Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2018 | |
Document and Entity Information | |
Entity Registrant Name | PRUDENTIAL PLC |
Entity Central Index Key | 1,116,578 |
Document Type | 6-K |
Document Period End Date | Jun. 30, 2018 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Document Fiscal Year Focus | 2,018 |
Document Fiscal Period Focus | Q2 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Income Statements - GBP (£) £ in Millions | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | ||
Unaudited Condensed Consolidated Income Statements | |||
Gross premiums earned | £ 21,341 | £ 22,105 | |
Outward reinsurance premiums | [1] | (12,961) | (947) |
Earned premiums, net of reinsurance | 8,380 | 21,158 | |
Investment return | 1,434 | 20,629 | |
Other income | [2] | 1,105 | 1,137 |
Total revenue, net of reinsurance | 10,919 | 42,924 | |
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (4,507) | (35,442) | |
Acquisition costs and other expenditure | [2] | (4,535) | (5,245) |
Finance costs: interest on core structural borrowings of shareholder-financed operations | (189) | (216) | |
(Loss) gain on disposal of businesses and corporate transactions | (57) | 61 | |
Re-measurement of the sold Korea life business | 5 | ||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | (9,288) | (40,837) | |
Share of profits from joint ventures and associates, net of related tax | 102 | 120 | |
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | [3],[4] | 1,733 | 2,207 |
Less tax charge attributable to policyholders' returns | (33) | (393) | |
Profit before tax attributable to shareholders | 1,700 | 1,814 | |
Total tax charge attributable to policyholders and shareholders | (377) | (702) | |
Adjustment to remove tax charge attributable to policyholders' returns | 33 | 393 | |
Tax charge attributable to shareholders' returns | (344) | (309) | |
Profit for the period | 1,356 | 1,505 | |
Attributable to: | |||
Equity holders of the Company | 1,355 | 1,505 | |
Non-controlling interests | 1 | ||
Profit for the period | £ 1,356 | £ 1,505 | |
Based on profit attributable to the equity holders of the Company: | |||
Basic (per share) | £ 0.527 | £ 0.587 | |
Diluted (per share) | 0.526 | 0.586 | |
Dividends relating to reporting period: | |||
First interim ordinary dividend (in GBP per share) | 0.1567 | 0.1450 | |
Dividends paid in reporting period: | |||
Second interim ordinary dividend for prior year (in GBP per share) | £ 0.3250 | £ 0.3057 | |
[1] | Outward reinsurance premiums of £(12,961) million includes the £(12,130) million paid during the period in respect of the reinsurance of the UK annuity portfolio. See note D1 for further details. | ||
[2] | The half year 2017 comparative results have been re-presented from those previously published for the deduction of certain expenses against revenue following the adoption of IFRS 15 (see note A2). | ||
[3] | This measure as explained in the footnote to the income statement 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 Prudential Assurance Company Limited (‘PAC’) with-profits fund after adjusting for taxes borne by policyholders. |
Unaudited Condensed Consolidat3
Unaudited Condensed Consolidated Income Statements (Parenthetical) - GBP (£) £ in Millions | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | ||
Outward reinsurance premiums | [1] | £ (12,961) | £ (947) |
UK and Europe insurance operations | Shareholder annuity portfolio being sold to Rothesay Life | |||
Outward reinsurance premiums | £ (12,130) | ||
[1] | Outward reinsurance premiums of £(12,961) million includes the £(12,130) million paid during the period in respect of the reinsurance of the UK annuity portfolio. See note D1 for further details. |
Unaudited Condensed Consolidat4
Unaudited Condensed Consolidated Statements of Comprehensive Income - GBP (£) £ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Unaudited Condensed Consolidated Statements of Comprehensive Income | ||
Profit for the period | £ 1,356 | £ 1,505 |
Exchange movements on foreign operations and net investment hedges: | ||
Exchange movements arising during the period | 67 | (220) |
Cumulative exchange gain of the sold Korea life business recycled through profit and loss | (61) | |
Related tax | 2 | (4) |
Exchange movements on foreign operations and net investment hedges | 69 | (285) |
Net unrealised valuation movements on securities of US insurance operations classified as available-for-sale: | ||
Net unrealised holding (losses) gains arising during the period | (1,392) | 565 |
Deduct net gains included in the income statement on disposal and impairment | (29) | (34) |
Total | (1,421) | 531 |
Related change in amortisation of deferred acquisition costs | 272 | (69) |
Related tax | 241 | (162) |
Net unrealised valuation movements on securities of US insurance operations classified as available-for-sale | (908) | 300 |
Total | (839) | 15 |
Shareholders' share of actuarial gains and losses on defined benefit pension schemes: | ||
Gross | 81 | 53 |
Related tax | (14) | (7) |
Shareholders' share of actuarial gains and losses on defined benefit pension schemes | 67 | 46 |
Other comprehensive (loss) income for the period, net of related tax | (772) | 61 |
Total comprehensive income (loss) for the period | 584 | 1,566 |
Attributable to: | ||
Equity holders of the Company | 583 | 1,566 |
Non-controlling interests | 1 | |
Total comprehensive income (loss) for the period | £ 584 | £ 1,566 |
Unaudited Condensed Consolidat5
Unaudited Condensed 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 period | £ 1,505 | £ 1,505 | £ 1,505 | |||||
Other comprehensive income (loss) | 61 | 46 | £ (285) | £ 300 | 61 | |||
Total comprehensive income (loss) for the period | 1,566 | 1,551 | (285) | 300 | 1,566 | |||
Dividends | (786) | (786) | (786) | |||||
Reserve movements in respect of share-based payments | 22 | 22 | 22 | |||||
Share capital and share premium | ||||||||
New share capital subscribed | 10 | £ 10 | 10 | |||||
Treasury shares | ||||||||
Movement in own shares in respect of share-based payment plans | (12) | (12) | (12) | |||||
Movement in Prudential plc shares purchased by unit trusts consolidated under IFRS | (17) | (17) | (17) | |||||
Net increase (decrease) in equity | 783 | 10 | 758 | (285) | 300 | 783 | ||
Equity at beginning of period at Dec. 31, 2016 | 14,666 | £ 129 | 1,927 | 10,942 | 1,310 | 358 | £ 1 | 14,667 |
Equity at end of period at Jun. 30, 2017 | 15,449 | 129 | 1,937 | 11,700 | 1,025 | 658 | 1 | 15,450 |
Share capital and share premium | ||||||||
New share capital subscribed | 21 | |||||||
Equity at beginning of period at Dec. 31, 2016 | 14,666 | 129 | 1,927 | 10,942 | 1,310 | 358 | 1 | 14,667 |
Equity at end of period at Dec. 31, 2017 | 16,087 | 129 | 1,948 | 12,326 | 840 | 844 | 7 | 16,094 |
Reserves | ||||||||
Profit for the period | 1,355 | 1,355 | 1 | 1,356 | ||||
Other comprehensive income (loss) | (772) | 67 | 69 | (908) | (772) | |||
Total comprehensive income (loss) for the period | 583 | 1,422 | 69 | (908) | 1 | 584 | ||
Dividends | (840) | (840) | (840) | |||||
Reserve movements in respect of share-based payments | (9) | (9) | (9) | |||||
Share capital and share premium | ||||||||
New share capital subscribed | 6 | 6 | 6 | |||||
Treasury shares | ||||||||
Movement in own shares in respect of share-based payment plans | 28 | 28 | 28 | |||||
Movement in Prudential plc shares purchased by unit trusts consolidated under IFRS | 27 | 27 | 27 | |||||
Net increase (decrease) in equity | (205) | 6 | 628 | 69 | (908) | 1 | (204) | |
Equity at end of period at Jun. 30, 2018 | £ 15,882 | £ 129 | £ 1,954 | £ 12,954 | £ 909 | £ (64) | £ 8 | £ 15,890 |
Unaudited Condensed Consolidat6
Unaudited Condensed Consolidated Statements Of Financial Position - GBP (£) £ in Millions | Jun. 30, 2018 | Dec. 31, 2017 | |
Assets | |||
Goodwill | £ 1,620 | £ 1,482 | |
Deferred acquisition costs and other intangible assets | 11,359 | 11,011 | |
Property, plant and equipment | 951 | 789 | |
Reinsurers' share of insurance contract liabilities | 9,620 | 9,673 | |
Deferred tax assets | 2,435 | 2,627 | |
Current tax recoverable | 626 | 613 | |
Accrued investment income | 2,574 | 2,676 | |
Other debtors | 3,519 | 2,963 | |
Investment properties | 17,605 | 16,497 | |
Investment in joint ventures and associates accounted for using the equity method | 1,554 | 1,416 | |
Loans | 16,922 | 17,042 | |
Equity securities and portfolio holdings in unit trusts | [1] | 229,707 | 223,391 |
Debt securities | [1] | 160,305 | 171,374 |
Derivative assets | 3,428 | 4,801 | |
Other investments | [1] | 6,059 | 5,622 |
Deposits | 12,412 | 11,236 | |
Assets held for sale | [2] | 12,024 | 38 |
Cash and cash equivalents | 8,450 | 10,690 | |
Total assets | 501,170 | 493,941 | |
Equity | |||
Shareholders' equity | 15,882 | 16,087 | |
Non-controlling interests | 8 | 7 | |
Total equity | 15,890 | 16,094 | |
Liabilities | |||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 405,482 | 411,243 | |
Unallocated surplus of with-profits funds | 17,283 | 16,951 | |
Core structural borrowings of shareholder-financed operations | 6,367 | 6,280 | |
Operational borrowings attributable to shareholder-financed operations | 1,618 | 1,791 | |
Borrowings attributable to with-profits operations | 3,589 | 3,716 | |
Obligations under funding, securities lending and sale and repurchase agreements | 7,128 | 5,662 | |
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 9,358 | 8,889 | |
Deferred tax liabilities | 4,443 | 4,715 | |
Current tax liabilities | 415 | 537 | |
Accruals, deferred income and other liabilities | 13,551 | 14,185 | |
Provisions | 920 | 1,123 | |
Derivative liabilities | 3,149 | 2,755 | |
Liabilities held for sale | 11,977 | ||
Total liabilities | 485,280 | 477,847 | |
Total equity and liabilities | £ 501,170 | £ 493,941 | |
[1] | Included within equity securities and portfolio holdings in unit trusts, debt securities and other investments are £8,993 million of lent securities as at 30 June 2018 (31 December 2017: £8,232 million). | ||
[2] | Assets held for sale of £12,024 million includes £11,977 million in respect of the reinsured UK annuity business (see note D1). |
Unaudited Condensed Consolidat7
Unaudited Condensed Consolidated Statements Of Financial Position (Parenthetical) - GBP (£) £ in Millions | Jun. 30, 2018 | Dec. 31, 2017 | |
Assets held for sale | [1] | £ 12,024 | £ 38 |
Lent securities and assets subject to repurchase agreements, included within equity securities and portfolio holdings in unit trusts, debt securities and other investments | 8,993 | £ 8,232 | |
UK and Europe insurance operations | Shareholder annuity portfolio being sold to Rothesay Life | |||
Assets held for sale | £ 11,977 | ||
[1] | Assets held for sale of £12,024 million includes £11,977 million in respect of the reinsured UK annuity business (see note D1). |
Unaudited Condensed Consolidat8
Unaudited Condensed Consolidated Statements of Cash Flows - GBP (£) £ in Millions | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | ||
Cash flows from operating activities | |||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | [1],[2] | £ 1,733 | £ 2,207 |
Other non-investment and non-cash assets | (389) | (550) | |
Investments | 7,616 | (26,539) | |
Policyholder liabilities (including unallocated surplus) | (10,725) | 21,597 | |
Other liabilities (including operational borrowings) | 568 | 3,390 | |
Other items | [3] | 466 | (15) |
Net cash flows from operating activities | (731) | 90 | |
Cash flows from investing activities | |||
Net cash outflows from purchases and disposals of property, plant and equipment | (167) | (56) | |
Net cash (outflows) inflows from corporate transactions | [4] | (248) | 813 |
Net cash flows from investing activities | (415) | 757 | |
Equity capital: | |||
Issues of ordinary share capital | 6 | 10 | |
Dividends paid | (840) | (786) | |
Net cash flows from financing activities | (1,125) | (987) | |
Net (decrease) increase in cash and cash equivalents | (2,271) | (140) | |
Cash and cash equivalents at beginning of period | 10,690 | 10,065 | |
Effect of exchange rate changes on cash and cash equivalents | 31 | (32) | |
Cash and cash equivalents at end of period | 8,450 | 9,893 | |
Shareholder-backed | |||
Structural borrowings of the Group: | |||
Interest paid | [5] | (187) | (207) |
With-profits | |||
Structural borrowings of the Group: | |||
Redemption of subordinated debt | (100) | ||
Interest paid | [6] | £ (4) | £ (4) |
[1] | This measure as explained in the footnote to the income statement 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 Prudential Assurance Company Limited (‘PAC’) with-profits fund after adjusting for taxes borne by policyholders. | ||
[3] | The adjusting items to profit before tax included within other items are adjustments in respect of non-cash items together with operational interest receipts and payments, dividend receipts and tax paid. | ||
[4] | Net cash flows for corporate transactions are for distribution rights and the 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.The changes in the carrying value of the structural borrowings of shareholder-financed operations during half year 2018 are analysed as follows:Cash movements £mNon-cash movements £m Balance at Foreign beginningIssueRedemptionexchangeOtherBalance atof period of debtof debtmovementmovementsend of periodHalf year 2018 6,280 — — 83 4 6,367Half year 2017 6,798 — — (191) 7 6,614 | ||
[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. These bonds were redeemed in full on 30 June 2018. 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. |
Unaudited Condensed Consolidat9
Unaudited Condensed Consolidated Statements of Cash Flows (Parenthetical) - GBP (£) £ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
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 | £ 6,280 | £ 6,798 |
Foreign exchange movement | 83 | (191) |
Other movements | 4 | 7 |
Balance at end of period | 6,367 | £ 6,614 |
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 | |
Interest paid on structural borrowings of with-profits operations | ||
Face amount | £ 100 | |
Interest rate (as a percent) | 8.50% |
BACKGROUND
BACKGROUND | 6 Months Ended |
Jun. 30, 2018 | |
BACKGROUND | |
BACKGROUND | A BACKGROUND A1 Basis of preparation, audit status and exchange rates These condensed consolidated interim financial statements for the six months ended 30 June 2018 have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’ as issued by the International Accounting Standards Board (IASB) and as endorsed by the European Union (EU). The Group’s policy for preparing this interim financial information is to use the accounting policies adopted by the Group in its last consolidated financial statements, as updated by any changes in accounting policies it intends to make in its next consolidated financial statements as a result of new or amended IFRS and other policy improvements. EU-endorsed IFRS may differ from IFRSs issued by the IASB if, at any point in time, new or amended IFRS have not been endorsed by the EU. At 30 June 2018, there were no unendorsed standards effective for the period ended 30 June 2018 which impact the condensed consolidated financial statements of the Group, and there were no differences between IFRS endorsed by the EU and IFRS issued by the IASB in terms of their application to the Group. The IFRS basis results for the 2018 and 2017 half years are unaudited. The 2017 full year IFRS basis results have been derived from Prudential’s 2017 audited consolidated financial statements filed with the Securities and Exchange Commission on Form 20-F. These 2017 consolidated financial statements do not represent Prudential’s statutory accounts for the purpose of the UK Companies Act 2006. The auditors have reported on the 2017 statutory accounts which have been delivered to the Registrar of Companies. The auditors’ report was: (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 Companies Act 2006. The exchange rates applied for balances and transactions in currencies other than the presentational currency of the Group, pounds sterling (GBP), were: Average Average Closing for the Closing for the Closing rate at 6 months to rate at 6 months to rate at 30 Jun 2018 30 Jun 2018 30 Jun 2017 30 Jun 2017 31 Dec 2017 Local currency: £ Hong Kong 10.36 10.78 10.14 9.80 10.57 Indonesia 18,919.18 18,938.64 17,311.76 16,793.63 18,353.44 Malaysia 5.33 5.42 5.58 5.53 5.47 Singapore 1.80 1.83 1.79 1.77 1.81 China 8.75 8.76 8.81 8.66 8.81 India 90.46 90.37 83.96 82.77 86.34 Vietnam 30,310.96 31,329.01 29,526.43 28,612.70 30,719.60 Thailand 43.74 43.66 44.13 43.72 44.09 US 1.32 1.38 1.30 1.26 1.35 The accounting policies applied by the Group in determining the IFRS basis results in this report are the same as those previously applied in the Group’s consolidated financial statements for the year ended 31 December 2017, as disclosed in the 2017 Form 20‑F, aside from those discussed in note A2 below. A2 New accounting pronouncements in 2018 IFRS 15, ‘Revenue from Contracts with Customers’ The Group has adopted IFRS 15, ‘Revenue from Contracts with Customers’ from 1 January 2018. This standard provides a single framework to recognise revenue for contracts with different characteristics and overrides the revenue recognition requirements previously provided 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, the main impacts of IFRS 15 in the context of Prudential’s business are to the recognition of revenue in respect of asset management contracts and investment contracts that do not contain discretionary participating features but do include investment management services. In accordance with the transition provisions in IFRS 15, the Group has adopted the standard using the full retrospective method for all periods presented. Adoption of the standard has not resulted in a restatement of the Group’s profit for the periods presented or shareholders’ equity. A minor reclassification has been made to the consolidated income statement to present certain expenses as a deduction against revenue, for example rebates to clients of asset management fees. Revenue has been reduced by £82 million in half year 2018 (half year 2017: £85 million). IFRS 9, ‘Financial Instruments’ The IASB published a complete version of IFRS 9 in July 2014 and the standard is mandatorily effective for annual periods beginning on or after 1 January 2018. 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. Other new accounting pronouncements In addition to the above, the IASB has also issued the following new accounting pronouncements to be effective for 1 January 2018: - IFRIC 22, ‘Foreign Currency Transactions and Advance consideration’; - Classification and measurement of share-based payment transactions (Amendments to IFRS 2, ‘Share-based payment’); - Transfers of Investment Property (Amendments to IAS 40, ‘Investment property’); and - Annual Improvements to IFRSs 2014‑2016 Cycle. These pronouncements have had no effect on the Group financial statements. |
Analysis of performance by segm
Analysis of performance by segment | 6 Months Ended |
Jun. 30, 2018 | |
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 2018 £m 2017* £m Note Half year Half year Asia Insurance operations B3(a) 927 870 Asset management 89 83 Total Asia 1,016 953 US Jackson (US insurance operations) 1,001 1,079 Asset management 1 (6) Total US 1,002 1,073 UK and Europe UK and Europe insurance operations: B3(b) Long-term business 487 480 General insurance commission note (i) 19 17 Total UK and Europe insurance operations 506 497 UK and Europe asset management (v) 272 248 Total UK and Europe 778 745 Total segment profit 2,796 2,771 Restructuring costs note (iii) (62) (31) Other income and expenditure: Investment return and other income 33 6 Interest payable on core structural borrowings (189) (216) Corporate expenditure note (ii) (173) (172) Total other income and expenditure (329) (382) Operating profit based on longer-term investment returns B1.3 2,405 2,358 Short-term fluctuations in investment returns on shareholder-backed business B1.2 (113) (573) Amortisation of acquisition accounting adjustments note (iv) (22) (32) (Loss) gain on disposal of businesses and corporate transactions D1 (570) 61 Profit before tax 1,700 1,814 Tax charge attributable to shareholders' returns B4 (344) (309) Profit for the period 1,356 1,505 Attributable to: Equity holders of the Company 1,355 1,505 Non-controlling interests 1 — Note Half year Half year Basic earnings per share (in pence) B5 Based on operating profit based on longer-term investment returns 76.8 p 70.0 p Based on profit for the period 52.7 p 58.7 p * The half year 2017 comparative results have been re-presented from those previously published to reflect the Group’s current operating segments. 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 the UK, Europe and Asia and represent the costs of 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) UK and Europe asset management operating profit based on longer-term investment returns: 2018 £m 2017 £m Half year Half year Asset management fee income 552 491 Other income 1 4 Staff costs (190) (166) Other costs (107) (95) Underlying profit before performance-related fees 256 234 Share of associate results 8 8 Performance-related fees 8 6 Total UK and Europe asset management operating profit based on longer-term investment returns 272 248 B1.2 Short-term fluctuations in investment returns on shareholder-backed business 2018 £m 2017 £m Half year Half year* Asia note (i) (326) 41 USn ote (ii) 244 (754) UK and Europe note (iii ) (122) 42 Other operations note (iv) 91 98 Total (113) (573) * The half year 2017 comparative results have been re-presented from those previously published to reflect the Group’s current operating segments. Notes (i) Asia operations In Asia, the negative short-term fluctuations of £(326) million principally reflect net value movements on shareholders’ assets and related liabilities following increases in bond yields during the period (half year 2017: positive £41 million). (ii) US operations The short-term fluctuations in investment returns for US insurance operations are reported net of the related charge for amortisation of deferred acquisition costs of £(199) million as shown in note C5 (half year 2017: credit of £231 million) and comprise amounts in respect of the following items: 2018 £m 2017 £m Half year Half year Net equity hedge result note (a) 383 (782) Other than equity-related derivatives note (b) (183) 12 Debt securities note (c) 6 5 Equity-type investments: actual less longer-term return 31 1 Other items 7 10 Total 244 (754) 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. The level of fees recognised in non-operating profit is determined by reference to that allowed for within the reserving basis. Both FAS157 and SOP 03-01 reserving methods require an entity to determine the total fee (“the fee assessment”) that is expected to fund future projected benefit payments arising using the assumptions applicable for that method. FAS 157 requires this fee assessment to be fixed at the time of issue. It is this fee assessment that is recognised within non-operating profit to match the relevant movement in the guarantee liability, which is also recognised in non-operating profit. 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. For further details, please refer to note B1.3(c) of the Group’s consolidated financial statements for the year ended 31 December 2017. 