Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2017shares | |
Document and Entity Information | |
Entity Registrant Name | PRUDENTIAL PLC |
Entity Central Index Key | 1,116,578 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2017 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | Yes |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 2,587,175,445 |
Document Fiscal Year Focus | 2,017 |
Document Fiscal Period Focus | FY |
Consolidated income statements
Consolidated income statements - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Gross premiums earned | £ 44,005 | £ 38,981 | £ 36,663 | |
Outward reinsurance premiums | (2,062) | (2,020) | (1,157) | |
Earned premiums, net of reinsurance | 41,943 | 36,961 | 35,506 | |
Investment return | 42,189 | 32,511 | 3,304 | |
Other income | 2,430 | 2,370 | 2,495 | |
Total revenue, net of reinsurance | 86,562 | 71,842 | 41,305 | |
Benefits and claims | (71,854) | (60,948) | (30,547) | |
Outward reinsurers' share of benefits and claims | 2,193 | 2,412 | 1,389 | |
Movement in unallocated surplus of with-profits funds | (2,871) | (830) | (498) | |
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (72,532) | (59,366) | (29,656) | |
Acquisition costs and other operating expenditure | (10,165) | (8,848) | (8,208) | |
Finance costs: interest on core structural borrowings of shareholder-financed operations | (425) | (360) | (312) | |
Gain on disposal of other businesses | 162 | |||
Total charges, net of reinsurance and gain (loss) on disposal of businesses | (82,894) | (68,812) | (38,222) | |
Share of profits from joint ventures and associates, net of related tax | 302 | 182 | 238 | |
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | [1],[2] | 3,970 | 3,212 | 3,321 |
Less tax charge attributable to policyholders' returns | (674) | (937) | (173) | |
Profit (loss) before tax attributable to shareholders | 3,296 | 2,275 | 3,148 | |
Total tax charge attributable to policyholders and shareholders | (1,580) | (1,291) | (742) | |
Adjustment to remove tax charge attributable to policyholders' returns | 674 | 937 | 173 | |
Tax charge attributable to shareholders' returns | (906) | (354) | (569) | |
Profit for the year | 2,390 | 1,921 | 2,579 | |
Attributable to: | ||||
Equity holders of the Company | 2,389 | 1,921 | 2,579 | |
Non-controlling interests | 1 | |||
Profit for the year | £ 2,390 | £ 1,921 | £ 2,579 | |
Based on profit attributable to the equity holders of the Company: | ||||
Basic (per share) | £ 0.931 | £ 0.750 | £ 1.010 | |
Diluted (per share) | £ 0.930 | £ 0.750 | £ 1.009 | |
PCA Life Insurance Company Ltd. - Korea | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | £ 61 | |||
Remeasurement adjustments | £ 5 | £ (238) | ||
PCA Life Insurance Company Ltd. - Japan | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | £ (46) | |||
[1] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. | |||
[2] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. This is principally because the corporate taxes of the Group include those on the income of consolidated with-profits and unit-linked funds that, through adjustments to benefits, are borne by policyholders. These amounts are required to be included in the tax charge of the Company under IAS 12. Consequently, the profit before all taxes measure is not representative of pre-tax profits attributable to shareholders. Profit before all taxes is determined after deducting the cost of policyholder benefits and movements in the liability for unallocated surplus of the PAC with-profits fund after adjusting for taxes borne by policyholders. |
Consolidated statements of comp
Consolidated statements of comprehensive income - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Consolidated Statements of Comprehensive Income | |||
Profit for the year | £ 2,390 | £ 1,921 | £ 2,579 |
Exchange movements on foreign operations and net investment hedges: | |||
Exchange movements arising during the year | (404) | 1,148 | 68 |
Related tax | (5) | 13 | 4 |
Exchange movements on foreign operations and net investment hedges | (470) | 1,161 | 118 |
Net unrealised valuation movements on securities of US insurance operations classified as available-for-sale: | |||
Net unrealised holding gains (losses) arising during the year | 591 | 241 | (1,256) |
Net gains (losses) included in the income statement on disposal and impairment | 26 | (269) | (49) |
Total | 617 | (28) | (1,305) |
Related change in amortisation of deferred acquisition costs | (76) | 76 | 337 |
Related tax | (55) | (17) | 339 |
Net unrealised valuation movements on securities of US insurance operations classified as available-for-sale | 486 | 31 | (629) |
Total | 16 | 1,192 | (511) |
Shareholders' share of actuarial gains and losses on defined benefit pension schemes: | |||
Gross | 104 | (107) | 27 |
Related tax | (15) | 14 | (5) |
Shareholders' share of actuarial gains and losses on defined benefit pension schemes | 89 | (93) | 22 |
Total other comprehensive income (loss) | 105 | 1,099 | (489) |
Total comprehensive income for the year | 2,495 | 3,020 | 2,090 |
Attributable to: | |||
Equity holders of the Company | 2,494 | 3,020 | 2,090 |
Non-controlling interests | 1 | ||
Total comprehensive income for the year | 2,495 | £ 3,020 | 2,090 |
PCA Life Insurance Company Ltd. - Korea | |||
Exchange movements on foreign operations and net investment hedges: | |||
Cumulative exchange (gain) loss of sold business recycled through profit or loss | £ (61) | ||
PCA Life Insurance Company Ltd. - Japan | |||
Exchange movements on foreign operations and net investment hedges: | |||
Cumulative exchange (gain) loss of sold business recycled through profit or loss | £ 46 |
Consolidated statement of chang
Consolidated statement of changes in equity - GBP (£) £ in Millions | Shareholders' equity | Share capital | Share premium | Retained earnings | Translation reserve | Available-for-sale securities reserves | Non-controlling interests | Total | |
Reserves | |||||||||
Profit for the year | £ 2,579 | £ 2,579 | £ 2,579 | ||||||
Other comprehensive income: | |||||||||
Exchange movements on foreign operations and net investment hedges, net of tax | 118 | £ 118 | 118 | ||||||
Net unrealised valuation movements, net of related change in amortisation of deferred acquisition costs and related tax | (629) | £ (629) | (629) | ||||||
Shareholders' share of actuarial gains and losses on defined benefit pension schemes, net of related tax | 22 | 22 | 22 | ||||||
Total other comprehensive income (loss) | (489) | 22 | 118 | (629) | (489) | ||||
Total comprehensive income for the year | 2,090 | 2,601 | 118 | (629) | 2,090 | ||||
Dividends | (974) | (974) | (974) | ||||||
Reserve movements in respect of share-based payments | 39 | 39 | 39 | ||||||
Share capital and share premium | |||||||||
New share capital subscribed | 7 | £ 7 | 7 | ||||||
Treasury shares | |||||||||
Movement in own shares in respect of share-based payment plans | (38) | (38) | (38) | ||||||
Movement in Prudential plc shares purchased by unit trusts consolidated under IFRS | 20 | 20 | 20 | ||||||
Net increase (decrease) in equity | 1,144 | 7 | 1,648 | 118 | (629) | 1,144 | |||
Equity at beginning of year at Dec. 31, 2014 | 11,811 | £ 128 | 1,908 | 8,788 | 31 | 956 | £ 1 | 11,812 | |
Equity at end of year at Dec. 31, 2015 | 12,955 | 128 | 1,915 | 10,436 | 149 | 327 | 1 | 12,956 | |
Reserves | |||||||||
Profit for the year | 1,921 | 1,921 | 1,921 | ||||||
Other comprehensive income: | |||||||||
Exchange movements on foreign operations and net investment hedges, net of tax | 1,161 | 1,161 | 1,161 | ||||||
Net unrealised valuation movements, net of related change in amortisation of deferred acquisition costs and related tax | 31 | 31 | 31 | ||||||
Shareholders' share of actuarial gains and losses on defined benefit pension schemes, net of related tax | (93) | (93) | (93) | ||||||
Total other comprehensive income (loss) | 1,099 | (93) | 1,161 | 31 | 1,099 | ||||
Total comprehensive income for the year | 3,020 | 1,828 | 1,161 | 31 | 3,020 | ||||
Dividends | (1,267) | (1,267) | (1,267) | ||||||
Reserve movements in respect of share-based payments | (51) | (51) | (51) | ||||||
Share capital and share premium | |||||||||
New share capital subscribed | 13 | 1 | 12 | 13 | |||||
Treasury shares | |||||||||
Movement in own shares in respect of share-based payment plans | 2 | 2 | 2 | ||||||
Movement in Prudential plc shares purchased by unit trusts consolidated under IFRS | (6) | (6) | (6) | ||||||
Net increase (decrease) in equity | 1,711 | 1 | 12 | 506 | 1,161 | 31 | 1,711 | ||
Equity at end of year at Dec. 31, 2016 | 14,666 | 129 | 1,927 | 10,942 | 1,310 | 358 | 1 | 14,667 | |
Reserves | |||||||||
Profit for the year | 2,389 | 2,389 | 1 | 2,390 | |||||
Other comprehensive income: | |||||||||
Exchange movements on foreign operations and net investment hedges, net of tax | (470) | (470) | (470) | ||||||
Net unrealised valuation movements, net of related change in amortisation of deferred acquisition costs and related tax | 486 | 486 | 486 | ||||||
Shareholders' share of actuarial gains and losses on defined benefit pension schemes, net of related tax | 89 | 89 | 89 | ||||||
Total other comprehensive income (loss) | 105 | 89 | (470) | 486 | 105 | ||||
Total comprehensive income for the year | 2,494 | 2,478 | (470) | 486 | 1 | 2,495 | |||
Dividends | (1,159) | (1,159) | (1,159) | ||||||
Reserve movements in respect of share-based payments | 89 | 89 | 89 | ||||||
Change in non-controlling interests | [1] | 5 | 5 | ||||||
Share capital and share premium | |||||||||
New share capital subscribed | 21 | 21 | 21 | ||||||
Treasury shares | |||||||||
Movement in own shares in respect of share-based payment plans | (15) | (15) | (15) | ||||||
Movement in Prudential plc shares purchased by unit trusts consolidated under IFRS | (9) | (9) | (9) | ||||||
Net increase (decrease) in equity | 1,421 | 21 | 1,384 | (470) | 486 | 6 | 1,427 | ||
Equity at end of year at Dec. 31, 2017 | £ 16,087 | £ 129 | £ 1,948 | £ 12,326 | £ 840 | £ 844 | £ 7 | £ 16,094 | |
[1] | Arising from the acquisition of the majority stake in Zenith Life of Nigeria in 2017. |
Consolidated statements of fina
Consolidated statements of financial position - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Assets | ||
Goodwill | £ 1,482 | £ 1,628 |
Deferred acquisition costs and other intangible assets | 11,011 | 10,807 |
Property, plant and equipment | 789 | 743 |
Reinsurers' share of insurance contract liabilities | 9,673 | 10,051 |
Deferred tax assets | 2,627 | 4,315 |
Current tax recoverable | 613 | 440 |
Accrued investment income | 2,676 | 3,153 |
Other debtors | 2,963 | 3,019 |
Investment properties | 16,497 | 14,646 |
Investment in joint ventures and associates accounted for using the equity method | 1,416 | 1,273 |
Loans | 17,042 | 15,173 |
Equity securities and portfolio holdings in unit trusts | 223,391 | 198,552 |
Debt securities | 171,374 | 170,458 |
Derivative assets | 4,801 | 3,936 |
Other investments | 5,622 | 5,465 |
Deposits | 11,236 | 12,185 |
Assets held for sale | 38 | 4,589 |
Cash and cash equivalents | 10,690 | 10,065 |
Total assets | 493,941 | 470,498 |
Equity | ||
Shareholders' equity | 16,087 | 14,666 |
Non-controlling interests | 7 | 1 |
Total equity | 16,094 | 14,667 |
Liabilities | ||
Insurance contract liabilities | 328,172 | 316,436 |
Investment contract liabilities with discretionary participation features | 62,677 | 52,837 |
Investment contract liabilities without discretionary participation features | 20,394 | 19,723 |
Unallocated surplus of with-profits funds | 16,951 | 14,317 |
Core structural borrowings of shareholder-financed operations | 6,280 | 6,798 |
Operational borrowings attributable to shareholder-financed operations | 1,791 | 2,317 |
Borrowings attributable to with-profits operations | 3,716 | 1,349 |
Obligations under funding, securities lending and sale and repurchase agreements | 5,662 | 5,031 |
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 8,889 | 8,687 |
Deferred tax liabilities | 4,715 | 5,370 |
Current tax liabilities | 537 | 649 |
Accruals, deferred income and other liabilities | 14,185 | 13,825 |
Provisions | 1,123 | 947 |
Derivative liabilities | 2,755 | 3,252 |
Liabilities held for sale | 4,293 | |
Total liabilities | 477,847 | 455,831 |
Total equity and liabilities | 493,941 | 470,498 |
Lent securities and assets subject to repurchase agreements, included within equity securities and portfolio holdings in unit trusts, debt securities and other investments | £ 8,232 | £ 8,545 |
Consolidated statements of cash
Consolidated statements of cash flows - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Cash flows from operating activities | ||||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | [1],[2] | £ 3,970 | £ 3,212 | £ 3,321 |
Non-cash movements in operating assets and liabilities reflected in profit before tax: | ||||
Investments | (49,771) | (37,824) | (6,814) | |
Other non-investment and non-cash assets | (968) | (2,490) | (1,063) | |
Policyholder liabilities (including unallocated surplus) | 44,877 | 31,135 | 6,067 | |
Other liabilities (including operational borrowings) | 3,360 | 7,861 | 1,761 | |
Interest income and expense and dividend income included in result before tax | (8,994) | (9,749) | (8,726) | |
Other non-cash items | 549 | 834 | 234 | |
Operating cash items: | ||||
Interest receipts | 6,900 | 7,886 | 7,316 | |
Dividend receipts | 2,612 | 2,286 | 1,777 | |
Tax paid | [3] | (915) | (950) | (1,340) |
Net cash flows from operating activities | 1,620 | 2,201 | 2,533 | |
Cash flows from investing activities | ||||
Purchases of property, plant and equipment | (134) | (348) | (256) | |
Proceeds from disposal of property, plant and equipment | 102 | 30 | ||
Acquisition of subsidiaries and intangibles | [4] | (351) | (303) | (286) |
Sale of businesses | [4] | 1,301 | 43 | |
Net cash flows from investing activities | 816 | (549) | (469) | |
Structural borrowings of the Group - Shareholder-financed operations: | ||||
Issue of subordinated debt, net of costs | [5] | 565 | 1,227 | 590 |
Redemption of subordinated debt | [5] | (751) | ||
Interest paid | [5] | (369) | (335) | (288) |
Structural borrowings of the Group - With-profits operations: | ||||
Interest paid | [6] | (9) | (9) | (9) |
Equity capital: | ||||
Issues of ordinary share capital | 21 | 13 | 7 | |
Dividends paid | (1,159) | (1,267) | (974) | |
Net cash flows from financing activities | (1,702) | (371) | (674) | |
Net increase in cash and cash equivalents | 734 | 1,281 | 1,390 | |
Cash and cash equivalents at beginning of year | 10,065 | 7,782 | 6,409 | |
Effect of exchange rate changes on cash and cash equivalents | (109) | 1,002 | (17) | |
Cash and cash equivalents at end of year | £ 10,690 | £ 10,065 | £ 7,782 | |
[1] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. | |||
[2] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. This is principally because the corporate taxes of the Group include those on the income of consolidated with-profits and unit-linked funds that, through adjustments to benefits, are borne by policyholders. These amounts are required to be included in the tax charge of the Company under IAS 12. Consequently, the profit before all taxes measure is not representative of pre-tax profits attributable to shareholders. Profit before all taxes is determined after deducting the cost of policyholder benefits and movements in the liability for unallocated surplus of the PAC with-profits fund after adjusting for taxes borne by policyholders. | |||
[3] | Tax paid includes £298 million (2016: £226 million; 2015: £229 million) paid on profits taxable at policyholder rather than shareholder rates. | |||
[4] | Net cash flows for corporate transactions are for distribution rights and acquisition and disposal of businesses (including private equity and other subsidiaries acquired by with-profits funds for investment purposes). | |||
[5] | Structural borrowings of shareholder-financed operations exclude borrowings to support short-term fixed income securities programmes, non-recourse borrowings of investment subsidiaries of shareholder-financed operations and other borrowings of shareholder-financed operations. Cash flows in respect of these borrowings are included within cash flows from operating activities. | |||
[6] | Interest paid on structural borrowings of with-profits operations relate solely to the £100 million 8.5 per cent undated subordinated guaranteed bonds, which contribute to the solvency base of the Scottish Amicable Insurance Fund (SAIF), a ring-fenced sub-fund of the PAC with-profits fund. There is no change in respect of the carrying value of the £100 million structural borrowings of the with-profits operations during 2017. Cash flows in respect of other borrowings of with-profits funds, which principally relate to consolidated investment funds, are included within cash flows from operating activities. |
Consolidated statements of cas7
Consolidated statements of cash flows (Parenthetical) - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Changes in the carrying value of the structural borrowings of shareholder-financed operations are analysed as follows: | ||||
Issue of subordinated debt, net of costs | [1] | £ 565 | £ 1,227 | £ 590 |
Redemption of subordinated debt | [1] | (751) | ||
Tax paid | ||||
Tax paid on profits taxable at policyholder rather than shareholder rates | 298 | 226 | £ 229 | |
Core structural borrowings of shareholder-financed operations | ||||
Changes in the carrying value of the structural borrowings of shareholder-financed operations are analysed as follows: | ||||
Balance at beginning of period | 6,798 | |||
Issue of subordinated debt, net of costs | 565 | |||
Redemption of subordinated debt | (751) | |||
Foreign exchange movement | (341) | |||
Other movements | 9 | |||
Balance at end of period | 6,280 | 6,798 | ||
100m 8.5% undated subordinated guaranteed bonds of Scottish Amicable Finance plc | ||||
Changes in the carrying value of the structural borrowings of shareholder-financed operations are analysed as follows: | ||||
Balance at beginning of period | 100 | |||
Balance at end of period | 100 | 100 | ||
Interest paid on structural borrowings of with-profits operations | ||||
Face amount | £ 100 | £ 100 | ||
Interest rate (as a percent) | 8.50% | 8.50% | ||
Change in respect of carrying value | £ 0 | |||
[1] | Structural borrowings of shareholder-financed operations exclude borrowings to support short-term fixed income securities programmes, non-recourse borrowings of investment subsidiaries of shareholder-financed operations and other borrowings of shareholder-financed operations. Cash flows in respect of these borrowings are included within cash flows from operating activities. |
BACKGROUND AND CRITICAL ACCOUNT
BACKGROUND AND CRITICAL ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
BACKGROUND AND CRITICAL AND OTHER SIGNIFICANT ACCOUNTING POLICIES | |
BACKGROUND AND CRITICAL ACCOUNTING POLICIES | A Background and critical accounting policies A1 Basis of preparation and exchange rates Prudential plc (the Company) together with its subsidiaries (collectively, the Group or Prudential) is an international financial services group. The Group has operations in Asia, the US, UK and Europe and Africa. Prudential offers a wide range of retail financial products and services and asset management services throughout these territories. The retail financial products and services primarily include life insurance, pensions and annuities as well as collective investment schemes. Basis of preparation These statements have been prepared in accordance with IFRS Standards as issued by the International Accounting Standards Board (IASB) and as endorsed by the European Union (EU) as required by EU law (IAS Regulation EC1606/2032). EU-endorsed IFRS Standards may differ from IFRS Standards issued by the IASB if, at any point in time, new or amended IFRS Standards have not been endorsed by the EU. At 31 December 2017, there were no unendorsed standards effective for the three years ended 31 December 2017 which impact the consolidated financial information of the Group. There were no differences between IFRS Standards endorsed by the EU and IFRS Standards issued by the IASB in terms of their application to the Group. These statements have been prepared on a going concern basis. The Group IFRS accounting policies are the same as those applied for the year ended 31 December 2016 with the exception of the adoption of the new and amended accounting standards as described in note A2. Exchange rates The exchange rates applied for balances and transactions in currency other than the presentational currency of the Group, pounds sterling (GBP) were: Closing Average Closing Average Closing Average Opening Local currency: £ Hong Kong Indonesia Malaysia Singapore China India Vietnam Thailand US The exchange movement arising during 2017 recognised in other comprehensive income is: £m £m £m Asia operations* † ) ) US operations ) Unallocated to a segment (other funds)** ) ) ) * 2017 included the recycling of the cumulative exchange gain of the sold Korea life business of £61 million to the income statement. ** The exchange rate movement unallocated to a segment mainly reflects the translation of currency borrowings, issued by group holding companies, that have been designated as a net investment hedge against the currency risk of the Group's investment in Jackson. † 2015 included the cumulative exchange loss of the Japan life business of £46 million. The consolidated financial statements do not represent Prudential's statutory accounts for the purposes of the UK Companies Act. These financial statements are based on the prescribed formats. The Group's external auditors have reported on the 2017, 2016 and 2015 statutory accounts. Statutory accounts for 2016 and 2015 have been delivered to the UK Registrar of Companies and those for 2017 will be delivered following the Company's Annual General Meeting. The auditor's reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498(2) or (3) of the UK Companies Act 2006. A2 New accounting pronouncements in 2017 The IASB has issued the following new accounting pronouncements to be effective for 1 January 2017: – Disclosure Initiative (Amendments to IAS 7, 'Statement of Cash Flows'); – Recognition of deferred tax assets for unrealised losses (Amendments to IAS 12, 'Income Taxes'); and – Annual improvements to IFRSs 2014 - 2016 cycle. Other than the additional disclosure of the changes in structural borrowings during the year in the statement of cash flows, these pronouncements have no effect on these financial statements. A3 Accounting policies A3.1 Critical accounting policies, estimates and judgements This note presents the critical accounting policies, accounting estimates and judgements applied in preparing the Group's consolidated financial statements. Other significant accounting policies are presented in note E1. All accounting policies are applied consistently for all years presented and normally are not subject to changes unless new accounting standards, interpretations or amendments are introduced by the IASB. The preparation of these financial statements requires Prudential to make estimates and judgements that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. Prudential evaluates its estimates, including those related to long-term business provisioning and the fair value of assets. Below are set out those critical accounting policies the application of which requires the Group to make critical estimates and judgements. Also set out are further critical accounting policies affecting the presentation of the Group's results and other items that require the application of critical estimates and judgements. (a) Critical accounting policies with linked critical estimates and judgements Classification of insurance and investment contracts IFRS 4 requires contracts written by insurers to be classified as either 'insurance' contracts or 'investment' contracts. The classification of the contract determines its accounting. Judgement is applied in considering whether the material features of a contract gives rise to the transfer of significant insurance risk. Contracts that transfer significant insurance risk to the Group are classified as insurance contracts. This judgement is made at the point of contract inception and is not revisited. For the majority of the Group's contracts classification is based on a readily identifiable scenario that demonstrates a significant difference in cash flows if the covered event occurs (as opposed to does not occur) reducing the level of judgement involved. Contracts that transfer financial risk to the Group but not significant insurance risk are classified as investment contracts. Furthermore, some contracts, both insurance and investment, contain discretionary participating features representing the contractual right to receive additional benefits as a supplement to guaranteed benefits that (a) are likely to be a significant portion of the total contract benefits; (b) have amount or timing contractually at the discretion of the insurer; and (c) are contractually based on asset or fund performance, as discussed in IFRS 4. Insurance contracts and investment contracts with discretionary participation features are accounted for under IFRS 4. Investment contracts without such discretionary participation features are accounted for as financial instruments under IAS 39. Impacts £436 billion of reported liabilities, requiring classification. Insurance business units Insurance contracts and investment contracts with discretionary participation features Investment contracts without discretionary participation features Asia – With-profits contracts – Non-participating term contracts – Minor amounts for a number of small categories of business – Whole life contracts – Unit-linked policies – Accident and health policies US – Variable annuity contracts – Fixed annuity contracts – Life insurance contracts – Guaranteed investment contracts (GICs) – Minor amounts of 'annuity certain' contracts UK and Europe – With-profits contracts – Bulk and individual annuity business – Certain unit-linked savings and similar contracts – Non-participating term contracts Measurement of policyholder liabilities and unallocated surplus of with-profits Due to their significance to the Group's business, the measurement of policyholder liabilities and unallocated surplus of with-profits is a critical accounting policy. The measurement basis of policyholder liabilities is dependent upon the classification of the contracts under IFRS 4 described above. Impacts £436 billion of liabilities IFRS 4 permits the continued usage of previously applied Generally Accepted Accounting Practices (GAAP) for insurance contracts and investment contracts with discretionary participating features. A modified statutory basis of reporting was adopted by the Group on first time adoption of IFRS in 2005. This was set out in the Statement of Recommended Practice issued by Association of British Insurers (ABI SORP). An exception was for UK regulated with-profits funds which were measured under FRS 27 as discussed below. FRS 27 and the ABI SORP were withdrawn in the UK for the accounting periods beginning in or after 2015. As used in these consolidated financial statements, the terms 'FRS 27' and the 'ABI SORP' refer to the requirements of these pronouncements prior to their withdrawal. For investment contracts that do not contain discretionary participating features, IAS 39 is applied and, where the contract includes an investment management element, IAS 18, 'Revenue', applies. The policies applied in each business unit are noted below. When measuring policyholder contract liabilities a number of assumptions are applied to estimate future amounts due to or from the policyholder. The nature of assumption varies by product and among the most significant are assumed rates of policyholders' mortality, particularly in respect of annuities sold in the UK, and policyholder behaviour, particularly in the US. Additional details of valuation methodologies and assumptions applied for material product types are discussed in note C4.2. Measurement of insurance contract liabilities and investment contracts liabilities with discretionary participation features. Asia insurance operations The policyholder liabilities for businesses in Asia are generally determined in accordance with methods prescribed by local GAAP adjusted to comply, where necessary, with the modified statutory basis. Refinements to the local reserving methodology are generally treated as changes in estimates, dependent on their nature. In some operations, Taiwan and India, US GAAP principles are applied. While the basis of valuation of liabilities in this business is in accordance with the requirements of the ABI SORP, it may differ from that determined on the modified statutory basis for UK and Europe insurance operations with the same features. US insurance operations The policyholder liabilities for Jackson's conventional protection-type policies are determined under US GAAP principles with locked in assumptions for mortality, interest, policy lapses and expenses along with provisions for adverse deviations. For other policies, the policyholder liabilities include the policyholder account balance. For those investment contracts in the US with fixed and guaranteed terms, the Group uses the amortised cost model to measure the liability. The US has no investment contracts with discretionary participation features. The sensitivity of US insurance operations to variations in key estimates and assumptions, including policyholder behaviour, is discussed in note C7.3. UK and Europe insurance operations The UK regulated with-profits funds' liabilities are the realistic basis liabilities in accordance with FRS 27. The realistic basis requires the value of liabilities to be calculated as: – A with-profits benefits reserve; plus – Future policy-related liabilities; plus – The realistic current liabilities of the fund. The with-profits benefits reserve is primarily based on the retrospective calculation of accumulated asset shares but is adjusted to reflect future policyholder benefits and other charges and expenses. Asset shares broadly reflect the policyholders' share of the with-profits fund assets attributable to their policies. The future policy-related liabilities must include a market consistent valuation of costs of guarantees, options and smoothing, less any related charges, and this amount is determined using either a stochastic approach, hedging costs or a series of deterministic projections with attributed probabilities. The shareholders' share of future costs of bonuses is included within the liabilities for unallocated surplus. Shareholders' share of profit is recognised in line with the distribution of bonuses to policyholders. For the purposes of local regulations, segregated accounts are established for linked business for which policyholder benefits are wholly or partly determined by reference to specific investments or to an investment-related index. The interest rates used in establishing policyholder benefit provisions for pension annuities in the course of payment are adjusted each year. Mortality rates used in establishing policyholder benefits are based on published mortality tables adjusted to reflect actual experience. The sensitivity of UK and Europe insurance operations to variations in key estimates and assumptions, including annuitant mortality, is discussed in note C7.4. Measurement of investment contracts without discretionary participation features liabilities. Investment contracts without discretionary participation features are measured in accordance with IAS 39 to reflect the deposit nature of the arrangement, with premiums and claims reflected as deposits and withdrawals and taken directly to the statement of financial position as movements in the financial liability balance. Incremental, directly attributable acquisition costs relating to the investment management element of these contracts are capitalised and amortised in line with the related revenue. If the contracts involve up-front charges, this income is also deferred and amortised through the income statement in line with contractual service provision in accordance with IAS 18. Investment contracts without fixed and guaranteed terms are classified as financial instruments and designated as fair value through profit or loss because the resulting liabilities are managed and their performance is evaluated on a fair value basis. Where the contract includes a surrender option its carrying value is subject to a minimum carrying value equal to its surrender value. Other investment contracts are measured at amortised cost. Measurement of unallocated surplus of with-profits funds. Represents the excess of assets over policyholder liabilities that are determined in accordance with the Group's accounting policies and are based on local GAAP for the Group's with-profits funds in the UK, Hong Kong and Malaysia that have yet to be appropriated between policyholders and shareholders. The unallocated surplus is recorded wholly as a liability with no allocation to equity. The annual excess (shortfall) of income over expenditure of the with-profits funds, after declaration and attribution of the cost of bonuses to policyholders and shareholders, is transferred to (from) the unallocated surplus each year through a charge (credit) to the income statement. The balance retained in the unallocated surplus represents cumulative income arising on the with-profits business that has not been allocated to policyholders or shareholders. The balance of the unallocated surplus is determined after full provision for deferred tax on unrealised appreciation on investments. Liability adequacy test. The Group performs adequacy testing on its insurance liabilities to ensure that the carrying amounts (net of related deferred acquisition costs) and, where relevant, present value of acquired in-force business is sufficient to cover current estimates of future cash flows. Any deficiency is immediately charged to the income statement. Jackson's liabilities for insurance contracts, which include those for separate accounts (reflecting separate account assets), policyholder account values and guarantees measured as described in note C4.2 and the associated deferred acquisition cost asset are measured under US GAAP and liability adequacy testing is performed in this context. Under US GAAP, most of Jackson's products are accounted for under Accounting Standards Codification Topic 944, Financial Services—Insurance of the Financial Accounting Standards Board (ASC 944) whereby deferred acquisition costs are amortised in line with expected gross profits. Recoverability of the deferred acquisition costs in the balance sheet is tested against the projected value of future profits using current estimates and therefore no additional liability adequacy test is required by IFRS 4. The DAC recoverability test is performed in line with US GAAP requirements which in practice is at a grouped level of those contracts managed together. (b) Further critical accounting policies Measurement and presentation of derivatives and debt securities of US insurance operations Jackson holds a number of derivative instruments and debt securities. The selection of the accounting approach for these items significantly affects the volatility of IFRS profit before tax. Jackson enters into derivative instruments to mitigate economic exposures. The Group has considered whether it is appropriate to undertake the necessary operational changes to qualify for hedge accounting so as to achieve matching of value movements in hedging instruments and hedged items in the performance statements. The key factors considered in this assessment were the complexity of asset and liability matching in Jackson's product range and the difficulty and cost of applying the macro hedge provisions under IAS 39 (which are more suited to banking arrangements) to Jackson's derivative book. £18,533 million of US income statement investment return arises from such derivatives and debt securities. The Group has decided that, except for occasional circumstances, applying hedge accounting using IAS 39 to derivative instruments held by Jackson would not improve the relevance or reliability of the financial statements to such an extent that would justify the difficulty and cost of applying these provisions. As a result of this decision, the total income statement results are more volatile as the movements in the fair value of Jackson's derivatives are reflected within it. This volatility is reflected in the level of short-term fluctuations in investment returns, as shown in notes B1.1 and B1.2. Under IAS 39, unless carried at amortised cost (subject to impairment provisions where appropriate) under the held-to-maturity category, debt securities are also carried at fair value. The Group has chosen not to classify any financial assets as held-to-maturity. Debt securities of Jackson are designated as available-for-sale with value movements, unless impaired, being recorded as movements within other comprehensive income. Impairments are recorded in the income statement. Presentation of results before tax Profit before tax is a significant IFRS income statement item. The Group has chosen to present a measure of profit before tax attributable to shareholders which distinguishes between tax attributable to policyholders and unallocated surplus and tax borne by shareholders, to support understanding of the performance of the Group. The total tax charge for the Group reflects tax that, in addition to relating to shareholders' profits, is also attributable to policyholders and unallocated surplus of with-profits funds and unit-linked policies. Further detail is provided in note B4. Reported profit before the total tax charge is not representative of pre-tax profits attributable to shareholders. Accordingly, in order to provide a measure of pre-tax profits attributable to shareholders the Group has chosen to adopt an income statement presentation of the tax charge and pre-tax results that distinguishes between policyholder and shareholder components. Profit before tax attributable to shareholders is £3,296 million and compares to profit before tax of £3,970 million. Segmental analysis of results and earnings attributable to shareholders The Group uses operating profit based on longer-term investment returns as the segmental measure of its results. Total segmental operating profit is £5,577 million and is shown in note B1.2. The basis of calculation of operating profit is disclosed in note B1.3. For shareholder-backed business, with the exception of debt securities held by Jackson and assets classified as loans and receivables at amortised cost, all financial investments and investment property are designated as assets at fair value through profit or loss. Short-term fluctuations in fair value affect the result for the year and the Group provides additional analysis of results before and after the effects of short-term fluctuations in investment returns, together with other items that are of a short-term, volatile or one-off nature. The effects of short-term fluctuations include asymmetric impacts where the measurement bases of the liabilities and associated derivatives used to manage the Jackson annuity business differ as described in note B1.2. Short-term fluctuations in investment returns on assets held by with-profits funds in the UK, Hong Kong, Malaysia and Singapore, do not affect directly reported shareholder results. This is because (i) the unallocated surplus of with-profits funds is accounted for as a liability and (ii) excess or deficits of income and expenditure of the funds over the required surplus for distribution are transferred to or from policyholder liabilities (including the unallocated surplus). (c) Further critical estimates or judgements Deferred acquisition costs for insurance contracts The Group applies judgement in determining qualifying costs that should be capitalised (ie those costs of acquiring new insurance business that meet the criteria under the Group's accounting policy for deferred acquisition costs). It makes estimates in projecting future profits/margins to assess whether adjustments to the carrying value or amortisation profile of deferred acquisition cost assets are necessary. Except for acquisition costs of with-profits contracts of the UK regulated with-profits funds, which are accounted for under FRS 27, costs of acquiring new insurance business are accounted for in a way that is consistent with the principles of the ABI SORP with deferral and amortisation against margins in future revenues on the related insurance policies. In general, this deferral is shown by an explicit carrying value in the balance sheet. However, in some Asia operations the deferral is implicit through the reserving methodology. The recoverability of the deferred acquisition costs is measured and is deemed impaired if the projected margins (which are estimated based on a number of assumptions similar to those underlying policyholder liabilities) are less than the carrying value. To the extent that the future margins differ from those anticipated, then an adjustment to the carrying value will be necessary. Asia insurance operations £9.2 billion of deferred acquisition costs as per note C5(b). For those business units applying US GAAP to insurance assets and liabilities, as permitted by the ABI SORP, principles similar to those set out in the US insurance operations paragraph below are applied to the deferral and amortisation of acquisition costs. For other territories in Asia, the general principles of the ABI SORP are applied with, as described above, deferral of acquisition costs being either explicit or implicit through the reserving basis. US insurance operations The most material estimates and assumptions applied in the measurement and amortisation of deferred acquisition cost balances relate to the US insurance operations. The Group's US insurance operations apply FAS ASU 2010-26 on 'Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts' and capitalise only those incremental costs directly relating to successfully acquiring a contract. For term business, acquisition costs are deferred and amortised in line with expected premiums. For annuity and interest-sensitive life business, acquisition costs are deferred and amortised in line with expected gross profits on the relevant contracts. For fixed and fixed index annuity and interest-sensitive life business, the key assumption is the long-term spread between the earned rate on investments and the rate credited to policyholders, which is based on an annual spread analysis. In addition, expected gross profits depend on mortality assumptions, assumed unit costs and terminations other than deaths (including the related charges), all of which are based on a combination of Jackson's actual experience, industry experience and future expectations. A detailed analysis of actual mortality, lapse and expenses experience is performed using internally developed experience studies. For US variable annuity business, a key assumption is the long-term investment return from the separate accounts, which is determined using a mean reversion methodology. Under the mean reversion technique applied by Jackson, the projected level of return for each of the next five years is adjusted from period to period, so that in combination with the actual rates of return for the preceding three years, including the current period, the assumed long-term annual return (gross of asset management fees and other charges to policyholders, but net of external fund management fees) is realised on average over the entire eight-year period. Projected returns after the mean reversion period revert back to the long-term investment return. For further details on current balances, assumptions and sensitivity, refer to note C5(b) and C7.3(iv). To ensure that the methodology in extreme market movements produces future expected returns that are realistic, the mean reversion technique has a cap and floor feature whereby the projected returns in each of the next five years can be no more than 15 per cent per annum and no less than 0 per cent per annum (both gross of asset management fees and other charges to policyholders, but net of external fund management fees) in each year. Jackson makes certain adjustments to the deferred acquisition costs which are recognised directly in other comprehensive income ('shadow accounting').If the recognition of unrealised gains or losses on available-for-sale securities causes adjustments to the carrying value and amortisation patterns of deferred acquisition costs and deferred income, these adjustments are recognised in other comprehensive income consistent with the gains or losses on the securities. More precisely, shadow deferred acquisition costs adjustments reflect the change in deferred acquisition costs that would have arisen if the assets held in the statement of financial position had been sold, crystallising unrealised gains or losses, and the proceeds reinvested at the yields currently available in the market. UK and Europe insurance operations For UK regulated with-profits funds where 'grandfathered' FRS 27 is applied, these costs are expensed as incurred. The majority of the UK shareholder-backed business is individual and group annuity business where the deferral of acquisition costs is negligible. Financial investments—Valuation Financial investments held at fair value represent £407.3 billion of the Group's total assets. The Group holds the majority of its financial investments at fair value (either through profit and loss or available-for-sale). Financial Investments held at amortised cost primarily comprise loans and deposits. Determination of fair value The Group applies valuation techniques, including the use of estimates, to determine the balance recognised for financial investments held at fair value. The Group uses current bid prices to value its investments having quoted prices. Actively traded investments without quoted prices are valued using prices provided by third parties as described further in note C3.1. Financial investments measured at fair value are classified into a three-level hierarchy as described in note C3.1(b). Financial investments held at amortised cost represent £12.2 billion of the Group's total assets. If the market for a financial investment of the Group is not active, the fair value is determined by using valuation techniques. The Group establishes fair value for these financial investments by using quotations from independent third parties, such as brokers or pricing services, or by using internally developed pricing models. Priority is given to publicly available prices from independent sources when available, but overall the source of pricing and/or the valuation technique is chosen with the objective of arriving at a fair value measurement which reflects the price at which an orderly transaction would take place between market participants on the measurement date. The valuation techniques include the use of recent arm's length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option-adjusted spread models and, if applicable, enterprise valuation and may include a number of assumptions relating to variables such as credit risk and interest rates. Changes in assumptions relating to these variables could positively or negatively impact the reported fair value of these financial investments. Details of the financial investments classified as 'level 3' to which valuation techniques are applied, and the sensitivity of profit before tax to a change in these items' valuation, are presented in note C3.1(d). Determination of impaired value In estimating the present value of future cash flows for determining the impaired value of instruments held at amortised cost, the Group looks at the expected cash flows of the assets and applies historical loss experience of assets with similar credit risks that has been adjusted for conditions in the historical loss experience which no longer exist, or for conditions that are expected to arise. The estimated future cash flows are discounted using the financial asset's original or variable effective interest rate and exclude credit losses that have not yet been incurred. In estimating any required impairment for US residential mortgage-backed and other asset-backed securities held as available-for-sale, the expected value of future cash flows is determined using a model, the key assumptions of which include how much of the currently delinquent loans will eventually default and assumed loss severity. Further details of the assumptions and estimates applied in assessing impairment of US available-for-sale securities is given in note C3.2(g). Financial investments—Determining impairment in relation to financial assets The Group applies judgement as to whether evidence of an impairment in value exists for financial investments classified as 'available-for-sale' or 'at amortised cost'. If evidence for impairment exists, valuation techniques, including estimates, are then applied in determining the impaired value. Affects £47.5 billion of assets. For financial investments classified as 'available for sale' or 'at amortised cost,' if a loss event that will have a detrimental effect on cash flows is identified, an impairment loss is recognised in the income statement. The loss recognised is determined as the difference between the book cost and the fair value of the relevant impairment assets. The loss comprises the effect of the expected loss of contractual cash flows and any additional market-price driven temporary reductions in values. Available-for-sale securities The Group's review of fair value involves several criteria, including economic conditions, credit loss experience, other issuer-specific developments and future cash flows. These assessments are based on the best available information at the time. Factors such as market liquidity, the widening of bid/ask spreads and a change in cash flow assumptions can contribute to future price volatility. If actual experience differs negatively from the assumptions and other considerations used in the consolidated financial statements, unrealised losses currently in equity may be recognised in the income statement in future periods. Additional details on the methodology and estimates used to determine impairments of the available-for-sale securities of Jackson are described in note C3.2(g). The majority of the US insurance operation's debt securities portfolio is accounted for on an available-for-sale basis. The consideration of evidence of impairment requires |
Analysis of performance by segm
Analysis of performance by segment | 12 Months Ended |
Dec. 31, 2017 | |
Analysis of performance by segment | |
Analysis of performance by segment | B Earnings performance B1 Analysis of performance by segment B1.1 Segment results—profit before tax Note 2016* 2015* £m £m £m Asia Insurance operations B3 (a) Asset management Total Asia US Jackson (US insurance operations) B3 (b) Asset management ) Total US UK and Europe UK and Europe insurance operations: B3 (c) Long-term business General insurance commission note (i) Total UK and Europe insurance operations UK and Europe asset management note (vi) Total UK and Europe Total segment profit Restructuring costs note (iii) ) ) ) Other income and expenditure: Investment return and other income Interest payable on core structural borrowings ) ) ) Corporate expenditure note (ii) ) ) ) Solvency II implementation costs — ) ) Total other income and expenditure ) ) ) Interest received from tax settlement — — Operating profit based on longer-term investment returns Short-term fluctuations in investment returns on shareholder-backed business B1.2 ) ) ) Amortisation of acquisition accounting adjustments note (iv) ) ) ) Profit (loss) attaching to disposal of businesses D1 ) Cumulative exchange gain on the sold Korea life business recycled from other comprehensive income D1 — — Cumulative exchange loss on the sold Japan life business recycled from other comprehensive income note (v) — — ) Profit before tax Tax charge attributable to shareholders' returns B4 ) ) ) Profit for the year Attributable to: Equity holders of the Company Non-controlling interests — — Basic earnings per share (in pence) B5 Based on operating profit based on longer-term investment returns note (vii) 145.2p 131.3p 124.6p Based on profit for the year 93.1p 75.0p 101.0p * The 2016 and 2015 comparative results have been re-presented from those previously published following the reassessment of the Group's operating segments as described in note B1.3. Notes (i) General insurance commission represents the commission receivable net of expenses for Prudential-branded general insurance products in connection with the arrangement to transfer the UK general insurance business to Churchill in 2002. (ii) Corporate expenditure as shown above is primarily for Group Head Office and Asia Regional Head Office. (iii) Restructuring costs are incurred primarily in UK and Europe and Asia and represent business transformation and integration costs. (iv) Amortisation of acquisition accounting adjustments principally relate to the REALIC business of Jackson which was acquired in 2012. (v) On 5 February 2015, the Group completed the sale of its closed book life insurance business in Japan. (vi) UK and Europe asset management operating profit based on longer-term investment returns: £m £m £m Asset management fee income Other income Staff costs ) ) ) Other costs ) ) ) Underlying profit before performance-related fees Share of associate results Performance-related fees Total UK and Europe asset management operating profit based on longer-term investment returns (vii) Tax charges have been reflected as operating and non-operating in the same way as for the pre-tax items. In 2017 a significant US tax reform package was enacted, and the effects of which in the income statement have been treated as non-operating. Further details are provided in note B4. B1.2 Short-term fluctuations in investment returns on shareholder-backed business £m £m £m Asia ) ) ) US note(i) ) ) ) UK and Europe note(ii) ) ) Other operations note(iii) ) ) Total ) ) ) Notes (i) US operations The short-term fluctuations in investment returns for US insurance operations are reported net of related credit for amortisation of deferred acquisition costs, of £462 million as shown in note C5(b) (2016: £565 million; 2015: £93 million) and comprise amounts in respect of the following items: £m £m £m Net equity hedge result note (a) ) ) ) Other than equity-related derivatives note (b) ) ) Debt securities note (c) ) Equity-type investments: actual less longer-term return Other items Total ) ) ) Notes (a) Net equity hedge result The purpose of the inclusion of this item in short-term fluctuations in investment returns is to segregate the amount included in pre-tax profit that relates to the accounting effect of market movements on both the measured value of guarantees in Jackson's variable annuity and fixed index annuity products and on the related derivatives used to manage the exposures inherent in these guarantees. As the Group applies US GAAP for the measured value of the product guarantees this item also includes asymmetric impacts where the measurement bases of the liabilities and associated derivatives used to manage the Jackson annuity business differ as described in note B1.3(c) below. The net equity hedge result therefore includes significant accounting mismatches and other factors that detract from the presentation of an economic result. These other factors include: – The variable annuity guarantees and fixed index annuity embedded options being only partially fair valued under 'grandfathered' US GAAP as described in note B1.3 (c); – The interest rate exposure being managed through the other than equity-related derivative programme explained in note (b) below; and – Jackson's management of its economic exposures for a number of other factors that are treated differently in the accounting frameworks such as future fees and assumed volatility levels. The net equity hedge result (net of related DAC) can be summarised as follows: £m £m £m Fair value movements on equity hedge instruments 1 ) ) ) Accounting value movements on the variable and fixed index annuity guarantee liabilities 2 ) ) ) Fee assessments net of claim payments Total ) ) ) 1. Held to manage equity exposures of the variable annuity guarantees and fixed index annuity options. 2. The accounting value movements on the variable and fixed index annuity guarantee liabilities reflect the impact of market movements and changes in economic and actuarial assumptions. These actuarial assumptions changes include, amongst other items, a charge (net of related DAC) of £359 million for strengthening policyholder utilisation and persistency rates offset by a benefit (net of related DAC) of £382 million from modelling refinements in the period, principally enhancements to how Jackson's own credit risk is incorporated in the fair valuation of these long-term liabilities. (b) Other than equity-related derivatives The fluctuations for this item comprise the net effect of: – Fair value movements on free-standing, other than equity-related derivatives; – Fair value movements on the Guaranteed Minimum Income Benefit (GMIB) reinsurance asset that are not matched by movements in the underlying GMIB liability, which is not fair valued as explained in note B1.3; and – Related amortisation of DAC. The free-standing, other than equity-related derivatives, are held to manage interest rate exposures and durations within the general account and the variable annuity guarantees and fixed index annuity embedded options described in note (a) above. Accounting mismatches arise because of differences between the measurement basis and presentation of the derivatives, which are fair valued with movements recorded in the income statement, and the exposures they are intended to manage. (c) Short-term fluctuations related to debt securities £m £m £m Short-term fluctuations relating to debt securities (Charges) credits in the year: Losses on sales of impaired and deteriorating bonds ) ) ) Defaults — ) — Bond write-downs ) ) ) Recoveries/reversals Total credits (charges) in the year ) ) Less: Risk margin allowance deducted from operating profit based on longer-term investment returns note ) Interest-related realised (losses) gains: (Losses) gains arising in the year ) Less: Amortisation of gains and losses arising in current and prior years to operating profit based on longer-term investment returns ) ) ) ) ) Related amortisation of deferred acquisition costs ) ) Total short-term fluctuations related to debt securities ) Note The debt securities of Jackson are held in the general account of the business. Realised gains and losses are recorded in the income statement with normalised returns included in operating profit with variations from year to year included in the short-term fluctuations category. The risk margin reserve charge for longer-term credit-related losses included in operating profit based on longer-term investment returns of Jackson for 2017 is based on an average annual risk margin reserve of 21 basis points (2016: 21 basis points; 2015: 23 basis points) on average book values of US$55.3 billion (2016: US$56.4 billion; 2015: US$54.6 billion) as shown below: 2017 2016 2015 Moody's rating category (or equivalent under NAIC ratings of mortgage-backed securities) Average RMR Annual Average RMR Annual Average RMR Annual US$m % US$m £m US$m % US$m £m US$m % US$m £m A3 or higher ) ) ) ) ) ) Baa1, 2 or 3 ) ) ) ) ) ) Ba1, 2 or 3 ) ) ) ) ) ) B1, 2 or 3 ) ) ) ) ) ) Below B3 ) ) ) ) ) ) Total ) ) ) ) ) ) Related amortisation of deferred acquisition costs (see below) Risk margin reserve charge to operating profit for longer-term credit-related losses ) ) ) ) ) ) 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 amortisation of deferred acquisition costs. In addition to the accounting for realised gains and losses described above for Jackson general account debt securities, included within the statement of other comprehensive income is a pre-tax credit of £541 million for net unrealised gains on debt securities classified as available-for-sale net of related amortisation of deferred acquisition costs (2016: credit of £48 million; 2015: charge of £(968) million). Temporary market value movements do not reflect defaults or impairments. Additional details of the movement in the value of the Jackson portfolio are included in note C3.2(b). (ii) UK and Europe operations The negative short-term fluctuations in investment returns for UK and Europe operations of £(14) million (2016: positive £206 million; 2015: negative £(121) million) include net unrealised movements on fixed income assets supporting the capital of the shareholder-backed annuity business. (iii) Other operations The positive short-term fluctuations in investment returns for other operations of £20 million (2016: negative £(204) million; 2015: negative £(73) million) include unrealised value movements on financial instruments. B1.3 Determining operating segments and performance measure of operating segments Operating segments The Group's operating segments for financial reporting are defined and presented in accordance with IFRS 8, 'Operating Segments' on the basis of the management reporting structure and its financial management information. Following the combination during the year of the Group's UK insurance business and M&G to form M&G Prudential, the Group has reassessed its operating segments. Under the Group's management and reporting structure its chief operating decision maker is the Group Executive Committee (GEC). In the revised management structure, responsibility is delegated to the Chief Executive Officers of Prudential Corporation Asia, the North American Business Unit and M&G Prudential for the day-to-day management of their business units (within the framework set out in the Group Governance Manual). Financial management information used by the GEC has been revised to align with these three business segments. These operating segments derive revenue from both long-term insurance and asset management activities. In the prior year, the operating segments of the Group were each of the insurance operations in Asia, US and UK, and the asset management operations of Asia, US, M&G and Prudential Capital. Operations which do not form part of any business unit are reported as 'Unallocated to a segment'. These include Group Head Office and Asia Regional Head Office costs. Following the formation of M&G Prudential certain minor operations which were previously reported as 'Unallocated to a segment' are now included in the UK and Europe segment, reflecting the revised structure. Prudential Capital and Africa operations do not form part of any operating segment under the revised structure, and their assets and liabilities and loss before tax are not material to the overall financial position of the Group. Prudential Capital and Africa operations are therefore reported as 'Unallocated to a segment'. Comparative segmental information for prior periods has been presented on a basis consistent with the current year. Performance measure The performance measure of operating segments utilised by the Company is IFRS operating profit attributable to shareholders based on longer-term investment returns, as described below. This measurement basis distinguishes operating profit based on long-term investment returns from other constituents of the total profit as follows: – Short-term fluctuations in investment returns on shareholder-backed business. This includes the impact of short-term market effects on the carrying value of Jackson's guarantee liabilities and related derivatives as explained below. – Amortisation of acquisition accounting adjustments arising on the purchase of business. This comprises principally the charge for the adjustments arising on the purchase of REALIC in 2012; and – Profit/loss attaching to businesses that have been sold in the year including, where relevant, the recycling of the cumulative translation gain or loss in respect of sold businesses. Determination of operating profit based on longer-term investment returns for investment and liability movements : (a) General principles (i) UK style with-profits business The operating profit based on longer-term returns reflects the statutory transfer gross of attributable tax. Value movements in the underlying assets of the with-profits funds do not affect directly the determination of operating profit. (ii) Unit-linked business The policyholder unit liabilities are directly reflective of the underlying asset value movements. Accordingly, the operating results based on longer-term investment returns reflect the current period value movements in both the unit liabilities and the backing assets. (iii) US variable annuity and fixed index annuity business This business has guarantee liabilities which are measured on a combination of fair value and other US GAAP derived principles. These liabilities are subject to an extensive derivative programme to manage equity and interest rate exposures. The principles for determination of the operating profit and short-term fluctuations are necessarily bespoke, as discussed in section (c) below. (iv) Business where policyholder liabilities are sensitive to market conditions Under IFRS, the degree to which the carrying values of liabilities to policyholders are sensitive to current market conditions varies between territories depending upon the nature of the 'grandfathered' measurement basis. In general, in those instances where the liabilities are particularly sensitive to routine changes in market conditions, the accounting basis is such that the impact of market movements on the assets and liabilities is broadly equivalent in the income statement, and operating profit based on longer-term investments returns is not distorted. In these circumstances, there is no need for the movement in the liability to be bifurcated between the elements that relate to longer-term market conditions and short-term effects. However, movements in liabilities for some types of business do require bifurcation to ensure that at the net level (ie after allocated investment return and charge for policyholder benefits) the operating result reflects longer-term market returns. Examples of where such bifurcation is necessary are in Hong Kong and for UK shareholder-backed annuity business, as explained in sections b(i) and d(i), respectively. For other types of Asia's non-participating business, expected longer-term investment returns are used to determine the movement in policyholder liabilities for determining operating results. (v) Other shareholder-financed business The measurement of operating profit based on longer-term investment returns reflects the particular features of long-term insurance business where assets and liabilities are held for the long term and for which the accounting basis for insurance liabilities under current IFRS is not generally conducive to demonstrating trends in underlying performance of life businesses exclusive of the effects of short-term fluctuations in market conditions. In determining the profit on this basis, the following key elements are applied to the results of the Group's shareholder-financed operations. Except in the case of assets backing liabilities which are directly matched (such as unit-linked business) or closely correlated with value movements (as discussed below) operating profit based on longer-term investment returns for shareholder-financed business is determined on the basis of expected longer-term investment returns. Longer-term investment returns comprise actual income receivable for the period (interest/dividend income) and for both debt and equity-type securities longer-term capital returns. Debt securities and loans In principle, for debt securities and loans, the longer-term capital returns comprise two elements: – Risk margin reserve based charge for the expected level of defaults for the period, which is determined by reference to the credit quality of the portfolio. The difference between impairment losses in the reporting period and the risk margin reserve charge to the operating result is reflected in short-term fluctuations in investment returns; and – The amortisation of interest-related realised gains and losses to operating results based on longer-term investment returns to the date when sold bonds would have otherwise matured. At 31 December 2017, the level of unamortised interest-related realised gains and losses related to previously sold bonds for the Group was a net gain of £855 million (2016: £969 million; 2015: £567 million). Equity-type securities For equity-type securities, the longer-term rates of return are estimates of the long-term trend investment returns for income and capital having regard to past performance, current trends and future expectations. Equity-type securities held for shareholder-financed operations other than the UK annuity business, unit-linked and US variable annuity separate accounts are principally relevant for the US and Asia insurance operations. Different rates apply to different categories of equity-type securities. Derivative value movements Generally, derivative value movements are excluded from operating results based on longer-term investment returns (unless those derivative value movements broadly offset changes in the accounting value of other assets and liabilities included in operating profit). The principal example of derivatives whose value movements are excluded from operating profit arises in Jackson, as discussed below in section (c). (b) Asia insurance operations (i) Business where policyholder liabilities are sensitive to market conditions For certain Asia non-participating business, for example in Hong Kong, the economic features are more akin to asset management products with policyholder liabilities reflecting asset shares over the contract term. For these products, the charge for policyholder benefits in the operating results should reflect the asset share feature rather than volatile movements that would otherwise be reflected if the local regulatory basis (also applied for IFRS basis) was used. For certain other types of non-participating business expected longer-term investment returns are used to determine the movement in policyholder liabilities for determining operating results. (ii) Other Asia shareholder-financed business Debt securities For this business, the realised gains and losses are principally interest related. Accordingly, all realised gains and losses to date for these operations are being amortised over the period to the date those securities would otherwise have matured, with no explicit risk margin reserve charge. Equity-type securities For Asia insurance operations, investments in equity securities held for non-linked shareholder-backed operations amounted to £1,759 million as at 31 December 2017 (2016: £1,405 million; 2015: £840 million). The rates of return applied in 2017 ranged from 4.3 per cent to 17.2 per cent (2016: 3.2 per cent to 13.9 per cent; 2015: 3.5 per cent to 13.0 per cent) with the rates applied varying by business unit. These rates are broadly stable from period to period but may be different between countries reflecting, for example, differing expectations of inflation in each business unit. The assumptions are for the returns expected to apply in equilibrium conditions. The assumed rates of return do not reflect any cyclical variability in economic performance and are not set by reference to prevailing asset valuations. The longer-term investment returns for the Asia insurance joint ventures accounted for using the equity method are determined on a similar basis as the other Asia insurance operations described above. (c) US insurance operations (i) Separate account business For such business the policyholder unit liabilities are directly reflective of the asset value movements. Accordingly, the operating results based on longer-term investment returns reflect the current period value movements in unit liabilities and the backing assets. (ii) US variable and fixed index annuity business The following value movements for Jackson's variable and fixed index annuity business are excluded from operating profit based on longer-term investment returns. See note B1.2 note (i): – Fair value movements for equity-based derivatives; – Fair value movements for embedded derivatives for the 'not for life' portion of Guaranteed Minimum Withdrawal Benefit (GMWB) and fixed index annuity business, and Guaranteed Minimum Income Benefit (GMIB) reinsurance (see below); – Movements in the accounts carrying value of Guaranteed Minimum Death Benefit (GMDB), GMIB and the 'for life' portion of GMWB liabilities, (see below) for which, under the 'grandfathered' US GAAP applied under IFRS for Jackson's insurance assets and liabilities, the measurement basis gives rise to a muted impact of current period market movements (ie they are relatively insensitive to the effect of current period equity market and interest rate changes); – A portion of the fee assessments as well as claim payments, in respect of guarantee liabilities; and – Related amortisation of deferred acquisition costs for each of the above items. Embedded derivatives for the 'not for life' portion of GMWB and fixed index annuity business The 'not for life' portion of GMWB embedded derivative liabilities is measured under the US GAAP basis applied for IFRS in a manner consistent with IAS 39 under which the projected future growth rate of the account balance is based on current swap rates (rather than expected rates of return) with only a portion of the expected future guarantee fees included. Reserve value movements on these liabilities are sensitive to changes to levels of equity markets, implied volatility and interest rates. Embedded derivatives for variable annuity guarantee minimum income benefit The GMIB liability, which is substantially fully reinsured, subject to a deductible and annual claim limits, is accounted for in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 944-80 Financial Services—Insurance—Separate Accounts (formerly SOP 03-1) under IFRS using 'grandfathered' US GAAP. This accounting basis substantially does not recognise the effects of market movements. As the corresponding reinsurance asset is net settled, it is considered to be a derivative under IAS 39, 'Financial Instruments: Recognition and Measurement', and the asset is therefore recognised at fair value. As the GMIB is economically reinsured, the mark to market element of the reinsurance asset is included as a component of short-term fluctuations in investment returns. (iii) Other derivative value movements The principal example of non-equity based derivatives (for example, interest rate swaps and swaptions) whose value movements are excluded from operating profit, arises in Jackson. Non-equity based derivatives are primarily held by Jackson as part of a broadly-based hedging programme for features of Jackson's bond portfolio (for which value movements are booked in the statement of other comprehensive income rather than the income statement), product liabilities (for which US GAAP accounting as 'grandfathered' under IFRS 4 does not fully reflect the economic features being hedged), and the interest rate exposure attaching to equity-based embedded derivatives. (iv) Other US shareholder-financed business Debt securities Jackson is the shareholder-backed operation for which the distinction between impairment losses and interest-related realised gains and losses is in practice relevant to a significant extent. Jackson has used the ratings by Nationally Recognised Statistical Ratings Organisations (NRSRO) or ratings resulting from the regulatory ratings detail issued by the National Association of Insurance Commissioners (NAIC) developed by external third parties such as BlackRock Solutions to determine the average annual risk margin reserve to apply to debt securities held to back general account business. Debt securities held to back separate account and reinsurance funds withheld are not subject to risk margin reserve charge. Further details of the risk margin reserve charge, as well as the amortisation of interest-related realised gains and losses, for Jackson are shown in note B1.2. Equity-type securities As at 31 December 2017, the equity-type securities for US insurance non-separate account operations amounted to £946 million (2016: £1,323 million; 2015: £1,004 million). For these operations, the longer-term rates of return for income and capital applied in the years indicated, which reflect the combination of the average risk-free rates over the year and appropriate risk premiums are as follows: Equity-type securities such as common and preferred stock and portfolio holdings in mutual funds 6.1% to 6.5% 5.5% to 6.5% 5.7% to 6.4% Other equity-type securities such as investments in limited partnerships and private equity funds 8.1% to 8.5% 7.5% to 8.5% 7.7% to 8.4% (d) UK and Europe insurance operations (i) Shareholder-backed annuity business For this business, policyholder liabilities are determined by reference to current interest rates. The value movements of the assets covering liabilities are closely correlated with the related change in liabilities. Accordingly, asset value movements are recorded within the 'operating results based on longer-term investment returns'. Policyholder liabilities include a margin for credit risk. Variations between actual and best estimate expected impairments are recorded as a component of short-term fluctuations in investment returns. The operating result based on longer-term investment returns reflects the impact of value movements on policyholder liabilities for shareholder-backed annuity business within The Prudential Assurance Company Limited (PAC) after adjustments to allocate the following elements of the movement to the category of 'short-term fluctuations in investment returns': – The impact on credit risk provisioning of actual upgrades and downgrades during the period; – Credit experience compared with assumptions; and – Short-term value movements on assets backing the capital of the business. Credit experience reflects the impact of defaults and other similar experience, such as asset exchanges arising from debt restructuring by issuers that include effectively an element of permanent impairment of the security held. Positive or negative experience compared with assumptions is included within short-term fluctuations in investment returns without further adjustment. The effects of other changes to credit risk provisioning are included in the operating result, as is the net effect of changes to the valuation rate of interest due to portfolio rebalancing to align more closely with management benchmark. (ii) Non-linked shareholder-financed business For debt securities backing non-linked shareholder-financed business of the UK and Europe insurance operations (other than the annuity business) the realised gains and losses are principally interest related. Accordingly, all realised gains and losses to date for these operations are being amortised over the period to the date those securities would otherwise have matured, with no explicit risk margin reserve charge. (e) Fund management and other non-insurance businesses For these businesses, the particular features applicable for life assurance noted above do not apply. For these businesses, it is inappropriate to include returns in the operating result on the basis described above. Instead, it is appropriate to generally include realised gains and losses in the operating result with temporary unrealised gains and losses being included in short-term fluctuations. In some instances, it may also be appropriate to amortise realised gains and losses on derivatives and other financial instruments to operating results over a time period that reflects the underlying economic substance of the arrangements. B1.4 Segmental income statement 2017 Asia US UK and Total Unallocated Group £m £m £m £m £m £m Gross premium earned Outward reinsurance ) ) ) ) ) ) Earned premiums, net of reinsurance Other income from external customers note(ii) Total revenue from external customers note(v) Intra-group revenue ) — Interest income note(iv) Other investment return B1.5 Total revenue, net of reinsurance Benefits and claims and movements in unallocated surplus of with-profits funds, net of reinsurance ) ) ) ) ) ) Acquisition costs and other operating expenditure B2 ) ) ) ) ) ) Interest on core structural borrowings — ) — ) ) ) Disposal of Korea life business D1 Cumulative exchange gain on the sold Korea life business recycled from other comprehensive income D1 — — — Remeasurement adjustments — — — Gain on disposal of other businesses D1 — — — Total charges, net of reinsurance and gain (loss) on disposal of businesses ) ) ) ) ) ) Share of profit from joint ventures and associates, net of related tax — — Profit (loss) before tax (being tax attributable to shareholders' and policyholders' returns) note(i) ) Tax charge attributable to policyholders' returns ) — ) ) — ) Profit (loss) before tax ) Analysis |
Acquisition costs and other exp
Acquisition costs and other expenditure | 12 Months Ended |
Dec. 31, 2017 | |
Acquisition costs and other expenditure | |
Acquisition costs and other expenditure | B2 Acquisition costs and other expenditure 2017 2016 2015 £m £m £m Acquisition costs incurred for insurance policies ) ) ) Acquisition costs deferred less amortisation of acquisition costs Administration costs and other expenditure ) ) ) Movements in amounts attributable to external unit holders of consolidated investment funds ) ) ) Total acquisition costs and other expenditure ) ) ) Total acquisition costs and other expenditure includes: (a) Total depreciation and amortisation expense of £(288) million (2016: £(242) million; 2015: £(755) million) is included in "Administration costs and other expenditure" and relates primarily to amortisation of deferred acquisition costs of insurance contracts and asset management contracts. (b) The charge for non-deferred acquisition costs and the amortisation of those costs that are deferred was £(2,801) million (2016: £(2,764) million; 2015: £(2,844) million).These amounts comprise £(2,772) million and £(29) million for insurance and investment contracts respectively (2016: £(2,734) million and £(30) million; 2015: £(2,817) million and £(27) million respectively). (c) Movements in amounts attributable to external unit holders are in respect of those OEICs and unit trusts which are required to be consolidated and comprise a charge of £(719) million (2016: £(485) million; 2015: £(599) million) for UK and Europe insurance operations and a charge of £(265) million (2016: £(77) million; 2015: £(19) million) for Asia insurance operations. (d) There were no fee expenses relating to financial liabilities held at amortised cost included in acquisition costs in 2017, 2016 and 2015. (e) The segmental analysis of interest expense (other than interest expense in core structural borrowings) and depreciation and amortisation included within total acquisition costs and other expenditure was as follows: Other interest expense Depreciation and 2017 2016* 2015* 2017 2016* 2015* £m £m £m £m £m £m Asia: Insurance — — — ) ) ) Asset management — — — ) ) ) US: Insurance ) ) ) ) Asset management — — — ) ) ) UK and Europe: Insurance ) ) ) ) ) ) Asset management — — — ) ) ) Total segment ) ) ) ) ) ) Unallocated to a segment (other operations) ) ) ) ) ) ) Group total ) ) ) ) ) ) * The 2016 and 2015 comparative results have been re-presented from those previously published following reassessment of the Group's operating segments as described in note B1.3. B2.1 Staff and employment costs The average number of staff employed by the Group during the year was: Business operations: Asia US UK and Europe* Total * The UK and Europe staff numbers include staff from central operations and Africa which are unallocated to a segment. The costs of employment were: £m £m £m Business operations: Wages and salaries Social security costs Pension costs: Defined benefit schemes* ) ) Defined contribution schemes Total * The (credit) charge incorporates the effect of actuarial gains and losses. B2.2 Share-based payment (a) Description of the plans The Group operates a number of share award and share option plans that provides Prudential plc shares to participants upon vesting. The plans in operation include the Prudential Long Term Incentive Plan (PLTIP), Annual Incentive Plan (AIP), savings-related share option schemes, share purchase plans and deferred bonus plans. Some of these plans are participated in by Executive Directors, the details of which are described in the Compensation and Employee section. In addition, the following information is provided. Share scheme Description Prudential Corporation Asia Long-Term Incentive Plan (PCA LTIP) The PCA LTIP provides eligible employees with conditional awards. Awards are discretionary and on a year-by-year basis determined by Prudential's full year financial results and the employee's contribution to the business. Awards vest after three years subject to the employee being in employment. Vesting of awards may also be subject to performance conditions. All awards are made in Prudential shares, or ADRs, except for countries where share awards are not feasible due to securities and/or tax reasons, where awards will be replaced by the cash value of the shares that would otherwise have vested. Prudential Agency Long-Term Incentive Plan Certain agents in Asia are eligible to be granted awards under the Prudential Agency Long-Term Incentive Plan. These awards are structured in a similar way to the PCA LTIP described above. Restricted Share Plan (RSP) The Company operates the RSP for certain employees. Awards under this plan are discretionary, and the vesting of awards may be subject to performance conditions. All awards are made in Prudential shares or ADRs. Deferred bonus plans The Company operates a number of deferred bonus schemes including the Group Deferred Bonus Plan (GDBP), the Prudential Corporation Asia Deferred Bonus Plan (PCA DBP), the Prudential Capital Deferred Bonus Plan (PruCap DBP) and other arrangements. There are no performance conditions attached to deferred share awards made under these arrangements. Savings-related share option schemes Employees and eligible agents in a number of geographies are eligible for plans similar to the HMRC-approved Save As You Earn (SAYE) share option scheme in the UK. Eligible employees participate in the international savings-related share option scheme while eligible agents based in certain regions of Asia can participate in the non-employee savings-related share option scheme. Share purchase plans Eligible employees outside the UK are invited to participate in arrangements similar to the Company's HMRC-approved UK SIP, which allows the purchase of Prudential plc shares. Staff based in Ireland are eligible to participate in the Share Participation Plan. Staff based in Asia are eligible to participate in the Prudential Corporation Asia All Employee Share Purchase Plan. (b) Outstanding options and awards The following table shows movement in outstanding options and awards under the Group's share-based compensation plans at 31 December 2017, 2016 and 2015: Options outstanding under SAYE schemes Awards outstanding 2017 2016 2015 2017 2016 2015 Number of Weighted Number of Weighted Number of Weighted Number of millions £ millions £ millions £ millions Beginning of year: Granted Exercised ) ) ) ) ) ) Forfeited ) ) ) ) ) ) Cancelled ) ) ) ) ) — Lapsed/Expired ) ) — ) — ) End of year Options immediately exercisable, end of year The weighted average share price of Prudential plc for the year ended 31 December 2017 was £17.51 compared to £13.56 for the year ended 31 December 2016 and £15.49 for the year ended 31 December 2015. The following table provides a summary of the range of exercise prices for Prudential plc options outstanding at 31 December. Outstanding Exercisable Number Weighted average Weighted average Number Weighted average (millions) (years) £ (millions) £ Between £2 and £3 — — — — — — — — — — — — Between £4 and £5 — — — — — Between £6 and £7 — — — Between £9 and £10 — — — — Between £11 and £12 — — — — Between £14 and £15 — — — — — — — — — — — — The years shown above for weighted average remaining contractual life include the time period from end of vesting period to expiration of contract. (c) Fair value of options and awards The fair value amounts estimated on the date of grant relating to all options and awards, were determined by using the following assumptions: 2017 2016 2015 Prudential SAYE Other Prudential SAYE Other Prudential SAYE Other Dividend yield (%) — — — — — — Expected volatility (%) — — — Risk-free interest rate (%) — — — Expected option life (years) — — — — — — Weighted average exercise price (£) — — — — — — Weighted average share price at grant date (£) — — — Weighted average fair value at grant date (£) The compensation costs for all awards and options are recognised in net income over the plans' respective vesting periods. The Group uses the Black-Scholes model to value all options and awards other than those which have TSR performance conditions attached (some Prudential LTIP and RSP awards) for which the Group uses a Monte Carlo model in order to allow for the impact of these conditions. These models are used to calculate fair values for share options and awards at the grant date based on the quoted market price of the stock at the measurement date, the amount, if any, that the employees are required to pay, the dividend yield, expected volatility, risk-free interest rates and exercise prices. For all options and awards, the expected volatility is based on the market implied volatilities as quoted on Bloomberg. The Prudential specific at-the-money implied volatilities are adjusted to allow for the different terms and discounted exercise price on SAYE options by using information on the volatility surface of the FTSE 100. Risk-free interest rates are taken from government bond spot rates with projections for two-year, three-year and five-year terms to match corresponding vesting periods. Dividend yields are determined as the average yield over a period of 12 months up to and including the date of grant. For awards with a TSR condition, volatilities and correlations between Prudential and a basket of 15 competitor companies is required. For grants in 2017, the average volatility for the basket of competitors was 22.93 per cent. Correlations for the basket are calculated for each pairing from the log of daily TSR returns for the three years prior to the valuation date. Market implied volatilities are used for both Prudential and the basket of competitors. Changes to the subjective input assumptions could materially affect the fair value estimate. (d) Share-based payment expense charged to the income statement Total expense recognised in the year in the consolidated financial statements relating to share-based compensation is as follows: £m £m £m Share-based compensation expense Amount accounted for as equity-settled Carrying value at 31 December of liabilities arising from share-based payment transactions — — Intrinsic value of above liabilities for which rights had vested at 31 December — — The group has no liabilities outstanding at the year-end relating to awards which are settled in cash. B2.3 Key management remuneration Key management constitutes the directors of Prudential plc as they have authority and responsibility for planning, directing and controlling the activities of the Group. Total key management remuneration is analysed in the following table: £m £m £m Salaries and short-term benefits Post-employment benefits Share-based payments The share-based payments charge comprises £8.3 million (2016: £12.9 million; 2015: £10.4 million), which is determined in accordance with IFRS 2, 'Share-based Payment' (see note B2.2) and £5.8 million (2016: £5.8 million; 2015: £5.1 million) of deferred share awards. Total key management remuneration includes total Directors' remuneration of £40.2 million (2016: £37.9 million; 2015: £42.7 million) less LTIP releases of £15.2 million (2016: £10.1 million; 2015: £19.4 million) as shown in the 'Compensation and Employees' section. Further information on Directors' remuneration is given in the 'Compensation and Employees' section. B2.4 Fees payable to the auditor £m £m £m Fees payable to the Company's auditor for the audit of the Company's annual accounts Fees payable to the Company's auditor and its associates for other services: Audit of subsidiaries pursuant to legislation Audit-related assurance services Tax compliance services — Other assurance services Services relating to corporate finance transactions — All other services Total fees paid to the auditor In addition, there were fees incurred by pension schemes of £0.1 million (2016: £0.1 million; 2015: £0.1 million) for audit services and £nil million (2016: £0.1 million; 2015: £nil) for other assurance services. |
Effect of changes and other acc
Effect of changes and other accounting matters on insurance assets and liabilities | 12 Months Ended |
Dec. 31, 2017 | |
Effect of changes and other accounting matters on insurance assets and liabilities | |
Effect of changes and other accounting matters on insurance assets and liabilities | B3 Effect of changes and other accounting matters on insurance assets and liabilities The following matters are relevant to the determination of the 2017 results: (a) Asia insurance operations In 2017, the IFRS operating profit based on longer-term investment returns for Asia insurance operations included a net credit of £75 million (2016: £67 million; 2015: £62 million) representing a small number of individually minor items. (b) US insurance operations Changes in the policyholder liabilities held for variable and fixed index annuity guarantees are reported as part of non-operating profit and are as described in note B1.2. (c) UK and Europe insurance operations Annuity business Allowance for credit risk For IFRS reporting, the results for UK shareholder-backed annuity business are particularly sensitive to the allowances made for credit risk. The allowance is reflected in the deduction from the valuation rate of interest for discounting projected future annuity payments to policyholders that would have otherwise applied. The credit risk allowance comprises an amount for long-term best estimate defaults and additional provisions for credit risk premium, the cost of downgrades and short-term defaults. The IFRS credit risk allowance made for the UK shareholder-backed fixed and linked annuity business equated to 42 basis points at 31 December 2017 (2016: 43 basis points; 2015: 42 basis points). The allowance represented 28 per cent of the bond spread over swap rates (2016: 26 per cent; 2015: 25 per cent). The reserves for credit risk allowance at 31 December 2017 for the UK shareholder-backed business were £1.6 billion (2016: £1.7 billion; 2015: £1.6 billion). Other assumption changes For the shareholder-backed business, in addition to the movement in the credit risk allowance discussed above, the net effect of routine changes to assumptions in 2017, was a credit of £173 million (2016: credit of £16 million; 2015: credit of £31 million).This included, amongst other items, a benefit to IFRS operating profit based on longer-term investment returns of £204 million, relating to changes to annuitant mortality assumptions primarily reflecting the adoption of the Continuous Mortality Investigation (CMI) 2015 model. Further information on changes to mortality assumptions is given in note C4.1(d). Longevity reinsurance and other management actions A number of management actions were taken in 2017 to improve the solvency position of the UK and Europe insurance operations and further mitigate market risk, which have generated combined profits of £276 million. Similar actions were also taken in 2016 and 2015. Of this amount £31 million related to profit from an additional longevity reinsurance transactions covering £0.5 billion of annuity liabilities on an IFRS basis, with the balance of £245 million reflecting the effect of repositioning the fixed income portfolio and other actions. The contribution to profit from similar longevity reinsurance and other management actions in 2016 was £332 million (of which £197 million related to longevity reinsurance transactions covering £5.4 billion of IFRS annuity liabilities). The contribution to profit from similar longevity reinsurance transactions in 2015 was £231 million, covering £6.4 billion of annuity liabilities (on a Pillar 1 basis). Other asset-related management actions generated a further £169 million in 2015. At 31 December 2017, longevity reinsurance covered £14.4 billion of IFRS annuity liabilities equivalent to 44 per cent of total annuity liabilities (2016: £14.4 billion, 42 per cent). With-profits sub-fund For the with-profits sub-fund, the aggregate effect of assumption changes in 2017 was a net charge to unallocated surplus of £58 million (2016: net charge of £78 million; 2015: net charge of £114 million). |
Tax charge
Tax charge | 12 Months Ended |
Dec. 31, 2017 | |
Tax charge | |
Tax charge | B4 Tax charge On 22 December 2017, a significant US tax reform package, the Tax Cuts and Jobs Act, was enacted into law effective from 1 January 2018. The tax reform package as a whole, which includes a reduction in the corporate income tax rate from 35 per cent to 21 per cent, and a number of specific measures affecting US life insurers, is expected to be beneficial in the longer term. However in 2017 the changes have had an adverse impact on the tax charge attributable to shareholders in the Group's US operations and a benefit to policyholders in the with-profits fund of the UK and Europe operations, due to the requirement to remeasure deferred tax balances at the new 21 per cent rate. The 2017 impacts on the Group's income statement and on other comprehensive income of the US tax changes are set out below and the impact on the balance sheet are set out in note C8. (a) Total tax charge by nature of expense The total tax charge in the income statement is as follows: 2017 2016 2015 Tax charge Current Deferred Total Total Total £m £m £m £m £m Attributable to shareholders: Asia operations ) ) ) ) ) US operations ) ) ) UK and Europe ) ) ) ) Other operations — Tax charge attributable to shareholders' returns ) ) ) ) ) Attributable to policyholders: Asia operations ) ) ) ) ) UK and Europe ) ) ) ) ) Tax charge attributable to policyholders' returns ) ) ) ) ) Total tax charge ) ) ) ) ) The principal reason for the increase in the tax charge attributable to shareholders' returns is a £445 million deferred tax charge arising on the remeasurement of the US net deferred tax assets from 35 per cent to 21 per cent. The principal reason for the decrease in the tax charge attributable to policyholders' returns is a smaller increase in deferred tax liabilities on unrealised gains on investments in the with-profits fund of UK and Europe compared to 2016, combined with a £92 million credit following the remeasurement of US net deferred tax liabilities in the same with-profits fund. The reconciliation of the expected to actual tax charge attributable to shareholders is provided in (b) below. The tax charge attributable to policyholders of £674 million above is equal to the profit before tax attributable to policyholders of £674 million. This is the result of accounting for policyholder income after the deduction of expenses and movement on unallocated surpluses and on an after tax basis. The total tax charge comprises: £m £m £m Current tax expense: Corporation tax ) ) ) Adjustments in respect of prior years Total current tax charge ) ) ) Deferred tax arising from: Origination and reversal of temporary differences ) ) Impact of changes in local statutory tax rates ) Credit in respect of a previously unrecognised tax loss, tax credit or temporary difference from a prior period — Total deferred tax (charge) credit ) ) Total tax charge ) ) ) The reduction in the corporation tax expense from £1,464 million in 2016 to £746 million in 2017 principally relates to US operations where a higher tax deduction arises in 2017 as compared to 2016 in respect of derivative losses. The 2017 impact of changes in local statutory tax rates relates to the remeasurement of US deferred tax balances following US tax reform attributable to both shareholders and policyholders. The current tax charge of £696 million (2016: £1,377 million; 2015: £734 million) includes £59 million (2016: £53 million; 2015: £35 million) in respect of the tax charge for the Hong Kong operation. The Hong Kong current tax charge is calculated as 16.5 per cent for all periods on either (i) 5 per cent of the net insurance premium or (ii) the estimated assessable profits, depending on the nature of the business written. The total deferred tax (charge) credit arises as follows: £m £m £m Short-term temporary differences ) ) Unrealised gains and losses on investments ) ) Balances relating to investment and insurance contracts ) ) ) Unused tax losses ) ) Capital allowances ) Deferred tax (charge) credit ) ) The movement in the short-term temporary differences from a credit in 2016 of £573 million to a charge in 2017 of £526 million principally relates to the US operations due to the combination of the £445 million charge relating to the remeasurement of the deferred tax balances following the US tax reform changes and a £695 million deferred tax charge relating to the amortisation of US operations derivative losses, which are spread across three years for tax purposes. The unrealised gains and losses on investments charge is after including the £92 million benefit from remeasurement of deferred tax balances on unrealised gains of US investments in the with-profits funds of UK and Europe operations. In 2017, a tax charge of £75 million (2016: credit of £10 million; 2015: credit of £338 million) attributable to shareholders has been taken through other comprehensive income. The 2017 charge includes a £190 million deferred tax charge primarily on unrealised gains on bonds held in the US operations partly offset by £134 million benefit relating to the remeasurement of US net deferred tax liabilities on the bonds (b) Reconciliation of shareholder effective tax rate In the reconciliation below, the expected tax rates reflect the corporation tax rates that are expected to apply to the taxable profit of the relevant business. Where there are profits of more than one jurisdiction the expected tax rates reflect the corporation tax rates weighted by reference to the amount of profit contributing to the aggregate business result. 2017 Asia US UK and Other* Total Percentage £m £m £m £m £m Operating profit (loss) based on longer-term investment returns ) Non-operating profit (loss) ) ) ) Profit (loss) before tax ) Expected tax rate % % % % % Tax at the expected rate ) % Effects of recurring tax reconciliation items: Income not taxable or taxable at concessionary rates ) ) ) ) ) )% Deductions not allowable for tax purposes % Items related to taxation of life insurance businesses ) ) ) — ) )% Deferred tax adjustments ) ) % Effect of results of joint ventures and associates ) — ) — ) )% Irrecoverable withholding taxes — — — % Other ) — ) ) )% Total ) ) ) )% Effects of non-recurring tax reconciliation items: Adjustments to tax charge in relation to prior years ) ) ) ) ) )% Movements in provisions for open tax matters — — % Impact of US tax reform — — — % Adjustments in relation to business disposals ) — — % Total ) ) % Total actual tax charge (credit) ) % Analysed into: Tax on operating profit based on longer-term investment returns ) Tax on non-operating profit ) ) ) ) ) Actual tax rate: Operating profit based on longer-term investment returns: Including non-recurring tax reconciling items % % % % % Excluding non-recurring tax reconciling items % % % % % Total profit % % % % % * Other operations include restructuring costs. The more significant reconciling items are explained below: Income not taxable or taxable at concessionary rates £26 million of the £64 million reconciling item in Asia operations is due to non-taxable gains on domestic securities in Taiwan (no equivalent amount in 2016) with the balance principally relating to income taxable at rates lower than the expected rates in Malaysia and Singapore. Items related to taxation of life insurance businesses The £92 million reconciling item in Asia operations reflects where the basis of tax is not the accounting profits, primarily in: – Hong Kong where the taxable profit is based on the net insurance premiums; and – Indonesia and Philippines where investment income is subject to withholding tax at source and no further corporation tax. It is higher than the 2016 adjustment of £20 million due to a larger proportion of profits attributable to Hong Kong. The £238 million (full year 2016: £159 million; full year 2015: £113 million) reconciling item in US operations reflects the impact of the dividend received deduction on the taxation of profits from variable annuity business. US tax reform changes effective from 1 January 2018 are expected to reduce the level of this deduction from 2018 onwards. Effects of results of joint ventures and associates The £55 million reconciling item arises from the accounting requirement for inclusion in the profit before tax of Prudential's share of the profits after tax from the joint ventures and associates, with no equivalent item included in Prudential's tax charge. Irrecoverable withholding taxes The £54 million adverse reconciling items reflects withholding taxes on dividends paid by certain non-UK subsidiaries, principally Indonesia, to the UK. The dividends are exempt from UK tax and consequently the withholding tax cannot be offset against UK tax payments. Movements in provisions for open tax matters The complexity of the tax laws and regulations that relate to our businesses means that from time to time we may disagree with tax authorities on the technical interpretation of a particular area of tax law. This uncertainty means that in the normal course of business the Group will have matters whereupon ultimate resolution of the uncertainty, the amount of profit subject to tax may be greater than the amounts reflected in the Group's submitted tax returns. The statement of financial position contains the following provisions in relation to open tax matters: £m At 1 January 2017 ) Movements in the current period included in: Tax charge attributable to shareholders ) Other movements* ) At 31 December 2017 ) * Other movements include interest arising on open tax matters and amounts included in the Group's share of profits from joint ventures and associates, net of related tax. Impact of US tax reform As noted earlier, the reduction in the US corporate income tax rate from 35 per cent to 21 per cent from 1 January 2018 was substantively enacted on 22 December 2017, giving rise to a £445 million unfavourable reconciling item in US operations relating to the remeasurement of the net deferred tax asset attributable to shareholders. Separately, a £134 million benefit has been recognised in other comprehensive income. Further detail on the impact of US tax reform is provided in note C8. 2016** Asia US UK and Other* Total Percentage £m £m £m £m £m Operating profit (loss) based on longer-term investment returns ) Non-operating (loss) profit ) ) ) ) Profit (loss) before tax ) Expected tax rate % % % % Tax at the expected rate ) % Effects of recurring tax reconciliation items: Income not taxable or taxable at concessionary rates ) ) ) ) ) )% Deductions not allowable for tax purposes % Items related to taxation of life insurance businesses ) ) ) — ) )% Deferred tax adjustments ) — ) ) )% Effect of results of joint ventures and associates ) — ) — ) )% Irrecoverable withholding taxes — — — % Other — — ) ) )% Total ) ) ) ) )% Effects of non-recurring tax reconciliation items: Adjustments to tax charge in relation to prior years ) ) ) )% Movements in provisions for open tax matters — — % Impact of changes in local statutory tax rates — — ) — ) )% Write-down of Korea life business — — — % Total ) ) % Total actual tax charge (credit) ) ) % Analysed into: Tax on operating profit based on longer-term investment returns ) Tax on non-operating profit ) ) ) ) Actual tax rate: Operating profit based on longer-term investment returns: Including non-recurring tax reconciling items % % % % Excluding non-recurring tax reconciling items % % % % Total profit % )% % % * Other operations include restructuring costs. ** The 2016 comparative results have been re-presented from those previously published following reassessment of the Group's operating segments as described in note B1.3. The 2016 expected and actual tax rates as shown include the impact of the re-measurement loss on the held for sale Korea life business. The 2016 tax rates for Asia insurance operations and Group, excluding the impact of the held for sale Korea life business are as follows: Asia Attributable to Expected tax rate on total profit % Actual tax rate: Operating profit based on longer-term investment returns % Total profit % 2015** Asia US UK and Other* Total Percentage £m £m £m £m £m Operating profit (loss) based on longer-term investment returns ) Non-operating loss ) ) ) ) ) Profit (loss) before tax ) Expected tax rate % % % % Tax at the expected rate ) % Effects of recurring tax reconciliation items: Income not taxable or taxable at concessionary rates ) ) ) ) ) )% Deductions not allowable for tax purposes % Items related to taxation of life insurance businesses ) ) — — ) )% Deferred tax adjustments — ) ) ) % Effect of results of joint ventures and associates ) — ) — ) )% Irrecoverable withholding taxes — — % Other ) ) % Total ) ) ) )% Effects of non-recurring tax reconciliation items: Adjustments to tax charge in relation to prior years ) ) — ) )% Movements in provisions for open tax matters ) — — ) ) )% Impact of changes in local statutory tax rates ) — ) — ) )% Total ) ) ) ) ) )% Total actual tax charge (credit) ) % Analysed into: Tax on operating profit based on longer-term investment returns ) Tax on non-operating profit ) ) ) ) ) Actual tax rate: Operating profit based on longer-term investment returns: Including non-recurring tax reconciling items % % % % Excluding non-recurring tax reconciling items % % % % Total profit % % % % * Other operations include restructuring costs. ** The 2015 comparative results have been re-presented from those previously published following reassessment of the Group's operating segments as described in note B1.3. Due to the requirements of the financial reporting standards IAS 1 'Presentation of Financial Statements' and IAS 12 'Income Taxes', the profit (loss) before tax and tax charge reflect the aggregate of amounts that are attributable to shareholders and policyholders. Profit (loss) before tax comprises profit attributable to shareholders and pre-tax profit attributable to policyholders of linked and with-profits funds and unallocated surplus of with-profits funds. The total tax charge for linked and with-profits business includes tax expense on unit-linked and with-profits funds attributable to policyholders, the unallocated surplus of with-profits funds and the shareholders' profits. This feature arises from the basis of taxation applied to life and pension business, principally in the UK, but with similar bases applying in certain Asia operations, and is explained in the 'Basis of taxation for UK life and pension business' section below. Furthermore, the basis of preparation of Prudential's financial statements incorporates the additional feature that, as permitted under IFRS 4, the residual equity of the Group's with-profits funds, ie unallocated surplus, is recorded as a liability with transfers to and from that liability reflected in pre-tax profits. This gives rise to anomalous effective tax rates for profits attributable to policyholders (as described in the 'Profits attributable to policyholders and related tax' section below). In meeting the reconciliation requirements set out in paragraph 81(c) of IAS 12, the presentation shown in this disclosure note seeks to ensure that the explanation of the relationship between tax expense and accounting profit draw properly the distinction between the elements of the profit and tax charge that are attributable to policyholders and shareholders as explained in the 'Profits attributable to policyholders and related tax' and 'Reconciliation of tax charge on profit attributable to shareholders' sections respectively. Due to the nature of the basis of taxation of UK life and pension business (as described in the 'Basis of taxation for UK life and pension business' section below), and the significance of the results of the business to the Group, it is inappropriate to seek to explain the effective tax rate on profit before tax by the traditional approach that would apply for other industries. The shareholder elements are the components of the profit and tax charge that are of most direct relevance to investors, and it is this aspect that the IAS 12 reconciliation requirement is seeking to explain for companies that do not need to account for both with-profits and unit-linked funds, where tax is borne by the Company on the policyholders' behalf and which is not contemplated by the IFRS requirement. Basis of taxation for UK life and pension business Different rules apply under UK tax law for taxing pension business and life insurance business and there are detailed rules for apportioning the investment return and profits of the fund between the types of business. The investment return referable to pension business, and some other less significant classes of business, is exempt from taxation, but tax is charged on the profit that shareholders derive from writing such business at the corporate rate of tax. The rules for taxing life insurance business are more complex. Initially, the UK regime seeks to tax the investment return less management expenses (I-E) on this business as it arises. However, in determining the actual tax charge, a calculation of the shareholder profits for taxation purposes from writing life insurance business also has to be made and compared with the I-E profit. If the shareholder profit is higher than the I-E amount, extra income is attributable to the I-E calculation until the I-E profit equals the shareholder profit. If on the other hand, the I-E profit is the greater, then an amount equal to the shareholder profit is taxed at the corporate rate of tax, with the remainder of the I-E profit being taxed at the lower policyholder rate of tax. The purpose of this approach is to ensure that the Company is always at a minimum taxed on the profit, as defined for taxation purposes by reference to the Company's IFRS results, that it has earned. The shareholders' portion of the long-term business is taxed at the shareholders' rate, with the remaining portion taxed at rates applicable to the policyholders. Profits attributable to policyholders and related tax As noted above, it is necessary under IFRS requirements to include the total tax charge of the Company (both policyholder and shareholder elements) in the tax charge disclosed in the income statement. The tax expense attributable to policyholders is a combination of current and deferred tax charges and reflects the nature of the income and expenditure of the with-profits and unit-linked funds. The current tax charge element reflects the element for the funds, determined on the I-E basis (as described in the 'Basis of taxation for UK life and pension business' section above) that is attributable to policyholders. For policyholder deferred tax, normally the most significant element reflects the movement on unrealised appreciation on investments. These investments are accounted for under IAS 39 on a fair value through profit or loss basis with attaching deferred tax charges or credits. For with-profits business, total pre-tax profits reflect the aggregate of profits attributable to policyholders and shareholders. However, amounts attributable to the equity of with-profits funds are carried in the liability for unallocated surplus. Also, as described in the 'Basis of taxation for UK life and pension business' section above, UK with-profits business is taxed on a basis that affects policyholders' unallocated surplus of with-profits funds and shareholders. For the PAC with-profits sub-fund, transfers to and from unallocated surplus are recorded in the income statement, so that after charging the total tax borne by the fund, the net balance reflects the statutory transfer from the fund for the year. The statutory transfer represents 10 per cent of the actuarially determined surplus for the year that is attributable to shareholders. For SAIF, similar transfers are made. However, in the case of SAIF, a net nil balance is derived, reflecting the lack of shareholder interest in the financial performance of the fund (other than through asset management arrangements). The accounting anomaly that arises under IFRS is that due to the fact that the net of tax profit attributable to with-profits policyholders is zero, the Company's presentation of pre-tax profit attributable to policyholders reflects an amount that is the mirror image of the tax charge attributable to policyholders. For unit-linked business, pre-tax profits also reflect the aggregate of profits attributable to policyholders and shareholders. The pre-tax profits attributable to policyholders represent fees earned that are used to pay tax borne by the Company on policyholders' behalf. The net of tax profit attributable to policyholders for unit-linked business is thus zero. In summary, for accounting purposes, in all cases and for all reporting periods, the apparent effective rate for profit attributable to policyholders and unallocated surplus is 100 per cent. However, it is to be noted that the 100 per cent rate does not reflect a rate paid on the profits attributable to policyholders. It instead reflects the basis of accounting for unallocated surplus coupled with the distinction made for performance reporting between sources of profit attributable to shareholders, policyholders and unallocated surplus and IFRS requirements in respect of reporting of all pre-tax profits and all tax charges irrespective of policyholder or shareholder economic interest. |
Earnings per share
Earnings per share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings per share | |
Earnings per share | B5 Earnings per share 2017 Note Before Tax Non- Net of tax Basic Diluted £m £m £m £m Pence Pence Based on operating profit based on longer-term investment returns ) ) 145.2p 145.1p Short-term fluctuations in investment returns on shareholder-backed business B1.2 ) — ) (38.6)p (38.6)p Amortisation of acquisition accounting adjustments ) — ) (1.7)p (1.7)p Cumulative exchange gain on the sold Korea life business recycled from other comprehensive income D1 — — 2.4p 2.4p Profit attaching to disposal of businesses D1 ) — 3.1p 3.1p Impact of US Tax Reform B4 — ) — ) (17.3)p (17.3)p Based on profit for the year ) ) 93.1p 93.0p 2016 Note Before Tax Non- Net of tax Basic Diluted £m £m £m £m Pence Pence Based on operating profit based on longer-term investment returns ) — 131.3p 131.2p Short-term fluctuations in investment returns on shareholder-backed business B1.2 ) — ) (45.3)p (45.2)p Loss attaching to held for sale Korea life business D1 ) ) — ) (9.0)p (9.0)p Amortisation of acquisition accounting adjustments ) — ) (2.0)p (2.0)p Based on profit for the year ) — 75.0p 75.0p 2015 Note Before Tax Non- Net of tax Basic Diluted £m £m £m Pence Pence Based on operating profit based on longer-term investment returns ) — 124.6p 124.5p Short-term fluctuations in investment returns on shareholder-backed business B1.2 ) — ) (21.5)p (21.5)p Profit attaching to held for sale Korea life business D1 ) — 1.7p 1.7p Cumulative exchange loss on the sold Japan life business recycled from other comprehensive income ) — — ) (1.8)p (1.8)p Amortisation of acquisition accounting adjustments ) — ) (2.0)p (2.0)p Based on profit for the year ) — 101.0p 100.9p Earnings per share are calculated based on earnings attributable to ordinary shareholders, after related tax and non-controlling interests. The weighted average number of shares for calculating earnings per share, which excludes those held in employee share trusts and consolidated unit trusts and OEICs, is set out as below: Weighted average number of shares for calculation of: 2017 2016 2015 Basic earnings per share Shares under option at end of year Number of shares that would have been issued at fair value on assumed option price ) ) ) Diluted earnings per share |
Dividends
Dividends | 12 Months Ended |
Dec. 31, 2017 | |
Dividends | |
Dividends | B6 Dividends 2017 2016 2015 Pence per £m Pence per £m Pence per £m Dividends relating to reporting year: First interim ordinary dividend 14.50p 12.93p 12.31p Second interim ordinary dividend 32.50p 30.57p 26.47p Special dividend — — 10.00p Total 47.00p 43.50p 48.78p Dividends paid in reporting year: Current year first interim ordinary dividend 14.50p 12.93p 12.31p Second interim ordinary dividend/ final ordinary dividend for prior year 30.57p 26.47p 25.74p Special dividend — — 10.00p — — Total 45.07p 49.40p 38.05p Dividend per share For the year ended 31 December 2016 the second interim ordinary dividend of 30.57 pence per ordinary share was paid to eligible shareholders on 19 May 2017. The 2017 first interim ordinary dividend of 14.50 pence per ordinary share was paid to eligible shareholders on 28 September 2017. The second interim ordinary dividend for the year ended 31 December 2017 of 32.50 ordinary pence per share will be paid on 18 May 2018 in sterling to shareholders on the principal register and the Irish branch register at 6.00pm BST on 3 April 2018 (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 dividends in US dollars on or about 25 May 2018. The second interim ordinary dividend will be paid on or about 25 May 2018 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 using the exchange rate quoted by the WM Company at the close of business on 13 March 2018. The exchange rate at which the dividend payable to the SG Shareholders will be translated into Singapore dollars, will be determined by CDP. Shareholders on the principal register and Irish branch register will be able to participate in a Dividend Reinvestment Plan. |
Analysis of Group statement of
Analysis of Group statement of financial position by segment | 12 Months Ended |
Dec. 31, 2017 | |
Analysis of Group statement of financial position by segment | |
Analysis of Group statement of financial position by segment | C Balance sheet notes C1 Analysis of Group statement of financial position by segment (a) Position as at 31 December 2017 2017 By operating segment Note Asia C2.1 US C2.2 UK and C2.3 Unallocated note (v) Elimination Group £m £m £m £m £m £m Assets Goodwill C5(a ) — — — Deferred acquisition costs and other intangible assets C5(b ) — Property, plant and equipment — Reinsurers' share of insurance contract liabilities ) Deferred tax assets C8.1 — Current tax recoverable C8.2 ) Accrued investment income note(i) — Other debtors note(i) ) Investment properties — — Investment in joint ventures and associates accounted for using the equity method D6 — — — Loans C3.3 — Equity securities and portfolio holdings in unit trusts — Debt securities C3.2 — Derivative assets — Other investments — — — Deposits — Assets held for sale — — — — Cash and cash equivalents note(ii) — Total assets ) Total equity ) — Liabilities Insurance contract liabilities C4.1 ) Investment contract liabilities with discretionary participation features C4.1 — — — Investment contract liabilities without discretionary participation features C4.1 — Unallocated surplus of with-profits funds C4.1 — — — Core structural borrowings of shareholder-financed operations C6.1 — — — Operational borrowings attributable to shareholder-financed operations note(iv) C6.2 — Borrowings attributable to with-profits operations C6.2 — — — Obligations under funding, securities lending and sale and repurchase agreements — — — Net asset value attributable to unit holders of consolidated unit trusts and similar funds — — Deferred tax liabilities C8.1 — Current tax liabilities C8.2 ) Accruals deferred income and other liabilities note(iii) ) Provisions C11 — Derivative liabilities C3.4 — Total liabilities ) Total equity and liabilities ) (b) Position as at 31 December 2016 2016* By operating segment Note Asia C2.1 US C2.2 UK and C2.3 Unallocated note (v) Elimination Group £m £m £m £m £m £m Assets Goodwill C5(a ) — — Deferred acquisition costs and other intangible assets C5(b ) — Property, plant and equipment — Reinsurers' share of insurance contract liabilities — ) Deferred tax assets C8.1 — Current tax recoverable C8.2 — Accrued investment income note(i) — Other debtors note(i) ) Investment properties — — Investment in joint ventures and associates accounted for using the equity method D6 — — — Loans C3.3 — Equity securities and portfolio holdings in unit trusts — Debt securities C3.2 — Derivative assets — Other investments — — — Deposits — Assets held for sale D1 — — — Cash and cash equivalents note(ii) — Total assets ) Total equity ) — Liabilities — Insurance contract liabilities C4.1 — ) Investment contract liabilities with discretionary participation features C4.1 — — — Investment contract liabilities without discretionary participation features C4.1 — — Unallocated surplus of with-profits funds C4.1 — — — Core structural borrowings of shareholder-financed operations C6.1 — — — Operational borrowings attributable to shareholder-financed operations note(iv) C6.2 — Borrowings attributable to with-profits operations C6.2 — — — Obligations under funding, securities lending and sale and repurchase agreements — — — Net asset value attributable to unit holders of consolidated unit trusts and similar funds — — — Deferred tax liabilities C8.1 — Current tax liabilities C8.2 — — Accruals, deferred income and other liabilities note(iii) ) Provisions C11 — Derivative liabilities C3.4 — Liabilities held for sale D1 — — — Total liabilities ) Total equity and liabilities ) * The 2016 comparative results have been re-presented from those previously published following reassessment of the Group's operating segments as described in note B1.3. (i) Accrued investment income and other debtors £m £m Interest receivable Other Total accrued investment income Other debtors comprises: Amounts due from Policyholders Intermediaries Reinsurers Other Total other debtors Total accrued investment income and other debtors Analysed as: Expected to be settled within one year Expected to be settled after one year Total accrued investment income and other debtors (ii) Cash and cash equivalents £m £m Cash Cash equivalents Total cash and cash equivalents Analysed as: Held centrally and available for general use by the Group Other funds not available for general use by the Group, including funds held for the benefit of policyholders Total cash and cash equivalents The Group's cash and cash equivalents are held in the following currencies: pounds sterling 31 per cent, US dollars 28 per cent, Euro 24 per cent and other currencies 17 per cent (2016: pounds sterling 38 per cent, US dollars 25 per cent, Euro 20 per cent and other currencies 17 per cent). (iii) Accruals, deferred income and other liabilities £m £m Accruals and deferred income Other creditors Creditors arising from direct insurance and reinsurance operations Interest payable Funds withheld under reinsurance of the REALIC business Other items Total accruals, deferred income and other liabilities (iv) Operational borrowings attributable to shareholder-financed operations within other operations, in respect of Prudential Capital's short-term fixed income security programme 2017 2016 £m £m Commercial paper Medium Term Notes Total Group debt represented by operational borrowings at Group level (v) Unallocated to a segment includes central operations, Prudential Capital and Africa operations as per note B1.3. |
Analysis of segment statement o
Analysis of segment statement of financial position by business type | 12 Months Ended |
Dec. 31, 2017 | |
Analysis of segment statement of financial position by business type | |
Analysis of segment statement of financial position by business type | C2 Analysis of segment statement of financial position by business type C2.1 Asia 31 Dec 2017 31 Dec Insurance Note With- Unit- Other Total Asset Eliminations Total Total £m £m £m £m £m £m £m £m Assets Goodwill — — — Deferred acquisition costs and other intangible assets — — Property, plant and equipment — — Reinsurers' share of insurance contract liabilities — — — Deferred tax assets — — — Current tax recoverable — — Accrued investment income — Other debtors ) Investment properties — — — — Investment in joint ventures and associates accounted for using the equity method — — — Loans C3.3 — — — Equity securities and portfolio holdings in unit trusts — Debt securities C3.2 — — Derivative assets — — Deposits — Assets held for sale D1 — — — — — — — Cash and cash equivalents — Total assets ) Total equity — — — Liabilities Insurance contract liabilities — — Investment contract liabilities with discretionary participation features C4.1 — — — — Investment contract liabilities without discretionary participation features C4.1 — — — — Unallocated surplus of with—profits funds — — — — Operational borrowings attributable to shareholder-financed operations — — — Borrowings attributable to with-profits operations — — — — Net asset value attributable to unit holders of consolidated unit trusts and similar funds — — Deferred tax liabilities — — Current tax liabilities — — Accruals, deferred income and other liabilities ) Provisions — — Derivative liabilities — — — Liabilities held for sale D1 — — — — — — — Total liabilities ) Total equity and liabilities ) * The 2016 comparative results have been re-presented from those previously published following reassessment of the Group's operating segments as described in note B1.3. Note The statement of financial position for with-profits business comprises the with-profits assets and liabilities of the Hong Kong, Malaysia and Singapore operations. Assets and liabilities of other participating business are included in the column for 'Other business'. C2.2 US 31 Dec 2017 31 Dec Insurance Note Variable annuity Fixed Total Asset Eliminations Total Total £m £m £m £m £m £m £m Assets Goodwill — — — — — — Deferred acquisition costs and other intangible assets — — Property, plant and equipment — — Reinsurers' share of insurance contract liabilities — — — Deferred tax assets — — Current tax recoverable — — Accrued investment income — — Other debtors — ) Investment properties — — — Loans C3.3 — — — Equity securities and portfolio holdings in unit trusts — — Debt securities C3.2 — — — Derivative assets — — — Other investments — — Deposits — — — — Cash and cash equivalents — — Total assets ) Total equity — — Liabilities Insurance contract liabilities — — Investment contract liabilities without discretionary participation features C4.1 — — — Core structural borrowings of shareholder-financed operations — — — Operational borrowings attributable to shareholder—financed operations — — — Obligations under funding, securities lending and sale and repurchase agreements — — — Net asset value attributable to unit holders of consolidated unit trusts and similar funds — — — — — — — Deferred tax liabilities — — Current tax liabilities — — — Accruals, deferred income and other liabilities — ) Provisions — — Derivative liabilities — — — Total liabilities ) Total equity and liabilities ) * The 2016 comparative results have been re-presented from those previously published following reassessment of the Group's operating segments as described in note B1.3. C2.3 UK and Europe 31 Dec 2017 31 Dec Insurance Other funds and Note With- Unit- Annuity Total Asset Eliminations Total Total £m £m £m £m £m £m £m £m Assets Goodwill — — — Deferred acquisition costs and other intangible assets — — Property, plant and equipment — — Reinsurers' share of insurance contract liabilities — — Deferred tax assets — — Current tax recoverable — — — Accrued investment income — Other debtors ) Investment properties — — Investment in joint ventures and associates accounted for using the equity method — — — Loans C3.3 — — — Equity securities and portfolio holdings in unit trusts — Debt securities C3.2 — — Derivative assets — — Other investments — Deposits — — Assets held for sale note(ii) — — — — Cash and cash equivalents — Total assets ) Total equity — — — Liabilities Insurance contract liabilities C4.1 — — Investment contract liabilities with discretionary participation features C4.1 — — — Investment contract liabilities without discretionary participation features C4.1 — — Unallocated surplus of with-profits funds C4.1 — — — — Operational borrowings attributable to shareholder-financed operations — — Borrowings attributable to with-profits operations — — — — Obligations under funding, securities lending and sale and repurchase agreements — — — Net asset value attributable to unit holders of consolidated unit trusts and similar funds — — Deferred tax liabilities — — Current tax liabilities — Accruals deferred income and other liabilities ) Provisions — — Derivative liabilities — — Liabilities held for sale note(ii) — — — — — — — Total liabilities ) Total equity and liabilities ) * The 2016 comparative results have been re-presented from those previously published following reassessment of the Group's operating segments as described in note B1.3. Note (i) Includes the Scottish Amicable Insurance Fund which, at 31 December 2017, have total assets and liabilities of £5,768 million (2016: £6,101 million). The PAC with-profits sub-fund (WPSF) mainly contains with-profits business but it also contains some non-profit business (unit-linked, term assurances and annuities). The PAC with-profits fund includes £10.6 billion (2016: £11.2 billion) of non-profits annuities liabilities. (ii) The assets and liabilities held for sale for the UK and Europe insurance operations comprise the investment properties and consolidated venture investments of the PAC with-profits fund, for which the sales had been agreed but not yet completed at the year end. |
Group assets and liabilities -
Group assets and liabilities - measurement | 12 Months Ended |
Dec. 31, 2017 | |
Group assets and liabilities - measurement | |
