) (Scottish

Provident) 626470 1707 2250

350 RL Stand-alone critical illness (guaranteed premiums) (Swiss Life) 12817 93 649

355 Ex SMA Stand-alone critical illness (reviewable premiums) 44108 188 263

355 Ex SMA Stand-alone critical illness (reviewable premiums) (per

annum) 82 3 (0)

355 Ex SPL Stand-alone critical illness (reviewable premiums) 11428 51 257

355 Ex SPL Stand-alone critical illness (reviewable premiums) (per

annum) 52 2 (1)

355 RL Stand-alone critical illness (reviewable premiums) (Bright Grey) 373015 1571 (523)

355 RL Stand-alone critical illness (reviewable premiums) (GRB)






355 RL Stand-alone critical illness (reviewable premiums) (Scottish

Provident) 39480 108 145

355 RL Stand-alone critical illness (reviewable premiums) (Swiss Life) 108 1 8

360 Ex SMA Income protection non-profit (guaranteed premiums) 336758 2490 (30874)

360 Ex SPL Income protection non-profit (guaranteed premiums) 36963 780 (2608)

149

Form 51





Units £000


Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9


Grey) 87422 838 (2873)

360 RL Income protection non-profit (guaranteed premiums) (Scottish

Provident) 154052 145 (6616)

360 RL Income protection non-profit (guaranteed premiums) (Swiss

Life) 380 14 32

365 Ex SMA Income Protection non-profit (reviewable premiums) 20293 68 (1316)

365 Ex SPL Income Protection non-profit (reviewable premiums) 1288 27 (72)

365 RL Income Protection non-profit (reviewable premiums) (Scottish

Provident) 11338 11 (403)

380 Ex SMA Miscellaneous protection rider 2197 220

380 RL Miscellaneous protection rider (Swiss Life) 156 6 2

385 Ex SMA Income protection claims in payment 5 9052

385 Ex SPL Income protection claims in payment 2822

385 RL Income protection claims in payment (Bright Grey) 1212


435 Ex SMA Miscellaneous non-profit 348 107

150

Form 51





Units £000

UK Pension / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

155 Ex RA Conventional pensions endowment with-profits 21346 313270 4109 163297

155 Ex RA Conventional pensions endowment with-profits (with GAR) 13482 182860 1159 135915

165 Ex RA Conventional deferred annuity with-profits 22384 37076 1637 321723

165 RL Conventional deferred annuity with-profits 116 135 2012

210 Ex RA Additional reserves with-profits OB (pension review) 6827



210 Ex SL Additional reserves with-profits OB (asset share charges) (41112)

210 Ex SL Additional reserves with-profits OB (expenses) 13060

210 RL Additional reserves with-profits OB (UFI pension review) 13030

305 RL Single premium non-profit WL/EA OB (Intermediary) 110 74

325 Ex CL Level term assurance 7 166 1 2

325 Ex PLAL Level term assurance 4123 132065 630 (516)

325 Ex RA Level term assurance 1983 37166 188 246


151

Form 51





Units £000

UK Pension / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

325 Ex SMA Level term assurance 374 70194 178 (140)

325 Ex UFI Level term assurance 29 1205 5 7

325 Ex UFLA Level term assurance 29 2203 8 27

325 RL Level term assurance 911 40107 157 197

325 RL Level term assurance (Bright Grey) 736 141759 333 (214)

330 Ex SL Decreasing term assurance 3 363 0 1

330 Ex SMA Decreasing term assurance 108 14860 31 (52)


380 RL Miscellaneous protection rider 5235 104 139

390 Ex RA Deferred annuity non-profit 4846 1631 17609

390 Ex SL Deferred annuity non-profit 37344 53 37312

390 Ex SL Deferred annuity non-profit (with GAR) 36807 60 37068

390 RL Deferred annuity non-profit (Intermediary) 1296 20635

390 RL Deferred annuity non-profit (Intermediary) (with GAR) 146 1245

400 Ex CL Annuity non-profit (CPA) 19 1 6

152

Form 51





Units £000

UK Pension / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

400 Ex PLAL Annuity non-profit (CPA) 10080 6032 92305

400 Ex RA Annuity non-profit (CPA) 771 171 1855

400 Ex RIL Annuity non-profit (CPA) 24 10 148

400 Ex SL Annuity non-profit (CPA) (group) 1063 1208 10091

400 Ex SL Annuity non-profit (CPA) (individual) 117 177 1886

400 Ex UFI Annuity non-profit (CPA) 4 1 24

400 Ex UFLA Annuity non-profit (CPA) 1 0 3

400 RL Annuity non-profit (CPA) 319 248 3850

400 RL Annuity non-profit (CPA) (Bancassurance) 6129 3441 60224

400 RL Annuity non-profit (CPA) (Intermediary) (group) 3117 4931 76687

400 RL Annuity non-profit (CPA) (Intermediary) (individual) 10460 15887 240585

410 Ex SL Group life 378 16719 40 18

435 Ex SL Miscellaneous non-profit 367 41 301

440 Ex CL Additional reserves non-profit OB (extra premiums) 0


153

Form 51





Units £000

UK Pension / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9


440 RL Additional reserves non-profit OB (DWP redress) 448

154

Form 51

Long-term insurance business : Valuation summary of non-linked contracts (other than accumulating with-profits contracts)




Units £000

UK Pension / Reinsurance ceded external

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9


325 Ex SMA Level term assurance 63261 90 268

325 Ex UFLA Level term assurance 1762


330 Ex SL Decreasing term assurance 305 0 1

330 Ex SMA Decreasing term assurance 13374 14 18

330 RL Decreasing term assurance (Bright Grey) 37612 75 (6)

380 RL Miscellaneous protection rider 4563 56 68

400 Ex SL Annuity non-profit (CPA) (group) 167 2106

400 Ex SL Annuity non-profit (CPA) (individual) 169 1162

400 RL Annuity non-profit (CPA) (Intermediary) (group) 3731 54256

400 RL Annuity non-profit (CPA) (Intermediary) (individual) 15091 206566

155

Form 51





Units £000

Overseas / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9



215 Ex RLA Additional reserves with-profits IB (expenses) 7159

215 Ex RLA Additional reserves with-profits IB (rate card charges) (12612)

325 RL Level term assurance (Bright Grey) 2617 618141 1322 443

325 RL Level term assurance (Caledonian) 3553 1800723 3743 (2265)


330 RL Decreasing term assurance (Caledonian) 6300 1239622 3127 (4037)

340 RL Accelerated critical illness (guaranteed premiums) (Bright Grey) 818 163845 807 (465)

340 RL Accelerated critical illness (guaranteed premiums) (Caledonian) 4653 467714 3086 (4432)

345 RL Accelerated critical illness (reviewable premiums) (Bright Grey) 457 79773 480 63

355 RL Stand-alone critical illness (reviewable premiums) (Bright Grey) 25 23542 125 (103)


Grey) 60 2212 66 (243)

380 RL Miscellaneous protection rider (Bright Grey) 835 38

435 RL Miscellaneous non-profit (Caledonian) 1292 430601 914 (482)

156

Form 51





Units £000

Overseas / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9



445 Ex RLA Additional reserves non-profit IB (expenses) 29982

445 Ex RLA Additional reserves non-profit IB (rate card charges) (43368)

157

Form 51





Units £000

Overseas / Reinsurance ceded external

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9


325 RL Level term assurance (Caledonian) 1637056 1113 3893

330 RL Decreasing term assurance (Bright Grey) 534414 695 214

330 RL Decreasing term assurance (Caledonian) 1121231 967 4296

340 RL Accelerated critical illness (guaranteed premiums) (Bright Grey) 132703 335 333

340 RL Accelerated critical illness (guaranteed premiums) (Caledonian) 330371 841 561

345 RL Accelerated critical illness (reviewable premiums) (Bright Grey) 64321 317 240

355 RL Stand-alone critical illness (reviewable premiums) (Bright Grey) 18773 75 (8)


Grey) 1358 17 (60)

435 RL Miscellaneous non-profit (Caledonian) 392583 242 1546

158

Form 51





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

105 Ex RA Conventional whole life with-profits IB 94741 98064 2130 80162

105 Ex RA Conventional whole life with-profits IB (with non-profit

recurring endowments) 781 169 3 166

105 Ex RA Conventional whole life with-profits IB (with with-profit


130 Ex RA Conventional endowment with-profits IB 6821 22834 964 18982

130 Ex RA Conventional endowment with-profits IB (with additional

death benefits) 2049 17866 238 4092

130 Ex RA Conventional endowment with-profits IB (with non-profit


310 Ex RA Non-profit IB 383600 14383 25262

159

Form 51





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

100 Ex UFI Conventional whole life with-profits OB 19891 92363 1426 50192

120 Ex UFI Conventional endowment with-profits OB savings 2918 18967 484 15703

125 Ex UFI Conventional endowment with-profits OB target cash 2526 44069 878 21728

210 Ex UFI Additional reserves with-profits OB (options and guarantees) 683

160

Form 51





Units £000

UK Pension / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

155 Ex UFI Conventional pensions endowment with-profits 172654 2271407 2421 1381414

161

Form 51





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

105 Ex UFI Conventional whole life with-profits IB 453278 526623 9668 373976

105 Ex UFI Conventional whole life with-profits IB (with with-profit


130 Ex UFI Conventional endowment with-profits IB 3136 7332 241 5883

162

Form 51





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

100 Ex SL Conventional whole life with-profits OB 1264 8047 45 6297

120 Ex SL Conventional endowment with-profits OB savings 589 4815 75 4322

125 Ex SL Conventional endowment with-profits OB target cash 3566 47374 1727 41852

165 Ex SL Conventional deferred annuity with-profits 4 3 37

205 Ex SL Miscellaneous conventional with-profits 31 0



330 Ex SL Decreasing term assurance 0 0

335 Ex SL Decreasing term assurance (rider benefits) 52038 188 158

390 Ex SL Deferred annuity non-profit 159 25 287

410 Ex SL Group life 18279 49 12

420 Ex SL Group income protection 10 535 39 11


435 Ex SL Miscellaneous non-profit 62 9

163

Form 51





Units £000


Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

100 Ex SL Conventional whole life with-profits OB 23 0 20

120 Ex SL Conventional endowment with-profits OB savings 16 1 12

125 Ex SL Conventional endowment with-profits OB target cash 28 1 84

205 Ex SL Miscellaneous conventional with-profits 141 14

335 Ex SL Decreasing term assurance (rider benefits) 28 0 0


164

Form 51





Units £000

UK Pension / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

155 Ex SL Conventional pensions endowment with-profits 366057 2183 334012

155 Ex SL Conventional pensions endowment with-profits (with GAR) 901 445248 1748 507181

155 RL Conventional pensions endowment with-profits (Intermediary) 22 21

175 Ex SL Group conventional deferred annuity with-profits 561 2613 130 51355

185 Ex SL Group conventional pensions endowment with-profits 28461 195 24407

185 Ex SL Group conventional pensions endowment with-profits (with

GAR) 356 22721 70 28886

205 Ex SL Miscellaneous conventional with-profits 3 697 0 4


300 Ex SL Regular premium non-profit WL/EA OB (with GAR) 15407


390 Ex SL Deferred annuity non-profit 5790 9472 73 130489

390 Ex SL Deferred annuity non-profit (with GAR) 2469 2704 15 37189

410 Ex SL Group life 79 181968 441 8

435 Ex SL Miscellaneous non-profit 47 44 63 833

165

Form 51





Units £000


Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9


166

Form 51





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

100 Ex RLA Conventional whole life with-profits OB 13374 41678 883 36572

105 Ex RLA Conventional whole life with-profits IB 3633 6362 45 4764

105 Ex RLA Conventional whole life with-profits IB (Friends Provident) 52544 40016 818 32896

115 Ex RLA Conventional whole life with-profits OB (tax exempt) 421 347 1 476

120 Ex RLA Conventional endowment with-profits OB savings 6814 45119 1740 34485

125 Ex RLA Conventional endowment with-profits OB target cash 1046 22553 448 11024

130 Ex RLA Conventional endowment with-profits IB 1315 3207 150 2873

130 Ex RLA Conventional endowment with-profits IB (Friends Provident) 29543 33063 1603 27334

140 Ex RLA Conventional endowment with-profits OB (tax exempt) 54 76 1 77

210 Ex RLA Additional reserves with-profits OB 7606

215 Ex RLA Additional reserves with-profits IB 10

300 Ex RLA Regular premium non-profit WL/EA OB 6378 7686 85 7368

310 Ex RLA Non-profit IB 42033 27359 599 24348

310 Ex RLA Non-profit IB (Friends Provident) 153792 8087 12034

310 Ex RLA Non-profit IB (tax-exempt) 1006748 37472 756 109199

167

Form 51





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

325 Ex RLA Level term assurance OB 2164 122539 315 722

330 Ex RLA Decreasing term assurance OB 684 29344 108 188

345 Ex RLA Accelerated critical illness OB (reviewable premiums) 44 3053 11 7

355 Ex RLA Stand-alone critical illness OB (reviewable premiums) 478 25147 128 817

375 Ex RLA Protection menu policy OB 60331 12791333 23643 42428

395 Ex RLA Annuity non-profit OB (PLA) 212 360 3475

440 Ex RLA Additional reserves non-profit OB 5633

445 Ex RLA Additional reserves non-profit IB 20

168

Form 51





Units £000


Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

375 Ex RLA Protection menu policy OB 10633363 16989 36485

169

Form 51





Units £000

UK Pension / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

165 Ex RLA Conventional deferred annuity with-profits OB 572 2977 81 11852



375 Ex RLA Protection menu policy OB 6602 1457416 3043 6456

400 Ex RLA Annuity non-profit OB (CPA) 4699 3849 65929


170

Form 51





Units £000


Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

375 Ex RLA Protection menu policy OB 1311675 2463 6226

171

Form 51





Units £000

Overseas / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

100 Ex RLA Conventional whole life with-profits OB 2065 10354 496 7260

100 Ex RLA Conventional whole life with-profits OB (Caledonian) 554 6036 163 2824

105 Ex RLA Conventional whole life with-profits IB 11662 21765 412 14753

105 Ex RLA Conventional whole life with-profits IB (Irish Life) 56690 29449 42 28379

115 Ex RLA Conventional whole life with-profits OB (tax-exempt) 21 22 0 27

120 Ex RLA Conventional endowment with-profits OB savings 14799 167261 7295 116700

120 Ex RLA Conventional endowment with-profits OB savings

(Caledonian) 751 9990 496 7731

125 Ex RLA Conventional endowment with-profits OB target cash 4284 97965 2004 40679

130 Ex RLA Conventional endowment with-profits IB 14533 44883 2378 31800

130 Ex RLA Conventional endowment with-profits IB (Irish Life) 1860 19032 187 1334

140 Ex RLA Conventional endowment with-profits OB (tax exempt) 11 18 0 18

165 Ex RLA Conventional deferred annuity with-profits OB (Caledonian) 2796 49492 1203 73710


215 Ex RLA Additional reserves with-profits IB 10

300 Ex RLA Regular premium non-profit WL/EA OB 1422 4448 17 3848

172

Form 51





Units £000

Overseas / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

300 Ex RLA Regular premium non-profit WL/EA OB (Caledonian) 198 752 12 564

310 Ex RLA Non-profit IB 47235 44127 1039 34800

310 Ex RLA Non-profit IB (Irish Life) 104175 23768 1078 19880

310 Ex RLA Non-profit IB (Irish Life) (tax-exempt) 734 1700 86

310 Ex RLA Non-profit IB (tax-exempt) 266959 12661 293 40219


325 Ex RLA Level term assurance OB (Caledonian) 18095 3301708 10055 18064

330 Ex RLA Decreasing term assurance OB 402 34602 106 412

330 Ex RLA Decreasing term assurance OB (Caledonian) 42084 5482950 15209 (3442)

340 Ex RLA Accelerated critical illness OB (guaranteed premiums)

(Caledonian) 1825 163784 1024 699

355 Ex RLA Stand-alone critical illness OB (reviewable premiums) 817 54801 252 1873

390 Ex RLA Deferred annuity non-profit OB (Caledonian) 47 762 1148

400 Ex RLA Annuity non-profit OB (CPA) 268 515 8626

400 Ex RLA Annuity non-profit OB (CPA) (Caledonian) 927 3794 50228

435 Ex RLA Miscellaneous non-profit OB (Caledonian) 523 192161 454 747

173

Form 51





Units £000

Overseas / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9


445 Ex RLA Additional reserves non-profit IB 10

174

Form 51





Units £000


Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

325 Ex RLA Level term assurance OB (Caledonian) 2935132 8553 1599

330 Ex RLA Decreasing term assurance OB (Caledonian) 4823065 9684 2920

340 Ex RLA Accelerated critical illness OB (guaranteed premiums)

(Caledonian) 130243 646 677

435 Ex RLA Miscellaneous non-profit OB (Caledonian) 175855 327 351

175

Form 52

Long-term insurance business : Valuation summary of accumulating with-profits contracts




Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

500 Ex PLAL Life UWP single premium 1212 2 2

500 Ex RA Life UWP single premium 16264 16103 15796 15796

500 RL Life UWP single premium 6836 88326 87452 87426 87426

500 RL Life UWP single premium (Intermediary) 32 1510 1496 1473 1473

505 RL Life UWP whole life regular premium 2734 13818 1706 13818 13723 13723

506 RL Life UWP whole life regular premium (ISA) 12286 67053 5958 67053 66216 66216

510 Ex SL Life UWP endowment regular premium - savings 7 1 12 11 183 194

510 RL Life UWP endowment regular premium - savings (Intermediary) 1155 81 823 823 3 827

515 Ex SL Life UWP endowment regular premium – target cash 285 28 0 361 301 1363 1664

515 RL Life UWP endowment regular premium – target cash

(Intermediary) 66 6303 250 2285 2285 13 2298

516 Ex PLAL Life UWP endowment regular premium (ISA) 182 182

575 RL Miscellaneous UWP (single premium ISA) 4671 6715 6715 6703 6703

610 Ex RLA Additional reserves UWP (expenses) 217 217

610 Ex RLA Additional reserves UWP (rate card charges) (386) (386)

610 Ex SL Additional reserves UWP (asset share charges) (1469) (1469)

176

Form 52





Units £000


Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

510 Ex SL Life UWP endowment regular premium - savings 0 0

515 Ex SL Life UWP endowment regular premium – target cash 3 5 5

515 RL Life UWP endowment regular premium – target cash

(Intermediary) 2435 1 1

177

Form 52

Long-term insurance business : Valuation summary of accumulating with-profits contracts (Sheet 1)




Units £000

UK Pension / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

525 Ex RA Individual pensions UWP 7138 30310 1491 30310 30296 1 30297

525 Ex SL Individual pensions UWP 180647 2934 180647 180738 2972 183710

525 RL Individual pensions UWP 161802 1281834 10205 1281834 1260270 92 1260362

525 RL Individual pensions UWP (Intermediary) 110842 2317 111042 110973 (161) 110812

525 RL Individual pensions UWP (with GAR) 9623 98046 1270 98046 76382 10128 86510

535 Ex SL Group money purchase pensions UWP 9563 310 9563 9581 6067 15648

535 Ex SL Group money purchase pensions UWP (final salary) 862 146 862 862 329 1190

535 RL Group money purchase pensions UWP (Intermediary) 11138 305 11138 11134 283 11418

535 RL Group money purchase pensions UWP (Intermediary) (final

salary) 1593 65 1593 1593 105 1697

580 Ex SL Term assurance rider 38744 161 40 40

580 RL Term assurance rider (Intermediary) 93137 288 72 72

595 RL Income protection rider (Intermediary) 24 6 6

605 Ex SL Miscellaneous protection rider 899 83 207 207

605 RL Miscellaneous protection rider (Intermediary) 2 2 2


178

Form 52

Long-term insurance business : Valuation summary of accumulating with-profits contracts (Sheet 2)




Units £000

UK Pension / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9


610 Ex SL Additional reserves UWP (asset share charges) (18871) (18871)

610 Ex SL Additional reserves UWP (expenses) 2848 2848

610 RL Additional reserves UWP (pension review) 54523 54523

179

Form 52





Units £000

Overseas / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

500 RL UWP single premium (Intermediary) 1779 104756 102479 100495 100495



180

Form 52





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

510 Ex SL Life UWP endowment regular premium - savings 4503 276 3782 3782 3782

515 Ex SL Life UWP endowment regular premium – target cash 42866 1126 12997 12984 12984

181

Form 52





Units £000


Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

510 Ex SL Life UWP endowment regular premium - savings 2

515 Ex SL Life UWP endowment regular premium – target cash 15745

182

Form 52





Units £000

UK Pension / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

525 Ex SL Individual pensions UWP 61713 828 61713 61642 61642

525 Ex SL Individual pensions UWP (with GAR) 23917 23917 3074 26991

525 RL Individual pensions UWP (Intermediary) 1121 3 1121 1117 1117

535 Ex SL Group money purchase pensions UWP 49408 134 51319 51244 51244

535 Ex SL Group money purchase pensions UWP (with GAR) 231 231 44 276

545 Ex SL Individual deposit administration with-profits 63 5056 21 5861 5740 261 6001

545 Ex SL Individual deposit administration with-profits (with GAR) 85214 14 108920 104696 110 104806

555 Ex SL Group deposit administration with-profits 37488 253360 381 359970 367329 5939 373267

555 Ex SL Group deposit administration with-profits (with GAR) 902 1205 1206 1206


580 RL Term assurance rider (Intermediary) 233 0 12 12

605 Ex SL Miscellaneous protection rider 461 122 236 236

610 Ex SL Additional reserves UWP 2253 22 2253 2253 2253

183

Form 52





Units £000


Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9


605 Ex SL Miscellaneous protection rider 0 0

184

Form 52





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

500 Ex PLAL Life UWP single premium 6207 121230 121230 120473 120473

505 Ex PLAL Life UWP whole life regular premium 3231 637 3231 3232 3232

510 Ex PLAL Life UWP endowment regular premium - savings 171121 11243 171121 171184 171184

516 Ex PLAL Life UWP endowment regular premium (ISA) 8789 23027 1955 23027 23026 23026

185

Form 52





Units £000

UK Pension / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

525 Ex PLAL Individual pensions UWP 165943 4585 165943 165958 165958

535 Ex PLAL Group money purchase pensions UWP 12 12 12 12

186

Form 52





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

505 Ex RLA Life UWP whole life regular premium 7727 375 7727 7348 3848 11197

187

Form 52





Units £000

UK Pension / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

525 Ex RLA Individual pensions UWP 287221 1134 287268 279268 12839 292107

188

Form 52





Units £000

Overseas / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

500 Ex RLA Life UWP single premium (Caledonian) 5756 329637 329249 309179 30190 339369

505 Ex RLA Life UWP whole life regular premium 20489 488 20489 20022 2507 22529

525 Ex RLA Individual pensions UWP 33103 967 33225 31622 3095 34717

525 Ex RLA Individual pensions UWP (with GAO) 32163 614 32341 26104 23234 49339

189

Form 53

Long-term insurance business : Valuation summary of property linked contracts (Sheet 1)




Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

700 Ex CL Life property linked single premium 7 42 40 40 0 40

700 Ex PLAL Life property linked single premium 26813 585439 579642 579642 363 580005

700 Ex RA Life property linked single premium 7333 39743 38707 38707 478 39186

700 Ex SL Life property linked single premium 1993 59732 57367 57367 618 57985

700 Ex UFI Life property linked single premium 534 4161 4161 4161 195 4356

700 Ex UFLA Life property linked single premium 343 14090 12823 12823 40 12863

700 Ex UFLA Life property linked single premium (with mortality gtee) 373 14334 14192 14192 323 14515

700 RL Life property linked single premium 108 1620 1620 1620 4 1624

700 RL Life property linked single premium (Bancassurance) 7 85 84 84 84

700 RL Life property linked single premium (Intermediary) 595 24222 22984 22984 44 23028

710 Ex CL Life property linked whole life regular premium 274 13585 57 716 716 45 761

710 Ex PLAL Life property linked whole life regular premium 5445 125109 878 5880 5880 208 6087

710 Ex RA Life property linked whole life regular premium 2533 99791 895 7683 7683 609 8292

710 Ex SL Life property linked whole life regular premium 783 28765 262 3854 3854 75 3929

710 Ex SMA Life property linked whole life regular premium 70151 12778498 72814 108869 108869 28785 137655

190

Form 53





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

710 Ex UFI Life property linked whole life regular premium 1560 27959 332 5478 5478 105 5583

710 Ex UFI Life property linked whole life regular premium (with critical

illness cover option) 297 8322 68 1151 1151 23 1173

710 Ex UFLA Life property linked whole life regular premium 4080 202083 1697 17786 17786 1813 19599

710 RL Life property linked whole life regular premium (Bancassurance) 25 215 2 1 1 3 4

710 RL Life property linked whole life regular premium (Scottish

Provident) 4827 3087060 4992 4750 4750 321 5072

715 Ex CL Life property linked endowment regular premium - savings 302 4018 136 3834 3834 8 3842

715 Ex PLAL Life property linked endowment regular premium - savings 39432 925298 13867 307864 307864 4548 312411

715 Ex RA Life property linked endowment regular premium - savings 28 275 5 275 275 275

715 Ex SL Life property linked endowment regular premium - savings 891 9802 203 8572 8572 76 8648

715 Ex UFI Life property linked endowment regular premium - savings 532 2423 51 2423 2423 3 2426

715 Ex UFLA Life property linked endowment regular premium - savings 99 2496 8 2496 2496 7 2504

715 RL Life property linked endowment regular premium - savings 109 1368 48 1367 1367 11 1378

715 RL Life property linked endowment regular premium - savings

(Intermediary) 237 2839 204 1376 1376 32 1407

720 Ex CL Life property linked endowment regular premium - target

cash 335 10792 176 7962 7962 392 8354

720 Ex SL Life property linked endowment regular premium – target

cash 14144 453655 8966 223505 223505 3207 226712

191

Form 53





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

720 Ex UFI Life property linked endowment regular premium - target

cash 100 2853 73 1822 1822 2 1824

720 Ex UFLA Life property linked endowment regular premium - target

cash 424 14782 237 9778 9778 25 9803

720 RL Life property linked endowment regular premium – target cash

(Intermediary) 504 17193 629 6780 6780 177 6957

775 Ex SL Accelerated critical illness rider 104764 339 339

775 RL Accelerated critical illness rider (Intermediary) 16851 48 48

780 Ex SL Stand-alone critical illness rider 12439 74 74

780 Ex UFI Stand-alone critical illness rider 24 537 6 84 84 0 85

780 Ex UFLA Stand-alone critical illness rider 26595

780 RL Stand-alone critical illness rider (Intermediary) 481 2 2

785 Ex UFI Income protection rider 4 8 1 16 16 0 16

785 Ex UFLA Income protection rider 16301

790 Ex SL Miscellaneous protection rider 76 157 157

790 Ex UFI Miscellaneous protection rider 84 3 3 3

790 Ex UFLA Miscellaneous protection rider 995 25 4741 4741


192

Form 53





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

795 Ex SMA Miscellaneous property linked (term assurance) 1578 182952 828 6739 6739 381 7120

800 Ex CL Additional reserves property linked (extra premiums) 1 1

800 Ex RLA Additional reserves property linked (expenses) 1494 1494

800 Ex RLA Additional reserves property linked (rate card charges) (1972) (1972)

800 Ex SMA Additional reserves property linked (extra premiums &

IBNR) 528 528 528

193

Form 53





Units £000


Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

710 Ex PLAL Life property linked whole life regular premium 51056 197

710 Ex SL Life property linked whole life regular premium 1955 3 3

710 Ex SMA Life property linked whole life regular premium 6515772 8111 8111

710 Ex UFI Life property linked whole life regular premium 17985

710 Ex UFI Life property linked whole life regular premium (with critical

illness cover option) 5737

710 Ex UFLA Life property linked whole life regular premium 147438

710 RL Life property linked whole life regular premium (Scottish

Provident) 2224118 25 25

715 Ex PLAL Life property linked endowment regular premium - savings 279318 1217

715 Ex SL Life property linked endowment regular premium - savings 25 0 0

715 RL Life property linked endowment regular premium - savings


720 Ex SL Life property linked endowment regular premium – target

cash 39886 16 16

720 Ex UFI Life property linked endowment regular premium - target

cash 825

720 Ex UFLA Life property linked endowment regular premium - target

cash 4003

720 RL Life property linked endowment regular premium – target cash


775 Ex SL Accelerated critical illness rider 82559 267 267

194

Form 53





Units £000


Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

775 RL Accelerated critical illness rider (Intermediary) 12844 36 36

780 Ex SL Stand-alone critical illness rider 9688 57 57

780 Ex UFI Stand-alone critical illness rider 362

780 Ex UFLA Stand-alone critical illness rider 21276

780 RL Stand-alone critical illness rider (Intermediary) 385 2 2

785 Ex UFLA Income protection rider 13041

790 Ex SL Miscellaneous protection rider 22 61 61

790 Ex UFI Miscellaneous protection rider 67 2 2

790 Ex UFLA Miscellaneous protection rider 796 3807 3807


795 Ex SMA Miscellaneous property linked (term assurance) 94510 251 251

800 Ex SMA Additional reserves property linked (extra premiums &

IBNR) 261 261 261

195

Form 53





Units £000

UK Pension / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

725 Ex CL Individual pensions property linked 2866 40103 115 38166 38166 516 38682

725 Ex CL Individual pensions property linked (with GAR) 215 1456 9 1456 1456 905 2362

725 Ex PLAL Individual pensions property linked 111669 718529 22455 715015 715015 8960 723975

725 Ex RIL Individual pensions property linked 93845 1246456 1273 1246456 1246456 2279 1248735

725 Ex SL Individual pensions property linked 77317 858991 10774 1032040 1032040 (7853) 1024186

725 Ex SL Individual pensions property linked (with GAR) 40970 510028 2511 510028 510028 (11421) 498607

725 Ex UFI Individual pensions property linked 19071 295274 2010 295274 295274 5054 300328

725 Ex UFLA Individual pensions property linked 7056 131259 925 123270 123270 610 123880

725 RL Individual pensions property linked 8188 78158 2113 78158 78158 1380 79538

725 RL Individual pensions property linked (Bancassurance) 2803 24258 2022 24258 24258 4 24262

725 RL Individual pensions property linked (Intermediary) 396259 9736736 579440 10540116 10540116 70542 10610659

735 Ex PLAL Group money purchase pensions property linked 18138 93185 1119 93204 93204 244 93448

735 Ex SL Group money purchase pensions property linked 28911 229750 1479 269442 269442 (689) 268753

735 Ex SL Group money purchase pensions property linked (final

salary) 4301 166851 1992 166851 166851 1955 168805

735 Ex SL Group money purchase pensions property linked (with GAR) 854 17169 162 17169 17169 (193) 16976

196

Form 53





Units £000

UK Pension / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

735 RL Group money purchase pensions property linked

(Bancassurance) 1742 3464 262 3464 3464 2 3467

735 RL Group money purchase pensions property linked (Intermediary) 32359 443984 13454 543842 543842 3733 547575

735 RL Group money purchase pensions property linked (Intermediary)

(final salary) 1147 421667 5518 421667 421667 4940 426607

750 Ex SL Income drawdown property linked 349 24230 23175 23175 (120) 23055

750 RL Income drawdown property linked (Intermediary) 4482 188583 179088 179088 773 179861

755 Ex SL Trustee investment plan 2083 2083 2083 2083

755 Ex UFLA Trustee investment plan 474 474 474 1 476

770 Ex UFI Term assurance rider 1 34957 86 3770 3770 3 3772

790 Ex UFI Miscellaneous protection rider 659 22 24 24

790 Ex UFLA Miscellaneous protection rider 301 15 15 15

800 Ex CL Additional reserves property linked (extra premiums) 0 0

800 Ex RIL Additional reserves property linked (pension review) 6271 6271



800 Ex UFI Additional reserves property linked (pension review) 4575 4575

197

Form 53





Units £000

UK Pension / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

800 Ex UFLA Additional reserves property linked (pension review) 50 50

800 RL Additional reserves property linked (contingency) 524 524

198

Form 53

Long-term insurance business : Valuation summary of property linked contracts




Units £000


Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

725 Ex SL Individual pensions property linked 18863 18863 18863

725 Ex UFLA Individual pensions property linked 6391

725 RL Individual pensions property linked (Intermediary) 1559278 1559278 (5759) 1553519

735 Ex SL Group money purchase pensions property linked 52007 52007 52007

735 RL Group money purchase pensions property linked (Intermediary) 227050 227050 227050

750 Ex SL Income drawdown property linked 1350 1350 1350

750 RL Income drawdown property linked (Intermediary) 4972 4972 4972

770 Ex UFI Term assurance rider 24950

790 Ex UFI Miscellaneous protection rider 527 20 20

790 Ex UFLA Miscellaneous protection rider 240 12 12

199

Form 53





Units £000

Overseas / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

700 RL Life property linked single premium (Intermediary) 91 8868 8779 8779 5 8784



200

Form 53





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

715 Ex SL Life property linked endowment regular premium - savings 1 12 0 11 11 4 14

201

Form 53





Units £000

UK Pension / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

725 Ex SL Individual pensions property linked (with GAR) 172300 172300 5067 177366

735 Ex SL Group money purchase pensions property linked (with GAR) 6580 6580 328 6908

202

Form 53





Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

700 Ex RLA Life property linked single premium 1528 14692 14692 14692 114 14806

710 Ex RLA Life property linked whole life regular premium 6808 24464 882 24464 24464 2011 26475

715 Ex RLA Life property linked endowment regular premium - savings 32 322 4 322 322 19 341

203

Form 53





Units £000

UK Pension / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

725 Ex RLA Individual pensions property linked 40085 146497 3026 146538 146497 5821 152318

800 Ex RLA Additional reserves property linked 1269 1269 1269

204

Form 53





Units £000

Overseas / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

700 Ex GRE Life property linked single premium 68 1590 1590 1590 5 1595

710 Ex GRE Life property linked whole life regular premium 160 1037 171 1037 1037 478 1516

710 Ex RLA Life property linked whole life regular premium 1166 3981 155 3981 3981 844 4825

725 Ex RLA Individual pensions property linked 6375 2384 91 2389 2384 572 2956

205

Form 54

Long-term insurance business : Valuation summary of index linked contracts




Units £000

UK Life / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

901 RL Index linked income protection claims in payment (Swiss Life) 188 188 188

905 Ex SL Index linked annuity (individual) 5 17 157 157 157

910 RL Miscellaneous index linked (Bright Grey) 8108 187385 4425 (12229) (12229) (12229)

910 RL Miscellaneous index linked (GRB) (Bright Grey) 277 5733 78 (203) (203) (203)

910 RL Miscellaneous index linked (Swiss Life) 283 1711 67 144 144 144

206

Form 54





Units £000


Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

901 RL Index linked income protection claims in payment (Swiss Life) 188 188 188

910 RL Miscellaneous index linked (Bright Grey) 132369 1620 (4031) (4031) (4031)

910 RL Miscellaneous index linked (GRB) (Bright Grey) 5238 27 28 28 28

910 RL Miscellaneous index linked (Swiss Life) 1711 67 144 144 144

207

Form 54





Units £000

UK Pension / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

905 Ex SL Index linked annuity (group) 1 397 3993 3993 3993

905 Ex SL Index linked annuity (individual) 3 255 1585 1585 1585

905 RL Index linked annuity (Intermediary) (group) 22 28 485 485 485

905 RL Index linked annuity (Intermediary) (individual) 71 178 3733 3733 3733

910 RL Miscellaneous index linked 2013 21555 1272 1272 1272

208

Form 54





Units £000


Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

905 Ex SL Index linked annuity (group) 61 691 691 691

905 Ex SL Index linked annuity (individual) 135 919 919 919

905 RL Index linked annuity (Intermediary) (group) 4 69 69 69

905 RL Index linked annuity (Intermediary) (individual) 65 1611 1611 1611

209

Form 54





Units £000

Overseas / Gross

Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

910 RL Miscellaneous index linked (Bright Grey) 151 4667 124 (438) (438) (438)

210

Form 54





Units £000


Product

code

number

Product description

Number of

policyholders /

scheme

members

Amount of

benefit

Amount of

annual office

premiums

Nominal value

of units

Discounted


Amount of

mathematical

reserves

1 2 3 4 5 6 7 8 9

910 RL Miscellaneous index linked (Bright Grey) 3222 43 (146) (146) (146)

211

Form 55

Long-term insurance business : Unit prices for internal linked funds


Total business


Units £000

Fund name Type of fund Net assets Main series

Unit

management

charge

Price at

previous

valuation date

Price at current

valuation date

Change in

price during

year

1 2 3 4 5 6 7 8

Royal London ANL Managed Fund 02 - life - balanced managed fund 796935 1.00 2.688962 3.103889 15.43

SL Managed Fund 02 - life - balanced managed fund 205974 0.75 7.112470 8.049610 13.18

SL Global Managed Pension Fund11 - individual pension - stock market managed

fund 1976935 1.00 6.986695 8.606173 23.18

Royal London ANL Pension Managed Fund 12 - individual pension - balanced managed fund 348085 1.00 3.259873 3.764796 15.49

Royal London Stakeholder Managed Fund 12 - individual pension - balanced managed fund 260745 1.00 3.180069 3.663854 15.21

RIL Pension Managed Fund 12 - individual pension - balanced managed fund 930312 Series 1 1.05 8.490112 9.756920 14.92

RIL Pension Managed Fund 12 - individual pension - balanced managed fund 161873 Series 2 1.05 8.490112 9.756920 14.92