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 net equity hedge result (net of related DAC amortisation in accordance with the policy that DAC is amortised in line with emergence of margins) can be summarised as follows: 2018 £m 2017 £m Half year Half year Fair value movements on equity hedge instruments* (375) (1,126) Accounting value movements on the variable and fixed index annuity guarantee liabilities 505 111 Fee assessments net of claim payments 253 233 Total 383 (782) * Held to manage equity exposures of the variable annuity guarantees and fixed index annuity options. (b) Other than equity-related derivatives The fluctuations for this item comprise the net effect of: – – – 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 2018 £m 2017 £m Half year Half year Short-term fluctuations relating to debt securities (Charges) credits in the period: Losses on sales of impaired and deteriorating bonds (1) (2) Bond write-downs (2) (1) Recoveries/reversals 18 7 Total credits in the period 15 4 Less: Risk margin allowance deducted from operating profit based on longer-term investment returns note 38 46 53 50 Interest-related realised (losses) gains: Gains (losses) arising in the period 8 23 Less: Amortisation of gains and losses arising in current and prior periods to operating profit based on longer-term investment returns (57) (72) (49) (49) Related amortisation of deferred acquisition costs 2 4 Total short-term fluctuations related to debt securities 6 5 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 half year 2018 is based on an average annual risk margin reserve of 19 basis points (half year 2017: 21 basis points ) on average book values of US$54.9 billion (half year 2017: US$55.8 billion) as shown below: Half year 2018 Half year 2017 Moody’s rating category (or equivalent under NAIC ratings of Average Average mortgage-backed book Book securities) value RMR Annual expected loss value RMR Annual expected loss US$m % US$m £m US$m % US$m £m A3 or higher 26,260 0.11 (29) (21) 27,848 0.13 (35) (28) Baa1, 2 or 3 27,337 0.20 (57) (41) 26,601 0.23 (60) (47) Ba1, 2 or 3 978 1.01 (10) (7) 1,052 1.03 (11) (9) B1, 2 or 3 309 2.61 (8) (6) 311 2.75 (9) (7) Below B3 11 3.71 — — 27 3.80 (1) (1) Total 54,895 0.19 (104) (75) 55,839 0.21 (116) (92) Related amortisation of deferred acquisition costs (see below) 22 15 22 17 Risk margin reserve charge to operating profit for longer-term credit-related losses (82) (60) (94) (75) 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 charge of £(1,149) million for net unrealised losses on debt securities classified as available-for-sale net of related amortisation of deferred acquisition costs (half year 2017: credit of £462 million for net unrealised gains). 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) . (iii) UK and Europe operations The negative short-term fluctuations in investment returns for UK and Europe operations of £(122) million (half year 2017: positive £42 million) include net unrealised movements on fixed income assets supporting the capital of the shareholder-backed annuity business. (iv) Other operations Short-term fluctuations in investment returns for other operations of positive £91 million (half year 2017: positive £98 million) include unrealised value movements on financial instruments held outside of the main life operations. 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. Under the Group's management and reporting structure its chief operating decision maker is the Group Executive Committee (GEC). In the 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 aligns to these three business segments. These operating segments derive revenue from both long-term insurance and asset management activities. 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. Prudential Capital and Africa operations do not form part of any operating segment under the 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’. The Group reassessed its segments in the second half of 2017 following the combination of the Group’s UK insurance business and M&G to form M&G Prudential. Comparative segmental information for half year 2017 has been re-presented on a basis consistent with the current period. 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. This measurement basis distinguishes operating profit based on longer-term investment returns from other constituents of the total profit as follows: – – – The determination of operating profit based on longer-term investment returns for investment and liability movements is as described in the Basis of Performance Measures section of this document. For Group debt securities at 30 June 2018, the level of unamortised interest-related realised gains and losses related to previously sold bonds and have yet to be amortised to operating profit was a net gain of £818 million (30 June 2017: net gain of £876 million). For equity-type securities, the longer-term rates of return applied by the non-linked shareholder-financed insurance operations of Asia and the US to determine the amount of investment return included in operating profit are as follows: – – Half year Half year Equity-type securities such as common and preferred stock and portfolio holdings in mutual funds 6.7 % to 7.0 % 6.2 % to 6.5 % Other equity-type securities such as investments in limited partnerships and private equity funds 8.7 % to 9.0 % 8.2 % to 8.5 % B1.4 Additional segmental analysis of revenue The additional segmental analysis of revenue net of outward reinsurance premiums is as follows: Half year 2018 £m Unallo- cated to a segment UK and Total (central Group Asia US Europe segment operations) total Gross premiums earned 7,736 7,036 6,555 21,327 14 21,341 Outward reinsurance premiums note (i) (222) (141) (12,598) (12,961) — (12,961) Earned premiums, net of reinsurance 7,514 6,895 (6,043) 8,366 14 8,380 Other income note (ii) 157 44 890 1,091 14 1,105 Total external revenue note (iv) 7,671 6,939 (5,153) 9,457 28 9,485 Intra-group revenue 20 32 1 53 (53) — Interest income 513 940 1,530 2,983 26 3,009 Other investment return (1,703) 1,486 (1,478) (1,695) 120 (1,575) Total revenue, net of reinsurance 6,501 9,397 (5,100) 10,798 121 10,919 Half year 2017* £m Unallo- cated to a segment UK and Total (central Group Asia US Europe segment operations) total Gross premiums earned 7,697 7,997 6,411 22,105 — 22,105 Outward reinsurance premiums (243) (168) (536) (947) — (947) Earned premiums, net of reinsurance 7,454 7,829 5,875 21,158 — 21,158 Other income note (ii),(iii) 159 374 580 1,113 24 1,137 Total external revenue note (iv) 7,613 8,203 6,455 22,271 24 22,295 Intra-group revenue 19 31 2 52 (52) — Interest income 486 1,082 1,754 3,322 33 3,355 Other investment return 4,317 7,254 5,609 17,180 94 17,274 Total revenue, net of reinsurance 12,435 16,570 13,820 42,825 99 42,924 * The half year 2017 comparative results have been re-presented from those previously published to reflect the Group’s current operating segments. Notes (i) Outward reinsurance premiums of £(12,961) million includes the £(12,130) million paid during the period in respect of the reinsurance of the UK annuity portfolio. See note D1 for further details. (ii) Included within other income is revenue from the Group’s asset management business of £764 million (half year 2017: £643 million). The remaining other income includes revenue from external customers for policy fees, advisory fees and commission income. The half year 2017 comparative also included amounts for broker-dealer fees generated by the US broker-dealer network, which was disposed of in August 2017, amounting to £305 million. (iii) Following the adoption of IFRS 15, the half year 2017 comparative results have been re-presented as described in note A2. (iv) Total external revenue shown in the tables above is all from external customers except for £166 million within the half year 2018 amount for UK and Europe of £5,153 million. The £166 million represents the insurance recoveries recognised in respect of costs associated with the review of past annuity sales as described further in note B3. |
Acquisition costs and other exp
Acquisition costs and other expenditure | 6 Months Ended |
Jun. 30, 2018 | |
Acquisition costs and other expenditure | |
Acquisition costs and other expenditure | B2 Acquisition costs and other expenditure 2018 £m 2017 £m Half year Half year Acquisition costs incurred for insurance policies (1,648) (1,920) Acquisition costs deferred less amortisation of acquisition costs (61) 399 Administration costs and other expenditure* (2,705) (2,970) Movements in amounts attributable to external unit holders of consolidated investment funds (121) (754) Total acquisition costs and other expenditure (4,535) (5,245) * Following the adoption of IFRS 15 the half year 2017 comparative results have been re-presented as described in note A2. Included in total acquisition costs and other expenditure is depreciation of property, plant and equipment of £(54) million (half year 2017: £(60) million). |
Effect of changes and other acc
Effect of changes and other accounting matters on insurance assets and liabilities | 6 Months Ended |
Jun. 30, 2018 | |
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 half year 2018 results: (a) Asia insurance operations In half year 2018, the IFRS operating profit based on longer-term investment returns for Asia insurance operations included a net credit of £69 million (half year 2017: £54 million) representing a small number of items that are not expected to reoccur, including the impact of a refinement to the run-off of the allowance for prudence within technical provisions. (b) 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 used 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 44 basis points at 30 June 2018 (30 June 2017: 43 basis points). The allowance represented 26 per cent of the bond spread over swap rates (30 June 2017: 28 per cent). The reserves for credit risk allowance at 30 June 2018 for the UK shareholder-backed business were £1.1 billion (31 December 2017: £1.6 billion). The 30 June 2018 credit risk allowance information is after reflecting the impact of the reinsurance of £12.0 billion of the UK shareholder-backed annuity portfolio to Rothesay Life entered into in March 2018. See note D1 for further details. Longevity reinsurance and other management actions Aside from the aforementioned reinsurance agreement with Rothesay Life, no new longevity reinsurance transactions were undertaken in the first half of 2018 (half year 2017: longevity reinsurance transactions covering £0.6 billion of IFRS annuity liabilities contributed £31 million to profit). Other management actions generated profits of £63 million (half year 2017: £157 million). Review of past annuity sales 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 is examining whether customers were given sufficient information about their potential eligibility to purchase an enhanced annuity, either from Prudential or another pension provider. A gross provision of £400 million, before costs incurred, had been established at 31 December 2017 to cover the costs of undertaking the review and any related redress. Following a reassessment of the provision held, no further amount has been provided in the first half of 2018. The ultimate amount that will be expended by the Group on the review, which is currently expected to be completed in 2019, remains uncertain. In the first half of 2018, the Group agreed with its professional indemnity insurers that they will meet £166 million of the Group’s claims costs, which will be paid as the Group incurs costs/redress. This has been recognised on the Group’s balance sheet within “Other debtors” at 30 June 2018. |
Tax charge
Tax charge | 6 Months Ended |
Jun. 30, 2018 | |
Tax charge | |
Tax charge | B4 Tax charge (a) Total tax charge by nature of expense The total tax charge in the income statement is as follows: 2018 £m 2017 £m Current Deferred Half year Half year Tax charge tax tax Total Total Attributable to shareholders: Asia operations (90) (49) (139) (144) US operations — (216) (216) (46) UK and Europe (43) 17 (26) (150) Other operations 43 (6) 37 31 Tax charge attributable to shareholders' returns (90) (254) (344) (309) Attributable to policyholders: Asia operations (47) 4 (43) (131) UK and Europe (64) 74 10 (262) Tax (charge) credit attributable to policyholders' returns (111) 78 (33) (393) Total tax charge (201) (176) (377) (702) The principal reason for the increase in the tax charge attributable to shareholders’ returns is an increase in the proportion of profits arising in US operations, offset by decreases in the proportion of profits arising in UK and Europe. The principal reason for the decrease in the tax charge attributable to policyholders’ returns is a decrease in the deferred tax liabilities on unrealised gains on investments in the with profits funds of the UK and Europe compared to the first half of 2017 and an increase in deferred tax liabilities on policyholder reserves reflecting growth in Asia. The current tax charge of £201 million (half year 2017: £427 million) includes £28 million (half year 2017: £37 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. (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. Half year 2018 £m Total Asia US UK and Other attributable to Percentage impact operations operations Europe operations* shareholders on ETR Operating profit (loss) based on longer-term investment returns 1,016 1,002 778 (391) 2,405 Non-operating (loss) profit (338) 184 (635) 84 (705) Profit (loss) before tax 678 1,186 143 (307) 1,700 Expected tax rate 22 % 21 % 19 % 19 % 22 % Tax at the expected rate 149 249 27 (58) 367 21.6 % Effects of recurring tax reconciliation items: Income not taxable or taxable at concessionary rates (11) (5) (1) (3) (20) (1.2) % Deductions not allowable for tax purposes 23 1 1 1 26 1.5 % Items related to taxation of life insurance businesses note (i) (2) (34) 1 — (35) (2.1) % Deferred tax adjustments (9) — — (8) (17) (1.0) % Effect of results of joint ventures and associates note (ii) (20) — (2) — (22) (1.3) % Irrecoverable withholding taxes note (iii) — — — 26 26 1.5 % Other — 2 1 2 5 0.4 % Total (19) (36) — 18 (37) (2.2) % Effects of non-recurring tax reconciliation items: Adjustments to tax charge in relation to prior years 1 3 (1) 3 6 0.4 % Movements in provisions for open tax matters note (iv) 8 — — — 8 0.4 % Total 9 3 (1) 3 14 0.8 % Total actual tax charge (credit) 139 216 26 (37) 344 20.2 % Analysed into: Tax on operating profit based on longer-term investment returns 151 177 150 (49) 429 Tax on non-operating profit (12) 39 (124) 12 (85) Actual tax rate: Operating profit based on longer-term investment returns: Including non-recurring tax reconciling items 15 % 18 % 19 % 13 % 18 % Excluding non-recurring tax reconciling items 14 % 17 % 19 % 13 % 17 % Total profit 21 % 18 % 18 % 12 % 20 % * Other operations include restructuring costs. Notes (i) Items related to taxation of life insurance businesses The £34 million (half year 2017: £85 million) reconciling item in US operations reflects the impact of the dividend received deduction on the taxation of profits from variable annuity business. The reduction from half year 2017 is a result of the US tax reform changes, which took effect from 1 January 2018. The principal reason for the reduction in the Asia operations reconciling items from £43 million at half year 2017 to £2 million at half year 2018 reflects non-operating investment losses in Hong Kong which do not attract tax relief due to the taxable profit being computed as 5 per cent of net insurance premiums. (ii) Effects of results of joint ventures and associates Profit before tax includes Prudential’s share of profits after tax from the joint ventures and associates. Therefore, the actual tax charge does not include tax arising from profit or loss of joint ventures and associates and is reflected as a reconciling item in the table above. (iii) Irrecoverable withholding taxes The £26 million (half year 2017: £29 million) adverse reconciling items reflects local 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. (iv) 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 where upon 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 31 December 2017 (139) Movements in the current period included in: Tax charge attributable to shareholders (8) Other movements* (2) At 30 June 2018 (149) * 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. Half year 2017 £m** Total Asia US UK and Other attributable to Percentage operations operations Europe operations* shareholders impact on ETR Operating profit (loss) based on longer-term investment returns 953 1,073 745 (413) 2,358 Non-operating profit (loss) 98 (782) 42 98 (544) Profit (loss) before tax 1,051 291 787 (315) 1,814 Expected tax rate 20 % 35 % 19 % 19 % 22 % Tax at the expected rate 210 102 150 (60) 402 22.2 % Effects of recurring tax reconciliation items: Income not taxable or taxable at concessionary rates (19) (10) — (2) (31) (1.7) % Deductions not allowable for tax purposes 9 — 6 3 18 1.0 % Items related to taxation of life insurance businesses (43) (85) (2) — (130) (7.2) % Deferred tax adjustments 4 — (1) — 3 0.2 % Effect of results of joint ventures and associates (19) — (1) — (20) (1.1) % Irrecoverable withholding taxes — — — 29 29 1.6 % Other 3 4 4 (1) 10 0.5 % Total (65) (91) 6 29 (121) (6.7) % Effects of non-recurring tax reconciliation items: Adjustments to tax charge in relation to prior years — 10 (6) — 4 0.2 % Movements in provisions for open tax matters 7 25 — — 32 1.7 % Cumulative exchange gains on the sold Korea life business recycled from other comprehensive income (8) — — — (8) (0.4) % Total (1) 35 (6) — 28 1.5 % Total actual tax charge (credit) 144 46 150 (31) 309 17.0 % Analysed into: Tax on operating profit based on longer-term investment returns 152 321 140 (50) 563 Tax on non-operating profit (8) (275) 10 19 (254) Actual tax rate: Operating profit based on longer-term investment returns Including non-recurring tax reconciling items 16 % 30 % 19 % 12 % 24 % Excluding non-recurring tax reconciling items 15 % 27 % 20 % 12 % 22 % Total profit 14 % 16 % 19 % 10 % 17 % * Other operations include restructuring costs. ** The half year 2017 comparative results have been re-presented from those previously published to reflect the Group’s current operating segments. |
Earnings per share
Earnings per share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings per share | |
Earnings per share | B5 Earnings per share Half year 2018 Net of tax and Basic Diluted Non- controlling non- controlling earnings earnings Before tax Tax interests interests per share per share note B1.1 note B4 Note £m £m £m £m pence pence Based on operating profit based on longer-term investment returns 2,405 (429) (1) 1,975 76.8 p 76.7 p Short-term fluctuations in investment returns on shareholder-backed business B1.2 (113) (24) — (137) (5.3) p (5.3) p Amortisation of acquisition accounting adjustments (22) 4 — (18) (0.7) p (0.7) p (Loss) attaching to disposal of businesses and corporate transactions (570) 105 — (465) (18.1) p (18.1) p Based on profit for the period 1,700 (344) (1) 1,355 52.7 p 52.6 p Half year 2017 Basic Diluted earnings earnings Before tax Tax Net of tax per share per share note B1.1 note B4 Note £m £m £m pence pence Based on operating profit based on longer-term investment returns 2,358 (563) 1,795 70.0 p 69.9 p Short-term fluctuations in investment returns on shareholder-backed business B1.2 (573) 248 (325) (12.7) p (12.7) p Amortisation of acquisition accounting adjustments (32) 6 (26) (1.0) p (1.0) p Cumulative exchange gain on the sold Korea life business recycled from other comprehensive income 61 — 61 2.4 p 2.4 p Based on profit for the period 1,814 (309) 1,505 58.7 p 58.6 p 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: Half year Half year Weighted average number of shares for calculation of: (millions) (millions) Basic earnings per share 2,573 2,565 Diluted earnings per share 2,574 2,567 |
Dividends
Dividends | 6 Months Ended |
Jun. 30, 2018 | |
Dividends | |
Dividends | B6 Dividends Half year 2018 Half year 2017 Pence per share £m Pence per share £m Dividends relating to reporting period: First interim ordinary dividend 15.67 p 406 14.50 p 375 Dividends paid in reporting period: Second interim ordinary dividend for prior year 32.50 p 840 30.57 p 786 Dividend per share The 2018 first interim dividend of 15.67 pence per ordinary share will be paid on 27 September 2018 in sterling to shareholders on the UK register and the Irish branch register on 24 August 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). 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 7 August 2018. Holders of US American Depositary Receipts (US Shareholders) will be paid their dividends in US dollars on or about 4 October 2018. The exchange rate at which the dividend payable to the US Shareholders will be translated into US dollars will be determined by the depositary agent. The first interim dividend will be paid on or about 4 October 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 exchange rate at which the dividend payable to the SG Shareholders will be translated from Hong Kong dollars into Singapore dollars, will be determined by CDP. Shareholders on the UK register and Irish branch register are eligible to participate in a Dividend Reinvestment Plan. |
Analysis of Group statement of
Analysis of Group statement of financial position by segment | 6 Months Ended |
Jun. 30, 2018 | |
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 To explain the assets, liabilities and capital of the Group’s businesses more comprehensively, it is appropriate to provide analyses of the Group’s statement of financial position by operating segment and type of business. 31-Dec 30 Jun 2018 £m 2017 £m Elimin- Unallo- ation cated of intra- to a segment group (central debtors UK and opera- and Group Group Asia US Europe tions) creditors Total Total By operating segment Note C2.1 C2.2 C2.3 note (v) Assets Goodwill C5(a) 306 — 1,314 — — 1,620 1,482 Deferred acquisition costs and other intangible assets C5(b) 2,614 8,503 199 43 — 11,359 11,011 Property, plant and equipment note (i) 123 237 588 3 — 951 789 Reinsurers' share of insurance contract liabilities note (ii) 2,258 6,436 2,104 3 (1,181) 9,620 9,673 Deferred tax assets C7 112 2,144 130 49 — 2,435 2,627 Current tax recoverable 23 298 255 115 (65) 626 613 Accrued investment income 611 460 1,471 32 — 2,574 2,676 Other debtors note (iii) 2,429 242 3,580 1,722 (4,454) 3,519 2,963 Investment properties 5 5 17,595 — — 17,605 16,497 Investment in joint ventures and associates accounted for using the equity method 867 — 687 — — 1,554 1,416 Loans C3.3 1,337 9,815 5,664 106 — 16,922 17,042 Equity securities and portfolio holdings in unit trusts 30,926 135,837 62,832 112 — 229,707 223,391 Debt securities C3.2 42,256 36,115 79,744 2,190 — 160,305 171,374 Derivative assets 191 816 2,305 116 — 3,428 4,801 Other investments — 901 5,158 — — 6,059 5,622 Deposits 1,203 17 11,020 172 — 12,412 11,236 Assets held for sale* — — 12,024 — — 12,024 38 Cash and cash equivalents 2,177 1,174 3,420 1,679 — 8,450 10,690 Total assets 87,438 203,000 210,090 6,342 (5,700) 501,170 493,941 Total equity 5,741 5,100 8,046 (2,997) — 15,890 16,094 Liabilities Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) C4.1(a) 66,821 185,150 154,655 37 (1,181) 405,482 411,243 Unallocated surplus of with-profits funds C4.1(a) 3,766 — 13,517 — — 17,283 16,951 Core structural borrowings of shareholder-financed operations C6.1 — 189 — 6,178 — 6,367 6,280 Operational borrowings attributable to shareholder-financed operations C6.2(a) 17 262 130 1,209 — 1,618 1,791 Borrowings attributable to with-profits operations C6.2(b) 32 — 3,557 — — 3,589 3,716 Obligations under funding, securities lending and sale and repurchase agreements — 5,612 1,516 — — 7,128 5,662 Net asset value attributable to unit holders of consolidated unit trusts and similar funds 3,550 — 5,781 27 — 9,358 8,889 Deferred tax liabilities C7 1,174 1,653 1,602 14 — 4,443 4,715 Current tax liabilities 155 22 194 109 (65) 415 537 Accruals, deferred income and other liabilities note (iv) 5,920 4,914 6,349 822 (4,454) 13,551 14,185 Provisions 175 19 684 42 — 920 1,123 Derivative liabilities 87 79 2,082 901 — 3,149 2,755 Liabilities held for sale — — 11,977 — — 11,977 — Total liabilities 81,697 197,900 202,044 9,339 (5,700) 485,280 477,847 Total equity and liabilities 87,438 203,000 210,090 6,342 (5,700) 501,170 493,941 * Assets held for sale of £12,024 million includes £11,977 million in respect of the reinsured UK annuity business (see note D1). Notes (i) £605 million (31 December 2017: £492 million) of the property, plant and equipment of £951 million (31 December 2017: £789 million) was held by the Group’s with-profits operations, primarily by the consolidated subsidiaries for venture funds and other investment purposes of the PAC with-profits fund. The Group made additions to property, plant and equipment of £167 million during the period (31 December 2017: £134 million). (ii) Reinsurers’ share of contract liabilities relate primarily to the reinsurance ceded in respect of the acquired REALIC business by the Group’s US insurance operations and the reinsurance of part of the UK Shareholder-backed annuity portfolio as described in note D1. (iii) Within other debtors are premiums receivable of £595 million (31 December 2017: £547 million) of which 89 per cent are due within one year. The remaining 11 per cent is due after one year. (iv) Within ‘Accruals, deferred income and other liabilities’ of £13,551 million (31 December 2017: £14,185 million) is an amount of £8,435 million (31 December 2017: £9,305 million) that is due within one year. (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 | 6 Months Ended |