Group assets and liabilities - measurement | C3 Assets and liabilities C3.1 Group assets and liabilities—measurement (a) Determination of fair value The fair values of the financial instruments for which fair valuation is required under IFRS are determined by the use of current market bid prices for exchange-quoted investments or by using quotations from independent third parties such as brokers and pricing services or by using appropriate valuation techniques. The estimated fair value of derivative financial instruments reflects the estimated amount the Group would receive or pay in an arm's length transaction. This amount is determined using quoted prices if exchange listed, quotations from independent third parties or valued internally using standard market practices. Other than the loans which have been designated at fair value through profit or loss, the loans and receivables have been shown net of provisions for impairment. The fair value of loans have been estimated from discounted cash flows expected to be received. The discount rate is updated for the market rate of interest where applicable. The fair value of investment properties is based on market values as assessed by professionally qualified external valuers or by the Group's qualified surveyors. The fair value of the subordinated and senior debt issued by the parent company is determined using quoted prices from independent third parties. The fair value of financial liabilities (other than derivative financial instruments) is determined using discounted cash flows of the amounts expected to be paid. (b) Fair value measurement hierarchy of Group assets and liabilities Assets and liabilities carried at fair value on the statement of financial position The table below shows the assets and liabilities carried at fair value analysed by level of the IFRS 13 'Fair Value Measurement' defined fair value hierarchy. This hierarchy is based on the inputs to the fair value measurement and reflects the lowest level input that is significant to that measurement. Financial instruments at fair value 31 Dec 2017 Level 1 Level 2 Level 3 Total Quoted prices Valuation based Valuation based £m £m £m £m Analysis of financial investments, net of derivative liabilities by business type With-profits Loans — — Equity securities and portfolio holdings in unit trusts Debt securities Other investments (including derivative assets) Derivative liabilities ) ) — ) Total financial investments, net of derivative liabilities Percentage of total % % % % Unit-linked and variable annuity separate account Equity securities and portfolio holdings in unit trusts Debt securities — Other investments (including derivative assets) Derivative liabilities — ) — ) Total financial investments, net of derivative liabilities Percentage of total % % % % Non-linked shareholder-backed Loans — — Equity securities and portfolio holdings in unit trusts Debt securities Other investments (including derivative assets) Derivative liabilities — ) ) ) Total financial investments, net of derivative liabilities Percentage of total % % % % Group total analysis, including other financial liabilities held at fair value Group total Loans — — Equity securities and portfolio holdings in unit trusts Debt securities Other investments (including derivative assets) Derivative liabilities ) ) ) ) Total financial investments, net of derivative liabilities Investment contract liabilities without discretionary participation features held at fair value — ) — ) Borrowings attributable to with-profits operations — — ) ) Net asset value attributable to unit holders of consolidated unit trusts and similar funds ) ) ) ) Other financial liabilities held at fair value — — ) ) Total financial instruments at fair value Percentage of total % % % % 31 Dec 2016 Level 1 Level 2 Level 3 Total Quoted prices Valuation Valuation £m £m £m £m Analysis of financial investments, net of derivative liabilities by business type With-profits Loans — — Equity securities and portfolio holdings in unit trusts Debt securities Other investments (including derivative assets) Derivative liabilities ) ) — ) Total financial investments, net of derivative liabilities Percentage of total % % % % Unit-linked and variable annuity separate account Equity securities and portfolio holdings in unit trusts Debt securities — Other investments (including derivative assets) Derivative liabilities ) ) — ) Total financial investments, net of derivative liabilities Percentage of total % % % % Non-linked shareholder-backed Loans — Equity securities and portfolio holdings in unit trusts Debt securities Other investments (including derivative assets) — Derivative liabilities ) ) ) ) Total financial investments, net of derivative liabilities Percentage of total % % % % Group total analysis, including other financial liabilities held at fair value Group total Loans — Equity securities and portfolio holdings in unit trusts Debt securities Other investments (including derivative assets) Derivative liabilities ) ) ) ) Total financial investments, net of derivative liabilities Investment contract liabilities without discretionary participation features held at fair value — ) — ) Net asset value attributable to unit holders of consolidated unit trusts and similar funds ) ) ) ) Other financial liabilities held at fair value — ) ) ) Total financial instruments at fair value Percentage of total % % % % All assets and liabilities held at fair value are classified as fair value through profit or loss, except for £35,293 million (2016: £40,645 million) of debt securities classified as available-for-sale. The Korea life business was classified as held for sale in 2016, with the sale completed in May 2017. The assets and liabilities held for sale on the consolidated statement of financial position at 31 December 2016 in respect of Korea life business included a net financial instruments balance of £3,200 million, primarily for equity securities and debt securities. Of this amount, £2,763 million was classified as level 1 and £437 million as level 2. Investment properties at fair value 31 December Level 1 Level 2 Level 3 Total Quoted prices Valuation Valuation £m £m £m £m 2017 — — 2016 — — Assets and liabilities at amortised cost for which fair value is disclosed The table below shows the assets and liabilities carried at amortised cost on the statement of financial position but for which fair value is disclosed in the financial statements. The assets and liabilities that are carried at amortised cost but where the carrying value approximates the fair value, are excluded from the analysis below. 31 Dec 2017 Level 1 Level 2 Level 3 Total Total Quoted prices Valuation Valuation £m £m £m £m £m Assets Loans note(i) — Liabilities Investment contract liabilities without discretionary participation features — — ) ) ) Core structural borrowings of shareholder-financed operations note(ii) — ) — ) ) Operational borrowings attributable to shareholder-financed operations — ) ) ) ) Borrowings attributable to the with-profits funds — ) ) ) ) Obligations under funding, securities lending and sale and repurchase agreements — ) ) ) ) 31 Dec 2016 Level 1 Level 2 Level 3 Total Total Quoted prices Valuation Valuation £m £m £m £m £m Assets Loans note(i) — Liabilities Investment contract liabilities without discretionary participation features — — ) ) ) Core structural borrowings of shareholder-financed operations note(ii) — ) — ) ) Operational borrowings attributable to shareholder-financed operations — ) ) ) ) Borrowings attributable to the with-profits funds — ) ) ) ) Obligations under funding, securities lending and sale and repurchase agreements — ) ) ) ) Notes (i) The carrying value of loans and receivables are reported net of allowance for loan losses of £28 million (2016: £15 million). (ii) As at 31 December 2017, £312 million (2016: £306 million) of convertible bonds were included in debt securities and £1,311 million (2016: £1,455 million) were included in borrowings. The fair value of the assets and liabilities in the table above, with the exception of the subordinated and senior debt issued by the parent company, has been estimated from the discounted cash flows expected to be received or paid. Where appropriate, the observable market interest rate has been used and the assets and liabilities are classified within level 2. Otherwise, they are included as level 3 assets or liabilities. During 2017, the assumptions applied within the discounted cash flow model used to value the equity release mortgage loans held by the UK insurance operations were refined to reflect developing market practice, including consideration of the Prudential Regulation Authority's industry wide review in this area and resulting guidance. This refinement incorporates inputs relevant to determining the discount rate that are not market observable. As a result, these loans (£1,429 million at 31 December 2017) have been transferred from level 2 to level 3 in the table above. The fair value included for the subordinated and senior debt issued by the parent company is determined using quoted prices from independent third parties. (c) Valuation approach for level 2 fair valued assets and liabilities A significant proportion of the Group's level 2 assets are corporate bonds, structured securities and other non-national government debt securities. These assets, in line with market practice, are generally valued using independent pricing services or third-party broker quotes. These valuations are determined using independent external quotations from multiple sources and are subject to a number of monitoring controls, such as monthly price variances, stale price reviews and variance analysis on prices achieved on subsequent trades. Pricing services, where available, are used to obtain the third-party broker quotes. Where pricing service providers are used, a single valuation is obtained and applied. When prices are not available from pricing services, quotes are sourced directly from brokers. Prudential seeks to obtain a number of quotes from different brokers so as to obtain the most comprehensive information available on their executability. Where quotes are sourced directly from brokers, the price used in the valuation is normally selected from one of the quotes based on a number of factors, including the timeliness and regularity of the quotes and the accuracy of the quotes considering the spreads provided. The selected quote is the one which best represents an executable quote for the security at the measurement date. Generally, no adjustment is made to the prices obtained from independent third parties. Adjustment is made in only limited circumstances, where it is determined that the third-party valuations obtained do not reflect fair value (eg either because the value is stale and/or the values are extremely diverse in range). These are usually securities which are distressed or that could be subject to a debt restructure or where reliable market prices are no longer available due to an inactive market or market dislocation. In these instances, prices are derived using internal valuation techniques including those as described below in this note with the objective of arriving at a fair value measurement that reflects the price at which an orderly transaction would take place between market participants on the measurement date. The techniques used require a number of assumptions relating to variables such as credit risk and interest rates. Examples of such variables include an average credit spread based on the corporate bond universe and the relevant duration of the asset being valued. Prudential determines the input assumptions based on the best available information at the measurement dates. Securities valued in such manner are classified as level 3 where these significant inputs are not based on observable market data. Of the total level 2 debt securities of £115,141 million at 31 December 2017 (2016: £116,257 million), £13,910 million are valued internally (2016: £12,708 million). The majority of such securities are valued using matrix pricing, which is based on assessing the credit quality of the underlying borrower to derive a suitable discount rate relative to government securities of a comparable duration. Under matrix pricing, the debt securities are priced taking the credit spreads on comparable quoted public debt securities and applying these to the equivalent debt instruments factoring in a specified liquidity premium. The majority of the parameters used in this valuation technique are readily observable in the market and, therefore, are not subject to interpretation. (d) Fair value measurements for level 3 fair valued assets and liabilities Reconciliation of movements in level 3 assets and liabilities measured at fair value The following table reconciles the value of level 3 fair valued assets and liabilities at 1 January 2017 to that presented at 31 December 2017. Financial instruments at fair value At Total Total Purchases Sales Settled Issued Transfers Transfers At £m £m £m £m £m £m £m £m £m £m 2017 Loans ) — ) — Equity securities and portfolio holdings in unit trusts ) ) ) — ) Debt securities ) ) — — — ) Other investments (including derivative assets) ) ) — — — Derivative liabilities ) — — — — — — — ) Total financial investments, net of derivative liabilities ) ) ) ) Borrowings attributable to with-profits operations — ) — — — ) — — ) Net asset value attributable to unit holders of consolidated unit trusts and similar funds ) ) — ) — ) — — ) Other financial liabilities ) — — ) ) — ) Total financial instruments at fair value ) ) ) ) ) ) 2016 Loans — — ) — — Equity securities and portfolio holdings in unit trusts ) ) ) — — Debt securities ) ) — — ) Other investments (including derivative assets) ) — — ) Derivative liabilities ) ) — — — — — — — ) Total financial investments, net of derivative liabilities ) ) ) Net asset value attributable to unit holders of consolidated unit trusts and similar funds ) ) ) — ) — — ) Other financial liabilities ) ) ) — — ) — — ) Total financial instruments at fair value ) ) ) Of the total net losses and gains in the income statement of £(402) million (2016: £320 million), £(139) million (2016: £242 million) relates to net unrealised gains and losses of financial instruments still held at the end of the year, which can be analysed as follows: £m £m Loans — Equity securities ) Debt securities ) Other investments ) Derivative liabilities — Borrowings attributable to with-profit operations ) — Net asset value attributable to unit holders of consolidated unit trusts and similar funds ) ) Other financial liabilities ) Total ) Other assets at fair value—investment properties At Total Total Purchases Sales Transfers Transfers At 31 Dec £m £m £m £m £m £m £m £m 2017 ) ) — — 2016 ) — ) Of the total net losses and gains in the income statement of £415 million (2016: £273 million), £394 million (2016: £286 million) relates to net unrealised gains of investment properties still held at the end of the year. Valuation approach for level 3 fair valued assets and liabilities Financial instruments at fair value Investments valued using valuation techniques include financial investments which by their nature do not have an externally quoted price based on regular trades, and financial investments for which markets are no longer active as a result of market conditions eg market illiquidity. The valuation techniques used include comparison to recent arm's length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option adjusted spread models and, if applicable, enterprise valuation. These techniques may include a number of assumptions relating to variables such as credit risk and interest rates. Changes in assumptions relating to these variables could positively or negatively impact the reported fair value of these instruments. When determining the inputs into the valuation techniques used priority is given to publicly available prices from independent sources when available, but overall the source of pricing is chosen with the objective of arriving at a fair value measurement that reflects the price at which an orderly transaction would take place between market participants on the measurement date. The fair value estimates are made at a specific point in time, based upon available market information and judgements about the financial instruments, including estimates of the timing and amount of expected future cash flows and the credit standing of counterparties. Such estimates do not reflect any premium or discount that could result from offering for sale at one time a significant volume of a particular financial instrument, nor do they consider the tax impact of the realisation of unrealised gains or losses from selling the financial instrument being fair valued. In some cases the disclosed value cannot be realised in immediate settlement of the financial instrument. In accordance with the Group's risk management framework, the estimated fair value of derivative financial instruments valued internally using standard market practices are subject to assessment against external counterparties' valuations. At 31 December 2017, the Group held £4,443 million (2016: £4,593 million) of net financial instruments at fair value within level 3. This represents 1 per cent (2016: 1 per cent) of the total fair valued financial assets net of fair valued financial liabilities. The net financial instruments at fair value within level 3 at 31 December 2017 include £1,983 million of loans and a corresponding £1,887 million of borrowings held by a subsidiary of the Group's UK with-profits fund, attaching to a portfolio of buy-to-let mortgages and other loans financed largely by external third-party (non-recourse) borrowings (see note C3.3(c) for further details). The Group's exposure is limited to the investment held by the UK with-profits fund, rather than to the individual loans and borrowings themselves. The fair value movements of these loans and borrowings have no effect on shareholders' profit and equity. The most significant non observable inputs to the mortgage fair value are the level of future defaults and prepayments by the mortgage holders. Also included within these amounts are loans of £2,512 million at 31 December 2017 (2016: £2,672 million), measured as the loan outstanding balance, plus accrued investment income, attached to REALIC and held to back the liabilities for funds withheld under reinsurance arrangements. The funds withheld liability of £2,664 million at 31 December 2017 (2016: £2,851 million) is also classified within level 3, accounted for on a fair value basis being equivalent to the carrying value of the underlying assets. Excluding the loans and funds withheld liability under REALIC's reinsurance arrangements as described above, which amounted to a net liability of £(152) million (2016: £(179) million), the level 3 fair valued financial assets net of financial liabilities are £4,595 million (2016: £4,772 million). Of this amount, a net asset of £117 million (2016: net asset of £72 million) is internally valued, representing less than 0.1 per cent of the total fair valued financial assets net of financial liabilities (2016: less than 0.1 per cent). Internal valuations are inherently more subjective than external valuations. Included within these internally valued net asset/liability are: (a) Debt securities of £500 million (2016: £422 million), which are either valued on a discounted cash flow method with an internally developed discount rate or on external prices adjusted to reflect the specific known conditions relating to these securities (eg distressed securities or securities which were being restructured). (b) Private equity and venture investments in both debt and equity securities of £217 million (2016: £956 million) which are valued internally using discounted cash flows based on management information available for these investments. The significant unobservable inputs include the determination of expected future cash flows on the investments being valued, determination of the probability of counterparty default and prepayments and the selection of appropriate discount rates. The valuation is performed in accordance with International Private Equity and Venture Capital Association Valuation guidelines. These investments were principally held by consolidated investment funds that are managed on behalf of third parties. (c) Equity release mortgage loans of £366 million (2016: £276 million classified as level 2) which are valued internally using the discounted cash flow models. The inputs that are significant to the valuation of these investments are primarily the economic assumptions, being the discount rate (risk-free rate plus a liquidity premium) and property values. See below for the explanation of the transfer of these investments from level 2 into level 3 during the year. (d) Liabilities of £(403) million (2016: £(883) million) for the net asset value attributable to external unit holders in respect of the consolidated investment funds, which are non-recourse to the Group. These liabilities are valued by reference to the underlying assets. (e) Derivative liabilities of £(512) million (2016: £(516) million) which are valued internally using the discounted cash flow method in line with standard market practices but are subject to independent assessment against external counterparties' valuations. (f) Other sundry individual financial investments of £81 million (2016: £93 million). Of the internally valued net asset referred to above of £117 million (2016: net asset of £72 million): (a) A net asset of £67 million (2016: £315 million) is held by the Group's participating funds and therefore shareholders' profit and equity are not impacted by movements in the valuation of these financial instruments. (b) A net liability of £(184) million (2016: £(243) million) is held to support non-linked shareholder-backed business. If the value of all the level 3 instruments held to support non-linked shareholder-backed business valued internally decreased by 10 per cent, the change in valuation would be £18 million (2016: £24 million), which would reduce shareholders' equity by this amount before tax. All this amount passes through the income statement substantially as part of short-term fluctuations in investment returns outside of operating profit. Other assets at fair value—investment properties The investment properties of the Group are principally held by the UK and Europe insurance operations that are externally valued by professionally qualified external valuers using the Royal Institution of Chartered Surveyors (RICS) valuation standards. An 'income capitalisation' technique is predominantly applied for these properties. This technique calculates the value through the yield and rental value depending on factors such as the lease length, building quality, covenant and location. The variables used are compared to recent transactions with similar features to those of the Group's investment properties. As the comparisons are not with properties that are virtually identical to the Group's investment properties, adjustments are made by the valuers where appropriate to the variables used. Changes in assumptions relating to these variables could positively or negatively impact the reported fair value of the properties. (e) Transfers into and transfers out of levels The Group's policy is to recognise transfers into and transfers out of levels as of the end of each half year reporting period except for material transfers which are recognised as of the date of the event or change in circumstances that caused the transfer. During the year, the transfers between levels within the Group's portfolio were primarily transfers from level 1 to level 2 of £1,389 million and transfers from level 2 to level 1 of £411 million. These transfers which relate to equity securities and debt securities arose to reflect the change in the observed valuation inputs and in certain cases, the change in the level of trading activities of the securities. In addition, in 2017, the transfers into level 3 were a net liability of £(80) million and the transfers out of level 3 were £92 million. The transfers into level 3 include a transfer from level 2 of a net liability of £(83) million relating to the equity release mortgage loans of £302 million and a corresponding liability of £(385) million held by the UK insurance operations that are carried at fair value through profit or loss. During 2017, the assumptions used within the discounted cash flow model used to value these loans were refined to reflect developing market practice, including consideration of the Prudential Regulation Authority's industry-wide review in this area and resulting guidance. This refinement incorporates inputs relevant to determining the discount rate that are not market observable. As a result, the loans were reclassified as level 3. There was no material difference in the fair value of these loans recognised in 2017, arising from this change in the valuation model. (f) Valuation processes applied by the Group The Group's valuation policies, procedures and analyses for instruments categorised as level 3 are overseen by Business Unit committees as part of the Group's wider financial reporting governance processes. The procedures undertaken include approval of valuation methodologies, verification processes, and resolution of significant or complex valuation issues. In undertaking these activities the Group makes use of the extensive expertise of its asset management functions. In addition the Group has minimum standards for independent price verification to ensure valuation accuracy is regularly independently verified. Adherence to this policy is monitored across the business units. |
Debt securities
Debt securities | 12 Months Ended |
Dec. 31, 2017 | |
Debt securities | |
Debt securities | C3.2 Debt securities This note provides analysis of the Group's debt securities, including asset-backed securities and sovereign debt securities. With the exception of certain debt securities for US insurance operations classified as 'available-for-sale' under IAS 39 as disclosed in notes C3.2 (b) to (d) below, the Group's debt securities are carried at fair value through profit or loss. (a) Credit rating Debt securities are analysed below according to external credit ratings issued, with equivalent ratings issued by different ratings agencies grouped together. Standard and Poor's ratings have been used where available, if this isn't the case Moody's and then Fitch have been used as alternatives. In the table below, AAA is the highest possible rating. Investment grade financial assets are classified within the range of AAA to BBB- ratings. Financial assets which fall outside this range are classified as below BBB-. Debt securities with no external credit rating are classified as 'Other'. 2017 AAA AA+ to A+ to BBB+ to Below Other Total £m £m £m £m £m £m £m Asia With-profits Unit-linked Non-linked shareholder-backed US Non-linked shareholder-backed UK and Europe With-profits Unit-linked Non-linked shareholder-backed Other operations Total debt securities 2016 AAA AA+ to A+ to BBB+ to Below Other Total £m £m £m £m £m £m £m Asia With-profits Unit-linked Non-linked shareholder-backed US Non-linked shareholder-backed UK and Europe With-profits Unit-linked Non-linked shareholder-backed Other operations Total debt securities The credit ratings, information or data contained in this report which are attributed and specifically provided by S&P, Moody's and Fitch Solutions and their respective affiliates and suppliers ('Content Providers') is referred to here as the 'Content'. Reproduction of any Content in any form is prohibited except with the prior written permission of the relevant party. The Content Providers do not guarantee the accuracy, adequacy, completeness, timeliness or availability of any Content and are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such Content. The Content Providers expressly disclaim liability for any damages, costs, expenses, legal fees, or losses (including lost income or lost profit and opportunity costs) in connection with any use of the Content. A reference to a particular investment or security, a rating or any observation concerning an investment that is part of the Content is not a recommendation to buy, sell or hold any such investment or security, nor does it address the suitability an investment or security and should not be relied on as investment advice. Securities with credit ratings classified as 'Other' can be further analysed as follows: £m £m Asia—non-linked shareholder-backed Internally rated Government bonds Corporate bonds—rated as investment grade by local external ratings agencies Other Total Asia non-linked shareholder-backed US Mortgage — Other 2017 total 2016 total £m £m £m £m Implicit ratings of other US debt securities based on NAIC* valuations (see below) NAIC 1 NAIC 2 NAIC 3-6 Total US * The Securities Valuation Office of the NAIC classifies debt securities into six quality categories ranging from Class 1 (the highest) to Class 6 (the lowest). Performing securities are designated as Classes 1 to 5 and securities in or near default are designated Class 6. £m £m UK and Europe Internal ratings or unrated AAA to A– BBB to B– Below B– or unrated Total UK and Europe In addition to the debt securities shown above, the assets held for sale on the consolidated statement of financial position at 31 December 2016 in respect of Korea life business included a debt securities balance of £652 million. (b) Additional analysis of US insurance operations debt securities £m £m Corporate and government security and commercial loans: Government Publicly traded and SEC Rule 144A securities* Non-SEC Rule 144A securities Asset backed securities (see note (e)) Total US debt securities † * A 1990 SEC rule that facilitates the resale of privately placed securities under Rule 144A that are without SEC registration to qualified institutional investors. The rule was designed to develop a more liquid and efficient institutional resale market for unregistered securities. † Debt securities for US operations included in the statement of financial position comprise: £m £m Available-for-sale Fair value through profit or loss: Securities held to back liabilities for funds withheld under reinsurance arrangement Realised gains and losses, including impairments, recorded in the income statement are as shown in note B1.2 of this report. (c) Movements in unrealised gains and losses on Jackson available-for-sale securities The movement in the statement of financial position value for debt securities classified as available-for-sale was from a net unrealised gain of £676 million to a net unrealised gain of £1,205 million as analysed in the table below. Foreign Changes in Reflected as part of movement in £m £m £m £m Assets fair valued at below book value Book value* Unrealised gain (loss) ) ) Fair value (as included in statement of financial position) Assets fair valued at or above book value Book value* Unrealised gain (loss) ) Fair value (as included in statement of financial position) Total Book value* Net unrealised gain (loss) ) Fair value (as included in the footnote above in the overview table and the statement of financial position) * Book value represents cost/amortised cost of the debt securities. ** Translated at the average rate of US$1.2889: £1.00. (d) US debt securities classified as available-for-sale in an unrealised loss position (i) Fair value of securities as a percentage of book value The following table shows the fair value of the debt securities in a gross unrealised loss position for various percentages of book value: 2017 2016 Fair Unrealised Fair Unrealised £m £m £m £m Between 90% and 100% ) ) Between 80% and 90% ) ) Below 80%: Residential mortgage-backed securities—sub-prime — — — — Commercial mortgage-backed securities — — ) Other asset-backed securities ) ) Government bonds — — — — Corporates ) ) ) Total ) ) (ii) Unrealised losses by maturity of security £m £m 1 year to 5 years ) ) 5 years to 10 years ) ) More than 10 years ) ) Mortgage-backed and other debt securities ) ) Total ) ) (iii) Age analysis of unrealised losses for the periods indicated The following table shows the age analysis of all the unrealised losses in the portfolio by reference to the length of time the securities have been in an unrealised loss position: 2017 2016 Non- Investment Total Non- Investment Total £m £m £m £m £m £m Less than 6 months ) ) ) ) ) ) 6 months to 1 year ) ) ) — ) ) 1 year to 2 years — ) ) ) ) ) 2 years to 3 years ) ) ) ) ) ) More than 3 years — ) ) ) ) ) Total ) ) ) ) ) ) Further, the following table shows the age analysis as at 31 December, of the securities whose fair values were below 80 per cent of the book value: 2017 2016 Age analysis Fair value Unrealised Fair value Unrealised £m £m £m £m Less than 3 months — — 3 months to 6 months ) — — More than 6 months ) ) ) ) (e) Asset-backed securities The Group's holdings in Asset-Backed Securities (ABS), which comprise Residential Mortgage-Backed Securities (RMBS), Commercial Mortgage-Backed Securities (CMBS), Collateralised Debt Obligations (CDO) funds and other asset-backed securities, at 31 December are as follows: £m £m Shareholder-backed operations Asia operations note(i) US operations note(ii) UK and Europe operations (2017: 34% AAA, 16% AA) note(iii) Other operations note(iv) With-profits operations Asia operations note(i) UK and Europe operations (2017: 58% AAA, 10% AA) note(iii) Total Notes (i) Asia operations The Asia operations' exposure to asset-backed securities is primarily held by the with-profits operations. Of the £233 million, 98 per cent (2016: 99 per cent) are investment grade. (ii) US operations US operations' exposure to asset-backed securities at 31 December comprises: £m £m RMBS Sub-prime (2017: 2% AAA, 4% AA, 3% A) Alt-A (2017: 3% AAA, 3% A) Prime including agency (2017: 70% AA, 4% A) CMBS (2017: 82% AAA, 15% AA, 1% A) CDO funds (2017: 49% AA, 31% A), including £nil exposure to sub-prime Other ABS (2017: 21% AAA, 14% AA, 50% A), including £96 million exposure to sub-prime Total (iii) UK and Europe operations The majority of holdings of the shareholder-backed business are UK securities and relate to PAC's annuity business. Of the holdings of the with-profits operations, £1,913 million (2016: £1,623 million) relates to exposure to the US markets with the remaining exposure being primarily to the UK market. (iv) Other operations Other operations' exposure to asset-backed securities is held by Prudential Capital with no sub-prime exposure. Of the £589 million, 96 per cent (2016: 95 per cent) are graded AAA. (f) Group sovereign debt and bank debt exposure The Group exposures held by the shareholder-backed business and with-profits funds in sovereign debts and bank debt securities at 31 December are analysed as follows: Exposure to sovereign debts 2017 2016 Shareholder- With-profits Shareholder- With-profits £m £m £m £m Italy Spain France — Germany* Other Eurozone Total Eurozone United Kingdom United States** Other, including Asia Total * Including bonds guaranteed by the federal government. ** The exposure to the United States sovereign debt comprises holdings of the US, UK and Europe and Asia insurance operations. Exposure to bank debt securities 2017 Senior debt Subordinated debt Shareholder-backed business Covered Senior Total Tier 1 Tier 2 Total 2017 2016 £m £m £m £m £m £m £m £m Italy — — — — — — — Spain — — — France Germany — — Netherlands — — Other Eurozone — — — — Total Eurozone United Kingdom United States — Other, including Asia Total With-profits funds Italy — — — — Spain — — — — France — Germany — Netherlands — Other Eurozone — — — — Total Eurozone United Kingdom United States — Other, including Asia Total The tables above exclude assets held to cover linked liabilities and those of the consolidated unit trusts and similar funds. In addition, the tables above exclude the proportionate share of sovereign debt holdings of the Group's joint venture operations. (g) Impairment of US available-for-sale debt securities and other financial assets In accordance with the Group's accounting policy set out in note A3.1, impairment reviews were performed for available-for-sale securities and loans and receivables. During the year ended 31 December 2017, net impairment credit of £1 million (2016: charge of £(44) million; 2015: charge of £(35) million) were recognised for available-for-sale securities and loans and receivables analysed as follows: £m £m £m Available-for-sale debt securities held by Jackson ) ) Loans and receivables* ) ) ) Net credit (charge) for impairment net of reversals ) ) * The impairment charges/reversals relate to loans held by the UK with-profits fund and mortgage loans held by Jackson. Jackson's portfolio of debt securities is managed proactively with credit analysts closely monitoring and reporting on the credit quality of its holdings. Jackson continues to review its investments on a case-by-case basis to determine whether any decline in fair value represents an impairment. In addition, investments in structured securities are subject to a rigorous review of their future estimated cash flows, including expected and stress case scenarios, to identify potential shortfalls in contractual payments (both interest and principal). Impairment charges are recorded on structured securities when the Company forecasts a contractual payment shortfall. Situations where such a shortfall would not lead to a recognition of a loss are rare. However, some structured securities do not have a single determined set of future cash flows and instead, there can be a reasonable range of estimates that could potentially emerge. With this variability, there could be instances where the projected cash flow shortfall under management's base case set of assumptions is so minor that relatively small and justifiable changes to the base case assumptions would eliminate the need for an impairment loss to be recognised. The impairment loss reflects the difference between the fair value and book value. In 2017, the Group realised gross losses on sales of available-for-sale securities of £155 million (2016: £152 million; 2015: £85 million) with 97 per cent (2016: 59 per cent; 2015: 57 per cent) of these losses related to the disposal of fixed maturity securities of the top 10 individual issuers, which were disposed of as part of risk reduction programmes intended to limit future credit loss exposure. Of the £155 million (2016: £152 million; 2015: £85 million), £3 million (2016: £94 million; 2015: £54 million) relates to losses on sales of impaired and deteriorating securities. The effect of changes in the key assumptions that underpin the assessment of whether impairment has taken place depends on the factors described in note A3.1. A key indicator of whether such impairment may arise in future, and the potential amounts at risk, is the profile of gross unrealised losses for fixed maturity securities accounted for on an available-for-sale basis by reference to the time periods by which the securities have been held continuously in an unrealised loss position and by reference to the maturity date of the securities concerned. For 2017, the amount of gross unrealised losses for fixed maturity securities classified as available-for-sale under IFRS in an unrealised loss position was £106 million (2016: £675 million; 2015: £673 million). Note B1.2 provides further details on the impairment charges and unrealised losses of Jackson's available-for-sale securities. |
Loans portfolio
Loans portfolio | 12 Months Ended |
Dec. 31, 2017 | |
Loans portfolio | |
Loans portfolio | C3.3 Loans portfolio (a) Overview of loans portfolio Loans are accounted for at amortised cost net of impairment except for: – Certain mortgage loans which have been designated at fair value through profit or loss of the UK and Europe insurance operations as this loan portfolio is managed and evaluated on a fair value basis; and – Certain policy loans of the US insurance operations that are held to back liabilities for funds withheld under reinsurance arrangements and are also accounted on a fair value basis. The amounts included in the statement of financial position are analysed as follows: 2017 2016 Mortgage Policy Other Total Mortgage Policy Other Total £m £m £m £m £m £m £m £m Asia With-profits — — Non-linked shareholder-backed US Non-linked shareholder-backed — — UK and Europe With-profits Non-linked shareholder-backed — — Other operations — — — — Total loans securities * All mortgage loans are secured by properties. ** In the US £2,512 million (2016: £2,672 million) policy loans are backing liabilities for funds withheld under reinsurance arrangements and are accounted for at fair value through profit or loss. All other policy loans are accounted for at amortised cost, less any impairment. † Other loans held in UK with-profits funds are commercial loans and comprise mainly syndicated loans. The majority of other loans in shareholder-backed business in Asia are commercial loans held by the Malaysia operation and which are all investment graded by two local rating agencies. (b) Additional information on US mortgage loans In the US, mortgage loans are all commercial mortgage loans that are secured by the following property types: industrial, multi-family residential, suburban office, retail or hotel. The US insurance operations' commercial mortgage loan portfolio does not include any single-family residential mortgage loans and is therefore not exposed to the same risk of defaults associated with residential sub-prime mortgage loans. The average loan size is £12.6 million (2016: £12.4 million). The portfolio has a current estimated average loan to value of 55 per cent (2016: 59 per cent). At 31 December 2017, Jackson had no mortgage loans where the contractual terms of the agreements had been restructured (2016: none). (c) Additional information on UK mortgage loans During 2017, the UK with-profits fund invested in an entity that holds a portfolio of buy-to-let mortgage loans. The vehicle financed its acquisitions through the issue of debt instruments, largely to external parties, securitised upon the loans acquired. These third-party borrowings have no recourse to any other assets of the Group and the Group's exposure is limited to the amount invested by the UK with-profits fund. By carrying value, 99.98 per cent of the £1,681 million (31 December 2016: 96.29 per cent of £1,642 million) mortgage loans held by the UK shareholder-backed business relates to lifetime (equity release) mortgage business which has an average loan to property value of 31 per cent (31 December 2016: 30 per cent). (d) Loans held by other operations These relate to loans and receivables managed by Prudential Capital. These assets are generally secured but most have no external credit ratings. Internal ratings prepared by the Group's asset management operations, as part of the risk management process, are: £m £m Loans and receivables internal ratings: AA+ to AA– A+ to A– — BBB+ to BBB– — BB+ to BB– B and other — Total |
Financial instruments - additio
Financial instruments - additional information | 12 Months Ended |
Dec. 31, 2017 | |
Financial instruments - additional information | |
Financial instruments - additional information | C3.4 Financial instruments—additional information C3.4(a) Financial risk (i) Liquidity analysis Contractual maturities of financial liabilities on an undiscounted cash flow basis The following table sets out the contractual maturities for applicable classes of financial liabilities, excluding derivative liabilities and investment contracts that are separately presented. The financial liabilities are included in the column relating to the contractual maturities at the undiscounted cash flows (including contractual interest payments) due to be paid assuming conditions are consistent with those of year end. 2017 Total 1 Year After After After After Over No stated Total £m £m £m £m £m £m £m £m £m Financial liabilities Core structural borrowings of shareholder-financed operations C6.1 Operational borrowings attributable to shareholder-financed operations C6.2 — — — — Borrowings attributable to with-profits funds C6.2 Obligations under funding, securities lending and sale and repurchase agreements — — — — — — Accruals, deferred income and other liabilities Net asset value attributable to unit holders of consolidated unit trusts and similar funds — — — — — — 2016 Total carrying 1 Year or less After After After After Over No stated Total £m £m £m £m £m £m £m £m £m Financial liabilities Core structural borrowings of shareholder-financed operations C6.1 Operational borrowings attributable to shareholder-financed operations C6.2 — — — — Borrowings attributable to with-profits funds C6.2 Obligations under funding, securities lending and sale and repurchase agreements — — — — — — Accruals, deferred income and other liabilities Net asset value attributable to unit holders of consolidated unit trusts and similar funds — — — — — — Maturity analysis of derivatives The following table shows the gross and net derivative positions together with a maturity profile of the net derivative position: Carrying value of net derivatives Maturity profile of net derivative position Net Derivative Derivative 1 year After 1 year After 3 years After Total £m £m £m £m £m £m £m £m 2017 ) ) ) ) 2016 ) ) ) The majority of derivative assets and liabilities have been included at fair value within the one year or less column, representing the basis on which they are managed (ie to manage principally asset or liability value exposures). The Group has no cash flow hedges and in general, contractual maturities are not considered essential for an understanding of the timing of the cash flows for these instruments. The only exception is certain identified interest rate swaps which are fully expected to be held until maturity solely for the purposes of matching cash flows on separately held assets and liabilities. For these instruments the undiscounted cash flows (including contractual interest amounts) due to be paid under the swap contract assuming conditions are consistent with those at year end are included in the column relating to the contractual maturity of the derivative. Maturity analysis of investment contracts The table below shows the maturity profile for investment contracts on undiscounted cash flow projections of expected benefit payments. 1 year After After After After Over Total Total £bn £bn £bn £bn £bn £bn £bn £bn 2017 2016 Most investment contracts have options to surrender early, often subject to surrender or other penalties. Therefore, most contracts can be said to have a contractual maturity of less than one year, but the additional charges and term of the contracts mean these are unlikely to be exercised in practice and the more useful information is to present information on expected payment. The maturity profile above excludes certain corporate unit-linked business with gross policyholder liabilities of £12 billion (2016: £11 billion) which have no stated maturity but which are repayable on demand. The vast majority of the Group's financial assets are held to back the Group's policyholder liabilities. Although asset/liability matching is an important component of managing policyholder liabilities (both those classified as insurance and those classified as investments), this profile is mainly relevant for managing market risk rather than liquidity risk. Within each business unit this asset/liability matching is performed on a portfolio-by-portfolio basis. In terms of liquidity risk, a large proportion of the policyholder liabilities contain discretionary surrender values or surrender charges, meaning that many of the Group's liabilities are expected to be held for the long term. Much of the Group's investment portfolios are in marketable securities, which can therefore be converted quickly to liquid assets. For the reasons provided above, an analysis of the Group's assets by contractual maturity is not considered appropriate to evaluate the nature and extent of the Group's liquidity risk. (ii) Credit risk The Group's maximum exposure to credit risk of financial instruments before any allowance for collateral or allocation of losses to policyholders is represented by the carrying value of financial instruments on the balance sheet that have exposures to credit risk comprising cash and cash equivalents, deposits, debt securities, loans and derivative assets, and other debtors, the carrying value of which are disclosed at the start of this note and note C3.4(b) below for derivative assets. The collateral in place in relation to derivatives is described in note C3.4(c) below. Note C3.3 describes the security for these loans held by the Group. The Group's exposure to credit risk is further discussed in note C7 below. Of the total loans and receivables held, £23 million (2016: £27 million) are past their due date but are not impaired. Of the total past due but not impaired, £17 million are less than one year past their due date (2016: £20 million). The Group expects full recovery of these loans and receivables. Financial assets that would have been past due or impaired had the terms not been renegotiated amounted to £22 million (2016: £27 million). In addition, during 2017 and 2016 the Group did not take possession of any other collateral held as security. Further details of collateral and pledges are provided in note C3.4(c) below. (iii) Foreign exchange risk As at 31 December 2017, the Group held 24 per cent (2016: 23 per cent) and 16 per cent (2016: 12 per cent) of its financial assets and financial liabilities respectively, in currencies, mainly US dollar and Euro, other than the functional currency of the relevant business unit. Of these financial assets, 52 per cent (2016: 52 per cent) are held by the PAC with-profits fund, allowing the fund to obtain exposure to foreign equity markets. Of these financial liabilities, 28 per cent (2016: 28 per cent) are held by the PAC with-profits fund, mainly relating to foreign currency borrowings. The exchange risks inherent in these exposures are mitigated through the use of derivatives, mainly forward currency contracts (note C3.4(b) below). The amount of exchange loss recognised in the income statement in 2017, except for those arising on financial instruments measured at fair value through profit or loss, is £112 million (2016: £1,005 million gain; 2015: £138 million gain). This constitutes £1 million gain (2016: £0.4 million gain; 2015: £1 million loss) on Medium Term Notes liabilities and £113 million of net loss (2016: £1,005 million net gain; 2015: £139 million net gain), mainly arising on investments of the PAC with-profits fund. The gains/losses on Medium Term Notes liabilities are fully offset by value movements on cross-currency swaps, which are measured at fair value through profit or loss. C3.4(b) Derivatives and hedging Derivatives The Group enters into a variety of exchange traded and over-the-counter derivative financial instruments, including futures, options, forward currency contracts and swaps such as interest rate swaps, cross-currency swaps, swaptions and credit default swaps. All over-the-counter derivative transactions, with the exception of some Asia transactions, are conducted under standardised ISDA (International Swaps and Derivatives Association Inc) master agreements and the Group has collateral agreements between the individual Group entities and relevant counterparties in place under each of these market master agreements. Under Article 11 of the European Market Infrastructure Regulation on derivatives, central counterparties and trade repositories ('EMIR') and Commission Delegated Regulation (EU) 2016/2251 supplementing EMIR, market participants transacting in non-cleared OTC derivatives are required to exchange collateral to cover variation and initial margin. However, trades between counterparties belonging to the same group are exempt from these margin requirements subject to certain criteria. Prudential Capital plc (Legal Entity Identifier reference ('LEI') CHW8NHK268SFPTV63Z64) has entered into such derivative agreements with the following five entities in the Group. These counterparty pairings meet the criteria to be eligible for intra-group exemptions to the margin requirements and have been approved by the Financial Conduct Authority: 31 Dec 2017 Counterparty Legal Entity Identifier Relationship Type of exemption Aggregate notional £m Prudential plc 5493001Z3ZE83NG Part of the same group holding company Full Prudential Holdings Limited 549300JVAI8CZD4 Part of the same group holding company Full Prudential (US HoldCo 1) Limited 549300JNYGDP2X Part of the same group holding company Full Prudential Corporation Holdings Limited 549300KDOPLFHA Part of the same group holding company Full Prudential Lifetime Mortgages Limited 5493001GSK4HF84 Part of the same group holding company Full Derivatives are used for efficient portfolio management to obtain cost effective and efficient management of exposure to various markets in accordance with the Group's investment strategies and to manage exposure to interest rate, currency, credit and other business risks. The Group also uses interest rate derivatives to reduce exposure to interest rate volatility. In particular: – UK with-profits funds use derivatives for efficient portfolio management or reduction in investment risks. For UK annuity business derivatives are used to assist with asset and liability cash flow matching; – US operations and some of the UK and Europe operations hold large amounts of interest-rate sensitive investments that contain credit risks on which a certain level of defaults is expected. These businesses have purchased some swaptions to manage the default risk on certain underlying assets and hence reduce the amount of regulatory capital held to support the assets; and – Some products, especially in the US, have guarantee features linked to equity indices. A mismatch between guaranteed product liabilities and the performance of the underlying assets exposes the Group to equity index risk. In order to mitigate this risk, the relevant business units purchase swaptions, equity options and futures to better match asset performance with liabilities under equity-indexed products. Hedging The Group has formally assessed and documented the effectiveness of the following net investment hedges under IAS 39. At 31 December 2017, the Group has designated perpetual subordinated capital securities totalling US$4.3 billion (2016: US$4.5 billion) as a net investment hedge to hedge the currency risks related to the net investment in Jackson. The carrying value of the subordinated capital securities was £3,140 million as at 31 December 2017 (2016: £3,644 million). The foreign exchange gain of £325 million (2016: loss of £389 million) on translation of the borrowings to pounds sterling at the statement of financial position date is recognised in the translation reserve in shareholders' equity. This net investment hedge was 100 per cent effective. The Group has no cash flow hedges or fair value hedges in place. C3.4(c) Derecognition, collateral and offsetting Securities lending and reverse repurchase agreements The Group has entered into securities lending (including repurchase agreements) whereby blocks of securities are loaned to third parties, primarily major brokerage firms. Typically, the value of collateral assets granted to the Group in these transactions is in excess of the value of securities lent, with the excess determined by the quality of the collateral assets granted. Collateral requirements are calculated on a daily basis. The loaned securities are not removed from the Group's consolidated statement of financial position, rather they are retained within the appropriate investment classification. Collateral typically consists of cash, debt securities, equity securities and letters of credit. At 31 December 2017, the Group has £8,232 million (2016: £8,545 million) of lent securities and assets subject to repurchase agreements, of which £8,182 million (2016: £8,113 million) related to the PAC with-profits fund. The cash and securities collateral held or pledged under such agreements were £8,733 million (2016: £9,086 million) of which £8,679 million (2016: £8,653 million) was held by the PAC with-profits fund. At 31 December 2017, the Group had entered into reverse repurchase transactions under which it purchased securities and had taken on the obligation to resell the securities. The fair value of the collateral held in respect of these transactions was £10,550 million (2016: £9,319 million). Collateral and pledges under derivative transactions At 31 December 2017, the Group had pledged £2,302 million (2016: £1,853 million) for liabilities and held collateral of £3,958 million (2016: £2,788 million) in respect of over-the-counter derivative transactions. These transactions are conducted under terms that are usual and customary to collateralised transactions including, where relevant, standard securities lending and repurchase agreements. Other collateral At 31 December 2017, the Group had pledged collateral of £3,412 million (2016: £3,384 million) in respect of other transactions. This principally arises from Jackson's membership of the Federal Home Loan Bank of Indianapolis primarily for the purpose of participating in the bank's collateralised loan advance programme with short-term and long-term funding facilities. Offsetting assets and liabilities The Group's derivative instruments, repurchase agreements and securities lending agreements are subject to master netting arrangements and collateral arrangements. A master netting arrangement with a counterparty creates a right of offset for amounts due to and due from that same counterparty that is enforceable in the event of a default or bankruptcy. The Group recognises amounts subject to master netting arrangements on a gross basis within the consolidated balance sheets. The following tables present the gross and net information about the Group's financial instruments subject to master netting arrangements: 31 Dec 2017 Gross amount Related amounts not offset Financial Cash Securities Net £m £m £m £m £m Financial assets: Derivative assets ) ) ) Reverse repurchase agreements — — ) Total financial assets ) ) ) Financial liabilities: Derivative liabilities ) ) Securities lending and repurchase agreements ) — ) Total financial liabilities ) ) 31 Dec 2016 Gross amount Related amounts not offset Financial Cash collateral Securities Net amount £m £m £m £m £m Financial assets: Derivative assets ) ) ) Reverse repurchase agreements — — ) — Total financial assets ) ) ) Financial liabilities: Derivative liabilities ) ) Securities lending and repurchase agreements ) — — Total financial liabilities ) ) Notes (i) The Group has not offset any of the amounts included in the consolidated statement of financial position. (ii) Represents the amount that could be offset under master netting or similar arrangements where the Group does not satisfy the full criteria to offset on the consolidated statement of financial position. (iii) Excludes initial margin amounts for exchange-traded derivatives. In the tables above, the amounts of assets or liabilities included in the consolidated statement of financial position would be offset first by financial instruments that have the right of offset under master netting or similar arrangements with any remaining amount reduced by the amount of cash and securities collateral. The actual amount of collateral may be greater than amounts presented in the tables. |
Policyholder liabilities and un
Policyholder liabilities and unallocated surplus | 12 Months Ended |
Dec. 31, 2017 | |
Policyholder liabilities and unallocated surplus | |
Policyholder liabilities and unallocated surplus | C4 Policyholder liabilities and unallocated surplus The note provides information of policyholder liabilities and unallocated surplus of with-profits funds held on the Group's statement of financial position: C4.1 Movement and duration of liabilities C4.1(a) Group overview (i) Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds Insurance operations Asia US UK and Total £m £m £m £m At 1 January 2016 Comprising: — Policyholder liabilities on the consolidated statement of financial position — Unallocated surplus of with-profits funds on the consolidated statement of financial position — — Group's share of policyholder liabilities of joint ventures and associate § — — Reclassification of Korea life business as held for sale * ) — — ) Net flows: Premiums Surrenders ) ) ) ) Maturities/deaths ) ) ) ) Net flows ) Shareholders' transfers post-tax ) — ) ) Investment-related items and other movements Foreign exchange translation differences As at 31 December 2016/1 January 2017 Comprising: — Policyholder liabilities on the consolidated statement of financial position ¶ — Unallocated surplus of with-profits funds on the consolidated statement of financial position — — Group's share of policyholder liabilities of joint ventures and associate § — — Net flows: Premiums Surrenders ) ) ) ) Maturities/deaths ) ) ) ) Net flows Shareholders' transfers post-tax ) — ) ) Investment-related items and other movements Foreign exchange translation differences ) ) ) At 31 December 2017 Comprising: — Policyholder liabilities on the consolidated statement of financial position ¶ (excludes £32 million classified as unallocated to a segment) — Unallocated surplus of with-profits funds on the consolidated statement of financial position — — Group's share of policyholder liabilities of joint ventures and associate § — — Average policyholder liability balances † 2017 2016 * The reclassification of Korea life business as held for sale reflects the value of policyholder liabilities held at 1 January 2016. No other amounts are shown within the 2016 analysis above in respect of Korea. † Averages have been based on opening and closing balances and adjusted for acquisitions, disposals and corporate transactions in the year and exclude unallocated surplus of with-profits funds. § The Group's investment in joint ventures and associates are accounted for on an equity method basis in the Group's balance sheet. The Group's share of the policyholder liabilities as shown above relate to life businesses in China, India and of the Takaful business in Malaysia. ¶ The policyholder liabilities of the Asia insurance operations of £62,898 million (2016: £53,716 million), shown in the table above, is after deducting the intra-group reinsurance liabilities ceded by the UK and Europe insurance operations of £1,235 million (2016: £1,302 million) to the Hong Kong with-profits business. Including this amount total Asia policyholder liabilities are £64,133 million (2016: £55,018 million). 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. The policyholder liabilities shown include investment contracts without discretionary participation features (as defined in IFRS 4) and their full movement in the year but exclude liabilities that have not been allocated to a reporting segment. The items above are shown gross of external reinsurance. The analysis includes the impact of premiums, claims and investment movements on policyholders' liabilities. The impact does not represent premiums, claims and investment movements as reported in the income statement. For example, the premiums shown above will exclude any deductions for fees/charges. Claims (surrenders, maturities and deaths) represent the policyholder liabilities provision released rather than the claim amount paid to the policyholder. (ii) Analysis of movements in policyholder liabilities for shareholder-backed business Shareholder-backed business Asia US UK and Total £m £m £m £m At 1 January 2016 Reclassification of Korea life business as held for sale* ) — — ) Net flows: Premiums Surrenders ) ) ) ) Maturities/deaths ) ) ) ) Net flows note(a) ) Investment-related items and other movements Foreign exchange translation differences — At 31 December 2016/1 January 2017 Comprising: — Policyholder liabilities on the consolidated statement of financial position — Group's share of policyholder liabilities relating to joint ventures and associate — — Net flows: Premiums Surrenders ) ) ) ) Maturities/deaths ) ) ) ) Net flows note(a) ) Investment-related items and other movements Foreign exchange translation differences ) ) — ) At 31 December 2017 Comprising: — Policyholder liabilities on the consolidated statement of financial position (excludes £32 million classified as unallocated to a segment) — Group's share of policyholder liabilities relating to joint ventures and associate — — * The reclassification of Korea life business as held for sale reflects the value of policyholder liabilities held at 1 January 2016. No other amounts are shown within the 2016 analysis above in respect of Korea. Note (a) Including net flows of the Group's insurance joint ventures and associate. (iii) Movement in insurance contract liabilities and unallocated surplus of with-profits funds Further analysis of the movement in the year of the Group's insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds is provided below: Insurance contract liabilities Unallocated Gross Reinsurers' £m £m £m At 1 January 2016 Income and expense included in the income statement and other comprehensive income Foreign exchange translation differences At 31 December 2016/1 January 2017 Income and expense included in the income statement and other comprehensive income Foreign exchange translation differences ) ) ) At 31 December 2017 (iv) Reinsurers' share of insurance contract liabilities Asia US UK and Unallocated £m £m Insurance contract liabilities — Claims outstanding The Group cedes certain business to other insurance companies. Although the ceding of insurance does not relieve the Group from its liability to its policyholders, the Group participates in such agreements for the purpose of managing its loss exposure. The Group evaluates the financial condition of its reinsurers and monitors concentration of credit risk from similar geographic regions, activities or economic characteristics of the reinsurers to minimise its exposure from reinsurer insolvencies. Of the reinsurers' share of insurance contract liabilities balance of £9,673 million at 31 December 2017 (2016: £10,051 million), 80 per cent (2016: 85 per cent) were ceded by the Group's UK and Europe and US operations, of which 96 per cent (2016: 96 per cent) of the balance were from reinsurers with Standard & Poor's rating A- and above. The reinsurance asset for Jackson as shown in the table above primarily relates to certain fully collateralised former REALIC business retained by Swiss Re through 100 per cent reinsurance agreements. Apart from the reinsurance of REALIC business, the principal reinsurance ceded by Jackson outside the Group is on term-life insurance, direct and assumed accident and health business and GMIB variable annuity guarantees. Net commissions received on ceded business and claims incurred ceded to external reinsurers totalled £28 million and £526 million respectively during 2017 (2016: £38 million and £500 million respectively). There were no deferred gains or losses on reinsurance contracts in either 2017 or 2016. In each of 2017, 2016 and 2015, the Group's UK and Europe insurance business entered into longevity reinsurance transactions on certain aspects of the UK's annuity liabilities. Further information on these transactions is provided in note B3(c). The gains and losses recognised in profit and loss for the other reinsurance contracts written in the year were immaterial. C4.1(b) Asia insurance operations (i) Analysis of movements 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 Asia insurance operations from the beginning of the year to the end of the year is as follows: With-profits Unit-linked Other Total £m £m £m £m At 1 January 2016 Comprising: — Policyholder liabilities on the consolidated statement of financial position — Unallocated surplus of with-profits funds on the consolidated statement of financial position — — — Group's share of policyholder liabilities relating to joint ventures and associate ‡ — Reclassification of Korea life business as held for sale* — ) ) ) Premiums New business In-force Surrenders note(c) ) ) ) ) Maturities/deaths ) ) ) ) Net flows note(b) Shareholders' transfers post-tax ) — — ) Investment-related items and other movements Foreign exchange translation differences note(a) At 31 December 2016/1 January 2017 Comprising: — Policyholder liabilities on the consolidated statement of financial position — Unallocated surplus of with-profits funds on the consolidated statement of financial position — — — Group's share of policyholder liabilities relating to joint ventures and associate ‡ — Premiums New business In-force Surrenders note(c) ) ) ) ) Maturities/deaths ) ) ) ) Net flows note(b) Shareholders' transfers post-tax ) — — ) Investment-related items and other movements note(d) Foreign exchange translation differences note(a) ) ) ) ) At 31 December 2017 note(b) Comprising: — Policyholder liabilities on the consolidated statement of financial position § — Unallocated surplus of with-profits funds on the consolidated statement of financial position — — — Group's share of policyholder liabilities relating to joint ventures and associate ‡ — Average policyholder liability balances † 2017 2016 * The reclassification of Korea life business as held for sale reflects the value of policyholder liabilities held at 1 January 2016. No other amounts are shown within the 2016 analysis above in respect of Korea. † Averages have been based on opening and closing balances and adjusted for acquisitions and disposals in the year and exclude unallocated surplus of with-profits funds. ‡ The Group's investment in joint ventures and associate are accounted for on an equity method basis and the Group's share of the policyholder liabilities as shown above relate to the life businesses in China, India and of the Takaful business in Malaysia. § The policyholder liabilities of the with-profits business of £32,963 million, shown in the table above, is after deducting the intra-group reinsurance liabilities ceded by UK and Europe insurance operations of £1,235 million to the Hong Kong with-profits business (2016: £1,302 million). Including this amount the Asia with-profits policyholder liabilities are £34,198 million. Notes (a) Movements in the year have been translated at the average exchange rates for the year. The closing balance has been translated at the closing spot rates as at the end of the year. Differences upon retranslation are included in foreign exchange translation differences. (b) Net flows have increased by £1,093 million to £6,875 million in 2017 predominantly reflecting continued growth of the in-force book and increased flows from new business. (c) Investment-related items and other movements for 2017 principally represent equity market gains and falls in bond yields during the year, in a number of business units with the greatest impact being on with-profits and unit-linked business. (ii) Duration of liabilities The table below shows the carrying value of policyholder liabilities and the maturity profile of the cash flows on a discounted basis for 2017 and 2016, taking account of expected future premiums and investment returns: £m £m Policyholder liabilities Expected maturity: 2017 % 2016 % 0 to 5 years 5 to 10 years 10 to 15 years 15 to 20 years 20 to 25 years Over 25 years (iii) Summary policyholder liabilities (net of reinsurance) and unallocated surplus At 31 December 2017, the policyholder liabilities and unallocated surplus for Asia operations excluding joint ventures and after deducting intra-group reinsurance liabilities ceded by UK and Europe of £66,372 million (2016: £56,383 million), net of external reinsurance of £1,961 million (2016: £1,539 million), , comprised the following: £m £m Hong Kong Indonesia Malaysia Singapore Taiwan Other operations Total Asia operations C4.1(c) US insurance operations (i) Analysis of movements in policyholder liabilities A reconciliation of the total policyholder liabilities of US insurance operations from the beginning of the year to the end of the year is as follows: US insurance operations Variable annuity Fixed annuity, Total £m £m £m At 1 January 2016 Premiums Surrenders ) ) ) Maturities/deaths ) ) ) Net flows note(b) Transfers from general to separate account ) — Investment-related items and other movements Foreign exchange translation differences note(a) At 31 December 2016/1 January 2017 Premiums Surrenders ) ) ) Maturities/deaths ) ) ) Net flows note(b) ) Transfers from general to separate account ) — Investment-related items and other movements note(c) Foreign exchange translation differences note(a) ) ) ) At 31 December 2017 Average policyholder liability balances* 2017 2016 * Averages have been based on opening and closing balances. Notes (a) Movements in the year have been translated at an average rate of US$1.29/£1.00 (2016: US$1.35/£1.00). The closing balances have been translated at closing rate of US$1.35/£1.00 (2016: US$1.24/£1.00). Differences upon retranslation are included in foreign exchange translation differences. (b) Net flows were £3,137 million in 2017, reflecting continued strong inflows into the variable annuity business. (c) Positive investment-related items and other movements in variable annuity separate account liabilities of £15,956 million for 2017 primarily reflects the increases in equities and bond values during the year. Fixed annuity, GIC and other business investment and other movements of £295 million primarily reflect the increase in guarantee reserve in the year. (ii) Duration of liabilities The table below shows the carrying value of policyholder liabilities and maturity profile of the cash flows on a discounted basis for 2017 and 2016: 2017 2016 Fixed annuity Variable Total Fixed annuity Variable Total £m £m £m £m £m £m Policyholder liabilities % % % % % % Expected maturity: 0 to 5 years 5 to 10 years 10 to 15 years 15 to 20 years 20 to 25 years Over 25 years (iii) Aggregate account values The table below shows the distribution of account values for fixed annuities (fixed interest rate and fixed index), the fixed account portion of variable annuities, and interest-sensitive life business within the range of minimum guaranteed interest rates as described in note C4.2(b) as at 31 December 2017 and 2016: Fixed annuities and Interest- Minimum guaranteed interest rate £m £m £m £m > 0% - 1.00% — — > 1.0% - 2.0% — — > 2.0% - 3.0% > 3.0% - 4.0% > 4.0% - 5.0% > 5.0% - 6.0% Total C4.1(d) UK and Europe insurance operations (i) Analysis of movements 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 UK and Europe insurance operations from the beginning of the year to the end of the year is as follows: Shareholder-backed With-profits Unit-linked Annuity Total £m £m £m £m At 1 January 2016 Comprising: — Policyholder liabilities — Unallocated surplus of with-profits funds — — Premiums Surrenders ) ) ) ) Maturities/deaths ) ) ) ) Net flows note(a) ) ) ) Shareholders' transfers post-tax ) — — ) Switches ) — — Investment-related items and other movements Foreign exchange translation differences — — At 31 December 2016/1 January 2017 Comprising: — Policyholder liabilities — Unallocated surplus of with-profits funds — — Premiums Surrenders ) ) ) ) Maturities/deaths ) ) ) ) Net flows note(a) ) ) Shareholders' transfers post-tax ) — — ) Switches ) — — Investment-related items and other movements note(b) Foreign exchange translation differences — — At 31 December 2017 Comprising: — Policyholder liabilities — Unallocated surplus of with-profits funds — — Average policyholder liability balances* 2017 2016 * Averages have been based on opening and closing balances and exclude unallocated surplus of with-profits funds. ** Includes the Scottish Amicable Insurance Fund. Notes (a) Net flows improved from negative £(2,527) million in 2016 to positive £736 million in 2017, due primarily to higher premium flows into our with-profits funds following increased sales into with-profits savings and retirement products. This has been offset by lower premiums into our annuity business following our withdrawal from this market in the UK. The level of inflows/outflows for unit-linked business remains subject to annual variation as it is driven by corporate pension schemes with transfers in or out from a small number of schemes influencing the level of flows in the period. (b) Investment-related items and other movements of £11,146 million principally comprise investment return attributable to policyholders earned in the period reflecting favourable equity market movements. (ii) Duration of liabilities With the exception of most unitised with-profits bonds and other whole of life contracts, the majority of the contracts of UK and Europe insurance operations have a contract term. In effect, the maturity term of the other contracts reflects the earlier of death, maturity, or the policy lapsing. In addition, as described in note A3.1, with-profits contract liabilities include projected future bonuses based on current investment values. The actual amounts payable will vary with future investment performance of SAIF and the WPSF. The following tables show the carrying value of the policyholder liabilities and the maturity profile of the cash flows, on a discounted basis for 2017 and 2016: 2017 With-profits business Annuity business Other Total Insurance Investment Total Non-profit Shareholder— Total Insurance Investments Total £m £m £m £m £m £m £m £m £m £m Policyholder liabilities 2017% Expected maturity: 0 to 5 years 5 to 10 years 10 to 15 years 15 to 20 years 20 to 25 years over 25 years 2016 £m £m £m £m £m £m £m £m £m £m Policyholder 2016% Expected maturity: 0 to 5 years 5 to 10 years 10 to 15 years 15 to 20 years 20 to 25 years over 25 years – The cash flow projections of expected benefit payments used in the maturity profile table above are from value of in-force business and exclude the value of future new business, including future vesting of internal pension contracts. – Benefit payments do not reflect the pattern of bonuses and shareholder transfers in respect of the with-profits business. – Shareholder-backed annuity business includes the ex-PRIL and the legacy PAC shareholder annuity business. – Investment contracts under 'Other' comprise certain unit-linked and similar contracts accounted for under IAS 39 and IAS 18. – For business with no maturity term included within the contracts; for example, with-profits investment bonds such as Prudence Bonds, an assumption is made as to likely duration based on prior experience. (iii) Annuitant mortality Mortality assumptions for UK annuity business are set in light of recent population and internal experience. The assumptions used are based on standard population mortality tables (PCMA08/PCFA08 for males/females in 2017 and PCMA00/PCFA00 in 2016), with an allowance for expected future mortality improvements. The standard population tables are adjusted to reflect the features of the Company's portfolio. For 2017 these portfolio-specific adjustments have been revised so that adjustments are now applied on a per policy basis, rather than across larger groupings, and therefore disclosure of broad percentage adjustments to the standard tables would no longer appropriately reflect the methodology applied. Where annuities have been sold on an enhanced basis to impaired lives, an adjustment is made for the additional expected mortality. New mortality projection models are released regularly by the Continuous Mortality Investigation (CMI). The CMI 2015 model was used to produce the 2017 results and the CMI 2014 model was used to produce the 2016 results, calibrated to reflect the Company's view of future mortality improvements. The tables and range of percentages used are summarised in the table below: CMI Model, with calibration to reflect future mortality improvements 2017 CMI 2015 For males: with a long-term improvement rate of 2.25% pa For females: with a long-term improvement rate of 2.00% pa 2016 CMI 2014 For males: with a long-term improvement rate of 2.25% pa* For females: with a long-term improvement rate of 1.50% pa* 2015 CMI 2014 For males: with a long-term improvement rate of 2.25% pa* For females: with a long-term improvement rate of 1.50% pa* * In 2016 and 2015, for both males and females, the initial rates of mortality improvement in the CMI model 2014 were uplifted by 0.25 per cent per annum. For annuities in deferment, the tables used were AM92—four years (males) and AF92—four years (females) for 2017,2016 and 2015. C4.2 Products and determining contract liabilities C4.2(a) Asia Contract type Description Material features Determination of liabilities With-profits and participating contracts Provides savings and/or protection where the basic sum assured can be enhanced by a profit share (or bonus) from the underlying fund as determined at the discretion of the Company. Participating products often offer a guaranteed maturity or surrender value. Declared regular bonus are guaranteed once vested. Future bonus rates and cash dividends are not guaranteed. Market value adjustments and surrender penalties are used for certain products where the law permits such adjustments. Guarantees are predominantly supported by segregated life funds and their estates. With-profits contracts are predominantly sold in Hong Kong, Malaysia and Singapore. The total value of the with-profits funds is driven by the underlying asset valuation with movements reflected principally in the accounting value of policyholder liabilities and unallocated surplus. In Taiwan and India, US GAAP is applied for measuring insurance assets and liabilities. The other Asia operations principally adopt a gross premium valuation method. Term, whole life and endowment assurance Non-participating savings and/or protection where the benefits are guaranteed, or determined by a set of defined market-related parameters. These products often offer a guaranteed maturity and surrender value. It is common in Asia for regulations or market-driven demand and competition to provide some form of capital value protection and minimum crediting interest rate guarantees. This is reflected within the guaranteed maturity and surrender values. Guarantees are borne by shareholders. The approach to determining the contract liabilities is generally driven by the local solvency basis. A gross premium valuation method is used in those countries where a risk-based capital framework is adopted for local solvency. Under the gross premium valuation method, all cash flows are valued explicitly using best estimate assumptions with a suitable margin for prudence. This is achieved either through adding an explicit allowance for assumptions to deviate from best estimate or by applying an overlay constraint so that no negative reserves (ie where future premium inflows are expected to exceed prudent future claims and outflows) are derived at an individual policyholder level or a combination of both. In Vietnam, the Company uses an estimation basis aligned substantially to that used by the countries applying the gross premium valuation method. For India and Taiwan, US GAAP is applied for measuring insurance liabilities. For these countries, the future policyholder benefit provisions for non-linked business are determined using the net level premium method, with an allowance for surrenders, maintenance and claims expenses. Rates of interest used in establishing the policyholder benefit provisions vary by operation depending on the circumstances attaching to each block of business. The other Asia operations principally adopt a net premium valuation method to determine the future policyholder benefit provisions. Unit-linked Combines savings with protection, the cash value of the policy depends on the value of the underlying unitised funds. The attaching liabilities reflect the unit value obligation driven by the value of the investments of the unit fund. Additional technical provisions are held for guaranteed benefits beyond the unit fund value using a gross premium valuation method. These additional provisions are recognised as a component of other business liabilities. Health and protection Health and protection features are offered as supplements to the products listed above or sold as stand-alone products. Protection covers mortality or morbidity benefits including health, disability, critical illness and accident coverage. The determination of the liabilities of health and protection contracts are driven by the local solvency basis. A gross premium valuation method is used in those countries where a risk-based capital framework is adopted for local solvency. Under the gross premium valuation method, all cash flows are valued explicitly using best estimate assumptions with a suitable margin for prudence. This is achieved either through adding an explicit allowance for assumptions to deviate from best estimate or by applying an overlay constraint so that no negative reserves (ie where future premium inflows are expected to exceed prudent future claims and outflows) are derived at an individual policyholder level or a combination of both. C4.2(b) US Contract type Description Material features Determination of liabilities Fixed interest rate annuities Fixed interest rate annuities are primarily deferred annuity products that are used for asset accumulation in retirement planning and for providing income in retirement. At 31 December 2017, fixed interest rate annuities accounted for 7 per cent (2016: 8 per cent) of policy and contract liabilities of Jackson. The policyholder of a fixed interest rate annuity pays Jackson a premium, which is credited to the policyholder's account. Periodically, interest is credited to the policyholder's account and in some cases administrative charges are deducted from the policyholder's account. Jackson makes benefit payments at a future date as specified in the policy based on the value of the policyholder's account at that date. The policy provides that at Jackson's discretion it may reset the interest rate, subject to a guaranteed minimum. Approximately 60 per cent (2016: 62 per cent) of the fixed interest rate annuities Jackson wrote in 2017 provide for a (positive or negative) market value adjustment (MVA) on surrender. This formula-based adjustment approximates the change in value that assets supporting the product would realise as interest rates move. Guaranteed minimum interest rate. At 31 December 2017, Jackson had fixed interest rate annuities totalling £12.6 billion (2016: £14.2 billion) in account value with minimum guaranteed rates ranging from 1.0 per cent to 5.5 per cent and a 2.93 per cent average guaranteed rate (2016: 1.0 per cent to 5.5 per cent and a 2.96 per cent average guaranteed rate). As explained in note A3.1 all of Jackson's insurance liabilities are based on US GAAP. An overview of the deferral and amortisation of acquisition costs for Jackson is provided in note C5(b). With minor exceptions the following is applied to most of Jackson's contracts. Contracts are accounted for as investment contracts as defined for US GAAP purposes by applying a retrospective deposit method to determine the liability for policyholder benefits. This is then augmented by: • Any amounts that have been assessed to compensate the insurer for services to be performed over future periods (ie deferred income); • Any amounts previously assessed against policyholders that are refundable on termination of the contract; and • Any probable future loss on the contract (ie premium deficiency). Capitalised acquisition costs and deferred income for these contracts are amortised over the life of the book of contracts. The present value of the estimated gross profits is computed using the rate of interest that accrues to policyholder balances (sometimes referred to as the contract rate). Estimated gross profits include estimates of the following, each of which will be determined based on the best estimate of amounts over the life of the book of contracts without provision for adverse deviation: • Amounts expected to be assessed for mortality less benefit claims in excess of related policyholder balances; • Amounts expected to be assessed for contract administration less costs incurred for contract administration; • Amounts expected to be earned from the investment of policyholder balances less interest credited to policyholder balances; • Amounts expected to be assessed against policyholder balances upon termination of contracts (sometimes referred to as surrender charges); and • Other expected assessments and cr |
Intangible assets
Intangible assets | 12 Months Ended |
Dec. 31, 2017 | |
Intangible assets | |
Intangible assets | C5 Intangible assets C5(a) Goodwill Attributable to: Shareholders With-profits 2017 2016 £m £m Cost At beginning of year Disposals/reclassifications to held for sale ) ) ) ) Additional consideration paid on previously acquired business — Exchange differences ) — Net book amount at end of year Goodwill comprises: 2017 2016 £m £m M&G Other—attributable to shareholders Goodwill—attributable to shareholders Venture fund investments—attributable to with-profits funds Other goodwill attributable to shareholders represents amounts allocated to entities in Asia and until August 2017 the US operations. These goodwill amounts are not individually material. Impairment testing Goodwill does not generate cash flows independently of other groups of assets and thus is assigned to cash-generating units for the purposes of impairment testing. These cash-generating units are based upon how management monitors the business and represent the lowest level to which goodwill can be allocated on a reasonable basis. Assessment of whether goodwill may be impaired Goodwill is tested for impairment by comparing the cash-generating units' carrying amount, including any goodwill, with its recoverable amount. With the exception of M&G, the goodwill attributable to shareholders mainly relates to acquired life businesses. The Company routinely compares the aggregate of net asset value and acquired goodwill on an IFRS basis of acquired life business with the value of the current in-force business as determined using the EEV methodology. Any excess of IFRS over EEV carrying value is then compared with EEV basis value of current and projected future new business to determine whether there is any indication that the goodwill in the IFRS statement of financial position may be impaired. Goodwill for venture fund investments is tested for impairment by comparing the business's carrying value, including goodwill to its recoverable amount (fair value less costs to sell). M&G The recoverable amount for the M&G business (which is now part of the UK and Europe operating segment) has been determined by calculating the value in use of M&G Group Limited and its subsidiaries (considered to be a cash-generating unit during 2017). This has been calculated by aggregating the present value of future cash flows expected to be derived from the M&G business. The discounted cash flow valuation has been based on a three-year plan prepared by M&G, and approved by management, and cash flow projections for later years. The value in use is particularly sensitive to a number of key assumptions as follows: i The set of economic, market and business assumptions used to derive the three-year plan. The direct and secondary effects of recent developments, such as changes in global equity markets and trends in fund flows, are considered by management in arriving at the expectations for the final projections for the plan; ii The assumed growth rate on forecast cash flows beyond the terminal year of the plan after considering expected future and past growth rates. A growth rate of 1.7 per cent (2016: 2.0 per cent) has been used to extrapolate beyond the plan period; iii The risk discount rate. Differing discount rates have been applied in accordance with the nature of the individual component businesses. For the most material component retail and institutional business, a risk discount rate of 12 per cent (2016: 12 per cent) has been applied to post-tax cash flows. The pre-tax risk discount rate was 15 per cent (2016: 16 per cent); and iv That asset management contracts continue on similar terms. Management believes that any reasonable change in the key assumptions would not cause the recoverable amount of M&G to fall below its carrying amount. C5(b) Deferred acquisition costs and other intangible assets 2017 2016 £m £m Deferred acquisition costs and other intangible assets attributable to shareholder Deferred acquisition costs and other intangible assets attributable to with-profits funds Total of deferred acquisition costs and other intangible assets The deferred acquisition costs and other intangible assets attributable to shareholders comprise: 2017 2016 £m £m Deferred acquisition costs related to insurance contracts as classified under IFRS 4 Deferred acquisition costs related to investment management contracts, including life assurance contracts classified as financial instruments and investment management contracts under IFRS 4 Present value of acquired in-force policies for insurance contracts as classified under IFRS 4 (PVIF) Distribution rights and other intangibles Total of deferred acquisition costs and other intangible assets 2017 2016 Deferred acquisition costs Asia US UK and All PVIF and 1 Total Total £m £m £m £m £m £m £m Balance at 1 January Additions Amortisation to the income statement: 2 Operating profit ) ) ) ) ) ) ) Non-operating profit — — — ) ) ) ) ) ) ) Disposals and transfers — — — — — — ) Exchange differences and other movements ) ) — ) ) Amortisation of DAC related to net unrealised valuation movements on the US insurance operation's available-for-sale securities recognised within other comprehensive income 1 — ) — — — ) Balance at 31 December 1 PVIF and other intangibles includes amounts in relation to software rights with additions of £38 million, amortisation of £32 million, foreign exchange losses of £5 million and a balance at 31 December 2017 of £67 million. 2 Under the Group's application of IFRS 4, US GAAP is used for measuring the insurance assets and liabilities of its US and certain Asia operations. Under US GAAP, most of the US insurance operation's products are accounted for under Accounting Standard no. 97 of the Financial Accounting Standards Board (FAS 97) whereby deferred acquisition costs are amortised in line with the emergence of actual and expected gross profits which are determined using an assumption for long-term investment returns for the separate account of 7.4 per cent (2016 and 2015: 7.4 per cent) (gross of asset management fees and other charges to policyholders, but net of external fund management fees). The amounts included in the income statement and other comprehensive income affect the pattern of profit emergence and thus the DAC amortisation attaching. DAC amortisation is allocated to the operating and non-operating components of the Group's supplementary analysis of profit and other comprehensive income by reference to the underlying items (see note C7.3(iv)). Note PVIF and other intangibles comprise PVIF, distribution rights and other intangibles such as software rights. Distribution rights relate to amounts that have been paid or have become unconditionally due for payment as a result of past events in respect of bancassurance partnership arrangements in Asia. These agreements allow for bank distribution of Prudential's insurance products for a fixed period of time. US insurance operations The DAC amount in respect of US insurance operations comprises amounts in respect of: 2017 2016 £m £m Variable annuity business Other business Cumulative shadow DAC (for unrealised gains booked in other comprehensive income)* ) ) Total DAC for US operations * Consequent upon the positive unrealised valuation movement in 2017 of £617 million (2016: negative unrealised valuation movement of £28 million), there is a loss of £76 million (2016: a gain of £76 million) for altered shadow DAC amortisation booked within other comprehensive income. These adjustments reflect movement from period to period, in the changes to the pattern of reported gross profits that would have occurred if the assets reflected in the statement of financial position had been sold, crystallising the unrealised gains and losses, and the proceeds reinvested at the yields currently available in the market. At 31 December 2017, the cumulative shadow DAC balance as shown in the table above was negative £289 million (2016: negative £237 million). Sensitivity of amortisation charge The amortisation charge to the income statement is reflected in both operating profit and short-term fluctuations in investment returns. The amortisation charge to the operating profit in a reporting period comprises: (i) A core amount that reflects a relatively stable proportion of underlying premiums or profit; and (ii) An element of acceleration or deceleration arising from market movements differing from expectations. In periods where the cap and floor feature of the mean reversion technique (which is used for moderating the effect of short-term volatility in investment returns) are not relevant, the technique operates to dampen the second element above. Nevertheless, extreme market movements can cause material acceleration or deceleration of amortisation in spite of this dampening effect. Furthermore, in those periods where the cap or floor is relevant, the mean reversion technique provides no further dampening and additional volatility may result. In 2017, the DAC amortisation charge for operating profit was determined after including a credit for decelerated amortisation of £86 million (2016: credit for decelerated amortisation of £93 million; 2015: charge for accelerated amortisation of £2 million). The 2017 amount primarily reflects the impact of the positive separate account performance, which is higher than the assumed level for the year. The application of the mean reversion formula, (described in note A3.1) has the effect of dampening the impact of equity market movements on DAC amortisation while the mean reversion assumption lies within the corridor. In 2018, it would take approximate movements in separate account values of more than either negative 32 per cent or positive 37 per cent for the mean reversion assumption to move outside the corridor. Deferred acquisition costs and other intangible assets attributable to with-profits funds Other intangible assets in the Group consolidated statement of financial position attributable to with-profits funds consist of: 2017 2016 £m £m Deferred acquisition costs related to insurance contracts attributable to the PAC with-profits fund — Computer software and other intangibles attributable to with-profits funds (i) Deferred acquisition costs related to insurance and investment contracts The movements in deferred acquisition costs relating to insurance and investment contracts are as follows: Insurance Investment Insurance Investment £m £m £m £m DAC at 1 January Additions Amortisation ) ) ) ) Exchange differences ) — — Disposals and transfers — — ) — Change in shadow DAC related to movement in unrealised appreciation of Jackson's securities classified as available-for-sale ) — — DAC at 31 December Note All of the additions are through internal development. The carrying amount of the balance comprises the following gross and accumulated amortisation amounts: 2017 2016 £m £m Gross amount Accumulated amortisation ) ) Net book amount (ii) Present value of acquired in-force (PVIF) and other intangibles attributable to shareholders 2017 2016 PVIF Distribution Other Total PVIF Distribution Other Total £m £m £m £m £m £m At 1 January Cost Accumulated amortisation ) ) ) ) ) ) ) ) Additions — — Amortisation charge ) ) ) ) ) ) ) ) Disposals and transfers — — — — — ) ) ) Exchange differences and other movements — ) ) ) At 31 December Comprising: Cost Accumulated amortisation ) ) ) ) ) ) ) ) Notes (i) All of the PVIF balances relate to insurance contracts. The PVIF attaching to investment contracts have been fully amortised. Amortisation is charged over the period of provision of asset management services as those profits emerge. (ii) Distribution rights relate to fees paid in relation to the bancassurance partnership arrangements for the bank distribution of Prudential's insurance products for a fixed period of time. The distribution rights amounts are amortised over the term of the distribution contracts. (iii) Software is amortised over its useful economic life, which generally represents the licence period of the software acquired. |
Borrowings
Borrowings | 12 Months Ended |
Dec. 31, 2017 | |
Borrowings | |
Borrowings | C6 Borrowings C6.1 Core structural borrowings of shareholder-financed operations £m £m Holding company operations: note(i) US$1,000m 6.5% Notes (Tier 2) note(v) — US$250m 6.75% Notes (Tier 1) note(vi) US$300m 6.5% Notes (Tier 1) note(vi) US$700m 5.25% Notes (Tier 2) US$550m 7.75% Notes (Tier 1) note(vi) US$1,000m 5.25% Notes (Tier 2) US$725m 4.375% Notes (Tier 2) US$750m 4.875% Notes (Tier 2) note(iv) — Perpetual Subordinated Capital Securities €20m Medium Term Notes 2023 (Tier 2) note(vii) £435m 6.125% Notes 2031 (Tier 2) £400m 11.375% Notes 2039 (Tier 2) £600m 5% Notes 2055 (Tier 2) £700m 5.7% Notes 2063 (Tier 2) Subordinated Notes Subordinated debt total Senior debt: note(ii) £300m 6.875% Bonds 2023 £250m 5.875% Bonds 2029 Holding company total Prudential Capital bank loan note(iii) Jackson US$250m 8.15% Surplus Notes 2027 note(viii) Total (per consolidated statement of financial position) Notes (i) These debt tier classifications are consistent with the treatment of capital for regulatory purposes under the Solvency II regime. The Group has designated all US$4,275 million (2016: US$4,525 million) of its US dollar denominated subordinated debt as a net investment hedge under IAS 39 to hedge the currency risks related to the net investment in Jackson. (ii) The senior debt ranks above subordinated debt in the event of liquidation. (iii) The Prudential Capital bank loan of £275 million is drawn at a cost of 12 month GBP LIBOR plus 0.33 per cent. The loan was renewed in December 2017 maturing on 20 December 2022 with an option to repay annually. (iv) In October 2017, the Company issued core structural borrowings of US$750 million 4.875 per cent Tier 2 perpetual subordinated notes. The proceeds, net of costs, were £565 million. (v) In December 2017, the Company repaid its US$1,000 million 6.5 per cent Tier 2 perpetual subordinated notes. (vi) These borrowings can be converted, in whole or in part, at the Company's option and subject to certain conditions, on any interest payment date, into one or more series of Prudential preference shares. (vii) The €20 million borrowings were issued at 20-year Euro Constant Maturity Swap (capped at 6.5 per cent). These have been swapped into borrowings of £14 million with interest payable at three-month GBP LIBOR plus 1.2 per cent. (viii) Jackson's borrowings are unsecured and subordinated to all present and future indebtedness, policy claims and other creditor claims of Jackson. C6.2 Other borrowings (a) Operational borrowings attributable to shareholder-financed operations 2017 2016 £m £m Commercial Paper Medium Term Notes 2018 Borrowings in respect of short-term fixed income securities programmes Bank loans and overdrafts Obligations under finance leases Other borrowings Other borrowings note Total Note Other borrowings mainly include senior debt issued through the Federal Home Loan Bank of Indianapolis (FHLB), secured by collateral posted with the FHLB by Jackson. In addition, other borrowings include amounts whose repayment to the lender is contingent upon future surplus emerging from certain contracts specified under the arrangement. If insufficient surplus emerges on those contracts, there is no recourse to other assets of the Group and the liability is not payable to the degree of shortfall. (b) Borrowings attributable to with-profits operations 2017 2016 £m £m Non-recourse borrowings of consolidated investment funds* £100m 8.5% undated subordinated guaranteed bonds of Scottish Amicable Finance plc † Other borrowings (predominantly obligations under finance leases) Total * In all instances the holders of the debt instruments issued by these subsidiaries and funds do not have recourse beyond the assets of these subsidiaries and funds. The increase since 31 December 2016 primarily relates to the debt instruments issued by new consolidated securitisation entities backed by a portfolio of mortgage loans (see note C3.3(c) for further details). † The interests of the holders of the bonds issued by Scottish Amicable Finance plc, a subsidiary of the Scottish Amicable Insurance Fund, are subordinated to the entitlements of the policyholders of that fund. C6.3 Maturity analysis The following table sets out the remaining contractual maturity analysis of the Group's borrowings as recognised in the statement of financial position: Shareholder-financed operations With-profits operations Core structural borrowings Operational borrowings Borrowings £m £m £m £m £m £m Less than 1 year 1 to 2 years — — 2 to 3 years — — — 3 to 4 years — — — 4 to 5 years — — — Over 5 years Total |
Risk and sensitivity analysis
Risk and sensitivity analysis | 12 Months Ended |
Dec. 31, 2017 | |
Risk and sensitivity analysis | |
Risk and sensitivity analysis | C7 Risk and sensitivity analysis C7.1 Group overview The Group's risk framework and the management of the risk, including those attached to the Group's financial statements including financial assets, financial liabilities and insurance liabilities, together with the inter-relationship with the management of capital have been included in the audited sections of 'Group Risk Framework'. The financial and insurance assets and liabilities on the Group's balance sheet are, to varying degrees, subject to market and insurance risk and other changes of experience assumptions that may have a material effect on IFRS basis profit or loss and shareholders' equity. The market and insurance risks, including how they affect Group's operations and how these are managed are discussed in the 'Group Risk Framework'. The most significant items that the IFRS shareholders' profit or loss and shareholders' equity for the Group's life assurance business are sensitive to, are shown in the following tables. The distinction between direct and indirect exposure is not intended to indicate the relative size of the sensitivity. Type of business Market and Insurance and Investments/derivatives Liabilities / unallocated surplus Other exposure Asia insurance operations (see also section C7.2) All business Currency risk Mortality and morbidity risk Persistency risk With-profits business Net neutral direct exposure (indirect exposure only) Investment performance subject to smoothing through declared bonuses Unit-linked business Net neutral direct exposure (indirect exposure only) Investment performance through asset management fees Non-participating business Asset/liability mismatch risk Credit risk Interest rates for those operations where the basis of insurance liabilities is sensitive to current market movements Interest rate and price risk US insurance operations (see also section C7.3) All business Currency risk Persistency risk Variable annuity business Net effect of market risk arising from incidence of guarantee features and variability of asset management fees offset by derivative hedging programme Risk that utilisation of withdrawal benefits or lapse levels differ from those assumed in pricing Fixed index annuity business Derivative hedge programme to the extent not fully hedged against liability Incidence of equity participation features Fixed index annuities, Fixed annuities and GIC business Credit risk Interest rate risk Profit and loss and shareholders' equity are volatile for these risks as they affect the values of derivatives and embedded derivatives and impairment losses. In addition, shareholders' equity is volatile for the incidence of these risks on unrealised appreciation of fixed income securities classified as available-for-sale under IAS 39 Spread difference between earned rate and rate credited to policyholders Lapse risk, but the effects of extreme events may be mitigated by the application of market value adjustments UK and Europe insurance operations (see also section C7.4) With-profits business Net neutral direct exposure (indirect exposure only) Investment performance subject to smoothing through declared bonuses Persistency risk to future shareholder transfers SAIF sub-fund Net neutral direct exposure (indirect exposure only) Asset management fees earned Unit-linked business Net neutral direct exposure (indirect exposure only) Investment performance through asset management fees Persistency risk Asset/liability mismatch risk Shareholder-backed annuity business Credit risk for assets covering liabilities and shareholder capital Mortality experience and assumptions for longevity Interest rate risk for assets in excess of liabilities ie assets representing shareholder capital Detailed analyses of sensitivity of IFRS basis profit or loss and shareholders' equity to key market and other risks by business unit are provided in notes C7.2, C7.3, C7.4 and C7.5. The sensitivity analyses provided show the effect on profit or loss and shareholders' equity to changes in the relevant risk variables, all of which are reasonably possible at the relevant balance sheet date. In the equity risk sensitivity analysis shown below, the Group has considered the impact of an instantaneous 20 per cent fall in equity markets. If equity markets were to fall by more than 20 per cent, the Group believes that this would not be an instantaneous fall but rather would be expected to occur over a period of time during which the Group would be able to put mitigating management actions in place. In addition, the equity risk sensitivity analysis provided assumed that all equity indices fall by the same percentage. Impact of diversification on risk exposure The Group benefits from diversification benefits achieved through the geographical spread of the Group's operations and, within those operations, through a broad mix of product types. Relevant correlation factors include: Correlation across geographic regions: – Financial risk factors; and – Non-financial risk factors. Correlation across risk factors: – Longevity risk; – Expenses; – Persistency; and – Other risks. Limitations The sensitivities below do not reflect that assets and liabilities are actively managed and may vary at the time any actual market movement occurs. There are strategies in place to minimise the exposure to market fluctuations. For example, as market indices fluctuate, Prudential would take certain actions including selling investments, changing investment portfolio allocation and adjusting bonuses credited to policyholders. In addition, these analyses do not consider the effect of market changes on new business generated in the future. Other limitations on the sensitivities include: the use of hypothetical market movements to demonstrate potential risk that only represent Prudential's view of reasonably possible near-term market changes and that cannot be predicted with any certainty; the assumption that interest rates in all countries move identically; the assumption that all global currencies move in tandem with the US dollar against pound sterling; and the lack of consideration of the inter-relation of interest rates, equity markets and foreign currency exchange rates. C7.2 Asia insurance operations Exposure and sensitivity of IFRS basis profit and shareholders' equity to market and other risks The Asia operations sell with-profits and unit-linked policies, and the investment portfolio of the with-profits funds contains a proportion of equities. Non-participating business is largely backed by debt securities or deposits. The Group's exposure to market risk arising from its Asia operations is therefore at modest levels. This reflects the fact that the Asia operations have a balanced portfolio of with-profits, unit-linked and other types of business. In Asia, adverse persistency experience can impact the IFRS profitability of certain types of business written in the region. This risk is managed at a business unit level through regular monitoring of experience and the implementation of management actions as necessary. These actions could include product enhancements, increased management focus on premium collection, as well as other customer retention efforts. The potential financial impact of lapses is often mitigated through the specific features of the products, eg surrender charges, or through the availability of premium holiday or partial withdrawal policy features. In summary, for Asia operations, the operating profit based on longer-term investment returns is mainly affected by the impact of market levels on unit-linked persistency, and other insurance risks. At the total IFRS profit level the Asia result is affected by short-term value movements on the asset portfolio for non-linked shareholder-backed business. i Sensitivity to risks other than foreign exchange risk Interest rate risk Excluding its with-profits and unit-linked businesses, the results of the Asia business are sensitive to the movements in interest rates. For the purposes of analysing sensitivity to variations in interest rates, reference has been made to the movements in the 10-year government bond rates of the territories. At 31 December 2017, 10-year government bond rates vary from territory to territory and range from 1.0 per cent to 7.5 per cent (2016: 1.2 per cent to 8.1 per cent). For the sensitivity analysis as shown in the table below, the reasonably possible interest rate movement used is 1 per cent for all territories. The estimated sensitivity to the decrease and increase in interest rates at 31 December 2017 and 2016 is as follows: 2017 2016 Decrease Increase Decrease Increase £m £m £m £m Profit before tax attributable to shareholders ) ) Related deferred tax (where applicable) ) ) Net effect on profit and shareholders' equity ) ) ) The pre-tax impacts, if they arose, would mostly be recorded within the category short-term fluctuations in investments returns in the Group's segmental analysis of profit before tax. The degree of sensitivity of the results of the non-linked shareholder-backed business of the Asia operations to movements in interest rates depends upon the degree to which the liabilities under the 'grandfathered' IFRS 4 measurement basis reflects market interest rates from period-to-period. For example for those countries, such as those applying US GAAP, the results can be more sensitive as the effect of interest rate movements on the backing investments may not be offset by liability movements. In addition, the degree of sensitivity of the results shown in the table above is dependent on the interest rate level at that point of time. The low interest rates in certain countries have had an adverse impact on the degree of sensitivity to a decrease in interest rates. An additional factor to the direction of the sensitivity of the Asia operations as a whole is movement in the country mix. Equity price risk The non-linked shareholder-backed business has limited exposure to equity and property investment (31 December 2017: £1,764 million). Generally changes in equity and property investment values are not directly offset by movements in non-linked policyholder liabilities. The estimated sensitivity to a 10 per cent and 20 per cent change in equity and property prices for shareholder-backed Asia other business (including those held by the Group's joint venture and associate businesses), which would be reflected in the short-term fluctuation component of the Group's segmental analysis of profit before tax, at 31 December 2017 and 2016 is as follows: 2017 2016 Decrease Decrease of 20% of 10% of 20% of 10% £m £m £m £m Profit before tax attributable to shareholders ) ) ) ) Related deferred tax (where applicable) Net effect on profit and shareholders' equity ) ) ) ) A 10 or 20 per cent increase in their value would have an approximately equal and opposite effect on profit and shareholders' equity to the sensitivities shown above. Insurance risk Many of the business units in Asia are exposed to mortality/morbidity risk and provision is made within policyholder liabilities on a prudent regulatory basis to cover the potential exposure. If these prudent assumptions were strengthened by 5 per cent then it is estimated that post-tax profit and shareholders' equity would be decreased by approximately £66 million (2016: £61 million). Mortality and morbidity have a symmetrical effect on the portfolio and any weakening of these assumptions would have a similar equal and opposite impact. ii Sensitivity to foreign exchange risk Consistent with the Group's accounting policies, the profits of the Asia insurance operations are translated at average exchange rates and shareholders' equity at the closing rate for the reporting period. For 2017, the rates for the most significant operations are given in note A1. A 10 per cent increase (strengthening of the pound sterling) or decrease (weakening of the pound sterling) in these rates would have reduced or increased profit before tax attributable to shareholders, profit for the year and shareholders' equity, excluding goodwill attributable to Asia insurance operations respectively as follows: A 10% increase in local A 10% decrease in local £m £m £m £m Profit before tax attributable to shareholders ) ) Profit for the year ) ) Shareholders' equity, excluding goodwill, attributable to Asia operations ) ) C7.3 US insurance operations Exposure and sensitivity of IFRS basis profit and shareholders' equity to market and other risks Jackson's reported operating profit based on longer-term investment returns is sensitive to market conditions, both with respect to income earned on spread-based products and indirectly with respect to income earned on variable annuity asset management fees. Jackson's main exposures to market risk are to interest rate risk and equity risk. Jackson is exposed primarily to the following risks: Risks Risk of loss Equity risk • Related to the incidence of benefits related to guarantees issued in connection with its variable annuity contracts; and • Related to meeting contractual accumulation requirements in fixed index annuity contracts. Interest rate risk • Related to meeting guaranteed rates of accumulation on fixed annuity products following a sustained fall in interest rates; • Related to increases in the present value of projected benefits related to guarantees issued in connection with its variable annuity contracts following a sustained fall in interest rates especially if in conjunction with a fall in equity markets; • Related to the surrender value guarantee features attached to the Company's fixed annuity products and to policyholder withdrawals following a sharp and sustained increase in interest rates; and • The risk of mismatch between the expected duration of certain annuity liabilities and prepayment risk and extension risk inherent in mortgage-backed securities. Jackson's derivative programme is used to manage interest rate risk associated with a broad range of products and equity market risk attaching to its equity-based products. Movements in equity markets, equity volatility, interest rates and credit spreads materially affect the carrying value of derivatives that are used to manage the liabilities to policyholders and backing investment assets. Movements in the carrying value of derivatives combined with the use of US GAAP measurement (as 'grandfathered' under IFRS 4) for the insurance contracts assets and liabilities, which is largely insensitive to current period market movements mean that the Jackson total profit (ie including short-term fluctuations in investment returns) is sensitive to market movements. In addition to these effects the Jackson shareholders' equity is sensitive to the impact of interest rate and credit spread movements on the value of fixed income securities. Movements in unrealised appreciation on these securities are included as movement in shareholders' equity (ie outside the income statement). Jackson enters into financial derivative transactions, including those noted below to reduce and manage business risks. These transactions manage the risk of a change in the value, yield, price, cash flows or quantity of, or a degree of exposure with respect to assets, liabilities or future cash flows, which Jackson has acquired or incurred. Jackson uses free-standing derivative instruments for hedging purposes. Additionally, certain liabilities, primarily trust instruments supported by funding agreements, fixed index annuities, certain variable annuity guaranteed benefit features and reinsured Guaranteed Minimum Income Benefit variable annuity features are similar to derivatives. Jackson does not account for such items as either fair value or cash flow hedges as might be permitted if the specific hedge documentation requirements of IAS 39 were followed. Financial derivatives, including derivatives embedded in certain host liabilities that have been separated for accounting and financial reporting purposes are carried at fair value. The principal types of derivatives used by Jackson and their purpose are as follows: Derivative Purpose Interest rate swaps These generally involve the exchange of fixed and floating payments over the period for which Jackson holds the instrument without an exchange of the underlying principal amount. These agreements are used to hedge Jackson's exposure to movements in interest rates. Swaption contracts These contracts provide the purchaser with the right, but not the obligation, to require the writer to pay the present value of a long-duration interest rate swap at future exercise dates. Jackson both purchases and writes swaptions in order to hedge against significant movements in interest rates. Treasury futures contracts These derivatives are used to hedge Jackson's exposure to movements in interest rates. Equity index futures contracts and equity index options These derivatives (including various call and put options and options contingent on interest rates and currency exchange rates) are used to hedge Jackson's obligations associated with its issuance of certain VA guarantees. Some of these annuities and guarantees contain embedded options that are fair valued for financial reporting purposes. Cross-currency swaps Cross-currency swaps, which embody spot and forward currency swaps and additionally, in some cases, interest rate swaps and equity index swaps, are entered into for the purpose of hedging Jackson's foreign currency denominated funding agreements supporting trust instrument obligations. Credit default swaps These swaps represent agreements under which Jackson has purchased default protection on certain underlying corporate bonds held in its portfolio. These contracts allow Jackson to sell the protected bonds at par value to the counterparty if a default event occurs in exchange for periodic payments made by Jackson for the life of the agreement. Jackson does not write default protection using credit derivatives. The estimated sensitivity of Jackson's profit and shareholders' equity to equity and interest rate risks provided below is net of the related changes in amortisation of DAC. The effect on the related changes in amortisation of DAC provided is based on the current 'grandfathered' US GAAP DAC basis but does not include any effect from an acceleration or deceleration of amortisation of DAC. i Sensitivity to equity risk At 31 December 2017 and 2016, Jackson had variable annuity contracts with guarantees, for which the net amount at risk (NAR) is defined as the amount of guaranteed benefit in excess of current account value, as follows: 31 December 2017 Minimum Account Net Weighted Period £m £m Return of net deposits plus a minimum return GMDB 0–6 % 66.0 years GMWB—premium only % GMWB* 0–5 %** GMAB—premium only % — Highest specified anniversary account value minus withdrawals post-anniversary GMDB 66.5 years GMWB—highest anniversary only GMWB* Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary GMDB 0–6 % 69.0 years GMIB† 0–6 % 0.4 years GMWB* 0–8 %** 31 December 2016 Minimum Account Net Weighted Period £m £m Return of net deposits plus a minimum return GMDB 0–6 % 65.6 years GMWB—premium only % GMWB* 0–5 %** GMAB—premium only % — Highest specified anniversary account value minus withdrawals post-anniversary GMDB 66.0 years GMWB—highest anniversary only GMWB* Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary GMDB 0–6 % 68.7 years GMIB† 0–6 % 0.5 years GMWB* 0–8 %** * Amounts shown for GMWB comprise sums for the 'not for life' portion (where the guaranteed withdrawal base less the account value equals to the net amount at risk (NAR)), and a 'for life' portion (where the NAR has been estimated as the present value of future expected benefit payment remaining after the amount of the 'not for life' guaranteed benefits is zero). ** Ranges shown based on simple interest. The upper limits of 5 per cent or 8 per cent simple interest are approximately equal to 4.1 per cent and 6 per cent respectively, on a compound interest basis over a typical 10-year bonus period. For example 1 + 10 × 0.05 is similar to 1.04 growing at a compound rate of 4 per cent for a further nine years. † The GMIB guarantees are essentially fully reinsured. Account balances of contracts with guarantees were invested in variable separate accounts as follows: £m £m Mutual fund type: Equity Bond Balanced Money market Total As noted above, Jackson is exposed to equity risk through the options embedded in the fixed index annuity liabilities and guarantees included in certain variable annuity benefits as illustrated above. This risk is managed using an equity hedging programme to minimise the risk of a significant economic impact as a result of increases or decreases in equity market levels while taking advantage of naturally offsetting exposures in Jackson's operations. Jackson purchases futures and options that hedge the risks inherent in these products, while also considering the impact of rising and falling guaranteed benefit fees. Due to the nature and the valuation under IFRS of the free-standing derivatives and the variable annuity guarantee features, this hedge, while highly effective on an economic basis, would not be completely mute in the financial reporting as the immediate impact of equity market movements reset the free-standing derivatives immediately while the hedged liabilities reset more slowly and fees are recognised prospectively in the period in which they are earned. In addition to the exposure explained above, Jackson is also exposed to equity risk from its holding of equity securities, partnerships in investment pools and other financial derivatives. At 31 December 2017, the estimated sensitivity of Jackson's profit and shareholders' equity to immediate increases and decreases in equity markets is shown below. The sensitivities are shown net of related changes in DAC amortisation. 2017 2016 Decrease Increase Decrease Increase of 20% of 10% of 20% of 10% of 20% of 10% of 20% of 10% £m £m £m £m £m £m £m £m Pre-tax profit, net of related changes in amortisation of DAC Related deferred tax effects ) ) ) ) ) ) ) ) Net sensitivity of profit after tax and shareholders' equity Note The table above has been prepared to exclude the impact of the instantaneous equity movements on the separate account fees. In addition, the sensitivity movements shown include those relating to the fixed index annuity and the reinsurance of GMIB guarantees. The above table provides sensitivity movements as at a point in time while the actual impact on financial results would vary contingent upon the volume of new product sales and lapses, changes to the derivative portfolio, correlation of market returns and various other factors including volatility, interest rates and elapsed time. The directional movements in the sensitivities reflect the hedging programme in place at 31 December 2017 and 2016. ii Sensitivity to interest rate risk Except in the circumstances of interest rate scenarios where the guarantee rates included in contract terms are higher than crediting rates that can be supported from assets held to cover liabilities, the accounting measurement of fixed annuity liabilities of Jackson's products is not generally sensitive to interest rate risk. This position derives from the nature of the products and the US GAAP basis of measurement. The GMWB features attached to variable annuity business (other than 'for life' components) are accounted for under US GAAP as embedded derivatives which are fair-valued and, therefore, will be sensitive to changes in interest rates. Debt securities and related derivatives are marked to fair value. Value movements on derivatives, again net of related changes to amortisation of DAC and deferred tax, are recorded within the income statement. Fair value movements on debt securities, net of related changes to amortisation of DAC and deferred tax, are recorded within other comprehensive income. The estimated sensitivity of these items and policyholder liabilities to a 1 per cent and 2 per cent decrease and increase in interest rates at 31 December 2017 and 2016 is as follows: 2017 2016 Decrease Increase Decrease Increase of 2% of 1% of 1% of 2% of 2% of 1% of 1% of 2% £m £m £m £m £m £m £m £m Profit and loss: Pre-tax profit effect (net of related changes in amortisation of DAC) ) ) ) ) Related effect on charge for deferred tax ) ) ) ) Net profit effect ) ) ) ) Other comprehensive income: Direct effect on carrying value of debt securities (net of related changes in amortisation of DAC) ) ) ) ) Related effect on movement in deferred tax ) ) ) ) Net effect ) ) ) ) Total net effect on shareholders' equity ) ) ) ) ) ) These sensitivities are shown only for interest rates in isolation and do not include other movements in credit risk that may affect credit spreads and valuations of debt securities. Similar to sensitivity to equity risk, the sensitivity movements provided in the table above are at a point in time and reflect the hedging programme in place on the balance sheet date, while the actual impact on financial results would vary contingent upon a number of factors. iii Sensitivity to foreign exchange risk Consistent with the Group's accounting policies, the profits of the Group's US operations are translated at average exchange rates and shareholders' equity at the closing rate for the reporting period. For 2017, the average and closing rates were US$1.29 (2016: US$1.35) and US$1.35 (2016: US$1.24) to £1.00, respectively. A 10 per cent increase (weakening of the dollar) or decrease (strengthening of the dollar) in these rates would reduce or increase profit before tax attributable to shareholders, profit for the year and shareholders' equity attributable to US insurance operations respectively as follows: A 10% increase in A 10% decrease in £m £m £m £m Profit before tax attributable to shareholders ) ) Profit for the year ) ) Shareholders' equity attributable to US insurance operations ) ) iv Other sensitivities The total profit of Jackson is sensitive to market risk on the assets covering liabilities other than variable annuity business segregated in the separate accounts. For term business, acquisition costs are deferred and amortised in line with expected premiums. For annuity and interest-sensitive life business, acquisition costs are deferred and amortised in line with expected gross profits on the relevant contracts. For interest-sensitive business, the key assumption is the expected long-term spread between the earned rate and the rate credited to policyholders. In addition, expected gross profits depend on mortality assumptions, assumed unit costs and terminations other than deaths (including the related charges) all of which are based on a combination of actual experience of Jackson, industry experience and future expectations. A detailed analysis of actual experience is measured by internally developed expense, mortality and persistency studies. For variable annuity business, an assumption made is the expected long-term level of separate account returns, which for 2017 was 7.4 per cent (2016: 7.4 per cent). The impact of using this return is reflected in two principal ways, namely: – Through the projected expected gross profits that are used to determine the amortisation of deferred acquisition costs. This is applied through the use of a mean reversion technique which is described in more detail in note A3.1 above; and – The required level of provision for claims for guaranteed minimum death, 'for life' withdrawal, and income benefits. Jackson is sensitive to mortality risk, lapse risk and other types of policyholder behaviour, such as the utilisation of its GMWB product features. Jackson's persistency assumptions reflect a combination of recent experience for each relevant line of business and expert judgement, especially where a lack of relevant and credible experience data exists. These assumptions vary by relevant factors, such as product, policy duration, attained age and for variable annuity lapse assumptions, the extent to which guaranteed benefits are 'in the money' relative to policy account values. Changes in these assumptions, which are assessed on an annual basis after considering recent experience, could have a material impact on policyholder liabilities and therefore on profit before tax. See further information in note B1.2. In addition, in the absence of hedging, equity and interest rate movements can both cause a loss directly or an increased future sensitivity to policyholder behaviour. Jackson has an extensive derivative programme that seeks to manage the exposure to such altered equity markets and interest rates. C7.4 UK and Europe insurance operations Exposure and sensitivity of IFRS basis profit and shareholders' equity to market and other risks The IFRS basis results of the UK and Europe insurance operations are most sensitive to the following factors: – Asset/liability matching; – Default rate experience; – Mortality; – Longevity assumptions; and – The difference between the return on corporate bond and risk-free rate for shareholder-backed annuity business of The Prudential Assurance Company Limited. Further details are described below. The IFRS operating profit based on longer-term investment returns for UK and Europe insurance operations is sensitive to changes in longevity assumptions affecting the carrying value of liabilities to policyholders for UK shareholder-backed annuity business. At the total IFRS profit level, the result is particularly sensitive to temporary value movements on assets backing the capital of the shareholder-backed annuity business. With-profits business With-profits sub-fund business The shareholder results of the UK with-profits business (including non-participating annuity business of the with-profits sub-fund) are only sensitive to market risk through the indirect effect of investment performance on declared policyholder bonuses. The investment assets of PAC with-profits funds are subject to market risk. Changes in their carrying value, net of related changes to asset-share liabilities of with-profits contracts, affect the level of unallocated surplus of the fund. Therefore, the level of unallocated surplus is particularly sensitive to the level of investment returns on the portion of the assets that represents surplus. However, as unallocated surplus is accounted for as a liability under IFRS, movements in its value do not affect shareholders' profit and equity. The shareholder results of the UK with-profits fund are currently one-ninth of the cost of bonuses declared to with-profits policyholders. For certain unitised with-profits products, such as the PruFund range of funds, the bonuses represent the policyholders' net return based on the smoothed unit price of the selected investment fund. Investment performance is a key driver of bonuses declared, and hence the shareholder results. Due to the 'smoothed' basis of bonus declaration, the sensitivity to short-term investment performance is relatively low. However, long-term investment performance and persistency trends may affect future shareholder transfers. Shareholder-backed annuity |
Tax assets and liabilities
Tax assets and liabilities | 12 Months Ended |
Dec. 31, 2017 | |
Tax assets and liabilities | |
Tax assets and liabilities | C8 Tax assets and liabilities C8.1 Deferred tax The statement of financial position contains the following deferred tax assets and liabilities in relation to: 2017 At 1 Jan Movement Movement Other At 31 Dec £m £m £m £m £m Deferred tax assets Unrealised losses or gains on investments ) — ) Balances relating to investment and insurance contracts — — — Short-term temporary differences ) ) ) Capital allowances ) — — Unused tax losses ) — ) Total ) ) ) Deferred tax liabilities Unrealised losses or gains on investments ) ) ) ) Balances relating to investment and insurance contracts ) ) — ) Short-term temporary differences ) ) ) Capital allowances ) ) — ) ) Total ) ) ) Of the short-term temporary differences of £2,532 million relating to deferred tax assets, £1,799 million relating to the US insurance operations is expected to be recovered in line with the run off of the in-force book, and the remaining balances of the £733 million are expected to be recovered within 10 years. The reduction in the US corporate income tax rate to 21 per cent from 1 January 2018 was substantively enacted on 22 December 2017. The remeasurement to 21 per cent reduced deferred tax assets subject to US taxation by £1,587 million and deferred tax liabilities by £1,368 million. The £219 million net reduction was reflected partly in the income statement (£445 million charge attributable to shareholders and £92 million benefit to policyholders) and partly through reserves in other comprehensive income (£134 million benefit). The deferred tax balances at 31 December 2017 and 2016 arise in the following parts of the Group: Deferred tax assets Deferred tax liabilities 2016* 2016* £m £m £m £m Asia operations ) ) US operations ) ) UK and Europe ) ) Other operations ) ) Total ) ) * The 2016 comparative results have been re-presented from those previously published for the reassessment of the Group's operating segments as described in note B1.3. Under IAS 12, 'Income Taxes', deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability settled, based on the tax rates (and laws) that have been enacted or are substantively enacted at the end of the reporting period. Deferred tax assets are recognised to the extent that they are regarded as recoverable, that is to the extent that, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying temporary differences can be deducted. The taxation regimes applicable across the Group often apply separate rules to trading and capital profits and losses. The distinction between temporary differences that arise from items of either a trading or capital nature may affect the recognition of deferred tax assets. For the 2017 full year results and financial position at 31 December 2017 the following tax benefits have not been recognised: 2017 2016 Tax benefit Losses Tax benefit Losses £m £bn £m £bn Capital losses Trading losses Of the unrecognised trading losses, losses of £41 million will expire within the next seven years, the rest have no expiry date. C8.2 Current tax Of the £613 million (2016: £440 million) current tax recoverable, the majority is expected to be recovered in one year or less. The current tax recoverable includes £112 million in relation to the ongoing litigation relating to the historic tax treatment of dividends received from overseas portfolio investments of life insurance companies. The Prudential Assurance Company Limited (PAC) is the test case for this litigation. In April 2016, the UK Court of Appeal found in PAC's favour on all substantive points in the litigation. HM Revenue & Customs's appeal against the Court of Appeal's judgment was heard by the Supreme Court in February 2018. A decision is expected later in 2018. The current tax liability of £537 million (2016: £649 million) includes £139 million (2016: £89 million) of provisions for uncertain tax matters. Further detail is provided in note B4. |
