B: Summary of results

The determination of the operating segments and performance measure of the operating segments of the Group are as detailed in note A4. Further segmentation of the income segment is provided in note F1 of these financial statements.

 

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  2010 £m 2009 £m
Asian operations    
Insurance operations:note ii    
Underlying results before exceptional credit 536 353
Exceptional credit for Malaysia operationsD4(i) 63
Total Asian insurance operations 536 416
Development expenses (4) (6)
Total Asian insurance operations after development expenses 532 410
Asian asset management 72 55
Total Asian operations 604 465
US operations    
Jackson (US insurance operations)notes ii,iv 833 618
Broker-dealer and asset managementnote iv 22 4
Total US operations 855 622
UK operations    
UK insurance operations:note ii    
Long-term business 673 606
General insurance commissionnote v 46 51
Total UK insurance operations 719 657
M&G 284 238
Total UK operations 1,003 895
Total segment profit 2,462 1,982
Other income and expenditure    
Investment return and other income 30 22
Interest payable on core structural borrowings (257) (209)
Corporate expenditure (220) (203)
Charge for share-based payments for Prudential schemesnote viii (3) (5)
Total (450) (395)
Solvency II implementation costs (45)
Restructuring costsnote ix (26) (23)
Operating profit based on longer-term investment returnsnote i 1,941 1,564
Short-term fluctuations in investment returns on Shareholder-backed businessnote vi (123) (123)
Shareholders’ share of actuarial and other gains and losses on defined benefit pension schemesnote vii (10) (74)
Costs of terminated AIA transactionnote x (377)
Gain on dilution of holding in PruHealthI2(a) 30
Loss on sale and results for Taiwan agency businessnote iii (621)
Profit from continuing operations before tax attributable to shareholders 1,461 746

Notes

  1. Operating profit based on longer-term investment returns.

    Operating profit based on longer-term investment returns is a supplemental measure of results and is the basis on which management regularly review the performance of the Group's segments as defined by IFRS 8. For the purposes of measuring operating profit, investment returns on shareholder-financed business are based on expected long-term rates of return as discussed in note A4. The expected long-term rates of return are intended to reflect historical real rates of return and, where appropriate, current inflation expectations adjusted for consensus economic and investment forecasts. The most significant operation that requires adjustment for the difference between actual and long-term investment returns is Jackson. The amounts included in operating results for long-term capital returns for Jackson's debt securities comprise two components. These are a risk margin reserve based charge for long-term expected defaults, which is determined by reference to the credit quality of the portfolio, and amortisation of interest-related realised gains and losses to operating results based on longer-term results to the date when sold bonds would otherwise have matured. Consistent with the policy of including longer-term investment returns in the measure of operating profit, movements in policyholder liabilities are also, where appropriate, delineated between amounts included in operating profits and movements arising from short-term market conditions, which are recorded in short-term fluctuations in investment returns. The presentation of operating profit based on longer-term investment returns has been revised in 2010 and the 2009 comparatives have been amended accordingly (see note (iv)).

  2. Effect of changes to assumptions, estimates and bases of determining life assurance liabilities.

    The results of the Group's long-term business operations are affected by changes to assumptions, estimates and bases of preparation. These are described in notes D2(i), D3(i) and D4(i).

  3. Sale of Taiwan agency business.

    In order to facilitate comparisons of operating profit based on longer-term investment returns that reflect the Group's retained operations, the results attributable to the Taiwan business for which the sale process was completed in June 2009 are included separately within the segmental analysis of profit for 2009.

  4. Jackson operating results based on longer-term investment returns.

    The Group has amended the presentation of operating profit for its US insurance operations to remove net equity hedge accounting effect (incorporating related amortisation of deferred acquisition costs) and include it in short-term fluctuations. The 2009 comparatives have been amended accordingly. The effect of this change is explained note A4(d)(ii).

    IFRS basis operating profits for US operations include the following amounts (net of related change in amortisation of deferred acquisition costs, where applicable) so as to derive longer-term investment returns.

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      2010 £m 2009 £m
    Debt securities:    
    Amortisation of interest related realised gains and losses 63 47
    Risk margin reserve charge for longer-term credit related losses (see below) (55) (60)
    Equity type investments:    
    Longer-term returns (8) 69

    The risk margin reserve (RMR) charge for longer-term credit related losses included in operating profit based on longer-term investment returns for 2010 is based on an average annual RMR of 26 basis points (2009: 27 basis points) on average book values of US $44.2 billion for the year as shown below.

     

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      2010 2009
    Moody’s rating category (or equivalent under NAIC ratings of MBS) Average book value
    (US $m)
    RMR
    %
    Annual expected losses Average book value
    (US $m)
    RMR
    %
    Annual expected losses
    US $m £m US $m £m
    A3 or higher 20,622 0.06 (12) (8) 19,509 0.03 (5) (3)
    Baa1, 2, 3 20,785 0.26 (53) (34) 21,072 0.23 (47) (30)
    Ba1, 2, 3 1,935 1.04 (20) (13) 2,035 1.13 (23) (15)
    B1, 2, 3 500 2.99 (15) (10) 594 2.86 (17) (11)
    Below B3 321 3.88 (13) (8) 691 3.91 (27) (17)
    Total 44,163 0.26 (113) (73) 43,901 0.27 (119) (76)
    Related change to amortisation of deferred acquisition costs (see below)     28 18     25 16
    Risk margin reserve charge to operating profit for longer-term credit related losses     (85) (55)     (94) (60)

    For the period ended 31 December 2010, Jackson has continued the practice commenced in the second half of 2009 in relation to RMBS and for 2010 for CMBS to determine the risk margin charge included in operating profit based on longer-term investment returns using the regulatory rating as determined by third parties; PIMCO (for RMBS) and BlackRock Solutions (for CMBS) on behalf of the National Association of Insurance Commissioners (NAIC). See note A4(d) for further information.

    The longer-term rates of return for equity-type investments are currently based on spreads over 10 year US treasury rates of 400 to 600 basis points. The longer-term rates of return for equity-type investments ranged from 6.5 per cent to 7.9 per cent at 31 December 2010 and 6.7 per cent to 7.4 per cent at 31 December 2009 depending on the type of investments.

    Consistent with the basis of measurement of insurance assets and liabilities for Jackson's IFRS results, the charges and credits to operating profits based on longer-term investment returns are partially offset by related changes to amortisation of deferred acquisition costs.

  5. UK operations transferred its general insurance business to Churchill in 2002, with general insurance commission representing the commission receivable net of expenses for Prudential-branded general insurance products as part of this arrangement.