SL Adventurous Managed Pension Fund 12 - individual pension - balanced managed fund 395527 1.00 1.600163 1.873496 17.08

SL Managed Pension Fund 12 - individual pension - balanced managed fund 2317459 1.00 8.754494 10.025243 14.52

UFI Series 1 - Pension UK Managed Fund 12 - individual pension - balanced managed fund 237997 UFI Policyholders 0.25 8.782557 9.972963 13.55

UFLA Series 2 - Pension Managed Fund 12 - individual pension - balanced managed fund 124937 1.00 9.913215 11.899222 20.03

SL Defensive Managed Pension Fund 13 - individual pension - defensive managed fund 522527 1.00 2.512334 2.728655 8.61

SL UK Ethical Pension Fund 15 - individual pension - UK equity 112668 1.00 1.551308 1.946070 25.45

SL UK Equity Pension Fund 15 - individual pension - UK equity 1120465 1.00 12.371743 15.105757 22.10

SL UK Income Specialist (Invesco Perpetual

Income) Pension Fund15 - individual pension - UK equity 113583 1.70 1.348923 1.700370 26.05

SL UK Mid Cap Pension Fund 15 - individual pension - UK equity 174375 1.00 2.278061 3.160045 38.72

SL European Pension Fund 16 - individual pension - overseas equity 159360 1.00 17.949622 22.475659 25.22

SL Property Pension Fund 17 - individual pension - property 1092805 1.00 6.796902 7.411760 9.05

21

2

Form 57

Long-term insurance business: Analysis of valuation interest rate


Subfund Royal London IB & OB Subfund


Units £000

Net mathematical

reserves

Net valuation

interest rate

Gross valuation

interest rate

Risk adjusted

yield on

matching assets

2 3 4 5

473049 3.90 4.36 4.50

194460 3.90 4.36 4.50

36752 3.90 4.36 4.50

(174639) 3.90 4.36 4.50

120408 3.90 4.36 4.50

72920 4.38 4.58

89 2.50 3.13 3.63

182 3.13 3.63

31395 2.50 3.13 3.63

4521 3.13 3.63

626093 4.38 4.58

13060 3.13 3.63

(26384) 4.38 4.58

223645 4.00 4.14

1717900 4.38 4.58

(70) 3.13 3.63

87393 3.13 3.63

(21512) 4.38 4.58

105771 n/a n/a 11.22

Total 3485033

UK L&GA ex SMA OB NP PHI Form 53 Non-unit reserves

Product group

1

UK L&GA RL and ex RA OB WP Form 51 Assurances (excl

Option and Guarantee)

UK L&GA RL IB WP Form 51 Assurances

UK L&GA RL IB NP Form 51 Assurances

UK L&GA RL, ex CL, ex RA, ex SL, ex UFI, ex UFLA, ex SMA, ex

SPL and ex PLAL OB NP Form 51 Assurances (except PHI and

gross roll up protection (GRB))UK L&GA OB WP Form 52 Unit Reserves (excl ISA and RL Life

UWP single premium (Intermediary))

UK L&GA RLOB WP Form 52 ISA

UK L&GA OB WP Form 52 Non-Unit Reserves (excl PLAL ISA

and ex RLA code 610)

UK L&GA ex PLAL OB WP Form 52 ISA sterling reserves

UK L&GA OB NP Form 53 Non-Unit Reserves (excl

Contingency, PHI and ex RLA code 800)

UK Pens OB NP Form 53 Non-Unit Reserves (excl Pensions

Review, Contingency and ex RLA code 800)

OLAB RL OB NP Form 51 (Caledonian) level and decreasing

term assurance, accelerated critical illness and miscellaneous

Misc

UK Pens RL and ex RA OB WP Form 51 Assurances and

Deferred Annuities (excl Pens Review)

UK Pens ex SL OB WP Form 51 Expense Provision

UK L&GA gross roll up and Pens RL, ex CL, ex PLAL, ex RA, ex

SMA, ex UFI and ex UFLA OB NP Form 51 Assurances

UK Pens OB NP Form 51 Annuities in Payment and RL Misc

Protection Rider

UK Pens OB WP Form 52 Unit Reserves and GAR Reserve

UK Pens OB WP Form 52 Non-Unit Reserves (excl GAR, Pens

Review and ex RLA code 610)

213

Form 57



Subfund Refuge Assurance IB Subfund


Units £000

Net mathematical

reserves

Net valuation

interest rate

Gross valuation

interest rate

Risk adjusted

yield on

matching assets

2 3 4 5

111008 3.90 4.21 4.38

25262 3.90 4.21 4.38

Total 136270

Product group

1

UK L&GA ex RA IB WP Form 51 Assurances

UK L&GA ex RA IB NP Form 51 Assurances

214

Form 57



Subfund United Friendly OB Subfund


Units £000

Net mathematical

reserves

Net valuation

interest rate

Gross valuation

interest rate

Risk adjusted

yield on

matching assets

2 3 4 5

87839 3.60 4.21 4.34

1381450 4.13 4.34

683 n/a n/a 4.34

Total 1469972

Product group

1

UK L&GA ex UFI OB WP Form 51 Assurances

UK Pens ex UFI OB WP Form 51 Assurances

Misc

215

Form 57



Subfund United Friendly IB Subfund


Units £000

Net mathematical

reserves

Net valuation

interest rate

Gross valuation

interest rate

Risk adjusted

yield on

matching assets

2 3 4 5

457092 4.30 4.54 4.74

Total 457092

Product group

1

UK L&GA ex UFI IB WP Form 51 Assurances

216

Form 57



Subfund Scottish Life Fund


Units £000

Net mathematical

reserves

Net valuation

interest rate

Gross valuation

interest rate

Risk adjusted

yield on

matching assets

2 3 4 5

69509 2.60 3.08 3.33

1092902 3.13 3.23

203241 3.13 3.23

496100 3.13 3.59

541 n/a n/a 3.28

Total 1862294

Product group

1

UK L&GA WP Form 51 excluding £0.037m reserve and UK

L&GA WP Form 52

UK Pens WP Form 51 and UK Pens Form 52 excluding deposit

administration

UK Pens NP Form 51 and UK Pens Form 53 other liabilities

UK Pens WP Form 52 deposit administration

Misc

217

Form 57



Subfund PLAL With-Profits Fund


Units £000

Net mathematical

reserves

Net valuation

interest rate

Gross valuation

interest rate

Risk adjusted

yield on

matching assets

2 3 4 5

294888 3.70 4.12 4.40

23026 4.13 4.40

165969 4.13 4.40

Total 483884

Product group

1

UK L&GA OB WP Form 52 Unit Reserves (Excl ISA)

UL L&GA OB WP Form 52 ISA Unit Reserves

UK Pens OB WP Form 52 Unit Reseves

218

Form 57

Long-term insurance business: Analysis of valuation interest rate (Sheet 1)


Subfund Royal Liver Assurance Fund


Units £000

Net mathematical

reserves

Net valuation

interest rate

Gross valuation

interest rate

Risk adjusted

yield on

matching assets

2 3 4 5

67912 3.13 3.13 3.40

145601 3.13 3.13 3.40

90240 3.13 3.13 3.40

20679 3.13 3.13 3.40

7380 3.13 3.13 3.40

3848 3.13 3.13 3.26

2144 3.13 3.13 3.26

11872 3.13 3.40

1541 3.13 3.40

65929 3.75 3.87

280682 3.13 3.40

12839 3.13 3.26

5821 3.13 3.26

343256 3.13 3.40

122810 3.13 3.40

58854 3.75 3.87

388882 3.13 3.40

59027 2.63 2.72

1900 2.63 2.72

Total

UK Pens ex RLA OB NP Form 51 Annuities in Payment

Product group

1

UK L&GA ex RLA IB WP Form 51 Assurances

UK L&GA ex RLA IB NP Form 51 Assurances

UK L&GA ex RLA OB WP Form 51 Assurances

UK L&GA ex RLA OB NP Form 51 Assurances

UK L&GA ex RLA OB WP Form 52 Unit Reserves

UK L&GA ex RLA OB WP Form 52 Non-Unit Reserves

UK L&GA ex RLA OB NP Form 53 Non-Unit Reserves

UK Pens ex RLA OB WP Form 51 Assurances and Deferred

Annuities

UK Pens ex RLA OB NP Form 51 Assurances

OLAB ex RLA OB WP Form 52 Unit Reserves

OLAB ex RLA OB WP Form 52 Non-Unit Reserves

OLAB ex RLA OB NP Form 53 Non-Unit Reserves

UK Pens ex RLA OB WP Form 52 Unit Reserves

UK Pens ex RLA OB WP Form 52 Non-Unit Reserves

UK Pens ex RLA OB NP Form 53 Non-Unit Reserves

OLAB ex RLA IB & OB WP Form 51 Assurances and Deferred

Annuities

OLAB ex RLA IB and OB NP Form 51 Assurances

OLAB ex RLA OB NP Form 51 Annuities in Payment

219

Form 57

Long-term insurance business: Analysis of valuation interest rate (Sheet 2)


Subfund Royal Liver Assurance Fund


Units £000

Net mathematical

reserves

Net valuation

interest rate

Gross valuation

interest rate

Risk adjusted

yield on

matching assets

2 3 4 5

3475 n/a n/a 3.87

Total 1694692

Product group

1

Misc

220

Form 58

Long-term insurance business : Distribution of surplus




Units £000


1 2

Valuation result

Fund carried forward 11 25909987 23978651

Bonus payments in anticipation of a surplus 12 266041 236655

Transfer to non-technical account 13

Transfer to other funds / parts of funds 14

Subtotal (11 to 14) 15 26176027 24215306

Mathematical reserves 21 25857577 23932502

29 318450 282804

Composition of surplus

Balance brought forward 31

Transfer from non-technical account 32

Transfer from other funds / parts of fund 33

Surplus arising since the last valuation 34 318450 282804

Total 39 318450 282804

Distribution of surplus

Bonus paid in anticipation of a surplus 41 266041 236655

Cash bonuses 42

Reversionary bonuses 43 52410 46149

Other bonuses 44

Premium reductions 45

Total allocated to policyholders (41 to 45) 46 318450 282804

Net transfer out of fund / part of fund 47

Total distributed surplus (46+47) 48 318450 282804

Surplus carried forward 49

Total (48+49) 59 318450 282804

Percentage of distributed surplus allocated to policyholders

Current year 61

Current year - 1 62

Current year - 2 63

Current year - 3 64

Surplus including contingency and other reserves held towards

the capital requirements (deficiency) (15-21)

221

Form 58





Units £000


1 2

Valuation result





Subtotal (11 to 14) 15 19527820 17174373


29 129419 117105




Transfer from other funds / parts of fund 33 5472 4872


Total 39 129419 117105



Cash bonuses 42


Other bonuses 44






Total (48+49) 59 129419 117105


Current year 61 100.00 100.00

Current year - 1 62 100.00 100.00

Current year - 2 63 100.00 100.00

Current year - 3 64 100.00 100.00



222

Form 58





Units £000


1 2

Valuation result




Transfer to other funds / parts of funds 14 1860 1451

Subtotal (11 to 14) 15 154353 176389


29 18600 14510






Total 39 18600 14510



Cash bonuses 42


Other bonuses 44



Net transfer out of fund / part of fund 47 1860 1451



Total (48+49) 59 18600 14510


Current year 61 90.00 90.00

Current year - 1 62 90.00 90.00

Current year - 2 63 90.00 90.00

Current year - 3 64 90.00 90.00



223

Form 58





Units £000


1 2

Valuation result





Subtotal (11 to 14) 15 1482630 1510967


29 12909 11193






Total 39 12909 11193



Cash bonuses 42


Other bonuses 44






Total (48+49) 59 12909 11193



Current year - 1 62 90.00 90.00

Current year - 2 63 90.00 90.00

Current year - 3 64 90.00 90.00



224

Form 58





Units £000


1 2

Valuation result





Subtotal (11 to 14) 15 478445 493301


29 23211 23017






Total 39 23211 23017



Cash bonuses 42


Other bonuses 44






Total (48+49) 59 23211 23017



Current year - 1 62 90.00 90.00

Current year - 2 63 90.00 90.00

Current year - 3 64 90.00 90.00



225

Form 58





Units £000


1 2

Valuation result





Subtotal (11 to 14) 15 2125201 2301859


29 98055 88507






Total 39 98055 88507



Cash bonuses 42


Other bonuses 44






Total (48+49) 59 98055 88507


Current year 61 100.00 100.00

Current year - 1 62 100.00 100.00

Current year - 2 63 100.00 100.00

Current year - 3 64 100.00 100.00



226

Form 58





Units £000


1 2

Valuation result





Subtotal (11 to 14) 15 505218 540553


29 21334 20138






Total 39 21334 20138



Cash bonuses 42

Reversionary bonuses 43

Other bonuses 44






Total (48+49) 59 21334 20138


Current year 61 100.00 100.00

Current year - 1 62 100.00 100.00

Current year - 2 63 100.00 100.00

Current year - 3 64 100.00 100.00



227

Form 58





Units £000


1 2

Valuation result





Subtotal (11 to 14) 15 1907833 2022736


29 20395 13206






Total 39 20395 13206



Cash bonuses 42


Other bonuses 44






Total (48+49) 59 20395 13206


Current year 61 100.00 100.00

Current year - 1 62 100.00 100.00

Current year - 2 63 100.00

Current year - 3 64



228

Form 59A

Long-term insurance business : With-profits payouts on maturity (normal retirement)


Original insurer Royal London Mutual Insurance Society

Date of maturity value / open market option 01 March 2014

Category of with-profits policyOriginal term

(years)

Maturity value / open market

optionTerminal bonus MVA

CWP /

UWP

MVA

permitted?Death benefit

1 2 3 4 5 6 7 8

Endowment assurance 10 8163 2459 n/a UWP N 8163

Endowment assurance 15 12530 3372 n/a CWP N 12530



Regular premium pension 5 14096 1546 n/a UWP N 14096


Regular premium pension 15 50788 13306 n/a CWP N 52359


Single premium pension 5 14865 3897 n/a UWP N 14865


Single premium pension 15 19362 6966 n/a CWP N 19960


22

9

Form 59B

Long-term insurance business : With-profits payouts on surrender


Original insurer Royal London Mutual Insurance Society

Date of surrender value 01 March 2014

Category of with-profits policy

Duration at

surrender

(years)

Surrender value Terminal bonus MVACWP /

UWP

MVA


1 2 3 4 5 6 7 8

Endowment assurance 5 1911 168 0 UWP Y 11250




With-profits bond 2 11910 2090 0 UWP Y 12537




Single premium pension 2 10863 674 0 UWP Y 10863




23

0

Form 59A



Original insurer Refuge Assurance



(years)



CWP /

UWP

MVA


1 2 3 4 5 6 7 8

Endowment assurance 10 n/a n/a n/a n/a n/a n/a




Regular premium pension 5 n/a n/a n/a n/a n/a n/a




Single premium pension 5 n/a n/a n/a n/a n/a n/a




23

1

Form 59B



Original insurer Refuge Assurance



Duration at

surrender

(years)


UWP

MVA


1 2 3 4 5 6 7 8





With-profits bond 2 n/a n/a n/a n/a n/a n/a








23

2

Form 59A



Original insurer United Friendly Insurance



(years)



CWP /

UWP

MVA


1 2 3 4 5 6 7 8













23

3

Form 59B



Original insurer United Friendly Insurance



Duration at

surrender

(years)


UWP

MVA


1 2 3 4 5 6 7 8













23

4

Form 59A



Original insurer Scottish Life



(years)



CWP /

UWP

MVA


1 2 3 4 5 6 7 8













23

5

Form 59B



Original insurer Scottish Life



Duration at

surrender

(years)


UWP

MVA


1 2 3 4 5 6 7 8













23

6

Form 59A



Original insurer Phoenix Life Assurance Limited / Abbey National Life



(years)



CWP /

UWP

MVA


1 2 3 4 5 6 7 8













23

7

Form 59B



Original insurer Phoenix Life Assurance Limited / Abbey National Life



Duration at

surrender

(years)


UWP

MVA


1 2 3 4 5 6 7 8













23

8

Form 59A



Original insurer Caledonian Life



(years)



CWP /

UWP

MVA


1 2 3 4 5 6 7 8













23

9

Form 59B



Original insurer Caledonian Life



Duration at

surrender

(years)


UWP

MVA


1 2 3 4 5 6 7 8













24

0

Form 59A



Original insurer Royal Liver Assurance (UK)



(years)



CWP /

UWP

MVA


1 2 3 4 5 6 7 8













24

1

Form 59B



Original insurer Royal Liver Assurance (UK)



Duration at

surrender

(years)


UWP

MVA


1 2 3 4 5 6 7 8








With-profits bond 10 13841 2496 n/a UWP N 13841





24

2

Form 59A



Original insurer Royal Liver Assurance (ROI)



(years)



CWP /

UWP

MVA


1 2 3 4 5 6 7 8













24

3

Form 59B



Original insurer Royal Liver Assurance (ROI)



Duration at

surrender

(years)


UWP

MVA


1 2 3 4 5 6 7 8








With-profits bond 10 15154 3355 n/a UWP N 15154





24

4

Form 60

Long-term insurance capital requirement


Global business


Units £000

LTICR

factor

Gross

reserves /

capital at

risk

Net

reserves /

capital at

risk

Reinsurance

factor

LTICR

Financial

year

LTICR

Previous

year

1 2 3 4 5 6

Insurance death risk capital component

Life protection reinsurance 11 0.0%

Classes I (other), II and IX 12 0.1% 280992 239676 140 148



Classes III, VII and VIII 15 0.3% 17933682 9520768 0.53 28562 30695

Total 16 158828159 33642983 238881 241819

Insurance health risk and life protection reinsurance capital component

Class IV supplementary

classes 1 and 2 and life

protection reinsurance

21 6795 7524

Insurance expense risk capital component

Life protection and permanent

health reinsurance31 0%

Classes I (other), II and IX 32 1% 8168977 7625398 0.93 76254 80895

Classes III, VII and VIII

(investment risk)33 1% 2718888 2712093 1.00 27121 26969


(expenses fixed 5 yrs +)34 1% 2472534 2472534 1.00 24725 21663


(other)35 25% 13206 11598

Class IV (other) 36 1% 926 (19850) 0.85 8 (240)

Class V 37 1%

Class VI 38 1%

Total 39 141314 140885

Insurance market risk capital component

Life protection and permanent

health reinsurance41 0%

Classes I (other), II and IX 42 3% 8168977 7625398 0.93 228762 242684


(investment risk)43 3% 2718888 2712093 1.00 81363 80907


(expenses fixed 5 yrs +)44 0% 2472534 2472534


(other)45 0% 14977573 13119812

Class IV (other) 46 3% 926 (19850) 0.85 24 (719)

Class V 47 0%

Class VI 48 3%

Total 49 28338897 25909987 310148 322872

Long term insurance capital

requirement51 697138 713100

0.50

245

VALUATION REPORT ON THE ROYAL LONDON MUTUAL INSURANCE SOCIETY

246

Structure of the long term business The Royal London Mutual Insurance Society Limited (“RL”) acquired United Assurance Group plc (“UAG”) on 18 April 2000. The long term businesses of the five insurance subsidiaries of UAG, Refuge Assurance plc (“RA”); United Friendly Insurance plc (“UFI”); Refuge Investments Limited (“RIL”); United Friendly Life Assurance Limited (“UFLA”) and Canterbury Life Assurance Company Limited (“CL”) were transferred to RL on 1 January 2001 by way of a scheme of transfer under Section 49 and Schedule 2C of the Insurance Companies Act 1982 (“the UAG Scheme”). RL acquired The Scottish Life Assurance Company (“SL”) by way of a demutualisation of SL. The long term business of SL was transferred to RL on 1 July 2001 by way of a scheme of transfer under Section 49 and Schedule 2C of the Insurance Companies Act 1982 (“the SL Scheme”). RL acquired Phoenix Life Assurance Limited (“PLAL”) together with Self Assurance and Pegasus protection business from Scottish Mutual Assurance Limited (“SMA”) and Scottish Provident Limited (“SPL”) in August 2008. The PLAL long term business was transferred to RL on 29 December 2008 by way of a scheme of transfer under Part VII of the Financial Services and Markets Act 2000 (“the PLAL Scheme”). The long term business acquired from SMA and SPL was similarly transferred to RL on 29 December 2008 by way of a scheme of transfer (“the RL Scheme”). RL acquired Royal Liver Assurance Limited (“RLA”) on 1 July 2011 by way of a scheme of transfer under Section 86 of the Insurance Companies Act 1992 (“the RLA scheme”). RL transferred the long term business of GRE Life Ireland Limited (a wholly owned subsidiary) into the Royal Liver Assurance Fund on 1 July 2012. The transfer of business was effected under an Irish Court scheme (“the GRELI Scheme”) in accordance with Section 13 of the Assurance Companies Act 1909 (Ireland) and the European Communities (Life Assurance) Framework Regulations 1994. These transfers have resulted in the creation of a number of separate categories of business allocated to separate with-profits funds within RL (as defined in IPRU(INS)) as follows:

Royal London IB & OB Subfund From 31 December 2006 this consists of the industrial assurance business of RL and all of the Society’s ordinary branch business with the exception of ordinary branch business allocated to the PLAL With-Profits Fund, the Scottish Life Fund, the Royal Liver Assurance Fund and the United Friendly OB Subfund. The subfund remains open to new ordinary business. PLAL With-Profits Fund This is the PLAL With-Profits Fund established under the PLAL Scheme, mentioned above. This consists of the investment element of the PLAL unitised with-profits business. It is closed to new business, other than new entrants under group schemes and increments to certain policies. Refuge Assurance IB Subfund This consists of the industrial assurance business relating to RA. New business is no longer accepted. Royal Liver Assurance Fund This fund was established under the RLA scheme mentioned above. This consists of the industrial and ordinary branch business sold in the UK and ROI relating to RLA. With the exception of increments to existing contracts, policies created as a result of options exercised under existing contracts and annuities set-up upon maturity of pension contracts, the fund is closed to new business.

Scottish Life Fund This is the Scottish Life Fund established under the SL Scheme, mentioned above. This consists of the SL conventional with-profits business, the investment element of the unitised with-profits business, deposit administration business and a small amount of non-profit business. It also has responsibility for the liabilities in respect of guaranteed annuity options under policies sold by SL, including policies where the basic liability is allocated to the Royal London IB & OB Subfund. It is closed to new business, other than new entrants under group schemes and increments up to the level of premium payable at the date of transfer. United Friendly IB Subfund This consists of the industrial assurance business relating to UFI. New business is no longer accepted. United Friendly OB Subfund This consists of the with-profits ordinary business of UFI. New business is no longer accepted.


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Contract identification Within this document, reference is made to the following categories of policies:

RL Business – contracts originally sold by RL and all new business sold by divisions of the Society from 1 July 2001. RL (bancassurance) – Royal London branded contracts sold after 1 January 2009, a subset of RL business. RL (intermediary) – Scottish Life branded contracts sold after 1 July 2001, a subset of RL Business. Bright Grey – Bright Grey branded contracts, a subset of RL Business. Caledonian – Caledonian branded contracts, a subset of RL Business. Scottish Provident – Scottish Provident branded contracts, a subset of RL Business. Former CL Business - contracts transferred in from CL. Former GRELI Business – contracts transferred in from GRELI. Former PLAL Business – contracts transferred in from PLAL. Former RA Business – contracts transferred in from RA. Former RIL Business - contracts transferred in from RIL. Former RLA Business- contracts transferred in from RLA. Former SL Business - contracts transferred in from SL. Former SMA Business – contracts transferred in from SMA. Former SPL Business - contracts transferred in from SPL. Former UFI Business - contracts transferred in from UFI. Former UFLA Business - contracts transferred in from UFLA.


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Introduction

1. (1)

This investigation relates to 31 December 2013.

1. (2)

The previous investigation related to 31 December 2012.

1. (3)

There were no interim investigations during 2013 within the scope of Rule 9.4, except those required for the realistic balance sheet submission as at 30 June 2013.

Product Range

2.

Royal London IB & OB Subfund

This subfund is open to new with-profits and non-profit business.

Bright Grey Relevant Life Plan – a separate version of the Business Protection Plan was launched in June 2013.

New versions of Pension Portfolio, Individual Stakeholder, Retirement Solutions Group Personal Pension, Retirement Solutions Group Stakeholder and Retirement Solutions Company Pension Plan have been introduced to facilitate different adviser remuneration options.

A new version of the RL Plus Guaranteed Lifetime Plan was introduced in June 2013. This version does not have the guarantee of return of premiums upon death claim.

Other Subfunds

There were no changes to the product range in the PLAL With-Profits Fund, Refuge Assurance IB Subfund, Royal Liver Assurance Fund, Scottish Life Fund, United Friendly IB Subfund and United Friendly OB Subfund during the year. These subfunds are closed to new business except by increment.


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Discretionary charges and benefits

3. (1)

Market value reductions have applied to unitised with-profits benefits during the year in accordance with policy conditions. Details are provided in the following tables:


Product name Date effective Affecting units originally purchased in RL Insurance ISA From 1 January Nil RL Unitised With-Profits Savings Plans From 1 January Nil European With-Profits Bond and With Profits Bond Plus From 1 January 2006 to 2007 From 15 August Nil RL Unitised Whole Life Assurance From 1 January Nil RA Unitised Whole Life Assurance From 1 January Nil RL With-Profits Bond (series 3) From 1 January Nil RA Unitised Personal Pension Series 1 From 1 January Nil RL Unitised Personal Pension Series 2 From 1 January Nil Profitbuilder, Budget Plan (TP1) and Budget Plan (TP2) From 1 January Nil Talisman, Retirement Solutions, Pension Portfolio and Individual ranges

From 1 January Nil

Crest Growth From 1 January Nil PLAL With-Profits Fund

Market value reductions have not been applied during the year on contracts in the PLAL with-profits fund.

Royal Liver Assurance Fund

Product Name Date effective Affecting units originally purchased in UK unitised with profits pension From 1 January 1998 to 2001 From 1 July 1999 UK unitised with profits investment plan From 1 January 2001 to 2006 From 1 July 2001, 2003, 2005, 2006 ROI unitised with profits pension From 1 January 1998 to 2006 ROI unitised with profits investment plan From 1 January 2003 to 2006 From 1 July 2004 to 2006 ROI Caledonian with profits bond From 1 January 2001, 2005 to 2008, 2010 From 1 April 2001, 2005 to 2008 From 1 July 2001, 2006 to 2008

Scottish Life Fund

Product name Date effective Affecting units originally purchased in Profitbuilder, Budget Plan (TP1) and Budget Plan (TP2) From 1 January Nil Talisman Series 1 and 2 From 1 January 2000 Talisman and Retirement Solutions ranges From 1 January Nil Crest Growth From 1 January Nil Crest Secure From 1 January Nil


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3. (2)

There were no changes during the year to the premiums charged on a small number of reviewable contracts administered by Swiss Life on the Society’s behalf.

There were no changes during the year to the premiums charged on a small number of Former RLA reviewable contracts.

Certain contracts sold under the Bright Grey brand contain reviewable premiums. Approximately 24,500 policies were reviewed during 2013. Of these 15,900 had their premium increased by 4.7% or 4.8% and 2,700 has their premium reduced by between 4.0% and 7.2%.

Certain contracts sold under the Self Assurance brand contain reviewable premiums. Approximately 3,100 policies were reviewed during 2013. Of these 1,900 had their premium increased by between 2.1% and 4.4% and 300 had their premium reduced by 3.3%.

3. (3)

The rates of interest added to deposit administration policies are included in paragraph 10. (1) below.

3. (4)

The following changes were made to service charges on unit-linked policies during the year:

Profitbuilder

For policies issued after 11 July 1999 the monthly administration charge increased by 2.9% for policies with an anniversary date on or after 12 July 2013. For policies with an anniversary date prior to 12 July 2013, the rate of increase was 3.5%.

Talisman Group Pension Plan – Series 1 to 6, Talisman CPS – Series 1 to 6:

For policies where a member charge is levied, the charge increased by 3.3% for policies with a renewal date on or after 1 July 2013. For policies with a renewal date prior to 1 July 2013, the rate of increase was 3.9%.

Talisman Executive Pension Plan – 98 Series 1 and 2, Talisman Personal Pension Plan – 98 Series 1 and 2, Talisman Buyout Bond – 98 Series 1, Talisman Freestanding AVC Plan – 98 Series 1 and 2, Talisman Income Drawdown Personal Pension Plan – 98 Series 1:

For policies where a policy charge is levied, the charge increased by 3.3% for policies with an anniversary date on or after 1 July 2013. For policies with a renewal date prior to 1 July 2013, the rate of increase was 3.9%.

Former RA policies

Policy fees on Former RA Unitised With-Profits personal pension contracts were maintained at the current rates in 2013.

Former PLAL policies

Policy fees on Former PLAL unit-linked products were increased by 2.9% on 1 January 2013. Policy fees on N&P products were increased by 1.50% on 1 January 2013.

Former SMA and Scottish Provident policies

Policy fees on Former SMA and Scottish Provident Pegasus unit-linked contracts were increased by 2.9% on 1 January 2013.

3. (5)

There were no changes to benefit charges on unit-linked policies during the year.

3. (6)

There were no changes to notional charges on accumulating with-profits business during the year.


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3. (7)

(a) (i)-(iv) Definition of terms used in pricing of internal linked funds. Accumulation Unit A unit in respect of which income is credited periodically to the capital value of the fund.

Asset Units The number of units in the fund, used to determine the price when creating or cancelling units in internal funds.

NAV The Net Asset Value is the market value of assets in the fund, on the pricing basis chosen, including costs of purchase or sale, tax provisions, accrued income and accrued charges as defined by the policy conditions.

Creation Price The NAV calculated on market Offer Prices including costs of purchase with tax provisions calculated on a consistent basis, divided by the number of Asset Units.

Cancellation Price The NAV calculated on market Bid Prices less costs of sale with tax provisions calculated on a consistent basis, divided by the number of Asset Units.

Bare Price Creation Price or Cancellation Price, depending on which pricing basis is being used (see below for details).

Offer Price Price quoted to policyholders which is used when allocating units from premiums and other payments.

Bid Price Price quoted to policyholders to value their unit holdings and to cancel units to pay for charges as allowed in the policy conditions.

Initial Charge The percentage used to calculate the quoted Offer Price from the Bare Price.

Bid-Offer Spread The difference between Bid and Offer Prices.

CIV Collective Investment Vehicle – generally a Unit Trust or an Open Ended Investment Company (OEIC).

ROI Republic of Ireland

Pricing basis The pricing basis depends on whether the unit-linked fund is expanding or contracting. The pricing basis is reviewed regularly. Generally, funds are considered to be expanding unless they have been in decline for at least three consecutive months prior to the review. Special Bid and Offer Prices may be used for large transactions, or series of transactions, in order to maintain fairness between policyholders. Method used for allocation and de-allocation of units RL Business stakeholder pension plan Whenever units are created the fund is increased by an amount equal to the number of units created multiplied by the price. Whenever units are cancelled the fund is decreased by an amount equal to the number of units cancelled multiplied by the price. The fund operates with a single price for the purchase and sale of units equal to the Creation Price.

Creations and cancellations are effected at the same time as units are priced. The price is rounded to the nearest multiple of 0.01 pence. Units are allocated to and cancelled from policies at this price.

Unit prices are calculated daily, with the holdings of the investments of the unit-linked funds being those applicable at 4.30 pm on the working day before the pricing. CIV holdings are valued at the Creation Prices. The price for CIVs is that applicable at 12 noon on the day of the pricing, this being the price applicable to transactions effected on the morning of that day.

To provide the liquidity needed to deal with daily fluctuation in net cash flows the Society operates a box system whereby the number of units in issue exceeds the matching unit liability by a specified margin. Investment profits and losses on the box accrue to the Society.

All units are accumulation units.

Riley Bond Whenever units are created the fund is increased by an amount equal to the number of units created multiplied by the Creation Price. Creation is effected at the same time as units are priced.

Whenever existing units in a fund are cancelled, the fund is decreased by an amount equal to the number of units cancelled multiplied by the Cancellation Price. Cancellation is effected at the same time as units are priced.


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The actual price will be set at a level between the Creation and Cancellation Prices depending upon the prevailing cash flows. Units are allocated to and cancelled from policies at this price.


Former PLAL, RL (bancassurance), Former SMA and Scottish Provident Funds

Whenever units are created the fund is increased by an amount equal to the number of units created multiplied by the Creation Price. Whenever units are cancelled the fund is decreased by an amount equal to the number of units cancelled multiplied by the Cancellation Price.

Units are allocated to policies at the quoted Offer Price which, for a particular day, is the Bare Price divided by (1 minus the Initial Charge) and rounded up by no more than 0.1p. Units are cancelled from policies at the quoted Bid Price which equals the quoted Offer Price adjusted for the Bid-Offer Spread and rounded to the lower 0.1p.

Former RLA Funds

Whenever units are created the fund is increased by an amount equal to the number of units created multiplied by the Creation Price. Creation is effected at the same time as units are priced. Whenever units are cancelled the fund is decreased by an amount equal to the number of units cancelled multiplied by the Cancellation Price. Cancellation is effected at the same time as units are priced.

Where the fund is priced on an offer basis, the Offer Price is calculated by using the NAV calculated on market Offer Prices (including purchase costs with tax provisions calculated on a consistent basis), divided by the number of Asset Units. This is then multiplied by 1.01 and divided by 0.95. The answer is rounded down by no more than 0.1p. The Bid Price calculated on an offer pricing basis is 95% of the Offer Price rounded to one decimal place.

Where the fund is priced on a bid pricing basis the Bid Price is calculated by using the NAV calculated on market Bid Prices (less costs of sale with tax provisions calculated on a consistent basis), divided by the number of Asset Units. This is then multiplied by 0.99 and rounded up by no more than 0.1p. The Offer Price on a bid pricing basis is the Bid Price divided by 95% rounded to one decimal place.

All other funds Whenever units are created the fund is increased by an amount equal to the number of units created multiplied by the Creation Price. Creation is effected at the same time as units are priced.

Whenever existing units in a fund are cancelled, the fund is decreased by an amount equal to the number of units cancelled multiplied by the Cancellation Price. Cancellation is effected at the same time as units are priced.

Units are allocated to policies at the Offer Price. The maximum Offer Price of a unit is calculated as the maximum value of the portion of the fund attributable to such units divided by the number of units then in issue plus, for certain funds, an initial charge, the result being rounded. The actual Offer Price may be below this level.

Units are cancelled from policies at the Bid Price. The minimum Bid Price of a unit is calculated as the minimum value of the portion of the fund attributed to such units divided by the number of units then in issue, the result being rounded. The actual Bid Price may be above this level.

For Retirement Solutions, Individual Pension Plans and Pension Portfolio units are allocated to and cancelled from a policy at a single price, which is the Bid Price of the fund. For all other products, the price at which units are allocated to a policy is the Offer Price and the price at which units are cancelled is the Bid Price.


Basis of Valuation of Assets

At the valuation date, the ruling Bid Price was equal to the minimum Bid Price for the following funds:


253

RL Business All funds Former RA and Former RIL Business All funds Former CL Business Pension Exempt Managed

Life Managed RL (intermediary) and Former SL Business

All life funds Pension Managed Fund Pension Defensive Managed Fund Pension UK Equity Fund Pension UK Mid Cap Fund Pension UK Ethical Pension Pacific Fund Pension European Fund Pension Fixed Interest Fund Pension Index Linked Fund Pension Short (5yr) Gilt Fund Pension Medium (10yr) Gilt Fund Pension Far East (Ex Japan) Fund

Former UFI and Former UFLA Business All funds Former GRELI business All funds Former PLAL Business Royal London ANL Managed

Royal London ANL Deposit Royal London ANL International Royal London ANL UK Equity Royal London ANL Pension Managed Fund Royal London ANL Pension Deposit Fund Royal London ANL UK Equity Pension Royal London ANL Stakeholder Managed Fund Royal London ANL Cautious Growth Royal London ANL Higher Growth Royal London ANL Steady Growth Royal London ANL Merrill Lynch Royal London ANL Newton Managed Royal London ANL Stakeholder UK Equity Fund

Former SMA and Scottish Provident Business Pegasus Aggressive Pegasus Balanced Pegasus Cautious

Former RLA Business All funds At the valuation date the ruling Offer Price was equal to the maximum Offer Price for the following funds:

Former CL Business Pension Fixed Interest Pension Managed Series 2 Life Fixed Interest Life Gilt Life Managed Series 2

RL (intermediary) and Former SL Business All pension funds other than those listed above


254

Former PLAL Business Royal London ANL Pension International Royal London ANL Stakeholder UK Equity Tracker Royal London ANL Stakeholder International Royal London ANL Stakeholder Annuity Protector Royal London ANL Stakeholder Deposit Fund Royal London ANL Stakeholder Managed Fund 2 Royal London ANL Stakeholder International Fund 2 Royal London ANL Stakeholder Annuity Protector Fund 2 Royal London ANL Stakeholder Deposit Fund 2

Former SMA and Scottish Provident Business Pegasus Growth Pegasus Opportunity Pegasus Safety

Riley bond All funds The values of Stock Exchange securities are based on quoted prices. The values of investments in real or heritable property are based on valuations prepared and certified by independent valuers adjusted to take into account the variations in prices between valuations. The values of other assets are determined by the Society.

Former PLAL, RL (bancassurance), Former SMA and Scottish Provident business

The prices used for transactions on a particular day are determined based on the asset position of the fund at 12 noon on the previous working day (except Broker Managed Funds which are priced at close of business). All funds use Forward Pricing, the timing of the transaction relative to the time at which the policyholder requested the trade varies by product and is defined in the policy conditions.