Defined benefit pension schemes
Defined benefit pension schemes | 12 Months Ended |
Dec. 31, 2017 | |
Defined benefit pension schemes | |
Defined benefit pension schemes | C9 Defined benefit pension schemes (a) Background and summary economic and IAS 19 financial positions The Group's businesses operate a number of pension schemes. The specific features of these schemes vary in accordance with the regulations of the country in which the employees are located, although they are, in general, funded by the Group and based either on a cash balance formula or on years of service and salary earned in the last year or years of employment. The largest defined benefit scheme is the principal UK scheme, namely the Prudential Staff Pension Scheme (PSPS). PSPS accounts for 82 per cent (2016: 82 per cent) of the underlying scheme liabilities of the Group's defined benefit schemes. The Group also operates two smaller UK defined benefit schemes in respect of Scottish Amicable (SASPS) and M&G (M&GGPS). In addition, there are two small defined benefit schemes in Taiwan which have negligible deficits. Under IAS 19 'Employee Benefits' and IFRIC 14 'IAS 19—The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction', the Group is only able to recognise a surplus to the extent that it is able to access the surplus either through an unconditional right of refund or through reduced future contributions relating to ongoing service of active members. The Group has no unconditional right of refund to any surplus in PSPS. Accordingly, the PSPS surplus recognised is restricted to the present value of the economic benefit to the Group from the difference between the estimated future ongoing contributions and the full future cost of service for the active members. In contrast, the Group is able to access the surplus of SASPS and M&GGPS. Therefore, the amounts recognised for these schemes are the IAS 19 valuation amount (either a surplus or deficit). The Group asset/liability in respect of defined benefit pension schemes is as follows: 2017 2016 PSPS SASPS M&GGPS Other Total PSPS SASPS M&GGPS Other Total £m £m £m £m £m £m £m £m £m £m Underlying economic surplus (deficit) ) ) ) ) Less: unrecognised surplus ) — — — ) ) — — — ) Economic surplus (deficit) (including investment in Prudential insurance policies) note(iii) ) ) ) ) Attributable to: PAC with-profits fund ) — — ) — — Shareholder-backed operations ) ) ) ) ) Consolidation adjustment against policyholder liabilities for investment in Prudential insurance policies — — ) — ) — — ) — ) IAS 19 pension asset (liability) on the Group statement of financial position note(iv) ) ) ) ) ) ) ) Notes (i) No deficit or other funding is required for PSPS. Deficit funding, where applicable, is apportioned in the ratio of 70/30 between the PAC with-profits fund and shareholder-backed operations following detailed considerations in 2005 of the sourcing of previous contributions. Employer contributions for ongoing service of current employees are apportioned in the ratio relevant to current activity. (ii) The deficit of SASPS has been allocated 40 per cent to the PAC with-profits fund and 60 per cent to the shareholders' fund as at 31 December 2017 and 2016. (iii) The underlying position on an economic basis reflects the assets (including investments in Prudential insurance policies that are offset against liabilities to policyholders on the Group consolidation) and the liabilities of the schemes. (iv) At 31 December 2017, the PSPS pension asset of £236 million (2016: £159 million) and the other schemes' pension liabilities of £180 million (2016: £288 million) are included within 'Other debtors' and 'Provisions' respectively on the consolidated statement of financial position. Triennial actuarial valuations In respect of PSPS the contributions into the scheme are payable at the minimum level required under the scheme rules. Excluding expenses, the contributions are payable at approximately £6 million per annum for on-going service of active members of the scheme. No deficit or other funding is required. Deficit funding for PSPS, when applicable, is apportioned in the ratio of 70/30 between the PAC with-profits fund and shareholder-backed operations based on the sourcing of previous contributions. Employer contributions for on-going service of current employees are apportioned in the ratio relevant to current activity. In respect of SASPS it has been agreed with the Trustees that the level of deficit funding should be £26.0 million per annum from 1 January 2018 until 31 March 2027, or earlier if the scheme's funding level reaches 100 per cent before this date, to eliminate the actuarial deficit. The deficit funding will be reviewed every three years at subsequent valuations. In respect of M&GGPS it has been agreed with the Trustees that no deficit funding is required from 1 January 2016. Deficit funding of £9.3 million was paid in 2015. Defined benefit pension schemes in the UK are generally required to be subject to full actuarial valuations every three years in order to assess the appropriate level of funding for schemes in relation to their commitments. These valuations include assessments of the likely rate of return on the assets held within the separate trustee administered funds. The actuarial valuation differs from the IAS 19 accounting basis valuation in a number of respects, including the discount rate assumption where IAS 19 prescribes a rate based on high quality corporate bonds while a more 'prudent' assumption is used for the actuarial valuation. Risks to which the defined benefit schemes expose the Group Responsibility of making good of any deficit that may arise in the schemes lies with the employers of the schemes, which are subsidiaries of the Group. Accordingly, the pension schemes expose the Group to a number of risks and the most significant of which are interest rate and investment risk, inflation risk and mortality risk. Corporate governance The Group's UK pension schemes are established under trust and are subject to UK legal requirements; this includes being subject to regulation by 'The Pension Regulator' in accordance with the Pension Act 1995. Each scheme has a corporate trustee to which some directors are appointed by Group employers with the remaining directors nominated by members in accordance with UK legal requirements. The trustees have the ultimate responsibility to ensure that the scheme is managed in accordance with the Trust Deed & Rules. The trustees act in the best interests of the schemes beneficiaries; this includes taking appropriate account of each employer's legal obligation and financial ability to support the schemes, when setting investment strategy and when agreeing funding with the employers. The employers' contribution commitments are formally updated at each triennial valuation; between valuations funding levels and employer strength continue to be monitored with the Trustees being able to bring forward the next triennial valuation if they consider it appropriate to do so. All of the Group's three UK defined benefit pension schemes (PSPS, SASPS and M&GGPS) are final salary schemes, which are closed to new entrants. The Trustees of each scheme set the general investment policy and specify any restrictions on types of investment and the degrees of divergence permitted from the benchmark, but delegate the responsibility for selection and realisation of specific investments to the Investment Managers. The Trustees consult the Principal Employer, (eg The Prudential Assurance Company for PSPS), on the investment principles, but the ultimate responsibility for the investment of the assets of the scheme lies with the Trustees. The Trustees of each of the schemes manage the investment strategy of the scheme to achieve an acceptable balance between investing in the assets that most closely match the expected benefit payments and assets that are expected to achieve a greater return in the hope of reducing the contributions required or providing additional benefits to members. For PSPS, a significant portion of the scheme assets are invested in liability matching assets such as bonds and gilts including index-linked gilts to partially hedge against inflation. In addition, PSPS has maintained a portfolio of interest rate and inflation swaps to match more closely the duration and inflation profile of its assets to its liabilities. SASPS and M&GGPS use very limited or no derivatives to manage their risks. The risks arising from these schemes are managed through a diversified mix of investments. SASPS has invested in a mix of both return-seeking assets, such as equities and property and matching assets including a leveraged liability driven investment portfolio to reflect the liability profile of the scheme. A portion of the M&GGPS assets is invested in index-linked gilts and leveraged index-linked gilts as part of its asset liability management. The mix of the investments is kept under review by the Trustees of the respective schemes. (b) Assumptions The actuarial assumptions used in determining benefit obligations and the net periodic benefit costs for the years ended 31 December were as follows: % % % Discount rate* Rate of increase in salaries Rate of inflation** Retail prices index (RPI) Consumer prices index (CPI) Rate of increase of pensions in payment for inflation: PSPS: Guaranteed (maximum 5%) Guaranteed (maximum 2.5%) Discretionary Other schemes * The discount rate has been determined by reference to an 'AA' corporate bond index, adjusted where applicable to allow for the difference in duration between the index and the pension liabilities. ** The rate of inflation reflects the long-term assumption for UK RPI or CPI depending on the tranche of the schemes. The calculations are based on current mortality estimates with an allowance made for future improvements in mortality. This allowance reflected the CMI's 2014 mortality improvements model, with scheme-specific calibrations. For immediate annuities in payment, in 2017 and 2016, a long-term mortality improvement rate of 1.75 per cent per annum and 1.25 per cent per annum was applied for males and females, respectively. (c) Estimated pension scheme surpluses and deficits This section illustrates the financial position of the Group's defined benefit pension schemes on an economic basis and the IAS 19 basis. The underlying pension position on an economic basis reflects the assets (including investments in Prudential policies that are offset against liabilities to policyholders on the Group consolidation) and the liabilities of the schemes. The IAS 19 basis excludes the investments in Prudential policies. At 31 December 2017, M&GGPS held investments in Prudential insurance policies of £151 million (2016: £134 million). Movements on the pension scheme surplus determined on the economic basis are as follows, with the effect of the application of IFRIC 14 being shown separately: 2017 Surplus (Charge) credit Actuarial gains Contributions Surplus £m £m £m £m £m All schemes Underlying position (without the effect of IFRIC 14) Surplus (deficit) ) Less: amount attributable to PAC with-profits fund ) ) ) ) Shareholders' share: Gross of tax surplus (deficit) ) Related tax ) ) ) ) Net of shareholders' tax ) Application of IFRIC 14 for the derecognition of PSPS surplus Derecognition of surplus ) ) — ) Less: amount attributable to PAC with-profits fund ) — Shareholders' share: Gross of tax ) ) — ) Related tax — ) — Net of shareholders' tax ) ) — ) With the effect of IFRIC 14 Surplus (deficit) ) Less: amount attributable to PAC with-profits fund ) ) ) ) Shareholders' share: Gross of tax surplus (deficit) ) ) Related tax ) ) ) Net of shareholders' tax ) ) Underlying investments of the schemes On the 'economic basis', after including the underlying assets represented by the investments in Prudential insurance policies as scheme assets, the plans' assets at 31 December comprise the following investments: 2017 2016 PSPS Other Total % PSPS Other Total % £m £m £m £m £m £m Equities UK Overseas Bonds* Government Corporate Asset-backed securities — Derivatives ) ) Properties Other assets Total value of assets** * 89 per cent of the bonds are investment graded (2016: 93 per cent). ** 96 per cent of the total value of the scheme assets are derived from quoted prices in an active market (2016: 98 per cent). None of the scheme assets included shares in Prudential plc or property occupied by the Prudential Group. The IAS 19 basis plan assets at 31 December 2017 of £8,766 million (2016: £8,872 million) is different from the economic basis plan assets of £8,917 million (2016: £9,006 million) as shown above due to the exclusion of investment in Prudential insurance policies, by M&GGPS as described above. The movements in the IAS 19 pension schemes' surplus and deficit between scheme assets and liabilities as consolidated in the financial statements were: Attributable to policyholders and shareholders 2017 £m Plan Present Net surplus Effect of Economic Other IAS 19 Net surplus (deficit), beginning of year ) ) ) ) Current service cost — ) ) — ) — ) Net interest on net defined benefit liability (asset) ) ) — ) ) Administration expenses ) — ) — ) — ) Benefit payments ) — — — — — Employers' contributions note (iii) — — — Employees' contributions ) — — — — — Actuarial gains and losses note (iv) — ) Transfer into investment in Prudential insurance policies — — — — — ) ) Net surplus (deficit), end of year ) ) ) 2016 £m Net surplus (deficit), beginning of year ) ) ) Current service cost — ) ) — ) — ) Net interest on net defined benefit liability (asset) ) ) ) Administration expenses ) — ) — ) — ) Benefit payments ) — — — — — Employers' contributions note (iii) — — — Employees' contributions ) — — — — — Actuarial gains and losses note (iv) ) ) ) ) ) Transfer into investment in Prudential insurance policies — — — — — ) ) Net surplus (deficit), end of year ) ) ) ) 2015 £m Net deficit, beginning of year ) ) ) ) Current service cost — ) ) — ) — ) Past service cost — — — Net interest on net defined benefit liability (asset) ) ) ) ) Administration expenses ) — ) — ) — ) Benefit payments ) — — — — — Employers' contributions note (iii) — — — Employees' contributions ) — — — — — Actuarial gains and losses note (iv) ) ) Settlements or curtailments — — — — — — — Transfer into investment in Prudential insurance policies — — — — — Net surplus (deficit), end of year ) ) ) Notes (i) Maturity profile of the benefit obligations The weighted average duration of the undiscounted benefit obligations of the schemes is 18.6 years (2016: 19.5 years). The following table provides an expected maturity analysis of the benefit obligations as at 31 December: All schemes 1 year After After After After Over Total £m £m £m £m £m £m £m 2017 2016 (ii) The adjustments for investments in Prudential insurance policies are consolidation adjustments for intra-group assets and liabilities with no impact to operating results. (iii) Total employer contributions expected to be paid into the Group defined benefit schemes for the year ending 31 December 2018 amount to £50 million (2017: £45 million). (iv) The actuarial gains and losses attributable to policyholders and shareholders as shown in the table above are analysed as follows: £m £m £m Actuarial gains and losses Return on the scheme assets less amount included in interest income ) (Losses) on changes in demographic assumptions ) ) ) (Losses) on changes in financial assumptions ) ) Experience gains on scheme liabilities ) Effect of derecognition of PSPS surplus ) Consolidation adjustment for investments in Prudential insurance policies and other adjustments ) ) ) The losses of £1,733 million in 2016 on change in financial assumptions primarily reflect the effect of the decrease in the discount rate used in determining the scheme liabilities from 3.8 per cent in 2015 to 2.6 per cent in 2016. These 2016 losses were partially offset by the increase in the return on the scheme assets, which was greater than the amount included in interest income by £1,203 million. (d) Sensitivity of the pension scheme liabilities to key variables The sensitivity information below is based on the core scheme liabilities and assumptions at the balance sheet date. The sensitivities are calculated based on a change in one assumption with all other assumptions being held constant. As such, interdependencies between the assumptions are excluded. The impact of the rate of inflation assumption sensitivity includes the impact of inflation on the rate of increase in salaries and rate of increase of pensions in payment. The sensitivities of the underlying pension scheme liabilities as shown below do not directly equate to the impact on the profit or loss attributable to shareholders or shareholders' equity due to the effect of the application of IFRIC 14 on PSPS and the allocation of a share of the interest in the financial position of PSPS and SASPS to the PAC with-profits fund as described above. Assumption applied Sensitivity change in Impact of sensitivity on scheme liabilities Discount rate Decrease by 0.2% Increase in scheme liabilities by: PSPS Other schemes Discount rate Increase by 0.2% Decrease in scheme liabilities by: PSPS Other schemes Rate of inflation RPI: Decrease by 0.2% Decrease in scheme liabilities by: CPI: Decrease by 0.2% PSPS with consequent Other schemes reduction in salary increases Mortality rate Increase life expectancy by 1 year Increase in scheme liabilities by: PSPS Other schemes |
Share capital, share premium an
Share capital, share premium and own shares | 12 Months Ended |
Dec. 31, 2017 | |
Share capital, share premium and own shares | |
Share capital, share premium and own shares | C10 Share capital, share premium and own shares 2017 2016 Issued shares of 5p each fully paid Number of Share Share Number of Share Share £m £m £m £m At 1 January Shares issued under share-based schemes — At 31 December Amounts recorded in share capital represent the nominal value of the shares issued. The difference between the proceeds received on issue of shares, net of issue costs, and the nominal value of shares issued is credited to the share premium account. At 31 December 2017, there were options outstanding under save as you earn schemes to subscribe for shares as follows: Number of Share price range Exercisable from to 31 December 2017 629p 1,455p 31 December 2016 466p 1,155p Transactions by Prudential plc and its subsidiaries in Prudential plc shares The Group buys and sells Prudential plc shares ('own shares') either in relation to its employee share schemes or via transactions undertaken by authorised investment funds that the Group is deemed to control. The cost of own shares of £250 million as at 31 December 2017 (2016: £226 million) is deducted from retained earnings. The Company has established trusts to facilitate the delivery of shares under employee incentive plans. At 31 December 2017, 11.4 million (2016: 10.7 million) Prudential plc shares with a market value of £218 million (2016: £175 million) were held in such trusts all of which are for employee incentive plans. The maximum number of shares held during 2017 was 15.1 million which was in March 2017. The Company purchased the following number of shares in respect of employee incentive plans. The shares purchased each month are as follows: 2017 share price 2016 share price Number of Number of Low High Cost Low High Cost £ £ £ £ £ £ January February March April May June July August September October November December Total The Group has consolidated a number of authorised investment funds where it is deemed to control these funds under IFRS. Some of these funds hold shares in Prudential plc. The total number of shares held by these funds at 31 December 2017 was 6.4 million (2016: 6.0 million) and the cost of acquiring these shares of £71 million (2016: £61 million) is included in the cost of own shares. The market value of these shares as at 31 December 2017 was £121 million (2016: £97 million). During 2017, these funds made net acquisitions of 372,029 Prudential shares (2016: net disposals of 77,423) for a net increase of £9.4 million to book cost (2016: net increase of £7.9 million). All share transactions were made on an exchange other than the Stock Exchange of Hong Kong. Other than set out above the Group did not purchase, sell or redeem any Prudential plc listed securities during 2017 or 2016. |
Provisions
Provisions | 12 Months Ended |
Dec. 31, 2017 | |
Provisions | |
Provisions | C11 Provisions £m £m Provision in respect of defined benefit pension schemes C9 Other provisions (see below) Total provisions Analysis of other provisions: £m £m At 1 January Charged to income statement: Additional provisions Unused amounts released ) ) Used during the year ) ) Exchange differences ) Total at 31 December Other provisions comprise staff benefits provisions of £453 million (2016: £415 million) that are generally expected to be paid out within the next three years, other provisions of £121 million (2016: £69 million) and a provision for review of past annuity sales after utilisation during the year of £369 million (2016: £175 million). Prudential has agreed with the Financial Conduct Authority (FCA) to review annuities sold without advice after 1 July 2008 to its contract-based defined contribution pension customers. The review will examine whether customers were given sufficient information about their potential eligibility to purchase an enhanced annuity, either from Prudential or another pension provider. The FCA formally released its redress calculation methodology in early 2018 and accordingly Prudential reassessed the provision held to cover the costs of undertaking the review and any potential redress. At 31 December 2017, following this reassessment, the gross provision was increased to £400 million (2016: £175 million), excluding any utilisation during the year. The ultimate amount that will be expended by the Group on the review, which is currently expected to be completed in 2019, remains uncertain. Although the Group's professional indemnity insurance is expected to mitigate the overall financial impact of this review, with potential insurance recoveries of up to £175 million, no such recovery has been factored into the provision, in accordance with the requirements of IAS 37 'Provisions, Contingent Liabilities and Contingent Assets'. |
Capital
Capital | 12 Months Ended |
Dec. 31, 2017 | |
Capital | |
Capital | C12 Capital C12(a) Group objectives, policies and processes for managing capital (i) Capital measure The Group manages its Group Solvency II own funds as its measure of capital. At 31 December 2017 estimated Group Solvency II own funds are £26.4 billion (2016: £24.8 billion). (ii) External capital requirements Solvency II is the Group's consolidated capital regime. Solvency II is a risk-based solvency framework required under the European Solvency II Directive as implemented by the Prudential Regulatory Authority in the UK. The Solvency II surplus represents the aggregated capital held by the Group less Solvency Capital Requirements. (iii) Meeting of capital management objectives The Group Solvency Capital Requirement has been met during 2017. As well as holding sufficient capital to meet Solvency II requirements at Group level, the Group also closely manages the cash it holds within its central holding companies so that it can: a) Maintain flexibility, fund new opportunities and absorb shock events b) Fund dividends; and c) Cover central costs and debt payments. More details on holding company cash flows and balances are given in the section II(a) of the additional unaudited financial information. While the Group at a consolidated level is subject to the Solvency II requirements, at a business unit level capital is defined by local capital regulations and local business needs. Each of the Group's long-term business operations is capitalised to a sufficiently strong level for its individual circumstances. The Group manages its assets, liabilities and capital locally, in accordance with local regulatory requirements and reflecting the different types of liabilities in each business. As a result of the diversity of products offered by Prudential and the different regulatory regimes under which it operates, the Group employs differing methods of asset/liability and capital management, depending on the business concerned. Stochastic modelling of assets and liabilities is undertaken in the UK, US and Asia to assess the economic capital requirements. A stochastic approach models the inter-relationship between asset and liability movements, taking into account asset correlation, management actions and policyholder behaviour under a large number of alternative economic scenarios. In addition, reserve adequacy testing under a range of scenarios and dynamic solvency testing is carried out, including under certain scenarios mandated by the UK, US and Asia regulators. The sensitivity of liabilities and other components of total capital vary depending upon the type of business concerned and this conditions the approach to asset/liability management. C12(b) Local capital regulations (i) Asia insurance operations The estimated capital position for Asia life insurance operations with reconciliation to shareholders equity is shown below: £m £m IFRS shareholders' equity Adjustments to regulatory basis Unallocated surplus of with-profits funds Deferred acquisition costs, distribution rights and goodwill of non-participating business not recognised for regulatory reporting ) ) Other adjustments Total adjustments Total available capital resources of life assurance businesses on local regulatory bases The capital requirements of significant operations are: China A risk-based capital, risk management and governance framework, known as the China Risk Oriented Solvency System (C-ROSS), applies in China. Under C-ROSS, insurers are required to maintain a core solvency ratio (core capital over minimum capital) and a comprehensive solvency ratio (actual capital over minimum capital) of not lower than 50 per cent and 100 per cent, respectively. The actual capital is the difference between the admitted assets and admitted liabilities. Hong Kong The capital requirement varies by underlying risk and duration of liabilities, but is generally determined as a percentage of mathematical reserves and capital at risk. Mathematical reserves are based on a best estimate basis with prudent margins for adverse deviations, discounted at a valuation interest rate based on a blend between the risk-adjusted portfolio yield and reinvestment rate. Indonesia Solvency capital is determined using a risk-based capital approach. Insurance companies in Indonesia are expected to maintain the level of net assets above 100 per cent of solvency capital. Malaysia A risk-based capital framework applies in Malaysia. The local regulator has set a Supervisory Target Capital Level of 130 per cent below which supervisory actions of increasing intensity will be taken. Each insurer is also required to set its own Individual Target Capital Level to reflect its own risk profile and this is expected to be higher than the Supervisory Target Capital Level. Singapore A risk-based capital framework applies in Singapore. A registered insurer incorporated in Singapore is required at all times to maintain a minimum level of paid-up ordinary share capital and to ensure that its financial resources are not less than the greater of (i) the total risk requirement arising from the assets and liabilities of the insurer, calculated in accordance with the Singapore Insurance Act; or (ii) a minimum amount of S$5 million (Singapore dollars). The regulator also has the authority to direct that the insurer satisfy additional capital adequacy requirements in addition to those set forth under the Singapore Insurance Act if it considers such additional requirements appropriate. (ii) US insurance operations The estimated capital position for Jackson with reconciliation to shareholders' equity is shown below: £m £m IFRS shareholders' equity Adjustments to regulatory basis Deferred acquisition costs, distribution rights and goodwill of non-participating business not recognised for regulatory reporting ) ) Jackson surplus notes Investment and policyholder liabilities valuation differences between IFRS and regulatory basis for Jackson Other adjustments Total adjustments ) ) Total available capital resources of life assurance businesses on local regulatory bases In December 2017 a significant US tax reform package, The Tax Cuts and Jobs Act, was enacted into law effective from 1 January 2018. These reforms led to a £628 million reduction in the level of statutory net admitted deferred tax assets. The regulatory framework for Jackson is governed by the requirements of the US NAIC approved Risk-Based Capital standards. Under these requirements life insurance companies report using a formula-based capital standard which includes components calculated by applying after-tax factors to various asset, premium and reserve items and a separate model-based component for market risk associated primarily with variable annuity products. The after-tax factors were not adjusted to reflect the impact of US Tax Reform. At 31 December 2017, Jackson had a permitted practice in effect as granted by the local regulator allowing Jackson to carry certain interest rate swaps at book value, as if statutory hedge accounting were in place, instead of at fair value as would have been otherwise required. Jackson is required to demonstrate the effectiveness of its interest rate swap programme pursuant to the Michigan Insurance Code. The total effect of this permitted practice, net of tax, was to decrease statutory surplus by £355 million at 31 December 2017. Under the equivalence provisions of Solvency II, Jackson is incorporated into the Group's Solvency II position at a level equal to available capital in excess of 250 per cent of the US local minimum risk-based capital requirement level at which corrective action commences. (iii) UK and Europe insurance operations Insurance operations in the UK and Europe are subject to Solvency II capital requirements on an individual basis. The UK solvency capital requirement has been met during 2017. (iv) Asset management operations—regulatory and other surplus Certain asset management subsidiaries of the Group are subject to regulatory requirements. The movement in the year of the surplus regulatory capital position of those subsidiaries, combined with the movement in the IFRS basis shareholders' funds for unregulated asset management operations, is as follows: Asset management operations 2017 2016 M&G US Eastspring Total Total £m £m £m £m £m Regulatory and other surplus Beginning of year Gains during the year Movement in capital requirement ) — ) ) ) Capital injection — — — Distributions made to the parent company ) — ) ) ) Exchange and other movements — ) ) ) End of year C12(c) Transferability of available capital In the UK PAC is required to meet the Solvency II capital requirements as a company as a whole, ie covering both its ring-fenced with-profits funds and non-profit funds. Further, the surplus of the with-profits funds is ring-fenced from the shareholder balance sheet with restrictions as to its distribution. Distributions from the with-profits funds to shareholders continue to reflect the shareholders' one-ninth share of the cost of declared policyholders' bonuses. For Jackson, capital retention is maintained at a level consistent with an appropriate rating by Standard & Poor's. Currently Jackson is rated AA. Jackson can pay dividends on its capital stock only out of earned surplus unless prior regulatory approval is obtained. Furthermore, dividends which exceed the greater of statutory net gain from operations less net realised investments losses for the prior year or 10 per cent of Jackson's prior year end statutory surplus, excluding any increase arising from the application of permitted practices, require prior regulatory approval. For Asia subsidiaries, the amounts retained within the companies are at levels that provide an appropriate level of capital strength in excess of the local regulatory minimum. For ring-fenced with-profits funds, the excess of assets over liabilities is retained with distribution tied to the shareholders' share of bonuses through declaration of actuarially determined surplus. The businesses in Asia may, in general, remit dividends to UK parent entities, provided the statutory insurance fund meets the local regulatory solvency targets. Available capital of the non-insurance business units is transferable after taking account of an appropriate level of operating capital, based on local regulatory solvency targets, over and above base liabilities. |
Property, plant and equipment
Property, plant and equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property, plant and equipment | |
Property, plant and equipment | C13 Property, plant and equipment Property, plant and equipment comprise Group occupied properties and tangible assets. A reconciliation of the carrying amount of these items from the beginning of the year to the end of the year is as follows: 2017 2016 Group Tangible Total Group Tangible Total £m £m £m £m £m £m At 1 January Cost Accumulated depreciation ) ) ) ) ) ) Net book amount Year ended 31 December Opening net book amount Exchange differences ) ) ) Depreciation charge ) ) ) ) ) ) Additions Arising on acquisitions of subsidiaries* — — — — Disposals and transfers ) ) ) ) ) ) Closing net book amount At 31 December Cost Accumulated depreciation ) ) ) ) ) ) Net book amount * Arising on an acquisition made for venture fund purposes by the PAC with-profits fund. Tangible assets Of the £494 million (2016: £392 million) of tangible assets, £360 million (2016: £247 million) were held by the Group's with-profits operations, primarily by the consolidated subsidiaries for venture fund and other investment purposes of the PAC with-profits fund. Capital expenditure: property, plant and equipment by segment The capital expenditure of £117 million (2016: £333 million) arose as follows: £41 million in UK and Europe, £19 million in US and £55 million in Asia with the remaining balance of £2 million arising from unallocated corporate expenditure (2016: £251 million in UK and Europe, £18 million in US and £62 million in Asia with the remaining balance of £2 million arising from unallocated corporate expenditure). |
Investment properties
Investment properties | 12 Months Ended |
Dec. 31, 2017 | |
Investment properties | |
Investment properties | C14 Investment properties Investment properties principally relate to the PAC with-profits fund and are carried at fair value. A reconciliation of the carrying amount of investment properties at the beginning and end of the year is set out below: £m £m At 1 January Additions: Resulting from property acquisitions Resulting from expenditure capitalised Disposals ) ) Net gain from fair value adjustments Net foreign exchange differences ) Transfers to held for sale assets — ) At 31 December The 2017 income statement includes rental income from investment properties of £876 million (2016: £781 million) and direct operating expenses including repairs and maintenance arising from these properties of £82 million (2016: £67 million). Investment properties of £5,689 million (2016: £6,020 million) are held under finance leases. The present value of minimum lease payments under these leases is £43 million (2016: £49 million) and 73 per cent (2016: 76 per cent) of lease payments are due in over five years. The Group's policy is to let investment properties to tenants through operating leases. Minimum future rentals to be received on non-cancellable operating leases of the Group's freehold investment properties are receivable in the following periods: £m £m Less than 1 year 1 to 5 years Over 5 years Total The total minimum future rentals to be received on non-cancellable sub-leases for the Group's investment properties held under finance leases at 31 December 2017 are £1,527 million (2016: £2,238 million). |
Disposal of businesses
Disposal of businesses | 12 Months Ended |
Dec. 31, 2017 | |
Disposal of businesses | |
Disposal of businesses | D Other notes D1 Disposal of businesses On 18 May 2017, the Group announced that it had completed the sale of its life insurance subsidiary in Korea, PCA Life Insurance Co. Ltd. to Mirae Asset Life Insurance Co. Ltd., following regulatory approvals. The transaction, announced on 10 November 2016, was for a consideration of KRW170 billion (equivalent to £117 million at 17 May 2017 closing rate).The proceeds, net of £9 million of related expenses, were £108 million. On completion of the sale the cumulative foreign exchange translation gain of the Korea life business of £61 million, that had arisen from 2004 (the year of the Group's conversion to IFRS) to disposal was recycled from other comprehensive income through the profit and loss account in 2017 as required by IAS 21. The adjustment has no net effect on shareholders' equity. The net contribution from the Korea life business to the 2017 profit after tax is the £61 million gain arising from the recycling of foreign exchange translation gains previously recognised in other comprehensive income and other elements in various line items of £5 million. The 2016 income statement recorded a charge for remeasurement of Korea life business classified as held for sale of £(238) million. For 2016 the result for the year, including short-term fluctuations in investment returns, together with the adjustment to the carrying value gave rise to an aggregate loss of £(227) million (2015: profit of £56 million). To facilitate comparisons of businesses retained by the Group, the supplementary analysis of profit shown in note B1.1 shows separately the results of the Korea life business. On 15 August 2017, the Group, through its subsidiary National Planning Holdings, Inc. (NPH) sold its US independent broker-dealer network to LPL Financial LLC. The initial consideration received was £252 million (US$325 million) resulting in a profit on disposal of £162 million (US$209 million) before tax and after costs and net losses that have been incurred in the year. |
Contingencies and related oblig
Contingencies and related obligations | 12 Months Ended |
Dec. 31, 2017 | |
Contingencies and related obligations | |
Contingencies and related obligations | D2 Contingencies and related obligations Litigation and regulatory matters In addition to the matters set out in note C11 in relation to the Financial Conduct Authority review of past annuity sales, the Group is involved in various litigation and regulatory issues. These may from time to time include class actions involving Jackson. While the outcome of such litigation and regulatory issues cannot be predicted with certainty, the Company believes that their ultimate outcome will not have a material adverse effect on the Group's financial condition, results of operations, or cash flows. Guarantees Guarantee funds in both the UK and the US provide for payments to be made to policyholders on behalf of insolvent life insurance companies and are financed by payments assessed on solvent insurance companies based on location, volume and types of business. The estimated reserve for future guarantee fund assessments is not significant. The directors believe that the reserve is adequate for all anticipated payments for known insolvencies. The Group has provided other guarantees and commitments to third-parties entered into in the normal course of business but the Group does not consider that the amounts involved are significant. Support for with-profits sub-funds by shareholders' funds PAC is liable to meet its obligations to with-profits policyholders even if the assets of the with-profits sub-funds are insufficient to do so. The assets, represented by the unallocated surplus of with-profits funds, in excess of amounts expected to be paid for future terminal bonuses and related shareholder transfers ('the excess assets') in the with-profits sub-funds could be materially depleted over time by, for example, a significant or sustained equity market downturn, costs of significant fundamental strategic change or a material increase in the pension mis-selling provision. In the unlikely circumstance that the depletion of the excess assets within the long-term fund was such that the Group's ability to satisfy policyholders' reasonable expectations was adversely affected, it might become necessary to restrict the annual distribution to shareholders or to contribute shareholders' funds to the with-profits sub-funds to provide financial support. Matters relating to with-profits sub-funds: – Pension mis-selling review—The UK insurance regulator required all UK life insurance companies to review sales of personal pensions policies for potential mis-selling. Offers to all cases were made by 30 June 2002. Costs arising from this review are met by the excess assets of the PAC with-profits sub-fund and hence have not been charged to the asset shares used in the determination of policyholder bonus rates. Prudential has given an assurance that these deductions from excess assets will not impact its bonus or investment policy for policies within the with-profits sub-funds that were in force at 31 December 2003. This assurance does not apply to new business since 1 January 2004. In the unlikely event that such deductions would affect the bonus or investment policy for the relevant policies, Prudential has stated it would make available support to the sub-fund from shareholder resources for as long as the situation continued, so as to ensure that policyholders were not disadvantaged. – Scottish Amicable Insurance sub-fund—Policies within this sub-fund (a with-profits sub-fund closed to new business) contain minimum levels of guaranteed benefit to policyholders. Should the assets of the sub-fund be inadequate to meet the guaranteed benefit obligations of the policyholders of SAIF, the PAC with-profits sub-fund would be liable to cover any such deficiency in the first instance. In addition, certain pensions products within this sub-fund have guaranteed annuity rates at retirement, for which a provision of £503 million was held within the sub-fund (2016: £571 million). – Guaranteed annuities—A provision for guaranteed annuity products of £53 million was held (2016: £62 million) in the PAC with-profits sub-fund. Intra-group capital support arrangements Prudential and PAC have put in place intra-group arrangements to formalise circumstances in which capital support would be made available by Prudential. While Prudential considers it unlikely that such support will be required, the arrangements are intended to provide additional comfort to PAC and its policyholders. In addition, Prudential has put in place intra-group arrangements to formalise undertakings by Prudential to the regulators of the Hong Kong subsidiaries regarding their solvency levels. |
Post balance sheet events
Post balance sheet events | 12 Months Ended |
Dec. 31, 2017 | |
Post balance sheet events | |
Post balance sheet events | D3 Post balance sheet events Dividends The second interim ordinary dividend for the year ended 31 December 2017, that was approved by the Board of Directors after 31 December 2017 is described in note B6. Intention to demerge the Group's UK businesses In March 2018, the Group announced its intention to demerge its UK and Europe business ('M&G Prudential') from Prudential plc, resulting in two separately-listed companies. In preparation for the UK demerger process, Prudential plc intends to transfer the legal ownership of its Hong Kong insurance subsidiaries from The Prudential Assurance Company Limited (M&G Prudential's UK regulated insurance entity) to Prudential Corporation Asia Limited, which is expected to complete by the end of 2019. Sale of £12.0 billion* UK annuity portfolio In March 2018, M&G Prudential also announced the sale of £12.0 billion* of its shareholder annuity portfolio to Rothesay Life. Under the terms of the agreement, M&G Prudential has reinsured £12.0 billion* of liabilities to Rothesay Life, which is expected to be followed by a Part VII transfer of the portfolio by the end of 2019. Further details are set out in the 'Corporate Transactions' section within 'Explanation of Performance and Other Financial Measures'. * |
Related party transactions
Related party transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related party transactions | |
Related party transactions | D4 Related party transactions Transactions between the Company and its subsidiaries are eliminated on consolidation. The Company has transactions and outstanding balances with certain unit trusts, Open-Ended Investment Companies (OEICs), collateralised debt obligations and similar entities which are not consolidated and where a Group company acts as manager which are regarded as related parties for the purposes of IAS 24. The balances are included in the Group's statement of financial position at fair value or amortised cost in accordance with their IAS 39 classifications. The transactions are included in the income statement and include amounts paid on issue of shares or units, amounts received on cancellation of shares or units and paid in respect of the periodic charge and administration fee. In addition, there are no material transactions between the Group's joint ventures which are accounted for on an equity method basis and other Group companies. Executive officers and directors of the Company may from time to time purchase insurance, asset management or annuity products marketed by Group companies in the ordinary course of business on substantially the same terms as those prevailing at the time for comparable transactions with other persons. In 2017, 2016 and 2015, other transactions with directors were not deemed to be significant both by virtue of their size and in the context of the directors' financial positions. All of these transactions are on terms broadly equivalent to those that prevail in arm's length transactions. Apart from these transactions with directors, no director had interests in shares, transactions or arrangements that require disclosure, other than those given in 'Compensation and Employees'. Key management remuneration is disclosed in note B2.3. |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2017 | |
Commitments | |
Commitments | D5 Commitments Operating leases and capital commitments The Group leases various offices to conduct its business. Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. £m £m Future minimum lease payments for non-cancellable operating leases fall due during the following periods: Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years Future minimum sub-lease rentals received for non-cancellable operating leases for land and buildings Minimum lease rental payments included in consolidated income statement In addition, the Group has provided, from time to time, certain guarantees and commitments to third parties including funding the purchase or development of land and buildings and other related matters. The contractual obligations to purchase or develop investment properties at 31 December 2017 were £176 million (2016: £458 million). At 31 December 2017, Jackson has unfunded commitments of £414 million (2016: £465 million) related to its investments in limited partnerships and £214 million (2016: £201 million) related to commercial mortgage loans and other fixed maturities. These commitments were entered into in the normal course of business and a material adverse impact on the operations is not expected to arise from them. At 31 December 2017, UK and Europe's insurance operations had unfunded commitments of £3,225 million (2016: £2,269 million) to private equity and infrastructure funds. These commitments were entered into in the normal course of business and no material adverse impact on the operations is expected to arise. |
Investments in subsidiary under
Investments in subsidiary undertakings, joint ventures and associates | 12 Months Ended |
Dec. 31, 2017 | |
Investments in subsidiary undertakings, joint ventures and associates | |
Investments in subsidiary undertakings, joint ventures and associates | D6 Investments in subsidiary undertakings, joint ventures and associates (a) Dividend restrictions and minimum capital requirements Certain Group subsidiaries and joint ventures are subject to restrictions on the amount of funds they may transfer in the form of cash dividends or otherwise to the parent company. Under UK company law, UK companies can only declare dividends if they have sufficient distributable reserves. Further, UK insurance companies are required to maintain solvency margins in accordance with the rules of the Prudential Regulation Authority. M&G Prudential's asset management company, M&G Investment Management Limited, is also required to maintain capital in accordance with regulatory requirements before making any distribution to the parent company. Jackson is subject to state laws that limit the dividends payable to its parent company based on statutory capital, surplus and prior year earnings. Dividends in excess of these limitations require prior regulatory approval. The Group's subsidiaries, joint ventures and associates in Asia may remit dividends to the Group, in general, provided the statutory insurance fund meets the capital adequacy standard required under local statutory regulations and has sufficient distributable reserves. For further details on local capital regulations in Asia please refer to note C12(b). (b) Investments in joint ventures and associates Joint ventures represent arrangements where the controlling parties through contractual or other agreement have the rights to the net assets of the arrangements. The Group has shareholder-backed joint venture insurance and asset management businesses in China with CITIC Group, and until September 2016 in India with ICICI Bank (see below). In addition, there is an asset management joint venture in Hong Kong with Bank of China International Holdings Limited (BOCI) and Takaful general and life insurance joint venture in Malaysia. The Group has various joint ventures relating to property investments held by the PAC with-profits fund. The results of these joint ventures are reflected in the movement in the unallocated surplus of the PAC with-profits funds and therefore do not affect shareholders' results. For the Group's joint ventures that are accounted for by using the equity method, the net of tax results of these operations are included in the Group's profit before tax. The investments in these joint ventures have the same accounting year end as the Group. The Group's associates, which are also accounted for under the equity method, include PPM South Africa and from September 2016 the Indian insurance entity, see below. In addition, the Group has investments in Open-Ended Investment Companies (OEICs), unit trusts, funds holding collateralised debt obligations, property unit trusts and venture capital investments of the PAC with-profits funds where the Group has significant influence. As allowed under IAS 28, these investments are accounted for on a fair value through profit or loss basis. The aggregate fair value of associates accounted for at fair value through profit or loss, where there are published price quotations, is approximately £2.4 billion at 31 December 2017 (2016: £3.5 billion). During 2016, following its listing and consequent amendments to the shareholder agreement, the Group ceased to exercise joint control over the insurance business in India, therefore the investment was re-classified as an associate, and continued to be accounted for using the equity method. The Group's share of the profits (including short-term fluctuations in investment returns), net of related tax, and carrying amount of interest in joint ventures and associates, which are equity accounted as shown in the consolidated income statement comprises the following: Joint ventures and associates 2015 £m £m £m Shareholder-backed business PAC with-profits fund (prior to offsetting effect in movement in unallocated surplus) Total Asia US UK and Europe Unallocated Insurance Asset Insurance Asset Insurance Asset Total Group 2017 Share of profits from joint ventures and associates, net of related tax — — — 2016 Share of profits from joint ventures and associates, net of related tax — — — 2015 Share of profits from joint ventures and associates, net of related tax — — — There is no other comprehensive income in the joint ventures and associates. There has been no unrecognised share of losses of a joint venture or associate that the Group has stopped recognising in the total income. The joint ventures have no significant contingent liabilities or capital commitments to which the Group is exposed nor does the Group have any significant contingent liabilities or capital commitments in relation to its interests in the joint ventures. (c) Related undertakings In accordance with Section 409 of the Companies Act 2006 a list of Prudential Group's subsidiaries, joint ventures, associates and significant holdings (being holdings of more than 20 per cent) along with the classes of shares held, the registered office address and the country of incorporation and the effective percentage of equity owned at 31 December 2017 is disclosed below. The definitions of a subsidiary undertaking, joint venture and associate in accordance with the Companies Act 2006 are different from the definition under IFRS. As a result, the related undertakings included within the list below may not be the same as the undertakings consolidated in the Group IFRS financial statements. The Group's consolidation policy is described in note A3.1(b). Direct subsidiary undertakings of the parent company, Prudential plc (shares held directly or via nominees) Key to share classes: Abbreviation Class of share held LBG Limited by Guarantee LPI Limited Partnership Interest MI Membership Interest NSB Non-stock basis OS Ordinary Shares PI Partnership Interest PS Preference Shares U Units Name of entity Classes of Proportion Registered office address and country of incorporation M&G Group Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Prudential (US Holdco1) Limited OS Prudential Capital Holding Company Limited OS Prudential Corporation Asia Limited OS 13th Floor, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong Prudential Financial Services Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Prudential Group Holdings Limited OS Prudential Property Services Limited OS The Prudential Assurance Company Limited OS Other subsidiaries, joint ventures, associates and significant holdings of the Group—no shares held directly by the parent company, Prudential plc or its nominees Name of entity Classes of Proportion Registered office address and country of incorporation Allied Life Brokerage Agency, Inc OS 400 East Court Avenue, Des Moines, IA 50309, USA ANRP II (AIV VI FC), LP LPI Cayman Corporate Centre, 27 Hospital Road, George Town, KY-9008, Cayman Islands BOCHK Aggressive Growth Fund OS 27th Floor, Bank of China Tower, 1 Garden Road, Central and Western District, Hong Kong BOCHK Balanced Growth Fund OS 12th Floor and 25th Floor, Citicorp Centre, 18 Whitfield Road, Causeway Bay, Hong Kong BOCHK China Equity Fund OS BOCHK Conservative Growth Fund OS BOCI—Prudential Asset Management Limited OS 27th Floor, Bank of China Tower, 1 Garden Road, Central and Western District, Hong Kong BOCI—Prudential Trustee Limited OS 12th Floor and 25th Floor, Citicorp Centre, 18 Whitfield Road, Causeway Bay, Hong Kong Brier Capital LLC OS 1 Corporate Way, Lansing, MI 48951, USA Brooke (Holdco 1) Inc OS 1105 North Market Street, Suite 1300, Wilmington, DE 19801, USA Brooke Holdings (UK) (In liquidation) OS c/o Mazars LLP, 45 Church Street, Birmingham, B3 2RT, UK Brooke Life Insurance Company OS 1 Corporate Way, Lansing, MI 48951, USA BWAT Retail Nominee (1) Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK BWAT Retail Nominee (2) Limited OS Name of entity Classes of Proportion Registered office address and country of incorporation Calvin F1 GP Limited OS 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Calvin F2 GP Limited OS Canada Property (Trustee) No 1 Limited OS Lime Grove House, Green Street, St Helier, Jersey, JE1 2ST Canada Property Holdings Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Canada Property Jersey No. 2 Trust OS Lime Grove House, Green Street, St Helier, Jersey, JE1 2ST Canada Property Jersey Trust OS Cardinal Distribution Park Management Limited OS 5th Floor Cavendish House, 39 Waterloo Street, Birmingham, B2 5PP, UK Carraway Guildford (Nominee A) Limited OS 13 Castle Street, St Helier, Jersey, JE4 5UT Carraway Guildford (Nominee B) Limited OS Carraway Guildford General Partner Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Carraway Guildford Investments Unit Trust OS 13 Castle Street, St Helier, Jersey, JE4 5UT Carraway Guildford LP LPI Lloyds Chambers, 1 Portsoken Street, London, E1 8HZ, UK Centaurus Retail LLP LPI 40 Broadway, London, SW1H 0BU, UK Central Square Leeds Limited (In liquidation) OS c/o Mazars LLP, 45 Church Street, Birmingham, B3 2RT, UK Centre Capital Non-Qualified Investors IV AIV Orion, LP LPI 2711 Centreville Road, Suite 400, Wilmington, DE 19808, USA Centre Capital Non-Qualified Investors IV AIV-ELS, LP LPI Centre Capital Non-Qualified Investors IV AIV-RA, LP LPI Centre Capital Non-Qualified Investors IV, LP LPI Name of entity Classes of Proportion Registered office address and country of incorporation Centre Capital Non-Qualified Investors V AIV-ELS, LP LPI 2711 Centreville Road, Suite 400, Wilmington, DE 19808, USA Centre Capital Non-Qualified Investors V, LP LPI CEP IV-A Chicago AIV, LP LPI 615 South Dupont Highway, Dover, DE 19901, USA CEP IV-A CWV AIV, LP LPI 850 New Burton Road, Suite 201, Dover, DE 19904, USA CEP IV-A Davenport AIV, LP LPI 615 South Dupont Highway, Dover, DE 19901, USA CEP IV-A Indy AIV, LP LPI CEP IV-A NMR AIV, LP LPI CEP IV-A WBCT AIV, LP LPI CF Prudential European QIS Fund OS 17 Rochester Row, London, SW1P 1QT, UK CF Prudential Japanese QIS Fund OS CF Prudential North American QIS Fund OS 135 Bishopsgate, London, EC2M 3UR, UK CF Prudential Pacific Markets Trust Fund OS Laurence Pountney Hill, London, EC4R 0HH, UK CF Prudential UK Growth QIS Fund OS 17 Rochester Row, London, SW1P 1QT, UK CITIC-CP Asset Management Co., Ltd. MI No.128 North Zhangjiabang Road, Pudong District, Shanghai, China CITIC-Prudential Fund Management Co., Ltd. MI Level 9, HSBC Building, Shanghai IFC, 8 Century Avenue, Pudong, Shanghai, China CITIC-Prudential Life Insurance Company Limited MI East Tower, World Financial Centre, No. 1 East Third Ring Middle Road, Chaoyang District, Beijing, China Clairvest Equity Partners IV-A LP LPI 22 St Clair Avenue East, Suite 1700, Toronto, ON M4T 2S3, Canada Cribbs Causeway JV Limited OS 40 Broadway, London, SW1H 0BU, UK Name of entity Classes of Proportion Registered office address and country of incorporation Cribbs Causeway Merchants Association Limited LBG The Mall at Cribbs Causeway, Bristol, BS34 5DG, UK Cribbs Mall Nominee (1) Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Curian Capital, LLC OS 1 Corporate Way, Lansing, MI 48951, USA Curian Clearing, LLC (Michigan) OS Digital Infrastructure Investment Partners GP LLP LPI Laurence Pountney Hill, London, EC4R 0HH, UK Digital Infrastructure Investment Partners GP1 Limited OS Digital Infrastructure Investment Partners LP LPI Digital Infrastructure Investment Partners SLP GP LLP LPI 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Digital Infrastructure Investment Partners SLP GP1 Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Digital Infrastructure Investment Partners SLP GP2 Limited OS Eastspring Al-Wara' Investments Berhad OS 16th Floor, Wisma Sime Darby, Jalan Raja Laut, 50350 Kuala Lumpur, Malaysia Eastspring Asset Management Korea Co. Ltd. OS 15th Floor, Shinhan Investment Tower, 70 Yoidae-ro, Youngdungpo-gu, Seoul 07325, Korea Eastspring Infrastructure Debt Fund L.P. PI PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands Eastspring Investments—Asian Local Bond Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments—Asian Smaller Companies Fund OS Eastspring Investments—Asian Total Return Bond Fund OS Name of entity Classes of Proportion Registered office address and country of incorporation Eastspring Investments—Developed and Emerging Asia Equity Fund OS Eastspring Investments—Emerging Europe, Middle East and Africa Dynamic Fund OS Eastspring Investments—Global Emerging Markets Customized Equity Fund OS Eastspring Investments—Global Emerging Markets Dynamic Fund OS Eastspring Investments—Global Low Volatility Equity Fund OS Eastspring Investments—Global Technology Fund OS Eastspring Investments—Japan Equity Fund OS Eastspring Investments—Japan Fundamental Value Fund OS Eastspring Investments—Pan European Fund OS 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Singapore 018983 Eastspring Investments—US Equity Income Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments—US High Yield Bond Fund OS Eastspring Investments—US Total Return Bond Fund OS Eastspring Investments (Hong Kong) Limited OS 13th Floor, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong Eastspring Investments (Luxembourg) SA OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments (Singapore) Limited OS 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Tower 2, Singapore 018983 Name of entity Classes of Proportion Registered office address and country of incorporation Eastspring Investments Asia Pacific Equity Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments Asian Bond Fund OS Eastspring Investments Asian Dynamic Fund OS Eastspring Investments Asian Equity Fund OS Eastspring Investments Asian Equity Income Fund OS Eastspring Investments Asian High Yield Bond Fund OS Eastspring Investments Asian Infrastructure Equity Fund OS Eastspring Investments Asian Low Volatility Equity Fund OS Eastspring Investments Asian Property Securities Fund OS Eastspring Investments Berhad OS 16th Floor, Wisma Sime Darby, Jalan Raja Laut, 50350 Kuala Lumpur, Malaysia Eastspring Investments China Equity Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments Dragon Peacock Fund OS Eastspring Investments European Investment Grade Bond Fund OS Eastspring Investments Fund Management Limited Liability Company MI 23rd Floor, Saigon Trade Center, 37 Ton Duc Thang Street, District 1, Ho Chi Minh City, Vietnam Eastspring Investments Global Emerging Markets Bond Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments Global Equity Navigator Fund OS Name of entity Classes of Proportion Registered office address and country of incorporation Eastspring Investments Global Market Navigator Fund OS Eastspring Investments Global Multi Asset Income Plus Growth Fund OS Eastspring Investments Greater China Equity Fund OS Eastspring Investments Hong Kong Equity Fund OS Eastspring Investments Incorporated OS 874 Walker Road, Suite C, Dover, DE 19904, USA Eastspring Investments India Consumer Equity Open Limited OS Suite 450, 4th Floor, Barkly Wharf East, Le Caudan Waterfront, Port Louis, Mauritius Eastspring Investments India Equity Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments India Equity Open Limited OS Suite 450, 4th Floor, Barkly Wharf East, Le Caudan Waterfront Port Louis, Mauritius Eastspring Investments India Infrastructure Equity Open Limited OS Eastspring Investments Latin American Equity Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments Limited OS Marunouchi Park Building, 6-1 Marunouchi 2-chome, Chiyoda-Ku, Tokyo, Japan Eastspring Investments Limited (In liquidation) OS Level 6, Precinct Building 5, Unit 5, Dubai International Financial Centre, Dubai, United Arab Emirates Eastspring Investments North America Value Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments Services Pte. Ltd. OS 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Tower 2, Singapore 018983 Name of entity Classes of Proportion Registered office address and country of incorporation Eastspring Investments SICAV-FIS—Alternative Investments Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments SICAV-FIS—Asia Pacific Loan Fund OS Eastspring Investments SICAV-FIS Universal USD Bond Fund OS Eastspring Investments SICAV-FIS Universal USD Bond II Fund OS Eastspring Investments US Bond Fund OS Eastspring Investments US Corporate Bond Fund OS Eastspring Investments US High Investment Grade Bond Fund OS Eastspring Investments US Investment Grade Bond Fund OS Eastspring Investments UT Singapore ASEAN Equity Fund OS 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Singapore 018983 Eastspring Investments UT Singapore Select Bond Fund OS Eastspring Investments World Value Equity Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Real Assets Partners OS PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands Eastspring Securities Investment Trust Co., Ltd. OS 4th Floor, No.1 Songzhi Road, Taipei 110, Taiwan Edger Investments Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Edinburgh Park (Management) Limited LBG 1 Exchange Crescent, Conference Square, Edinburgh, EH3 8UL, UK Embankment GP Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Name of entity Classes of Proportion Registered office address and country of incorporation Embankment Nominee 1 Limited OS Embankment Nominee 2 Limited OS Empire Holding SARL (In liquidation) OS 5, rue Guillaume Kroll, L-1882, Luxembourg Euro Salas Properties Limited (In liquidation) OS c/o Mazars LLP, 90 St. Vincent Street, Glasgow, G2 5UB, UK European Specialist Investment Funds—M&G Total Return Credit Investment Fund OS 80, route d'Esch, L-1470, Luxembourg Falan GP Limited OS 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Fashion Square ECO LP (In liquidation) LPI 1209 Orange Street, Wilmington, DE 19801, USA First Dakota, Inc OS 314 East Thayer Avenue, Bismarck, ND 58501, USA Five Hotel Holding, LLC MI 208 South LaSalle Street, Suite 814, Chicago, IL 60604, USA Foudry Properties Limited OS Clearwater Court, Vastern Road, Reading RG1 8DB, UK Furnival Insurance Company PCC Limited OS Third Floor, La Plaiderie Chambers, La Plaiderie, St Peter Port, Guernsey, GY1 1WG Genny GP 1 LLP LPI Laurence Pountney Hill, London, EC4R 0HH, UK Genny GP 2 Limited OS 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Genny GP Limited OS George Digital GP 1 LLP LPI George Digital GP 2 Limited OS George Digital GP Limited OS GGE GP Limited OS Green GP Limited OS Name of entity Classes of Proportion Registered office address and country of incorporation Greenpark (Reading) General Partner Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Greenpark (Reading) Nominee No. 1 Limited OS GreenPark (Reading) Nominee No. 2 Limited OS GS Twenty Two Limited OS Hermitage Management, LLC OS 1 Corporate Way, Lansing, MI 48951, USA Holborn Bars Nominees Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Holtwood Limited OS International House, Castle Hill, Victoria Road, Douglas, IM2 4RB, Isle of Man Hudson Seasons, LLC MI 874 Walker Road, Suite C, Dover, DE 19904, USA Hyde Holdco 1 Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK ICICI Prudential Asset Management Company Limited OS 12th Floor, Narain Manzil, 23, Barakhamba Road, New Delhi 110001, India ICICI Prudential Life Insurance Company Limited OS ICICI PruLife Towers, 1089 Appasaheb Marathe Marg, Prabhadevi, Mumbai 400025, India ICICI Prudential Pension Funds Management Company Limited OS ICICI Prudential Trust Limited OS 12th Floor, Narain Manzil, 23, Barakhamba Road, New Delhi 110001, India IFC Holdings, Inc OS 1209 Orange Street, Wilmington, DE 19801, USA Infracapital (AIRI) GP Limited OS 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital (Belmond) GP Limited OS Infracapital (Bio) GP Limited OS Name of entity Classes of Proportion Registered office address and country of incorporation Infracapital (GC) GP Limited OS Infracapital (IT PPP) GP Limited OS Infracapital (Sense) GP Limited OS Infracapital (TLSB) GP Limited OS Infracapital (TLSB) SLP LP LPI Infracapital ABP GP Limited (In liquidation) OS Infracapital CI II Limited OS Infracapital DF II GP LLP LPI Infracapital DF II Limited OS Infracapital Employee Feeder GP 1 LLP LPI Infracapital Employee Feeder GP 2 LLP LPI Infracapital Employee Feeder GP Limited OS Infracapital F1 GP2 Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Infracapital F2 GP1 Limited OS Infracapital F2 GP2 Limited OS Infracapital GP 1 LLP LPI Infracapital GP 2 LLP LPI Infracapital GP II Limited OS Infracapital GP Limited OS Infracapital Greenfield DF GP LLP LPI 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Greenfield Partners 1 SLP GP LLP LPI Infracapital Greenfield Partners 1 SLP GP1 Limited OS Infracapital Greenfield Partners 1 SLP GP2 Limited OS Name of entity Classes of Proportion Registered office address and country of incorporation Infracapital Greenfield Partners I Employee Feeder GP LLP LPI Infracapital Greenfield Partners I GP 1 Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Infracapital Greenfield Partners I GP 2 Limited OS Infracapital Greenfield Partners I GP LLP LPI 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Greenfield Partners I LP LPI Laurence Pountney Hill, London, EC4R 0HH, UK Infracapital Greenfield Partners I SLP2 GP LLP LPI 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Greenfield Partners I Subholdings GP LLP LPI Infracapital Greenfield Partners I Subholdings GP1 Limited OS Infracapital Long Term Income Partners GP 1 Limited (In liquidation) OS Laurence Pountney Hill, London, EC4R 0HH, UK Infracapital Long Term Income Partners GP 2 Limited (In liquidation) OS Infracapital Long Term Income Partners GP LLP LPI Infracapital Partners II LP LPI Infracapital Partners II Subholdings GP LLP LPI 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Partners II Subholdings GP1 Limited OS Infracapital Partners III GP SARL OS 6, rue Eugène Ruppert, L-245, Luxembourg Infracapital Partners LP LPI Laurence Pountney Hill, London, EC4R 0HH, UK Name of entity Classes of Proportion Registered office address and country of incorporation Infracapital RF GP Limited OS 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Sisu GP Limited OS Infracapital SLP II GP LLP LPI Infracapital SLP II LP LPI Infracapital SLP Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Innisfree M&G PPP LP LPI Boundary House, 91-93 Charterhouse Street, London, EC1M 6HR, UK Innisfree M&G PPP LLP LPI INVEST Financial Corporation Insurance Agency Inc, of Delaware OS 100 West 10th Street, Wilmington, DE 19801, USA INVEST Financial Corporation Insurance Agency Inc, of Illinois OS 208 South LaSalle Street, Chicago, IL 60604, USA Investment Centers of America, Inc OS 314 East Thayer Avenue, Bismarck, ND 58501, USA Jackson Charitable Foundation, Inc NSB 1 Corporate Way, Lansing, MI 48951, USA Jackson Holdings, LLC OS 1105 North Market Street, Suite 1300, Wilmington, DE 19801, USA Jackson National Asset Management, LLC OS 1 Corporate Way, Lansing, MI 48951, USA |
FURTHER ACCOUNTING POLICIES
FURTHER ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
FURTHER ACCOUNTING POLICIES | |
FURTHER ACCOUNTING POLICIES | E FURTHER ACCOUNTING POLICIES E1 Other significant accounting policies In addition to the critical accounting polices presented in note A3.1, the following detailed accounting policies are adopted by the Group to prepare the consolidated financial statements. These accounting policies are applied consistently for all years presented and normally are not subject to change unless new accounting standards, interpretations or amendments are introduced by the IASB. (a) Basis of consolidation The Group consolidates those investees it is deemed to control. The Group has control over an investee if all three of the following are met: (1) it has power over an investee; (2) it is exposed to, or has rights to, variable returns from its involvement with the investee; and (3) it has ability to use its power over the investee to affect its own returns (i) Subsidiaries Subsidiaries are those investees that the Group controls. The majority of the Group's subsidiaries are corporate entities, but the Group's insurance operations also invest in a number of limited partnerships. The Group performs a re-assessment of consolidation whenever there is a change in the substance of the relationship between the Group and an investee. Where the Group is deemed to control an entity it is treated as a subsidiary and its results, assets and liabilities are consolidated. Where the Group holds a minority share in an entity, with no control over the entity, the investments are carried at fair value through profit or loss within financial investments in the consolidated statement of financial position. Entities consolidated by the Group include Qualifying Partnerships as defined under the UK Partnerships (Accounts) Regulations 2008 (the 'Partnerships Act'). Some of these limited partnerships have taken advantage of the exemption under regulation 7 of the Partnerships Act from the financial statements requirements. This is under regulations 4 to 6, on the basis that these limited partnerships are dealt with on a consolidated basis in these financial statements. (ii) Joint ventures and associates Joint ventures are joint arrangements arising from a contractual agreement whereby the Group and other investors have joint control of the net assets of the arrangement. In a number of these arrangements, the Group's share of the underlying net assets may be less than 50 per cent but the terms of the relevant agreement make it clear that control is jointly exercised between the Group and the third party. Associates are entities over which the Group has significant influence, but it does not control. Generally it is presumed that the Group has significant influence if it holds between 20 per cent and 50 per cent voting rights of the entity. With the exception of those referred to below, the Group accounts for its investments in joint ventures and associates by using the equity method of accounting. The Group's share of profit or loss of its joint ventures and associates is recognised in the income statement and its share of movements in other comprehensive income is recognised in other comprehensive income. The equity method of accounting does not apply to investments in associates and joint ventures held by the Group's insurance or investment funds. This includes venture capital business, mutual funds and unit trusts and which, as allowed by IAS 28, 'Investments in Associates and Joint Ventures', are carried at fair value through profit or loss. (iii) Structured entities Structured entities are those that have been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity. Voting rights relate to administrative tasks. Relevant activities are directed by means of contractual arrangements. The Group invests in structured entities such as: – Open-Ended Investment Companies (OEICs); – Unit Trusts (UTs); – Limited partnerships; – Variable interest entities; – Investment vehicles within separate accounts offered through variable annuities; – Collateralised debt obligations; – Mortgage-backed securities; and – Similar asset-backed securities. Open-ended investment companies and unit trusts The Group invests in OEICs and UTs, which invest mainly in equities, bonds, cash and cash equivalents, and properties. The Group's percentage ownership in these entities can fluctuate on a daily basis according to the participation of the Group and other investors in them. – Where the entity is managed by a Group asset manager, and the Group's ownership holding in the entity exceeds 50 per cent, the Group is judged to have control over the entity. – Where the entity is managed by a Group asset manager, and the Group's ownership holding in the entity is between 20 per cent and 50 per cent, the facts and circumstances of the Group's involvement in the entity are considered, including the rights to any fees earned by the asset manager from the entity, in forming a judgement as to whether the Group has control over the entity. – Where the entity is managed by a Group asset manager, and the Group's ownership holding in the entity is less than 20 per cent, the Group is judged to not have control over the entity. – Where the entity is managed by an asset manager outside the Group, an assessment is made of whether the Group has existing rights that gives it the ability to direct the current activities of the entity and therefore control the entity. In assessing the Group's ability to direct an entity, the Group considers its ability relative to other investors. The Group has a limited number of OEICs and UTs where it considers it has such ability. Where the Group is deemed to control these entities, they are treated as a subsidiary and are consolidated, with the interests of investors other than the Group being classified as liabilities, and appear as net asset value attributable to unit holders of consolidated unit trusts and similar funds. Where the Group does not control these entities (as it is deemed to be acting as an agent) and they do not meet the definition of associates, they are carried at fair value through profit or loss within financial investments in the consolidated statement of financial position. Where the Group's asset manager sets up OEICs and UTs as part of asset management operations, the Group's interest is limited to the administration fees charged to manage the assets of such entities. With no participation in these entities, the Group does not retain risks associated with OEICs and UTs. For these open-ended investment companies and unit trusts, the Group is not deemed to control the entities but to be acting as an agent. The Group generates returns and retains the ownership risks in investment vehicles commensurate to its participation and does not have any further exposure to the residual risks of these investment vehicles. Jackson's separate account assets These are investment vehicles that invest contract holders' premiums in equity, fixed income, bonds and money market mutual funds. The contract holder retains the underlying returns and the ownership risks related to the underlying investments. The shareholder's economic interest in separate accounts is limited to the administrative fees charged. The separate accounts are set up as separate regulated entities governed by a Board of Governors or trustees for which the majority of the members are independent of Jackson or any affiliated entity. The independent members are responsible for any decision making that impacts contract holders' interest and govern the operational activities of the entities' advisers, including asset managers. Accordingly, the Group does not control these vehicles. These investments are carried at fair value through profit or loss within financial investments in the consolidated statement of financial position. Limited partnerships The Group's insurance operations invest in a number of limited partnerships, either directly or through unit trusts, through a mix of capital and loans. These limited partnerships are managed by general partners, in which the Group holds equity. Such interest in general partners and limited partnerships provide the Group with voting and similar rights to participate in the governance framework of the relevant activities in which limited partnerships are engaged in. Accounting for the limited partnerships as subsidiaries, joint ventures, associates or other financial investments depends on the terms of each partnership agreement and the shareholdings in the general partners. Other structured entities The Group holds investments in mortgage-backed securities, collateralised debt obligations and similar asset-backed securities, the majority of which are actively traded in a liquid market. The Group consolidates the vehicles that hold the investments where the Group is deemed to control the vehicles. When assessing control over the vehicles, the factors considered include the purpose and design of the vehicle, the Group's exposure to the variability of returns and the scope of the Group's ability to direct the relevant activities of the vehicle including any kick-out or removal rights that are held by third parties. The outcome of the control assessment is dependent on the terms and conditions of the respective individual arrangements. The majority of such vehicles are not consolidated. In these cases the Group is not the sponsor of the vehicles in which it holds investments and has no administrative rights over the vehicles' activities. The Group generates returns and retains the ownership risks commensurate to its holding and its exposure to the investments. Accordingly the Group does not have power over the relevant activities of such vehicles and all are carried at fair value through profit or loss within financial investments in the consolidated statement of financial position. The table below provides aggregate carrying amounts of the investments in unconsolidated structured entities reported in the Group's statement of financial position: 2017 2016 OEICs/UTs Separate Other OEICs/UTs Separate Other £m £m £m £m £m £m Statement of financial position line items Equity securities and portfolio holdings in unit trusts — — Debt securities — — — — Total The Group generates returns and retains the ownership risks in these investments commensurate to its participation and does not have any further exposure to the residual risks or losses of the investments or the vehicles in which it holds investments. As at 31 December 2017, the Group does not have an agreement, contractual or otherwise, or intention to provide financial support to structured entities that could expose the Group to a loss. (b) Reinsurance The measurement of reinsurance assets is consistent with the measurement of the underlying direct insurance contracts. The treatment of any gains or losses arising on the purchase of reinsurance contracts is dependent on the underlying accounting basis of the entity concerned. (c) Earned premiums, policy fees and claims paid Premiums for conventional with-profits policies and other protection type insurance policies are recognised as revenue when due. Premiums and annuity considerations for linked policies, unitised with-profits and other investment type policies are recognised as revenue when received or, in the case of unitised or unit-linked policies, when units are issued. These amounts exclude premium taxes and similar duties where Prudential collects and settles taxes borne by the customer. Policy fees charged on linked and unitised with-profits policies for mortality, asset management and policy administration are recognised as revenue when related services are provided. Claims paid include maturities, annuities, surrenders and deaths. Maturity claims are recorded as charges on the policy maturity date. Annuity claims are recorded when each annuity instalment becomes due for payment. Surrenders are charged to the income statement when paid and death claims are recorded when notified. (d) Investment return Investment return included in the income statement principally comprises interest income, dividends, investment appreciation/depreciation (realised and unrealised gains and losses) on investments designated as fair value through profit or loss, and realised gains and losses (including impairment losses) on items held at amortised cost and Jackson's debt securities designated as available-for-sale. Movements in unrealised appreciation/depreciation of Jackson's debt securities designated as available-for-sale are recorded in other comprehensive income. Interest income is recognised as it accrues, taking into account the effective yield on investments. Dividends on equity securities are recognised on the ex-dividend date and rental income is recognised on an accrual basis. (e) Financial investments other than instruments classified as long-term business contracts (i) Investment classification The Group holds financial investments in accordance with IAS 39, whereby subject to specific criteria, financial instruments are required to be accounted for under one of the following categories: – Financial assets and liabilities at fair value through profit or loss—this comprises assets and liabilities designated by management as fair value through profit or loss on inception and derivatives that are held for trading. These investments are measured at fair value with all changes thereon being recognised in investment return in the income statement; – Financial investments on an available-for-sale basis—this comprises assets that are designated by management as available-for-sale and/or do not fall into any of the other categories. These assets are initially recognised at fair value plus attributable transaction costs. Available-for-sale assets are subsequently measured at fair value. Interest income is recognised on an effective interest basis in the income statement. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset. Except for foreign exchange gains and losses on debt securities, which are included in the income statement, unrealised gains and losses are recognised in other comprehensive income. Upon disposal or impairment, accumulated unrealised gains and losses are transferred from other comprehensive income to the income statement as realised gains or losses; and – Loans and receivables—except for those designated as at fair value through profit or loss or available-for-sale, these instruments comprise non-quoted investments that have fixed or determinable payments. These instruments include loans collateralised by mortgages, deposits, loans to policyholders and other unsecured loans and receivables. These investments are initially recognised at fair value plus transaction costs. Subsequently, these instruments are carried at amortised cost using the effective interest method. The Group uses the trade date method to account for regular purchases and sales of financial assets. See note A3.1 for further details of valuation of financial investments. (ii) Derivatives and hedge accounting Derivative financial instruments are used to reduce or manage investment, interest rate and currency exposures, to facilitate efficient portfolio management and for investment purposes. The Group may designate certain derivatives as hedges. For hedges of net investments in foreign operations, the effective portion of any change in fair value of derivatives or other financial instruments designated as net investment hedges is recognised in other comprehensive income. The ineffective portion of changes in the fair value of the hedging instrument is recorded in the income statement. The Group does not regularly seek to apply fair value or cash flow hedging treatment under IAS 39. The Group has no fair value and cash flows hedges under IAS 39 at 31 December 2017 and 2016. All derivatives that are not designated as hedging instruments are carried at fair value, with movements in fair value being recorded in the income statement. The primary areas of the Group's continuing operations where derivative instruments are held are the UK with-profits funds and annuity business, and Jackson. For UK with-profits funds the derivative programme is used for the purposes of efficient portfolio management or reduction in investment risk. For shareholder-backed UK annuity business the derivatives are held to contribute to the matching as far as practical, of asset returns and duration with those of liabilities to policyholders. The carrying value of these liabilities is sensitive to the return on the matching financial assets including derivatives held. For Jackson's derivative programme see note A3.1. (iii) Embedded derivatives Embedded derivatives are present in host contracts issued by various Group companies, in particular Jackson. They are embedded within other non-derivative host financial instruments and insurance contracts to create hybrid instruments. Embedded derivatives meeting the definition of an insurance contract are accounted for under IFRS 4. Where economic characteristics and risks of the embedded derivatives are not closely related to the economic characteristics and risks of the host instrument, and where the hybrid instrument is not measured at fair value with the changes in fair value recognised in the income statement, the embedded derivative is bifurcated and carried at fair value as a derivative measured in accordance with IAS 39. In addition, the Group applies the option under IFRS 4 to not separate and fair value surrender options embedded in host contracts and with-profits investment contracts whose strike price is either a fixed amount or a fixed amount plus interest. (iv) Securities lending and reverse repurchase agreements The Group is party to various securities lending agreements (including repurchase agreements) under which securities are loaned to third parties on a short-term basis. The loaned securities are not derecognised; rather, they continue to be recognised within the appropriate investment classification. The Group's policy is that collateral in excess of 100 per cent of the fair value of securities loaned is required from all securities' borrowers and typically consists of cash, debt securities, equity securities or letters of credit. In cases where the Group takes possession of the collateral under its securities lending programme, the collateral, and corresponding obligation to return such collateral, are recognised in the consolidated statement of financial position. The Group is also party to various reverse repurchase agreements under which securities are purchased from third parties with an obligation to resell the securities. The securities are not recognised as investments in the statement of financial position. (v) Derecognition of financial assets and liabilities The Group's policy is to derecognise financial assets when it is deemed that substantially all the risks and rewards of ownership have been transferred. The Group derecognises financial liabilities only when the obligation specified in the contract is discharged, cancelled or has expired. (vi) Financial liabilities designated at fair value through profit or loss Consistent with the Group's risk management and investment strategy and the nature of the products concerned, the Group has designated under IAS 39 classification certain financial liabilities at fair value through profit or loss as these instruments are managed and their performance evaluated on a fair value basis. These instruments include liabilities related to consolidated collateralised debt obligations and net assets attributable to unit holders of consolidated unit trusts and similar funds. (f) Segments Under IFRS 8 'Operating Segments', the Group determines and presents operating segments based on the information that is internally provided to the Group Executive Committee which is the Group's chief operating decision maker. The operating segments identified by the Group reflect the Group's organisational structure, which, following a reorganisation during the year, is by business units Asia, US and UK and Europe. All business units contain both insurance and asset management operations. Further information on the Group's operating segments is provided in note B1.3. (g) Borrowings Although initially recognised at fair value, net of transaction costs, borrowings, excluding liabilities of consolidated collateralised debt obligations, are subsequently accounted for on an amortised cost basis using the effective interest method. Under the effective interest method, the difference between the redemption value of the borrowing and the initial proceeds (net of related issue costs) is amortised through the income statement to the date of maturity or for hybrid debt, over the expected life of the instrument. (h) Investment properties Investments in leasehold and freehold properties not for occupation by the Group, including properties under development for future use as investment properties, are carried at fair value, with changes in fair value included in the income statement. Properties are valued annually either by the Group's qualified surveyors or by taking into consideration the advice of professional external valuers using the Royal Institution of Chartered Surveyors valuation standards. Each property is externally valued at least once every three years. Leases of investment property where the Group has substantially all the risks and rewards of ownership are classified as finance leases (leasehold property). Finance leases are capitalised at the lease's inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. (i) Pension schemes For the Group's defined benefit schemes, if the present value of the defined benefit obligation exceeds the fair value of the scheme assets, then a liability is recorded in the Group's statement of financial position. By contrast, if the fair value of the assets exceeds the present value of the defined benefit obligation then the surplus will only be recognised if the nature of the arrangements under the trust deed, and funding arrangements between the Trustee and the Company, support the availability of refunds or recoverability through agreed reductions in future contributions. In addition, if there is a constructive obligation for the Company to pay deficit funding, this is also recognised such that the financial position recorded for the scheme reflects the higher of any underlying IAS 19 deficit and the obligation for deficit funding. The Group utilises the projected unit credit method to calculate the defined benefit obligation. This method sees each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Estimated future cash flows are then discounted at a high-quality corporate bond rate, adjusted to allow for the difference in duration between the bond index and the pension liabilities where appropriate, to determine its present value. These calculations are performed by independent actuaries. The plan assets of the Group's pension schemes include several insurance contracts that have been issued by the Group. These assets are excluded from plan assets in determining the pension surplus or deficit recognised in the consolidated statement of financial position. The aggregate of the actuarially determined service costs of the currently employed personnel, and the net interest on the net defined benefit liability (asset) at the start of the period, is charged to the income statement. Actuarial and other gains and losses as a result of changes in assumptions or experience variances are recognised as other comprehensive income. Contributions to the Group's defined contribution schemes are expensed when due. (j) Share-based payments and related movements in own shares The Group offers share award and option plans for certain key employees and a Save As You Earn plan for all UK and certain overseas employees. Shares held in trust relating to these plans are conditionally gifted to employees. The compensation expense charged to the income statement is primarily based upon the fair value of the options granted, the vesting period and the vesting conditions. The Company has established trusts to facilitate the delivery of Prudential plc shares under employee incentive plans and savings-related share option schemes. The cost to the Company of acquiring these treasury shares held in trusts is shown as a deduction from shareholders' equity. (k) Tax Prudential is subject to tax in numerous jurisdictions and the calculation of the total tax charge inherently involves a degree of estimation and judgement. Current tax expense is charged or credited based upon amounts estimated to be payable or recoverable as a result of taxable amounts for the current year and adjustments made in relation to prior years. The positions taken in tax returns where applicable tax regulation is subject to interpretation are recognised in full in the determination of the tax charge in the financial statements if the Group considers that it is probable that the taxation authority will accept those positions. Otherwise, provisions are established based on management's estimate and judgement of the likely amount of the liability, or recovery by providing for the single best estimate of the most likely outcome or the weighted average expected value where there are multiple outcomes. The total tax charge includes tax expense attributable to both policyholders and shareholders. The tax expense attributable to policyholders comprises the tax on the income of the consolidated with-profits and unit-linked funds. In certain jurisdictions, such as the UK, life insurance companies are taxed on both their shareholders' profits and on their policyholders' insurance and investment returns on certain insurance and investment products. Although both types of tax are included in the total tax charge in the Group's consolidated income statement, they are presented separately in the consolidated income statement to provide the most relevant information about tax that the Group pays on its profits. Deferred taxes are provided under the liability method for all relevant temporary differences. IAS 12 'Income Taxes' does not require all temporary differences to be provided for, in particular, the Group does not provide for deferred tax on undistributed earnings of subsidiaries where the Group is able to control the timing of the distribution and the temporary difference created is not expected to reverse in the foreseeable future. Deferred tax assets are only recognised when it is more likely than not that future taxable profits will be available against which these losses can be utilised. Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability settled, based on tax rates (and laws) that have been enacted or are substantively enacted at the end of the reporting period. (l) Business acquisitions and disposals Business acquisitions are accounted for by applying the purchase method of accounting, which adjusts the net assets of the acquired company to fair value at the date of purchase. The excess of the acquisition consideration over the fair value of the assets and liabilities of the acquired entity is recorded as goodwill. Expenses related to acquiring new subsidiaries are charged to the income statement in the period in which they are incurred. Income and expenses of acquired entities are included in the income statement from the date of acquisition. Income and expenses of entities sold during the period are included in the income statement up to the date of disposal. The gain or loss on disposal is calculated as the difference between sale proceeds net of selling costs, less the net assets of the entity at the date of disposal, adjusted for foreign exchange movements attaching to the sold entity that are required to be recycled to the income statement under IAS 21. (m) Goodwill Goodwill arising on acquisitions of subsidiaries and businesses is capitalised and carried on the Group statement of financial position as an intangible asset at initial value less any accumulated impairment losses. Goodwill impairment testing is conducted annually and when there is an indication of impairment. For the purposes of impairment testing, goodwill is allocated to cash generating units. For further details see note C5(a). (n) Intangible assets Intangible assets acquired on the purchase of a subsidiary or portfolio of contracts are measured at fair value on acquisition. Deferred acquisition costs are accounted for as described in note A3.1(c). Other intangible assets, such as distribution rights and software, are valued initially at the price paid to acquire them and are subsequently carried at cost less amortisation and any accumulated impairment losses. Distribution rights relate to fees paid under bancassurance partnership arrangements for bank distribution of products for the term of the contract. Amounts for distribution rights are amortised on a basis to reflect the pattern in which the future economic benefits are expected to be consumed by reference to new business production levels. The same principles apply to determining the amortisation method for other intangible assets unless the pattern cannot be determined reliably, in which case a straight line method is applied. Amortisation of intangible assets is charged to the 'acquisition costs and other expenditure' line in the consolidated income statement. Impairment testing is conducted when there is an indication of impairment. (o) Cash and cash equivalents Cash and cash equivalents consist of cash at bank and in hand, deposits held at call with banks, treasury bills and other short-term highly liquid investments with less than 90 days maturity from the date of acquisition. (p) Shareholders' dividends 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. (q) Share capital Shares are classified as equity when their terms do not create an obligation to transfer assets. The difference between the proceeds received on issue of the shares, net of share issue costs, and the nominal value of the shares issued, is credited to share premium. Where the Company purchases shares for the purposes of employee incentive plans, the consideration paid, net of issue costs, is deducted from retained earnings. Upon issue or sale any consideration received is credited to retained earnings net of related costs. (r) Foreign exchange The Group's consolidated financial statements are presented in pounds sterling, the Group's presentation currency. Accordingly, the results and financial position of foreign subsidiaries must be translated into the presentation currency of the Group from their functional currencies, ie the currency of the primary economic environment in which the entity operates. All assets and liabilities of foreign subsidiaries are converted at year end exchange rates while all income and expenses are converted at average exchange rates where this is a reasonable approximation of the rates prevailing on transaction dates. The impact of these currency translations is recorded as a separate component in the statement of comprehensive income. Foreign currency borrowings that are used to provide a hedge against Group equity investments in overseas subsidiaries are translated at year end exchange rates and movements recognised in other comprehensive income. Other foreign currency monetary items are translated at year end exchange rates with changes recognised in the income statement. Foreign currency transactions are translated at the spot rate prevailing at the time. (s) Earnings per share 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 potentially dilutive ordinary shares are those shar |
Condensed Financial Information
Condensed Financial Information of Registrant Prudential plc | 12 Months Ended |
Dec. 31, 2017 | |
Condensed Financial Information of Registrant Prudential plc | |
Condensed Financial Information of Registrant Prudential plc | Schedule II Condensed Financial Information of Registrant Prudential plc Profit and Loss Accounts (FRS 101 Basis) Years ended 31 December £m £m £m Investment income, including dividends received from subsidiary undertakings Investment expenses and charges ) ) ) Other charges: Corporate expenditure ) ) ) Foreign currency exchange gains ) Profit on ordinary activities before tax Tax credit on profit on ordinary activities Profit for the financial year Other comprehensive income: Items that will not be reclassified to profit or loss Actuarial gains recognised in respect of the defined benefit pension scheme Related tax ) — — Total comprehensive income for the year Schedule II 31 December £m £m Fixed assets Investments in subsidiary undertakings Current assets Debtors: Amounts owed by subsidiary undertakings Other debtors Tax recoverable Derivative assets Pension asset Cash at bank and in hand Liabilities: amounts falling due within one year Commercial paper ) ) Other borrowings ) — Derivative liabilities ) ) Amounts owed to subsidiary undertakings ) ) Tax payable ) ) Deferred tax liability ) ) Accruals and deferred income ) ) ) ) Net current assets Total assets less current liabilities Liabilities: amounts falling due after more than one year Subordinated liabilities ) ) Debenture loans ) ) Other borrowings — ) ) ) Total net assets Capital and reserves Share capital Share premium Profit and loss account Shareholders' funds Schedule II Share Share Profit Total £m £m £m £m Balance at 1 January 2015 Total comprehensive income for the year Profit for the year — — Actuarial gains recognised in respect of the defined benefit pension scheme — — Total comprehensive income for the year — — Transactions with owners, recorded directly in equity New share capital subscribed — — Share based payment transactions — — Dividends — — ) ) Total contributions by and distributions to owners — ) ) Balance at 31 December 2015 Balance at 1 January 2016 Total comprehensive income for the year Profit for the year — — Actuarial gains recognised in respect of the defined benefit pension scheme — — Total comprehensive income for the year — — Transactions with owners, recorded directly in equity New share capital subscribed — Share based payment transactions — — Dividends — — ) ) Total contributions by and distributions to owners ) ) Balance at 31 December 2016 Balance at 1 January 2017 Total comprehensive income for the year Profit for the year — — Actuarial gains recognised in respect of the defined benefit pension scheme — — Total comprehensive income for the year — — Transactions with owners, recorded directly in equity New share capital subscribed — — Share based payment transactions — — ) ) Dividends — — ) ) Total contributions by and distributions to owners — ) ) Balance at 31 December 2017 Schedule II Years ended 31 December 2017 2016 2015 £m £m £m Operations Net cash inflow from operating activities before interest and tax Interest paid ) ) ) Taxes received Equity dividends paid ) ) ) Net cash inflow before financing Financing Issue of ordinary share capital Issue of borrowings Repayment of borrowings ) — — Movement in commercial paper and other borrowings to support a short-term fixed income securities program ) ) ) Movement in net amount owed by subsidiary undertakings ) ) Net cash inflow (outflow) from financing ) ) Net cash inflow (outflow) for the year ) Reconciliation of profit on ordinary activities before tax to net cash inflow from operating activities Profit on ordinary activities before tax Add back: interest charged Adjustments for non-cash items: Fair value adjustments on derivatives ) Pension scheme ) Foreign currency exchange and other movements ) Decrease (increase) in debtors ) — Increase (decrease) in creditors ) Net cash inflow from operating activities Schedule II Condensed Financial Information of Registrant Prudential plc Notes to the Condensed Financial Statement Schedule 31 December 2017 1 Basis of preparation The financial statements of the parent company are prepared in accordance with UK Generally Accepted Accounting Practice, including Financial Reporting Standard 101 Reduced Disclosure Framework ('FRS 101'). In preparing these financial statements, the Company applies the recognition and measurement requirements in International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board ('IASB') and endorsed by the EU but makes amendments where necessary in order to comply with the Companies Act 2006. 2 Significant accounting policies Investments in subsidiary undertakings Investments in subsidiary undertakings are shown at cost less impairment. Amounts owed by subsidiary undertakings Amounts owed by subsidiary undertakings are shown at cost, less provisions. Derivatives Derivative financial instruments are held to manage certain macro-economic exposures. Derivative financial instruments are carried at fair value with changes in fair value included in the profit and loss account. Borrowings Borrowings are initially recognised at fair value, net of transaction costs, and subsequently accounted for on an amortised cost basis using the effective interest method. Under the effective interest method, the difference between the redemption value of the borrowing and the initial proceeds, net of transaction costs, is amortised through the profit and loss account to the date of maturity or, for subordinated debt, over the expected life of the instrument. Dividends Interim dividends are recorded in the period in which they are paid. Share premium The difference between the proceeds received on issue of shares and the nominal value of the shares issued is credited to the share premium account. Foreign currency translation Assets and liabilities denominated in foreign currencies, including borrowings that have been used to finance or provide a hedge against Group equity investments in overseas subsidiaries, are translated at year end exchange rates. The impact of these currency translations is recorded within the profit and loss account for the year. Tax Current tax expense is charged or credited to operations based upon amounts estimated to be payable or recoverable as a result of taxable amounts for the current year. To the extent that losses of an individual UK company are not offset in any one year, they can be carried back for one year or carried forward indefinitely to be offset against profits arising from the same company. Deferred tax assets and liabilities are recognised in accordance with the provisions of IAS 12, 'Income Taxes'. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that future taxable profits will be available against which these losses can be utilised. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. The Group's UK subsidiaries each file separate tax returns. In accordance with UK tax legislation, where one domestic UK company is a 75 per cent owned subsidiary of another UK company or both are 75 per cent owned subsidiaries of a common parent, the companies are considered to be within the same UK tax group. For companies within the same tax group, trading profits and losses arising in the same accounting period may be offset for the purposes of determining current and deferred taxes. Pensions The Company assumes a portion of the pension surplus or deficit of the Group's main pension scheme, the Prudential Staff Pension Scheme ('PSPS'). The Company applies the requirements of IAS 19 'Employee Benefit' (as revised in 2011) for the accounting of its interest in the PSPS surplus or deficit. A pension surplus or deficit is recorded as the difference between the present value of the scheme liabilities and the fair value of the scheme assets. The Company's share of pension surplus is recognised to the extent that the Company is able to recover a surplus either through reduced contributions in the future or through refunds from the scheme. The assets and liabilities of the defined benefit pension schemes of the Prudential Group are subject to a full triennial actuarial valuation using the projected unit method. Estimated future cash flows are then discounted at a high quality corporate bond yield, adjusted to allow for the difference in duration between the bond index and the pension liabilities, where appropriate, to determine their present value. These calculations are performed by independent actuaries. The aggregate of the actuarially determined service costs of the currently employed personnel and the net income (interest) on the net scheme assets (liabilities) at the start of the period, is recognised in the profit or loss account. Actuarial gains and losses as a result of the changes in assumptions, experience variances or the return on scheme assets excluding amounts included in the net deferred benefit asset (liability) are recorded in other comprehensive income. Share-based payments The Group offers share award and option plans for certain key employees and a Save As You Earn ('SAYE') plan for all UK and certain overseas employees. The share-based payment plans operated by the Group are mainly equity-settled plans with a few cash-settled plans. Under IFRS 2 'Share-based payment', where the Company, as the parent company, has the obligation to settle the options or awards of its equity instruments to employees of its subsidiary undertakings, and such share-based payments are accounted for as equity-settled in the Group financial statements, the Company records an increase in the investment in subsidiary undertakings for the value of the share options and awards granted with a corresponding credit entry recognised directly in equity. The value of the share options and awards granted is based upon the fair value of the options and awards at the grant date, the vesting period and the vesting conditions. 3 Dividends received from subsidiary undertakings The parent company received dividends totalling £1,685 million from its consolidated subsidiary undertakings in 2017 (2016: £1,318 million; 2015: £985 million). 4 Reconciliation from the FRS 101 parent company results to the IFRS Group results The parent company financial statements are prepared in accordance with FRS 101 and the Group financial statements are prepared in accordance with IFRS as issued by the IASB and endorsed by the EU. At 31 December 2017, there were no differences between FRS 101 and IFRS as issued by the IASB and endorsed by the EU in terms of their application to the parent company. The tables below provide a reconciliation between the FRS 101 parent company results and the IFRS Group results. £m £m £m Profit after tax Profit for the financial year of the Company (including dividends from subsidiaries) in accordance with FRS 101 and IFRS Share in the IFRS result of the Group, net of distributions to the Company* Profit after tax of the Group attributable to shareholders in accordance with IFRS £m £m Net equity Shareholders' equity of the Company in accordance with FRS 101 and IFRS Share in the IFRS net equity of the Group* Shareholders' equity of the Group in accordance with IFRS * The 'share in the IFRS result and net equity of the Group' lines represent the parent company's equity in the earnings and net assets of its subsidiaries and associates. The profit for the financial year of the parent company in accordance with IFRS includes dividends received in the year from subsidiary undertakings (note 3). As stated in note 2, under FRS 101, the parent company accounts for its investments in subsidiary undertakings at cost less impairment. For the purpose of this reconciliation, no adjustment is made to the parent company in respect of any valuation adjustments to shares in subsidiary undertakings that would be eliminated on consolidation. 5 Guarantees provided by the parent company In certain instances the parent company has guaranteed that its subsidiaries will meet their obligations when they fall due for payment. 6 Post balance sheet events The second interim ordinary dividend for the year ended 31 December 2017, which was approved by the Board of Directors after 31 December 2017, is described in note B6 of the Group financial statements. Intention to demerge the Group's UK businesses In March 2018, the Group announced its intention to demerge its UK & Europe business ('M&G Prudential') from Prudential plc, resulting in two separately-listed companies. In preparation for the UK demerger process, Prudential plc intends to transfer the legal ownership of its Hong Kong insurance subsidiaries from The Prudential Assurance Company Limited (M&G Prudential's UK regulated insurance entity) to Prudential Corporation Asia Limited, which is expected to complete by the end of 2019. Sale of £12.0 billion* UK annuity portfolio In March 2018, M&G Prudential also announced the sale of £12.0 billion* of its shareholder annuity portfolio to Rothesay Life. Under the terms of the agreement, M&G Prudential has reinsured £12.0 billion* of liabilities to Rothesay Life, which is expected to be followed by a Part VII transfer of the portfolio by the end of 2019. Further details are set out in the 'Corporate Transactions' section within 'Explanation of Performance and Other Financial Measures'. * |
BACKGROUND AND CRITICAL ACCOU40
BACKGROUND AND CRITICAL ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting policies | |
Basis of preparation | Basis of preparation These statements have been prepared in accordance with IFRS Standards as issued by the International Accounting Standards Board (IASB) and as endorsed by the European Union (EU) as required by EU law (IAS Regulation EC1606/2032). EU-endorsed IFRS Standards may differ from IFRS Standards issued by the IASB if, at any point in time, new or amended IFRS Standards have not been endorsed by the EU. At 31 December 2017, there were no unendorsed standards effective for the three years ended 31 December 2017 which impact the consolidated financial information of the Group. There were no differences between IFRS Standards endorsed by the EU and IFRS Standards issued by the IASB in terms of their application to the Group. These statements have been prepared on a going concern basis. The Group IFRS accounting policies are the same as those applied for the year ended 31 December 2016 with the exception of the adoption of the new and amended accounting standards as described in note A2. |
Classification of insurance and investment contracts; measurement of policyholder liabilities and unallocated surplus of with-profits; earned premiums, policy fees and claims paid | Classification of insurance and investment contracts IFRS 4 requires contracts written by insurers to be classified as either 'insurance' contracts or 'investment' contracts. The classification of the contract determines its accounting. Judgement is applied in considering whether the material features of a contract gives rise to the transfer of significant insurance risk. Contracts that transfer significant insurance risk to the Group are classified as insurance contracts. This judgement is made at the point of contract inception and is not revisited. For the majority of the Group's contracts classification is based on a readily identifiable scenario that demonstrates a significant difference in cash flows if the covered event occurs (as opposed to does not occur) reducing the level of judgement involved. Contracts that transfer financial risk to the Group but not significant insurance risk are classified as investment contracts. Furthermore, some contracts, both insurance and investment, contain discretionary participating features representing the contractual right to receive additional benefits as a supplement to guaranteed benefits that (a) are likely to be a significant portion of the total contract benefits; (b) have amount or timing contractually at the discretion of the insurer; and (c) are contractually based on asset or fund performance, as discussed in IFRS 4. Insurance contracts and investment contracts with discretionary participation features are accounted for under IFRS 4. Investment contracts without such discretionary participation features are accounted for as financial instruments under IAS 39. Impacts £436 billion of reported liabilities, requiring classification. Insurance business units Insurance contracts and investment contracts with discretionary participation features Investment contracts without discretionary participation features Asia – With-profits contracts – Non-participating term contracts – Minor amounts for a number of small categories of business – Whole life contracts – Unit-linked policies – Accident and health policies US – Variable annuity contracts – Fixed annuity contracts – Life insurance contracts – Guaranteed investment contracts (GICs) – Minor amounts of 'annuity certain' contracts UK and Europe – With-profits contracts – Bulk and individual annuity business – Certain unit-linked savings and similar contracts – Non-participating term contracts Measurement of policyholder liabilities and unallocated surplus of with-profits Due to their significance to the Group's business, the measurement of policyholder liabilities and unallocated surplus of with-profits is a critical accounting policy. The measurement basis of policyholder liabilities is dependent upon the classification of the contracts under IFRS 4 described above. Impacts £436 billion of liabilities IFRS 4 permits the continued usage of previously applied Generally Accepted Accounting Practices (GAAP) for insurance contracts and investment contracts with discretionary participating features. A modified statutory basis of reporting was adopted by the Group on first time adoption of IFRS in 2005. This was set out in the Statement of Recommended Practice issued by Association of British Insurers (ABI SORP). An exception was for UK regulated with-profits funds which were measured under FRS 27 as discussed below. FRS 27 and the ABI SORP were withdrawn in the UK for the accounting periods beginning in or after 2015. As used in these consolidated financial statements, the terms 'FRS 27' and the 'ABI SORP' refer to the requirements of these pronouncements prior to their withdrawal. For investment contracts that do not contain discretionary participating features, IAS 39 is applied and, where the contract includes an investment management element, IAS 18, 'Revenue', applies. The policies applied in each business unit are noted below. When measuring policyholder contract liabilities a number of assumptions are applied to estimate future amounts due to or from the policyholder. The nature of assumption varies by product and among the most significant are assumed rates of policyholders' mortality, particularly in respect of annuities sold in the UK, and policyholder behaviour, particularly in the US. Additional details of valuation methodologies and assumptions applied for material product types are discussed in note C4.2. Measurement of insurance contract liabilities and investment contracts liabilities with discretionary participation features. Asia insurance operations The policyholder liabilities for businesses in Asia are generally determined in accordance with methods prescribed by local GAAP adjusted to comply, where necessary, with the modified statutory basis. Refinements to the local reserving methodology are generally treated as changes in estimates, dependent on their nature. In some operations, Taiwan and India, US GAAP principles are applied. While the basis of valuation of liabilities in this business is in accordance with the requirements of the ABI SORP, it may differ from that determined on the modified statutory basis for UK and Europe insurance operations with the same features. US insurance operations The policyholder liabilities for Jackson's conventional protection-type policies are determined under US GAAP principles with locked in assumptions for mortality, interest, policy lapses and expenses along with provisions for adverse deviations. For other policies, the policyholder liabilities include the policyholder account balance. For those investment contracts in the US with fixed and guaranteed terms, the Group uses the amortised cost model to measure the liability. The US has no investment contracts with discretionary participation features. The sensitivity of US insurance operations to variations in key estimates and assumptions, including policyholder behaviour, is discussed in note C7.3. UK and Europe insurance operations The UK regulated with-profits funds' liabilities are the realistic basis liabilities in accordance with FRS 27. The realistic basis requires the value of liabilities to be calculated as: – A with-profits benefits reserve; plus – Future policy-related liabilities; plus – The realistic current liabilities of the fund. The with-profits benefits reserve is primarily based on the retrospective calculation of accumulated asset shares but is adjusted to reflect future policyholder benefits and other charges and expenses. Asset shares broadly reflect the policyholders' share of the with-profits fund assets attributable to their policies. The future policy-related liabilities must include a market consistent valuation of costs of guarantees, options and smoothing, less any related charges, and this amount is determined using either a stochastic approach, hedging costs or a series of deterministic projections with attributed probabilities. The shareholders' share of future costs of bonuses is included within the liabilities for unallocated surplus. Shareholders' share of profit is recognised in line with the distribution of bonuses to policyholders. For the purposes of local regulations, segregated accounts are established for linked business for which policyholder benefits are wholly or partly determined by reference to specific investments or to an investment-related index. The interest rates used in establishing policyholder benefit provisions for pension annuities in the course of payment are adjusted each year. Mortality rates used in establishing policyholder benefits are based on published mortality tables adjusted to reflect actual experience. The sensitivity of UK and Europe insurance operations to variations in key estimates and assumptions, including annuitant mortality, is discussed in note C7.4. Measurement of investment contracts without discretionary participation features liabilities. Investment contracts without discretionary participation features are measured in accordance with IAS 39 to reflect the deposit nature of the arrangement, with premiums and claims reflected as deposits and withdrawals and taken directly to the statement of financial position as movements in the financial liability balance. Incremental, directly attributable acquisition costs relating to the investment management element of these contracts are capitalised and amortised in line with the related revenue. If the contracts involve up-front charges, this income is also deferred and amortised through the income statement in line with contractual service provision in accordance with IAS 18. Investment contracts without fixed and guaranteed terms are classified as financial instruments and designated as fair value through profit or loss because the resulting liabilities are managed and their performance is evaluated on a fair value basis. Where the contract includes a surrender option its carrying value is subject to a minimum carrying value equal to its surrender value. Other investment contracts are measured at amortised cost. Measurement of unallocated surplus of with-profits funds. Represents the excess of assets over policyholder liabilities that are determined in accordance with the Group's accounting policies and are based on local GAAP for the Group's with-profits funds in the UK, Hong Kong and Malaysia that have yet to be appropriated between policyholders and shareholders. The unallocated surplus is recorded wholly as a liability with no allocation to equity. The annual excess (shortfall) of income over expenditure of the with-profits funds, after declaration and attribution of the cost of bonuses to policyholders and shareholders, is transferred to (from) the unallocated surplus each year through a charge (credit) to the income statement. The balance retained in the unallocated surplus represents cumulative income arising on the with-profits business that has not been allocated to policyholders or shareholders. The balance of the unallocated surplus is determined after full provision for deferred tax on unrealised appreciation on investments. Liability adequacy test. The Group performs adequacy testing on its insurance liabilities to ensure that the carrying amounts (net of related deferred acquisition costs) and, where relevant, present value of acquired in-force business is sufficient to cover current estimates of future cash flows. Any deficiency is immediately charged to the income statement. Jackson's liabilities for insurance contracts, which include those for separate accounts (reflecting separate account assets), policyholder account values and guarantees measured as described in note C4.2 and the associated deferred acquisition cost asset are measured under US GAAP and liability adequacy testing is performed in this context. Under US GAAP, most of Jackson's products are accounted for under Accounting Standards Codification Topic 944, Financial Services—Insurance of the Financial Accounting Standards Board (ASC 944) whereby deferred acquisition costs are amortised in line with expected gross profits. Recoverability of the deferred acquisition costs in the balance sheet is tested against the projected value of future profits using current estimates and therefore no additional liability adequacy test is required by IFRS 4. The DAC recoverability test is performed in line with US GAAP requirements which in practice is at a grouped level of those contracts managed together. (c) Earned premiums, policy fees and claims paid Premiums for conventional with-profits policies and other protection type insurance policies are recognised as revenue when due. Premiums and annuity considerations for linked policies, unitised with-profits and other investment type policies are recognised as revenue when received or, in the case of unitised or unit-linked policies, when units are issued. These amounts exclude premium taxes and similar duties where Prudential collects and settles taxes borne by the customer. Policy fees charged on linked and unitised with-profits policies for mortality, asset management and policy administration are recognised as revenue when related services are provided. Claims paid include maturities, annuities, surrenders and deaths. Maturity claims are recorded as charges on the policy maturity date. Annuity claims are recorded when each annuity instalment becomes due for payment. Surrenders are charged to the income statement when paid and death claims are recorded when notified. |
Measurement and presentation of derivatives and debt securities of US insurance operations; financial instruments other than instruments classified as long-term business contracts | Measurement and presentation of derivatives and debt securities of US insurance operations Jackson holds a number of derivative instruments and debt securities. The selection of the accounting approach for these items significantly affects the volatility of IFRS profit before tax. Jackson enters into derivative instruments to mitigate economic exposures. The Group has considered whether it is appropriate to undertake the necessary operational changes to qualify for hedge accounting so as to achieve matching of value movements in hedging instruments and hedged items in the performance statements. The key factors considered in this assessment were the complexity of asset and liability matching in Jackson's product range and the difficulty and cost of applying the macro hedge provisions under IAS 39 (which are more suited to banking arrangements) to Jackson's derivative book. £18,533 million of US income statement investment return arises from such derivatives and debt securities. The Group has decided that, except for occasional circumstances, applying hedge accounting using IAS 39 to derivative instruments held by Jackson would not improve the relevance or reliability of the financial statements to such an extent that would justify the difficulty and cost of applying these provisions. As a result of this decision, the total income statement results are more volatile as the movements in the fair value of Jackson's derivatives are reflected within it. This volatility is reflected in the level of short-term fluctuations in investment returns, as shown in notes B1.1 and B1.2. Under IAS 39, unless carried at amortised cost (subject to impairment provisions where appropriate) under the held-to-maturity category, debt securities are also carried at fair value. The Group has chosen not to classify any financial assets as held-to-maturity. Debt securities of Jackson are designated as available-for-sale with value movements, unless impaired, being recorded as movements within other comprehensive income. Impairments are recorded in the income statement. (e) Financial investments other than instruments classified as long-term business contracts (i) Investment classification The Group holds financial investments in accordance with IAS 39, whereby subject to specific criteria, financial instruments are required to be accounted for under one of the following categories: – Financial assets and liabilities at fair value through profit or loss—this comprises assets and liabilities designated by management as fair value through profit or loss on inception and derivatives that are held for trading. These investments are measured at fair value with all changes thereon being recognised in investment return in the income statement; – Financial investments on an available-for-sale basis—this comprises assets that are designated by management as available-for-sale and/or do not fall into any of the other categories. These assets are initially recognised at fair value plus attributable transaction costs. Available-for-sale assets are subsequently measured at fair value. Interest income is recognised on an effective interest basis in the income statement. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset. Except for foreign exchange gains and losses on debt securities, which are included in the income statement, unrealised gains and losses are recognised in other comprehensive income. Upon disposal or impairment, accumulated unrealised gains and losses are transferred from other comprehensive income to the income statement as realised gains or losses; and – Loans and receivables—except for those designated as at fair value through profit or loss or available-for-sale, these instruments comprise non-quoted investments that have fixed or determinable payments. These instruments include loans collateralised by mortgages, deposits, loans to policyholders and other unsecured loans and receivables. These investments are initially recognised at fair value plus transaction costs. Subsequently, these instruments are carried at amortised cost using the effective interest method. The Group uses the trade date method to account for regular purchases and sales of financial assets. See note A3.1 for further details of valuation of financial investments. (ii) Derivatives and hedge accounting Derivative financial instruments are used to reduce or manage investment, interest rate and currency exposures, to facilitate efficient portfolio management and for investment purposes. The Group may designate certain derivatives as hedges. For hedges of net investments in foreign operations, the effective portion of any change in fair value of derivatives or other financial instruments designated as net investment hedges is recognised in other comprehensive income. The ineffective portion of changes in the fair value of the hedging instrument is recorded in the income statement. The Group does not regularly seek to apply fair value or cash flow hedging treatment under IAS 39. The Group has no fair value and cash flows hedges under IAS 39 at 31 December 2017 and 2016. All derivatives that are not designated as hedging instruments are carried at fair value, with movements in fair value being recorded in the income statement. The primary areas of the Group's continuing operations where derivative instruments are held are the UK with-profits funds and annuity business, and Jackson. For UK with-profits funds the derivative programme is used for the purposes of efficient portfolio management or reduction in investment risk. For shareholder-backed UK annuity business the derivatives are held to contribute to the matching as far as practical, of asset returns and duration with those of liabilities to policyholders. The carrying value of these liabilities is sensitive to the return on the matching financial assets including derivatives held. For Jackson's derivative programme see note A3.1. (iii) Embedded derivatives Embedded derivatives are present in host contracts issued by various Group companies, in particular Jackson. They are embedded within other non-derivative host financial instruments and insurance contracts to create hybrid instruments. Embedded derivatives meeting the definition of an insurance contract are accounted for under IFRS 4. Where economic characteristics and risks of the embedded derivatives are not closely related to the economic characteristics and risks of the host instrument, and where the hybrid instrument is not measured at fair value with the changes in fair value recognised in the income statement, the embedded derivative is bifurcated and carried at fair value as a derivative measured in accordance with IAS 39. In addition, the Group applies the option under IFRS 4 to not separate and fair value surrender options embedded in host contracts and with-profits investment contracts whose strike price is either a fixed amount or a fixed amount plus interest. (iv) Securities lending and reverse repurchase agreements The Group is party to various securities lending agreements (including repurchase agreements) under which securities are loaned to third parties on a short-term basis. The loaned securities are not derecognised; rather, they continue to be recognised within the appropriate investment classification. The Group's policy is that collateral in excess of 100 per cent of the fair value of securities loaned is required from all securities' borrowers and typically consists of cash, debt securities, equity securities or letters of credit. In cases where the Group takes possession of the collateral under its securities lending programme, the collateral, and corresponding obligation to return such collateral, are recognised in the consolidated statement of financial position. The Group is also party to various reverse repurchase agreements under which securities are purchased from third parties with an obligation to resell the securities. The securities are not recognised as investments in the statement of financial position. (v) Derecognition of financial assets and liabilities The Group's policy is to derecognise financial assets when it is deemed that substantially all the risks and rewards of ownership have been transferred. The Group derecognises financial liabilities only when the obligation specified in the contract is discharged, cancelled or has expired. (vi) Financial liabilities designated at fair value through profit or loss Consistent with the Group's risk management and investment strategy and the nature of the products concerned, the Group has designated under IAS 39 classification certain financial liabilities at fair value through profit or loss as these instruments are managed and their performance evaluated on a fair value basis. These instruments include liabilities related to consolidated collateralised debt obligations and net assets attributable to unit holders of consolidated unit trusts and similar funds. |