Jun. 30, 2018 | |
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 To show the statement of financial position by reference to the differing degrees of policyholder and shareholder economic interest of the different types of business, the analysis below is structured to show the assets and liabilities of each segment by business type. C2.1 Asia 2018 £m 2017 £m Unit -linked With assets Asset- -profits and Other manage Elimina- 30 Jun 31 Dec Note business liabilities business Total ment tions Total Total Assets Goodwill — — 245 245 61 — 306 305 Deferred acquisition costs and other intangible assets 48 — 2,561 2,609 5 — 2,614 2,540 Property, plant and equipment 86 — 34 120 3 — 123 125 Reinsurers' share of insurance contract liabilities 79 — 2,179 2,258 — — 2,258 1,960 Deferred tax assets — — 105 105 7 — 112 112 Current tax recoverable — 4 19 23 — — 23 58 Accrued investment income 266 57 256 579 32 — 611 595 Other debtors 1,599 232 551 2,382 76 (29) 2,429 2,675 Investment properties — — 5 5 — — 5 5 Investment in joint ventures and associates accounted for using the equity method — — 723 723 144 — 867 912 Loans C3.3 757 — 580 1,337 — — 1,337 1,317 Equity securities and portfolio holdings in unit trusts 16,673 12,592 1,622 30,887 39 — 30,926 29,976 Debt securities C3.2 24,923 3,771 13,522 42,216 40 — 42,256 40,982 Derivative assets 136 3 52 191 — — 191 113 Deposits 271 369 530 1,170 33 — 1,203 1,291 Cash and cash equivalents 722 524 820 2,066 111 — 2,177 1,934 Total assets 45,560 17,552 23,804 86,916 551 (29) 87,438 84,900 Total equity — — 5,327 5,327 414 — 5,741 5,926 Liabilities Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) C4.1(b) 36,282 16,094 14,445 66,821 — — 66,821 64,133 Unallocated surplus of with-profits funds C4.1(b) 3,766 — — 3,766 — — 3,766 3,474 Operational borrowings attributable to shareholder-financed operations — 10 7 17 — — 17 50 Borrowings attributable to with-profits operations 32 — — 32 — — 32 10 Net asset value attributable to unit holders of consolidated unit trusts and similar funds 2,042 1,273 235 3,550 — — 3,550 3,631 Deferred tax liabilities 782 30 362 1,174 — — 1,174 1,152 Current tax liabilities 54 — 89 143 12 — 155 122 Accruals, deferred income and other liabilities 2,526 137 3,211 5,874 75 (29) 5,920 6,069 Provisions 26 — 99 125 50 — 175 254 Derivative liabilities 50 8 29 87 — — 87 79 Total liabilities 45,560 17,552 18,477 81,589 137 (29) 81,697 78,974 Total equity and liabilities 45,560 17,552 23,804 86,916 551 (29) 87,438 84,900 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 businesses are included in the column for ‘Other business’. C2.2 US 2018 £m 2017 £m Variable annuity separate Fixed account annuity, assets GIC and Asset- and other manage Elimina- 30 Jun 31 Dec Note liabilities business Total ment tions Total Total Assets Goodwill — — — — — — — Deferred acquisition costs and other intangible assets — 8,503 8,503 — — 8,503 8,219 Property, plant and equipment — 234 234 3 — 237 214 Reinsurers' share of insurance contract liabilities — 6,436 6,436 — — 6,436 6,424 Deferred tax assets — 2,056 2,056 88 — 2,144 2,300 Current tax recoverable — 292 292 6 — 298 298 Accrued investment income — 438 438 22 — 460 492 Other debtors — 236 236 76 (70) 242 248 Investment properties — 5 5 — — 5 5 Loans C3.3 — 9,815 9,815 — — 9,815 9,630 Equity securities and portfolio holdings in unit trusts 135,546 289 135,835 2 — 135,837 130,630 Debt securities C3.2 — 36,115 36,115 — — 36,115 35,378 Derivative assets — 816 816 — — 816 1,611 Other investments — 898 898 3 — 901 848 Deposits — — — 17 — 17 43 Cash and cash equivalents — 836 836 338 — 1,174 1,658 Total assets 135,546 66,969 202,515 555 (70) 203,000 197,998 Total equity — 4,896 4,896 204 — 5,100 5,248 Liabilities Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) C4.1(c) 135,546 49,604 185,150 — — 185,150 180,724 Core structural borrowings of shareholder-financed operations — 189 189 — — 189 184 Operational borrowings attributable to shareholder-financed operations — 262 262 — — 262 508 Obligations under funding, securities lending and sale and repurchase agreements — 5,612 5,612 — — 5,612 4,304 Deferred tax liabilities — 1,652 1,652 1 — 1,653 1,845 Current tax liabilities — 21 21 1 — 22 47 Accruals, deferred income and other liabilities — 4,642 4,642 342 (70) 4,914 5,109 Provisions — 12 12 7 — 19 24 Derivative liabilities — 79 79 — — 79 5 Total liabilities 135,546 62,073 197,619 351 (70) 197,900 192,750 Total equity and liabilities 135,546 66,969 202,515 555 (70) 203,000 197,998 C2.3 UK and Europe 2018 £m 2017 £m Other funds and subsidiaries Annuity With- and profits Unit-linked other Asset- sub- assets and long-term manage Elimina- 30 Jun 31 Dec funds liabilities business Total ment tions Total Total By operating segment Note note (i) Assets Goodwill 161 — — 161 1,153 — 1,314 1,177 Deferred acquisition costs and other intangible assets 101 — 92 193 6 — 199 210 Property, plant and equipment 519 — 33 552 36 — 588 447 Reinsurers' share of insurance contract liabilities 1,213 126 765 2,104 — — 2,104 2,521 Deferred tax assets 65 — 44 109 21 — 130 157 Current tax recoverable 58 — 197 255 — — 255 244 Accrued investment income 993 96 374 1,463 8 — 1,471 1,558 Other debtors 1,725 399 656 2,780 909 (109) 3,580 3,118 Investment properties 15,293 647 1,655 17,595 — — 17,595 16,487 Investment in joint ventures and associates accounted for using the equity method 649 — — 649 38 — 687 504 Loans C3.3 3,943 — 1,721 5,664 — — 5,664 5,986 Equity securities and portfolio holdings in unit trusts 47,590 15,072 15 62,677 155 — 62,832 62,670 Debt securities C3.2 51,064 6,536 22,144 79,744 — — 79,744 92,707 Derivative assets 1,844 1 460 2,305 — — 2,305 2,954 Other investments 5,147 10 1 5,158 — — 5,158 4,774 Deposits 8,853 1,330 837 11,020 — — 11,020 9,540 Assets held for sale 47 — 11,977 12,024 — — 12,024 38 Cash and cash equivalents 2,280 138 593 3,011 409 — 3,420 5,808 Total assets 141,545 24,355 41,564 207,464 2,735 (109) 210,090 210,900 Total equity — — 6,032 6,032 2,014 — 8,046 8,245 Liabilities Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) C4.1(d) 112,339 22,198 20,118 154,655 — — 154,655 167,589 Unallocated surplus of with-profits funds C4.1(d) 13,517 — — 13,517 — — 13,517 13,477 Operational borrowings attributable to shareholder-financed operations — 4 126 130 — — 130 148 Borrowings attributable to with-profits operations 3,557 — — 3,557 — — 3,557 3,706 Obligations under funding, securities lending and sale and repurchase agreements 1,193 — 323 1,516 — — 1,516 1,358 Net asset value attributable to unit holders of consolidated unit trusts and similar funds 3,998 1,697 86 5,781 — — 5,781 5,243 Deferred tax liabilities 1,353 — 225 1,578 24 — 1,602 1,703 Current tax liabilities 21 48 80 149 45 — 194 377 Accruals, deferred income and other liabilities 4,549 403 1,047 5,999 459 (109) 6,349 6,609 Provisions 25 — 466 491 193 — 684 784 Derivative liabilities 993 5 1,084 2,082 — — 2,082 1,661 Liabilities held for sale — — 11,977 11,977 — — 11,977 — Total liabilities 141,545 24,355 35,532 201,432 721 (109) 202,044 202,655 Total equity and liabilities 141,545 24,355 41,564 207,464 2,735 (109) 210,090 210,900 Notes (i) Includes the Scottish Amicable Insurance Fund which, at 30 June 2018, has total assets and liabilities of £5,310 million (31 December 2017: £5,768 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 £10.2 billion (31 December 2017: £10.6 billion) of non-profits annuities liabilities. |
Group assets and liabilities -
Group assets and liabilities - measurement | 6 Months Ended |
Jun. 30, 2018 | |
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 has been estimated from discounted cash flows expected to be received. The discount rate used 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 30 Jun 2018 £m Level 1 Level 2 Level 3 Total Valuation Valuation Quoted prices based on based on (unadjusted) significant significant in active observable unobservable Analysis of financial investments, net of derivative liabilities by business type markets market inputs market inputs With-profits Loans — — 1,848 1,848 Equity securities and portfolio holdings in unit trusts 59,025 4,748 490 64,263 Debt securities 29,680 45,952 355 75,987 Other investments (including derivative assets) 76 3,185 3,866 7,127 Derivative liabilities (40) (1,003) — (1,043) Total financial investments, net of derivative liabilities 88,741 52,882 6,559 148,182 Percentage of total 60 % 36 % 4 % 100 % Unit-linked and variable annuity separate account Equity securities and portfolio holdings in unit trusts 162,698 494 18 163,210 Debt securities 5,162 5,145 — 10,307 Other investments (including derivative assets) 3 4 7 14 Derivative liabilities (9) (4) — (13) Total financial investments, net of derivative liabilities 167,854 5,639 25 173,518 Percentage of total 97 % 3 % — % 100 % Non-linked shareholder-backed Loans — — 2,935 2,935 Equity securities and portfolio holdings in unit trusts 2,215 9 10 2,234 Debt securities 17,918 55,795 298 74,011 Other investments (including derivative assets) 34 1,403 909 2,346 Derivative liabilities (1) (1,692) (400) (2,093) Total financial investments, net of derivative liabilities 20,166 55,515 3,752 79,433 Percentage of total 25 % 70 % 5 % 100 % Group total analysis, including other financial liabilities held at fair value Group total Loans — — 4,783 4,783 Equity securities and portfolio holdings in unit trusts 223,938 5,251 518 229,707 Debt securities 52,760 106,892 653 160,305 Other investments (including derivative assets) 113 4,592 4,782 9,487 Derivative liabilities (50) (2,699) (400) (3,149) Total financial investments, net of derivative liabilities 276,761 114,036 10,336 401,133 Investment contract liabilities without discretionary participation features held at fair value — (16,713) — (16,713) Borrowings attributable to with-profits operations — — (1,746) (1,746) Net asset value attributable to unit holders of consolidated unit trusts and similar funds (5,184) (3,407) (767) (9,358) Other financial liabilities held at fair value — — (3,159) (3,159) Total financial instruments at fair value 271,577 93,916 4,664 370,157 Percentage of total 74 % 25 % 1 % 100 % 31 Dec 2017 £m Level 1 Level 2 Level 3 Total Valuation Valuation Quoted prices based on based on (unadjusted) significant significant in active observable unobservable Analysis of financial investments, net of derivative liabilities by business type markets market inputs market inputs With-profits Loans — — 2,023 2,023 Equity securities and portfolio holdings in unit trusts 57,347 4,470 351 62,168 Debt securities 29,143 45,602 348 75,093 Other investments (including derivative assets) 68 3,638 3,540 7,246 Derivative liabilities (68) (615) — (683) Total financial investments, net of derivative liabilities 86,490 53,095 6,262 145,847 Percentage of total 60 % 36 % 4 % 100 % Unit-linked and variable annuity separate account Equity securities and portfolio holdings in unit trusts 158,631 457 10 159,098 Debt securities 4,993 5,226 — 10,219 Other investments (including derivative assets) 12 4 8 24 Derivative liabilities — (1) — (1) Total financial investments, net of derivative liabilities 163,636 5,686 18 169,340 Percentage of total 97 % 3 % 0 % 100 % Non-linked shareholder-backed Loans — — 2,814 2,814 Equity securities and portfolio holdings in unit trusts 2,105 10 10 2,125 Debt securities 21,443 64,313 306 86,062 Other investments (including derivative assets) 7 2,270 876 3,153 Derivative liabilities — (1,559) (512) (2,071) Total financial investments, net of derivative liabilities 23,555 65,034 3,494 92,083 Percentage of total 25 % 71 % 4 % 100 % Group total analysis, including other financial liabilities held at fair value Group total Loans — — 4,837 4,837 Equity securities and portfolio holdings in unit trusts 218,083 4,937 371 223,391 Debt securities 55,579 115,141 654 171,374 Other investments (including derivative assets) 87 5,912 4,424 10,423 Derivative liabilities (68) (2,175) (512) (2,755) Total financial investments, net of derivative liabilities 273,681 123,815 9,774 407,270 Investment contract liabilities without discretionary participation features held at fair value — (17,397) — (17,397) Borrowings attributable to with-profits operations — — (1,887) (1,887) Net asset value attributable to unit holders of consolidated unit trusts and similar funds (4,836) (3,640) (413) (8,889) Other financial liabilities held at fair value — — (3,031) (3,031) Total financial instruments at fair value 268,845 102,778 4,443 376,066 Percentage of total 72 % 27 % 1 % 100 % All assets and liabilities held at fair value are classified as fair value through profit or loss, except for £35,860 million (31 December 2017: £35,293 million) of debt securities classified as available-for-sale. Assets and liabilities at amortised cost and their fair value The table below shows the assets and liabilities carried at amortised cost on the statement of financial position and their fair value. 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. 30 Jun 2018 £m Total Total carrying fair value value Assets Loans 12,139 12,710 Liabilities Investment contract liabilities without discretionary participation features (3,001) (3,003) Core structural borrowings of shareholder-financed operations (6,367) (6,518) Operational borrowings attributable to shareholder-financed operations (1,618) (1,618) Borrowings attributable to the with-profits funds (1,843) (1,768) Obligations under funding, securities lending and sale and repurchase agreements (7,128) (7,126) 31 Dec 2017 £m Total Total fair carrying value value Assets Loans 12,205 12,939 Liabilities Investment contract liabilities without discretionary participation features (2,997) (3,032) Core structural borrowings of shareholder-financed operations (6,280) (7,032) Operational borrowings attributable to shareholder-financed operations (1,791) (1,791) Borrowings attributable to the with-profits funds (1,829) (1,832) Obligations under funding, securities lending and sale and repurchase agreements (5,662) (5,828) (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. For further detail on the valuation approach for level 2 fair valued assets and liabilities please refer to note C3.1 of the Group’s consolidated financial statements for the year ended 31 December 2017. Of the total level 2 debt securities of £106,892 million at 30 June 2018 (31 December 2017: £115,141 million), £13,871 million are valued internally (31 December 2017: £13,910 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 2018 to that presented at 30 June 2018. Total investment return recorded in the income statement represents interest and dividend income, realised gains and losses, unrealised gains and losses on the assets classified at fair value through profit and loss and foreign exchange movements on an individual entity’s overseas investments. Total gains and losses recorded in other comprehensive income includes unrealised gains and losses on debt securities held as available-for-sale within Jackson and foreign exchange movements arising from the retranslation of the Group’s overseas subsidiaries and branches. Total gains (losses) Total recorded gains in other At (losses) in compre- Transfers Transfers At 1 Jan income hensive into out of 30 Jun Half year 2018 £m statement income Purchases Sales Settled Issued level 3 level 3 Loans 4,837 59 65 2 — (223) 43 — — 4,783 Equity securities and portfolio holdings in unit trusts 371 43 (7) 112 (1) — — — — 518 Debt securities 654 (10) — 55 (46) — — — — 653 Other investments (including derivative assets) 4,424 188 46 550 (426) — — — — 4,782 Derivative liabilities (512) 57 — — — — — — 55 (400) Total financial investments, net of derivative liabilities 9,774 337 104 719 (473) (223) 43 — 55 10,336 Borrowings attributable to with-profits operations (1,887) (2) — — — 143 — — — (1,746) Net asset value attributable to unit holders of consolidated unit trusts and similar funds (413) 38 — — — 22 * (414) — — (767) Other financial liabilities (3,031) (84) (68) — — 103 (79) — — (3,159) Total financial instruments at fair value 4,443 289 36 719 (473) 45 (450) — 55 4,664 Total gains (losses) Total recorded gains in other At (losses) in compre- Transfers Transfers At 1 Jan income hensive into out of 31 Dec Full year 2017 £m statement income Purchases Sales Settled Issued level 3 level 3 Loans 2,699 17 (235) 2,129 — (311) 236 302 — 4,837 Equity securities and portfolio holdings in unit trusts 722 11 (5) 186 (468) (6) — 1 (70) 371 Debt securities 942 51 (11) 216 (522) — — — (22) 654 Other investments (including derivative assets) 4,480 73 (133) 727 (725) — — 2 — 4,424 Derivative liabilities (516) 4 — — — — — — — (512) Total financial investments, net of derivative liabilities 8,327 156 (384) 3,258 (1,715) (317) 236 305 (92) 9,774 Borrowings attributable to with-profits operations — (13) — — — 115 (1,989) — — (1,887) Net asset value attributable to unit holders of consolidated unit trusts and similar funds (883) (559) — (13) — 1,276 * (234) — — (413) Other financial liabilities (2,851) 14 250 — — 252 (311) (385) — (3,031) Total financial instruments at fair value 4,593 (402) (134) 3,245 (1,715) 1,326 (2,298) (80) (92) 4,443 * Includes distributions to third-party investors by subsidiaries held by the UK with-profits funds for investment purposes. These distributions vary period to period depending on the maturity of the subsidiaries and the gains realised by those entities in the period. Of the total net gains and losses in the income statement of £289 million (31 December 2017: £(402) million), £210 million (31 December 2017: £(139) million) relates to net unrealised gains and losses of financial instruments still held at the end of the period, which can be analysed as follows: 2018 £m 2017 £m 30 Jun 31 Dec Loans (23) 20 Equity securities 43 (12) Debt securities (10) (5) Other investments 109 (22) Derivative liabilities 57 4 Borrowings attributable to with-profit operations (2) (13) Net asset value attributable to unit holders of consolidated unit trusts and similar funds 38 (123) Other financial liabilities (2) 12 Total 210 (139) Valuation approach for level 3 fair valued assets and liabilities 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. For further detail on the valuation approach for level 3 fair valued assets and liabilities, please refer to note C3.1 of the Group’s consolidated financial statements for the year ended 31 December 2017. At 30 June 2018, the Group held £4,664 million (31 December 2017: £4,443 million) of net financial instruments at fair value within level 3. This represents 1 per cent (31 December 2017: 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 30 June 2018 include £1,808 million of loans and a corresponding £1,746 million of borrowings held by a subsidiary of the Group’s UK with-profits fund, attaching to the acquisition of 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. Included within these amounts are loans of £2,638 million at 30 June 2018 ( 31 December 2017: £2,512 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 £2,793 million at 30 June 2018 ( 31 December 2017: £2,664 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 £(155) million ( 31 December 2017: £(152) million), the level 3 fair valued financial assets net of financial liabilities were £4,819 million ( 31 December 2017: £4,595 million). Of this amount, a net liability of £(312) million ( 31 December 2017: net asset of £117 million) is internally valued, representing less than 0.1 per cent of the total fair valued financial assets net of financial liabilities (31 December 2017: 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 £494 million ( 31 December 2017: £500 million), which were 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 £255 million ( 31 December 2017: £217 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 loan investments of £297 million ( 31 December 2017: £302 million) 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. (d) Liabilities of £(735) million ( 31 December 2017: £(403) 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 £(400) million ( 31 December 2017: £(512) 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 £74 million (31 December 2017: £81 million). Of the internally valued net liability referred to above of £(312) million ( 31 December 2017: net asset of £117 million): (a) A net liability of £(214) million (31 December 2017: net asset of £67 million) was 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 £(98) million ( 31 December 2017: net liability of £(184) million) was 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 £10 million ( 31 December 2017: £18 million), which would increase (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. (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. Transfers are deemed to have occurred when there is a material change in the observed valuation inputs or a change in the level of trading activities of the securities. During half year 2018, the transfers between levels within the Group’s portfolio were primarily transfers from level 1 to level 2 of £621 million and transfers from level 2 to level 1 of £312 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, the transfers out of level 3 in half year 2018 were £55 million. These transfers were primarily between levels 3 and 2 for derivative liabilities. There were no transfers into level 3 in the period. (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 | 6 Months Ended |
Jun. 30, 2018 | |