All other funds

The holdings of the investments of the unit-linked funds are those applicable at 12 noon on the day of the pricing. For direct investments, the price is also that applicable at 12 noon on the day of the pricing. At each valuation each internal fund is charged with a management charge calculated as a percentage of the current maximum value of the fund multiplied by the number of days since the previous valuation.

Unit prices are calculated as follows:

RL Life Business Weekly, usually Tuesday RL Pension Business Weekly, usually Thursday Former CL Business Monthly, first working day of each month Former RA and Former RIL Business Weekly, usually Wednesday Former RLA UK Business Weekly, usually Wednesday Former RLA ROI Business Weekly, usually Tuesday Former GRELI business Weekly, usually Friday All other business Daily

To provide the liquidity needed to deal with daily fluctuation in net cash flows the Society operates a box system on funds priced daily whereby the number of units in creation exceeds the matching unit liability by a specified margin. A box system is also adopted for the weekly RL and Former RLA ROI Business Funds. Investment profits and losses on the box accrue to the Society.

(b)

There are no circumstances in which different pricing bases apply to different policies within the same fund at any one time.

(c) Former RLA Business The prices used to value funds invested in CIVs are the previous day’s closing prices.


255

All other business For CIVs provided by Royal London Unit Trust Managers (“RLUTM”), the price is that applicable to transactions effected on the morning of the day of the unit-linked pricing and for external CIVs the price is that applicable to transactions effected on the morning of the day before the unit-linked pricing. 3. (8)

Riley Bond

No deduction is made for deferred tax in respect of realised or unrealised chargeable gains or losses in the internal linked funds. Instead each Riley Bond has an associated tax account reflecting the accrued tax liability on the investments backing the fund, the value of which is deducted from any claim payment. The internal linked funds into which Riley Bonds invest include a provision for withholding tax on overseas investment income at the appropriate rate. All other life funds

Each individual linked fund is treated as a separate entity for the purpose of tax. Fixed interest income and interest are taxed at the standard rate and this is reflected in the unit price. The calculation of the unit price includes, as appropriate, a charge for realised and unrealised capital gains net of indexation relief or a credit for realised or unrealised losses where there is a reasonable prospect of recognising those losses in the future. Unrealised gains and losses are carried forward to the next accounting period and allowance will be made in the unit price where there is a realistic likelihood of the tax being paid or relieved as appropriate in the short to medium term.

The rate of tax charge on gains is the policyholder tax rate discounted to reflect timing until the tax is paid, including allowance for spreading of gains under the deemed disposal rules where the underlying holding is a CIV.

Where there is little prospect of any losses being relieved in the short to medium term, the rate of CGT applying to realised and unrealised losses is currently set to zero and the total amount of the losses is being retained in a separate memorandum account.

That part of the allowance which represents the tax payable if the fund is assessed as a stand-alone entity for tax purposes is settled for cash annually, with the exception of unrealised gains/losses in the RA Special Situations Fund and the property funds where cash settlement is only made for realised gains.

Where benefits under Former CL Endowment Investment and Endowment Investment Escalator Plans become payable, the linked Scottish Widows Global Growth OEIC (Class A) shares are deemed sold and the proceeds adjusted for an amount equal to the tax due, at the current rate on the indexed gain as if the policyholder had directly purchased the shares. The rate used during the report period was 20%.

For some of the equity and property based life unit linked funds substantial capital losses have arisen in prior years and these losses are sufficient to absorb some subsequent capital gains. Therefore the tax rates applied in computing the capital gains tax liabilities have been reduced to reflect these losses with any remaining surplus being carried forward to be utilised in future years.

For the other equity and property based life unit linked funds the charge for unrealised capital gains tax has been determined at the rates specified below which have been discounted to reflect the period of time over which the liabilities will crystallise.

Fund Start End Rate* CL Life Managed Fund 1 January 2013 31 December 2013 19% CL Life Managed Fund (Series 2)

RA Equity Fund RA International Fund RA Managed Fund Royal London Equity Fund SL American Fund SL Pacific Fund UFLA American Fund (Series 2) UFLA Equity Fund (Series 2) UFLA Equity Income Fund (Series 2) UFLA Far East Fund (Series 2) UFLA Managed Fund (Series 2)


256

Fund Start End Rate* Pegasus Safety Fund Royal London European Fund 1 January 2013 21 March 2013 10% Royal London International Fund 22 March 2013 31 December 2013 19% UFLA European Fund (Series 2)

UFLA World Fund (Series 2) Pegasus Growth Fund

Royal London Mixed Fund 1 January 2013 6 February 2013 0% 7 February 2013 23 May 2013 10% 24 May 2013 31 December 2013 19% SL UK Equity Fund 1 January 2013 6 February 2013 10% 7 February 2013 31 December 2013 19% SL Worldwide Fund 1 January 2013 21 March 2013 0% 22 March 2013 23 May 2013 10% 24 May 2013 31 December 2013 19% SL European Fund 1 January 2013 23 August 2013 0% 24 August 2013 25 October 2013 5% 26 October 2013 31 December 2013 0% UFI Equity Fund 1 January 2013 3 May 2013 10%

4 May 2013 31 December 2013 19%

Pegasus Opportunity Fund 1 January 2013 3 May 2013 0% 4 May 2013 23 May 2013 5% 24 May 2013 23 August 2013 10% 24 August 2013 21 November 2013 15% 22 November 2013 17 December 2013 19% 18 December 2013 31 December 2013 15% Royal London ANL Managed 1 January 2013 3 May 2013 0% 4 May 2013 23 May 2013 10% 24 May 2013 21 November 2013 15% 22 November 2013 17 December 2013 19% 18 December 2013 31 December 2013 15% Royal London ANL UK Equity 1 January 2013 21 March 2013 0% 22 March 2013 23 May 2013 10% 24 May 2013 21 November 2013 5% 22 November 2013 31 December 2013 10% Royal London ANL International 1 January 2013 3 May 2013 0% 4 May 2013 23 May 2013 10% 24 May 2013 21 November 2013 15% 22 November 2013 31 December 2013 19% Royal London ANL Cautious Growth 1 January 2013 21 November 2013 0% 22 November 2013 31 December 2013 5% Royal London ANL Steady Growth 1 January 2013 3 May 2013 0% Royal London ANL Higher Growth 4 May 2013 21 November 2013 5% 22 November 2013 31 December 2013 10%

*For all realised/unrealised gains and losses.

RA Special Situations Fund 20% for unrealised/realised gains from 1 January 2013 to 31 December 2013 18% for realised losses from 1 January 2013 to 31 December 2013 15% for unrealised losses from 1 January 2013 to 31 December 2013

Former RLA business 20% for unrealised/realised gains/losses from 1 January 2013 to 31 December 2013


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3. (9)

Tax provisions for internal linked UK life funds are established for deferred tax in respect of realised and unrealised chargeable gains and losses as follows: Riley Bond

No provision is made for deferred tax in respect of realised or unrealised chargeable gains or losses in the internal linked funds. Instead each Riley Bond has an associated tax account reflecting the accrued tax liability on the investments backing the fund, the value of which is deducted from any claim payment. The internal linked funds into which Riley Bonds invest include a provision for withholding tax on overseas investment income at the appropriate rate. All other life funds

Each internal fund is treated as an independent entity for the purposes of assessing capital gains tax. A rate of tax is levied on the gain net of any indexation relief and capital losses, as appropriate.

The maximum rate of tax for realised capital gains is the policyholder rate of tax for the period in question. Where appropriate, this may be reduced to reflect the period between the realisation of the gain and the date when the tax is actually due to be paid.

The maximum rate of tax for unrealised capital gains is the rate for realised capital gains. This is normally discounted to reflect the period of time over which the liabilities will crystallise.

The rates of tax charge and credit for realised and unrealised gains and losses applying during the reporting period are shown in sub-paragraph 3. (8). Allowance for realised and unrealised losses is made in the unit price where there is a realistic likelihood of the loss being relieved. If there is little prospect of the losses being relieved in the short to medium term, no credit is given in the unit price but the value of the losses is retained in a loss memorandum account to be offset against future gains. 3. (10)

RL Stakeholder Pension Plan

CIVs managed by the Society's wholly-owned subsidiary company RLUTM are held by the Royal London Stakeholder Pension Managed Fund. Purchase and sale of these CIVs is at the NAV per Share but may be subject to a dilution levy which is applied with the manager’s discretion following principles set out in RLAM’s Dilution Levy and Adjustment Policy. The NAV per Share is used in the calculation of the daily price of the internal linked fund passing the full benefit on to the policyholder. The whole of the regular management charge made on each CIV together with audit, trustee, regulatory and custody fees incurred by each CIV are refunded to the fund to ensure that no additional charges are incurred by the policyholders. Other than RL Stakeholder Pension Plan

CIVs managed by the Society's wholly-owned subsidiary company RLUTM are held by some of the internal linked funds. Purchase and sale of these CIVs is at the NAV per Share but may be subject to a dilution levy which is applied with the manager’s discretion following principles set out in RLAM’s Dilution Levy and Adjustment Policy. The NAV per Share is used in the calculation of the daily price of the internal linked fund passing the full benefit on to the policyholder. Some internal funds hold, as investments, units in CIVs operated by external fund managers. Units may be purchased from these fund managers at a discount from the full purchase price, the benefit of which is passed on to the policyholder. This discount varies according to the external fund manager in question. In respect of the purchase of shares of the Scottish Widows Global Growth OEIC to which the benefits of the Former CL Endowment Investment and Endowment Investment Escalator Plans are linked, the Society receives a discount on the initial charge of such shares. This discount is not passed on to policyholders, but is used to defray the Society’s costs. The management service charge is rebated as follows: RL Business

The whole of the regular management charge made on CIVs managed by RLUTM is rebated to the relevant internal linked funds to ensure that policyholders pay only the same management charges as if the underlying assets had been held directly by the internal


258

linked fund. Former CL, Former GRELI, Former RA, Former RIL, Former UFI and Former UFLA Business The whole of the regular management charge made on CIVs managed by RLUTM is rebated to the relevant internal linked funds to ensure that policyholders pay only the same management charges as if the underlying assets had been held directly by the internal linked fund. RL (intermediary), Former SL Business, Former RLA Business, Former PLAL, RL (bancassurance), Former SMA and Scottish Provident Business The whole of the regular management charge made on CIVs managed by RLUTM is rebated to the relevant internal linked funds to ensure that policyholders pay only the same management charges as if the underlying assets had been held directly by the internal linked fund. Annual fund management charges for external CIVs are accrued and collected by the fund managers on holdings in respect of the internal linked funds. Rebates of part of the management charges are payable on some of these funds, the benefit of these rebates being passed on to the policyholder. The rebates are as follows: RL (intermediary) and Former SL Business

Name Annual

Percentage Rate

SL/Towry Defensive Portfolio 1.300% SL/Towry Growth Portfolio 1.300% SL/Towry Mixed Portfolio 1.300% SL/Neptune Global Alpha 1.000% SL/Newton Balanced 1.000% SL/Newton Managed 1.000% SL/Newton Balanced 'A' 1.000% SL/Newton Managed 'A' 1.000% SL/GLG Balanced Managed 1.000% SL/GLG Stockmarket Managed 1.000% SL/Sarasin Agrisar 0.880% SL/Neptune Global Equity 0.875% SL/Investec Cautious Managed 0.875% SL/BlackRock Gold & General 0.875% SL Europe Specialist (Neptune European Opportunities) 0.875% SL/Investec UK Blue Chip 0.850% SL/Investec UK Blue Chip 'A' 0.850% SL/Neptune US Opportunities 0.800% SL/Neptune Balanced 0.800% SL/Invesco Perpetual UK Growth 'A' 0.800% SL Global Managed Equity Specialist (Invesco Perpetual Global Equity) 0.800% SL UK Equity Specialist (Invesco Perpetual UK Growth) 0.800% SL/M&G Global Dividend 0.750% SL/Invesco Perpetual High Income 0.750% SL/Investec UK Special Situations 0.750% SL/M&G Global Leaders 0.750% SL/Threadneedle Latin America 0.750% SL/Newton Global Higher Income 0.750% SL/Newton Real Return 0.750% SL/M&G Recovery 0.750% SL/M&G Global Basics 0.750% SL/Legg Mason US Smaller Companies 0.750% SL/Investec Emerging Markets Local Currency Debt 0.750%


259

Name Annual

Percentage Rate

SL/Investec Global Energy 0.750% SL/Henderson China Opportunities 0.750% SL/JPMorgan New Europe 0.750% SL Emerging Markets Core Plus (JPM Emerging Markets) 0.750% SL/JPMorgan Natural Resources 0.750% SL Asia Pacific Core Plus (Invesco Perpetual Asian) 0.750% SL UK Income Core Plus (Artemis Income) 0.750% SL Japan Specialist (Invesco Perpetual Japan) 0.750% SL UK Equity Specialist (Artemis UK Special Situations) 0.750% SL US Specialist (JPMorgan US) 0.750% SL UK Income Specialist (Invesco Perpetual Income) 0.750% SL UK Mid Cap Specialist (Franklin UK Midcap) 0.750% SL/Jupiter European Special Situations 0.650% SL/Schroder Income Maximiser 0.650% SL/Jupiter Ecology 0.650% SL/Jupiter Financial Opportunities 0.650% SL/Jupiter India 0.650% SL/Jupiter Merlin Balanced Portfolio 0.650% SL/Jupiter Merlin Growth Portfolio 0.650% SL/Jupiter Merlin Income Portfolio 0.650% SL/Jupiter Merlin Worldwide Portfolio 0.650% SL/Schroder Global Property Securities 0.650% SL/Schroder US Mid Cap 0.650% SL Global Managed Equity Specialist (Investec Global Free Enterprise) 0.650% SL UK Small Cap Specialist (Investec UK Smaller Companies) 0.650% SL Japan Core Plus (Schroder Tokyo) 0.650% SL UK Equity Specialist (Schroder UK Alpha Plus) 0.650% SL/Threadneedle Absolute Return Bond 0.625% SL/M&G Optimal Income 0.625% SL/M&G High Yield Corporate Bond 0.625% SL/JPMorgan Cautious Managed 0.625% SL/Invesco Perpetual Distribution 0.575% SL/Invesco Perpetual Monthly Income Plus 0.550% SL/UBS Global Allocation 'A' 0.550% SL/UBS Global Allocation 0.550% SL/Fidelity South East Asia 0.500% SL/M&G Strategic Corporate Bond 0.500% SL/M&G Corporate Bond 0.500% SL/Fidelity Emerging Europe Middle East and Africa 0.500% SL/Fidelity Strategic Bond 0.500% SL/Fidelity Moneybuilder Income 0.500% SL Europe Core Plus (Fidelity European Blended) 0.500% SL GlbBlendCorePls (Rathbone Glb Alpha ex Fid Int) 0.500% SL/Fidelity UK Growth 0.500% SL/Fidelity Special Situations Blended 0.500% SL US Core Plus (Fidelity American) 0.500% SL UK Equity Core Plus (Schroder UK Equity) 0.500% SL/Invesco Perpetual Corporate Bond 0.400% SL/Invesco Perpetual Global Bond 0.400%


260

Name Annual

Percentage Rate

SL/UBS Global Blend (50:50) 0.350% SL/UBS Global Blended (50:50) 'A' 0.350% SL/Cazenove Multi-Manager Diversity Balanced 0.100% SL/Cazenove Multi-Manager Diversity Tactical 0.100% SL/Cazenove Multi-Manager Global (ex UK) 0.100% SL/Cazenove Multi-Manager UK Growth 0.100% SL/Cazenove Multi-Manager Diversity 0.100% SL/HSBC FTSE 100 Index 0.100% SL/BlackRock UK Equity 'A' 0.100% SL/BlackRock UK Equity 0.100% SL/BlackRock Aquila Global Blend 0.004%

Former RLA Business

Name Annual

Percentage Rate

Global Equity Life Pooled 0.750% Global Equity Pension Pooled 0.750% High Yield Life Pooled 0.750% High Yield Pension Pooled 0.750%

Former PLAL, RL (bancassurance), Former SMA and Scottish Provident business

Name Annual

Percentage Rate

Pegasus Growth Fund 1.000% Royal London ANL Newton Managed 1.000% Royal London ANL Merrill Lynch 0.750% Royal London ANL Cautious Growth 0.400% Royal London ANL Higher Growth 0.400% Royal London ANL Steady Growth 0.400%


261

Valuation basis (other than special reserves)

4. (1)

The mathematical reserves have been calculated as follows:

(i) for non-linked business, other than accumulating with-profits business, mathematical reserves have been calculated using the gross premium method as the total of the present value of benefits (including existing annual bonus) plus the value of future expenses less the present value of future office premiums. Where appropriate, allowance has been made for payments in accordance with reinsurance treaties. There are a few exceptions which are detailed below.

With the exception of Former RLA business, mathematical reserves for Industrial Branch whole life assurance contracts with a contractual premium cessation date in the future are calculated assuming that the benefits will be paid at the premium cessation date.

Mathematical reserves on most with-profits contracts incorporate an allowance for a persistency decrement. Surrender values have been assumed to be equal to policy reserves for this purpose.

Negative mathematical reserves are permitted for Bright Grey protection products, Former PLAL, RL and RL (bancassurance) protection products, Former SMA, Former SPL and Scottish Provident branded Self Assurance products, Caledonian business and Former RLA protection products. With the exception of Former RLA business, all other mathematical reserves were subject to a minimum of the surrender value of guaranteed benefits.

Allowance is made when calculating expense reserves in the Royal London IB & OB Subfund for some contracts which are valued in the Royal Liver Assurance and Scottish Life funds. Allowance is made when calculating reserves in the Royal Liver Assurance and Scottish Life funds for any future monies payable to the Royal London IB & OB Subfund.

(ii) for accumulating with-profits business, in accordance with INSPRU 1.2.70R to INSPRU 1.2.72G, mathematical reserves have been calculated as the greater of a bonus reserve valuation and the lower of the surrender value under the policy having regard to the representations of the Society and that amount disregarding all discretionary adjustments. For the accumulating with-profits elements of Crest Growth Final Salary business, the reserve has been taken as the value of the units deemed allocated to policies in force at the valuation date, such amount being greater than the reserve required under INSPRU 1.2.70R to INSPRU 1.2.72G.

For Unitised Personal Pension Plan (Series 1 and 2), Budgetplan (TP1 and TP2), Profitbuilder, Crest Growth, Talisman Executive Pension Plan - 98 Series 1 and 2, Talisman Personal Pension Plan - 98 Series 1 and 2, Talisman Buyout Bond – 98 Series 1, Talisman Group Pension Plan - Series 1 to 6, Talisman CPS – Series 1 to 6, Talisman Freestanding AVC Pension Plan – 98 Series 1 and 2, Retirement Solutions - Group Personal Pensions, Retirement Solutions – Company Pension Scheme, Individual Executive Pension Plan, Pension Portfolio, Individual Section 32 Buy Out Plan, Former PLAL and Former RLA products with unitised with-profits benefits, a sterling reserve has been assessed in a similar manner as described below for linked business.

(iii) for linked business, mathematical reserves have been calculated as a combination of a unit reserve and a sterling reserve, where the sterling reserve is determined on a cash flow approach by calculating the projected outgo and the projected amount available to meet the outgo. Each year’s projected net cash flow was discounted to the valuation date. A series of summations was then carried out to determine the sterling reserve ensuring that, if the valuation assumptions were fulfilled, no valuation strains would emerge in future years. For premium paying policies, the sterling reserve for an individual policy was determined as the greater of: • sterling reserve assuming the policy continues as premium paying, and • sterling reserve assuming the policy becomes paid up at the valuation date. Policy fees payable by customers were assumed to inflate where there is an established practice of increasing such fees. The valuation assumed no changes from current levels of risk benefit charges for these policies. No sterling reserves were set up for pension policies in the Scottish Life Fund as the liability is in respect of guaranteed annuity options on unit-linked liabilities which are included in the Royal London IB & OB Subfund.

With the exception of material lines of protection business issued at an extra premium, policies on under-average lives, issued at an extra premium or with a contingent debt upon the sum assured, have been valued at the true ages as if the policies in all cases had been issued for the full sum assured at ordinary rates. An additional reserve of the current year's extra premiums has been included.

Certain assurances accepted at an increased rate of premium are valued at corresponding increased ages. For material lines of protection business issued at an extra premium, the extra premiums have been included within the gross premium cashflows valued. The extra risks associated with policies issued at an extra premium are allowed for either explicitly or implicitly in the demographic assumptions used.


262

In accordance with INSPRU 1.2.9R, no allowance has been made for final bonuses within the valuation of with-profits policies. In addition, as a realistic basis life firm, no allowance has been made for future annual bonuses except for Former UFI business in the United Friendly OB Subfund. UFI guaranteed a minimum annual bonus on its with-profits policies issued before 1987 at the rate of 1.50% for whole life assurances and 1.00% for endowment assurances. This minimum bonus has been valued as a liability throughout the remaining duration of the policies.

No additional reserves are held for investment performance guarantees.

Additional reserving information by origin of business:

RL Business

(i) The value of office premiums has been reduced to reflect a concession whereby the Society gives credit for LAPR not received from the Inland Revenue in respect of a small number of cases issued on or before 13 March 1984.

(ii) Most whole life assurances under which premiums are payable throughout life have been valued as though premium payments cease at the policy anniversary preceding age 85 for ordinary branch business and at an advanced age for industrial branch business, in view of a concession currently in operation.

(iii) For waiver of premium business other than RL (bancassurance), Bright Grey and Self Assurance (both direct business and reinsurance ceded), the reserve is the annual office premium. For RL (bancassurance), Bright Grey and Self Assurance a standard gross premium valuation method is used with a minimum reserve of zero. In all cases an additional reserve in respect of claims currently being paid is held.

(iv) In the valuation of some group deferred annuities, the reserve has been taken as the sum of:

(a) the present value of pensions purchased up to and including 5 April 2013, with allowance for future expenses of 2.25% of the pension, and

(b) the premiums paid between 6 April 2013 and 31 December 2013 (which are not allocated to purchase pensions until 5 April 2014).

(v) The reserve for group life policies, for most of which the premiums are due monthly on the 6th

(vi) For permanent health insurance policies, additional reserves have been included in respect of claims currently being paid.

of each month, has been taken as the total of premiums paid between 6 July 2013 and 6 December 2013, both dates inclusive.

(vii) Individual Executive Pension Plan and Pension Portfolio Lump Sum Benefits - the reserve is the proportion of the year’s premium required to meet the unexpired risk.

Former CL Business

(i) The mathematical reserves include explicit provisions in respect of the cost of undertakings given by the company to certain policyholders whose applications were under consideration at the time of the removal of Life Assurance Premium Relief.

Former PLAL Business

(i) The net unit liability shown on Form 53 includes an additional unit reserve to provide for the cost of loyalty bonuses available on certain products. The following table shows the rate of loyalty bonus applying to each product line.

Former PLAL Product Loyalty Bonus Low Cost Endowment, Low Start Endowment, Personal Pension Single, Top-up Pension Single

0.75% annually from year 10 onwards

Personal Pension Regular, Top-up Pension Regular 0.35% annually from year 10 onwards N&P Low Cost Endowment 0.75% annually from year 1 or 6 depending on series N&P Low Start Endowment 0.75% annually from year 1 or 11 depending on series N&P Flexible Lifetime, N&P Regular Savings Plan 0.75% annually from year 1 N&P Personal Pension Regular, N&P Top-up Pension Regular 0.75% annually from year 6 or 11 depending on series

Former RLA business (i) For Caledonian deferred annuity contracts the value of the benefits has been taken to be the larger of the present value of the

deferred annuity and the present value of the guaranteed cash option (where available).


263

Former SL Business

Individual Contracts

(i) In cases where free cover had been granted at the outset of the contract a reserve equal to 6 months’ chargeable premiums in respect of the sum at risk was held.

(ii) The reserves in the following classes were calculated as follows:

(1) Sovereign Plan - the reserve for the temporary assurance benefit is calculated as the proportion of the year’s premium required to meet the unexpired risk.

(2) Talisman Executive Pension Plan - Series 1 and 2 Lump Sum and Widow’s Death in Service Benefits, Talisman Executive Pension Plan - 98 Series 1 and 2 Lump Sum Benefits, Talisman Freestanding AVC Pension Plan - 98 Series 1 and 2 Lump Sum Benefits and Talisman Personal Pension Plan - 98 Series 1 and 2 Lump Sum Benefits - the reserve is the proportion of the year’s premium required to meet the unexpired risk.

(3) Capital Investment Bond & Flexible Life Plan – an additional mortality reserve equal to 1/6 of qx

(4) Waiver of Premium Benefit – the reserve is the annual office premium plus an additional reserve in respect of claims currently being paid.

times sum at risk is held.

(5) Profitbuilder Plan – for contracts including Living Cover (Critical Illness) Benefit, the reserve for that benefit is calculated as one full year’s risk premium.

(6) Mortgage Interest Benefit – the reserve is the proportion of the year’s premium required to meet the unexpired risk.

Group Contracts

(i) For Group Deferred Annuities (including the Section 591 Buy Out Bond), Group Deferred Cash and Group Endowments the liability was obtained by taking the present value of the benefits purchased by the actual premiums paid to the date of valuation. Adjustments were made in respect of premiums paid to the date of valuation which had not been used to purchase benefits as at the valuation date and in respect of exits which had not been fully processed. Similar adjustments were made under Crest Growth Plan and Crest Secure Plan. The method of valuation used in dealing with these adjustments was such as to reproduce approximately the correct reserve according to the basis described elsewhere in these Returns.

(ii) The reserves for the following classes were calculated as follows:

(1) Group Life Assurances and Death in Service Widow’s Benefit - the proportion of the year’s premium required to meet the unexpired risk, including allowances for possible late notification of claims and any rate guarantees.

(2) Group Permanent Health Policies - the proportion of the year’s premium required to meet the unexpired risk, including allowances for possible late notification of claims and any rate guarantees plus an additional reserve in respect of claims currently being paid.

Former UFI and UFLA Business

(i) Whole life policies with recurring endowments issued before 6 April 1979 in the United Friendly IB Subfund are valued on the assumption that the policyholder will take whatever endowment sum is due on the quinquennial policy anniversary next following the valuation date.


264

4. (2)

The following table shows the valuation interest rates used to calculate the liabilities at this valuation together with the interest rates assumed in the previous investigation:

PLAL With-Profits Fund

Scottish Life Fund Royal Liver Assurance Fund

All other subfunds

2013 2012 2013 2012 2013 2012 2013 2012 UK Life assurance:

Conventional and accumulating with-profits business

3.70% 3.90% 2.60% 2.50% 3.125% 3.00% Note 1 Note 1

Conventional non-profit business n/a n/a 2.60% 2.50% 3.125% 3.00% Note 1 Note 1

Sterling reserve discount rate - life business - PHI business

n/a n/a

n/a n/a

2.50%

n/a

1.80%

n/a

3.125%

n/a

2.25%

n/a

2.50% 3.125%

1.80% 2.25%

Purchased life annuities: - gross - net

n/a n/a

n/a n/a

n/a n/a

n/a n/a

3.75%

n/a

3.25%

n/a

4.00% 3.20%

4.125% 3.30%

Conventional PHI & sickness benefits n/a n/a 4.0% 4.125% 3.125% 3.00% 4.375% 4.625%

Pensions, Insurance ISA, Overseas Business:


4.125% 4.375% 3.125% 3.00% 3.125% 3.00% Note 2 Note 2

Conventional non-profit business n/a n/a 3.125% 3.00% 3.125% 3.00% 4.375% 4.625%

Sterling reserve discount rate n/a n/a 3.125% 2.25% Note 3 Note 3 3.125% 2.25%

Compulsory purchase pension annuities in payment – RPI linked

n/a n/a n/a n/a n/a n/a -0.125% -0.50%

Compulsory purchase pension annuities in payment

n/a n/a n/a n/a 3.75% 3.25% 4.000% 4.125%

Notes:

1) For conventional life business, the 2013 & 2012 valuation interest rates differ by subfund and are shown in the following table:

RA IB subfund UF IB subfund UF OB subfund RL IB & OB subfund

2013 2012 2013 2012 2013 2012 2013 2012


3.90% 4.10% 4.30% 5.00% 3.60% 3.50% 3.90% 4.30%

Conventional non-profit business *

3.90% 4.10% 4.30% 5.00% 3.60% 3.50% 3.90% 4.30%

* Conventional non-profit business sold prior to 1/1/2013 is valued on the net rates shown above. Post 1/1/2013 conventional non-profit business is subject to gross roll up taxation and is valued using the equivalent gross rates applied to Pensions , Insurance ISA and Overseas business.


265

2) For conventional pensions, insurance ISA & overseas business, the 2013 & 2012 interest rates differ by subfund and are shown in the following table:

RL IB & OB subfund UF OB subfund

2013 2012 2013 2012


4.375% 4.625% 4.125% 4.00%

Paragraph 4. (1) (ii) stated that the reserves for certain accumulating with-profits contracts consisted of a with-profits benefit reserve and a sterling reserve. These calculations used the appropriate valuation interest rates from the table.

The valuation of certain deferred annuity contracts and deferred cash contracts with an annuity rate guarantee used a stochastic approach described in paragraph 5. (1). The interest rates used have not been provided.

3) The sterling reserve discount rates for the Royal Liver Assurance Fund are 3.125% for pensions business (2.25% in 2012) and 2.625% for overseas business (1.875% in 2012).

4) UK life assurance business in the Royal Liver Assurance Fund has been valued using gross rates of interest reflecting the tax status of the fund.


266

4. (3) The yields on assets have been adjusted in accordance with INSPRU 3.1.41R as set out below:

(i) UK Equities The yields were reduced by a 5% margin and the risk adjusted return was subject to a maximum of the UK FTSE Actuaries 15 year gilt yield index plus 5.5%.

(ii) Overseas Equities The risk adjustment was consistent with that made in respect of UK equities, but with a 7.5% margin.

(iii) Land The yields were reduced by a fixed margin of 0.5% and the risk adjusted return was subject to a maximum of the UK FTSE Actuaries 15 year gilt yield index plus 5.5%.

(iv) Other fixed interest securities The yields were reduced by a margin which varied by rating and term to maturity, with external ratings used where available otherwise equivalent internal ratings were used. The margins were as follows:

Outstanding Term AAA AA A BBB BB B C 0 to 1 year 0.07% 0.22% 0.35% 0.52% 1.78% 4.08% 10.93% 1 to 2 years 0.07% 0.23% 0.36% 0.56% 1.84% 4.11% 10.08% 2 to 3 years 0.08% 0.25% 0.38% 0.59% 1.88% 4.11% 9.36% 3 to 4 years 0.09% 0.26% 0.39% 0.62% 1.92% 4.08% 8.74% 4 to 5 years 0.09% 0.27% 0.40% 0.65% 1.94% 4.03% 8.21% 5 to 6 years 0.10% 0.28% 0.41% 0.66% 1.96% 3.96% 7.75% 6 to 7 years 0.10% 0.29% 0.42% 0.68% 1.97% 3.89% 7.36% 7 to 8 years 0.11% 0.30% 0.43% 0.69% 1.97% 3.81% 7.01% 8 to 9 years 0.12% 0.30% 0.43% 0.70% 1.96% 3.73% 6.72% 9 to 10 years 0.12% 0.31% 0.44% 0.71% 1.96% 3.65% 6.47% 10 to 11 years 0.13% 0.32% 0.45% 0.72% 1.95% 3.57% 6.25% 11 to 12 years 0.13% 0.32% 0.45% 0.72% 1.93% 3.50% 6.06% 12 to 13 years 0.14% 0.33% 0.46% 0.72% 1.92% 3.43% 5.88% 13 to 14 years 0.14% 0.34% 0.46% 0.73% 1.90% 3.36% 5.73% 14 to 15 years 0.15% 0.34% 0.47% 0.73% 1.88% 3.30% 5.60% 15 to 16 years 0.15% 0.35% 0.47% 0.73% 1.87% 3.24% 5.48% 16 to 17 years 0.16% 0.35% 0.48% 0.73% 1.85% 3.18% 5.37% 17 to 18 years 0.16% 0.36% 0.48% 0.73% 1.83% 3.13% 5.28% 18 to 19 years 0.17% 0.36% 0.48% 0.73% 1.82% 3.08% 5.19% 19 to 20 years 0.17% 0.36% 0.48% 0.73% 1.80% 3.04% 5.12% 20 to 21 years 0.17% 0.37% 0.49% 0.72% 1.78% 3.00% 5.05% 21 to 22 years 0.18% 0.37% 0.49% 0.72% 1.77% 2.96% 4.98% 22 to 23 years 0.18% 0.37% 0.49% 0.72% 1.75% 2.92% 4.92% 23 to 24 years 0.19% 0.37% 0.49% 0.72% 1.74% 2.89% 4.87% 24 to 25 years 0.19% 0.38% 0.49% 0.72% 1.73% 2.86% 4.82% 25 to 26 years 0.19% 0.38% 0.49% 0.72% 1.71% 2.83% 4.77% 26 to 27 years 0.20% 0.38% 0.49% 0.71% 1.70% 2.80% 4.73% 27 to 28 years 0.20% 0.38% 0.50% 0.71% 1.69% 2.78% 4.70% 28 to 29 years 0.20% 0.38% 0.50% 0.71% 1.68% 2.75% 4.67% 29 to 30 years 0.20% 0.39% 0.50% 0.71% 1.67% 2.73% 4.63% ….. 39 to 40 years 0.22% 0.40% 0.50% 0.70% 1.63% 2.63% 4.55% ….. 49+ years 0.23% 0.40% 0.50% 0.70% 1.63% 2.61% 4.55%

Adjusted yields were capped at 5% above the gilt yield for the same term for corporate bonds and 4% above the gilt yield for the same term for European government bonds. Negative yields were set to zero.


267

4. (4)

The following table shows the valuation mortality assumptions used to calculate the liabilities at this valuation together with the equivalent assumptions from the previous investigation:

2013 2012

Industrial branch business

- RL, Former RA & Former UFI business 82.08% ELT16(M) 79.8% ELT16(M)

- Former RLA business 77.76% ELT16(M) 70.875% ELT15(M)

Ordinary branch business:

RL Life and pension business a) annuities currently in payment, and b) deferred annuities in possession

111% PPMV00 CMI(2013) 2%p.a. (males) & 96% PPFV00 CMI(2013) 2% p.a. (females) See note [1].

CMI_2011_M[2%] + 0.75 + 0.01 * {year of birth -1944} & CMI_2011_F[2%] + 0.70 – 0.033 * {year of birth -1944} See note [2].

Former SL Life and pension business a) annuities currently in payment, and b) deferred annuities in possession

101% PPMV00 CMI(2013) 2% p.a. (males) & 92% PPFV00 CMI(2013) 2% p.a. (females) See note [1].

CMI_2011_M[2%] + 0.75 + 0.01 * {year of birth -1944} & CMI_2011_F[2%] + 0.70 – 0.033 * {year of birth -1944} See note [2].

Pensions in deferment:

- RL (intermediary) and Former SL group business 56.12% AM92 & 57.96% AF92 63.65% AM92 & 54.15% AF92 - RL (intermediary) and Former SL individual business 62.56% AM92 & 60.72% AF92 64.6% AM92 & 62.7% AF92 - Former RA business and Former UF business (non-linked pure endowments)

Nil Nil

- Former RA business (non-linked other) 105.80% PPMD00 & 102.12% PPFD00

106.875% AM92 & 118.75% AF92

- RL business (non-linked) and Former UF business (non-linked other)

124.20% PPMD00 & 119.88% PPFD00

118.125% AM92 & 131.25% AF92

- RL business, Former CL business, Former RIL business, Former UF business and Former UFLA business (linked)

89.64% AM92 & 118.8% AF92 105% AM92 & 115.5% AF92

- Former PLAL Pension Term Assurance 92.88% TMS00 sel & 95.04% TFS00 sel (smoker) 88.56% TMN00 sel & 90.72% TFN00 sel (non-smoker)

96.6% TMS00 sel & 80.9% TFS00 sel (smoker) 89.3% TMN00 sel & 92.4% TFN00 sel (non-smoker)

- Former PLAL Pensions other than Stakeholder, Flexi and AVC

138.24% AM92 & 172.80% AF92 (smoker) 69.12% AM92 & 86.40% AF92 (non-smoker)

134.4% AM92 & 168% AF92 (smoker) 67.2% AM92 & 84% AF92 (non-smoker)

- Former PLAL Stakeholder, Flexi and AVC Pensions 75.6% AM92 & 75.6% AF92 73.5% AM92 & 73.5% AF92 - Former RLA UWP pensions 88.32% AM92 & 98.44% AF92 78.85% AM92 & 85.50% AF92 - Former RLA Traditional Pensions with GAOs 88.32% AM92 & 98.44% AF92 78.85% AM92 & 85.50% AF92 - Former RLA Traditional Pensions without GAOs 88.32% AM92 & 98.44% AF92 78.85% AM92 & 85.50% AF92 Assured Lives:

- RL (intermediary) and Former SL business 57.24% AM92 & 91.80% AF92 55.65% AM92 & 89.25% AF92 - Bright Grey Protection Plan Life cover (UK and overseas) (level)



- Bright Grey Protection Plan Life cover (UK and overseas) (decreasing)




268

2013 2012

- RL safe combinationTM 86.40% AM92 & 86.40% A92

105% AM80 – 1 yr & 105% AF80 – 1 yr

- European Bond, With Profits Bond Plus (UK and overseas)

73.60% AM92 & 73.60% AF92

95% AM80 – 1 yr & 95% AF80 – 1 yr

- RL business, Former CL business, Former RA business and Former UF business (non-linked)

78.84% AM92 & 113.4% AF92 76.65% AM92 & 110.25% AF92

- RL business, Former CL business, Former RA business, Former RIL business, Former UF business and Former UFLA business (linked)

89.64% AM92 & 118.80% AF92

105% AM92 & 115.5% AF92

- Former PLAL and RL (bancassurance) Life Term Assurance (level)



- Former PLAL and RL (bancassurance) Life Term Assurance (decreasing)



- Former PLAL Protection Plan Stand-Alone CI Nil Nil - Former PLAL Whole of life & Endowment Assurances 108% AM92 & 135% AF92

(smoker) 57.24% AM92 & 57.24% AF92 (non-smoker)

105% AM92 & 131.25% AF92 (smoker) 55.65% AM92 & 55.65% AF92 (non-smoker)

- Former PLAL WP Bond and ISA 54% AM92 & 64.8% AF92 52.5% AM92 & 63% AF92 - Former PLAL and RL (bancassurance) Investment Bonds

54% AM92 & 75.6% AF92 52.5% AM92 & 73.5% AF92

- Former PLAL Stand-Alone CIC, N&P Life 138.24% AM92 & 172.8% AF92 (smoker) 69.12% AM92 & 86.4% AF92 (non-smoker)

134.4% AM92 & 168% AF92 (smoker) 67.2% AM92 & 84% AF92 (non-smoker)

- Former SMA, Former SPL and Scottish Provident branded Self Assurance (death only) (level)



- Former SMA, Former SPL and Scottish Provident branded Self Assurance (death only) (decreasing)



- Former SMA and Scottish Provident branded Unit-Linked Pegasus (death only)



- RL (bancassurance) Guaranteed Lifetime Plan Modified reinsurers’ risk rates. See note [3].