  6. Short-term fluctuations in investment returns on shareholder-backed business.

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      2010 £m 2009 £m
    Insurance operations:    
    Asia 114 31
    US (378) (132)
    UK 116 108
    Other operations:    
    IGD hedge costs (235)
    Other 25 105
      25 (130)
    Total (123) (123)

    General overview of defaults

    The Group incurred defaults of £nil in 2010 (2009: £11 million) on its debt securities portfolio. The defaults of £11 million in 2009 were experienced by the UK Shareholder-backed annuity business.

    Asian insurance operations

    The fluctuations for Asian insurance operations in 2010 of £114 million primarily reflect unrealised gains on the debt securities held by shareholders' funds, as well as a £30 million unrealised gain on the Group's 8.66 per cent stake in China Life Insurance Company of Taiwan. For 2009, the gain of £31 million primarily relate to strong market performance in Taiwan and Japan partially offset by the fall in the Vietnamese bond markets.

    US insurance operations

    The short-term fluctuations in investment returns for US insurance operations for the year comprise the following items:

     

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      2010 £m 2009 £m
    • *
      The charges on debt securities of Jackson incurred in 2010 and 2009 of £213 million and £631 million respectively, comprise the following:
    Short-term fluctuations related to debt securities:
    Charges in the year
       
    Losses on sales of impaired and deteriorating bonds (99) (6)
    Bond write downs (124) (630)
    Recoveries/reversals 10 5
    Total charges in the year* (213) (631)
    Less: risk margin charge included in operating profit based on longer-term investment returnsB1 (iv) 73 76
      (140) (555)
    Interest related realised gains (losses):    
    Arising in the year 224 125
    Less: amortisation gains and losses arising in current and prior years to operating profit based on longer-term investment returns (82) (59)
      142 66
    Related change to amortisation of deferred acquisition costs (3) 75
    Total short-term fluctuations related to debt securities (1) (414)
    Derivatives (other than equity related): market value movements (net of related change to amortisation of deferred acquisition costs) (15) 385
    Net equity hedge results based on longer-term equity volatility and interest rates (net of related change to amortisation of deferred acquisition costs) (367) (159)
    Equity related derivatives: volatility and interest rate normalisation (net of related change to amortisation of deferred acquisition costs)# 2 85
    Equity type investments: actual less longer-term return (net of related change to amortisation of deferred acquisition costs)B1(iv) 3 (59)
    Other items (net of related change to amortisation of deferred acquisition costs) 30
    Total (378) (132)

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      Defaults
    £m
    Bond write downs
    £m
    Losses on sale of impaired and deteriorating bonds
    £m
    Recoveries/ reversals
    £m
    2010 Total
    £m
    2009 Total
    £m
    Residential mortgage-backed securities            
    Prime (including agency) 21 35 56 268
    Alt-A 35 20 (1) 54 182
    Sub-prime 15 (2) 13 49
    Total residential mortgage-backed securities 71 53 (1) 123 499
    Corporate debt securities 1 40 (4) 37 107
    Other 52 6 (5) 53 25
    Total 124 99 (10) 213 631

    Within other bond write downs of £52 million (2009: £30 million), £40 million (2009: £30 million) relate to Piedmont securities. Piedmont is an investment vehicle investing in certain asset-backed and mortgage-backed securities in the US.

    • The loss of £15 million (2009: gain of £385 million) is for the value movement for non-equity freestanding derivatives held to manage the fixed annuity and other general account business. Under IAS 39, unless hedge accounting is applied, value movements on derivatives are recognised in the income statement.

      For the derivatives programme attaching to the fixed annuity and other general account business the Group has continued its approach of not seeking to apply hedge accounting under IAS 39. This decision reflects the inherent constraints of IAS 39 for hedge accounting investments and life assurance assets and liabilities under 'grandfathered' US GAAP under IFRS 4.

    • The Group has amended its presentation of equity-based derivatives and associated guarantee liabilities to remove the net equity hedge accounting effect (incorporating related amortisation of deferred acquisition costs) from operating profit based on longer-term investment returns and include it in short-term fluctuations. The 2009 comparatives have been amended accordingly. The effect of this change is explained in note A4(d)(ii).

    • #

      Prior to the change in the presentation of operating profit of the US insurance operations as explained in note A4(d)(ii), the effect of the difference in the value movements for freestanding derivatives and embedded derivatives arising from changes between longer-term and actual levels of implied equity volatility and end of period AA corporate bond yield curves was reflected in short-term fluctuations in investment return. This normalisation reflects the use of longer-term implied equity volatility levels, and also, for embedded derivatives 10 year average AA corporate bond yield curves, in the value movement included in net equity hedge accounting effect and is unaffected by the change in the presentation of the net equity hedge accounting effect.

      This volatility and interest rate normalisation of value movements for freestanding and embedded derivatives gave rise to a £2 million gain (2009: £85 million). The net equity hedge accounting effect based on longer-term equity volatility and interest rate is as described above in note ‡.

      In addition to the items discussed above, for US insurance operations, included within the statement of comprehensive income, is an increase in net unrealised gains on debt securities classified as available-for-sale of £1,221 million (2009: reduction in net unrealised losses of £2,669 million). Temporary market value movements do not reflect defaults or impairments. Additional details on the movement in the value of the Jackson portfolio are included in note D3.

    UK insurance operations

    The short-term fluctuations gain for UK insurance operations of £116 million (2009: £108 million) reflected principally asset value movements, principally for shareholder-backed annuity business.

    IGD hedge costs

    During the severe equity market conditions experienced in the first quarter of 2009 coupled with historically high equity volatility the Group entered into exceptional short-dated hedging contracts to protect against potential tail-events on the IGD capital position, in addition to the regular operational hedging programmes. The hedge contracts expired in 2009 and have not been renewed.

    Other

    Short-term fluctuations of other operations, in addition to the previously discussed IGD hedge costs, arise from:

     

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      2010 £m 2009 £m
    Unrealised value movements on swaps held centrally to manage Group assets and liabilities (25) 28
    Unrealised value movements on Prudential Capital’s bond portfolio 48 66
    Unrealised value movements on investments held by other operations 2 11
      25 105
  7. Shareholders' share of actuarial and other gains and losses on defined benefit pension schemes

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      2010 £m 2009 £m
    Actuarial gains and losses    
    Actual less expected return on scheme assets 31 23
    Experience (losses) gains on scheme liabilities (5) 17
    Losses on changes of assumptions for scheme liabilities (41) (147)
      (15) (107)
    Less: amount attributable to the PAC with-profits sub-fund 5 47
      (10) (60)
    Other gains and losses    
    Movement in the provision for deficit funding of PSPS (48)
    Less: amount attributable to the PAC with-profits sub-fund 34
      (14)
    Total (10) (74)

    The actuarial gains and losses shown in the table above relate to the Scottish Amicable and M&G. The amounts did not include actuarial gains and losses for the Prudential Staff Pension Scheme (PSPS) for which the Group has not recognised its interest in the scheme's underlying surplus.