Presentation of results before tax | Presentation of results before tax Profit before tax is a significant IFRS income statement item. The Group has chosen to present a measure of profit before tax attributable to shareholders which distinguishes between tax attributable to policyholders and unallocated surplus and tax borne by shareholders, to support understanding of the performance of the Group. The total tax charge for the Group reflects tax that, in addition to relating to shareholders' profits, is also attributable to policyholders and unallocated surplus of with-profits funds and unit-linked policies. Further detail is provided in note B4. Reported profit before the total tax charge is not representative of pre-tax profits attributable to shareholders. Accordingly, in order to provide a measure of pre-tax profits attributable to shareholders the Group has chosen to adopt an income statement presentation of the tax charge and pre-tax results that distinguishes between policyholder and shareholder components. Profit before tax attributable to shareholders is £3,296 million and compares to profit before tax of £3,970 million. |
Segmental analysis of results and earnings attributable to shareholders; Segments | Segmental analysis of results and earnings attributable to shareholders The Group uses operating profit based on longer-term investment returns as the segmental measure of its results. Total segmental operating profit is £5,577 million and is shown in note B1.2. The basis of calculation of operating profit is disclosed in note B1.3. For shareholder-backed business, with the exception of debt securities held by Jackson and assets classified as loans and receivables at amortised cost, all financial investments and investment property are designated as assets at fair value through profit or loss. Short-term fluctuations in fair value affect the result for the year and the Group provides additional analysis of results before and after the effects of short-term fluctuations in investment returns, together with other items that are of a short-term, volatile or one-off nature. The effects of short-term fluctuations include asymmetric impacts where the measurement bases of the liabilities and associated derivatives used to manage the Jackson annuity business differ as described in note B1.2. Short-term fluctuations in investment returns on assets held by with-profits funds in the UK, Hong Kong, Malaysia and Singapore, do not affect directly reported shareholder results. This is because (i) the unallocated surplus of with-profits funds is accounted for as a liability and (ii) excess or deficits of income and expenditure of the funds over the required surplus for distribution are transferred to or from policyholder liabilities (including the unallocated surplus). (f) Segments Under IFRS 8 'Operating Segments', the Group determines and presents operating segments based on the information that is internally provided to the Group Executive Committee which is the Group's chief operating decision maker. The operating segments identified by the Group reflect the Group's organisational structure, which, following a reorganisation during the year, is by business units Asia, US and UK and Europe. All business units contain both insurance and asset management operations. Further information on the Group's operating segments is provided in note B1.3. |
Deferred acquisition costs for insurance contracts | Deferred acquisition costs for insurance contracts The Group applies judgement in determining qualifying costs that should be capitalised (ie those costs of acquiring new insurance business that meet the criteria under the Group's accounting policy for deferred acquisition costs). It makes estimates in projecting future profits/margins to assess whether adjustments to the carrying value or amortisation profile of deferred acquisition cost assets are necessary. Except for acquisition costs of with-profits contracts of the UK regulated with-profits funds, which are accounted for under FRS 27, costs of acquiring new insurance business are accounted for in a way that is consistent with the principles of the ABI SORP with deferral and amortisation against margins in future revenues on the related insurance policies. In general, this deferral is shown by an explicit carrying value in the balance sheet. However, in some Asia operations the deferral is implicit through the reserving methodology. The recoverability of the deferred acquisition costs is measured and is deemed impaired if the projected margins (which are estimated based on a number of assumptions similar to those underlying policyholder liabilities) are less than the carrying value. To the extent that the future margins differ from those anticipated, then an adjustment to the carrying value will be necessary. Asia insurance operations £9.2 billion of deferred acquisition costs as per note C5(b). For those business units applying US GAAP to insurance assets and liabilities, as permitted by the ABI SORP, principles similar to those set out in the US insurance operations paragraph below are applied to the deferral and amortisation of acquisition costs. For other territories in Asia, the general principles of the ABI SORP are applied with, as described above, deferral of acquisition costs being either explicit or implicit through the reserving basis. US insurance operations The most material estimates and assumptions applied in the measurement and amortisation of deferred acquisition cost balances relate to the US insurance operations. The Group's US insurance operations apply FAS ASU 2010-26 on 'Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts' and capitalise only those incremental costs directly relating to successfully acquiring a contract. For term business, acquisition costs are deferred and amortised in line with expected premiums. For annuity and interest-sensitive life business, acquisition costs are deferred and amortised in line with expected gross profits on the relevant contracts. For fixed and fixed index annuity and interest-sensitive life business, the key assumption is the long-term spread between the earned rate on investments and the rate credited to policyholders, which is based on an annual spread analysis. In addition, expected gross profits depend on mortality assumptions, assumed unit costs and terminations other than deaths (including the related charges), all of which are based on a combination of Jackson's actual experience, industry experience and future expectations. A detailed analysis of actual mortality, lapse and expenses experience is performed using internally developed experience studies. For US variable annuity business, a key assumption is the long-term investment return from the separate accounts, which is determined using a mean reversion methodology. Under the mean reversion technique applied by Jackson, the projected level of return for each of the next five years is adjusted from period to period, so that in combination with the actual rates of return for the preceding three years, including the current period, the assumed long-term annual return (gross of asset management fees and other charges to policyholders, but net of external fund management fees) is realised on average over the entire eight-year period. Projected returns after the mean reversion period revert back to the long-term investment return. For further details on current balances, assumptions and sensitivity, refer to note C5(b) and C7.3(iv). To ensure that the methodology in extreme market movements produces future expected returns that are realistic, the mean reversion technique has a cap and floor feature whereby the projected returns in each of the next five years can be no more than 15 per cent per annum and no less than 0 per cent per annum (both gross of asset management fees and other charges to policyholders, but net of external fund management fees) in each year. Jackson makes certain adjustments to the deferred acquisition costs which are recognised directly in other comprehensive income ('shadow accounting').If the recognition of unrealised gains or losses on available-for-sale securities causes adjustments to the carrying value and amortisation patterns of deferred acquisition costs and deferred income, these adjustments are recognised in other comprehensive income consistent with the gains or losses on the securities. More precisely, shadow deferred acquisition costs adjustments reflect the change in deferred acquisition costs that would have arisen if the assets held in the statement of financial position had been sold, crystallising unrealised gains or losses, and the proceeds reinvested at the yields currently available in the market. UK and Europe insurance operations For UK regulated with-profits funds where 'grandfathered' FRS 27 is applied, these costs are expensed as incurred. The majority of the UK shareholder-backed business is individual and group annuity business where the deferral of acquisition costs is negligible. |
Financial Investments - Valuation | Financial investments—Valuation Financial investments held at fair value represent £407.3 billion of the Group's total assets. The Group holds the majority of its financial investments at fair value (either through profit and loss or available-for-sale). Financial Investments held at amortised cost primarily comprise loans and deposits. Determination of fair value The Group applies valuation techniques, including the use of estimates, to determine the balance recognised for financial investments held at fair value. The Group uses current bid prices to value its investments having quoted prices. Actively traded investments without quoted prices are valued using prices provided by third parties as described further in note C3.1. Financial investments measured at fair value are classified into a three-level hierarchy as described in note C3.1(b). Financial investments held at amortised cost represent £12.2 billion of the Group's total assets. If the market for a financial investment of the Group is not active, the fair value is determined by using valuation techniques. The Group establishes fair value for these financial investments by using quotations from independent third parties, such as brokers or pricing services, or by using internally developed pricing models. Priority is given to publicly available prices from independent sources when available, but overall the source of pricing and/or the valuation technique is chosen with the objective of arriving at a fair value measurement which reflects the price at which an orderly transaction would take place between market participants on the measurement date. The valuation techniques include the use of recent arm's length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option-adjusted spread models and, if applicable, enterprise valuation and may include a number of assumptions relating to variables such as credit risk and interest rates. Changes in assumptions relating to these variables could positively or negatively impact the reported fair value of these financial investments. Details of the financial investments classified as 'level 3' to which valuation techniques are applied, and the sensitivity of profit before tax to a change in these items' valuation, are presented in note C3.1(d). Determination of impaired value In estimating the present value of future cash flows for determining the impaired value of instruments held at amortised cost, the Group looks at the expected cash flows of the assets and applies historical loss experience of assets with similar credit risks that has been adjusted for conditions in the historical loss experience which no longer exist, or for conditions that are expected to arise. The estimated future cash flows are discounted using the financial asset's original or variable effective interest rate and exclude credit losses that have not yet been incurred. In estimating any required impairment for US residential mortgage-backed and other asset-backed securities held as available-for-sale, the expected value of future cash flows is determined using a model, the key assumptions of which include how much of the currently delinquent loans will eventually default and assumed loss severity. Further details of the assumptions and estimates applied in assessing impairment of US available-for-sale securities is given in note C3.2(g). |
Financial Investments - Determining impairment in relation to financial assets | Financial investments—Determining impairment in relation to financial assets The Group applies judgement as to whether evidence of an impairment in value exists for financial investments classified as 'available-for-sale' or 'at amortised cost'. If evidence for impairment exists, valuation techniques, including estimates, are then applied in determining the impaired value. Affects £47.5 billion of assets. For financial investments classified as 'available for sale' or 'at amortised cost,' if a loss event that will have a detrimental effect on cash flows is identified, an impairment loss is recognised in the income statement. The loss recognised is determined as the difference between the book cost and the fair value of the relevant impairment assets. The loss comprises the effect of the expected loss of contractual cash flows and any additional market-price driven temporary reductions in values. Available-for-sale securities The Group's review of fair value involves several criteria, including economic conditions, credit loss experience, other issuer-specific developments and future cash flows. These assessments are based on the best available information at the time. Factors such as market liquidity, the widening of bid/ask spreads and a change in cash flow assumptions can contribute to future price volatility. If actual experience differs negatively from the assumptions and other considerations used in the consolidated financial statements, unrealised losses currently in equity may be recognised in the income statement in future periods. Additional details on the methodology and estimates used to determine impairments of the available-for-sale securities of Jackson are described in note C3.2(g). The majority of the US insurance operation's debt securities portfolio is accounted for on an available-for-sale basis. The consideration of evidence of impairment requires management's judgement. In making this determination a range of market and industry indicators are considered including the severity and duration of the decline in fair value and the financial condition and prospects of the issuer. For US residential mortgage-backed and other asset-backed securities, all of which are classified as available-for-sale, impairment is estimated using a model of expected future cash flows. Key assumptions used in the model include assumptions about how much of the currently delinquent loans will eventually default and assumed loss severity. Assets held at amortised cost Assets held at amortised cost are subject to impairment testing where appropriate under IFRS requirements by comparing estimated future cash flows to the carrying value of the asset. In estimating future cash flows, the Group looks at the expected cash flows of the assets and applies historical loss experience of assets with similar credit risks that has been adjusted for conditions in the historical loss experience which no longer exist, or for conditions that are expected to arise. The estimated future cash flows are discounted using the financial asset's original or variable effective interest rate and exclude credit losses that have not yet been incurred. Reversal of impairment losses If, in subsequent periods, an impaired debt security held on an available-for-sale basis or an impaired loan or receivable recovers in value (in part or in full), and this recovery can be objectively related to an event occurring after the impairment, then the previously recognised impairment loss is reversed through the income statement (in part or in full). |
Intangible Assets - Carrying value of distribution rights; Intangible assets | Intangible assets—Carrying value of distribution rights The Group applies judgement when considering whether indicators of impairment exist for intangible assets representing distribution rights. Affects £1.5 billion of assets. Distribution rights relate to fees paid under bancassurance partnership arrangements for bank distribution of products for the term of the contractual agreement with the bank partner. Distribution rights impairment testing is conducted when there is an indication of impairment. To ensure any required impairment is recognised in the current period the Group monitors a number of internal and external factors, including indications that the financial performance of the arrangement is likely to be worse than originally expected and changes in relevant legislation and regulatory requirements that could impact the Group's ability to continue to sell new business through the bancassurance channel, and then applies judgement to assess whether these factors indicate impairment has occurred. If an impairment has occurred, an impairment charge is recognised for the difference between the carrying value and recoverable amount of the asset. The recoverable amount is the greater of fair value less costs to sell and value in use. Value in use is calculated as the present value of future expected cash flows from the asset or the cash generating unit to which it is allocated. (n) Intangible assets Intangible assets acquired on the purchase of a subsidiary or portfolio of contracts are measured at fair value on acquisition. Deferred acquisition costs are accounted for as described in note A3.1(c). Other intangible assets, such as distribution rights and software, are valued initially at the price paid to acquire them and are subsequently carried at cost less amortisation and any accumulated impairment losses. Distribution rights relate to fees paid under bancassurance partnership arrangements for bank distribution of products for the term of the contract. Amounts for distribution rights are amortised on a basis to reflect the pattern in which the future economic benefits are expected to be consumed by reference to new business production levels. The same principles apply to determining the amortisation method for other intangible assets unless the pattern cannot be determined reliably, in which case a straight line method is applied. Amortisation of intangible assets is charged to the 'acquisition costs and other expenditure' line in the consolidated income statement. Impairment testing is conducted when there is an indication of impairment. |
New accounting pronouncements not yet effective | A3.2 New accounting pronouncements not yet effective The following standards, interpretations and amendments have been issued but are not yet effective in 2017, including those which have not yet been adopted in the EU. This is not intended to be a complete list as only those standards, interpretations and amendments that could have an impact upon the Group's financial statements are discussed. Accounting pronouncements endorsed by the EU but not yet effective This standard effective for annual periods beginning on or after 1 January 2018, provides a single framework to recognise revenue for contracts with different characteristics and overrides the framework provided for such contracts in other standards. The contracts excluded from the scope of this standard include: – Lease contracts within the scope of IAS 17 'Leases'; – Insurance contracts within the scope of IFRS 4 'Insurance Contracts'; and – Financial instruments within the scope of IAS 39 'Financial Instruments'. As a result, IFRS 15 in the context of Prudential's business, applies to the Group's asset management contracts and the measurement of the Group's investment contracts that do not contain discretionary participating features where the contracts include provision for investment management services. The IFRS 15 impact assessment performed included the review of the recognition of asset management and performance fees of these contracts. The adoption of this standard in 2018 is not expected to result in a restatement of the Group's profit for the year or shareholders' equity. IFRS 9, 'Financial instruments: Classification and measurement' In July 2014, the IASB published a complete version of IFRS 9 with the exception of macro hedge accounting. The standard becomes mandatorily effective for the annual periods beginning on or after 1 January 2018, with early application permitted and transitional rules apply. In October 2017, the IASB issued two amendments to IFRS 9, to permit the measurement of debt instruments with prepayment compensation features to be measured at amortised cost or fair value through other comprehensive income if certain conditions are met, and to clarify that IFRS 9 applies to long-term interests in joint ventures and associates. Both of these amendments that were issued in October 2017 are effective for the annual periods beginning on or after 1 January 2019, but are not yet endorsed by the EU. In September 2016, the IASB published Amendments to IFRS 4, 'Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts' to address the temporary consequences of the different effective dates of IFRS 9 and IFRS 17, 'Insurance Contracts'. The amendments include an optional temporary exemption from applying IFRS 9 and the associated amendments until IFRS 17 comes into effect in 2021. This temporary exemption is available to companies whose predominant activity is to issue insurance contracts based on meeting the eligibility criteria as at 31 December 2015 as set out in the amendments. The Group met the eligibility criteria and will defer the adoption of IFRS 9 to 1 January 2021. When adopted IFRS 9 replaces the existing IAS 39, 'Financial Instruments—Recognition and Measurement', and will affect the following three areas: – The classification and the measurement of financial assets and liabilities Under IFRS 9, the classification of financial assets is redefined. Based on the business model in which the assets are held and their contractual cash flow characteristics (whether the cash flows represent 'solely payments of principal and interest'), financial assets are classified into one of the following categories: amortised cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL). An option is also available at initial recognition to irrevocably designate a financial asset as at FVTPL if doing so eliminates or significantly reduces accounting mismatches. At present a significant proportion (82 per cent) of the Group's investments are valued at FVTPL and the Group's current expectation is that a significant proportion will continue to be designated as such under IFRS 9. The existing IAS 39 amortised cost measurement for financial liabilities is largely maintained under IFRS 9 but for financial liabilities designated at FVTPL, changes in fair value due to changes in entity's own credit risk, required by IFRS 13, are to be recognised in other comprehensive income. – The calculation of the impairment charge relevant for financial assets held at amortised cost or FVOCI A new impairment model based on an expected credit loss approach replaces the existing IAS 39 incurred loss impairment model, resulting in earlier recognition of credit losses compared to IAS 39. The impairment charge recognition under the new model is in three stages: • Stage 1—at initial recognition, and for each subsequent reporting period when there has been no significant increase in credit risk since initial recognition, recognise 12 month expected credit losses; • Stage 2—recognise lifetime expected credit losses if there has been a significant increase in credit risk since initial recognition; or • Stage 3—recognise incurred losses for credit-impaired assets, similar to IAS 39. This aspect is the most complex area of IFRS 9 to implement and will involve significant judgements and estimate processes. – The hedge accounting requirements which are more closely aligned with the risk management activities of the Company. No significant change to the Group's hedge accounting is currently anticipated, but this remains under review. The Group is assessing the impact of IFRS 9 and implementing this standard in conjunction with the IFRS 17. Further details on IFRS 17 are provided below. Adoption of IFRS 9 may result in reclassifying certain of the Group's financial assets and hence lead to a change in the measurement of those instruments or the reporting of their value. In addition, for any investments classified as amortised cost or FVOCI, as noted above, the impairment provisioning approach is altered from the current IAS 39 approach. The Group is currently assessing the scope of assets to which these requirements will apply. The Group does not currently apply hedge accounting for most of its derivate programmes but will reconsider its approach in light of new requirements under the standard on adoption. IFRS 16, 'Leases' In January 2016, the IASB published IFRS 16 'Leases' effective for periods beginning on or after 1 January 2019, with earlier adoption permitted if IFRS 15 'Revenue from Contracts with Customers' has also been applied. The new standard brings most leases on-balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. For lessee accounting, this has the effect of requiring most of the existing operating leases to be accounted for in a similar manner as finance leases under the existing IAS 17, 'Leases'. The only optional exemptions are for short-term leases and leases of low-value assets. Lessor accounting however remains largely unchanged from IAS 17. IFRS 16 applies primarily to operating leases of major properties occupied by the Group's businesses where Prudential is a lessee. Under IFRS 16, these leases will be brought onto the Group's statement of financial position with a 'right to use' asset being established and a corresponding liability representing the obligation to make lease payments. The current rental accrual charge in the income statement will be replaced with a depreciation charge for the 'right to use' asset and an interest expense on the lease liability leading to a more front-loaded operating lease cost profile compared to IAS 17. The Group is currently sourcing the required information to implement this new standard. IFRS 16 permits transition to the new standard through a modified retrospective approach or a full retrospective approach. Under the modified retrospective approach, as well as affording a number of simplifications the Group's comparative information is not restated, but there is an adjustment to retained earnings at the date of initial application (ie 1 January 2019). The Group is currently assessing the impact of the modified retrospective approach before confirming the approach it intends to adopt. The ultimate impact of IFRS 16 on the Group's financial statements will be dependent on the leases that are in place and the related discount rate on the date of initial application. Accounting pronouncements not yet endorsed by the EU In May 2017, the IASB issued IFRS 17 'Insurance Contracts' to replace the existing IFRS 4 'Insurance Contracts'. The standard, which is subject to endorsement in the EU and other territories, applies to annual periods beginning on or after 1 January 2021. Early application is permitted; provided the entity also applies IFRS 9 and IFRS 15 on or before the date it first applies IFRS 17. The Group intends to adopt the new standard on its mandatory effective date in 2021, alongside the adoption of IFRS 9 (see above). IFRS 4 permitted insurers to continue to use the statutory basis of accounting for insurance assets and liabilities that existed in their jurisdictions prior to January 2005. IFRS 17 replaces this with a new liability and revenue measurement model for all insurance contracts. The new measurement model requires liabilities for insurance contracts to be recognised as the present value of future cash flows, incorporating an explicit risk adjustment, and a contractual service margin (CSM) that is equal and opposite to any day-one gain arising. Losses are recognised directly into the income statement. The present value of future cash flows and the risk adjustment are updated at each reporting date in order to reflect current conditions. The CSM is released to the income statement as profit over the coverage period of the insurance contract, reflecting the delivery of services to the policyholder. Subsequent changes in non-economic assumptions applied to the valuation of insurance liabilities are recognised as an adjustment to the CSM, prospectively affecting the amounts released to the statement of comprehensive income. For the purpose of the measurement insurance contracts are grouped together with contracts of similar risk, profitability profile and issue year, with the measurement model applied at this group level. IFRS 17 provides an adaptation of the measurement model designed to account for certain contracts with participating features, such as UK style with-profits contracts and unit-linked or similar contracts, in which the policyholder will be paid a substantial share of the fair value returns of a specified group of items and the return to the insurer effectively reflects a variable management fee. This adaptation—the Variable Fee Approach (VFA)—allows the CSM to be adjusted for changes in economic experience and assumptions which reflect a change in the overall future fee the insurer expects to receive as a result of managing the participating pool of assets. IFRS 17 introduces a new measure of insurance revenue, based on the delivery of services to policyholders and excluding any premiums related to the investment elements of policies, which will be significantly different from existing premium revenue measures, currently reported in the income statement. Retrospective application of the standard is required for determining the CSM for the opening balance sheet. However, if full retrospective application for a group of insurance contracts is impracticable, then the entity is required to choose either a modified retrospective approach or a fair value approach. Choosing the appropriate approach and hence determining the opening balance sheet is one of the most critical activities in implementing the new standard, as the approach adopted will have a significant impact on the entity's results both on the initial impact on shareholders' funds at IFRS 17 adoption and on the future profits to be earned on the in-force business at the date of transition. IFRS 17 Implementation Programme The Group has commenced a Group-wide programme to implement IFRS 17 and IFRS 9 (as discussed above). The requirements of IFRS 17 are complex and will have the effect of introducing fundamental changes to the existing IFRS 4 insurance accounting and require the application of significant judgement and new estimation techniques. As previously highlighted IFRS 9 could require reclassification of investments and the introduction of new and complex impairment models. The effect of changes required to the Group's accounting policies as a result of implementing these standards are currently uncertain, but these changes can be expected to, among other things, alter the timing of IFRS profit recognition. The implementation of this standard is also likely to involve significant enhancements to IT, actuarial and finance systems of the Group, and so will have an impact on the Group's expenses. A Group-wide Steering Committee, chaired by the Group Chief Financial Officer and with participation from group's and business units' senior finance managers, provides oversight and strategic direction to the implementation programme. A number of sub-committees are also in place to provide governance over the technical interpretation and accounting policies selected, programme management and design and delivery of the project. The key responsibilities of the programme include setting a framework for Group wide accounting policies, determining additional data requirements, assessing the level of IT and finance system changes as well as establishing an appropriate work plan for determining the opening balance sheet. The work is at an early stage. Other new accounting pronouncements In addition to the above, the following new accounting pronouncements have also been issued and are not yet effective but the Group is not expecting them to have a significant impact on the Group's financial statements: – Amendments to IFRS 2: Classification and measurement of share-based payment transactions, issued in June 2016 and effective from 1 January 2018; – IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration, issued in December 2016 and effective from 1 January 2018; – Amendments to IAS 40, Transfers of Investment Property, issued in December 2016 and effective from 1 January 2018; – IFRIC Interpretation 23 Uncertainty over Income Taxes, issued June 2017 and effective from 1 January 2019; – Annual Improvements to IFRSs 2015-2017 cycle; and – Amendments to IAS 19: Plan Amendment, Curtailment or Settlement, issued on 7 February 2018 and effective from 1 January 2019. |
Basis of consolidation | (a) Basis of consolidation The Group consolidates those investees it is deemed to control. The Group has control over an investee if all three of the following are met: (1) it has power over an investee; (2) it is exposed to, or has rights to, variable returns from its involvement with the investee; and (3) it has ability to use its power over the investee to affect its own returns. (i) Subsidiaries Subsidiaries are those investees that the Group controls. The majority of the Group's subsidiaries are corporate entities, but the Group's insurance operations also invest in a number of limited partnerships. The Group performs a re-assessment of consolidation whenever there is a change in the substance of the relationship between the Group and an investee. Where the Group is deemed to control an entity it is treated as a subsidiary and its results, assets and liabilities are consolidated. Where the Group holds a minority share in an entity, with no control over the entity, the investments are carried at fair value through profit or loss within financial investments in the consolidated statement of financial position. Entities consolidated by the Group include Qualifying Partnerships as defined under the UK Partnerships (Accounts) Regulations 2008 (the 'Partnerships Act'). Some of these limited partnerships have taken advantage of the exemption under regulation 7 of the Partnerships Act from the financial statements requirements. This is under regulations 4 to 6, on the basis that these limited partnerships are dealt with on a consolidated basis in these financial statements. (ii) Joint ventures and associates Joint ventures are joint arrangements arising from a contractual agreement whereby the Group and other investors have joint control of the net assets of the arrangement. In a number of these arrangements, the Group's share of the underlying net assets may be less than 50 per cent but the terms of the relevant agreement make it clear that control is jointly exercised between the Group and the third party. Associates are entities over which the Group has significant influence, but it does not control. Generally it is presumed that the Group has significant influence if it holds between 20 per cent and 50 per cent voting rights of the entity. With the exception of those referred to below, the Group accounts for its investments in joint ventures and associates by using the equity method of accounting. The Group's share of profit or loss of its joint ventures and associates is recognised in the income statement and its share of movements in other comprehensive income is recognised in other comprehensive income. The equity method of accounting does not apply to investments in associates and joint ventures held by the Group's insurance or investment funds. This includes venture capital business, mutual funds and unit trusts and which, as allowed by IAS 28, 'Investments in Associates and Joint Ventures', are carried at fair value through profit or loss. (iii) Structured entities Structured entities are those that have been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity. Voting rights relate to administrative tasks. Relevant activities are directed by means of contractual arrangements. The Group invests in structured entities such as: – Open-Ended Investment Companies (OEICs); – Unit Trusts (UTs); – Limited partnerships; – Variable interest entities; – Investment vehicles within separate accounts offered through variable annuities; – Collateralised debt obligations; – Mortgage-backed securities; and – Similar asset-backed securities. Open-ended investment companies and unit trusts The Group invests in OEICs and UTs, which invest mainly in equities, bonds, cash and cash equivalents, and properties. The Group's percentage ownership in these entities can fluctuate on a daily basis according to the participation of the Group and other investors in them. – Where the entity is managed by a Group asset manager, and the Group's ownership holding in the entity exceeds 50 per cent, the Group is judged to have control over the entity. – Where the entity is managed by a Group asset manager, and the Group's ownership holding in the entity is between 20 per cent and 50 per cent, the facts and circumstances of the Group's involvement in the entity are considered, including the rights to any fees earned by the asset manager from the entity, in forming a judgement as to whether the Group has control over the entity. – Where the entity is managed by a Group asset manager, and the Group's ownership holding in the entity is less than 20 per cent, the Group is judged to not have control over the entity. – Where the entity is managed by an asset manager outside the Group, an assessment is made of whether the Group has existing rights that gives it the ability to direct the current activities of the entity and therefore control the entity. In assessing the Group's ability to direct an entity, the Group considers its ability relative to other investors. The Group has a limited number of OEICs and UTs where it considers it has such ability. Where the Group is deemed to control these entities, they are treated as a subsidiary and are consolidated, with the interests of investors other than the Group being classified as liabilities, and appear as net asset value attributable to unit holders of consolidated unit trusts and similar funds. Where the Group does not control these entities (as it is deemed to be acting as an agent) and they do not meet the definition of associates, they are carried at fair value through profit or loss within financial investments in the consolidated statement of financial position. Where the Group's asset manager sets up OEICs and UTs as part of asset management operations, the Group's interest is limited to the administration fees charged to manage the assets of such entities. With no participation in these entities, the Group does not retain risks associated with OEICs and UTs. For these open-ended investment companies and unit trusts, the Group is not deemed to control the entities but to be acting as an agent. The Group generates returns and retains the ownership risks in investment vehicles commensurate to its participation and does not have any further exposure to the residual risks of these investment vehicles. Jackson's separate account assets These are investment vehicles that invest contract holders' premiums in equity, fixed income, bonds and money market mutual funds. The contract holder retains the underlying returns and the ownership risks related to the underlying investments. The shareholder's economic interest in separate accounts is limited to the administrative fees charged. The separate accounts are set up as separate regulated entities governed by a Board of Governors or trustees for which the majority of the members are independent of Jackson or any affiliated entity. The independent members are responsible for any decision making that impacts contract holders' interest and govern the operational activities of the entities' advisers, including asset managers. Accordingly, the Group does not control these vehicles. These investments are carried at fair value through profit or loss within financial investments in the consolidated statement of financial position. Limited partnerships The Group's insurance operations invest in a number of limited partnerships, either directly or through unit trusts, through a mix of capital and loans. These limited partnerships are managed by general partners, in which the Group holds equity. Such interest in general partners and limited partnerships provide the Group with voting and similar rights to participate in the governance framework of the relevant activities in which limited partnerships are engaged in. Accounting for the limited partnerships as subsidiaries, joint ventures, associates or other financial investments depends on the terms of each partnership agreement and the shareholdings in the general partners. Other structured entities The Group holds investments in mortgage-backed securities, collateralised debt obligations and similar asset-backed securities, the majority of which are actively traded in a liquid market. The Group consolidates the vehicles that hold the investments where the Group is deemed to control the vehicles. When assessing control over the vehicles, the factors considered include the purpose and design of the vehicle, the Group's exposure to the variability of returns and the scope of the Group's ability to direct the relevant activities of the vehicle including any kick-out or removal rights that are held by third parties. The outcome of the control assessment is dependent on the terms and conditions of the respective individual arrangements. The majority of such vehicles are not consolidated. In these cases the Group is not the sponsor of the vehicles in which it holds investments and has no administrative rights over the vehicles' activities. The Group generates returns and retains the ownership risks commensurate to its holding and its exposure to the investments. Accordingly the Group does not have power over the relevant activities of such vehicles and all are carried at fair value through profit or loss within financial investments in the consolidated statement of financial position. The table below provides aggregate carrying amounts of the investments in unconsolidated structured entities reported in the Group's statement of financial position: 2017 2016 OEICs/UTs Separate Other OEICs/UTs Separate Other £m £m £m £m £m £m Statement of financial position line items Equity securities and portfolio holdings in unit trusts — — Debt securities — — — — Total The Group generates returns and retains the ownership risks in these investments commensurate to its participation and does not have any further exposure to the residual risks or losses of the investments or the vehicles in which it holds investments. As at 31 December 2017, the Group does not have an agreement, contractual or otherwise, or intention to provide financial support to structured entities that could expose the Group to a loss. |
Reinsurance | (b) Reinsurance The measurement of reinsurance assets is consistent with the measurement of the underlying direct insurance contracts. The treatment of any gains or losses arising on the purchase of reinsurance contracts is dependent on the underlying accounting basis of the entity concerned. |
Investment return | (d) Investment return Investment return included in the income statement principally comprises interest income, dividends, investment appreciation/depreciation (realised and unrealised gains and losses) on investments designated as fair value through profit or loss, and realised gains and losses (including impairment losses) on items held at amortised cost and Jackson's debt securities designated as available-for-sale. Movements in unrealised appreciation/depreciation of Jackson's debt securities designated as available-for-sale are recorded in other comprehensive income. Interest income is recognised as it accrues, taking into account the effective yield on investments. Dividends on equity securities are recognised on the ex-dividend date and rental income is recognised on an accrual basis. |
Borrowings | (g) Borrowings Although initially recognised at fair value, net of transaction costs, borrowings, excluding liabilities of consolidated collateralised debt obligations, are subsequently accounted for on an amortised cost basis using the effective interest method. Under the effective interest method, the difference between the redemption value of the borrowing and the initial proceeds (net of related issue costs) is amortised through the income statement to the date of maturity or for hybrid debt, over the expected life of the instrument. |
Investment properties | (h) Investment properties Investments in leasehold and freehold properties not for occupation by the Group, including properties under development for future use as investment properties, are carried at fair value, with changes in fair value included in the income statement. Properties are valued annually either by the Group's qualified surveyors or by taking into consideration the advice of professional external valuers using the Royal Institution of Chartered Surveyors valuation standards. Each property is externally valued at least once every three years. Leases of investment property where the Group has substantially all the risks and rewards of ownership are classified as finance leases (leasehold property). Finance leases are capitalised at the lease's inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. |
Pension schemes; Pensions | (i) Pension schemes For the Group's defined benefit schemes, if the present value of the defined benefit obligation exceeds the fair value of the scheme assets, then a liability is recorded in the Group's statement of financial position. By contrast, if the fair value of the assets exceeds the present value of the defined benefit obligation then the surplus will only be recognised if the nature of the arrangements under the trust deed, and funding arrangements between the Trustee and the Company, support the availability of refunds or recoverability through agreed reductions in future contributions. In addition, if there is a constructive obligation for the Company to pay deficit funding, this is also recognised such that the financial position recorded for the scheme reflects the higher of any underlying IAS 19 deficit and the obligation for deficit funding. The Group utilises the projected unit credit method to calculate the defined benefit obligation. This method sees each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Estimated future cash flows are then discounted at a high-quality corporate bond rate, adjusted to allow for the difference in duration between the bond index and the pension liabilities where appropriate, to determine its present value. These calculations are performed by independent actuaries. The plan assets of the Group's pension schemes include several insurance contracts that have been issued by the Group. These assets are excluded from plan assets in determining the pension surplus or deficit recognised in the consolidated statement of financial position. The aggregate of the actuarially determined service costs of the currently employed personnel, and the net interest on the net defined benefit liability (asset) at the start of the period, is charged to the income statement. Actuarial and other gains and losses as a result of changes in assumptions or experience variances are recognised as other comprehensive income. Contributions to the Group's defined contribution schemes are expensed when due. |
Share-based payments and related movements in own shares | (j) Share-based payments and related movements in own shares The Group offers share award and option plans for certain key employees and a Save As You Earn plan for all UK and certain overseas employees. Shares held in trust relating to these plans are conditionally gifted to employees. The compensation expense charged to the income statement is primarily based upon the fair value of the options granted, the vesting period and the vesting conditions. The Company has established trusts to facilitate the delivery of Prudential plc shares under employee incentive plans and savings-related share option schemes. The cost to the Company of acquiring these treasury shares held in trusts is shown as a deduction from shareholders' equity. |
Tax | (k) Tax Prudential is subject to tax in numerous jurisdictions and the calculation of the total tax charge inherently involves a degree of estimation and judgement. Current tax expense is charged or credited based upon amounts estimated to be payable or recoverable as a result of taxable amounts for the current year and adjustments made in relation to prior years. The positions taken in tax returns where applicable tax regulation is subject to interpretation are recognised in full in the determination of the tax charge in the financial statements if the Group considers that it is probable that the taxation authority will accept those positions. Otherwise, provisions are established based on management's estimate and judgement of the likely amount of the liability, or recovery by providing for the single best estimate of the most likely outcome or the weighted average expected value where there are multiple outcomes. The total tax charge includes tax expense attributable to both policyholders and shareholders. The tax expense attributable to policyholders comprises the tax on the income of the consolidated with-profits and unit-linked funds. In certain jurisdictions, such as the UK, life insurance companies are taxed on both their shareholders' profits and on their policyholders' insurance and investment returns on certain insurance and investment products. Although both types of tax are included in the total tax charge in the Group's consolidated income statement, they are presented separately in the consolidated income statement to provide the most relevant information about tax that the Group pays on its profits. Deferred taxes are provided under the liability method for all relevant temporary differences. IAS 12 'Income Taxes' does not require all temporary differences to be provided for, in particular, the Group does not provide for deferred tax on undistributed earnings of subsidiaries where the Group is able to control the timing of the distribution and the temporary difference created is not expected to reverse in the foreseeable future. Deferred tax assets are only recognised when it is more likely than not that future taxable profits will be available against which these losses can be utilised. Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability settled, based on tax rates (and laws) that have been enacted or are substantively enacted at the end of the reporting period. |
Business acquisitions | (l) Business acquisitions and disposals Business acquisitions are accounted for by applying the purchase method of accounting, which adjusts the net assets of the acquired company to fair value at the date of purchase. The excess of the acquisition consideration over the fair value of the assets and liabilities of the acquired entity is recorded as goodwill. Expenses related to acquiring new subsidiaries are charged to the income statement in the period in which they are incurred. Income and expenses of acquired entities are included in the income statement from the date of acquisition. |
Disposals | (l) Business acquisitions and disposals Income and expenses of entities sold during the period are included in the income statement up to the date of disposal. The gain or loss on disposal is calculated as the difference between sale proceeds net of selling costs, less the net assets of the entity at the date of disposal, adjusted for foreign exchange movements attaching to the sold entity that are required to be recycled to the income statement under IAS 21. |
Goodwill | (m) Goodwill Goodwill arising on acquisitions of subsidiaries and businesses is capitalised and carried on the Group statement of financial position as an intangible asset at initial value less any accumulated impairment losses. Goodwill impairment testing is conducted annually and when there is an indication of impairment. For the purposes of impairment testing, goodwill is allocated to cash generating units. For further details see note C5(a). |
Cash and cash equivalents | (o) Cash and cash equivalents Cash and cash equivalents consist of cash at bank and in hand, deposits held at call with banks, treasury bills and other short-term highly liquid investments with less than 90 days maturity from the date of acquisition. |
Shareholders' dividends; Dividends | (p) Shareholders' dividends 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. |
Share capital; Share premium | (q) Share capital Shares are classified as equity when their terms do not create an obligation to transfer assets. The difference between the proceeds received on issue of the shares, net of share issue costs, and the nominal value of the shares issued, is credited to share premium. Where the Company purchases shares for the purposes of employee incentive plans, the consideration paid, net of issue costs, is deducted from retained earnings. Upon issue or sale any consideration received is credited to retained earnings net of related costs. |
Foreign exchange; Foreign currency translation | (r) Foreign exchange The Group's consolidated financial statements are presented in pounds sterling, the Group's presentation currency. Accordingly, the results and financial position of foreign subsidiaries must be translated into the presentation currency of the Group from their functional currencies, ie the currency of the primary economic environment in which the entity operates. All assets and liabilities of foreign subsidiaries are converted at year end exchange rates while all income and expenses are converted at average exchange rates where this is a reasonable approximation of the rates prevailing on transaction dates. The impact of these currency translations is recorded as a separate component in the statement of comprehensive income. Foreign currency borrowings that are used to provide a hedge against Group equity investments in overseas subsidiaries are translated at year end exchange rates and movements recognised in other comprehensive income. Other foreign currency monetary items are translated at year end exchange rates with changes recognised in the income statement. Foreign currency transactions are translated at the spot rate prevailing at the time. |
Earnings per share | (s) Earnings per share 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 potentially dilutive 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. |
Prudential plc | |
Accounting policies | |
Basis of preparation | 1 Basis of preparation The financial statements of the parent company are prepared in accordance with UK Generally Accepted Accounting Practice, including Financial Reporting Standard 101 Reduced Disclosure Framework ('FRS 101'). In preparing these financial statements, the Company applies the recognition and measurement requirements in International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board ('IASB') and endorsed by the EU but makes amendments where necessary in order to comply with the Companies Act 2006. |
Investments in and amounts owed by subsidiary undertakings | Investments in subsidiary undertakings Investments in subsidiary undertakings are shown at cost less impairment. Amounts owed by subsidiary undertakings Amounts owed by subsidiary undertakings are shown at cost, less provisions. |
Derivatives | Derivatives Derivative financial instruments are held to manage certain macro-economic exposures. Derivative financial instruments are carried at fair value with changes in fair value included in the profit and loss account. |
Borrowings | Borrowings Borrowings are initially recognised at fair value, net of transaction costs, and subsequently accounted for on an amortised cost basis using the effective interest method. Under the effective interest method, the difference between the redemption value of the borrowing and the initial proceeds, net of transaction costs, is amortised through the profit and loss account to the date of maturity or, for subordinated debt, over the expected life of the instrument. |
Pension schemes; Pensions | Pensions The Company assumes a portion of the pension surplus or deficit of the Group's main pension scheme, the Prudential Staff Pension Scheme ('PSPS'). The Company applies the requirements of IAS 19 'Employee Benefit' (as revised in 2011) for the accounting of its interest in the PSPS surplus or deficit. A pension surplus or deficit is recorded as the difference between the present value of the scheme liabilities and the fair value of the scheme assets. The Company's share of pension surplus is recognised to the extent that the Company is able to recover a surplus either through reduced contributions in the future or through refunds from the scheme. The assets and liabilities of the defined benefit pension schemes of the Prudential Group are subject to a full triennial actuarial valuation using the projected unit method. Estimated future cash flows are then discounted at a high quality corporate bond yield, adjusted to allow for the difference in duration between the bond index and the pension liabilities, where appropriate, to determine their present value. These calculations are performed by independent actuaries. The aggregate of the actuarially determined service costs of the currently employed personnel and the net income (interest) on the net scheme assets (liabilities) at the start of the period, is recognised in the profit or loss account. Actuarial gains and losses as a result of the changes in assumptions, experience variances or the return on scheme assets excluding amounts included in the net deferred benefit asset (liability) are recorded in other comprehensive income. |
Share-based payments and related movements in own shares | Share-based payments The Group offers share award and option plans for certain key employees and a Save As You Earn ('SAYE') plan for all UK and certain overseas employees. The share-based payment plans operated by the Group are mainly equity-settled plans with a few cash-settled plans. Under IFRS 2 'Share-based payment', where the Company, as the parent company, has the obligation to settle the options or awards of its equity instruments to employees of its subsidiary undertakings, and such share-based payments are accounted for as equity-settled in the Group financial statements, the Company records an increase in the investment in subsidiary undertakings for the value of the share options and awards granted with a corresponding credit entry recognised directly in equity. The value of the share options and awards granted is based upon the fair value of the options and awards at the grant date, the vesting period and the vesting conditions. |
Tax | Tax Current tax expense is charged or credited to operations based upon amounts estimated to be payable or recoverable as a result of taxable amounts for the current year. To the extent that losses of an individual UK company are not offset in any one year, they can be carried back for one year or carried forward indefinitely to be offset against profits arising from the same company. Deferred tax assets and liabilities are recognised in accordance with the provisions of IAS 12, 'Income Taxes'. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that future taxable profits will be available against which these losses can be utilised. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. The Group's UK subsidiaries each file separate tax returns. In accordance with UK tax legislation, where one domestic UK company is a 75 per cent owned subsidiary of another UK company or both are 75 per cent owned subsidiaries of a common parent, the companies are considered to be within the same UK tax group. For companies within the same tax group, trading profits and losses arising in the same accounting period may be offset for the purposes of determining current and deferred taxes. |
Shareholders' dividends; Dividends | Dividends Interim dividends are recorded in the period in which they are paid. |
Share capital; Share premium | Share premium The difference between the proceeds received on issue of shares and the nominal value of the shares issued is credited to the share premium account. |
Foreign exchange; Foreign currency translation | Foreign currency translation Assets and liabilities denominated in foreign currencies, including borrowings that have been used to finance or provide a hedge against Group equity investments in overseas subsidiaries, are translated at year end exchange rates. The impact of these currency translations is recorded within the profit and loss account for the year. |
BACKGROUND AND CRITICAL ACCOU41
BACKGROUND AND CRITICAL ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
BACKGROUND AND CRITICAL AND OTHER SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of exchange rates applied and exchange movement recognised in other comprehensive income | The exchange rates applied for balances and transactions in currency other than the presentational currency of the Group, pounds sterling (GBP) were: Closing Average Closing Average Closing Average Opening Local currency: £ Hong Kong Indonesia Malaysia Singapore China India Vietnam Thailand US The exchange movement arising during 2017 recognised in other comprehensive income is: £m £m £m Asia operations* † ) ) US operations ) Unallocated to a segment (other funds)** ) ) ) * 2017 included the recycling of the cumulative exchange gain of the sold Korea life business of £61 million to the income statement. ** The exchange rate movement unallocated to a segment mainly reflects the translation of currency borrowings, issued by group holding companies, that have been designated as a net investment hedge against the currency risk of the Group's investment in Jackson. † 2015 included the cumulative exchange loss of the Japan life business of £46 million. |
Analysis of performance by se42
Analysis of performance by segment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Analysis of performance by segment | |
Schedule of segment results - profit before tax | Note 2016* 2015* £m £m £m Asia Insurance operations B3 (a) Asset management Total Asia US Jackson (US insurance operations) B3 (b) Asset management ) Total US UK and Europe UK and Europe insurance operations: B3 (c) Long-term business General insurance commission note (i) Total UK and Europe insurance operations UK and Europe asset management note (vi) Total UK and Europe Total segment profit Restructuring costs note (iii) ) ) ) Other income and expenditure: Investment return and other income Interest payable on core structural borrowings ) ) ) Corporate expenditure note (ii) ) ) ) Solvency II implementation costs — ) ) Total other income and expenditure ) ) ) Interest received from tax settlement — — Operating profit based on longer-term investment returns Short-term fluctuations in investment returns on shareholder-backed business B1.2 ) ) ) Amortisation of acquisition accounting adjustments note (iv) ) ) ) Profit (loss) attaching to disposal of businesses D1 ) Cumulative exchange gain on the sold Korea life business recycled from other comprehensive income D1 — — Cumulative exchange loss on the sold Japan life business recycled from other comprehensive income note (v) — — ) Profit before tax Tax charge attributable to shareholders' returns B4 ) ) ) Profit for the year Attributable to: Equity holders of the Company Non-controlling interests — — Basic earnings per share (in pence) B5 Based on operating profit based on longer-term investment returns note (vii) 145.2p 131.3p 124.6p Based on profit for the year 93.1p 75.0p 101.0p * The 2016 and 2015 comparative results have been re-presented from those previously published following the reassessment of the Group's operating segments as described in note B1.3. Notes (i) General insurance commission represents the commission receivable net of expenses for Prudential-branded general insurance products in connection with the arrangement to transfer the UK general insurance business to Churchill in 2002. (ii) Corporate expenditure as shown above is primarily for Group Head Office and Asia Regional Head Office. (iii) Restructuring costs are incurred primarily in UK and Europe and Asia and represent business transformation and integration costs. (iv) Amortisation of acquisition accounting adjustments principally relate to the REALIC business of Jackson which was acquired in 2012. (v) On 5 February 2015, the Group completed the sale of its closed book life insurance business in Japan. (vi) UK and Europe asset management operating profit based on longer-term investment returns: £m £m £m Asset management fee income Other income Staff costs ) ) ) Other costs ) ) ) Underlying profit before performance-related fees Share of associate results Performance-related fees Total UK and Europe asset management operating profit based on longer-term investment returns (vii) Tax charges have been reflected as operating and non-operating in the same way as for the pre-tax items. In 2017 a significant US tax reform package was enacted, and the effects of which in the income statement have been treated as non-operating. Further details are provided in note B4. |
Schedule of UK and Europe asset management operating profit based on longer-term investments returns | £m £m £m Asset management fee income Other income Staff costs ) ) ) Other costs ) ) ) Underlying profit before performance-related fees Share of associate results Performance-related fees Total UK and Europe asset management operating profit based on longer-term investment returns |
Schedules of short-term fluctuations in investment returns on shareholder-backed business | £m £m £m Asia ) ) ) US note(i) ) ) ) UK and Europe note(ii) ) ) Other operations note(iii) ) ) Total ) ) ) Notes (i) US operations The short-term fluctuations in investment returns for US insurance operations are reported net of related credit for amortisation of deferred acquisition costs, of £462 million as shown in note C5(b) (2016: £565 million; 2015: £93 million) and comprise amounts in respect of the following items: £m £m £m Net equity hedge result note (a) ) ) ) Other than equity-related derivatives note (b) ) ) Debt securities note (c) ) Equity-type investments: actual less longer-term return Other items Total ) ) ) Notes (a) Net equity hedge result The purpose of the inclusion of this item in short-term fluctuations in investment returns is to segregate the amount included in pre-tax profit that relates to the accounting effect of market movements on both the measured value of guarantees in Jackson's variable annuity and fixed index annuity products and on the related derivatives used to manage the exposures inherent in these guarantees. As the Group applies US GAAP for the measured value of the product guarantees this item also includes asymmetric impacts where the measurement bases of the liabilities and associated derivatives used to manage the Jackson annuity business differ as described in note B1.3(c) below. The net equity hedge result therefore includes significant accounting mismatches and other factors that detract from the presentation of an economic result. These other factors include: – The variable annuity guarantees and fixed index annuity embedded options being only partially fair valued under 'grandfathered' US GAAP as described in note B1.3 (c); – The interest rate exposure being managed through the other than equity-related derivative programme explained in note (b) below; and – Jackson's management of its economic exposures for a number of other factors that are treated differently in the accounting frameworks such as future fees and assumed volatility levels. The net equity hedge result (net of related DAC) can be summarised as follows: £m £m £m Fair value movements on equity hedge instruments 1 ) ) ) Accounting value movements on the variable and fixed index annuity guarantee liabilities 2 ) ) ) Fee assessments net of claim payments Total ) ) ) 1. Held to manage equity exposures of the variable annuity guarantees and fixed index annuity options. 2. The accounting value movements on the variable and fixed index annuity guarantee liabilities reflect the impact of market movements and changes in economic and actuarial assumptions. These actuarial assumptions changes include, amongst other items, a charge (net of related DAC) of £359 million for strengthening policyholder utilisation and persistency rates offset by a benefit (net of related DAC) of £382 million from modelling refinements in the period, principally enhancements to how Jackson's own credit risk is incorporated in the fair valuation of these long-term liabilities. (b) Other than equity-related derivatives The fluctuations for this item comprise the net effect of: – Fair value movements on free-standing, other than equity-related derivatives; – Fair value movements on the Guaranteed Minimum Income Benefit (GMIB) reinsurance asset that are not matched by movements in the underlying GMIB liability, which is not fair valued as explained in note B1.3; and – Related amortisation of DAC. The free-standing, other than equity-related derivatives, are held to manage interest rate exposures and durations within the general account and the variable annuity guarantees and fixed index annuity embedded options described in note (a) above. Accounting mismatches arise because of differences between the measurement basis and presentation of the derivatives, which are fair valued with movements recorded in the income statement, and the exposures they are intended to manage. (c) Short-term fluctuations related to debt securities £m £m £m Short-term fluctuations relating to debt securities (Charges) credits in the year: Losses on sales of impaired and deteriorating bonds ) ) ) Defaults — ) — Bond write-downs ) ) ) Recoveries/reversals Total credits (charges) in the year ) ) Less: Risk margin allowance deducted from operating profit based on longer-term investment returns note ) Interest-related realised (losses) gains: (Losses) gains arising in the year ) Less: Amortisation of gains and losses arising in current and prior years to operating profit based on longer-term investment returns ) ) ) ) ) Related amortisation of deferred acquisition costs ) ) Total short-term fluctuations related to debt securities ) Note The debt securities of Jackson are held in the general account of the business. Realised gains and losses are recorded in the income statement with normalised returns included in operating profit with variations from year to year included in the short-term fluctuations category. The risk margin reserve charge for longer-term credit-related losses included in operating profit based on longer-term investment returns of Jackson for 2017 is based on an average annual risk margin reserve of 21 basis points (2016: 21 basis points; 2015: 23 basis points) on average book values of US$55.3 billion (2016: US$56.4 billion; 2015: US$54.6 billion) as shown below: 2017 2016 2015 Moody's rating category (or equivalent under NAIC ratings of mortgage-backed securities) Average RMR Annual Average RMR Annual Average RMR Annual US$m % US$m £m US$m % US$m £m US$m % US$m £m A3 or higher ) ) ) ) ) ) Baa1, 2 or 3 ) ) ) ) ) ) Ba1, 2 or 3 ) ) ) ) ) ) B1, 2 or 3 ) ) ) ) ) ) Below B3 ) ) ) ) ) ) Total ) ) ) ) ) ) Related amortisation of deferred acquisition costs (see below) Risk margin reserve charge to operating profit for longer-term credit-related losses ) ) ) ) ) ) Consistent with the basis of measurement of insurance assets and liabilities for Jackson's IFRS results, the charges and credits to operating profits based on longer-term investment returns are partially offset by related amortisation of deferred acquisition costs. In addition to the accounting for realised gains and losses described above for Jackson general account debt securities, included within the statement of other comprehensive income is a pre-tax credit of £541 million for net unrealised gains on debt securities classified as available-for-sale net of related amortisation of deferred acquisition costs (2016: credit of £48 million; 2015: charge of £(968) million). Temporary market value movements do not reflect defaults or impairments. Additional details of the movement in the value of the Jackson portfolio are included in note C3.2(b). (ii) UK and Europe operations The negative short-term fluctuations in investment returns for UK and Europe operations of £(14) million (2016: positive £206 million; 2015: negative £(121) million) include net unrealised movements on fixed income assets supporting the capital of the shareholder-backed annuity business. (iii) Other operations The positive short-term fluctuations in investment returns for other operations of £20 million (2016: negative £(204) million; 2015: negative £(73) million) include unrealised value movements on financial instruments. |
Schedule of average annual risk margin reserve | 2017 2016 2015 Moody's rating category (or equivalent under NAIC ratings of mortgage-backed securities) Average RMR Annual Average RMR Annual Average RMR Annual US$m % US$m £m US$m % US$m £m US$m % US$m £m A3 or higher ) ) ) ) ) ) Baa1, 2 or 3 ) ) ) ) ) ) Ba1, 2 or 3 ) ) ) ) ) ) B1, 2 or 3 ) ) ) ) ) ) Below B3 ) ) ) ) ) ) Total ) ) ) ) ) ) Related amortisation of deferred acquisition costs (see below) Risk margin reserve charge to operating profit for longer-term credit-related losses ) ) ) ) ) ) |
Schedule of equity-type securities | Equity-type securities such as common and preferred stock and portfolio holdings in mutual funds 6.1% to 6.5% 5.5% to 6.5% 5.7% to 6.4% Other equity-type securities such as investments in limited partnerships and private equity funds 8.1% to 8.5% 7.5% to 8.5% 7.7% to 8.4% |
Schedule of segmental income statements | 2017 Asia US UK and Total Unallocated Group £m £m £m £m £m £m Gross premium earned Outward reinsurance ) ) ) ) ) ) Earned premiums, net of reinsurance Other income from external customers note(ii) Total revenue from external customers note(v) Intra-group revenue ) — Interest income note(iv) Other investment return B1.5 Total revenue, net of reinsurance Benefits and claims and movements in unallocated surplus of with-profits funds, net of reinsurance ) ) ) ) ) ) Acquisition costs and other operating expenditure B2 ) ) ) ) ) ) Interest on core structural borrowings — ) — ) ) ) Disposal of Korea life business D1 Cumulative exchange gain on the sold Korea life business recycled from other comprehensive income D1 — — — Remeasurement adjustments — — — Gain on disposal of other businesses D1 — — — Total charges, net of reinsurance and gain (loss) on disposal of businesses ) ) ) ) ) ) Share of profit from joint ventures and associates, net of related tax — — Profit (loss) before tax (being tax attributable to shareholders' and policyholders' returns) note(i) ) Tax charge attributable to policyholders' returns ) — ) ) — ) Profit (loss) before tax ) Analysis of operating profit Operating profit (loss) based on longer-term investment returns ) Short-term fluctuations in investment returns on shareholder-backed business ) ) ) ) ) Amortisation of acquisition accounting adjustments ) ) — ) — ) Profit attaching to the disposal of businesses — — — Cumulative exchange gain on the sold Korea life business recycled from other comprehensive income D1 — — — Profit (loss) before tax ) 2016* Asia US UK and Total Unallocated Group £m £m £m £m £m £m Gross premium earned — Outward reinsurance ) ) ) ) — ) Earned premiums, net of reinsurance — Other income from external customers note(ii) Total revenue from external customers note(v) Intra-group revenue ) — Interest income note(iv) Other investment return B1.5 ) Total revenue, net of reinsurance ) Benefits and claims and movements in unallocated surplus of with-profits funds, net of reinsurance ) ) ) ) — ) Acquisition costs and other operating expenditure B2 ) ) ) ) ) ) Interest on core structural borrowings — ) — ) ) ) Remeasurement of carrying value of Korea life business classified as held for sale D1 ) — — ) — ) Total charges, net of reinsurance and gain (loss)on disposal of business ) ) ) ) ) ) Share of profit from joint ventures and associates, net of related tax — — Profit (loss) before tax (being tax attributable to shareholders' and policyholders' returns) note(i) ) Tax charge attributable to policyholders' returns ) — ) ) — ) Profit (loss) before tax attributable to shareholders ) Analysis of operating profit Operating profit (loss) based on longer-term investment returns ) Short-term fluctuations in investment returns on shareholder-backed business ) ) ) ) ) Amortisation of acquisition accounting adjustments ) ) — ) — ) Loss attaching to the held for sale Korea life business D1 ) — — ) — ) Profit (loss) before tax ) 2015* Asia US UK and Total Unallocated Group £m £m £m £m £m £m Gross premium earned — Outward reinsurance ) ) ) ) — ) Earned premiums, net of reinsurance — Other income from external customers note(ii) Total revenue from external customers note(v) Intra-group revenue ) — Interest income note(iv) Other investment return B1.5 ) ) ) ) ) Total revenue, net of reinsurance Benefits and claims and movements in unallocated surplus of with-profits funds, net of reinsurance ) ) ) ) — ) Acquisition costs and other operating expenditure B2 ) ) ) ) ) ) Interest on core structural borrowings — ) — ) ) ) Disposal of Japan life business D1 ) — — ) — ) Total charges, net of reinsurance and gain (loss) on disposal of businesses ) ) ) ) ) ) Share of profit from joint ventures and associates, net of related tax — — Profit (loss) before tax (being tax attributable to shareholders' and policyholders' returns) note(i) ) Tax charge attributable to policyholders' returns ) — ) ) — ) Profit (loss) before tax attributable to shareholders ) Analysis of operating profit Operating profit (loss) based on longer-term investment returns ) Short-term fluctuations in investment returns on shareholder-backed business ) ) ) ) ) ) Amortisation of acquisition accounting adjustments ) ) — ) — ) Profit attaching to the held for sale Korea life business — — — Cumulative exchange loss on sold Japan life business ) — — ) — ) Profit (loss) before tax ) * The 2016 and 2015 comparative results have been re-presented from those previously published following the reassessment of the Group's operating segments as described in note B1.3. Notes (i) This measure is the formal profit (loss) before tax measure under IFRS but is not the result attributable to shareholders. (ii) Other income from external customers includes £7 million (2016: £8 million; 2015: £19 million) relating to financial instruments that are not held at fair value through profit or loss. These fees primarily related to prepayment fees, late fees and syndication fees. (iii) Unallocated to a segment includes central operations (Group and Asia Regional Head Offices and Group borrowings), Prudential Capital and Africa operations. In addition, this column includes intra-group eliminations, including the elimination of the intra-group reinsurance contract between the UK with-profits and Asia with-profits operations. (iv) Interest income includes £3 million (2016: £3 million; 2015: £3 million) accrued in respect of impaired securities. (v) In Asia, revenue from external customers from no individual market exceeds 10 per cent of the Group total except for Hong Kong in 2017 (2016: no individual market exceeded 10 per cent except for Hong Kong; 2015: no individual market exceeded 10 per cent). Total revenue from external customers of Hong Kong is £7,269 million (2016: £6,313 million; 2015: £ 3,836 million). (vi) Due to the nature of the business of the Group, there is no reliance on any major customers. |
Schedule of other investment return | £m £m £m Realised and unrealised gains (losses) on securities at fair value through profit or loss ) Realised and unrealised (losses) on derivatives at fair value through profit or loss ) ) ) Realised (losses) gains on available-for-sale securities, previously recognised in other comprehensive income* ) Realised gains on loans ) Dividends Other investment income Other investment return ) * Including impairment. |
Schedule of additional analysis of performance by segment | B1.6(a) Asia 2017 2016* 2015* Insurance Asset Eliminations Total Total Total £m £m £m £m £m £m Earned premiums, net of reinsurance — — Other income from external customers — Total revenue from external customers — Intra-group revenue — ) Interest income — Other investment return — ) Total revenue, net of reinsurance ) Benefits and claims and movements in unallocated surplus of with-profits funds, net of reinsurance ) — — ) ) ) Acquisition costs and other operating expenditure B2 ) ) ) ) ) Disposal of Korea life business: D1 Cumulative exchange gain recycled from other comprehensive income — — — — Remeasurement adjustments — — ) — Cumulative exchange loss on the sold Japan life business recycled from other comprehensive income — — — — — ) Total charges, net of reinsurance and gain (loss) on disposal of businesses ) ) ) ) ) Share of profit from joint ventures and associates, net of related tax — Profit before tax (being tax attributable to shareholders' and policyholders' returns) — Tax charge attributable to policyholders' returns ) — — ) ) ) Profit before tax attributable to shareholders — Analysis of operating profit Operating profit based on longer-term investment returns — Short-term fluctuations in investment returns on shareholder-backed business ) — — ) ) ) Amortisation of acquisition accounting adjustments ) — — ) ) ) Profit (loss) attaching to disposal of businesses — — — — ) Cumulative exchange gain on the sold Korea life business D1 — — — — Cumulative exchange loss on the sold Japan life business D1 — — — — — ) Profit before tax attributable to shareholders — * The 2016 and 2015 comparative results have been re-presented from those previously published following reassessment of the Group's operating segments as described in note B1.3. B1.6(b) US 2017 2016* 2015* Insurance Asset Eliminations Total Total Total £m £m £m £m £m £m Earned premiums, net of reinsurance — — Other income from external customers — Total revenue from external customers — Intra-group revenue — ) Interest income — — Other investment return — — ) Total revenue, net of reinsurance ) Benefits and claims ) — — ) ) ) Interest on core structural borrowings ) — — ) ) ) Acquisition costs and other operating expenditure B2 ) ) ) ) ) Gain on disposal of businesses D1 — — — — Total charges, net of reinsurance and gain on disposal of businesses ) ) ) ) ) Profit before tax — Analysis of operating profit Operating profit based on longer-term investment returns — Short-term fluctuations in investment returns on shareholder-backed business ) — — ) ) ) Amortisation of acquisition accounting adjustments ) — — ) ) ) Profit attaching to the disposal of businesses — — — Profit before tax — * The 2016 and 2015 comparative results have been re-presented from those previously published following reassessment of the Group's operating segments as described in note B1.3. ** The US total revenue includes asset management gross revenue of £780 million (2016: £785 million; 2015: £843 million), including £542 million of NPH broker-dealer fees (2016: £550 million; 2015: £522 million), and asset management gross charges of £770 million (2016: £789 million; 2015: £832 million), including £542 million (2016: £550 million; 2015: £522 million) of NPH broker-dealer fees. B1.6(c) UK and Europe 2017 2016* 2015* Insurance Asset Eliminations Total Total Total £m £m £m £m £m £m Earned premiums, net of reinsurance — — Other income from external customers — Total revenue from external customers — Intra-group revenue — ) Interest income — Other investment return — Total revenue, net of reinsurance ) Benefits and claims and movements in unallocated surplus of with-profits funds, net of reinsurance ) — — ) ) ) Acquisition costs and other operating expenditure B2 ) ) ) ) ) Total charges, net of reinsurance ) ) ) ) ) Share of profit from joint ventures and associates, net of related tax — Profit before tax (being tax attributable to shareholders' and policyholders' returns) — Tax charge attributable to policyholders' returns ) — — ) ) ) Profit before tax — Analysis of operating profit Operating profit based on longer-term investment returns — Short-term fluctuations in investment returns on shareholder-backed business ) — ) ) Profit before tax — * The 2016 and 2015 comparative results have been re-presented from those previously published following reassessment of the Group's operating segments as described in note B1.3. ** The revenue for UK and Europe Asset Management of £1,087 million (2016: £956 million; 2015: £961 million), comprising the amounts for asset management fee income, other income and performance-related fees shown in note B1.1(vi), is different to the amount of £1,444 million shown in the table above. This is because the £1,087 million (2016: £956 million; 2015: £961 million) is after deducting commissions which would have been included as charges in the table above. The difference in the presentation of commission is aligned with how management reviews the business. For further information see note B1.1. |
Acquisition costs and other e43
Acquisition costs and other expenditure (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Acquisition costs and other expenditure | |
Schedule of acquisition costs and other expenditure | 2017 2016 2015 £m £m £m Acquisition costs incurred for insurance policies ) ) ) Acquisition costs deferred less amortisation of acquisition costs Administration costs and other expenditure ) ) ) Movements in amounts attributable to external unit holders of consolidated investment funds ) ) ) Total acquisition costs and other expenditure ) ) ) |
Schedule of segmental analysis of other interest expense and depreciation and amortisation | Other interest expense Depreciation and 2017 2016* 2015* 2017 2016* 2015* £m £m £m £m £m £m Asia: Insurance — — — ) ) ) Asset management — — — ) ) ) US: Insurance ) ) ) ) Asset management — — — ) ) ) UK and Europe: Insurance ) ) ) ) ) ) Asset management — — — ) ) ) Total segment ) ) ) ) ) ) Unallocated to a segment (other operations) ) ) ) ) ) ) Group total ) ) ) ) ) ) * The 2016 and 2015 comparative results have been re-presented from those previously published following reassessment of the Group's operating segments as described in note B1.3. |
Schedule of average number of staff employed | Business operations: Asia US UK and Europe* Total * The UK and Europe staff numbers include staff from central operations and Africa which are unallocated to a segment. |
Schedule of costs of employment | £m £m £m Business operations: Wages and salaries Social security costs Pension costs: Defined benefit schemes* ) ) Defined contribution schemes Total * The (credit) charge incorporates the effect of actuarial gains and losses. |
Schedule of movement in outstanding options and awards | Options outstanding under SAYE schemes Awards outstanding 2017 2016 2015 2017 2016 2015 Number of Weighted Number of Weighted Number of Weighted Number of millions £ millions £ millions £ millions Beginning of year: Granted Exercised ) ) ) ) ) ) Forfeited ) ) ) ) ) ) Cancelled ) ) ) ) ) — Lapsed/Expired ) ) — ) — ) End of year Options immediately exercisable, end of year |
Summary of the range of exercise prices for options outstanding | Outstanding Exercisable Number Weighted average Weighted average Number Weighted average (millions) (years) £ (millions) £ Between £2 and £3 — — — — — — — — — — — — Between £4 and £5 — — — — — Between £6 and £7 — — — Between £9 and £10 — — — — Between £11 and £12 — — — — Between £14 and £15 — — — — — — — — — — — — |
Schedule of assumptions used to estimate fair value amounts on date of grant relating to all options and awards | 2017 2016 2015 Prudential SAYE Other Prudential SAYE Other Prudential SAYE Other Dividend yield (%) — — — — — — Expected volatility (%) — — — Risk-free interest rate (%) — — — Expected option life (years) — — — — — — Weighted average exercise price (£) — — — — — — Weighted average share price at grant date (£) — — — Weighted average fair value at grant date (£) |
Schedule of expense recognised relating to share-based compensation | £m £m £m Share-based compensation expense Amount accounted for as equity-settled Carrying value at 31 December of liabilities arising from share-based payment transactions — — Intrinsic value of above liabilities for which rights had vested at 31 December — — |
Schedule of key management remuneration | £m £m £m Salaries and short-term benefits Post-employment benefits Share-based payments |
Schedule of fees payable to the auditor | £m £m £m Fees payable to the Company's auditor for the audit of the Company's annual accounts Fees payable to the Company's auditor and its associates for other services: Audit of subsidiaries pursuant to legislation Audit-related assurance services Tax compliance services — Other assurance services Services relating to corporate finance transactions — All other services Total fees paid to the auditor |
Tax charge (Tables)
Tax charge (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tax charge | |
Schedule of total tax charge in the income statement | 2017 2016 2015 Tax charge Current Deferred Total Total Total £m £m £m £m £m Attributable to shareholders: Asia operations ) ) ) ) ) US operations ) ) ) UK and Europe ) ) ) ) Other operations — Tax charge attributable to shareholders' returns ) ) ) ) ) Attributable to policyholders: Asia operations ) ) ) ) ) UK and Europe ) ) ) ) ) Tax charge attributable to policyholders' returns ) ) ) ) ) Total tax charge ) ) ) ) ) |
Schedule of components total tax charge | £m £m £m Current tax expense: Corporation tax ) ) ) Adjustments in respect of prior years Total current tax charge ) ) ) Deferred tax arising from: Origination and reversal of temporary differences ) ) Impact of changes in local statutory tax rates ) Credit in respect of a previously unrecognised tax loss, tax credit or temporary difference from a prior period — Total deferred tax (charge) credit ) ) Total tax charge ) ) ) |
Schedule of deferred tax charge (credit) | £m £m £m Short-term temporary differences ) ) Unrealised gains and losses on investments ) ) Balances relating to investment and insurance contracts ) ) ) Unused tax losses ) ) Capital allowances ) Deferred tax (charge) credit ) ) |
Reconciliation of shareholder effective tax rate | 2017 Asia US UK and Other* Total Percentage £m £m £m £m £m Operating profit (loss) based on longer-term investment returns ) Non-operating profit (loss) ) ) ) Profit (loss) before tax ) Expected tax rate % % % % % Tax at the expected rate ) % Effects of recurring tax reconciliation items: Income not taxable or taxable at concessionary rates ) ) ) ) ) )% Deductions not allowable for tax purposes % Items related to taxation of life insurance businesses ) ) ) — ) )% Deferred tax adjustments ) ) % Effect of results of joint ventures and associates ) — ) — ) )% Irrecoverable withholding taxes — — — % Other ) — ) ) )% Total ) ) ) )% Effects of non-recurring tax reconciliation items: Adjustments to tax charge in relation to prior years ) ) ) ) ) )% Movements in provisions for open tax matters — — % Impact of US tax reform — — — % Adjustments in relation to business disposals ) — — % Total ) ) % Total actual tax charge (credit) ) % Analysed into: Tax on operating profit based on longer-term investment returns ) Tax on non-operating profit ) ) ) ) ) Actual tax rate: Operating profit based on longer-term investment returns: Including non-recurring tax reconciling items % % % % % Excluding non-recurring tax reconciling items % % % % % Total profit % % % % % * Other operations include restructuring costs. 2016** Asia US UK and Other* Total Percentage £m £m £m £m £m Operating profit (loss) based on longer-term investment returns ) Non-operating (loss) profit ) ) ) ) Profit (loss) before tax ) Expected tax rate % % % % Tax at the expected rate ) % Effects of recurring tax reconciliation items: Income not taxable or taxable at concessionary rates ) ) ) ) ) )% Deductions not allowable for tax purposes % Items related to taxation of life insurance businesses ) ) ) — ) )% Deferred tax adjustments ) — ) ) )% Effect of results of joint ventures and associates ) — ) — ) )% Irrecoverable withholding taxes — — — % Other — — ) ) )% Total ) ) ) ) )% Effects of non-recurring tax reconciliation items: Adjustments to tax charge in relation to prior years ) ) ) )% Movements in provisions for open tax matters — — % Impact of changes in local statutory tax rates — — ) — ) )% Write-down of Korea life business — — — % Total ) ) % Total actual tax charge (credit) ) ) % Analysed into: Tax on operating profit based on longer-term investment returns ) Tax on non-operating profit ) ) ) ) Actual tax rate: Operating profit based on longer-term investment returns: Including non-recurring tax reconciling items % % % % Excluding non-recurring tax reconciling items % % % % Total profit % )% % % \ * Other operations include restructuring costs. ** The 2016 comparative results have been re-presented from those previously published following reassessment of the Group's operating segments as described in note B1.3. 2015** Asia US UK and Other* Total Percentage £m £m £m £m £m Operating profit (loss) based on longer-term investment returns ) Non-operating loss ) ) ) ) ) Profit (loss) before tax ) Expected tax rate % % % % Tax at the expected rate ) % Effects of recurring tax reconciliation items: Income not taxable or taxable at concessionary rates ) ) ) ) ) )% Deductions not allowable for tax purposes % Items related to taxation of life insurance businesses ) ) — — ) )% Deferred tax adjustments — ) ) ) % Effect of results of joint ventures and associates ) — ) — ) )% Irrecoverable withholding taxes — — % Other ) ) % Total ) ) ) )% Effects of non-recurring tax reconciliation items: Adjustments to tax charge in relation to prior years ) ) — ) )% Movements in provisions for open tax matters ) — — ) ) )% Impact of changes in local statutory tax rates ) — ) — ) )% Total ) ) ) ) ) )% Total actual tax charge (credit) ) % Analysed into: Tax on operating profit based on longer-term investment returns ) Tax on non-operating profit ) ) ) ) ) Actual tax rate: Operating profit based on longer-term investment returns: Including non-recurring tax reconciling items % % % % Excluding non-recurring tax reconciling items % % % % Total profit % % % % * Other operations include restructuring costs. ** The 2015 comparative results have been re-presented from those previously published following reassessment of the Group's operating segments as described in note B1.3. |
Schedule of movements in provisions for open tax matters | £m At 1 January 2017 ) Movements in the current period included in: Tax charge attributable to shareholders ) Other movements* ) At 31 December 2017 ) * Other movements include interest arising on open tax matters and amounts included in the Group's share of profits from joint ventures and associates, net of related tax. |
Schedule of tax rates for Asia insurance and Group, excluding the held for sale Korea life business | Asia Attributable to Expected tax rate on total profit % Actual tax rate: Operating profit based on longer-term investment returns % Total profit % |
Earnings per share (Tables)
Earnings per share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings per share | |
Schedule of earnings per share | 2017 Note Before Tax Non- Net of tax Basic Diluted £m £m £m £m Pence Pence Based on operating profit based on longer-term investment returns ) ) 145.2p 145.1p Short-term fluctuations in investment returns on shareholder-backed business B1.2 ) — ) (38.6)p (38.6)p Amortisation of acquisition accounting adjustments ) — ) (1.7)p (1.7)p Cumulative exchange gain on the sold Korea life business recycled from other comprehensive income D1 — — 2.4p 2.4p Profit attaching to disposal of businesses D1 ) — 3.1p 3.1p Impact of US Tax Reform B4 — ) — ) (17.3)p (17.3)p Based on profit for the year ) ) 93.1p 93.0p 2016 Note Before Tax Non- Net of tax Basic Diluted £m £m £m £m Pence Pence Based on operating profit based on longer-term investment returns ) — 131.3p 131.2p Short-term fluctuations in investment returns on shareholder-backed business B1.2 ) — ) (45.3)p (45.2)p Loss attaching to held for sale Korea life business D1 ) ) — ) (9.0)p (9.0)p Amortisation of acquisition accounting adjustments ) — ) (2.0)p (2.0)p Based on profit for the year ) — 75.0p 75.0p 2015 Note Before Tax Non- Net of tax Basic Diluted £m £m £m Pence Pence Based on operating profit based on longer-term investment returns ) — 124.6p 124.5p Short-term fluctuations in investment returns on shareholder-backed business B1.2 ) — ) (21.5)p (21.5)p Profit attaching to held for sale Korea life business D1 ) — 1.7p 1.7p Cumulative exchange loss on the sold Japan life business recycled from other comprehensive income ) — — ) (1.8)p (1.8)p Amortisation of acquisition accounting adjustments ) — ) (2.0)p (2.0)p Based on profit for the year ) — 101.0p 100.9p |
Summary of weighted average number of shares for calculating earnings per share | Weighted average number of shares for calculation of: 2017 2016 2015 Basic earnings per share Shares under option at end of year Number of shares that would have been issued at fair value on assumed option price ) ) ) Diluted earnings per share |
Dividends (Tables)
Dividends (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Dividends | |
Schedule of dividends | 2017 2016 2015 Pence per £m Pence per £m Pence per £m Dividends relating to reporting year: First interim ordinary dividend 14.50p 12.93p 12.31p Second interim ordinary dividend 32.50p 30.57p 26.47p Special dividend — — 10.00p Total 47.00p 43.50p 48.78p Dividends paid in reporting year: Current year first interim ordinary dividend 14.50p 12.93p 12.31p Second interim ordinary dividend/ final ordinary dividend for prior year 30.57p 26.47p 25.74p Special dividend — — 10.00p — — Total 45.07p 49.40p 38.05p |
Analysis of Group statement o47
Analysis of Group statement of financial position by segment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Analysis of Group statement of financial position by segment | |
Schedule of financial position by segment | 2017 By operating segment Note Asia C2.1 US C2.2 UK and C2.3 Unallocated note (v) Elimination Group £m £m £m £m £m £m Assets Goodwill C5(a ) — — — Deferred acquisition costs and other intangible assets C5(b ) — Property, plant and equipment — Reinsurers' share of insurance contract liabilities ) Deferred tax assets C8.1 — Current tax recoverable C8.2 ) Accrued investment income note(i) — Other debtors note(i) ) Investment properties — — Investment in joint ventures and associates accounted for using the equity method D6 — — — Loans C3.3 — Equity securities and portfolio holdings in unit trusts — Debt securities C3.2 — Derivative assets — Other investments — — — Deposits — Assets held for sale — — — — Cash and cash equivalents note(ii) — Total assets ) Total equity ) — Liabilities Insurance contract liabilities C4.1 ) Investment contract liabilities with discretionary participation features C4.1 — — — Investment contract liabilities without discretionary participation features C4.1 — Unallocated surplus of with-profits funds C4.1 — — — Core structural borrowings of shareholder-financed operations C6.1 — — — Operational borrowings attributable to shareholder-financed operations note(iv) C6.2 — Borrowings attributable to with-profits operations C6.2 — — — Obligations under funding, securities lending and sale and repurchase agreements — — — Net asset value attributable to unit holders of consolidated unit trusts and similar funds — — Deferred tax liabilities C8.1 — Current tax liabilities C8.2 ) Accruals deferred income and other liabilities note(iii) ) Provisions C11 — Derivative liabilities C3.4 — Total liabilities ) Total equity and liabilities ) |
Schedule of accrued investment income and other debtors | £m £m Interest receivable Other Total accrued investment income Other debtors comprises: Amounts due from Policyholders Intermediaries Reinsurers Other Total other debtors Total accrued investment income and other debtors Analysed as: Expected to be settled within one year Expected to be settled after one year Total accrued investment income and other debtors |
Schedule of cash and cash equivalents | £m £m Cash Cash equivalents Total cash and cash equivalents Analysed as: Held centrally and available for general use by the Group Other funds not available for general use by the Group, including funds held for the benefit of policyholders Total cash and cash equivalents |
Schedule of accruals, deferred income and other liabilities | £m £m Accruals and deferred income Other creditors Creditors arising from direct insurance and reinsurance operations Interest payable Funds withheld under reinsurance of the REALIC business Other items Total accruals, deferred income and other liabilities |
Schedule of operational borrowings attributable to shareholder-financed operations, in respect of Prudential Capital's short-term fixed income security programme | 2017 2016 £m £m Commercial paper Medium Term Notes Total Group debt represented by operational borrowings at Group level |
Analysis of segment statement48
Analysis of segment statement of financial position by business type (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Asia | |
Disclosure of operating segments [line items] | |
Schedule of segment statement of financial position by business type | 31 Dec 2017 31 Dec Insurance Note With- Unit- Other Total Asset Eliminations Total Total £m £m £m £m £m £m £m £m Assets Goodwill — — — Deferred acquisition costs and other intangible assets — — Property, plant and equipment — — Reinsurers' share of insurance contract liabilities — — — Deferred tax assets — — — Current tax recoverable — — Accrued investment income — Other debtors ) Investment properties — — — — Investment in joint ventures and associates accounted for using the equity method — — — Loans C3.3 — — — Equity securities and portfolio holdings in unit trusts — Debt securities C3.2 — — Derivative assets — — Deposits — Assets held for sale D1 — — — — — — — Cash and cash equivalents — Total assets ) Total equity — — — Liabilities Insurance contract liabilities — — Investment contract liabilities with discretionary participation features C4.1 — — — — Investment contract liabilities without discretionary participation features C4.1 — — — — Unallocated surplus of with—profits funds — — — — Operational borrowings attributable to shareholder-financed operations — — — Borrowings attributable to with-profits operations — — — — Net asset value attributable to unit holders of consolidated unit trusts and similar funds — — Deferred tax liabilities — — Current tax liabilities — — Accruals, deferred income and other liabilities ) Provisions — — Derivative liabilities — — — Liabilities held for sale D1 — — — — — — — Total liabilities ) Total equity and liabilities ) |
US | |
Disclosure of operating segments [line items] | |
Schedule of segment statement of financial position by business type | 31 Dec 2017 31 Dec Insurance Note Variable annuity Fixed Total Asset Eliminations Total Total £m £m £m £m £m £m £m Assets Goodwill — — — — — — Deferred acquisition costs and other intangible assets — — Property, plant and equipment — — Reinsurers' share of insurance contract liabilities — — — Deferred tax assets — — Current tax recoverable — — Accrued investment income — — Other debtors — ) Investment properties — — — Loans C3.3 — — — Equity securities and portfolio holdings in unit trusts — — Debt securities C3.2 — — — Derivative assets — — — Other investments — — Deposits — — — — Cash and cash equivalents — — Total assets ) Total equity — — Liabilities Insurance contract liabilities — — Investment contract liabilities without discretionary participation features C4.1 — — — Core structural borrowings of shareholder-financed operations — — — Operational borrowings attributable to shareholder—financed operations — — — Obligations under funding, securities lending and sale and repurchase agreements — — — Net asset value attributable to unit holders of consolidated unit trusts and similar funds — — — — — — — Deferred tax liabilities — — Current tax liabilities — — — Accruals, deferred income and other liabilities — ) Provisions — — Derivative liabilities — — — Total liabilities ) Total equity and liabilities ) * The 2016 comparative results have been re-presented from those previously published following reassessment of the Group's operating segments as described in note B1.3. |
UK and Europe | |
Disclosure of operating segments [line items] | |
Schedule of segment statement of financial position by business type | 31 Dec 2017 31 Dec Insurance Other funds and Note With- Unit- Annuity Total Asset Eliminations Total Total £m £m £m £m £m £m £m £m Assets Goodwill — — — Deferred acquisition costs and other intangible assets — — Property, plant and equipment — — Reinsurers' share of insurance contract liabilities — — Deferred tax assets — — Current tax recoverable — — — Accrued investment income — Other debtors ) Investment properties — — Investment in joint ventures and associates accounted for using the equity method — — — Loans C3.3 — — — Equity securities and portfolio holdings in unit trusts — Debt securities C3.2 — — Derivative assets — — Other investments — Deposits — — Assets held for sale note(ii) — — — — Cash and cash equivalents — Total assets ) Total equity — — — Liabilities Insurance contract liabilities C4.1 — — Investment contract liabilities with discretionary participation features C4.1 — — — Investment contract liabilities without discretionary participation features C4.1 — — Unallocated surplus of with-profits funds C4.1 — — — — Operational borrowings attributable to shareholder-financed operations — — Borrowings attributable to with-profits operations — — — — Obligations under funding, securities lending and sale and repurchase agreements — — — Net asset value attributable to unit holders of consolidated unit trusts and similar funds — — Deferred tax liabilities — — Current tax liabilities — Accruals deferred income and other liabilities ) Provisions — — Derivative liabilities — — Liabilities held for sale note(ii) — — — — — — — Total liabilities ) Total equity and liabilities ) * The 2016 comparative results have been re-presented from those previously published following reassessment of the Group's operating segments as described in note B1.3. |
Group assets and liabilities 49
Group assets and liabilities - measurement (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Financial instruments | |
Schedule of investment properties at fair value | 31 December Level 1 Level 2 Level 3 Total Quoted prices Valuation Valuation £m £m £m £m 2017 — — 2016 — — |
Schedule of reconciliation of movements in level 3 financial instruments measured at fair value | At Total Total Purchases Sales Settled Issued Transfers Transfers At £m £m £m £m £m £m £m £m £m £m 2017 Loans ) — ) — Equity securities and portfolio holdings in unit trusts ) ) ) — ) Debt securities ) ) — — — ) Other investments (including derivative assets) ) ) — — — Derivative liabilities ) — — — — — — — ) Total financial investments, net of derivative liabilities ) ) ) ) Borrowings attributable to with-profits operations — ) — — — ) — — ) Net asset value attributable to unit holders of consolidated unit trusts and similar funds ) ) — ) — ) — — ) Other financial liabilities ) — — ) ) — ) Total financial instruments at fair value ) ) ) ) ) ) 2016 Loans — — ) — — Equity securities and portfolio holdings in unit trusts ) ) ) — — Debt securities ) ) — — ) Other investments (including derivative assets) ) — — ) Derivative liabilities ) ) — — — — — — — ) Total financial investments, net of derivative liabilities ) ) ) Net asset value attributable to unit holders of consolidated unit trusts and similar funds ) ) ) — ) — — ) Other financial liabilities ) ) ) — — ) — — ) Total financial instruments at fair value ) ) ) |
Schedule of net unrealised gains and losses in the income statement for financial instruments still held at the end of the year | £m £m Loans — Equity securities ) Debt securities ) Other investments ) Derivative liabilities — Borrowings attributable to with-profit operations ) — Net asset value attributable to unit holders of consolidated unit trusts and similar funds ) ) Other financial liabilities ) Total ) |
Schedule of reconciliation of movements in level 3 investment properties measured at fair value | At Total Total Purchases Sales Transfers Transfers At 31 Dec £m £m £m £m £m £m £m £m 2017 ) ) — — 2016 ) — ) |
At fair value | |
Financial instruments | |
Schedule of fair value of assets and liabilities | 31 Dec 2017 Level 1 Level 2 Level 3 Total Quoted prices Valuation based Valuation based £m £m £m £m Analysis of financial investments, net of derivative liabilities by business type With-profits Loans — — Equity securities and portfolio holdings in unit trusts Debt securities Other investments (including derivative assets) Derivative liabilities ) ) — ) Total financial investments, net of derivative liabilities Percentage of total % % % % Unit-linked and variable annuity separate account Equity securities and portfolio holdings in unit trusts Debt securities — Other investments (including derivative assets) Derivative liabilities — ) — ) Total financial investments, net of derivative liabilities Percentage of total % % % % Non-linked shareholder-backed Loans — — Equity securities and portfolio holdings in unit trusts Debt securities Other investments (including derivative assets) Derivative liabilities — ) ) ) Total financial investments, net of derivative liabilities Percentage of total % % % % Group total analysis, including other financial liabilities held at fair value Group total Loans — — Equity securities and portfolio holdings in unit trusts Debt securities Other investments (including derivative assets) Derivative liabilities ) ) ) ) Total financial investments, net of derivative liabilities Investment contract liabilities without discretionary participation features held at fair value — ) — ) Borrowings attributable to with-profits operations — — ) ) Net asset value attributable to unit holders of consolidated unit trusts and similar funds ) ) ) ) Other financial liabilities held at fair value — — ) ) Total financial instruments at fair value Percentage of total % % % % 31 Dec 2016 Level 1 Level 2 Level 3 Total Quoted prices Valuation Valuation £m £m £m £m Analysis of financial investments, net of derivative liabilities by business type With-profits Loans — — Equity securities and portfolio holdings in unit trusts Debt securities Other investments (including derivative assets) Derivative liabilities ) ) — ) Total financial investments, net of derivative liabilities Percentage of total % % % % Unit-linked and variable annuity separate account Equity securities and portfolio holdings in unit trusts Debt securities — Other investments (including derivative assets) Derivative liabilities ) ) — ) Total financial investments, net of derivative liabilities Percentage of total % % % % Non-linked shareholder-backed Loans — Equity securities and portfolio holdings in unit trusts Debt securities Other investments (including derivative assets) — Derivative liabilities ) ) ) ) Total financial investments, net of derivative liabilities Percentage of total % % % % Group total analysis, including other financial liabilities held at fair value Group total Loans — Equity securities and portfolio holdings in unit trusts Debt securities Other investments (including derivative assets) Derivative liabilities ) ) ) ) Total financial investments, net of derivative liabilities Investment contract liabilities without discretionary participation features held at fair value — ) — ) Net asset value attributable to unit holders of consolidated unit trusts and similar funds ) ) ) ) Other financial liabilities held at fair value — ) ) ) Total financial instruments at fair value Percentage of total % % % % |
Assets and liabilities at amortised cost for which fair value is disclosed | |
Financial instruments | |
Schedule of fair value of assets and liabilities | 31 Dec 2017 Level 1 Level 2 Level 3 Total Total Quoted prices Valuation Valuation £m £m £m £m £m Assets Loans note(i) — Liabilities Investment contract liabilities without discretionary participation features — — ) ) ) Core structural borrowings of shareholder-financed operations note(ii) — ) — ) ) Operational borrowings attributable to shareholder-financed operations — ) ) ) ) Borrowings attributable to the with-profits funds — ) ) ) ) Obligations under funding, securities lending and sale and repurchase agreements — ) ) ) ) 31 Dec 2016 Level 1 Level 2 Level 3 Total Total Quoted prices Valuation Valuation £m £m £m £m £m Assets Loans note(i) — Liabilities Investment contract liabilities without discretionary participation features — — ) ) ) Core structural borrowings of shareholder-financed operations note(ii) — ) — ) ) Operational borrowings attributable to shareholder-financed operations — ) ) ) ) Borrowings attributable to the with-profits funds — ) ) ) ) Obligations under funding, securities lending and sale and repurchase agreements — ) ) ) ) Notes (i) The carrying value of loans and receivables are reported net of allowance for loan losses of £28 million (2016: £15 million). (ii) As at 31 December 2017, £312 million (2016: £306 million) of convertible bonds were included in debt securities and £1,311 million (2016: £1,455 million) were included in borrowings. |
Debt securities (Tables)
Debt securities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Financial investments | |
Schedule of impairment of US available-for-sale debt securities and other financial assets | £m £m £m Available-for-sale debt securities held by Jackson ) ) Loans and receivables* ) ) ) Net credit (charge) for impairment net of reversals ) ) * The impairment charges/reversals relate to loans held by the UK with-profits fund and mortgage loans held by Jackson. |
Debt securities | |
Financial investments | |
Schedule of securities analysed according to external credit ratings | 2017 AAA AA+ to A+ to BBB+ to Below Other Total £m £m £m £m £m £m £m Asia With-profits Unit-linked Non-linked shareholder-backed US Non-linked shareholder-backed UK and Europe With-profits Unit-linked Non-linked shareholder-backed Other operations Total debt securities 2016 AAA AA+ to A+ to BBB+ to Below Other Total £m £m £m £m £m £m £m Asia With-profits Unit-linked Non-linked shareholder-backed US Non-linked shareholder-backed UK and Europe With-profits Unit-linked Non-linked shareholder-backed Other operations Total debt securities |
Schedule of securities with credit ratings classified as "Other" | £m £m Asia—non-linked shareholder-backed Internally rated Government bonds Corporate bonds—rated as investment grade by local external ratings agencies Other Total Asia non-linked shareholder-backed US Mortgage — Other 2017 total 2016 total £m £m £m £m Implicit ratings of other US debt securities based on NAIC* valuations (see below) NAIC 1 NAIC 2 NAIC 3-6 Total US * The Securities Valuation Office of the NAIC classifies debt securities into six quality categories ranging from Class 1 (the highest) to Class 6 (the lowest). Performing securities are designated as Classes 1 to 5 and securities in or near default are designated Class 6. £m £m UK and Europe Internal ratings or unrated AAA to A– BBB to B– Below B– or unrated Total UK and Europe |
Debt securities | Jackson (US insurance operations) | |
Financial investments | |
Schedule of additional analysis of securities | (b) Additional analysis of US insurance operations debt securities £m £m Corporate and government security and commercial loans: Government Publicly traded and SEC Rule 144A securities* Non-SEC Rule 144A securities Asset backed securities (see note (e)) Total US debt securities † * A 1990 SEC rule that facilitates the resale of privately placed securities under Rule 144A that are without SEC registration to qualified institutional investors. The rule was designed to develop a more liquid and efficient institutional resale market for unregistered securities. † Debt securities for US operations included in the statement of financial position comprise: £m £m Available-for-sale Fair value through profit or loss: Securities held to back liabilities for funds withheld under reinsurance arrangement |
Schedule of movements in unrealised gains and losses on available-for-sale securities | Foreign Changes in Reflected as part of movement in £m £m £m £m Assets fair valued at below book value Book value* Unrealised gain (loss) ) ) Fair value (as included in statement of financial position) Assets fair valued at or above book value Book value* Unrealised gain (loss) ) Fair value (as included in statement of financial position) Total Book value* Net unrealised gain (loss) ) Fair value (as included in the footnote above in the overview table and the statement of financial position) * Book value represents cost/amortised cost of the debt securities. ** Translated at the average rate of US$1.2889: £1.00. |
Schedule of securities classified as available-for-sale in an unrealised loss position | (i) Fair value of securities as a percentage of book value The following table shows the fair value of the debt securities in a gross unrealised loss position for various percentages of book value: 2017 2016 Fair Unrealised Fair Unrealised £m £m £m £m Between 90% and 100% ) ) Between 80% and 90% ) ) Below 80%: Residential mortgage-backed securities—sub-prime — — — — Commercial mortgage-backed securities — — ) Other asset-backed securities ) ) Government bonds — — — — Corporates ) ) ) Total ) ) (ii) Unrealised losses by maturity of security £m £m 1 year to 5 years ) ) 5 years to 10 years ) ) More than 10 years ) ) Mortgage-backed and other debt securities ) ) Total ) ) (iii) Age analysis of unrealised losses for the periods indicated The following table shows the age analysis of all the unrealised losses in the portfolio by reference to the length of time the securities have been in an unrealised loss position: 2017 2016 Non- Investment Total Non- Investment Total £m £m £m £m £m £m Less than 6 months ) ) ) ) ) ) 6 months to 1 year ) ) ) — ) ) 1 year to 2 years — ) ) ) ) ) 2 years to 3 years ) ) ) ) ) ) More than 3 years — ) ) ) ) ) Total ) ) ) ) ) ) Further, the following table shows the age analysis as at 31 December, of the securities whose fair values were below 80 per cent of the book value: 2017 2016 Age analysis Fair value Unrealised Fair value Unrealised £m £m £m £m Less than 3 months — — 3 months to 6 months ) — — More than 6 months ) ) ) ) |
Asset-backed securities | |
Financial investments | |
Schedule of additional analysis of securities | The Group's holdings in Asset-Backed Securities (ABS), which comprise Residential Mortgage-Backed Securities (RMBS), Commercial Mortgage-Backed Securities (CMBS), Collateralised Debt Obligations (CDO) funds and other asset-backed securities, at 31 December are as follows: £m £m Shareholder-backed operations Asia operations note(i) US operations note(ii) UK and Europe operations (2017: 34% AAA, 16% AA) note(iii) Other operations note(iv) With-profits operations Asia operations note(i) UK and Europe operations (2017: 58% AAA, 10% AA) note(iii) Total Notes (i) Asia operations The Asia operations' exposure to asset-backed securities is primarily held by the with-profits operations. Of the £233 million, 98 per cent (2016: 99 per cent) are investment grade. (ii) US operations US operations' exposure to asset-backed securities at 31 December comprises: £m £m RMBS Sub-prime (2017: 2% AAA, 4% AA, 3% A) Alt-A (2017: 3% AAA, 3% A) Prime including agency (2017: 70% AA, 4% A) CMBS (2017: 82% AAA, 15% AA, 1% A) CDO funds (2017: 49% AA, 31% A), including £nil exposure to sub-prime Other ABS (2017: 21% AAA, 14% AA, 50% A), including £96 million exposure to sub-prime Total (iii) UK and Europe operations The majority of holdings of the shareholder-backed business are UK securities and relate to PAC's annuity business. Of the holdings of the with-profits operations, £1,913 million (2016: £1,623 million) relates to exposure to the US markets with the remaining exposure being primarily to the UK market. (iv) Other operations Other operations' exposure to asset-backed securities is held by Prudential Capital with no sub-prime exposure. Of the £589 million, 96 per cent (2016: 95 per cent) are graded AAA. |
Sovereign debt | |
Financial investments | |
Schedule of additional analysis of securities | 2017 2016 Shareholder- With-profits Shareholder- With-profits £m £m £m £m Italy Spain France — Germany* Other Eurozone Total Eurozone United Kingdom United States** Other, including Asia Total * Including bonds guaranteed by the federal government. ** The exposure to the United States sovereign debt comprises holdings of the US, UK and Europe and Asia insurance operations. |
Bank debt securities | |
Financial investments | |
Schedule of additional analysis of securities | 2017 Senior debt Subordinated debt Shareholder-backed business Covered Senior Total Tier 1 Tier 2 Total 2017 2016 £m £m £m £m £m £m £m £m Italy — — — — — — — Spain — — — France Germany — — Netherlands — — Other Eurozone — — — — Total Eurozone United Kingdom United States — Other, including Asia Total With-profits funds Italy — — — — Spain — — — — France — Germany — Netherlands — Other Eurozone — — — — Total Eurozone United Kingdom United States — Other, including Asia Total |
Loans portfolio (Tables)
Loans portfolio (Tables) - Loans | 12 Months Ended |
Dec. 31, 2017 | |
Financial investments | |
Schedule of amounts included in the statement of financial position | 2017 2016 Mortgage Policy Other Total Mortgage Policy Other Total £m £m £m £m £m £m £m £m Asia With-profits — — Non-linked shareholder-backed US Non-linked shareholder-backed — — UK and Europe With-profits Non-linked shareholder-backed — — Other operations — — — — Total loans securities * All mortgage loans are secured by properties. ** In the US £2,512 million (2016: £2,672 million) policy loans are backing liabilities for funds withheld under reinsurance arrangements and are accounted for at fair value through profit or loss. All other policy loans are accounted for at amortised cost, less any impairment. † Other loans held in UK with-profits funds are commercial loans and comprise mainly syndicated loans. The majority of other loans in shareholder-backed business in Asia are commercial loans held by the Malaysia operation and which are all investment graded by two local rating agencies. |
Unallocated to a segment (other operations) | |
Financial investments | |
Schedule of loans by internal ratings | £m £m Loans and receivables internal ratings: AA+ to AA– A+ to A– — BBB+ to BBB– — BB+ to BB– B and other — Total |
Financial instruments - addit52
Financial instruments - additional information (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Financial instruments - additional information | |
Schedule of contractual maturities of financial liabilities, excluding derivative liabilities and investment contracts, on an undiscounted cash flow basis | 2017 Total 1 Year After After After After Over No stated Total £m £m £m £m £m £m £m £m £m Financial liabilities Core structural borrowings of shareholder-financed operations C6.1 Operational borrowings attributable to shareholder-financed operations C6.2 — — — — Borrowings attributable to with-profits funds C6.2 Obligations under funding, securities lending and sale and repurchase agreements — — — — — — Accruals, deferred income and other liabilities Net asset value attributable to unit holders of consolidated unit trusts and similar funds — — — — — — 2016 Total carrying 1 Year or less After After After After Over No stated Total £m £m £m £m £m £m £m £m £m Financial liabilities Core structural borrowings of shareholder-financed operations C6.1 Operational borrowings attributable to shareholder-financed operations C6.2 — — — — Borrowings attributable to with-profits funds C6.2 Obligations under funding, securities lending and sale and repurchase agreements — — — — — — Accruals, deferred income and other liabilities Net asset value attributable to unit holders of consolidated unit trusts and similar funds — — — — — — |
Schedule of maturity profile of net derivative positions | Carrying value of net derivatives Maturity profile of net derivative position Net Derivative Derivative 1 year After 1 year After 3 years After Total £m £m £m £m £m £m £m £m 2017 ) ) ) ) 2016 ) ) ) |
Schedule of maturity profile for investment contracts | 1 year After After After After Over Total Total £bn £bn £bn £bn £bn £bn £bn £bn 2017 2016 |
Schedule of derivative agreements eligible for intra-group exemptions to margin requirements | 31 Dec 2017 Counterparty Legal Entity Identifier Relationship Type of exemption Aggregate notional £m Prudential plc 5493001Z3ZE83NG Part of the same group holding company Full Prudential Holdings Limited 549300JVAI8CZD4 Part of the same group holding company Full Prudential (US HoldCo 1) Limited 549300JNYGDP2X Part of the same group holding company Full Prudential Corporation Holdings Limited 549300KDOPLFHA Part of the same group holding company Full Prudential Lifetime Mortgages Limited 5493001GSK4HF84 Part of the same group holding company Full |
Schedule of gross and net information about financial instruments subject to master netting arrangements | 31 Dec 2017 Gross amount Related amounts not offset Financial Cash Securities Net £m £m £m £m £m Financial assets: Derivative assets ) ) ) Reverse repurchase agreements — — ) Total financial assets ) ) ) Financial liabilities: Derivative liabilities ) ) Securities lending and repurchase agreements ) — ) Total financial liabilities ) ) 31 Dec 2016 Gross amount Related amounts not offset Financial Cash collateral Securities Net amount £m £m £m £m £m Financial assets: Derivative assets ) ) ) Reverse repurchase agreements — — ) — Total financial assets ) ) ) Financial liabilities: Derivative liabilities ) ) Securities lending and repurchase agreements ) — — Total financial liabilities ) ) Notes (i) The Group has not offset any of the amounts included in the consolidated statement of financial position. (ii) Represents the amount that could be offset under master netting or similar arrangements where the Group does not satisfy the full criteria to offset on the consolidated statement of financial position. (iii) Excludes initial margin amounts for exchange-traded derivatives. |
Policyholder liabilities and 53
Policyholder liabilities and unallocated surplus (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Policyholder liabilities and unallocated surplus | |
Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds | Insurance operations Asia US UK and Total £m £m £m £m At 1 January 2016 Comprising: — Policyholder liabilities on the consolidated statement of financial position — Unallocated surplus of with-profits funds on the consolidated statement of financial position — — Group's share of policyholder liabilities of joint ventures and associate § — — Reclassification of Korea life business as held for sale * ) — — ) Net flows: Premiums Surrenders ) ) ) ) Maturities/deaths ) ) ) ) Net flows ) Shareholders' transfers post-tax ) — ) ) Investment-related items and other movements Foreign exchange translation differences As at 31 December 2016/1 January 2017 Comprising: — Policyholder liabilities on the consolidated statement of financial position ¶ — Unallocated surplus of with-profits funds on the consolidated statement of financial position — — Group's share of policyholder liabilities of joint ventures and associate § — — Net flows: Premiums Surrenders ) ) ) ) Maturities/deaths ) ) ) ) Net flows Shareholders' transfers post-tax ) — ) ) Investment-related items and other movements Foreign exchange translation differences ) ) ) At 31 December 2017 Comprising: — Policyholder liabilities on the consolidated statement of financial position ¶ (excludes £32 million classified as unallocated to a segment) — Unallocated surplus of with-profits funds on the consolidated statement of financial position — — Group's share of policyholder liabilities of joint ventures and associate § — — Average policyholder liability balances † 2017 2016 * The reclassification of Korea life business as held for sale reflects the value of policyholder liabilities held at 1 January 2016. No other amounts are shown within the 2016 analysis above in respect of Korea. † Averages have been based on opening and closing balances and adjusted for acquisitions, disposals and corporate transactions in the year and exclude unallocated surplus of with-profits funds. § The Group's investment in joint ventures and associates are accounted for on an equity method basis in the Group's balance sheet. The Group's share of the policyholder liabilities as shown above relate to life businesses in China, India and of the Takaful business in Malaysia. ¶ The policyholder liabilities of the Asia insurance operations of £62,898 million (2016: £53,716 million), shown in the table above, is after deducting the intra-group reinsurance liabilities ceded by the UK and Europe insurance operations of £1,235 million (2016: £1,302 million) to the Hong Kong with-profits business. Including this amount total Asia policyholder liabilities are £64,133 million (2016: £55,018 million). |
Further analysis of insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with profit funds | Insurance contract liabilities Unallocated Gross Reinsurers' £m £m £m At 1 January 2016 Income and expense included in the income statement and other comprehensive income Foreign exchange translation differences At 31 December 2016/1 January 2017 Income and expense included in the income statement and other comprehensive income Foreign exchange translation differences ) ) ) At 31 December 2017 (iv) Reinsurers' share of insurance contract liabilities Asia US UK and Unallocated £m £m Insurance contract liabilities — Claims outstanding |