Modified reinsurers’ risk rates. See note [4].

- Former RLA business 103.68% AM92 & 115.56% AF92

87.15% AM92 & 95.55% AF92

- Former RLA Progress Modified TM92 & TF92 See Note [5].

Modified TM92 & TF92 See Note [5].

- Former RLA (Caledonian) Broker Term Assurance 77.76% TMS00 sel & 96.12% TFS00 sel (smoker) 61.56% TMN00 sel & 95.04% TFN00 sel (non-smoker)


- Former RLA & RL (Caledonian) EBS Term Assurance 86.40% TMS00 sel & 97.20% TFS00 sel (smoker) 81.00% TMN00 sel & 103.68% TFN00 sel (non smoker)

89.25% TMS00 sel & 68.25% TFS00 sel (smoker) 68.25% TMN00 sel & 97.125% TFN00 sel (non smoker)

- RL (Caledonian) Level Broker Term Assurance 83.16% TMS00 sel & 89.64% TFS00 sel (smoker) 70.20% TMN00 sel & 71.28% TFN00 sel (non-smoker)



269

2013 2012

- RL (Caledonian) Decreasing Broker Term Assurance 96.12% TMS00 sel & 95.04% TFS00 sel (smoker) 73.44% TMN00 sel & 70.20% TFN00 sel (non-smoker)


Ultimate rates of mortality are used unless indicated otherwise.

Note [1]: Annuities currently in payment and deferred pension annuities in possession 2013 The mortality basis is displayed as a % of base table mortality in 2000 projected in line with the CMI model mortality improvements and a % per annum long term improvement rate. Note [2]: Annuities currently in payment and deferred pension annuities in possession 2012 A description of the 2012 assumption can be found on page 270 of the 2012 Annual FSA Insurance Returns. For annuities currently in payment, the required complete expectation of life information is contained in the following table:

Sex Age Royal London 2013

Scottish Life 2013

Royal London 2012

Scottish Life 2012

Male 65 24.36 25.11 25.14 25.14 Female 65 27.79 28.11 26.95 26.95 Male 75 15.11 15.73 15.60 15.60

Female 75 17.66 17.95 17.41 17.41 For deferred annuity pension contracts, the required complete expectation of life information is contained in the following table:

Sex Age Royal London 2013

Scottish Life 2013

Royal London 2012

Scottish Life 2012

Male 45 27.17 27.93 28.50 28.50 Female 45 30.47 30.79 29.45 29.45 Male 55 25.75 26.51 26.75 26.75

Female 55 29.12 29.44 28.21 28.21 Note [3]: RL (bancassurance) Guaranteed Lifetime Plan 2013 The mortality assumptions for these contracts are based on proportions of the reinsurer’s rates, the proportions varying by gender only. The minimum age of entry for this plan is 40, hence rates are not provided at ages 25 and 35. Sample mortality rates are:

Age Male Female 45 0.005069 0.004191 55 0.009860 0.006849

Note [4]: RL (bancassurance) Guaranteed Lifetime Plan 2012 A description of the 2012 assumption can be found on page 271 of the 2012 Annual FSA Insurance Returns Note [5]: Former RLA Progress 2012 & 2013 Mortality rates for Progress business are based upon adjustments to standard tables TM92 ultimate and TF92 ultimate. Sample mortality rates are:

Age Male non-

smoker Male

smoker Female non-

smoker Female smoker

25 0.000506 0.000819 0.000207 0.000353 35 0.000454 0.000821 0.000350 0.000628 45 0.000946 0.002024 0.000834 0.001745 55 0.002822 0.006563 0.002117 0.004876

There is sufficient margin within the mortality rates assumed in the valuation to allow for significant changes in the incidence of disease or developments in medical science. No additional provision has been made.


270

4. (5)

The following table shows the valuation morbidity assumptions used to calculate the liabilities at this valuation together with the equivalent assumptions from the previous investigation:

2013 2012

Bright Grey Protection Plan Life or Critical Illness cover (UK and overseas) – reviewable business

116.15% modified AC04 See note [1]


Bright Grey Protection Plan Life or Critical Illness cover (UK and overseas) – guaranteed business



Bright Grey Protection Plan Critical Illness cover (UK and overseas) – reviewable business

116.15% modified SAC04 See note [3]

111.1% modified SAC04 See note [4]

Bright Grey Protection Plan Income Cover for Sickness (UK and overseas)

Modified IPM 1991-1998 See note [5]


Former UFLA Protection Plan – critical illness benefit Modified reinsurer’s risk rates See note [7]

Modified reinsurer’s risk rates See note [7]

Former UFLA Protection Plan – income replacement benefit



RL (intermediary) and Former SL Profitbuilder – critical illness benefit



Former PLAL and RL (bancassurance) with stand-alone critical illness benefit

135.240% SACMSL04 & 160.598% SACFSL04 (smoker) 143.693% SACMNL04 & 171.465% SACFNL04 (non-smoker)


Former PLAL and RL (bancassurance) with accelerated critical illness benefit sold before 1st

100.223% ACMSL04 & 119.543% ACFSL04 (smoker) April 2010 106.260% ACMNL04 & 126.788% ACFNL04 (non-smoker)

98.2% ACMSL04 & 121.3% ACFSL04 (smoker) 108.6% ACMNL04 & 121.3% ACFNL04 (non-smoker)

RL (bancassurance) with accelerated critical illness benefit sold after 1st

101.676% ACMSL04 & 121.993% ACFSL04 (smoker) April 2010 107.801% ACMNL04 & 129.387% ACFNL04 (non-smoker)


Former PLAL unit-linked business (including N&P branded business)



Former SMA, Former SPL, Scottish Provident branded Self Assurance with critical illness

Modified AC04 (ACIC) / Modified SAC04 (SACIC) See note [12]

Modified AC04 (ACIC) / Modified SAC04 (SACIC) See note [13]

Former SMA, Former SPL, Scottish Provident branded Self Assurance PHI



Former SMA and Scottish Provident branded Pegasus with stand-alone critical illness benefit



Former SMA and Scottish Provident branded Pegasus with accelerated critical illness benefit



Former RLA critical illness cover Modified reinsurer’s risk rates. See note [16].

Modified reinsurer’s risk rates. See note [16].


271

Note [1]: Bright Grey Protection Plan Life or Critical Illness Cover 2013 For calculating the valuation reserves for this cover a loading of 16.15% (reviewable business) or 20.75% (guaranteed business) above modified AC04 risk rates has been used. The risk rates apply to the ‘own occupation’ definition of total permanent disability. Where a ‘working tasks’ definition of total permanent disability is used, the risk rates are reduced. Sample risk rates before the 16.15% or 20.75% loading is applied are as follows: Contracts sold before 23 May 2011

Age Male non-smoker Male smoker Female non-smoker Female smoker 25 0.000776 0.000774 0.000565 0.000645 35 0.001114 0.001644 0.001393 0.001514 45 0.002570 0.005072 0.003020 0.004770 55 0.008011 0.015228 0.006714 0.011232

Due to amendments to critical illness definitions the following further loadings apply cumulatively to contracts sold from the dates given.

Male Female 23/05/2011 1.55% 1.70% 28/05/2012 0.55% 0.55% 16/09/2013 0.10% 0.10%

An allowance for a future deterioration of 0.3% (males) or 0.4% (females) per annum was also made for Accelerated Critical Illness Cover morbidity. Note [2]: Bright Grey Protection Plan Life or Critical Illness Cover 2012 A description of the 2012 assumption can be found on page 273 of the 2012 Annual FSA Insurance Returns. Note [3]: Bright Grey Protection Plan Critical Illness Cover 2013 For calculating the valuation reserves for this cover a loading of 16.15% above modified SAC04 risk rates has been used. The risk rates apply to the ‘own occupation’ definition of total permanent disability. Where a ‘working tasks’ definition of total permanent disability is used or where total permanent disability benefit is not included, the risk rates are reduced. Sample risk rates before the 16.15% loading is applied are as follows: Contracts sold before 23 May 2011



Male Female 23/05/2011 2.25% 2.40% 28/05/2012 0.55% 0.55% 16/09/2013 0.10% 0.10%

An allowance has been made for applications received under which instant cover is provided. An allowance for a future deterioration of 0.6% (males) or 0.8% (females) per annum was also made for Stand-Alone Critical Illness Cover morbidity. Note [4]: Bright Grey Protection Plan Critical Illness Cover 2012 A description of the 2012 assumption can be found on page 273 of the 2012 Annual FSA Insurance Returns. Note [5]: Bright Grey Protection Plan Income Cover for Sickness 2013: Inception rates are based on IPM 1991-98 rates adjusted to take account of expected office experience. Sample inception rates for a class 1 occupation with a deferred period of 13 weeks and an own occupation definition of incapacity, prior to the 20.75% valuation loading are as follows:


272

Age Male Non-smoker Male Smoker Female Non-smoker Female smoker

25 0.000784 0.001250 0.001187 0.001886 35 0.000518 0.000825 0.000783 0.001245 45 0.001209 0.001928 0.001830 0.002909 55 0.003460 0.005517 0.005237 0.008322

Recovery rates are based on CMIR 12 recovery rates adjusted for expected office experience. Sample recovery rates for deferred periods of 13 weeks are as follows:

Male Female Age Sickness duration

2 years Sickness duration



5 years 25 0.024862 0.063432 0.019125 0.048794 35 0.018860 0.046941 0.014508 0.036108 45 0.012806 0.030033 0.009857 0.023102 55 0.006699 0.012697 0.005153 0.009767

Note [6]: Bright Grey Protection Plan Income Cover for Sickness 2012 A description of the 2012 assumption can be found on page 274 of the 2012 Annual FSA Insurance Returns Note [7]: Former UFLA Protection Plan – critical illness benefit 2012 and 2013 For calculating the valuation reserves for this benefit, risk rates supplied by a leading reinsurer have been used. The risk rates are ultimate and the benefit ceases at age 65. Sample ultimate risk rates are as follows:


No allowance has been made for deterioration of future experience. Note [8]: Former UFLA Protection Plan – income replacement benefit 2012 and 2013 For calculating the valuation reserves for this benefit, risk rates supplied by a leading reinsurer have been used. The risk rates are ultimate. Sample ultimate risk rates for a level benefit ceasing at age 65, deferred period 13 weeks, class 1 occupation are as follows:


Additional loadings apply for occupation classes 2, 3 or 4. No allowance has been made for deterioration of future experience. Note [9]: RL (intermediary) and Former SL Profitbuilder – critical illness benefit 2012 and 2013 Living Cover (Critical Illness) Benefit under Profitbuilder contracts has been valued using the risk rates supplied by a leading reinsurer. Sample ultimate risk rates for accelerated comprehensive critical illness including total and permanent disability (own occupation) are as follows:



273

Note [10]: Former PLAL Unit-Linked Business (including N&P branded business) 2013 For Former PLAL Unit-Linked Endowment Mortgages and Flexible Lifetime Plan together with N&P branded policies, the rates of morbidity are based on the reinsurer’s rates. Sample valuation rates are:


Note [11]: Former PLAL Unit-Linked Business (including N&P branded business) 2012 A description of the 2012 assumption can be found on page 275 of the 2012 Annual FSA Insurance Returns Note [12]: Former SMA, Former SPL and Scottish Provident branded Self Assurance with critical illness 2013 For calculating the valuation reserves for this cover a loading of 16.15% (reviewable business) or 20.75% (guaranteed business) above the modified AC04 risk rates has been used. The risk rates apply to the ‘own occupation’ definition of total permanent disability Where a ‘working tasks’ definition of total permanent disability is used or where total permanent disability benefit is not included, the risk rates are reduced. Sample risk rates before the 16.15% or 20.75% loading is applied are as follows: Mortality & Critical Illness (with Total Permanent Disability) – Policies Entered Pre 01/01/2005


Mortality & Critical Illness (with Total Permanent Disability) – Policies Entered Post 01/01/2005



Male Female 23/05/2011 1.60% 1.90% 28/05/2012 0.55% 0.55% 16/09/2013 1.60% 1.60%

An allowance for a future deterioration of 0.3% (males) and 0.4% (females) per annum was made for Accelerated Critical Illness Cover morbidity. Critical Illness For calculating the valuation reserves for this cover a loading of 16.15% above modified SAC04 risk rates has been used. The risk rates apply to the ‘own occupation’ definition of total permanent disability. Where a ‘working tasks’ definition of total permanent disability is used or where total permanent disability benefit is not included, the risk rates are reduced. Sample risk rates before the 16.15% loading is applied are as follows:




274

Male Female

23/05/2011 2.25% 2.70% 28/05/2012 0.55% 0.55% 16/09/2013 1.60% 1.60%

An allowance for a future deterioration of 0.6% (males) or 0.8% (females) per annum was also made for Critical Illness Cover morbidity. Note [13]: Former SMA, Former SPL and Scottish Provident branded Self Assurance with critical illness 2012 A description of the 2012 assumption can be found on page275 of the 2012 Annual FSA Insurance Returns. Note [14]: Former SMA, Former SPL and Scottish Provident branded Self Assurance PHI 2013 Inception rates are based on IPM 1991-98 rates adjusted to take account of expected office experience. Sample inception rates for a class 1 occupation with a deferred period of 13 weeks and an own occupation definition of incapacity, prior to the 20.75% valuation loading are as follows:


Recovery rates are based on CMIR 12 recovery rates adjusted for expected office experience. Sample recovery rates for deferred periods of 13 weeks are as follows:

Male Female Age Sickness duration




5 years 25 0.024862 0.063432 0.019125 0.048794 35 0.018860 0.046941 0.014508 0.036108 45 0.012806 0.030033 0.009857 0.023102 55 0.006699 0.012697 0.005153 0.009767

Note [15]: Former SMA, Former SPL and Scottish Provident branded Self Assurance PHI 2012. A description of the 2012 assumption can be found on page 276 of the 2012 Annual FSA Insurance Returns. Note [16]: Former RLA Business 2012 & 2013 For Progress business, sample stand alone critical illness rates are provided below:


For Caledonian business, critical illness rates are used split by sex, smoker status and term. Sample rates are provided below:

Male non-smoker Policy term Age 5 10 15 20 25 25 0.000848 0.000879 0.000909 0.000940 0.000971 35 0.001226 0.001270 0.001314 0.001359 0.001403 45 0.002860 0.002963 0.003067 0.003170 0.003273 55 0.007530 0.007802 0.008074 0.008346 0.008619


275

Male smoker Policy term

Age 5 10 15 20 25 25 0.001374 0.001424 0.001473 0.001523 0.001573 35 0.001957 0.002028 0.002099 0.002169 0.002240 45 0.005628 0.005831 0.006034 0.006238 0.006441 55 0.016230 0.016816 0.017403 0.017990 0.018576

Female non-smoker Policy term Age 5 10 15 20 25 25 0.000630 0.000653 0.000676 0.000698 0.000721 35 0.001346 0.001394 0.001443 0.001491 0.001540 45 0.003259 0.003377 0.003495 0.003613 0.003731 55 0.006968 0.007220 0.007472 0.007724 0.007976

Female smoker Policy term Age 5 10 15 20 25 25 0.001015 0.001051 0.001088 0.001125 0.001161 35 0.002346 0.002431 0.002516 0.002601 0.002686 45 0.005863 0.006075 0.006286 0.006498 0.006710 55 0.013813 0.014312 0.014811 0.015310 0.015810


276

4. (6)


Expense assumptions are provided in the following table: Current year assumptions Prior year assumptions

Per Policy (per

annum)

% Office Premium

Investment Per Policy (per

annum)

% Office Premium

Investment

CWP savings endowment (120)

Note 1 5.4% 0.097% Note 2 5.0% 0.090%

CWP target cash endowment (125) Note 1 5.4% 0.097% Note 2 5.0% 0.090%

CWP pensions (155/165)

Note 3 4.32% 0.075% Note 4 4.0% 0.071%

Term assurance (325/330) £16.47 0% 0.065% £16.79 0% 0.06%

Critical illness (340/345/350/355) £19.57 0% 0.065% Note 5 0% 0.06%

Income protection (360/365) £19.57 0% 0.065% Note 5 0% 0.06%

Annuity (400)

Note 6 n/a 0.065% £25.88 n/a 0.06%

UWP bond (500)

Note 1 n/a 0.097% Note 2 n/a 0.090%

UWP regular premium pension (525/545)

Note 1 5.4% 0.097% Note 2 5.0% 0.090%

UWP single premium pension (525/545)

Note 1 n/a 0.097% Note 2 n/a 0.090%

UWP group regular premium pension (535)

£40.38 0% 0.081%-0.097%

£39.37 0% 0.074%-0.09%

UWP group single premium pension (535)

£38.89 n/a 0.081%-0.097%

£37.77 n/a 0.074%-0.09%

UL bond (700) Note 7 n/a 0.122% Note 8 n/a 0.113% UL savings endowment (715) Note 9 0% 0.122% Note 10 0% 0.113% UL target cash endowment (720) £51.39 0% 0.065% £39.82 0% 0.06% UL regular premium pensions (725) £40.38 0% 0.065% £39.37 0% 0.06% UL single premium pensions (725) £38.89 n/a 0.065% £37.77 n/a 0.06% UL group regular premium pension (735)

£53.97 0% 0.065% £53.03 0% 0.06%

UL group single premium pension (735)

£49.15 n/a 0.065% £48.68 n/a 0.06%

Notes: 1) Per policy expenses for CWP savings endowment, CWP target cash endowment, UWP bond, UWP regular premium pension and

UWP single premium pension relate to RL business and are shown in the following table:

2014 2015 2016 2017 2018 £9.42 £10.29 £11.42 £12.54 £13.67

All expenses are given in 2014 terms and are assumed to inflate for future years.

2) A description of the 2012 assumption can be found on page 278 of the 2012 Annual FSA Insurance Returns.

3) Per policy expenses for CWP pensions relate to Former RA business and are shown in the following table:

2014-2016 2017+ £9.37 £13.41



277



6) Per policy expenses for the annuity relate to Former PLAL business and are shown in the following table:

2014 2015 2016 2017+ £12.70 £12.78 £12.84 £12.91

7) Per policy expenses for the UL bond relate to Former PLAL business and are shown in the following table:

2014 2015 2016 2017+ £14.60 £14.70 £14.77 £14.84



9) Per policy expenses for the UL savings endowment also relate to Former PLAL business and are shown in the following table. These expenses apply to both regular premium and paid up policies.

2014 2015 2016 2017+ £24.21 £24.36 £24.49 £24.61



11) For unit-linked business the investment expenses shown are for the unit fund. In addition, investment expenses of 0.065% per annum [2012: 0.06%] were assumed on sterling reserves.

12) References to 0.081% [2012: 0.074%] relate to policies with benefits in the Scottish Life Fund with expenses incurred by the Royal London IB & OB Subfund.

PLAL With-Profits Fund All expenses relating to policies and benefits allocated to this subfund are incurred by the Royal London IB & OB Subfund. No separate disclosure is necessary. Royal Liver Assurance Fund Expense assumptions are provided in the following table:

Current year assumptions Prior year assumptions

Per Policy (per

annum)

% Office Premium


annum)

% Office Premium

Investment

£46.83 CWP savings endowment (120) 0% 0.26% £46.17 0% 0.26% £46.83 CWP target cash endowment (125) 0% 0.26%

£46.17 0% 0.26%

£47.33 CWP Pensions (165) 0% 0.26% £46.03 0% 0.26% £47.33 Term assurance (325/330) 0% 0.26% £46.03 0% 0.26% £47.33 Critical illness (340/345/355) 0% 0.26% £46.03 0% 0.26% £30.13 Annuity (400) n/a 0.26% £29.71 n/a 0.26% £47.33 UWP bond (500) n/a 0.26% £46.03 n/a 0.26% £46.83 UWP regular and single premium pension

(525) 0% 0.26% £46.17 0% 0.26%

£30.13 UL bond (700) n/a 0.26% £29.71 n/a 0.26% £30.13 UL savings endowment (715) 0% 0.26% £29.71 0% 0.26% £30.13 UL regular and single premium pension

(725) 0% 0.26% £29.71 0% 0.26%


278

Scottish Life Fund Expense assumptions are provided in the following table:


Per Policy (per

annum)

% Office Premium


annum)

% Office Premium

Investment

CWP savings endowment (120) £37.55 0% 0.081% £30.65 0% 0.074% CWP target cash endowment (125) £37.55 0% 0.081% £30.65 0% 0.074% CWP pensions (155/165) £37.68 0% 0.081% £32.13 0% 0.074% UWP regular premium pension (525/545)

£37.68 0% 0.081% £32.13 0% 0.074%

UWP single premium pension (525/545)

£34.18 0% 0.081% £30.08 0% 0.074%

United Friendly OB Subfund Expense assumptions are provided in the following table:


Per Policy (per

annum)

% Office Premium


annum)

% Office Premium

Investment

CWP savings endowment (120) Note 1 4.32% 0.076% Note 2 4.0% 0.072% CWP target cash endowment (125) Note 1 4.32% 0.076% Note 2 4.0% 0.072% CWP pensions (155) 0.00 0.0% 0.184% 0.00 0.0% 0.172%

Notes: 1) Per policy expenses are shown in the following table:

2014-2016 2017+ £9.37 £13.41



All expenses across all subfunds are shown gross. In calculating expense reserves UK life business expenses were netted down for tax relief at 20% except for the Royal Liver Assurance Fund where UK life business is treated as gross due to the tax position of the fund. 4. (7)

The following unit growth assumptions were used to calculate non unit liabilities for unit-linked business: 2013 2012

Life assurance business 5.70% 4.70% ROI business 4.50% 4.50% Pension, overseas (non-ROI) and PHI business 6.00% 5.00%

The following inflation assumptions were used in the valuation of linked and non linked business:

2013 2012

Inflation Rate for Future Expenses (ROI) 3.00% 3.00% Inflation Rate for Future Expenses (non-ROI) 4.50% 3.50% Inflation Rate for Policy Charges on Former PLAL, Former SMA, RL(bancassurance) and Scottish Provident branded linked business

3.50% 2.50%

Inflation Rate for Policy Charges on other linked Business 4.50% (see note) 3.50% (see note) Note: An inflation rate is applied to policy charges only where there is an established practice of annual increases. For other business it is assumed that policy charges do not increase. The growth rate is before the deduction of regular management charges.


279

4. (8)

As a realistic basis firm no specific reserve has been made for future bonus within the valuation of conventional or unitised with-profits business except for certain contracts in the United Friendly OB Subfund as described in paragraph 4. (1).

4. (9)

Royal London IB & OB Subfund Average lapse, surrender and PUP rates are provided in the following table. All rates apply to ordinary business unless indicated otherwise.

Product Average lapse / surrender / paid-up rates for the policy years 1-5 6-10 11-15 16-20 Level term lapse 11.56 7.75 5.05 5.01 Decreasing term lapse 10.45 8.51 7.18 7.18 Accelerated critical illness lapse 13.41 9.38 6.21 6.21 Income protection lapse 11.74 8.66 5.50 5.50 CWP savings endowment surrender n/a n/a 1.73 1.39 CWP savings endowment (IB) surrender n/a n/a 0.80 0.80 CWP target cash endowment surrender n/a n/a 1.64 1.59 UL savings endowment surrender n/a 4.40 4.16 3.68 UL target cash endowment surrender n/a 4.00 4.00 3.92 UWP bond surrender n/a 5.00 5.00 5.00 UWP bond automatic withdrawals n/a 100%

current 100%

current 100%

current UL bond surrender 5.60 5.60 5.12 4.40 UL bond automatic withdrawals 2.50 2.50 2.50 2.50 CWP pension regular premium PUP n/a n/a n/a n/a CWP pension regular premium surrender n/a n/a n/a n/a CWP pension single premium surrender 0.80 0.80 0.80 0.80 UWP indiv pension regular premium PUP 0.00 0.00 0.00 0.00 UWP indiv pension regular premium surrender 0.00 0.00 0.00 0.00 UWP indiv pension single premium surrender 0.00 0.00 0.00 0.00 UL indiv pension regular premium PUP See Note 2 See Note 2 See Note 2 See Note 2 UL indiv pension regular premium surrender 2.47 3.03 2.80 2.82 UL group pension regular premium PUP See Note 2 See Note 2 See Note 2 See Note 2 UL group pension regular premium surrender 0.64 1.52 2.00 2.00 UL indiv pension single premium surrender 3.39 3.72 3.61 3.60

The following notes apply:

1) Allowance is made for lapses in the valuation of Bright Grey, Former PLAL, RL (bancassurance), Former SMA, Former SPL, Caledonian and Scottish Provident branded protection business only. The lapse rates shown above are average best estimate lapse rates. Within the valuation of Bright Grey business, Scottish Provident Self Assurance business and Caledonian business, best estimate lapse rates are reduced by 20% when the mathematical reserve net of reinsurance is positive and increased by 20% when the net reserve is negative. Within the valuation of other protection business, reserves are calculated using best estimate lapse rates and with best estimate lapse rates increased and reduced by 20%. The reserve for each policy is set at the highest of the three reserves calculated.

2) Paragraph 4. (1) (iii) describes the method used to calculate sterling reserves for regular premium business. No additional allowance is made for conversions to paid up status after the valuation date.


Average surrender and withdrawal rates are provided in the following table. Product Average surrender rates for the policy years 1-5 6-10 11-15 16-20 UWP bond surrender n/a n/a 7.50 7.50 UWP bond automatic withdrawals n/a n/a 5.00 5.00


280

Refuge Assurance IB Subfund Average surrender rates are provided in the following table.

Product Average surrender rates for the policy years 1-5 6-10 11-15 16-20 CWP savings endowment (IB) surrender n/a n/a 0.80 0.80

Royal Liver Assurance Fund Average lapse rates are provided in the following table.

ROI Products Average lapse rates for the policy years 1-5 6-10 11-15 16-20 Level term lapse 9.20% 5.80% 5.90% 4.90% Decreasing term lapse 11.20% 9.50% 9.50% 9.50% Accelerated critical illness lapse 9.20% 5.80% 5.90% 4.90%

The following notes apply:

1) Within the valuation of Royal Liver business, best estimate lapse rates are reduced by 20% when the mathematical reserve net of reinsurance is positive and increased by 20% when the net reserve is negative.

Scottish Life Fund Average lapse, surrender and PUP rates are provided in the following table.

Product Average lapse / surrender / paid-up rates for the policy years 1-5 6-10 11-15 16-20 Level term lapse n/a n/a 0.00 0.00 Decreasing term lapse n/a n/a 0.00 0.00 Income protection lapse n/a n/a n/a n/a CWP savings endowment surrender n/a n/a 0.00 0.00 CWP target cash endowment surrender n/a n/a 0.00 0.00 UWP savings endowment surrender n/a n/a 4.00 3.92 UWP target cash endowment surrender n/a n/a 4.00 3.92 UL savings endowment surrender n/a n/a n/a n/a CWP pension regular premium PUP n/a n/a 0.00 0.00 CWP pension regular premium surrender n/a n/a 2.23 2.23 CWP pension single premium surrender n/a n/a 2.64 2.49 UWP indiv pension regular premium PUP n/a n/a 0.00 0.00 UWP indiv pension regular premium surrender n/a n/a 2.38 2.75 UWP indiv pension single premium surrender n/a n/a 3.06 3.06 UL indiv pension regular premium PUP n/a n/a 0.00 0.00 UL group pension regular premium PUP n/a n/a 0.00 0.00

United Friendly IB Subfund Average surrender rates are provided in the following table.

Product Average surrender rates for the policy years 1-5 6-10 11-15 16-20 CWP savings endowment (IB) surrender n/a n/a n/a 0.80

UK products Average lapse rates for the policy years 1-5 6-10 11-15 16-20 Level term lapse 6.50% 5.90% 2.90% 2.50% Decreasing term lapse 6.50% 5.90% 2.90% 2.50% Accelerated critical illness lapse 6.50% 5.90% 2.90% 2.50%


281

United Friendly OB Subfund Average surrender and PUP rates are provided in the following table.

Product Average surrender / paid-up rates for the policy years 1-5 6-10 11-15 16-20 CWP savings endowment surrender n/a n/a 0.80 1.20 CWP target cash endowment surrender n/a n/a n/a 1.20 CWP pension regular premium PUP n/a n/a n/a 0.00 CWP pension regular premium surrender n/a n/a n/a 0.50 CWP pension single premium surrender 0.40 0.40 0.40 0.40

4. (10)

There are no other material basis assumptions.

4. (11) No allowance is made for derivatives in the determination of long-term non-RLA fund liabilities except for the valuation of a small number of other derivative based contracts where generally derivatives are held within unit-linked funds. Any remaining derivatives held in each non-RLA subfund are held for efficient portfolio management or to reduce investment risk. The RLA Fund holds currency forwards in order to hedge the currency risk associated with investing in overseas assets. The RLA Fund holds equity put options in order to hedge against market risk. No explicit allowance has been made for this when valuing the liabilities as these derivatives are not assumed to back liabilities. 4. (12)

Not applicable.


282

Options and guarantees

5. (1)


(a) The mathematical reserves established for RL deferred retirement annuity personal pension policies incorporate an allowance for the guaranteed roll up and pension conversion rates contained in these policies. The addition to the reserves was determined by capitalising any shortfall in the projected pension calculated using the valuation basis, including future contributions where appropriate, compared to the guaranteed amount, discounted back to the valuation date. The take-up rate assumption was 85% for policies vesting in 2014-2023 and then rising linearly by 1% per annum to a maximum of 95% for policies vesting in 2033 and later years.

The valuation interest rate used to value these guarantees at retirement was determined using a stochastic method and varied by retirement year, age, sex and guarantee type. The Barrie & Hibbert Economic Scenario Generator was calibrated to the forward gilt curve as described in the realistic abstract (Appendix 9.4A) and 1000 market consistent scenarios were run to produce 25 year par yield annuities for each future calendar year. A spreadsheet method was used to calculate the cost of providing the guarantee per unit of benefit for each scenario assuming payments start in the retirement year, valuation mortality and expenses. The average cost over the simulations was calculated for each combination of retirement year, age, sex and guarantee type. The implied valuation interest rate was determined using a goal seeking approach and multiplied by 97.5%.

(b) (i) RL deferred retirement annuity personal pension policies. (ii) £24m (iii) Policies vest in the period 2014 – 2043. (iv) £10m (v) 10.02%

(vi) Increments can be made to the policy. However, the guarantee applies to contracts issued and increments effected prior to 25 September 1986 only.

(vii) Monthly in advance, single life, 5 year guarantee, level. (viii) 60 – 75.

(a) Former RA Pension Business Pure Endowments issued or increments effected prior to 31 December 1994 incorporate guaranteed pension rates. The addition to the reserves for these guaranteed pension rates was determined by calculating the additional cost of converting to pension annuities the value of the sum assured plus attaching annual bonuses on the valuation basis over the guaranteed pension rates multiplied by a take-up rate assumption. The take-up rate assumption was 85% for policies vesting in 2014-2023 and then rising linearly by 1% per annum to a maximum of 95% for policies vesting in 2033 and later years.

The valuation interest rates were determined using the approach described above.

(b) (i) Former RA Pension Business Pure Endowment - tables WPCO (contracted out), WPPP (personal pension), WPAVC (FSAVC).

(ii) Contracted out version £9m Other versions £91m These reserves include amounts in respect of increments which are not entitled to the guarantee. (iii) Policies vest in the period 2014 – 2042. (iv) Contracted out version £4m Other versions £32m (v) Contracted out version 5.64% Other versions 8.61%

(vi) Increments can be made to the policy. However, the guarantee applies to contracts issued and increments effected prior to 31 December 1994 only.

(vii) Contracted out version monthly in advance, joint life with 50% spouse’s benefit, no guarantee, increases at 3% per annum.

Other versions monthly in advance, single life, level, guaranteed 5 years, guarantee does not apply if increasing annuity or spouse’s benefit required at vesting.

(viii) Contracted out version males 65 - 75, females 60 – 75. Other versions 55 - 75.


283


a) Reserves for guaranteed annuity options at retirement have been determined by comparing the current guaranteed sum assured plus attaching reversionary bonus to the capital value of the guaranteed annuity. A take-up rate of 100% was assumed for guaranteed annuity options that were in the money.

(b) (i) UWP pension ROI with GAO (ii) £29m (iii) Policies vest in the period 2014 – 2044. (iv) £21m (v) 9%

(vi) Increments can be made to the policy. (vii) The annuity is monthly in advance and guaranteed for 5 years. (viii) 65 years

(a) Similarly, for guaranteed cash options (applicable for former Caledonian business), the capital value of the deferred annuity

has been compared to the capital value of the guaranteed cash option. The capital value of the deferred annuity has been determined using the following basis:

Mortality in payment assumption: 111% PPMV00 CMI(2013) 2% p.a. / 96% PPFV00 CMI(2013) 2% p.a. where these denote a percentage of base table mortality (at 1/1/2000) projected in line with the CMI model mortality improvements and a percentage per annum long-term improvement rate.

Mortality in deferment is assumed to be Nil The following information is in respect of former Caledonian business. (b) (i) Caledonian deferred pensions

(ii) £75m (iii) Policies vest in the period 2014 – 2049. (iv) 0 (v) 9-10%

(vi) Increments can be made to the policy. (vii) The annuity is monthly in advance and guaranteed for 5 years. (viii) 55-70 years

Scottish Life Fund

(a) In the case of Former SL deferred cash contracts with a guaranteed minimum annuity at vesting, the reserve was calculated using the higher of the cash amount and the value of the guaranteed minimum annuity at vesting. The take-up rate assumption was 82.5% for policies vesting in 2014-2018, 85% for policies vesting in 2019-2023 and then rising linearly by 1% pa to a maximum of 95% for policies vesting in 2033 and later years.

The valuation interest rates were determined using the approach described for the Royal London IB & OB Subfund above. The interest rates calculated for unit-linked liabilities also allow for a stochastic projection of the unit funds to the option exercise date.

(b) (i) Talisman Personal Pension Plan Series 1 issued pre July 1988, Sovereign Plan, Personal Pension Policy, Personal Pension Bonus Bond, Personal Pension Cashplan and With-Profits Variable Premium Bond.

(ii) £177m (iii) Policies vest in the period 2014 – 2042. (iv) £79m (v) 10.887% (vi) Contractual increments can be made to the Talisman Personal Pension Plan but these do not qualify for guaranteed

annuity rates unless they were arranged prior to 1995. (vii) Level, yearly in arrears. (viii) 55 – 75.

(b) (i) Talisman Personal Pension Plan Series 1 issued post June 1988 (non-Protected Rights). (ii) £213m


284

(iii) Policies vest in the period 2014 – 2039. (iv) £63m (v) 9.864% (vi) Contractual increments can be made to the policy but these do not qualify for guaranteed annuity rates unless they

were arranged prior to 1995. (vii) Level, yearly in arrears. (viii) 55 – 75.

(b) (i) Talisman Personal Pension Plan Series 1 issued post June 1988 (Protected Rights). (ii) £701m (iii) Policies vest in the period 2014 – 2040. (iv) £245m (v) 5.673% (vi) Increments cannot be made to these policies. (vii) Escalating at 3% pa, payable yearly in arrears. There is an attaching widows/widowers pension of 50%. (viii) 60 – 75 (including late vesting).

(b) (i) Talisman Executive Pension Plan Series 1 and With-Profits Deferred MIPA. (ii) £41m (iii) Policies vest in the period 2014 – 2035. (iv) £17m (v) 10.000% (vi) Contractual increments can be made to the Talisman Executive Pension Plan but these do not qualify for guaranteed

annuity rates unless they were arranged prior to 1995. Increments cannot be made to the With-Profits Deferred MIPA contract.