    The losses of £41 million on change of assumptions comprise mainly the effect of a decrease in the risk discount rate partially offset by the effect of decrease in inflation rates.

    Other gains and losses in 2009 related to the change in the provision for deficit funding obligation for PSPS. There was no change in 2010.

    Further details on the Group's defined benefit pension schemes are shown in note I3.

  8. Share-based payments

    The charge for share-based payments for Prudential schemes is for the SAYE and Group performance-related schemes.

  9. Restructuring costs are incurred in the UK as part of EEV covered business (£26 million) and as part of central operations of £nil (EEV noncovered business) (2009: £16 million and £7 million respectively).

  10. The following costs were incurred in relation to the proposed, and subsequently terminated transaction, to purchase AIA Group Limited and related rights issue.

     

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      2010 £m
    AIG termination break fee 153
    Underwriting fees 58
    Costs associated with foreign exchange hedging 100
    Adviser fees and other 66
    Total costs before tax 377
    Associated tax relief (93)
    Total costs after tax 284

    Of the £377 million total costs before tax, the £100 million associated with foreign exchange hedging has been recorded within 'Investment return' and the other £277 million has been recorded as 'Other expenditure' within 'Acquisition costs and other expenditure' in the consolidated income statement.

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year, excluding those held in employee share trusts and consolidated unit-trusts and OEICs, which are treated as cancelled.

For diluted earnings per share, the weighted average number of shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group's only class of dilutive potential ordinary shares are those share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the year. No adjustment is made if the impact is anti-dilutive overall.

Earnings per share are calculated based on earnings attributable to ordinary shareholders, after related tax and non-controlling interests.

 

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  2010
Before tax
B1
£m
Tax
F5
£m
Non-controlling interests
£m
Net of tax and non-controlling interests
£m
Basic earnings per share
Pence
Diluted earnings per share
Pence
  • *The tax charge attributable to shareholders' return includes an exceptional tax credit of £158 million which primarily relates to the impact of settlement agreed with the UK tax authorities.
Based on operating profit based on longer-term investment returns, excluding exceptional tax credit 1,941 (371) (5) 1,565 62.0p 61.9p
Exceptional tax credit* 158 158 6.3p 6.3p
Based on operating profit based on longer-term investment returns 1,941 (213) (5) 1,723 68.3p 68.2p
Short-term fluctuations in investment returns on shareholder-backed business (123) 92 (31) (1.2p) (1.2p)
Shareholders’ share of actuarial and other gains and losses on defined benefit pension schemes (10) 3 (7) (0.3p) (0.3p)
Costs of terminated AIA transaction (377) 93 (284) (11.3p) (11.3p)
Gain on dilution of holding in PruHealth 30 30 1.2p 1.2p
Based on profit for the year from continuing operations including exceptional tax credit 1,461 (25) (5) 1,431 56.7p 56.6p
 

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  2009(1)
Before tax
B1
£m
Tax
F5
£m
Non-controlling interests
£m
Net of tax and non-controlling interests
£m
Basic earnings per share
Pence
Diluted earnings per share
Pence
Note
  • (1)The Group has amended the presentation of IFRS operating profit for its US operations to remove net equity hedge accounting effect (incorporating related amortisation of deferred acquisition costs) and include it in short-term fluctuations. The 2009 comparatives have been amended accordingly.
Based on operating profit based on longer-term investment returns 1,564 (374) (2) 1,188 47.5p 47.4p
Short-term fluctuations in investment returns on shareholder-backed business (123) 280 1 158 6.3p 6.3p
Shareholders’ share of actuarial and other gains and losses on defined benefit pension schemes (74) 21 (53) (2.1p) (2.1p)
Adjustment from loss on sale and result of Taiwan agency business (621) 18 (603) (24.1p) (24.0p)
Based on profit for the year from continuing operations 746 (55) (1) 690 27.6p 27.6p
Adjustments for post-tax results of discontinued operations (14) (14) (0.6p) (0.6p)
Based on profit for the year 732 (55) (1) 676 27.0p 27.0p

Number of shares

A reconciliation of the weighted average number of ordinary shares used for calculating basic and diluted earnings per share is set out as below:

 

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  2010 £m 2009 £m
Weighted average shares for calculation of basic earnings per share 2,524 2,501
Shares under option at end of year 13 12
Number of shares that would have been issued at fair value on assumed option exercise (8) (7)
Weighted average shares for calculation of diluted earnings per share 2,529 2,506

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  2010 £m 2009 £m
Dividends declared and paid in reporting period
Parent company:
   
Interim dividend (2010: 6.61p, 2009: 6.29p per share) 168 159
Second interim/Final dividend for prior period (2010: 13.56p, 2009: 12.91p per share) 343 322
Total 511 481

As a result of shares issued in lieu of dividends of £62 million (2009: £137 million), dividends paid in cash, as set out in the consolidated cash flow statement, were £449 million (2009: £344 million).

 

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  2010 £m 2009 £m
Parent company dividends relating to reporting period:    
Interim dividend (2010: 6.61p, 2009: 6.29p per share) 168 159
Final/second interim dividend (2010: 17.24p, 2009: 13.56p per share) 439 343
Total 607 502

Interim dividends are recorded in the period in which they are paid. Final dividends are recorded in the period in which they are approved by shareholders. The second interim dividend of 13.56 pence per ordinary share for the year ended 31 December 2009 was paid to eligible shareholders on 27 May 2010 and the 2010 interim dividend of 6.61 pence per ordinary share was paid to eligible shareholders on 23 September 2010.

Following the Board's decision to rebase the dividend upwards and subject to shareholders' approval, the 2010 final dividend of 17.24 pence per ordinary share will be paid on 26 May 2011 in sterling to shareholders on the principal and Irish branch registers at 6.00pm BST on Friday, 1 April 2011 (the 'Record Date'), and in Hong Kong dollars to shareholders on the Hong Kong branch register at 4.30pm Hong Kong time on the Record Date ('HK Shareholders'). Holders of US American Depositary Receipts ('US Shareholders') will be paid their dividend in US dollars on or about five days after the payment date of the dividend to shareholders on the principal register. The dividend will be paid on or about 2 June 2011 in Singapore dollars to shareholders with shares standing to the credit of their securities accounts with The Central Depository (Pte.) Limited ('CDP') at 5.00pm Singapore time on the Record Date ('SG Shareholders'). The dividend payable to the HK Shareholders will be translated at the exchange rate ruling at the close of business on 8 March 2011. The exchange rate at which the dividend payable to the SG Shareholders will be translated will be determined by CDP. The dividend will distribute an estimated £439 million of shareholders' funds.