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. For the US NAIC ratings have also been used where relevant. 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’. 30 Jun 2018 £m BBB+ AAA AA+ to AA- A+ to A- to BBB- Below BBB- Other Total Asia With-profits 2,496 11,425 3,983 3,351 1,768 1,900 24,923 Unit-linked 726 147 489 1,326 441 642 3,771 Non-linked shareholder-backed 948 3,138 3,234 3,063 2,040 1,099 13,522 Asset Management 12 — 28 — — — 40 US Non-linked shareholder-backed 442 6,338 9,439 13,148 1,035 5,713 36,115 UK and Europe With-profits 7,091 8,723 11,606 13,544 2,847 7,253 51,064 Unit-linked 358 2,099 1,694 1,448 718 219 6,536 Non-linked shareholder-backed 3,273 6,296 5,138 1,496 223 5,718 22,144 Other operations 673 1,237 177 39 45 19 2,190 Total debt securities 16,019 39,403 35,788 37,415 9,117 22,563 160,305 31 Dec 2017 £m BBB+ to AAA AA+ to AA- A+ to A- BBB- Below BBB- Other Total Asia With-profits 2,504 10,641 3,846 3,234 1,810 2,397 24,432 Unit-linked 528 103 510 1,429 372 565 3,507 Non-linked shareholder-backed 990 2,925 3,226 2,970 1,879 1,053 13,043 US Non-linked shareholder-backed 368 6,352 9,578 12,311 1,000 5,769 35,378 UK and Europe With-profits 6,492 9,378 11,666 12,856 2,877 7,392 50,661 Unit-linked 670 2,732 1,308 1,793 91 117 6,711 Non-linked shareholder-backed 5,118 11,005 9,625 3,267 258 6,062 35,335 Other operations 742 1,264 182 67 36 16 2,307 Total debt securities 17,412 44,400 39,941 37,927 8,323 23,371 171,374 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: 2018 £m 2017 £m Asia 30 Jun 31 Dec Non-linked shareholder-backed Internally rated Government bonds 23 25 Corporate bonds – rated as investment grade by local external ratings agencies 1,006 959 Other 70 69 Total Asia non-linked shareholder-backed 1,099 1,053 2018 £m 2017 £m Mortgage -backed Other 30 Jun 31 Dec US securities securities Total Total Implicit ratings of other US debt securities based on NAIC* valuations (see below) NAIC 1 1,802 2,101 3,903 3,918 NAIC 2 14 1,767 1,781 1,794 NAIC 3-6 3 26 29 57 Total US** 1,819 3,894 5,713 5,769 * 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. ** Mortgage-backed securities totalling £1,545 million at 30 June 2018 have credit ratings issued by Standard & Poor’s of BBB- or above and hence are designated as investment grade. Other securities totalling £3,868 at 30 June 2018 with NAIC ratings 1 or 2 are also designated as investment grade. 2018 £m 2017 £m UK and Europe 30 Jun 31 Dec Internal ratings or unrated AAA to A- 7,828 7,994 BBB to B- 2,866 3,141 Below B- or unrated 2,496 2,436 Total UK and Europe 13,190 13,571 (b) Additional analysis of US insurance operations debt securities 2018 £m 2017 £m 30 Jun 31 Dec Corporate and government security and commercial loans: Government 4,737 4,835 Publicly traded and SEC Rule 144A securities* 23,346 22,849 Non-SEC Rule 144A securities 4,659 4,468 Asset backed securities (see note (e)) 3,373 3,226 Total US debt securities** 36,115 35,378 * 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: 2018 £m 2017 £m 30 Jun 31 Dec Available-for-sale 35,860 35,293 Fair value through profit and loss: 255 85 36,115 35,378 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 from a net unrealised gain of £1,205 million to a net unrealised loss of £247 million as analysed in the table below. Foreign Changes in exchange unrealised 30 Jun 2018 £m translation** appreciation 31 Dec 2017 £m Reflected as part of movement in other Assets fair valued at below book value Book value* 23,159 6,325 Unrealised gain (loss) (762) (30) (626) (106) Fair value (as included in statement of financial position) 22,397 6,219 Assets fair valued at or above book value Book value* 12,948 27,763 Unrealised gain (loss) 515 (1) (795) 1,311 Fair value (as included in statement of financial position) 13,463 29,074 Total Book value* 36,107 34,088 Net unrealised gain (loss) (247) (31) (1,421) 1,205 Fair value (as included in the footnote above in the overview table and the statement of financial position) 35,860 35,293 * Book value represents cost/amortised cost of the debt securities. ** Translated at the average rate of US$1.38: £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: 30 Jun 2018 £m 31 Dec 2017 £m Fair Unrealised Fair Unrealised Between 90% and 100% 22,187 (729) 6,170 (95) Between 80% and 90% 195 (29) 36 (6) Below 80%: Other than mortgage-backed securities — — 10 (4) Corporate bonds 15 (4) 3 (1) 15 (4) 13 (5) Total 22,397 (762) 6,219 (106) (ii) Unrealised losses by maturity of security 2018 £m 2017 £m 30 Jun 31 Dec 1 year to 5 years (65) (7) 5 year to 10 years (348) (41) More than 10 years (297) (39) Mortgage-backed and other debt securities (52) (19) Total (762) (106) (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: 30 Jun 2018 £m 31 Dec 2017 £m Non- Non- investment Investment investment Investment Age analysis grade grade Total grade grade Total Less than 6 months (14) (418) (432) (4) (31) (35) 6 months to 1 year (7) (148) (155) (1) (4) (5) 1 year to 2 years (1) (148) (149) — (49) (49) 2 year to 3 years — (1) (1) (1) (6) (7) More than 3 years (1) (24) (25) — (10) (10) (23) (739) (762) (6) (100) (106) Further, the following table shows the age analysis as at 30 June 2018 of the securities whose fair values were below 80 per cent of the book value: 30 Jun 2018 £m 31 Dec 2017 £m Fair Unrealised Fair Unrealised Age analysis value loss value loss Less than 3 months 13 (3) 2 — 3 months to 6 months — — 1 (1) More than 6 months 2 (1) 10 (4) 15 (4) 13 (5) (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 30 June 2018 are as follows: 2018 £m 2017 £m 30 Jun 31 Dec Shareholder-backed operations: Asia operations note (i) 97 118 US operations note (ii) 3,373 3,226 UK insurance operations (2018: 33% AAA, 15% AA) note (iii) 960 1,070 Other operations note (iv) 507 589 4,937 5,003 With-profits operations: Asia operations note (i) 192 233 UK insurance operations (2018: 65% AAA, 10% AA) note (iii) 5,414 5,658 5,606 5,891 Total 10,543 10,894 Notes (i) Asia operations The Asia operations’ exposure to asset-backed securities is primarily held by the with-profits operations. Of the £192 million, 100 per cent (31 December 2017: 98 per cent) are investment grade. (ii) US operations US operations’ exposure to asset-backed securities at 30 June 2018 comprises: 2018 £m 2017 £m 30 Jun 31 Dec RMBS Sub-prime (2018: 2% AAA, 6% AA, 3% A) 105 112 Alt-A (2018: 3% AAA, 2% A) 117 126 Prime including agency (2018: 5% AAA, 67 % AA, 8% A) 425 440 CMBS (2018: 83% AAA, 16% AA, 1% A) 1,638 1,579 CDO funds (2018: 13% AA, 87% A), including £nil exposure to sub-prime 11 28 Other ABS (2018: 16% AAA, 16% AA, 53% A), including £93 million exposure to sub-prime 1,077 941 Total 3,373 3,226 (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, £1,833 million (31 December 2017: £1,913 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 £507 million, 99 per cent (31 December 2017: 96 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 30 June 2018 are analysed as follows: Exposure to sovereign debts 30 Jun 2018 £m 31 Dec 2017 £m Shareholder- With- Shareholder- With- backed profits backed profits business funds business funds Italy — 60 58 63 Spain 36 18 34 18 France 23 6 23 38 Germany* 663 315 693 301 Other Eurozone 77 30 82 31 Total Eurozone 799 429 890 451 United Kingdom 3,482 3,130 5,918 3,287 United States** 5,243 10,519 5,078 10,156 Other, including Asia 4,923 2,314 4,638 2,143 Total 14,447 16,392 16,524 16,037 * 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 2018 £m 2017 £m Senior debt Subordinated debt Total Total senior subordinated 30 Jun 31 Dec Shareholder-backed business Covered Senior debt Tier 1 Tier 2 debt Total Total Italy — — — — — — — — Spain 42 36 78 — — — 78 68 France 27 37 64 13 4 17 81 86 Germany 30 — 30 — 89 89 119 117 Netherlands — 45 45 — 6 6 51 71 Other Eurozone 15 — 15 — — — 15 15 Total Eurozone 114 118 232 13 99 112 344 357 United Kingdom 575 545 1,120 5 164 169 1,289 1,382 United States — 2,399 2,399 1 95 96 2,495 2,619 Other, including Asia 16 699 715 105 391 496 1,211 1,163 Total 705 3,761 4,466 124 749 873 5,339 5,521 With-profits funds Italy — 38 38 — — — 38 31 Spain — 21 21 — — — 21 16 France 8 245 253 2 63 65 318 286 Germany 141 31 172 — 35 35 207 180 Netherlands — 216 216 5 6 11 227 199 Other Eurozone — 27 27 — — — 27 27 Total Eurozone 149 578 727 7 104 111 838 739 United Kingdom 865 797 1,662 2 368 370 2,032 1,938 United States — 2,188 2,188 47 298 345 2,533 2,518 Other, including Asia 580 1,451 2,031 327 430 757 2,788 2,531 Total 1,594 5,014 6,608 383 1,200 1,583 8,191 7,726 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. |
Loans portfolio
Loans portfolio | 6 Months Ended |
Jun. 30, 2018 | |
Loans portfolio | |
Loans portfolio | C3.3 Loans portfolio (a) Overview of loans portfolio Loans are principally accounted for at amortised cost, net of impairment except for: – – The amounts included in the statement of financial position are analysed as follows: 30 Jun 2018 £m 31 Dec 2017 £m Mortgage Policy Other Mortgage Policy Other loans* loans** loans † Total loans* loans** loans † Total Asia With-profits — 652 105 757 — 613 112 725 Non-linked shareholder-backed 170 217 193 580 177 216 199 592 US Non-linked shareholder-backed 6,292 3,523 — 9,815 6,236 3,394 — 9,630 UK and Europe With-profits 2,267 4 1,672 3,943 2,441 4 1,823 4,268 Non-linked shareholder-backed 1,686 — 35 1,721 1,681 — 37 1,718 Other operations — — 106 106 — — 109 109 Total loans securities 10,415 4,396 2,111 16,922 10,535 4,227 2,280 17,042 * All mortgage loans are secured by properties. ** In the US £2,638 million (31 December 2017: £2,512 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 average loan size is £13.3 million (31 December 2017: £12.6 million). The portfolio has a current estimated average loan to value of 55 per cent (31 December 2017: 55 per cent). At 30 June 2018, Jackson had no mortgage loans where the contractual terms of the agreements had been restructured (31 December 2017: none). (c) Additional information on UK mortgage loans The UK with-profits fund invests in an entity established to acquire a portfolio of buy-to-let mortgage loans. The vehicle financed the acquisition 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, 99.99 per cent of the £1,686 million (31 December 2017: 99.98 per cent of £1,681 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 32 per cent (31 December 2017: 31 per cent). |
Policyholder liabilities and un
Policyholder liabilities and unallocated surplus | 6 Months Ended |
Jun. 30, 2018 | |
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 £m UK and Asia US Europe Total Half year 2018 movements note C4.1(b) note C4.1(c) note C4.1(d) At 1 January 2018 73,839 180,724 181,066 435,629 Comprising: - Policyholder liabilities on the consolidated statement of financial position ‡ (excludes £32 million classified as unallocated to a segment) 62,898 180,724 167,589 411,211 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,474 — 13,477 16,951 - Group's share of policyholder liabilities of joint ventures and associate † 7,467 — — 7,467 Reclassification of reinsured UK annuity contracts as held for sale * — — (12,002) (12,002) Net flows: Premiums 6,247 7,111 6,964 20,322 Surrenders (1,547) (5,953) (3,446) (10,946) Maturities/deaths (838) (1,076) (3,499) (5,413) Net flows 3,862 82 19 3,963 Shareholders' transfers post tax (27) — (127) (154) Investment-related items and other movements (1,349) (103) (801) (2,253) Foreign exchange translation differences 690 4,447 17 5,154 As at 30 June 2018 77,015 185,150 168,172 430,337 Comprising: - Policyholder liabilities on the consolidated statement of financial position ‡ 65,640 185,150 154,655 405,445 (excludes £37 million classified as unallocated to a segment) - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,766 — 13,517 17,283 - Group's share of policyholder liabilities of joint ventures and associate † 7,609 — — 7,609 Half year 2017 movements At 1 January 2017 62,784 177,626 169,304 409,714 Comprising: - Policyholder liabilities on the consolidated statement of financial position ‡ 53,716 177,626 157,654 388,996 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 2,667 — 11,650 14,317 - Group's share of policyholder liabilities of joint ventures and associate † 6,401 — — 6,401 Net flows: Premiums 5,699 8,148 7,756 21,603 Surrenders (1,508) (5,071) (3,816) (10,395) Maturities/deaths (880) (1,119) (3,533) (5,532) Net flows 3,311 1,958 407 5,676 Shareholders' transfers post tax (27) — (115) (142) Investment-related items and other movements 4,288 7,124 5,214 16,626 Foreign exchange translation differences (2,035) (8,929) 130 (10,834) At 30 June 2017 68,321 177,779 174,940 421,040 Comprising: - Policyholder liabilities on the consolidated statement of financial position ‡ 58,348 177,779 162,853 398,980 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,003 — 12,087 15,090 - Group's share of policyholder liabilities of joint ventures and associate † 6,970 — — 6,970 Average policyholder liability balances** Half year 2018 71,807 182,937 161,122 415,866 Half year 2017 62,718 177,702 160,254 400,674 * The reclassification of the reinsured UK annuity business as held for sale reflects the value of policyholder liabilities held at 1 January 2018. Movements in items covered by the reinsurance contract prior to the 14 March inception date are included within net flows of the UK and Europe business. * * Averages have been based on opening and closing balances 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 statement of financial position. The Group’s share of the policyholder liabilities as shown above relates to life businesses in China, India and of the Takaful business in Malaysia. ‡ The policyholder liabilities of the Asia insurance operations of £65,640 million (30 June 2017: £58,348 million), shown in the table above, are after deducting the intra-group reinsurance liabilities ceded by the UK and Europe insurance operations of £1,181 million (30 June 2017: £1,271 million) to the Hong Kong with-profits business. Including this amount, total Asia policyholder liabilities were £66,821 million (30 June 2017: £59,619 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 period 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 Half year 2018 £m UK and Total Asia US Europe note (b) At 1 January 2018 37,402 180,724 56,367 274,493 Reclassification of reinsured UK annuity contracts as held for sale* — — (12,002) (12,002) Net flows: Premiums 3,266 7,111 681 11,058 Surrenders (1,383) (5,953) (1,200) (8,536) Maturities/deaths (420) (1,076) (1,294) (2,790) Net flows note 1,463 82 (1,813) (268) Investment-related items and other movements (718) (103) (236) (1,057) Foreign exchange translation differences 1 4,447 — 4,448 At 30 June 2018 38,148 185,150 42,316 265,614 Comprising: - Policyholder liabilities on the consolidated statement of financial position 30,539 185,150 42,316 258,005 (excludes £37 million classified as unallocated to a segment) - Group's share of policyholder liabilities relating to joint ventures and associate 7,609 — — 7,609 Half year 2017 £m UK and Asia US Europe Total At 1 January 2017 32,851 177,626 56,158 266,635 Net flows: Premiums 2,801 8,148 1,658 12,607 Surrenders (1,335) (5,071) (1,500) (7,906) Maturities/deaths (450) (1,119) (1,325) (2,894) Net flows note 1,016 1,958 (1,167) 1,807 Investment-related items and other movements 1,912 7,124 1,500 10,536 Foreign exchange translation differences (739) (8,929) — (9,668) At 30 June 2017 35,040 177,779 56,491 269,310 Comprising: - Policyholder liabilities on the consolidated statement of financial position 28,070 177,779 56,491 262,340 - Group's share of policyholder liabilities relating to joint ventures and associate 6,970 — — 6,970 * The reclassification of the reinsured UK annuity business as held for sale reflects the value of policyholder liabilities held at 1 January 2018. Movements in items covered by the reinsurance contract prior to the 14 March inception date are included within net flows of the UK and Europe business. Note Including net flows of the Group’s insurance joint ventures and associate. 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 period to 30 June is as follows: £m With-profits Unit-linked Other Half year 2018 movements business* liabilities business Total At 1 January 2018 36,437 20,027 17,375 73,839 Comprising: - Policyholder liabilities on the consolidated statement of financial position 32,963 16,263 13,672 62,898 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,474 — — 3,474 - Group's share of policyholder liabilities relating to joint ventures and associate ‡ — 3,764 3,703 7,467 Premiums: New business 432 870 435 1,737 In-force 2,549 841 1,120 4,510 2,981 1,711 1,555 6,247 Surrenders note (c) (164) (1,071) (312) (1,547) Maturities/deaths (418) (93) (327) (838) Net flows note (b) 2,399 547 916 3,862 Shareholders' transfers post tax (27) — — (27) Investment-related items and other movements note (d) (631) (652) (66) (1,349) Foreign exchange translation differences note (a) 689 (142) 143 690 At 30 June 2018 38,867 19,780 18,368 77,015 Comprising: - Policyholder liabilities on the consolidated statement of financial position * 35,101 16,094 14,445 65,640 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,766 — — 3,766 - Group's share of policyholder liabilities relating to joint ventures and associate ‡ — 3,686 3,923 7,609 Half year 2017 movements At 1 January 2017 29,933 17,507 15,344 62,784 Comprising: - Policyholder liabilities on the consolidated statement of financial position 27,266 14,289 12,161 53,716 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 2,667 — — 2,667 - Group's share of policyholder liabilities relating to joint ventures and associate ‡ — 3,218 3,183 6,401 Premiums: New business 676 527 528 1,731 In-force 2,222 805 941 3,968 2,898 1,332 1,469 5,699 Surrenders note (c) (173) (1,102) (233) (1,508) Maturities/deaths (430) (82) (368) (880) Net flows note (b) 2,295 148 868 3,311 Shareholders' transfers post tax (27) — — (27) Investment-related items and other movements note (d) 2,376 1,551 361 4,288 Foreign exchange translation differences note (a) (1,296) (373) (366) (2,035) At 30 June 2017 33,281 18,833 16,207 68,321 Comprising: - Policyholder liabilities on the consolidated statement of financial position 30,278 15,326 12,744 58,348 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,003 — — 3,003 - Group's share of policyholder liabilities relating to joint ventures and associate ‡ — 3,507 3,463 6,970 Average policyholder liability balances † Half year 2018 34,032 19,903 17,872 71,807 Half year 2017 28,772 18,170 15,776 62,718 * The policyholder liabilities of the with-profits business of £35,101 million, shown in the table above, is after deducting the intra-group reinsurance liabilities ceded by the UK and Europe insurance operations of £1,181 million to the Hong Kong with-profits business (30 June 2017: £1,271 million). Including this amount the Asia with-profits policyholder liabilities are £36,282 million (30 June 2017: £31,549 million) † Averages have been based on opening and closing balances and adjusted for any acquisitions, disposals and corporate transactions arising in the period and exclude unallocated surplus of with-profits funds. ‡ The Group’s investment in joint ventures are accounted for on an equity method and the Group’s share of the policyholder liabilities as shown above relate to the life business in China, India and of the Takaful business in Malaysia. Notes (a) Movements in the period have been translated at the average exchange rates for the period ended 30 June 2018. The closing balance has been translated at the closing spot rates as at 30 June 2018. Differences upon retranslation are included in foreign exchange translation differences. (b) Net flows increased by 17 per cent from £3,311 million in half year 2017 to £3,862 million in half year 2018 predominantly reflecting continued growth of the in-force book. (c) The rate of surrenders for shareholder-backed business (expressed as a percentage of opening liabilities) was 3.7 per cent in the first half of 2018 (half year 2017: 4.1 per cent). (d) Investment-related items and other movements in the first half of 2018 primarily represent unrealised investments losses following unfavourable equity markets in the period and rising interest rates. 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 period to 30 June is as follows: US insurance operations £m Variable annuity Fixed annuity, separate account GIC and other liabilities business Total Half year 2018 movements At 1 January 2018 130,528 50,196 180,724 Premiums 5,528 1,583 7,111 Surrenders (4,225) (1,728) (5,953) Maturities/deaths (540) (536) (1,076) Net flows note (b) 763 (681) 82 Transfers from general to separate account 387 (387) — Investment-related items and other movements note (c) 582 (685) (103) Foreign exchange translation differences note (a) 3,286 1,161 4,447 At 30 June 2018 135,546 49,604 185,150 Half year 2017 movements At 1 January 2017 120,411 57,215 177,626 Premiums 5,981 2,167 8,148 Surrenders (3,409) (1,662) (5,071) Maturities/deaths (541) (578) (1,119) Net flows note (b) 2,031 (73) 1,958 Transfers from general to separate account 1,240 (1,240) — Investment-related items and other movements 7,236 (112) 7,124 Foreign exchange translation differences note (a) (6,183) (2,746) (8,929) At 30 June 2017 124,735 53,044 177,779 Average policyholder liability balances* Half year 2018 133,037 49,900 182,937 Half year 2017 122,573 55,129 177,702 * Averages have been based on opening and closing balances. Notes (a) Movements in the period have been translated at an average rate of US$1.38: £1.00 (30 June 2017: US$1.26: £1.00). The closing balance has been translated at closing rate of US$1.32:£1.00 (31 December 2017: US$1.30:£1.00). Differences upon retranslation are included in foreign exchange translation differences. (b) Net flows in the first half of 2018 were £82 million (first half of 2017: £1,958 million) as we continue to grow the business with gross inflows of £7,111 million, principally into variable annuities, more than exceeding surrenders and maturities in the period which are expected to grow in line with the business. (c) Positive investment-related items and other movements in variable annuity separate account liabilities of £582 million for the first six months in 2018 represents positive separate account return mainly following the increase in the US equity market in the period. For fixed annuity, GIC and other business, investment-related items and other movements mainly represent accounting value movements on the guaranteed liabilities driven by increase in interest rates. 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 period to 30 June is as follows: £m Shareholder-backed funds and subsidiaries Annuity and other With-profits Unit-linked long-term Half year 2018 movements sub-fund† liabilities business Total At 1 January 2018 124,699 23,145 33,222 181,066 Comprising: - Policyholder liabilities 111,222 23,145 33,222 167,589 - Unallocated surplus of with-profits funds 13,477 — — 13,477 Reclassification of reinsured UK annuity contracts as held for sale* — — (12,002) (12,002) Premiums 6,283 516 165 6,964 Surrenders (2,246) (1,163) (37) (3,446) Maturities/deaths (2,205) (313) (981) (3,499) Net flows note (a) 1,832 (960) (853) 19 Shareholders' transfers post tax (127) — — (127) Switches (89) 89 — — Investment-related items and other movements note (b) (476) (76) (249) (801) Foreign exchange translation differences 17 — — 17 At 30 June 2018 125,856 22,198 20,118 168,172 Comprising: - Policyholder liabilities 112,339 22,198 20,118 154,655 - Unallocated surplus of with-profits funds 13,517 — — 13,517 Half year 2017 movements At 1 January 2017 113,146 22,119 34,039 169,304 Comprising: - Policyholder liabilities 101,496 22,119 34,039 157,654 - Unallocated surplus of with-profits funds 11,650 — — 11,650 Premiums 6,098 1,484 174 7,756 Surrenders (2,316) (1,472) (28) (3,816) Maturities/deaths (2,208) (323) (1,002) (3,533) Net flows note (a) 1,574 (311) (856) 407 Shareholders' transfers post tax (115) — — (115) Switches (91) 91 — — Investment-related items and other movements note (b) 3,805 1,018 391 5,214 Foreign exchange translation differences 130 — — 130 At 30 June 2017 118,449 22,917 33,574 174,940 Comprising: - Policyholder liabilities 106,362 22,917 33,574 162,853 - Unallocated surplus of with-profits funds 12,087 — — 12,087 Average policyholder liability balances** Half year 2018 111,781 22,671 26,670 161,122 Half year 2017 103,929 22,518 33,807 160,254 * The reclassification of the reinsured UK annuity business as held for sale reflects the value of policyholder liabilities held at 1 January 2018. Movements in items covered by the reinsurance contract prior to the 14 March inception date are included within net flows. ** Averages have been based on opening and closing balances and adjusted for any acquisitions, disposals and corporate transactions arising in the period and exclude unallocated surplus of with-profits funds. † Includes the Scottish Amicable Insurance Fund. Notes (a) Net flows have declined from net inflows of £407 million in the first half of 2017 to net inflows of £19 million in the same period of 2018 due primarily to lower premium flows into unit-linked business. The levels of inflows/outflows for unit-linked business is driven by corporate pension schemes with transfers in or out from only a small number of schemes influencing the level of flows in the period. (b) Investment-related items and other movements for with-profits business principally comprise investment return attributable to policyholders earned in the period reflecting unfavourable equity market movements. For shareholder-backed annuity and other long-term business, investment-related items and other movements include the effects of movement in interest rates and credit spreads. |
Intangible assets
Intangible assets | 6 Months Ended |
Jun. 30, 2018 | |
Intangible assets | |