(vii) Level, monthly in advance, guaranteed 5 years. (viii) 55 – 75.

5. (2)


The reserve is subject to a minimum of the present value of the guaranteed surrender value available at the valuation date.

Guaranteed surrender values and unit linked maturity values – Royal Liver IB policies

Product Name Basic

Reserve (£'000s)

Spread of outstanding durations (curtate years)

Guarantee reserve (£'000s)

Guaranteed amount

MVA free conditions

In-force premiums

p.a. (£'000s)

Additional increments available (Yes/No)

34 Flexible Endowment 11,837 0 - 10 224 See Table n/a 497 No

Guaranteed amounts for Table 34 : Guaranteed surrender value per £1000 sum assured

Curtate duration (years)

Guaranteed surrender value per £1000 sum assured – table 34

Curtate duration (years)

Guaranteed surrender value per £1000 sum assured – table 34

0-9 0 15 1090

10 640 16 1190

11 720 17 1290

12 810 18 1400

13 900 19 1520

14 990


285

Guaranteed surrender values and unit linked maturity values – Royal Liver OB non-linked policies

Product Name Basic

Reserve (£'000s)

Spread of outstanding durations (curtate years)

Guarantee reserve (£'000s)

Guaranteed amount

MVA free conditions

In-force premiums

p.a. (£'000s)

Additional increments available (Yes/No)

Single Premium Endowment (ROI) 15,101 0 - 22 422 Return of

Premium n/a n/a No

5. (3)

Former RLA contracts contain the following Guaranteed Insurability Options:

Guaranteed insurability options – Former Royal Liver Assurance products A reserve equal to £0.10 million is held in respect of Guaranteed Insurability Options for low cost endowment assurances. These policyholders have the option to take out new policies, or change their existing term, without providing any further medical evidence. The reserve has been calculated assuming that the take up rate is equal to the total number of policies who have exercised the option to date divided by the number of currently in force eligible policies. A cost is determined based on all policies exercising the option claim immediately. Guaranteed Insurability Options – Former Progress products An additional loading is applied to the base mortality assumption in respect of Guaranteed Insurability Options for Progress protection menu products. A reserve equal to £0.16m is held in respect of guarantee insurability options for Progress protection menu products.

Product name In-force premium

Sum assured

Description of option Guarantee reserve

Progress £26.7m £14.25bn Option to increase sum assured without further underwriting on certain events e.g. marriage or moving house.

£1.2m gross of reinsurance £0.16 m net of reinsurance

Guaranteed insurability options – Former Caledonian products For conversion and further assurance options the additional prospective mortality cost arising from the exercise of such options has been assessed. For business sold under the Caledonian brand this is calculated on the basis that 35% of policyholders renew on maturity and incur 50% higher mortality for the first 7 years after renewing. A mortality basis of 116% TM80 ultimate is used with age loadings of 0 for male non-smoker, +3 for male smoker, -4 for female non-smoker and +1 for female smoker. A total of £7.8 million is held within the reserves to provide for the exercising of these options in respect of business sold under the Caledonian brand.

Product name In-force premium

Sum assured


Caledonian protection £26.7m £9.14bn Option to convert to any Caledonian brand protection policy open to new business at conversion date without further underwriting.

£7.8m


286

5. (4)


Guarantees have been issued to settle some cases under the review of pension transfers and opt-outs as instigated by the Securities and Investments Board. The guaranteed benefits have been valued using the following principal assumptions:

Interest rate in deferment RPI

Interest rate in possession RPI -0.250%

Salary inflation RPI + 2.5%

Promotional increases 1%

Rate of pension increase in payment RPI

Rate of pension increase in deferment RPI + 1%

Mortality in deferment 105.80% PPMD00 ultimate unrated, 102.12% PPFD00 ultimate

unrated

Mortality in possession 111% PPMV00 CMI(2013) 2%p.a. & 96% PPFV00 CMI(2013) 2%p.a.

(See Note [1] in 4. (4))

The gross reserves for the guarantees were reduced by the reserves for the guaranteed policies as shown in the following table. The net reserves are included within the total reserves for the pensions review shown in Forms 51 – 54 as appropriate.

Gross provision for guarantees

Mathematical reserves for underlying contracts

Net provision for guarantees

RL business £60,083,000 £5,092,000 £54,991,000

Former RA business £7,606,000 £778,000 £6,827,000

Former RIL business £6,888,000 £616,000 £6,271,000

Former UFI business £19,689,000 £2,085,000 £17,605,000

Former UFLA business £205,000 £156,000 £50,000

Total £94,470,000 £8,727,000 £85,744,000

RL Business Under certain policies which are a combination of with-profits endowment assurances and additional temporary benefits, a guarantee of a minimum payment on maturity applies (GMDB).

From time to time as considered appropriate, the Society may compute the estimated maturity value under these policies and, where this is less than the GMDB, the endowment sum assured would be increased, without evidence of health, with an appropriate increase in premium.

Although there is no general premium rate guarantee, the following guarantees do apply:

(a) any increase in premium is limited to 10% of the premium applying immediately prior to the review, and

(b) the increase in premium is limited to such amount as will allow the policy to remain a qualifying policy under paragraphs 2(1)(c) and (d) of Schedule 15 of ICTA 1988, or the equivalent earlier legislation.

The mathematical reserve for these policies includes an amount of £12,363,000 being the present value of the projected shortfall. The shortfall calculation assumed no future bonuses are added to the policies in accordance with the requirements of INSPRU 1.2.

An additional reserve of £190,000 has been included in Form 51 in respect of options and guarantees.


287

Former RA Business

In respect of regular premium conventional with-profits pension policies written between March and September 1999, there is an undertaking safeguarding the interests of policyholders following the issue of any relevant announcements concerning the terms on which Stakeholder pensions might be sold. For those eligible to join a Stakeholder pension scheme, this will lead to enhanced transfer values being payable.

A reserve of £9,690,000 is included in Form 51 for the undertaking. The liability was calculated as the accumulated value of premiums paid from entry to the valuation date (£29,206,000) less the mathematical reserves held (£19,516,000).

An additional reserve of £250,000 has been included in Form 51 in respect of options and guarantees.

Former RLA business

In respect of Homeguard policies, there is a guarantee to repay the outstanding mortgage on death regardless of how mortgage interest rates have moved since the commencement of the policy. The expected cost of this guarantee has been allowed for by calculating expected payments on death using a prudent rate of mortgage interest which is currently capped at 7%. The mortgage interest rate which applied at policy inception is recorded on Homeguard and the main valuation run decreases the sum assured at this rate. A total reserve of £1.9 million has been held to cover the guarantee.

Product name In-force

premium Sum assured


Caledonian Homeguard £5.3m £1.53bn n/a £1.9m Former UFI Business

In respect of regular premium unit-linked pension policies written between March and September 1999, there is an undertaking safeguarding the interests of policyholders following the issue of any relevant announcements concerning the terms on which Stakeholder pensions might be sold. For those eligible to join a Stakeholder pension scheme, this will lead to enhanced transfer values being payable.

A non unit liability of £3,481,000 is included in Form 53 for the undertaking. The liability was calculated as the accumulated value of premiums paid from entry to the valuation date (£12,379,000) less the mathematical reserves held (£8,898,000).

Former UFLA Business

A sterling reserve of £285,000 has been included in Form 53 in respect of the mortality guarantee option on certain Investment Bond contracts. The reserve has been calculated by applying the ratio of annuity values on prospective mortality and guaranteed mortality tables determined using the sterling reserve discount rate for life business to eligible reserves of £13,221,000 and a take-up rate of 5% (based on experience).

Scottish Life Fund & Royal London IB & OB Subfund

Within the contract descriptions shown below some contracts have underlying guaranteed minimum pensions (GMPs). The GMPs are valued as non-profit deferred pensions with attaching widow’s/er’s pensions. An additional liability is calculated as the higher of zero and the value of the GMPs less the value of the non-guaranteed benefits. The valuation bases are described in Section 4.

Contract Non-Guaranteed Reserve

Scottish Life Fund

Non-Guaranteed Reserve


GMP Reserve

Scottish Life Fund

GMP Reserve


Buyout Bond & Policy

£170,576,000 £21,610,000 £657,000 £344,000

Crest Secure £270,714,000 £101,760,000 Talisman Buyout Bond – Series 2

£51,435,000 £8,689,000 £22,015,000

Talisman Buyout Bond – 98 Series 1

£3,325,000 £26,852,000 £288,000

Individual Section 32 Buyout Plan

£53,870,000 £30,000


288

Expense reserves

6. (1)

At least £112m is expected to arise during the calendar year after the valuation date from explicit allowances made in the valuation to meet expenses in fulfilling contracts in force at the valuation date. This amount consists of £27m investment expenses and £86m other maintenance expenses.

6. (2)

There are no implicit expense allowances.

6. (3)

The amount of expense shown in Form 43 line 14 is significantly different to the amount expected on the valuation assumptions per paragraph 6. (1) above.

Revenue account expenses in Form 43 include the following items not provided for in the valuation:

• Investment expenses associated with the management of the excess assets are not provided for nor are the costs of acquiring/disposing assets.

• A vacant property provision and expenses associated with the management of property assets are charged to the funds. These are allowed for in the liability valuation via a reduction in the risk adjusted yield on property assets available to back/value the liabilities.

• A Financial Services Compensation Scheme levy.

• Ex gratia/compensation payments (which are charged to the estate).

• A discretionary payment to the staff pension fund.

• Integration costs arising from the Royal Liver and Co-operative Insurance acquisitions.

• Redundancy costs.

• Exceptional costs related to strategic projects of the Society.

Finally, the amount shown in paragraph 6. (1) reflects the run off of the closed books of business within the Society.

6. (4)

The impact of writing new business on the provision for expenses in the valuation has been evaluated after taking into account anticipated levels of new business and expenses as projected in the Society's budgetary process. No additional provision was considered necessary.

6. (5)

In assessing the adequacy of the provision for expenses in the mathematical reserves, the potential impact of additional expenses arising from closing the Society to new business twelve months after the valuation date has been evaluated. The investigation considered redundancy costs, vacant property provision and the termination of service agreements upon closure, together with the maintenance costs of continuing to service the existing book of business and margins projected to emerge on the existing business. No additional provision was considered necessary.

6. (6)

All maintenance expenses have been classed as attributable expenses.


289

Mismatching reserves 7. (1)

A schedule of the mathematical reserves (other than liabilities for property linked benefits), after distribution of surplus, analysed by reference to the currencies in which the liabilities are expressed to be payable together with the value of the assets which match such liabilities has been produced as follows:

Currency Liabilities £000s

Assets £000s

Royal London IB & OB Subfund Sterling 3,439,827 3,439,827 Euros 45,206 45,206 Refuge Assurance IB Subfund Sterling 136,270 136,270 United Friendly IB Subfund Sterling 457,092 457,092 United Friendly OB Subfund Sterling 1,469,972 1,469,972 Royal Liver Assurance Fund Sterling 719,964 719,964 Euros 974,728 974,728 Scottish Life Fund Sterling 1,862,294 1,862,294 PLAL With-Profits Fund Sterling 483,884 483,884

There are no liabilities in respect of deposits received from reinsurers.

7. (2)

Not applicable.

7. (3)

No reserve is held for currency mismatching. Non-profit liabilities are backed by assets denominated in the same currency. Any non sterling denominated assets are held as part of a diversified portfolio of investments. The discretionary nature of payouts on with-profit policies is such that they can vary with the returns on the assets and so there is no need to hold an additional reserve.

7. (4) – (6)

As a realistic basis life firm the Society is no longer required to calculate a resilience capital requirement as per INSPRU 3.1.10R.

7. (7)

The assets held in respect of technical provisions are adequately diversified and are appropriate to the type of business undertaken in relation to their safety, yield and marketability. The assets are substantially denominated in sterling and are of a sufficient amount and liquidity to ensure that inflows from the assets are expected to be sufficient to meet the insurance liabilities (including all guarantees and options) as they fall due. No additional reserve is necessary. Other special reserves

8.

The mathematical reserves for the Royal Liver Assurance Fund include an additional reserve of £10.3m in respect of the future fund related charge of 26 basis points that will be applied to the Royal Liver estate assets.


290

Reinsurance

9. (1)

The Society does not cede any long term business on a facultative basis to a reinsurer who is not authorised to carry on insurance business in the United Kingdom.

9. (2)

Details are set out on the next two pages of each reinsurance treaty where the Society is the cedant, under which business was in force at the date of the investigation and where either the premium payable to the reinsurer or the mathematical reserves ceded to the reinsurer exceeded £10m.

The following notes apply to the table:

(g) None of the treaties contain deposit back arrangements. (i) Not applicable. (l) All of the reinsurers are authorised to carry on insurance business in the United Kingdom. (m) The reinsurers are not connected companies of the Society. (n) The treaties with BlackRock Life Limited, AXA Wealth Ltd and Baillie Gifford Life Limited are in respect of the reinsurance

of the investment liability arising in relation to funds, the performance of which is determined by property linked funds provided by the reinsurers. Each of these treaties provides a floating charge in favour of the Society over all of the reinsurer’s assets. In the event of a winding up of a reinsurer the floating charge ranks the liabilities equally with standard insured policies. A credit risk exists in the event of default of Prudential Retirement Income Limited and consequent recapture of the treaty, in that the additional premiums receivable, plus any amounts recoverable from the reinsurer, may not match the incidence of the additional risk. There is a floating charge in favour of the Society over all of the reinsurer’s assets which ranks the liability under the treaty equally with all unsecured and unsubordinated Insurance Debts of the reinsurer on a winding up of the reinsurer. In respect of all other treaties, a credit risk exists in the event of default of the reinsurer and consequent recapture of the treaty, in that the additional premiums receivable, plus any amounts recoverable from the reinsurer, may not match the incidence of the additional risk. In view of the credit risk associated with reinsurance arrangements, a reinsurer default reserve of £8m is held.

(o) No specific provision has been made for any liability to refund reinsurance commission in the event of early termination of policies.

(p) No treaties are “financing arrangements”.


291

Reinsurer

(d)

Reinsurance Cover

(e)

Premiums payable

(£m) (f)

Treaty Status

(h)

Mathematical Reserves

ceded (£m) (j)

Insurer’s Retention

(k)

(i) Swiss Re Europe S.A.

Former PLAL contracts A Surplus basis, mortality (risk premium) B Quota Share Mortality (risk premium) C Quota Share Mortality (modified original terms) D Quota Share Critical Illness and mortality (risk premium) E Quota Share Critical Illness and mortality (modified original terms) F Quota Share Critical Illness (risk premium) G Quota Share Critical Illness (modified original terms)

£13.7m Closed to new business £5.6m Not applicable

(ii) Swiss Re Europe S.A.

Former PLAL Protection Plans Quota share critical illness and mortality (risk premium)

£6.5m Closed to new business £(13.5)m Not applicable

(iii) Swiss Re Europe S.A.; RGA

Former SMA and Scottish Provident branded Pegasus policies – various treaties covering: mortality only, mortality with attaching critical illness, waiver of premium benefit, other benefits (income replacement, medical expenses, hospital cash) for older policies. All reinsured on risk premium basis.

£22.9m Swiss Re closed to new business RGA open to new business

£8.8m For policies containing Critical Illness benefits, 50% of the sum at risk or £125,000 if less. For policies containing life cover only or life cover with terminal illness, first £400,000 of sum at risk.

(iv) Swiss Re Europe S.A., SCOR UK, SCOR Germany, SCOR Ireland, Hannover Re, Munich Re, Pacific Life Re Limited, XL Re, Gen Re

Former SMA and Scottish Provident branded Self Assurance contracts – various treaties covering: mortality, Accelerated critical illness and Stand-Alone critical illness, Accelerated and Stand-Alone disability benefit. Premium payment benefit for sickness, accident and disability. SCOR/Hannover/Scot RE reinsured on risk premium basis. Some closed treaties are original terms.

£84.7m Swiss Re open for disability income benefit Hannover / Pacific Life Re/ SCOR closed for death benefit SCOR Germany and XL Re closed for Stand-Alone CIC. SCOR UK/SCOR Ireland open for Stand-Alone CIC. SCOR Germany and XL Re closed for Accelerated CIC. Swiss Re and SCOR UK/SCOR Ireland open for Accelerated CIC. Munich Re open for mortality benefit Gen Re open for mortality benefit

£103.6m 25% or £45,000 per annum if less 10% or £125,000 if less 50% or £125,000 if less 43.75% or £125,000 if less 10% or £125,000 if less


292

Reinsurer

(d)

Reinsurance Cover

(e)

Premiums payable

(£m) (f)

Treaty Status

(h)


ceded (£m) (j)


(k)

(v) Swiss Re Europe S.A.

Former SPL Self Assurance contracts. Mortality, Accelerated critical illness and Stand-Alone critical illness. All reinsured on a quota share basis.


(vi) General Reinsurance Life UK Limited

Bright Grey contracts Quota share mortality cover (risk premium and nil premium periods)

£24.7m Open to new business £57.7m 20% or £50,000 if less up to 7 October 2008 10% or £50,000 if less from 8 October 2008.

(vii) BlackRock Life Limited

All benefits expressed in terms of units in the SL/BlackRock Aquila Consensus, SL/BlackRock Aquila Global Equity Index (60:40), SL/BlackRock Aquila US Equity Index, SL/BlackRock Aquila European Equity Index, SL/BlackRock Aquila UK Equity Index, SL/BlackRock Aquila Global Equity Index (50:50), SL/BlackRock Aquila Long Gilt Index, SL/BlackRock Aquila World (ex UK) Equity Index 'A', SL/BlackRock Aquila US Equity Index 'A', SL/BlackRock Aquila European Equity Index 'A', SL/BlackRock Aquila Japanese Equity Index, SL/BlackRock Aquila Japanese Equity Index ‘A’, SL/BlackRock Aquila Pacific Rim Equity Index, SL/BlackRock Aquila Pacific Rim Equity Index ‘A’, SL/BlackRock Aquila UK All Stocks Corporate Bond Index, SL/BlackRock Aquila World (ex UK) Equity Index, SL/BlackRock Aquila Global Blend and SL/BlackRock Aquila Over 5 years Index Linked Gilt Index Pension funds are reinsured.

£308.6m Open to new business £1,724.7m Nil

(viii) AXA Wealth Ltd All benefits expressed in terms of units in the SL UK Equity Core Plus (Close TEAMS UK Equities (2%)), SL UK Equity Core Plus (Close TEAMS UK Equities (1%)), SL Global Blend Core Plus (Close TEAMS Global Alpha), SL/Close TEAMS Global Equities 1% 'A' Pension funds are reinsured.

£43.2m Open to new business £114.2m Nil.

(ix) Prudential Retirement Income Limited

Former SL and RL (intermediary) pension annuity business with currency dates after 31st

£134.5m December 2004.

Open to new business £267.4m Nil

(x) Unum Limited Former SL and RL (intermediary) group protection business - reinsurance of 100% claims in payment and any claims arising.

£2.1m Open to new business in so far as future claims can be reinsured.

£17.4m Nil.


293

Reinsurer

(d)

Reinsurance Cover

(e)

Premiums payable

(£m) (f)

Treaty Status

(h)


ceded (£m) (j)


(k) (xi) Munich Re UK Life Branch

Former RLA business Business written on original terms basis under the Progress brand with rebate during initial period. Covers protection business that includes: • term assurance • reviewable accelerated critical illness cover • guaranteed accelerated critical illness cover • stand-alone critical illness cover • pension life cover • family income cover • income protection


(xii) Munich Re UK Life Branch

Former RLA business Business written on an original terms basis covering Caledonian escalating protection and Caledonian protection (excluding Homeguard) policies

£14.3 Open to new business £15.3m 10% up to max of 63,487 Euros for non-Serious Illness Products 10% up to max of 50,000 Euros for Serious Illness Products

(xiii) Baillie Gifford Life Limited

All benefits expressed in terms of units in the SL/Baillie Gifford UK Equity ‘A’, SL/Baillie Gifford Worldwide Equity (50:50) ‘A’, SL/Baillie Gifford UK Equity and SL/Baillie Gifford Worldwide Equity (50:50) Pension funds.

£3.9m Open to new business £14.8m Nil.

(xix) Munich Re UK Life Branch

Bright Grey contracts Quota share mortality (nil and reduced premium periods) and income protection cover (risk premium)

£10.8m Open to new business for mortality cover £8.6m 10% or £50,000 if less for mortality cover 50% or £12,000 if less for income protection cover

(xx) RGA Bright Grey contracts – various treaties covering: Reviewable critical illness cover (nil premium periods), guaranteed critical illness cover (risk premium), mortality with attaching critical illness cover (risk premium)

£14.2m Open to new business £16.5m 25% or £50,000 if less up to 22 May 2011 10% or £50,000 if less from 23 May 2011

(xxi) SCOR Vie Bright Grey contracts Reviewable stand-alone critical illness cover (nil premium periods), Reviewable accelerated critical illness cover (nil premium periods and risk premium), guaranteed accelerated critical illness cover (risk premium)

£4.1m Open to new business £11.1m 20% or £50,000 if less up to 2 May 2004 10% or £50,000 if less from 3 May 2004


294

Reversionary (or annual) bonus

10. (1)


Name of bonus series Mathematical

reserves Reversionary bonus rate 2013 2012

Total guaranteed bonus rate for

2013

Conventional business: RL Regular premium assurances (simple) £348m 0.5% 0.5% 0.5%

RL Single premium assurances (simple) £14m 0.5% 0.5% 0.5%

RA Assurances (compound) £109m 0.5%/0.5% 0.5%/0.5% 0.5%/0.5% RA Pensions (compound) £621m 0.5%/0.5% 0.5%/0.5% 0.5%/0.5% RL Industrial (simple) £194m 0.5% 0.5% 0.5% Accumulating with profits business

RL Retirement annuity pension (compound) £86m 1.5%/1.5% 1.0%/1.0% 1.5%/1.5%

RL Personal pension, Freestanding AVC (compound) £1,249m 1.5%/1.5% 1.0%/1.0% 1.5%/1.5%

UWP business: RL Unitised Whole Life Assurance £82m 2.0% 1.25% 2.0%

RA Unitised Whole Life Assurance £16m 2.0% 1.25% 2.0%

RL Unitised With-Profits Savings Plans £14m 2.0% 1.5% 2.0%

RL Insurance ISA £73m 0.5% 0.1% 0.5% European With-Profits Bond and With Profits Bond Plus £102m 1.0% 2.0% 1.0%

RL Unitised Personal Pension Plan (Series 2) £11m 1.35% 1.35% 0.35% *

RA Unitised Personal Pension Plan (Series 1) £30m 1.35% 1.35% 0.1% *

Talisman, Retirement Solutions, Individual & Pension Portfolio £308m 2.0%/2.0% 2.0%/2.0% 2.0%/2.0%

Note: Bonus rates marked “*” are net of policy charges deducted from the gross bonus rate. PLAL With-Profits Fund




2013

Series III Life £174m 1.0% 1.0% 1.0% Series III Pension £166m 1.0% 1.0% 1.0% Series V Life Bonds £120m 1.0% 1.0% 1.0%

Insurance ISA £23m 0% 0% 0%


295

Refuge Assurance IB Subfund




2013

RA Industrial (compound) £110m 0.5%/0.5% 0.5%/0.5% 0.5%/0.5% Whole of life policies on which premiums ceased under the terms of the contract after 31 March 1988 are deemed to be participating policies.



reserves

Reversionary bonus rate Total guaranteed

bonus rate for 2013 2013 2012

Royal Liver Business OB Simple Old Series £61.4m 0.00% 0.00% 0.00% OB Compound Old Series £51.3m 0.00%/0.00% 0.00%/0.00% 0.00%/0.00% OB New Series £145.9m 0.00%/0.00% 0.00%/0.00% 0.00%/0.00% Unitised With Profit Pensions – Tables 50(1998), 54(1998), 100(1998).

£378.0m 0.50%/0.50% 0.50%/0.50% 0.50%/0.50%

Unitised With Profit Savings Schemes - UK £11.2m 0.50%/0.50% 0.50%/0.50% 0.50%/0.50% Unitised With Profit Savings Schemes – ROI £22.5m 0.50%/0.50% 0.50%/0.50% 0.50%/0.50% IB Post Rationalisation £54.2m 0.00%/0.00% 0.00%/0.00% 0.00%/0.00%

Former Caledonian Business With Profit Bond £340.9m 0.50%/0.50% 0.50%/0.50% 0.50%/0.50% VIP Series I – simple £16.1m 0.00% 0.00% 0.00% SERP – simple £11.0m 0.00% 0.00% 0.00% PPP and VIP Series II £32.7m 0.00%/0.00% 0.00%/0.00% 0.00%/0.00% PPP and VIP Series III £13.9m 0.00%/0.00% 0.00%/0.00% 0.00%/0.00% Former Irish Life Business Post 1980 £17.3m 1.00% 0.00% 1.00% Former Friends Provident Business All tables except 1/2/3 & 10F pre 1979, all post 2000 & tables 82F,83F and 84F £43.3m 0.00% 0.00% 0.00%


296

Scottish Life Fund


reserves Reversionary bonus rate

2013 2012


2013

SL conventional business: Assurances (compound) £52m 0.1%/0.1% 0.1%/0.1% 0.1%/0.1% Pensions (compound) £910m 0.1%/0.1% 0.1%/0.1% 0.1%/0.1% With-profits plan (compound) £33m 0.1%* 0.1%** 0.1% SL UWP business: Profitbuilder, Budget Plan (TP1), Budget Plan (TP2) £17m 2.0%/2.0% 2.0%/2.0% 2.0%/2.0%

Talisman and Retirement Solutions £92m 2.0%/2.0% 2.0%/2.0% 2.0%/2.0%

Crest Growth *** £51m 2.0% 2.0% 2.0% SL deposit administration business:

Sovereign Plan, Talisman Secure Account £116m 5.75%* 5.75%** 5.75%

Crest Secure £371m 5.0%* 5.0%** 5.0% Note: bonus rates marked “*” indicate that the rate shown applies for a calendar year, policy year or scheme year 2013/2014 as appropriate. Rates marked “**” apply similarly for 2012/2013.

*** A special bonus of 5% has been declared for 2013 for defined benefit schemes.

United Friendly IB Subfund




2013

Whole life assurance (simple): Class 1 (table 7) £112m 0.5% 0.5% 0.5% Class 2 (table 27W) £183m 1.0% 0.5% 1.0% Class 3 (table 27L) £78m 1.5% 1.0% 1.5% Whole life assurance with recurring endowments (simple): Class 1 (table 5) £56m 1.0% 0.5% 1.0% Class 2 (table 25) £19m 1.0% 0.5% 1.0% Endowment assurance (simple): Class 3 (table 21L) £5m 1.0% 0.5% 1.0% All applicable contracts LAPR sum assured addition 6.4.79 (except table 7) Included above 1.0% 0.5% 1.0% LAPR sum assured addition 6.4.79 (table 7) Included above 0.5% 0.5% 0.5% LAPR sum assured reduction 6.4.81 (except table 7) Included above 1.0% 0.5% 1.0% LAPR sum assured reduction 6.4.81 (table 7) Included above 0.5% 0.5% 0.5% The Society has issued business on three broad rating tables. - Class 1 applies to weekly business written up to and including 5 April 1979. - Class 2 applies to weekly business written between 6 April 1979 and 4 September 1988. - Class 3 applies to all lunar monthly business.


297

United Friendly OB Subfund




2013

Whole life assurances (tables I, W):

Series 1 with guarantee (simple) £38m (including non guaranteed) 0.0% 0.0% 1.5%

Series 1 no guarantee (simple) Included above 0.0% 0.0% 0.0% Series 2 (compound) £12m 1.5%/1.5% 1.0%/1.0% 1.5%/1.5% Low cost endowment assurance (table E):

Series 2 (compound) £14m 0.0%/0.0% 0.0%/0.0% 0.0%/0.0% Pension business: DWP rebates (compound) £1,208m 0.0%/0.0% 0.0%/0.0% 0.0%/0.0% Regular premium personal pensions (compound) £151m 0.0%/0.0% 0.0%/0.0% 0.0%/0.0%

Single premium personal pensions (compound) £19m 0.0%/0.0% 0.0%/0.0% 0.0%/0.0%

There are three bonus series for life assurance with-profits business: - Series 1 applies to simple annual bonus contracts written up to 30 September 1989. - Series 2 applies to compound annual bonus contracts written from 1 October 1989 (excluding low cost endowment contracts

written from May 1994). 10. (2)

The tables in paragraph 10. (1) above separately identify unitised with-profits business. Where a single rate has been supplied, this is the rate of increase in the unit price during the year. Where two rates have been provided, bonus units are added to the policies.

10. (3)

The tables in paragraph 10. (1) show the separate rates applicable to the sum assured and existing bonus for super compound bonus series.

10. (4)

There are no bonus series with variable bonus rates.

VALUATION REPORT FOR REALISTIC VALUATION ON THE ROYAL LONDON MUTUAL INSURANCE SOCIETY

298

Introduction 1. (1)

This investigation relates to 31 December 2013. 1. (2)

The previous investigation related to 31 December 2012. 1. (3)

The date of the last interim valuation, which was not published, was 30 June 2013. Assets 2. (1)

A table of the economic assumptions used to determine the value of future profits for non profit insurance contracts, applying to all with-profits funds except the Royal Liver Assurance Fund, is set out below:

31/12/2013 31/12/2012 Non participating (pre tax) return 3.45% 2.30% Non participating (post tax) return 2.75% 1.85% Unit linked (pre tax) return 3.45% 2.30% Unit Linked (post tax) return 3.25% 2.15% Risk Discount Rate (pre tax) 3.45% 2.30% Expense Inflation (UK) 4.50% 3.50% Expense Inflation (ROI) 3.00% 3.00%

A table of the economic assumptions used to determine the value of future profits for non profit insurance contracts, applying to the Royal Liver Assurance Fund, is set out below:

31/12/2013 31/12/2013 31/12/2012 31/12/2012 UK ROI UK ROI Non participating (pre tax) return 3.45% 2.70% 2.30% 2.00% Unit linked (pre tax) return 3.45% 2.70% 2.30% 2.00% Risk Discount Rate (pre tax) 3.45% 2.70% 2.30% 2.00% Expense Inflation 4.50% 3.00% 3.50% 3.00%

Under the terms of a waiver granted by FSA, the value of future profits in respect of certain with-profits business may be brought into account in line L22 of Form 19 for the Royal London IB & OB Subfund, provided that these values are calculated on a market consistent approach and use stochastic investment scenarios and liability cashflows consistent with those used for the calculation of the future policy related liabilities (FPRL) in the originating with-profits fund. These future profits relate to shareholder transfers on acquired UAG with-profits business, charges deducted from asset shares on those lines of acquired with-profits SL business detailed in the SL Scheme and rate card charges less cost outgo arising on with-profits business in the Royal Liver Assurance Fund. A description of the market consistent calibration is given in more detail in paragraph 6 below. The value of the liability in respect of unit linked GARs held in the Scottish Life Fund has been assessed on a market consistent approach, using the same investment scenarios as for the FPRL calculations and best estimate non economic assumptions. The difference between the regulatory and realistic values of this liability has been included within the value of future profits on non profit business. 2. (2)

The economic assumptions used to determine the value of future profits for non profit insurance contracts under INSPRU 1.3.33R(2) are the same as those given in the table in 2.(1) above. 2. (3)

Not applicable.


299

2. (4) The different economic assumptions applying to the Royal Liver Assurance Fund have been disclosed in 2.(1) above. With-Profits Benefits Reserve (WPBR) 3. (1) (a) (b) (c) The table below summarises the classes of with-profits insurance contracts that are used throughout the remainder of this abstract where this level of detail is required:

Class Business Covered Comment 1 IB (CWP) Industrial Branch business, including endowment and whole of life business. 2 OB RP Life (CWP) Ordinary Branch Life Regular Premium Conventional with-profits business, including both

endowment and whole life business 3 OB SP Life (CWP) Ordinary Branch Life Single Premium Conventional with-profits business, including both

endowment and whole life business. 4 OB Life (UWP) Ordinary Branch Life Regular and Single Premium Accumulating (Unitised) with-profits

business. 5 OB RP Pension (CWP) Ordinary Branch Regular Premium Conventional with-profits Pensions business, including

both contracts that fund for an annuity and that fund for cash. 6 OB SP Pension (CWP) Ordinary Branch Single Premium Conventional with-profits Pensions business, including

both contracts that fund for an annuity and that fund for cash. 7 OB RP Pension (UWP) Ordinary Branch Regular Premium Accumulating (Unitised) with-profits Pensions

business. 8 OB SP Pension (UWP) Ordinary Branch Single Premium Accumulating (Unitised) with-profits Pensions business 9 DA Business Regular and Single Premium Deposit Administration business (Scottish Life Fund only). 10 Miscellaneous Covers ISA business written in the Royal London IB & OB Subfund and other lines of

business which are not required to be disclosed separately under paragraph 3.(3) of this abstract. For the Royal Liver Assurance Fund this contains additional reserves that have not been assigned to specific classes of business.

Tables are presented separately for each with-profits fund, where requested. When calculating the with-profits benefit reserve (WPBR), the retrospective method is the predominant calculation approach, as indicated in the tables below.

The prospective method is used in the following circumstances: where historic data is not in a suitable format, the only material classes being acquired RA OB Class 5 business in the

Royal London IB & OB Subfund issued since 1992 which has become paid up, and United Friendly OB Subfund life policies in class 2 that have been converted;

For all funds, whole of life business, contained in Classes 1, 2 and 3, at advanced ages to prevent tontine effects that can occur using retrospective methods;

true deferred annuity business contained within Classes 5 and 6 for the Scottish Life Fund where historic data is not in a suitable format and where the prospective value is anticipated to be higher than theoretical WPBR; and

for some Former RLA Caledonian pension contracts in Class 5, where premium histories were not sufficiently reliable to compute retrospective reserves, a prospective method has been used up to 31/12/2004 with a retrospective calculation applying from 01/01/2005.

There are two approaches used to determine the WPBR under the Retrospective method:

Retrospective A: Asset shares are calculated using proprietary model office software by accumulating the premiums paid at the rate of return earned on the assets backing the policies after allowing for charges. These charges include the expenses incurred (for example, set up costs, commission payments, administrative fees and investment management costs), the cost of risk benefits, the cost of guarantees, the cost of smoothing, the cost of tax and (in respect of acquired UAG business only) a transfer to the estate within the Royal London IB & OB Subfund.

Retrospective B: For certain lines of Scottish Life Fund business and Royal London IB & OB Subfund business direct computation of Retrospective method A is not possible. For these lines, the results of Retrospective method A, as described above, for comparable classes of business are used to determine the WPBR and FPRL by reference to the relationship between statutory liability and realistic liability for each class. The prospective method can be described as follows:

The WPBR is set equal to the discounted value of future claim outgo (death, maturity and surrender) plus renewal expenses less associated tax relief, (in respect of acquired UAG business only) a transfer to the estate within the Royal London IB & OB Subfund less future premiums. The basis for performing this calculation is described in more detail under paragraph 5 below.


300

The tables below provide information by with-profits fund on the WPBR and FPRL for each class of business identified above (in £m).


Class Retro. A Retro. A Retro. B Retro. B Prospective Prospective Total

WPBR FPRL WPBR FPRL WPBR FPRL 1 254.9 -14.1 0.0 0.0 60.7 0.0 301.4 2 562.0 31.8 0.0 0.0 16.9 0.0 610.7 3 14.9 2.2 0.0 0.0 0.0 0.0 17.1 4 297.5 3.0 0.0 0.0 0.0 0.0 300.5 5 257.0 238.1 0.0 0.0 93.4 12.0 600.6 6 42.0 36.8 0.0 0.0 0.0 0.0 78.9 7 1173.3 -18.4 3.4 -0.2 0.0 0.0 1158.2 8 1713.4 14.1 0.0 0.0 0.0 0.0 1727.5 10 173.5 66.6 0.0 0.0 0.0 0.0 240.2

Total 4492.0 360.0 0.0 0.0 171.0 12.0 5035.0 Refuge Assurance IB Subfund


WPBR FPRL WPBR FPRL WPBR FPRL 1 96.5 68.4 0.0 0.0 91.8 0.0 256.7

Total 96.5 68.4 0.0 0.0 91.8 0.0 256.7 United Friendly OB Subfund

Class Retro.