The scrip dividend alternative is not being offered in respect of this dividend. In its place shareholders will be offered a Dividend Reinvestment Plan (DRIP).

Exchange movement recognised in other comprehensive income

 

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  2010 £m 2009 £m
Asian operations 164 (189)
US operations 88 (244)
Unallocated to a segment (central funds) (35) 227
  217 (206)

The movements for Asian and US operations reflect the application of year end exchange rates to the assets and liabilities and average exchange rates to the income statement on translation of these operations into the presentation currency of the Group. The movement unallocated to a segment mainly reflects the translation of currency borrowings and forward contracts which have been designated as a net investment hedge against the currency risk of the net investment in Jackson. The exchange rates applied were:

 

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Local currency: £ Closing rate at 31 Dec 2010 Average for 2010 Closing rate at 31 Dec 2009 Average for 2009 Opening rate at 1 Jan 2009
Hong Kong 12.17 12.01 12.52 12.14 11.14
Indonesia 14,106.51 14,033.41 15,171.52 16,173.28 15,799.22
Malaysia 4.83 4.97 5.53 5.51 5.02
Singapore 2.01 2.11 2.27 2.27 2.07
India 70.01 70.66 75.15 75.70 70.05
Vietnam 30,526.26 29,587.63 29,832.74 27,892.39 25,205.87
US 1.57 1.55 1.61 1.57 1.44

Insurance products and investment products note i

 

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  Insurance products gross premiums Investment products gross inflowsnote ii Total
2010 £m 2009 £m 2010 £m 2009 £m 2010 £m 2009 £m
Asian operations 2,514 2,019 80,597 71,176 83,111 73,195
US operations 11,439 8,909 6 11,439 8,915
UK operations 5,910 5,014 26,372 24,875 32,282 29,889
Group total 19,863 15,942 106,969 96,057 126,832 111,999

Insurance products – new business premiums and contributions note i

 

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  Single Regular Annual Equivalents
2010 £m 2009 £m 2010 £m 2009 £m 2010 £m 2009 £m
Group Insurance Operations            
Asia – ex Japan 1,104 785 1,391 1,131 1,501 1,209
US 11,417 8,885 22 24 1,164 912
UK 5,656 4,768 254 246 820 723
Group Total – ex Japan 18,177 14,438 1,667 1,401 3,485 2,844
Japan(iv) 13 57 6 46 7 52
Group Total 18,190 14,495 1,673 1,447 3,492 2,896
Asian Insurance Operations            
Hong Kong 107 94 276 232 287 241
Indonesia 141 41 269 186 283 190
Malaysia 58 63 198 140 204 146
Philippines 64 14 17 10 23 11
Singapore 318 297 143 98 175 128
Thailand 15 14 25 14 26 16
Vietnam 1 1 41 35 41 35
SE Asia Operations inc. Hong Kong 704 524 969 715 1,039 767
China (Group’s 50% interest) 103 72 48 38 58 45
India (Group’s 26% interest) 85 47 180 163 188 168
Korea 66 38 89 118 96 122
Taiwan(iii) 146 104 105 97 120 107
Total Asia Operations – ex Japan 1,104 785 1,391 1,131 1,501 1,209
US Insurance Operations            
Fixed Annuities 836 1,053 84 105
Fixed Index Annuities 1,089 1,433 109 143
Life 11 10 22 24 23 25
Variable Annuities 9,481 6,389 948 639
Total US Insurance Operations 11,417 8,885 22 24 1,164 912
UK & Europe Insurance Operations(vi)            
Direct and Partnership Annuities 593 590 59 59
Intermediated Annuities 221 242 22 24
Internal Vesting Annuities 1,235 1,357 124 136
Total Individual Annuities 2,049 2,189 205 219
Corporate Pensions 228 192 198 191 221 210
On-shore Bonds 1,660 1,444 166 145
Other Products 774 881 56 55 133 143
Wholesale 945 62 95 6
Total UK & Europe Insurance Ops 5,656 4,768 254 246 820 723
Group Total – ex Japan 18,177 14,438 1,667 1,401 3,485 2,844

Investment products – funds under management notes ii and iv

 

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  2010 £m
1 Jan 2010 Market gross inflows Redemptions Market exchange translation and other movements 31 Dec 2010
Asian operations 19,474 80,597 (80,812) 2,789 22,048
US operations
UK operations 70,306 26,372 (17,267) 9,915 89,326
Group total 89,780 106,969 (98,079) 12,704 111,374

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  2009 £m
1 Jan 2009 Market gross inflows Redemptions Market exchange translation and other movements 31 Dec 2009
Asian operations 15,232 71,176 (69,177) 2,243 19,474
US operations 50 6 (66) 10
UK operations 46,997 24,875 (11,397) 9,831 70,306
Group total 62,279 96,057 (80,640) 12,084 89,780
Notes
  1. The tables shown above are provided as an indicative volume measure of transactions undertaken in the reporting period that have the potential to generate profits for shareholders. The amounts shown are not, and not intended to be, reflective of premium income recorded in the IFRS income statement.

    Annual Premium Equivalents (APEs) are calculated as the aggregate of regular new business amounts and one-tenth of single new business amounts. New business premiums for regular premium products are shown on an annualised basis. Department of Work and Pensions (DWP) rebate business is classified as single recurrent business. Internal vesting business is classified as new business where the contracts include an open market option.

    The format of the tables shown above is consistent with the distinction between insurance and investment products as applied for previous financial reporting periods. With the exception of some US institutional business, products categorised as 'insurance' refer to those classified as contracts of long-term insurance business for regulatory reporting purposes, i.e. falling within one of the classes of insurance specified in Part II of Schedule 1 to the Regulated Activities Order under FSA regulations.

    The details shown above for insurance products include contributions for contracts that are classified under IFRS 4 'Insurance Contracts' as not containing significant insurance risk. These products are described as investment contracts or other financial instruments under IFRS. Contracts included in this category are primarily certain unit-linked and similar contracts written in UK insurance operations and Guaranteed Investment Contracts and similar funding agreements written in US operations.

  2. Investment products referred to in the table for funds under management above are unit trust, mutual funds and similar types of retail fund management arrangements. These are unrelated to insurance products that are classified as 'investment contracts' under IFRS 4, as described in the preceding paragraph, although similar IFRS recognition and measurement principles apply to the acquisition costs and fees attaching to this type of business.