Schedule of products and determination of contract liabilities | C4.2(a) Asia Contract type Description Material features Determination of liabilities With-profits and participating contracts Provides savings and/or protection where the basic sum assured can be enhanced by a profit share (or bonus) from the underlying fund as determined at the discretion of the Company. Participating products often offer a guaranteed maturity or surrender value. Declared regular bonus are guaranteed once vested. Future bonus rates and cash dividends are not guaranteed. Market value adjustments and surrender penalties are used for certain products where the law permits such adjustments. Guarantees are predominantly supported by segregated life funds and their estates. With-profits contracts are predominantly sold in Hong Kong, Malaysia and Singapore. The total value of the with-profits funds is driven by the underlying asset valuation with movements reflected principally in the accounting value of policyholder liabilities and unallocated surplus. In Taiwan and India, US GAAP is applied for measuring insurance assets and liabilities. The other Asia operations principally adopt a gross premium valuation method. Term, whole life and endowment assurance Non-participating savings and/or protection where the benefits are guaranteed, or determined by a set of defined market-related parameters. These products often offer a guaranteed maturity and surrender value. It is common in Asia for regulations or market-driven demand and competition to provide some form of capital value protection and minimum crediting interest rate guarantees. This is reflected within the guaranteed maturity and surrender values. Guarantees are borne by shareholders. The approach to determining the contract liabilities is generally driven by the local solvency basis. A gross premium valuation method is used in those countries where a risk-based capital framework is adopted for local solvency. Under the gross premium valuation method, all cash flows are valued explicitly using best estimate assumptions with a suitable margin for prudence. This is achieved either through adding an explicit allowance for assumptions to deviate from best estimate or by applying an overlay constraint so that no negative reserves (ie where future premium inflows are expected to exceed prudent future claims and outflows) are derived at an individual policyholder level or a combination of both. In Vietnam, the Company uses an estimation basis aligned substantially to that used by the countries applying the gross premium valuation method. For India and Taiwan, US GAAP is applied for measuring insurance liabilities. For these countries, the future policyholder benefit provisions for non-linked business are determined using the net level premium method, with an allowance for surrenders, maintenance and claims expenses. Rates of interest used in establishing the policyholder benefit provisions vary by operation depending on the circumstances attaching to each block of business. The other Asia operations principally adopt a net premium valuation method to determine the future policyholder benefit provisions. Unit-linked Combines savings with protection, the cash value of the policy depends on the value of the underlying unitised funds. The attaching liabilities reflect the unit value obligation driven by the value of the investments of the unit fund. Additional technical provisions are held for guaranteed benefits beyond the unit fund value using a gross premium valuation method. These additional provisions are recognised as a component of other business liabilities. Health and protection Health and protection features are offered as supplements to the products listed above or sold as stand-alone products. Protection covers mortality or morbidity benefits including health, disability, critical illness and accident coverage. The determination of the liabilities of health and protection contracts are driven by the local solvency basis. A gross premium valuation method is used in those countries where a risk-based capital framework is adopted for local solvency. Under the gross premium valuation method, all cash flows are valued explicitly using best estimate assumptions with a suitable margin for prudence. This is achieved either through adding an explicit allowance for assumptions to deviate from best estimate or by applying an overlay constraint so that no negative reserves (ie where future premium inflows are expected to exceed prudent future claims and outflows) are derived at an individual policyholder level or a combination of both. C4.2(b) US Contract type Description Material features Determination of liabilities Fixed interest rate annuities Fixed interest rate annuities are primarily deferred annuity products that are used for asset accumulation in retirement planning and for providing income in retirement. At 31 December 2017, fixed interest rate annuities accounted for 7 per cent (2016: 8 per cent) of policy and contract liabilities of Jackson. The policyholder of a fixed interest rate annuity pays Jackson a premium, which is credited to the policyholder's account. Periodically, interest is credited to the policyholder's account and in some cases administrative charges are deducted from the policyholder's account. Jackson makes benefit payments at a future date as specified in the policy based on the value of the policyholder's account at that date. The policy provides that at Jackson's discretion it may reset the interest rate, subject to a guaranteed minimum. Approximately 60 per cent (2016: 62 per cent) of the fixed interest rate annuities Jackson wrote in 2017 provide for a (positive or negative) market value adjustment (MVA) on surrender. This formula-based adjustment approximates the change in value that assets supporting the product would realise as interest rates move. Guaranteed minimum interest rate. At 31 December 2017, Jackson had fixed interest rate annuities totalling £12.6 billion (2016: £14.2 billion) in account value with minimum guaranteed rates ranging from 1.0 per cent to 5.5 per cent and a 2.93 per cent average guaranteed rate (2016: 1.0 per cent to 5.5 per cent and a 2.96 per cent average guaranteed rate). As explained in note A3.1 all of Jackson's insurance liabilities are based on US GAAP. An overview of the deferral and amortisation of acquisition costs for Jackson is provided in note C5(b). With minor exceptions the following is applied to most of Jackson's contracts. Contracts are accounted for as investment contracts as defined for US GAAP purposes by applying a retrospective deposit method to determine the liability for policyholder benefits. This is then augmented by: • Any amounts that have been assessed to compensate the insurer for services to be performed over future periods (ie deferred income); • Any amounts previously assessed against policyholders that are refundable on termination of the contract; and • Any probable future loss on the contract (ie premium deficiency). Capitalised acquisition costs and deferred income for these contracts are amortised over the life of the book of contracts. The present value of the estimated gross profits is computed using the rate of interest that accrues to policyholder balances (sometimes referred to as the contract rate). Estimated gross profits include estimates of the following, each of which will be determined based on the best estimate of amounts over the life of the book of contracts without provision for adverse deviation: • Amounts expected to be assessed for mortality less benefit claims in excess of related policyholder balances; • Amounts expected to be assessed for contract administration less costs incurred for contract administration; • Amounts expected to be earned from the investment of policyholder balances less interest credited to policyholder balances; • Amounts expected to be assessed against policyholder balances upon termination of contracts (sometimes referred to as surrender charges); and • Other expected assessments and credits. The interest guarantees are not explicitly valued but are reflected as they are earned in the current account liability value. Fixed index annuities Fixed index annuities vary in structure but are generally deferred annuities that enable policyholders to obtain a portion of an equity-linked return (based on participation rates and caps), and provide a guaranteed minimum return. Fixed index annuities accounted for 5 per cent (2016: 6 per cent) of Jackson's policy and contract liabilities at 31 December 2017. Jackson hedges the equity return risk on fixed index products using offsetting equity exposure in the variable annuity product. The cost of hedging is taken into account in setting the index participation rates or caps. Guaranteed minimum rates are generally set at 1.0 to 3.0 per cent. At 31 December 2017, Jackson had fixed index annuities allocated to indexed funds totalling £6.3 billion (2016: £7.3 billion) in account value with minimum guaranteed rates on index accounts ranging from 1.0 per cent to 3.0 per cent and a 1.77 per cent average guaranteed rate (2016: 1.0 per cent to 3.0 per cent and a 1.77 per cent average guarantee rate). Jackson offers an optional lifetime income rider, which can be elected for an additional fee. Jackson also offers fixed interest accounts on some fixed index annuity products. At 31 December 2017, fixed interest accounts of fixed index annuities totalled £2.5 billion (2016: £2.6 billion) in account value. The liability for policyholder benefits that represent the guaranteed minimum return is determined similarly to the liabilities of the fixed interest annuity above. The equity-linked return option within the contract is treated as an embedded liability under US GAAP and therefore this element of the liability is recognised at fair value. Minimum guaranteed rates on fixed interest accounts range from 1.0 per cent to 3.0 per cent and a 2.58 per cent average guaranteed rate (2016: 1.0 per cent to 3.0 per cent and a 2.55 per cent average guaranteed rate). Variable annuities Variable annuities are deferred annuities that have the same tax advantages and payout options as fixed interest rate and fixed index annuities. They are also used for asset accumulation in retirement planning and to provide income in retirement. At 31 December 2017, variable annuities accounted for 77 per cent (2016: 74 per cent) of Jackson's policy and contract liabilities. The rate of return depends upon the performance of the selected fund portfolio. Policyholders may allocate their investment to either the fixed account or a selection of variable accounts. Subject to benefit guarantees, investment risk on the variable account is borne by the policyholder, while investment risk on the fixed account is borne by Jackson through guaranteed minimum fixed rates of return. At 31 December 2017, 5 per cent (2016: 6 per cent) of variable annuity funds were in fixed accounts. Jackson had variable annuity funds in fixed accounts totalling £5.9 billion (2016: £7.3 billion) with minimum guaranteed rates ranging from 1.0 per cent to 3.0 per cent and a 1.68 per cent average guaranteed rate (2016: 1.0 per cent to 3.0 per cent and a 1.64 per cent average guaranteed rate). Jackson offers a choice of guaranteed benefit options within its variable annuity product portfolio, which can be elected for additional fees. These guaranteed benefits might be expressed as the return of either: (a) total deposits made to the contract adjusted for any partial withdrawals, (b) total deposits made to the contract adjusted for any partial withdrawals, plus a minimum return, or (c) the highest contract value on a specified anniversary date adjusted for any withdrawals following that contract anniversary. Jackson hedges these risks using derivative instruments as described in note C7.3. The general principles for fixed annuity and fixed index annuity also apply to variable annuities. The impact of any fixed account interest guarantees is reflected as they are earned in the current account value. Jackson regularly evaluates estimates used and adjusts the benefit guarantee liability balances, with a related charge or credit to benefit expense if actual experience or other evidence suggests that earlier assumptions should be revised. The benefit guarantee types are set out below: Benefits that are payable in the event of death (guaranteed minimum death benefit). The liability for Guaranteed Minimum Death Benefit (GMDB) is determined each period end by estimating the expected value of benefits in excess of the projected account balance and recognising the excess ratably over the life of the contract based on total expected assessments. At 31 December 2017, these liabilities were valued using a series of stochastic investment performance scenarios, a mean investment return of 7.4 per cent (2016: 7.4 per cent) net of external fund management fees, and assumptions for policyholder behaviour, mortality and expense that are similar to those used in amortising the capitalised acquisition costs. Benefits that are payable upon the depletion of funds (guaranteed minimum withdrawal benefit). The liability for the Guaranteed Minimum Withdrawal Benefit (GMWB) 'for life' portion is determined similarly to GMDB above. Guaranteed Minimum Withdrawal Benefit 'not for life' features are treated as embedded derivatives under US GAAP. Therefore, provisions for these benefits are recognised at fair value. Non-performance risk is incorporated into the fair value calculation through the use of discount interest rates sourced from an AA corporate credit curve as a proxy for Jackson's own credit risk. Other risk margins, particularly for policyholder behaviour and long-term volatility, are also incorporated into the model through the use of explicitly conservative assumptions. On a periodic basis, Jackson validates the resulting fair values based on comparisons to other models and market movements. Benefits that are payable at annuitisation (guaranteed minimum income benefit). This feature is no longer offered and existing coverage is substantially reinsured, subject to deductibles and annual claim limits. The direct Guaranteed Minimum Income Benefit (GMIB) liability is determined by estimating the expected value of the annuitisation benefits in excess of the projected account balance at the date of annuitisation and recognising the excess ratably over the life of the contract based on total expected assessments. Guaranteed Minimum Income Benefits are reinsured, subject to a deductible and annual claim limits. As this reinsurance benefit is net settled, it is considered to be a derivative under IAS 39, and is therefore recognised at fair value with the change in fair value included as a component of short-term fluctuations. Volatility and non-performance risk is considered as per GMWB above. Benefits that are payable at the end of a specified period (guaranteed minimum accumulation benefit). This feature is no longer offered. Guaranteed Minimum Accumulation Benefit (GMAB) are treated as embedded derivatives under US GAAP. Therefore, provisions for these benefits are recognised at fair value. Volatility and non-performance risk is considered as per GMWB above. Life insurance Life products include term life, traditional life and interest-sensitive life (universal life and variable universal life). Life insurance products accounted for 9 per cent (2016: 10 per cent) of Jackson's policy and contract liabilities at 31 December 2017. Jackson discontinued new sales of life insurance products in 2012. Term life provides protection for a defined period and a benefit that is payable to a designated beneficiary upon death of the insured. Traditional life provides protection for either a defined period or until a stated age and includes a predetermined cash value. Universal life provides permanent individual life insurance for the life of the insured and includes a savings element. Variable universal life is a type of life insurance policy that combines death benefit protection with the ability for the policyholder account to be invested in separate account funds. For certain fixed universal life plans, additional provisions are held to reflect the existence of guarantees offered in the past that are no longer supported by earnings on the existing asset portfolio, or for situations where future mortality charges are not expected to be sufficient to provide for future mortality costs. Excluding the business that is subject to the retrocession treaties at 31 December 2017, Jackson had interest-sensitive life business in force with total account value of £6.3 billion (2016: £7.1 billion), with minimum guaranteed interest rates ranging from 2.5 per cent to 6.0 per cent with a 4.67 per cent average guaranteed rate (2016: 2.5 per cent to 6.0 per cent with a 4.66 per cent average guaranteed rate). For term and traditional life insurance contracts, provisions for future policy benefits are determined under US GAAP using the net level premium method and assumptions as of the issue date as to mortality, interest, policy lapses and expenses plus provisions for adverse deviation for directly sold business and assumptions at purchase for acquired business. For universal life and variable universal life a retrospective deposit method is used to determine the liability for policyholder benefits. This is then augmented by additional liabilities to account for no-lapse guarantees, profits followed by losses, contract features such as persistency bonuses, and cost of interest rate guarantees. Institutional products Institutional products are: guaranteed investment contracts (GICs), funding agreements (including agreements issued in conjunction with Jackson's participation in the US Federal Home Loan Bank programme) and Medium Term Note funding agreements. At 31 December 2017 institutional products accounted for 1 per cent of contract liabilities (2016: 1 per cent). GICs feature a lump sum policyholder deposit on which interest is paid at a rate fixed at inception. Market value adjustments are made to the value of any early withdrawals. Funding agreements feature either lump sum or periodic policyholder deposits. Interest is paid at a fixed or index linked rate. Funding agreements have a duration of between one and 30 years. In 2017 and 2016 there were no funding agreements terminable by the policyholder with less than 90 days notice. Institutional products are classified as investment contracts, and are accounted for as financial liabilities. The currency risk on contracts that represent currency obligations other than US dollars are hedged using cross-currency swaps. C4.2(c) UK and Europe Contract type Description Material features Determination of liabilities With-profits contracts in WPSF With-profits contracts provide returns to policyholders through bonuses that are 'smoothed'. There are two types of bonuses: 'regular' and 'final'. Regular bonus rates are determined for each type of policy primarily by targeting the bonus level at a prudent proportion of the long-term expected future investment return on underlying assets, reduced as appropriate for each type of policy to allow for items such as expenses, charges, tax and shareholders' transfers. In normal investment conditions, PAC expects changes in regular bonus rates to be gradual over time. However, PAC retains the discretion whether or not to declare a regular bonus each year, and there is no limit on the amount by which regular bonus rates can change. A final bonus which is normally declared annually, may be added when a claim is paid or when units of a unitised product are realised. The rates of final bonus usually vary by type of policy and by reference to the period, usually a year, in which the policy commences or each premium is paid. These rates are determined by reference to the asset shares for the sample policies but subject to the smoothing approach as explained below. Regular bonuses are typically declared once a year, and once credited, are guaranteed in accordance with the terms of the particular product. Final bonuses rates are guaranteed only until the next bonus declaration. The policyholder liabilities reported for the WPSF are primarily for two broad types of business. These are accumulating and conventional with-profits contracts. The policyholder liabilities of the WPSF are accounted for in accordance with the requirements of FRS 27. For with-profits business a market consistent valuation is performed. Additional assumptions required are for persistency and the management actions under which the fund is managed. Assumptions used for a market-consistent valuation typically do not contain margins, whereas those used for the valuation of other classes of business do. The provisions have been determined on a basis consistent with the detailed methodology included in regulations contained in the PRA's previously issued rules for the determination of reserves on the PRA's 'realistic' Peak 2 basis. Though no longer in force for regulatory purposes, these rules continue to be applied to determine with-profits contract liabilities in accordance with IFRS 4. In aggregate, the regime has the effect of placing a value on the liabilities of UK with-profits contracts, which reflects the amounts expected to be paid based on the current value of investments held by the with-profits funds and current circumstances. These contracts are a combination of insurance and investment contracts with discretionary participation features, as defined by IFRS 4. The PRA's Peak 2 calculation under the realistic regime requirement is explained further in note A3.1 under the UK regulated with-profits section. Persistency assumptions are set based on the results of the most recent experience analysis looking at the experience over recent years of the relevant business. Maintenance and, for some classes of business, termination expense assumptions are expressed as per policy amounts. They are set based on the expenses incurred during the year, including an allowance for ongoing investment expenditure and allocated between entities and product groups in accordance with the operation's internal cost allocation model. Expense inflation assumptions are set consistent with the economic basis and based on the inflation swap spot curve. The contract liabilities for with-profits business also require assumptions for mortality. These are set based on the results of recent experience analysis. PruFund contracts A range of with-profits contracts offering policyholders a choice of investment profiles. Unlike traditional with-profits contracts no regular or final bonuses are declared. Policyholder return is determined by an Expected Growth Rate (EGR) which is declared quarterly. A different EGR is applied for each of the different PruFund funds within the range, each relating to the individual asset mix of that fund. The relevant EGR is applied to increase the unit value of policyholder funds, calculated daily. In normal investment conditions the EGR is expected to reflect PAC's view of how the funds will perform over the longer term. An adjustment is made to the smoothed unit value if it moves outside of a specified range relative to the value of the underlying assets. As with-profits contracts, the liability for PruFund contracts are calculated in accordance with the methodology applied to other WPSF contracts, as described above. SAIF with-profits SAIF is a ring-fenced with-profits sub-fund of PAC. No new business is written in SAIF, although regular premiums are still being paid on in-force policies. The fund is solely for the benefit of policyholders of SAIF. Shareholders have no interest in the profits of this fund although they are entitled to asset management fees on this business. The process for determining policyholder bonuses of SAIF with-profits policies, is similar to that for the with-profits policies of the WPSF. However, in addition, the surplus assets in SAIF are allocated to policies in an orderly and equitable distribution over time as enhancements to policyholder benefits. Provision is made for the risks attaching to some SAIF unitised with-profits policies that have (Market Value Reduction) MVR-free dates and for those SAIF products which have a guaranteed minimum benefit on death or maturity of premiums accumulated at 4 per cent per annum. The Group's main exposure to guaranteed annuities in the UK is through SAIF and a provision of £503 million was held in SAIF at 31 December 2017 (2016: £571 million) to honour the guarantees. As SAIF is a separate sub-fund solely for the benefit of policyholders of SAIF, this provision has no impact on the financial position of the Group's shareholders' equity. The process of determining policyholder liabilities of SAIF is similar to that for the with-profits policies of the WPSF. Contract type Description Material features Determination of liabilities Annuities—level, fixed increase and inflation-linked annuities Level Provide a fixed annuity payment over the policyholder's life. Annuity liabilities are calculated as the expected future value of future annuity payments and expenses discounted by a valuation interest rate. Fixed increase Provide for a regular annuity payment which incorporates automatic increases in annuity payments by fixed amounts over the policyholder's life. Key assumptions include: Mortality The mortality assumptions are set in light of recent population and internal experience. The assumptions used are adjusted percentages of standard actuarial mortality tables with an allowance for future mortality improvements, the effect of anti-selection and characteristics specific to each individual policyholder. Where annuities have been sold on an enhanced basis to impaired lives an additional age adjustment is made. Inflation-linked Provide for a regular annuity payment to which an additional amount is added periodically based on the increase in the UK RPI. With-profits Written in the with-profits fund, these combine the income features of annuity products with the investment smoothing features of with-profits products and enable policyholders to obtain exposure to investment return on the with-profits fund equity shares, property and other investment categories over time. As per with-profits products. New mortality projection models are released annually by the Continuous Mortality Investigation (CMI). The CMI 2015 model was used to produce the 2017 results calibrated to reflect an appropriate view of future mortality improvements. For annuities in payment, the mortality tables used are set out in C4.1(d)(iii). Expense Maintenance expense assumptions are expressed as per policy amounts. They are set based on the expenses incurred during the year, including an allowance for ongoing investment expenditure and allocated between entities and product groups in accordance with the operation's internal cost allocation model. A margin for adverse deviation is added to this amount. Expense inflation assumptions are set consistent with the economic basis and based on the inflation swap spot curve. Valuation interest rates Valuation interest rates used to discount the liabilities are based on the yields as at the valuation date on the assets backing the technical provisions. For fixed interest securities the internal rate of return of the assets backing the liabilities is used. Properties are valued using the lower of the rental yield and the redemption yield, and for equities it is the greater of the dividend yield and the average of the dividend yield and the earnings yield. An adjustment is made to the yield on non-risk-free fixed interest securities and property to reflect credit risk. Credit risk For IFRS reporting, the results for UK shareholder-backed annuity business are particularly sensitive to the allowances made for credit risk on fixed interest securities. Further details on credit risk allowance are provided in note B3(c). Unit-linked UK and Europe insurance operations also have a book of unit-linked policies. There are no guaranteed maturity values or guaranteed annuity options on unit-linked policies except for minor amounts for certain policies linked to cash units within SAIF. For unit-linked contracts the attaching liability reflects the unit value obligation and, in the case of policies classified as insurance contracts, provision for expenses and mortality risk. The latter component is determined by applying mortality assumptions on a basis that is appropriate for the policyholder profile. For those contracts where the level of insurance risk is insignificant, the assets and liabilities arising under the contracts are distinguished between those that relate to the financial instrument liability and acquisition costs and deferred income that relate to the component of the contract that relates to investment management. Acquisition costs and deferred income are recognised consistent with the level of service provision in line with the requirements of IAS 18. To calculate the non-unit reserves for linked business, assumptions have been set for the gross unit growth rate and the rate of inflation of maintenance expenses, as well as for the valuation interest rate. |
Shareholder-backed | |
Policyholder liabilities and unallocated surplus | |
Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds | Shareholder-backed business Asia US UK and Total £m £m £m £m At 1 January 2016 Reclassification of Korea life business as held for sale* ) — — ) Net flows: Premiums Surrenders ) ) ) ) Maturities/deaths ) ) ) ) Net flows note(a) ) Investment-related items and other movements Foreign exchange translation differences — At 31 December 2016/1 January 2017 Comprising: — Policyholder liabilities on the consolidated statement of financial position — Group's share of policyholder liabilities relating to joint ventures and associate — — Net flows: Premiums Surrenders ) ) ) ) Maturities/deaths ) ) ) ) Net flows note(a) ) Investment-related items and other movements Foreign exchange translation differences ) ) — ) At 31 December 2017 Comprising: — Policyholder liabilities on the consolidated statement of financial position (excludes £32 million classified as unallocated to a segment) — Group's share of policyholder liabilities relating to joint ventures and associate — — * The reclassification of Korea life business as held for sale reflects the value of policyholder liabilities held at 1 January 2016. No other amounts are shown within the 2016 analysis above in respect of Korea. Note (a) Including net flows of the Group's insurance joint ventures and associate. |
Asia insurance operations | |
Policyholder liabilities and unallocated surplus | |
Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds | With-profits Unit-linked Other Total £m £m £m £m At 1 January 2016 Comprising: — Policyholder liabilities on the consolidated statement of financial position — Unallocated surplus of with-profits funds on the consolidated statement of financial position — — — Group's share of policyholder liabilities relating to joint ventures and associate ‡ — Reclassification of Korea life business as held for sale* — ) ) ) Premiums New business In-force Surrenders note(c) ) ) ) ) Maturities/deaths ) ) ) ) Net flows note(b) Shareholders' transfers post-tax ) — — ) Investment-related items and other movements Foreign exchange translation differences note(a) At 31 December 2016/1 January 2017 Comprising: — Policyholder liabilities on the consolidated statement of financial position — Unallocated surplus of with-profits funds on the consolidated statement of financial position — — — Group's share of policyholder liabilities relating to joint ventures and associate ‡ — Premiums New business In-force Surrenders note(c) ) ) ) ) Maturities/deaths ) ) ) ) Net flows note(b) Shareholders' transfers post-tax ) — — ) Investment-related items and other movements note(d) Foreign exchange translation differences note(a) ) ) ) ) At 31 December 2017 note(b) Comprising: — Policyholder liabilities on the consolidated statement of financial position § — Unallocated surplus of with-profits funds on the consolidated statement of financial position — — — Group's share of policyholder liabilities relating to joint ventures and associate ‡ — Average policyholder liability balances † 2017 2016 * The reclassification of Korea life business as held for sale reflects the value of policyholder liabilities held at 1 January 2016. No other amounts are shown within the 2016 analysis above in respect of Korea. † Averages have been based on opening and closing balances and adjusted for acquisitions and disposals in the year and exclude unallocated surplus of with-profits funds. ‡ The Group's investment in joint ventures and associate are accounted for on an equity method basis and the Group's share of the policyholder liabilities as shown above relate to the life businesses in China, India and of the Takaful business in Malaysia. § The policyholder liabilities of the with-profits business of £32,963 million, shown in the table above, is after deducting the intra-group reinsurance liabilities ceded by UK and Europe insurance operations of £1,235 million to the Hong Kong with-profits business (2016: £1,302 million). Including this amount the Asia with-profits policyholder liabilities are £34,198 million. Notes (a) Movements in the year have been translated at the average exchange rates for the year. The closing balance has been translated at the closing spot rates as at the end of the year. Differences upon retranslation are included in foreign exchange translation differences. (b) Net flows have increased by £1,093 million to £6,875 million in 2017 predominantly reflecting continued growth of the in-force book and increased flows from new business. (c) Investment-related items and other movements for 2017 principally represent equity market gains and falls in bond yields during the year, in a number of business units with the greatest impact being on with-profits and unit-linked business. |
Schedule of carrying value of policyholder liabilities and maturity profile of cash flows on a discounted basis | £m £m Policyholder liabilities Expected maturity: 2017 % 2016 % 0 to 5 years 5 to 10 years 10 to 15 years 15 to 20 years 20 to 25 years Over 25 years |
Summary of policyholder liabilities (net of reinsurance) and unallocated surplus, by geographical area | £m £m Hong Kong Indonesia Malaysia Singapore Taiwan Other operations Total Asia operations |
Jackson (US insurance operations) | |
Policyholder liabilities and unallocated surplus | |
Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds | Variable annuity Fixed annuity, Total £m £m £m At 1 January 2016 Premiums Surrenders ) ) ) Maturities/deaths ) ) ) Net flows note(b) Transfers from general to separate account ) — Investment-related items and other movements Foreign exchange translation differences note(a) At 31 December 2016/1 January 2017 Premiums Surrenders ) ) ) Maturities/deaths ) ) ) Net flows note(b) ) Transfers from general to separate account ) — Investment-related items and other movements note(c) Foreign exchange translation differences note(a) ) ) ) At 31 December 2017 Average policyholder liability balances* 2017 2016 * Averages have been based on opening and closing balances. Notes (a) Movements in the year have been translated at an average rate of US$1.29/£1.00 (2016: US$1.35/£1.00). The closing balances have been translated at closing rate of US$1.35/£1.00 (2016: US$1.24/£1.00). Differences upon retranslation are included in foreign exchange translation differences. (b) Net flows were £3,137 million in 2017, reflecting continued strong inflows into the variable annuity business. (c) Positive investment-related items and other movements in variable annuity separate account liabilities of £15,956 million for 2017 primarily reflects the increases in equities and bond values during the year. Fixed annuity, GIC and other business investment and other movements of £295 million primarily reflect the increase in guarantee reserve in the year. |
Schedule of carrying value of policyholder liabilities and maturity profile of cash flows on a discounted basis | 2017 2016 Fixed annuity Variable Total Fixed annuity Variable Total £m £m £m £m £m £m Policyholder liabilities % % % % % % Expected maturity: 0 to 5 years 5 to 10 years 10 to 15 years 15 to 20 years 20 to 25 years Over 25 years |
Schedule of account values within ranges of minimum guaranteed interest rates | Fixed annuities and Interest- Minimum guaranteed interest rate £m £m £m £m > 0% - 1.00% — — > 1.0% - 2.0% — — > 2.0% - 3.0% > 3.0% - 4.0% > 4.0% - 5.0% > 5.0% - 6.0% Total |
UK and Europe insurance operations | |
Policyholder liabilities and unallocated surplus | |
Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds | Shareholder-backed With-profits Unit-linked Annuity Total £m £m £m £m At 1 January 2016 Comprising: — Policyholder liabilities — Unallocated surplus of with-profits funds — — Premiums Surrenders ) ) ) ) Maturities/deaths ) ) ) ) Net flows note(a) ) ) ) Shareholders' transfers post-tax ) — — ) Switches ) — — Investment-related items and other movements Foreign exchange translation differences — — At 31 December 2016/1 January 2017 Comprising: — Policyholder liabilities — Unallocated surplus of with-profits funds — — Premiums Surrenders ) ) ) ) Maturities/deaths ) ) ) ) Net flows note(a) ) ) Shareholders' transfers post-tax ) — — ) Switches ) — — Investment-related items and other movements note(b) Foreign exchange translation differences — — At 31 December 2017 Comprising: — Policyholder liabilities — Unallocated surplus of with-profits funds — — Average policyholder liability balances* 2017 2016 * Averages have been based on opening and closing balances and exclude unallocated surplus of with-profits funds. ** Includes the Scottish Amicable Insurance Fund. Notes (a) Net flows improved from negative £(2,527) million in 2016 to positive £736 million in 2017, due primarily to higher premium flows into our with-profits funds following increased sales into with-profits savings and retirement products. This has been offset by lower premiums into our annuity business following our withdrawal from this market in the UK. The level of inflows/outflows for unit-linked business remains subject to annual variation as it is driven by corporate pension schemes with transfers in or out from a small number of schemes influencing the level of flows in the period. (b) Investment-related items and other movements of £11,146 million principally comprise investment return attributable to policyholders earned in the period reflecting favourable equity market movements. |
Schedule of carrying value of policyholder liabilities and maturity profile of cash flows on a discounted basis | 2017 With-profits business Annuity business Other Total Insurance Investment Total Non-profit Shareholder— Total Insurance Investments Total £m £m £m £m £m £m £m £m £m £m Policyholder liabilities 2017% Expected maturity: 0 to 5 years 5 to 10 years 10 to 15 years 15 to 20 years 20 to 25 years over 25 years 2016 £m £m £m £m £m £m £m £m £m £m Policyholder 2016% Expected maturity: 0 to 5 years 5 to 10 years 10 to 15 years 15 to 20 years 20 to 25 years over 25 years – The cash flow projections of expected benefit payments used in the maturity profile table above are from value of in-force business and exclude the value of future new business, including future vesting of internal pension contracts. – Benefit payments do not reflect the pattern of bonuses and shareholder transfers in respect of the with-profits business. – Shareholder-backed annuity business includes the ex-PRIL and the legacy PAC shareholder annuity business. – Investment contracts under 'Other' comprise certain unit-linked and similar contracts accounted for under IAS 39 and IAS 18. – For business with no maturity term included within the contracts; for example, with-profits investment bonds such as Prudence Bonds, an assumption is made as to likely duration based on prior experience. |
Schedule of anticipated mortality improvements for annuities in payment | CMI Model, with calibration to reflect future mortality improvements 2017 CMI 2015 For males: with a long-term improvement rate of 2.25% pa For females: with a long-term improvement rate of 2.00% pa 2016 CMI 2014 For males: with a long-term improvement rate of 2.25% pa* For females: with a long-term improvement rate of 1.50% pa* 2015 CMI 2014 For males: with a long-term improvement rate of 2.25% pa* For females: with a long-term improvement rate of 1.50% pa* * In 2016 and 2015, for both males and females, the initial rates of mortality improvement in the CMI model 2014 were uplifted by 0.25 per cent per annum. |
Schedule of smoothing of investment return for policyholder bonuses | £m £m £m Net income of the fund: Investment return Claims incurred ) ) ) Movement in policyholder liabilities ) ) ) Add back policyholder bonuses for the year (as shown below) Claims incurred and movement in policyholder liabilities (including charge for provision for asset shares and excluding policyholder bonuses) ) ) ) Earned premiums, net of reinsurance Other income Acquisition costs and other expenditure ) ) ) Share of profits from investment joint ventures Tax charge ) ) ) Net income of the fund before movement in unallocated surplus Movement in unallocated surplus ) ) ) Surplus for distribution Surplus for distribution allocated as follows: — 90% policyholders' bonus (as shown above) — 10% shareholders' transfers |
Intangible assets (Tables)
Intangible assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Intangible assets | |
Reconciliation of goodwill | Attributable to: Shareholders With-profits 2017 2016 £m £m Cost At beginning of year Disposals/reclassifications to held for sale ) ) ) ) Additional consideration paid on previously acquired business — Exchange differences ) — Net book amount at end of year |
Schedule of goodwill components | 2017 2016 £m £m M&G Other—attributable to shareholders Goodwill—attributable to shareholders Venture fund investments—attributable to with-profits funds |
Schedule of deferred acquisition costs and other intangible assets | 2017 2016 £m £m Deferred acquisition costs and other intangible assets attributable to shareholder Deferred acquisition costs and other intangible assets attributable to with-profits funds Total of deferred acquisition costs and other intangible assets |
Shareholder-backed | |
Intangible assets | |
Schedule of deferred acquisition costs and other intangible assets | 2017 2016 £m £m Deferred acquisition costs related to insurance contracts as classified under IFRS 4 Deferred acquisition costs related to investment management contracts, including life assurance contracts classified as financial instruments and investment management contracts under IFRS 4 Present value of acquired in-force policies for insurance contracts as classified under IFRS 4 (PVIF) Distribution rights and other intangibles Total of deferred acquisition costs and other intangible assets |
Reconciliation of deferred acquisition costs and other intangible assets | 2017 2016 Deferred acquisition costs Asia US UK and All PVIF and 1 Total Total £m £m £m £m £m £m £m Balance at 1 January Additions Amortisation to the income statement: 2 Operating profit ) ) ) ) ) ) ) Non-operating profit — — — ) ) ) ) ) ) ) Disposals and transfers — — — — — — ) Exchange differences and other movements ) ) — ) ) Amortisation of DAC related to net unrealised valuation movements on the US insurance operation's available-for-sale securities recognised within other comprehensive income 1 — ) — — — ) Balance at 31 December 1 PVIF and other intangibles includes amounts in relation to software rights with additions of £38 million, amortisation of £32 million, foreign exchange losses of £5 million and a balance at 31 December 2017 of £67 million. 2 Under the Group's application of IFRS 4, US GAAP is used for measuring the insurance assets and liabilities of its US and certain Asia operations. Under US GAAP, most of the US insurance operation's products are accounted for under Accounting Standard no. 97 of the Financial Accounting Standards Board (FAS 97) whereby deferred acquisition costs are amortised in line with the emergence of actual and expected gross profits which are determined using an assumption for long-term investment returns for the separate account of 7.4 per cent (2016 and 2015: 7.4 per cent) (gross of asset management fees and other charges to policyholders, but net of external fund management fees). The amounts included in the income statement and other comprehensive income affect the pattern of profit emergence and thus the DAC amortisation attaching. DAC amortisation is allocated to the operating and non-operating components of the Group's supplementary analysis of profit and other comprehensive income by reference to the underlying items (see note C7.3(iv)). Note PVIF and other intangibles comprise PVIF, distribution rights and other intangibles such as software rights. Distribution rights relate to amounts that have been paid or have become unconditionally due for payment as a result of past events in respect of bancassurance partnership arrangements in Asia. These agreements allow for bank distribution of Prudential's insurance products for a fixed period of time. |
Reconciliation of deferred acquisition costs relating to insurance and investment contracts | Insurance Investment Insurance Investment £m £m £m £m DAC at 1 January Additions Amortisation ) ) ) ) Exchange differences ) — — Disposals and transfers — — ) — Change in shadow DAC related to movement in unrealised appreciation of Jackson's securities classified as available-for-sale ) — — DAC at 31 December Note All of the additions are through internal development. The carrying amount of the balance comprises the following gross and accumulated amortisation amounts: 2017 2016 £m £m Gross amount Accumulated amortisation ) ) Net book amount |
Reconciliation of PVIF and other intangibles | 2017 2016 PVIF Distribution Other Total PVIF Distribution Other Total £m £m £m £m £m £m At 1 January Cost Accumulated amortisation ) ) ) ) ) ) ) ) Additions — — Amortisation charge ) ) ) ) ) ) ) ) Disposals and transfers — — — — — ) ) ) Exchange differences and other movements — ) ) ) At 31 December Comprising: Cost Accumulated amortisation ) ) ) ) ) ) ) ) Notes (i) All of the PVIF balances relate to insurance contracts. The PVIF attaching to investment contracts have been fully amortised. Amortisation is charged over the period of provision of asset management services as those profits emerge. (ii) Distribution rights relate to fees paid in relation to the bancassurance partnership arrangements for the bank distribution of Prudential's insurance products for a fixed period of time. The distribution rights amounts are amortised over the term of the distribution contracts. (iii) Software is amortised over its useful economic life, which generally represents the licence period of the software acquired. |
With-profits | |
Intangible assets | |
Schedule of deferred acquisition costs and other intangible assets | 2017 2016 £m £m Deferred acquisition costs related to insurance contracts attributable to the PAC with-profits fund — Computer software and other intangibles attributable to with-profits funds |
Jackson (US insurance operations) | Shareholder-backed | |
Intangible assets | |
Schedule of DAC components | 2017 2016 £m £m Variable annuity business Other business Cumulative shadow DAC (for unrealised gains booked in other comprehensive income)* ) ) Total DAC for US operations * Consequent upon the positive unrealised valuation movement in 2017 of £617 million (2016: negative unrealised valuation movement of £28 million), there is a loss of £76 million (2016: a gain of £76 million) for altered shadow DAC amortisation booked within other comprehensive income. These adjustments reflect movement from period to period, in the changes to the pattern of reported gross profits that would have occurred if the assets reflected in the statement of financial position had been sold, crystallising the unrealised gains and losses, and the proceeds reinvested at the yields currently available in the market. At 31 December 2017, the cumulative shadow DAC balance as shown in the table above was negative £289 million (2016: negative £237 million). |
Borrowings (Tables)
Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Borrowings | |
Schedule of remaining contractual maturities of the Group's borrowings | Shareholder-financed operations With-profits operations Core structural borrowings Operational borrowings Borrowings £m £m £m £m £m £m Less than 1 year 1 to 2 years — — 2 to 3 years — — — 3 to 4 years — — — 4 to 5 years — — — Over 5 years Total |
Core structural borrowings of shareholder-financed operations | |
Borrowings | |
Schedule of borrowings | £m £m Holding company operations: note(i) US$1,000m 6.5% Notes (Tier 2) note(v) — US$250m 6.75% Notes (Tier 1) note(vi) US$300m 6.5% Notes (Tier 1) note(vi) US$700m 5.25% Notes (Tier 2) US$550m 7.75% Notes (Tier 1) note(vi) US$1,000m 5.25% Notes (Tier 2) US$725m 4.375% Notes (Tier 2) US$750m 4.875% Notes (Tier 2) note(iv) — Perpetual Subordinated Capital Securities €20m Medium Term Notes 2023 (Tier 2) note(vii) £435m 6.125% Notes 2031 (Tier 2) £400m 11.375% Notes 2039 (Tier 2) £600m 5% Notes 2055 (Tier 2) £700m 5.7% Notes 2063 (Tier 2) Subordinated Notes Subordinated debt total Senior debt: note(ii) £300m 6.875% Bonds 2023 £250m 5.875% Bonds 2029 Holding company total Prudential Capital bank loan note(iii) Jackson US$250m 8.15% Surplus Notes 2027 note(viii) Total (per consolidated statement of financial position) Notes (i) These debt tier classifications are consistent with the treatment of capital for regulatory purposes under the Solvency II regime. The Group has designated all US$4,275 million (2016: US$4,525 million) of its US dollar denominated subordinated debt as a net investment hedge under IAS 39 to hedge the currency risks related to the net investment in Jackson. (ii) The senior debt ranks above subordinated debt in the event of liquidation. (iii) The Prudential Capital bank loan of £275 million is drawn at a cost of 12 month GBP LIBOR plus 0.33 per cent. The loan was renewed in December 2017 maturing on 20 December 2022 with an option to repay annually. (iv) In October 2017, the Company issued core structural borrowings of US$750 million 4.875 per cent Tier 2 perpetual subordinated notes. The proceeds, net of costs, were £565 million. (v) In December 2017, the Company repaid its US$1,000 million 6.5 per cent Tier 2 perpetual subordinated notes. (vi) These borrowings can be converted, in whole or in part, at the Company's option and subject to certain conditions, on any interest payment date, into one or more series of Prudential preference shares. (vii) The €20 million borrowings were issued at 20-year Euro Constant Maturity Swap (capped at 6.5 per cent). These have been swapped into borrowings of £14 million with interest payable at three-month GBP LIBOR plus 1.2 per cent. (viii) Jackson's borrowings are unsecured and subordinated to all present and future indebtedness, policy claims and other creditor claims of Jackson. |
Operational borrowings attributable to shareholder-financed operations | |
Borrowings | |
Schedule of borrowings | 2017 2016 £m £m Commercial Paper Medium Term Notes 2018 Borrowings in respect of short-term fixed income securities programmes Bank loans and overdrafts Obligations under finance leases Other borrowings Other borrowings note Total Note Other borrowings mainly include senior debt issued through the Federal Home Loan Bank of Indianapolis (FHLB), secured by collateral posted with the FHLB by Jackson. In addition, other borrowings include amounts whose repayment to the lender is contingent upon future surplus emerging from certain contracts specified under the arrangement. If insufficient surplus emerges on those contracts, there is no recourse to other assets of the Group and the liability is not payable to the degree of shortfall. |
Borrowings attributable to with-profits operations | |
Borrowings | |
Schedule of borrowings | 2017 2016 £m £m Non-recourse borrowings of consolidated investment funds* £100m 8.5% undated subordinated guaranteed bonds of Scottish Amicable Finance plc † Other borrowings (predominantly obligations under finance leases) Total * In all instances the holders of the debt instruments issued by these subsidiaries and funds do not have recourse beyond the assets of these subsidiaries and funds. The increase since 31 December 2016 primarily relates to the debt instruments issued by new consolidated securitisation entities backed by a portfolio of mortgage loans (see note C3.3(c) for further details). † The interests of the holders of the bonds issued by Scottish Amicable Finance plc, a subsidiary of the Scottish Amicable Insurance Fund, are subordinated to the entitlements of the policyholders of that fund. |
Risk and sensitivity analysis (
Risk and sensitivity analysis (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Risk and sensitivity analysis | |
Schedule of significant items of risk sensitivity | Type of business Market and Insurance and Investments/derivatives Liabilities / unallocated surplus Other exposure Asia insurance operations (see also section C7.2) All business Currency risk Mortality and morbidity risk Persistency risk With-profits business Net neutral direct exposure (indirect exposure only) Investment performance subject to smoothing through declared bonuses Unit-linked business Net neutral direct exposure (indirect exposure only) Investment performance through asset management fees Non-participating business Asset/liability mismatch risk Credit risk Interest rates for those operations where the basis of insurance liabilities is sensitive to current market movements Interest rate and price risk US insurance operations (see also section C7.3) All business Currency risk Persistency risk Variable annuity business Net effect of market risk arising from incidence of guarantee features and variability of asset management fees offset by derivative hedging programme Risk that utilisation of withdrawal benefits or lapse levels differ from those assumed in pricing Fixed index annuity business Derivative hedge programme to the extent not fully hedged against liability Incidence of equity participation features Fixed index annuities, Fixed annuities and GIC business Credit risk Interest rate risk Profit and loss and shareholders' equity are volatile for these risks as they affect the values of derivatives and embedded derivatives and impairment losses. In addition, shareholders' equity is volatile for the incidence of these risks on unrealised appreciation of fixed income securities classified as available-for-sale under IAS 39 Spread difference between earned rate and rate credited to policyholders Lapse risk, but the effects of extreme events may be mitigated by the application of market value adjustments UK and Europe insurance operations (see also section C7.4) With-profits business Net neutral direct exposure (indirect exposure only) Investment performance subject to smoothing through declared bonuses Persistency risk to future shareholder transfers SAIF sub-fund Net neutral direct exposure (indirect exposure only) Asset management fees earned Unit-linked business Net neutral direct exposure (indirect exposure only) Investment performance through asset management fees Persistency risk Asset/liability mismatch risk Shareholder-backed annuity business Credit risk for assets covering liabilities and shareholder capital Mortality experience and assumptions for longevity Interest rate risk for assets in excess of liabilities ie assets representing shareholder capital |
Asia insurance operations | Interest rate risk | |
Risk and sensitivity analysis | |
Schedule of estimated sensitivity to risk | 2017 2016 Decrease Increase Decrease Increase £m £m £m £m Profit before tax attributable to shareholders ) ) Related deferred tax (where applicable) ) ) Net effect on profit and shareholders' equity ) ) ) |
Asia insurance operations | Equity price risk | |
Risk and sensitivity analysis | |
Schedule of estimated sensitivity to risk | 2017 2016 Decrease Decrease of 20% of 10% of 20% of 10% £m £m £m £m Profit before tax attributable to shareholders ) ) ) ) Related deferred tax (where applicable) Net effect on profit and shareholders' equity ) ) ) ) |
Asia insurance operations | Foreign exchange risk | |
Risk and sensitivity analysis | |
Schedule of estimated sensitivity to risk | A 10% increase in local A 10% decrease in local £m £m £m £m Profit before tax attributable to shareholders ) ) Profit for the year ) ) Shareholders' equity, excluding goodwill, attributable to Asia operations ) ) |
Jackson (US insurance operations) | |
Risk and sensitivity analysis | |
Schedule of significant items of risk sensitivity | Risks Risk of loss Equity risk • Related to the incidence of benefits related to guarantees issued in connection with its variable annuity contracts; and • Related to meeting contractual accumulation requirements in fixed index annuity contracts. Interest rate risk • Related to meeting guaranteed rates of accumulation on fixed annuity products following a sustained fall in interest rates; • Related to increases in the present value of projected benefits related to guarantees issued in connection with its variable annuity contracts following a sustained fall in interest rates especially if in conjunction with a fall in equity markets; • Related to the surrender value guarantee features attached to the Company's fixed annuity products and to policyholder withdrawals following a sharp and sustained increase in interest rates; and • The risk of mismatch between the expected duration of certain annuity liabilities and prepayment risk and extension risk inherent in mortgage-backed securities. |
Schedule of principal types of derivatives used and their purpose | Derivative Purpose Interest rate swaps These generally involve the exchange of fixed and floating payments over the period for which Jackson holds the instrument without an exchange of the underlying principal amount. These agreements are used to hedge Jackson's exposure to movements in interest rates. Swaption contracts These contracts provide the purchaser with the right, but not the obligation, to require the writer to pay the present value of a long-duration interest rate swap at future exercise dates. Jackson both purchases and writes swaptions in order to hedge against significant movements in interest rates. Treasury futures contracts These derivatives are used to hedge Jackson's exposure to movements in interest rates. Equity index futures contracts and equity index options These derivatives (including various call and put options and options contingent on interest rates and currency exchange rates) are used to hedge Jackson's obligations associated with its issuance of certain VA guarantees. Some of these annuities and guarantees contain embedded options that are fair valued for financial reporting purposes. Cross-currency swaps Cross-currency swaps, which embody spot and forward currency swaps and additionally, in some cases, interest rate swaps and equity index swaps, are entered into for the purpose of hedging Jackson's foreign currency denominated funding agreements supporting trust instrument obligations. Credit default swaps These swaps represent agreements under which Jackson has purchased default protection on certain underlying corporate bonds held in its portfolio. These contracts allow Jackson to sell the protected bonds at par value to the counterparty if a default event occurs in exchange for periodic payments made by Jackson for the life of the agreement. Jackson does not write default protection using credit derivatives. |
Jackson (US insurance operations) | Interest rate risk | |
Risk and sensitivity analysis | |
Schedule of estimated sensitivity to risk | 2017 2016 Decrease Increase Decrease Increase of 2% of 1% of 1% of 2% of 2% of 1% of 1% of 2% £m £m £m £m £m £m £m £m Profit and loss: Pre-tax profit effect (net of related changes in amortisation of DAC) ) ) ) ) Related effect on charge for deferred tax ) ) ) ) Net profit effect ) ) ) ) Other comprehensive income: Direct effect on carrying value of debt securities (net of related changes in amortisation of DAC) ) ) ) ) Related effect on movement in deferred tax ) ) ) ) Net effect ) ) ) ) Total net effect on shareholders' equity ) ) ) ) ) ) |
Jackson (US insurance operations) | Equity price risk | |
Risk and sensitivity analysis | |
Schedule of net amount at risk for variable annuity contracts with guarantees | 31 December 2017 Minimum Account Net Weighted Period £m £m Return of net deposits plus a minimum return GMDB 0–6 % 66.0 years GMWB—premium only % GMWB* 0–5 %** GMAB—premium only % — Highest specified anniversary account value minus withdrawals post-anniversary GMDB 66.5 years GMWB—highest anniversary only GMWB* Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary GMDB 0–6 % 69.0 years GMIB† 0–6 % 0.4 years GMWB* 0–8 %** 31 December 2016 Minimum Account Net Weighted Period £m £m Return of net deposits plus a minimum return GMDB 0–6 % 65.6 years GMWB—premium only % GMWB* 0–5 %** GMAB—premium only % — Highest specified anniversary account value minus withdrawals post-anniversary GMDB 66.0 years GMWB—highest anniversary only GMWB* Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary GMDB 0–6 % 68.7 years GMIB† 0–6 % 0.5 years GMWB* 0–8 %** * Amounts shown for GMWB comprise sums for the 'not for life' portion (where the guaranteed withdrawal base less the account value equals to the net amount at risk (NAR)), and a 'for life' portion (where the NAR has been estimated as the present value of future expected benefit payment remaining after the amount of the 'not for life' guaranteed benefits is zero). ** Ranges shown based on simple interest. The upper limits of 5 per cent or 8 per cent simple interest are approximately equal to 4.1 per cent and 6 per cent respectively, on a compound interest basis over a typical 10-year bonus period. For example 1 + 10 × 0.05 is similar to 1.04 growing at a compound rate of 4 per cent for a further nine years. † The GMIB guarantees are essentially fully reinsured. Account balances of contracts with guarantees were invested in variable separate accounts as follows: £m £m Mutual fund type: Equity Bond Balanced Money market Total |
Schedule of estimated sensitivity to risk | 2017 2016 Decrease Increase Decrease Increase of 20% of 10% of 20% of 10% of 20% of 10% of 20% of 10% £m £m £m £m £m £m £m £m Pre-tax profit, net of related changes in amortisation of DAC Related deferred tax effects ) ) ) ) ) ) ) ) Net sensitivity of profit after tax and shareholders' equity Note The table above has been prepared to exclude the impact of the instantaneous equity movements on the separate account fees. In addition, the sensitivity movements shown include those relating to the fixed index annuity and the reinsurance of GMIB guarantees. The above table provides sensitivity movements as at a point in time while the actual impact on financial results would vary contingent upon the volume of new product sales and lapses, changes to the derivative portfolio, correlation of market returns and various other factors including volatility, interest rates and elapsed time. The directional movements in the sensitivities reflect the hedging programme in place at 31 December 2017 and 2016. |
Jackson (US insurance operations) | Foreign exchange risk | |
Risk and sensitivity analysis | |
Schedule of estimated sensitivity to risk | A 10% increase in A 10% decrease in £m £m £m £m Profit before tax attributable to shareholders ) ) Profit for the year ) ) Shareholders' equity attributable to US insurance operations ) ) |
UK and Europe insurance operations | Non-linked shareholder-backed | Interest rate risk | |
Risk and sensitivity analysis | |
Schedule of estimated sensitivity to risk | The estimated sensitivity of the UK non-linked shareholder-backed business (principally annuities business) to a movement in interest rates is as follows: 2017 2016 A decrease A decrease An increase An increase A decrease A decrease An increase An increase £m £m £m £m £m £m £m £m Carrying value of debt securities and derivatives ) ) ) ) Policyholder liabilities ) ) ) ) Related deferred tax effects ) ) ) ) Net sensitivity of profit after tax and shareholders' equity ) ) ) ) In addition the shareholder-backed portfolio of UK non-linked insurance operations (covering policyholder liabilities and shareholders' equity) includes equity securities and investment properties. Excluding any offsetting effects on the measurement of policyholder liabilities, a fall in their value would have given rise to the following effects on pre-tax profit, profit after tax and shareholders' equity. 2017 2016 A decrease A decrease A decrease A decrease £m £m £m £m Pre-tax profit ) ) ) ) Related deferred tax effects Net sensitivity of profit after tax and shareholders' equity ) ) ) ) |
Tax assets and liabilities (Tab
Tax assets and liabilities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tax assets and liabilities | |
Schedule of deferred tax assets and liabilities | 2017 At 1 Jan Movement Movement Other At 31 Dec £m £m £m £m £m Deferred tax assets Unrealised losses or gains on investments ) — ) Balances relating to investment and insurance contracts — — — Short-term temporary differences ) ) ) Capital allowances ) — — Unused tax losses ) — ) Total ) ) ) Deferred tax liabilities Unrealised losses or gains on investments ) ) ) ) Balances relating to investment and insurance contracts ) ) — ) Short-term temporary differences ) ) ) Capital allowances ) ) — ) ) Total ) ) ) Deferred tax assets Deferred tax liabilities 2016* 2016* £m £m £m £m Asia operations ) ) US operations ) ) UK and Europe ) ) Other operations ) ) Total ) ) * The 2016 comparative results have been re-presented from those previously published for the reassessment of the Group's operating segments as described in note B1.3. |
Schedule of tax benefits not recognised | 2017 2016 Tax benefit Losses Tax benefit Losses £m £bn £m £bn Capital losses Trading losses |
Defined benefit pension schem58
Defined benefit pension schemes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Defined benefit pension schemes | |
Schedule of recognised asset/liability in respect of defined benefit pension schemes | 2017 2016 PSPS SASPS M&GGPS Other Total PSPS SASPS M&GGPS Other Total £m £m £m £m £m £m £m £m £m £m Underlying economic surplus (deficit) ) ) ) ) Less: unrecognised surplus ) — — — ) ) — — — ) Economic surplus (deficit) (including investment in Prudential insurance policies) note(iii) ) ) ) ) Attributable to: PAC with-profits fund ) — — ) — — Shareholder-backed operations ) ) ) ) ) Consolidation adjustment against policyholder liabilities for investment in Prudential insurance policies — — ) — ) — — ) — ) IAS 19 pension asset (liability) on the Group statement of financial position note(iv) ) ) ) ) ) ) ) Notes (i) No deficit or other funding is required for PSPS. Deficit funding, where applicable, is apportioned in the ratio of 70/30 between the PAC with-profits fund and shareholder-backed operations following detailed considerations in 2005 of the sourcing of previous contributions. Employer contributions for ongoing service of current employees are apportioned in the ratio relevant to current activity. (ii) The deficit of SASPS has been allocated 40 per cent to the PAC with-profits fund and 60 per cent to the shareholders' fund as at 31 December 2017 and 2016. (iii) The underlying position on an economic basis reflects the assets (including investments in Prudential insurance policies that are offset against liabilities to policyholders on the Group consolidation) and the liabilities of the schemes. (iv) At 31 December 2017, the PSPS pension asset of £236 million (2016: £159 million) and the other schemes' pension liabilities of £180 million (2016: £288 million) are included within 'Other debtors' and 'Provisions' respectively on the consolidated statement of financial position. |
Schedule of actuarial assumptions used in determining benefit obligations and the net periodic benefit costs | % % % Discount rate* Rate of increase in salaries Rate of inflation** Retail prices index (RPI) Consumer prices index (CPI) Rate of increase of pensions in payment for inflation: PSPS: Guaranteed (maximum 5%) Guaranteed (maximum 2.5%) Discretionary Other schemes * The discount rate has been determined by reference to an 'AA' corporate bond index, adjusted where applicable to allow for the difference in duration between the index and the pension liabilities. ** The rate of inflation reflects the long-term assumption for UK RPI or CPI depending on the tranche of the schemes. |
Schedule of movements on the pension scheme surplus determined on the economic basis | 2017 Surplus (Charge) credit Actuarial gains Contributions Surplus £m £m £m £m £m All schemes Underlying position (without the effect of IFRIC 14) Surplus (deficit) ) Less: amount attributable to PAC with-profits fund ) ) ) ) Shareholders' share: Gross of tax surplus (deficit) ) Related tax ) ) ) ) Net of shareholders' tax ) Application of IFRIC 14 for the derecognition of PSPS surplus Derecognition of surplus ) ) — ) Less: amount attributable to PAC with-profits fund ) — Shareholders' share: Gross of tax ) ) — ) Related tax — ) — Net of shareholders' tax ) ) — ) With the effect of IFRIC 14 Surplus (deficit) ) Less: amount attributable to PAC with-profits fund ) ) ) ) Shareholders' share: Gross of tax surplus (deficit) ) ) Related tax ) ) ) Net of shareholders' tax ) ) |
Schedule of underlying investments of the plan assets | 2017 2016 PSPS Other Total % PSPS Other Total % £m £m £m £m £m £m Equities UK Overseas Bonds* Government Corporate Asset-backed securities — Derivatives ) ) Properties Other assets Total value of assets** * 89 per cent of the bonds are investment graded (2016: 93 per cent). ** 96 per cent of the total value of the scheme assets are derived from quoted prices in an active market (2016: 98 per cent). None of the scheme assets included shares in Prudential plc or property occupied by the Prudential Group. The IAS 19 basis plan assets at 31 December 2017 of £8,766 million (2016: £8,872 million) is different from the economic basis plan assets of £8,917 million (2016: £9,006 million) as shown above due to the exclusion of investment in Prudential insurance policies, by M&GGPS as described above. |
Schedule of movements in pension schemes' surplus and deficit between scheme assets and liabilities | 2017 £m Plan Present Net surplus Effect of Economic Other IAS 19 Net surplus (deficit), beginning of year ) ) ) ) Current service cost — ) ) — ) — ) Net interest on net defined benefit liability (asset) ) ) — ) ) Administration expenses ) — ) — ) — ) Benefit payments ) — — — — — Employers' contributions note (iii) — — — Employees' contributions ) — — — — — Actuarial gains and losses note (iv) — ) Transfer into investment in Prudential insurance policies — — — — — ) ) Net surplus (deficit), end of year ) ) ) 2016 £m Net surplus (deficit), beginning of year ) ) ) Current service cost — ) ) — ) — ) Net interest on net defined benefit liability (asset) ) ) ) Administration expenses ) — ) — ) — ) Benefit payments ) — — — — — Employers' contributions note (iii) — — — Employees' contributions ) — — — — — Actuarial gains and losses note (iv) ) ) ) ) ) Transfer into investment in Prudential insurance policies — — — — — ) ) Net surplus (deficit), end of year ) ) ) ) 2015 £m Net deficit, beginning of year ) ) ) ) Current service cost — ) ) — ) — ) Past service cost — — — Net interest on net defined benefit liability (asset) ) ) ) ) Administration expenses ) — ) — ) — ) Benefit payments ) — — — — — Employers' contributions note (iii) — — — Employees' contributions ) — — — — — Actuarial gains and losses note (iv) ) ) Settlements or curtailments — — — — — — — Transfer into investment in Prudential insurance policies — — — — — Net surplus (deficit), end of year ) ) ) Notes (i) Maturity profile of the benefit obligations The weighted average duration of the undiscounted benefit obligations of the schemes is 18.6 years (2016: 19.5 years). The following table provides an expected maturity analysis of the benefit obligations as at 31 December: |
Schedule of expected maturity analysis of the benefit obligations | All schemes 1 year After After After After Over Total £m £m £m £m £m £m £m 2017 2016 (ii) The adjustments for investments in Prudential insurance policies are consolidation adjustments for intra-group assets and liabilities with no impact to operating results. (iii) Total employer contributions expected to be paid into the Group defined benefit schemes for the year ending 31 December 2018 amount to £50 million (2017: £45 million). (iv) The actuarial gains and losses attributable to policyholders and shareholders as shown in the table above are analysed as follows: |
Schedule of actuarial gains and losses attributable to policyholders and shareholders | £m £m £m Actuarial gains and losses Return on the scheme assets less amount included in interest income ) (Losses) on changes in demographic assumptions ) ) ) (Losses) on changes in financial assumptions ) ) Experience gains on scheme liabilities ) Effect of derecognition of PSPS surplus ) Consolidation adjustment for investments in Prudential insurance policies and other adjustments ) ) ) |
Schedule of sensitivities of the underlying pension scheme liabilities to key variables | Assumption applied Sensitivity change in Impact of sensitivity on scheme liabilities Discount rate Decrease by 0.2% Increase in scheme liabilities by: PSPS Other schemes Discount rate Increase by 0.2% Decrease in scheme liabilities by: PSPS Other schemes Rate of inflation RPI: Decrease by 0.2% Decrease in scheme liabilities by: CPI: Decrease by 0.2% PSPS with consequent Other schemes reduction in salary increases Mortality rate Increase life expectancy by 1 year Increase in scheme liabilities by: PSPS Other schemes |
Share capital, share premium 59
Share capital, share premium and own shares (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Share capital, share premium and own shares | |
Schedule of reconciliation of issued shares | 2017 2016 Issued shares of 5p each fully paid Number of Share Share Number of Share Share £m £m £m £m At 1 January Shares issued under share-based schemes — At 31 December |
Summary of options outstanding under save as you earn schemes to subscribe for shares | Number of Share price range Exercisable from to 31 December 2017 629p 1,455p 31 December 2016 466p 1,155p |
Summary of purchases of own shares in respect of employee incentive plans | 2017 share price 2016 share price Number of Number of Low High Cost Low High Cost £ £ £ £ £ £ January February March April May June July August September October November December Total |
Provisions (Tables)
Provisions (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Provisions | |
Schedule of total provisions | £m £m Provision in respect of defined benefit pension schemes C9 Other provisions (see below) Total provisions |
Schedule of analysis of other provisions | £m £m At 1 January Charged to income statement: Additional provisions Unused amounts released ) ) Used during the year ) ) Exchange differences ) Total at 31 December |
Capital (Tables)
Capital (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Asset management operations | |
Group objectives, policies and processes for managing capital | |
Reconciliation of regulatory and other surplus | Asset management operations 2017 2016 M&G US Eastspring Total Total £m £m £m £m £m Regulatory and other surplus Beginning of year Gains during the year Movement in capital requirement ) — ) ) ) Capital injection — — — Distributions made to the parent company ) — ) ) ) Exchange and other movements — ) ) ) End of year |
Operations within segments | Asia insurance operations | |
Group objectives, policies and processes for managing capital | |
Reconciliation of estimated capital position to shareholders' equity | £m £m IFRS shareholders' equity Adjustments to regulatory basis Unallocated surplus of with-profits funds Deferred acquisition costs, distribution rights and goodwill of non-participating business not recognised for regulatory reporting ) ) Other adjustments Total adjustments Total available capital resources of life assurance businesses on local regulatory bases |
Operations within segments | Jackson (US insurance operations) | |
Group objectives, policies and processes for managing capital | |
Reconciliation of estimated capital position to shareholders' equity | £m £m IFRS shareholders' equity Adjustments to regulatory basis Deferred acquisition costs, distribution rights and goodwill of non-participating business not recognised for regulatory reporting ) ) Jackson surplus notes Investment and policyholder liabilities valuation differences between IFRS and regulatory basis for Jackson Other adjustments Total adjustments ) ) Total available capital resources of life assurance businesses on local regulatory bases |
Property, plant and equipment (
Property, plant and equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, plant and equipment | |
Reconciliation of the carrying amount of property, plant and equipment | 2017 2016 Group Tangible Total Group Tangible Total £m £m £m £m £m £m At 1 January Cost Accumulated depreciation ) ) ) ) ) ) Net book amount Year ended 31 December Opening net book amount Exchange differences ) ) ) Depreciation charge ) ) ) ) ) ) Additions Arising on acquisitions of subsidiaries* — — — — Disposals and transfers ) ) ) ) ) ) Closing net book amount At 31 December Cost Accumulated depreciation ) ) ) ) ) ) Net book amount * Arising on an acquisition made for venture fund purposes by the PAC with-profits fund. |
Investment properties (Tables)
Investment properties (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Investment properties | |
Reconciliation of the carrying amount of investment properties | £m £m At 1 January Additions: Resulting from property acquisitions Resulting from expenditure capitalised Disposals ) ) Net gain from fair value adjustments Net foreign exchange differences ) Transfers to held for sale assets — ) At 31 December |
Schedule of minimum future rentals receivable on non-cancellable operating leases of freehold investment properties | £m £m Less than 1 year 1 to 5 years Over 5 years Total |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments | |
Schedule of future minimum lease payments for non-cancellable operating leases | £m £m Future minimum lease payments for non-cancellable operating leases fall due during the following periods: Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years Future minimum sub-lease rentals received for non-cancellable operating leases for land and buildings Minimum lease rental payments included in consolidated income statement |
Investments in subsidiary und65
Investments in subsidiary undertakings, joint ventures and associates (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Investments in subsidiary undertakings, joint ventures and associates | |
Schedule of group's share of the profits , net of related tax, and carrying amount of interest in joint ventures and associates, which are equity accounted | Joint ventures and associates 2015 £m £m £m Shareholder-backed business PAC with-profits fund (prior to offsetting effect in movement in unallocated surplus) Total |
Schedule of direct subsidiary undertakings of the parent company | Asia US UK and Europe Unallocated Insurance Asset Insurance Asset Insurance Asset Total Group 2017 Share of profits from joint ventures and associates, net of related tax — — — 2016 Share of profits from joint ventures and associates, net of related tax — — — 2015 Share of profits from joint ventures and associates, net of related tax — — — |
Schedule of other subsidiaries, joint ventures, associates and significant holdings | Key to share classes: Abbreviation Class of share held LBG Limited by Guarantee LPI Limited Partnership Interest MI Membership Interest NSB Non-stock basis OS Ordinary Shares PI Partnership Interest PS Preference Shares U Units Name of entity Classes of Proportion Registered office address and country of incorporation M&G Group Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Prudential (US Holdco1) Limited OS Prudential Capital Holding Company Limited OS Prudential Corporation Asia Limited OS 13th Floor, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong Prudential Financial Services Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Prudential Group Holdings Limited OS Prudential Property Services Limited OS The Prudential Assurance Company Limited OS Other subsidiaries, joint ventures, associates and significant holdings of the Group—no shares held directly by the parent company, Prudential plc or its nominees Name of entity Classes of Proportion Registered office address and country of incorporation Allied Life Brokerage Agency, Inc OS 400 East Court Avenue, Des Moines, IA 50309, USA ANRP II (AIV VI FC), LP LPI Cayman Corporate Centre, 27 Hospital Road, George Town, KY-9008, Cayman Islands BOCHK Aggressive Growth Fund OS 27th Floor, Bank of China Tower, 1 Garden Road, Central and Western District, Hong Kong BOCHK Balanced Growth Fund OS 12th Floor and 25th Floor, Citicorp Centre, 18 Whitfield Road, Causeway Bay, Hong Kong BOCHK China Equity Fund OS BOCHK Conservative Growth Fund OS BOCI—Prudential Asset Management Limited OS 27th Floor, Bank of China Tower, 1 Garden Road, Central and Western District, Hong Kong BOCI—Prudential Trustee Limited OS 12th Floor and 25th Floor, Citicorp Centre, 18 Whitfield Road, Causeway Bay, Hong Kong Brier Capital LLC OS 1 Corporate Way, Lansing, MI 48951, USA Brooke (Holdco 1) Inc OS 1105 North Market Street, Suite 1300, Wilmington, DE 19801, USA Brooke Holdings (UK) (In liquidation) OS c/o Mazars LLP, 45 Church Street, Birmingham, B3 2RT, UK Brooke Life Insurance Company OS 1 Corporate Way, Lansing, MI 48951, USA BWAT Retail Nominee (1) Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK BWAT Retail Nominee (2) Limited OS Name of entity Classes of Proportion Registered office address and country of incorporation Calvin F1 GP Limited OS 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Calvin F2 GP Limited OS Canada Property (Trustee) No 1 Limited OS Lime Grove House, Green Street, St Helier, Jersey, JE1 2ST Canada Property Holdings Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Canada Property Jersey No. 2 Trust OS Lime Grove House, Green Street, St Helier, Jersey, JE1 2ST Canada Property Jersey Trust OS Cardinal Distribution Park Management Limited OS 5th Floor Cavendish House, 39 Waterloo Street, Birmingham, B2 5PP, UK Carraway Guildford (Nominee A) Limited OS 13 Castle Street, St Helier, Jersey, JE4 5UT Carraway Guildford (Nominee B) Limited OS Carraway Guildford General Partner Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Carraway Guildford Investments Unit Trust OS 13 Castle Street, St Helier, Jersey, JE4 5UT Carraway Guildford LP LPI Lloyds Chambers, 1 Portsoken Street, London, E1 8HZ, UK Centaurus Retail LLP LPI 40 Broadway, London, SW1H 0BU, UK Central Square Leeds Limited (In liquidation) OS c/o Mazars LLP, 45 Church Street, Birmingham, B3 2RT, UK Centre Capital Non-Qualified Investors IV AIV Orion, LP LPI 2711 Centreville Road, Suite 400, Wilmington, DE 19808, USA Centre Capital Non-Qualified Investors IV AIV-ELS, LP LPI Centre Capital Non-Qualified Investors IV AIV-RA, LP LPI Centre Capital Non-Qualified Investors IV, LP LPI Name of entity Classes of Proportion Registered office address and country of incorporation Centre Capital Non-Qualified Investors V AIV-ELS, LP LPI 2711 Centreville Road, Suite 400, Wilmington, DE 19808, USA Centre Capital Non-Qualified Investors V, LP LPI CEP IV-A Chicago AIV, LP LPI 615 South Dupont Highway, Dover, DE 19901, USA CEP IV-A CWV AIV, LP LPI 850 New Burton Road, Suite 201, Dover, DE 19904, USA CEP IV-A Davenport AIV, LP LPI 615 South Dupont Highway, Dover, DE 19901, USA CEP IV-A Indy AIV, LP LPI CEP IV-A NMR AIV, LP LPI CEP IV-A WBCT AIV, LP LPI CF Prudential European QIS Fund OS 17 Rochester Row, London, SW1P 1QT, UK CF Prudential Japanese QIS Fund OS CF Prudential North American QIS Fund OS 135 Bishopsgate, London, EC2M 3UR, UK CF Prudential Pacific Markets Trust Fund OS Laurence Pountney Hill, London, EC4R 0HH, UK CF Prudential UK Growth QIS Fund OS 17 Rochester Row, London, SW1P 1QT, UK CITIC-CP Asset Management Co., Ltd. MI No.128 North Zhangjiabang Road, Pudong District, Shanghai, China CITIC-Prudential Fund Management Co., Ltd. MI Level 9, HSBC Building, Shanghai IFC, 8 Century Avenue, Pudong, Shanghai, China CITIC-Prudential Life Insurance Company Limited MI East Tower, World Financial Centre, No. 1 East Third Ring Middle Road, Chaoyang District, Beijing, China Clairvest Equity Partners IV-A LP LPI 22 St Clair Avenue East, Suite 1700, Toronto, ON M4T 2S3, Canada Cribbs Causeway JV Limited OS 40 Broadway, London, SW1H 0BU, UK Name of entity Classes of Proportion Registered office address and country of incorporation Cribbs Causeway Merchants Association Limited LBG The Mall at Cribbs Causeway, Bristol, BS34 5DG, UK Cribbs Mall Nominee (1) Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Curian Capital, LLC OS 1 Corporate Way, Lansing, MI 48951, USA Curian Clearing, LLC (Michigan) OS Digital Infrastructure Investment Partners GP LLP LPI Laurence Pountney Hill, London, EC4R 0HH, UK Digital Infrastructure Investment Partners GP1 Limited OS Digital Infrastructure Investment Partners LP LPI Digital Infrastructure Investment Partners SLP GP LLP LPI 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Digital Infrastructure Investment Partners SLP GP1 Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Digital Infrastructure Investment Partners SLP GP2 Limited OS Eastspring Al-Wara' Investments Berhad OS 16th Floor, Wisma Sime Darby, Jalan Raja Laut, 50350 Kuala Lumpur, Malaysia Eastspring Asset Management Korea Co. Ltd. OS 15th Floor, Shinhan Investment Tower, 70 Yoidae-ro, Youngdungpo-gu, Seoul 07325, Korea Eastspring Infrastructure Debt Fund L.P. PI PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands Eastspring Investments—Asian Local Bond Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments—Asian Smaller Companies Fund OS Eastspring Investments—Asian Total Return Bond Fund OS Name of entity Classes of Proportion Registered office address and country of incorporation Eastspring Investments—Developed and Emerging Asia Equity Fund OS Eastspring Investments—Emerging Europe, Middle East and Africa Dynamic Fund OS Eastspring Investments—Global Emerging Markets Customized Equity Fund OS Eastspring Investments—Global Emerging Markets Dynamic Fund OS Eastspring Investments—Global Low Volatility Equity Fund OS Eastspring Investments—Global Technology Fund OS Eastspring Investments—Japan Equity Fund OS Eastspring Investments—Japan Fundamental Value Fund OS Eastspring Investments—Pan European Fund OS 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Singapore 018983 Eastspring Investments—US Equity Income Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments—US High Yield Bond Fund OS Eastspring Investments—US Total Return Bond Fund OS Eastspring Investments (Hong Kong) Limited OS 13th Floor, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong Eastspring Investments (Luxembourg) SA OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments (Singapore) Limited OS 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Tower 2, Singapore 018983 Name of entity Classes of Proportion Registered office address and country of incorporation Eastspring Investments Asia Pacific Equity Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments Asian Bond Fund OS Eastspring Investments Asian Dynamic Fund OS Eastspring Investments Asian Equity Fund OS Eastspring Investments Asian Equity Income Fund OS Eastspring Investments Asian High Yield Bond Fund OS Eastspring Investments Asian Infrastructure Equity Fund OS Eastspring Investments Asian Low Volatility Equity Fund OS Eastspring Investments Asian Property Securities Fund OS Eastspring Investments Berhad OS 16th Floor, Wisma Sime Darby, Jalan Raja Laut, 50350 Kuala Lumpur, Malaysia Eastspring Investments China Equity Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments Dragon Peacock Fund OS Eastspring Investments European Investment Grade Bond Fund OS Eastspring Investments Fund Management Limited Liability Company MI 23rd Floor, Saigon Trade Center, 37 Ton Duc Thang Street, District 1, Ho Chi Minh City, Vietnam Eastspring Investments Global Emerging Markets Bond Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments Global Equity Navigator Fund OS Name of entity Classes of Proportion Registered office address and country of incorporation Eastspring Investments Global Market Navigator Fund OS Eastspring Investments Global Multi Asset Income Plus Growth Fund OS Eastspring Investments Greater China Equity Fund OS Eastspring Investments Hong Kong Equity Fund OS Eastspring Investments Incorporated OS 874 Walker Road, Suite C, Dover, DE 19904, USA Eastspring Investments India Consumer Equity Open Limited OS Suite 450, 4th Floor, Barkly Wharf East, Le Caudan Waterfront, Port Louis, Mauritius Eastspring Investments India Equity Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments India Equity Open Limited OS Suite 450, 4th Floor, Barkly Wharf East, Le Caudan Waterfront Port Louis, Mauritius Eastspring Investments India Infrastructure Equity Open Limited OS Eastspring Investments Latin American Equity Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments Limited OS Marunouchi Park Building, 6-1 Marunouchi 2-chome, Chiyoda-Ku, Tokyo, Japan Eastspring Investments Limited (In liquidation) OS Level 6, Precinct Building 5, Unit 5, Dubai International Financial Centre, Dubai, United Arab Emirates Eastspring Investments North America Value Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments Services Pte. Ltd. OS 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Tower 2, Singapore 018983 Name of entity Classes of Proportion Registered office address and country of incorporation Eastspring Investments SICAV-FIS—Alternative Investments Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments SICAV-FIS—Asia Pacific Loan Fund OS Eastspring Investments SICAV-FIS Universal USD Bond Fund OS Eastspring Investments SICAV-FIS Universal USD Bond II Fund OS Eastspring Investments US Bond Fund OS Eastspring Investments US Corporate Bond Fund OS Eastspring Investments US High Investment Grade Bond Fund OS Eastspring Investments US Investment Grade Bond Fund OS Eastspring Investments UT Singapore ASEAN Equity Fund OS 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Singapore 018983 Eastspring Investments UT Singapore Select Bond Fund OS Eastspring Investments World Value Equity Fund OS 26, Boulevard Royal, L-2449, Luxembourg Eastspring Real Assets Partners OS PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands Eastspring Securities Investment Trust Co., Ltd. OS 4th Floor, No.1 Songzhi Road, Taipei 110, Taiwan Edger Investments Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Edinburgh Park (Management) Limited LBG 1 Exchange Crescent, Conference Square, Edinburgh, EH3 8UL, UK Embankment GP Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Name of entity Classes of Proportion Registered office address and country of incorporation Embankment Nominee 1 Limited OS Embankment Nominee 2 Limited OS Empire Holding SARL (In liquidation) OS 5, rue Guillaume Kroll, L-1882, Luxembourg Euro Salas Properties Limited (In liquidation) OS c/o Mazars LLP, 90 St. Vincent Street, Glasgow, G2 5UB, UK European Specialist Investment Funds—M&G Total Return Credit Investment Fund OS 80, route d'Esch, L-1470, Luxembourg Falan GP Limited OS 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Fashion Square ECO LP (In liquidation) LPI 1209 Orange Street, Wilmington, DE 19801, USA First Dakota, Inc OS 314 East Thayer Avenue, Bismarck, ND 58501, USA Five Hotel Holding, LLC MI 208 South LaSalle Street, Suite 814, Chicago, IL 60604, USA Foudry Properties Limited OS Clearwater Court, Vastern Road, Reading RG1 8DB, UK Furnival Insurance Company PCC Limited OS Third Floor, La Plaiderie Chambers, La Plaiderie, St Peter Port, Guernsey, GY1 1WG Genny GP 1 LLP LPI Laurence Pountney Hill, London, EC4R 0HH, UK Genny GP 2 Limited OS 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Genny GP Limited OS George Digital GP 1 LLP LPI George Digital GP 2 Limited OS George Digital GP Limited OS GGE GP Limited OS Green GP Limited OS Name of entity Classes of Proportion Registered office address and country of incorporation Greenpark (Reading) General Partner Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Greenpark (Reading) Nominee No. 1 Limited OS GreenPark (Reading) Nominee No. 2 Limited OS GS Twenty Two Limited OS Hermitage Management, LLC OS 1 Corporate Way, Lansing, MI 48951, USA Holborn Bars Nominees Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Holtwood Limited OS International House, Castle Hill, Victoria Road, Douglas, IM2 4RB, Isle of Man Hudson Seasons, LLC MI 874 Walker Road, Suite C, Dover, DE 19904, USA Hyde Holdco 1 Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK ICICI Prudential Asset Management Company Limited OS 12th Floor, Narain Manzil, 23, Barakhamba Road, New Delhi 110001, India ICICI Prudential Life Insurance Company Limited OS ICICI PruLife Towers, 1089 Appasaheb Marathe Marg, Prabhadevi, Mumbai 400025, India ICICI Prudential Pension Funds Management Company Limited OS ICICI Prudential Trust Limited OS 12th Floor, Narain Manzil, 23, Barakhamba Road, New Delhi 110001, India IFC Holdings, Inc OS 1209 Orange Street, Wilmington, DE 19801, USA Infracapital (AIRI) GP Limited OS 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital (Belmond) GP Limited OS Infracapital (Bio) GP Limited OS Name of entity Classes of Proportion Registered office address and country of incorporation Infracapital (GC) GP Limited OS Infracapital (IT PPP) GP Limited OS Infracapital (Sense) GP Limited OS Infracapital (TLSB) GP Limited OS Infracapital (TLSB) SLP LP LPI Infracapital ABP GP Limited (In liquidation) OS Infracapital CI II Limited OS Infracapital DF II GP LLP LPI Infracapital DF II Limited OS Infracapital Employee Feeder GP 1 LLP LPI Infracapital Employee Feeder GP 2 LLP LPI Infracapital Employee Feeder GP Limited OS Infracapital F1 GP2 Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Infracapital F2 GP1 Limited OS Infracapital F2 GP2 Limited OS Infracapital GP 1 LLP LPI Infracapital GP 2 LLP LPI Infracapital GP II Limited OS Infracapital GP Limited OS Infracapital Greenfield DF GP LLP LPI 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Greenfield Partners 1 SLP GP LLP LPI Infracapital Greenfield Partners 1 SLP GP1 Limited OS Infracapital Greenfield Partners 1 SLP GP2 Limited OS Name of entity Classes of Proportion Registered office address and country of incorporation Infracapital Greenfield Partners I Employee Feeder GP LLP LPI Infracapital Greenfield Partners I GP 1 Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Infracapital Greenfield Partners I GP 2 Limited OS Infracapital Greenfield Partners I GP LLP LPI 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Greenfield Partners I LP LPI Laurence Pountney Hill, London, EC4R 0HH, UK Infracapital Greenfield Partners I SLP2 GP LLP LPI 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Greenfield Partners I Subholdings GP LLP LPI Infracapital Greenfield Partners I Subholdings GP1 Limited OS Infracapital Long Term Income Partners GP 1 Limited (In liquidation) OS Laurence Pountney Hill, London, EC4R 0HH, UK Infracapital Long Term Income Partners GP 2 Limited (In liquidation) OS Infracapital Long Term Income Partners GP LLP LPI Infracapital Partners II LP LPI Infracapital Partners II Subholdings GP LLP LPI 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Partners II Subholdings GP1 Limited OS Infracapital Partners III GP SARL OS 6, rue Eugène Ruppert, L-245, Luxembourg Infracapital Partners LP LPI Laurence Pountney Hill, London, EC4R 0HH, UK Name of entity Classes of Proportion Registered office address and country of incorporation Infracapital RF GP Limited OS 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Sisu GP Limited OS Infracapital SLP II GP LLP LPI Infracapital SLP II LP LPI Infracapital SLP Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK Innisfree M&G PPP LP LPI Boundary House, 91-93 Charterhouse Street, London, EC1M 6HR, UK Innisfree M&G PPP LLP LPI INVEST Financial Corporation Insurance Agency Inc, of Delaware OS 100 West 10th Street, Wilmington, DE 19801, USA INVEST Financial Corporation Insurance Agency Inc, of Illinois OS 208 South LaSalle Street, Chicago, IL 60604, USA Investment Centers of America, Inc OS 314 East Thayer Avenue, Bismarck, ND 58501, USA Jackson Charitable Foundation, Inc NSB 1 Corporate Way, Lansing, MI 48951, USA Jackson Holdings, LLC OS 1105 North Market Street, Suite 1300, Wilmington, DE 19801, USA Jackson National Asset Management, LLC OS 1 Corporate Way, Lansing, MI 48951, USA Jackson National Life (Bermuda) Limited OS Cedar House, Hamilton, Bermuda Jackson National Life Distributors, LLC OS 1209 Orange Street, Wilmington, DE 19801, USA Jackson National Life Insurance Company OS 1 Corporate Way, Lansing, MI 48951, USA Jackson National Life Insurance Company of New York OS 2900 Westchester Avenue, Suite 305, Purchase, NY 10577, USA Jefferies Capital Partners V, LP LPI 1209 Orange Street, Wilmington, DE 19801, USA Name of entity Classes of Proportion Registered office address and country of incorporation JNL Strategic Income Fund, LLC MI Lion Credit Opportunity Fund plc—Credit Opportunity Fund XV OS 53 Merrion Square South, Dublin 2, D02 PR63, Ireland LIPP SARL (In liquidation) OS 5, rue Guillaume Kroll, L-1882, Luxembourg Livicos Limited OS Montague House, Adelaide Road, Dublin 2, D02 K039, Ireland London Stone Investments F3 Employee Feeder GP LLP LPI 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK London Stone Investments F3 I Limited OS London Stone Investments F3 II Limited OS London Stone Investments F3 SP GP LLP LPI M&G (Guernsey) Limited OS Dorey Court, Admiral Park, St. Peter Port, Guernsey, GY1 2HT M&G (Lux) Investment Funds 1—M&G (Lux) Floating Rate High Yield Solution OS 49, Avenue J.F. Kennedy, L-1855, Luxembourg M&G Alternatives Investment Management Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK M&G Asia Property Fund OS 34-38, Avenue de la Liberté, L-1930, Luxembourg M&G Corporate Bond Fund OS Laurence Pountney Hill, London, EC4R 0HH, UK M&G Dividend Fund OS M&G Episode Defensive Fund OS M&G Episode Macro Fund OS M&G European Credit Investment Fund OS 80, route d'Esch, L-1470, Luxembourg M&G European High Yield Credit Investment Fund OS Name of entity Classes of Proportion Registered office address and country of incorporation M&G European Property Fund SICAV-FIS OS 34-38, Avenue de la Liberté, L-1930, Luxembourg M&G European Secured Property Income Fund U M&G European Select Fund OS Laurence Pountney Hill, London, EC4R 0HH, UK M&G European Strategic Value Fund OS M&G Financial Services Limited OS M&G Founders 1 Limited OS M&G General Partner Inc OS Walker House, 87 Mary Street, Grand Cayman, KY1-9002, Cayman Islands M&G Gilt & Fixed Interest Income Fund OS Laurence Pountney Hill, London, EC4R 0HH, UK M&G Global Corporate Bond Fund OS M&G Global Credit Investment Fund OS 80, route d'Esch, L-1470, Luxembourg M&G Global Leaders Fund OS Laurence Pountney Hill, London, EC4R 0HH, UK M&G Global Select Fund OS M&G IMPPP 1 Limited OS M&G International Investments Limited OS M&G International Investments Nominees Limited OS M&G International Investments SA OS 34-38, Avenue de la Liberté, L-1930, Luxembourg M&G International Investments Switzerland AG OS Talstrasse 66, 8001 Zurich, Switzerland M&G Investment Funds (10)—M&G Absolute Return Bond Fund OS Laurence Pountney Hill, London, EC4R 0HH, UK Name of entity Classes of Proportion Registered office address and country of incorporation M&G Investment Funds (10)—M&G Global Listed Infrastructure Fund OS M&G Investment Management Limited OS M&G Investments (Hong Kong) Limited OS 6th Floor, Alexandra House, 18 Chater Road, Central, Hong Kong M&G Investments (Singapore) Pte. Ltd. OS 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Singapore 018983 M&G Investments Japan Co., Ltd. OS 3-1 Toranomon, 4 Chome, Minato-ku, Tokyo, Japan M&G Limited OS Laurence Pountney Hill, London, EC4R 0HH, UK M&G Luxembourg SA OS 34-38, Avenue de la Liberté, L-1930, Luxembourg M&G Managed Growth Fund OS Laurence Pountney Hill, London, EC4R 0HH, UK M&G Management Services Limited OS M&G Nominees Limited OS M&G Pan European Dividend Fund OS M&G PFI 2018 GP LLP LPI 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK M&G PFI 2018 GP1 Limited OS Laurence Pountney Hill, London, EC4R 0HH |
FURTHER ACCOUNTING POLICIES (Ta
FURTHER ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
FURTHER ACCOUNTING POLICIES | |
Schedule of investments in unconsolidated structured entities | 2017 2016 OEICs/UTs Separate Other OEICs/UTs Separate Other £m £m £m £m £m £m Statement of financial position line items Equity securities and portfolio holdings in unit trusts — — Debt securities — — — — Total |
BACKGROUND AND CRITICAL ACCOU67
BACKGROUND AND CRITICAL ACCOUNTING POLICIES - Exchange rates applied (Details) | 12 Months Ended | |||
Dec. 31, 2017₫ / £$ / £฿ / £$ / £RM / £₨ / £Rp / £$ / £¥ / £ | Dec. 31, 2016₫ / £$ / £฿ / £$ / £RM / £₨ / £Rp / £$ / £¥ / £ | Dec. 31, 2015₫ / £$ / £฿ / £$ / £RM / £₨ / £Rp / £$ / £¥ / £ | Dec. 31, 2014₫ / £$ / £฿ / £$ / £RM / £₨ / £Rp / £$ / £¥ / £ | |
Hong Kong | ||||
Exchange rates | ||||
Opening / Closing rate | 10.57 | 9.58 | 11.42 | 12.09 |
Average rate | 10.04 | 10.52 | 11.85 | |
Indonesia | ||||
Exchange rates | ||||
Opening / Closing rate | Rp / £ | 18,353.44 | 16,647.30 | 20,317.71 | 19,311.31 |
Average rate | Rp / £ | 17,249.38 | 18,026.11 | 20,476.93 | |
Malaysia | ||||
Exchange rates | ||||
Opening / Closing rate | RM / £ | 5.47 | 5.54 | 6.33 | 5.45 |
Average rate | RM / £ | 5.54 | 5.61 | 5.97 | |
Singapore | ||||
Exchange rates | ||||
Opening / Closing rate | 1.81 | 1.79 | 2.09 | 2.07 |
Average rate | 1.78 | 1.87 | 2.10 | |
China | ||||
Exchange rates | ||||
Opening / Closing rate | ¥ / £ | 8.81 | 8.59 | 9.57 | 9.67 |
Average rate | ¥ / £ | 8.71 | 8.99 | 9.61 | |
India | ||||
Exchange rates | ||||
Opening / Closing rate | ₨ / £ | 86.34 | 83.86 | 97.51 | 98.42 |
Average rate | ₨ / £ | 83.90 | 91.02 | 98.08 | |
Vietnam | ||||
Exchange rates | ||||
Opening / Closing rate | ₫ / £ | 30,719.60 | 28,136.99 | 33,140.64 | 33,348.46 |
Average rate | ₫ / £ | 29,279.71 | 30,292.79 | 33,509.21 | |
Thailand | ||||
Exchange rates | ||||
Opening / Closing rate | ฿ / £ | 44.09 | 44.25 | 53.04 | 51.30 |
Average rate | ฿ / £ | 43.71 | 47.80 | 52.38 | |
US dollars | ||||
Exchange rates | ||||
Opening / Closing rate | 1.35 | 1.24 | 1.47 | 1.56 |
Average rate | 1.29 | 1.35 | 1.53 |
BACKGROUND AND CRITICAL ACCOU68
BACKGROUND AND CRITICAL ACCOUNTING POLICIES - Exchange movement (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Exchange movement arising recognised in other comprehensive income | |||
Exchange difference, before related tax, recognized in other comprehensive income | £ (465) | £ 1,148 | £ 114 |
PCA Life Insurance Company Ltd. - Korea | |||
Exchange movement arising recognised in other comprehensive income | |||
Cumulative exchange gain (loss) of sold business | 61 | ||
PCA Life Insurance Company Ltd. - Japan | |||
Exchange movement arising recognised in other comprehensive income | |||
Cumulative exchange gain (loss) of sold business | (46) | ||
Operating segments | Asia | |||
Exchange movement arising recognised in other comprehensive income | |||
Exchange difference, before related tax, recognized in other comprehensive income | (295) | 785 | (5) |
Operating segments | US | |||
Exchange movement arising recognised in other comprehensive income | |||
Exchange difference, before related tax, recognized in other comprehensive income | (477) | 853 | 238 |
Operating segments | PCA Life Insurance Company Ltd. - Korea | Asia | |||
Exchange movement arising recognised in other comprehensive income | |||
Cumulative exchange gain (loss) of sold business | 61 | ||
Operating segments | PCA Life Insurance Company Ltd. - Japan | Asia | |||
Exchange movement arising recognised in other comprehensive income | |||
Cumulative exchange gain (loss) of sold business | 46 | ||
Unallocated to a segment (other operations) | |||
Exchange movement arising recognised in other comprehensive income | |||
Exchange difference, before related tax, recognized in other comprehensive income | £ 307 | £ (490) | £ (119) |
BACKGROUND AND CRITICAL ACCOU69
BACKGROUND AND CRITICAL ACCOUNTING POLICIES - Various accounting policies (Details) - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Critical accounting policies and estimates | ||||
Liabilities requiring classification as relating to insurance or investment contracts | £ 435,629 | £ 409,714 | £ 340,584 | |
Profit (loss) before tax, attributable to shareholders | 3,296 | 2,275 | 3,148 | |
Profit (loss) before tax | [1],[2] | 3,970 | 3,212 | 3,321 |
Total segmental operating profit | 4,699 | 4,256 | 3,969 | |
Operating segments | ||||
Critical accounting policies and estimates | ||||
Profit (loss) before tax, attributable to shareholders | 4,154 | 3,168 | 3,877 | |
Profit (loss) before tax | 4,828 | 4,105 | 4,050 | |
Total segmental operating profit | 5,577 | 4,945 | 4,625 | |
Jackson (US insurance operations) | ||||
Critical accounting policies and estimates | ||||
Liabilities requiring classification as relating to insurance or investment contracts | 180,724 | £ 177,626 | £ 138,913 | |
Income statement investment return | £ 18,533 | |||
[1] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. | |||
[2] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. This is principally because the corporate taxes of the Group include those on the income of consolidated with-profits and unit-linked funds that, through adjustments to benefits, are borne by policyholders. These amounts are required to be included in the tax charge of the Company under IAS 12. Consequently, the profit before all taxes measure is not representative of pre-tax profits attributable to shareholders. Profit before all taxes is determined after deducting the cost of policyholder benefits and movements in the liability for unallocated surplus of the PAC with-profits fund after adjusting for taxes borne by policyholders. |
BACKGROUND AND CRITICAL ACCOU70
BACKGROUND AND CRITICAL ACCOUNTING POLICIES - Policies - deferred acquisition costs (Details) - Shareholder-backed - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Critical accounting policies and estimates | ||
Deferred acquisition costs for insurance contracts | £ 9,233 | £ 9,178 |
Jackson (US insurance operations) | ||
Critical accounting policies and estimates | ||
Deferred acquisition costs for insurance contracts | £ 8,197 | £ 8,303 |
Jackson (US insurance operations) | Variable annuities | ||
Critical accounting policies and estimates | ||
Assumptions for amortisation of deferred acquisition costs - period for projected level of investment return | 5 years | |
Assumptions for amortisation of deferred acquisition costs - preceding period of actual investment return | 3 years | |
Assumptions for amortisation of deferred acquisition costs - investment return realisation period | 8 years | |
Jackson (US insurance operations) | Maximum | Variable annuities | ||
Critical accounting policies and estimates | ||
Projected long-term level of returns | 15.00% | |
Jackson (US insurance operations) | Minimum | Variable annuities | ||
Critical accounting policies and estimates | ||
Projected long-term level of returns | 0.00% |
BACKGROUND AND CRITICAL ACCOU71
BACKGROUND AND CRITICAL ACCOUNTING POLICIES - Policies - investments (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
At fair value | ||
Financial instruments | ||
Financial investments at fair value | £ 407,270 | £ 378,134 |
Assets and liabilities at amortised cost for which fair value is disclosed | ||
Financial instruments | ||
Financial investments | £ 12,200 |
BACKGROUND AND CRITICAL ACCOU72
BACKGROUND AND CRITICAL ACCOUNTING POLICIES - Policies - impairment (Details) £ in Billions | Dec. 31, 2017GBP (£) |
Distribution rights | |
Assets subject to impairment estimates | |
Intangible assets | £ 1.5 |
Available-for-sale securities and assets held at amortised cost | |
Assets subject to impairment estimates | |
Financial investments | £ 47.5 |
BACKGROUND AND CRITICAL ACCOU73
BACKGROUND AND CRITICAL ACCOUNTING POLICIES - New accounting pronouncements (Details) | Dec. 31, 2017 |
BACKGROUND AND CRITICAL AND OTHER SIGNIFICANT ACCOUNTING POLICIES | |
Percentage of the Group's investments valued at FVTPL | 82.00% |
Analysis of performance by se74
Analysis of performance by segment - Profit before tax (Details) - GBP (£) £ / shares in Units, £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Analysis of operating segments | |||
Operating profit (loss) based on longer-term investment returns | £ 4,699 | £ 4,256 | £ 3,969 |
Other income and expenditure | |||
Interest payable on core structural borrowings | (425) | (360) | (312) |
Short-term fluctuations in investment returns on shareholder-backed business | (1,563) | (1,678) | (755) |
Amortisation of acquisition accounting adjustments | (63) | (76) | (76) |
Profit (loss) attaching to disposal of businesses | 162 | (227) | 56 |
Profit (loss) before tax attributable to shareholders | 3,296 | 2,275 | 3,148 |
Tax charge attributable to shareholders' returns | (906) | (354) | (569) |
Profit for the year | 2,390 | 1,921 | 2,579 |
Attributable to: | |||
Equity holders of the Company | 2,389 | £ 1,921 | £ 2,579 |
Non-controlling interests | £ 1 | ||
Basic earnings per share | |||
Based on operating profit based on longer-term investment returns | £ 1.452 | £ 1.313 | £ 1.246 |
Based on profit for the year | £ 0.931 | £ 0.750 | £ 1.010 |
PCA Life Insurance Company Ltd. - Korea | |||
Other income and expenditure | |||
Profit (loss) attaching to disposal of businesses | £ (227) | £ 56 | |
Cumulative exchange gain (loss) recycled from other comprehensive income | £ 61 | ||
PCA Life Insurance Company Ltd. - Japan | |||
Other income and expenditure | |||
Cumulative exchange gain (loss) recycled from other comprehensive income | (46) | ||
Operating segments | |||
Analysis of operating segments | |||
Operating profit (loss) based on longer-term investment returns | 5,577 | 4,945 | 4,625 |
Other income and expenditure | |||
Interest payable on core structural borrowings | (16) | (15) | (13) |
Short-term fluctuations in investment returns on shareholder-backed business | (1,583) | (1,474) | (682) |
Amortisation of acquisition accounting adjustments | (63) | (76) | (76) |
Profit (loss) attaching to disposal of businesses | 162 | ||
Profit (loss) before tax attributable to shareholders | 4,154 | 3,168 | 3,877 |
Operating segments | PCA Life Insurance Company Ltd. - Korea | |||
Other income and expenditure | |||
Profit (loss) attaching to disposal of businesses | (227) | 56 | |
Cumulative exchange gain (loss) recycled from other comprehensive income | 61 | ||
Operating segments | PCA Life Insurance Company Ltd. - Japan | |||
Other income and expenditure | |||
Cumulative exchange gain (loss) recycled from other comprehensive income | (46) | ||
Operating segments | Asia | |||
Analysis of operating segments | |||
Operating profit (loss) based on longer-term investment returns | 1,975 | 1,644 | 1,286 |
Other income and expenditure | |||
Short-term fluctuations in investment returns on shareholder-backed business | (1) | (225) | (137) |
Amortisation of acquisition accounting adjustments | (7) | (8) | (8) |
Profit (loss) attaching to disposal of businesses | (227) | 56 | |
Profit (loss) before tax attributable to shareholders | 2,028 | 1,184 | 1,151 |
Tax charge attributable to shareholders' returns | (253) | (256) | (179) |
Operating segments | Asia | PCA Life Insurance Company Ltd. - Korea | |||
Other income and expenditure | |||
Profit (loss) attaching to disposal of businesses | (227) | 56 | |
Cumulative exchange gain (loss) recycled from other comprehensive income | 61 | ||
Operating segments | Asia | PCA Life Insurance Company Ltd. - Japan | |||
Other income and expenditure | |||
Cumulative exchange gain (loss) recycled from other comprehensive income | (46) | ||
Operating segments | US | |||
Analysis of operating segments | |||
Operating profit (loss) based on longer-term investment returns | 2,224 | 2,048 | 1,702 |
Other income and expenditure | |||
Interest payable on core structural borrowings | (16) | (15) | (13) |
Short-term fluctuations in investment returns on shareholder-backed business | (1,568) | (1,455) | (424) |
Amortisation of acquisition accounting adjustments | (56) | (68) | (68) |
Profit (loss) attaching to disposal of businesses | 162 | ||
Profit (loss) before tax attributable to shareholders | 762 | 525 | 1,210 |
Tax charge attributable to shareholders' returns | (508) | 66 | (240) |
Operating segments | UK and Europe | |||
Analysis of operating segments | |||
Operating profit (loss) based on longer-term investment returns | 1,378 | 1,253 | 1,637 |
Other income and expenditure | |||
Short-term fluctuations in investment returns on shareholder-backed business | (14) | 206 | (121) |
Profit (loss) before tax attributable to shareholders | 1,364 | 1,459 | 1,516 |
Tax charge attributable to shareholders' returns | (267) | (275) | (287) |
Operations within segments | Asia insurance operations | |||
Analysis of operating segments | |||
Operating profit (loss) based on longer-term investment returns | 1,799 | 1,503 | 1,171 |
Other income and expenditure | |||
Short-term fluctuations in investment returns on shareholder-backed business | (1) | ||
Amortisation of acquisition accounting adjustments | (7) | ||
Profit (loss) before tax attributable to shareholders | 1,852 | ||
Operations within segments | Asia insurance operations | PCA Life Insurance Company Ltd. - Korea | |||
Other income and expenditure | |||
Cumulative exchange gain (loss) recycled from other comprehensive income | 61 | ||
Operations within segments | Asia asset management | |||
Analysis of operating segments | |||
Operating profit (loss) based on longer-term investment returns | 176 | 141 | 115 |
Other income and expenditure | |||
Profit (loss) before tax attributable to shareholders | 176 | ||
Operations within segments | Jackson (US insurance operations) | |||
Analysis of operating segments | |||
Operating profit (loss) based on longer-term investment returns | 2,214 | 2,052 | 1,691 |
Other income and expenditure | |||
Interest payable on core structural borrowings | (16) | ||
Short-term fluctuations in investment returns on shareholder-backed business | (1,568) | (1,455) | (424) |
Amortisation of acquisition accounting adjustments | (56) | ||
Profit (loss) before tax attributable to shareholders | 590 | ||
Operations within segments | Asset management (US) | |||
Analysis of operating segments | |||
Operating profit (loss) based on longer-term investment returns | 10 | (4) | 11 |
Other income and expenditure | |||
Profit (loss) attaching to disposal of businesses | 162 | ||
Profit (loss) before tax attributable to shareholders | 172 | ||
Operations within segments | UK and Europe insurance operations | |||
Analysis of operating segments | |||
Operating profit (loss) based on longer-term investment returns | 878 | 828 | 1,195 |
Other income and expenditure | |||
Short-term fluctuations in investment returns on shareholder-backed business | (20) | ||
Profit (loss) before tax attributable to shareholders | 858 | ||
Operations within segments | Long-term business (UK and Europe insurance operations) | |||
Analysis of operating segments | |||
Operating profit (loss) based on longer-term investment returns | 861 | 799 | 1,167 |
Operations within segments | General insurance commission (UK and Europe insurance operations) | |||
Analysis of operating segments | |||
Operating profit (loss) based on longer-term investment returns | 17 | 29 | 28 |
Operations within segments | UK and Europe asset management | |||
Analysis of operating segments | |||
Operating profit (loss) based on longer-term investment returns | 500 | 425 | 442 |
Other income and expenditure | |||
Short-term fluctuations in investment returns on shareholder-backed business | 6 | ||
Profit (loss) before tax attributable to shareholders | 506 | ||
Other income and expenditure | |||
Other income and expenditure | |||
Investment return and other income | 11 | 28 | 33 |
Interest payable on core structural borrowings | (425) | (360) | (312) |
Corporate expenditure | (361) | (334) | (319) |
Solvency II implementation costs | (28) | (43) | |
Total other income and expenditure | (775) | (694) | (641) |
Restructuring costs | £ (103) | (38) | £ (15) |
Interest received from tax settlement | £ 43 |
Analysis of performance by se75
Analysis of performance by segment - UK and Europe asset management (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating profit based on longer-term investment returns: | |||
Staff costs | £ (1,985) | £ (1,885) | £ (1,475) |
Operating profit based on longer-term investment returns | 4,699 | 4,256 | 3,969 |
Operations within segments | UK and Europe asset management | |||
Operating profit based on longer-term investment returns: | |||
Asset management fee income | 1,027 | 900 | 934 |
Other income | 7 | 23 | 5 |
Staff costs | (400) | (332) | (293) |
Other costs | (202) | (212) | (240) |
Underlying profit before performance-related fees | 432 | 379 | 406 |
Share of associate results | 15 | 13 | 14 |
Performance-related fees | 53 | 33 | 22 |
Operating profit based on longer-term investment returns | £ 500 | £ 425 | £ 442 |
Analysis of performance by se76
Analysis of performance by segment - Short-term fluctuations in investment returns (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | £ (1,563) | £ (1,678) | £ (755) |
Operating segments | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | (1,583) | (1,474) | (682) |
Operating segments | Asia | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | (1) | (225) | (137) |
Operating segments | US | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | (1,568) | (1,455) | (424) |
Operating segments | UK and Europe | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | (14) | 206 | (121) |
Operations within segments | Jackson (US insurance operations) | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | (1,568) | (1,455) | (424) |
Operations within segments | Jackson (US insurance operations) | Net equity hedge result | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | (1,490) | (1,587) | (504) |
Fair value movements on equity hedge instruments | (1,871) | (1,786) | (589) |
Accounting value movements on the variable and fixed index annuity guarantee liabilities | (99) | (188) | (214) |
Fee assessments net of claim payments | 480 | 387 | 299 |
Charge for strengthening policyholder utilisation | 359 | ||
Benefit from modelling refinements | 382 | ||
Operations within segments | Jackson (US insurance operations) | Other than equity-related derivatives | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | (36) | (126) | 29 |
Operations within segments | Jackson (US insurance operations) | Debt securities | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | (73) | 201 | 1 |
Operations within segments | Jackson (US insurance operations) | Equity-type securities such as common and preferred stock and portfolio holdings in mutual funds | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | 12 | 35 | 19 |
Operations within segments | Jackson (US insurance operations) | Other items | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | 19 | 22 | 31 |
Operations within segments | Jackson (US insurance operations) | Amortisation to the income statement, Non-operating profit | |||
Analysis of operating segments | |||
Related credit for amortisation of deferred acquisition costs | 462 | 565 | 93 |
Unallocated to a segment (other operations) | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | £ 20 | £ (204) | £ (73) |
Analysis of performance by se77
Analysis of performance by segment - Short-term fluctuations related to debt securities - (Details) £ in Millions, $ in Millions | 12 Months Ended | |||||
Dec. 31, 2017USD ($) | Dec. 31, 2017GBP (£) | Dec. 31, 2016USD ($) | Dec. 31, 2016GBP (£) | Dec. 31, 2015USD ($) | Dec. 31, 2015GBP (£) | |
Interest-related realised (losses) gains: | ||||||
Total short-term fluctuations related to debt securities | £ (1,563) | £ (1,678) | £ (755) | |||
Jackson (US insurance operations) | Debt securities | ||||||
(Charges) credits in the year: | ||||||
Less: Risk margin allowance deducted from operating profit based on longer-term investment returns | $ 112 | 86 | $ 120 | 89 | $ 127 | 83 |
Operations within segments | Jackson (US insurance operations) | ||||||
Interest-related realised (losses) gains: | ||||||
Total short-term fluctuations related to debt securities | (1,568) | (1,455) | (424) | |||
Operations within segments | Jackson (US insurance operations) | Debt securities | ||||||
(Charges) credits in the year: | ||||||
Losses on sales of impaired and deteriorating bonds | (3) | (94) | (54) | |||
Defaults | (4) | |||||
Bond write-downs | (2) | (35) | (37) | |||
Recoveries/reversals | 10 | 15 | 18 | |||
Total credits (charges) in the year | 5 | (118) | (73) | |||
Less: Risk margin allowance deducted from operating profit based on longer-term investment returns | 86 | 89 | 83 | |||
Total credits (charges), net of risk margin allowance | 91 | (29) | 10 | |||
Interest-related realised (losses) gains: | ||||||
(Losses) gains arising in the year | (43) | 376 | 102 | |||
Less: Amortisation of gains and losses arising in current and prior years to operating profit based on longer-term investment returns | (140) | (135) | (108) | |||
Total interest-related realised gains | (183) | 241 | (6) | |||
Related amortisation of deferred acquisition costs | 19 | (11) | (3) | |||
Total short-term fluctuations related to debt securities | £ (73) | £ 201 | £ 1 |
Analysis of performance by se78
Analysis of performance by segment - Risk margin reserve (Details) £ in Millions, $ in Millions | 12 Months Ended | |||||||
Dec. 31, 2017USD ($) | Dec. 31, 2017GBP (£) | Dec. 31, 2016USD ($) | Dec. 31, 2016GBP (£) | Dec. 31, 2015USD ($) | Dec. 31, 2015GBP (£) | Dec. 31, 2017GBP (£) | Dec. 31, 2016GBP (£) | |
Risk margin reserve | ||||||||
Debt securities | £ | £ 171,374 | £ 170,458 | ||||||
Jackson (US insurance operations) | Debt securities | ||||||||
Risk margin reserve | ||||||||
RMR (as a percent) | 0.21% | 0.21% | 0.23% | 0.21% | 0.21% | |||
Annual expected loss | $ (112) | £ (86) | $ (120) | £ (89) | $ (127) | £ (83) | ||
Related amortisation of deferred acquisition costs | 21 | 15 | 23 | 17 | 24 | 16 | ||
Risk margin reserve charge to operating profit for longer-term credit related losses | (91) | (71) | (97) | (72) | (103) | (67) | ||
Pre-tax net unrealised gains (losses) on debt securities classified as available-for-sale | £ | 541 | 48 | (968) | |||||
Jackson (US insurance operations) | Debt securities | Cost/Gross amount | Average | ||||||||
Risk margin reserve | ||||||||
Debt securities | $ 55,290 | $ 56,418 | $ 54,633 | |||||
Jackson (US insurance operations) | Debt securities | A3 or higher | ||||||||
Risk margin reserve | ||||||||
RMR (as a percent) | 0.12% | 0.12% | 0.13% | 0.12% | 0.12% | |||
Annual expected loss | $ (33) | (25) | $ (36) | (27) | $ (37) | (24) | ||
Jackson (US insurance operations) | Debt securities | A3 or higher | Cost/Gross amount | Average | ||||||||
Risk margin reserve | ||||||||
Debt securities | $ 27,277 | $ 29,051 | $ 28,185 | |||||
Jackson (US insurance operations) | Debt securities | Baa1, 2 or 3 | ||||||||
Risk margin reserve | ||||||||
RMR (as a percent) | 0.22% | 0.24% | 0.25% | 0.22% | 0.24% | |||
Annual expected loss | $ (58) | (45) | $ (62) | (46) | $ (62) | (40) | ||
Jackson (US insurance operations) | Debt securities | Baa1, 2 or 3 | Cost/Gross amount | Average | ||||||||
Risk margin reserve | ||||||||
Debt securities | $ 26,626 | $ 25,964 | $ 24,768 | |||||
Jackson (US insurance operations) | Debt securities | Ba1, 2 or 3 | ||||||||
Risk margin reserve | ||||||||
RMR (as a percent) | 1.03% | 1.07% | 1.17% | 1.03% | 1.07% | |||
Annual expected loss | $ (11) | (8) | $ (11) | (8) | $ (15) | (10) | ||
Jackson (US insurance operations) | Debt securities | Ba1, 2 or 3 | Cost/Gross amount | Average | ||||||||
Risk margin reserve | ||||||||
Debt securities | $ 1,046 | $ 1,051 | $ 1,257 | |||||
Jackson (US insurance operations) | Debt securities | B1, 2 or 3 | ||||||||
Risk margin reserve | ||||||||
RMR (as a percent) | 2.70% | 2.95% | 3.08% | 2.70% | 2.95% | |||
Annual expected loss | $ (9) | (7) | $ (9) | (7) | $ (12) | (8) | ||
Jackson (US insurance operations) | Debt securities | B1, 2 or 3 | Cost/Gross amount | Average | ||||||||
Risk margin reserve | ||||||||
Debt securities | $ 318 | $ 312 | $ 388 | |||||
Jackson (US insurance operations) | Debt securities | Below B3 | ||||||||
Risk margin reserve | ||||||||
RMR (as a percent) | 3.78% | 3.81% | 3.70% | 3.78% | 3.81% | |||
Annual expected loss | $ (1) | £ (1) | $ (2) | £ (1) | $ (1) | £ (1) | ||
Jackson (US insurance operations) | Debt securities | Below B3 | Cost/Gross amount | Average | ||||||||
Risk margin reserve | ||||||||
Debt securities | $ 23 | $ 40 | $ 35 |
Analysis of performance by se79
Analysis of performance by segment - Performance measure - (Details) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017GBP (£)segment | Dec. 31, 2016GBP (£) | Dec. 31, 2015GBP (£) | |
Analysis of operating segments | |||
Number of operating segments | segment | 3 | ||
Unamortised interest-related realised gains and losses related to previously sold bonds | £ 855 | £ 969 | £ 567 |
Asia insurance operations | Non-linked shareholder-backed | Equity-type securities such as common and preferred stock and portfolio holdings in mutual funds | Minimum | |||
Equity-type securities | |||
Longer-term rates of return (as a percent) | 4.30% | 3.20% | 3.50% |
Asia insurance operations | Non-linked shareholder-backed | Equity-type securities such as common and preferred stock and portfolio holdings in mutual funds | Maximum | |||
Equity-type securities | |||
Longer-term rates of return (as a percent) | 17.20% | 13.90% | 13.00% |
Jackson (US insurance operations) | Non-linked shareholder-backed | Equity-type securities such as common and preferred stock and portfolio holdings in mutual funds | Minimum | |||
Equity-type securities | |||
Longer-term rates of return (as a percent) | 6.10% | 5.50% | 5.70% |
Jackson (US insurance operations) | Non-linked shareholder-backed | Equity-type securities such as common and preferred stock and portfolio holdings in mutual funds | Maximum | |||
Equity-type securities | |||
Longer-term rates of return (as a percent) | 6.50% | 6.50% | 6.40% |
Jackson (US insurance operations) | Non-linked shareholder-backed | Other equity-type securities such as investments in limited partnerships and private equity funds | Minimum | |||
Equity-type securities | |||
Longer-term rates of return (as a percent) | 8.10% | 7.50% | 7.70% |
Jackson (US insurance operations) | Non-linked shareholder-backed | Other equity-type securities such as investments in limited partnerships and private equity funds | Maximum | |||
Equity-type securities | |||
Longer-term rates of return (as a percent) | 8.50% | 8.50% | 8.40% |
Operations within segments | Asia insurance operations | Non-linked shareholder-backed | Equity-type securities such as common and preferred stock and portfolio holdings in mutual funds | |||
Equity-type securities | |||
Financial investments | £ 1,759 | £ 1,405 | £ 840 |
Operations within segments | Jackson (US insurance operations) | Non-linked shareholder-backed | Equity-type securities | |||
Equity-type securities | |||
Financial investments | £ 946 | £ 1,323 | £ 1,004 |
Analysis of performance by se80
Analysis of performance by segment - Segmental income statement (Details) - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Analysis of operating segments | ||||
Gross premiums earned | £ 44,005 | £ 38,981 | £ 36,663 | |
Outward reinsurance | (2,062) | (2,020) | (1,157) | |
Earned premiums, net of reinsurance | 41,943 | 36,961 | 35,506 | |
Other income from external customers | 2,430 | 2,370 | 2,495 | |
Total revenue | 44,373 | 39,331 | 38,001 | |
Interest income | 6,497 | 7,647 | 7,018 | |
Other investment return | 35,692 | 24,864 | (3,714) | |
Total revenue, net of reinsurance | 86,562 | 71,842 | 41,305 | |
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (72,532) | (59,366) | (29,656) | |
Acquisition costs and other operating expenditure | (10,165) | (8,848) | (8,208) | |
Interest payable on core structural borrowings | (425) | (360) | (312) | |
Gain on disposal of other businesses | 162 | |||
Total charges, net of reinsurance and gain (loss) on disposal of businesses | (82,894) | (68,812) | (38,222) | |
Share of profits from joint ventures and associates, net of related tax | 302 | 182 | 238 | |
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | [1],[2] | 3,970 | 3,212 | 3,321 |
Tax charge attributable to policyholders' returns | (674) | (937) | (173) | |
Profit (loss) before tax attributable to shareholders | 3,296 | 2,275 | 3,148 | |
Analysis of operating profit | ||||
Operating profit (loss) based on longer-term investment returns | 4,699 | 4,256 | 3,969 | |
Short-term fluctuations in investment returns on shareholder-backed business | (1,563) | (1,678) | (755) | |
Amortisation of acquisition accounting adjustments | (63) | (76) | (76) | |
Profit (loss) attaching to disposal of businesses | 162 | (227) | 56 | |
Profit (loss) before tax attributable to shareholders | 3,296 | 2,275 | 3,148 | |
Income from financial instruments that are not held at fair value through profit or loss | 7 | 8 | 19 | |
Interest income accrued in respect of impaired securities | 3 | 3 | 3 | |
Hong Kong | ||||
Analysis of operating segments | ||||
Total revenue | 7,269 | 6,313 | 3,836 | |
Operating segments excluding intra-group amounts | ||||
Analysis of operating segments | ||||
Gross premiums earned | 43,978 | 38,981 | 36,663 | |
Outward reinsurance | (2,058) | (2,020) | (1,157) | |
Earned premiums, net of reinsurance | 41,920 | 36,961 | 35,506 | |
Other income from external customers | 2,382 | 2,283 | 2,377 | |
Total revenue | 44,302 | 39,244 | 37,883 | |
Operating segments | ||||
Analysis of operating segments | ||||
Interest income | 6,430 | 7,543 | 6,924 | |
Other investment return | 35,682 | 25,081 | (3,602) | |
Total revenue, net of reinsurance | 86,523 | 71,952 | 41,281 | |
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (72,521) | (59,366) | (29,656) | |
Acquisition costs and other operating expenditure | (9,688) | (8,410) | (7,754) | |
Interest payable on core structural borrowings | (16) | (15) | (13) | |
Gain on disposal of other businesses | 162 | |||
Total charges, net of reinsurance and gain (loss) on disposal of businesses | (81,997) | (68,029) | (37,469) | |
Share of profits from joint ventures and associates, net of related tax | 302 | 182 | 238 | |
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 4,828 | 4,105 | 4,050 | |
Tax charge attributable to policyholders' returns | (674) | (937) | (173) | |
Profit (loss) before tax attributable to shareholders | 4,154 | 3,168 | 3,877 | |
Analysis of operating profit | ||||
Operating profit (loss) based on longer-term investment returns | 5,577 | 4,945 | 4,625 | |
Short-term fluctuations in investment returns on shareholder-backed business | (1,583) | (1,474) | (682) | |
Amortisation of acquisition accounting adjustments | (63) | (76) | (76) | |
Profit (loss) attaching to disposal of businesses | 162 | |||
Profit (loss) before tax attributable to shareholders | 4,154 | 3,168 | 3,877 | |
Elimination of intra-group amounts | ||||
Analysis of operating segments | ||||
Total revenue | (109) | (84) | (76) | |
Unallocated to a segment (other operations) - including intra-group eliminations | ||||
Analysis of operating segments | ||||
Gross premiums earned | 27 | |||
Outward reinsurance | (4) | |||
Earned premiums, net of reinsurance | 23 | |||
Other income from external customers | 48 | 87 | 118 | |
Total revenue | 71 | 87 | 118 | |
Interest income | 67 | 104 | 94 | |
Other investment return | 10 | (217) | (112) | |
Total revenue, net of reinsurance | 39 | (110) | 24 | |
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (11) | |||
Acquisition costs and other operating expenditure | (477) | (438) | (454) | |
Interest payable on core structural borrowings | (409) | (345) | (299) | |
Total charges, net of reinsurance and gain (loss) on disposal of businesses | (897) | (783) | (753) | |
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | (858) | (893) | (729) | |
Profit (loss) before tax attributable to shareholders | (858) | (893) | (729) | |
Analysis of operating profit | ||||
Operating profit (loss) based on longer-term investment returns | (878) | (689) | (656) | |
Short-term fluctuations in investment returns on shareholder-backed business | 20 | (204) | (73) | |
Profit (loss) before tax attributable to shareholders | (858) | (893) | (729) | |
PCA Life Insurance Company Ltd. - Korea | ||||
Analysis of operating segments | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | 61 | |||
Remeasurement adjustments | 5 | (238) | ||
Analysis of operating profit | ||||
Profit (loss) attaching to disposal of businesses | (227) | 56 | ||
Cumulative exchange gain (loss) recycled from other comprehensive income | 61 | |||
PCA Life Insurance Company Ltd. - Korea | Operating segments | ||||
Analysis of operating segments | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | 61 | |||
Remeasurement adjustments | 5 | (238) | ||
Analysis of operating profit | ||||
Profit (loss) attaching to disposal of businesses | (227) | 56 | ||
Cumulative exchange gain (loss) recycled from other comprehensive income | 61 | |||
PCA Life Insurance Company Ltd. - Japan | ||||
Analysis of operating segments | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | (46) | |||
Analysis of operating profit | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | (46) | |||
PCA Life Insurance Company Ltd. - Japan | Operating segments | ||||
Analysis of operating segments | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | (46) | |||
Analysis of operating profit | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | (46) | |||
Asia | Operating segments excluding intra-group amounts | ||||
Analysis of operating segments | ||||
Gross premiums earned | 15,688 | 14,006 | 10,814 | |
Outward reinsurance | (656) | (648) | (364) | |
Earned premiums, net of reinsurance | 15,032 | 13,358 | 10,450 | |
Other income from external customers | 307 | 253 | 235 | |
Total revenue | 15,339 | 13,611 | 10,685 | |
Asia | Operating segments | ||||
Analysis of operating segments | ||||
Interest income | 932 | 875 | 745 | |
Other investment return | 8,063 | 2,042 | (1,041) | |
Total revenue, net of reinsurance | 24,374 | 16,555 | 10,416 | |
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (18,291) | (11,442) | (6,543) | |
Acquisition costs and other operating expenditure | (4,052) | (3,684) | (2,778) | |
Total charges, net of reinsurance and gain (loss) on disposal of businesses | (22,277) | (15,364) | (9,367) | |
Share of profits from joint ventures and associates, net of related tax | 181 | 148 | 171 | |
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 2,278 | 1,339 | 1,220 | |
Tax charge attributable to policyholders' returns | (250) | (155) | (69) | |
Profit (loss) before tax attributable to shareholders | 2,028 | 1,184 | 1,151 | |
Analysis of operating profit | ||||
Operating profit (loss) based on longer-term investment returns | 1,975 | 1,644 | 1,286 | |
Short-term fluctuations in investment returns on shareholder-backed business | (1) | (225) | (137) | |
Amortisation of acquisition accounting adjustments | (7) | (8) | (8) | |
Profit (loss) attaching to disposal of businesses | (227) | 56 | ||
Profit (loss) before tax attributable to shareholders | 2,028 | 1,184 | 1,151 | |
Asia | Elimination of intra-group amounts | ||||
Analysis of operating segments | ||||
Total revenue | (40) | (27) | (27) | |
Asia | PCA Life Insurance Company Ltd. - Korea | Operating segments | ||||
Analysis of operating segments | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | 61 | |||
Remeasurement adjustments | 5 | (238) | ||
Analysis of operating profit | ||||
Profit (loss) attaching to disposal of businesses | (227) | 56 | ||
Cumulative exchange gain (loss) recycled from other comprehensive income | 61 | |||
Asia | PCA Life Insurance Company Ltd. - Japan | Operating segments | ||||
Analysis of operating segments | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | (46) | |||
Analysis of operating profit | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | (46) | |||
US | Operating segments excluding intra-group amounts | ||||
Analysis of operating segments | ||||
Gross premiums earned | 15,164 | 14,685 | 16,887 | |
Outward reinsurance | (352) | (367) | (320) | |
Earned premiums, net of reinsurance | 14,812 | 14,318 | 16,567 | |
Other income from external customers | 669 | 684 | 760 | |
Total revenue | 15,481 | 15,002 | 17,327 | |
US | Operating segments | ||||
Analysis of operating segments | ||||
Interest income | 2,085 | 2,151 | 1,921 | |
Other investment return | 16,448 | 5,461 | (2,710) | |
Total revenue, net of reinsurance | 34,078 | 22,667 | 16,584 | |
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (31,205) | (20,214) | (13,029) | |
Acquisition costs and other operating expenditure | (2,257) | (1,913) | (2,332) | |
Interest payable on core structural borrowings | (16) | (15) | (13) | |
Gain on disposal of other businesses | 162 | |||
Total charges, net of reinsurance and gain (loss) on disposal of businesses | (33,316) | (22,142) | (15,374) | |
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 762 | 525 | 1,210 | |
Profit (loss) before tax attributable to shareholders | 762 | 525 | 1,210 | |
Analysis of operating profit | ||||
Operating profit (loss) based on longer-term investment returns | 2,224 | 2,048 | 1,702 | |
Short-term fluctuations in investment returns on shareholder-backed business | (1,568) | (1,455) | (424) | |
Amortisation of acquisition accounting adjustments | (56) | (68) | (68) | |
Profit (loss) attaching to disposal of businesses | 162 | |||
Profit (loss) before tax attributable to shareholders | 762 | 525 | 1,210 | |
US | Elimination of intra-group amounts | ||||
Analysis of operating segments | ||||
Total revenue | (64) | (53) | (46) | |
UK and Europe | Operating segments excluding intra-group amounts | ||||
Analysis of operating segments | ||||
Gross premiums earned | 13,126 | 10,290 | 8,962 | |
Outward reinsurance | (1,050) | (1,005) | (473) | |
Earned premiums, net of reinsurance | 12,076 | 9,285 | 8,489 | |
Other income from external customers | 1,406 | 1,346 | 1,382 | |
Total revenue | 13,482 | 10,631 | 9,871 | |
UK and Europe | Operating segments | ||||
Analysis of operating segments | ||||
Interest income | 3,413 | 4,517 | 4,258 | |
Other investment return | 11,171 | 17,578 | 149 | |
Total revenue, net of reinsurance | 28,071 | 32,730 | 14,281 | |
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (23,025) | (27,710) | (10,084) | |
Acquisition costs and other operating expenditure | (3,379) | (2,813) | (2,644) | |
Total charges, net of reinsurance and gain (loss) on disposal of businesses | (26,404) | (30,523) | (12,728) | |
Share of profits from joint ventures and associates, net of related tax | 121 | 34 | 67 | |
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 1,788 | 2,241 | 1,620 | |
Tax charge attributable to policyholders' returns | (424) | (782) | (104) | |
Profit (loss) before tax attributable to shareholders | 1,364 | 1,459 | 1,516 | |
Analysis of operating profit | ||||
Operating profit (loss) based on longer-term investment returns | 1,378 | 1,253 | 1,637 | |
Short-term fluctuations in investment returns on shareholder-backed business | (14) | 206 | (121) | |
Profit (loss) before tax attributable to shareholders | 1,364 | 1,459 | 1,516 | |