A Retro. A Retro. B Retro. B Prospective Prospective Total

WPBR FPRL WPBR FPRL WPBR FPRL 2 101.4 20.5 0.0 0.0 17.4 0.0 139.2 5 124.0 59.7 0.0 0.0 0.0 0.0 183.7 6 1785.9 126.4 0.0 0.0 0.0 0.0 1912.3 10 0.0 0.7 0.0 0.0 0.0 0.0 0.7

Total 2011.3 207.2 0.0 0.0 17.4 0.0 2235.9 United Friendly IB Subfund


WPBR FPRL WPBR FPRL WPBR FPRL 1 703.6 193.9 0.0 0.0 123.8 0.0 1021.4

Total 703.6 193.9 0.0 0.0 123.8 0.0 1021.4

Scottish Life Fund

Class Retro. A Retro. A Retro. B Retro. B Prospective Prospective Total WPBR FPRL WPBR FPRL WPBR FPRL

2 65.5 24.9 9.1 3.5 0.0 0.0 103.0 5 872.5 431.4 46.7 23.1 48.3 0.0 1,422.0 7 92.4 63.3 0.0 0.0 0.0 0.0 155.7 9 389.9 176.0 1.8 0.8 0.0 0.0 568.5 10 0.0 0.0 0.0 9.8 0.0 0.0 9.8

Total 1,420.3 695.6 57.7 37.1 48.3 0.0 2,259.0


Class Retro. A Retro. A Retro. B Retro. B Prospective Prospective Total WPBR FPRL WPBR FPRL WPBR FPRL

4 427.0 21.1 0.0 0.0 0.0 0.0 448.1 7 141.1 7.7 0.0 0.0 0.0 0.0 148.7 8 98.3 4.9 0.0 0.0 0.0 0.0 103.2 10 0.0 0.1 0.0 0.0 0.0 0.0 0.1

Total 666.4 33.8 0.0 0.0 0.0 0.0 700.2 Royal Liver Assurance Fund



301

WPBR FPRL WPBR FPRL WPBR FPRL 1 132.1 62.5 0.0 0.0 69.2 8.4 272.2 2 212.7 77.9 0.0 0.0 19.2 7.1 316.9 3 15.2 4.5 0.0 0.0 0.0 0.0 19.8 4 360.5 117.5 0.0 0.0 0.0 0.0 478.0 5 49.9 47.1 0.0 0.0 0.0 0.0 97.0 7 326.5 73.8 0.0 0.0 0.0 0.0 400.3 8 0.0 22.2 0.0 0.0 0.0 0.0 22.2 10 5.0 26.3 0.0 0.0 0.0 0.0 31.3

Total 1101.9 431.8 0.0 0.0 88.4 15.5 1637.7

Notes: Any other long-term liabilities in Line L47 have been allocated in aggregate to Class 10. These are described in more

detail in paragraph 8 below. Under the prospective method, for non Royal Liver Assurance Funds all policy liabilities excluding the costs of financial

options are captured within the WPBR. For the Royal Liver Assurance Fund all policy liabilities excluding the cost of guarantees and cost of past surplus attributed to WPBR are captured within the prospective WPBR.

3. (2)

Not applicable. 3. (3) Not applicable. 3. (4) Not applicable. With-Profits Benefits Reserve (WPBR) – Retrospective Method 4. (1) (a)&(b) All WPBRs calculated using a retrospective method have been calculated on an individual basis. 4. (1) (c) Not applicable. 4. (2) (a) The modelling of the Royal Liver business liabilities has moved to use the Prophet modelling software consistent with the rest of the group. As part of this migration the methods used to calculate the liabilities have also been made consistent. The methodology for whole of life business has changed to harmonise with the modelling approach for other whole life business. A prospective WPBR calculation method is used at advanced ages to prevent tontine effects that can occur using retrospective methods. Previously the Royal Liver business used a retrospective approach at advanced ages. There have been no other material changes made to the methods for the December 2013 calculations compared to the previous financial year end. 4. (2) (b) Not applicable. 4. (3) (a) Acquisition and maintenance expenses are charged to the with-profits funds, based on an agreement with Royal London Management Services Limited (“RLMSL”) which is agreed annually in advance. The with-profits funds pay fees to RLMSL in line with the agreement, which for acquired business imposes limits by which the fees may increase, and RLMSL incurs all expenses. Expense investigations were performed during 2013, with the results of this investigation being taken into account when setting service fees for 2013. Investment expenses are charged to each with-profits fund, based on an Investment Management Agreement with Royal London Asset Management (“RLAM”), a wholly owned subsidiary of the Society. This agreement is subject to periodic review. 4. (3) (b)


302

Acquisition and maintenance expense investigations are performed at least annually to confirm the adequacy of the maintenance fees charged by RLMSL, based on budgeted expenditure for the following year. Maintenance expenses charged to acquired UAG and SL with-profits business are set by reference to a formulaic approach documented in the respective Schemes. Maintenance expenses charged to the Royal Liver Assurance Fund are based on the rate card set out in the instrument of transfer. 4. (3) (c) The table below analyses expenses reported in Form 43 lines L41 to L45 inclusive for 2013 (in £m):

With-profits fund Acquisition charged to

WPBR

Maintenance charged to

WPBR

Other not charged to

WPBR

Total

Royal London IB & OB 0.6 8.9 335.3 344.8 Refuge Assurance IB 0.0 1.8 1.2 3.0 United Friendly OB 0.0 7.0 0.5 7.5 United Friendly IB 0.0 6.4 0.6 7.1 Scottish Life 0.0 3.8 0.0 3.8 PLAL With-Profits 0.0 0.2 0.0 0.2 Royal Liver Assurance 0.0 9.4 24.9 34.4 Total 0.6 37.5 362.5 400.8

(i) The only acquisition expenses charged directly to the WPBR relate to new Intermediary business overseas bonds for non RLA business. For Former RLA business, initial expenses on the unitised with-profits business are recouped via annual management charges. (ii) Maintenance expenses charged to the WPBR cover fees payable to RLMSL associated with administering the long term business plus investment expenses payable to RLAM. This covers all with-profits business with the exception of those classes described further in paragraph 4.(3)(c)(iv) below. (iii) For all with-profits business where fees payable to RLMSL are charged to the WPBR, acquisition and maintenance fees are charged on a contract by contract basis for individual business, and on a per scheme basis for Group pensions business. The RLMSL agreement specifies for each product annual expense allowances in the form of amounts per policy, percentages of annual or single premium (as appropriate), percentages of WPBR and/or amounts per claim. Additionally investment expenses are charged as a percentage of the WPBR, where the percentage varies by category of asset as described in the UAG, SL and RLA Schemes. (iv) Expenses charged to the with-profits funds, other than to the WPBR relate to the following items: non participating business written in the with-profits funds, covering both in force business and new pensions and

protection business written in the Royal London IB & OB Subfund. The SL and RLA Schemes allows certain new business to be written within the Scottish Life Fund and Royal Liver Assurance Fund;

under the SL Scheme, fees payable to RLMSL for certain lines of acquired with-profits business, whose WPBR are held

within the Scottish Life Fund, are debited from the Royal London IB & OB Subfund. The realistic value of these future payments are held within other long-term liabilities as described in paragraph 8 below. In turn the subfund is credited with those charges debited from these policies’ WPBR as described in paragraph 4.(5) below;

under the RLA Scheme, fees are payable to Royal London IB & OB Subfund based on a rate card that was agreed prior to

transfer. The rate card specifies which costs are covered by the fees and the level of fees for each product. All business in the Royal Liver Assurance Fund is covered by the rate card. Royal London IB & OB Subfund incurs fees payable to RLMSL. The value of future fees payable to RLMSL are offset against the value of future income and the total is reported in Form 19 line 22.

all new Intermediary with-profits business written following the Scottish Life acquisition is written directly in the Royal

London IB & OB Subfund. With the exception of the overseas bond where expenses are charged directly to the WPBR, the relevant subfund pays the commission and acquisition and maintenance fees to RLMSL. As for the acquired Scottish Life business described in the previous bullet point, the WPBR for these classes of business are debited with charges as described in paragraph 4.(5) below;

balancing payments, which may be negative, are generally payable by the Royal London IB & OB Subfund at the end of

the year to ensure that the expenses incurred by RLMSL do not exceed the income in the form of fees payable by the Society. For 2013, the RLMSL expenses exceeded the income received and so a balancing payment was made from the Royal London IB & OB Subfund; and


303

additional investment expenses may be charged directly to the with-profits fund for items such as property costs, legal fees, management of the excess assets in each fund and the costs of buying and selling hedging arrangements. These items are not charged to the WPBR.

4. (4) For with-profits business written in the Scottish Life Fund, charges in respect of Guaranteed Annuity Rates are currently deducted from each policy’s WPBR. The current rates are 0.49% pa for all business issued prior to 1998 and 0.16% pa for business issued from 1998 to 11 September 2000. These rates are unchanged from 2012. Additionally under the terms of the SL Scheme, the WPBR is credited with a “demutualisation enhancement” to distribute the estate over the lifetime of the policies. In the Royal Liver Assurance Fund, the following table summarises the charges for guarantees that are deducted from the WPBR: Charge for guarantees

Product Charge for guarantees 2013 Charge for guarantees 2012 Unitised with-profits business 0.75% 0.75% Contracts transferred from Friends Provident (pre 2000 business) 0.50% 0.50%

Contracts transferred from Irish Life 0.00% 0.00% Royal Liver IB, OB and Caledonian conventional with-profits business and post 2000 Friends Provident 1.50% 1.50%

There are currently no other significant charges deducted from asset shares to cover the costs of guarantees or the use of capital. 4. (5) Charges are deducted from the WPBR for non insurance risk on the following types of with-profits contracts to cover expenses (both acquisition and maintenance including commission) and to provide a profit loading:

With-profits fund Contracts affected Royal London IB & OB Business written post 30/6/2001 under the Scottish Life marketing brand and RA

OB and RL unitised with-profits pension business. Scottish Life All acquired unitised with-profits contracts, the Old Talisman range of

conventional with-profits policies and all Deposit Administration (DA) business. PLAL With-Profits All acquired unitised with-profits contracts. Royal Liver Assurance All acquired unitised with-profits contracts.

The table below gives an estimate of the charges deducted from the WPBR for these lines of business for 2013 (in £m):

With-profits fund Total Charges (Non Insurance Risk) Royal London IB & OB 5.4 Scottish Life 11.4 PLAL With-Profits 6.8 Royal Liver Assurance 10.8

Following the merger of the Refuge Assurance OB Fund into the Royal London IB & OB Subfund the value of future 1/9th

cost of bonus transfers on acquired RA OB business is included within Line 36 of Form 19.


304

4. (6) The table below shows the estimated ratio of claims paid to the sum of WPBR adjusted for miscellaneous surpluses and/or deficits, for each of the last three calendar years:

With-profits fund 2011 2012 2013 Royal London IB & OB 101% 100% 98% Refuge Assurance IB 99% 98% 99% United Friendly OB 100% 99% 101% United Friendly IB 114% 112% 112% Scottish Life 101% 103% 108% PLAL With-Profits 100% 97% 96% Royal Liver Assurance 104% 103% 102%

4. (7) A summary of the investment returns credited to the WPBR for 2013 is given in the table below:

With-profits fund Gross Return

Average %

Gross Return HITM policies

%

Gross Return Lowest EBR

%

Gross Return Highest EBR

%

Royal London IB & OB 10.60 -1.88 3.41 13.75 Refuge Assurance IB 5.55 n/a 4.41 12.97 United Friendly IB 10.66 n/a 3.47 14.65 United Friendly OB 3.92 -2.49 2.49 4.36 Scottish Life – Other than DA Business 4.25 n/a n/a n/a Scottish Life – DA Business 1.09 n/a n/a n/a PLAL With-Profits 7.69 n/a n/a n/a Royal Liver Assurance 5.23 n/a n/a n/a

In the Royal London IB & OB, Refuge Assurance IB, United Friendly IB and United Friendly OB Subfunds the proportions of assets invested in equities and properties depends on the outstanding term of the policy, and on whether the class of business that the policy belongs to has guarantees that are heavily in the money (HITM i.e. where guarantees significantly exceed projected with-profits benefits reserves). Hence the actual investment return credited to an individual policy will differ from the rates in the gross return average column above. Heavily in the money policies have a zero equity backing ratio (EBR). Gross investment returns credited to such policies in the Royal London IB & OB and United Friendly OB Subfunds are shown in the table above. In addition the range of investment returns for non heavily in the money policies is also shown. This is based on the lowest and highest equity backing ratios for policies in each fund. There are different assets mixes backing the WPBR for Deposit Administration (DA) and Other than DA business within the Scottish Life Fund. In accordance with the PPFM the assumed asset allocation backing each individual with profits policy in the Scottish Life Fund depends on the relationship between the WPBR and the attaching guaranteed benefits. Within this framework the total asset return stated in the table above is allocated to policies. All with-profits contracts within the Royal Liver Assurance Fund are attributed the same basic investment return, before tax and expenses are taken in to account. This return applied for the period 31 December 2012 to 31 December 2013 was 5.23% gross. With-profits benefit reserve – Prospective Method

5. (1) (a) The discount rate is given in the table below:

With-profits fund Gross % Net % Royal London IB & OB 3.45 2.95 Refuge Assurance IB 3.45 2.95 United Friendly IB 3.45 2.95 United Friendly OB 3.45 2.95 Scottish Life 3.45 2.95 Royal Liver Assurance UK 3.45 n/a Royal Liver Assurance ROI 2.70 n/a

The pre-tax discount rate return is set equal to the annualised return on the 15 year gilt at the valuation date. The tax rate used is derived from those assumed for each individual asset class applied to the asset mix described in paragraph 6.(5) below.


305

For Royal Liver Assurance business no net of tax discount rates is specified. Taxable business within the Royal Liver Assurance Fund is currently valued using gross assumptions reflecting the latest assessment of the future tax position of the fund. 5. (1) (b) The investment return is set equal to the discount rate described above and consequently no risk adjustments are required. 5. (1) (c) The rate of expense inflation for all business except Caledonian business, is determined as projected UK RPI plus 1.00%, with UK RPI calculated as the difference between the gross redemption yield on the 15 year UK gilts and the real yield on UK index-linked gilts. As at the calculation date, the expense inflation assumption for all business excluding Caledonian was 4.5%.

The rate of expense inflation assumed to apply to Caledonian business is based on an estimate of the Irish Consumer Prices Index plus 1%. As at the calculation date the expense inflation assumption for Caledonian business was 3.0%. 5. (1) (d) A summary of key projected bonus assumptions are given in the table below:


Product Type Annual Bonus Final Bonus RL IB Whole Life 0.25% pa simple Current scale introduced for claims on 1

January 2014 retained. RA OB RP Pension Lapsed 0.25% pa compound Current scale introduced for claims on 1

January 2014 retained. Refuge Assurance IB Subfund

Product Type Annual Bonus Final Bonus RA IB Whole Life

0.25% pa compound Current scale introduced for claims on 1 January 2014 retained.


Product Type Annual Bonus Final Bonus UF OB Whole Life and Endowments

0% pa simple / compound depending on product type except Table I compound where 1.5% pa is used (or 1% pa / 1.5% pa where a guarantee applies.)

Current scale introduced for claims on 1 January 2014 retained.


Product Type Annual Bonus Final Bonus UF IB Whole Life

1% pa simple except Table 27L where 1.5% pa simple is used and Table 7 where 0.25% pa is used


Scottish Life Fund

Product Type Annual Bonus Final Bonus All Conventional WP 0.10% pa simple/compound

depending on product type No explicit final bonus, allowance made by reference to proportion payable on similar policies.


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Royal Liver Assurance Fund Product Type Annual Bonus Final Bonus Ex Irish Life Whole Life and Endowments

4.0% pa compound for policies sold before 1965, 2.5% pa compound for policies sold from 1965 to 1980 and 1.0% pa compound for policies sold from 1980.


Liver and Ex Friends Provident Conventional WP

30 x weekly premium for FP Table 10 sold before 1979, 41 x weekly premium for FP Tables 1, 2 and 3 sold before 1979 and 0% pa for all other Liver conventional WP


5. (1) (e) Expenses are projected in line with the RLMSL agreement described in paragraph 4 above, assumed to inflate at the rate described in 5.(1) (c). All monetary amounts in the following tables are given in 2014 terms. Key assumptions are: Royal London IB & OB Subfund

Product Type Expense Assumption RL IB Whole Life £6.14 per policy plus 0.092% of reserve in 2014

£6.54 per policy plus 0.092% of reserve in 2015 £7.05 per policy plus 0.092% of reserve in 2016 £7.53 per policy plus 0.092% of reserve in 2017 £7.95 per policy plus 0.092% of reserve from 2018 onwards

RA OB RP Pension Lapsed £8.85 per policy plus 0.07% of reserve from 2014 to 2016 inclusive £12.66 per policy plus 0.07% of reserve from 2017 onwards


Product Type Expense Assumption Whole Life £6.69 per policy plus 0.073% of reserve from 2014 to 2016 inclusive

£8.02 per policy plus 0.073% of reserve from 2017 onwards


Product Type Expense Assumption Whole Life and Endowments

£8.85 per policy plus 0.071% of reserve from 2014 to 2016 inclusive £12.66 per policy plus 0.071% of reserve from 2017 onwards


Product Type Expense Assumption Whole Life £6.42 per policy plus 0.08% of reserve from 2014 to 2016 inclusive

£7.62 per policy plus 0.08% of reserve from 2017 onwards Scottish Life Fund

Product Type Expense Assumption SL Pensions £46.42 per policy plus 0.0765% of reserve


Product Type Expense Assumption Caledonian £47.33 per policy plus 0.26% of reserve from 2014 to 2021 inclusive

£52.20 per policy plus 0.26% of reserve from 2022 IB Conventional £10.36 per policy plus 0.26% of reserve from 2014 to 2021 inclusive

£9.98 per policy plus 0.26% of reserve from 2022 OB Conventional £46.83 per policy plus 0.26% of reserve from 2014 to 2021 inclusive

£44.47 per policy plus 0.26% of reserve from 2022


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5. (1) (f) A summary of key persistency assumptions are given in the table below (showing annual lapse rates). For lines of business where the last entry date means that there is no business in force with a particular duration, no data is provided:


Product Type Duration

5 Duration

10 Duration

15 Duration

20 Duration

25 Duration

30+ RL IB Whole Life N/A N/A % 0.95% 0.95% 1.425% 1.425% RA OB RP Pen Lapsed N/A N/A N/A N/A 0.475% 0.475%



5 Duration

10 Duration

15 Duration

20 Duration

25 Duration

30+ Whole Life N/A N/A 0.95% 0.95% 1.425% 1.425%



5 Duration

10 Duration

15 Duration

20 Duration

25 Duration

30+ Whole Life and Endowment N/A N/A 1.425% 1.425% 1.425% 0.95%



5 Duration

10 Duration

15 Duration

20 Duration

25 Duration

30+ Whole Life N/A N/A N/A 0.95% 0.95% 0.95%


Product Type Duration 5

Duration 10

Duration 15

Duration 20

Duration 25

Duration 30+

RLA OB Retirement Annuity, Whole of Life and Endowment

N/A 4.75% 3.325% 2.85% 1.9% 0.95%

Caledonian WP Bond 5.225% 5.225% 5.225% 5.225% 5.225% 5.225% Unitised With Profit Pension 1.9% 1.425% 1.425% 1.9% 1.9% 1.9%

5. (2)

Not applicable Costs of Guarantees, options and smoothing 6. (1) Not applicable 6. (2) (a) All business where the WPBR has been calculated using a retrospective method has valued its costs of guarantees, smoothing and options using a market consistent stochastic method. 6. (2) (b) (i) & (ii) All costs have been calculated using grouped model points. 6. (2) (b) (iii) The market consistent stochastic model contains a number of products which calculate the market consistent costs of guarantees, smoothing and options. Each product models with-profits contracts with similar policy benefit characteristics. The table below summarises the products and gives the number of policies and model points:

With-profits fund Bonus Class Issued Contracts Model Points Royal London IB & OB Subfund C 1 Pre 2001 230,602 338 C 2 Pre 2001 38,760 972


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C 3 Pre 2001 2,577 51 C 5 Pre 2001 37,653 771 C 6 Pre 2001 3,905 182 A 4 Pre 2001 10,622 130 A 4 Post 2000 5,581 143 A 7 Pre 2001 72,010 515 A 7 Post 6/2001 14,927 713 A 8 Pre 2001 97,330 1,054 A 10 Post 1998 15,020 114 A 10 Pre 2001 9,560 261 Refuge Assurance IB Subfund C 1 Pre 2000 47,431 261 United Friendly OB Subfund C 2 Pre 1998 20,187 1,395 C 5 Pre 1998 34,972 208 C 6 Pre 1998 129,967 2,103 United Friendly IB Subfund C 1 Pre 1998 505,731 403 Scottish Life Fund C 2 Pre 7/2001 4,119 181 A 5 Pre 7/2001 37,152 1,055 A 7 Pre 7/2001 9,277 162 D 9 Pre 7/2001 37,488 261 PLAL With-Profits Fund A 4 Post 1/1993 45,086 257 A 7 Post 1/1993 34,833 293 A 8 Post 3/1992 13,553 144 Royal Liver Assurance Fund C 1 Pre 8/2005 91,647 2,085 C 2 Pre 7/2010 35,218 4,355 A 4 Pre 7/2010 9,200 884 C 5 Pre 7/2010 2,796 1,475 A 8 Pre 7/2010 47,861 655 Total 1,645,065 21,421

Bonus Method A Accumulating (unitised) with-profits C Conventional with-profits D Deposit administration Class follows those described in paragraph 3.(1)(a) above.

Grouping of Contracts

The basis used to group policies for the purpose of calculating the cost of guarantees, smoothing and options is described below for RL, PLAL,acquired UAG and RLA business: Stage 1: A review was undertaken of all the with-profits business written by the Society. The in force business was categorised by with-profits fund into: Product type - life savings, whole of life contracts and pensions business; Bonus declaration method – conventional with-profits, accumulating with-profits or deposit administration; Premium paying mode – regular or single; Pension benefit structure – funding for an annuity or funding for cash at retirement; These contract groupings were reviewed for benefit characteristics and options that would require separate quantification under a market consistent valuation method. For example, pension contracts may or may not have been written with a guaranteed annuity option or savings contracts may have been written with a guaranteed minimum bonus rate prior to a certain date.


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Stage 2: Grouping criteria within each product are chosen to ensure that the most important features of the projection of the in force business are not lost. The key grouping criteria are: Different bonus series within stochastic product Policy term Year of maturity or year of entry Age group Guaranteed annuity rate attaching and gender of policyholder (for the most significant business lines) Additional grouping criteria was included, where relevant, to separate policies with guarantees projected to exceed WPBR on maturity from those expected to fall below it. Stage 3: Grouping policy term and maturity date into monthly intervals would produce too many model points and lead to serious degradation in run time for little change in accuracy of projection. Expanding these grouping intervals is the principal tool for reducing the number of model points and improving run times. The paragraphs below describe the approach taken for key product categories. (a) Endowments: Policy term is generally grouped in 5 year bands, centered around the quinquennial terms (e.g. term 15 covers terms 13 –

17 inclusive), to which the majority of the business has been sold. Maturity year needs to capture the projected run off profile of the business. Typically grouping will be by individual years

of maturity for a certain number of years, though this will depend upon the projected development of claim outgo and particularly projected guarantee and smoothing costs. Thereafter grouping will typically be triennial.

(b) Pensions: Policy term is generally grouped in 3 year bands, centered around a central year (e.g. term 10 covers terms 9 – 11

inclusive). Maturity year needs to capture the projected run off profile of the business. Typically claim outgo builds up over the next

decade and peaks in 20 to 30 years time. The average duration of the business varies by product line and originating Company. Given the longer term nature of this business, grouping will be annual at peak periods of claim outgo, otherwise triennial grouping is typically used.

Policies with and without GARs are grouped separately. For policies with GARs, retirement age is retained in the grouping to ensure that the correct GAR is captured.

For SL branded business, the grouping principles described above were followed. However, the model points were grouped analytically, with the term/duration granularity varying by the amount of WPBR for the policies under investigation. For example, where there were significant volumes of business the model points were taken at more frequent intervals. This in turn results in the computation time being allocated in proportion to the WPBR.

Validation of Grouping

For each stochastic model product, cashflows are projected initially by running all individual contracts through the stochastic model on a single deterministic run using economic assumptions described in paragraph 5.(1) above and best estimate non-economic assumptions. Results are compared against those produced by the deterministic models used to calculate the WPBR using an equivalent projection basis. This ensures that the coding of the stochastic model products correctly reflects the product features. These runs are repeated using the grouped model points and the comparison is made between these projected cashflows and the stochastic model run performed using individual model points. The key validation check is that the difference in the cost of maturity guarantees between the two runs is considered acceptable. The maximum tolerance allowed for each with-profits subfund was generally a difference of between 3.0% and 5.0%, out of total maturity guarantee costs of approximately £270m on this deterministic projection basis. Individual products within a with-profits subfund may in isolation exceed this tolerance provided the subfund level tolerance is not breached. Grouping would be further refined or a scalar applied for a product if the difference exceeded 5% and the amount of guarantees was considered material. Other validations performed to ensure that significant attributes of the contracts have not been lost in the grouping are a comparison of : projected revenue account cashflows, such as premiums, claims and expenses; projected costs of guaranteed benefits, assets shares and claim outgo in excess of guarantees; the present value of the cost of guarantees over the run off period; and the present value of the cost of GARs over the run off period.


310

6. (2) (c) For certain contract types where the WPBR falls below a de minimis level, the costs of guarantees, smoothing and options are not calculated directly. Instead, the stochastic results of the closest available stochastic product are scaled up based on the ratio of the unmodelled WPBR to modelled WPBR.

This covers certain small lines of SP UWP bonds, RP UWP savings plan, UWP and conventional pensions, UWP ISA and the unmodelled business calculated using Retrospective method B described above.

6. (3) Not applicable 6. (4) (a) (i) A description is given below for each of the costs of guarantees, smoothing and options separately:

Guarantees Details of material guarantee costs and an indication of the range of guarantee costs as a % of WPBR are given in the table below:

Guarantee Offered Class Guarantee as % of WPBR

Life Pension CWP Business - maturity values being subject to the minimum of sum assured plus guaranteed benefits. Death benefits in excess of asset share are charged to the WPBR of remaining policies. Surrender values, unless guaranteed contractually, are treated as being fully discretionary and no guarantee cost is calculated. For RLA business some surrender benefits are based on formula based surrender scales which may exceed the WPBR.

1, 2, 3, 5 and 6

0.1% - 73.7%

0% - 75%

DA Business – maturity value being face value of units. 9 N/A 0% UWP Life Bonds sold in the UK (excluding PLAL and RLA) - guarantees relate to contractual instances when Market Value Adjusters (MVA’s) cannot be imposed. This includes regular withdrawals under a contractual maximum of the original premium paid and policy anniversaries when surrenders are MVA free. MVA free surrender dates were removed from some contracts issued after 31/3/2001. UWP Life Bonds sold in Germany – policyholders have the option of electing a capital guarantee after either 12, 15 or 20 years, for which they pay an additional charge. If the guarantee is selected then the payout on surrender at the selected point in time is guaranteed to be not less than a fixed percentage of the amount invested. This product was introduced in 2007. UWP Life Bonds sold in Ireland (RLA) – guarantees relate to contractual instances when Market Value Adjusters (MVA’s) cannot be imposed. This includes regular withdrawals and policy anniversaries when surrenders are MVA free. UWP Life Bonds sold in the UK (PLAL and RLA) - guarantees relate to contractual instances when Market Value Adjusters (MVA’s) cannot be imposed. This includes regular withdrawals and policy anniversaries when surrenders are MVA free. MVA free surrender dates were removed from all PLAL contracts issued after 31/10/2000.

4 0.0% -3.8%

0.1%

UWP Individual Pensions - MVA free dates apply on the retirement date chosen at outset. For some contracts MVA free dates also apply during windows prior to the maturity date.

7 and 8 N/A 0% - 0.7%

UWP and DA Group Pensions – exits prior to retirement are free of MVAs where the exit does not form part of a mass-discontinuance of a pension scheme

7, 8 and 9 N/A 0% - 0.7%

The majority of life endowment business maturing over the next few years has guarantees that are in the money either because no final bonuses are currently being paid or the guaranteed benefits exceed the WPBR. The extent to which the guarantee is in the money depends on the term of the contract and the originating company. Longer dated policies, i.e. both life policies and pension policies maturing in more than five years time, exhibit greater variability in the extent to which the guarantee is in the money. The key determinant here is the originating company, with outstanding term also being relevant.


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Options These relate primarily to Guaranteed Annuity Rates (GARs) offered on pensions contracts. Details of material GARs and details of the range of GAR costs as a % of WPBR are given in the table below:

Guarantee Offered Business Class GAR cost as % of WPBR

Deferred annuity contracts where there is a minimum annuity guaranteed at retirement subject to a guaranteed conversion factor to produce a “cash equivalent” value to which current annuity rates are applied to produce the annuity payable, if greater than the minimum.

5 (RA OB pre 1993 and RLA (Caledonian) deferred annuity contracts

10% - 101% Fund for cash contracts where there is a minimum conversion rate per unit of maturity value into an annuity for comparison with current market conversion rates.

5 (RA OB Post 1992, RLA retirement annuity contracts and SL only), 6 (RA OB and SL only) 8 (RLA Overseas UWP pensions)

DA Business – certain policies in this class attract Guaranteed Minimum Pensions as a result of contracting out of SERPS/S2P and these have been modelled explicitly using a market consistent approach.

9 133%

The table below includes the guaranteed minimum annuity rate basis for the key assumptions of interest rates and mortality:

Business Class Interest Rate Mortality Basis RA OB (pre 9/92) 7.00% a(55) M/F Select RA OB (post 8/92) 5.00% IM/F80(C=2010) Ultimate

SL 4.50% PA90M/F-2 Ultimate Given current levels of interest rates and projected mortality experience compared to that priced within the original mortality guarantees, all material GAR options are currently “in the money”. Smoothing This comprises two elements, covering: A “glidepath” cost being the cost of moving to target payout ratios consistent with the PPFMs; and Natural variability in the investment returns earned on the assets supporting the business. 6. (4) (a) (ii) The asset model is proprietary software developed by a third party provider (Barrie and Hibbert). Calibrations are provided by the third party to which the individual characteristics of the subfund are applied. The key elements of the nature and input calibration parameters within the asset model (Economic Scenario Generator “ESG”) are:

the GBP interest rate model used is an annual time-step version of the LIBOR Market Model Plus (LMM+), an enhanced

version of LMM which captures interest rate volatility skew and negative interest rates. The model is calibrated to annual forward rates based on the UK government bond yield curve. The volatility structure of these forward rates are calibrated to a surface of at the money and 10 year out of the money swaption volatilities. The table below gives market data inputs at quinquennial durations with at the money swaption implied volatilities for a 20 year tenor:

Duration Yield Curve

(spot yields) Implied

Volatilities 5 1.98% 18.5%

10 3.21% 16.7% 15 3.69% 15.4% 20 3.81% 14.2% 25 3.83% 13.1%

EUR interest rates are modelled using the same LMM+ model using rates calibrated to an average of German and French

Government bonds. Spot yields and Implied volatilities for the EUR calibration are provided in the table below:


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Duration Yield Curve

(spot yields) Implied

Volatilities 5 1.10% 23.0%

10 2.28% 21.7% 15 2.91% 20.8% 20 3.20% 19.6% 25 3.36% 18.3%

an extension of a lognormal equity model which allows calibration to observed market FTSE 100 options varying by strike

price and duration where available, which currently do not exceed ten years. The table below provides data on the implied volatilities input into the GBP economy model:

Strike

Duration 80% 90% 100% 110% 120% 1 20.34% 17.47% 14.89% 12.77% 11.67% 2 19.90% 18.17% 16.45% 14.82% 13.52% 3 20.15% 18.85% 17.55% 16.30% 15.17% 5 20.98% 20.04% 19.16% 18.31% 17.52%

10 23.00% 22.37% 21.81% 21.30% 20.83%

For the EUR Economy, the equivalent model is calibrated to the EUROSTOXX 50 index. The calibration data is shown in the table below:

Strike

Duration 80% 90% 100% 110% 120% 1 22.71% 20.04% 17.71% 15.86% 14.77% 2 22.00% 20.31% 18.71% 17.29% 16.18% 3 21.79% 20.53% 19.32% 18.22% 17.27% 5 21.71% 20.85% 20.05% 19.32% 18.64%

10 21.78% 21.29% 20.85% 20.45% 20.09%

a lognormal property volatility model using a fixed estimated implied volatility of 15% for both GBP and EUR economies, being a best estimate as the property option prices required for market consistent calibration do not exist; and

a corporate bond model which is calibrated using long term expected “credit transition” matrices and market data on

observed spreads on UK and European stocks.

Because net cashflow is negative each year in the future, the term of the fixed interest assets has been assumed to reduce in line with the run off of the business, i.e. the bond portfolio is assumed to be held to maturity. The table below provides details of the key input correlations included within the proprietary asset model, based on average observed results from the first ten years of simulation for the scenarios used to value the FPRLs. These correlations reflect the outcome of the calibration approach used by the Society, based on inputting the provider’s best estimates. These are based on their analysis of past data and judgment of future trends. The third party have supplied supporting documentation describing the rationale for their use in market consistent calculations. In performing these calculations, the Society has maintained these assumptions without adjustment:

Asset Class UK Equity EUR Equity UK Property UK Gilts UK Corporate Bond (A rated)

UK Equity 100% 51% 30% 16% 49% EUR Equity 100% 11% 13% 39% UK Property 100% 14% 27%

UK Gilts 100% 70% UK Corporate Bond (A rated)

100%


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6. (4)(a)(iii) The required tables are given below, based on the ESG output for the 1000 simulations run through the stochastic model. The results allow for the control variate methodology described in paragraph 6.(4)(a)(viii) below (except for sterling receiver swaptions).

Notes to Table (from Paragraph 6.(4) of the Interim Prudential Sourcebook for Insurers for ease of reference)

Row 1 should be completed showing the value of cash payments of £1,000,000 due n years after the valuation date. Rows 2 to 15 inclusive should be completed for the appropriate asset classes showing the value of a put option on a

portfolio worth £1,000,000 on the valuation date exercisable n years after the valuation date with strike price of K*£1,000,000*(1+r*p)^n.

All references to 15 year bonds mean rolling bonds traded to maintain the 15 year duration at all future dates. The corporate bonds should be assumed to be rolling AA rated zero coupon bonds.

Row 16 should be completed showing the value of sterling receiver swaptions with a strike of 5% exercisable n years after the valuation date with swap durations on exercise of L years. The values should be expressed as a percentage of nominal.

In carrying out the calculations required to complete the table below firms must assume, where appropriate, that the options for which a value is to be included in the table are options which, where appropriate, are based on underlying asset portfolios which are continuously rebalanced to the stated proportions. Swaptions in relation to which a value must be included in the table must be based on swaptions with monthly payments. Firms must include in the table the value that their liability model would produce for such options and values will thus reflect the actual time-intervals underlying their valuation models. The property put options should be assumed to relate to a well diversified portfolio of United Kingdom commercial property.

A zero trend growth in property prices should be assumed where this is relevant. In each case the options should be valued with reinvestment of any dividend income into the FTSE All Share index and

reinvestment of any rental or other property income into United Kingdom property. Tax should be ignored in all calculations. All options should be assumed to be European-style. A firm may consider that its model does not need to be calibrated to produce a reasonable value for a particular entry in the

table because that entry is insignificant to the valuation of its assets and liabilities. In such circumstances the firm may leave an entry in the table blank, but must give an explanation as a note to the table.

K 0.75 n Duration (n) 5 15 25 35 r Annualised compound equivalent of the risk free rate assumed for the period (r ) 1.98% 3.69% 3.82% 3.74%

1 Risk-Free Zero Coupon Bond £906,790 £581,004 £391,828 £276,579

2 FTSE All Share Index (p=1) £64,307 £209,179 £313,448 £389,050

3 FTSE All Share Index (p=0.8) £60,179 £171,620 £240,081 £279,342

4 Property (p=1) £32,348 £106,190 £178,242 £234,527

5 Property (p=0.8) £28,858 £75,626 £117,100 £144,588

6 15yr Risk-Free ZCBs (p=1) £13,211 £12,328 £13,116 £18,795

7 15yr Risk-Free ZCBs (p=0.8) £11,398 £5,812 £3,295 £2,565

8 15yr Corporate Bonds (p=1) £23,021 £35,001 £38,333 £56,241

9 15yr Corporate Bonds (p=0.8) £20,603 £21,136 £17,718 £20,836

10 Portfolio of 65% FTSE All Share and 35% property (p=1) £37,040 £141,722 £231,442 £301,902

11 Portfolio of 65% FTSE All Share and 35% property (p=0.8) £33,854 £109,836 £167,335 £206,383

12 Portfolio of 65% equity and 35% 15yr risk free ZCBs (p=1) £28,679 £116,129 £195,992 £257,803

13 Portfolio of 65% equity and 35% 15yr risk free ZCBs (p=0.8) £26,043 £87,706 £137,440 £170,281

14 Portfolio 40% equity,15% property,22.5% 15 yr risk free ZCBs & 22.5% 15yr

corporates (p=1) £15,821 £68,063 £127,570 £176,534


corporates (p=0.8) £13,936 £47,269 £80,973 £103,871

16 Sterling Receiver Swaptions 13.75% 9.38% 6.43% 4.52%

Swap Duration = 15 years


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4 Property (p=1) £134,038 £240,814 £329,130 £396,837

5 Property (p=0.8) £123,345 £181,202 £225,024 £252,611










corporates (p=1) £94,013 £176,196 £250,282 £313,770


corporates (p=0.8) £84,452 £125,705 £164,522 £191,409


Swap Duration = 20 years





4 Property (p=1) £519,177 £611,189 £703,921 £776,280

5 Property (p=0.8) £492,994 £489,812 £507,968 £518,938










corporates (p=1) £500,528 £534,360 £599,409 £662,502


corporates (p=0.8) £472,289 £410,189 £412,132 £422,519


Swap Duration = 25 years 6. (4) (a) (iv) The initial UK and European equity yields are 3.46% and 3.49% respectively. Initial UK and Euro property yieldsare both

4.30%.