  3. The tables above include new business for the Taiwan bank distribution operation. New business of the Taiwan Agency business, which was sold in June 2009 (as explained in note I2(b) is excluded from the tables.

  4. New business sales for the Group's Japanese insurance subsidiary, which ceased selling new business with effect from 15 February 2010, have been presented separately from the remainder of the Group.

  5. New business and market gross inflows and redemptions have been translated at the average exchange rate for the year applicable. Funds under management at points in time are translated at the exchange rate applicable at those dates.

  6. The Prudential's European operation is based in Ireland and sells products into Jersey, Guernsey, Isle of Man, Gibraltar, Cyprus, Malta, Belgium, Spain and UK.

To explain more comprehensively the assets, liabilities and capital of the Group's businesses it is appropriate to provide an analysis of the Group's statement of financial position by operating segment and type of business. The tables below aggregate the three asset management segments for ease of presentation and hence should be read in conjunction with the associated tables on asset management in note E2.

a Group statement of financial position by operating segment

i Position at 31 December 2010

 

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By operating segment 2010 £m
Insurance operations Total insurance operations Asset management operations
E2
Unallocated to a segment (central operations) Intra-group eliminations 31 Dec 2010 Group total
UK
D2
US
D3
Asia
D4
Assets  
Intangible assets attributable to shareholders:  
Goodwill 236 236 1,230 1,466
Deferred acquisition costs and other intangible assets 118 3,543 939 4,600 9 4,609
TotalH1 118 3,543 1,175 4,836 1,239 6,075
Intangible assets attributable to with-profits funds:  
In respect of acquired subsidiaries for venture fund and other investment purposes 166 166 166
Deferred acquisition costs and other intangible assets 13 97 110 110
TotalH2 179 97 276 276
Total 297 3,543 1,272 5,112 1,239 6,351
Deferred tax assetsH4 214 1,391 98 1,703 123 362 2,188
Other non-investment and non-cash assetsH3-H6 4,633 1,241 811 6,685 999 4,159 (5,761) 6,082
Investment of long-term business and other operations:  
Investment properties 11,212 26 9 11,247 11,247
Investments accounted for using the equity method 69 2 71 71
Financial investments:  
Loansnote d 2,302 4,201 1,340 7,843 1,418 9,261
Equity securities and portfolio holdings in unit trusts 40,519 31,501 14,464 86,484 151 86,635
Debt securitiesnote d 74,304 26,366 14,108 114,778 1,574 116,352
Other investments 3,998 1,199 382 5,579 59 141 5,779
Deposits 9,022 212 638 9,872 80 9,952
Total investmentsG1,H7,H8,note c 141,426 63,505 30,943 235,874 3,282 141 239,297
Properties held for saleH9 254 3 257 257
Cash and cash equivalentsH10 2,839 232 1,601 4,672 1,436 523 6,631
Total assets 149,663 69,915 34,725 254,303 7,079 5,185 (5,761) 260,806
Note
  1. Further segmental analysis:

    The non-current assets of the Group comprise goodwill, intangible assets other than DAC and present value of acquired in-force business and property, plant and equipment included within 'other non-investment and non-cash assets'. Items defined as financial instruments or related to insurance contracts are excluded. Of the Group's total non-current assets at 31 December 2010 of £2,454 million (2009: £1,965 million), £1,708 million (2009: £1,444 million) was held in the UK by the UK insurance operations, M&G and central operations, £131 million (2009: £112 million) was held in the US and £615 million (2009: £409 million) was held in Asia.

    No individual country in Asia held non-current assets at the end of the year which exceeded 10 per cent of the Group total.

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By operating segment 2010 £m
Insurance operations Total insurance operations Asset management operations
E2
Unallocated to a segment (central operations) Intra-group eliminations 31 Dec 2010 Group total
UK
D2
US
D3
Asia
D4
Equity and liabilities  
Equity  
Shareholders’ equityH11 2,148 3,815 2,149 8,112 1,787 (1,868) 8,031
Non-controlling interests 35 5 40 4 44
Total equity 2,183 3,815 2,154 8,152 1,791 (1,868) 8,075
Liabilities  
Policyholder liabilities and unallocated surplus of with-profits funds:  
Insurance contract liabilitiesH12 84,152 58,641 28,498 171,291 171,291
Investment contract liabilities with discretionary participation featuresG1 25,613 119 25,732 25,732
Investment contract liabilities without discretionary participation featuresG1 15,765 1,882 57 17,704 17,704
Unallocated surplus of with-profits funds (reflecting application of ‘realistic’ basis provisions for UK regulated with-profits funds)D2(g)ii,H12 10,187 66 10,253 10,253
Total policyholder liabilities and unallocated surplus of with-profits fundsnote e 135,717 60,523 28,740 224,980 224,980
Core structural borrowings of shareholder-financed operations:H13  
Subordinated debt 2,718 2,718
Other 159 159 250 549 958
Total 159 159 250 3,267 3,676
Operational borrowings attributable to shareholder-financed operationsG1,H13 162 90 189 441 3 2,560 3,004
Borrowings attributable to with-profits operationsH13 1,522 1,522 1,522
Other non-insurance liabilities:G1,H4,H14,H15                
Obligations under funding, securities lending and sale and repurchase agreements 2,398 1,801 4,199 4,199
Net asset value attributable to unit holders of consolidated unit trusts and similar funds 1,755 33 1,126 2,914 458 3,372
Deferred tax liabilities 1,738 1,776 495 4,009 5 210 4,224
Current tax liabilities 399 34 70 503 33 295 831
Accruals and deferred income 340 109 449 244 14 707
Other creditors 1,939 511 1,122 3,572 4,039 471 (5,761) 2,321
Provisions 442 19 61 522 157 50 729
Derivative liabilities 792 799 222 1,813 78 146 2,037
Other liabilities 276 355 437 1,068 21 40 1,129
Total 10,079 5,328 3,642 19,049 5,035 1,226 (5,761) 19,549
Total liabilities 147,480 66,100 32,571 246,151 5,288 7,053 (5,761) 252,731
Total equity and liabilities 149,663 69,915 34,725 254,303 7,079 5,185 (5,761) 260,806