UK and Europe | Elimination of intra-group amounts | ||||
Analysis of operating segments | ||||
Total revenue | £ (5) | £ (4) | £ (3) | |
[1] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. | |||
[2] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. This is principally because the corporate taxes of the Group include those on the income of consolidated with-profits and unit-linked funds that, through adjustments to benefits, are borne by policyholders. These amounts are required to be included in the tax charge of the Company under IAS 12. Consequently, the profit before all taxes measure is not representative of pre-tax profits attributable to shareholders. Profit before all taxes is determined after deducting the cost of policyholder benefits and movements in the liability for unallocated surplus of the PAC with-profits fund after adjusting for taxes borne by policyholders. |
Analysis of performance by se81
Analysis of performance by segment - Other investment return (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Analysis of operating segments | |||
Realised (losses) gains on available-for-sale securities, previously recognised in other comprehensive income | £ (26) | £ 270 | £ 49 |
Realised gains on loans | 9 | 91 | (50) |
Dividends | 2,654 | 2,283 | 1,791 |
Other investment income | 1,558 | 781 | 769 |
Other investment return | 35,692 | 24,864 | (3,714) |
Realized gains and losses on investments recognised in the income statement | 5,700 | (1,600) | 3,000 |
Securities | |||
Analysis of operating segments | |||
Realised and unrealised gains (losses) on investments at fair value through profit or loss | 33,121 | 28,489 | (4,572) |
Derivatives | |||
Analysis of operating segments | |||
Realised and unrealised gains (losses) on investments at fair value through profit or loss | £ (1,624) | £ (7,050) | £ (1,701) |
Analysis of performance by se82
Analysis of performance by segment - Additional analysis of performance by segment components (Details) - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Additional analysis of performance by segment | ||||
Earned premiums, net of reinsurance | £ 41,943 | £ 36,961 | £ 35,506 | |
Other income from external customers | 2,430 | 2,370 | 2,495 | |
Total revenue | 44,373 | 39,331 | 38,001 | |
Interest income | 6,497 | 7,647 | 7,018 | |
Other investment return | 35,692 | 24,864 | (3,714) | |
Total revenue, net of reinsurance | 86,562 | 71,842 | 41,305 | |
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (72,532) | (59,366) | (29,656) | |
Interest payable on core structural borrowings | (425) | (360) | (312) | |
Acquisition costs and other operating expenditure | (10,165) | (8,848) | (8,208) | |
Gain on disposal of other businesses | 162 | |||
Total charges, net of reinsurance and gain (loss) on disposal of businesses | (82,894) | (68,812) | (38,222) | |
Share of profits from joint ventures and associates, net of related tax | 302 | 182 | 238 | |
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | [1],[2] | 3,970 | 3,212 | 3,321 |
Tax charge attributable to policyholders' returns | (674) | (937) | (173) | |
Profit (loss) before tax attributable to shareholders | 3,296 | 2,275 | 3,148 | |
Analysis of operating profit | ||||
Operating profit (loss) based on longer-term investment returns | 4,699 | 4,256 | 3,969 | |
Short-term fluctuations in investment returns | (1,563) | (1,678) | (755) | |
Amortisation of acquisition accounting adjustments | (63) | (76) | (76) | |
Profit (loss) attaching to disposal of businesses | 162 | (227) | 56 | |
Profit (loss) before tax attributable to shareholders | 3,296 | 2,275 | 3,148 | |
Operating segments excluding intra-group amounts | ||||
Additional analysis of performance by segment | ||||
Earned premiums, net of reinsurance | 41,920 | 36,961 | 35,506 | |
Other income from external customers | 2,382 | 2,283 | 2,377 | |
Total revenue | 44,302 | 39,244 | 37,883 | |
Operating segments excluding intra-group amounts | Asia | ||||
Additional analysis of performance by segment | ||||
Earned premiums, net of reinsurance | 15,032 | 13,358 | 10,450 | |
Other income from external customers | 307 | 253 | 235 | |
Total revenue | 15,339 | 13,611 | 10,685 | |
Operating segments excluding intra-group amounts | Asia insurance operations | ||||
Additional analysis of performance by segment | ||||
Earned premiums, net of reinsurance | 15,032 | |||
Other income from external customers | 95 | |||
Total revenue | 15,127 | |||
Operating segments excluding intra-group amounts | Asia asset management | ||||
Additional analysis of performance by segment | ||||
Other income from external customers | 212 | |||
Total revenue | 212 | |||
Operating segments excluding intra-group amounts | US | ||||
Additional analysis of performance by segment | ||||
Earned premiums, net of reinsurance | 14,812 | 14,318 | 16,567 | |
Other income from external customers | 669 | 684 | 760 | |
Total revenue | 15,481 | 15,002 | 17,327 | |
Operating segments excluding intra-group amounts | Jackson (US insurance operations) | ||||
Additional analysis of performance by segment | ||||
Earned premiums, net of reinsurance | 14,812 | |||
Other income from external customers | 4 | |||
Total revenue | 14,816 | |||
Operating segments excluding intra-group amounts | Asset management (US) | ||||
Additional analysis of performance by segment | ||||
Other income from external customers | 665 | |||
Total revenue | 665 | |||
Operating segments excluding intra-group amounts | UK and Europe | ||||
Additional analysis of performance by segment | ||||
Earned premiums, net of reinsurance | 12,076 | 9,285 | 8,489 | |
Other income from external customers | 1,406 | 1,346 | 1,382 | |
Total revenue | 13,482 | 10,631 | 9,871 | |
Operating segments excluding intra-group amounts | UK and Europe insurance operations | ||||
Additional analysis of performance by segment | ||||
Earned premiums, net of reinsurance | 12,076 | |||
Other income from external customers | 241 | |||
Total revenue | 12,317 | |||
Operating segments excluding intra-group amounts | UK and Europe asset management | ||||
Additional analysis of performance by segment | ||||
Other income from external customers | 1,165 | |||
Total revenue | 1,165 | |||
Operating segments | ||||
Additional analysis of performance by segment | ||||
Interest income | 6,430 | 7,543 | 6,924 | |
Other investment return | 35,682 | 25,081 | (3,602) | |
Total revenue, net of reinsurance | 86,523 | 71,952 | 41,281 | |
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (72,521) | (59,366) | (29,656) | |
Interest payable on core structural borrowings | (16) | (15) | (13) | |
Acquisition costs and other operating expenditure | (9,688) | (8,410) | (7,754) | |
Gain on disposal of other businesses | 162 | |||
Total charges, net of reinsurance and gain (loss) on disposal of businesses | (81,997) | (68,029) | (37,469) | |
Share of profits from joint ventures and associates, net of related tax | 302 | 182 | 238 | |
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 4,828 | 4,105 | 4,050 | |
Tax charge attributable to policyholders' returns | (674) | (937) | (173) | |
Profit (loss) before tax attributable to shareholders | 4,154 | 3,168 | 3,877 | |
Analysis of operating profit | ||||
Operating profit (loss) based on longer-term investment returns | 5,577 | 4,945 | 4,625 | |
Short-term fluctuations in investment returns | (1,583) | (1,474) | (682) | |
Amortisation of acquisition accounting adjustments | (63) | (76) | (76) | |
Profit (loss) attaching to disposal of businesses | 162 | |||
Profit (loss) before tax attributable to shareholders | 4,154 | 3,168 | 3,877 | |
Operating segments | Asia | ||||
Additional analysis of performance by segment | ||||
Interest income | 932 | 875 | 745 | |
Other investment return | 8,063 | 2,042 | (1,041) | |
Total revenue, net of reinsurance | 24,374 | 16,555 | 10,416 | |
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (18,291) | (11,442) | (6,543) | |
Acquisition costs and other operating expenditure | (4,052) | (3,684) | (2,778) | |
Total charges, net of reinsurance and gain (loss) on disposal of businesses | (22,277) | (15,364) | (9,367) | |
Share of profits from joint ventures and associates, net of related tax | 181 | 148 | 171 | |
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 2,278 | 1,339 | 1,220 | |
Tax charge attributable to policyholders' returns | (250) | (155) | (69) | |
Profit (loss) before tax attributable to shareholders | 2,028 | 1,184 | 1,151 | |
Analysis of operating profit | ||||
Operating profit (loss) based on longer-term investment returns | 1,975 | 1,644 | 1,286 | |
Short-term fluctuations in investment returns | (1) | (225) | (137) | |
Amortisation of acquisition accounting adjustments | (7) | (8) | (8) | |
Profit (loss) attaching to disposal of businesses | (227) | 56 | ||
Profit (loss) before tax attributable to shareholders | 2,028 | 1,184 | 1,151 | |
Operating segments | US | ||||
Additional analysis of performance by segment | ||||
Interest income | 2,085 | 2,151 | 1,921 | |
Other investment return | 16,448 | 5,461 | (2,710) | |
Total revenue, net of reinsurance | 34,078 | 22,667 | 16,584 | |
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (31,205) | (20,214) | (13,029) | |
Interest payable on core structural borrowings | (16) | (15) | (13) | |
Acquisition costs and other operating expenditure | (2,257) | (1,913) | (2,332) | |
Gain on disposal of other businesses | 162 | |||
Total charges, net of reinsurance and gain (loss) on disposal of businesses | (33,316) | (22,142) | (15,374) | |
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 762 | 525 | 1,210 | |
Profit (loss) before tax attributable to shareholders | 762 | 525 | 1,210 | |
Analysis of operating profit | ||||
Operating profit (loss) based on longer-term investment returns | 2,224 | 2,048 | 1,702 | |
Short-term fluctuations in investment returns | (1,568) | (1,455) | (424) | |
Amortisation of acquisition accounting adjustments | (56) | (68) | (68) | |
Profit (loss) attaching to disposal of businesses | 162 | |||
Profit (loss) before tax attributable to shareholders | 762 | 525 | 1,210 | |
Operating segments | UK and Europe | ||||
Additional analysis of performance by segment | ||||
Interest income | 3,413 | 4,517 | 4,258 | |
Other investment return | 11,171 | 17,578 | 149 | |
Total revenue, net of reinsurance | 28,071 | 32,730 | 14,281 | |
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (23,025) | (27,710) | (10,084) | |
Acquisition costs and other operating expenditure | (3,379) | (2,813) | (2,644) | |
Total charges, net of reinsurance and gain (loss) on disposal of businesses | (26,404) | (30,523) | (12,728) | |
Share of profits from joint ventures and associates, net of related tax | 121 | 34 | 67 | |
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 1,788 | 2,241 | 1,620 | |
Tax charge attributable to policyholders' returns | (424) | (782) | (104) | |
Profit (loss) before tax attributable to shareholders | 1,364 | 1,459 | 1,516 | |
Analysis of operating profit | ||||
Operating profit (loss) based on longer-term investment returns | 1,378 | 1,253 | 1,637 | |
Short-term fluctuations in investment returns | (14) | 206 | (121) | |
Profit (loss) before tax attributable to shareholders | 1,364 | 1,459 | 1,516 | |
Operations within segments | Asia insurance operations | ||||
Additional analysis of performance by segment | ||||
Interest income | 930 | |||
Other investment return | 8,060 | |||
Total revenue, net of reinsurance | 24,117 | |||
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (18,291) | |||
Acquisition costs and other operating expenditure | (3,911) | |||
Total charges, net of reinsurance and gain (loss) on disposal of businesses | (22,136) | |||
Share of profits from joint ventures and associates, net of related tax | 121 | |||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 2,102 | |||
Tax charge attributable to policyholders' returns | (250) | |||
Profit (loss) before tax attributable to shareholders | 1,852 | |||
Analysis of operating profit | ||||
Operating profit (loss) based on longer-term investment returns | 1,799 | 1,503 | 1,171 | |
Short-term fluctuations in investment returns | (1) | |||
Amortisation of acquisition accounting adjustments | (7) | |||
Profit (loss) before tax attributable to shareholders | 1,852 | |||
Operations within segments | Asia asset management | ||||
Additional analysis of performance by segment | ||||
Interest income | 2 | |||
Other investment return | 3 | |||
Total revenue, net of reinsurance | 365 | |||
Acquisition costs and other operating expenditure | (249) | |||
Total charges, net of reinsurance and gain (loss) on disposal of businesses | (249) | |||
Share of profits from joint ventures and associates, net of related tax | 60 | |||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 176 | |||
Profit (loss) before tax attributable to shareholders | 176 | |||
Analysis of operating profit | ||||
Operating profit (loss) based on longer-term investment returns | 176 | 141 | 115 | |
Profit (loss) before tax attributable to shareholders | 176 | |||
Operations within segments | Jackson (US insurance operations) | ||||
Additional analysis of performance by segment | ||||
Interest income | 2,085 | |||
Other investment return | 16,448 | |||
Total revenue, net of reinsurance | 33,349 | |||
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (31,205) | |||
Interest payable on core structural borrowings | (16) | |||
Acquisition costs and other operating expenditure | (1,538) | |||
Total charges, net of reinsurance and gain (loss) on disposal of businesses | (32,759) | |||
Profit (loss) before tax attributable to shareholders | 590 | |||
Analysis of operating profit | ||||
Operating profit (loss) based on longer-term investment returns | 2,214 | 2,052 | 1,691 | |
Short-term fluctuations in investment returns | (1,568) | (1,455) | (424) | |
Amortisation of acquisition accounting adjustments | (56) | |||
Profit (loss) before tax attributable to shareholders | 590 | |||
Operations within segments | Asset management (US) | ||||
Additional analysis of performance by segment | ||||
Total revenue, net of reinsurance | 780 | 785 | 843 | |
Acquisition costs and other operating expenditure | (770) | |||
Gain on disposal of other businesses | 162 | |||
Total charges, net of reinsurance and gain (loss) on disposal of businesses | (608) | |||
Profit (loss) before tax attributable to shareholders | 172 | |||
Analysis of operating profit | ||||
Operating profit (loss) based on longer-term investment returns | 10 | (4) | 11 | |
Profit (loss) attaching to disposal of businesses | 162 | |||
Profit (loss) before tax attributable to shareholders | 172 | |||
NPH broker-dealer fees included in gross revenue | 542 | 550 | 522 | |
Gross charges | 770 | 789 | 832 | |
NPH broker-dealer fees included in gross charges | 542 | 550 | 522 | |
Operations within segments | UK and Europe insurance operations | ||||
Additional analysis of performance by segment | ||||
Interest income | 3,412 | |||
Other investment return | 11,164 | |||
Total revenue, net of reinsurance | 26,893 | |||
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (23,025) | |||
Acquisition costs and other operating expenditure | (2,692) | |||
Total charges, net of reinsurance and gain (loss) on disposal of businesses | (25,717) | |||
Share of profits from joint ventures and associates, net of related tax | 106 | |||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 1,282 | |||
Tax charge attributable to policyholders' returns | (424) | |||
Profit (loss) before tax attributable to shareholders | 858 | |||
Analysis of operating profit | ||||
Operating profit (loss) based on longer-term investment returns | 878 | 828 | 1,195 | |
Short-term fluctuations in investment returns | (20) | |||
Profit (loss) before tax attributable to shareholders | 858 | |||
Operations within segments | UK and Europe asset management | ||||
Additional analysis of performance by segment | ||||
Interest income | 1 | |||
Other investment return | 7 | |||
Total revenue, net of reinsurance | 1,444 | |||
Acquisition costs and other operating expenditure | (953) | |||
Total charges, net of reinsurance and gain (loss) on disposal of businesses | (953) | |||
Share of profits from joint ventures and associates, net of related tax | 15 | |||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 506 | |||
Profit (loss) before tax attributable to shareholders | 506 | |||
Analysis of operating profit | ||||
Operating profit (loss) based on longer-term investment returns | 500 | 425 | 442 | |
Short-term fluctuations in investment returns | 6 | |||
Profit (loss) before tax attributable to shareholders | 506 | |||
Revenue after deducting commissions | 1,087 | 956 | 961 | |
Elimination of intra-segment amounts | Asia | ||||
Additional analysis of performance by segment | ||||
Total revenue | 108 | |||
Total revenue, net of reinsurance | (108) | |||
Acquisition costs and other operating expenditure | 108 | |||
Total charges, net of reinsurance and gain (loss) on disposal of businesses | 108 | |||
Elimination of intra-segment amounts | Asia asset management | ||||
Additional analysis of performance by segment | ||||
Total revenue | (148) | |||
Elimination of intra-segment amounts | US | ||||
Additional analysis of performance by segment | ||||
Total revenue | (51) | |||
Total revenue, net of reinsurance | (51) | |||
Acquisition costs and other operating expenditure | 51 | |||
Total charges, net of reinsurance and gain (loss) on disposal of businesses | 51 | |||
Elimination of intra-segment amounts | Asset management (US) | ||||
Additional analysis of performance by segment | ||||
Total revenue | (115) | |||
Elimination of intra-segment amounts | UK and Europe | ||||
Additional analysis of performance by segment | ||||
Total revenue | (266) | |||
Total revenue, net of reinsurance | (266) | |||
Acquisition costs and other operating expenditure | 266 | |||
Total charges, net of reinsurance and gain (loss) on disposal of businesses | 266 | |||
Elimination of intra-segment amounts | UK and Europe asset management | ||||
Additional analysis of performance by segment | ||||
Total revenue | (271) | |||
Elimination of intra-group amounts | ||||
Additional analysis of performance by segment | ||||
Total revenue | (109) | (84) | (76) | |
Elimination of intra-group amounts | Asia | ||||
Additional analysis of performance by segment | ||||
Total revenue | (40) | (27) | (27) | |
Elimination of intra-group amounts | US | ||||
Additional analysis of performance by segment | ||||
Total revenue | (64) | (53) | (46) | |
Elimination of intra-group amounts | UK and Europe | ||||
Additional analysis of performance by segment | ||||
Total revenue | (5) | (4) | (3) | |
PCA Life Insurance Company Ltd. - Korea | ||||
Additional analysis of performance by segment | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | 61 | |||
Remeasurement adjustments | 5 | (238) | ||
Analysis of operating profit | ||||
Profit (loss) attaching to disposal of businesses | (227) | 56 | ||
Cumulative exchange gain (loss) recycled from other comprehensive income | 61 | |||
PCA Life Insurance Company Ltd. - Korea | Operating segments | ||||
Additional analysis of performance by segment | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | 61 | |||
Remeasurement adjustments | 5 | (238) | ||
Analysis of operating profit | ||||
Profit (loss) attaching to disposal of businesses | (227) | 56 | ||
Cumulative exchange gain (loss) recycled from other comprehensive income | 61 | |||
PCA Life Insurance Company Ltd. - Korea | Operating segments | Asia | ||||
Additional analysis of performance by segment | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | 61 | |||
Remeasurement adjustments | 5 | (238) | ||
Analysis of operating profit | ||||
Profit (loss) attaching to disposal of businesses | £ (227) | 56 | ||
Cumulative exchange gain (loss) recycled from other comprehensive income | 61 | |||
PCA Life Insurance Company Ltd. - Korea | Operations within segments | Asia insurance operations | ||||
Additional analysis of performance by segment | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | 61 | |||
Remeasurement adjustments | 5 | |||
Analysis of operating profit | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | £ 61 | |||
PCA Life Insurance Company Ltd. - Japan | ||||
Additional analysis of performance by segment | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | (46) | |||
Analysis of operating profit | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | (46) | |||
PCA Life Insurance Company Ltd. - Japan | Operating segments | ||||
Additional analysis of performance by segment | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | (46) | |||
Analysis of operating profit | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | (46) | |||
PCA Life Insurance Company Ltd. - Japan | Operating segments | Asia | ||||
Additional analysis of performance by segment | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | (46) | |||
Analysis of operating profit | ||||
Cumulative exchange gain (loss) recycled from other comprehensive income | £ (46) | |||
[1] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. | |||
[2] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. This is principally because the corporate taxes of the Group include those on the income of consolidated with-profits and unit-linked funds that, through adjustments to benefits, are borne by policyholders. These amounts are required to be included in the tax charge of the Company under IAS 12. Consequently, the profit before all taxes measure is not representative of pre-tax profits attributable to shareholders. Profit before all taxes is determined after deducting the cost of policyholder benefits and movements in the liability for unallocated surplus of the PAC with-profits fund after adjusting for taxes borne by policyholders. |
Acquisition costs and other e83
Acquisition costs and other expenditure - Components (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Acquisition costs and other expenditure | |||
Acquisition costs incurred for insurance policies | £ (3,712) | £ (3,687) | £ (3,275) |
Acquisition costs deferred less amortisation of acquisition costs | 911 | 923 | 431 |
Administration costs and other expenditure | (6,380) | (5,522) | (4,746) |
Movements in amounts attributable to external unit holders of consolidated investment funds | (984) | (562) | (618) |
Total acquisition costs and other expenditure | (10,165) | (8,848) | (8,208) |
Depreciation and amortisation expense | (288) | (242) | (755) |
Charge for non-deferred acquisition costs and amortisation of costs that were deferred | (2,801) | (2,764) | (2,844) |
Fee expenses relating to financial liabilities held at amortised cost included in acquisition costs | 0 | 0 | 0 |
UK and Europe insurance operations | |||
Acquisition costs and other expenditure | |||
Movements in amounts attributable to external unit holders of consolidated investment funds | (719) | (485) | (599) |
Asia insurance operations | |||
Acquisition costs and other expenditure | |||
Movements in amounts attributable to external unit holders of consolidated investment funds | (265) | (77) | (19) |
Insurance contracts | |||
Acquisition costs and other expenditure | |||
Charge for non-deferred acquisition costs and amortisation of costs that were deferred | (2,772) | (2,734) | (2,817) |
Investment contracts | |||
Acquisition costs and other expenditure | |||
Charge for non-deferred acquisition costs and amortisation of costs that were deferred | £ (29) | £ (30) | £ (27) |
Acquisition costs and other e84
Acquisition costs and other expenditure - Interest expense, depreciation and amortisation (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Acquisition costs and other expenditure | |||
Other interest expense | £ (240) | £ (185) | £ (147) |
Depreciation and amortisation expense | (288) | (242) | (755) |
Operating segments | |||
Acquisition costs and other expenditure | |||
Other interest expense | (201) | (158) | (112) |
Depreciation and amortisation expense | (286) | (240) | (750) |
Operations within segments | Asia insurance operations | |||
Acquisition costs and other expenditure | |||
Depreciation and amortisation expense | (230) | (201) | (175) |
Operations within segments | Asia asset management | |||
Acquisition costs and other expenditure | |||
Depreciation and amortisation expense | (3) | (2) | (2) |
Operations within segments | Jackson (US insurance operations) | |||
Acquisition costs and other expenditure | |||
Other interest expense | (116) | (56) | (19) |
Depreciation and amortisation expense | 20 | 94 | (453) |
Operations within segments | Asset management (US) | |||
Acquisition costs and other expenditure | |||
Depreciation and amortisation expense | (7) | (3) | (3) |
Operations within segments | UK and Europe insurance operations | |||
Acquisition costs and other expenditure | |||
Other interest expense | (85) | (102) | (93) |
Depreciation and amortisation expense | (59) | (121) | (109) |
Operations within segments | UK and Europe asset management | |||
Acquisition costs and other expenditure | |||
Depreciation and amortisation expense | (7) | (7) | (8) |
Unallocated to a segment (other operations) | |||
Acquisition costs and other expenditure | |||
Other interest expense | (39) | (27) | (35) |
Depreciation and amortisation expense | £ (2) | £ (2) | £ (5) |
Acquisition costs and other e85
Acquisition costs and other expenditure - Staff and employment costs (Details) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017GBP (£)employee | Dec. 31, 2016GBP (£)employee | Dec. 31, 2015GBP (£)employee | |
Acquisition costs and other expenditure | |||
Average number of staff employed by the Group during the year | employee | 27,151 | 26,267 | 25,512 |
Costs of employment | |||
Wages and salaries | £ 1,774 | £ 1,483 | £ 1,370 |
Social security costs | 129 | 110 | 101 |
Defined benefit schemes | (3) | 213 | (63) |
Defined contribution schemes | 85 | 79 | 67 |
Total costs of employment | £ 1,985 | £ 1,885 | £ 1,475 |
Asia | |||
Acquisition costs and other expenditure | |||
Average number of staff employed by the Group during the year | employee | 15,477 | 15,439 | 15,030 |
US | |||
Acquisition costs and other expenditure | |||
Average number of staff employed by the Group during the year | employee | 4,564 | 4,447 | 4,562 |
UK and Europe | |||
Acquisition costs and other expenditure | |||
Average number of staff employed by the Group during the year | employee | 7,110 | 6,381 | 5,920 |
Acquisition costs and other e86
Acquisition costs and other expenditure - Share-based payment plans (Details) | 12 Months Ended |
Dec. 31, 2017 | |
PCA LTIP | |
Share-based payment | |
Vesting period of awards | 3 years |
Acquisition costs and other e87
Acquisition costs and other expenditure - Outstanding options and awards (Details) EquityInstruments in Millions | 12 Months Ended | ||
Dec. 31, 2017GBP (£)OptionsEquityInstruments | Dec. 31, 2016GBP (£)OptionsEquityInstruments | Dec. 31, 2015GBP (£)OptionsEquityInstruments | |
Number of options | |||
Beginning of year | 7,000,000 | 9,000,000 | |
End of year | 6,000,000 | 7,000,000 | 9,000,000 |
Number of awards | |||
Weighted average share price | £ | £ 17.51 | £ 13.56 | £ 15.49 |
SAYE options | |||
Number of options | |||
Beginning of year | 7,068,884 | 8,800,000 | 8,600,000 |
Granted | 1,400,000 | 1,400,000 | 2,200,000 |
Exercised | (1,700,000) | (2,000,000) | (1,600,000) |
Forfeited | (100,000) | (100,000) | (200,000) |
Cancelled | (200,000) | (800,000) | (200,000) |
Lapsed/Expired | (100,000) | (200,000) | |
End of year | 6,448,853 | 7,068,884 | 8,800,000 |
Options immediately exercisable, end of year | 400,000 | 600,000 | 1,100,000 |
Weighted average exercise price | |||
Beginning of year | £ | £ 10.74 | £ 9.44 | £ 8.29 |
Granted | £ | 14.55 | 11.04 | 11.11 |
Exercised | £ | 10.07 | 7.30 | 5.72 |
Forfeited | £ | 10.83 | 9.95 | 8.14 |
Cancelled | £ | 11.19 | 6.45 | 10.15 |
Lapsed/Expired | £ | 10.86 | 9.64 | 7.47 |
End of year | £ | 11.74 | 10.74 | 9.44 |
Options immediately exercisable, end of year | £ | £ 11.06 | £ 8.53 | £ 5.71 |
Incentive plans | |||
Number of awards | |||
Beginning of year | EquityInstruments | 30.2 | 28.4 | 28.8 |
Granted | EquityInstruments | 12.7 | 13.9 | 9.9 |
Exercised | EquityInstruments | (7.3) | (10.5) | (7.9) |
Forfeited | EquityInstruments | (1.3) | (1.5) | (2.3) |
Cancelled | EquityInstruments | (0.1) | (0.1) | |
Lapsed/Expired | EquityInstruments | (0.6) | (0.1) | |
End of year | EquityInstruments | 33.6 | 30.2 | 28.4 |
Acquisition costs and other e88
Acquisition costs and other expenditure - Exercise price ranges for options (Details) | Dec. 31, 2017GBP (£)OptionsY | Dec. 31, 2016GBP (£)OptionsY | Dec. 31, 2015GBP (£)OptionsY | Dec. 31, 2014GBP (£)Options |
Summary of options exercise price range | ||||
Outstanding - Number outstanding | Options | 6,000,000 | 7,000,000 | 9,000,000 | |
SAYE options | ||||
Summary of options exercise price range | ||||
Outstanding - Number outstanding | Options | 6,448,853 | 7,068,884 | 8,800,000 | 8,600,000 |
Outstanding - Weighted average remaining contractual life (years) | Y | 2.5 | 2.6 | 2.6 | |
Outstanding - Weighted average exercise prices | £ 11.74 | £ 10.74 | £ 9.44 | £ 8.29 |
Exercisable - Number exercisable | Options | 400,000 | 600,000 | 1,100,000 | |
Exercisable - Weighted average exercise prices | £ 11.06 | £ 8.53 | £ 5.71 | |
SAYE options | Minimum | ||||
Summary of options exercise price range | ||||
Exercise price | 6.29 | 4.66 | ||
SAYE options | Maximum | ||||
Summary of options exercise price range | ||||
Exercise price | 14.55 | 11.55 | ||
SAYE options | Between 2 and 3 | ||||
Summary of options exercise price range | ||||
Outstanding - Number outstanding | Options | 200,000 | |||
Outstanding - Weighted average remaining contractual life (years) | Y | 0.9 | |||
Outstanding - Weighted average exercise prices | £ 2.88 | |||
SAYE options | Between 2 and 3 | Minimum | ||||
Summary of options exercise price range | ||||
Exercise price | 2 | 2 | 2 | |
SAYE options | Between 2 and 3 | Maximum | ||||
Summary of options exercise price range | ||||
Exercise price | 3 | £ 3 | £ 3 | |
SAYE options | Between 4 and 5 | ||||
Summary of options exercise price range | ||||
Outstanding - Number outstanding | Options | 100,000 | 800,000 | ||
Outstanding - Weighted average remaining contractual life (years) | Y | 0.4 | 0.9 | ||
Outstanding - Weighted average exercise prices | £ 4.66 | £ 4.64 | ||
Exercisable - Number exercisable | Options | 100,000 | 400,000 | ||
Exercisable - Weighted average exercise prices | £ 4.66 | £ 4.61 | ||
SAYE options | Between 4 and 5 | Minimum | ||||
Summary of options exercise price range | ||||
Exercise price | 4 | 4 | 4 | |
SAYE options | Between 4 and 5 | Maximum | ||||
Summary of options exercise price range | ||||
Exercise price | £ 5 | £ 5 | £ 5 | |
SAYE options | Between 6 and 7 | ||||
Summary of options exercise price range | ||||
Outstanding - Number outstanding | Options | 200,000 | 1,000,000 | ||
Outstanding - Weighted average remaining contractual life (years) | Y | 0.4 | 1.4 | 0.9 | |
Outstanding - Weighted average exercise prices | £ 6.29 | £ 6.29 | £ 6.29 | |
Exercisable - Number exercisable | Options | 700,000 | |||
Exercisable - Weighted average exercise prices | 6.29 | 6.29 | £ 6.29 | |
SAYE options | Between 6 and 7 | Minimum | ||||
Summary of options exercise price range | ||||
Exercise price | 6 | 6 | 6 | |
SAYE options | Between 6 and 7 | Maximum | ||||
Summary of options exercise price range | ||||
Exercise price | £ 7 | £ 7 | £ 7 | |
SAYE options | Between 9 and 10 | ||||
Summary of options exercise price range | ||||
Outstanding - Number outstanding | Options | 500,000 | 1,100,000 | 2,200,000 | |
Outstanding - Weighted average remaining contractual life (years) | Y | 1.4 | 1.4 | 1.9 | |
Outstanding - Weighted average exercise prices | £ 9.01 | £ 9.01 | £ 9.01 | |
Exercisable - Number exercisable | Options | 500,000 | |||
Exercisable - Weighted average exercise prices | £ 9.01 | |||
SAYE options | Between 9 and 10 | Minimum | ||||
Summary of options exercise price range | ||||
Exercise price | 9 | 9 | 9 | |
SAYE options | Between 9 and 10 | Maximum | ||||
Summary of options exercise price range | ||||
Exercise price | £ 10 | £ 10 | £ 10 | |
SAYE options | Between 11 and 12 | ||||
Summary of options exercise price range | ||||
Outstanding - Number outstanding | Options | 4,500,000 | 5,700,000 | 4,600,000 | |
Outstanding - Weighted average remaining contractual life (years) | Y | 2.2 | 2.9 | 3.6 | |
Outstanding - Weighted average exercise prices | £ 11.21 | £ 11.27 | £ 11.34 | |
Exercisable - Number exercisable | Options | 400,000 | |||
Exercisable - Weighted average exercise prices | £ 11.55 | |||
SAYE options | Between 11 and 12 | Minimum | ||||
Summary of options exercise price range | ||||
Exercise price | 11 | 11 | 11 | |
SAYE options | Between 11 and 12 | Maximum | ||||
Summary of options exercise price range | ||||
Exercise price | £ 12 | 12 | 12 | |
SAYE options | Between 14 and 15 | ||||
Summary of options exercise price range | ||||
Outstanding - Number outstanding | Options | 1,400,000 | |||
Outstanding - Weighted average remaining contractual life (years) | Y | 3.9 | |||
Outstanding - Weighted average exercise prices | £ 14.55 | |||
SAYE options | Between 14 and 15 | Minimum | ||||
Summary of options exercise price range | ||||
Exercise price | 14 | 14 | 14 | |
SAYE options | Between 14 and 15 | Maximum | ||||
Summary of options exercise price range | ||||
Exercise price | £ 15 | £ 15 | £ 15 |
Acquisition costs and other e89
Acquisition costs and other expenditure - Fair value of options and awards (Details) | 12 Months Ended | ||
Dec. 31, 2017GBP (£)entityY | Dec. 31, 2016GBP (£)Y | Dec. 31, 2015GBP (£)Y | |
Share-based payment | |||
Basis for risk-free interest rate - government bond term one | 2 years | ||
Basis for risk-free interest rate - government bond term two | 3 years | ||
Basis for risk-free interest rate - government bond term three | 5 years | ||
Dividend yield period | 12 months | ||
Volatility assumption - number of competitors in basket | entity | 15 | ||
Volatility assumption - average volatility for basket of competitors (as a percent) | 22.93% | ||
Volatility assumption - period of correlations for basket of competitors | 3 years | ||
Prudential LTIP (TSR) | |||
Share-based payment | |||
Expected volatility (as a percent) | 23.17% | 29.36% | 21.48% |
Risk-free interest rate (as a percent) | 0.62% | 0.12% | 0.88% |
Weighted average share price at grant date | £ 16.80 | £ 12.82 | £ 16.67 |
Weighted-average fair value at grant date | £ 8.30 | £ 4.41 | £ 7.97 |
SAYE options | |||
Share-based payment | |||
Dividend yield (as a percent) | 2.85% | 3.19% | 2.35% |
Expected volatility (as a percent) | 20.15% | 25.41% | 22.73% |
Risk-free interest rate (as a percent) | 0.56% | 0.15% | 1.02% |
Expected option life | Y | 3.49 | 3.70 | 3.79 |
Weighted average exercise price | £ 14.55 | £ 11.04 | £ 11.11 |
Weighted average share price at grant date | 17.74 | 13.94 | 13.52 |
Weighted average fair value at grant date | 3.29 | 3.05 | 2.95 |
Other awards | |||
Share-based payment | |||
Weighted-average fair value at grant date | £ 16.12 | £ 12.57 | £ 16.28 |
Acquisition costs and other e90
Acquisition costs and other expenditure - Share-based payment expense (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based payment expense charged to the income statement | |||
Share-based compensation expense | £ 158 | £ 126 | £ 111 |
Amount accounted for as equity-settled | 158 | £ 127 | 110 |
Carrying value at 31 December of liabilities arising from share-based payment transactions | 6 | ||
Intrinsic value of above liabilities for which rights had vested at 31 December | £ 6 | ||
Liabilities relating to awards which are settled in cash | £ 0 |
Acquisition costs and other e91
Acquisition costs and other expenditure - Key management remuneration (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Key management remuneration | |||
Salaries and short-term benefits | £ 17.9 | £ 20.7 | £ 17.1 |
Post-employment benefits | 1.3 | 1.3 | 1.1 |
Share-based payments | 14.1 | 18.7 | 15.5 |
Total key management remuneration | 33.3 | 40.7 | 33.7 |
Share-based payments in accordance with IFRS 2 | 8.3 | 12.9 | 10.4 |
Deferred share awards | 5.8 | 5.8 | 5.1 |
Total directors' remuneration | 40.2 | 37.9 | 42.7 |
LTIP releases | £ 15.2 | £ 10.1 | £ 19.4 |
Acquisition costs and other e92
Acquisition costs and other expenditure - Fees payable to the auditor (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Fees payable to the auditor | |||
Fees payable to the Company's auditor for the audit of the Company's annual accounts | £ 2.1 | £ 2 | £ 2 |
Fees payable to the Company's auditor and its associates for other services: | |||
Audit of subsidiaries pursuant to legislation | 8.3 | 7.5 | 7.2 |
Audit-related assurance services | 4.3 | 3.9 | 3.1 |
Tax compliance services | 0.1 | 0.7 | |
Other assurance services | 1.5 | 2.1 | 2.2 |
Services relating to corporate finance transactions | 0.4 | 0.2 | |
All other services | 0.7 | 0.6 | 1.2 |
Total fees paid to the auditor | 17.3 | 16.2 | 16.6 |
Pension schemes audit services | 0.1 | 0.1 | 0.1 |
Pension schemes other assurance services | £ 0 | £ 0.1 | £ 0 |
Effect of changes and other a93
Effect of changes and other accounting matters on insurance assets and liabilities (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Asia insurance operations | |||
Effect of changes and other accounting matters on insurance | |||
Non-recurring items included in operating profit based on longer-term investment returns | £ 75 | £ 67 | £ 62 |
UK and Europe insurance operations | UK and Europe with-profits sub-funds | |||
Effect of changes and other accounting matters on insurance | |||
Net effect of changes to assumptions | £ (58) | £ (78) | £ (114) |
UK and Europe insurance operations | Shareholder-backed annuity | |||
Effect of changes and other accounting matters on insurance | |||
Credit risk allowance (as a percent) | 0.42% | 0.43% | 0.42% |
Credit risk allowance as percentage of bond spread over swap rates | 28.00% | 26.00% | 25.00% |
Reserves for credit risk allowance | £ 1,600 | £ 1,700 | £ 1,600 |
Net effect of changes to assumptions | 173 | 16 | 31 |
Profits from management actions to improve solvency and mitigate market risk | 276 | 332 | |
Profit from additional longevity reinsurance transactions | 31 | 197 | 231 |
Liabilities under additional longevity reinsurance transactions | 500 | 5,400 | 6,400 |
Effect of repositioning the fixed income portfolio and other actions | 245 | £ 169 | |
Liabilities covered by longevity reinsurance | £ 14,400 | £ 14,400 | |
Percentage of total insurance liabilities covered by longevity reinsurance | 44.00% | 42.00% | |
UK and Europe insurance operations | Shareholder-backed annuity | Annuitant mortality assumptions | |||
Effect of changes and other accounting matters on insurance | |||
Net effect of changes to assumptions | £ 204 |
Tax charge - Income statement (
Tax charge - Income statement (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Tax charge attributable to shareholders: | |||
Current tax attributable to shareholders | £ (288) | ||
Deferred tax attributable to shareholders | (618) | ||
Tax charge attributable to shareholders' returns | (906) | £ (354) | £ (569) |
Tax charge attributable to policyholders: | |||
Current tax to attributable policyholders | (408) | ||
Deferred tax attributable to policyholders | (266) | ||
Tax charge attributable to policyholders' returns | (674) | (937) | (173) |
Total current tax charge | (696) | (1,377) | (734) |
Total deferred tax (charge) credit | (884) | 86 | (8) |
Total tax charge | (1,580) | (1,291) | (742) |
Profit before tax attributable to policyholders | 674 | ||
Operating segments | |||
Tax charge attributable to policyholders: | |||
Tax charge attributable to policyholders' returns | (674) | (937) | (173) |
Operating segments | Asia | |||
Tax charge attributable to shareholders: | |||
Current tax attributable to shareholders | (164) | ||
Deferred tax attributable to shareholders | (89) | ||
Tax charge attributable to shareholders' returns | (253) | (256) | (179) |
Tax charge attributable to policyholders: | |||
Current tax to attributable policyholders | (92) | ||
Deferred tax attributable to policyholders | (157) | ||
Tax charge attributable to policyholders' returns | (250) | (155) | (69) |
Operating segments | US | |||
Tax charge attributable to shareholders: | |||
Current tax attributable to shareholders | 56 | ||
Deferred tax attributable to shareholders | (564) | ||
Tax charge attributable to shareholders' returns | (508) | 66 | (240) |
US tax reform | |||
Deferred tax charge on remeasurement of net deferred tax assets, attributable to shareholders' returns | 445 | ||
Credit following remeasurement of deferred tax liabilities, attributable to policyholders | 92 | ||
Remeasurement of deferred tax liabilities subject to US taxation | 1,368 | ||
Operating segments | UK and Europe | |||
Tax charge attributable to shareholders: | |||
Current tax attributable to shareholders | (302) | ||
Deferred tax attributable to shareholders | 35 | ||
Tax charge attributable to shareholders' returns | (267) | (275) | (287) |
Tax charge attributable to policyholders: | |||
Current tax to attributable policyholders | (316) | ||
Deferred tax attributable to policyholders | (109) | ||
Tax charge attributable to policyholders' returns | (424) | (782) | (104) |
Unallocated to a segment (other operations) | |||
Tax charge attributable to shareholders: | |||
Current tax attributable to shareholders | 122 | ||
Tax charge attributable to shareholders' returns | £ 122 | £ 111 | £ 137 |
Tax charge - Components (Detail
Tax charge - Components (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current tax expense: | |||
Corporation tax | £ (746) | £ (1,464) | £ (782) |
Adjustments in respect of prior years | 50 | 87 | 48 |
Total current tax charge | (696) | (1,377) | (734) |
Deferred tax arising from: | |||
Origination and reversal of temporary differences | (531) | 64 | (40) |
Impact of changes in local statutory tax rates | (353) | 6 | 22 |
Credit in respect of a previously unrecognised tax loss, tax credit or temporary difference from a prior period | 16 | 10 | |
Total deferred tax (charge) credit | (884) | 86 | (8) |
Total tax charge | (1,580) | (1,291) | (742) |
Hong Kong | |||
Current tax expense: | |||
Total current tax charge | £ (59) | £ (53) | £ (35) |
Deferred tax arising from: | |||
Current tax charge (as a percent) | 16.50% | ||
Percentage of net insurance premium used to calculate income tax charge | 5.00% |
Tax charge - Deferred tax credi
Tax charge - Deferred tax credit (charge) (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Deferred tax credit (charge) | |||
Deferred tax (charge) credit | £ (884) | £ 86 | £ (8) |
Deferred tax charge (credit) taken through other comprehensive income | 75 | (10) | (338) |
US | |||
Deferred tax credit (charge) | |||
Deferred tax charge on remeasurement of net deferred tax assets, attributable to shareholders' returns | 445 | ||
Credit following remeasurement of deferred tax liabilities, attributable to policyholders | 92 | ||
Short-term temporary differences | |||
Deferred tax credit (charge) | |||
Deferred tax (charge) credit | (526) | 573 | (200) |
Short-term temporary differences | US | |||
Deferred tax credit (charge) | |||
Deferred tax charge on remeasurement of net deferred tax assets, attributable to shareholders' returns | 445 | ||
Deferred tax charge relating to the amortisation of derivative losses | £ 695 | ||
Amortisation period of derivative losses | 3 years | ||
Unrealised gains and losses on investments | |||
Deferred tax credit (charge) | |||
Deferred tax (charge) credit | £ (185) | (437) | 272 |
Credit following remeasurement of deferred tax liabilities, attributable to policyholders | 92 | ||
Balances relating to investment and insurance contracts | |||
Deferred tax credit (charge) | |||
Deferred tax (charge) credit | (156) | (90) | (55) |
Unused tax losses | |||
Deferred tax credit (charge) | |||
Deferred tax (charge) credit | (12) | 36 | (26) |
Capital allowances | |||
Deferred tax credit (charge) | |||
Deferred tax (charge) credit | (5) | £ 4 | £ 1 |
Unrealised gains on bonds | |||
Deferred tax credit (charge) | |||
Deferred tax charge (credit) taken through other comprehensive income | 190 | ||
Benefit relating to remeasurement of US net deferred tax liabilities | £ 134 |
Tax charge - Reconciliation of
Tax charge - Reconciliation of effective tax rate (Details) - GBP (£) £ in Millions | Jan. 01, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Reconciliation of effective tax rate | ||||
Operating profit (loss) based on longer-term investment returns | £ 4,699 | £ 4,256 | £ 3,969 | |
Non-operating profit (loss) | (1,403) | (1,981) | (821) | |
Profit (loss) before tax, attributable to shareholders | £ 3,296 | £ 2,275 | £ 3,148 | |
Expected tax rate, attributable to shareholders (as a percent) | 23.90% | 24.40% | 27.00% | |
Tax at the expected rate, attributable to shareholders | £ 789 | £ 557 | £ 850 | |
Effects of recurring tax reconciliation items: | ||||
Income not taxable or taxable at concessionary rates | £ (91) | £ (67) | £ (63) | |
Income not taxable or taxable at concessionary rates, percentage impact on ETR | (2.80%) | (2.90%) | (2.00%) | |
Deductions not allowable for tax purposes | £ 55 | £ 60 | £ 33 | |
Deductions not allowable for tax purposes, percentage impact on ETR | 1.70% | 2.60% | 1.00% | |
Items related to taxation of life insurance businesses | £ (332) | £ (180) | £ (133) | |
Items related to taxation of life insurance businesses, percentage impact on ETR | (10.10%) | (7.90%) | (4.20%) | |
Deferred tax adjustments | £ 22 | £ (23) | £ (1) | |
Deferred tax adjustments, percentage impact on ETR | 0.70% | (1.00%) | 0.00% | |
Effect of results of joint ventures and associates | £ (55) | £ (46) | £ (50) | |
Effect of results of joint ventures and associates, percentage impact on ETR | (1.70%) | (2.00%) | (1.60%) | |
Irrecoverable withholding taxes | £ 54 | £ 36 | £ 28 | |
Irrecoverable withholding taxes, percentage impact on ETR | 1.60% | 1.60% | 0.90% | |
Other | £ (5) | £ (4) | £ 5 | |
Other, percentage impact on ETR | (0.10%) | (0.10%) | 0.10% | |
Total effects of recurring tax reconciliation items | £ (352) | £ (224) | £ (181) | |
Total tax rate, Effects of recurring tax reconciliation items | (10.70%) | (9.70%) | (5.80%) | |
Effects of non-recurring tax reconciliation items: | ||||
Adjustments to tax charge in relation to prior years | £ (24) | £ (82) | £ (67) | |
Adjustments to tax charge in relation to prior years, percentage impact on ETR | (0.70%) | (3.60%) | (2.10%) | |
Movements in provisions for open tax matters | £ 44 | £ 51 | £ (11) | |
Movements in provisions for open tax matters, percentage impact on ETR | 1.30% | 2.20% | (0.30%) | |
Impact of US tax reform | £ 445 | |||
Impact of US tax reform, percentage impact on ETR | 13.50% | |||
Adjustments in relation to business disposals | £ 4 | |||
Adjustments in relation to business disposals, percentage impact on ETR | 0.10% | |||
Impact of changes in local statutory tax rates | £ (6) | £ (22) | ||
Impact of changes in local statutory tax rates, percentage impact on ETR | (0.20%) | (0.70%) | ||
Write down of Korea life business | £ 58 | |||
Write down of Korea life business, percentage impact on ETR | 2.50% | |||
Total effects of non-recurring tax reconciliation items | £ 469 | £ 21 | £ (100) | |
Total tax rate, Effects of non-recurring tax reconciliation items | 14.20% | 0.90% | (3.10%) | |
Total actual tax charge (credit), attributable to shareholders | £ 906 | £ 354 | £ 569 | |
Total actual tax charge (credit) (as a percent) | 27.40% | 15.60% | 18.10% | |
Analysed into: | ||||
Tax on operating profit based on longer-term investment returns | £ 971 | £ 894 | £ 786 | |
Tax on non-operating profit | £ (65) | £ (540) | £ (217) | |
Actual tax rate: | ||||
Operating profit based on longer-term investment returns, including non-recurring tax reconciling items (as a percent) | 21.00% | 21.00% | 20.00% | |
Operating profit based on longer-term investment returns, excluding non-recurring tax reconciling items (as a percent) | 20.00% | 22.00% | 22.00% | |
Total profit attributable to shareholders (as a percent) | 27.40% | 15.60% | 18.10% | |
Statutory transfer from unallocated surplus, percentage of actuarially determined surplus attributable to shareholders | 10.00% | |||
Net of tax profit attributable to with-profits policyholders | £ 0 | £ 0 | £ 0 | |
US | ||||
Impact of US tax reform | ||||
Corporation tax rate (as a percent) | 21.00% | 35.00% | ||
Deferred tax charge on remeasurement of net deferred tax assets, attributable to shareholders' returns | £ 445 | |||
Operating segments | ||||
Reconciliation of effective tax rate | ||||
Operating profit (loss) based on longer-term investment returns | 5,577 | 4,945 | 4,625 | |
Profit (loss) before tax, attributable to shareholders | 4,154 | 3,168 | 3,877 | |
Unallocated to a segment (other operations) | ||||
Reconciliation of effective tax rate | ||||
Operating profit (loss) based on longer-term investment returns | (878) | (689) | (655) | |
Non-operating profit (loss) | 20 | (204) | (74) | |
Profit (loss) before tax, attributable to shareholders | £ (858) | £ (893) | £ (729) | |
Expected tax rate, attributable to shareholders (as a percent) | 19.00% | 20.00% | 21.00% | |
Tax at the expected rate, attributable to shareholders | £ (163) | £ (179) | £ (153) | |
Effects of recurring tax reconciliation items: | ||||
Income not taxable or taxable at concessionary rates | (14) | (5) | (3) | |
Deductions not allowable for tax purposes | 10 | 22 | 1 | |
Deferred tax adjustments | (5) | (14) | (9) | |
Irrecoverable withholding taxes | 54 | 36 | 27 | |
Other | (1) | (7) | 5 | |
Total effects of recurring tax reconciliation items | 44 | 32 | 21 | |
Effects of non-recurring tax reconciliation items: | ||||
Adjustments to tax charge in relation to prior years | (3) | 5 | ||
Movements in provisions for open tax matters | 31 | (5) | ||
Total effects of non-recurring tax reconciliation items | (3) | 36 | (5) | |
Total actual tax charge (credit), attributable to shareholders | £ (122) | £ (111) | £ (137) | |
Total actual tax charge (credit) (as a percent) | 14.00% | 12.00% | 19.00% | |
Analysed into: | ||||
Tax on operating profit based on longer-term investment returns | £ (121) | £ (88) | £ (121) | |
Tax on non-operating profit | £ (1) | £ (23) | £ (16) | |
Actual tax rate: | ||||
Operating profit based on longer-term investment returns, including non-recurring tax reconciling items (as a percent) | 14.00% | 13.00% | 18.00% | |
Operating profit based on longer-term investment returns, excluding non-recurring tax reconciling items (as a percent) | 13.00% | 18.00% | 18.00% | |
Total profit attributable to shareholders (as a percent) | 14.00% | 12.00% | 19.00% | |
Excluding held for sale business | ||||
Reconciliation of effective tax rate | ||||
Expected tax rate, attributable to shareholders (as a percent) | 24.00% | |||
Effects of non-recurring tax reconciliation items: | ||||
Total actual tax charge (credit) (as a percent) | 14.00% | |||
Actual tax rate: | ||||
Operating profit based on longer-term investment returns, including non-recurring tax reconciling items (as a percent) | 21.00% | |||
Total profit attributable to shareholders (as a percent) | 14.00% | |||
Asia | Taiwan | ||||
Effects of recurring tax reconciliation items: | ||||
Income not taxable due to non-taxable gains on domestic securities | £ 26 | £ 0 | ||
Asia | Operating segments | ||||
Reconciliation of effective tax rate | ||||
Operating profit (loss) based on longer-term investment returns | 1,975 | 1,644 | £ 1,286 | |
Non-operating profit (loss) | 53 | (460) | (135) | |
Profit (loss) before tax, attributable to shareholders | £ 2,028 | £ 1,184 | £ 1,151 | |
Expected tax rate, attributable to shareholders (as a percent) | 21.00% | 22.00% | 24.00% | |
Tax at the expected rate, attributable to shareholders | £ 426 | £ 260 | £ 276 | |
Effects of recurring tax reconciliation items: | ||||
Income not taxable or taxable at concessionary rates | (64) | (31) | (45) | |
Deductions not allowable for tax purposes | 26 | 20 | 16 | |
Items related to taxation of life insurance businesses | (92) | (20) | (20) | |
Deferred tax adjustments | 11 | (11) | 10 | |
Effect of results of joint ventures and associates | (52) | (44) | (47) | |
Other | (10) | 3 | (5) | |
Total effects of recurring tax reconciliation items | (181) | (83) | (91) | |
Effects of non-recurring tax reconciliation items: | ||||
Adjustments to tax charge in relation to prior years | (3) | 1 | 5 | |
Movements in provisions for open tax matters | 19 | 20 | (6) | |
Adjustments in relation to business disposals | (8) | |||
Impact of changes in local statutory tax rates | (5) | |||
Write down of Korea life business | 58 | |||
Total effects of non-recurring tax reconciliation items | 8 | 79 | (6) | |
Total actual tax charge (credit), attributable to shareholders | £ 253 | £ 256 | £ 179 | |
Total actual tax charge (credit) (as a percent) | 12.00% | 22.00% | 16.00% | |
Analysed into: | ||||
Tax on operating profit based on longer-term investment returns | £ 276 | £ 271 | £ 184 | |
Tax on non-operating profit | £ (23) | £ (15) | £ (5) | |
Actual tax rate: | ||||
Operating profit based on longer-term investment returns, including non-recurring tax reconciling items (as a percent) | 14.00% | 16.00% | 14.00% | |
Operating profit based on longer-term investment returns, excluding non-recurring tax reconciling items (as a percent) | 13.00% | 15.00% | 15.00% | |
Total profit attributable to shareholders (as a percent) | 12.00% | 22.00% | 16.00% | |
Asia insurance operations | Excluding held for sale business | ||||
Reconciliation of effective tax rate | ||||
Expected tax rate, attributable to shareholders (as a percent) | 22.00% | |||
Effects of non-recurring tax reconciliation items: | ||||
Total actual tax charge (credit) (as a percent) | 18.00% | |||
Actual tax rate: | ||||
Operating profit based on longer-term investment returns, including non-recurring tax reconciling items (as a percent) | 16.00% | |||
Total profit attributable to shareholders (as a percent) | 18.00% | |||
US | Operating segments | ||||
Reconciliation of effective tax rate | ||||
Operating profit (loss) based on longer-term investment returns | £ 2,224 | £ 2,048 | £ 1,702 | |
Non-operating profit (loss) | (1,462) | (1,523) | (492) | |
Profit (loss) before tax, attributable to shareholders | £ 762 | £ 525 | £ 1,210 | |
Expected tax rate, attributable to shareholders (as a percent) | 35.00% | 35.00% | 35.00% | |
Tax at the expected rate, attributable to shareholders | £ 267 | £ 184 | £ 424 | |
Effects of recurring tax reconciliation items: | ||||
Income not taxable or taxable at concessionary rates | (11) | (18) | (10) | |
Deductions not allowable for tax purposes | 6 | 8 | 6 | |
Items related to taxation of life insurance businesses | (238) | (159) | (113) | |
Deferred tax adjustments | 17 | |||
Irrecoverable withholding taxes | 1 | |||
Other | (3) | |||
Total effects of recurring tax reconciliation items | (226) | (169) | (119) | |
Effects of non-recurring tax reconciliation items: | ||||
Adjustments to tax charge in relation to prior years | (15) | (81) | (65) | |
Movements in provisions for open tax matters | 25 | |||
Impact of US tax reform | 445 | |||
Adjustments in relation to business disposals | 12 | |||
Total effects of non-recurring tax reconciliation items | 467 | (81) | (65) | |
Total actual tax charge (credit), attributable to shareholders | £ 508 | £ (66) | £ 240 | |
Total actual tax charge (credit) (as a percent) | 67.00% | (13.00%) | 20.00% | |
Analysed into: | ||||
Tax on operating profit based on longer-term investment returns | £ 548 | £ 467 | £ 413 | |
Tax on non-operating profit | £ (40) | £ (533) | £ (173) | |
Actual tax rate: | ||||
Operating profit based on longer-term investment returns, including non-recurring tax reconciling items (as a percent) | 25.00% | 23.00% | 24.00% | |
Operating profit based on longer-term investment returns, excluding non-recurring tax reconciling items (as a percent) | 24.00% | 27.00% | 28.00% | |
Total profit attributable to shareholders (as a percent) | 67.00% | (13.00%) | 20.00% | |
Impact of US tax reform | ||||
Deferred tax charge on remeasurement of net deferred tax assets, attributable to shareholders' returns | £ 445 | |||
Benefit reflected through reserves in other comprehensive income | 134 | |||
UK and Europe | Operating segments | ||||
Reconciliation of effective tax rate | ||||
Operating profit (loss) based on longer-term investment returns | 1,378 | £ 1,253 | £ 1,637 | |
Non-operating profit (loss) | (14) | 206 | (120) | |
Profit (loss) before tax, attributable to shareholders | £ 1,364 | £ 1,459 | £ 1,516 | |
Expected tax rate, attributable to shareholders (as a percent) | 19.00% | 20.00% | 20.00% | |
Tax at the expected rate, attributable to shareholders | £ 259 | £ 292 | £ 303 | |
Effects of recurring tax reconciliation items: | ||||
Income not taxable or taxable at concessionary rates | (2) | (13) | (5) | |
Deductions not allowable for tax purposes | 13 | 10 | 10 | |
Items related to taxation of life insurance businesses | (2) | (1) | ||
Deferred tax adjustments | (1) | 2 | (2) | |
Effect of results of joint ventures and associates | (3) | (2) | (3) | |
Other | 6 | 8 | ||
Total effects of recurring tax reconciliation items | 11 | (4) | 8 | |
Effects of non-recurring tax reconciliation items: | ||||
Adjustments to tax charge in relation to prior years | (3) | (7) | (7) | |
Impact of changes in local statutory tax rates | (6) | (17) | ||
Total effects of non-recurring tax reconciliation items | (3) | (13) | (24) | |
Total actual tax charge (credit), attributable to shareholders | £ 267 | £ 275 | £ 287 | |
Total actual tax charge (credit) (as a percent) | 20.00% | 19.00% | 19.00% | |
Analysed into: | ||||
Tax on operating profit based on longer-term investment returns | £ 268 | £ 244 | £ 310 | |
Tax on non-operating profit | £ (1) | £ 31 | £ (23) | |
Actual tax rate: | ||||
Operating profit based on longer-term investment returns, including non-recurring tax reconciling items (as a percent) | 19.00% | 19.00% | 19.00% | |
Operating profit based on longer-term investment returns, excluding non-recurring tax reconciling items (as a percent) | 20.00% | 21.00% | 20.00% | |
Total profit attributable to shareholders (as a percent) | 20.00% | 19.00% | 19.00% |
Tax charge - Provision for open
Tax charge - Provision for open tax matters (Details) £ in Millions | 12 Months Ended |
Dec. 31, 2017GBP (£) | |
Movements in provisions for open tax matters | |
Provision for open tax matters at beginning of period | £ (89) |
Tax charge attributable to shareholders | (44) |
Other movements | (6) |
Provision for open tax matters at end of period | £ (139) |
Earnings per share - Calculatio
Earnings per share - Calculation (Details) - GBP (£) £ / shares in Units, £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Before tax | |||
Operating profit (loss) based on longer-term investment returns | £ 4,699 | £ 4,256 | £ 3,969 |
Short-term fluctuations in investment returns on shareholder-backed business | (1,563) | (1,678) | (755) |
Amortisation of acquisition accounting adjustments | (63) | (76) | (76) |
Profit (loss) attaching to disposal of businesses | 162 | (227) | 56 |
Profit (loss) before tax attributable to shareholders | 3,296 | 2,275 | 3,148 |
Tax | |||
Based on operating profit based on longer-term investment returns | (971) | (894) | (786) |
Short-term fluctuations in investment returns on shareholder-backed business | 572 | 519 | 206 |
Amortisation of acquisition accounting adjustments | 20 | 25 | 25 |
Profit (loss) attaching to disposal of business | (82) | ||
Impact of US Tax Reform | (445) | ||
Based on profit for the year | (906) | (354) | (569) |
Non-controlling interests | |||
Based on operating profit based on longer-term investment returns | (1) | ||
Based on profit for the year | (1) | ||
Net of tax and non-controlling interests | |||
Based on operating profit based on longer-term investment returns | 3,727 | 3,362 | 3,183 |
Short-term fluctuations in investment returns on shareholder-backed business | (991) | (1,159) | (549) |
Amortisation of acquisition accounting adjustments | (43) | (51) | (51) |
Profit (loss) attaching to disposal of businesses | 80 | ||
Impact of US Tax Reform | 445 | ||
Profit for the year attributable to equity holders of the Company | £ 2,389 | £ 1,921 | £ 2,579 |
Basic earnings per share | |||
Based on operating profit based on longer-term investment returns (in GBP per share) | £ 1.452 | £ 1.313 | £ 1.246 |
Short-term fluctuations in investment returns on shareholder-backed business (in GBP per share) | (0.386) | (0.453) | (0.215) |
Amortisation of acquisition accounting adjustments (in GBP per share) | (0.017) | (0.020) | (0.020) |
Profit (loss) attaching to disposal of businesses (in GBP per share) | 0.031 | ||
Impact of US Tax Reform (in GBP per share) | (0.173) | ||
Based on profit for the year (in GBP per share) | 0.931 | 0.750 | 1.010 |
Diluted earnings per share | |||
Based on operating profit based on longer-term investment returns (in GBP per share) | 1.451 | 1.312 | 1.245 |
Short-term fluctuations in investment returns on shareholder-backed business (in GBP per share) | (0.386) | (0.452) | (0.215) |
Amortisation of acquisition accounting adjustments (in GBP per share) | (0.017) | (0.020) | (0.020) |
Profit (loss) attaching to disposal of businesses (in GBP per share) | 0.031 | ||
Impact of US Tax Reform (in GBP per share) | (0.173) | ||
Based on profit for the year (in GBP per share) | £ 0.930 | £ 0.750 | £ 1.009 |
PCA Life Insurance Company Ltd. - Korea | |||
Before tax | |||
Cumulative exchange gain (loss) recycled from other comprehensive income | £ 61 | ||
Profit (loss) attaching to disposal of businesses | £ (227) | £ 56 | |
Tax | |||
Profit (loss) attaching to disposal of business | (4) | (14) | |
Net of tax and non-controlling interests | |||
Cumulative exchange gain (loss) on sold business, recycled from other comprehensive income | £ 61 | ||
Profit (loss) attaching to disposal of businesses | £ (231) | £ 42 | |
Basic earnings per share | |||
Cumulative exchange gain (loss) on sold business, recycled from other comprehensive income (in GBP per share) | £ 0.024 | ||
Profit (loss) attaching to disposal of businesses (in GBP per share) | £ (0.090) | £ 0.017 | |
Diluted earnings per share | |||
Cumulative exchange gain (loss) on sold business, recycled from other comprehensive income (in GBP per share) | £ 0.024 | ||
Profit (loss) attaching to disposal of businesses (in GBP per share) | £ (0.090) | £ 0.017 | |
PCA Life Insurance Company Ltd. - Japan | |||
Before tax | |||
Cumulative exchange gain (loss) recycled from other comprehensive income | £ (46) | ||
Net of tax and non-controlling interests | |||
Cumulative exchange gain (loss) on sold business, recycled from other comprehensive income | £ (46) | ||
Basic earnings per share | |||
Cumulative exchange gain (loss) on sold business, recycled from other comprehensive income (in GBP per share) | £ (0.018) | ||
Diluted earnings per share | |||
Cumulative exchange gain (loss) on sold business, recycled from other comprehensive income (in GBP per share) | £ (0.018) |
Earnings per share - Weighted a
Earnings per share - Weighted average shares (Details) shares in Millions, Options in Millions | 12 Months Ended | ||
Dec. 31, 2017Optionsshares | Dec. 31, 2016Optionsshares | Dec. 31, 2015Optionsshares | |
Weighted average number of shares for calculating earnings per share | |||
Basic earnings per share | 2,567 | 2,560 | 2,553 |
Shares under option | Options | 6 | 7 | 9 |
Number of shares that would have been issued at fair value on assumed option price | (5) | (5) | (6) |
Diluted earnings per share | 2,568 | 2,562 | 2,556 |
Dividends (Details)
Dividends (Details) - GBP (£) £ / shares in Units, £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Dividends relating to reporting year: | |||
First interim ordinary dividend (in GBP per share) | £ 0.1450 | £ 0.1293 | £ 0.1231 |
Second interim ordinary dividend (in GBP per share) | 0.3250 | 0.3057 | 0.2647 |
Special dividend (in GBP per share) | 0.1000 | ||
Total (in GBP per share) | £ 0.4700 | £ 0.4350 | £ 0.4878 |
First interim ordinary dividend | £ 375 | £ 333 | £ 315 |
Second interim ordinary dividend | 841 | 789 | 681 |
Special dividend | 257 | ||
Total | £ 1,216 | £ 1,122 | £ 1,253 |
Dividends paid in reporting year: | |||
Current year first interim ordinary dividend (in GBP per share) | £ 0.1450 | £ 0.1293 | £ 0.1231 |
Second interim ordinary dividend/final ordinary dividend for prior year (in GBP per share) | 0.3057 | 0.2647 | 0.2574 |
Special dividend (in GBP per share) | 0.1000 | ||
Total (in GBP per share) | £ 0.4507 | £ 0.4940 | £ 0.3805 |
Current year first interim ordinary dividend | £ 373 | £ 332 | £ 315 |
Second interim ordinary dividend/final ordinary dividend for prior year | 786 | 679 | 659 |
Special dividend | 256 | ||
Total | £ 1,159 | £ 1,267 | £ 974 |
Analysis of Group statement 102
Analysis of Group statement of financial position by segment (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Assets | ||||
Goodwill | £ 1,482 | £ 1,628 | £ 1,648 | |
Deferred acquisition costs and other intangible assets | 11,011 | 10,807 | ||
Property, plant and equipment | 789 | 743 | 1,197 | |
Reinsurers' share of insurance contract liabilities | 9,673 | 10,051 | ||
Deferred tax assets | 2,627 | 4,315 | ||
Current tax recoverable | 613 | 440 | ||
Accrued investment income | 2,676 | 3,153 | ||
Other debtors | 2,963 | 3,019 | ||
Investment properties | 16,497 | 14,646 | 13,422 | |
Investment in joint ventures and associates accounted for using the equity method | 1,416 | 1,273 | ||
Loans | 17,042 | 15,173 | ||
Equity securities and portfolio holdings in unit trusts | 223,391 | 198,552 | ||
Debt securities | 171,374 | 170,458 | ||
Derivative assets | 4,801 | 3,936 | ||
Other investments | 5,622 | 5,465 | ||
Deposits | 11,236 | 12,185 | ||
Assets held for sale | 38 | 4,589 | ||
Cash and cash equivalents | 10,690 | 10,065 | 7,782 | £ 6,409 |
Total assets | 493,941 | 470,498 | ||
Total equity | 16,094 | 14,667 | 12,956 | £ 11,812 |
Liabilities | ||||
Insurance contract liabilities | 328,172 | 316,436 | 260,753 | |
Investment contract liabilities with discretionary participation features | 62,677 | 52,837 | ||
Investment contract liabilities without discretionary participation features | 20,394 | 19,723 | ||
Unallocated surplus of with-profits funds | 16,951 | 14,317 | £ 13,096 | |
Core structural borrowings of shareholder-financed operations | 6,280 | 6,798 | ||
Operational borrowings attributable to shareholder-financed operations | 1,791 | 2,317 | ||
Borrowings attributable to with-profits operations | 3,716 | 1,349 | ||
Obligations under funding, securities lending and sale and repurchase agreements | 5,662 | 5,031 | ||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 8,889 | 8,687 | ||
Deferred tax liabilities | 4,715 | 5,370 | ||
Current tax liabilities | 537 | 649 | ||
Accruals deferred income and other liabilities | 14,185 | 13,825 | ||
Provisions | 1,123 | 947 | ||
Derivative liabilities | 2,755 | 3,252 | ||
Liabilities held for sale | 4,293 | |||
Total liabilities | 477,847 | 455,831 | ||
Total equity and liabilities | 493,941 | 470,498 | ||
Unallocated to a segment (other operations) | ||||
Assets | ||||
Deferred acquisition costs and other intangible assets | 42 | 29 | ||
Property, plant and equipment | 3 | 3 | ||
Reinsurers' share of insurance contract liabilities | 3 | |||
Deferred tax assets | 58 | 55 | ||
Current tax recoverable | 93 | 2 | ||
Accrued investment income | 31 | 37 | ||
Other debtors | 2,121 | 2,130 | ||
Loans | 109 | 563 | ||
Equity securities and portfolio holdings in unit trusts | 115 | 29 | ||
Debt securities | 2,307 | 2,371 | ||
Derivative assets | 123 | 128 | ||
Deposits | 362 | 6 | ||
Cash and cash equivalents | 1,290 | 1,709 | ||
Total assets | 6,657 | 7,062 | ||
Total equity | (3,325) | (3,949) | ||
Liabilities | ||||
Insurance contract liabilities | 31 | |||
Investment contract liabilities without discretionary participation features | 1 | |||
Core structural borrowings of shareholder-financed operations | 6,096 | 6,596 | ||
Operational borrowings attributable to shareholder-financed operations | 1,085 | 1,651 | ||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 15 | |||
Deferred tax liabilities | 15 | 11 | ||
Current tax liabilities | 71 | 11 | ||
Accruals deferred income and other liabilities | 1,597 | 1,611 | ||
Provisions | 61 | 68 | ||
Derivative liabilities | 1,010 | 1,063 | ||
Total liabilities | 9,982 | 11,011 | ||
Total equity and liabilities | 6,657 | 7,062 | ||
Elimination of intra-group amounts | ||||
Assets | ||||
Reinsurers' share of insurance contract liabilities | (1,235) | (1,302) | ||
Current tax recoverable | (80) | |||
Other debtors | (5,199) | (5,310) | ||
Total assets | (6,514) | (6,612) | ||
Liabilities | ||||
Insurance contract liabilities | (1,235) | (1,302) | ||
Current tax liabilities | (80) | |||
Accruals deferred income and other liabilities | (5,199) | (5,310) | ||
Total liabilities | (6,514) | (6,612) | ||
Total equity and liabilities | (6,514) | (6,612) | ||
Asia | Operating segments | ||||
Assets | ||||
Goodwill | 305 | 306 | ||
Deferred acquisition costs and other intangible assets | 2,540 | 2,319 | ||
Property, plant and equipment | 125 | 124 | ||
Reinsurers' share of insurance contract liabilities | 1,960 | 1,539 | ||
Deferred tax assets | 112 | 107 | ||
Current tax recoverable | 58 | 29 | ||
Accrued investment income | 595 | 549 | ||
Other debtors | 2,675 | 2,662 | ||
Investment properties | 5 | 5 | ||
Investment in joint ventures and associates accounted for using the equity method | 912 | 825 | ||
Loans | 1,317 | 1,303 | ||
Equity securities and portfolio holdings in unit trusts | 29,976 | 23,599 | ||
Debt securities | 40,982 | 36,546 | ||
Derivative assets | 113 | 47 | ||
Deposits | 1,291 | 1,425 | ||
Assets held for sale | 3,863 | |||
Cash and cash equivalents | 1,934 | 2,157 | ||
Total assets | 84,900 | 77,405 | ||
Total equity | 5,926 | 5,376 | ||
Liabilities | ||||
Insurance contract liabilities | 63,468 | 54,417 | ||
Investment contract liabilities with discretionary participation features | 337 | 347 | ||
Investment contract liabilities without discretionary participation features | 328 | 254 | ||
Unallocated surplus of with-profits funds | 3,474 | 2,667 | ||
Operational borrowings attributable to shareholder-financed operations | 50 | 19 | ||
Borrowings attributable to with-profits operations | 10 | 4 | ||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 3,631 | 3,093 | ||
Deferred tax liabilities | 1,152 | 935 | ||
Current tax liabilities | 122 | 125 | ||
Accruals deferred income and other liabilities | 6,069 | 5,916 | ||
Provisions | 254 | 229 | ||
Derivative liabilities | 79 | 265 | ||
Liabilities held for sale | 3,758 | |||
Total liabilities | 78,974 | 72,029 | ||
Total equity and liabilities | 84,900 | 77,405 | ||
US | Operating segments | ||||
Assets | ||||
Goodwill | 16 | |||
Deferred acquisition costs and other intangible assets | 8,219 | 8,327 | ||
Property, plant and equipment | 214 | 247 | ||
Reinsurers' share of insurance contract liabilities | 6,424 | 7,224 | ||
Deferred tax assets | 2,300 | 3,979 | ||
Current tax recoverable | 298 | 101 | ||
Accrued investment income | 492 | 628 | ||
Other debtors | 248 | 304 | ||
Investment properties | 5 | 6 | ||
Loans | 9,630 | 9,735 | ||
Equity securities and portfolio holdings in unit trusts | 130,630 | 120,747 | ||
Debt securities | 35,378 | 40,745 | ||
Derivative assets | 1,611 | 834 | ||
Other investments | 848 | 992 | ||
Deposits | 43 | 49 | ||
Cash and cash equivalents | 1,658 | 1,135 | ||
Total assets | 197,998 | 195,069 | ||
Total equity | 5,248 | 5,408 | ||
Liabilities | ||||
Insurance contract liabilities | 177,728 | 174,328 | ||
Investment contract liabilities without discretionary participation features | 2,996 | 3,298 | ||
Core structural borrowings of shareholder-financed operations | 184 | 202 | ||
Operational borrowings attributable to shareholder-financed operations | 508 | 480 | ||
Obligations under funding, securities lending and sale and repurchase agreements | 4,304 | 3,534 | ||
Deferred tax liabilities | 1,845 | 2,832 | ||
Current tax liabilities | 47 | |||
Accruals deferred income and other liabilities | 5,109 | 4,920 | ||
Provisions | 24 | 3 | ||
Derivative liabilities | 5 | 64 | ||
Total liabilities | 192,750 | 189,661 | ||
Total equity and liabilities | 197,998 | 195,069 | ||
UK and Europe | Operating segments | ||||
Assets | ||||
Goodwill | 1,177 | 1,306 | ||
Deferred acquisition costs and other intangible assets | 210 | 132 | ||
Property, plant and equipment | 447 | 369 | ||
Reinsurers' share of insurance contract liabilities | 2,521 | 2,590 | ||
Deferred tax assets | 157 | 174 | ||
Current tax recoverable | 244 | 308 | ||
Accrued investment income | 1,558 | 1,939 | ||
Other debtors | 3,118 | 3,233 | ||
Investment properties | 16,487 | 14,635 | ||
Investment in joint ventures and associates accounted for using the equity method | 504 | 448 | ||
Loans | 5,986 | 3,572 | ||
Equity securities and portfolio holdings in unit trusts | 62,670 | 54,177 | ||
Debt securities | 92,707 | 90,796 | ||
Derivative assets | 2,954 | 2,927 | ||
Other investments | 4,774 | 4,473 | ||
Deposits | 9,540 | 10,705 | ||
Assets held for sale | 38 | 726 | ||
Cash and cash equivalents | 5,808 | 5,064 | ||
Total assets | 210,900 | 197,574 | ||
Total equity | 8,245 | 7,832 | ||
Liabilities | ||||
Insurance contract liabilities | 88,180 | 88,993 | ||
Investment contract liabilities with discretionary participation features | 62,340 | 52,490 | ||
Investment contract liabilities without discretionary participation features | 17,069 | 16,171 | ||
Unallocated surplus of with-profits funds | 13,477 | 11,650 | ||
Operational borrowings attributable to shareholder-financed operations | 148 | 167 | ||
Borrowings attributable to with-profits operations | 3,706 | 1,345 | ||
Obligations under funding, securities lending and sale and repurchase agreements | 1,358 | 1,497 | ||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 5,243 | 5,594 | ||
Deferred tax liabilities | 1,703 | 1,592 | ||
Current tax liabilities | 377 | 513 | ||
Accruals deferred income and other liabilities | 6,609 | 6,688 | ||
Provisions | 784 | 647 | ||
Derivative liabilities | 1,661 | 1,860 | ||
Liabilities held for sale | 535 | |||
Total liabilities | 202,655 | 189,742 | ||
Total equity and liabilities | £ 210,900 | £ 197,574 |
Analysis of Group statement 103
Analysis of Group statement of financial position by segment - Accrued investment income and other debtors (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Accrued investment income and other debtors | ||
Interest receivable | £ 1,789 | £ 1,975 |
Other | 887 | 1,178 |
Total accrued investment income | 2,676 | 3,153 |
Other debtors comprises: | ||
Amounts due from Reinsurers | 134 | 90 |
Other | 2,417 | 2,520 |
Total other debtors | 2,963 | 3,019 |
Total accrued investment income and other debtors | 5,639 | 6,172 |
Policyholders | ||
Other debtors comprises: | ||
Amounts due from Policyholders and Intermediaries | 408 | 403 |
Intermediaries | ||
Other debtors comprises: | ||
Amounts due from Policyholders and Intermediaries | 4 | 6 |
Expected to be settled within one year | ||
Other debtors comprises: | ||
Total accrued investment income and other debtors | 4,957 | 5,548 |
Expected to be settled after one year | ||
Other debtors comprises: | ||
Total accrued investment income and other debtors | £ 682 | £ 624 |
Analysis of Group statement 104
Analysis of Group statement of financial position by segment - Cash and cash equivalents (Details) - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash and cash equivalents | ||||
Cash | £ 6,623 | £ 5,581 | ||
Cash equivalents | 4,067 | 4,484 | ||
Total cash and cash equivalents | 10,690 | 10,065 | £ 7,782 | £ 6,409 |
Held centrally and available for general use by the Group | 328 | 247 | ||
Other funds not available for general use by the Group, including funds held for the benefit of policyholders | £ 10,362 | £ 9,818 | ||
Pounds sterling | ||||
Cash and cash equivalents | ||||
Percentage of cash and cash equivalents held in respective currencies | 31.00% | 38.00% | ||
US dollars | ||||
Cash and cash equivalents | ||||
Percentage of cash and cash equivalents held in respective currencies | 28.00% | 25.00% | ||
Euro | ||||
Cash and cash equivalents | ||||
Percentage of cash and cash equivalents held in respective currencies | 24.00% | 20.00% | ||
Other | ||||
Cash and cash equivalents | ||||
Percentage of cash and cash equivalents held in respective currencies | 17.00% | 17.00% |
Analysis of Group statement 105
Analysis of Group statement of financial position by segment - Accruals, deferred income and other liabilities (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Analysis of Group statement of financial position by segment | ||
Accruals and deferred income | £ 1,233 | £ 1,150 |
Other creditors | 7,289 | 6,788 |
Creditors arising from direct insurance and reinsurance operations | 2,296 | 2,520 |
Interest payable | 100 | 90 |
Funds withheld under reinsurance of the REALIC business | 2,664 | 2,851 |
Other items | 603 | 426 |
Total accruals, deferred income and other liabilities | £ 14,185 | £ 13,825 |
Analysis of Group statement 106
Analysis of Group statement of financial position by segment - Operational borrowings attributable to shareholder-financed operations (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Borrowings | ||
Total Group debt represented by operational borrowings at Group level | £ 1,791 | £ 2,317 |
Borrowings in respect of short-term fixed income securities programmes | ||
Borrowings | ||
Total Group debt represented by operational borrowings at Group level | 1,085 | 1,651 |
Commercial Paper | ||
Borrowings | ||
Total Group debt represented by operational borrowings at Group level | 485 | 1,052 |
Medium Term Notes | ||
Borrowings | ||
Total Group debt represented by operational borrowings at Group level | £ 600 | £ 599 |
Analysis of segment statemen107
Analysis of segment statement of financial position by business type (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Assets | ||||
Goodwill | £ 1,482 | £ 1,628 | £ 1,648 | |
Deferred acquisition costs and other intangible assets | 11,011 | 10,807 | ||
Property, plant and equipment | 789 | 743 | 1,197 | |
Reinsurers' share of insurance contract liabilities | 9,673 | 10,051 | ||
Deferred tax assets | 2,627 | 4,315 | ||
Current tax recoverable | 613 | 440 | ||
Accrued investment income | 2,676 | 3,153 | ||
Other debtors | 2,963 | 3,019 | ||
Investment properties | 16,497 | 14,646 | 13,422 | |
Investment in joint ventures and associates accounted for using the equity method | 1,416 | 1,273 | ||
Loans | 17,042 | 15,173 | ||
Equity securities and portfolio holdings in unit trusts | 223,391 | 198,552 | ||
Debt securities | 171,374 | 170,458 | ||
Derivative assets | 4,801 | 3,936 | ||
Deposits | 11,236 | 12,185 | ||
Assets held for sale | 38 | 4,589 | ||
Other investments | 5,622 | 5,465 | ||
Cash and cash equivalents | 10,690 | 10,065 | 7,782 | £ 6,409 |
Total assets | 493,941 | 470,498 | ||
Total equity | 16,094 | 14,667 | 12,956 | £ 11,812 |
Liabilities | ||||
Insurance contract liabilities | 328,172 | 316,436 | 260,753 | |
Investment contract liabilities with discretionary participation features | 62,677 | 52,837 | ||
Investment contract liabilities without discretionary participation features | 20,394 | 19,723 | ||
Unallocated surplus of with-profits funds | 16,951 | 14,317 | 13,096 | |
Core structural borrowings of shareholder-financed operations | 6,280 | 6,798 | ||
Operational borrowings attributable to shareholder-financed operations | 1,791 | 2,317 | ||
Borrowings attributable to with-profits operations | 3,716 | 1,349 | ||
Obligations under funding, securities lending and sale and repurchase agreements | 5,662 | 5,031 | ||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 8,889 | 8,687 | ||
Deferred tax liabilities | 4,715 | 5,370 | ||
Current tax liabilities | 537 | 649 | ||
Accruals, deferred income and other liabilities | 14,185 | 13,825 | ||
Provisions | 1,123 | 947 | ||
Derivative liabilities | 2,755 | 3,252 | ||
Liabilities held for sale | 4,293 | |||
Total liabilities | 477,847 | 455,831 | ||
Total equity and liabilities | 493,941 | 470,498 | ||
Asia insurance operations | ||||
Assets | ||||
Reinsurers' share of insurance contract liabilities | 1,961 | 1,539 | ||
Liabilities | ||||
Unallocated surplus of with-profits funds | 3,474 | 2,667 | 2,553 | |
UK and Europe insurance operations | ||||
Liabilities | ||||
Unallocated surplus of with-profits funds | 13,477 | 11,650 | 10,543 | |
UK and Europe with-profits sub-funds | UK and Europe insurance operations | ||||
Liabilities | ||||
Unallocated surplus of with-profits funds | 13,477 | 11,650 | 10,543 | |
With-profits | ||||
Assets | ||||
Goodwill | 24 | 153 | ||
Deferred acquisition costs and other intangible assets | 145 | 52 | ||
With-profits | Asia insurance operations | ||||
Liabilities | ||||
Unallocated surplus of with-profits funds | 3,474 | 2,667 | £ 2,553 | |
Operating segments | Asia | ||||
Assets | ||||
Goodwill | 305 | 306 | ||
Deferred acquisition costs and other intangible assets | 2,540 | 2,319 | ||
Property, plant and equipment | 125 | 124 | ||
Reinsurers' share of insurance contract liabilities | 1,960 | 1,539 | ||
Deferred tax assets | 112 | 107 | ||
Current tax recoverable | 58 | 29 | ||
Accrued investment income | 595 | 549 | ||
Other debtors | 2,675 | 2,662 | ||
Investment properties | 5 | 5 | ||
Investment in joint ventures and associates accounted for using the equity method | 912 | 825 | ||
Loans | 1,317 | 1,303 | ||
Equity securities and portfolio holdings in unit trusts | 29,976 | 23,599 | ||
Debt securities | 40,982 | 36,546 | ||
Derivative assets | 113 | 47 | ||
Deposits | 1,291 | 1,425 | ||
Assets held for sale | 3,863 | |||
Cash and cash equivalents | 1,934 | 2,157 | ||
Total assets | 84,900 | 77,405 | ||
Total equity | 5,926 | 5,376 | ||
Liabilities | ||||
Insurance contract liabilities | 63,468 | 54,417 | ||
Investment contract liabilities with discretionary participation features | 337 | 347 | ||
Investment contract liabilities without discretionary participation features | 328 | 254 | ||
Unallocated surplus of with-profits funds | 3,474 | 2,667 | ||
Operational borrowings attributable to shareholder-financed operations | 50 | 19 | ||
Borrowings attributable to with-profits operations | 10 | 4 | ||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 3,631 | 3,093 | ||
Deferred tax liabilities | 1,152 | 935 | ||
Current tax liabilities | 122 | 125 | ||
Accruals, deferred income and other liabilities | 6,069 | 5,916 | ||
Provisions | 254 | 229 | ||
Derivative liabilities | 79 | 265 | ||
Liabilities held for sale | 3,758 | |||
Total liabilities | 78,974 | 72,029 | ||
Total equity and liabilities | 84,900 | 77,405 | ||
Operating segments | US | ||||
Assets | ||||
Goodwill | 16 | |||
Deferred acquisition costs and other intangible assets | 8,219 | 8,327 | ||
Property, plant and equipment | 214 | 247 | ||
Reinsurers' share of insurance contract liabilities | 6,424 | 7,224 | ||
Deferred tax assets | 2,300 | 3,979 | ||
Current tax recoverable | 298 | 101 | ||
Accrued investment income | 492 | 628 | ||
Other debtors | 248 | 304 | ||
Investment properties | 5 | 6 | ||
Loans | 9,630 | 9,735 | ||
Equity securities and portfolio holdings in unit trusts | 130,630 | 120,747 | ||
Debt securities | 35,378 | 40,745 | ||
Derivative assets | 1,611 | 834 | ||
Deposits | 43 | 49 | ||
Other investments | 848 | 992 | ||
Cash and cash equivalents | 1,658 | 1,135 | ||
Total assets | 197,998 | 195,069 | ||
Total equity | 5,248 | 5,408 | ||
Liabilities | ||||
Insurance contract liabilities | 177,728 | 174,328 | ||
Investment contract liabilities without discretionary participation features | 2,996 | 3,298 | ||
Core structural borrowings of shareholder-financed operations | 184 | 202 | ||
Operational borrowings attributable to shareholder-financed operations | 508 | 480 | ||
Obligations under funding, securities lending and sale and repurchase agreements | 4,304 | 3,534 | ||
Deferred tax liabilities | 1,845 | 2,832 | ||
Current tax liabilities | 47 | |||
Accruals, deferred income and other liabilities | 5,109 | 4,920 | ||
Provisions | 24 | 3 | ||
Derivative liabilities | 5 | 64 | ||
Total liabilities | 192,750 | 189,661 | ||
Total equity and liabilities | 197,998 | 195,069 | ||
Operating segments | UK and Europe | ||||
Assets | ||||
Goodwill | 1,177 | 1,306 | ||
Deferred acquisition costs and other intangible assets | 210 | 132 | ||
Property, plant and equipment | 447 | 369 | ||
Reinsurers' share of insurance contract liabilities | 2,521 | 2,590 | ||
Deferred tax assets | 157 | 174 | ||
Current tax recoverable | 244 | 308 | ||
Accrued investment income | 1,558 | 1,939 | ||
Other debtors | 3,118 | 3,233 | ||
Investment properties | 16,487 | 14,635 | ||
Investment in joint ventures and associates accounted for using the equity method | 504 | 448 | ||
Loans | 5,986 | 3,572 | ||
Equity securities and portfolio holdings in unit trusts | 62,670 | 54,177 | ||
Debt securities | 92,707 | 90,796 | ||
Derivative assets | 2,954 | 2,927 | ||
Deposits | 9,540 | 10,705 | ||
Assets held for sale | 38 | 726 | ||
Other investments | 4,774 | 4,473 | ||
Cash and cash equivalents | 5,808 | 5,064 | ||
Total assets | 210,900 | 197,574 | ||
Total equity | 8,245 | 7,832 | ||
Liabilities | ||||
Insurance contract liabilities | 88,180 | 88,993 | ||
Investment contract liabilities with discretionary participation features | 62,340 | 52,490 | ||
Investment contract liabilities without discretionary participation features | 17,069 | 16,171 | ||
Unallocated surplus of with-profits funds | 13,477 | 11,650 | ||
Operational borrowings attributable to shareholder-financed operations | 148 | 167 | ||
Borrowings attributable to with-profits operations | 3,706 | 1,345 | ||
Obligations under funding, securities lending and sale and repurchase agreements | 1,358 | 1,497 | ||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 5,243 | 5,594 | ||
Deferred tax liabilities | 1,703 | 1,592 | ||
Current tax liabilities | 377 | 513 | ||
Accruals, deferred income and other liabilities | 6,609 | 6,688 | ||
Provisions | 784 | 647 | ||
Derivative liabilities | 1,661 | 1,860 | ||
Liabilities held for sale | 535 | |||
Total liabilities | 202,655 | 189,742 | ||
Total equity and liabilities | 210,900 | 197,574 | ||
Operating segments | With-profits | Asia | ||||
Assets | ||||
Loans | 725 | 690 | ||
Debt securities | 24,432 | 21,861 | ||
Operating segments | With-profits | UK and Europe | ||||
Assets | ||||
Loans | 4,268 | 1,892 | ||
Debt securities | 50,661 | 48,936 | ||
Operating segments | Unit-linked | Asia | ||||
Assets | ||||
Debt securities | 3,507 | 3,321 | ||
Operating segments | Unit-linked | UK and Europe | ||||
Assets | ||||
Debt securities | 6,711 | 6,277 | ||
Operations within segments | Asia insurance operations | ||||
Assets | ||||
Goodwill | 244 | |||
Deferred acquisition costs and other intangible assets | 2,535 | |||
Property, plant and equipment | 122 | |||
Reinsurers' share of insurance contract liabilities | 1,960 | |||
Deferred tax assets | 102 | |||
Current tax recoverable | 58 | |||
Accrued investment income | 560 | |||
Other debtors | 2,640 | |||
Investment properties | 5 | |||
Investment in joint ventures and associates accounted for using the equity method | 768 | |||
Loans | 1,317 | |||
Equity securities and portfolio holdings in unit trusts | 29,953 | |||
Debt securities | 40,982 | |||
Derivative assets | 113 | |||
Deposits | 1,256 | |||
Cash and cash equivalents | 1,741 | |||
Total assets | 84,356 | |||
Total equity | 5,525 | 4,992 | ||
Liabilities | ||||
Insurance contract liabilities | 63,468 | |||
Investment contract liabilities with discretionary participation features | 337 | |||
Investment contract liabilities without discretionary participation features | 328 | |||
Unallocated surplus of with-profits funds | 3,474 | |||
Operational borrowings attributable to shareholder-financed operations | 50 | |||
Borrowings attributable to with-profits operations | 10 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 3,631 | |||
Deferred tax liabilities | 1,152 | |||
Current tax liabilities | 105 | |||
Accruals, deferred income and other liabilities | 6,033 | |||
Provisions | 164 | |||
Derivative liabilities | 79 | |||
Total liabilities | 78,831 | |||
Total equity and liabilities | 84,356 | |||
Operations within segments | Asia asset management | ||||
Assets | ||||
Goodwill | 61 | |||
Deferred acquisition costs and other intangible assets | 5 | |||
Property, plant and equipment | 3 | |||
Deferred tax assets | 10 | |||
Accrued investment income | 35 | |||
Other debtors | 67 | |||
Investment in joint ventures and associates accounted for using the equity method | 144 | |||
Equity securities and portfolio holdings in unit trusts | 23 | |||
Deposits | 35 | |||
Cash and cash equivalents | 193 | |||
Total assets | 576 | |||
Total equity | 401 | |||
Liabilities | ||||
Current tax liabilities | 17 | |||
Accruals, deferred income and other liabilities | 68 | |||
Provisions | 90 | |||
Total liabilities | 175 | |||
Total equity and liabilities | 576 | |||
Operations within segments | Jackson (US insurance operations) | ||||
Assets | ||||
Deferred acquisition costs and other intangible assets | 8,216 | |||
Property, plant and equipment | 209 | |||
Reinsurers' share of insurance contract liabilities | 6,424 | |||
Deferred tax assets | 2,218 | |||
Current tax recoverable | 284 | |||
Accrued investment income | 444 | |||
Other debtors | 247 | |||
Investment properties | 5 | |||
Loans | 9,630 | |||
Equity securities and portfolio holdings in unit trusts | 130,630 | |||
Debt securities | 35,378 | |||
Derivative assets | 1,611 | |||
Other investments | 844 | |||
Cash and cash equivalents | 1,224 | |||
Total assets | 197,364 | |||
Total equity | 5,013 | 5,204 | ||
Liabilities | ||||
Insurance contract liabilities | 177,728 | |||
Investment contract liabilities without discretionary participation features | 2,996 | |||
Core structural borrowings of shareholder-financed operations | 184 | 202 | ||
Operational borrowings attributable to shareholder-financed operations | 508 | |||
Obligations under funding, securities lending and sale and repurchase agreements | 4,304 | |||
Deferred tax liabilities | 1,844 | |||
Current tax liabilities | 46 | |||
Accruals, deferred income and other liabilities | 4,728 | |||
Provisions | 8 | |||
Derivative liabilities | 5 | |||
Total liabilities | 192,351 | |||
Total equity and liabilities | 197,364 | |||
Operations within segments | Asset management (US) | ||||
Assets | ||||
Deferred acquisition costs and other intangible assets | 3 | |||
Property, plant and equipment | 5 | |||
Deferred tax assets | 82 | |||
Current tax recoverable | 14 | |||
Accrued investment income | 48 | |||
Other debtors | 77 | |||
Deposits | 43 | |||
Other investments | 4 | |||
Cash and cash equivalents | 434 | |||
Total assets | 710 | |||
Total equity | 235 | |||
Liabilities | ||||
Deferred tax liabilities | 1 | |||
Current tax liabilities | 1 | |||
Accruals, deferred income and other liabilities | 457 | |||
Provisions | 16 | |||
Total liabilities | 475 | |||
Total equity and liabilities | 710 | |||
Operations within segments | UK and Europe insurance operations | ||||
Assets | ||||
Goodwill | 24 | |||
Deferred acquisition costs and other intangible assets | 203 | |||
Property, plant and equipment | 443 | |||
Reinsurers' share of insurance contract liabilities | 2,521 | |||
Deferred tax assets | 134 | |||
Current tax recoverable | 244 | |||
Accrued investment income | 1,552 | |||
Other debtors | 2,253 | |||
Investment properties | 16,487 | |||
Investment in joint ventures and associates accounted for using the equity method | 464 | |||
Loans | 5,986 | |||
Equity securities and portfolio holdings in unit trusts | 62,551 | |||
Debt securities | 92,707 | |||
Derivative assets | 2,954 | |||
Deposits | 9,540 | |||
Assets held for sale | 38 | |||
Other investments | 4,756 | |||
Cash and cash equivalents | 5,365 | |||
Total assets | 208,222 | |||
Total equity | 6,344 | |||
Liabilities | ||||
Insurance contract liabilities | 88,180 | |||
Investment contract liabilities with discretionary participation features | 62,340 | |||
Investment contract liabilities without discretionary participation features | 17,069 | |||
Unallocated surplus of with-profits funds | 13,477 | |||
Operational borrowings attributable to shareholder-financed operations | 127 | |||
Borrowings attributable to with-profits operations | 3,706 | |||
Obligations under funding, securities lending and sale and repurchase agreements | 1,358 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 5,243 | |||
Deferred tax liabilities | 1,684 | |||
Current tax liabilities | 333 | |||
Accruals, deferred income and other liabilities | 6,120 | |||
Provisions | 580 | |||
Derivative liabilities | 1,661 | |||
Total liabilities | 201,878 | |||
Total equity and liabilities | 208,222 | |||
Operations within segments | UK and Europe asset management | ||||
Assets | ||||
Goodwill | 1,153 | |||
Deferred acquisition costs and other intangible assets | 7 | |||
Property, plant and equipment | 4 | |||
Deferred tax assets | 23 | |||
Accrued investment income | 6 | |||
Other debtors | 941 | |||
Investment in joint ventures and associates accounted for using the equity method | 40 | |||
Equity securities and portfolio holdings in unit trusts | 119 | |||
Other investments | 18 | |||
Cash and cash equivalents | 443 | |||
Total assets | 2,754 | |||
Total equity | 1,901 | |||
Liabilities | ||||
Operational borrowings attributable to shareholder-financed operations | 21 | |||
Deferred tax liabilities | 19 | |||
Current tax liabilities | 44 | |||
Accruals, deferred income and other liabilities | 565 | |||
Provisions | 204 | |||
Total liabilities | 853 | |||
Total equity and liabilities | 2,754 | |||
Operations within segments | UK and Europe with-profits sub-funds | UK and Europe insurance operations | ||||
Assets | ||||
Goodwill | 24 | |||
Deferred acquisition costs and other intangible assets | 100 | |||
Property, plant and equipment | 406 | |||
Reinsurers' share of insurance contract liabilities | 1,269 | |||
Deferred tax assets | 70 | |||
Current tax recoverable | 63 | |||
Accrued investment income | 892 | |||
Other debtors | 1,553 | |||
Investment properties | 14,153 | |||
Investment in joint ventures and associates accounted for using the equity method | 464 | |||
Loans | 4,268 | |||
Equity securities and portfolio holdings in unit trusts | 47,173 | |||
Debt securities | 50,661 | |||
Derivative assets | 2,420 | |||
Deposits | 7,167 | |||
Assets held for sale | 38 | |||
Other investments | 4,744 | |||
Cash and cash equivalents | 4,096 | |||
Total assets | 139,561 | |||
Liabilities | ||||
Insurance contract liabilities | 48,894 | |||
Investment contract liabilities with discretionary participation features | 62,323 | |||
Investment contract liabilities without discretionary participation features | 5 | |||
Unallocated surplus of with-profits funds | 13,477 | |||
Borrowings attributable to with-profits operations | 3,706 | |||
Obligations under funding, securities lending and sale and repurchase agreements | 748 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 3,409 | |||
Deferred tax liabilities | 1,410 | |||
Current tax liabilities | 119 | |||
Accruals, deferred income and other liabilities | 4,791 | |||
Provisions | 55 | |||
Derivative liabilities | 624 | |||
Total liabilities | 139,561 | |||
Total equity and liabilities | 139,561 | |||
Operations within segments | With-profits | Asia insurance operations | ||||
Assets | ||||
Deferred acquisition costs and other intangible assets | 45 | |||
Property, plant and equipment | 86 | |||
Reinsurers' share of insurance contract liabilities | 76 | |||
Current tax recoverable | 1 | |||
Accrued investment income | 230 | |||
Other debtors | 1,823 | |||
Loans | 725 | |||
Equity securities and portfolio holdings in unit trusts | 14,995 | |||
Debt securities | 24,432 | |||
Derivative assets | 82 | |||
Deposits | 246 | |||
Cash and cash equivalents | 632 | |||
Total assets | 43,373 | |||
Liabilities | ||||
Insurance contract liabilities | 33,861 | |||
Investment contract liabilities with discretionary participation features | 337 | |||
Unallocated surplus of with-profits funds | 3,474 | |||
Borrowings attributable to with-profits operations | 10 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 2,152 | |||
Deferred tax liabilities | 774 | |||
Current tax liabilities | 24 | |||
Accruals, deferred income and other liabilities | 2,620 | |||
Provisions | 62 | |||
Derivative liabilities | 59 | |||
Total liabilities | 43,373 | |||
Total equity and liabilities | 43,373 | |||
Operations within segments | With-profits | Scottish Amicable Insurance Fund | UK and Europe insurance operations | ||||
Assets | ||||
Total assets | 5,768 | 6,101 | ||
Liabilities | ||||
Total liabilities | 5,768 | 6,101 | ||
Operations within segments | With-profits | PAC with-profits fund | UK and Europe insurance operations | ||||
Liabilities | ||||
Non-profits annuities liabilities | 10,600 | £ 11,200 | ||
Operations within segments | Unit-linked | Asia insurance operations | ||||
Assets | ||||
Current tax recoverable | 2 | |||
Accrued investment income | 53 | |||
Other debtors | 169 | |||
Equity securities and portfolio holdings in unit trusts | 13,199 | |||
Debt securities | 3,507 | |||
Derivative assets | 5 | |||
Deposits | 511 | |||
Cash and cash equivalents | 287 | |||
Total assets | 17,733 | |||
Liabilities | ||||
Insurance contract liabilities | 15,935 | |||
Investment contract liabilities without discretionary participation features | 328 | |||
Operational borrowings attributable to shareholder-financed operations | 7 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 1,219 | |||
Deferred tax liabilities | 38 | |||
Accruals, deferred income and other liabilities | 206 | |||
Total liabilities | 17,733 | |||
Total equity and liabilities | 17,733 | |||
Operations within segments | Unit-linked | UK and Europe other funds and subsidiaries | UK and Europe insurance operations | ||||
Assets | ||||
Reinsurers' share of insurance contract liabilities | 133 | |||
Accrued investment income | 107 | |||
Other debtors | 76 | |||
Investment properties | 682 | |||
Equity securities and portfolio holdings in unit trusts | 15,369 | |||
Debt securities | 6,711 | |||
Derivative assets | 8 | |||
Deposits | 1,139 | |||
Other investments | 11 | |||
Cash and cash equivalents | 693 | |||
Total assets | 24,929 | |||
Liabilities | ||||
Insurance contract liabilities | 6,097 | |||
Investment contract liabilities without discretionary participation features | 17,048 | |||
Operational borrowings attributable to shareholder-financed operations | 4 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 1,667 | |||
Current tax liabilities | 76 | |||
Accruals, deferred income and other liabilities | 36 | |||
Derivative liabilities | 1 | |||
Total liabilities | 24,929 | |||
Total equity and liabilities | 24,929 | |||
Operations within segments | Other business | Asia insurance operations | ||||
Assets | ||||
Goodwill | 244 | |||
Deferred acquisition costs and other intangible assets | 2,490 | |||
Property, plant and equipment | 36 | |||
Reinsurers' share of insurance contract liabilities | 1,884 | |||
Deferred tax assets | 102 | |||
Current tax recoverable | 55 | |||
Accrued investment income | 277 | |||
Other debtors | 648 | |||
Investment properties | 5 | |||
Investment in joint ventures and associates accounted for using the equity method | 768 | |||
Loans | 592 | |||
Equity securities and portfolio holdings in unit trusts | 1,759 | |||
Debt securities | 13,043 | |||
Derivative assets | 26 | |||
Deposits | 499 | |||
Cash and cash equivalents | 822 | |||
Total assets | 23,250 | |||
Total equity | 5,525 | |||
Liabilities | ||||
Insurance contract liabilities | 13,672 | |||
Operational borrowings attributable to shareholder-financed operations | 43 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 260 | |||
Deferred tax liabilities | 340 | |||
Current tax liabilities | 81 | |||
Accruals, deferred income and other liabilities | 3,207 | |||
Provisions | 102 | |||
Derivative liabilities | 20 | |||
Total liabilities | 17,725 | |||
Total equity and liabilities | 23,250 | |||
Operations within segments | Variable annuity separate account | Jackson (US insurance operations) | ||||
Assets | ||||
Equity securities and portfolio holdings in unit trusts | 130,528 | |||
Total assets | 130,528 | |||
Liabilities | ||||
Insurance contract liabilities | 130,528 | |||
Total liabilities | 130,528 | |||
Total equity and liabilities | 130,528 | |||
Operations within segments | Fixed annuity, GIC and other business | Jackson (US insurance operations) | ||||
Assets | ||||
Deferred acquisition costs and other intangible assets | 8,216 | |||
Property, plant and equipment | 209 | |||
Reinsurers' share of insurance contract liabilities | 6,424 | |||
Deferred tax assets | 2,218 | |||
Current tax recoverable | 284 | |||
Accrued investment income | 444 | |||
Other debtors | 247 | |||
Investment properties | 5 | |||
Loans | 9,630 | |||
Equity securities and portfolio holdings in unit trusts | 102 | |||
Debt securities | 35,378 | |||
Derivative assets | 1,611 | |||
Other investments | 844 | |||
Cash and cash equivalents | 1,224 | |||
Total assets | 66,836 | |||
Total equity | 5,013 | |||
Liabilities | ||||
Insurance contract liabilities | 47,200 | |||
Investment contract liabilities without discretionary participation features | 2,996 | |||
Core structural borrowings of shareholder-financed operations | 184 | |||
Operational borrowings attributable to shareholder-financed operations | 508 | |||
Obligations under funding, securities lending and sale and repurchase agreements | 4,304 | |||
Deferred tax liabilities | 1,844 | |||
Current tax liabilities | 46 | |||
Accruals, deferred income and other liabilities | 4,728 | |||
Provisions | 8 | |||
Derivative liabilities | 5 | |||
Total liabilities | 61,823 | |||
Total equity and liabilities | 66,836 | |||
Operations within segments | Annuity and other long term business | UK and Europe other funds and subsidiaries | UK and Europe insurance operations | ||||
Assets | ||||
Deferred acquisition costs and other intangible assets | 103 | |||
Property, plant and equipment | 37 | |||
Reinsurers' share of insurance contract liabilities | 1,119 | |||
Deferred tax assets | 64 | |||
Current tax recoverable | 181 | |||
Accrued investment income | 553 | |||
Other debtors | 624 | |||
Investment properties | 1,652 | |||
Loans | 1,718 | |||
Equity securities and portfolio holdings in unit trusts | 9 | |||
Debt securities | 35,335 | |||
Derivative assets | 526 | |||
Deposits | 1,234 | |||
Other investments | 1 | |||
Cash and cash equivalents | 576 | |||
Total assets | 43,732 | |||
Total equity | 6,344 | |||
Liabilities | ||||
Insurance contract liabilities | 33,189 | |||
Investment contract liabilities with discretionary participation features | 17 | |||
Investment contract liabilities without discretionary participation features | 16 | |||
Operational borrowings attributable to shareholder-financed operations | 123 | |||
Obligations under funding, securities lending and sale and repurchase agreements | 610 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 167 | |||
Deferred tax liabilities | 274 | |||
Current tax liabilities | 138 | |||
Accruals, deferred income and other liabilities | 1,293 | |||
Provisions | 525 | |||
Derivative liabilities | 1,036 | |||
Total liabilities | 37,388 | |||
Total equity and liabilities | 43,732 | |||
Elimination of intra-segment amounts | Asia | ||||
Assets | ||||
Other debtors | (32) | |||
Total assets | (32) | |||
Liabilities | ||||
Accruals, deferred income and other liabilities | (32) | |||
Total liabilities | (32) | |||
Total equity and liabilities | (32) | |||
Elimination of intra-segment amounts | US | ||||
Assets | ||||
Other debtors | (76) | |||
Total assets | (76) | |||
Liabilities | ||||
Accruals, deferred income and other liabilities | (76) | |||
Total liabilities | (76) | |||
Total equity and liabilities | (76) | |||
Elimination of intra-segment amounts | UK and Europe | ||||
Assets | ||||
Other debtors | (76) | |||
Total assets | (76) | |||
Liabilities | ||||
Accruals, deferred income and other liabilities | (76) | |||
Total liabilities | (76) | |||
Total equity and liabilities | £ (76) |
Group assets and liabilities108
Group assets and liabilities - measurement - Carried at fair value (Details) - At fair value - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 407,270 | £ 378,134 | |
Total financial instruments at fair value | £ 376,066 | £ 349,786 | |
Percentage of total | 100.00% | 100.00% | |
PCA Life Insurance Company Ltd. - Korea | |||
Financial instruments | |||
Total financial instruments at fair value | £ 3,200 | ||
Loans | |||
Financial instruments | |||
Financial assets | £ 4,837 | 2,975 | |
Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | 223,391 | 198,552 | |
Debt securities | |||
Financial instruments | |||
Financial assets | 171,374 | 170,458 | |
Financial assets classified as available-for-sale | 35,293 | 40,645 | |
Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 10,423 | 9,401 | |
Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (2,755) | (3,252) | |
Investment contract liabilities without discretionary participation features held at fair value | |||
Financial instruments | |||
Financial liabilities | (17,397) | (16,425) | |
Borrowings attributable to with-profits operations | |||
Financial instruments | |||
Financial liabilities | (1,887) | ||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | (8,889) | (8,687) | |
Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | (3,031) | (3,236) | |
Level 1 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 273,681 | 247,043 | |
Total financial instruments at fair value | £ 268,845 | £ 242,826 | |
Percentage of total | 72.00% | 70.00% | |
Level 1 | PCA Life Insurance Company Ltd. - Korea | |||
Financial instruments | |||
Total financial instruments at fair value | £ 2,763 | ||
Level 1 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 218,083 | 193,784 | |
Level 1 | Debt securities | |||
Financial instruments | |||
Financial assets | 55,579 | 53,259 | |
Level 1 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 87 | 64 | |
Level 1 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (68) | (64) | |
Level 1 | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | (4,836) | (4,217) | |
Level 2 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 123,815 | 122,764 | |
Total financial instruments at fair value | £ 102,778 | £ 102,367 | |
Percentage of total | 27.00% | 29.00% | |
Level 2 | PCA Life Insurance Company Ltd. - Korea | |||
Financial instruments | |||
Total financial instruments at fair value | £ 437 | ||
Level 2 | Loans | |||
Financial instruments | |||
Financial assets | 276 | ||
Level 2 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 4,937 | 4,046 | |
Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 115,141 | 116,257 | |
Level 2 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 5,912 | 4,857 | |
Level 2 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (2,175) | (2,672) | |
Level 2 | Investment contract liabilities without discretionary participation features held at fair value | |||
Financial instruments | |||
Financial liabilities | (17,397) | (16,425) | |
Level 2 | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | (3,640) | (3,587) | |
Level 2 | Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | (385) | ||
Level 3 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 9,774 | 8,327 | |
Total financial instruments at fair value | £ 4,443 | £ 4,593 | £ 4,108 |
Percentage of total | 1.00% | 1.00% | |
Level 3 | Loans | |||
Financial instruments | |||
Financial assets | £ 4,837 | £ 2,699 | 2,183 |
Level 3 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | 371 | 722 | 607 |
Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 654 | 942 | 778 |
Level 3 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 4,424 | 4,480 | 4,276 |
Level 3 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (512) | (516) | (353) |
Level 3 | Borrowings attributable to with-profits operations | |||
Financial instruments | |||
Financial liabilities | (1,887) | ||
Level 3 | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | (413) | (883) | (1,036) |
Level 3 | Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | (3,031) | (2,851) | £ (2,347) |
With-profits | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 145,847 | £ 126,146 | |
Percentage of total | 100.00% | 100.00% | |
With-profits | Loans | |||
Financial instruments | |||
Financial assets | £ 2,023 | £ 27 | |
With-profits | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | 62,168 | 49,540 | |
With-profits | Debt securities | |||
Financial instruments | |||
Financial assets | 75,093 | 70,797 | |
With-profits | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 7,246 | 6,858 | |
With-profits | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (683) | (1,076) | |
With-profits | Level 1 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 86,490 | £ 71,415 | |
Percentage of total | 60.00% | 56.00% | |
With-profits | Level 1 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 57,347 | £ 45,181 | |
With-profits | Level 1 | Debt securities | |||
Financial instruments | |||
Financial assets | 29,143 | 26,227 | |
With-profits | Level 1 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 68 | 58 | |
With-profits | Level 1 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (68) | (51) | |
With-profits | Level 2 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 53,095 | £ 49,881 | |
Percentage of total | 36.00% | 40.00% | |
With-profits | Level 2 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 4,470 | £ 3,669 | |
With-profits | Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 45,602 | 43,880 | |
With-profits | Level 2 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 3,638 | 3,357 | |
With-profits | Level 2 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (615) | (1,025) | |
With-profits | Level 3 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 6,262 | £ 4,850 | |
Percentage of total | 4.00% | 4.00% | |
With-profits | Level 3 | Loans | |||
Financial instruments | |||
Financial assets | £ 2,023 | £ 27 | |
With-profits | Level 3 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | 351 | 690 | |
With-profits | Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 348 | 690 | |
With-profits | Level 3 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 3,540 | 3,443 | |
Unit-linked and variable annuity separate account | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 169,340 | £ 156,622 | |
Percentage of total | 100.00% | 100.00% | |
Unit-linked and variable annuity separate account | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 159,098 | £ 147,033 | |
Unit-linked and variable annuity separate account | Debt securities | |||
Financial instruments | |||
Financial assets | 10,219 | 9,598 | |
Unit-linked and variable annuity separate account | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 24 | 19 | |
Unit-linked and variable annuity separate account | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (1) | (28) | |
Unit-linked and variable annuity separate account | Level 1 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 163,636 | £ 151,775 | |
Percentage of total | 97.00% | 97.00% | |
Unit-linked and variable annuity separate account | Level 1 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 158,631 | £ 146,637 | |
Unit-linked and variable annuity separate account | Level 1 | Debt securities | |||
Financial instruments | |||
Financial assets | 4,993 | 5,136 | |
Unit-linked and variable annuity separate account | Level 1 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 12 | 6 | |
Unit-linked and variable annuity separate account | Level 1 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (4) | ||
Unit-linked and variable annuity separate account | Level 2 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 5,686 | £ 4,820 | |
Percentage of total | 3.00% | 3.00% | |
Unit-linked and variable annuity separate account | Level 2 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 457 | £ 374 | |
Unit-linked and variable annuity separate account | Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 5,226 | 4,462 | |
Unit-linked and variable annuity separate account | Level 2 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 4 | 8 | |
Unit-linked and variable annuity separate account | Level 2 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (1) | (24) | |
Unit-linked and variable annuity separate account | Level 3 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 18 | £ 27 | |
Percentage of total | 0.00% | 0.00% | |
Unit-linked and variable annuity separate account | Level 3 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 10 | £ 22 | |
Unit-linked and variable annuity separate account | Level 3 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 8 | 5 | |
Non-linked shareholder-backed | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 92,083 | £ 95,366 | |
Percentage of total | 100.00% | 100.00% | |
Non-linked shareholder-backed | Loans | |||
Financial instruments | |||
Financial assets | £ 2,814 | £ 2,948 | |
Non-linked shareholder-backed | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | 2,125 | 1,979 | |
Non-linked shareholder-backed | Debt securities | |||
Financial instruments | |||
Financial assets | 86,062 | 90,063 | |
Non-linked shareholder-backed | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 3,153 | 2,524 | |
Non-linked shareholder-backed | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (2,071) | (2,148) | |
Non-linked shareholder-backed | Level 1 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 23,555 | £ 23,853 | |
Percentage of total | 25.00% | 25.00% | |
Non-linked shareholder-backed | Level 1 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 2,105 | £ 1,966 | |
Non-linked shareholder-backed | Level 1 | Debt securities | |||
Financial instruments | |||
Financial assets | 21,443 | 21,896 | |
Non-linked shareholder-backed | Level 1 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 7 | ||
Non-linked shareholder-backed | Level 1 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (9) | ||
Non-linked shareholder-backed | Level 2 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 65,034 | £ 68,063 | |
Percentage of total | 71.00% | 71.00% | |
Non-linked shareholder-backed | Level 2 | Loans | |||
Financial instruments | |||
Financial assets | £ 276 | ||
Non-linked shareholder-backed | Level 2 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 10 | 3 | |
Non-linked shareholder-backed | Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 64,313 | 67,915 | |
Non-linked shareholder-backed | Level 2 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 2,270 | 1,492 | |
Non-linked shareholder-backed | Level 2 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (1,559) | (1,623) | |
Non-linked shareholder-backed | Level 3 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 3,494 | £ 3,450 | |
Percentage of total | 4.00% | 4.00% | |
Non-linked shareholder-backed | Level 3 | Loans | |||
Financial instruments | |||
Financial assets | £ 2,814 | £ 2,672 | |
Non-linked shareholder-backed | Level 3 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | 10 | 10 | |
Non-linked shareholder-backed | Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 306 | 252 | |
Non-linked shareholder-backed | Level 3 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 876 | 1,032 | |
Non-linked shareholder-backed | Level 3 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | £ (512) | £ (516) |
Group assets and liabilities109
Group assets and liabilities - measurement - Investment properties (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Group assets and liabilities - measurement | |||
Assets | £ 493,941 | £ 470,498 | |
Investment properties | At fair value | |||
Group assets and liabilities - measurement | |||
Assets | 16,497 | 14,646 | |
Level 3 | Investment properties | At fair value | |||
Group assets and liabilities - measurement | |||
Assets | £ 16,497 | £ 14,646 | £ 13,422 |
Group assets and liabilities110
Group assets and liabilities - measurement - Fair value disclosed (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Financial instruments | ||
Financial liabilities, carrying value | £ (40,523) | £ (38,007) |
Debt securities | 171,374 | 170,458 |
Core structural borrowings of shareholder-financed operations | 6,280 | 6,798 |
Core structural borrowings of shareholder-financed operations | ||
Financial instruments | ||
Financial liabilities, carrying value | (6,280) | (6,798) |
Operational borrowings attributable to shareholder-financed operations | ||
Financial instruments | ||
Financial liabilities, carrying value | (1,791) | (2,317) |
Borrowings attributable to with-profits operations | ||
Financial instruments | ||
Financial liabilities, carrying value | (3,716) | (1,349) |
Obligations under funding, securities lending and sale and repurchase agreements | ||
Financial instruments | ||
Financial liabilities, carrying value | (5,662) | (5,031) |
Assets and liabilities at amortised cost for which fair value is disclosed | ||
Financial instruments | ||
Financial assets, carrying value | 12,200 | |
Assets and liabilities at amortised cost for which fair value is disclosed | Loans | ||
Financial instruments | ||
Financial assets, fair value | 12,939 | 12,908 |
Financial assets, carrying value | 12,205 | 12,198 |
Allowance for loan losses | 28 | 15 |
Assets and liabilities at amortised cost for which fair value is disclosed | Investment contract liabilities without discretionary participation features held at fair value | ||
Financial instruments | ||
Financial liabilities, fair value | (3,032) | (3,333) |
Financial liabilities, carrying value | (2,997) | (3,298) |
Assets and liabilities at amortised cost for which fair value is disclosed | Core structural borrowings of shareholder-financed operations | ||
Financial instruments | ||
Financial liabilities, fair value | (7,023) | (7,220) |
Financial liabilities, carrying value | (6,280) | (6,798) |
Assets and liabilities at amortised cost for which fair value is disclosed | Operational borrowings attributable to shareholder-financed operations | ||
Financial instruments | ||
Financial liabilities, fair value | (1,791) | (2,317) |
Financial liabilities, carrying value | (1,791) | (2,317) |
Assets and liabilities at amortised cost for which fair value is disclosed | Borrowings attributable to with-profits operations | ||
Financial instruments | ||
Financial liabilities, fair value | (1,832) | (1,353) |
Financial liabilities, carrying value | (1,829) | (1,349) |
Assets and liabilities at amortised cost for which fair value is disclosed | Obligations under funding, securities lending and sale and repurchase agreements | ||
Financial instruments | ||
Financial liabilities, fair value | (5,728) | (5,066) |
Financial liabilities, carrying value | (5,662) | (5,031) |
Assets and liabilities at amortised cost for which fair value is disclosed | Convertible bonds | ||
Financial instruments | ||
Debt securities | 312 | 306 |
Core structural borrowings of shareholder-financed operations | 1,311 | 1,455 |
Assets and liabilities at amortised cost for which fair value is disclosed | Level 2 | Loans | ||
Financial instruments | ||
Financial assets, fair value | 2,756 | 4,062 |
Assets and liabilities at amortised cost for which fair value is disclosed | Level 2 | Core structural borrowings of shareholder-financed operations | ||
Financial instruments | ||
Financial liabilities, fair value | (7,023) | (7,220) |
Assets and liabilities at amortised cost for which fair value is disclosed | Level 2 | Operational borrowings attributable to shareholder-financed operations | ||
Financial instruments | ||
Financial liabilities, fair value | (1,788) | (2,313) |
Assets and liabilities at amortised cost for which fair value is disclosed | Level 2 | Borrowings attributable to with-profits operations | ||
Financial instruments | ||
Financial liabilities, fair value | (1,761) | (1,220) |
Assets and liabilities at amortised cost for which fair value is disclosed | Level 2 | Obligations under funding, securities lending and sale and repurchase agreements | ||
Financial instruments | ||
Financial liabilities, fair value | (1,410) | (1,926) |
Assets and liabilities at amortised cost for which fair value is disclosed | Level 3 | Loans | ||
Financial instruments | ||
Financial assets, fair value | 10,183 | 8,846 |
Assets and liabilities at amortised cost for which fair value is disclosed | Level 3 | Lifetime (equity-release) mortgages | ||
Financial instruments | ||
Financial assets, fair value | 1,429 | |
Assets and liabilities at amortised cost for which fair value is disclosed | Level 3 | Investment contract liabilities without discretionary participation features held at fair value | ||
Financial instruments | ||
Financial liabilities, fair value | (3,032) | (3,333) |
Assets and liabilities at amortised cost for which fair value is disclosed | Level 3 | Operational borrowings attributable to shareholder-financed operations | ||
Financial instruments | ||
Financial liabilities, fair value | (3) | (4) |
Assets and liabilities at amortised cost for which fair value is disclosed | Level 3 | Borrowings attributable to with-profits operations | ||
Financial instruments | ||
Financial liabilities, fair value | (71) | (133) |
Assets and liabilities at amortised cost for which fair value is disclosed | Level 3 | Obligations under funding, securities lending and sale and repurchase agreements | ||
Financial instruments | ||
Financial liabilities, fair value | £ (4,318) | £ (3,140) |
Group assets and liabilities111
Group assets and liabilities - measurement - Valuation approach for level 2 (Details) - At fair value - Debt securities - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Group assets and liabilities - measurement | ||
Financial assets | £ 171,374 | £ 170,458 |
Level 2 | ||
Group assets and liabilities - measurement | ||
Financial assets | 115,141 | 116,257 |
Level 2 | Internal valuation | ||
Group assets and liabilities - measurement | ||
Financial assets | £ 13,910 | £ 12,708 |
Group assets and liabilities112
Group assets and liabilities - measurement - Level 3 financial instruments (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of movements in level 3 net financial instruments measured at fair value | ||
Net unrealised gains (losses) of financial instruments still held at end of year | £ (139) | £ 242 |
At fair value | ||
Reconciliation of movements in level 3 net financial instruments measured at fair value | ||
Financial instruments at beginning of period | 349,786 | |
Financial instruments at end of period | 376,066 | 349,786 |
At fair value | Level 3 | ||
Reconciliation of movements in level 3 net financial instruments measured at fair value | ||
Financial instruments at beginning of period | 4,593 | 4,108 |
Total gains/(losses) in income statement | (402) | 320 |
Total (losses)/gains recorded as other comprehensive income | (134) | 402 |
Purchases | 3,245 | 1,058 |
Sales | (1,715) | (1,186) |
Settled | 1,326 | 361 |
Issued | (2,298) | (214) |
Transfers into level 3 | (80) | 138 |
Transfers out of level 3 | (92) | (394) |
Financial instruments at end of period | 4,443 | 4,593 |
Net unrealised gains (losses) of financial instruments still held at end of year | (139) | 242 |
At fair value | Financial investments, net of derivative liabilities | Level 3 | ||
Reconciliation of movements in level 3 net financial instruments measured at fair value | ||
Financial instruments at beginning of period | 8,327 | 7,491 |
Total gains/(losses) in income statement | 156 | 342 |
Total (losses)/gains recorded as other comprehensive income | (384) | 861 |
Purchases | 3,258 | 1,058 |
Sales | (1,715) | (1,210) |
Settled | (317) | (169) |
Issued | 236 | 210 |
Transfers into level 3 | 305 | 138 |
Transfers out of level 3 | (92) | (394) |
Financial instruments at end of period | 9,774 | 8,327 |
At fair value | Loans | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 2,975 | |
Assets at end of period | 4,837 | 2,975 |
At fair value | Loans | Level 3 | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 2,699 | 2,183 |
Total gains/(losses) in income statement | 17 | 2 |
Total (losses)/gains recorded as other comprehensive income | (235) | 427 |
Purchases | 2,129 | |
Settled | (311) | (123) |
Issued | 236 | 210 |
Transfers into level 3 | 302 | |
Assets at end of period | 4,837 | 2,699 |
Reconciliation of movements in level 3 net financial instruments measured at fair value | ||
Net unrealised gains (losses) of financial instruments still held at end of year | 20 | |
At fair value | Equity securities and portfolio holdings in unit trusts | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 198,552 | |
Assets at end of period | 223,391 | 198,552 |
At fair value | Equity securities and portfolio holdings in unit trusts | Level 3 | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 722 | 607 |
Total gains/(losses) in income statement | 11 | 59 |
Total (losses)/gains recorded as other comprehensive income | (5) | (20) |
Purchases | 186 | 153 |
Sales | (468) | (133) |
Settled | (6) | (9) |
Transfers into level 3 | 1 | 65 |
Transfers out of Level 3 | (70) | |
Assets at end of period | 371 | 722 |
Reconciliation of movements in level 3 net financial instruments measured at fair value | ||
Net unrealised gains (losses) of financial instruments still held at end of year | (12) | 8 |
At fair value | Debt securities | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 170,458 | |
Assets at end of period | 171,374 | 170,458 |
At fair value | Debt securities | Level 3 | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 942 | 778 |
Total gains/(losses) in income statement | 51 | 85 |
Total (losses)/gains recorded as other comprehensive income | (11) | 11 |
Purchases | 216 | 185 |
Sales | (522) | (75) |
Settled | (37) | |
Transfers out of Level 3 | (22) | (5) |
Assets at end of period | 654 | 942 |
Reconciliation of movements in level 3 net financial instruments measured at fair value | ||
Net unrealised gains (losses) of financial instruments still held at end of year | (5) | 71 |
At fair value | Other investments (including derivative assets) | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 9,401 | |
Assets at end of period | 10,423 | 9,401 |
At fair value | Other investments (including derivative assets) | Level 3 | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 4,480 | 4,276 |
Total gains/(losses) in income statement | 73 | 359 |
Total (losses)/gains recorded as other comprehensive income | (133) | 443 |
Purchases | 727 | 720 |
Sales | (725) | (1,002) |
Transfers into level 3 | 2 | 73 |
Transfers out of Level 3 | (389) | |
Assets at end of period | 4,424 | 4,480 |
Reconciliation of movements in level 3 net financial instruments measured at fair value | ||
Net unrealised gains (losses) of financial instruments still held at end of year | (22) | 182 |
At fair value | Derivative liabilities | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (3,252) | |
Liabilities at end of period | (2,755) | (3,252) |
At fair value | Derivative liabilities | Level 3 | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (516) | (353) |
Total gains/(losses) in income statement | 4 | (163) |
Liabilities at end of period | (512) | (516) |
Reconciliation of movements in level 3 net financial instruments measured at fair value | ||
Net unrealised gains (losses) of financial instruments still held at end of year | 4 | |
At fair value | Borrowings attributable to with-profits operations | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at end of period | (1,887) | |
At fair value | Borrowings attributable to with-profits operations | Level 3 | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Total gains/(losses) in income statement | (13) | |
Settled | 115 | |
Issued | (1,989) | |
Liabilities at end of period | (1,887) | |
Reconciliation of movements in level 3 net financial instruments measured at fair value | ||
Net unrealised gains (losses) of financial instruments still held at end of year | (13) | |
At fair value | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (8,687) | |
Liabilities at end of period | (8,889) | (8,687) |
At fair value | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | Level 3 | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (883) | (1,036) |
Total gains/(losses) in income statement | (559) | (18) |
Total (losses)/gains recorded as other comprehensive income | (2) | |
Purchases | (13) | |
Sales | 24 | |
Settled | 1,276 | 271 |
Issued | (234) | (122) |
Liabilities at end of period | (413) | (883) |
Reconciliation of movements in level 3 net financial instruments measured at fair value | ||
Net unrealised gains (losses) of financial instruments still held at end of year | (123) | (18) |
At fair value | Other financial liabilities | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (3,236) | |
Liabilities at end of period | (3,031) | (3,236) |
At fair value | Other financial liabilities | Level 3 | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (2,851) | (2,347) |
Total gains/(losses) in income statement | 14 | (4) |
Total (losses)/gains recorded as other comprehensive income | 250 | (457) |
Settled | 252 | 259 |
Issued | (311) | (302) |
Transfers into level 3 | (385) | |
Liabilities at end of period | (3,031) | (2,851) |
Reconciliation of movements in level 3 net financial instruments measured at fair value | ||
Net unrealised gains (losses) of financial instruments still held at end of year | £ 12 | £ (1) |
Group assets and liabilities113
Group assets and liabilities - measurement - Level 3 investment properties (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | £ 470,498 | |
Assets at end of period | 493,941 | £ 470,498 |
At fair value | Level 3 | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Net unrealised gains of investment properties still held at end of year | 394 | 286 |
At fair value | Investment properties | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 14,646 | |
Assets at end of period | 16,497 | 14,646 |
At fair value | Investment properties | Level 3 | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 14,646 | 13,422 |
Total gains in income statement | 415 | 273 |
Total (losses)/gains recorded as other comprehensive income | (21) | 97 |
Purchases | 2,048 | 1,527 |
Sales | (591) | (632) |
Transfers out of Level 3 | (41) | |
Assets at end of period | £ 16,497 | £ 14,646 |
Group assets and liabilities114
Group assets and liabilities - measurement - Valuation approach for level 3 (Details) - At fair value - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Financial instruments | |||
Net financial instruments at fair value | £ 376,066 | £ 349,786 | |
Percentage at hierarchy level | 100.00% | 100.00% | |
Loans | |||
Financial instruments | |||
Financial assets | £ 4,837 | £ 2,975 | |
Borrowings attributable to with-profits operations | |||
Financial instruments | |||
Financial liabilities | 1,887 | ||
Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | 3,031 | 3,236 | |
Debt securities | |||
Financial instruments | |||
Financial assets | 171,374 | 170,458 | |
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | 8,889 | 8,687 | |
Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 2,755 | 3,252 | |
Level 2 | |||
Financial instruments | |||
Net financial instruments at fair value | £ 102,778 | £ 102,367 | |
Percentage at hierarchy level | 27.00% | 29.00% | |
Level 2 | Loans | |||
Financial instruments | |||
Financial assets | £ 276 | ||
Level 2 | Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | 385 | ||
Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | £ 115,141 | 116,257 | |
Level 2 | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | 3,640 | 3,587 | |
Level 2 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 2,175 | 2,672 | |
Level 3 | |||
Financial instruments | |||
Net financial instruments at fair value | £ 4,443 | £ 4,593 | £ 4,108 |
Percentage at hierarchy level | 1.00% | 1.00% | |
Level 3 | Loans | |||
Financial instruments | |||
Financial assets | £ 4,837 | £ 2,699 | 2,183 |
Level 3 | Borrowings attributable to with-profits operations | |||
Financial instruments | |||
Financial liabilities | 1,887 | ||
Level 3 | Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | 3,031 | 2,851 | 2,347 |
Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 654 | 942 | 778 |
Level 3 | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | 413 | 883 | 1,036 |
Level 3 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 512 | 516 | £ 353 |
With-profits | Loans | |||
Financial instruments | |||
Financial assets | 2,023 | 27 | |
With-profits | Debt securities | |||
Financial instruments | |||
Financial assets | 75,093 | 70,797 | |
With-profits | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 683 | 1,076 | |
With-profits | Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 45,602 | 43,880 | |
With-profits | Level 2 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 615 | 1,025 | |
With-profits | Level 3 | Loans | |||
Financial instruments | |||
Financial assets | 2,023 | 27 | |
With-profits | Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 348 | 690 | |
Non-linked shareholder-backed | Loans | |||
Financial instruments | |||
Financial assets | 2,814 | 2,948 | |
Non-linked shareholder-backed | Debt securities | |||
Financial instruments | |||
Financial assets | 86,062 | 90,063 | |
Non-linked shareholder-backed | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 2,071 | 2,148 | |
Non-linked shareholder-backed | Level 2 | Loans | |||
Financial instruments | |||
Financial assets | 276 | ||
Non-linked shareholder-backed | Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 64,313 | 67,915 | |
Non-linked shareholder-backed | Level 2 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 1,559 | 1,623 | |
Non-linked shareholder-backed | Level 3 | Loans | |||
Financial instruments | |||
Financial assets | 2,814 | 2,672 | |
Non-linked shareholder-backed | Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 306 | 252 | |
Non-linked shareholder-backed | Level 3 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 512 | 516 | |
Subsidiary of UK with-profits fund for acquisition of buy-to-let mortgage loans | Level 3 | Loans | |||
Financial instruments | |||
Financial assets | 1,983 | ||
Subsidiary of UK with-profits fund for acquisition of buy-to-let mortgage loans | Level 3 | Borrowings attributable to with-profits operations | |||
Financial instruments | |||
Financial liabilities | 1,887 | ||
REALIC of Jacksonville Plans, Inc | Level 3 | |||
Financial instruments | |||
Net financial instruments at fair value | (152) | (179) | |
REALIC of Jacksonville Plans, Inc | Level 3 | Loans | |||
Financial instruments | |||
Financial assets | 2,512 | 2,672 | |
REALIC of Jacksonville Plans, Inc | Level 3 | Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | 2,664 | 2,851 | |
Entity excluding REALIC | Level 3 | |||
Financial instruments | |||
Net financial instruments at fair value | 4,595 | 4,772 | |
Internal valuation | Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 13,910 | 12,708 | |
Internal valuation | Entity excluding REALIC | Level 2 | Lifetime (equity-release) mortgages | |||
Financial instruments | |||
Financial assets | 276 | ||
Internal valuation | Entity excluding REALIC | Level 3 | |||
Financial instruments | |||
Net financial instruments at fair value | £ 117 | £ 72 | |
Percentage using valuation method | 0.10% | 0.10% | |
Internal valuation | Entity excluding REALIC | Level 3 | Lifetime (equity-release) mortgages | |||
Financial instruments | |||
Financial assets | £ 366 | ||
Internal valuation | Entity excluding REALIC | Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 500 | £ 422 | |
Internal valuation | Entity excluding REALIC | Level 3 | Private equity and venture investments | |||
Financial instruments | |||
Financial assets | 217 | 956 | |
Internal valuation | Entity excluding REALIC | Level 3 | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | 403 | 883 | |
Internal valuation | Entity excluding REALIC | Level 3 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 512 | 516 | |
Internal valuation | Entity excluding REALIC | Level 3 | Other sundry individual financial investments | |||
Financial instruments | |||
Financial assets | 81 | 93 | |