Intangible assets | C5 Intangible assets (a) Goodwill Attributable to: Shareholders With-profits 2018 £m 2017 £m 30 Jun 31 Dec Cost At beginning of year 1,458 24 1,482 1,628 Disposals/reclassifications to held for sale — (10) (10) (155) Additions in the period — 149 149 9 Exchange differences 1 (2) (1) — Net book amount at end of year 1,459 161 1,620 1,482 Goodwill comprises: 2018 £m 2017 £m 30 Jun 31 Dec M&G 1,153 1,153 Other - attributable to shareholders 306 305 Goodwill - attributable to shareholders 1,459 1,458 Venture fund investments - attributable to with-profits funds 161 24 1,620 1,482 Other goodwill attributable to shareholders represents amounts allocated to entities in Asia. These goodwill amounts are not individually material. During the first half of 2018, the PAC with-profits fund, via its venture fund holdings managed by M&G Prudential asset management, made a small number of acquisitions that are consolidated by the Group resulting in an addition to goodwill of £149 million. As these transactions are within the with-profits fund, they have no impact on shareholders’ profit or equity for the period ended 30 June 2018. The impact on the Group’s consolidated revenue, including investment returns, is not material. Had the acquisitions been effected at 1 January 2018, the revenue and profit of the Group for half year 2018 would not have been materially different. (b) Deferred acquisition costs and other intangible assets 2018 £m 2017 £m 30 Jun 31 Dec Deferred acquisition costs and other intangible assets attributable to shareholders 11,210 10,866 Deferred acquisition costs and other intangible assets attributable to with-profits funds 149 145 Total of deferred acquisition costs and other intangible assets 11,359 11,011 The deferred acquisition costs and other intangible assets attributable to shareholders comprise: 2018 £m 2017 £m 30 Jun 31 Dec Deferred acquisition costs related to insurance contracts as classified under IFRS 4 9,596 9,170 Deferred acquisition costs related to investment management contracts, including life assurance contracts classified as financial instruments and investment management contracts under IFRS 4 61 63 9,657 9,233 Present value of acquired in-force policies for insurance contracts as classified under IFRS 4 (PVIF) 35 36 Distribution rights and other intangibles 1,518 1,597 1,553 1,633 Total of deferred acquisition costs and other intangible assets 11,210 10,866 2018 £m 2017 £m Deferred acquisition costs UK and Asia US Europe All asset PVIF and other 30 Jun 31 Dec insurance insurance insurance management intangibles* Total note Total Balance at beginning of period: 946 8,197 84 6 1,633 10,866 10,755 Additions 199 290 7 1 14 511 1,240 Amortisation to the income statement: † Operating profit (70) (280) (6) (3) (88) (447) (709) Non-operating profit (199) (199) 455 (70) (479) (6) (3) (88) (646) (254) Disposals and transfers — — — — (11) (11) — Exchange differences and other movements 6 206 — 1 5 218 (799) Amortisation of DAC related to net unrealised valuation movements on the US insurance operation's available-for-sale securities recognised within other comprehensive income † — 272 — — — 272 (76) Balance at end of period 1,081 8,486 85 5 1,553 11,210 10,866 * PVIF and other intangibles includes amounts in relation to software rights with additions of £10 million, amortisation of £18 million, disposals of £10 million and a balance at 30 June 2018 of £49 million. † 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 (full year 2017: 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. 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: 2018 £m 2017 £m 30 Jun 31 Dec Variable annuity business 8,258 8,208 Other business 241 278 Cumulative shadow DAC (for unrealised gains/losses booked in other comprehensive income)* (13) (289) Total DAC for US operations 8,486 8,197 * Consequent upon the negative unrealised valuation movement for half year 2018 of £1,421 million (31 December 2017: positive unrealised valuation movement of £617 million), there is a gain of £272 million (31 December 2017: a loss of £76 million) for altered ‘shadow’ DAC amortisation booked within other comprehensive income. These adjustments reflect the movement from period to period, in the changes to the pattern of reported gross profits that would have happened 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 30 June 2018, the cumulative shadow DAC balance as shown in the table above was negative £13 million (31 December 2017: negative £289 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 the first half of 2018, the DAC amortisation charge for operating profit was determined after including a charge for accelerated amortisation of £42 million (half year 2017 credit for deceleration: £36 million). The acceleration arising in the first half of 2018 reflects a mechanical reduction in the projected separate account return for the next five years under the mean-reversion technique. Under this technique the projected level of return for each of the next five years is adjusted so that in combination with the actual rates of return for the preceding three years (including the current period) the assumed long-term annual separate account return of 7.4 per cent is realised on average over the entire eight-year period. The acceleration in DAC amortisation in the first half of 2018, is driven, in part, by the lower than expected return in 2015 falling out of the eight-year period and primarily represents the reversal of the benefit received in 2015 under the mean reversion formula. The application of the mean reversion formula has the effect of dampening the impact of equity market movements on DAC amortisation while the mean reversion assumption lies within the corridor. At 1 July 2018, it would take approximate movements in separate account values of more than either negative 33.1 per cent or positive 34.6 per cent for mean reversion assumption to move outside the corridor. |
Borrowings
Borrowings | 6 Months Ended |
Jun. 30, 2018 | |
Borrowings | |
Borrowings | C6 Borrowings C6.1 Core structural borrowings of shareholder-financed operations 2018 £m 2017 £m 30 Jun 31 Dec Holding company operations: note (i) Perpetual Subordinated Capital Securities (Tier 1) note (iv) 833 814 Perpetual Subordinated Capital Securities (Tier 2) 2,388 2,326 Subordinated notes (Tier 2) 2,133 2,132 Subordinated debt total 5,354 5,272 Senior debt: note (ii) £300m 6.875% Bonds 2023 300 300 £250m 5.875% Bonds 2029 249 249 Holding company total 5,903 5,821 Prudential Capital bank loan note (iii) 275 275 Jackson US$250m 8.15% Surplus Notes 2027 note (v) 189 184 Total (per condensed consolidated statement of financial position) note (vi) 6,367 6,280 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 US$4,275 million (31 December 2017: US$4,275 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) These borrowings can be converted, in whole or 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. (v) Jackson’s borrowings are unsecured and subordinated to all present and future indebtedness, policy claims and other creditor claims of Jackson. (vi) The maturity profile, currency and interest rates applicable to all other core structural borrowings of shareholder-financed operations of the Group are as detailed in note C6.1 of the Group’s consolidated financial statements for the year ended 31 December 2017. C6.2 Other borrowings (a) Operational borrowings attributable to shareholder-financed operations 2018 £m 2017 £m 30 Jun 31 Dec Borrowings in respect of short-term fixed income securities programmes: Commercial paper 909 485 Medium Term Notes 2018 300 600 1,209 1,085 Other borrowings note 409 706 Total 1,618 1,791 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 2018 £m 2017 £m 30 Jun 31 Dec Non-recourse borrowings of consolidated investment funds* 3,521 3,570 £100m 8.5% undated subordinated guaranteed bonds of Scottish Amicable Finance plc** — 100 Other borrowings (predominantly obligations under finance leases) 68 46 Total 3,589 3,716 * In all instances the holders of the debt instruments issued by these subsidiaries and funds do not have recourse beyond the assets of those subsidiaries and funds. ** 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. These bonds were redeemed in full on 30 June 2018. |
Deferred tax
Deferred tax | 6 Months Ended |
Jun. 30, 2018 | |
Deferred tax | |
Deferred tax | C7 Deferred tax The statement of financial position contains the following deferred tax assets and liabilities in relation to: 2018 £m Movement Other through movements other including Movement in comprehensive foreign income income and currency At 1 Jan statement equity movements At 30 Jun Deferred tax assets Unrealised losses or gains on investments 14 (1) 55 (1) 67 Balances relating to investment and insurance contracts 1 — — — 1 Short-term temporary differences 2,498 (343) (12) 44 2,187 Capital allowances 14 1 — 1 16 Unused tax losses 100 63 1 — 164 Total 2,627 (280) 44 44 2,435 Deferred tax liabilities Unrealised losses or gains on investments (1,748) 126 186 32 (1,404) Balances relating to investment and insurance contracts (872) (49) — (4) (925) Short-term temporary differences (2,041) 27 (11) (36) (2,061) Capital allowances (54) — — 1 (53) Total (4,715) 104 175 (7) (4,443) 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 principal reasons for the decrease in deferred tax assets are a reduction in the deferred tax asset in the US insurance business relating to a narrowing of the difference between the accounting basis and tax basis for insurance reserves following changes in US interest rates, combined with a reduction in the deferred tax asset for losses on derivatives, which for US tax purposes are spread across three years, reflecting a lower level of losses in the first half of 2018 (and therefore a lower amount deferred to subsequent periods) compared to the first half of 2017. 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 2018 half year results and financial position at 30 June 2018 the following tax benefits have not been recognised: 2018 2017 30 Jun 31 Dec Tax benefit £m Losses £bn Tax benefit £m Losses £bn Capital losses 70 0.4 79 0.4 Trading losses 42 0.2 74 0.3 Of the unrecognised trading losses, losses giving rise to a tax benefit of £38 million will expire within the next seven years, the rest have no expiry date. |
Defined benefit pension schemes
Defined benefit pension schemes | 6 Months Ended |
Jun. 30, 2018 | |
Defined benefit pension schemes | |
Defined benefit pension schemes | C8 Defined benefit pension schemes (a) IAS 19 financial positions The Group’s businesses operate a number of pension schemes. The largest defined benefit scheme is the principal UK scheme, namely the Prudential Staff Pension Scheme (PSPS). 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. The Group asset/liability in respect of defined benefit pension schemes is as follows: 2018 £m 2017 £m 30 Jun 31 Dec Other Other PSPS SASPS M&GGPS schemes Total PSPS SASPS M&GGPS schemes Total Underlying economic surplus (deficit) 891 (62) 143 (1) 971 721 (137) 109 (1) 692 Less: unrecognised surplus (657) — — — (657) (485) — — — (485) Economic surplus (deficit) (including investment in Prudential insurance policies) 234 (62) 143 (1) 314 236 (137) 109 (1) 207 Attributable to: PAC with-profits fund 164 (25) — — 139 165 (55) — — 110 Shareholder-backed operations 70 (37) 143 (1) 175 71 (82) 109 (1) 97 Consolidation adjustment against policyholder liabilities for investment in Prudential insurance policies — — (214) — (214) — — (151) — (151) IAS 19 pension asset (liability) on the Group statement of financial position* 234 (62) (71) (1) 100 236 (137) (42) (1) 56 * At 30 June 2018, the PSPS pension asset of £234 million (31 December 2017: £236 million) and the other schemes’ pension liabilities of £134 million (31 December 2017: £180 million) are included within ‘Other debtors’ and ‘Provisions’ respectively in the consolidated statement of financial position. Triennial actuarial valuations 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. The triennial valuation for the PSPS as at 5 April 2017 was completed in the first half of 2018 demonstrating that there is no change to the ongoing contributions which are kept at the minimum level required under the scheme rules. For SASPS, the current funding arrangement agreed with the trustees based on the last completed triennial valuation as at 31 March 2017 is described in note C9 of the Group’s consolidated financial statements for the year ended 31 December 2017. The triennial valuation for the M&GGPS as at 31 December 2017 is currently in progress. (b) Estimated pension scheme surpluses and deficits 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 30 June 2018, M&GGPS held investments in Prudential insurance policies of £214 million (31 December 2017: £151 million). Movements on the pension scheme deficit determined on the economic basis are as follows, with the effect of the application of IFRIC 14 being shown separately: Half year 2018 £m Actuarial gains Surplus (Charge) and losses Surplus (deficit) in credit to in other (deficit) in schemes at income comprehensive Contributions schemes at 1 Jan 2018 statement income paid 30 Jun 2018 All schemes Underlying position (without the effect of IFRIC 14) Surplus (deficit) 692 (15) 267 27 971 Less: amount attributable to PAC with-profits fund (473) 4 (144) (10) (623) Shareholders' share: Gross of tax surplus (deficit) 219 (11) 123 17 348 Related tax (42) 2 (24) (3) (67) Net of shareholders' tax 177 (9) 99 14 281 Application of IFRIC 14 for the derecognition of PSPS surplus Derecognition of surplus (485) (6) (166) — (657) Less: amount attributable to PAC with-profits fund 363 4 117 — 484 Shareholders' share: Gross of tax (122) (2) (49) — (173) Related tax 23 — 10 — 33 Net of shareholders' tax (99) (2) (39) — (140) With the effect of IFRIC 14 Surplus (deficit) 207 (21) 101 27 314 Less: amount attributable to PAC with-profits fund (110) 8 (27) (10) (139) Shareholders' share: Gross of tax surplus (deficit) 97 (13) 74 17 175 Related tax (19) 2 (14) (3) (34) Net of shareholders' tax 78 (11) 60 14 141 |
Share capital, share premium an
Share capital, share premium and own shares | 6 Months Ended |
Jun. 30, 2018 | |
Share capital, share premium and own shares | |
Share capital, share premium and own shares | C9 Share capital, share premium and own shares 30 Jun 2018 31 Dec 2017 Number of Share Share Number of Share Share ordinary shares capital premium ordinary shares capital premium £m £m £m £m Issued shares of 5p each fully paid: At 1 January 2,587,175,445 129 1,948 2,581,061,573 129 1,927 Shares issued under share-based schemes 4,697,422 — 6 6,113,872 — 21 At end of period 2,591,872,867 129 1,954 2,587,175,445 129 1,948 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 30 June 2018, there were options outstanding under Save As You Earn schemes to subscribe for shares as follows: Number of shares Share price Exercisable to subscribe for range by year from to 30 June 2018 5,851,810 629 p 1,455 p 31 December 2017 6,448,853 629 p 1,455 p 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 £197 million at 30 June 2018 (31 December 2017: £250 million) is deducted from retained earnings. The Company has established trusts to facilitate the delivery of shares under employee incentive plans. At 30 June 2018, 9.7 million (31 December 2017: 11.4 million) Prudential plc shares with a market value of £168 million (31 December 2017: £218 million) were held in such trusts, all of which are for employee incentive plans. The maximum number of shares held during the period was 14.9 million which was in March 2018. The Company purchased the following number of shares in respect of employee incentive plans: Number of shares purchased Cost (in millions) £m Half year 2018 1.8 32.2 Full year 2017 3.9 66.1 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 30 June 2018 was 4.8 million (31 December 2017: 6.4 million) and the cost of acquiring these shares of £46 million (31 December 2017: £71 million) is included in the cost of own shares. The market value of these shares as at 30 June 2018 was £84 million (31 December 2017: £121 million). During 2018, these funds made disposals of 1,556,423 Prudential shares (31 December 2017: additions of 372,029) for a net decrease of £24.4 million to book cost (31 December 2017: net increase of £9.4 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 half year 2018 or 2017. |
Held for sale and corporate tra
Held for sale and corporate transactions | 6 Months Ended |
Jun. 30, 2018 | |
Held for sale and corporate transactions | |
Held for sale and corporate transactions | D Other notes D1 Held for sale and corporate transactions ‘(Loss) gain on disposal of businesses and corporate transactions’ comprises the following: 2018 £m 2017 £m Half year Half year Loss arising on reinsurance of part of UK shareholder-backed annuity portfolio note (i) (513) — Other transactions note (ii) (57) 61 (570) 61 Notes (i) Loss arising on reinsurance of part of UK shareholder-backed annuity portfolio In March 2018, M&G Prudential announced the sale of £12.0 billion (as at 31 December 2017) of its shareholder annuity portfolio to Rothesay Life. Under the terms of the agreement, M&G Prudential has reinsured the liabilities to Rothesay Life, which is expected to be followed by a court-sanctioned legal transfer, under Part VII of the Financial Services and Markets Act 2000 (Part VII), of the policies underlying the liabilities to Rothesay Life by the end of 2019. The reinsurance agreement became effective on 14 March 2018. A reinsurance premium of £12,130 million has been recognised within ‘Outward reinsurance premiums’ in the income statement and settled via the transfer of financial investments and other assets to Rothesay Life. After allowing for the recognition of a reinsurance asset and associated changes to policyholder liabilities, a loss of £(513) million was recognised in the first half of 2018 in relation to the transaction. The reinsured annuity business that will be transferred once the Part VII process is complete has been classified as held for sale in these consolidated financial statements in accordance with IFRS 5, ‘Non-current assets held for sale and discontinued operations’. Following the reinsurance transaction the carrying value, and fair value less costs to sell, of the business to be transferred is £nil. The assets and liabilities of the M&G Prudential annuity business classified as held for sale on the statement of financial position as at 30 June 2018 are as follows: 2018 £m Half year Assets Reinsurers’ share of insurance contract liabilities 11,928 Other debtors 49 Assets held for sale 11,977 Liabilities Policyholder liabilities 11,928 Accruals, deferred income and other liabilities 49 Liabilities held for sale 11,977 (ii) Other transactions In the first half of 2017, the Group completed its disposal of its Korea life business, realising a gain of £61 million in half year 2017 principally as a result of recycling from other comprehensive income cumulative exchange gains of this 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 which realised a gain of £162 million in the second half of 2017. Including the £61 million for Korea referred to above, this gave a total profit attaching to disposal of other businesses and corporate transactions in full year 2017 of £223 million. Other transaction costs of £57 million incurred by the Group in the first half of 2018 primarily relate to additional costs incurred in exiting from the NPH broker-dealer business and costs related to preparation for the previously announced intention to demerge M&G Prudential from Prudential plc, resulting in two separately listed entities. |
Contingencies and related oblig
Contingencies and related obligations | 6 Months Ended |
Jun. 30, 2018 | |
Contingencies and related obligations | |
Contingencies and related obligations | D2 Contingencies and related obligations In addition to the matters set out in note B3(b) 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, Prudential believes that the ultimate outcome will not have a material adverse effect on the Group’s financial condition, results of operations or cash flows. There have been no material changes to the Group’s contingencies and related obligations in the six-month period ended 30 June 2018. |
Post balance sheet events
Post balance sheet events | 6 Months Ended |
Jun. 30, 2018 | |
Post balance sheet events | |
Post balance sheet events | D3 Post balance sheet events First interim ordinary dividend The 2018 first interim ordinary dividend approved by the Board of Directors after 30 June 2018 is as described in note B6. On 25 July 2018 the Group announced that Eastspring had reached an agreement to initially acquire 65 per cent of TMB Asset Management Co. Ltd., an asset management company in Thailand, from TMB Bank Public Company Limited ("TMB"). Eastspring has an option to increase its ownership to 100 per cent in the future. As part of this acquisition, Eastspring has also entered into a distribution agreement with TMB to provide investment solutions to their customers. The completion of the transaction is subject to local regulatory approval. In August 2018 the Group announced the extension of the geographical scope of its bancassurance partnership with Standard Chartered Bank to include Ghana. Under the partnership, a range of Prudential Ghana’s life insurance products will be made available to clients through Standard Chartered’s branch network. In August 2018 the Group announced that it had entered into an agreement with the UK-based healthcare technology and services company Babylon Health to provide customers in Asia access to a suite of health services that utilise artificial intelligence technology. |
Related party transactions
Related party transactions | 6 Months Ended |
Jun. 30, 2018 | |
Related party transactions | |
Related party transactions | D4 Related party transactions There were no transactions with related parties during the six months ended 30 June 2018 which have had a material effect on the results or financial position of the Group. The nature of the related party transactions of the Group has not changed from those described in the Group’s consolidated financial statements for the year ended 31 December 2017. |
BACKGROUND (Tables)
BACKGROUND (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
BACKGROUND | |
Schedule of exchange rates applied | Average Average Closing for the Closing for the Closing rate at 6 months to rate at 6 months to rate at 30 Jun 2018 30 Jun 2018 30 Jun 2017 30 Jun 2017 31 Dec 2017 Local currency: £ Hong Kong 10.36 10.78 10.14 9.80 10.57 Indonesia 18,919.18 18,938.64 17,311.76 16,793.63 18,353.44 Malaysia 5.33 5.42 5.58 5.53 5.47 Singapore 1.80 1.83 1.79 1.77 1.81 China 8.75 8.76 8.81 8.66 8.81 India 90.46 90.37 83.96 82.77 86.34 Vietnam 30,310.96 31,329.01 29,526.43 28,612.70 30,719.60 Thailand 43.74 43.66 44.13 43.72 44.09 US 1.32 1.38 1.30 1.26 1.35 |
Analysis of performance by se33
Analysis of performance by segment (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Analysis of performance by segment | |
Schedule of segment results - profit before tax | 2018 £m 2017* £m Note Half year Half year Asia Insurance operations B3(a) 927 870 Asset management 89 83 Total Asia 1,016 953 US Jackson (US insurance operations) 1,001 1,079 Asset management 1 (6) Total US 1,002 1,073 UK and Europe UK and Europe insurance operations: B3(b) Long-term business 487 480 General insurance commission note (i) 19 17 Total UK and Europe insurance operations 506 497 UK and Europe asset management (v) 272 248 Total UK and Europe 778 745 Total segment profit 2,796 2,771 Restructuring costs note (iii) (62) (31) Other income and expenditure: Investment return and other income 33 6 Interest payable on core structural borrowings (189) (216) Corporate expenditure note (ii) (173) (172) Total other income and expenditure (329) (382) Operating profit based on longer-term investment returns B1.3 2,405 2,358 Short-term fluctuations in investment returns on shareholder-backed business B1.2 (113) (573) Amortisation of acquisition accounting adjustments note (iv) (22) (32) (Loss) gain on disposal of businesses and corporate transactions D1 (570) 61 Profit before tax 1,700 1,814 Tax charge attributable to shareholders' returns B4 (344) (309) Profit for the period 1,356 1,505 Attributable to: Equity holders of the Company 1,355 1,505 Non-controlling interests 1 — Note Half year Half year Basic earnings per share (in pence) B5 Based on operating profit based on longer-term investment returns 76.8 p 70.0 p Based on profit for the period 52.7 p 58.7 p * The half year 2017 comparative results have been re-presented from those previously published to reflect the Group’s current operating segments. 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 the UK, Europe and Asia and represent the costs of 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) UK and Europe asset management operating profit based on longer-term investment returns: 2018 £m 2017 £m Half year Half year Asset management fee income 552 491 Other income 1 4 Staff costs (190) (166) Other costs (107) (95) Underlying profit before performance-related fees 256 234 Share of associate results 8 8 Performance-related fees 8 6 Total UK and Europe asset management operating profit based on longer-term investment returns 272 248 |