ii Position at 31 December 2009

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By operating segment 2009 £m
Insurance operations Total insurance operations Asset management operations
E2
Unallocated to a segment (central operations) Intra-group eliminations 31 Dec 2010 Group total
UK
D2
US
D3
Asia
D4
Assets  
Intangible assets attributable to shareholders:  
Goodwill 80 80 1,230 1,310
Deferred acquisition costs and other intangible assets 127 3,092 822 4,041 8 4,049
TotalH1 127 3,092 902 4,121 1,238 5,359
Intangible assets attributable to with-profits funds:  
In respect of acquired subsidiaries for venture fund and other investment purposes 124 124 124
Deferred acquisition costs and other intangible assets 9 97 106 106
TotalH2 133 97 230 230
Total 260 3,092 999 4,351 1,238 5,589
Deferred tax assetsH4 292 1,944 132 2,368 132 208 2,708
Other non-investment and non-cash assetsH3-H6 3,074 1,404 880 5,358 718 4,393 (5,044) 5,425
Investment of long-term business and other operations:                
Investment properties 10,861 33 11 10,905 10,905
Investments accounted for using the equity method 4 2 6 6
Financial investments:                
Loansnote d 1,815 4,319 1,207 7,341 1,413 8,754
Equity securities and portfolio holdings in unit trusts 37,051 20,984 11,182 69,217 137 69,354
Debt securitiesnote d 67,772 22,831 9,984 100,587 1,164 101,751
Other investments 3,630 955 258 4,843 113 176 5,132
Deposits 11,557 454 746 12,757 63 12,820
Total investmentsG1,H7,H8,note c 132,690 49,576 23,390 205,656 2,890 176 208,722
Properties held for saleH9 3 3 3
Cash and cash equivalentsH10 2,265 340 837 3,442 970 895 5,307
Total assets 138,581 56,359 26,238 221,178 5,948 5,672 (5,044) 227,754
 

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By operating segment 2010 £m
Insurance operations Total insurance operations Asset management operations
E2
Unallocated to a segment (central operations) Intra-group eliminations 31 Dec 2010 Group total
UK
D2
US
D3
Asia
D4
Equity and liabilities  
Equity  
Shareholders’ equityH11 1,939 3,011 1,462 6,412 1,659 (1,800) 6,271
Non-controlling interests 28 1 29 3 32
Total equity 1,967 3,011 1,463 6,441 1,662 (1,800) 6,303
Liabilities  
Policyholder liabilities and unallocated surplus of with-profits funds:  
Insurance contract liabilitiesH12 77,655 46,346 21,712 145,713 145,713
Investment contract liabilities with discretionary participation featuresG1 24,780 100 24,880 24,880
Investment contract liabilities without discretionary participation featuresG1 13,794 1,965 46 15,805 15,805
Unallocated surplus of with-profits funds (reflecting application of ‘realistic’ basis provisions for UK regulated with-profits funds)D2(g)ii,H12 9,966 53 10,019 10,019
Total policyholder liabilities and unallocated surplus of with-profits fundsnote e 126,195 48,311 21,911 196,417 196,417
Core structural borrowings of shareholder-financed operations:H13                
Subordinated debt 2,691 2,691
Other 154 154 549 703
Total 154 154 3,240 3,394
Operational borrowings attributable to shareholder-financed operationsG1,H13 158 203 210 571 142 2,038 2,751
Borrowings attributable to with-profits operationsH13 1,284 1,284 1,284
Other non-insurance liabilities:G1,H4,H14,H15                
Obligations under funding, securities lending and sale and repurchase agreements 2,108 1,374 3,482 3,482
Net asset value attributable to unit holders of consolidated unit trusts and similar funds 2,534 47 818 3,399 410 3,809
Deferred tax liabilities 1,606 1,858 384 3,848 5 19 3,872
Current tax liabilities 426 89 85 600 35 580 1,215
Accruals and deferred income 271 105 376 209 9 594
Other creditors 726 532 760 2,018 3,292 1,346 (5,044) 1,612
Provisions 406 10 50 466 127 50 643
Derivative liabilities 709 461 146 1,316 49 136 1,501
Other liabilities 191 309 306 806 17 54 877
Total 8,977 4,680 2,654 16,311 4,144 2,194 (5,044) 17,605
Total liabilities 136,614 53,348 24,775 214,737 4,286 7,472 (5,044) 221,451
Total equity and liabilities 138,581 56,359 26,238 221,178 5,948 5,672 (5,044) 227,754

b Group statement of financial position by business type

 

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  2010 £m 2009 £m
    Shareholder-backed business    
By business type Participating funds Unit-linked and variable annuity Non-linked business Asset management operations
E2
Unallocated to a segment (central operations) Intra-group elimination 31 Dec 2010 Group total 31 Dec 2009 Group total
Assets    
Intangible assets attributable to shareholders:    
Goodwill 236 1,230 1,466 1,310
Deferred acquisition costs and other intangible assets 4,600 9 4,609 4,049
TotalH1 4,836 1,239 6,075 5,359
Intangible assets attributable to with-profits funds:    
In respect of acquired subsidiaries for venture fund and other investment purposes 166 166 124
Deferred acquisition costs and other intangible assets 110 110 106
TotalH2 276 276 230
Total 276 4,836 1,239 6,351 5,589
Deferred tax assetsH4 109 1,594 123 362 2,188 2,708
Other non-investment and non-cash assetsH3-H6 2,749 651 3,285 999 4,159 (5,761) 6,082 5,425
Investment of long-term business and other operations:    
Investment properties 8,993 745 1,509 11,247 10,905
Investments accounted for using the equity method 71 71 6
Financial investments:    
Loansnote d 2,144 5,699 1,418 9,261 8,754
Equity securities and portfolio holdings in unit trusts 31,371 54,274 839 151 86,635 69,354
Debt securitiesnote d 53,261 9,054 52,463 1,574 116,352 101,751
Other investments 3,887 131 1,561 59 141 5,779 5,132
Deposits 7,272 749 1,851 80 9,952 12,820
Total investmentsG1,H7,H8, note c 106,928 64,953 63,993 3,282 141 239,297 208,722
Properties held for saleH9 254 3 257 3
Cash and cash equivalentsH10 1,915 1,490 1,267 1,436 523 6,631 5,307
Total assets 112,231 67,094 74,978 7,079 5,185 (5,761) 260,806 227,754