Internal valuation | Entity excluding REALIC | With-profits | Level 3 | |||
Financial instruments | |||
Net financial instruments at fair value | 67 | 315 | |
Internal valuation | Entity excluding REALIC | Non-linked shareholder-backed | Level 3 | |||
Financial instruments | |||
Net financial instruments at fair value | £ (184) | £ (243) | |
Reasonably possible decrease in valuation (as a percent) | 10.00% | 10.00% | |
Amount of reasonably possible decrease in valuation | £ 18 | £ 24 |
Group assets and liabilities115
Group assets and liabilities - measurement - Transfers between levels (Details) - At fair value - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Level 3 | ||
Disclosure of detailed information about financial instruments [line items] | ||
Transfers into level 3 | £ (80) | £ 138 |
Transfers out of level 3 | 92 | £ 394 |
Equity and debt securities | ||
Disclosure of detailed information about financial instruments [line items] | ||
Transfers from level 1 to level 2 | 1,389 | |
Transfers from level 2 to level 1 | 411 | |
Lifetime (equity release) mortgage loans net of corresponding liability | Level 3 | ||
Disclosure of detailed information about financial instruments [line items] | ||
Transfers from level 2 to level 3 | (83) | |
Loans | Level 3 | ||
Disclosure of detailed information about financial instruments [line items] | ||
Transfers into level 3, assets | 302 | |
Other financial liabilities | Level 3 | ||
Disclosure of detailed information about financial instruments [line items] | ||
Transfers into level 3, liabilities | £ 385 |
Debt securities - Credit rating
Debt securities - Credit rating analysis (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Financial investments | ||
Debt securities | £ 171,374 | £ 170,458 |
AAA | ||
Financial investments | ||
Debt securities | 17,412 | 16,427 |
AA+ to AA- | ||
Financial investments | ||
Debt securities | 44,400 | 42,968 |
A+ to A- | ||
Financial investments | ||
Debt securities | 39,941 | 40,195 |
BBB+ to BBB- | ||
Financial investments | ||
Debt securities | 37,927 | 39,764 |
Below BBB- | ||
Financial investments | ||
Debt securities | 8,323 | 8,978 |
Other | ||
Financial investments | ||
Debt securities | 23,371 | 22,126 |
Operating segments | Asia | ||
Financial investments | ||
Debt securities | 40,982 | 36,546 |
Operating segments | Asia | With-profits | ||
Financial investments | ||
Debt securities | 24,432 | 21,861 |
Operating segments | Asia | Unit-linked | ||
Financial investments | ||
Debt securities | 3,507 | 3,321 |
Operating segments | Asia | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 13,043 | 11,364 |
Operating segments | Asia | AAA | With-profits | ||
Financial investments | ||
Debt securities | 2,504 | 3,183 |
Operating segments | Asia | AAA | Unit-linked | ||
Financial investments | ||
Debt securities | 528 | 448 |
Operating segments | Asia | AAA | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 990 | 1,082 |
Operating segments | Asia | AA+ to AA- | With-profits | ||
Financial investments | ||
Debt securities | 10,641 | 8,522 |
Operating segments | Asia | AA+ to AA- | Unit-linked | ||
Financial investments | ||
Debt securities | 103 | 112 |
Operating segments | Asia | AA+ to AA- | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 2,925 | 2,435 |
Operating segments | Asia | A+ to A- | With-profits | ||
Financial investments | ||
Debt securities | 3,846 | 3,560 |
Operating segments | Asia | A+ to A- | Unit-linked | ||
Financial investments | ||
Debt securities | 510 | 525 |
Operating segments | Asia | A+ to A- | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 3,226 | 2,864 |
Operating segments | Asia | BBB+ to BBB- | With-profits | ||
Financial investments | ||
Debt securities | 3,234 | 2,996 |
Operating segments | Asia | BBB+ to BBB- | Unit-linked | ||
Financial investments | ||
Debt securities | 1,429 | 1,321 |
Operating segments | Asia | BBB+ to BBB- | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 2,970 | 2,388 |
Operating segments | Asia | Below BBB- | With-profits | ||
Financial investments | ||
Debt securities | 1,810 | 1,887 |
Operating segments | Asia | Below BBB- | Unit-linked | ||
Financial investments | ||
Debt securities | 372 | 494 |
Operating segments | Asia | Below BBB- | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 1,879 | 1,680 |
Operating segments | Asia | Other | With-profits | ||
Financial investments | ||
Debt securities | 2,397 | 1,713 |
Operating segments | Asia | Other | Unit-linked | ||
Financial investments | ||
Debt securities | 565 | 421 |
Operating segments | Asia | Other | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 1,053 | 915 |
Operating segments | US | ||
Financial investments | ||
Debt securities | 35,378 | 40,745 |
Operating segments | US | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 35,378 | 40,745 |
Operating segments | US | AAA | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 368 | 445 |
Operating segments | US | AA+ to AA- | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 6,352 | 7,932 |
Operating segments | US | A+ to A- | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 9,578 | 10,609 |
Operating segments | US | BBB+ to BBB- | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 12,311 | 13,950 |
Operating segments | US | Below BBB- | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 1,000 | 1,009 |
Operating segments | US | Other | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 5,769 | 6,800 |
Operating segments | UK and Europe | ||
Financial investments | ||
Debt securities | 92,707 | 90,796 |
Operating segments | UK and Europe | With-profits | ||
Financial investments | ||
Debt securities | 50,661 | 48,936 |
Operating segments | UK and Europe | Unit-linked | ||
Financial investments | ||
Debt securities | 6,711 | 6,277 |
Operating segments | UK and Europe | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 35,335 | 35,583 |
Operating segments | UK and Europe | AAA | With-profits | ||
Financial investments | ||
Debt securities | 6,492 | 5,740 |
Operating segments | UK and Europe | AAA | Unit-linked | ||
Financial investments | ||
Debt securities | 670 | 461 |
Operating segments | UK and Europe | AAA | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 5,118 | 4,238 |
Operating segments | UK and Europe | AA+ to AA- | With-profits | ||
Financial investments | ||
Debt securities | 9,378 | 9,746 |
Operating segments | UK and Europe | AA+ to AA- | Unit-linked | ||
Financial investments | ||
Debt securities | 2,732 | 2,660 |
Operating segments | UK and Europe | AA+ to AA- | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 11,005 | 10,371 |
Operating segments | UK and Europe | A+ to A- | With-profits | ||
Financial investments | ||
Debt securities | 11,666 | 10,679 |
Operating segments | UK and Europe | A+ to A- | Unit-linked | ||
Financial investments | ||
Debt securities | 1,308 | 1,158 |
Operating segments | UK and Europe | A+ to A- | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 9,625 | 10,558 |
Operating segments | UK and Europe | BBB+ to BBB- | With-profits | ||
Financial investments | ||
Debt securities | 12,856 | 12,798 |
Operating segments | UK and Europe | BBB+ to BBB- | Unit-linked | ||
Financial investments | ||
Debt securities | 1,793 | 1,699 |
Operating segments | UK and Europe | BBB+ to BBB- | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 3,267 | 4,515 |
Operating segments | UK and Europe | Below BBB- | With-profits | ||
Financial investments | ||
Debt securities | 2,877 | 3,289 |
Operating segments | UK and Europe | Below BBB- | Unit-linked | ||
Financial investments | ||
Debt securities | 91 | 212 |
Operating segments | UK and Europe | Below BBB- | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 258 | 397 |
Operating segments | UK and Europe | Other | ||
Financial investments | ||
Debt securities | 13,571 | 12,275 |
Operating segments | UK and Europe | Other | With-profits | ||
Financial investments | ||
Debt securities | 7,392 | 6,684 |
Operating segments | UK and Europe | Other | Unit-linked | ||
Financial investments | ||
Debt securities | 117 | 87 |
Operating segments | UK and Europe | Other | Non-linked shareholder-backed | ||
Financial investments | ||
Debt securities | 6,062 | 5,504 |
Unallocated to a segment (other operations) | ||
Financial investments | ||
Debt securities | 2,307 | 2,371 |
Unallocated to a segment (other operations) | AAA | ||
Financial investments | ||
Debt securities | 742 | 830 |
Unallocated to a segment (other operations) | AA+ to AA- | ||
Financial investments | ||
Debt securities | 1,264 | 1,190 |
Unallocated to a segment (other operations) | A+ to A- | ||
Financial investments | ||
Debt securities | 182 | 242 |
Unallocated to a segment (other operations) | BBB+ to BBB- | ||
Financial investments | ||
Debt securities | 67 | 97 |
Unallocated to a segment (other operations) | Below BBB- | ||
Financial investments | ||
Debt securities | 36 | 10 |
Unallocated to a segment (other operations) | Other | ||
Financial investments | ||
Debt securities | £ 16 | £ 2 |
Debt securities - Credit rat117
Debt securities - Credit rating classified as Other (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Financial investments | ||
Debt securities | £ 171,374 | £ 170,458 |
PCA Life Insurance Company Ltd. - Korea | ||
Financial investments | ||
Debt securities | 652 | |
Other | ||
Financial investments | ||
Debt securities | 23,371 | 22,126 |
Operating segments | Asia | ||
Financial investments | ||
Debt securities | 40,982 | 36,546 |
Operating segments | US | ||
Financial investments | ||
Debt securities | 35,378 | 40,745 |
Operating segments | UK and Europe | ||
Financial investments | ||
Debt securities | 92,707 | 90,796 |
Operating segments | UK and Europe | Other | ||
Financial investments | ||
Debt securities | 13,571 | 12,275 |
Operating segments | UK and Europe | Internal rating AAA to A- | Other | ||
Financial investments | ||
Debt securities | 7,994 | 6,939 |
Operating segments | UK and Europe | Internal rating BBB to B- | Other | ||
Financial investments | ||
Debt securities | 3,141 | 3,257 |
Operating segments | UK and Europe | Internal rating Below B- or unrated | Other | ||
Financial investments | ||
Debt securities | 2,436 | 2,079 |
Operating segments | Non-linked shareholder-backed | Asia | ||
Financial investments | ||
Debt securities | 13,043 | 11,364 |
Operating segments | Non-linked shareholder-backed | Asia | Other | ||
Financial investments | ||
Debt securities | 1,053 | 915 |
Operating segments | Non-linked shareholder-backed | Asia | Government bonds | Other | ||
Financial investments | ||
Debt securities | 25 | 63 |
Operating segments | Non-linked shareholder-backed | Asia | Corporate bonds | Other | ||
Financial investments | ||
Debt securities | 959 | 757 |
Operating segments | Non-linked shareholder-backed | Asia | Other securities | Other | ||
Financial investments | ||
Debt securities | 69 | 95 |
Operating segments | Non-linked shareholder-backed | US | ||
Financial investments | ||
Debt securities | 35,378 | 40,745 |
Operating segments | Non-linked shareholder-backed | US | Other | ||
Financial investments | ||
Debt securities | 5,769 | 6,800 |
Operating segments | Non-linked shareholder-backed | US | NAIC 1 | Other | ||
Financial investments | ||
Debt securities | 3,918 | 4,759 |
Operating segments | Non-linked shareholder-backed | US | NAIC 2 | Other | ||
Financial investments | ||
Debt securities | 1,794 | 1,909 |
Operating segments | Non-linked shareholder-backed | US | NAIC 3-6 | Other | ||
Financial investments | ||
Debt securities | 57 | 132 |
Operating segments | Non-linked shareholder-backed | US | Mortgage-backed securities | Other | ||
Financial investments | ||
Debt securities | 1,868 | |
Operating segments | Non-linked shareholder-backed | US | Mortgage-backed securities | NAIC 1 | Other | ||
Financial investments | ||
Debt securities | 1,843 | |
Operating segments | Non-linked shareholder-backed | US | Mortgage-backed securities | NAIC 2 | Other | ||
Financial investments | ||
Debt securities | 22 | |
Operating segments | Non-linked shareholder-backed | US | Mortgage-backed securities | NAIC 3-6 | Other | ||
Financial investments | ||
Debt securities | 3 | |
Operating segments | Non-linked shareholder-backed | US | Other securities | Other | ||
Financial investments | ||
Debt securities | 3,901 | |
Operating segments | Non-linked shareholder-backed | US | Other securities | NAIC 1 | Other | ||
Financial investments | ||
Debt securities | 2,075 | |
Operating segments | Non-linked shareholder-backed | US | Other securities | NAIC 2 | Other | ||
Financial investments | ||
Debt securities | 1,772 | |
Operating segments | Non-linked shareholder-backed | US | Other securities | NAIC 3-6 | Other | ||
Financial investments | ||
Debt securities | 54 | |
Operating segments | Non-linked shareholder-backed | UK and Europe | ||
Financial investments | ||
Debt securities | 35,335 | 35,583 |
Operating segments | Non-linked shareholder-backed | UK and Europe | Other | ||
Financial investments | ||
Debt securities | 6,062 | 5,504 |
Operating segments | With-profits | Asia | ||
Financial investments | ||
Debt securities | 24,432 | 21,861 |
Operating segments | With-profits | Asia | Other | ||
Financial investments | ||
Debt securities | 2,397 | 1,713 |
Operating segments | With-profits | UK and Europe | ||
Financial investments | ||
Debt securities | 50,661 | 48,936 |
Operating segments | With-profits | UK and Europe | Other | ||
Financial investments | ||
Debt securities | £ 7,392 | £ 6,684 |
Debt securities - US operations
Debt securities - US operations (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Financial investments | ||
Debt securities | £ 171,374 | £ 170,458 |
Operating segments | US | ||
Financial investments | ||
Debt securities | 35,378 | 40,745 |
Operating segments | US | Available-for-sale | ||
Financial investments | ||
Debt securities | 35,293 | 40,645 |
Operating segments | US | Fair value through profit or loss | ||
Financial investments | ||
Debt securities | 85 | 100 |
Operating segments | US | Government | ||
Financial investments | ||
Debt securities | 4,835 | 5,856 |
Operating segments | US | Publicly traded and SEC rule 144A securities | ||
Financial investments | ||
Debt securities | 22,849 | 25,992 |
Operating segments | US | Non-SEC Rule 144A securities | ||
Financial investments | ||
Debt securities | 4,468 | 4,576 |
Operating segments | US | Asset-backed securities | ||
Financial investments | ||
Debt securities | £ 3,226 | £ 4,321 |
Debt securities - Movements in
Debt securities - Movements in unrealised gains and losses (Details) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017GBP (£)$ / £ | Dec. 31, 2016GBP (£)$ / £ | Dec. 31, 2015$ / £ | |
US dollars | |||
Available-for-sale securities | |||
Average rate | $ / £ | 1.29 | 1.35 | 1.53 |
Jackson (US insurance operations) | US dollars | |||
Available-for-sale securities | |||
Average rate | $ / £ | 1.29 | 1.35 | |
Jackson (US insurance operations) | Debt securities | |||
Available-for-sale securities | |||
Available-for-sale debt securities at beginning of period | £ 40,645 | ||
Available-for-sale debt securities at end of period | £ 35,293 | £ 40,645 | |
Jackson (US insurance operations) | Debt securities | US dollars | |||
Available-for-sale securities | |||
Average rate | $ / £ | 1.2889 | ||
Jackson (US insurance operations) | Cost/Gross amount | Debt securities | |||
Available-for-sale securities | |||
Available-for-sale debt securities at beginning of period | £ 39,969 | ||
Available-for-sale debt securities at end of period | 34,088 | 39,969 | |
Jackson (US insurance operations) | Unrealised gain (loss) | Debt securities | |||
Available-for-sale securities | |||
Available-for-sale debt securities at beginning of period | 676 | ||
Foreign exchange translation reflected as part of movement in other comprehensive income | (88) | ||
Changes in unrealised appreciation reflected as part of movement in other comprehensive income | 617 | ||
Available-for-sale debt securities at end of period | 1,205 | 676 | |
Jackson (US insurance operations) | Assets fair valued at below book value | Debt securities | |||
Available-for-sale securities | |||
Available-for-sale debt securities at beginning of period | 13,942 | ||
Available-for-sale debt securities at end of period | 6,219 | 13,942 | |
Jackson (US insurance operations) | Assets fair valued at below book value | Cost/Gross amount | Debt securities | |||
Available-for-sale securities | |||
Available-for-sale debt securities at beginning of period | 14,617 | ||
Available-for-sale debt securities at end of period | 6,325 | 14,617 | |
Jackson (US insurance operations) | Assets fair valued at below book value | Unrealised gain (loss) | Debt securities | |||
Available-for-sale securities | |||
Available-for-sale debt securities at beginning of period | (675) | ||
Foreign exchange translation reflected as part of movement in other comprehensive income | 33 | ||
Changes in unrealised appreciation reflected as part of movement in other comprehensive income | 536 | ||
Available-for-sale debt securities at end of period | (106) | (675) | |
Jackson (US insurance operations) | Assets fair valued at or above book value | Debt securities | |||
Available-for-sale securities | |||
Available-for-sale debt securities at beginning of period | 26,703 | ||
Available-for-sale debt securities at end of period | 29,074 | 26,703 | |
Jackson (US insurance operations) | Assets fair valued at or above book value | Cost/Gross amount | Debt securities | |||
Available-for-sale securities | |||
Available-for-sale debt securities at beginning of period | 25,352 | ||
Available-for-sale debt securities at end of period | 27,763 | 25,352 | |
Jackson (US insurance operations) | Assets fair valued at or above book value | Unrealised gain (loss) | Debt securities | |||
Available-for-sale securities | |||
Available-for-sale debt securities at beginning of period | 1,351 | ||
Foreign exchange translation reflected as part of movement in other comprehensive income | (121) | ||
Changes in unrealised appreciation reflected as part of movement in other comprehensive income | 81 | ||
Available-for-sale debt securities at end of period | £ 1,311 | £ 1,351 |
Debt securities - Unrealised lo
Debt securities - Unrealised loss positions (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Available-for-sale securities | |||
Unrealised loss | £ (106) | £ (675) | £ (673) |
Jackson (US insurance operations) | Debt securities | |||
Available-for-sale securities | |||
Fair value | 35,293 | 40,645 | |
Unrealised loss | (106) | (675) | |
Jackson (US insurance operations) | 1 to 5 years | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (7) | (7) | |
Jackson (US insurance operations) | 5 years to 10 years | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (41) | (118) | |
Jackson (US insurance operations) | More than 10 years | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (39) | (510) | |
Jackson (US insurance operations) | Mortgage-backed and other debt securities | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (19) | (40) | |
Jackson (US insurance operations) | Between 90% and 100% | Debt securities | |||
Available-for-sale securities | |||
Fair value | 6,170 | 12,326 | |
Unrealised loss | (95) | (405) | |
Jackson (US insurance operations) | Between 80% and 90% | Debt securities | |||
Available-for-sale securities | |||
Fair value | 36 | 1,598 | |
Unrealised loss | (6) | (259) | |
Jackson (US insurance operations) | Below 80% | Debt securities | |||
Available-for-sale securities | |||
Fair value | 13 | 18 | |
Unrealised loss | (5) | (11) | |
Jackson (US insurance operations) | Below 80% | CMBS | |||
Available-for-sale securities | |||
Fair value | 8 | ||
Unrealised loss | (3) | ||
Jackson (US insurance operations) | Below 80% | Other asset-backed securities | |||
Available-for-sale securities | |||
Fair value | 10 | 9 | |
Unrealised loss | (4) | (8) | |
Jackson (US insurance operations) | Below 80% | Corporate bonds | |||
Available-for-sale securities | |||
Fair value | 3 | 1 | |
Unrealised loss | (1) | ||
Jackson (US insurance operations) | Assets fair valued at below book value | Debt securities | |||
Available-for-sale securities | |||
Fair value | 6,219 | 13,942 | |
Unrealised loss | (106) | (675) | |
Jackson (US insurance operations) | Assets fair valued at below book value | Non-investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (6) | (11) | |
Jackson (US insurance operations) | Assets fair valued at below book value | Investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (100) | (664) | |
Jackson (US insurance operations) | Assets fair valued at below book value | Below 80% | Debt securities | |||
Available-for-sale securities | |||
Fair value | 13 | 18 | |
Unrealised loss | (5) | (11) | |
Jackson (US insurance operations) | Less than 6 months | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (35) | (602) | |
Jackson (US insurance operations) | Less than 6 months | Non-investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (4) | (3) | |
Jackson (US insurance operations) | Less than 6 months | Investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (31) | (599) | |
Jackson (US insurance operations) | 6 months to 1 year | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (5) | (2) | |
Jackson (US insurance operations) | 6 months to 1 year | Non-investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (1) | ||
Jackson (US insurance operations) | 6 months to 1 year | Investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (4) | (2) | |
Jackson (US insurance operations) | 1 year to 2 years | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (49) | (31) | |
Jackson (US insurance operations) | 1 year to 2 years | Non-investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (4) | ||
Jackson (US insurance operations) | 1 year to 2 years | Investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (49) | (27) | |
Jackson (US insurance operations) | 2 years to 3 years | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (7) | (3) | |
Jackson (US insurance operations) | 2 years to 3 years | Non-investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (1) | (2) | |
Jackson (US insurance operations) | 2 years to 3 years | Investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (6) | (1) | |
Jackson (US insurance operations) | More than 3 years | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (10) | (37) | |
Jackson (US insurance operations) | More than 3 years | Non-investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (2) | ||
Jackson (US insurance operations) | More than 3 years | Investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (10) | (35) | |
Jackson (US insurance operations) | Less than 3 months | Below 80% | Debt securities | |||
Available-for-sale securities | |||
Fair value | 2 | 1 | |
Jackson (US insurance operations) | 3 months to 6 months | Below 80% | Debt securities | |||
Available-for-sale securities | |||
Fair value | 1 | ||
Unrealised loss | (1) | ||
Jackson (US insurance operations) | More than 6 months | Below 80% | Debt securities | |||
Available-for-sale securities | |||
Fair value | 10 | 17 | |
Unrealised loss | £ (4) | £ (11) |
Debt securities - Asset-backed
Debt securities - Asset-backed securities (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Financial investments | ||
Asset-backed securities | £ 10,894 | £ 12,220 |
Shareholder-backed | ||
Financial investments | ||
Asset-backed securities | £ 5,003 | 6,686 |
Shareholder-backed | AAA | UK and Europe | ||
Financial investments | ||
Percentage for credit rating category | 34.00% | |
Shareholder-backed | AA | UK and Europe | ||
Financial investments | ||
Percentage for credit rating category | 16.00% | |
Shareholder-backed | RMBS Sub-prime | AAA | US | ||
Financial investments | ||
Percentage for credit rating category | 2.00% | |
Shareholder-backed | RMBS Sub-prime | AA | US | ||
Financial investments | ||
Percentage for credit rating category | 4.00% | |
Shareholder-backed | RMBS Sub-prime | A | US | ||
Financial investments | ||
Percentage for credit rating category | 3.00% | |
Shareholder-backed | Alt-A | AAA | US | ||
Financial investments | ||
Percentage for credit rating category | 3.00% | |
Shareholder-backed | Alt-A | A | US | ||
Financial investments | ||
Percentage for credit rating category | 3.00% | |
Shareholder-backed | Prime including agency | AA | US | ||
Financial investments | ||
Percentage for credit rating category | 70.00% | |
Shareholder-backed | Prime including agency | A | US | ||
Financial investments | ||
Percentage for credit rating category | 4.00% | |
Shareholder-backed | CMBS | AAA | US | ||
Financial investments | ||
Percentage for credit rating category | 82.00% | |
Shareholder-backed | CMBS | AA | US | ||
Financial investments | ||
Percentage for credit rating category | 15.00% | |
Shareholder-backed | CMBS | A | US | ||
Financial investments | ||
Percentage for credit rating category | 1.00% | |
Shareholder-backed | CDO funds | AA | US | ||
Financial investments | ||
Percentage for credit rating category | 49.00% | |
Shareholder-backed | CDO funds | A | US | ||
Financial investments | ||
Percentage for credit rating category | 31.00% | |
Shareholder-backed | Other asset-backed securities | AAA | US | ||
Financial investments | ||
Percentage for credit rating category | 21.00% | |
Shareholder-backed | Other asset-backed securities | AA | US | ||
Financial investments | ||
Percentage for credit rating category | 14.00% | |
Shareholder-backed | Other asset-backed securities | A | US | ||
Financial investments | ||
Percentage for credit rating category | 50.00% | |
Shareholder-backed | Operating segments | Asia | ||
Financial investments | ||
Asset-backed securities | £ 118 | 130 |
Shareholder-backed | Operating segments | US | ||
Financial investments | ||
Asset-backed securities | 3,226 | 4,321 |
Shareholder-backed | Operating segments | UK and Europe | ||
Financial investments | ||
Asset-backed securities | 1,070 | 1,464 |
Shareholder-backed | Operating segments | RMBS Sub-prime | US | ||
Financial investments | ||
Asset-backed securities | 112 | 180 |
Shareholder-backed | Operating segments | Alt-A | US | ||
Financial investments | ||
Asset-backed securities | 126 | 177 |
Shareholder-backed | Operating segments | Prime including agency | US | ||
Financial investments | ||
Asset-backed securities | 440 | 675 |
Shareholder-backed | Operating segments | CMBS | US | ||
Financial investments | ||
Asset-backed securities | 1,579 | 2,234 |
Shareholder-backed | Operating segments | CDO funds | US | ||
Financial investments | ||
Asset-backed securities | 28 | 50 |
Shareholder-backed | Operating segments | CDO funds | US | Sub-prime | ||
Financial investments | ||
Asset-backed securities | 0 | |
Shareholder-backed | Operating segments | Other asset-backed securities | US | ||
Financial investments | ||
Asset-backed securities | 941 | 1,005 |
Shareholder-backed | Operating segments | Other asset-backed securities | US | Sub-prime | ||
Financial investments | ||
Asset-backed securities | 96 | |
Shareholder-backed | Unallocated to a segment (other operations) | ||
Financial investments | ||
Asset-backed securities | 589 | £ 771 |
Shareholder-backed | Unallocated to a segment (other operations) | Sub-prime | ||
Financial investments | ||
Asset-backed securities | £ 0 | |
Shareholder-backed | Unallocated to a segment (other operations) | AAA | ||
Financial investments | ||
Percentage for credit rating category | 96.00% | 95.00% |
With-profits | ||
Financial investments | ||
Asset-backed securities | £ 5,891 | £ 5,534 |
With-profits | Asia | Investment grade | ||
Financial investments | ||
Percentage for credit rating category | 98.00% | 99.00% |
With-profits | AAA | UK and Europe | ||
Financial investments | ||
Percentage for credit rating category | 58.00% | |
With-profits | AA | UK and Europe | ||
Financial investments | ||
Percentage for credit rating category | 10.00% | |
With-profits | Operating segments | Asia | ||
Financial investments | ||
Asset-backed securities | £ 233 | £ 357 |
With-profits | Operating segments | UK and Europe | ||
Financial investments | ||
Asset-backed securities | 5,658 | 5,177 |
With-profits | Operating segments | UK and Europe | US | ||
Financial investments | ||
Asset-backed securities | £ 1,913 | £ 1,623 |
Debt securities - Group soverei
Debt securities - Group sovereign debt and bank debt exposure (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Shareholder-backed | ||
Financial investments | ||
Sovereign debt exposure | £ 16,524 | £ 17,117 |
Bank debt instruments held | 5,521 | 5,437 |
Shareholder-backed | Eurozone | ||
Financial investments | ||
Sovereign debt exposure | 890 | 767 |
Bank debt instruments held | 357 | 561 |
Shareholder-backed | Italy | ||
Financial investments | ||
Sovereign debt exposure | 58 | 56 |
Bank debt instruments held | 32 | |
Shareholder-backed | Spain | ||
Financial investments | ||
Sovereign debt exposure | 34 | 33 |
Bank debt instruments held | 68 | 170 |
Shareholder-backed | France | ||
Financial investments | ||
Sovereign debt exposure | 23 | 22 |
Bank debt instruments held | 86 | 166 |
Shareholder-backed | Germany | ||
Financial investments | ||
Sovereign debt exposure | 693 | 573 |
Bank debt instruments held | 117 | 124 |
Shareholder-backed | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 71 | 50 |
Shareholder-backed | Other Eurozone | ||
Financial investments | ||
Sovereign debt exposure | 82 | 83 |
Bank debt instruments held | 15 | 19 |
Shareholder-backed | UK | ||
Financial investments | ||
Sovereign debt exposure | 5,918 | 5,510 |
Bank debt instruments held | 1,382 | 1,174 |
Shareholder-backed | US | ||
Financial investments | ||
Sovereign debt exposure | 5,078 | 6,861 |
Bank debt instruments held | 2,619 | 2,684 |
Shareholder-backed | Other, including Asia | ||
Financial investments | ||
Sovereign debt exposure | 4,638 | 3,979 |
Bank debt instruments held | 1,163 | 1,018 |
Shareholder-backed | Senior debt | ||
Financial investments | ||
Bank debt instruments held | 4,442 | |
Shareholder-backed | Senior debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 247 | |
Shareholder-backed | Senior debt | Spain | ||
Financial investments | ||
Bank debt instruments held | 68 | |
Shareholder-backed | Senior debt | France | ||
Financial investments | ||
Bank debt instruments held | 69 | |
Shareholder-backed | Senior debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 30 | |
Shareholder-backed | Senior debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 65 | |
Shareholder-backed | Senior debt | Other Eurozone | ||
Financial investments | ||
Bank debt instruments held | 15 | |
Shareholder-backed | Senior debt | UK | ||
Financial investments | ||
Bank debt instruments held | 1,069 | |
Shareholder-backed | Senior debt | US | ||
Financial investments | ||
Bank debt instruments held | 2,457 | |
Shareholder-backed | Senior debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 669 | |
Shareholder-backed | Covered senior debt | ||
Financial investments | ||
Bank debt instruments held | 827 | |
Shareholder-backed | Covered senior debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 115 | |
Shareholder-backed | Covered senior debt | Spain | ||
Financial investments | ||
Bank debt instruments held | 42 | |
Shareholder-backed | Covered senior debt | France | ||
Financial investments | ||
Bank debt instruments held | 28 | |
Shareholder-backed | Covered senior debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 30 | |
Shareholder-backed | Covered senior debt | Other Eurozone | ||
Financial investments | ||
Bank debt instruments held | 15 | |
Shareholder-backed | Covered senior debt | UK | ||
Financial investments | ||
Bank debt instruments held | 695 | |
Shareholder-backed | Covered senior debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 17 | |
Shareholder-backed | Other senior debt | ||
Financial investments | ||
Bank debt instruments held | 3,615 | |
Shareholder-backed | Other senior debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 132 | |
Shareholder-backed | Other senior debt | Spain | ||
Financial investments | ||
Bank debt instruments held | 26 | |
Shareholder-backed | Other senior debt | France | ||
Financial investments | ||
Bank debt instruments held | 41 | |
Shareholder-backed | Other senior debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 65 | |
Shareholder-backed | Other senior debt | UK | ||
Financial investments | ||
Bank debt instruments held | 374 | |
Shareholder-backed | Other senior debt | US | ||
Financial investments | ||
Bank debt instruments held | 2,457 | |
Shareholder-backed | Other senior debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 652 | |
Shareholder-backed | Subordinated debt | ||
Financial investments | ||
Bank debt instruments held | 1,079 | |
Shareholder-backed | Subordinated debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 110 | |
Shareholder-backed | Subordinated debt | France | ||
Financial investments | ||
Bank debt instruments held | 17 | |
Shareholder-backed | Subordinated debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 87 | |
Shareholder-backed | Subordinated debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 6 | |
Shareholder-backed | Subordinated debt | UK | ||
Financial investments | ||
Bank debt instruments held | 313 | |
Shareholder-backed | Subordinated debt | US | ||
Financial investments | ||
Bank debt instruments held | 162 | |
Shareholder-backed | Subordinated debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 494 | |
Shareholder-backed | Tier 1 subordinated debt | ||
Financial investments | ||
Bank debt instruments held | 109 | |
Shareholder-backed | Tier 1 subordinated debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 10 | |
Shareholder-backed | Tier 1 subordinated debt | France | ||
Financial investments | ||
Bank debt instruments held | 10 | |
Shareholder-backed | Tier 1 subordinated debt | UK | ||
Financial investments | ||
Bank debt instruments held | 5 | |
Shareholder-backed | Tier 1 subordinated debt | US | ||
Financial investments | ||
Bank debt instruments held | 1 | |
Shareholder-backed | Tier 1 subordinated debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 93 | |
Shareholder-backed | Tier 2 subordinated debt | ||
Financial investments | ||
Bank debt instruments held | 970 | |
Shareholder-backed | Tier 2 subordinated debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 100 | |
Shareholder-backed | Tier 2 subordinated debt | France | ||
Financial investments | ||
Bank debt instruments held | 7 | |
Shareholder-backed | Tier 2 subordinated debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 87 | |
Shareholder-backed | Tier 2 subordinated debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 6 | |
Shareholder-backed | Tier 2 subordinated debt | UK | ||
Financial investments | ||
Bank debt instruments held | 308 | |
Shareholder-backed | Tier 2 subordinated debt | US | ||
Financial investments | ||
Bank debt instruments held | 161 | |
Shareholder-backed | Tier 2 subordinated debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 401 | |
With-profits | ||
Financial investments | ||
Sovereign debt exposure | 16,037 | 14,396 |
Bank debt instruments held | 7,726 | 6,452 |
With-profits | Eurozone | ||
Financial investments | ||
Sovereign debt exposure | 451 | 441 |
Bank debt instruments held | 739 | 835 |
With-profits | Italy | ||
Financial investments | ||
Sovereign debt exposure | 63 | 61 |
Bank debt instruments held | 31 | 62 |
With-profits | Spain | ||
Financial investments | ||
Sovereign debt exposure | 18 | 18 |
Bank debt instruments held | 16 | 213 |
With-profits | France | ||
Financial investments | ||
Sovereign debt exposure | 38 | |
Bank debt instruments held | 286 | 213 |
With-profits | Germany | ||
Financial investments | ||
Sovereign debt exposure | 301 | 329 |
Bank debt instruments held | 180 | 114 |
With-profits | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 199 | 202 |
With-profits | Other Eurozone | ||
Financial investments | ||
Sovereign debt exposure | 31 | 33 |
Bank debt instruments held | 27 | 31 |
With-profits | UK | ||
Financial investments | ||
Sovereign debt exposure | 3,287 | 2,868 |
Bank debt instruments held | 1,938 | 1,396 |
With-profits | US | ||
Financial investments | ||
Sovereign debt exposure | 10,156 | 9,008 |
Bank debt instruments held | 2,518 | 2,229 |
With-profits | Other, including Asia | ||
Financial investments | ||
Sovereign debt exposure | 2,143 | 2,079 |
Bank debt instruments held | 2,531 | £ 1,992 |
With-profits | Senior debt | ||
Financial investments | ||
Bank debt instruments held | 6,072 | |
With-profits | Senior debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 628 | |
With-profits | Senior debt | Italy | ||
Financial investments | ||
Bank debt instruments held | 31 | |
With-profits | Senior debt | Spain | ||
Financial investments | ||
Bank debt instruments held | 16 | |
With-profits | Senior debt | France | ||
Financial investments | ||
Bank debt instruments held | 222 | |
With-profits | Senior debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 144 | |
With-profits | Senior debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 188 | |
With-profits | Senior debt | Other Eurozone | ||
Financial investments | ||
Bank debt instruments held | 27 | |
With-profits | Senior debt | UK | ||
Financial investments | ||
Bank debt instruments held | 1,451 | |
With-profits | Senior debt | US | ||
Financial investments | ||
Bank debt instruments held | 2,205 | |
With-profits | Senior debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 1,788 | |
With-profits | Covered senior debt | ||
Financial investments | ||
Bank debt instruments held | 1,520 | |
With-profits | Covered senior debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 129 | |
With-profits | Covered senior debt | France | ||
Financial investments | ||
Bank debt instruments held | 9 | |
With-profits | Covered senior debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 120 | |
With-profits | Covered senior debt | UK | ||
Financial investments | ||
Bank debt instruments held | 859 | |
With-profits | Covered senior debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 532 | |
With-profits | Other senior debt | ||
Financial investments | ||
Bank debt instruments held | 4,552 | |
With-profits | Other senior debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 499 | |
With-profits | Other senior debt | Italy | ||
Financial investments | ||
Bank debt instruments held | 31 | |
With-profits | Other senior debt | Spain | ||
Financial investments | ||
Bank debt instruments held | 16 | |
With-profits | Other senior debt | France | ||
Financial investments | ||
Bank debt instruments held | 213 | |
With-profits | Other senior debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 24 | |
With-profits | Other senior debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 188 | |
With-profits | Other senior debt | Other Eurozone | ||
Financial investments | ||
Bank debt instruments held | 27 | |
With-profits | Other senior debt | UK | ||
Financial investments | ||
Bank debt instruments held | 592 | |
With-profits | Other senior debt | US | ||
Financial investments | ||
Bank debt instruments held | 2,205 | |
With-profits | Other senior debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 1,256 | |
With-profits | Subordinated debt | ||
Financial investments | ||
Bank debt instruments held | 1,654 | |
With-profits | Subordinated debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 111 | |
With-profits | Subordinated debt | France | ||
Financial investments | ||
Bank debt instruments held | 64 | |
With-profits | Subordinated debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 36 | |
With-profits | Subordinated debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 11 | |
With-profits | Subordinated debt | UK | ||
Financial investments | ||
Bank debt instruments held | 487 | |
With-profits | Subordinated debt | US | ||
Financial investments | ||
Bank debt instruments held | 313 | |
With-profits | Subordinated debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 743 | |
With-profits | Tier 1 subordinated debt | ||
Financial investments | ||
Bank debt instruments held | 315 | |
With-profits | Tier 1 subordinated debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 5 | |
With-profits | Tier 1 subordinated debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 5 | |
With-profits | Tier 1 subordinated debt | UK | ||
Financial investments | ||
Bank debt instruments held | 3 | |
With-profits | Tier 1 subordinated debt | US | ||
Financial investments | ||
Bank debt instruments held | 17 | |
With-profits | Tier 1 subordinated debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 290 | |
With-profits | Tier 2 subordinated debt | ||
Financial investments | ||
Bank debt instruments held | 1,339 | |
With-profits | Tier 2 subordinated debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 106 | |
With-profits | Tier 2 subordinated debt | France | ||
Financial investments | ||
Bank debt instruments held | 64 | |
With-profits | Tier 2 subordinated debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 36 | |
With-profits | Tier 2 subordinated debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 6 | |
With-profits | Tier 2 subordinated debt | UK | ||
Financial investments | ||
Bank debt instruments held | 484 | |
With-profits | Tier 2 subordinated debt | US | ||
Financial investments | ||
Bank debt instruments held | 296 | |
With-profits | Tier 2 subordinated debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | £ 453 |
Debt securities - Impairment of
Debt securities - Impairment of US available-for-sale debt securities (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Financial investments | |||
Realised gross losses on sales of available-for-sale securities | £ 155 | £ 152 | £ 85 |
Percentage of realised gross losses related to top 10 individual issuers | 97.00% | 59.00% | 57.00% |
Unrealised loss | £ 106 | £ 675 | £ 673 |
Impaired financial assets | |||
Financial investments | |||
Net credit (charge) for impairment net of reversals | 1 | (44) | (35) |
Impaired financial assets | Available-for-sale | |||
Financial investments | |||
Net credit (charge) for impairment net of reversals | 8 | (20) | (19) |
Impaired financial assets | Loans and receivables | |||
Financial investments | |||
Net credit (charge) for impairment net of reversals | (7) | (24) | (16) |
Impaired and deteriorating financial assets | |||
Financial investments | |||
Realised gross losses on sales of available-for-sale securities | £ 3 | £ 94 | £ 54 |
Loans portfolio - Components (D
Loans portfolio - Components (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Financial investments | ||
Loans | £ 17,042 | £ 15,173 |
Mortgage loans | ||
Financial investments | ||
Loans | 10,535 | 8,544 |
Policy loans | ||
Financial investments | ||
Loans | 4,227 | 4,489 |
Other loans | ||
Financial investments | ||
Loans | £ 2,280 | £ 2,140 |
UK and Europe | Non-linked shareholder-backed | Lifetime (equity-release) mortgages | Average | ||
Financial investments | ||
Estimated loan to value (as a percent) | 31.00% | 30.00% |
Jackson (US insurance operations) | Mortgage loans | ||
Financial investments | ||
Loans with restructured contractual terms | £ 0 | £ 0 |
Jackson (US insurance operations) | Mortgage loans | Average | ||
Financial investments | ||
Loans | £ 12.6 | £ 12.4 |
Estimated loan to value (as a percent) | 55.00% | 59.00% |
Operating segments | Asia | ||
Financial investments | ||
Loans | £ 1,317 | £ 1,303 |
Operating segments | Asia | With-profits | ||
Financial investments | ||
Loans | 725 | 690 |
Operating segments | Asia | With-profits | Policy loans | ||
Financial investments | ||
Loans | 613 | 577 |
Operating segments | Asia | With-profits | Other loans | ||
Financial investments | ||
Loans | 112 | 113 |
Operating segments | Asia | Non-linked shareholder-backed | ||
Financial investments | ||
Loans | 592 | 613 |
Operating segments | Asia | Non-linked shareholder-backed | Mortgage loans | ||
Financial investments | ||
Loans | 177 | 179 |
Operating segments | Asia | Non-linked shareholder-backed | Policy loans | ||
Financial investments | ||
Loans | 216 | 226 |
Operating segments | Asia | Non-linked shareholder-backed | Other loans | ||
Financial investments | ||
Loans | 199 | 208 |
Operating segments | US | ||
Financial investments | ||
Loans | 9,630 | 9,735 |
Operating segments | US | Non-linked shareholder-backed | ||
Financial investments | ||
Loans | 9,630 | 9,735 |
Operating segments | US | Non-linked shareholder-backed | Mortgage loans | ||
Financial investments | ||
Loans | 6,236 | 6,055 |
Operating segments | US | Non-linked shareholder-backed | Policy loans | ||
Financial investments | ||
Loans | 3,394 | 3,680 |
Accounted for at fair value through profit or loss | 2,512 | 2,672 |
Operating segments | UK and Europe | ||
Financial investments | ||
Loans | 5,986 | 3,572 |
Operating segments | UK and Europe | With-profits | ||
Financial investments | ||
Loans | 4,268 | 1,892 |
Operating segments | UK and Europe | With-profits | Mortgage loans | ||
Financial investments | ||
Loans | 2,441 | 668 |
Operating segments | UK and Europe | With-profits | Policy loans | ||
Financial investments | ||
Loans | 4 | 6 |
Operating segments | UK and Europe | With-profits | Other loans | ||
Financial investments | ||
Loans | 1,823 | 1,218 |
Operating segments | UK and Europe | Non-linked shareholder-backed | ||
Financial investments | ||
Loans | 1,718 | 1,680 |
Operating segments | UK and Europe | Non-linked shareholder-backed | Mortgage loans | ||
Financial investments | ||
Loans | £ 1,681 | £ 1,642 |
Percentage related to lifetime (equity release) mortgage business | 99.98% | 96.29% |
Operating segments | UK and Europe | Non-linked shareholder-backed | Other loans | ||
Financial investments | ||
Loans | £ 37 | £ 38 |
Unallocated to a segment (other operations) | ||
Financial investments | ||
Loans | 109 | 563 |
Unallocated to a segment (other operations) | Other loans | ||
Financial investments | ||
Loans | £ 109 | £ 563 |
Loans portfolio - Other operati
Loans portfolio - Other operations (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Financial investments | ||
Loans | £ 17,042 | £ 15,173 |
Unallocated to a segment (other operations) | ||
Financial investments | ||
Loans | 109 | 563 |
Unallocated to a segment (other operations) | Internal rating AA+ to AA- | ||
Financial investments | ||
Loans | 14 | 29 |
Unallocated to a segment (other operations) | Internal rating A+ to A- | ||
Financial investments | ||
Loans | 100 | |
Unallocated to a segment (other operations) | Internal rating BBB+ to BBB- | ||
Financial investments | ||
Loans | 248 | |
Unallocated to a segment (other operations) | Internal rating BB+ to BB- | ||
Financial investments | ||
Loans | £ 95 | 185 |
Unallocated to a segment (other operations) | Internal rating B and other | ||
Financial investments | ||
Loans | £ 1 |
Financial instruments - addi126
Financial instruments - additional information - Maturity of financial liabilities (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Carrying value | £ 40,523 | £ 38,007 |
Contractual maturities | 45,637 | 43,342 |
Core structural borrowings of shareholder-financed operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Carrying value | 6,280 | 6,798 |
Contractual maturities | 11,056 | 11,771 |
Operational borrowings attributable to shareholder-financed operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Carrying value | 1,791 | 2,317 |
Contractual maturities | 1,796 | 2,333 |
Borrowings attributable to with-profits operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Carrying value | 3,716 | 1,349 |
Contractual maturities | 3,831 | 1,489 |
Obligations under funding, securities lending and sale and repurchase agreements | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Carrying value | 5,662 | 5,031 |
Contractual maturities | 5,662 | 5,031 |
Accruals, deferred income and other liabilities | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Carrying value | 14,185 | 13,825 |
Contractual maturities | 14,403 | 14,031 |
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Carrying value | 8,889 | 8,687 |
Contractual maturities | 8,889 | 8,687 |
Expected to be settled within one year | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 27,147 | 26,197 |
Expected to be settled within one year | Core structural borrowings of shareholder-financed operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 473 | 474 |
Expected to be settled within one year | Operational borrowings attributable to shareholder-financed operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 1,130 | 1,657 |
Expected to be settled within one year | Borrowings attributable to with-profits operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 905 | 475 |
Expected to be settled within one year | Obligations under funding, securities lending and sale and repurchase agreements | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 5,662 | 5,031 |
Expected to be settled within one year | Accruals, deferred income and other liabilities | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 10,088 | 9,873 |
Expected to be settled within one year | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 8,889 | 8,687 |
1 to 5 years | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 2,772 | 2,453 |
1 to 5 years | Core structural borrowings of shareholder-financed operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 784 | 778 |
1 to 5 years | Operational borrowings attributable to shareholder-financed operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 597 | 607 |
1 to 5 years | Borrowings attributable to with-profits operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 922 | 748 |
1 to 5 years | Accruals, deferred income and other liabilities | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 469 | 320 |
5 years to 10 years | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 1,519 | 1,367 |
5 years to 10 years | Core structural borrowings of shareholder-financed operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 1,350 | 1,205 |
5 years to 10 years | Operational borrowings attributable to shareholder-financed operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 69 | 69 |
5 years to 10 years | Borrowings attributable to with-profits operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 32 | 32 |
5 years to 10 years | Accruals, deferred income and other liabilities | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 68 | 61 |
After 10 years to 15 years | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 1,503 | 1,302 |
After 10 years to 15 years | Core structural borrowings of shareholder-financed operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 1,389 | 1,202 |
After 10 years to 15 years | Borrowings attributable to with-profits operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 29 | 20 |
After 10 years to 15 years | Accruals, deferred income and other liabilities | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 85 | 80 |
After 15 years to 20 years | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 711 | 1,124 |
After 15 years to 20 years | Core structural borrowings of shareholder-financed operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 576 | 1,011 |
After 15 years to 20 years | Borrowings attributable to with-profits operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 29 | 10 |
After 15 years to 20 years | Accruals, deferred income and other liabilities | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 106 | 103 |
Over 20 years | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 5,454 | 3,821 |
Over 20 years | Core structural borrowings of shareholder-financed operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 3,324 | 3,439 |
Over 20 years | Borrowings attributable to with-profits operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 1,810 | 60 |
Over 20 years | Accruals, deferred income and other liabilities | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 320 | 322 |
No stated maturity | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 6,531 | 7,078 |
No stated maturity | Core structural borrowings of shareholder-financed operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 3,160 | 3,662 |
No stated maturity | Borrowings attributable to with-profits operations | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 104 | 144 |
No stated maturity | Accruals, deferred income and other liabilities | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | £ 3,267 | £ 3,272 |
Financial instruments - addi127
Financial instruments - additional information - Maturity analysis of derivatives (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Maturity analysis of derivatives | ||
Derivative assets | £ 4,801 | £ 3,936 |
Derivative liabilities | (2,755) | (3,252) |
Net derivative position | 2,046 | 684 |
Maturity profile of net derivative position | 2,333 | 1,006 |
Expected to be settled within one year | ||
Maturity analysis of derivatives | ||
Maturity profile of net derivative position | 2,359 | 1,009 |
After 1 year to 3 years | ||
Maturity analysis of derivatives | ||
Maturity profile of net derivative position | (16) | (14) |
After 3 years to 5 years | ||
Maturity analysis of derivatives | ||
Maturity profile of net derivative position | (9) | (7) |
Over 5 years | ||
Maturity analysis of derivatives | ||
Maturity profile of net derivative position | £ (1) | £ 18 |
Financial instruments - addi128
Financial instruments - additional information - Maturity analysis of investment contracts (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Maturity profile for investment contracts on undiscounted cash flow projections of expected benefit payments | |||
Policyholder liabilities | £ 411,211 | £ 388,996 | £ 322,518 |
Investment contracts | |||
Maturity profile for investment contracts on undiscounted cash flow projections of expected benefit payments | |||
Undiscounted value | 110,000 | 89,000 | |
Policyholder liabilities | 83,000 | 73,000 | |
Investment contracts | Expected to be settled within one year | |||
Maturity profile for investment contracts on undiscounted cash flow projections of expected benefit payments | |||
Undiscounted value | 8,000 | 6,000 | |
Investment contracts | 1 to 5 years | |||
Maturity profile for investment contracts on undiscounted cash flow projections of expected benefit payments | |||
Undiscounted value | 29,000 | 24,000 | |
Investment contracts | 5 years to 10 years | |||
Maturity profile for investment contracts on undiscounted cash flow projections of expected benefit payments | |||
Undiscounted value | 27,000 | 23,000 | |
Investment contracts | After 10 years to 15 years | |||
Maturity profile for investment contracts on undiscounted cash flow projections of expected benefit payments | |||
Undiscounted value | 19,000 | 16,000 | |
Investment contracts | After 15 years to 20 years | |||
Maturity profile for investment contracts on undiscounted cash flow projections of expected benefit payments | |||
Undiscounted value | 13,000 | 11,000 | |
Investment contracts | Over 20 years | |||
Maturity profile for investment contracts on undiscounted cash flow projections of expected benefit payments | |||
Undiscounted value | 14,000 | 9,000 | |
Investment contracts | Unit-linked | On demand | |||
Maturity profile for investment contracts on undiscounted cash flow projections of expected benefit payments | |||
Policyholder liabilities | £ 12,000 | £ 11,000 |
Financial instruments - addi129
Financial instruments - additional information - Credit risk (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Credit risk | ||
Financial assets not past due or impaired due to renegotiation of terms | £ 22 | £ 27 |
Past due date but not impaired | ||
Credit risk | ||
Loans and receivables | 23 | 27 |
Past due date but not impaired | Less than one year past due date | ||
Credit risk | ||
Loans and receivables | £ 17 | £ 20 |
Financial instruments - addi130
Financial instruments - additional information - Foreign exchange risk (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Foreign exchange risk | |||
Amount of exchange gain (loss) recognised | £ (112) | £ 1,005 | £ 138 |
Medium Term Notes liabilities | |||
Foreign exchange risk | |||
Amount of exchange gain (loss) recognised | 1 | 0.4 | (1) |
Other (mainly investments of PAC with-profits fund) | |||
Foreign exchange risk | |||
Amount of exchange gain (loss) recognised | £ (113) | £ 1,005 | £ 139 |
Foreign exchange risk | |||
Foreign exchange risk | |||
Percentage of financial assets in other than functional currencies | 24.00% | 23.00% | |
Percentage of financial liabilities in other than functional currencies | 16.00% | 12.00% | |
Foreign exchange risk | PAC with-profits fund | |||
Foreign exchange risk | |||
Percentage of non-functional currency financial assets held by fund | 52.00% | 52.00% | |
Percentage of non-functional currency financial liabilities held by fund | 28.00% | 28.00% |
Financial instruments - addi131
Financial instruments - additional information - Derivatives and hedging (Details) £ in Millions, $ in Billions | Dec. 31, 2017USD ($) | Dec. 31, 2017GBP (£) | Dec. 31, 2016USD ($) | Dec. 31, 2016GBP (£) |
Net investment hedge | Subordinated capital securities | ||||
Derivatives and hedging | ||||
Notional amount | $ | $ 4.3 | $ 4.5 | ||
Net investment of hedging instruments | £ 3,140 | £ 3,644 | ||
Foreign exchange gain (loss) recognised in shareholders' equity | £ 325 | £ (389) | ||
Effectiveness of hedging | 100.00% | 100.00% | 100.00% | 100.00% |
Cash flow hedges | ||||
Derivatives and hedging | ||||
Notional amount | £ 0 | £ 0 | ||
Fair value hedges | ||||
Derivatives and hedging | ||||
Notional amount | 0 | £ 0 | ||
Prudential Capital Plc | Prudential plc | OTC derivative contracts exempt from margin requirements | ||||
Derivatives and hedging | ||||
Notional amount | 3,615 | |||
Prudential Capital Plc | Prudential Holdings Limited | OTC derivative contracts exempt from margin requirements | ||||
Derivatives and hedging | ||||
Notional amount | 110 | |||
Prudential Capital Plc | Prudential (US Holdco1) Limited | OTC derivative contracts exempt from margin requirements | ||||
Derivatives and hedging | ||||
Notional amount | 3,123 | |||
Prudential Capital Plc | Prudential Corporation Holdings Limited | OTC derivative contracts exempt from margin requirements | ||||
Derivatives and hedging | ||||
Notional amount | 822 | |||
Prudential Capital Plc | Prudential Lifetime Mortgages Limited | OTC derivative contracts exempt from margin requirements | ||||
Derivatives and hedging | ||||
Notional amount | £ 71 |
Financial instruments - addi132
Financial instruments - additional information - Derecognition and collateral (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Securities lending and reverse repurchase agreements | ||
Lent securities and assets subject to repurchase | £ 8,232 | £ 8,545 |
Cash and securities collateral held or pledged under repurchase and securities lending agreements | 8,733 | 9,086 |
Collateral held in respect of reverse repurchase agreements | 10,550 | 9,319 |
Credit risk, over-the-counter derivative transactions | ||
Collateral and pledges | ||
Amount of assets pledged as collateral for liabilities | 2,302 | 1,853 |
Amount of collateral held | 3,958 | 2,788 |
Credit risk, funding agreements and other transactions | ||
Collateral and pledges | ||
Amount of assets pledged as collateral for liabilities | 3,412 | 3,384 |
PAC with-profits fund | ||
Securities lending and reverse repurchase agreements | ||
Lent securities and assets subject to repurchase | 8,182 | 8,113 |
Cash and securities collateral held or pledged under repurchase and securities lending agreements | £ 8,679 | £ 8,653 |
Financial instruments - addi133
Financial instruments - additional information - Offsetting assets and liabilities (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Financial assets: | ||
Financial assets, gross amount included in the consolidated statement of financial position | £ 14,998 | £ 13,001 |
Financial assets, financial instruments not offset in the consolidated statement of financial position | (946) | (1,053) |
Financial assets, cash collateral not offset in the consolidated statement of financial position | (2,641) | (1,895) |
Financial assets, securities collateral not offset in the consolidated statement of financial position | (11,254) | (9,865) |
Net amount of financial assets | 157 | 188 |
Financial liabilities: | ||
Financial liabilities, gross amount included in the consolidated statement of financial position | (3,711) | (4,801) |
Financial liabilities, financial instruments not offset in the consolidated statement of financial position | 946 | 1,053 |
Financial liabilities, cash collateral not offset in the consolidated statement of financial position | 472 | 795 |
Financial liabilities, securities collateral not offset in the consolidated statement of financial position | 2,225 | 2,858 |
Net amount of financial liabilities | (68) | (95) |
Derivative liabilities | ||
Financial liabilities: | ||
Financial liabilities, gross amount included in the consolidated statement of financial position | (2,301) | (2,874) |
Financial liabilities, financial instruments not offset in the consolidated statement of financial position | 946 | 1,053 |
Financial liabilities, cash collateral not offset in the consolidated statement of financial position | 420 | 698 |
Financial liabilities, securities collateral not offset in the consolidated statement of financial position | 893 | 1,028 |
Net amount of financial liabilities | (42) | (95) |
Securities lending and repurchase agreements | ||
Financial liabilities: | ||
Financial liabilities, gross amount included in the consolidated statement of financial position | (1,410) | (1,927) |
Financial liabilities, cash collateral not offset in the consolidated statement of financial position | 52 | 97 |
Financial liabilities, securities collateral not offset in the consolidated statement of financial position | 1,332 | 1,830 |
Net amount of financial liabilities | (26) | |
Derivative assets | ||
Financial assets: | ||
Financial assets, gross amount included in the consolidated statement of financial position | 4,718 | 3,869 |
Financial assets, financial instruments not offset in the consolidated statement of financial position | (946) | (1,053) |
Financial assets, cash collateral not offset in the consolidated statement of financial position | (2,641) | (1,895) |
Financial assets, securities collateral not offset in the consolidated statement of financial position | (984) | (733) |
Net amount of financial assets | 147 | 188 |
Reverse repurchase agreements | ||
Financial assets: | ||
Financial assets, gross amount included in the consolidated statement of financial position | 10,280 | 9,132 |
Financial assets, securities collateral not offset in the consolidated statement of financial position | (10,270) | £ (9,132) |
Net amount of financial assets | £ 10 |
Policyholder liabilities and134
Policyholder liabilities and unallocated surplus - Analysis of movements (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | £ 409,714 | £ 340,584 |
Policyholder liabilities on the consolidated statement of financial position | 388,996 | 322,518 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 14,317 | 13,096 |
Group's share of policyholder liabilities of joint ventures and associates | 6,401 | 4,970 |
Reclassification of Korea life business as held for sale | (2,812) | |
Premiums | 41,892 | 35,534 |
Surrenders | (20,035) | (16,992) |
Maturities/deaths | (11,109) | (10,089) |
Net flows | 10,748 | 8,453 |
Shareholders' transfers post-tax | (287) | (259) |
Investment-related items and other movements | 35,579 | 26,321 |
Foreign exchange translation differences | (20,125) | 37,427 |
Ending Balance | 435,629 | 409,714 |
Policyholder liabilities on the consolidated statement of financial position | 411,211 | 388,996 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 16,951 | 14,317 |
Group's share of policyholder liabilities of joint ventures and associates | 7,467 | 6,401 |
Average Policy liability | 407,038 | 360,038 |
Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities | 266,635 | 219,581 |
Policyholder liabilities on the consolidated statement of financial position | 260,234 | |
Group's share of policyholder liabilities of joint ventures and associates | 6,401 | |
Reclassification of Korea life business as held for sale | (2,812) | |
Premiums | 23,566 | 21,357 |
Surrenders | (15,205) | (12,770) |
Maturities/deaths | (5,644) | (4,949) |
Net flows | 2,717 | 3,638 |
Investment-related items and other movements | 22,978 | 13,786 |
Foreign exchange translation differences | (17,837) | 32,442 |
Policyholder liabilities | 274,493 | 266,635 |
Policyholder liabilities on the consolidated statement of financial position | 267,026 | 260,234 |
Group's share of policyholder liabilities of joint ventures and associates | 7,467 | 6,401 |
Deductions for intra-group reinsurance | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | (1,302) | |
Policyholder liabilities on the consolidated statement of financial position | (1,235) | (1,302) |
Unallocated to a segment (other operations) | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 32 | |
Unallocated to a segment (other operations) | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 32 | |
Asia insurance operations | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 62,784 | 48,778 |
Policyholder liabilities on the consolidated statement of financial position | 53,716 | 41,255 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 2,667 | 2,553 |
Group's share of policyholder liabilities of joint ventures and associates | 6,401 | 4,970 |
Reclassification of Korea life business as held for sale | (2,812) | |
Premiums | 11,863 | 9,639 |
Surrenders | (3,079) | (2,299) |
Maturities/deaths | (1,909) | (1,558) |
Net flows | 6,875 | 5,782 |
Shareholders' transfers post-tax | (54) | (44) |
Investment-related items and other movements | 8,182 | 2,005 |
Foreign exchange translation differences | (3,948) | 9,075 |
Ending Balance | 73,839 | 62,784 |
Policyholder liabilities on the consolidated statement of financial position | 62,898 | 53,716 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 3,474 | 2,667 |
Group's share of policyholder liabilities of joint ventures and associates | 7,467 | 6,401 |
Average Policy liability | 65,241 | 51,765 |
Asia insurance operations | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities | 32,851 | 27,844 |
Policyholder liabilities on the consolidated statement of financial position | 26,450 | |
Group's share of policyholder liabilities of joint ventures and associates | 6,401 | |
Reclassification of Korea life business as held for sale | (2,812) | |
Premiums | 6,064 | 4,749 |
Surrenders | (2,755) | (1,931) |
Maturities/deaths | (1,008) | (732) |
Net flows | 2,301 | 2,086 |
Investment-related items and other movements | 3,797 | 1,116 |
Foreign exchange translation differences | (1,547) | 4,617 |
Policyholder liabilities | 37,402 | 32,851 |
Policyholder liabilities on the consolidated statement of financial position | 29,935 | 26,450 |
Group's share of policyholder liabilities of joint ventures and associates | 7,467 | 6,401 |
Asia insurance operations | Operations within segments | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 55,018 | |
Policyholder liabilities on the consolidated statement of financial position | 64,133 | 55,018 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 3,474 | |
Jackson (US insurance operations) | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 177,626 | 138,913 |
Policyholder liabilities on the consolidated statement of financial position | 177,626 | 138,913 |
Premiums | 15,219 | 14,766 |
Surrenders | (10,017) | (7,872) |
Maturities/deaths | (2,065) | (1,696) |
Net flows | 3,137 | 5,198 |
Investment-related items and other movements | 16,251 | 5,690 |
Foreign exchange translation differences | (16,290) | 27,825 |
Ending Balance | 180,724 | 177,626 |
Policyholder liabilities on the consolidated statement of financial position | 180,724 | 177,626 |
Average Policy liability | 179,175 | 158,270 |
Jackson (US insurance operations) | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities | 177,626 | 138,913 |
Policyholder liabilities on the consolidated statement of financial position | 177,626 | |
Premiums | 15,219 | 14,766 |
Surrenders | (10,017) | (7,872) |
Maturities/deaths | (2,065) | (1,696) |
Net flows | 3,137 | 5,198 |
Investment-related items and other movements | 16,251 | 5,690 |
Foreign exchange translation differences | (16,290) | 27,825 |
Policyholder liabilities | 180,724 | 177,626 |
Policyholder liabilities on the consolidated statement of financial position | 180,724 | 177,626 |
UK and Europe insurance operations | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 169,304 | 152,893 |
Policyholder liabilities on the consolidated statement of financial position | 157,654 | 142,350 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 11,650 | 10,543 |
Premiums | 14,810 | 11,129 |
Surrenders | (6,939) | (6,821) |
Maturities/deaths | (7,135) | (6,835) |
Net flows | 736 | (2,527) |
Shareholders' transfers post-tax | (233) | (215) |
Investment-related items and other movements | 11,146 | 18,626 |
Foreign exchange translation differences | 113 | 527 |
Ending Balance | 181,066 | 169,304 |
Policyholder liabilities on the consolidated statement of financial position | 167,589 | 157,654 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 13,477 | 11,650 |
Average Policy liability | 162,622 | 150,003 |
UK and Europe insurance operations | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities | 56,158 | 52,824 |
Policyholder liabilities on the consolidated statement of financial position | 56,158 | |
Premiums | 2,283 | 1,842 |
Surrenders | (2,433) | (2,967) |
Maturities/deaths | (2,571) | (2,521) |
Net flows | (2,721) | (3,646) |
Investment-related items and other movements | 2,930 | 6,980 |
Policyholder liabilities | 56,367 | 56,158 |
Policyholder liabilities on the consolidated statement of financial position | 56,367 | £ 56,158 |
UK and Europe insurance operations | Operations within segments | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Unallocated surplus of with-profits funds on the consolidated statement of financial position | £ 13,477 |
Policyholder liabilities and135
Policyholder liabilities and unallocated surplus - Movement by gross, reinsurers' share and unallocated surplus (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | ||
Insurance contract liabilities at beginning of period | £ 316,436 | £ 260,753 |
Income and expense included in the income statement and other comprehensive income | 31,142 | 20,210 |
Foreign exchange translation differences | (19,405) | 35,472 |
Insurance contract liabilities at end of period | 328,172 | 316,436 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 14,317 | 13,096 |
Income and expense included in the income statement and other comprehensive income | 2,949 | 768 |
Foreign exchange translation differences | (315) | 453 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 16,951 | 14,317 |
Reinsurers' share | ||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | ||
Insurance contract liabilities at beginning of period | 8,965 | 6,992 |
Income and expense included in the income statement and other comprehensive income | 422 | 752 |
Foreign exchange translation differences | (667) | 1,221 |
Insurance contract liabilities at end of period | £ 8,720 | £ 8,965 |
Policyholder liabilities and136
Policyholder liabilities and unallocated surplus - Reinsurers' share of insurance contract liabilities (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | ||
Insurance contract liabilities | £ 8,720 | £ 8,965 |
Claims outstanding | 953 | 1,086 |
Total reinsurers' share of insurance contract liabilities | 9,673 | 10,051 |
Net commission on ceded business | 28 | 38 |
Claims incurred on ceded business | 526 | 500 |
Asia insurance operations | ||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | ||
Total reinsurers' share of insurance contract liabilities | £ 1,961 | £ 1,539 |
Jackson (US insurance operations) | REALIC of Jacksonville Plans, Inc | ||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | ||
Percentage of reinsurance agreement coverage | 100.00% | |
UK and Europe and US insurance operations | ||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | ||
Segment percentage of reinsurers' share of insurance contract liabilities | 80.00% | 85.00% |
UK and Europe and US insurance operations | Standard & Poor's rating A- and above | ||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | ||
Percentage of ceded insurance contract liabilities per credit rating of reinsurer | 96.00% | 96.00% |
Operating segments net of eliminations | Asia insurance operations | ||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | ||
Insurance contract liabilities | £ 1,912 | |
Claims outstanding | 48 | |
Total reinsurers' share of insurance contract liabilities | 1,960 | |
Operating segments net of eliminations | Jackson (US insurance operations) | ||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | ||
Insurance contract liabilities | 5,672 | |
Claims outstanding | 752 | |
Total reinsurers' share of insurance contract liabilities | 6,424 | |
Operating segments net of eliminations | UK and Europe insurance operations | ||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | ||
Insurance contract liabilities | 1,136 | |
Claims outstanding | 150 | |
Total reinsurers' share of insurance contract liabilities | 1,286 | |
Unallocated to a segment (other operations) | ||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | ||
Claims outstanding | 3 | |
Total reinsurers' share of insurance contract liabilities | £ 3 |
Policyholder liabilities and137
Policyholder liabilities and unallocated surplus - Analysis of movements, Asia (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | £ 409,714 | £ 340,584 |
Policyholder liabilities on the consolidated statement of financial position | 388,996 | 322,518 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 14,317 | 13,096 |
Group's share of policyholder liabilities of joint ventures and associates | 6,401 | 4,970 |
Reclassification of Korea life business as held for sale | (2,812) | |
Premiums | 41,892 | 35,534 |
Surrenders | (20,035) | (16,992) |
Maturities/deaths | (11,109) | (10,089) |
Net flows | 10,748 | 8,453 |
Shareholders' transfers post-tax | (287) | (259) |
Investment-related items and other movements | 35,579 | 26,321 |
Foreign exchange translation differences | (20,125) | 37,427 |
Ending Balance | 435,629 | 409,714 |
Policyholder liabilities on the consolidated statement of financial position | 411,211 | 388,996 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 16,951 | 14,317 |
Group's share of policyholder liabilities of joint ventures and associates | 7,467 | 6,401 |
Average Policy liability | 407,038 | 360,038 |
Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 260,234 | |
Group's share of policyholder liabilities of joint ventures and associates | 6,401 | |
Reclassification of Korea life business as held for sale | (2,812) | |
Premiums | 23,566 | 21,357 |
Surrenders | (15,205) | (12,770) |
Maturities/deaths | (5,644) | (4,949) |
Net flows | 2,717 | 3,638 |
Investment-related items and other movements | 22,978 | 13,786 |
Foreign exchange translation differences | (17,837) | 32,442 |
Policyholder liabilities on the consolidated statement of financial position | 267,026 | 260,234 |
Group's share of policyholder liabilities of joint ventures and associates | 7,467 | 6,401 |
Deductions for intra-group reinsurance | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | (1,302) | |
Policyholder liabilities on the consolidated statement of financial position | (1,235) | (1,302) |
Deductions for intra-group reinsurance | With-profits | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 1,302 | |
Policyholder liabilities on the consolidated statement of financial position | 1,235 | 1,302 |
Asia insurance operations | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 62,784 | 48,778 |
Policyholder liabilities on the consolidated statement of financial position | 53,716 | 41,255 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 2,667 | 2,553 |
Group's share of policyholder liabilities of joint ventures and associates | 6,401 | 4,970 |
Reclassification of Korea life business as held for sale | (2,812) | |
New business | 3,440 | 3,389 |
In-force | 8,423 | 6,250 |
Premiums | 11,863 | 9,639 |
Surrenders | (3,079) | (2,299) |
Maturities/deaths | (1,909) | (1,558) |
Net flows | 6,875 | 5,782 |
Shareholders' transfers post-tax | (54) | (44) |
Investment-related items and other movements | 8,182 | 2,005 |
Foreign exchange translation differences | (3,948) | 9,075 |
Ending Balance | 73,839 | 62,784 |
Policyholder liabilities on the consolidated statement of financial position | 62,898 | 53,716 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 3,474 | 2,667 |
Group's share of policyholder liabilities of joint ventures and associates | 7,467 | 6,401 |
Average Policy liability | 65,241 | 51,765 |
Net flow increase (decrease) | 1,093 | |
Asia insurance operations | With-profits | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 29,933 | 20,934 |
Policyholder liabilities on the consolidated statement of financial position | 27,266 | 18,381 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 2,667 | 2,553 |
New business | 1,143 | 1,701 |
In-force | 4,656 | 3,189 |
Premiums | 5,799 | 4,890 |
Surrenders | (324) | (368) |
Maturities/deaths | (901) | (826) |
Net flows | 4,574 | 3,696 |
Shareholders' transfers post-tax | (54) | (44) |
Investment-related items and other movements | 4,385 | 889 |
Foreign exchange translation differences | (2,401) | 4,458 |
Ending Balance | 36,437 | 29,933 |
Policyholder liabilities on the consolidated statement of financial position | 32,963 | 27,266 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 3,474 | 2,667 |
Average Policy liability | 30,115 | 22,823 |
Asia insurance operations | Unit-linked | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 17,507 | 15,966 |
Policyholder liabilities on the consolidated statement of financial position | 14,289 | 13,355 |
Group's share of policyholder liabilities of joint ventures and associates | 3,218 | 2,611 |
Reclassification of Korea life business as held for sale | (2,187) | |
New business | 1,298 | 921 |
In-force | 1,637 | 1,447 |
Premiums | 2,935 | 2,368 |
Surrenders | (2,288) | (1,641) |
Maturities/deaths | (150) | (78) |
Net flows | 497 | 649 |
Investment-related items and other movements | 2,830 | 621 |
Foreign exchange translation differences | (807) | 2,458 |
Ending Balance | 20,027 | 17,507 |
Policyholder liabilities on the consolidated statement of financial position | 16,263 | 14,289 |
Group's share of policyholder liabilities of joint ventures and associates | 3,764 | 3,218 |
Average Policy liability | 18,767 | 15,643 |
Asia insurance operations | Other business | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 15,344 | 11,878 |
Policyholder liabilities on the consolidated statement of financial position | 12,161 | 9,519 |
Group's share of policyholder liabilities of joint ventures and associates | 3,183 | 2,359 |
Reclassification of Korea life business as held for sale | (625) | |
New business | 999 | 767 |
In-force | 2,130 | 1,614 |
Premiums | 3,129 | 2,381 |
Surrenders | (467) | (290) |
Maturities/deaths | (858) | (654) |
Net flows | 1,804 | 1,437 |
Investment-related items and other movements | 967 | 495 |
Foreign exchange translation differences | (740) | 2,159 |
Ending Balance | 17,375 | 15,344 |
Policyholder liabilities on the consolidated statement of financial position | 13,672 | 12,161 |
Group's share of policyholder liabilities of joint ventures and associates | 3,703 | 3,183 |
Average Policy liability | 16,359 | 13,299 |
Asia insurance operations | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 26,450 | |
Group's share of policyholder liabilities of joint ventures and associates | 6,401 | |
Reclassification of Korea life business as held for sale | (2,812) | |
Premiums | 6,064 | 4,749 |
Surrenders | (2,755) | (1,931) |
Maturities/deaths | (1,008) | (732) |
Net flows | 2,301 | 2,086 |
Investment-related items and other movements | 3,797 | 1,116 |
Foreign exchange translation differences | (1,547) | 4,617 |
Policyholder liabilities on the consolidated statement of financial position | 29,935 | 26,450 |
Group's share of policyholder liabilities of joint ventures and associates | 7,467 | 6,401 |
Asia insurance operations | Operations within segments | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 55,018 | |
Policyholder liabilities on the consolidated statement of financial position | 64,133 | £ 55,018 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 3,474 | |
Asia insurance operations | Operations within segments | With-profits | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 34,198 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | £ 3,474 |
Policyholder liabilities and138
Policyholder liabilities and unallocated surplus - Asia liabilities by duration (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Liabilities | |||
Policyholder liabilities | £ 411,211 | £ 388,996 | £ 322,518 |
Asia insurance operations | |||
Liabilities | |||
Policyholder liabilities | £ 62,898 | £ 53,716 | £ 41,255 |
Asia insurance operations | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 21.00% | 23.00% | |
Asia insurance operations | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 19.00% | 20.00% | |
Asia insurance operations | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 16.00% | 16.00% | |
Asia insurance operations | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 12.00% | 11.00% | |
Asia insurance operations | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 10.00% | 9.00% | |
Asia insurance operations | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 22.00% | 21.00% |
Policyholder liabilities and139
Policyholder liabilities and unallocated surplus - Asia liabilities by geographic area (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Liabilities | ||
Reinsurers' share of insurance contract liabilities | £ 9,673 | £ 10,051 |
Asia insurance operations | ||
Liabilities | ||
Policyholder liabilities and unallocated surplus, excluding joint ventures and after deducting intra-group reinsurance liabilities | 66,372 | 56,383 |
Reinsurers' share of insurance contract liabilities | 1,961 | 1,539 |
Policyholder liabilities and unallocated surplus, net of reinsurance, excluding joint ventures | 64,410 | 54,844 |
Hong Kong | Asia insurance operations | ||
Liabilities | ||
Policyholder liabilities and unallocated surplus, net of reinsurance, excluding joint ventures | 29,411 | 23,852 |
Indonesia | Asia insurance operations | ||
Liabilities | ||
Policyholder liabilities and unallocated surplus, net of reinsurance, excluding joint ventures | 3,762 | 3,405 |
Malaysia | Asia insurance operations | ||
Liabilities | ||
Policyholder liabilities and unallocated surplus, net of reinsurance, excluding joint ventures | 5,014 | 4,332 |
Singapore | Asia insurance operations | ||
Liabilities | ||
Policyholder liabilities and unallocated surplus, net of reinsurance, excluding joint ventures | 17,432 | 15,324 |
Taiwan | Asia insurance operations | ||
Liabilities | ||
Policyholder liabilities and unallocated surplus, net of reinsurance, excluding joint ventures | 3,729 | 3,504 |
Other operations | Asia insurance operations | ||
Liabilities | ||
Policyholder liabilities and unallocated surplus, net of reinsurance, excluding joint ventures | £ 5,062 | £ 4,427 |
Policyholder liabilities and140
Policyholder liabilities and unallocated surplus - Analysis of movements, US (Details) £ in Millions | 12 Months Ended | |||
Dec. 31, 2017GBP (£)$ / £ | Dec. 31, 2016GBP (£)$ / £ | Dec. 31, 2015GBP (£)$ / £ | Dec. 31, 2014$ / £ | |
Analysis of movements in policyholder liabilities and unallocated surplus | ||||
Policyholder liabilities on the consolidated statement of financial position | £ 388,996 | £ 322,518 | ||
Premiums | 41,892 | 35,534 | ||
Surrenders | (20,035) | (16,992) | ||
Maturities/deaths | (11,109) | (10,089) | ||
Net flows | 10,748 | 8,453 | ||
Investment-related items and other movements | 35,579 | 26,321 | ||
Foreign exchange translation differences | (20,125) | 37,427 | ||
Policyholder liabilities on the consolidated statement of financial position | 411,211 | 388,996 | £ 322,518 | |
Average Policy liability | £ 407,038 | £ 360,038 | ||
US dollars | ||||
Analysis of movements in policyholder liabilities and unallocated surplus | ||||
Average exchange rate | $ / £ | 1.29 | 1.35 | 1.53 | |
Closing exchange rate | $ / £ | 1.35 | 1.24 | 1.47 | 1.56 |
Jackson (US insurance operations) | ||||
Analysis of movements in policyholder liabilities and unallocated surplus | ||||
Policyholder liabilities on the consolidated statement of financial position | £ 177,626 | £ 138,913 | ||
Premiums | 15,219 | 14,766 | ||
Surrenders | (10,017) | (7,872) | ||
Maturities/deaths | (2,065) | (1,696) | ||
Net flows | 3,137 | 5,198 | ||
Investment-related items and other movements | 16,251 | 5,690 | ||
Foreign exchange translation differences | (16,290) | 27,825 | ||
Policyholder liabilities on the consolidated statement of financial position | 180,724 | 177,626 | £ 138,913 | |
Average Policy liability | £ 179,175 | £ 158,270 | ||
Jackson (US insurance operations) | US dollars | ||||
Analysis of movements in policyholder liabilities and unallocated surplus | ||||
Average exchange rate | $ / £ | 1.29 | 1.35 | ||
Closing exchange rate | $ / £ | 1.35 | 1.24 | ||
Jackson (US insurance operations) | Variable annuity separate account | ||||
Analysis of movements in policyholder liabilities and unallocated surplus | ||||
Policyholder liabilities on the consolidated statement of financial position | £ 120,411 | £ 91,022 | ||
Premiums | 11,529 | 10,232 | ||
Surrenders | (6,997) | (5,036) | ||
Maturities/deaths | (1,026) | (803) | ||
Net flows | 3,506 | 4,393 | ||
Transfers from general to separate account | 2,096 | 1,164 | ||
Investment-related items and other movements | 15,956 | 5,246 | ||
Foreign exchange translation differences | (11,441) | 18,586 | ||
Policyholder liabilities on the consolidated statement of financial position | 130,528 | 120,411 | 91,022 | |
Average Policy liability | 125,469 | 105,717 | ||
Jackson (US insurance operations) | Fixed annuity, GIC and other business | ||||
Analysis of movements in policyholder liabilities and unallocated surplus | ||||
Policyholder liabilities on the consolidated statement of financial position | 57,215 | 47,891 | ||
Premiums | 3,690 | 4,534 | ||
Surrenders | (3,020) | (2,836) | ||
Maturities/deaths | (1,039) | (893) | ||
Net flows | (369) | 805 | ||
Transfers from general to separate account | (2,096) | (1,164) | ||
Investment-related items and other movements | 295 | 444 | ||
Foreign exchange translation differences | (4,849) | 9,239 | ||
Policyholder liabilities on the consolidated statement of financial position | 50,196 | 57,215 | £ 47,891 | |
Average Policy liability | £ 53,706 | £ 52,553 |
Policyholder liabilities and141
Policyholder liabilities and unallocated surplus - US liabilities by duration (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Liabilities | |||
Policyholder liabilities | £ 411,211 | £ 388,996 | £ 322,518 |
Jackson (US insurance operations) | |||
Liabilities | |||
Policyholder liabilities | £ 180,724 | £ 177,626 | 138,913 |
Jackson (US insurance operations) | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 44.00% | 45.00% | |
Jackson (US insurance operations) | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 28.00% | 28.00% | |
Jackson (US insurance operations) | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 14.00% | 14.00% | |
Jackson (US insurance operations) | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 8.00% | 7.00% | |
Jackson (US insurance operations) | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 4.00% | 3.00% | |
Jackson (US insurance operations) | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 2.00% | 3.00% | |
Jackson (US insurance operations) | Fixed annuity, GIC and other business | |||
Liabilities | |||
Policyholder liabilities | £ 50,196 | £ 57,215 | 47,891 |
Jackson (US insurance operations) | Fixed annuity, GIC and other business | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 50.00% | 49.00% | |
Jackson (US insurance operations) | Fixed annuity, GIC and other business | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 25.00% | 26.00% | |
Jackson (US insurance operations) | Fixed annuity, GIC and other business | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 12.00% | 11.00% | |
Jackson (US insurance operations) | Fixed annuity, GIC and other business | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 7.00% | 7.00% | |
Jackson (US insurance operations) | Fixed annuity, GIC and other business | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 3.00% | 3.00% | |
Jackson (US insurance operations) | Fixed annuity, GIC and other business | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 3.00% | 4.00% | |
Jackson (US insurance operations) | Variable annuity separate account | |||
Liabilities | |||
Policyholder liabilities | £ 130,528 | £ 120,411 | £ 91,022 |
Jackson (US insurance operations) | Variable annuity separate account | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 42.00% | 43.00% | |
Jackson (US insurance operations) | Variable annuity separate account | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 29.00% | 29.00% | |
Jackson (US insurance operations) | Variable annuity separate account | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 15.00% | 14.00% | |
Jackson (US insurance operations) | Variable annuity separate account | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 8.00% | 8.00% | |
Jackson (US insurance operations) | Variable annuity separate account | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 4.00% | 4.00% | |
Jackson (US insurance operations) | Variable annuity separate account | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 2.00% | 2.00% |
Policyholder liabilities and142
Policyholder liabilities and unallocated surplus - Aggregate account values (Details) - Jackson (US insurance operations) - GBP (£) £ in Millions | 24 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
> 0% - 1.00% | Minimum | ||
Liabilities | ||
Minimum guaranteed interest rate (as a percent) | 0.00% | |
> 0% - 1.00% | Maximum | ||
Liabilities | ||
Minimum guaranteed interest rate (as a percent) | 1.00% | |
> 1.0% - 2.0% | Minimum | ||
Liabilities | ||
Minimum guaranteed interest rate (as a percent) | 1.00% | |
> 1.0% - 2.0% | Maximum | ||
Liabilities | ||
Minimum guaranteed interest rate (as a percent) | 2.00% | |
> 2.0% - 3.0% | Minimum | ||
Liabilities | ||
Minimum guaranteed interest rate (as a percent) | 2.00% | |
> 2.0% - 3.0% | Maximum | ||
Liabilities | ||
Minimum guaranteed interest rate (as a percent) | 3.00% | |
> 3.0% - 4.0% | Minimum | ||
Liabilities | ||
Minimum guaranteed interest rate (as a percent) | 3.00% | |
> 3.0% - 4.0% | Maximum | ||
Liabilities | ||
Minimum guaranteed interest rate (as a percent) | 4.00% | |
> 4.0% - 5.0% | Minimum | ||
Liabilities | ||
Minimum guaranteed interest rate (as a percent) | 4.00% | |
> 4.0% - 5.0% | Maximum | ||
Liabilities | ||
Minimum guaranteed interest rate (as a percent) | 5.00% | |
> 5.0% - 6.0% | Minimum | ||
Liabilities | ||
Minimum guaranteed interest rate (as a percent) | 5.00% | |
> 5.0% - 6.0% | Maximum | ||
Liabilities | ||
Minimum guaranteed interest rate (as a percent) | 6.00% | |
Fixed annuities and the fixed account portion of variable annuities | ||
Liabilities | ||
Aggregate account value | £ 27,307 | £ 31,389 |
Fixed annuities and the fixed account portion of variable annuities | > 0% - 1.00% | ||
Liabilities | ||
Aggregate account value | 6,887 | 7,765 |
Fixed annuities and the fixed account portion of variable annuities | > 1.0% - 2.0% | ||
Liabilities | ||
Aggregate account value | 7,385 | 8,718 |
Fixed annuities and the fixed account portion of variable annuities | > 2.0% - 3.0% | ||
Liabilities | ||
Aggregate account value | 9,799 | 11,249 |
Fixed annuities and the fixed account portion of variable annuities | > 3.0% - 4.0% | ||
Liabilities | ||
Aggregate account value | 1,272 | 1,456 |
Fixed annuities and the fixed account portion of variable annuities | > 4.0% - 5.0% | ||
Liabilities | ||
Aggregate account value | 1,744 | 1,954 |
Fixed annuities and the fixed account portion of variable annuities | > 5.0% - 6.0% | ||
Liabilities | ||
Aggregate account value | 220 | 247 |
Interest-sensitive life business | ||
Liabilities | ||
Aggregate account value | 6,272 | 7,090 |
Interest-sensitive life business | > 2.0% - 3.0% | ||
Liabilities | ||
Aggregate account value | 221 | 243 |
Interest-sensitive life business | > 3.0% - 4.0% | ||
Liabilities | ||
Aggregate account value | 2,341 | 2,675 |
Interest-sensitive life business | > 4.0% - 5.0% | ||
Liabilities | ||
Aggregate account value | 2,059 | 2,333 |
Interest-sensitive life business | > 5.0% - 6.0% | ||
Liabilities | ||
Aggregate account value | £ 1,651 | £ 1,839 |
Policyholder liabilities and143
Policyholder liabilities and unallocated surplus - Analysis of movements, UK and Europe (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | £ 409,714 | £ 340,584 |
Policyholder liabilities on the consolidated statement of financial position | 388,996 | 322,518 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 14,317 | 13,096 |
Premiums | 41,892 | 35,534 |
Surrenders | (20,035) | (16,992) |
Maturities/deaths | (11,109) | (10,089) |
Net flows | 10,748 | 8,453 |
Shareholders' transfers post-tax | (287) | (259) |
Investment-related items and other movements | 35,579 | 26,321 |
Foreign exchange translation differences | (20,125) | 37,427 |
Ending Balance | 435,629 | 409,714 |
Policyholder liabilities on the consolidated statement of financial position | 411,211 | 388,996 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 16,951 | 14,317 |
Average Policy liability | 407,038 | 360,038 |
UK and Europe insurance operations | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 169,304 | 152,893 |
Policyholder liabilities on the consolidated statement of financial position | 157,654 | 142,350 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 11,650 | 10,543 |
Premiums | 14,810 | 11,129 |
Surrenders | (6,939) | (6,821) |
Maturities/deaths | (7,135) | (6,835) |
Net flows | 736 | (2,527) |
Shareholders' transfers post-tax | (233) | (215) |
Investment-related items and other movements | 11,146 | 18,626 |
Foreign exchange translation differences | 113 | 527 |
Ending Balance | 181,066 | 169,304 |
Policyholder liabilities on the consolidated statement of financial position | 167,589 | 157,654 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 13,477 | 11,650 |
Average Policy liability | 162,622 | 150,003 |
UK and Europe insurance operations | With-profits | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 90,343 | |
Policyholder liabilities on the consolidated statement of financial position | 100,613 | 90,343 |
UK and Europe insurance operations | UK and Europe with-profits sub-funds | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 113,146 | 100,069 |
Policyholder liabilities on the consolidated statement of financial position | 101,496 | 89,526 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 11,650 | 10,543 |
Premiums | 12,527 | 9,287 |
Surrenders | (4,506) | (3,854) |
Maturities/deaths | (4,564) | (4,314) |
Net flows | 3,457 | 1,119 |
Shareholders' transfers post-tax | (233) | (215) |
Switches | (192) | (152) |
Investment-related items and other movements | 8,408 | 11,798 |
Foreign exchange translation differences | 113 | 527 |
Ending Balance | 124,699 | 113,146 |
Policyholder liabilities on the consolidated statement of financial position | 111,222 | 101,496 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 13,477 | 11,650 |
Average Policy liability | 106,359 | 95,511 |
UK and Europe insurance operations | UK and Europe other funds and subsidiaries | Unit-linked | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 22,119 | 21,442 |
Policyholder liabilities on the consolidated statement of financial position | 22,119 | 21,442 |
Premiums | 1,923 | 1,227 |
Surrenders | (2,342) | (2,889) |
Maturities/deaths | (612) | (583) |
Net flows | (1,031) | (2,245) |
Switches | 192 | 152 |
Investment-related items and other movements | 1,865 | 2,770 |
Ending Balance | 23,145 | 22,119 |
Policyholder liabilities on the consolidated statement of financial position | 23,145 | 22,119 |
Average Policy liability | 22,632 | 21,781 |
UK and Europe insurance operations | UK and Europe other funds and subsidiaries | Annuity and other long term business | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 34,039 | 31,382 |
Policyholder liabilities on the consolidated statement of financial position | 34,039 | 31,382 |
Premiums | 360 | 615 |
Surrenders | (91) | (78) |
Maturities/deaths | (1,959) | (1,938) |
Net flows | (1,690) | (1,401) |
Investment-related items and other movements | 873 | 4,058 |
Ending Balance | 33,222 | 34,039 |
Policyholder liabilities on the consolidated statement of financial position | 33,222 | 34,039 |
Average Policy liability | £ 33,631 | £ 32,711 |
Policyholder liabilities and144
Policyholder liabilities and unallocated surplus - UK and Europe liabilities by duration (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Liabilities | |||
Policyholder liabilities | £ 411,211 | £ 388,996 | £ 322,518 |
Investment contracts | |||
Liabilities | |||
Policyholder liabilities | 83,000 | 73,000 | |
UK and Europe insurance operations | |||
Liabilities | |||
Policyholder liabilities | £ 167,589 | £ 157,654 | £ 142,350 |
UK and Europe insurance operations | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 34.00% | 34.00% | |
UK and Europe insurance operations | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 25.00% | 25.00% | |
UK and Europe insurance operations | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 17.00% | 17.00% | |
UK and Europe insurance operations | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 11.00% | 11.00% | |
UK and Europe insurance operations | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 6.00% | 6.00% | |
UK and Europe insurance operations | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 7.00% | 7.00% | |
UK and Europe insurance operations | With-profits | |||
Liabilities | |||
Policyholder liabilities | £ 100,613 | £ 90,343 | |
UK and Europe insurance operations | With-profits | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 36.00% | 37.00% | |
UK and Europe insurance operations | With-profits | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 25.00% | 26.00% | |
UK and Europe insurance operations | With-profits | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 17.00% | 16.00% | |
UK and Europe insurance operations | With-profits | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 10.00% | 10.00% | |
UK and Europe insurance operations | With-profits | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 5.00% | 5.00% | |
UK and Europe insurance operations | With-profits | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 7.00% | 6.00% | |
UK and Europe insurance operations | With-profits | Insurance contracts | |||
Liabilities | |||
Policyholder liabilities | £ 38,285 | £ 37,848 | |
UK and Europe insurance operations | With-profits | Insurance contracts | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 33.00% | 37.00% | |
UK and Europe insurance operations | With-profits | Insurance contracts | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 23.00% | 23.00% | |
UK and Europe insurance operations | With-profits | Insurance contracts | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 16.00% | 15.00% | |
UK and Europe insurance operations | With-profits | Insurance contracts | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 11.00% | 9.00% | |
UK and Europe insurance operations | With-profits | Insurance contracts | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 7.00% | 7.00% | |
UK and Europe insurance operations | With-profits | Insurance contracts | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 10.00% | 9.00% | |
UK and Europe insurance operations | With-profits | Investment contracts | |||
Liabilities | |||
Policyholder liabilities | £ 62,328 | £ 52,495 | |
UK and Europe insurance operations | With-profits | Investment contracts | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 37.00% | 37.00% | |
UK and Europe insurance operations | With-profits | Investment contracts | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 27.00% | 29.00% | |
UK and Europe insurance operations | With-profits | Investment contracts | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 17.00% | 16.00% | |
UK and Europe insurance operations | With-profits | Investment contracts | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 10.00% | 10.00% | |
UK and Europe insurance operations | With-profits | Investment contracts | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 4.00% | 4.00% | |
UK and Europe insurance operations | With-profits | Investment contracts | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 5.00% | 4.00% | |
UK and Europe insurance operations | Annuity business | |||
Liabilities | |||
Policyholder liabilities | £ 43,181 | £ 45,034 | |
UK and Europe insurance operations | Annuity business | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 27.00% | 26.00% | |
UK and Europe insurance operations | Annuity business | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 23.00% | 23.00% | |
UK and Europe insurance operations | Annuity business | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 18.00% | 18.00% | |
UK and Europe insurance operations | Annuity business | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 13.00% | 13.00% | |
UK and Europe insurance operations | Annuity business | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 9.00% | 9.00% | |
UK and Europe insurance operations | Annuity business | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 10.00% | 11.00% | |
UK and Europe insurance operations | Annuity business | Non-profit annuities within WPSF | |||
Liabilities | |||
Policyholder liabilities | £ 10,609 | £ 11,153 | |
UK and Europe insurance operations | Annuity business | Non-profit annuities within WPSF | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 31.00% | 29.00% | |
UK and Europe insurance operations | Annuity business | Non-profit annuities within WPSF | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 24.00% | 24.00% | |
UK and Europe insurance operations | Annuity business | Non-profit annuities within WPSF | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 17.00% | 18.00% | |
UK and Europe insurance operations | Annuity business | Non-profit annuities within WPSF | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 11.00% | 12.00% | |
UK and Europe insurance operations | Annuity business | Non-profit annuities within WPSF | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 7.00% | 7.00% | |
UK and Europe insurance operations | Annuity business | Non-profit annuities within WPSF | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 10.00% | 10.00% | |
UK and Europe insurance operations | Annuity business | Shareholder-backed annuity | |||
Liabilities | |||
Policyholder liabilities | £ 32,572 | £ 33,881 | |
UK and Europe insurance operations | Annuity business | Shareholder-backed annuity | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 26.00% | 25.00% | |
UK and Europe insurance operations | Annuity business | Shareholder-backed annuity | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 23.00% | 22.00% | |
UK and Europe insurance operations | Annuity business | Shareholder-backed annuity | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 18.00% | 18.00% | |
UK and Europe insurance operations | Annuity business | Shareholder-backed annuity | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 13.00% | 14.00% | |
UK and Europe insurance operations | Annuity business | Shareholder-backed annuity | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 9.00% | 9.00% | |
UK and Europe insurance operations | Annuity business | Shareholder-backed annuity | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 11.00% | 12.00% | |
UK and Europe insurance operations | Other business | |||
Liabilities | |||
Policyholder liabilities | £ 23,795 | £ 22,277 | |
UK and Europe insurance operations | Other business | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 34.00% | 37.00% | |
UK and Europe insurance operations | Other business | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 23.00% | 23.00% | |
UK and Europe insurance operations | Other business | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 17.00% | 15.00% | |
UK and Europe insurance operations | Other business | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 12.00% | 10.00% | |
UK and Europe insurance operations | Other business | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 7.00% | 6.00% | |
UK and Europe insurance operations | Other business | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 7.00% | 9.00% | |
UK and Europe insurance operations | Other business | Insurance contracts | |||
Liabilities | |||
Policyholder liabilities | £ 6,714 | £ 6,111 | |
UK and Europe insurance operations | Other business | Insurance contracts | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 41.00% | 40.00% | |
UK and Europe insurance operations | Other business | Insurance contracts | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 26.00% | 23.00% | |
UK and Europe insurance operations | Other business | Insurance contracts | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 15.00% | 12.00% | |
UK and Europe insurance operations | Other business | Insurance contracts | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 9.00% | 7.00% | |
UK and Europe insurance operations | Other business | Insurance contracts | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 5.00% | 4.00% | |
UK and Europe insurance operations | Other business | Insurance contracts | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 4.00% | 14.00% | |
UK and Europe insurance operations | Other business | Investment contracts | |||
Liabilities | |||
Policyholder liabilities | £ 17,081 | £ 16,166 | |
UK and Europe insurance operations | Other business | Investment contracts | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 31.00% | 34.00% | |
UK and Europe insurance operations | Other business | Investment contracts | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 22.00% | 23.00% | |
UK and Europe insurance operations | Other business | Investment contracts | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 18.00% | 17.00% | |
UK and Europe insurance operations | Other business | Investment contracts | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 13.00% | 12.00% | |
UK and Europe insurance operations | Other business | Investment contracts | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 8.00% | 7.00% | |
UK and Europe insurance operations | Other business | Investment contracts | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 8.00% | 7.00% |
Policyholder liabilities and145
Policyholder liabilities and unallocated surplus - Annuitant mortality (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Liabilities | |||
Uplift per annum to initial rates of mortality improvement | 0.25% | 0.25% | |
Male | |||
Liabilities | |||
Mortality improvement rate assumption | 2.25% | 2.25% | 2.25% |
Female | |||
Liabilities | |||
Mortality improvement rate assumption | 2.00% | 1.50% | 1.50% |
UK and Europe insurance operations | Male | |||
Liabilities | |||
Number of years for annuities in deferment | 4 years | 4 years | 4 years |
UK and Europe insurance operations | Female | |||
Liabilities | |||
Number of years for annuities in deferment | 4 years | 4 years | 4 years |
Policyholder liabilities and146
Policyholder liabilities and unallocated surplus - Products and determining contract liabilities (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Liabilities | |||
Provisions | £ 1,123 | £ 947 | |
Jackson (US insurance operations) | Fixed interest rate annuities | |||
Liabilities | |||
Percentage of policy and contract liabilities | 7.00% | 8.00% | |
Account value | £ 12,600 | £ 14,200 | |
Average guaranteed rate | 2.93% | 2.96% | |
Percentage of market value adjustment | 60.00% | 62.00% | |
Jackson (US insurance operations) | Fixed interest rate annuities | Minimum | |||
Liabilities | |||
Minimum guaranteed interest rate | 1.00% | 1.00% | |
Jackson (US insurance operations) | Fixed interest rate annuities | Maximum | |||
Liabilities | |||
Minimum guaranteed interest rate | 5.50% | 5.50% | |
Jackson (US insurance operations) | Fixed index annuities | |||
Liabilities | |||
Percentage of policy and contract liabilities | 5.00% | 6.00% | |
Account value | £ 6,300 | £ 7,300 | |
Average guaranteed rate | 1.77% | 1.77% | |
Jackson (US insurance operations) | Fixed index annuities | Minimum | |||
Liabilities | |||
Minimum guaranteed interest rate | 1.00% | 1.00% | |
Jackson (US insurance operations) | Fixed index annuities | Maximum | |||
Liabilities | |||
Minimum guaranteed interest rate | 3.00% | 3.00% | |
Jackson (US insurance operations) | Fixed interest accounts of fixed index annuities | |||
Liabilities | |||
Account value | £ 2,500 | £ 2,600 | |
Average guaranteed rate | 2.58% | 2.55% | |
Jackson (US insurance operations) | Fixed interest accounts of fixed index annuities | Minimum | |||
Liabilities | |||
Minimum guaranteed interest rate | 1.00% | 1.00% | |
Jackson (US insurance operations) | Fixed interest accounts of fixed index annuities | Maximum | |||
Liabilities | |||
Minimum guaranteed interest rate | 3.00% | 3.00% | |
Jackson (US insurance operations) | Variable annuities | |||
Liabilities | |||
Percentage of policy and contract liabilities | 77.00% | 74.00% | |
Percentage of variable annuity funds | 5.00% | 6.00% | |
Mean investment return | 7.40% | 7.40% | |
Jackson (US insurance operations) | Variable annuities in fixed accounts | |||
Liabilities | |||
Account value | £ 5,900 | £ 7,300 | |
Average guaranteed rate | 1.68% | 1.64% | |
Jackson (US insurance operations) | Variable annuities in fixed accounts | Minimum | |||
Liabilities | |||
Minimum guaranteed interest rate | 1.00% | 1.00% | |
Jackson (US insurance operations) | Variable annuities in fixed accounts | Maximum | |||
Liabilities | |||
Minimum guaranteed interest rate | 3.00% | 3.00% | |
Jackson (US insurance operations) | Life insurance contracts | |||
Liabilities | |||
Percentage of policy and contract liabilities | 9.00% | 10.00% | |
Account value | £ 6,300 | £ 7,100 | |
Average guaranteed rate | 4.67% | 4.66% | |
Jackson (US insurance operations) | Life insurance contracts | Minimum | |||
Liabilities | |||
Minimum guaranteed interest rate | 2.50% | 2.50% | |
Jackson (US insurance operations) | Life insurance contracts | Maximum | |||
Liabilities | |||
Minimum guaranteed interest rate | 6.00% | 6.00% | |
Jackson (US insurance operations) | Institutional products | |||
Liabilities | |||
Percentage of policy and contract liabilities | 1.00% | 1.00% | |
Minimum notice period for funding agreement termination by the policyholder | 90 days | ||
Jackson (US insurance operations) | Institutional products | Minimum | |||
Liabilities | |||
Number of years funding agreements | 1 year | ||
Jackson (US insurance operations) | Institutional products | Maximum | |||
Liabilities | |||
Number of years funding agreements | 30 years | ||
UK and Europe insurance operations | SAIF with-profits | |||
Liabilities | |||
Minimum benefit on death or maturity of premium accumulated | 4.00% | ||
Provisions | £ 503 | £ 571 |
Policyholder liabilities and147
Policyholder liabilities and unallocated surplus - Determination of bonus rates (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net income of the fund: | |||
Investment return | £ 42,189 | £ 32,511 | £ 3,304 |
Claims incurred | (71,854) | (60,948) | (30,547) |
Earned premiums, net of reinsurance | 41,943 | 36,961 | 35,506 |
Other income | 2,430 | 2,370 | 2,495 |
Acquisition costs and other expenditure | (10,165) | (8,848) | (8,208) |
Share of profits from investment joint ventures | 302 | 182 | 238 |
Total tax charge attributable to policyholders and shareholders | (1,580) | (1,291) | (742) |
UK | PAC with-profits fund | |||
Net income of the fund: | |||
Investment return | 9,985 | 13,185 | 3,130 |
Claims incurred | (8,449) | (7,410) | (6,745) |
Movement in policyholder liabilities | (10,011) | (11,824) | (1,307) |
Add back policyholder bonuses for the year (as shown below) | 2,071 | 1,934 | 1,943 |
Claims incurred and movement in policyholder liabilities (including charge for provision for asset shares and excluding policyholder bonuses) | (16,389) | (17,300) | (6,109) |
Earned premiums, net of reinsurance | 12,508 | 9,261 | 6,507 |
Other income | 35 | 177 | 210 |
Acquisition costs and other expenditure | (1,732) | (1,288) | (1,318) |
Share of profits from investment joint ventures | 106 | 22 | 53 |
Total tax charge attributable to policyholders and shareholders | (440) | (739) | (148) |
Net income of the fund before movement in unallocated surplus | 4,073 | 3,318 | 2,325 |
Movement in unallocated surplus | (1,769) | (1,169) | (168) |
Surplus for distribution | 2,304 | 2,149 | 2,157 |
Surplus for distribution allocated as follows: | |||
- 90% policyholders' bonus (as shown above) | 2,071 | 1,934 | 1,943 |
- 10% shareholders' transfers | 233 | 215 | 214 |
Surplus for distribution | £ 2,304 | £ 2,149 | £ 2,157 |
Percentage of surplus distribution allocated as policyholders' bonus | 90.00% | 90.00% | 90.00% |
Percentage of surplus distribution allocated as shareholders' transfers | 10.00% | 10.00% | 10.00% |
Intangible assets - Goodwill re
Intangible assets - Goodwill reconciliation (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Changes in goodwill: | ||
At beginning of year | £ 1,628 | £ 1,648 |
Disposals/reclassifications to held for sale | (155) | (56) |
Additional consideration paid on previously acquired business | 9 | 7 |
Exchange differences | 29 | |
Net book amount at end of year | 1,482 | 1,628 |
Shareholder-backed | ||
Changes in goodwill: | ||
At beginning of year | 1,475 | |
Disposals/reclassifications to held for sale | (16) | |
Exchange differences | (1) | |
Net book amount at end of year | 1,458 | 1,475 |
With-profits | ||
Changes in goodwill: | ||
At beginning of year | 153 | |
Disposals/reclassifications to held for sale | (139) | |
Additional consideration paid on previously acquired business | 9 | |
Exchange differences | 1 | |
Net book amount at end of year | £ 24 | £ 153 |
Intangible assets - Goodwill al
Intangible assets - Goodwill allocation (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Goodwill allocation | |||
Goodwill | £ 1,482 | £ 1,628 | £ 1,648 |
Shareholder-backed | |||
Goodwill allocation | |||
Goodwill | 1,458 | 1,475 | |
Shareholder-backed | M&G | |||
Goodwill allocation | |||
Goodwill | 1,153 | 1,153 | |
Shareholder-backed | Other | |||
Goodwill allocation | |||
Goodwill | 305 | 322 | |
With-profits | |||
Goodwill allocation | |||
Goodwill | 24 | 153 | |
With-profits | Venture funds investments | |||
Goodwill allocation | |||
Goodwill | £ 24 | £ 153 |
Intangible assets - M&G cash-ge
Intangible assets - M&G cash-generating unit (Details) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
M&G | ||
Cash-generating units | ||
Period of discounted cash flow valuation | 3 years | |
Assumed growth rate | 1.70% | 2.00% |
M&G - retail and institutional business | ||
Cash-generating units | ||
Risk discount rate | 12.00% | 12.00% |
Pre-tax discount rate | 15.00% | 16.00% |
Intangible assets - Deferred ac
Intangible assets - Deferred acquisition costs and other intangible assets (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred acquisition costs and other intangible assets | |||
Total of deferred acquisition costs and other intangible assets | £ 11,011 | £ 10,807 | |
Shareholder-backed | |||
Deferred acquisition costs and other intangible assets | |||
Deferred acquisition costs | 9,233 | 9,178 | |
Intangible assets other than goodwill | 1,633 | 1,577 | £ 1,400 |
Total of deferred acquisition costs and other intangible assets | 10,866 | 10,755 | 8,422 |
Shareholder-backed | PVIF | |||
Deferred acquisition costs and other intangible assets | |||
Intangible assets other than goodwill | 36 | 43 | 45 |
Shareholder-backed | Distribution rights and other intangible assets | |||
Deferred acquisition costs and other intangible assets | |||
Intangible assets other than goodwill | 1,597 | 1,534 | |
Shareholder-backed | Insurance contracts | |||
Deferred acquisition costs and other intangible assets | |||
Deferred acquisition costs | 9,170 | 9,114 | 6,948 |
Shareholder-backed | Investment contracts | |||
Deferred acquisition costs and other intangible assets | |||
Deferred acquisition costs | 63 | 64 | £ 74 |
With-profits | |||
Deferred acquisition costs and other intangible assets | |||
Total of deferred acquisition costs and other intangible assets | £ 145 | £ 52 |
Intangible assets - Changes in
Intangible assets - Changes in DAC and other intangibles (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Movements in deferred acquisition costs | |||
At beginning of year | £ 10,807 | ||
At end of year | 11,011 | £ 10,807 | |
Shareholder-backed | |||
Movements in deferred acquisition costs | |||
At beginning of year | 10,755 | 8,422 | |
Additions | 1,240 | 1,179 | |
Amortisation to the income statement | (254) | (129) | |
Disposals and transfers | (268) | ||
Exchange differences and other movements | (799) | 1,475 | |
Amortisation of DAC related to net unrealised valuation movements on the US insurance operation's available-for-sale securities recognised within other comprehensive income | (76) | 76 | |
At end of year | 10,866 | 10,755 | £ 8,422 |
PVIF and other intangibles | |||
Additions | 229 | 222 | |
Amortisation | 165 | 95 | |
Intangible assets | 1,633 | 1,577 | £ 1,400 |
Shareholder-backed | Amortisation to the income statement, Operating profit | |||
Movements in deferred acquisition costs | |||
Amortisation to the income statement | (709) | (686) | |
Shareholder-backed | Amortisation to the income statement, Non-operating profit | |||
Movements in deferred acquisition costs | |||
Amortisation to the income statement | 455 | 557 | |
Shareholder-backed | PVIF and other intangibles | |||
Movements in deferred acquisition costs | |||
At beginning of year | 1,577 | ||
Additions | 229 | ||
Amortisation to the income statement | (165) | ||
Exchange differences and other movements | (8) | ||
At end of year | 1,633 | 1,577 | |
Shareholder-backed | PVIF and other intangibles | Amortisation to the income statement, Operating profit | |||
Movements in deferred acquisition costs | |||
Amortisation to the income statement | (158) | ||
Shareholder-backed | PVIF and other intangibles | Amortisation to the income statement, Non-operating profit | |||
Movements in deferred acquisition costs | |||
Amortisation to the income statement | (7) | ||
Shareholder-backed | Software | |||
PVIF and other intangibles | |||
Additions | 38 | ||
Amortisation | 32 | ||
Foreign exchange losses | 5 | ||
Intangible assets | 67 | ||
Shareholder-backed | Asia insurance operations | Deferred acquisition costs | |||
Movements in deferred acquisition costs | |||
At beginning of year | 788 | ||
Additions | 331 | ||
Amortisation to the income statement | (133) | ||
Exchange differences and other movements | (40) | ||
At end of year | 946 | £ 788 | |
Shareholder-backed | Asia insurance operations | Deferred acquisition costs | Amortisation to the income statement, Operating profit | |||
Movements in deferred acquisition costs | |||
Amortisation to the income statement | £ (133) | ||
Shareholder-backed | Jackson (US insurance operations) | |||
Movements in deferred acquisition costs | |||
Assumption for long-term investment returns (as a percent) | 7.40% | 7.40% | 7.40% |
Shareholder-backed | Jackson (US insurance operations) | Deferred acquisition costs | |||
Movements in deferred acquisition costs | |||
At beginning of year | £ 8,303 | ||
Additions | 663 | ||
Amortisation to the income statement | 59 | ||
Exchange differences and other movements | (752) | ||
Amortisation of DAC related to net unrealised valuation movements on the US insurance operation's available-for-sale securities recognised within other comprehensive income | (76) | ||
At end of year | 8,197 | £ 8,303 | |
Shareholder-backed | Jackson (US insurance operations) | Deferred acquisition costs | Amortisation to the income statement, Operating profit | |||
Movements in deferred acquisition costs | |||
Amortisation to the income statement | (403) | ||
Shareholder-backed | Jackson (US insurance operations) | Deferred acquisition costs | Amortisation to the income statement, Non-operating profit | |||
Movements in deferred acquisition costs | |||
Amortisation to the income statement | 462 | ||
Shareholder-backed | General insurance commission (UK and Europe insurance operations) | Deferred acquisition costs | |||
Movements in deferred acquisition costs | |||
At beginning of year | 79 | ||
Additions | 14 | ||
Amortisation to the income statement | (10) | ||
Exchange differences and other movements | 1 | ||
At end of year | 84 | 79 | |
Shareholder-backed | General insurance commission (UK and Europe insurance operations) | Deferred acquisition costs | Amortisation to the income statement, Operating profit | |||
Movements in deferred acquisition costs | |||
Amortisation to the income statement | (10) | ||
Shareholder-backed | Asset management operations | Deferred acquisition costs | |||
Movements in deferred acquisition costs | |||
At beginning of year | 8 | ||
Additions | 3 | ||
Amortisation to the income statement | (5) | ||
At end of year | 6 | £ 8 | |
Shareholder-backed | Asset management operations | Deferred acquisition costs | Amortisation to the income statement, Operating profit | |||
Movements in deferred acquisition costs | |||
Amortisation to the income statement | £ (5) |
Intangible Assets - DAC for US
Intangible Assets - DAC for US operations (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
DAC amounts | |||
Gain (loss) for altered shadow DAC amortisation | £ (76) | £ 76 | £ 337 |
Shareholder-backed | |||
DAC amounts | |||
Deferred acquisition costs | 9,233 | 9,178 | |
Shareholder-backed | Jackson (US insurance operations) | |||
DAC amounts | |||
Deferred acquisition costs | 8,197 | 8,303 | |
Positive (negative) unrealised valuation movement | 617 | (28) | |
Gain (loss) for altered shadow DAC amortisation | (76) | 76 | |
Shareholder-backed | Jackson (US insurance operations) | Cumulative shadow DAC | |||
DAC amounts | |||
Deferred acquisition costs | (289) | (237) | |
Shareholder-backed | Jackson (US insurance operations) | Amortisation to the income statement, Operating profit | |||
DAC amounts | |||
(Credit) charge for (decelerated) accelerated amortisation | £ (86) | (93) | £ 2 |
Shareholder-backed | Jackson (US insurance operations) | Variable annuities | |||
DAC amounts | |||
Maximum decrease in separate account values for mean reversion assumption to remain within the corridor (as a percent) | 32.00% | ||
Maximum decrease in separate account values for mean reversion assumption to remain within the corridor (as a percent) | 37.00% | ||
Shareholder-backed | Jackson (US insurance operations) | Variable annuities | Amount before cumulative shadow DAC | |||
DAC amounts | |||
Deferred acquisition costs | £ 8,208 | 7,844 | |
Shareholder-backed | Jackson (US insurance operations) | Other business | Amount before cumulative shadow DAC | |||
DAC amounts | |||
Deferred acquisition costs | £ 278 | £ 696 |
Intangible assets - With-profit
Intangible assets - With-profits (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
DAC amounts | ||
Deferred acquisition costs and other intangible assets | £ 11,011 | £ 10,807 |
Distribution rights | ||
DAC amounts | ||
Intangible assets | 1,500 | |
With-profits | ||
DAC amounts | ||
Deferred acquisition costs and other intangible assets | 145 | 52 |
With-profits | Computer software and other intangibles | ||
DAC amounts | ||
Intangible assets | £ 145 | 50 |
With-profits | PAC with-profits fund | ||
DAC amounts | ||
Deferred acquisition costs | £ 2 |
Intangible Assets - DAC for ins
Intangible Assets - DAC for insurance and investment contracts (Details) - Shareholder-backed - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Movements in deferred acquisition costs | ||
DAC at the beginning of the period | £ 9,178 | |
Change in shadow DAC related to movement in unrealised appreciation of Jackson's securities classified as available-for-sale | (76) | £ 76 |
DAC at the end of the period | 9,233 | 9,178 |
Insurance contracts | ||
Movements in deferred acquisition costs | ||
DAC at the beginning of the period | 9,114 | 6,948 |
Additions | 1,000 | 954 |
Amortisation | (77) | (21) |
Exchange differences | (791) | 1,408 |
Disposals and transfers | (251) | |
Change in shadow DAC related to movement in unrealised appreciation of Jackson's securities classified as available-for-sale | (76) | 76 |
DAC at the end of the period | 9,170 | 9,114 |
Investment contracts | ||
Movements in deferred acquisition costs | ||
DAC at the beginning of the period | 64 | 74 |
Additions | 11 | 3 |
Amortisation | (12) | (13) |
DAC at the end of the period | 63 | 64 |
Investment contracts | Cost/Gross amount | ||
Movements in deferred acquisition costs | ||
DAC at the beginning of the period | 145 | |
DAC at the end of the period | 156 | 145 |
Investment contracts | Accumulated amortisation | ||
Movements in deferred acquisition costs | ||
DAC at the beginning of the period | (81) | |
DAC at the end of the period | £ (93) | £ (81) |
Intangible Assets - PVIF and ot
Intangible Assets - PVIF and other intangibles (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Distribution rights | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the end of the period | £ 1,500 | |
Shareholder-backed | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | 1,577 | £ 1,400 |
Additions | 229 | 222 |
Amortisation charge | (165) | (95) |
Disposals and transfers | (17) | |
Exchange differences and other movements | (8) | 67 |
Balance at the end of the period | 1,633 | 1,577 |
Shareholder-backed | Cost/Gross amount | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | 2,175 | 1,874 |
Balance at the end of the period | 2,383 | 2,175 |
Shareholder-backed | Accumulated amortisation | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | (598) | (474) |
Balance at the end of the period | (750) | (598) |
Shareholder-backed | PVIF | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | 43 | 45 |
Amortisation charge | (7) | (8) |
Exchange differences and other movements | 6 | |
Balance at the end of the period | 36 | 43 |
Shareholder-backed | PVIF | Cost/Gross amount | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | 226 | 209 |
Balance at the end of the period | 227 | 226 |
Shareholder-backed | PVIF | Accumulated amortisation | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | (183) | (164) |
Balance at the end of the period | (191) | (183) |
Shareholder-backed | Distribution rights | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | 1,432 | 1,258 |
Additions | 173 | 172 |
Amortisation charge | (121) | (52) |
Disposals and transfers | (3) | |
Exchange differences and other movements | (3) | 57 |
Balance at the end of the period | 1,481 | 1,432 |
Shareholder-backed | Distribution rights | Cost/Gross amount | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | 1,628 | 1,387 |
Balance at the end of the period | 1,793 | 1,628 |
Shareholder-backed | Distribution rights | Accumulated amortisation | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | (196) | (129) |
Balance at the end of the period | (312) | (196) |
Shareholder-backed | Other intangibles (including software) | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | 102 | 97 |
Additions | 56 | 50 |
Amortisation charge | (37) | (35) |
Disposals and transfers | (14) | |
Exchange differences and other movements | (5) | 4 |
Balance at the end of the period | 116 | 102 |
Shareholder-backed | Other intangibles (including software) | Cost/Gross amount | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | 321 | 278 |
Balance at the end of the period | 363 | 321 |
Shareholder-backed | Other intangibles (including software) | Accumulated amortisation | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | (219) | (181) |
Balance at the end of the period | £ (247) | £ (219) |
Borrowings - Core Structural Bo
Borrowings - Core Structural Borrowings (Details) € in Millions, £ in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2017USD ($) | Oct. 31, 2017GBP (£) | Dec. 31, 2017EUR (€) | Dec. 31, 2017USD ($) | Dec. 31, 2017GBP (£) | Dec. 31, 2016EUR (€) | Dec. 31, 2016USD ($) | Dec. 31, 2016GBP (£) | |
Core structural borrowings of shareholder-financed operations | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | £ 6,280 | £ 6,798 | ||||||
Holding company total | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | 5,821 | 6,321 | ||||||
Subordinated debt total | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | 5,272 | 5,772 | ||||||
Perpetual Subordinated Capital Securities | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | £ 3,140 | 3,644 | ||||||
Perpetual Subordinated Capital Securities | Net investment hedge | ||||||||
Borrowings | ||||||||
Face amount | $ | $ 4,275 | $ 4,525 | ||||||
US$1,000m 6.5% Notes (Tier 2) | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | £ 809 | |||||||
Face amount | $ | $ 1,000 | $ 1,000 | ||||||
Interest rate (as a percent) | 6.50% | 6.50% | 6.50% | 6.50% | 6.50% | 6.50% | ||
Repayment of borrowings | $ | $ 1,000 | |||||||
US$250m 6.75% Notes (Tier 1) | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | £ 185 | £ 202 | ||||||
Face amount | $ | $ 250 | $ 250 | ||||||
Interest rate (as a percent) | 6.75% | 6.75% | 6.75% | 6.75% | 6.75% | 6.75% | ||
US$300m 6.5% Notes (Tier 1) | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | £ 222 | £ 243 | ||||||
Face amount | $ | $ 300 | $ 300 | ||||||
Interest rate (as a percent) | 6.50% | 6.50% | 6.50% | 6.50% | 6.50% | 6.50% | ||
US$700m 5.25% Notes (Tier 2) | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | £ 517 | £ 565 | ||||||
Face amount | $ | $ 700 | $ 700 | ||||||
Interest rate (as a percent) | 5.25% | 5.25% | 5.25% | 5.25% | 5.25% | 5.25% | ||
US$550m 7.75% Notes (Tier 1) | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | £ 407 | £ 445 | ||||||
Face amount | $ | $ 550 | $ 550 | ||||||
Interest rate (as a percent) | 7.75% | 7.75% | 7.75% | 7.75% | 7.75% | 7.75% | ||
US$1,000m 5.25% Notes (Tier 2) | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | £ 731 | £ 800 | ||||||
Face amount | $ | $ 1,000 | $ 1,000 | ||||||
Interest rate (as a percent) | 5.25% | 5.25% | 5.25% | 5.25% | 5.25% | 5.25% | ||
US$725m 4.375% Notes (Tier 2) | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | £ 530 | £ 580 | ||||||
Face amount | $ | $ 725 | $ 725 | ||||||
Interest rate (as a percent) | 4.375% | 4.375% | 4.375% | 4.375% | 4.375% | 4.375% | ||
US$750m 4.875% Notes (Tier 2) | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | £ 548 | |||||||
Face amount | $ | $ 750 | $ 750 | ||||||
Interest rate (as a percent) | 4.875% | 4.875% | 4.875% | 4.875% | 4.875% | 4.875% | ||
Proceeds, net of costs | £ 565 | |||||||
Subordinated Notes | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | £ 2,132 | £ 2,128 | ||||||
20m Medium Term Notes 2023 (Tier 2) | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | £ 18 | 17 | ||||||
Face amount | € | € 20 | € 20 | ||||||
Adjustment to interest rate basis (as a percent) | 1.20% | 1.20% | 1.20% | |||||
Term of Euro Constant Maturity Swap | 20 years | |||||||
Interest rate cap (as a percent) | 6.50% | 6.50% | 6.50% | |||||
Borrowing swapped into | £ 14 | |||||||
435m 6.125% Notes 2031 (Tier 2) | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | 430 | 430 | ||||||
Face amount | £ 435 | £ 435 | ||||||
Interest rate (as a percent) | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | ||
400m 11.375% Notes 2039 (Tier 2) | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | £ 397 | £ 395 | ||||||
Face amount | £ 400 | £ 400 | ||||||
Interest rate (as a percent) | 11.375% | 11.375% | 11.375% | 11.375% | 11.375% | 11.375% | ||
600m 5% Notes 2055 (Tier 2) | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | £ 591 | £ 590 | ||||||
Face amount | £ 600 | £ 600 | ||||||
Interest rate (as a percent) | 5.00% | 5.00% | 5.00% | 5.00% | 5.00% | 5.00% | ||
700m 5.7% Notes 2063 (Tier 2) | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | £ 696 | £ 696 | ||||||
Face amount | £ 700 | £ 700 | ||||||
Interest rate (as a percent) | 5.70% | 5.70% | 5.70% | 5.70% | 5.70% | 5.70% | ||
Senior debt: 300m 6.875% Bonds 2023 | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | £ 300 | £ 300 | ||||||
Face amount | £ 300 | £ 300 | ||||||
Interest rate (as a percent) | 6.875% | 6.875% | 6.875% | 6.875% | 6.875% | 6.875% | ||
Senior debt: 250m 5.875% Bonds 2029 | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | £ 249 | £ 249 | ||||||
Face amount | £ 250 | £ 250 | ||||||
Interest rate (as a percent) | 5.875% | 5.875% | 5.875% | 5.875% | 5.875% | 5.875% | ||
Prudential Capital Bank Loan | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | £ 275 | £ 275 | ||||||
Face amount | £ 275 | |||||||
Interest rate basis | 12 month GBP LIBOR | |||||||
Adjustment to interest rate basis (as a percent) | 0.33% | 0.33% | 0.33% | |||||
Jackson US$250m 8.15% Surplus Notes 2027 | ||||||||
Borrowings | ||||||||
Borrowings per consolidated statement of financial position | £ 184 | 202 | ||||||
Face amount | £ 250 | £ 250 | ||||||
Interest rate (as a percent) | 8.15% | 8.15% | 8.15% | 8.15% | 8.15% | 8.15% |
Borrowings - Operational borrow
Borrowings - Operational borrowings (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Operational borrowings attributable to shareholder-financed operations | ||
Borrowings | ||
Borrowings | £ 1,791 | £ 2,317 |
Borrowings in respect of short-term fixed income securities programmes | ||
Borrowings | ||
Borrowings | 1,085 | 1,651 |
Commercial Paper | ||
Borrowings | ||
Borrowings | 485 | 1,052 |
Medium term notes of shareholder-financed operations, maturing in 2018 | ||
Borrowings | ||
Borrowings | 600 | 599 |
Total other borrowings | ||
Borrowings | ||
Borrowings | 706 | 666 |
Bank loans and overdrafts | ||
Borrowings | ||
Borrowings | 70 | 19 |
Obligations under finance leases | ||
Borrowings | ||
Borrowings | 5 | 5 |
Other borrowings | ||
Borrowings | ||
Borrowings | £ 631 | £ 642 |
Borrowings - With-profits opera
Borrowings - With-profits operations (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Borrowings attributable to with-profits operations | ||
Disclosure of detailed information about borrowings [line items] | ||
Borrowings | £ 3,716 | £ 1,349 |
Non-recourse borrowings of consolidated investment funds | ||
Disclosure of detailed information about borrowings [line items] | ||
Borrowings | 3,570 | 1,189 |
100m 8.5% undated subordinated guaranteed bonds of Scottish Amicable Finance plc | ||
Disclosure of detailed information about borrowings [line items] | ||
Borrowings | 100 | 100 |
Face amount | £ 100 | £ 100 |
Interest rate (as a percent) | 8.50% | 8.50% |
Other borrowings (predominantly obligations under finance leases) | ||
Disclosure of detailed information about borrowings [line items] | ||
Borrowings | £ 46 | £ 60 |
Borrowings - Maturity analysis
Borrowings - Maturity analysis (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Core structural borrowings of shareholder-financed operations | ||
Remaining contractual maturity analysis of the Group's borrowings | ||
Borrowings per consolidated statement of financial position | £ 6,280 | £ 6,798 |
Core structural borrowings of shareholder-financed operations | Expected to be settled within one year | ||
Remaining contractual maturity analysis of the Group's borrowings | ||
Borrowings per consolidated statement of financial position | 275 | 275 |
Core structural borrowings of shareholder-financed operations | Over 5 years | ||
Remaining contractual maturity analysis of the Group's borrowings | ||
Borrowings per consolidated statement of financial position | 6,005 | 6,523 |