Schedule of UK and Europe asset management operating profit based on longer-term investments returns | 2018 £m 2017 £m Half year Half year Asset management fee income 552 491 Other income 1 4 Staff costs (190) (166) Other costs (107) (95) Underlying profit before performance-related fees 256 234 Share of associate results 8 8 Performance-related fees 8 6 Total UK and Europe asset management operating profit based on longer-term investment returns 272 248 |
Schedules of short-term fluctuations in investment returns on shareholder-backed business | 2018 £m 2017 £m Half year Half year* Asia note (i) (326) 41 USn ote (ii) 244 (754) UK and Europe note (iii ) (122) 42 Other operations note (iv) 91 98 Total (113) (573) * The half year 2017 comparative results have been re-presented from those previously published to reflect the Group’s current operating segments. Notes (i) Asia operations In Asia, the negative short-term fluctuations of £(326) million principally reflect net value movements on shareholders’ assets and related liabilities following increases in bond yields during the period (half year 2017: positive £41 million). (ii) US operations The short-term fluctuations in investment returns for US insurance operations are reported net of the related charge for amortisation of deferred acquisition costs of £(199) million as shown in note C5 (half year 2017: credit of £231 million) and comprise amounts in respect of the following items: 2018 £m 2017 £m Half year Half year Net equity hedge result note (a) 383 (782) Other than equity-related derivatives note (b) (183) 12 Debt securities note (c) 6 5 Equity-type investments: actual less longer-term return 31 1 Other items 7 10 Total 244 (754) 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. The level of fees recognised in non-operating profit is determined by reference to that allowed for within the reserving basis. Both FAS157 and SOP 03-01 reserving methods require an entity to determine the total fee (“the fee assessment”) that is expected to fund future projected benefit payments arising using the assumptions applicable for that method. FAS 157 requires this fee assessment to be fixed at the time of issue. It is this fee assessment that is recognised within non-operating profit to match the relevant movement in the guarantee liability, which is also recognised in non-operating profit. 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. For further details, please refer to note B1.3(c) of the Group’s consolidated financial statements for the year ended 31 December 2017. 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 net equity hedge result (net of related DAC amortisation in accordance with the policy that DAC is amortised in line with emergence of margins) can be summarised as follows: 2018 £m 2017 £m Half year Half year Fair value movements on equity hedge instruments* (375) (1,126) Accounting value movements on the variable and fixed index annuity guarantee liabilities 505 111 Fee assessments net of claim payments 253 233 Total 383 (782) * Held to manage equity exposures of the variable annuity guarantees and fixed index annuity options. (b) Other than equity-related derivatives The fluctuations for this item comprise the net effect of: – – – 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 2018 £m 2017 £m Half year Half year Short-term fluctuations relating to debt securities (Charges) credits in the period: Losses on sales of impaired and deteriorating bonds (1) (2) Bond write-downs (2) (1) Recoveries/reversals 18 7 Total credits in the period 15 4 Less: Risk margin allowance deducted from operating profit based on longer-term investment returns note 38 46 53 50 Interest-related realised (losses) gains: Gains (losses) arising in the period 8 23 Less: Amortisation of gains and losses arising in current and prior periods to operating profit based on longer-term investment returns (57) (72) (49) (49) Related amortisation of deferred acquisition costs 2 4 Total short-term fluctuations related to debt securities 6 5 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 half year 2018 is based on an average annual risk margin reserve of 19 basis points (half year 2017: 21 basis points ) on average book values of US$54.9 billion (half year 2017: US$55.8 billion) as shown below: Half year 2018 Half year 2017 Moody’s rating category (or equivalent under NAIC ratings of Average Average mortgage-backed book Book securities) value RMR Annual expected loss value RMR Annual expected loss US$m % US$m £m US$m % US$m £m A3 or higher 26,260 0.11 (29) (21) 27,848 0.13 (35) (28) Baa1, 2 or 3 27,337 0.20 (57) (41) 26,601 0.23 (60) (47) Ba1, 2 or 3 978 1.01 (10) (7) 1,052 1.03 (11) (9) B1, 2 or 3 309 2.61 (8) (6) 311 2.75 (9) (7) Below B3 11 3.71 — — 27 3.80 (1) (1) Total 54,895 0.19 (104) (75) 55,839 0.21 (116) (92) Related amortisation of deferred acquisition costs (see below) 22 15 22 17 Risk margin reserve charge to operating profit for longer-term credit-related losses (82) (60) (94) (75) 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 charge of £(1,149) million for net unrealised losses on debt securities classified as available-for-sale net of related amortisation of deferred acquisition costs (half year 2017: credit of £462 million for net unrealised gains). 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) . (iii) UK and Europe operations The negative short-term fluctuations in investment returns for UK and Europe operations of £(122) million (half year 2017: positive £42 million) include net unrealised movements on fixed income assets supporting the capital of the shareholder-backed annuity business. (iv) Other operations Short-term fluctuations in investment returns for other operations of positive £91 million (half year 2017: positive £98 million) include unrealised value movements on financial instruments held outside of the main life operations. |
Schedule of risk margin reserve charge to operating profit for longer-term credit-related losses | Half year 2018 Half year 2017 Moody’s rating category (or equivalent under NAIC ratings of Average Average mortgage-backed book Book securities) value RMR Annual expected loss value RMR Annual expected loss US$m % US$m £m US$m % US$m £m A3 or higher 26,260 0.11 (29) (21) 27,848 0.13 (35) (28) Baa1, 2 or 3 27,337 0.20 (57) (41) 26,601 0.23 (60) (47) Ba1, 2 or 3 978 1.01 (10) (7) 1,052 1.03 (11) (9) B1, 2 or 3 309 2.61 (8) (6) 311 2.75 (9) (7) Below B3 11 3.71 — — 27 3.80 (1) (1) Total 54,895 0.19 (104) (75) 55,839 0.21 (116) (92) Related amortisation of deferred acquisition costs (see below) 22 15 22 17 Risk margin reserve charge to operating profit for longer-term credit-related losses (82) (60) (94) (75) |
Schedule of equity-type securities | Half year Half year Equity-type securities such as common and preferred stock and portfolio holdings in mutual funds 6.7 % to 7.0 % 6.2 % to 6.5 % Other equity-type securities such as investments in limited partnerships and private equity funds 8.7 % to 9.0 % 8.2 % to 8.5 % |
Schedule of additional segmental analysis of revenue | Half year 2018 £m Unallo- cated to a segment UK and Total (central Group Asia US Europe segment operations) total Gross premiums earned 7,736 7,036 6,555 21,327 14 21,341 Outward reinsurance premiums note (i) (222) (141) (12,598) (12,961) — (12,961) Earned premiums, net of reinsurance 7,514 6,895 (6,043) 8,366 14 8,380 Other income note (ii) 157 44 890 1,091 14 1,105 Total external revenue note (iv) 7,671 6,939 (5,153) 9,457 28 9,485 Intra-group revenue 20 32 1 53 (53) — Interest income 513 940 1,530 2,983 26 3,009 Other investment return (1,703) 1,486 (1,478) (1,695) 120 (1,575) Total revenue, net of reinsurance 6,501 9,397 (5,100) 10,798 121 10,919 Half year 2017* £m Unallo- cated to a segment UK and Total (central Group Asia US Europe segment operations) total Gross premiums earned 7,697 7,997 6,411 22,105 — 22,105 Outward reinsurance premiums (243) (168) (536) (947) — (947) Earned premiums, net of reinsurance 7,454 7,829 5,875 21,158 — 21,158 Other income note (ii),(iii) 159 374 580 1,113 24 1,137 Total external revenue note (iv) 7,613 8,203 6,455 22,271 24 22,295 Intra-group revenue 19 31 2 52 (52) — Interest income 486 1,082 1,754 3,322 33 3,355 Other investment return 4,317 7,254 5,609 17,180 94 17,274 Total revenue, net of reinsurance 12,435 16,570 13,820 42,825 99 42,924 * The half year 2017 comparative results have been re-presented from those previously published to reflect the Group’s current operating segments. Notes (i) Outward reinsurance premiums of £(12,961) million includes the £(12,130) million paid during the period in respect of the reinsurance of the UK annuity portfolio. See note D1 for further details. (ii) Included within other income is revenue from the Group’s asset management business of £764 million (half year 2017: £643 million). The remaining other income includes revenue from external customers for policy fees, advisory fees and commission income. The half year 2017 comparative also included amounts for broker-dealer fees generated by the US broker-dealer network, which was disposed of in August 2017, amounting to £305 million. (iii) Following the adoption of IFRS 15, the half year 2017 comparative results have been re-presented as described in note A2. (iv) Total external revenue shown in the tables above is all from external customers except for £166 million within the half year 2018 amount for UK and Europe of £5,153 million. The £166 million represents the insurance recoveries recognised in respect of costs associated with the review of past annuity sales as described further in note B3. |
Acquisition costs and other e34
Acquisition costs and other expenditure (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Acquisition costs and other expenditure | |
Schedule of acquisition costs and other expenditure | 2018 £m 2017 £m Half year Half year Acquisition costs incurred for insurance policies (1,648) (1,920) Acquisition costs deferred less amortisation of acquisition costs (61) 399 Administration costs and other expenditure* (2,705) (2,970) Movements in amounts attributable to external unit holders of consolidated investment funds (121) (754) Total acquisition costs and other expenditure (4,535) (5,245) * Following the adoption of IFRS 15 the half year 2017 comparative results have been re-presented as described in note A2. |
Tax charge (Tables)
Tax charge (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Tax charge | |
Schedule of total tax charge in the income statement | 2018 £m 2017 £m Current Deferred Half year Half year Tax charge tax tax Total Total Attributable to shareholders: Asia operations (90) (49) (139) (144) US operations — (216) (216) (46) UK and Europe (43) 17 (26) (150) Other operations 43 (6) 37 31 Tax charge attributable to shareholders' returns (90) (254) (344) (309) Attributable to policyholders: Asia operations (47) 4 (43) (131) UK and Europe (64) 74 10 (262) Tax (charge) credit attributable to policyholders' returns (111) 78 (33) (393) Total tax charge (201) (176) (377) (702) |
Reconciliation of effective tax rate | Half year 2018 £m Total Asia US UK and Other attributable to Percentage impact operations operations Europe operations* shareholders on ETR Operating profit (loss) based on longer-term investment returns 1,016 1,002 778 (391) 2,405 Non-operating (loss) profit (338) 184 (635) 84 (705) Profit (loss) before tax 678 1,186 143 (307) 1,700 Expected tax rate 22 % 21 % 19 % 19 % 22 % Tax at the expected rate 149 249 27 (58) 367 21.6 % Effects of recurring tax reconciliation items: Income not taxable or taxable at concessionary rates (11) (5) (1) (3) (20) (1.2) % Deductions not allowable for tax purposes 23 1 1 1 26 1.5 % Items related to taxation of life insurance businesses note (i) (2) (34) 1 — (35) (2.1) % Deferred tax adjustments (9) — — (8) (17) (1.0) % Effect of results of joint ventures and associates note (ii) (20) — (2) — (22) (1.3) % Irrecoverable withholding taxes note (iii) — — — 26 26 1.5 % Other — 2 1 2 5 0.4 % Total (19) (36) — 18 (37) (2.2) % Effects of non-recurring tax reconciliation items: Adjustments to tax charge in relation to prior years 1 3 (1) 3 6 0.4 % Movements in provisions for open tax matters note (iv) 8 — — — 8 0.4 % Total 9 3 (1) 3 14 0.8 % Total actual tax charge (credit) 139 216 26 (37) 344 20.2 % Analysed into: Tax on operating profit based on longer-term investment returns 151 177 150 (49) 429 Tax on non-operating profit (12) 39 (124) 12 (85) Actual tax rate: Operating profit based on longer-term investment returns: Including non-recurring tax reconciling items 15 % 18 % 19 % 13 % 18 % Excluding non-recurring tax reconciling items 14 % 17 % 19 % 13 % 17 % Total profit 21 % 18 % 18 % 12 % 20 % * Other operations include restructuring costs. Notes (i) Items related to taxation of life insurance businesses The £34 million (half year 2017: £85 million) reconciling item in US operations reflects the impact of the dividend received deduction on the taxation of profits from variable annuity business. The reduction from half year 2017 is a result of the US tax reform changes, which took effect from 1 January 2018. The principal reason for the reduction in the Asia operations reconciling items from £43 million at half year 2017 to £2 million at half year 2018 reflects non-operating investment losses in Hong Kong which do not attract tax relief due to the taxable profit being computed as 5 per cent of net insurance premiums. (ii) Effects of results of joint ventures and associates Profit before tax includes Prudential’s share of profits after tax from the joint ventures and associates. Therefore, the actual tax charge does not include tax arising from profit or loss of joint ventures and associates and is reflected as a reconciling item in the table above. (iii) Irrecoverable withholding taxes The £26 million (half year 2017: £29 million) adverse reconciling items reflects local 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. (iv) 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 where upon 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 31 December 2017 (139) Movements in the current period included in: Tax charge attributable to shareholders (8) Other movements* (2) At 30 June 2018 (149) * 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. Half year 2017 £m** Total Asia US UK and Other attributable to Percentage operations operations Europe operations* shareholders impact on ETR Operating profit (loss) based on longer-term investment returns 953 1,073 745 (413) 2,358 Non-operating profit (loss) 98 (782) 42 98 (544) Profit (loss) before tax 1,051 291 787 (315) 1,814 Expected tax rate 20 % 35 % 19 % 19 % 22 % Tax at the expected rate 210 102 150 (60) 402 22.2 % Effects of recurring tax reconciliation items: Income not taxable or taxable at concessionary rates (19) (10) — (2) (31) (1.7) % Deductions not allowable for tax purposes 9 — 6 3 18 1.0 % Items related to taxation of life insurance businesses (43) (85) (2) — (130) (7.2) % Deferred tax adjustments 4 — (1) — 3 0.2 % Effect of results of joint ventures and associates (19) — (1) — (20) (1.1) % Irrecoverable withholding taxes — — — 29 29 1.6 % Other 3 4 4 (1) 10 0.5 % Total (65) (91) 6 29 (121) (6.7) % Effects of non-recurring tax reconciliation items: Adjustments to tax charge in relation to prior years — 10 (6) — 4 0.2 % Movements in provisions for open tax matters 7 25 — — 32 1.7 % Cumulative exchange gains on the sold Korea life business recycled from other comprehensive income (8) — — — (8) (0.4) % Total (1) 35 (6) — 28 1.5 % Total actual tax charge (credit) 144 46 150 (31) 309 17.0 % Analysed into: Tax on operating profit based on longer-term investment returns 152 321 140 (50) 563 Tax on non-operating profit (8) (275) 10 19 (254) Actual tax rate: Operating profit based on longer-term investment returns Including non-recurring tax reconciling items 16 % 30 % 19 % 12 % 24 % Excluding non-recurring tax reconciling items 15 % 27 % 20 % 12 % 22 % Total profit 14 % 16 % 19 % 10 % 17 % * Other operations include restructuring costs. ** |
Schedule of movements in provisions for open tax matters | £m At 31 December 2017 (139) Movements in the current period included in: Tax charge attributable to shareholders (8) Other movements* (2) At 30 June 2018 (149) * 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. |
Earnings per share (Tables)
Earnings per share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings per share | |
Schedule of earnings per share | Half year 2018 Net of tax and Basic Diluted Non- controlling non- controlling earnings earnings Before tax Tax interests interests per share per share note B1.1 note B4 Note £m £m £m £m pence pence Based on operating profit based on longer-term investment returns 2,405 (429) (1) 1,975 76.8 p 76.7 p Short-term fluctuations in investment returns on shareholder-backed business B1.2 (113) (24) — (137) (5.3) p (5.3) p Amortisation of acquisition accounting adjustments (22) 4 — (18) (0.7) p (0.7) p (Loss) attaching to disposal of businesses and corporate transactions (570) 105 — (465) (18.1) p (18.1) p Based on profit for the period 1,700 (344) (1) 1,355 52.7 p 52.6 p Half year 2017 Basic Diluted earnings earnings Before tax Tax Net of tax per share per share note B1.1 note B4 Note £m £m £m pence pence Based on operating profit based on longer-term investment returns 2,358 (563) 1,795 70.0 p 69.9 p Short-term fluctuations in investment returns on shareholder-backed business B1.2 (573) 248 (325) (12.7) p (12.7) p Amortisation of acquisition accounting adjustments (32) 6 (26) (1.0) p (1.0) p Cumulative exchange gain on the sold Korea life business recycled from other comprehensive income 61 — 61 2.4 p 2.4 p Based on profit for the period 1,814 (309) 1,505 58.7 p 58.6 p |
Summary of weighted average number of shares for calculating earnings per share | Half year Half year Weighted average number of shares for calculation of: (millions) (millions) Basic earnings per share 2,573 2,565 Diluted earnings per share 2,574 2,567 |
Dividends (Tables)
Dividends (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Dividends | |
Schedule of dividends | Half year 2018 Half year 2017 Pence per share £m Pence per share £m Dividends relating to reporting period: First interim ordinary dividend 15.67 p 406 14.50 p 375 Dividends paid in reporting period: Second interim ordinary dividend for prior year 32.50 p 840 30.57 p 786 |
Analysis of Group statement o38
Analysis of Group statement of financial position by segment (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Analysis of Group statement of financial position by segment | |
Schedule of financial position by segment | 31-Dec 30 Jun 2018 £m 2017 £m Elimin- Unallo- ation cated of intra- to a segment group (central debtors UK and opera- and Group Group Asia US Europe tions) creditors Total Total By operating segment Note C2.1 C2.2 C2.3 note (v) Assets Goodwill C5(a) 306 — 1,314 — — 1,620 1,482 Deferred acquisition costs and other intangible assets C5(b) 2,614 8,503 199 43 — 11,359 11,011 Property, plant and equipment note (i) 123 237 588 3 — 951 789 Reinsurers' share of insurance contract liabilities note (ii) 2,258 6,436 2,104 3 (1,181) 9,620 9,673 Deferred tax assets C7 112 2,144 130 49 — 2,435 2,627 Current tax recoverable 23 298 255 115 (65) 626 613 Accrued investment income 611 460 1,471 32 — 2,574 2,676 Other debtors note (iii) 2,429 242 3,580 1,722 (4,454) 3,519 2,963 Investment properties 5 5 17,595 — — 17,605 16,497 Investment in joint ventures and associates accounted for using the equity method 867 — 687 — — 1,554 1,416 Loans C3.3 1,337 9,815 5,664 106 — 16,922 17,042 Equity securities and portfolio holdings in unit trusts 30,926 135,837 62,832 112 — 229,707 223,391 Debt securities C3.2 42,256 36,115 79,744 2,190 — 160,305 171,374 Derivative assets 191 816 2,305 116 — 3,428 4,801 Other investments — 901 5,158 — — 6,059 5,622 Deposits 1,203 17 11,020 172 — 12,412 11,236 Assets held for sale* — — 12,024 — — 12,024 38 Cash and cash equivalents 2,177 1,174 3,420 1,679 — 8,450 10,690 Total assets 87,438 203,000 210,090 6,342 (5,700) 501,170 493,941 Total equity 5,741 5,100 8,046 (2,997) — 15,890 16,094 Liabilities Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) C4.1(a) 66,821 185,150 154,655 37 (1,181) 405,482 411,243 Unallocated surplus of with-profits funds C4.1(a) 3,766 — 13,517 — — 17,283 16,951 Core structural borrowings of shareholder-financed operations C6.1 — 189 — 6,178 — 6,367 6,280 Operational borrowings attributable to shareholder-financed operations C6.2(a) 17 262 130 1,209 — 1,618 1,791 Borrowings attributable to with-profits operations C6.2(b) 32 — 3,557 — — 3,589 3,716 Obligations under funding, securities lending and sale and repurchase agreements — 5,612 1,516 — — 7,128 5,662 Net asset value attributable to unit holders of consolidated unit trusts and similar funds 3,550 — 5,781 27 — 9,358 8,889 Deferred tax liabilities C7 1,174 1,653 1,602 14 — 4,443 4,715 Current tax liabilities 155 22 194 109 (65) 415 537 Accruals, deferred income and other liabilities note (iv) 5,920 4,914 6,349 822 (4,454) 13,551 14,185 Provisions 175 19 684 42 — 920 1,123 Derivative liabilities 87 79 2,082 901 — 3,149 2,755 Liabilities held for sale — — 11,977 — — 11,977 — Total liabilities 81,697 197,900 202,044 9,339 (5,700) 485,280 477,847 Total equity and liabilities 87,438 203,000 210,090 6,342 (5,700) 501,170 493,941 * Assets held for sale of £12,024 million includes £11,977 million in respect of the reinsured UK annuity business (see note D1). Notes (i) £605 million (31 December 2017: £492 million) of the property, plant and equipment of £951 million (31 December 2017: £789 million) was held by the Group’s with-profits operations, primarily by the consolidated subsidiaries for venture funds and other investment purposes of the PAC with-profits fund. The Group made additions to property, plant and equipment of £167 million during the period (31 December 2017: £134 million). (ii) Reinsurers’ share of contract liabilities relate primarily to the reinsurance ceded in respect of the acquired REALIC business by the Group’s US insurance operations and the reinsurance of part of the UK Shareholder-backed annuity portfolio as described in note D1. (iii) Within other debtors are premiums receivable of £595 million (31 December 2017: £547 million) of which 89 per cent are due within one year. The remaining 11 per cent is due after one year. (iv) Within ‘Accruals, deferred income and other liabilities’ of £13,551 million (31 December 2017: £14,185 million) is an amount of £8,435 million (31 December 2017: £9,305 million) that is due within one year. (v) Unallocated to a segment includes central operations, Prudential Capital and Africa operations as per note B1.3. |
Analysis of segment statement39
Analysis of segment statement of financial position by business type (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Asia | |
Analysis of operating segments | |
Schedule of segment statement of financial position by business type | 2018 £m 2017 £m Unit -linked With assets Asset- -profits and Other manage Elimina- 30 Jun 31 Dec Note business liabilities business Total ment tions Total Total Assets Goodwill — — 245 245 61 — 306 305 Deferred acquisition costs and other intangible assets 48 — 2,561 2,609 5 — 2,614 2,540 Property, plant and equipment 86 — 34 120 3 — 123 125 Reinsurers' share of insurance contract liabilities 79 — 2,179 2,258 — — 2,258 1,960 Deferred tax assets — — 105 105 7 — 112 112 Current tax recoverable — 4 19 23 — — 23 58 Accrued investment income 266 57 256 579 32 — 611 595 Other debtors 1,599 232 551 2,382 76 (29) 2,429 2,675 Investment properties — — 5 5 — — 5 5 Investment in joint ventures and associates accounted for using the equity method — — 723 723 144 — 867 912 Loans C3.3 757 — 580 1,337 — — 1,337 1,317 Equity securities and portfolio holdings in unit trusts 16,673 12,592 1,622 30,887 39 — 30,926 29,976 Debt securities C3.2 24,923 3,771 13,522 42,216 40 — 42,256 40,982 Derivative assets 136 3 52 191 — — 191 113 Deposits 271 369 530 1,170 33 — 1,203 1,291 Cash and cash equivalents 722 524 820 2,066 111 — 2,177 1,934 Total assets 45,560 17,552 23,804 86,916 551 (29) 87,438 84,900 Total equity — — 5,327 5,327 414 — 5,741 5,926 Liabilities Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) C4.1(b) 36,282 16,094 14,445 66,821 — — 66,821 64,133 Unallocated surplus of with-profits funds C4.1(b) 3,766 — — 3,766 — — 3,766 3,474 Operational borrowings attributable to shareholder-financed operations — 10 7 17 — — 17 50 Borrowings attributable to with-profits operations 32 — — 32 — — 32 10 Net asset value attributable to unit holders of consolidated unit trusts and similar funds 2,042 1,273 235 3,550 — — 3,550 3,631 Deferred tax liabilities 782 30 362 1,174 — — 1,174 1,152 Current tax liabilities 54 — 89 143 12 — 155 122 Accruals, deferred income and other liabilities 2,526 137 3,211 5,874 75 (29) 5,920 6,069 Provisions 26 — 99 125 50 — 175 254 Derivative liabilities 50 8 29 87 — — 87 79 Total liabilities 45,560 17,552 18,477 81,589 137 (29) 81,697 78,974 Total equity and liabilities 45,560 17,552 23,804 86,916 551 (29) 87,438 84,900 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 businesses are included in the column for ‘Other business’. |