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  2010 £m 2009 £m
    Shareholder-backed business    
By business type Participating funds Unit-linked and variable annuity Non-linked business Asset management operations
E2
Unallocated to a segment (central operations) Intra-group elimination 31 Dec 2010 Group total 31 Dec 2009 Group total
Equity and liabilities    
Equity    
Shareholders’ equityH11 8,112 1,787 (1,868) 8,031 6,271
Non-controlling interests 35 5 4 44 32
Total equity 35 8,117 1,791 (1,868) 8,075 6,303
Liabilities    
Policyholder liabilities and unallocated surplus of with-profits funds:    
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) 92,544 65,598 56,585 214,727 186,398
Unallocated surplus of with-profits funds (reflecting application of ‘realistic’ basis provisions for UK regulated with-profits funds)D2g(ii),H12 10,253 10,253 10,019
Total policyholder liabilities and unallocated surplus of with-profits fundsnote e 102,797 65,598 56,585 224,980 196,417
Core structural borrowings of shareholder-financed operations:H13    
Subordinated debt 2,718 2,718 2,691
Other 159 250 549 958 703
Total 159 250 3,267 3,676 3,394
Operational borrowings attributable to shareholder-financed operationsG1,H13 441 3 2,560 3,004 2,751
Borrowings attributable to with-profits operationsG1,H13 1,522 1,522 1,284
Deferred tax liabilities 1,576 25 2,408 5 210 4,224 3,872
Other non-insurance liabilities 6,301 1,471 7,268 5,030 1,016 (5,761) 15,325 13,733
Total liabilities 112,196 67,094 66,861 5,288 7,053 (5,761) 252,731 221,451
Total equity and liabilities 112,231 67,094 74,978 7,079 5,185 (5,761) 260,806 227,754

c Reconciliation of movement in investments

A reconciliation of the Group's directly held investments from the beginning of the year to the end of the year is as follows:

 

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  Insurance operations Total insurance operations
£m
Asset Management
£m
Unallocated to a segment
£m
Group total
£m
UK
£m
US
£m
Asia
£m
  • *The above reconciliation analyses the movement of directly held investments net of derivative liabilities. The deduction of derivative liabilities reflects the fact that these are considered an integral part of the Group's investment portfolio and the exclusion from investments is merely a matter of required balance sheet presentation. The analysis excludes investments held in the balance sheet as a result of the consolidation of Open-Ended Investment Companies (OEICs) and unit trusts, as the Group's exposure is merely to its share of the value of the fund as a whole rather than to the underlying investments and other assets and liabilities.
At 31 December 2008/
1 January 2009
             
Total investments (including derivative assets) 121,862 46,171 21,809 189,842 3,303 289 193,434
Less: investments held by consolidated investment funds (609) (1,101) (1,710) (1,710)
Less: derivative liabilitiesG3 (3,401) (863) (32) (4,296) (292) (244) (4,832)
Directly held investments, net of derivative liabilities 117,852 45,308 20,676 183,836 3,011 45 186,892
Net cash inflow (outflow) from operating activities 1,432 2,755 3,028 7,215 (148) (52) 7,015
Disposal of Taiwan agency business (3,261) (3,261) (3,261)
Realised gains (losses) in the year 108 (529) (243) (664) 34 4 (626)
Unrealised gains and losses and exchange movements in the year 10,623 1,581 2,326 14,530 (56) 43 14,517
Reclassification of property under development 131 131 131
Movement in the year of directly held investments, net of derivative liabilities 12,294 3,807 1,850 17,951 (170) (5) 17,776
At 31 December 2009/
1 January 2010
 
Total investments (including derivative assets) 132,690 49,576 23,390 205,656 2,890 176 208,722
Less: investments held by consolidated investment funds (1,835) (718) (2,553) (2,553)
Less: derivative liabilitiesG3 (709) (461) (146) (1,316) (49) (136) (1,501)
Directly held investments, net of derivative liabilities 130,146 49,115 22,526 201,787 2,841 40 204,668
Net cash inflow from operating activities 1,329 7,306 2,167 10,802 329 120 11,251
Realised gains (losses) in the year 2,233 21 984 3,238 11 (148) 3,101
Unrealised gains and losses and exchange movements in the year 5,958 6,264 3,301 15,523 23 (17) 15,529
Dilution of PruHealth investment 56 56 56
Acquisition of UOB Life Assurance Ltd 1,004 1,004 1,004
Movement in the year of directly held investments, net of derivative liabilities 9,576 13,591 7,456 30,623 363 (45) 30,941
At 31 December 2010  
Total investments (including derivative assets) 141,426 63,505 30,943 235,874 3,282 141 239,297
Less: investments held by consolidated investment funds (912) (739) (1,651) (1,651)
Less: derivative liabilitiesG3 (792) (799) (222) (1,813) (78) (146) (2,037)
Directly held investments, net of derivative liabilities 139,722 62,706 29,982 232,410 3,204 (5) 235,609

d Debt securities and loans

i Information on the credit risks of debt securities

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  2010 £m 2009 £m
Insurance operations Total insurance operations Asset management Group total Group total
UK US Asia
S&P – AAA 18,833 4,187 2,934 25,954 884 26,838 22,106
S&P – AA+ to AA– 6,885 801 2,138 9,824 143 9,967 9,060
S&P – A+ to A– 21,508 5,156 2,843 29,507 452 29,959 26,849
S&P – BBB+ to BBB– 12,848 8,202 913 21,963 70 22,033 20,581
S&P – Other 3,403 866 1,773 6,042 6 6,048 4,479
  63,477 19,212 10,601 93,290 1,555 94,845 83,075
Moody’s – Aaa 765 34 65 864 864 870
Moody’s – Aa1 to Aa3 360 32 115 507 14 521 687
Moody’s – A1 to A3 632 36 130 798 798 1,144
Moody’s – Baa1 to Baa3 949 73 95 1,117 2 1,119 919
Moody’s – Other 233 135 49 417 417 411
  2,939 310 454 3,703 16 3,719 4,031
Implicit ratings of MBS based on NAIC valuations (see below)    
– NAIC 1 3,083 3,083 3,083 747
– NAIC 2 181 181 181 105
– NAIC 3-6 232 232 232 473
  3,496 3,496 3,496 1,325
Fitch 630 176 49 855 855 1,342
Other 7,258 3,172 3,004 13,434 3 13,437 11,978
Total debt securities 74,304 26,366 14,108 114,778 1,574 116,352 101,751

In the table above, with the exception of residential mortgage-backed securities within Jackson, Standard & Poor's (S&P) ratings have been used where available. For securities where S&P ratings are not immediately available, those produced by Moody's and then Fitch have been used as an alternative. During 2009, the National Association of Insurance Commissioners in the US revised the regulatory ratings process for more than 20,000 residential mortgage-backed securities. In addition, in 2010, NAIC applied the revised ratings process for commercial mortgage-backed securities. The table above includes these securities, held by Jackson, using the regulatory ratings levels established by an external third party (PIMCO). Notes D2(d), D3(d), D4(d) and E2 provide further details on the credit risks of debt securities by segment.