Operational borrowings attributable to shareholder-financed operations | ||
Remaining contractual maturity analysis of the Group's borrowings | ||
Borrowings per consolidated statement of financial position | 1,791 | 2,317 |
Operational borrowings attributable to shareholder-financed operations | Expected to be settled within one year | ||
Remaining contractual maturity analysis of the Group's borrowings | ||
Borrowings per consolidated statement of financial position | 1,723 | 1,636 |
Operational borrowings attributable to shareholder-financed operations | 1 to 2 years | ||
Remaining contractual maturity analysis of the Group's borrowings | ||
Borrowings per consolidated statement of financial position | 1 | 599 |
Operational borrowings attributable to shareholder-financed operations | 2 to 3 years | ||
Remaining contractual maturity analysis of the Group's borrowings | ||
Borrowings per consolidated statement of financial position | 1 | |
Operational borrowings attributable to shareholder-financed operations | 3 to 4 years | ||
Remaining contractual maturity analysis of the Group's borrowings | ||
Borrowings per consolidated statement of financial position | 1 | |
Operational borrowings attributable to shareholder-financed operations | 4 to 5 years | ||
Remaining contractual maturity analysis of the Group's borrowings | ||
Borrowings per consolidated statement of financial position | 1 | |
Operational borrowings attributable to shareholder-financed operations | Over 5 years | ||
Remaining contractual maturity analysis of the Group's borrowings | ||
Borrowings per consolidated statement of financial position | 66 | 80 |
Borrowings attributable to with-profits operations | ||
Remaining contractual maturity analysis of the Group's borrowings | ||
Borrowings per consolidated statement of financial position | 3,716 | 1,349 |
Borrowings attributable to with-profits operations | Expected to be settled within one year | ||
Remaining contractual maturity analysis of the Group's borrowings | ||
Borrowings per consolidated statement of financial position | 351 | 118 |
Borrowings attributable to with-profits operations | 1 to 2 years | ||
Remaining contractual maturity analysis of the Group's borrowings | ||
Borrowings per consolidated statement of financial position | 371 | 48 |
Borrowings attributable to with-profits operations | 2 to 3 years | ||
Remaining contractual maturity analysis of the Group's borrowings | ||
Borrowings per consolidated statement of financial position | 184 | 108 |
Borrowings attributable to with-profits operations | 3 to 4 years | ||
Remaining contractual maturity analysis of the Group's borrowings | ||
Borrowings per consolidated statement of financial position | 59 | 8 |
Borrowings attributable to with-profits operations | 4 to 5 years | ||
Remaining contractual maturity analysis of the Group's borrowings | ||
Borrowings per consolidated statement of financial position | 1 | 146 |
Borrowings attributable to with-profits operations | Over 5 years | ||
Remaining contractual maturity analysis of the Group's borrowings | ||
Borrowings per consolidated statement of financial position | £ 2,750 | £ 921 |
Risk and sensitivity analysis -
Risk and sensitivity analysis - Overview (Details) | Dec. 31, 2017 |
Equity price risk | Maximum | |
Risk and sensitivity analysis | |
Instantaneous decrease in risk assumption considered in analysis | 20.00% |
Risk and sensitivity analysi162
Risk and sensitivity analysis - Asia, interest rate sensitivity (Details) - Asia insurance operations - Non-linked shareholder-backed - Interest rate risk - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 1.00% | 1.00% |
Change in profit before tax attributable to shareholders, decrease in assumption | £ 2 | £ 213 |
Change in related deferred tax (where applicable), decrease in assumption | (7) | (41) |
Net effect on profit and shareholders' equity, decrease in assumption | £ (5) | £ 172 |
Reasonably possible increase in assumption (as a percent) | 1.00% | 1.00% |
Change in profit before tax attributable to shareholders, increase in assumption | £ (443) | £ (509) |
Change in related deferred tax (where applicable), increase in assumption | 20 | 62 |
Net effect on profit and shareholders' equity, increase in assumption | £ (423) | £ (447) |
10-year government bond rates | Minimum | ||
Risk and sensitivity analysis | ||
Reference rate (as a percent) | 1.00% | 1.20% |
10-year government bond rates | Maximum | ||
Risk and sensitivity analysis | ||
Reference rate (as a percent) | 7.50% | 8.10% |
Risk and sensitivity analysi163
Risk and sensitivity analysis - Asia, equity price sensitivity (Details) - Asia insurance operations - Non-linked shareholder-backed - Equity price risk - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Risk and sensitivity analysis | ||
Exposure to equity and property investment | £ 1,764 | |
20% change | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 20.00% | 20.00% |
Change in profit before tax attributable to shareholders, decrease in assumption | £ (478) | £ (386) |
Change in related deferred tax (where applicable), decrease in assumption | 7 | 4 |
Net effect on profit and shareholders' equity, decrease in assumption | £ (471) | £ (382) |
10% change | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 10.00% | 10.00% |
Change in profit before tax attributable to shareholders, decrease in assumption | £ (239) | £ (192) |
Change in related deferred tax (where applicable), decrease in assumption | 4 | 2 |
Net effect on profit and shareholders' equity, decrease in assumption | £ (235) | £ (190) |
Risk and sensitivity analysi164
Risk and sensitivity analysis - Asia, insurance risk sensitivity (Details) - Asia insurance operations - Mortality rates - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Risk and sensitivity analysis | ||
Reasonably possible increase in assumption (as a percent) | 5.00% | 5.00% |
Effect on post-tax profit and shareholders' equity, increase in assumption | £ (66) | £ (61) |
Risk and sensitivity analysi165
Risk and sensitivity analysis - Asia, foreign exchange sensitivity (Details) - Asia insurance operations - Foreign exchange risk - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Risk and sensitivity analysis | ||
Reasonably possible increase in assumption (as a percent) | 10.00% | 10.00% |
Change in profit before tax attributable to shareholders, increase in assumption | £ (155) | £ (97) |
Change in profit for the year, increase in assumption | (135) | (77) |
Change in shareholders' equity, excluding goodwill, increase in assumption | £ (492) | £ (442) |
Reasonably possible decrease in assumption (as a percent) | 10.00% | 10.00% |
Change in profit before tax attributable to shareholders, decrease in assumption | £ 189 | £ 118 |
Change in profit for the year, decrease in assumption | 165 | 94 |
Change in shareholders' equity, excluding goodwill, decrease in assumption | £ 601 | £ 540 |
Risk and sensitivity analysi166
Risk and sensitivity analysis - US, variable annuity guarantees (Details) - Jackson (US insurance operations) - Variable annuities - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
GMDB | Return of net deposits plus a minimum return | ||
Risk and sensitivity analysis | ||
Account value | £ 100,451 | £ 93,512 |
Net amount at risk | £ 1,665 | £ 2,483 |
Weighted average attained age | 66 years | 65 years 7 months 6 days |
GMDB | Return of net deposits plus a minimum return | Minimum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 0.00% | 0.00% |
GMDB | Return of net deposits plus a minimum return | Maximum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 6.00% | 6.00% |
GMDB | Highest specified anniversary account value minus withdrawals post-anniversary | ||
Risk and sensitivity analysis | ||
Account value | £ 9,099 | £ 8,798 |
Net amount at risk | £ 96 | £ 346 |
Weighted average attained age | 66 years 6 months | 66 years |
GMDB | Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary | ||
Risk and sensitivity analysis | ||
Account value | £ 5,694 | £ 5,309 |
Net amount at risk | £ 426 | £ 699 |
Weighted average attained age | 69 years | 68 years 8 months 12 days |
GMDB | Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary | Minimum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 0.00% | 0.00% |
GMDB | Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary | Maximum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 6.00% | 6.00% |
GMIB | Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary | ||
Risk and sensitivity analysis | ||
Account value | £ 1,484 | £ 1,595 |
Net amount at risk | £ 436 | £ 595 |
Period until expected annuitisation | 4 months 24 days | 6 months |
GMIB | Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary | Minimum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 0.00% | 0.00% |
GMIB | Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary | Maximum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 6.00% | 6.00% |
GMWB | Return of net deposits plus a minimum return | ||
Risk and sensitivity analysis | ||
Account value | £ 235 | £ 256 |
Net amount at risk | £ 13 | £ 22 |
GMWB | Return of net deposits plus a minimum return | Minimum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 0.00% | 0.00% |
GMWB | Return of net deposits plus a minimum return | Maximum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 5.00% | 5.00% |
Compound interest equivalent of minimum return (as a percent) | 4.10% | |
Bonus period for compound interest equivalent of minimum return | 10 years | |
GMWB | Return of net deposits - premium only | ||
Risk and sensitivity analysis | ||
Account value | £ 2,133 | £ 2,217 |
Net amount at risk | £ 20 | £ 39 |
GMWB | Return of net deposits - premium only | Maximum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 0.00% | 0.00% |
GMWB | Highest specified anniversary account value minus withdrawals post-anniversary | ||
Risk and sensitivity analysis | ||
Account value | £ 667 | £ 747 |
Net amount at risk | 47 | 83 |
GMWB | Highest specified anniversary account value only | ||
Risk and sensitivity analysis | ||
Account value | 2,447 | 2,479 |
Net amount at risk | 51 | 125 |
GMWB | Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary | ||
Risk and sensitivity analysis | ||
Account value | 93,227 | 85,402 |
Net amount at risk | £ 4,393 | £ 9,293 |
GMWB | Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary | Minimum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 0.00% | 0.00% |
GMWB | Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary | Maximum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 8.00% | 8.00% |
Compound interest equivalent of minimum return (as a percent) | 6.00% | |
Bonus period for compound interest equivalent of minimum return | 10 years | |
GMAB | Return of net deposits - premium only | ||
Risk and sensitivity analysis | ||
Account value | £ 38 | £ 44 |
GMAB | Return of net deposits - premium only | Maximum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 0.00% | 0.00% |
Risk and sensitivity analysi167
Risk and sensitivity analysis - US, separate account balances (Details) - Jackson (US insurance operations) - Variable annuities - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Mutual funds | ||
Risk and sensitivity analysis | ||
Guarantee contract account balance in variable separate accounts | £ 115,352 | £ 106,909 |
Equity mutual funds | ||
Risk and sensitivity analysis | ||
Guarantee contract account balance in variable separate accounts | 80,843 | 73,430 |
Bond mutual funds | ||
Risk and sensitivity analysis | ||
Guarantee contract account balance in variable separate accounts | 13,976 | 15,044 |
Balanced mutual funds | ||
Risk and sensitivity analysis | ||
Guarantee contract account balance in variable separate accounts | 19,852 | 17,441 |
Money market mutual funds | ||
Risk and sensitivity analysis | ||
Guarantee contract account balance in variable separate accounts | £ 681 | £ 994 |
Risk and sensitivity analysi168
Risk and sensitivity analysis - US, equity price sensitivity (Details) - Jackson (US insurance operations) - Equity price risk - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
20% change | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 20.00% | 20.00% |
Change in pre-tax profit, net of related changes in amortisation of DAC, decrease in assumption | £ 1,107 | £ 1,061 |
Change in related deferred tax, decrease in assumption | (233) | (371) |
Net effect on profit and shareholders' equity, decrease in assumption | £ 874 | £ 690 |
Reasonably possible increase in assumption (as a percent) | 20.00% | 20.00% |
Change in pre-tax profit, net of related changes in amortisation of DAC, increase in assumption | £ 619 | £ 370 |
Change in related deferred tax, increase in assumption | (130) | (129) |
Net effect on profit and shareholders' equity, increase in assumption | £ 489 | £ 241 |
10% change | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 10.00% | 10.00% |
Change in pre-tax profit, net of related changes in amortisation of DAC, decrease in assumption | £ 336 | £ 488 |
Change in related deferred tax, decrease in assumption | (71) | (171) |
Net effect on profit and shareholders' equity, decrease in assumption | £ 265 | £ 317 |
Reasonably possible increase in assumption (as a percent) | 10.00% | 10.00% |
Change in pre-tax profit, net of related changes in amortisation of DAC, increase in assumption | £ 262 | £ 59 |
Change in related deferred tax, increase in assumption | (55) | (21) |
Net effect on profit and shareholders' equity, increase in assumption | £ 207 | £ 38 |
Risk and sensitivity analysi169
Risk and sensitivity analysis - US, interest rate sensitivity (Details) - Jackson (US insurance operations) - Interest rate risk - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
2% change | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 2.00% | 2.00% |
Change in pre-tax profit, net of related changes in amortisation of DAC, decrease in assumption | £ (4,079) | £ (2,899) |
Change in related deferred tax, decrease in assumption | 857 | 1,015 |
Net profit effect, decrease in assumption | (3,222) | (1,884) |
Direct effect on carrying value of debt securities (net of related changes in amortisation of DAC), decrease in assumption | 3,063 | 3,364 |
Related effect on movement in deferred tax, decrease in assumption | (643) | (1,177) |
Net OCI effect, decrease in assumption | 2,420 | 2,187 |
Net effect on profit and shareholders' equity, decrease in assumption | £ (802) | £ 303 |
Reasonably possible increase in assumption (as a percent) | 2.00% | 2.00% |
Change in pre-tax profit, net of related changes in amortisation of DAC, increase in assumption | £ 2,533 | £ 2,004 |
Change in related deferred tax, increase in assumption | (532) | (701) |
Net profit effect, increase in assumption | 2,001 | 1,303 |
Direct effect on carrying value of debt securities (net of related changes in amortisation of DAC), increase in assumption | (3,063) | (3,364) |
Related effect on movement in deferred tax, increase in assumption | 643 | 1,177 |
Net OCI effect, increase in assumption | (2,420) | (2,187) |
Net effect on profit and shareholders' equity, increase in assumption | £ (419) | £ (884) |
1% change | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 1.00% | 1.00% |
Change in pre-tax profit, net of related changes in amortisation of DAC, decrease in assumption | £ (1,911) | £ (1,394) |
Change in related deferred tax, decrease in assumption | 401 | 488 |
Net profit effect, decrease in assumption | (1,510) | (906) |
Direct effect on carrying value of debt securities (net of related changes in amortisation of DAC), decrease in assumption | 1,700 | 1,883 |
Related effect on movement in deferred tax, decrease in assumption | (357) | (659) |
Net OCI effect, decrease in assumption | 1,343 | 1,224 |
Net effect on profit and shareholders' equity, decrease in assumption | £ (167) | £ 318 |
Reasonably possible increase in assumption (as a percent) | 1.00% | 1.00% |
Change in pre-tax profit, net of related changes in amortisation of DAC, increase in assumption | £ 1,373 | £ 1,065 |
Change in related deferred tax, increase in assumption | (288) | (373) |
Net profit effect, increase in assumption | 1,085 | 692 |
Direct effect on carrying value of debt securities (net of related changes in amortisation of DAC), increase in assumption | (1,700) | (1,883) |
Related effect on movement in deferred tax, increase in assumption | 357 | 659 |
Net OCI effect, increase in assumption | (1,343) | (1,224) |
Net effect on profit and shareholders' equity, increase in assumption | £ (258) | £ (532) |
Risk and sensitivity analysi170
Risk and sensitivity analysis - US, foreign exchange and other sensitivity (Details) £ in Millions | 12 Months Ended | |||
Dec. 31, 2017GBP (£)$ / £ | Dec. 31, 2016GBP (£)$ / £ | Dec. 31, 2015$ / £ | Dec. 31, 2014$ / £ | |
US dollars | ||||
Risk and sensitivity analysis | ||||
Average foreign exchange rate | $ / £ | 1.29 | 1.35 | 1.53 | |
Closing foreign exchange rate | $ / £ | 1.35 | 1.24 | 1.47 | 1.56 |
Jackson (US insurance operations) | Variable annuities | ||||
Risk and sensitivity analysis | ||||
Expected long-term level of separate account returns (as a percent) | 7.40% | 7.40% | ||
Jackson (US insurance operations) | US dollars | ||||
Risk and sensitivity analysis | ||||
Average foreign exchange rate | $ / £ | 1.29 | 1.35 | ||
Closing foreign exchange rate | $ / £ | 1.35 | 1.24 | ||
Jackson (US insurance operations) | US dollars | Foreign exchange risk | ||||
Risk and sensitivity analysis | ||||
Reasonably possible increase in assumption (as a percent) | 10.00% | 10.00% | ||
Change in profit before tax attributable to shareholders, increase in assumption | £ (54) | £ (48) | ||
Change in profit for the year, increase in assumption | (20) | (54) | ||
Change in shareholders' equity, increase in assumption | £ (456) | £ (473) | ||
Reasonably possible decrease in assumption (as a percent) | 10.00% | 10.00% | ||
Change in profit before tax attributable to shareholders, decrease in assumption | £ 66 | £ 59 | ||
Change in profit for the year, decrease in assumption | 24 | 66 | ||
Change in shareholders' equity, decrease in assumption | £ 557 | £ 578 |
Risk and sensitivity analysi171
Risk and sensitivity analysis - UK and Europe, shareholder-backed annuity sensitivity (Details) - UK and Europe insurance operations - Shareholder-backed annuity - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Insurance risk | ||
Risk and sensitivity analysis | ||
Net effect on profit after tax and shareholders' equity, decreases in combination of assumptions | £ 143 | £ 144 |
Mortality rates | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 1.00% | 1.00% |
Change in pre-tax profit, decrease in assumption | £ (66) | £ (67) |
Credit default rates | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 0.05% | 0.05% |
Change in pre-tax profit, decrease in assumption | £ 198 | £ 200 |
Renewal expenses | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 5.00% | 5.00% |
Change in pre-tax profit, decrease in assumption | £ 40 | £ 41 |
Risk and sensitivity analysi172
Risk and sensitivity analysis - UK and Europe, interest rate sensitivity (Details) - UK and Europe insurance operations - Non-linked shareholder-backed - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Shareholder-backed annuity | ||
Risk and sensitivity analysis | ||
Percentage of business liabilities | 98.00% | 98.00% |
2% change | Interest rate risk | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 2.00% | 2.00% |
Change in carrying value of debt securities and derivatives, decrease in assumption | £ 13,497 | £ 12,353 |
Change in policyholder liabilities, decrease in assumption | (9,426) | (10,023) |
Change in related deferred tax, decrease in assumption | (658) | (396) |
Net effect on profit and shareholders' equity, decrease in assumption | £ 3,413 | £ 1,934 |
Reasonably possible increase in assumption (as a percent) | 2.00% | 2.00% |
Change in carrying value of debt securities and derivatives, increase in assumption | £ (8,541) | £ (8,313) |
Change in policyholder liabilities, increase in assumption | 6,295 | 6,635 |
Change in related deferred tax, increase in assumption | 348 | 285 |
Net effect on profit and shareholders' equity, increase in assumption | £ (1,898) | £ (1,393) |
1% change | Interest rate risk | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 1.00% | 1.00% |
Change in carrying value of debt securities and derivatives, decrease in assumption | £ 5,805 | £ 5,508 |
Change in policyholder liabilities, decrease in assumption | (4,210) | (4,466) |
Change in related deferred tax, decrease in assumption | (254) | (177) |
Net effect on profit and shareholders' equity, decrease in assumption | £ 1,341 | £ 865 |
Reasonably possible increase in assumption (as a percent) | 1.00% | 1.00% |
Change in carrying value of debt securities and derivatives, increase in assumption | £ (4,659) | £ (4,527) |
Change in policyholder liabilities, increase in assumption | 3,443 | 3,636 |
Change in related deferred tax, increase in assumption | 190 | 151 |
Net effect on profit and shareholders' equity, increase in assumption | £ (1,026) | £ (740) |
Risk and sensitivity analysi173
Risk and sensitivity analysis - UK and Europe, equity securities and investment properties sensitivity (Details) - UK and Europe insurance operations - Non-linked shareholder-backed - Equity securities and investment properties in portfolio - Portfolio value risk - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
20% change | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 20.00% | 20.00% |
Change in pre-tax profit, decrease in assumption | £ (332) | £ (326) |
Change in related deferred tax, decrease in assumption | 57 | 66 |
Net effect on profit and shareholders' equity, decrease in assumption | £ (275) | £ (260) |
10% change | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 10.00% | 10.00% |
Change in pre-tax profit, decrease in assumption | £ (166) | £ (163) |
Change in related deferred tax, decrease in assumption | 28 | 33 |
Net effect on profit and shareholders' equity, decrease in assumption | £ (138) | £ (130) |
Risk and sensitivity analysi174
Risk and sensitivity analysis - Asset management and other operations (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Risk and sensitivity analysis | ||
Debt securities | £ 171,374 | £ 170,458 |
Eastspring Investments and US asset management operations | Foreign exchange risk | ||
Risk and sensitivity analysis | ||
Reasonably possible increase in assumption (as a percent) | 10.00% | 10.00% |
Change in profit before tax attributable to shareholders, increase in assumption | £ 30 | £ 12 |
Change in shareholders' equity, excluding goodwill, increase in assumption | 53 | 47 |
Unallocated to a segment (other operations) | ||
Risk and sensitivity analysis | ||
Debt securities | 2,307 | 2,371 |
Unallocated to a segment (other operations) | Prudential Capital Plc | ||
Risk and sensitivity analysis | ||
Debt securities | 2,238 | £ 2,359 |
Unallocated to a segment (other operations) | Derivatives for managing foreign currency movements and macroeconomic exposures | ||
Risk and sensitivity analysis | ||
Reasonably possible fair value movement from sensitivity to exchanges rates, interest rates and inflation rates | £ 150 |
Tax assets and liabilities - De
Tax assets and liabilities - Deferred tax in statement of financial position (Details) £ in Millions | 12 Months Ended |
Dec. 31, 2017GBP (£) | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the beginning of the year | £ 4,315 |
Movement in income statement | (1,418) |
Movement through Other comprehensive income and equity | (1) |
Other movements including foreign currency movements | (269) |
Deferred tax assets at the end of the year | 2,627 |
Deferred tax liabilities in statement of financial position | |
Deferred tax liabilities at the beginning of the year | (5,370) |
Movement in income statement | 534 |
Movement through Other comprehensive income and equity | (81) |
Other movements including foreign currency movements | 202 |
Deferred tax liabilities at the end of the year | (4,715) |
Unrealised gains and losses on investments | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the beginning of the year | 23 |
Movement in income statement | (8) |
Other movements including foreign currency movements | (1) |
Deferred tax assets at the end of the year | 14 |
Deferred tax liabilities in statement of financial position | |
Deferred tax liabilities at the beginning of the year | (1,534) |
Movement in income statement | (177) |
Movement through Other comprehensive income and equity | (55) |
Other movements including foreign currency movements | 18 |
Deferred tax liabilities at the end of the year | (1,748) |
Balances relating to investment and insurance contracts | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the beginning of the year | 1 |
Deferred tax assets at the end of the year | 1 |
Deferred tax liabilities in statement of financial position | |
Deferred tax liabilities at the beginning of the year | (730) |
Movement in income statement | (156) |
Other movements including foreign currency movements | 14 |
Deferred tax liabilities at the end of the year | (872) |
Short-term temporary differences | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the beginning of the year | 4,196 |
Movement in income statement | (1,396) |
Movement through Other comprehensive income and equity | (1) |
Other movements including foreign currency movements | (267) |
Deferred tax assets at the end of the year | 2,532 |
Deferred tax liabilities in statement of financial position | |
Deferred tax liabilities at the beginning of the year | (3,071) |
Movement in income statement | 870 |
Movement through Other comprehensive income and equity | (26) |
Other movements including foreign currency movements | 186 |
Deferred tax liabilities at the end of the year | (2,041) |
Short-term temporary differences | Jackson (US insurance operations) | |
Deferred tax liabilities in statement of financial position | |
Deferred tax assets expected to be recovered in line with the run off of the in-force book | 1,799 |
Short-term temporary differences | Within 10 years | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the end of the year | 733 |
Capital allowances | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the beginning of the year | 16 |
Movement in income statement | (2) |
Deferred tax assets at the end of the year | 14 |
Deferred tax liabilities in statement of financial position | |
Deferred tax liabilities at the beginning of the year | (35) |
Movement in income statement | (3) |
Other movements including foreign currency movements | (16) |
Deferred tax liabilities at the end of the year | (54) |
Unused tax losses | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the beginning of the year | 79 |
Movement in income statement | (12) |
Other movements including foreign currency movements | (1) |
Deferred tax assets at the end of the year | £ 66 |
Tax assets and liabilities - US
Tax assets and liabilities - US tax reform (Details) - GBP (£) £ in Millions | Jan. 01, 2018 | Dec. 31, 2017 |
US tax reform | ||
Net reduction in deferred taxes | £ 445 | |
Operating segments | US | ||
US tax reform | ||
Remeasurement of deferred tax assets subject to US taxation | 1,587 | |
Remeasurement of deferred tax liabilities subject to US taxation | 1,368 | |
Net reduction in deferred taxes | 219 | |
Charge reflected in the income statement, attributable to shareholders | 445 | |
Benefit reflected in the income statement, attributable to policyholders | 92 | |
Benefit reflected through reserves in other comprehensive income | £ 134 | |
US | ||
US tax reform | ||
Corporation tax rate (as a percent) | 21.00% | 35.00% |
Charge reflected in the income statement, attributable to shareholders | £ 445 | |
Benefit reflected in the income statement, attributable to policyholders | £ 92 |
Tax assets and liabilities -177
Tax assets and liabilities - Deferred tax by segment (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Disclosure of deferred tax in statement of financial position and by Group's operations | ||
Deferred tax assets | £ 2,627 | £ 4,315 |
Deferred tax liabilities | (4,715) | (5,370) |
Unallocated to a segment (other operations) | ||
Disclosure of deferred tax in statement of financial position and by Group's operations | ||
Deferred tax assets | 58 | 55 |
Deferred tax liabilities | (15) | (11) |
Asia | Operating segments | ||
Disclosure of deferred tax in statement of financial position and by Group's operations | ||
Deferred tax assets | 112 | 107 |
Deferred tax liabilities | (1,152) | (935) |
US | Operating segments | ||
Disclosure of deferred tax in statement of financial position and by Group's operations | ||
Deferred tax assets | 2,300 | 3,979 |
Deferred tax liabilities | (1,845) | (2,832) |
UK and Europe | Operating segments | ||
Disclosure of deferred tax in statement of financial position and by Group's operations | ||
Deferred tax assets | 157 | 174 |
Deferred tax liabilities | £ (1,703) | £ (1,592) |
Tax assets and liabilities - Ta
Tax assets and liabilities - Tax benefits not recognized (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Capital losses | ||
Disclosure of deferred tax in statement of financial position and by Group's operations | ||
Tax benefit not recognized | £ 79 | £ 89 |
Losses for which tax benefits have not been recognised | 400 | 400 |
Trading losses | ||
Disclosure of deferred tax in statement of financial position and by Group's operations | ||
Tax benefit not recognized | 74 | 41 |
Losses for which tax benefits have not been recognised | 300 | £ 200 |
Trading losses | Within seven years | ||
Disclosure of deferred tax in statement of financial position and by Group's operations | ||
Losses for which tax benefits have not been recognised | £ 41 |
Tax assets and liabilities - Cu
Tax assets and liabilities - Current tax (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Tax assets and liabilities | ||
Current tax recoverable | £ 613 | £ 440 |
Current tax recoverable relating to ongoing litigation | 112 | |
Current tax liability | 537 | 649 |
Provision for uncertain tax matters | £ 139 | £ 89 |
Defined benefit pension sche180
Defined benefit pension schemes - Background (Details) - item | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
PSPS | ||
Defined benefit pension schemes | ||
Percentage of the underlying liabilities of the Group's defined benefit schemes | 82.00% | 82.00% |
Smaller UK defined benefit schemes | ||
Defined benefit pension schemes | ||
Number of plans | 2 | |
Other schemes | Taiwan | ||
Defined benefit pension schemes | ||
Number of plans | 2 |
Defined benefit pension sche181
Defined benefit pension schemes - Summary economic and IAS 19 positions (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Defined benefit pension schemes | ||||
Pension asset | £ 236 | £ 159 | ||
Pension liability | 180 | 288 | ||
Pension plans | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | 56 | (129) | £ 84 | £ (87) |
Pension plans | Surplus (deficit) (without the effect of IFRIC 14) | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | 692 | 563 | 961 | 755 |
Pension plans | Effect of IFRIC 14 for derecognition of PSPS surplus | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | (485) | (558) | (800) | (710) |
Pension plans | Economic basis net surplus (deficit) | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | 207 | 5 | 161 | 45 |
Economic surplus (deficit) attributable to: PAC with-profits fund | 110 | 16 | ||
Economic surplus (deficit) attributable to: Shareholder-backed operations | 97 | (11) | ||
Pension plans | Other adjustments including for investments in Prudential insurance policies | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | (151) | (134) | £ (77) | £ (132) |
PSPS | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | 236 | 159 | ||
Deficit or other funding required | £ 0 | £ 0 | ||
Percentage allocated to PAC with-profits fund | 70.00% | 70.00% | ||
Percentage allocated to shareholder-backed operations | 30.00% | 30.00% | ||
PSPS | Surplus (deficit) (without the effect of IFRIC 14) | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | £ 721 | £ 717 | ||
PSPS | Effect of IFRIC 14 for derecognition of PSPS surplus | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | (485) | (558) | ||
PSPS | Economic basis net surplus (deficit) | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | 236 | 159 | ||
Economic surplus (deficit) attributable to: PAC with-profits fund | 165 | 111 | ||
Economic surplus (deficit) attributable to: Shareholder-backed operations | 71 | 48 | ||
SASPS | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | £ (137) | £ (237) | ||
Percentage allocated to PAC with-profits fund | 40.00% | 40.00% | ||
Percentage allocated to shareholder-backed operations | 60.00% | 60.00% | ||
SASPS | Surplus (deficit) (without the effect of IFRIC 14) | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | £ (137) | £ (237) | ||
SASPS | Economic basis net surplus (deficit) | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | (137) | (237) | ||
Economic surplus (deficit) attributable to: PAC with-profits fund | (55) | (95) | ||
Economic surplus (deficit) attributable to: Shareholder-backed operations | (82) | (142) | ||
M&GGPS | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | (42) | (50) | ||
M&GGPS | Surplus (deficit) (without the effect of IFRIC 14) | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | 109 | 84 | ||
M&GGPS | Economic basis net surplus (deficit) | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | 109 | 84 | ||
Economic surplus (deficit) attributable to: Shareholder-backed operations | 109 | 84 | ||
M&GGPS | Other adjustments including for investments in Prudential insurance policies | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | (151) | (134) | ||
Other schemes | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | (1) | (1) | ||
Other schemes | Surplus (deficit) (without the effect of IFRIC 14) | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | (1) | (1) | ||
Other schemes | Economic basis net surplus (deficit) | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | (1) | (1) | ||
Economic surplus (deficit) attributable to: Shareholder-backed operations | £ (1) | £ (1) |
Defined benefit pension sche182
Defined benefit pension schemes - Actuarial valuations (Details) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017GBP (£)item | Dec. 31, 2015GBP (£) | Dec. 31, 2016GBP (£) | |
Pension plans | |||
Defined benefit pension schemes | |||
Required actuarial valuations (in years) | 3 years | ||
Pension plans | UK | |||
Defined benefit pension schemes | |||
Number of plans | item | 3 | ||
PSPS | |||
Defined benefit pension schemes | |||
Contributions payable per annum | £ 6 | ||
Annual deficit funding required | £ 0 | ||
Percentage allocated to PAC with-profits fund | 70.00% | 70.00% | |
Percentage allocated to shareholder-backed operations | 30.00% | 30.00% | |
SASPS | |||
Defined benefit pension schemes | |||
Annual deficit funding required | £ 26 | ||
Percentage allocated to PAC with-profits fund | 40.00% | 40.00% | |
Percentage allocated to shareholder-backed operations | 60.00% | 60.00% | |
Funding level to eliminate deficit funding requirement (as a percent) | 100.00% | ||
Required actuarial valuations (in years) | 3 years | ||
M&GGPS | |||
Defined benefit pension schemes | |||
Annual deficit funding required | £ 0 | ||
Deficit funding paid | £ 9.3 | ||
Number of plans | item | 2 |
Defined benefit pension sche183
Defined benefit pension schemes - Actuarial assumptions (Details) | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Defined benefit pension schemes | |||
Long-term mortality improvement rate for males | 1.75% | 1.75% | |
Long-term mortality improvement rate for females | 1.25% | 1.25% | |
Pension plans | |||
Defined benefit pension schemes | |||
Discount rate | 2.50% | 2.60% | 3.80% |
Rate of increase in salaries | 3.10% | 3.20% | 3.00% |
Rate of inflation - Retail prices index (RPI) | 3.10% | 3.20% | 3.00% |
Rate of inflation - Consumer prices index (CPI) | 2.10% | 2.20% | 2.00% |
PSPS: Guaranteed (maximum 5%) | |||
Defined benefit pension schemes | |||
Rate of increase of pensions in payment for inflation | 2.50% | 2.50% | 2.50% |
PSPS: Guaranteed (maximum 5%) | Maximum | |||
Defined benefit pension schemes | |||
Rate of increase of pensions in payment for inflation | 5.00% | 5.00% | 5.00% |
PSPS: Guaranteed (maximum 2.5%) | |||
Defined benefit pension schemes | |||
Rate of increase of pensions in payment for inflation | 2.50% | 2.50% | 2.50% |
PSPS: Guaranteed (maximum 2.5%) | Maximum | |||
Defined benefit pension schemes | |||
Rate of increase of pensions in payment for inflation | 2.50% | 2.50% | 2.50% |
PSPS: Discretionary | |||
Defined benefit pension schemes | |||
Rate of increase of pensions in payment for inflation | 2.50% | 2.50% | 2.50% |
Other schemes | |||
Defined benefit pension schemes | |||
Rate of increase of pensions in payment for inflation | 3.10% | 3.20% | 3.00% |
Defined benefit pension sche184
Defined benefit pension schemes - Estimated surpluses and deficits (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Pension plans | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | £ (129) | £ 84 | £ (87) |
Actuarial gains and losses in other comprehensive income | 200 | (181) | 57 |
Contributions paid | 50 | 45 | 56 |
Net surplus (deficit), end of year | 56 | (129) | 84 |
Pension plans | Surplus (deficit) (without the effect of IFRIC 14) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 563 | 961 | 755 |
(Charge) credit to income statement | (40) | ||
Actuarial gains and losses in other comprehensive income | 119 | (442) | 115 |
Contributions paid | 50 | 45 | 56 |
Net surplus (deficit), end of year | 692 | 563 | 961 |
Pension plans | Less: amount attributable to PAC with-profits fund (without the effect of IFRIC 14) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | (425) | ||
(Charge) credit to income statement | 10 | ||
Actuarial gains and losses in other comprehensive income | (39) | ||
Contributions paid | (19) | ||
Net surplus (deficit), end of year | (473) | (425) | |
Pension plans | Shareholders' share, gross of tax surplus (deficit) (without the effect of IFRIC 14) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 138 | ||
(Charge) credit to income statement | (30) | ||
Actuarial gains and losses in other comprehensive income | 80 | ||
Contributions paid | 31 | ||
Net surplus (deficit), end of year | 219 | 138 | |
Pension plans | Shareholders' share related tax (without the effect of IFRIC 14) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | (27) | ||
(Charge) credit to income statement | 6 | ||
Actuarial gains and losses in other comprehensive income | (15) | ||
Contributions paid | (6) | ||
Net surplus (deficit), end of year | (42) | (27) | |
Pension plans | Net of shareholders' tax (without the effect of IFRIC 14) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 111 | ||
(Charge) credit to income statement | (24) | ||
Actuarial gains and losses in other comprehensive income | 65 | ||
Contributions paid | 25 | ||
Net surplus (deficit), end of year | 177 | 111 | |
Pension plans | Effect of IFRIC 14 for derecognition of PSPS surplus | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | (558) | (800) | (710) |
(Charge) credit to income statement | (14) | ||
Actuarial gains and losses in other comprehensive income | 87 | 274 | (64) |
Net surplus (deficit), end of year | (485) | (558) | (800) |
Pension plans | Less: amount attributable to PAC with-profits fund (application of IFRIC 14) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 409 | ||
(Charge) credit to income statement | 10 | ||
Actuarial gains and losses in other comprehensive income | (56) | ||
Net surplus (deficit), end of year | 363 | 409 | |
Pension plans | Shareholders' share, gross of tax (application of IFRIC 14) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | (149) | ||
(Charge) credit to income statement | (4) | ||
Actuarial gains and losses in other comprehensive income | 31 | ||
Net surplus (deficit), end of year | (122) | (149) | |
Pension plans | Shareholders' share related tax (application of IFRIC 14) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 29 | ||
Actuarial gains and losses in other comprehensive income | (6) | ||
Net surplus (deficit), end of year | 23 | 29 | |
Pension plans | Net of shareholders' tax (application of IFRIC 14) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | (120) | ||
(Charge) credit to income statement | (4) | ||
Actuarial gains and losses in other comprehensive income | 25 | ||
Net surplus (deficit), end of year | (99) | (120) | |
Pension plans | Economic basis net surplus (deficit) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 5 | 161 | 45 |
(Charge) credit to income statement | (54) | ||
Actuarial gains and losses in other comprehensive income | 206 | (168) | 51 |
Contributions paid | 50 | 45 | 56 |
Net surplus (deficit), end of year | 207 | 5 | £ 161 |
Pension plans | Less: amount attributable to PAC with-profits fund (with the effect of IFRIC 14) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | (16) | ||
(Charge) credit to income statement | 20 | ||
Actuarial gains and losses in other comprehensive income | (95) | ||
Contributions paid | (19) | ||
Net surplus (deficit), end of year | (110) | (16) | |
Pension plans | Shareholders' share, gross of tax surplus (deficit) (with the effect of IFRIC 14) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | (11) | ||
(Charge) credit to income statement | (34) | ||
Actuarial gains and losses in other comprehensive income | 111 | ||
Contributions paid | 31 | ||
Net surplus (deficit), end of year | 97 | (11) | |
Pension plans | Shareholders' share related tax (with the effect of IFRIC 14) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 2 | ||
(Charge) credit to income statement | 6 | ||
Actuarial gains and losses in other comprehensive income | (21) | ||
Contributions paid | (6) | ||
Net surplus (deficit), end of year | (19) | 2 | |
Pension plans | Net of shareholders' tax (with the effect of IFRIC 14) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | (9) | ||
(Charge) credit to income statement | (28) | ||
Actuarial gains and losses in other comprehensive income | 90 | ||
Contributions paid | 25 | ||
Net surplus (deficit), end of year | 78 | (9) | |
M&GGPS | |||
Defined benefit pension schemes | |||
Investments in Prudential insurance policies | 151 | 134 | |
Net surplus (deficit), beginning of year | (50) | ||
Net surplus (deficit), end of year | (42) | (50) | |
M&GGPS | Surplus (deficit) (without the effect of IFRIC 14) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 84 | ||
Net surplus (deficit), end of year | 109 | 84 | |
M&GGPS | Economic basis net surplus (deficit) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 84 | ||
Net surplus (deficit), end of year | £ 109 | £ 84 |
Defined benefit pension sche185
Defined benefit pension schemes - Investments (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Pension plans | ||
Defined benefit pension schemes | ||
Total value of assets | £ 8,917 | £ 9,006 |
Investment (as a percent) | 100.00% | 100.00% |
Bonds investment graded (as a percent) | 89.00% | 93.00% |
Value of scheme assets derived from quoted prices in active market (as a percent) | 96.00% | 98.00% |
Shares in Prudential plc included in scheme assets | £ 0 | £ 0 |
Property occupied by the Prudential Group included in plan assets | 0 | 0 |
IAS 19 basis plan assets | 8,766 | 8,872 |
Pension plans | UK equities | ||
Defined benefit pension schemes | ||
Equities | £ 76 | £ 103 |
Investment (as a percent) | 1.00% | 1.00% |
Pension plans | Overseas equities | ||
Defined benefit pension schemes | ||
Equities | £ 498 | £ 661 |
Investment (as a percent) | 6.00% | 7.00% |
Pension plans | Government bonds | ||
Defined benefit pension schemes | ||
Bonds | £ 5,695 | £ 5,961 |
Investment (as a percent) | 63.00% | 66.00% |
Pension plans | Corporate bonds | ||
Defined benefit pension schemes | ||
Bonds | £ 1,739 | £ 1,365 |
Investment (as a percent) | 20.00% | 15.00% |
Pension plans | Asset-backed securities | ||
Defined benefit pension schemes | ||
Asset-backed securities | £ 164 | £ 150 |
Investment (as a percent) | 2.00% | 2.00% |
Pension plans | Derivatives | ||
Defined benefit pension schemes | ||
Derivatives | £ 182 | £ 250 |
Investment (as a percent) | 2.00% | 3.00% |
Pension plans | Investment properties | ||
Defined benefit pension schemes | ||
Properties | £ 270 | £ 180 |
Investment (as a percent) | 3.00% | 2.00% |
Pension plans | Other assets | ||
Defined benefit pension schemes | ||
Other assets | £ 293 | £ 336 |
Investment (as a percent) | 3.00% | 4.00% |
PSPS | ||
Defined benefit pension schemes | ||
Total value of assets | £ 7,474 | £ 7,627 |
PSPS | UK equities | ||
Defined benefit pension schemes | ||
Equities | 9 | 18 |
PSPS | Overseas equities | ||
Defined benefit pension schemes | ||
Equities | 226 | 293 |
PSPS | Government bonds | ||
Defined benefit pension schemes | ||
Bonds | 5,040 | 5,411 |
PSPS | Corporate bonds | ||
Defined benefit pension schemes | ||
Bonds | 1,491 | 1,169 |
PSPS | Asset-backed securities | ||
Defined benefit pension schemes | ||
Asset-backed securities | 164 | 144 |
PSPS | Derivatives | ||
Defined benefit pension schemes | ||
Derivatives | 188 | 252 |
PSPS | Investment properties | ||
Defined benefit pension schemes | ||
Properties | 140 | 71 |
PSPS | Other assets | ||
Defined benefit pension schemes | ||
Other assets | 216 | 269 |
Other schemes | ||
Defined benefit pension schemes | ||
Total value of assets | 1,443 | 1,379 |
Other schemes | UK equities | ||
Defined benefit pension schemes | ||
Equities | 67 | 85 |
Other schemes | Overseas equities | ||
Defined benefit pension schemes | ||
Equities | 272 | 368 |
Other schemes | Government bonds | ||
Defined benefit pension schemes | ||
Bonds | 655 | 550 |
Other schemes | Corporate bonds | ||
Defined benefit pension schemes | ||
Bonds | 248 | 196 |
Other schemes | Asset-backed securities | ||
Defined benefit pension schemes | ||
Asset-backed securities | 6 | |
Other schemes | Derivatives | ||
Defined benefit pension schemes | ||
Derivatives | (6) | (2) |
Other schemes | Investment properties | ||
Defined benefit pension schemes | ||
Properties | 130 | 109 |
Other schemes | Other assets | ||
Defined benefit pension schemes | ||
Other assets | £ 77 | £ 67 |
Defined benefit pension sche186
Defined benefit pension schemes - Movement and deficit (Details) - Pension plans - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | £ (129) | £ 84 | £ (87) |
Current service cost | (46) | (34) | (36) |
Past service cost | 48 | ||
Net interest on net defined benefit liability (asset) | (3) | 3 | (3) |
Administration expenses | (8) | (5) | (5) |
Employers' contributions | 50 | 45 | 56 |
Actuarial gains and losses | 200 | (181) | 57 |
Transfer into investment in Prudential insurance policies | (8) | (41) | 54 |
Net surplus (deficit), end of year | 56 | (129) | 84 |
Plan assets | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 9,006 | 7,819 | 8,067 |
Net interest on net defined benefit liability (asset) | 228 | 292 | 278 |
Administration expenses | (8) | (5) | (5) |
Benefit payments | (479) | (350) | (301) |
Employers' contributions | 50 | 45 | 56 |
Employees' contributions | 1 | 2 | 2 |
Actuarial gains and losses | 119 | 1,203 | (278) |
Net surplus (deficit), end of year | 8,917 | 9,006 | 7,819 |
Present value of benefit obligations | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | (8,443) | (6,858) | (7,312) |
Current service cost | (46) | (34) | (36) |
Past service cost | 48 | ||
Net interest on net defined benefit liability (asset) | (214) | (254) | (250) |
Benefit payments | 479 | 350 | 301 |
Employees' contributions | (1) | (2) | (2) |
Actuarial gains and losses | (1,645) | 393 | |
Net surplus (deficit), end of year | (8,225) | (8,443) | (6,858) |
Surplus (deficit) (without the effect of IFRIC 14) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 563 | 961 | 755 |
Current service cost | (46) | (34) | (36) |
Past service cost | 48 | ||
Net interest on net defined benefit liability (asset) | 14 | 38 | 28 |
Administration expenses | (8) | (5) | (5) |
Employers' contributions | 50 | 45 | 56 |
Actuarial gains and losses | 119 | (442) | 115 |
Net surplus (deficit), end of year | 692 | 563 | 961 |
Effect of IFRIC 14 for derecognition of PSPS surplus | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | (558) | (800) | (710) |
Net interest on net defined benefit liability (asset) | (14) | (32) | (26) |
Actuarial gains and losses | 87 | 274 | (64) |
Net surplus (deficit), end of year | (485) | (558) | (800) |
Economic basis net surplus (deficit) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 5 | 161 | 45 |
Current service cost | (46) | (34) | (36) |
Past service cost | 48 | ||
Net interest on net defined benefit liability (asset) | 6 | 2 | |
Administration expenses | (8) | (5) | (5) |
Employers' contributions | 50 | 45 | 56 |
Actuarial gains and losses | 206 | (168) | 51 |
Net surplus (deficit), end of year | 207 | 5 | 161 |
Other adjustments including for investments in Prudential insurance policies | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | (134) | (77) | (132) |
Net interest on net defined benefit liability (asset) | (3) | (3) | (5) |
Actuarial gains and losses | (6) | (13) | 6 |
Transfer into investment in Prudential insurance policies | (8) | (41) | 54 |
Net surplus (deficit), end of year | £ (151) | £ (134) | £ (77) |
Defined benefit pension sche187
Defined benefit pension schemes - Maturity (Details) - Pension plans £ in Millions | 12 Months Ended | |
Dec. 31, 2017GBP (£)Y | Dec. 31, 2016GBP (£)Y | |
Defined benefit pension schemes | ||
Weighted average duration of the benefit obligations | Y | 18.6 | 19.5 |
Estimated future obligations | £ 14,169 | £ 14,824 |
Total employer contributions expected to be paid in the next year | 50 | 45 |
Expected to be settled within one year | ||
Defined benefit pension schemes | ||
Estimated future obligations | 255 | 243 |
1 to 5 years | ||
Defined benefit pension schemes | ||
Estimated future obligations | 1,108 | 1,090 |
5 years to 10 years | ||
Defined benefit pension schemes | ||
Estimated future obligations | 1,589 | 1,585 |
After 10 years to 15 years | ||
Defined benefit pension schemes | ||
Estimated future obligations | 1,667 | 1,694 |
After 15 years to 20 years | ||
Defined benefit pension schemes | ||
Estimated future obligations | 1,661 | 1,704 |
Over 20 years | ||
Defined benefit pension schemes | ||
Estimated future obligations | £ 7,889 | £ 8,508 |
Defined benefit pension sche188
Defined benefit pension schemes - Actuarial gains and losses (Details) - Pension plans - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Actuarial gains and losses | |||
Return on the scheme assets less amount included in interest income | £ 119 | £ 1,203 | £ (278) |
(Losses) on changes in demographic assumptions | (10) | (18) | (3) |
(Losses) on changes in financial assumptions | (101) | (1,733) | 371 |
Experience gains on scheme liabilities | 111 | 106 | 25 |
Effect of derecognition of PSPS surplus | 87 | 274 | (64) |
Consolidation adjustment for investments in Prudential insurance policies and other adjustments | (6) | (13) | 6 |
Total actuarial gains and losses | £ 200 | £ (181) | £ 57 |
Discount rate | 2.50% | 2.60% | 3.80% |
Surplus (deficit) (without the effect of IFRIC 14) | |||
Actuarial gains and losses | |||
Total actuarial gains and losses | £ 119 | £ (442) | £ 115 |
Defined benefit pension sche189
Defined benefit pension schemes - Sensitivity (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Pension plans | |||
Sensitivity of the pension scheme liabilities | |||
Discount rate | 2.50% | 2.60% | 3.80% |
Rate of inflation - Retail prices index (RPI) | 3.10% | 3.20% | 3.00% |
Rate of inflation - Consumer prices index (CPI) | 2.10% | 2.20% | 2.00% |
Pension plans | Discount rate | |||
Sensitivity of the pension scheme liabilities | |||
Decrease in assumption | 0.20% | 0.20% | |
Increase in assumption | 0.20% | 0.20% | |
Pension plans | Rate of inflation - RPI | |||
Sensitivity of the pension scheme liabilities | |||
Decrease in assumption | 0.20% | 0.20% | |
Pension plans | Rate of inflation - CPI | |||
Sensitivity of the pension scheme liabilities | |||
Decrease in assumption | 0.20% | 0.20% | |
Pension plans | Life expectancy | |||
Sensitivity of the pension scheme liabilities | |||
Increase in life expectancy | 1 year | ||
PSPS | Discount rate | |||
Sensitivity of the pension scheme liabilities | |||
Impact of decrease in assumption - increase (decrease) in scheme liabilities | 3.50% | 3.50% | |
Impact of increase in assumption - increase (decrease) in scheme liabilities | (3.40%) | (3.50%) | |
PSPS | Rate of inflation | |||
Sensitivity of the pension scheme liabilities | |||
Impact of decrease in assumption - increase (decrease) in scheme liabilities | (0.60%) | (0.60%) | |
PSPS | Life expectancy | |||
Sensitivity of the pension scheme liabilities | |||
Impact of increase in assumption - increase (decrease) in scheme liabilities | 4.00% | 3.50% | |
Other schemes | Discount rate | |||
Sensitivity of the pension scheme liabilities | |||
Impact of decrease in assumption - increase (decrease) in scheme liabilities | 5.40% | 5.30% | |
Impact of increase in assumption - increase (decrease) in scheme liabilities | (4.90%) | (5.00%) | |
Other schemes | Rate of inflation | |||
Sensitivity of the pension scheme liabilities | |||
Impact of decrease in assumption - increase (decrease) in scheme liabilities | (3.90%) | (4.10%) | |
Other schemes | Life expectancy | |||
Sensitivity of the pension scheme liabilities | |||
Impact of increase in assumption - increase (decrease) in scheme liabilities | 3.80% | 3.70% |
Share capital, share premium190
Share capital, share premium and own shares - Share capital and premium (Details) | 12 Months Ended | |||
Dec. 31, 2017GBP (£)Options£ / sharesshares | Dec. 31, 2016GBP (£)Options£ / sharesshares | Dec. 31, 2015GBP (£)Optionsshares | Dec. 31, 2014Options | |
Disclosure of classes of share capital | ||||
Par value per share (in GBP per share) | £ / shares | £ 0.05 | £ 0.05 | ||
Number of issued shares at beginning of year | shares | 2,581,061,573 | 2,572,454,958 | ||
Number of shares issued under share-based schemes | shares | 6,113,872 | 8,606,615 | ||
Number of issued shares at end of year | shares | 2,587,175,445 | 2,581,061,573 | 2,572,454,958 | |
Equity at beginning of year | £ 14,667,000,000 | £ 12,956,000,000 | £ 11,812,000,000 | |
New share capital subscribed | 21,000,000 | 13,000,000 | 7,000,000 | |
Equity at end of year | £ 16,094,000,000 | £ 14,667,000,000 | £ 12,956,000,000 | |
Options outstanding under save as you earn schemes | ||||
Shares under option | Options | 6,000,000 | 7,000,000 | 9,000,000 | |
Share capital | ||||
Disclosure of classes of share capital | ||||
Equity at beginning of year | £ 129,000,000 | £ 128,000,000 | £ 128,000,000 | |
New share capital subscribed | 1,000,000 | |||
Equity at end of year | 129,000,000 | 129,000,000 | 128,000,000 | |
Share premium | ||||
Disclosure of classes of share capital | ||||
Equity at beginning of year | 1,927,000,000 | 1,915,000,000 | 1,908,000,000 | |
New share capital subscribed | 21,000,000 | 12,000,000 | 7,000,000 | |
Equity at end of year | £ 1,948,000,000 | £ 1,927,000,000 | £ 1,915,000,000 | |
SAYE options | ||||
Options outstanding under save as you earn schemes | ||||
Shares under option | Options | 6,448,853 | 7,068,884 | 8,800,000 | 8,600,000 |
SAYE options | Minimum | ||||
Options outstanding under save as you earn schemes | ||||
Exercise price | £ 6.29 | £ 4.66 | ||
SAYE options | Maximum | ||||
Options outstanding under save as you earn schemes | ||||
Exercise price | £ 14.55 | £ 11.55 |
Share capital, share premium191
Share capital, share premium and own shares - Transactions in Prudential plc shares (Details) - GBP (£) | 1 Months Ended | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2017 | Nov. 30, 2017 | Oct. 31, 2017 | Sep. 30, 2017 | Aug. 31, 2017 | Jul. 31, 2017 | Jun. 30, 2017 | May 31, 2017 | Apr. 30, 2017 | Mar. 31, 2017 | Feb. 28, 2017 | Jan. 31, 2017 | Dec. 31, 2016 | Nov. 30, 2016 | Oct. 31, 2016 | Sep. 30, 2016 | Aug. 31, 2016 | Jul. 31, 2016 | Jun. 30, 2016 | May 31, 2016 | Apr. 30, 2016 | Mar. 31, 2016 | Feb. 29, 2016 | Jan. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Transactions in Prudential plc shares | ||||||||||||||||||||||||||
Cost of own shares deducted from retained earnings | £ 250,000,000 | £ 226,000,000 | £ 250,000,000 | £ 226,000,000 | ||||||||||||||||||||||
Shares held in trust for employee incentive plans | ||||||||||||||||||||||||||
Transactions in Prudential plc shares | ||||||||||||||||||||||||||
Number of shares held | 11,400,000 | 15,100,000 | 10,700,000 | 11,400,000 | 10,700,000 | |||||||||||||||||||||
Market value of shares held | £ 218,000,000 | £ 175,000,000 | £ 218,000,000 | £ 175,000,000 | ||||||||||||||||||||||
Number of shares purchased | 53,519 | 53,951 | 136,563 | 51,226 | 55,857 | 51,984 | 182,780 | 55,744 | 3,090,167 | 70,139 | 65,706 | 62,388 | 71,626 | 69,976 | 71,253 | 173,166 | 73,602 | 84,883 | 576,386 | 2,272,344 | 84,848 | 735,361 | 79,077 | 67,625 | 3,930,024 | 4,360,147 |
Cost of shares purchased | £ 986,000 | £ 992,123 | £ 2,483,879 | £ 912,151 | £ 1,025,802 | £ 927,452 | £ 3,269,447 | £ 979,645 | £ 51,369,760 | £ 1,159,950 | £ 1,052,657 | £ 989,583 | £ 1,134,181 | £ 1,044,194 | £ 1,026,260 | £ 2,372,037 | £ 1,040,528 | £ 1,040,732 | £ 6,604,231 | £ 30,238,832 | £ 1,115,919 | £ 9,686,101 | £ 947,993 | £ 932,711 | £ 66,148,449 | £ 57,183,719 |
Shares held in authorized investment funds | ||||||||||||||||||||||||||
Transactions in Prudential plc shares | ||||||||||||||||||||||||||
Cost of own shares deducted from retained earnings | £ 71,000,000 | £ 61,000,000 | £ 71,000,000 | £ 61,000,000 | ||||||||||||||||||||||
Number of shares held | 6,400,000 | 6,000,000 | 6,400,000 | 6,000,000 | ||||||||||||||||||||||
Market value of shares held | £ 121,000,000 | £ 97,000,000 | £ 121,000,000 | £ 97,000,000 | ||||||||||||||||||||||
Net number of shares on acquisitions (disposed) | 372,029 | (77,423) | ||||||||||||||||||||||||
Net increase to book cost | £ 9,400,000 | £ 7,900,000 | ||||||||||||||||||||||||
Minimum | Shares held in trust for employee incentive plans | ||||||||||||||||||||||||||
Transactions in Prudential plc shares | ||||||||||||||||||||||||||
Share price | £ 18.26 | £ 18.38 | £ 17.99 | £ 17.45 | £ 18.30 | £ 17.72 | £ 17.52 | £ 17.50 | £ 16.58 | £ 16.40 | £ 15.70 | £ 15.83 | £ 15.76 | £ 13.49 | £ 14.37 | £ 13.69 | £ 14.01 | £ 11.96 | £ 11.28 | £ 13.17 | £ 12.91 | £ 13.09 | £ 11.96 | £ 13.73 | £ 18.26 | £ 15.76 |
Maximum | Shares held in trust for employee incentive plans | ||||||||||||||||||||||||||
Transactions in Prudential plc shares | ||||||||||||||||||||||||||
Share price | £ 18.47 | £ 18.40 | £ 18.22 | £ 17.97 | £ 18.73 | £ 17.93 | £ 18 | £ 17.62 | £ 16.80 | £ 16.54 | £ 16.09 | £ 16.02 | £ 16.37 | £ 15.40 | £ 14.50 | £ 14.14 | £ 14.25 | £ 12.32 | £ 13.09 | £ 13.31 | £ 13.31 | £ 13.72 | £ 12.01 | £ 14 | £ 18.47 | £ 16.37 |
Provisions - Total provisions (
Provisions - Total provisions (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Provisions | |||
Provision in respect of defined benefit pension schemes | £ 180 | £ 288 | |
Other provisions | 943 | 659 | £ 519 |
Total provisions | £ 1,123 | £ 947 |
Provisions - Analysis of other
Provisions - Analysis of other provisions (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Analysis of other provisions: | ||
Balance at the beginning of the period | £ 659 | £ 519 |
Charged to income statement: | ||
Additional provisions | 542 | 381 |
Unused amounts released | (9) | (53) |
Used during the year | (239) | (222) |
Exchange differences | (10) | 34 |
Balance at the end of the period | 943 | 659 |
Other provisions | ||
Analysis of other provisions: | ||
Balance at the beginning of the period | 69 | |
Charged to income statement: | ||
Balance at the end of the period | £ 121 | £ 69 |
Provisions - Details of other p
Provisions - Details of other provisions (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Other provisions | |||
Other provisions | £ 943 | £ 659 | £ 519 |
Staff benefits provisions | |||
Other provisions | |||
Other provisions | £ 453 | 415 | |
Expected pay out period of provision | 3 years | ||
Other provisions | |||
Other provisions | |||
Other provisions | £ 121 | 69 | |
Provision for review of past annuity sales | |||
Other provisions | |||
Other provisions | 369 | 175 | |
Gross provision, excluding utilisation | 400 | £ 175 | |
Provision for review of past annuity sales | Maximum | |||
Other provisions | |||
Potential insurance recoveries | £ 175 |
Capital - Capital Measure (Deta
Capital - Capital Measure (Details) - GBP (£) £ in Billions | Dec. 31, 2017 | Dec. 31, 2016 |
Capital | ||
Estimated Group Solvency II own funds | £ 26.4 | £ 24.8 |
Capital - Local capital regulat
Capital - Local capital regulations (Details) £ in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | ||||
Dec. 31, 2017GBP (£) | Dec. 31, 2017SGD ($) | Dec. 31, 2017GBP (£) | Dec. 31, 2016GBP (£) | Dec. 31, 2015GBP (£) | Dec. 31, 2014GBP (£) | |
Estimated capital position with reconciliation to shareholders' equity | ||||||
IFRS shareholders' equity | £ 16,094 | £ 14,667 | £ 12,956 | £ 11,812 | ||
Surplus notes | 6,280 | 6,798 | ||||
Asia insurance operations | China | ||||||
Local capital regulations | ||||||
Minimum core solvency ratio | 50.00% | |||||
Minimum comprehensive solvency ratio | 100.00% | |||||
Asia insurance operations | Indonesia | ||||||
Local capital regulations | ||||||
Minimum net asset level expressed as a percentage of solvency capital | 100.00% | |||||
Asia insurance operations | Malaysia | ||||||
Local capital regulations | ||||||
Minimum Supervisory Target Capital Level percentage | 130.00% | |||||
Asia insurance operations | Singapore | ||||||
Local capital regulations | ||||||
Minimum financial resources required to meet capital adequacy guidelines | $ | $ 5 | |||||
Jackson (US insurance operations) | ||||||
Local capital regulations | ||||||
Amount of reduction in the level of statutory net admitted deferred tax assets | £ 628 | |||||
Decrease to statutory surplus from permitted practice | £ 355 | |||||
Solvency II available capital as percentage of local requirement | 250.00% | 250.00% | ||||
Operations within segments | Asia insurance operations | ||||||
Estimated capital position with reconciliation to shareholders' equity | ||||||
IFRS shareholders' equity | £ 5,525 | 4,992 | ||||
Unallocated surplus of with-profits funds | 3,474 | 2,667 | ||||
Deferred acquisition costs, distribution rights and goodwill of non-participating business not recognized for regulatory reporting | (1,515) | (1,365) | ||||
Other adjustments | 2,411 | 1,628 | ||||
Total adjustments | 4,370 | 2,930 | ||||
Total available capital resources of life assurance businesses on local regulatory bases | 9,894 | 7,922 | ||||
Operations within segments | Jackson (US insurance operations) | ||||||
Estimated capital position with reconciliation to shareholders' equity | ||||||
IFRS shareholders' equity | 5,013 | 5,204 | ||||
Deferred acquisition costs, distribution rights and goodwill of non-participating business not recognized for regulatory reporting | (8,197) | (8,303) | ||||
Surplus notes | 184 | 202 | ||||
Investment and policyholder liabilities valuation differences between IFRS and regulatory basis for Jackson | 5,325 | 6,657 | ||||
Other adjustments | 818 | 535 | ||||
Total adjustments | (1,870) | (909) | ||||
Total available capital resources of life assurance businesses on local regulatory bases | £ 3,143 | £ 4,295 |
Capital - Asset management oper
Capital - Asset management operations (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Asset management operations | ||
Regulatory and other surplus | ||
Beginning of year | £ 814 | £ 733 |
Gains during the year | 586 | 469 |
Movement in capital requirement | (73) | (54) |
Capital injection | 6 | |
Distributions made to the parent company | (433) | (387) |
Exchange and other movements | (24) | 53 |
End of year | 876 | 814 |
M&G Prudential asset management | ||
Regulatory and other surplus | ||
Beginning of year | 405 | |
Gains during the year | 401 | |
Movement in capital requirement | (65) | |
Distributions made to the parent company | (322) | |
End of year | 419 | 405 |
Asset management (US) | ||
Regulatory and other surplus | ||
Beginning of year | 205 | |
Gains during the year | 43 | |
Capital injection | 6 | |
Exchange and other movements | (19) | |
End of year | 235 | 205 |
Asia asset management | ||
Regulatory and other surplus | ||
Beginning of year | 204 | |
Gains during the year | 142 | |
Movement in capital requirement | (8) | |
Distributions made to the parent company | (111) | |
Exchange and other movements | (5) | |
End of year | £ 222 | £ 204 |
Capital - Transferability of av
Capital - Transferability of available capital (Details) | 12 Months Ended |
Dec. 31, 2017 | |
UK and Europe | |
Group objectives, policies and processes for managing capital | |
Shareholders' percentage share of the cost of declared policyholders' bonuses | 0.111 |
Jackson (US insurance operations) | |
Group objectives, policies and processes for managing capital | |
Percentage of prior year end statutory surplus, above which dividends require prior regulatory approval | 10.00% |
Property, plant and equipmen199
Property, plant and equipment (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | £ 743 | £ 1,197 | |
Exchange differences | (22) | 102 | |
Depreciation charge | (116) | (159) | |
Additions | 134 | 348 | |
Arising on acquisitions of subsidiaries | 178 | ||
Disposals and transfers | (128) | (745) | |
Property, plant and equipment at end of period | 789 | 743 | £ 1,197 |
Capital expenditures | 134 | 348 | 256 |
Operating segments | UK and Europe | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 369 | ||
Property, plant and equipment at end of period | 447 | 369 | |
Operating segments | US | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 247 | ||
Property, plant and equipment at end of period | 214 | 247 | |
Operating segments | Asia | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 124 | ||
Property, plant and equipment at end of period | 125 | 124 | |
Unallocated to a segment (other operations) | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 3 | ||
Property, plant and equipment at end of period | 3 | 3 | |
Group occupied property | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 351 | 411 | |
Exchange differences | (8) | 50 | |
Depreciation charge | (22) | (15) | |
Additions | 17 | 15 | |
Disposals and transfers | (43) | (110) | |
Property, plant and equipment at end of period | 295 | 351 | 411 |
Tangible assets | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 392 | 786 | |
Exchange differences | (14) | 52 | |
Depreciation charge | (94) | (144) | |
Additions | 117 | 333 | |
Arising on acquisitions of subsidiaries | 178 | ||
Disposals and transfers | (85) | (635) | |
Property, plant and equipment at end of period | 494 | 392 | 786 |
Capital expenditures | 117 | 333 | |
Tangible assets | Operating segments | UK and Europe | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Capital expenditures | 41 | 251 | |
Tangible assets | Operating segments | US | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Capital expenditures | 19 | 18 | |
Tangible assets | Operating segments | Asia | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Capital expenditures | 55 | 62 | |
Tangible assets | Unallocated to a segment (other operations) | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Capital expenditures | 2 | 2 | |
Tangible assets | With-profits | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 247 | ||
Property, plant and equipment at end of period | 360 | 247 | |
Cost/Gross amount | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 1,516 | 1,867 | |
Property, plant and equipment at end of period | 1,408 | 1,516 | 1,867 |
Cost/Gross amount | Group occupied property | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 439 | 480 | |
Property, plant and equipment at end of period | 367 | 439 | 480 |
Cost/Gross amount | Tangible assets | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 1,077 | 1,387 | |
Property, plant and equipment at end of period | 1,041 | 1,077 | 1,387 |
Accumulated depreciation | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | (773) | (670) | |
Property, plant and equipment at end of period | (619) | (773) | (670) |
Accumulated depreciation | Group occupied property | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | (88) | (69) | |
Property, plant and equipment at end of period | (72) | (88) | (69) |
Accumulated depreciation | Tangible assets | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | (685) | (601) | |
Property, plant and equipment at end of period | £ (547) | £ (685) | £ (601) |
Investment properties - Reconci
Investment properties - Reconciliation (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Investment properties | ||
Investment properties at beginning of period | £ 14,646 | £ 13,422 |
Additions: resulting from property acquisitions | 2,009 | 1,338 |
Additions: resulting from expenditure capitalised | 39 | 189 |
Disposals | (591) | (632) |
Net gain from fair value adjustments | 415 | 273 |
Net foreign exchange differences | (21) | 97 |
Transfers to held for sale assets | (41) | |
Investment properties at end of period | £ 16,497 | £ 14,646 |
Investment properties - Income
Investment properties - Income and expenses (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Investment properties | ||
Rental income from investment property | £ 876 | £ 781 |
Direct operating expense including repairs and maintenance | £ 82 | £ 67 |
Investment properties - Lease (
Investment properties - Lease (Details) - Investment properties - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Investment properties | ||
Properties held under finance leases | £ 5,689 | £ 6,020 |
Present value of minimum lease payments due | 43 | 49 |
Minimum future rentals receivable on non-cancellable operating leases of freehold investment properties | 3,681 | 4,025 |
Minimum future rentals receivable on non-cancellable sub-leases for properties held under finance leases | 1,527 | 2,238 |
Expected to be settled within one year | ||
Investment properties | ||
Minimum future rentals receivable on non-cancellable operating leases of freehold investment properties | 322 | 314 |
1 to 5 years | ||
Investment properties | ||
Minimum future rentals receivable on non-cancellable operating leases of freehold investment properties | £ 1,073 | £ 1,077 |
Over 5 years | ||
Investment properties | ||
Percentage of lease payments due | 73.00% | 76.00% |
Minimum future rentals receivable on non-cancellable operating leases of freehold investment properties | £ 2,286 | £ 2,634 |
Disposal of businesses (Details
Disposal of businesses (Details) £ in Millions, $ in Millions, ₩ in Billions | Aug. 15, 2017USD ($) | Aug. 15, 2017GBP (£) | May 18, 2017GBP (£) | Dec. 31, 2017GBP (£) | Dec. 31, 2016GBP (£) | Dec. 31, 2015GBP (£) | May 18, 2017KRW (₩) | May 18, 2017GBP (£) |
Disposal of businesses | ||||||||
Aggregate profit (loss), including short-term fluctuations in investment returns, together with adjustment to carrying value | £ 162 | £ (227) | £ 56 | |||||
Gain on disposal of other businesses | 162 | |||||||
PCA Life Insurance Company Ltd. - Korea | ||||||||
Disposal of businesses | ||||||||
Consideration for sale of life insurance subsidiary | ₩ 170 | £ 117 | ||||||
Related expenses | £ 9 | |||||||
Proceeds from sale, net of related expenses | £ 108 | |||||||
Cumulative exchange gain (loss) recycled from other comprehensive income | 61 | |||||||
Remeasurement of carrying value of business classified as held for sale | £ 5 | (238) | ||||||
Aggregate profit (loss), including short-term fluctuations in investment returns, together with adjustment to carrying value | £ (227) | £ 56 | ||||||
NPH broker-dealer | ||||||||
Disposal of businesses | ||||||||
Initial consideration received | $ (325) | £ (252) | ||||||
Gain on disposal of other businesses | $ 209 | £ 162 |
Contingencies and related ob204
Contingencies and related obligations (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Disclosure of other provisions [line items] | |||
Provision for guaranteed annuities | £ 411,211 | £ 388,996 | £ 322,518 |
Scottish Amicable Insurance Fund | Pension products with guaranteed annuity rates at retirement | |||
Disclosure of other provisions [line items] | |||
Provision for guaranteed annuities | 503 | 571 | |
PAC with-profits fund | Guaranteed annuities | |||
Disclosure of other provisions [line items] | |||
Provision for guaranteed annuities | 53 | 62 | |
Jackson (US insurance operations) | |||
Disclosure of other provisions [line items] | |||
Provision for guaranteed annuities | £ 180,724 | £ 177,626 | £ 138,913 |
Post balance sheet events (Deta
Post balance sheet events (Details) £ in Millions | 1 Months Ended | |||
Mar. 22, 2018GBP (£)company | Dec. 31, 2017GBP (£) | Dec. 31, 2016GBP (£) | Dec. 31, 2015GBP (£) | |
Post balance sheet events | ||||
Insurance contract liabilities | £ 328,172 | £ 316,436 | £ 260,753 | |
Intention to demerge the Group's UK businesses | ||||
Post balance sheet events | ||||
Expected number of separately-listed companies expected from demerger | company | 2 | |||
UK and Europe insurance operations | Shareholder-backed annuity | Sale of portion of UK annuity portfolio | ||||
Post balance sheet events | ||||
Insurance contract liabilities | £ 12,000 | |||
Liabilities reinsured under agreement to sell | £ 12,000 |
Commitments - Operating leases
Commitments - Operating leases (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Operating leases | ||
Future minimum sub-lease rental received for non-cancellable operating leases for land and buildings | £ 56 | £ 60 |
Minimum lease rental payments included in consolidated income statements | 123 | 115 |
Expected to be settled within one year | ||
Operating leases | ||
Future minimum lease payments for non-cancellable operating leases | 113 | 107 |
1 to 5 years | ||
Operating leases | ||
Future minimum lease payments for non-cancellable operating leases | 284 | 209 |
Over 5 years | ||
Operating leases | ||
Future minimum lease payments for non-cancellable operating leases | £ 118 | £ 96 |
Commitments - Capital commitmen
Commitments - Capital commitments (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Investment properties | ||
Contractual obligations and unfunded commitments | ||
Amount committed | £ 176 | £ 458 |
Jackson (US insurance operations) | Investments in limited partnerships | ||
Contractual obligations and unfunded commitments | ||
Amount committed | 414 | 465 |
Jackson (US insurance operations) | Commercial mortgage loans and other fixed maturities | ||
Contractual obligations and unfunded commitments | ||
Amount committed | 214 | 201 |
UK and Europe insurance operations | Private equity and infrastructure funds | ||
Contractual obligations and unfunded commitments | ||
Amount committed | £ 3,225 | £ 2,269 |
Investments in subsidiary un208
Investments in subsidiary undertakings, joint ventures and associates - Equity method and fair value through profit or loss (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Investments in subsidiary undertakings, joint ventures and associates | |||
Fair value of associates accounted for at fair value through profit or loss | £ 2,400 | £ 3,500 | |
Share of profits from joint ventures and associates, net of related tax | 302 | 182 | £ 238 |
Other comprehensive income in the joint ventures and associates | 0 | 0 | 0 |
Unrecognised share of losses of a joint venture | 0 | 0 | 0 |
Unrecognised share of losses of a associate | 0 | 0 | 0 |
Contingent liabilities in relation to interests in joint ventures | 0 | 0 | 0 |
Capital commitments in relation to interests in joint ventures | 0 | 0 | 0 |
Operating segments | |||
Investments in subsidiary undertakings, joint ventures and associates | |||
Share of profits from joint ventures and associates, net of related tax | 302 | 182 | 238 |
Operating segments | Asia insurance operations | |||
Investments in subsidiary undertakings, joint ventures and associates | |||
Share of profits from joint ventures and associates, net of related tax | 121 | 94 | 130 |
Operating segments | Asia asset management | |||
Investments in subsidiary undertakings, joint ventures and associates | |||
Share of profits from joint ventures and associates, net of related tax | 60 | 54 | 41 |
Operating segments | General insurance commission (UK and Europe insurance operations) | |||
Investments in subsidiary undertakings, joint ventures and associates | |||
Share of profits from joint ventures and associates, net of related tax | 106 | 21 | 53 |
Operating segments | UK and Europe asset management | |||
Investments in subsidiary undertakings, joint ventures and associates | |||
Share of profits from joint ventures and associates, net of related tax | 15 | 13 | 14 |
Shareholder-backed | |||
Investments in subsidiary undertakings, joint ventures and associates | |||
Share of profits from joint ventures and associates, net of related tax | 196 | 161 | 185 |
With-profits | PAC with-profits fund | |||
Investments in subsidiary undertakings, joint ventures and associates | |||
Share of profits from joint ventures and associates, net of related tax | £ 106 | £ 21 | £ 53 |
Investments in subsidiary un209
Investments in subsidiary undertakings, joint ventures and associates - Ownership percentage (Details) | 12 Months Ended |
Dec. 31, 2017 | |
ANRP II (AIV VI FC), LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 36.58% |
BOCHK Balanced Growth Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 48.19% |
BWAT Retail Nominee (1) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 50.00% |
BWAT Retail Nominee (2) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 50.00% |
Centaurus Retail LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 50.00% |
Centre Capital Non-Qualified Investors IV AIV-RA, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 31.92% |
CEP IV-A Chicago AIV, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 31.92% |
CEP IV-A CWV AIV, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 31.95% |
CEP IV-A Davenport AIV, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 31.92% |
CEP IV-A Indy AIV, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 31.92% |
CEP IV-A NMR AIV, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 31.92% |
CEP IV-A WBCT AIV, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 31.91% |
Clairvest Equity Partners IV-A LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 31.87% |
Cribbs Causeway JV Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 50.00% |
Eastspring Investments - US High Yield Bond Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 32.58% |
Eastspring Investments Asian High Yield Bond Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 47.52% |
Eastspring Investments Asian Infrastructure Equity Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 36.37% |
Eastspring Investments US Bond Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 28.34% |
Eastspring Investments US Investment Grade Bond Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 27.01% |
European Specialist Investment Funds - M&G Total Return Credit Investment Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 30.75% |
Foudry Properties Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 50.00% |
ICICI Prudential Asset Management Company Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 49.00% |
ICICI Prudential Life Insurance Company Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 25.83% |
ICICI Prudential Pension Funds Management Company Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 25.83% |
ICICI Prudential Trust Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 49.00% |
Infracapital Greenfield partners I LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 26.52% |
Infracapital Partners II LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 31.56% |
Infracapital Partners LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 33.04% |
Infracapital SLP II LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 34.00% |
Innisfree M&G PPP LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 62.22% |
Innisfree M&G PPP LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 35.00% |
Jefferies Capital Partners V. LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 21.92% |
M&G Corporate Bond Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 25.71% |
M&G Episode Macro Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 22.83% |
M&G European Secured Property Income Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 22.97% |
M&G European Select Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 39.97% |
M&G Gilt & Fixed Interest Income Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 45.22% |
M&G Global Corporate Bond Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 31.25% |
M&G Global Leaders Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 24.91% |
M&G Global Select Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 20.09% |
M&G Managed Growth Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 26.14% |
M&G Pan European Dividend Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 25.74% |
M&G PFI Carry Partnership 2016 LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 25.00% |
M&G Real Estate Debt Fund LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 29.20% |
M&G Real Estate UK Enhanced Value LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G RED II SLP LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 28.00% |
M&G RED III SLP LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 25.00% |
M&G RED SLP LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 44.00% |
M&G UK Companies Financing Fund II LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 48.32% |
Manchester JV Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 50.00% |
MCF S.r.l | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 45.00% |
Murphy &Partners Fund, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 21.07% |
Oaktree Business Park Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 12.50% |
PGF Management Company (Ireland) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 50.00% |
PPM America Capital Partners IV, LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 34.50% |
PPM America Capital Partners V, LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 34.00% |
PPM America Capital Partners VI, LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 32.00% |
PPM Managers Partnership CI VII (A) LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 25.00% |
Prenetics Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 15.00% |
Property Partners (Two Rivers) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 50.00% |
Prudential Dynamic 0-30 Portfolio | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 29.81% |
Prudential Dynamic 10-40 Portfolio | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 31.51% |
Prudential Dynamic 20 - 55 Portfolio | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 36.60% |
Prudential Dynamic 40-80 Portfolio | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 38.09% |
Prudential Dynamic 60-100 Portfolio | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 35.42% |
Prudential Dynamic Focused 20 - 55 Portfolio | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 42.94% |
Prudential Dynamic Focused 40-80 Portfolio | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 28.38% |
Prudential Dynamic Focused 60-100 Portfolio | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 31.01% |
Prudential Pensions Management Zambia Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 49.00% |
Prudential Portfolio Managers (South Africa) (Pty) Limited | Ordinary shares | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 49.99% |
Prudential Portfolio Managers (South Africa) (Pty) Limited | A Class Ordinary shares | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 75.00% |
Prudential/M&G UK Companies Financing Fund LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 34.42% |
Reksa Dana Eastspring Investments IDR High Grade | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 44.09% |
Scotts Spazio Pte. Ltd. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 45.00% |
Sectordate Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 32.60% |
St Edward Homes Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 50.00% |
St Edwards Strand Partnership | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 50.00% |
The Car Auction Unit Trust | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 50.00% |
The Heights Management Company Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 50.00% |
The St Edward Homes Partnership | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 49.95% |
The Strand Property Unit Trust | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 50.00% |
The Two Rivers Trust | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 50.00% |
Two Rivers LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 50.00% |
BOCI - Prudential Asset Management Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 36.00% |
BOCI - Prudential Trustee Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 36.00% |
CITIC-CP Asset Management Co., Ltd. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 26.95% |
CITIC-Prudential Fund Management Co., Ltd. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 49.00% |
CITIC-Prudential Life Insurance Company Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 50.00% |
Prudential BSN Takaful Berhad | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 49.00% |
M&G Group Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held (as a percent) | 100.00% |
Prudential (US Holdco1) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held (as a percent) | 100.00% |
Prudential Capital Holding Company Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held (as a percent) | 100.00% |
Prudential Corporation Asia Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held (as a percent) | 100.00% |
Prudential Financial Services Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held (as a percent) | 100.00% |
Prudential Group Holdings Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held (as a percent) | 100.00% |
Prudential Property Services Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held (as a percent) | 100.00% |
The Prudential Assurance Company Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held (as a percent) | 100.00% |
Allied Life Brokerage Agency, Inc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
BOCHK Aggressive Growth Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 60.22% |
BOCHK China Equity Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 66.25% |
BOCHK Conservative Growth Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 56.35% |
Brier Capital LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Brooke (Holdco 1) Inc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Brooke Holdings (UK) (In liquidation) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Brooke Life Insurance Company | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Calvin F1 GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Calvin F2 GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Canada Property (Trustee) No 1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Canada Property Holdings Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Canada Property Jersey No. 2 Trust | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Canada Property Jersey Trust | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Cardinal Distribution Park Management Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 66.00% |
Carraway Guildford (Nominee A) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Carraway Guildford (Nominee B) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Carraway Guildford General Partner Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Carraway Guildford Investments Unit Trust | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Carraway Guildford LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Central Square Leeds Limited (In liquidation) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Centre Capital Non-Qualified Investors IV AIV Orion, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 76.80% |
Centre Capital Non-Qualified Investors IV AIV-ELS, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 76.53% |
Centre Capital Non-Qualified Investors IV, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 73.06% |
Centre Capital Non-Qualified Investors V AIV-ELS, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 73.16% |
Centre Capital Non-Qualified Investors V, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 67.16% |
CF Prudential European QIS Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 97.68% |
CF Prudential Japanese QIS Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 97.64% |
CF Prudential North American QIS Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 98.33% |
CF Prudential Pacific Markets Trust Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 97.96% |
CF Prudential UK Growth QIS Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 94.27% |
Cribbs Causeway Merchants Association Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Cribbs Mall Nominee (1) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Curian Capital, LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Curian Clearing, LLC (Michigan) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Digital Infrastructure Investment Partners GP LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 65.00% |
Digital Infrastructure Investment Partners GP1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Digital Infrastructure Investment Partners LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Digital Infrastructure Investment Partners SLP GP LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Digital Infrastructure Investment Partners SLP GP1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Digital Infrastructure Investment Partners SLP GP2 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Al-Wara' Investments Berhad | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Asset Management Korea Co. Ltd. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Infrastructure Debt Fund L.P. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments - Asian Local Bond Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 97.95% |
Eastspring Investments - Asian Smaller Companies Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.69% |
Eastspring Investments - Asian Total Return Bond Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments - Developed and Emerging Asia Equity Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments - Emerging Europe, Middle East and Africa Dynamic Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments - Global Emerging Markets Customized Equity Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.90% |
Eastspring Investments - Global Emerging Markets Dynamic Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 96.48% |
Eastspring Investments - Global Low Volatility Equity Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.57% |
Eastspring Investments - Global Technology Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 84.46% |
Eastspring Investments - Japan Equity Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 85.13% |
Eastspring Investments - Japan Fundamental Value Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 98.45% |
Eastspring Investments - Pan European Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 56.25% |
Eastspring Investments - US Equity Income Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments - US Total Return Bond Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments (Hong Kong) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments (Luxembourg) SA | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments (Singapore) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments Asia Pacific Equity Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.93% |
Eastspring Investments Asian Bond Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 82.70% |
Eastspring Investments Asian Dynamic Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 90.17% |
Eastspring Investments Asian Equity Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 65.25% |
Eastspring Investments Asian Equity Income Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 83.03% |
Eastspring Investments Asian Low Volatility Equity Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 92.37% |
Eastspring Investments Asian Property Securities Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 95.47% |
Eastspring Investments Berhad | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments China Equity Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 50.03% |
Eastspring Investments Dragon Peacock Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 97.21% |
Eastspring Investments European Grade Bond Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.36% |
Eastspring Investments Fund Management Limited Liability Company | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments Global Emerging Markets Bond Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 94.59% |
Eastspring Investments Global Equity Navigator Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.99% |
Eastspring Investments Global Market Navigator Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 97.63% |
Eastspring Investments Global Multi Asset Income Plus Growth Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments Greater China Equity Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 92.37% |
Eastspring Investments Hong Kong Equity Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.86% |
Eastspring Investments Incorporated | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments India Consumer Equity Open Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments India Equity Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 81.09% |
Eastspring Investments India Equity Open Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments India Infrastructure Equity Open Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments Latin American Equity Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 89.29% |
Eastspring Investments Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments Limited (in liquidation) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments North America Value Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.97% |
Eastspring Investments Services Pte. Ltd. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments SICAV-FIS - Alternative Investments Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments SICAV-FIS - Asia Pacific Loan Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments SICAV-FIS Universal USD Bond Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.95% |
Eastspring Investments SICAV-FIS Universal USD Bond II Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Investments US Corporate Bond Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 86.49% |
Eastspring Investments US High Grade Bond Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 92.09% |
Eastspring Investments UT Singapore ASEAN Equity Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.72% |
Eastspring Investments UT Singapore Select Bond Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 90.97% |
Eastspring Investments World Value Equity Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 88.41% |
Eastspring Real Assets Partners | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Eastspring Securities Investment Trust Co., Ltd. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.54% |
Edger Investments Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Edinburgh Park (Management) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Embankment GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Embankment Nominee 1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Embankment Nominee 2 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Empire Holding SARL (In liquidation) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Euro Salas Properties Limited (In liquidation) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Falan GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Fashion Square ECO LP (In liquidation) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
First Dakota, Inc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 50.00% |
Five Hotel Holding, LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Furnival Insurance Company PCC Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Genny GP 1 LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Genny GP 2 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Genny GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
George Digital GP 1 LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
George Digital GP 2 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
George Digital GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
GGE GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Green GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Greenpark (Reading) General Partner Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Greenpark (Reading) Nominee No. 1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Greenpark (Reading) Nominee No. 2 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
GS Twenty Two Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Hermitage Management, LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Holborn Bars Nominees Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Holtwood Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Hudson Seasons, LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Hyde Holdco 1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
IFC Holdings, Inc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital (AIRI) GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital (Belmond) GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital (Bio) GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital (GC) GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital (IT PPP) GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital (Sense) GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital (TLSB) GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital (TLSB) SLP LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital ABP GP Limited (In liquidation) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital CI II Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital DF II GP LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital DF II Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Employee Feeder GP 1 LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Employee Feeder GP 2 LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Employee Feeder GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital F1 GP2 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital F2 GP1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital F2 GP2 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital GP 1 LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital GP 2 LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital GP II Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Greenfield DF GP LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Greenfield Partners 1 SLP GP LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Greenfield Partners 1 SLP GP1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Greenfield Partners 1 SLP GP2 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Greenfield Partners I Employee Feeder GP LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Greenfield Partners I GP 1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Greenfield Partners I GP 2 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Greenfield Partners I GP LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Greenfield Partners I SLP2 GP LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Greenfield Partners I Subholdings GP LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Greenfield Partners I Subholdings GP1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Long Term Income Partners GP 1 Limited (In liquidation) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Long Term Income Partners GP 2 Limited (In liquidation) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Long Term Income Partners GP LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Partners II Subholdings GP LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Partners II Subholdings GP1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Partners III GP SARL | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital RF GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital Sisu GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital SLP II GP LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Infracapital SLP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
INVEST Financial Corporation Insurance Agency Inc, of Delaware | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
INVEST Financial Corporation Insurance Agency Inc, of Illinois | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Investment Centers of America, Inc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Jackson Charitable Foundation, Inc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Jackson Holdings, LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Jackson National Asset Management, LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Jackson National Life (Bermuda) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Jackson National Life Distributors, LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Jackson National Life Insurance Company | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Jackson National Life Insurance Company of New York | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
JNL Strategic Income Fund, LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Lion Credit Opportunity Fund plc - Credit Opportunity Fund XV | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.98% |
LIPP SARL (In liquidation) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Livicos Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
London Stone Investments F3 Employee Feeder GP LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
London Stone Investments F3 I Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
London Stone Investments F3 II Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
London Stone Investments F3 SP GP LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G (Guernsey) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G (Lux) Investment Funds 1 - M&G (Lux) Floating Rate High Yield Solution | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 93.99% |
M&G Alternatives Investment Management Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Asia Property Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 54.49% |
M&G Dividend Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 55.09% |
M&G Episode Defensive Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 91.64% |
M&G European Credit Investment Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.98% |
M&G European High Yield Credit Investment Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G European Property Fund SICAV-FIS | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 51.86% |
M&G European Strategic Value Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 71.25% |
M&G Financial Services Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Founders 1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G General Partner Inc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Global Credit Investment Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 67.28% |
M&G IMPPP 1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G International Investments Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G International Investments Nominees Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G International Investments SA | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G International Investments Switzerland AG | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Investment Funds (10) - M&G Absolute Return Bond Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 50.23% |
M&G Investment Funds (10) - M&G Global Listed Infrastructure Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 64.83% |
M&G Investment Management Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Investments (Hong Kong) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Investments (Singapore) Pte. Ltd. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Investments Japan Co., Ltd. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Luxembourg SA | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Management Services Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Nominees Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G PFI 2018 GP LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G PFI 2018 GP1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G PFI 2018 GP2 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G PFI Partnership 2018 LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Platform Nominees Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Prudential Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G RE Espana 2016 S.L. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Real Estate Asia Holding Company Pte. Ltd. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Real Estate Asia Pte. Ltd | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Real Estate Funds Management SARL | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Real Estate Japan Co., Ltd. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Real Estate Korea Co., Ltd. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Real Estate Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Real Estate UKEV (GP) LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G RED Employee Feeder GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G RED GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G RED II Employee Feeder GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G RED II GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G RED II SLP GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G RED III Employee Feeder GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G RED III GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G RED III SLP GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G RED SLP GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G RPF GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G RPF Nominee 1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G RPF Nominee 2 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G Securities Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G SIF Management Company (Ireland) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G UK Property GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G UK Property Nominee 1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G UK Property Nominee 2 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G UKCF II GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G UKEV (SLP) General Partner LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
M&G UKEV (SLP) LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Manchester Nominee (1) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Minster Court Estate Management Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 75.00% |
Mission Plans of America, Inc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
MM&S (2375) Limited (In liquidation) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
NAPI REIT, Inc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.00% |
National Planning Corporation | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
National Planning Holdings, Inc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
North Sathorn Holdings Company Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Nova Sepadu Sdn. Bhd. (In liquidation) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 51.00% |
Old Kingsway, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Optimus Point Management Company Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Pacus (UK) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
PCA IP Services Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
PCA Life Assurance Co. Ltd. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.79% |
PCA Reinsurance Co. Ltd. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
PGDS (UK One) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
PGDS (US One), LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
PPM America Capital Partners II, LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 63.45% |
PPM America Capital Partners III, LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 60.50% |
PPM America Capital Partners, LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 52.50% |
PPM America Private Equity Fund II, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.81% |
PPM America Private Equity Fund III, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.81% |
PPM America Private Equity Fund IV, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.84% |
PPM America Private Equity Fund, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.60% |
PPM America Private Equity Fund V, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.84% |
PPM America Private Equity Fund VI, LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.85% |
PPM America, Inc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
PPM Capital (Holdings) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
PPM CLO 2018-1 Ltd. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
PPM Finance, Inc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
PPM Holdings, Inc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
PPM Loan Management Company LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
PPM Loan Management Holding Company LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
PPM Managers GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
PPM Ventures (Asia) Limited (In liquidation) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
PPMC First Nominees Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Pru Life Insurance Corporation of U.K. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Pru Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudence Foundation | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudence Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential (Cambodia) Life Assurance Plc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential / M&G UKCF GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Africa Holdings Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Africa Services Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Assurance Company Singapore (Pte) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Assurance Malaysia Berhad | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 51.00% |
Prudential Assurance Uganda Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Capital (Singapore) Pte. Ltd. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Capital Plc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Corporate Pensions Trustee Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Corporation Australasia Holdings Pty Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Corporation Holdings Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Credit Opportunities 1 SARL | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Credit Opportunities GP SARL | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Credit Opportunities Scsp | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Development Management Limited (In liquidation) | Ordinary shares | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Development Management Limited (In liquidation) | Preference shares | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Distribution Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Dublin Investments Limited (In liquidation) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Dynamic Focused 0-30 Portfolio | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 61.66% |
Prudential Equity Release Mortgages Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Europe Assurance Holdings Limited (In liquidation) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Financial Planning Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Five Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential General Insurance Hong Kong Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Global Services Private Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential GP Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Greenfield GP LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Greenfield GP1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Greenfield GP2 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Greenfield LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Greenfield SLP GP LLP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Group Pensions Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Group Secretarial Services Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Holborn Life Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Holdings Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Hong Kong Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential International Assurance plc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential International Management Services Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential International Staff Pensions Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Investment (Luxembourg) 2 SARL | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Investments Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential IP Services Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Life Assurance (Lao) Company Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Life Assurance (Thailand) Public Company Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.93% |
Prudential Life Assurance Kenya Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Life Assurance Zambia Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Life Insurance Ghana Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Lifetime Mortgages Limited | Ordinary shares | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Lifetime Mortgages Limited | Preference shares | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Loan Investments 1 SARL | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Loan Investments GP SARL | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Loan Investments SCSp | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Mauritius Holdings Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Mortgages Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Nominees Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Pensions Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Polska sp. z.o.o | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Portfolio Management Group Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Portfolio Managers Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Properties Trusty Pty Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Property Holding Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Property Investment Managers Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Property Investments Limited | Ordinary shares | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Property Investments Limited | Preference shares | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Protect Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Real Estate Investments 1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Real Estate Investments 2 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Real Estate Investments 3 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Retirement Income Limited (In liquidation) | Ordinary shares | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Retirement Income Limited (In liquidation) | Preference shares | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Services Asia Sdn. Bhd. | Ordinary shares | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Services Asia Sdn. Bhd. | Preference shares | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Services Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Services Singapore Pte. Ltd. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Singapore Holdings Pte. Ltd. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Staff Pensions Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Trustee Company Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential UK Real Estate General Partner Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential UK Real Estate LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential UK Real Estate Nominee 1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential UK Real Estate Nominee 2 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential UK Services Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Unit Trusts Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Venture Managers Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Vietnam Assurance Private Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prudential Vietnam Finance Company Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Prutec Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
PT. Eastspring Investments Indonesia | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.95% |
PT. Prudential Life Assurance | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 94.62% |
PVFC Financial Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
PVM Partnerships Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Randolph Street LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
REALIC of Jacksonville Plans, Inc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Reksa Dana Eastspring IDR Fixed Income Fund (NDEIFF) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Reksa Dana Eastspring Investments Cash Reserve | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Reksa Dana Eastspring Investments Value Discovery | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 89.60% |
Reksa Dana Eastspring Investments Yield Discovery | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 79.21% |
Reksa Dana Syariah Eastspring Syariah Equity Islamic Asia Pacific USD | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.90% |
Reksa Dana Syariah Eastspring Syariah Fixed Income Amanah | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 96.82% |
Rhodium Investment Fund | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Rift GP 1 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Rift GP 2 Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
ROP, Inc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
ScotAm Pension Trustees Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Scottish Amicable Finance plc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Scottish Amicable Holdings Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Scottish Amicable Life Assurance Society | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Scottish Amicable Pensions Investments Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Sealand (No 1) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Sealand (No 2) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Selly Oak Shopping Park (General Partner) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Selly Oak Shopping Park (Nominee 1) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Selly Oak Shopping Park (Nominee 2) Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
SII Investments, Inc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Silverfleet Capital 2004 LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Silverfleet Capital 2005 LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Silverfleet Capital 2006 LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Silverfleet Capital 2008 LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Silverfleet Capital 2009 LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Silverfleet Capital 2011/12 LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Silverfleet Capital II WPLF | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Smithfield Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
SM,LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Squire Capital I, LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Squire Capital II, LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Squire Reassurance Company II, Inc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Squire Reassurance Company, LLC | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Sri Han Suria Sdn. Bhd. | Ordinary shares | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 51.00% |
Sri Han Suria Sdn. Bhd. | Preference shares | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Stableview Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Staple Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Staple Nominees Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Thanachart Life Assurance Public Company Limited (In liquidation) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.93% |
The First British Fixed Trust Company Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
The Greenpark (Reading) LP | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
The Hub (Witton) Management Company Limited (In liquidation) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Three Snowhill Birmingham SARL | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Two Snowhill Birmingham SARL | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
US Strategic Income Bond Fund D USD Acc | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 96.36% |
VFL International Life Company SPC, Ltd. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Warren Farm Office Village Limited (in liquidation) | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Wessex Gate Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Westwacker Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 100.00% |
Wynnefield Private Equity Partners I, L.P. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.00% |
Wynnefield Private Equity Partners II, L.P. | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 99.00% |
Zenith Prudential Life Insurance Company Limited | |
Investments in subsidiaries, joint ventures, associates and significant holdings | |
Proportion held indirectly - related undertakings (as a percent) | 51.00% |
FURTHER ACCOUNTING POLICIES - S
FURTHER ACCOUNTING POLICIES - Structured entities (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
OEICs/UTs | ||
Unconsolidated structured entities reported in the statement of financial position | ||
Aggregate carrying amount of investments in unconsolidated structured entities | £ 20,718 | £ 16,489 |
OEICs/UTs | Equity securities and portfolio holdings in unit trusts | ||
Unconsolidated structured entities reported in the statement of financial position | ||
Aggregate carrying amount of investments in unconsolidated structured entities | 20,718 | 16,489 |
Separate account assets | ||
Unconsolidated structured entities reported in the statement of financial position | ||
Aggregate carrying amount of investments in unconsolidated structured entities | 130,528 | 120,411 |
Separate account assets | Equity securities and portfolio holdings in unit trusts | ||
Unconsolidated structured entities reported in the statement of financial position | ||
Aggregate carrying amount of investments in unconsolidated structured entities | 130,528 | 120,411 |
Other structured entities | ||
Unconsolidated structured entities reported in the statement of financial position | ||
Aggregate carrying amount of investments in unconsolidated structured entities | 10,894 | 12,220 |
Other structured entities | Debt securities | ||
Unconsolidated structured entities reported in the statement of financial position | ||
Aggregate carrying amount of investments in unconsolidated structured entities | £ 10,894 | £ 12,220 |
FURTHER ACCOUNTING POLICIES - F
FURTHER ACCOUNTING POLICIES - Financial investments (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Financial instruments | ||
Minimum cash collateral required as percentage of fair value of securities loaned | 100.00% | |
Fair value hedges | ||
Financial instruments | ||
Notional amount | £ 0 | £ 0 |
Cash flow hedges | ||
Financial instruments | ||
Notional amount | £ 0 | £ 0 |
FURTHER ACCOUNTING POLICIES - I
FURTHER ACCOUNTING POLICIES - Investment properties (Details) | 12 Months Ended |
Dec. 31, 2017 | |
FURTHER ACCOUNTING POLICIES | |
Maximum period between external valuations of investment properties | 3 years |
Condensed Financial Informat213
Condensed Financial Information of Registrant Prudential plc - Profit and Loss Accounts (Details) - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Profit and Loss Accounts | ||||
Investment income, including dividends received from subsidiary undertakings | £ 42,189 | £ 32,511 | £ 3,304 | |
Other charges: | ||||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | [1],[2] | 3,970 | 3,212 | 3,321 |
Tax credit on profit on ordinary activities | (1,580) | (1,291) | (742) | |
Profit for the year attributable to equity holders of the Company | 2,389 | 1,921 | 2,579 | |
Items that will not be reclassified to profit or loss | ||||
Actuarial gains recognised in respect of the defined benefit pension scheme | 104 | (107) | 27 | |
Related tax | (15) | 14 | (5) | |
Total other comprehensive income (loss) | 105 | 1,099 | (489) | |
Total comprehensive income for the year | 2,494 | 3,020 | 2,090 | |
Prudential plc | ||||
Profit and Loss Accounts | ||||
Investment income, including dividends received from subsidiary undertakings | 1,757 | 1,413 | 1,363 | |
Investment expenses and charges | (414) | (479) | (311) | |
Other charges: | ||||
Corporate expenditure | (217) | (212) | (230) | |
Foreign currency exchange gains | (10) | 3 | 2 | |
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 1,116 | 725 | 824 | |
Tax credit on profit on ordinary activities | 119 | 115 | 96 | |
Profit for the year attributable to equity holders of the Company | 1,235 | 840 | 920 | |
Items that will not be reclassified to profit or loss | ||||
Actuarial gains recognised in respect of the defined benefit pension scheme | 34 | 4 | 4 | |
Related tax | (6) | |||
Total other comprehensive income (loss) | 28 | 4 | 4 | |
Total comprehensive income for the year | £ 1,263 | £ 844 | £ 924 | |
[1] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. | |||
[2] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. This is principally because the corporate taxes of the Group include those on the income of consolidated with-profits and unit-linked funds that, through adjustments to benefits, are borne by policyholders. These amounts are required to be included in the tax charge of the Company under IAS 12. Consequently, the profit before all taxes measure is not representative of pre-tax profits attributable to shareholders. Profit before all taxes is determined after deducting the cost of policyholder benefits and movements in the liability for unallocated surplus of the PAC with-profits fund after adjusting for taxes borne by policyholders. |
Condensed Financial Informat214
Condensed Financial Information of Registrant Prudential plc - Statements of Financial Position (Details) - GBP (£) £ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets | ||
Debtors: Other debtors | £ 2,963 | £ 3,019 |
Tax recoverable | 613 | 440 |
Cash at bank and in hand | 6,623 | 5,581 |
Liabilities: amounts falling due within one year | ||
Deferred tax liabilities | (4,715) | (5,370) |
Accruals and deferred income | (1,233) | (1,150) |
Capital and reserves | ||
Shareholders' funds | 16,087 | 14,666 |
Prudential plc | ||
Fixed assets | ||
Investments in subsidiary undertakings | 10,798 | 10,859 |
Current assets | ||
Debtors: Amounts owed by subsidiary undertakings | 4,732 | 5,798 |
Debtors: Other debtors | 5 | 11 |
Tax recoverable | 40 | 44 |
Derivative assets | 5 | 4 |
Pension asset | 71 | 48 |
Cash at bank and in hand | 143 | 24 |
Total current assets | 4,996 | 5,929 |
Liabilities: amounts falling due within one year | ||
Commercial paper | (485) | (1,052) |
Other borrowings | (600) | |
Derivative liabilities | (443) | (447) |
Amounts owed to subsidiary undertakings | (715) | (773) |
Tax payable | (10) | (10) |
Deferred tax liabilities | (12) | (9) |
Accruals and deferred income | (79) | (72) |
Total current liabilities | (2,344) | (2,363) |
Net current assets | 2,652 | 3,566 |
Total assets less current liabilities | 13,450 | 14,425 |
Liabilities: amounts falling due after more than one year | ||
Subordinated liabilities | (5,272) | (5,772) |
Debenture loans | (549) | (549) |
Other borrowings | (599) | |
Total non-current liabilities | (5,821) | (6,920) |
Total net assets | 7,629 | 7,505 |
Capital and reserves | ||
Share capital | 129 | 129 |
Share premium | 1,948 | 1,927 |
Profit and loss account | 5,552 | 5,449 |
Shareholders' funds | £ 7,629 | £ 7,505 |
Condensed Financial Informat215
Condensed Financial Information of Registrant Prudential plc - Statements of Changes in Equity (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Equity at beginning of year | £ 14,667 | £ 12,956 | £ 11,812 |
Comprehensive income | |||
Profit for the year | 2,389 | 1,921 | 2,579 |
Actuarial gains recognised in respect of the defined benefit pension scheme | 89 | (93) | 22 |
Total comprehensive income for the year | 2,494 | 3,020 | 2,090 |
Transactions with owners, recorded directly in equity | |||
New share capital subscribed | 21 | 13 | 7 |
Share based payment transactions | 89 | (51) | 39 |
Dividends | (1,159) | (1,267) | (974) |
Equity at end of year | 16,094 | 14,667 | 12,956 |
Share capital | |||
Equity at beginning of year | 129 | 128 | 128 |
Transactions with owners, recorded directly in equity | |||
New share capital subscribed | 1 | ||
Equity at end of year | 129 | 129 | 128 |
Share premium | |||
Equity at beginning of year | 1,927 | 1,915 | 1,908 |
Transactions with owners, recorded directly in equity | |||
New share capital subscribed | 21 | 12 | 7 |
Equity at end of year | 1,948 | 1,927 | 1,915 |
Prudential plc | |||
Equity at beginning of year | 7,505 | 7,909 | 7,945 |
Comprehensive income | |||
Profit for the year | 1,235 | 840 | 920 |
Actuarial gains recognised in respect of the defined benefit pension scheme | 28 | 4 | 4 |
Total comprehensive income for the year | 1,263 | 844 | 924 |
Transactions with owners, recorded directly in equity | |||
New share capital subscribed | 21 | 13 | 7 |
Share based payment transactions | (1) | 6 | 7 |
Dividends | (1,159) | (1,267) | (974) |
Total contributions by and distributions to owners | (1,139) | (1,248) | (960) |
Equity at end of year | 7,629 | 7,505 | 7,909 |
Prudential plc | Share capital | |||
Equity at beginning of year | 129 | 128 | 128 |
Transactions with owners, recorded directly in equity | |||
New share capital subscribed | 1 | ||
Total contributions by and distributions to owners | 1 | ||
Equity at end of year | 129 | 129 | 128 |
Prudential plc | Share premium | |||
Equity at beginning of year | 1,927 | 1,915 | 1,908 |
Transactions with owners, recorded directly in equity | |||
New share capital subscribed | 21 | 12 | 7 |
Total contributions by and distributions to owners | 21 | 12 | 7 |
Equity at end of year | 1,948 | 1,927 | 1,915 |
Prudential plc | Profit and loss account | |||
Equity at beginning of year | 5,449 | 5,866 | 5,909 |
Comprehensive income | |||
Profit for the year | 1,235 | 840 | 920 |
Actuarial gains recognised in respect of the defined benefit pension scheme | 28 | 4 | 4 |
Total comprehensive income for the year | 1,263 | 844 | 924 |
Transactions with owners, recorded directly in equity | |||
Share based payment transactions | (1) | 6 | 7 |
Dividends | (1,159) | (1,267) | (974) |
Total contributions by and distributions to owners | (1,160) | (1,261) | (967) |
Equity at end of year | £ 5,552 | £ 5,449 | £ 5,866 |
Condensed Financial Informat216
Condensed Financial Information of Registrant Prudential plc - Statements of Cash Flows (Details) - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Operations | ||||
Taxes received | [1] | £ (915) | £ (950) | £ (1,340) |
Financing | ||||
Issues of ordinary share capital | 21 | 13 | 7 | |
Issue of borrowings | [2] | 565 | 1,227 | 590 |
Repayments of borrowings | [2] | (751) | ||
Net cash flows from financing activities | (1,702) | (371) | (674) | |
Reconciliation of profit on ordinary activities before tax to net cash inflow from operating activities | ||||
Profit (loss) before tax | [3],[4] | 3,970 | 3,212 | 3,321 |
Prudential plc | ||||
Operations | ||||
Net cash inflow from operating activities before interest and tax | 1,534 | 1,621 | 1,335 | |
Interest paid | (409) | (339) | (289) | |
Taxes received | 121 | 105 | 41 | |
Equity dividends paid | (1,159) | (1,267) | (974) | |
Net cash inflow before financing | 87 | 120 | 113 | |
Financing | ||||
Issues of ordinary share capital | 21 | 13 | 7 | |
Issue of borrowings | 565 | 1,227 | 590 | |
Repayments of borrowings | (751) | |||
Movement in commercial paper and other borrowings to support a short-term fixed income securities program | (567) | (255) | (299) | |
Movement in net amount owed by subsidiary undertakings | 764 | (1,185) | (314) | |
Net cash flows from financing activities | 32 | (200) | (16) | |
Net cash inflow (outflow) for the year | 119 | (80) | 97 | |
Reconciliation of profit on ordinary activities before tax to net cash inflow from operating activities | ||||
Profit (loss) before tax | 1,116 | 725 | 824 | |
Add back: interest charged | 424 | 371 | 318 | |
Adjustments for non-cash items: | ||||
Fair value adjustments on derivatives | (4) | 122 | 7 | |
Pension scheme | 11 | 6 | (7) | |
Foreign currency exchange and other movements | (27) | 404 | 196 | |
Decrease (increase) in debtors | 6 | (8) | ||
Increase (decrease) in creditors | 8 | 1 | (3) | |
Net cash inflow from operating activities | £ 1,534 | £ 1,621 | £ 1,335 | |
[1] | Tax paid includes £298 million (2016: £226 million; 2015: £229 million) paid on profits taxable at policyholder rather than shareholder rates. | |||
[2] | Structural borrowings of shareholder-financed operations exclude borrowings to support short-term fixed income securities programmes, non-recourse borrowings of investment subsidiaries of shareholder-financed operations and other borrowings of shareholder-financed operations. Cash flows in respect of these borrowings are included within cash flows from operating activities. | |||
[3] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. | |||
[4] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. This is principally because the corporate taxes of the Group include those on the income of consolidated with-profits and unit-linked funds that, through adjustments to benefits, are borne by policyholders. These amounts are required to be included in the tax charge of the Company under IAS 12. Consequently, the profit before all taxes measure is not representative of pre-tax profits attributable to shareholders. Profit before all taxes is determined after deducting the cost of policyholder benefits and movements in the liability for unallocated surplus of the PAC with-profits fund after adjusting for taxes borne by policyholders. |
Condensed Financial Informat217
Condensed Financial Information of Registrant Prudential plc - Notes (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Additional information | |||
Dividends received by parent company from consolidated subsidiary undertakings | £ 1,685 | £ 1,318 | £ 985 |
Profit after tax of the Group attributable to shareholders in accordance with IFRS | 2,390 | 1,921 | 2,579 |
Shareholders' equity of the Group in accordance with IFRS | 16,087 | 14,666 | |
Prudential plc | |||
Additional information | |||
Profit after tax of the Group attributable to shareholders in accordance with IFRS | 1,235 | 840 | 920 |
Shareholders' equity of the Group in accordance with IFRS | 7,629 | 7,505 | |
Share in the IFRS result (net of distributions to the Company) and IFRS net equity of the Group | |||
Additional information | |||
Profit after tax of the Group attributable to shareholders in accordance with IFRS | 1,155 | 1,081 | £ 1,659 |
Shareholders' equity of the Group in accordance with IFRS | £ 8,458 | £ 7,161 |