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6. (4) (a) (v) The Society holds a basket of overseas equities and bonds, of which only those denominated in Euros and US Dollars qualify as significant territories under INSPRU 1.3.63R. Given the diversification benefit of different small territorial equity holdings between territories, achieved by the ESG having a correlation assumption less than one, all overseas equities are modelled as being wholly EUR. Overseas bonds are modelled as being wholly EUR in the Liver closed fund and 50:50 UK equities:fixed interest in Royal London’s other with-profits funds. 6. (4) (a) (vi) The calibration of the model has been set at the company level with one set of simulations being used to model all classes of business. Property volatilities are targeted at a constant rate of 15%. For life business, the majority of the guarantee costs will arise within the next ten years, particularly when considered in terms of present value. Conversely, the cost of guarantees for pensions business will exceed ten years where implied volatilities for equities are based on the longest available market data. The table below gives an estimate of the average outstanding duration of the guarantees, including financial options and smoothing liabilities, for each with-profits fund, split life and pensions:

With-profits fund Average Duration (years) Life Pension

Scottish Life 2 9 Royal London IB & OB 5 11 Refuge Assurance IB 4 n/a United Friendly IB 11 n/a United Friendly OB 11 13 PLAL With-Profits 6 14 Royal Liver Assurance 7 14

6. (4) (a) (vii) The following validation tests are performed on the simulation output: for each asset class, £1 is accumulated for every annual projection period within the run off period and the net present value

taken by discounting at the accumulated cash return over the equivalent period. The calculations are performed for each simulation. The average value is taken across all simulations and from the data, a 95% confidence interval is taken. The results are plotted to ensure that the expected value of £1 lies within the 95% confidence interval.

A yield curve is calculated from an average of the observed simulated cash returns, again with a 95% confidence interval being taken. This is compared to an observed market yield curve increased by 10bps at all durations. This ensures that the model is based on a correctly calibrated yield curve.

The simulation produced option implied volatilities were reviewed to ensure that the market observed implied volatilities for equities and swaptions lie within a 95% confident interval

The results were repeated for ten independent sets of simulations, with the chosen set determined by reference to the best fit over the run off period of the projected fund accumulated returns.

6. (4) (a)(viii) The number of simulations used for the valuation was 1000. For this valuation, Royal London has adopted an advanced technique for reducing the variance in simulated results by the use of “Control Variates”. Implementation of control variate techniques involves calculating a weighted average of simulation results. The weights reflect the accuracy of each simulation in estimating some known quantities (the “controls”). Royal London uses the market values of several different asset classes as controls. The table below provides results of standard error calculations for each subfund, expressed as a percentage of the sum of the absolute values of the market consistent liability calculated by the model (guarantees, smoothing and options), using the 1000 simulations adopted for the valuation:


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With-profits fund Standard Error (%) Market Consistent Costs

of Guarantees, smoothing and Options (£m)

Royal London IB & OB 0.04% 337.9 Refuge Assurance IB 0.15% 14.6 United Friendly IB 0.43% 9.9 United Friendly OB 0.27% 80.0 Scottish Life 0.02% 434.8 PLAL With-Profits 0.46% 2.8 Royal Liver Assurance 0.08% 116.8

The 95% confidence interval associated with these standard errors is approximately plus or minus two times the standard errors quoted above. The magnitude of these standard errors and their associated 95% confidence interval were considered to be sufficiently low so as to confirm convergence in the model results.

6. (4) (b) Not applicable 6. (4) (c) All options and guarantees except those offered under Caledonian Homeguard products were valued using a market-consistent stochastic model. Homeguard mortgage protection policies provide a guarantee that the mortgage will be repaid irrespective of the level of mortgage interest rates experienced during the life of the mortgage. (i) Homeguard products were valued deterministically using a single projection assuming an underlying mortgage interest rate of 7% per annum. The underlying mortgage rate is a key determinant in the guarantee costs arising from these products. (ii) The underlying assumed mortgage interest rate of 7% was selected as it was assumed to be prudent relative to the forward yield curve as at 31 December 2013. The actual mortgage interest rate in the markets in which Homeguard policies were sold was approximately 4.58% pa last year. (iii) The risk-free rate was taken to be 2.7%. This was based on zero coupon bond yields plus 10 basis points. (iv) The following table shows the outstanding duration for Homeguard business:

Expiry years 2013-2017

2018-2022

2023-2027

2028-2032

2033-2037

2038-2042 Total

Sum assured (% of total) 5.70% 15.56% 19.61% 29.13% 17.96% 12.04% 100% 6. (5) (a) The following key assumptions have been incorporated when projecting forward the assets and liabilities in the base scenario:

In the Royal London IB & OB, Refuge Assurance IB, United Friendly IB and United Friendly OB Subfunds the proportions

of assets invested in equities and properties depends on the outstanding term of the policy and on whether the class of business that the policy belongs to has guarantees that are heavily in the money (i.e. where guarantees significantly exceed projected with profits benefits reserves). The proportions within each class and each outstanding term are assumed to be fixed for all future years.

For the Royal Liver Assurance Fund the proportion of assets invested in equities and properties varies by future year in relation to the different run off speeds of the UK and ROI liabilities.

For the Scottish Life and PLAL With Profits Funds the proportion of assets invested in equities and properties are assumed to be fixed for all future years.

The following table shows the proportions of assets invested for the benefit of with-profits business in equities and property at sample outstanding terms. Note that the Royal Liver proportions are applicable for 2014 only. For all other Funds the proportions are applicable for all future years.


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With-profits fund Products Policies with

outstanding terms of less than 1 year

Policies with outstanding terms of between 5 and 6

years

Policies with outstanding terms of more than 10

years 2014 and after 2014 and after 2014 and after

Royal London IB & OB Other Than Heavily in The Money 33.56% 60.32% 84.38%

Refuge Assurance IB All 38.87% 57.68% 74.98%

United Friendly OB Other Than Heavily in The Money 29.36% 34.29% 39.15%

Royal London IB & OB and United Friendly OB

Heavily in The Money 0.00% 0.00% 0.00%

United Friendly IB All 33.55% 61.36% 86.39% Scottish Life Other Than DA 31.39% 31.39% 31.39% Scottish Life DA 14.54% 14.54% 14.54% PLAL With-Profits All 40.12% 40.12% 40.12% Royal Liver Assurance All 37.31% 37.31% 37.31%

In all funds, annual bonuses are changed progressively from the most recently declared rates, according to line of business,

to:

Line of Business Assumptions CWP business (Royal London IB & OB Subfund, Refuge IB Subfund, UF IB Subfund Table 7)

0.25% pa

CWP business (UF IB Subfund Table 27L, UF OB Subfund FSAVC, Table I compound, Table E post 1994)

1.50% pa

CWP business (UFIB subfund except Table 7 and table 27L)

1.00% pa

CWP business (UF OB Subfund except FSAVC, Table I compound, Table E post 1994)

0.00% pa

CWP business sold before 1 July 2001 (SL Fund) 0.10% pa CWP Business: (Royal Liver Fund Irish Life pre 1965) 4.00% pa CWP Business: (Royal Liver Fund Irish Life 1965 - 1980)

2.50% pa

CWP Business: (Royal Liver Fund Irish Life post 1980)

1.00% pa

CWP Business: (Royal Liver Fund FP Table 10 pre 1979)

30 x weekly premium

CWP Business: (Royal Liver Fund FP Table 1, 2, and 3 pre 1979)

41 x weekly premium

CWP Business: (All other Royal Liver Fund) 0.00% pa UWP Life business sold before 1 July 2001 0.50% pa to 4.00% pa (dynamically linked to investment returns) UWP Pensions business sold before 1 July 2001 (Royal London IB & OB Subfund)

0.25% pa to 2.00% pa (dynamically linked to investment returns)

UWP Pensions business sold before 1 July 2001 (SL Fund)


DA Pensions business sold before 1 July 2001 0.10% pa to 5.00% pa (dynamically linked to investment returns) Crest Growth 0.10% pa to 4.00% pa (dynamically linked to investment returns) UWP Business sold after 1 July 2001 0.50% pa to 3.00% pa (dynamically linked to investment returns) PLAL Business 0.50% pa to 3.00% pa (dynamically linked to investment returns) Royal Liver Fund UWP and Caledonian UWP Bond 0.25% pa to 1.00% pa (dynamically linked to investment returns)

For all with-profits business in the Royal London IB & OB, Refuge Assurance IB, United Friendly IB and OB Subfunds and Royal Liver Assurance Fund, it is assumed that terminal bonus declarations will be made on a quarterly basis if a projection of the FTSE 100 falls below a pre-determined trigger level. The value of the trigger is regularly reassessed to reflect the level where this action would be taken. If the projected level of the FTSE 100 subsequently recovers above a higher trigger point then annual bonus declarations are assumed to recommence.


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6. (5) (b)

The table below gives indicative equity backing ratios (which, for the avoidance of doubt, excludes properties) in five years’ time which, as described above, is independent of investment return:

With-profits fund Products Policies with outstanding terms of less than 1 year

Policies with outstanding

terms of between 5 and 6 years


terms of more than 10 years

Royal London IB & OB

Other Than Heavily in The Money 26.28% 47.23% 66.07%

Refuge Assurance IB All 38.87% 57.68% 74.98% United Friendly OB




United Friendly IB All 26.38% 48.25% 67.93% Scottish Life Other than DA 29.67% 29.67% 29.67% Scottish Life DA 13.75% 13.75% 13.75% PLAL With-Profits All 40.12% 40.12% 40.12% Royal Liver Assurance All 27.87% 27.87% 27.87%

The table below gives indicative equity backing ratios (which, for the avoidance of doubt, excludes properties) in ten years’ time which, as described above, is independent of investment return:

With-profits fund Products Policies with outstanding terms of less than 1 year


terms of between 5 and 6 years


terms of more than 10 years

Royal London IB & OB


Refuge Assurance IB All 38.87% 57.68% 74.98% United Friendly OB




United Friendly IB All 26.38% 48.25% 67.93% Scottish Life Other than DA 29.67% 29.67% 29.67% Scottish Life DA 13.75% 13.75% 13.75% PLAL With-Profits All 40.12% 40.12% 40.12% Royal Liver Assurance All 26.62% 26.62% 26.62%

The table below gives indicative annual bonus rates in five and ten years’ time for accumulating with-profits business:

Class Base Base + 60bps Base – 60bps 5 Years 10 Years 5 Years 10 Years 5 Years 10 Years 4 (RL & RA) 4 (RL 360) 4 (PLAL)

0.50% 0.50% 0.50%

0.50% 0.50% 0.50%

0.50% 0.50% 0.50%

0.50% 0.50% 0.50%

0.50% 0.50% 0.50%

0.50% 0.50% 0.50%

4 (RLA) 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 7 (RL Fund pre 7/2001) 7 (RL Fund post 6/2001) 7 (SL Fund) 7 (PLAL)

0.25% 0.50% 0.50% 0.50%

0.25% 0.50% 0.50% 0.50%

0.25% 0.50% 0.50% 1.00%

0.25% 0.50% 0.50% 1.00%

0.25% 0.50% 0.50% 0.50%

0.25% 0.50% 0.50% 0.50%

8 (RL Fund pre 7/2001) 8 (PLAL)

0.25% 0.50%

0.25% 0.50%

0.25% 1.00%

0.25% 1.00%

0.25% 0.50%

0.25% 0.50%

8 (RLA) 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 9 (SL Fund) 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%

There are no significant equity derivative contracts to take into consideration. 6. (6) The tables below give persistency assumptions for the key classes of business. For lines of business where the last entry date means that there is no business in force with a particular duration, no data is provided.


319

Exit Rates (% pa) for major lines of RL IB & OB pre acquisition business

Product 1-5 6-10 11-15 16-20 21-25 26-30 CWP savings endowment surrender n/a 2.4% 2.1% 1.7% 1.2% 0.8% CWP target cash endowment surrender n/a 2.4% 2.1% 1.7% 1.2% 0.8% AWP bond surrender 4.7% 8.7% 7.8% 7.3% 9.5% 9.5% AWP bond automatic

withdrawals 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%

CWP pension regular premium PUP n/a n/a 2.6% 2.4% 2.1% 1.8% CWP pension regular premium surrender n/a n/a 1.0% 0.6% 0.5% 0.5% CWP pension single premium surrender n/a n/a 1.0% 1.0% 1.0% 1.0% AWP indiv pension regular premium PUP n/a n/a 4.2% 3.4% 2.6% 2.1% AWP indiv pension regular premium surrender n/a n/a 2.2% 2.4% 2.8% 3.4% AWP indiv pension single premium surrender 3.8% 3.5% 2.1% 1.3% 1.3% 1.9%

For IB and OB Life business, conversions to a paid up non profit contract for reduced benefit (“Pups”) are not modelled explicitly. An increased surrender rate is input into the model. All business has been in force at least five years. Exit Rates (% pa) for major lines of acquired UAG business Refuge Assurance IB Subfund

Product 1-5 6-10 11-15 16-20 21-25 26-30 CWP savings endowment surrender n/a n/a 1.0% 1.0% 1.0% 0.8%


Product 1-5 6-10 11-15 16-20 21-25 26-30 CWP savings endowment surrender n/a n/a 1.4% 1.6% 1.6% 1.2% CWP target cash endowment surrender n/a n/a 1.4% 1.6% 1.6% 1.2% CWP pension regular premium PUP n/a n/a 0.00% 0.00% 0.00% 0.00% CWP pension regular premium surrender n/a n/a 1.3% 1.0% 1.0% 1.0% CWP pension single premium surrender 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%


Product 1-5 6-10 11-15 16-20 21-25 26-30 CWP savings endowment surrender n/a n/a n/a 1.0% 1.0% 1.0%

All acquired UAG business has been in force at least ten years.

Exit Rates (% pa) for major lines of SL Business

Product 1-5 6-10 11-15 16-20 CWP savings endowment surrender n/a n/a 0.0% 0.0% CWP target cash endowment surrender n/a n/a 0.0% 0.0% CWP pension regular premium PUP n/a n/a 3.1% 2.9% CWP pension regular premium surrender n/a n/a 2.8% 2.8% CWP pension single premium surrender n/a n/a 3.4% 3.1% AWP indiv pension regular premium PUP n/a n/a 7.0% 5.9% AWP indiv pension regular premium surrender n/a n/a 2.9% 3.3% AWP indiv pension single premium surrender n/a n/a 4.1% 4.1%

Note that the model assumes the lapse rates vary by calendar year.

The pension rates above apply to personal pensions which form the majority of the SL pensions business. Separate rates apply to EPP and S32 contracts. In order to retain the cost of GARs on retirement at any age the early retirement decrement is set to zero. The benefits given on conversion to paid-up for life business are broadly equivalent to actuarial value of those policies remaining in force. Office experience of conversions to paid-up status for this business is less than 3.5% of the total portfolio after 20 years. Therefore, no Pup assumption is made. No decrements are assumed prior to vesting for the Crest Secure Guaranteed Minimum Pension benefits as a benefit of similar or slightly lower value would be available on earlier exit or death.


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Exit Rates (% pa) for major lines of PLAL Business

Product 1-5 6-10 11-15 16-20 21-25 26-30 AWP savings endowment surrender n/a 5.8% 5.5% 4.8% 4.7% 4.7% AWP bond surrender n/a n/a 6.8% 6.8% 6.8% 6.8%

AWP bond Automatic withdrawals

n/a n/a 7.5% 7.5% 7.5% 7.5%

CWP pension regular premium PUP n/a n/a 0.0% 0.0% 0.0% 0.0% CWP pension regular premium surrender n/a n/a 1.6% 1.6% 1.6% 1.6% CWP pension single premium surrender n/a n/a 1.6% 1.6% 1.6% 1.6%

Exit Rates (% pa) for major lines of Former RLA Business

Product 1-5 6-10 11-15 16-20 CWP savings endowment Surrender n/a 6.0% 4.6% 3.3% CWP target cash endowment Surrender n/a 6.0% 4.6% 3.3% UWP savings endowment Surrender n/a 8.5% 15.1%* 5.7% UWP target cash endowment Surrender n/a n/a n/a n/a UWP bond Surrender 5.2% 5.2% 5.2%* 5.2%

UWP bond Automatic withdrawals No future withdrawals allowed for

CWP pension regular premium Pup 0.0% 0.0% 0.0% 0.0% CWP pension regular premium Surrender n/a 6.0% 4.6% 3.3% CWP pension single premium Surrender n/a 6.0% 4.6% 3.3% UWP pension regular premium Pup 0.0% 0.0% 0.0% 0.0% UWP pension regular premium Surrender 1.9% 1.6% 1.5% 2.1% UWP pension single premium Surrender 1.9% 1.6% 1.5% 2.1%

* The surrender rate in the 11th year is 55% assuming the majority of the policyholders exit on the 1st

MVA-free date. The rate for other years is 5.2% for UWP bond and 5.7% for UWP savings endowment.

Guaranteed Annuity Option Take Up Rates

For SL lines of business with attaching GARs the assumed take up rate is 80% for policies vesting in 2014-2023, based on an examination of recent experience, increasing uniformly to 85% by 2033. For RL lines of business with attaching GARs the assumed take up rate is 82.5% for policies vesting in 2014-2023, based on an examination of recent experience, increasing uniformly to 85% by 2033.

For RLA business, guaranteed annuity options are always assumed to be exercised where the guarantee is in the money. Further details are given in paragraph 6.(7) below.


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Annuitant Mortality Rates

The assumed future rates of annuitant mortality experience as described in the tables below:

Class Proportion Age Rating Table Males / Females See

“Table” 0

PP(M/F)V00 CMI(2013) [1.75%], where CMI(2013) [1.75%] denotes projected mortality in line with CMI mortality improvements and a 1.75% pa long term improvement rate from 01/01/2000. The resulting rates were adjusted by a factor dependent on sex and business line. The factors were: RL business Male: 117% Female: 102% SL business Male: 107% Female: 97%

6. (7) The following policyholder actions are assumed: For non-RLA business GAR take up rates are scenario and calendar year specific. If observed bond yields lie within ±1%

of long bond yield (fixed at 4.25%), then the take up rate is as described in paragraph 6.(6) above. As yields fall below this range, the take up rate increases and vice versa, with the minimum take up rate always being 80% and the maximum set at 90%.

The stochastic model does not incorporate any dynamic links between policyholder lapse rates and investment performance.

UWP pensions contracts include a best estimate of early retirements. For SL branded business, no early retirements are assumed where policy literature indicates that MVA’s will not be applied. This is 5 years for Group Personal Pensions business and 1 year for all other SL branded UWP business.

For RLA business, where unitised with-profits contracts include a right to payment with no MVA at specified durations, claim rates at that duration are assumed to increase on a sliding scale where the claim value available exceeds the with-profits benefit reserve.

Financing Costs 7. Not applicable Other long-term insurance liabilities

8. No liabilities are held with respect to line 46 of Form 19 “liabilities related to regulatory duty to treat customers fairly”. The table below describes the liabilities included within Lines 47 of Form 19 (in £m):

With-profits fund PPR SL Expense Provision

Other Total

Royal London IB & OB 48.0 23.1 2.2 73.3 Refuge Assurance IB 0.0 0.0 0.0 0.0 United Friendly OB 0.0 0.0 0.7 0.7 United Friendly IB 0.0 0.0 0 0 Scottish Life 0.2 0.0 9.7 9.8 PLAL With-Profits 0.0 0.0 0.1 0.1 Royal Liver Assurance 0.0 0.0 25.3 25.3 Total 48.2 23.1 37.8 109.1

The nature of the most material liabilities is as follows: Personal Pension Review (PPR) – this represents a provision for the costs associated with redressing policyholders who

were mis-sold pension policies. The most significant proportion of this provision relates to policyholders who were redressed by way of a guarantee to meet occupational scheme benefits. This guarantee has been calculated using the same market consistent asset scenarios that determine the costs of guarantees, smoothing and options.


322

SL expense provision – this is the realistic value of expenses payable to RLMSL in excess of loadings receivable from acquired SL UWP business allocated to the Royal London IB & OB Subfund under the SL Scheme. This is consistent with the description given in the second bullet under paragraph 4.(3)(c)(iv) above.

The entry under Other for the Scottish Life Fund represents £5.9m in respect of future charges payable to the Royal London IB & OB Subfund on Crest Secure business and £3.8m in respect of other miscellaneous liabilities.

The entry for Royal Liver Assurance is the net total of the additional liabilities arising from mis-selling provisions, data reserves, unmodelled liabilities and end piece adjustments to the liability total.

Realistic current liabilities 9. The table below provides a summary of the realistic current liabilities by with-profits fund (in £m):

With-profits fund Subordinated Debt

Claims outstanding

Creditors – insurance operations

Provisions and

Creditors - Tax

Other Creditors,

accruals and deferred income

Total

Royal London IB & OB 655.3 82.3 62.3 -36.7 338.1 1101.3 Refuge Assurance IB 0.0 3.2 0.7 17.0 2.6 23.5 United Friendly OB 0.0 1.3 0.8 11.2 29.8 43.1 United Friendly IB 0.0 0.0 0.8 62.1 9.0 71.9 Scottish Life 0.0 20.1 10.9 0.1 37.4 68.5 PLAL With-Profits 0.0 0.0 0.0 1.7 2.7 4.4 Royal Liver Assurance 0.0 31.1 14.2 0.0 77.2 122.5 Total 655.3 138.1 89.8 55.3 496.7 1435.1

This is less than the quoted regulatory current liabilities (Form 14 Line 49) value of £1455.5m by £20.4m. This difference is made up of -£15.7m in respect of the write down of the subordinated debt in the Royal London IB & OB Subfund to market value and £36.1 in respect of deductions from outstanding claims provisions.

Risk capital margin

10. (a) The risk capital margin amounted in aggregate to £0.0m. The amounts calculated separately for each with-profits fund are as follows:

With-profits fund Risk Capital Margin Royal London IB & OB £0.0m Refuge Assurance IB £0.0m United Friendly OB £0.0m United Friendly IB £0.0m Scottish Life £0.0m PLAL With-Profits £0.0m Royal Liver Assurance £0.0m

The RCM is zero for the Refuge Assurance IB, United Friendly OB, United Friendly IB, Scottish Life, PLAL With-Profits and Royal Liver Assurance Funds because in both the base scenario and stress tests, planned enhancements to WPBRs are varied to maintain a zero working capital. The RCM can only be positive for the Royal London IB & OB Subfund 10. (a) (i) The most onerous assumptions for the market risk test for all equities and properties are shown in the table below.

Asset class Change Direction Equities 20.0% FALL Properties 12.5% FALL


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10. (a) (ii) The most onerous assumption for the market risk test for all fixed interest assets is shown in the table below.

Asset class Change Direction Long Gilt Yield Fixed Interest (Non € or $) 60bps FALL 3.45% Fixed Interest (€) 49bps FALL 2.79% Fixed Interest ($) 53bps FALL 3.05%

10. (a) (iii) The impact of the credit risk scenario and the percentage change in asset value under the credit risk event is given in the table

below:

Asset Category

Royal London IB & OB Subfunds

Refuge Assurance IB, United Friendly

IB and United Friendly OB

Subfunds

Scottish Life Fund PLAL With-Profits Fund


Spread Value Spread Value Spread Value Spread Value Spread Value Bonds +133bps -7.5% +117bps -7.2% +92bps -6.7% +103bps -7.3% +70bps -4.7% Debts n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Reinsurance n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Other Reins n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Other - - - - - - - - - -

The category of bonds covers all assets reported under Form 48 Lines L13 and L23, non approved securities under Form 48 Lines 14 and L24 and approved securities reported under Form 48 Lines L12 and L22 that are subject to the credit risk test. No credit risk test is considered necessary for swaption assets held in respect of financial options, given the level of collateral supporting these assets and their lack of sensitivity to credit spread risk. 10. (a) (iv) The most onerous assumption for the persistency risk test is an IMPROVEMENT by 32.5% for all lines of business. The impact on the realistic value of liabilities of this projected improvement in persistency is as follows:

With-profits fund % Change in Realistic Value of Liabilities for

persistency test Royal London IB & OB 0.2% Refuge Assurance IB 0.0% United Friendly OB 0.0% United Friendly IB 0.0% Scottish Life 0.0% PLAL With-Profits 0.0% Royal Liver Assurance 0.0%

10. (a) (v) Not applicable 10. (b) (i) Additional management actions assumed in excess of those described in paragraph 6.(5) (a) above are: The proportion of assets invested in equities and property are assumed to reduce from the values shown for the base

scenario above with effect from 31 December 2014 (i.e. 12 months after the date of the assumed stress event). The reductions result fully from changes in asset values.

- In the Royal London IB & OB, Refuge Assurance IB, United Friendly OB and United Friendly IB Subfunds the reduction depends on the outstanding term of the policy and on whether the class of business that the policy belongs to has guarantees that are heavily in the money (i.e. where guarantees significantly exceed projected with profits benefits reserves). For policies in classes that are heavily in the money there is no reduction. For other policies the reduction is between 3.15 and 6.87 percentage points .

- For Unit linked business in the Scottish Life Fund the reduction is 4.97 percentage points. - For other with profits business (excluding late vesting policies which are invested in 100% cash) in the Scottish

Life Fund the reduction is 7.45 percentage points. For DA business in the Scottish Life Fund the reduction is 3.75 percentage points.


324

- For business in the PLAL With-Profits Fund the reduction is 5.24 percentage points. - For business in the Royal Liver Assurance Fund the reduction is 5.17 percentage points.

For with profits business in the Scottish Life Fund (excluding late vesting policies), the EBR is assumed to reduce by a

further 2.5% pa in each of the years from 2015 to 2018. For DA business in the Scottish Life Fund, the EBR is assumed to reduce by a further 1% pa in each of the years from 2015 to 2018.

Annual bonuses in all funds are changed progressively from the most recently declared rates, according to line of business to:

Life of Business Assumptions CWP business sold before 1 July 2001: 0.00% pa UWP Life business sold before 1 July 2001 0.00% pa to 1.00% pa (dynamically linked to investment returns) UWP Pensions business sold before 1 July 2001 (Royal London IB and OB Subfund):


UWP Pensions business sold before 1 July 2001 (SL Fund):


DA Pensions business sold before 1 July 2001: 0.00% pa to 1.50% pa (dynamically linked to investment returns) Crest Growth 0.00% pa to 0.25% pa (dynamically linked to investment returns) UWP Business sold after 1 July 2001: 0.00% pa to 1.00% pa (dynamically linked to investment returns) PLAL Business 0.00% pa to 1.00% pa (dynamically linked to investment returns) Royal Liver UWP and Caledonian UWP bond 0.00% pa to 0.25% pa (dynamically linked to investment returns)

For unitised business in the Royal London IB & OB Subfund, final bonuses in the base scenario are calculated so that

payouts equal unsmoothed asset shares, except that MVAs exclude the first 10% of any shortfall when the asset share lies below the unit fund. A management action is applied in the RCM scenario so that MVA’s exclude just the first 2.5% of any shortfall when the asset share lies below the unit fund.

For certain lines of business where payouts targeted above 100% of asset share in the base scenario, it is assumed that the

target payouts are reduced to 100% of asset share for all future years. 10. (b) (ii) The table below indicates the impact of excluding management actions from the RCM calculation

With-profits fund RCM (with management

actions)

RCM (without management

actions)

Benefit of management

actions on RCM Royal London IB & OB 0.0 23.2 23.2 Refuge Assurance IB 0.0 0.0 0.0 United Friendly OB 0.0 0.0 0.0 United Friendly IB 0.0 0.0 0.0 Scottish Life 0.0 0.0 0.0 PLAL With-Profits 0.0 0.0 0.0 Royal Liver Assurance 0.0 0.0 0.0

This benefit of management actions is entirely due to revisions of future assumed annual bonus declarations. 10. (b) (iii) Management actions reduce the equity backing ratios shown in the table in paragraph 6.(5)(b) by between 0.00% and 7.45% depending on the with-profits fund and the outstanding term of the policy. For annual bonus rates, management actions reduce bonus rates for all conventional business down to 0% or remain at 0% 12 months after the valuation date. For unitised business bonus rates are calculated using the same algorithm, though subject to lower maximum and minimum boundaries, as described in paragraph 10.(b)(i) above.


325

Class 5 Years 10 Years 4 (RL & RA) 4 (RL 360) 4 (PLAL) 4 (RLA)

0.00% 0.00% 0.00% 0.00%

0.00% 0.00% 0.00% 0.00%

7 (RL Fund pre 7/2001) 7 (RL Fund post 6//2001) 7 (SL Fund) 7 (PLAL)

0.00% 0.00% 0.00% 0.00%

0.00% 0.00% 0.00% 0.00%

8 (RL Fund pre 7/2001) 8 (PLAL) 8 (RLA)

0.00% 0.00% 0.00%

0.00% 0.00% 0.00%

9 (SL Fund) 0.10% 0.10% 10. (b) (iv) INSPRU 1.3.188R does not apply, since either charges for guarantees or options or smoothing are not taken or in the case of the Scottish Life Fund are more than offset by demutualisation enhancements.

10. (c) (i) The assets backing the risk capital margin are held within the Royal London IB & OB Subfund. In calculating the RCM, relevant assets have been identified comprising: equity (UK, overseas and unlisted); property; fixed interest securities (approved and other, including gilts specifically allocated to the Royal London estate to match the

cost of financial options); index linked securities (approved and other); other assets (income and non income producing) which include swaps and swaptions; present value of future profits on non-profit insurance contracts written in the fund as reported in L22 of Form 19

excluding any with profits future profits assets. Note that the swaps and the majority of the swaptions are held to specifically back the cost of financial options within the Royal London IB & OB Subfund and Scottish Life Fund. This is described further in paragraph 12 below. 10. (c) (ii) Not applicable.

Tax

11

In calculating the WPBR, tax for life business is charged against asset shares using rates prevailing for each historic calendar year for the differing components of return (income, capital gains etc). Tax relief for expenses is charged in line with relevant rates subject to spreading on acquisition. Current tax rates are incorporated into the stochastic model for projecting the WPBR. The model calculates tax chargeable to asset shares on a standalone basis. Tax is not modelled explicitly within the calculation of the life business costs of smoothing and guarantees costs. Instead, the discount rate used to calculate these elements of the Life business FPRL is netted down for tax using an implied rate determined from net and gross fund returns calculated by the stochastic model for each time period and within each simulation separately. The discount rate used to calculate the Royal Liver Life prospective business FPRL is not netted down as the fund is not currently subject to tax. However an additional reserve is held to allow for the increase to liabilities that is projected to arise in future when the fund reverts to a taxable position.


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Derivatives 12. Royal London IB & OB Subfund, Scottish Life, PLAL With-Profits, and Royal Liver Assurance Fund – Swaps and Swaptions The funds hold derivative instruments to hedge its interest rate exposures, including GARs on non linked policies. Details are given below for the relevant funds: The Scottish Life Fund holds interest rate swaps and payer swaptions. The underlying economic exposure of these

derivatives at 31 December 2013 was £1.3bn. These, together with a portfolio of UK government securities, provide a hedge against interest rate movements on non linked liabilities, including attaching GARs. Periodic reviews will be undertaken to ensure that these interest rate derivatives remain an appropriate match to the actual development of the liability exposure over time. In the event of material divergence, it is likely that re-balancing transactions will be initiated. There is no intention to unwind these derivatives other than in respect of any re-balancing or re-structuring.

The PLAL With-Profits Fund holds a portfolio of swaps and options with a total nominal value at 31 December 2013 of

approximately £0.1bn. These provide a hedge against adverse market conditions. The Royal London IB & OB Subfund holds interest rate swaps with a total nominal value at 31 December 2013 of

approximately £0.3bn. These, together with a portfolio of UK government securities, provide a hedge against interest rate movements on former RA OB non linked liabilities with GARs attaching. Similar review procedures as described for the derivatives held within the SL Fund above will be followed.

The Royal Liver Assurance Fund holds a portfolio of options with a total nominal value at 31 December 2013 of

approximately £0.2bn. These provide a hedge against adverse market conditions. The Scottish Life Fund also holds a portfolio of equity-linked receiver swaps; conventional receiver swaps plus equity-linked and conventional payer swaptions with a total economic exposure of approximately £0.9bn at 31 December 2013. This provides a hedge against interest rate movements on linked liabilities with GARs attaching.

Royal London IB & OB and United Friendly OB Subfunds – Quasi-derivative

Under the terms of the UAG Scheme, the Refuge Assurance IB, United Friendly OB and United Friendly IB Subfunds have a call on the Royal London IB & OB estate in adverse scenarios where their additional account becomes zero. At the valuation date, the additional accounts for the Refuge Assurance IB, United Friendly OB and United Friendly OB Subfunds were positive, since net with-profits assets exceeded WPBR. As realistic assets exceeded realistic liabilities in each of these funds, no capital support was required at the valuation date.


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13. Analysis of Working Capital

Category Total RL IB&OB RA IB UF IB UF OB PLAL Liver SL

Opening Working Capital (Form 19 L68) 2,206 2,206

Add back Planned Enhancements for closed with-profits funds 1,045 55 163 70 20 325 412

Capital support for closed funds (Quasi-derivative) 0 0 0 0

Adjusted Opening Working Capital 3,251 2,206 55 163 70 20 325 412

Investment return on adjusted opening working capital 314 239 5 21 11 4 34 0

Mismatch profits on assets backing FPRLs and realistic current liabs 93 (17) 7 14 40 4 44 1

Assumption changes:

- economic (VIF) 55 51 (1) 0 0 0 5 0

- economic (FPRLs) - excl. yield curve movements 10 11 (0) 3 4 4 2 (14)

- non economic (VIF) 47 52 (2) 0 0 0 (2) (1)

- non economic (FPRLs) (41) 12 (1) (2) 2 0 (3) (49)

- policyholder actions 0 0 0 0 0 0 0 0

Other variances:

- economic - management actions (16) (6) 0 (2) (6) (1) (2) 1

- economic - other 46 29 0 (3) 1 (2) (9) 30

- non economic - management actions (264) (88) (7) (21) (3) (2) (95) (48)

- non economic - other (6) (12) (2) 6 12 3 (15) 2

Value of new business 36 36 0 0 0 0 0 0

Material changes in Lines 47/51 14 0 0 0 0 0 14 0

Modelling changes and opening adjustments (55) (10) (1) (1) 1 0 (37) (7)

Other factors (59) (49) 1 6 (5) 1 (7) (6)

Sub Total: Movement in adjusted Working Capital during year 174 248 (1) 21 57 11 (71) (91)

Adjusted Closing Working Capital 3,425 2,454 54 184 127 31 254 321

Deduct Planned Enhancements for closed with-profits funds (971) (54) (184) (127) (31) (254) (321)

Capital support for closed funds (Quasi-derivative) 0 0 0 0 0

Closing Working Capital (Form 19 L68) 2,454 2,454 For all funds except the Royal London IB & OB Subfund, working capital is zeroised by adjusting the planned enhancements in Line 34 of Form 19. The analysis above therefore shows the movement in planned enhancements over 2013 for the subfunds. The impact on liabilities and VIF assets for changes in yield curves has been included within the row “mismatch profits on assets backing FPRLs and realistic current liabilities”, for consistency with the associated change in asset values being reported here. The “other factors” line for the Royal London IB & OB Subfund includes the impact of the corporate sale and acquisition of subsidiary companies during 2013. Optional disclosure 14. Not applicable

Returns under the Accounts and Statements Rules Supplementary Notes Name of insurer The Royal London Mutual Insurance Society Limited Global business Financial year ended 31 December 2013

328

0201 – Section 148 directions

The Financial Services Authority, on the application of the firm, issued to the firm in September 2012 a direction under section 148 of the Financial Services and Markets Act 2000. The effect of the direction is to vary the direction granted to the firm in July 2011 to permit the firm to include the value of transfers to the Royal London IB and OB subfund as an asset in the receiving fund, as these amounts must be booked as liabilities in the paying fund.

0301 – Reconciliation of net admissible assets to total capital resources after deductions

2013 £000

Form 13, line 89 32,467,247

Less:

Form 14, line 11 (25,909,987)

Form 14, line 49 (1,455,523)

Net admissible assets 5,101,737

Capital resources treated as a liability in Form 14 (Form 3, line 46) 245,153 Capital resources treated as a liability in Form 14 (Form 3, line 52) 394,425 Other items: - capital resources requirements of regulated related undertakings (Form 2, line 35) 532,408

- with profits insurance capital components of regulated related undertakings (within Form 2, line 39) 2,829,776

Total capital resources after deductions (Form 3, line 79) 9,103,499

The capital resources treated as a liability in Form 14 relates to subordinated loan capital included in Form 14, line 38. There are two instruments in issue, an Upper Tier 2 instrument issued in December 2005 (the 2005 notes) and a Lower Tier 2 instrument issued in November 2013 (the 2013 notes). The 2005 notes raised £395,524,000, net of £4,476,000 initial costs and discount, which are being amortised over 10 years. In November 2013, 2005 notes with a nominal value of £153,923,000 were purchased by way of a tender offer at a price equal to 101% of the nominal value. The remaining carrying value at 31 December 2013 is £245,153,000. The amount of initial costs and discount remaining to be amortised is £924,000. The 2013 notes raised £394,387,000, net of £5,613,000 initial costs and discount, which are being amortised over 10 years. The amount remaining to be amortised is £5,575,000. The ‘other items’ comprise differences in the valuation of regulated undertakings between Forms 3 and 13. The value included in Form 13, lines 21 and 25 includes a deduction for the capital resources requirements of regulated related undertakings that is not reflected in Form 3.