ii Group exposure to holdings in asset-backed securities

The Group's exposure to holdings in asset-backed securities which comprise residential mortgage-backed securities (RMBS), commercial mortgage backed securities (CMBS), CDO funds and other asset-backed securities (ABS), at 31 December 2010 is as follows:

 

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  2010 £m 2009 £m
Shareholder-backed operations:    
UK insurance operationsnote i 1,181 2,044
US insurance operationsnote ii 6,135 6,376
Asian insurance operationsnote iii 113 59
Other operationsnote iv 437 326
  7,866 8,805
With-profits operations:    
UK insurance operationsnote i 5,237 6,451
Asian insurance operationsnote iii 435 378
  5,672 6,829
Total 13,538 15,634

i UK insurance operations

The UK insurance operations' exposure to asset-backed securities at 31 December 2010 comprises:

 

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  2010 £m 2009 £m
Shareholder-backed business (2010: 51% AAA, 23% AA) 1,181 2,044
With-profits operations (2010: 52% AAA, 13% AA) 5,237 6,451
Total 6,418 8,495

All of the £1,181 million (2009: £2,044 million) exposure of the shareholder-backed business relates to the UK market, primarily to investments held by PRIL. £3,685 million of the £5,237 million (2009: £4,695 million of the £6,451 million) exposure of the with-profits operations relates to exposure to the UK market while the remaining £1,552 million (2009: £1,756 million) relates to exposure to the US market.

ii US insurance operations

The US insurance operations' exposure to asset-backed securities at 31 December 2010 comprises:

 

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  2010 £m 2009 £m
  • *RMBS ratings refer to the rating implicit within NAIC risk-based capital valuation (see note d(i)). For 2010, CMBS ratings refer to the NAIC rating.
  • Including the Group's economic interest in Piedmont and other consolidated CDO funds.
    Further details on Jackson's RMBS sub-prime and Alt-A securities are given in note D3(d).
RMBS*:    
Sub-prime (2010: 40% AAA, 11% AA) 224 194
Alt-A (2010: 15% AAA, 6% AA) 415 443
Prime including agency (2010: 79% AAA, 2% AA) 2,145 2,679
CMBS* (2010: 36% AAA, 15% AA) 2,375 2,104
CDO funds (2010: 4% AAA, 4% AA), including £1 million exposure to sub-prime 162 79
Other ABS (2010: 26% AAA, 20% AA), including £37 million exposure to sub-prime 814 877
Total 6,135 6,376

iii Asian insurance operations

The Asian insurance operations' exposure to asset-backed securities is primarily held by the with-profits operations. The £435 million (2009: £378 million) asset-backed securities exposure of the Asian with-profits operations comprises:

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  2010 £m 2009 £m
CMBS 251 91
CDO funds and other ABS 184 287
Total 435 378

The £435 million (2009: £378 million) includes £341 million (2009: £228 million) held by investment funds consolidated under IFRS in recognition of the control arrangements for those funds and includes an amount not owned by the Group with a corresponding liability of £7 million (2009: £61 million) on the statement of financial position for net asset value attributable to external unit-holders in respect of these funds, which are non-recourse to the Group. Of the £435 million, 43 per cent (2009: £378 million, 72 per cent) are investments graded by Standard & Poor's.

iv Other operations

Other operations' exposure to asset-backed securities at 31 December 2010 is held by Prudential Capital and comprises:

 

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  2010 £m 2009 £m
RMBS: Prime (2010: 96% AAA, 4% AA) 197 91
CMBS (2010: 30% AAA, 23% AA) 184 193
CDO funds and other ABS – all without sub-prime exposure (2010: 98% AAA) 56 42
Total 437 326

iii Loans

Information on the credit quality of the portfolio of loans, which almost wholly is for amounts which are neither past due or impaired is shown in notes D2, D3, D4 and E2. Details of allowances for loans, losses and amounts past due are shown in notes G1 and G2. No additional analysis is provided of the element of loans and receivables that were neither past due nor impaired from those of the total portfolio on the grounds of the immateriality of the difference between the neither past due nor impaired element and the total portfolio.

e Reconciliation of movement in policyholder liabilities and unallocated surplus of with-profits funds

A reconciliation of the total policyholder liabilities and unallocated surplus of with-profits funds of the Group from the beginning of the year to the end of the year is as follows:

 

Download as excel file

  Insurance operations
UK
£m
US
£m
Asia
£m
Total
£m
  • *Adjusted for acquisition and disposals in the period and excluding unallocated surplus of with-profits funds.
At 1 January 2009 115,961 45,361 21,069 182,391
Premiums 6,867 9,177 3,807 19,851
Surrenders (3,971) (3,255) (1,201) (8,427)
Maturities/Deaths (7,239) (733) (342) (8,314)
Net flows (4,343) 5,189 2,264 3,110
Shareholders’ transfers post-tax (202) (20) (222)
Changes in reserving basis in Malaysia (63) (63)
Assumption changes (shareholder-backed business) (46) (4) (50)
Investment-related items and other movements 14,118 2,986 4,242 21,346
Foreign exchange translation differences 707 (5,225) (2,069) (6,587)
Disposal of Taiwan agency business (3,508) (3,508)
At 31 December 2009/1 January 2010 126,195 48,311 21,911 196,417
Comprising        
– Policyholder liability 116,229 48,311 21,858 186,398
– Unallocated surplus of with-profits funds 9,966 53 10,019
Premiums 7,890 11,735 4,308 23,933
Surrenders (3,779) (3,598) (2,241) (9,618)
Maturities/Deaths (7,303) (769) (498) (8,570)
Net flows (3,192) 7,368 1,569 5,745
Shareholders’ transfers post-tax (223) (24) (247)
Assumption changes (shareholder-backed business) (46) 19 (27)
Investment-related items and other movements 13,218 3,464 2,216 18,898
Foreign exchange translation differences (208) 1,380 2,081 3,253
Dilution of holding in PruHealth investment (27) (27)
Acquisition of UOB Life Assurance Limited 968 968
At 31 December 2010 135,717 60,523 28,740 224,980
Comprising        
– Policyholder liability 125,530 60,523 28,674 214,727
– Unallocated surplus of with-profits funds 10,187 66 10,253
Average policyholder liability balances*        
2010 120,880 54,417 25,750 201,047
2009 111,969 46,837 19,630 178,436

The items above represent the amount attributable to changes in policyholder liabilities and unallocated surplus of with-profits funds as a result of each of the components listed.

Premiums, surrenders and maturities/deaths represent the amounts impacting policyholder liabilities and may not represent the total cash paid/received (for example, premiums are net of any deductions to cover acquisition costs and claims represent the policyholder liabilities released).

 

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