Returns under the Accounts and Statements Rules Supplementary Notes (continued) Name of insurer The Royal London Mutual Insurance Society Limited Global business Financial year ended 31 December 2013

329

0310 – Net Valuation Differences The net valuation differences shown in Form 3, line 14 are as follows:

2013

£000

Positive valuation differences relating to liabilities

Mathematical reserves 5,028,939

Deferred fees and renewal commission 421,040

Deferred tax on pension scheme surplus 4,960

Positive valuation differences relating to assets

100% reinsured unit liability (1,868,856)

Net valuation differences 3,586,083

The adjustments in respect of mathematical reserves and deferred tax represent the difference between the values determined in accordance with GENPRU and INSPRU and those included in the Companies Act accounts prepared in accordance with Financial Reporting Standard 27 and International Financial Reporting Standards (‘IFRS’). The adjustment in respect of deferred fees and renewal commission results from the application of IPRU (INS) Appendix 9.3 para.8, which prohibits the use of deposit accounting in the return. The ‘100% reinsured unit liability’ adjustment relates to reinsured liabilities which are presented as reinsurance in the return but cannot be presented as such in the Companies Act accounts prepared under IFRS.

0313 – Reconciliation of profit and loss account No reconciliation has been presented as the company is a mutual and consequently does not produce a form 16.

1104 – Use of discounting

Certain provisions for outstanding claims included in line 51 have been valued as annuities. The interest rates used to calculate the value of these annuities were the same as the interest rates used to determine the regulatory peak liabilities.

1308 – Unlisted investments and unregulated collective investment schemes

Unlisted investments included on Form 13 at 31 December 2013 were as follows:

£000

Line 41 3,603

Line 42 136,948

Line 46 13,667

Line 48 127,212

Reversionary interests or remainders in property other than land or buildings included on Form 13 at 31 December 2013 were as follows:

£000

Line 49 135,050


330

1309 – Hybrid securities The aggregate value of hybrid securities included at line 46 amounted to £210,375,000

1310 – Amounts set off Amounts have been set off in Form 13 to the extent permitted by generally accepted accounting principles.

1312 – Exposure to large counterparties At the year end there was no exposure to large counterparties.

1313 – Collateral held in respect of counterparty exposure As at 31 December 2013 collateral with a market value of £59,761,000 was held in respect of counterparty exposures on derivative contracts included in Form 13, line 44.

1318 – Other asset adjustments The amounts included in Form 13, line 101 are as follows:

2013

£000

Positive valuation differences relating to assets:

100% reinsured unit liability 1,868,856

Items reclassified between assets and liabilities:

Assets held to cover linked liabilities 115,380

Outstanding balances between linked and non-linked funds (73,820)

Allocation of taxation (74,192)

Other 4,681

1,840,905


331

1319 – Maximum counterparty limit During 2013, the maximum exposure to a counterparty permitted by the company’s investment guidelines, excluding subsidiary undertakings and Royal London open ended investment companies, was such that no investment should be made which would result in the portfolio holding:

a) in respect of each of the Royal London IB & OB, Refuge Assurance IB, United Friendly IB & OB Funds, the Scottish Life Fund, the PLAL With-Profits Fund and the Royal Liver Fund (the “Sub-funds”) separately: i) more than 10% of the total Sub-fund with any one counterparty. ii) more than 10% of the share capital in issue of any one issuer, other than in the case of collective

investment schemes. iii) more than 1% of the value of the Sub-fund in unquoted securities, limited partnerships and

development capital funds.

b) in respect of the fund as a whole: i) any investment that would cause the aggregate value of the assets of the company to be reduced

in accordance with INSPRU rule 2.1.22R. ii) more than 10% of the share capital in issue of any one issuer.

These limits were observed throughout the period with the exception of the following authorised holdings:

Company % holding (Equity Shares unless specified)

WP Global Mezzanine Private Equity 99.00

SPL ARL Private Finance PF5 99.00

RL Private Equity Fund LP 44.20

Corealpha Private Equity Partners 28.25

RJD Private Equity Fund 2 14.40

Knightsbridge Holdings II 11.11

1401 – Provision for reasonably foreseeable adverse variations

No provision has been made for reasonably foreseeable adverse variations, as there were no instruments held at the year-end that would necessitate such a provision.

1402 – Contingent liabilities

a. There are no charges over assets. b. The total potential liability to taxation on capital gains as at 31st

c. During the year, the company continued to address issues from past inappropriate selling practices and other regulatory matters. The directors consider that they have made prudent provision for any liabilities arising in the UK and overseas and, as and when the circumstances calling for such provisions arise, that the company has adequate reserves to meet all reasonably foreseeable eventualities.

December 2013 is £88,028,000. The amount provided for taxation on capital gains which is included in the deferred tax in Form 14 Line 21 is £77,855,000. This reflects the total potential liability after a reduction of £10,173,000 due to unrelieved capital losses carried forward.

d. There are no other contingent liabilities other than those arising in the normal course of business. e. There are no guarantees, indemnity or other contractual commitments effected by the company other than in the

ordinary course of its insurance business, in respect of the existing or future liabilities of any related companies that are required to be reported under IPRU (INS) Appendix 9.1, para 13.

f. There are no fundamental uncertainties to report.


332

1405 – Other adjustments to liabilities

The amounts included in Form 14, line 74 are as follows:

2013

£000

Positive valuation differences relating to liabilities:

Mathematical reserves 5,028,939

Deferred fees and renewal commission 421,040

Items reclassified between assets and liabilities:

Assets held to cover linked liabilities 115,380

Outstanding balances between linked and non-linked funds (73,820)

Allocation of taxation (74,192)

Other 4,681

5,422,029 1406 – Increase or decrease in the value of non-linked assets

The amount of the increase/(decrease) in the value of non-linked assets is as follows:

2013

£000

Royal London IB & OB Subfund (53,427)

Refuge Assurance IB Subfund 18,266

United Friendly OB Subfund (36,378)

United Friendly IB Subfund 12,712

Scottish Life fund 110,492

Phoenix Life fund 1,842

Royal Liver Assurance fund 12,700

1701 –Variation margin

Variation margin, including cash collateral treated as variation margin of £26,345,000 is included in Form 13 lines 54, 55 and line 81. A liability to repay this amount is included in Form 14 line 36.

1801 – With-profits insurance capital component for the fund The entries in Form 18, line 61 for the sub-total form Total Long Term Insurance Business Assets have been deliberately

left blank. This is because the calculation of the WPICC in Form 18, line 66, would produce a different value to the sum of the different with-profits subfunds. This is because, in the Royal London IB & OB Subfund, the realistic excess capital in Form 18, line 51, is more than the regulatory excess capital in Form 18, line 49, while in the other subfunds, the reverse is true.


333

4002 – Other Income and other expenditure Form 40, line 15, includes other income as follows:

2012

£000

Commissions received 11,739 Currency movement adjustments 4,079 Interest on finance leases 794 Other interest 248

Interest on reassurance claims 565 (RL) CIS admin services (see note 4009 vi) 26,115 Other 135 43,675

Commissions received represents commissions received in respect of the renewal of general insurance policies previously sold by the company on behalf of third parties and in respect of vested pensions policies.

Form 40, line 25, includes other expenditure as follows:

2012

£000

(RL) CIS admin services (see note 4009 vi) 23,435 Currency movement adjustments 669 RL Foundation 53

24,157

In addition to the above the following items are included within other income and other expenditure in the Sub-fund Form 40s relating to movements between the Sub-funds of the long-term fund. As these relate to movements between Sub-funds they have been excluded from the total Form 40.

Sub-fund Line 15 £000

Line 25 £000

Transfers United Friendly IB 2,321 Royal London IB & OB 2,321

Transfers United Friendly OB 1,291 Royal London IB & OB 1,291

Transfers Refuge Assurance IB 1,860 Royal London IB & OB 1,860

Annual management charges and other fees payable by Scottish Life to Royal London IB & OB per Scottish Life Schedule 2c scheme

Scottish Life 13,478

Royal London IB & OB 13,478

Annual management charges payable by Phoenix Life to Royal London IB & OB

Phoenix Life 5,116 Royal London IB & OB 5,116

Reimbursed GAO management charges between Scottish Life and Royal London IB & OB

Scottish Life 1,725

Royal London IB & OB 1,725 Interfund interest Scottish Life 17

Royal London IB & OB 17 Management charges payable by Royal Liver Assurance to Royal London IB & OB

Royal London IB & OB 36,264 Royal London IB & OB 36,264


334

4004 – Transfers of contracts from or to other funds or other insurers In addition to the above the lines 31 and 32 of the Sub-fund Form 40s include £37,736,000, which represents switches of policies between Sub-funds of the long-term fund. As these relate to movements between Sub-funds they have been excluded from the total Form 40.

4005 – Foreign currency translation

Assets and liabilities in currencies other than sterling have been translated into sterling at the rates of exchange ruling at the balance sheet date. Income and expenditure of those operations which operate in currencies other than sterling, are translated at average rates of exchange for the financial year. For all other operations, income and expenditure transactions are translated at the exchange rate ruling when the transaction took place.

4006 – Apportionment of long term funds

Premium income, claims and surrenders are allocated directly. Investment return comprising income, realised and unrealised capital gains is allocated based on the unit holdings of each of the sub-funds in the underlying investment funds. Management expenses generally take the form of fees payable to a management services company. These fees are directly related to individual policies, either as per policy or per premium loadings, and therefore the management expenses are directly allocated in line with the policy allocation. Investment expenses are also allocated based on the unit holdings of each of the sub-funds in the underlying investment funds. The tax charge for each Sub-fund is determined initially on a standalone mutual basis using the allocations of investment income, gains and expenses set out in this note. The balance of the charge is then allocated to the Royal London IB & OB Sub-fund. The basis of apportionment of the long-term funds has been performed in accordance with the detailed requirements of the Schedule 2C Scheme and principals of financial management for Scottish Life and United Assurance Group and the Schemes of Transfer for the Royal Liver and Phoenix Life Sub-funds. Further information on these requirements is presented in the Valuation Report in accordance with Appendix 9.4 of IPRU (INS).

4008 – Provision of management services

Royal London Management Services Limited, a subsidiary undertaking of the company, provided management services to the company throughout the year. Pending the intended Part VII transfer to the company of the entire long-term business of its subsidiary, Royal London (CIS) Limited, the company provided management services to Royal London (CIS), from the date of its acquisition, 31 July 2013.

4009 – Material connected party transactions i) Royal London Management Services Limited a wholly owned subsidiary of the company, recharged to the

company administration fees during the year totalling £229,370,000. ii) Royal London Asset Management Limited, a wholly owned subsidiary of the company, recharged to the

company investment management fees during the year totalling £12,618,000. iii) RL Finance Bonds plc, a wholly owned subsidiary of the company has lent the proceeds of subordinated

liabilities to the company on the same terms as the original debt issue with interest recharged during the year totalling £23,648,000.

iv) RL Finance Bonds No.2 plc, a wholly owned subsidiary of the company has lent the proceeds of subordinated liabilities to the company on the same terms as the original debt issue with interest recharged during the year totalling £,2,215,000.

v) Royal London Unit Trust Managers Limited, a wholly owned subsidiary of the company, rebated the portion of its investment management fee relating to the internal holding of Open ended investment companies to the company during the year totalling £37,887,000.

vi) Pending the intended Part VII transfer to the company of the entire long-term business of its subsidiary, Royal

London (CIS) Limited, the company provided management services to Royal London (CIS) and its

subsidiaries, RLUM (CIS) Limited and RL Marketing (CIS) Limited, from 31 July 2013. Fees for these services in the period were £24,304,000, £1,792,000 and £19,000 respectively. The company incurred expenses of £23,435,000 in respect of these services, which are included within the administration fees shown in i) above.


335

4010 – Linked asset investment income

Included within Line 12 is £417,000,000 of investment income relating to linked assets. 4012 – Premiums and claims between sub-funds

Lines 11 and 21 of the Sub-fund Form 40s both include £33,921,000 which represents amounts payable in respect of Guaranteed Annuity Options between Sub-funds of the long-term fund. As these relate to transactions between Sub-funds they have been excluded from the total Form 40.

4101 – Premiums and claims between sub-funds

Line 12, column 2 of the Sub-fund Form 41s include £33,921,000 which represents amounts payable in respect of Guaranteed Annuity Options between Sub-funds of the long-term fund. As these relate to transactions between Sub-funds they have been excluded from the total Form 41.

4201 – Premiums and claims between sub-funds

Line 14, column 2 of the Sub-fund Form 42s include £33,921,000 which represents amounts payable in respect of Guaranteed Annuity Options between Sub-funds of the long-term fund. As these relate to transactions between Sub-funds they have been excluded from the total Form 42.

4401 – Valuation of linked assets The securities held in the internal linked funds have been valued at bid price.

Land has been valued on an open market basis by qualified valuers. 4402 – Derivative contracts

The aggregate value of rights under derivative contracts included in assets amount to:-

Gross Net

2013 2013 £000 £000

SLI Protected Funds 8 8

RLAM FTSE 350 Options Fund 100 -

Schroders FTSE 350 Options Fund 440 -

Long term corporate bonds - - 4404 – Surplus Units To provide the liquidity needed to deal with daily fluctuations in net cash flows the company operates a box system

whereby the number of units in creation exceeds the matching unit liability by a specified margin.


336

4502 – Particulars of Other Income and Other Expenditure

Form 45, line 14, includes currency movement adjustments of £898,000 and interest income on finance leases of £390,000.

4601 - Amount of new single premiums Form 46 includes amounts payable in respect of Guaranteed Annuity Options between subfunds of the long-term fund.

These amounts are included within line 12, column 2 of the subfund Form 41s. 4701 - New group schemes

The company does not maintain scheme member records for certain group pension schemes. The number of such schemes split by product code is: Product code Number of schemes 735 3

4703 - Approximations used to estimate the number of policyholders

A new plan or member contributes to column 3 where only regular premiums have been paid or where both regular and single premiums have been paid. A new plan or member contributes to column 5 where only single premiums have been paid. The count in respect of DWP National Insurance rebates relate to plans where this is the only contribution type present. For group schemes with attaching risk benefits, the member count is allocated to the product code containing the retirement benefit, where this benefit is present. For risk benefit only members, the member count is allocated to Group Life where only this benefit is present or where Group Life is present along with other risk benefits. The member count is allocated to Group Income Protection where this is the only risk benefit present.

4801 - Asset share asset mix Royal London IB & OB Subfund

A variation of asset mix by outstanding duration of policy is assumed for all with-profits business. One variation of asset mix applies to table WPPP single premium business and table MW business. A separate asset mix applies to all other with profit business. At the valuation date, the asset mix backing asset shares is 5% more or less for at least one of the asset categories derived from lines 21-29 of column 2. The asset mixes are: Asset share category WPPP single All other

Premium and business Table MW

Land and buildings 0.0% 14.5% Approved fixed interest securities 59.9% 20.1% Other fixed interest securities 34.6% 11.6% Variable interest securities 5.5% 1.9% UK listed equity shares 0.0% 38.7% Non-UK listed equity shares 0.0% 12.7% Unlisted equity shares 0.0% 0.5% Other assets 0.0% 0.0%


337

4801 - Asset share asset mix (continued) Refuge Assurance IB Subfund

A variation of asset mix by outstanding duration of policy is assumed for all with-profits business in the subfund. At the valuation date, the asset mix backing asset shares is 5% more or less for at least one of the asset categories derived from lines 21-29 of column 2. The asset mix is: Asset share category Land and buildings 0.4% Approved fixed interest securities 35.1% Other fixed interest securities 14.4% Variable interest securities 1.7% UK listed equity shares 32.4% Non-UK listed equity shares 15.4% Unlisted equity shares 0.6% Other assets 0.0%

United Friendly OB Subfund A variation of asset mix by outstanding duration of policy is assumed for all with-profits business. One variation of asset mix applies to heavily in the money paid up pension business. A separate asset mix applies to all other with-profits business. At the valuation date, the asset mix backing asset shares is 5% more or less for at least one of the asset categories derived from lines 21-29 of column 2. The asset mixes are: Asset share category Paid up All other

pensions business Land and buildings 0.0% 14.4% Approved fixed interest securities 63.9% 40.5% Other fixed interest securities 31.1% 19.7% Variable interest securities 3.6% 2.3% UK listed equity shares 0.0% 18.7% Non-UK listed equity shares 0.0% 3.0% Unlisted equity shares 0.0% 0.5% Other assets 1.4% 0.9%


A variation of asset mix by outstanding duration of policy is assumed for all with-profits business in the subfund.


338

4801 - Asset share asset mix (continued) Scottish Life Fund

The asset mix for the with-profits business scheduled in Forms 51 and 52 is 5% more or less for at least one of the asset categories in the asset mix derived from lines 21 to 29 in column 2. A variation of asset mix by duration of policy is assumed for all with-profits business apart from Crest Growth. The asset mix for business other than Crest Growth is: Land and buildings 1.5% Approved fixed interest securities 56.7% Other fixed interest securities 9.6% Variable interest securities 2.7% UK listed equity shares 21.0% Non-UK listed equity shares 5.4% Unlisted equity shares 0.0% Other assets 3.1% The asset mix for the deposit administration business scheduled in Form 52 is 5% more or less for at least one of the asset categories in the asset mix derived from lines 21 to 29 in column 2. The asset mix is: Land and buildings 0.8% Approved fixed interest securities 67.2% Other fixed interest securities 11.3% Variable interest securities 3.2% UK listed equity shares 11.0% Non-UK listed equity shares 2.8% Unlisted equity shares 0.0% Other assets 3.7%


At the valuation date, the asset mix backing asset shares is 5% more or less for at least one of the asset categories derived from lines 21-29 of column 2. The asset mix is: Land and buildings 14.2% Approved fixed interest securities 26.4% Other fixed interest securities 28.5% Variable interest securities 0.4% UK listed equity shares 9.6% Non-UK listed equity shares 13.8% Unlisted equity shares 7.1% Other assets 0.0%

4802 - Expected income in default

Expected income from admissible assets excludes interest in default. At the valuation date, the amounts excluded were: Royal London IB & OB Subfund £8,880 Refuge Assurance IB Subfund £499 United Friendly OB Subfund £3,776 United Friendly IB Subfund £1,299 Scottish Life Fund £106,875 PLAL With-Profits Fund £55 Royal Liver Assurance Fund £nil


339

4803 - Split redemption bonds

Where securities may be redeemed over a period at the option of the guarantor or the issuer, the yield and market value are internally consistent and reflect the market's view of the likely redemption date within the available range. The total value of such bonds is: Royal London IB & OB Subfund £254m Refuge Assurance IB Subfund £14m United Friendly OB Subfund £108m United Friendly IB Subfund £37m Scottish Life Fund £60m PLAL With-Profits Fund £58m Royal Liver Assurance Fund £88m

4806 - Investment returns shown in column 5

The investment returns shown in line 21-28 of column 5 represent the returns on each category of assets backing asset shares as provided by our fund managers.


The weighted average return shown in line 29 has been calculated using the assets backing “all other business” asset shares as described in note 4801, not the weights shown in column 2.


The weighted average return shown in line 29 has been calculated using the assets backing asset shares as described in note 4801, not the weights shown in column 2.


The weighted average return shown in line 29 has been calculated using the assets backing “all other business” asset shares as described in note 4801, not the weights shown in column 2.

Scottish Life Fund

The asset mix of the portfolio used to back with-profits asset shares is described in note 4801. This portfolio is larger than the value of assets backing deposit administration business and it has been used to calculate the investment returns shown in lines 21-29 of column 5.


The weighted average return shown in line 29 has been calculated using the assets backing asset shares as described in note 4801, not the weights shown in column 2.

4901 - Credit rating agency

The credit ratings used to classify the other fixed interest securities have been provided by Standard & Poor’s Corporation. If a rating was not available then Moody’s Investors Service ratings were used as a second source and Fitch Ratings has been used as a third source.

5101 - Number of contracts The company does not maintain scheme member records for certain group life and pension schemes. The number of

such schemes split by product code is:

Product code Number of schemes 210 10 440 7


340

5102 - Approximations in estimating numbers of policyholders

Where practical we have eliminated double counting of scheme members between risk and retirement benefits. It has not proved practical to eliminate double counting between certain final salary retirement and risk benefits. For certain money purchase pensions we have set the policyholder count in respect of the scheduled risk benefits to be nil.

5103 - Miscellaneous product code Some Ex RLA (Caledonian) and RL (Caledonian) escalating term assurance policies have been allocated to the

miscellaneous product code 435 in the Royal Liver Assurance Fund and the Royal London IB & OB Subfund respectively.

5104 - Approximations used to apportion between product codes

Certain whole life and endowment assurance contracts contain additional benefits and do not naturally fall into a single product code. These contracts have been allocated to product codes 100, 105 and 130 as appropriate in line with the predominant benefit and the product description amended.

5105 - Inter-subfund payments Under the Scottish Life Schedule 2C Scheme, certain inter-subfund payments are due from the Scottish Life Fund to the

Royal London IB & OB Subfund where the value of such amounts would normally be inadmissible. FSA issued the Society individual guidance which requires the long term insurance liabilities in the Scottish Life Fund to be increased by £41,112,110 in Form 51 Pension. The long term insurance liabilities in the Royal London IB & OB Subfund have been reduced by £41,112,110 in Form 51 Pension.

Under the Royal Liver Instrument of Transfer, certain inter-subfund payments are due from the Royal Liver Assurance Fund to the Royal London IB & OB Subfund where the value of such amounts would normally be inadmissible. The long term insurance liabilities in the Royal Liver Assurance Fund have been increased by £110,918,294, £5,401,726 and £90,866,110 in Form 51 Life, Pension and Overseas respectively. The long term liabilities in the Royal London IB & OB Subfund have been reduced by £110,918,294, £5,401,726 and £90,866,110 in Form 51 Life, Pension and Overseas respectively.

5106 - Number of contracts

To avoid double counting, the number of policyholders/scheme members in respect of contracts offering a choice of investment funds, in addition to property linked has been scheduled entirely in Form 53. The corresponding numbers in Form 51 and Form 52 have been set to nil.

5202 - Approximations in estimating numbers of policyholders Where practical we have eliminated double counting of scheme members between risk and retirement benefits. For

certain money purchase pensions we have set the policyholder count in respect of the scheduled risk benefits to be nil.

5203 - Miscellaneous product code Single premium Insurance ISA contracts have been allocated to miscellaneous product code 575 in the Royal London IB

& OB Subfund.


341

5205 - Liability internally reassured between the Royal London IB & OB Subfund and other funds Certain former Scottish Life contracts issued prior to 1 July 2001 may contain accumulating with-profits units and/or

property linked units. Accumulating with-profits liabilities of £16,765,861 in respect of life business and £143,078,865 for pension business are wholly reassured into the Scottish Life Fund from the Royal London IB & OB Subfund. Liability and death benefits relating to accumulating with-profits units are shown on the respective forms.

Certain former PLAL contracts may contain accumulating with-profits units and/or property linked units. Accumulating

with-profits liabilities of £174,415,605 in respect of life business and £165,969,237 for pension business are wholly reassured into the PLAL With-Profits Fund from the Royal London IB & OB Subfund. Liability and death benefits relating to accumulating with-profits units are shown on the respective forms.

5206 - Inter-subfund payments

Under the Scottish Life Schedule 2C Scheme, certain inter-subfund payments are due from the Scottish Life Fund to the Royal London IB & OB Subfund where the value of such amounts would normally be inadmissible. FSA issued the Society individual guidance which requires the long term insurance liabilities in the Scottish Life Fund to be increased by £1,469,128 in Form 52 Life and by £18,871,467 in Form 52 Pension. The long term insurance liabilities in the Royal London IB & OB Subfund have been reduced by £1,469,128 in Form 52 Life and by £18,871,467 in Form 52 Pension respectively. Under the Royal Liver Instrument of Transfer, certain inter-subfund payments are due from the Royal Liver Assurance Fund to the Royal London IB & OB Subfund where the value of such amounts would normally be inadmissible. The long term insurance liabilities in the Royal Liver Assurance Fund have been increased by £386,136, £36,841,223 and £13,199,586 in Form 52 Life, Pension and Overseas respectively. The long term liabilities in the Royal London IB & OB Subfund have been reduced by £386,136, £36,841,223 and £13,199,586 in Form 52 Life, Pension and Overseas respectively.



5301 - Number of contracts The company does not maintain scheme member records for certain group pension schemes. The number of such

schemes split by product code is:

Product code Number of schemes 735 88 755 13

5302 - Approximations in estimating numbers of policyholders

Where practical we have eliminated double counting of scheme members between risk and retirement benefits. It has not proved practical to eliminate double counting between certain final salary retirement and risk benefits.

5304 - Approximations used to apportion between product codes

Certain whole life assurance contracts contain additional benefits and do not naturally fall into a single product code. These contracts have been allocated to product code 710 and the product description amended.

5305 - Liability internally reassured between the Scottish Life Fund and the Royal London IB & OB Subfund Certain former Scottish Life pension contracts issued prior to 1 July 2001 may contain conventional with-profits and/or

property linked benefits. The property linked liability of £984,040,011 is wholly reassured into the Royal London IB & OB Subfund from the Scottish Life Fund. Liability and death benefits relating to accumulating with-profits units are shown on the respective forms.


342

5306 - Inter-subfund payments

Under the Royal Liver Instrument of Transfer, certain inter-subfund payments are due from the Royal Liver Assurance Fund to the Royal London IB & OB Subfund where the value of such amounts would normally be inadmissible. The long term insurance liabilities in the Royal Liver Assurance Fund have been increased by £1,971,821, £19,473,552 and £1,150,916 in Form 53 Life, Pension and Overseas respectively. The long term liabilities in the Royal London IB & OB Subfund have been reduced by £1,971,821, £19,473,552 and £1,150,916 in Form 53 Life, Pension and Overseas respectively.



5600 - Omission of Form 56

Form 56 has been omitted as index-linked assets are below the de-minimis limit.

5701 - Treatment of negative reserves

Royal London IB & OB Subfund Any negative sterling reserves in either Form 52 or Form 53 have been combined with positive sterling reserves calculated at the same interest rate for the same type of business in the same form. Negative reserves on Form 51 have been offset against positive reserves calculated at the same rate of interest.

UK L&GA OB WP Form 52 Non-Unit Reserves (excl PLAL ISA and ex RLA code 610) comprises £1,469,128 of negative asset share charges offset against £1,558,119 of sterling reserves.

UK Pens OB WP Form 52 Non-Unit Reserves (Excl GAR, Pensions Review and ex RLA code 610) comprises £12,932,720 of negative asset share charges partly offset against expense provisions of £2,848,201 and sterling reserves of £10,015,002.

UK L&GA RL, ex CL, ex RA, ex SL, ex UFI, ex UFLA, ex SMA, ex SPL and ex PLAL OB NP Form 51 Assurances (except PHI and gross roll up protection (GRB)) includes negative reserves of £224,180,642 relating to protection business written by Royal London, Bright Grey, SMA, SPL and PLAL. These are partly offset against larger positive non-profit and with-profits reserves calculated at the same rate of interest. UK L&GA gross roll up and Pens RL, ex CL, ex PLAL ex RA, ex SMA, ex UFI and ex UFLA OB NP Form 51 Assurances includes negative reserves of £66,873,708 relating to protection business written within Royal London, Bright Grey, PLAL and SMA. These are offset against larger positive non-profit and with-profits reserves calculated at the same interest rate. Misc includes £47,050,857 of negative asset share charges in Forms 51 and 52, £280,209,364 of Liver charges in Forms 51, 52 and 53, £2,816,378 negative reserves in relation to OLAB term assurances in Form 51 and £32,516,066 negative reserves in relation to PHI business. These were partly offset against £74,699,012 of Form 51 late vesting pension reserves and £11,138,090 of other reserves.

5702 – Royal Liver Assurance Fund

Due to the tax position of the Royal Liver Assurance Fund, all of the business in the fund is valued using gross of tax valuation discount rates.

Returns under the Accounts and Statements Rules Statement required by Rule 9.29 of the Interim Prudential Sourcebook for Insurers Name of insurer The Royal London Mutual Insurance Society Limited Global business Financial year ended 31 December 2013

343

Derivative contracts The following additional information is provided pursuant to regulation 9.29 of the Interim Prudential

Sourcebook for Insurers. (a) Investment guidelines for the use of derivative contracts were operated by the Insurer. These form part of

the overall limits on investment detailed in an agreement between the Insurer and its wholly owned investment management subsidiary. In particular, in relation to derivatives, limitations are in place in relation to warrants, futures, contracts for differences and forward foreign exchange contracts. With the exception of the Phoenix Group warrants (see below), all derivatives are held for the purposes of reduction in investment risk or efficient portfolio management. In particular derivatives are used to match contractual liabilities. The Insurer maintains assets which, as far as can reasonably be foreseen, will match the obligations under the contract and from which these obligations can be fulfilled. The Insurer has a holding of warrants to acquire 12,360,000 ordinary shares in Phoenix Group. These warrants are held as a strategic asset by the Royal London fund and do not back policyholder liabilities. The warrants do not meet the definition of an approved derivative within INSPRU 3.2.5R and so are not included as admissible assets on Form 13.

(b) There are no specific investment guidelines relating to the use of contracts which were not, at the time of entry, reasonably likely to be exercised.

(c) The Insurer’s exposure during the year to contracts of the kind described in section (b) was confined to the use of derivatives in connection with options granted to policyholders which were reasonably likely to be exercised.

(d) During the financial year the Insurer has not held any derivative contract for which a significant provision needed to be made under INSPRU 3.2.17R or which was not a permitted derivative contract.

(e) During the financial year the Insurer received sub-underwriting commissions of £0.18m.

Returns under the Accounts and Statements Rules Statement required by Rule 9.30 of the Interim Prudential Sourcebook for Insurers Name of insurer The Royal London Mutual Insurance Society Limited Global business Financial year ended 31 December 2013

344

Shareholder controllers

The following additional information is provided pursuant to Rule 9.30 of the Interim Prudential Sourcebook for Insurers. The Insurer is a mutual insurer and therefore has no shareholder controllers.

Returns under the Accounts and Statements Rules Directors’ certificate pursuant to Rule 9.34 and Appendix 9.6 of the Interim Prudential Sourcebook for Insurers Name of insurer The Royal London Mutual Insurance Society Limited Global business Financial year ended 31 December 2013

345

We certify that: (a) the return has been properly prepared in accordance with the requirements in IPRU(INS),

GENPRU and INSPRU; (b) with the exception of the items notified to the PRA in accordance with SUP 15.3, we are satisfied

that:

(i) throughout the financial year, the Insurer has complied in all material respects with the requirements in SYSC and PRIN as well as the provisions of IPRU(INS), GENPRU and INSPRU; and

(ii) it is reasonable to believe that the Insurer has continued so to comply subsequently and will continue so to comply in future;

(c) in our opinion premiums for contracts entered into during the financial year and the resulting

income earned are sufficient, under reasonable actuarial methods and assumptions, and taking into account the other financial resources of the Insurer that are available for the purpose, to enable the Insurer to meet its obligations in respect of those contracts and, in particular, to establish adequate mathematical reserves;

(d) the sum of the mathematical reserves and the deposits received from reinsurers as shown in Form

14 constitute proper provision at the end of the financial year in question for the long-term insurance liabilities (including all liabilities arising from deposit back arrangements, but excluding other liabilities which had fallen due before the end of the financial year) including any increase in those liabilities arising from a distribution of surplus as a result of an actuarial investigation as at that date into the financial condition of the long-term insurance business;

(e) the with-profits fund has been managed in accordance with the Principles and Practices of Financial Management, as established, maintained and recorded under COBS 20.3; and

(f) we have, in preparing the return, taken and paid due regard to:

(i) advice from every actuary appointed by the Insurer to perform the actuarial function in accordance with SUP 4.3.13R; and

(ii) advice from every actuary appointed by the Insurer to perform the with-profits actuary function in accordance with SUP 4.3.16R.

Phil Loney

Group Chief Executive

Kerr Luscombe Group Finance Director

Andy Carter Director

31st March 2014

Returns under the Accounts and Statements Rules Independent auditors’ report to the directors pursuant to Rule 9.35 of the Interim Prudential Sourcebook for Insurers Name of insurer The Royal London Mutual Insurance Society Limited Global business Financial year ended 31 December 2013

346

We have audited the following documents prepared by the insurer pursuant to the Accounts and Statements Rules set out in Part I and Part IV of Chapter 9 to IPRU(INS) the Interim Prudential Sourcebook for Insurers, GENPRU the General Prudential Sourcebook and INSPRU the Prudential Sourcebook for Insurers (“the Rules”) made by the Prudential Regulation Authority under section 137G of the Financial Services and Markets Act 2000:

• Forms 2, 3, 11 to 14, 17 to 19, 40 to 45, 48, 49, 58 and 60, (including the supplementary notes) on pages 1 to 104, 111 to 126, 221 to 228, 245 and 328 to 342 ("the Forms”);

• the statement required by IPRU (INS) rule 9.29 on page 343 ("the statement"); and • the valuation reports required by IPRU (INS) rule 9.31(a) (“the valuation report”) and rule 9.31(b) (“the

realistic valuation report”) on pages 246 to 327.

We are not required to audit and do not express an opinion on:

• Forms 46 to 47, 50 to 55, 57 and 59A to 59B (including the supplementary notes) on pages 105 to 110, 127 to 220, 229 to 244 and 328 to 342;

• the statements required by IPRU (INS) rules 9.30 and 9.36 on pages 344 and 348 respectively; and • the certificate required by IPRU (INS) rule 9.34 on page 345 ("the certificate").

Respective responsibilities of the insurer and its auditors

The insurer is responsible for the preparation of an annual return (including the Forms, the statement and the valuation reports under the provisions of the Rules. The requirements of the Rules have been modified by a direction issued under section 138A of the Financial Services and Markets Act 2000 in September 2012. Under IPRU(INS) rule 9.11 the Forms, the statement and the valuation reports are required to be prepared in the manner specified by the Rules and to state fairly the information provided on the basis required by the Rules. The methods and assumptions determined by the insurer and used to perform the actuarial investigation as set out in the valuation reports are required to reflect appropriately the requirements of INSPRU 1.2 and 1.3. It is our responsibility to form an independent opinion as to whether the Forms, the statement and the valuation reports meet these requirements, and to report our opinions to you. We also report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

• the Forms, the statement and the valuation reports are not in agreement with the accounting records and returns; or

• we have not received all the information we require for our audit.

This report has been prepared for the directors of the insurer to comply with their obligations under IPRU (INS) rule 9.35 and for no other purpose. We do not, in providing this report, accept or assume responsibility for any other purpose save where expressly agreed by our prior consent in writing.

Basis of opinion

We conducted our work in accordance with Practice Note 20 'The audit of insurers in the United Kingdom (Revised)' issued by the Auditing Practices Board. Our work included examination, on a test basis, of evidence relevant to the amounts and disclosures in the Forms, the statement and the valuation reports. The evidence included that previously obtained by us relating to the audit of the financial statements of the insurer for the financial year. It also included an assessment of the significant estimates and judgements made by the insurer in the preparation of the Forms, the statement and the valuation reports. We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Forms, the statement and the valuation reports are free from material misstatement, whether caused by fraud or other irregularity or error and comply with IPRU(INS) rule 9.11. In accordance with IPRU(INS) rule 9.35(1A), to the extent that any document, Form, statement, analysis or report to be examined under IPRU(INS) rule 9.35(1) contains amounts or information abstracted from the actuarial investigation performed pursuant to IPRU(INS) rule 9.4, we have obtained and paid due regard to advice from a suitably qualified actuary who is independent of the insurer.

Returns under the Accounts and Statements Rules Independent auditors’ report to the directors pursuant to Rule 9.35 of the Interim Prudential Sourcebook for Insurers (continued) Name of insurer The Royal London Mutual Insurance Society Limited Global business Financial year ended 31 December 2013

347

Opinion

In our opinion:

(i) the Forms, the statement and the valuation reports fairly state the information provided on the basis required by the Rules as modified and have been properly prepared in accordance with the provisions of those Rules; and

(ii) the methods and assumptions determined by the insurer and used to perform the actuarial investigation as set out in the valuation reports appropriately reflect the requirements of INSPRU 1.2 and 1.3.

PricewaterhouseCoopers LLP 31st

Chartered Accountants and Statutory Auditors March 2014

7 More London Riverside London SE1 2RT

Returns under the Accounts and Statements Rules Information on the actuary appointed to perform the with-profits actuary function Name of insurer The Royal London Mutual Insurance Society Limited Global business Financial year ended 31 December 2013

348

Pursuant to Rule 9.36 of the Interim Prudential Sourcebook for Insurers, The Royal London Mutual Insurance Society Limited (the Society) has made a request to Mr Stephen Wilson, who was the actuary appointed to perform the with-profits actuary function, to furnish to it the particulars specified in paragraph (1) of the aforesaid Rule. The following are the particulars identified pursuant to that request:

a. The actuary appointed to perform the with-profits actuary function had at no time in the year any interest in any shares in, or debentures of, any subsidiary of the Society (the Society itself is a mutual company). Nor did he have any interest in the undated subordinated guaranteed bonds.

b. The actuary appointed to perform the with-profits actuary function had no interest at any time in the year in any transaction between himself and the Society, or a subsidiary thereof.

c. The aggregate amount of the remuneration paid to the actuary appointed to perform the with-profits actuary function in 2013 and the value of other benefits granted to him, excluding pension fund contributions, was £343,045.

d. The only other pecuniary benefit was membership of the Royal London Group Pension Scheme (“the Scheme”). Prior to April 2012, Mr Wilson was an active member of the Scheme under the normal terms applicable to a member of the Society's staff. From April 2012, Mr Wilson became a deferred member of the Scheme.

The Royal London Mutual Insurance Society Limited · Form 13 Analysis of admissible assets 7 ......

Documents

Transcript of The Royal London Mutual Insurance Society Limited · Form 13 Analysis of admissible assets 7 ......