US | |
Analysis of operating segments | |
Schedule of segment statement of financial position by business type | 2018 £m 2017 £m Variable annuity separate Fixed account annuity, assets GIC and Asset- and other manage Elimina- 30 Jun 31 Dec Note liabilities business Total ment tions Total Total Assets Goodwill — — — — — — — Deferred acquisition costs and other intangible assets — 8,503 8,503 — — 8,503 8,219 Property, plant and equipment — 234 234 3 — 237 214 Reinsurers' share of insurance contract liabilities — 6,436 6,436 — — 6,436 6,424 Deferred tax assets — 2,056 2,056 88 — 2,144 2,300 Current tax recoverable — 292 292 6 — 298 298 Accrued investment income — 438 438 22 — 460 492 Other debtors — 236 236 76 (70) 242 248 Investment properties — 5 5 — — 5 5 Loans C3.3 — 9,815 9,815 — — 9,815 9,630 Equity securities and portfolio holdings in unit trusts 135,546 289 135,835 2 — 135,837 130,630 Debt securities C3.2 — 36,115 36,115 — — 36,115 35,378 Derivative assets — 816 816 — — 816 1,611 Other investments — 898 898 3 — 901 848 Deposits — — — 17 — 17 43 Cash and cash equivalents — 836 836 338 — 1,174 1,658 Total assets 135,546 66,969 202,515 555 (70) 203,000 197,998 Total equity — 4,896 4,896 204 — 5,100 5,248 Liabilities Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) C4.1(c) 135,546 49,604 185,150 — — 185,150 180,724 Core structural borrowings of shareholder-financed operations — 189 189 — — 189 184 Operational borrowings attributable to shareholder-financed operations — 262 262 — — 262 508 Obligations under funding, securities lending and sale and repurchase agreements — 5,612 5,612 — — 5,612 4,304 Deferred tax liabilities — 1,652 1,652 1 — 1,653 1,845 Current tax liabilities — 21 21 1 — 22 47 Accruals, deferred income and other liabilities — 4,642 4,642 342 (70) 4,914 5,109 Provisions — 12 12 7 — 19 24 Derivative liabilities — 79 79 — — 79 5 Total liabilities 135,546 62,073 197,619 351 (70) 197,900 192,750 Total equity and liabilities 135,546 66,969 202,515 555 (70) 203,000 197,998 |
UK and Europe | |
Analysis of operating segments | |
Schedule of segment statement of financial position by business type | 2018 £m 2017 £m Other funds and subsidiaries Annuity With- and profits Unit-linked other Asset- sub- assets and long-term manage Elimina- 30 Jun 31 Dec funds liabilities business Total ment tions Total Total By operating segment Note note (i) Assets Goodwill 161 — — 161 1,153 — 1,314 1,177 Deferred acquisition costs and other intangible assets 101 — 92 193 6 — 199 210 Property, plant and equipment 519 — 33 552 36 — 588 447 Reinsurers' share of insurance contract liabilities 1,213 126 765 2,104 — — 2,104 2,521 Deferred tax assets 65 — 44 109 21 — 130 157 Current tax recoverable 58 — 197 255 — — 255 244 Accrued investment income 993 96 374 1,463 8 — 1,471 1,558 Other debtors 1,725 399 656 2,780 909 (109) 3,580 3,118 Investment properties 15,293 647 1,655 17,595 — — 17,595 16,487 Investment in joint ventures and associates accounted for using the equity method 649 — — 649 38 — 687 504 Loans C3.3 3,943 — 1,721 5,664 — — 5,664 5,986 Equity securities and portfolio holdings in unit trusts 47,590 15,072 15 62,677 155 — 62,832 62,670 Debt securities C3.2 51,064 6,536 22,144 79,744 — — 79,744 92,707 Derivative assets 1,844 1 460 2,305 — — 2,305 2,954 Other investments 5,147 10 1 5,158 — — 5,158 4,774 Deposits 8,853 1,330 837 11,020 — — 11,020 9,540 Assets held for sale 47 — 11,977 12,024 — — 12,024 38 Cash and cash equivalents 2,280 138 593 3,011 409 — 3,420 5,808 Total assets 141,545 24,355 41,564 207,464 2,735 (109) 210,090 210,900 Total equity — — 6,032 6,032 2,014 — 8,046 8,245 Liabilities Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) C4.1(d) 112,339 22,198 20,118 154,655 — — 154,655 167,589 Unallocated surplus of with-profits funds C4.1(d) 13,517 — — 13,517 — — 13,517 13,477 Operational borrowings attributable to shareholder-financed operations — 4 126 130 — — 130 148 Borrowings attributable to with-profits operations 3,557 — — 3,557 — — 3,557 3,706 Obligations under funding, securities lending and sale and repurchase agreements 1,193 — 323 1,516 — — 1,516 1,358 Net asset value attributable to unit holders of consolidated unit trusts and similar funds 3,998 1,697 86 5,781 — — 5,781 5,243 Deferred tax liabilities 1,353 — 225 1,578 24 — 1,602 1,703 Current tax liabilities 21 48 80 149 45 — 194 377 Accruals, deferred income and other liabilities 4,549 403 1,047 5,999 459 (109) 6,349 6,609 Provisions 25 — 466 491 193 — 684 784 Derivative liabilities 993 5 1,084 2,082 — — 2,082 1,661 Liabilities held for sale — — 11,977 11,977 — — 11,977 — Total liabilities 141,545 24,355 35,532 201,432 721 (109) 202,044 202,655 Total equity and liabilities 141,545 24,355 41,564 207,464 2,735 (109) 210,090 210,900 Notes (i) Includes the Scottish Amicable Insurance Fund which, at 30 June 2018, has total assets and liabilities of £5,310 million (31 December 2017: £5,768 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 £10.2 billion (31 December 2017: £10.6 billion) of non-profits annuities liabilities. |
Group assets and liabilities 40
Group assets and liabilities - measurement (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Financial instruments | |
Schedule of reconciliation of movements in level 3 financial instruments measured at fair value | Total gains (losses) Total recorded gains in other At (losses) in compre- Transfers Transfers At 1 Jan income hensive into out of 30 Jun Half year 2018 £m statement income Purchases Sales Settled Issued level 3 level 3 Loans 4,837 59 65 2 — (223) 43 — — 4,783 Equity securities and portfolio holdings in unit trusts 371 43 (7) 112 (1) — — — — 518 Debt securities 654 (10) — 55 (46) — — — — 653 Other investments (including derivative assets) 4,424 188 46 550 (426) — — — — 4,782 Derivative liabilities (512) 57 — — — — — — 55 (400) Total financial investments, net of derivative liabilities 9,774 337 104 719 (473) (223) 43 — 55 10,336 Borrowings attributable to with-profits operations (1,887) (2) — — — 143 — — — (1,746) Net asset value attributable to unit holders of consolidated unit trusts and similar funds (413) 38 — — — 22 * (414) — — (767) Other financial liabilities (3,031) (84) (68) — — 103 (79) — — (3,159) Total financial instruments at fair value 4,443 289 36 719 (473) 45 (450) — 55 4,664 Total gains (losses) Total recorded gains in other At (losses) in compre- Transfers Transfers At 1 Jan income hensive into out of 31 Dec Full year 2017 £m statement income Purchases Sales Settled Issued level 3 level 3 Loans 2,699 17 (235) 2,129 — (311) 236 302 — 4,837 Equity securities and portfolio holdings in unit trusts 722 11 (5) 186 (468) (6) — 1 (70) 371 Debt securities 942 51 (11) 216 (522) — — — (22) 654 Other investments (including derivative assets) 4,480 73 (133) 727 (725) — — 2 — 4,424 Derivative liabilities (516) 4 — — — — — — — (512) Total financial investments, net of derivative liabilities 8,327 156 (384) 3,258 (1,715) (317) 236 305 (92) 9,774 Borrowings attributable to with-profits operations — (13) — — — 115 (1,989) — — (1,887) Net asset value attributable to unit holders of consolidated unit trusts and similar funds (883) (559) — (13) — 1,276 * (234) — — (413) Other financial liabilities (2,851) 14 250 — — 252 (311) (385) — (3,031) Total financial instruments at fair value 4,593 (402) (134) 3,245 (1,715) 1,326 (2,298) (80) (92) 4,443 * Includes distributions to third-party investors by subsidiaries held by the UK with-profits funds for investment purposes. These distributions vary period to period depending on the maturity of the subsidiaries and the gains realised by those entities in the period. |
Schedule of net unrealised gains and losses in the income statement for financial instruments still held at the end of the year | 2018 £m 2017 £m 30 Jun 31 Dec Loans (23) 20 Equity securities 43 (12) Debt securities (10) (5) Other investments 109 (22) Derivative liabilities 57 4 Borrowings attributable to with-profit operations (2) (13) Net asset value attributable to unit holders of consolidated unit trusts and similar funds 38 (123) Other financial liabilities (2) 12 Total 210 (139) |
At fair value | |
Financial instruments | |
Schedule of fair value of assets and liabilities | 30 Jun 2018 £m Level 1 Level 2 Level 3 Total Valuation Valuation Quoted prices based on based on (unadjusted) significant significant in active observable unobservable Analysis of financial investments, net of derivative liabilities by business type markets market inputs market inputs With-profits Loans — — 1,848 1,848 Equity securities and portfolio holdings in unit trusts 59,025 4,748 490 64,263 Debt securities 29,680 45,952 355 75,987 Other investments (including derivative assets) 76 3,185 3,866 7,127 Derivative liabilities (40) (1,003) — (1,043) Total financial investments, net of derivative liabilities 88,741 52,882 6,559 148,182 Percentage of total 60 % 36 % 4 % 100 % Unit-linked and variable annuity separate account Equity securities and portfolio holdings in unit trusts 162,698 494 18 163,210 Debt securities 5,162 5,145 — 10,307 Other investments (including derivative assets) 3 4 7 14 Derivative liabilities (9) (4) — (13) Total financial investments, net of derivative liabilities 167,854 5,639 25 173,518 Percentage of total 97 % 3 % — % 100 % Non-linked shareholder-backed Loans — — 2,935 2,935 Equity securities and portfolio holdings in unit trusts 2,215 9 10 2,234 Debt securities 17,918 55,795 298 74,011 Other investments (including derivative assets) 34 1,403 909 2,346 Derivative liabilities (1) (1,692) (400) (2,093) Total financial investments, net of derivative liabilities 20,166 55,515 3,752 79,433 Percentage of total 25 % 70 % 5 % 100 % Group total analysis, including other financial liabilities held at fair value Group total Loans — — 4,783 4,783 Equity securities and portfolio holdings in unit trusts 223,938 5,251 518 229,707 Debt securities 52,760 106,892 653 160,305 Other investments (including derivative assets) 113 4,592 4,782 9,487 Derivative liabilities (50) (2,699) (400) (3,149) Total financial investments, net of derivative liabilities 276,761 114,036 10,336 401,133 Investment contract liabilities without discretionary participation features held at fair value — (16,713) — (16,713) Borrowings attributable to with-profits operations — — (1,746) (1,746) Net asset value attributable to unit holders of consolidated unit trusts and similar funds (5,184) (3,407) (767) (9,358) Other financial liabilities held at fair value — — (3,159) (3,159) Total financial instruments at fair value 271,577 93,916 4,664 370,157 Percentage of total 74 % 25 % 1 % 100 % 31 Dec 2017 £m Level 1 Level 2 Level 3 Total Valuation Valuation Quoted prices based on based on (unadjusted) significant significant in active observable unobservable Analysis of financial investments, net of derivative liabilities by business type markets market inputs market inputs With-profits Loans — — 2,023 2,023 Equity securities and portfolio holdings in unit trusts 57,347 4,470 351 62,168 Debt securities 29,143 45,602 348 75,093 Other investments (including derivative assets) 68 3,638 3,540 7,246 Derivative liabilities (68) (615) — (683) Total financial investments, net of derivative liabilities 86,490 53,095 6,262 145,847 Percentage of total 60 % 36 % 4 % 100 % Unit-linked and variable annuity separate account Equity securities and portfolio holdings in unit trusts 158,631 457 10 159,098 Debt securities 4,993 5,226 — 10,219 Other investments (including derivative assets) 12 4 8 24 Derivative liabilities — (1) — (1) Total financial investments, net of derivative liabilities 163,636 5,686 18 169,340 Percentage of total 97 % 3 % 0 % 100 % Non-linked shareholder-backed Loans — — 2,814 2,814 Equity securities and portfolio holdings in unit trusts 2,105 10 10 2,125 Debt securities 21,443 64,313 306 86,062 Other investments (including derivative assets) 7 2,270 876 3,153 Derivative liabilities — (1,559) (512) (2,071) Total financial investments, net of derivative liabilities 23,555 65,034 3,494 92,083 Percentage of total 25 % 71 % 4 % 100 % Group total analysis, including other financial liabilities held at fair value Group total Loans — — 4,837 4,837 Equity securities and portfolio holdings in unit trusts 218,083 4,937 371 223,391 Debt securities 55,579 115,141 654 171,374 Other investments (including derivative assets) 87 5,912 4,424 10,423 Derivative liabilities (68) (2,175) (512) (2,755) Total financial investments, net of derivative liabilities 273,681 123,815 9,774 407,270 Investment contract liabilities without discretionary participation features held at fair value — (17,397) — (17,397) Borrowings attributable to with-profits operations — — (1,887) (1,887) Net asset value attributable to unit holders of consolidated unit trusts and similar funds (4,836) (3,640) (413) (8,889) Other financial liabilities held at fair value — — (3,031) (3,031) Total financial instruments at fair value 268,845 102,778 4,443 376,066 Percentage of total 72 % 27 % 1 % 100 % |
Assets and liabilities at amortised cost for which fair value is disclosed | |
Financial instruments | |
Schedule of fair value of assets and liabilities | 30 Jun 2018 £m Total Total carrying fair value value Assets Loans 12,139 12,710 Liabilities Investment contract liabilities without discretionary participation features (3,001) (3,003) Core structural borrowings of shareholder-financed operations (6,367) (6,518) Operational borrowings attributable to shareholder-financed operations (1,618) (1,618) Borrowings attributable to the with-profits funds (1,843) (1,768) Obligations under funding, securities lending and sale and repurchase agreements (7,128) (7,126) 31 Dec 2017 £m Total Total fair carrying value value Assets Loans 12,205 12,939 Liabilities Investment contract liabilities without discretionary participation features (2,997) (3,032) Core structural borrowings of shareholder-financed operations (6,280) (7,032) Operational borrowings attributable to shareholder-financed operations (1,791) (1,791) Borrowings attributable to the with-profits funds (1,829) (1,832) Obligations under funding, securities lending and sale and repurchase agreements (5,662) (5,828) |
Debt securities (Tables)
Debt securities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt securities | |
Financial investments | |
Schedule of securities analysed according to external credit ratings | 30 Jun 2018 £m BBB+ AAA AA+ to AA- A+ to A- to BBB- Below BBB- Other Total Asia With-profits 2,496 11,425 3,983 3,351 1,768 1,900 24,923 Unit-linked 726 147 489 1,326 441 642 3,771 Non-linked shareholder-backed 948 3,138 3,234 3,063 2,040 1,099 13,522 Asset Management 12 — 28 — — — 40 US Non-linked shareholder-backed 442 6,338 9,439 13,148 1,035 5,713 36,115 UK and Europe With-profits 7,091 8,723 11,606 13,544 2,847 7,253 51,064 Unit-linked 358 2,099 1,694 1,448 718 219 6,536 Non-linked shareholder-backed 3,273 6,296 5,138 1,496 223 5,718 22,144 Other operations 673 1,237 177 39 45 19 2,190 Total debt securities 16,019 39,403 35,788 37,415 9,117 22,563 160,305 31 Dec 2017 £m BBB+ to AAA AA+ to AA- A+ to A- BBB- Below BBB- Other Total Asia With-profits 2,504 10,641 3,846 3,234 1,810 2,397 24,432 Unit-linked 528 103 510 1,429 372 565 3,507 Non-linked shareholder-backed 990 2,925 3,226 2,970 1,879 1,053 13,043 US Non-linked shareholder-backed 368 6,352 9,578 12,311 1,000 5,769 35,378 UK and Europe With-profits 6,492 9,378 11,666 12,856 2,877 7,392 50,661 Unit-linked 670 2,732 1,308 1,793 91 117 6,711 Non-linked shareholder-backed 5,118 11,005 9,625 3,267 258 6,062 35,335 Other operations 742 1,264 182 67 36 16 2,307 Total debt securities 17,412 44,400 39,941 37,927 8,323 23,371 171,374 |
Schedule of securities with credit ratings classified as "Other" | 2018 £m 2017 £m Asia 30 Jun 31 Dec Non-linked shareholder-backed Internally rated Government bonds 23 25 Corporate bonds – rated as investment grade by local external ratings agencies 1,006 959 Other 70 69 Total Asia non-linked shareholder-backed 1,099 1,053 2018 £m 2017 £m Mortgage -backed Other 30 Jun 31 Dec US securities securities Total Total Implicit ratings of other US debt securities based on NAIC* valuations (see below) NAIC 1 1,802 2,101 3,903 3,918 NAIC 2 14 1,767 1,781 1,794 NAIC 3-6 3 26 29 57 Total US** 1,819 3,894 5,713 5,769 * 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. ** Mortgage-backed securities totalling £1,545 million at 30 June 2018 have credit ratings issued by Standard & Poor’s of BBB- or above and hence are designated as investment grade. Other securities totalling £3,868 at 30 June 2018 with NAIC ratings 1 or 2 are also designated as investment grade. 2018 £m 2017 £m UK and Europe 30 Jun 31 Dec Internal ratings or unrated AAA to A- 7,828 7,994 BBB to B- 2,866 3,141 Below B- or unrated 2,496 2,436 Total UK and Europe 13,190 13,571 |
Debt securities | Jackson (US insurance operations) | |
Financial investments | |
Schedule of additional analysis of securities | 2018 £m 2017 £m 30 Jun 31 Dec Corporate and government security and commercial loans: Government 4,737 4,835 Publicly traded and SEC Rule 144A securities* 23,346 22,849 Non-SEC Rule 144A securities 4,659 4,468 Asset backed securities (see note (e)) 3,373 3,226 Total US debt securities** 36,115 35,378 * 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: 2018 £m 2017 £m 30 Jun 31 Dec Available-for-sale 35,860 35,293 Fair value through profit and loss: 255 85 36,115 35,378 |
Schedule of movements in unrealised gains and losses on available-for-sale securities | Foreign Changes in exchange unrealised 30 Jun 2018 £m translation** appreciation 31 Dec 2017 £m Reflected as part of movement in other Assets fair valued at below book value Book value* 23,159 6,325 Unrealised gain (loss) (762) (30) (626) (106) Fair value (as included in statement of financial position) 22,397 6,219 Assets fair valued at or above book value Book value* 12,948 27,763 Unrealised gain (loss) 515 (1) (795) 1,311 Fair value (as included in statement of financial position) 13,463 29,074 Total Book value* 36,107 34,088 Net unrealised gain (loss) (247) (31) (1,421) 1,205 Fair value (as included in the footnote above in the overview table and the statement of financial position) 35,860 35,293 * Book value represents cost/amortised cost of the debt securities. ** Translated at the average rate of US$1.38: £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: 30 Jun 2018 £m 31 Dec 2017 £m Fair Unrealised Fair Unrealised Between 90% and 100% 22,187 (729) 6,170 (95) Between 80% and 90% 195 (29) 36 (6) Below 80%: Other than mortgage-backed securities — — 10 (4) Corporate bonds 15 (4) 3 (1) 15 (4) 13 (5) Total 22,397 (762) 6,219 (106) (ii) Unrealised losses by maturity of security 2018 £m 2017 £m 30 Jun 31 Dec 1 year to 5 years (65) (7) 5 year to 10 years (348) (41) More than 10 years (297) (39) Mortgage-backed and other debt securities (52) (19) Total (762) (106) (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: 30 Jun 2018 £m 31 Dec 2017 £m Non- Non- investment Investment investment Investment Age analysis grade grade Total grade grade Total Less than 6 months (14) (418) (432) (4) (31) (35) 6 months to 1 year (7) (148) (155) (1) (4) (5) 1 year to 2 years (1) (148) (149) — (49) (49) 2 year to 3 years — (1) (1) (1) (6) (7) More than 3 years (1) (24) (25) — (10) (10) (23) (739) (762) (6) (100) (106) Further, the following table shows the age analysis as at 30 June 2018 of the securities whose fair values were below 80 per cent of the book value: 30 Jun 2018 £m 31 Dec 2017 £m Fair Unrealised Fair Unrealised Age analysis value loss value loss Less than 3 months 13 (3) 2 — 3 months to 6 months — — 1 (1) More than 6 months 2 (1) 10 (4) 15 (4) 13 (5) |
Asset-backed securities | |
Financial investments | |
Schedule of additional analysis of securities | 2018 £m 2017 £m 30 Jun 31 Dec Shareholder-backed operations: Asia operations note (i) 97 118 US operations note (ii) 3,373 3,226 UK insurance operations (2018: 33% AAA, 15% AA) note (iii) 960 1,070 Other operations note (iv) 507 589 4,937 5,003 With-profits operations: Asia operations note (i) 192 233 UK insurance operations (2018: 65% AAA, 10% AA) note (iii) 5,414 5,658 5,606 5,891 Total 10,543 10,894 Notes (i) Asia operations The Asia operations’ exposure to asset-backed securities is primarily held by the with-profits operations. Of the £192 million, 100 per cent (31 December 2017: 98 per cent) are investment grade. (ii) US operations US operations’ exposure to asset-backed securities at 30 June 2018 comprises: 2018 £m 2017 £m 30 Jun 31 Dec RMBS Sub-prime (2018: 2% AAA, 6% AA, 3% A) 105 112 Alt-A (2018: 3% AAA, 2% A) 117 126 Prime including agency (2018: 5% AAA, 67 % AA, 8% A) 425 440 CMBS (2018: 83% AAA, 16% AA, 1% A) 1,638 1,579 CDO funds (2018: 13% AA, 87% A), including £nil exposure to sub-prime 11 28 Other ABS (2018: 16% AAA, 16% AA, 53% A), including £93 million exposure to sub-prime 1,077 941 Total 3,373 3,226 (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, £1,833 million (31 December 2017: £1,913 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 £507 million, 99 per cent (31 December 2017: 96 per cent) are graded AAA. |
Sovereign debt | |
Financial investments | |
Schedule of additional analysis of securities | 30 Jun 2018 £m 31 Dec 2017 £m Shareholder- With- Shareholder- With- backed profits backed profits business funds business funds Italy — 60 58 63 Spain 36 18 34 18 France 23 6 23 38 Germany* 663 315 693 301 Other Eurozone 77 30 82 31 Total Eurozone 799 429 890 451 United Kingdom 3,482 3,130 5,918 3,287 United States** 5,243 10,519 5,078 10,156 Other, including Asia 4,923 2,314 4,638 2,143 Total 14,447 16,392 16,524 16,037 * 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 | 2018 £m 2017 £m Senior debt Subordinated debt Total Total senior subordinated 30 Jun 31 Dec Shareholder-backed business Covered Senior debt Tier 1 Tier 2 debt Total Total Italy — — — — — — — — Spain 42 36 78 — — — 78 68 France 27 37 64 13 4 17 81 86 Germany 30 — 30 — 89 89 119 117 Netherlands — 45 45 — 6 6 51 71 Other Eurozone 15 — 15 — — — 15 15 Total Eurozone 114 118 232 13 99 112 344 357 United Kingdom 575 545 1,120 5 164 169 1,289 1,382 United States — 2,399 2,399 1 95 96 2,495 2,619 Other, including Asia 16 699 715 105 391 496 1,211 1,163 Total 705 3,761 4,466 124 749 873 5,339 5,521 With-profits funds Italy — 38 38 — — — 38 31 Spain — 21 21 — — — 21 16 France 8 245 253 2 63 65 318 286 Germany 141 31 172 — 35 35 207 180 Netherlands — 216 216 5 6 11 227 199 Other Eurozone — 27 27 — — — 27 27 Total Eurozone 149 578 727 7 104 111 838 739 United Kingdom 865 797 1,662 2 368 370 2,032 1,938 United States — 2,188 2,188 47 298 345 2,533 2,518 Other, including Asia 580 1,451 2,031 327 430 757 2,788 2,531 Total 1,594 5,014 6,608 383 1,200 1,583 8,191 7,726 |
Loans portfolio (Tables)
Loans portfolio (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Loans | |
Financial investments | |
Schedule of amounts included in the statement of financial position | 30 Jun 2018 £m 31 Dec 2017 £m Mortgage Policy Other Mortgage Policy Other loans* loans** loans † Total loans* loans** loans † Total Asia With-profits — 652 105 757 — 613 112 725 Non-linked shareholder-backed 170 217 193 580 177 216 199 592 US Non-linked shareholder-backed 6,292 3,523 — 9,815 6,236 3,394 — 9,630 UK and Europe With-profits 2,267 4 1,672 3,943 2,441 4 1,823 4,268 Non-linked shareholder-backed 1,686 — 35 1,721 1,681 — 37 1,718 Other operations — — 106 106 — — 109 109 Total loans securities 10,415 4,396 2,111 16,922 10,535 4,227 2,280 17,042 * All mortgage loans are secured by properties. ** In the US £2,638 million (31 December 2017: £2,512 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. |
Policyholder liabilities and 43
Policyholder liabilities and unallocated surplus (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Policyholder liabilities and unallocated surplus | |
Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds | Insurance operations £m UK and Asia US Europe Total Half year 2018 movements note C4.1(b) note C4.1(c) note C4.1(d) At 1 January 2018 73,839 180,724 181,066 435,629 Comprising: - Policyholder liabilities on the consolidated statement of financial position ‡ (excludes £32 million classified as unallocated to a segment) 62,898 180,724 167,589 411,211 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,474 — 13,477 16,951 - Group's share of policyholder liabilities of joint ventures and associate † 7,467 — — 7,467 Reclassification of reinsured UK annuity contracts as held for sale * — — (12,002) (12,002) Net flows: Premiums 6,247 7,111 6,964 20,322 Surrenders (1,547) (5,953) (3,446) (10,946) Maturities/deaths (838) (1,076) (3,499) (5,413) Net flows 3,862 82 19 3,963 Shareholders' transfers post tax (27) — (127) (154) Investment-related items and other movements (1,349) (103) (801) (2,253) Foreign exchange translation differences 690 4,447 17 5,154 As at 30 June 2018 77,015 185,150 168,172 430,337 Comprising: - Policyholder liabilities on the consolidated statement of financial position ‡ 65,640 185,150 154,655 405,445 (excludes £37 million classified as unallocated to a segment) - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,766 — 13,517 17,283 - Group's share of policyholder liabilities of joint ventures and associate † 7,609 — — 7,609 Half year 2017 movements At 1 January 2017 62,784 177,626 169,304 409,714 Comprising: - Policyholder liabilities on the consolidated statement of financial position ‡ 53,716 177,626 157,654 388,996 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 2,667 — 11,650 14,317 - Group's share of policyholder liabilities of joint ventures and associate † 6,401 — — 6,401 Net flows: Premiums 5,699 8,148 7,756 21,603 Surrenders (1,508) (5,071) (3,816) (10,395) Maturities/deaths (880) (1,119) (3,533) (5,532) Net flows 3,311 1,958 407 5,676 Shareholders' transfers post tax (27) — (115) (142) Investment-related items and other movements 4,288 7,124 5,214 16,626 Foreign exchange translation differences (2,035) (8,929) 130 (10,834) At 30 June 2017 68,321 177,779 174,940 421,040 Comprising: - Policyholder liabilities on the consolidated statement of financial position ‡ 58,348 177,779 162,853 398,980 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,003 — 12,087 15,090 - Group's share of policyholder liabilities of joint ventures and associate † 6,970 — — 6,970 Average policyholder liability balances** Half year 2018 71,807 182,937 161,122 415,866 Half year 2017 62,718 177,702 160,254 400,674 * The reclassification of the reinsured UK annuity business as held for sale reflects the value of policyholder liabilities held at 1 January 2018. Movements in items covered by the reinsurance contract prior to the 14 March inception date are included within net flows of the UK and Europe business. * * Averages have been based on opening and closing balances 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 statement of financial position. The Group’s share of the policyholder liabilities as shown above relates to life businesses in China, India and of the Takaful business in Malaysia. ‡ The policyholder liabilities of the Asia insurance operations of £65,640 million (30 June 2017: £58,348 million), shown in the table above, are after deducting the intra-group reinsurance liabilities ceded by the UK and Europe insurance operations of £1,181 million (30 June 2017: £1,271 million) to the Hong Kong with-profits business. Including this amount, total Asia policyholder liabilities were £66,821 million (30 June 2017: £59,619 million). |
Shareholder-backed | |
Policyholder liabilities and unallocated surplus | |
Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds | Half year 2018 £m UK and Total Asia US Europe note (b) At 1 January 2018 37,402 180,724 56,367 274,493 Reclassification of reinsured UK annuity contracts as held for sale* — — (12,002) (12,002) Net flows: Premiums 3,266 7,111 681 11,058 Surrenders (1,383) (5,953) (1,200) (8,536) Maturities/deaths (420) (1,076) (1,294) (2,790) Net flows note 1,463 82 (1,813) (268) Investment-related items and other movements (718) (103) (236) (1,057) Foreign exchange translation differences 1 4,447 — 4,448 At 30 June 2018 38,148 185,150 42,316 265,614 Comprising: - Policyholder liabilities on the consolidated statement of financial position 30,539 185,150 42,316 258,005 (excludes £37 million classified as unallocated to a segment) - Group's share of policyholder liabilities relating to joint ventures and associate 7,609 — — 7,609 Half year 2017 £m UK and Asia US Europe Total At 1 January 2017 32,851 177,626 56,158 266,635 Net flows: Premiums 2,801 8,148 1,658 12,607 Surrenders (1,335) (5,071) (1,500) (7,906) Maturities/deaths (450) (1,119) (1,325) (2,894) Net flows note 1,016 1,958 (1,167) 1,807 Investment-related items and other movements 1,912 7,124 1,500 10,536 Foreign exchange translation differences (739) (8,929) — (9,668) At 30 June 2017 35,040 177,779 56,491 269,310 Comprising: - Policyholder liabilities on the consolidated statement of financial position 28,070 177,779 56,491 262,340 - Group's share of policyholder liabilities relating to joint ventures and associate 6,970 — — 6,970 * The reclassification of the reinsured UK annuity business as held for sale reflects the value of policyholder liabilities held at 1 January 2018. Movements in items covered by the reinsurance contract prior to the 14 March inception date are included within net flows of the UK and Europe business. Note 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 | £m With-profits Unit-linked Other Half year 2018 movements business* liabilities business Total At 1 January 2018 36,437 20,027 17,375 73,839 Comprising: - Policyholder liabilities on the consolidated statement of financial position 32,963 16,263 13,672 62,898 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,474 — — 3,474 - Group's share of policyholder liabilities relating to joint ventures and associate ‡ — 3,764 3,703 7,467 Premiums: New business 432 870 435 1,737 In-force 2,549 841 1,120 4,510 2,981 1,711 1,555 6,247 Surrenders note (c) (164) (1,071) (312) (1,547) Maturities/deaths (418) (93) (327) (838) Net flows note (b) 2,399 547 916 3,862 Shareholders' transfers post tax (27) — — (27) Investment-related items and other movements note (d) (631) (652) (66) (1,349) Foreign exchange translation differences note (a) 689 (142) 143 690 At 30 June 2018 38,867 19,780 18,368 77,015 Comprising: - Policyholder liabilities on the consolidated statement of financial position * 35,101 16,094 14,445 65,640 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,766 — — 3,766 - Group's share of policyholder liabilities relating to joint ventures and associate ‡ — 3,686 3,923 7,609 Half year 2017 movements At 1 January 2017 29,933 17,507 15,344 62,784 Comprising: - Policyholder liabilities on the consolidated statement of financial position 27,266 14,289 12,161 53,716 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 2,667 — — 2,667 - Group's share of policyholder liabilities relating to joint ventures and associate ‡ — 3,218 3,183 6,401 Premiums: New business 676 527 528 1,731 In-force 2,222 805 941 3,968 2,898 1,332 1,469 5,699 Surrenders note (c) (173) (1,102) (233) (1,508) Maturities/deaths (430) (82) (368) (880) Net flows note (b) 2,295 148 868 3,311 Shareholders' transfers post tax (27) — — (27) Investment-related items and other movements note (d) 2,376 1,551 361 4,288 Foreign exchange translation differences note (a) (1,296) (373) (366) (2,035) At 30 June 2017 33,281 18,833 16,207 68,321 Comprising: - Policyholder liabilities on the consolidated statement of financial position 30,278 15,326 12,744 58,348 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,003 — — 3,003 - Group's share of policyholder liabilities relating to joint ventures and associate ‡ — 3,507 3,463 6,970 Average policyholder liability balances † Half year 2018 34,032 19,903 17,872 71,807 Half year 2017 28,772 18,170 15,776 62,718 * The policyholder liabilities of the with-profits business of £35,101 million, shown in the table above, is after deducting the intra-group reinsurance liabilities ceded by the UK and Europe insurance operations of £1,181 million to the Hong Kong with-profits business (30 June 2017: £1,271 million). Including this amount the Asia with-profits policyholder liabilities are £36,282 million (30 June 2017: £31,549 million) † Averages have been based on opening and closing balances and adjusted for any acquisitions, disposals and corporate transactions arising in the period and exclude unallocated surplus of with-profits funds. ‡ The Group’s investment in joint ventures are accounted for on an equity method and the Group’s share of the policyholder liabilities as shown above relate to the life business in China, India and of the Takaful business in Malaysia. Notes (a) Movements in the period have been translated at the average exchange rates for the period ended 30 June 2018. The closing balance has been translated at the closing spot rates as at 30 June 2018. Differences upon retranslation are included in foreign exchange translation differences. (b) Net flows increased by 17 per cent from £3,311 million in half year 2017 to £3,862 million in half year 2018 predominantly reflecting continued growth of the in-force book. (c) The rate of surrenders for shareholder-backed business (expressed as a percentage of opening liabilities) was 3.7 per cent in the first half of 2018 (half year 2017: 4.1 per cent). (d) Investment-related items and other movements in the first half of 2018 primarily represent unrealised investments losses following unfavourable equity markets in the period and rising interest rates. |
Jackson (US insurance operations) | |
Policyholder liabilities and unallocated surplus | |
Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds | £m Variable annuity Fixed annuity, separate account GIC and other liabilities business Total Half year 2018 movements At 1 January 2018 130,528 50,196 180,724 Premiums 5,528 1,583 7,111 Surrenders (4,225) (1,728) (5,953) Maturities/deaths (540) (536) (1,076) Net flows note (b) 763 (681) 82 Transfers from general to separate account 387 (387) — Investment-related items and other movements note (c) 582 (685) (103) Foreign exchange translation differences note (a) 3,286 1,161 4,447 At 30 June 2018 135,546 49,604 185,150 Half year 2017 movements At 1 January 2017 120,411 57,215 177,626 Premiums 5,981 2,167 8,148 Surrenders (3,409) (1,662) (5,071) Maturities/deaths (541) (578) (1,119) Net flows note (b) 2,031 (73) 1,958 Transfers from general to separate account 1,240 (1,240) — Investment-related items and other movements 7,236 (112) 7,124 Foreign exchange translation differences note (a) (6,183) (2,746) (8,929) At 30 June 2017 124,735 53,044 177,779 Average policyholder liability balances* Half year 2018 133,037 49,900 182,937 Half year 2017 122,573 55,129 177,702 * Averages have been based on opening and closing balances. Notes (a) Movements in the period have been translated at an average rate of US$1.38: £1.00 (30 June 2017: US$1.26: £1.00). The closing balance has been translated at closing rate of US$1.32:£1.00 (31 December 2017: US$1.30:£1.00). Differences upon retranslation are included in foreign exchange translation differences. (b) Net flows in the first half of 2018 were £82 million (first half of 2017: £1,958 million) as we continue to grow the business with gross inflows of £7,111 million, principally into variable annuities, more than exceeding surrenders and maturities in the period which are expected to grow in line with the business. (c) Positive investment-related items and other movements in variable annuity separate account liabilities of £582 million for the first six months in 2018 represents positive separate account return mainly following the increase in the US equity market in the period. For fixed annuity, GIC and other business, investment-related items and other movements mainly represent accounting value movements on the guaranteed liabilities driven by increase in interest rates. |
UK and Europe insurance operations | |
Policyholder liabilities and unallocated surplus | |
Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds | £m Shareholder-backed funds and subsidiaries Annuity and other With-profits Unit-linked long-term Half year 2018 movements sub-fund† liabilities business Total At 1 January 2018 124,699 23,145 33,222 181,066 Comprising: - Policyholder liabilities 111,222 23,145 33,222 167,589 - Unallocated surplus of with-profits funds 13,477 — — 13,477 Reclassification of reinsured UK annuity contracts as held for sale* — — (12,002) (12,002) Premiums 6,283 516 165 6,964 Surrenders (2,246) (1,163) (37) (3,446) Maturities/deaths (2,205) (313) (981) (3,499) Net flows note (a) 1,832 (960) (853) 19 Shareholders' transfers post tax (127) — — (127) Switches (89) 89 — — Investment-related items and other movements note (b) (476) (76) (249) (801) Foreign exchange translation differences 17 — — 17 At 30 June 2018 125,856 22,198 20,118 168,172 Comprising: - Policyholder liabilities 112,339 22,198 20,118 154,655 - Unallocated surplus of with-profits funds 13,517 — — 13,517 Half year 2017 movements At 1 January 2017 113,146 22,119 34,039 169,304 Comprising: - Policyholder liabilities 101,496 22,119 34,039 157,654 - Unallocated surplus of with-profits funds 11,650 — — 11,650 Premiums 6,098 1,484 174 7,756 Surrenders (2,316) (1,472) (28) (3,816) Maturities/deaths (2,208) (323) (1,002) (3,533) Net flows note (a) 1,574 (311) (856) 407 Shareholders' transfers post tax (115) — — (115) Switches (91) 91 — — Investment-related items and other movements note (b) 3,805 1,018 391 5,214 Foreign exchange translation differences 130 — — 130 At 30 June 2017 118,449 22,917 33,574 174,940 Comprising: - Policyholder liabilities 106,362 22,917 33,574 162,853 - Unallocated surplus of with-profits funds 12,087 — — 12,087 Average policyholder liability balances** Half year 2018 111,781 22,671 26,670 161,122 Half year 2017 103,929 22,518 33,807 160,254 * The reclassification of the reinsured UK annuity business as held for sale reflects the value of policyholder liabilities held at 1 January 2018. Movements in items covered by the reinsurance contract prior to the 14 March inception date are included within net flows. ** Averages have been based on opening and closing balances and adjusted for any acquisitions, disposals and corporate transactions arising in the period and exclude unallocated surplus of with-profits funds. † Includes the Scottish Amicable Insurance Fund. Notes (a) Net flows have declined from net inflows of £407 million in the first half of 2017 to net inflows of £19 million in the same period of 2018 due primarily to lower premium flows into unit-linked business. The levels of inflows/outflows for unit-linked business is driven by corporate pension schemes with transfers in or out from only a small number of schemes influencing the level of flows in the period. (b) Investment-related items and other movements for with-profits business principally comprise investment return attributable to policyholders earned in the period reflecting unfavourable equity market movements. For shareholder-backed annuity and other long-term business, investment-related items and other movements include the effects of movement in interest rates and credit spreads. |
Intangible assets (Tables)
Intangible assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Intangible assets | |
Reconciliation of goodwill | Attributable to: Shareholders With-profits 2018 £m 2017 £m 30 Jun 31 Dec Cost At beginning of year 1,458 24 1,482 1,628 Disposals/reclassifications to held for sale — (10) (10) (155) Additions in the period — 149 149 9 Exchange differences 1 (2) (1) — Net book amount at end of year 1,459 161 1,620 1,482 |
Schedule of goodwill components | 2018 £m 2017 £m 30 Jun 31 Dec M&G 1,153 1,153 Other - attributable to shareholders 306 305 Goodwill - attributable to shareholders 1,459 1,458 Venture fund investments - attributable to with-profits funds 161 24 1,620 1,482 |
Schedule of deferred acquisition costs and other intangible assets | 2018 £m 2017 £m 30 Jun 31 Dec Deferred acquisition costs and other intangible assets attributable to shareholders 11,210 10,866 Deferred acquisition costs and other intangible assets attributable to with-profits funds 149 145 Total of deferred acquisition costs and other intangible assets 11,359 11,011 |
Shareholder-backed | |
Intangible assets | |
Schedule of deferred acquisition costs and other intangible assets | 2018 £m 2017 £m 30 Jun 31 Dec Deferred acquisition costs related to insurance contracts as classified under IFRS 4 9,596 9,170 Deferred acquisition costs related to investment management contracts, including life assurance contracts classified as financial instruments and investment management contracts under IFRS 4 61 63 9,657 9,233 Present value of acquired in-force policies for insurance contracts as classified under IFRS 4 (PVIF) 35 36 Distribution rights and other intangibles 1,518 1,597 1,553 1,633 Total of deferred acquisition costs and other intangible assets 11,210 10,866 |
Reconciliation of deferred acquisition costs and other intangible assets | 2018 £m 2017 £m 30 Jun 31 Dec Deferred acquisition costs related to insurance contracts as classified under IFRS 4 9,596 9,170 Deferred acquisition costs related to investment management contracts, including life assurance contracts classified as financial instruments and investment management contracts under IFRS 4 61 63 9,657 9,233 Present value of acquired in-force policies for insurance contracts as classified under IFRS 4 (PVIF) 35 36 Distribution rights and other intangibles 1,518 1,597 1,553 1,633 Total of deferred acquisition costs and other intangible assets 11,210 10,866 2018 £m 2017 £m Deferred acquisition costs UK and Asia US Europe All asset PVIF and other 30 Jun 31 Dec insurance insurance insurance management intangibles* Total note Total Balance at beginning of period: 946 8,197 84 6 1,633 10,866 10,755 Additions 199 290 7 1 14 511 1,240 Amortisation to the income statement: † Operating profit (70) (280) (6) (3) (88) (447) (709) Non-operating profit (199) (199) 455 (70) (479) (6) (3) (88) (646) (254) Disposals and transfers — — — — (11) (11) — Exchange differences and other movements 6 206 — 1 5 218 (799) Amortisation of DAC related to net unrealised valuation movements on the US insurance operation's available-for-sale securities recognised within other comprehensive income † — 272 — — — 272 (76) Balance at end of period 1,081 8,486 85 5 1,553 11,210 10,866 * PVIF and other intangibles includes amounts in relation to software rights with additions of £10 million, amortisation of £18 million, disposals of £10 million and a balance at 30 June 2018 of £49 million. † 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 (full year 2017: 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. 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. |
Jackson (US insurance operations) | Shareholder-backed | |
Intangible assets | |
Schedule of DAC components | 2018 £m 2017 £m 30 Jun 31 Dec Variable annuity business 8,258 8,208 Other business 241 278 Cumulative shadow DAC (for unrealised gains/losses booked in other comprehensive income)* (13) (289) Total DAC for US operations 8,486 8,197 * Consequent upon the negative unrealised valuation movement for half year 2018 of £1,421 million (31 December 2017: positive unrealised valuation movement of £617 million), there is a gain of £272 million (31 December 2017: a loss of £76 million) for altered ‘shadow’ DAC amortisation booked within other comprehensive income. These adjustments reflect the movement from period to period, in the changes to the pattern of reported gross profits that would have happened 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 30 June 2018, the cumulative shadow DAC balance as shown in the table above was negative £13 million (31 December 2017: negative £289 million). |
Borrowings (Tables)
Borrowings (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Core structural borrowings of shareholder-financed operations | |
Borrowings | |
Schedule of borrowings | 2018 £m 2017 £m 30 Jun 31 Dec Holding company operations: note (i) Perpetual Subordinated Capital Securities (Tier 1) note (iv) 833 814 Perpetual Subordinated Capital Securities (Tier 2) 2,388 2,326 Subordinated notes (Tier 2) 2,133 2,132 Subordinated debt total 5,354 5,272 Senior debt: note (ii) £300m 6.875% Bonds 2023 300 300 £250m 5.875% Bonds 2029 249 249 Holding company total 5,903 5,821 Prudential Capital bank loan note (iii) 275 275 Jackson US$250m 8.15% Surplus Notes 2027 note (v) 189 184 Total (per condensed consolidated statement of financial position) note (vi) 6,367 6,280 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 US$4,275 million (31 December 2017: US$4,275 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) These borrowings can be converted, in whole or 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. (v) Jackson’s borrowings are unsecured and subordinated to all present and future indebtedness, policy claims and other creditor claims of Jackson. (vi) The maturity profile, currency and interest rates applicable to all other core structural borrowings of shareholder-financed operations of the Group are as detailed in note C6.1 of the Group’s consolidated financial statements for the year ended 31 December 2017. |
Operational borrowings attributable to shareholder-financed operations | |
Borrowings | |
Schedule of borrowings | 2018 £m 2017 £m 30 Jun 31 Dec Borrowings in respect of short-term fixed income securities programmes: Commercial paper 909 485 Medium Term Notes 2018 300 600 1,209 1,085 Other borrowings note 409 706 Total 1,618 1,791 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 | 2018 £m 2017 £m 30 Jun 31 Dec Non-recourse borrowings of consolidated investment funds* 3,521 3,570 £100m 8.5% undated subordinated guaranteed bonds of Scottish Amicable Finance plc** — 100 Other borrowings (predominantly obligations under finance leases) 68 46 Total 3,589 3,716 * In all instances the holders of the debt instruments issued by these subsidiaries and funds do not have recourse beyond the assets of those subsidiaries and funds. ** 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. These bonds were redeemed in full on 30 June 2018. |
Deferred tax (Tables)
Deferred tax (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Deferred tax | |
Schedule of deferred tax assets and liabilities | 2018 £m Movement Other through movements other including Movement in comprehensive foreign income income and currency At 1 Jan statement equity movements At 30 Jun Deferred tax assets Unrealised losses or gains on investments 14 (1) 55 (1) 67 Balances relating to investment and insurance contracts 1 — — — 1 Short-term temporary differences 2,498 (343) (12) 44 2,187 Capital allowances 14 1 — 1 16 Unused tax losses 100 63 1 — 164 Total 2,627 (280) 44 44 2,435 Deferred tax liabilities Unrealised losses or gains on investments (1,748) 126 186 32 (1,404) Balances relating to investment and insurance contracts (872) (49) — (4) (925) Short-term temporary differences (2,041) 27 (11) (36) (2,061) Capital allowances (54) — — 1 (53) Total (4,715) 104 175 (7) (4,443) |
Schedule of tax benefits not recognised | 2018 2017 30 Jun 31 Dec Tax benefit £m Losses £bn Tax benefit £m Losses £bn Capital losses 70 0.4 79 0.4 Trading losses 42 0.2 74 0.3 |
Defined benefit pension schem47
Defined benefit pension schemes (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Defined benefit pension schemes | |
Schedule of recognised asset/liability in respect of defined benefit pension schemes | 2018 £m 2017 £m 30 Jun 31 Dec Other Other PSPS SASPS M&GGPS schemes Total PSPS SASPS M&GGPS schemes Total Underlying economic surplus (deficit) 891 (62) 143 (1) 971 721 (137) 109 (1) 692 Less: unrecognised surplus (657) — — — (657) (485) — — — (485) Economic surplus (deficit) (including investment in Prudential insurance policies) 234 (62) 143 (1) 314 236 (137) 109 (1) 207 Attributable to: PAC with-profits fund 164 (25) — — 139 165 (55) — — 110 Shareholder-backed operations 70 (37) 143 (1) 175 71 (82) 109 (1) 97 Consolidation adjustment against policyholder liabilities for investment in Prudential insurance policies — — (214) — (214) — — (151) — (151) IAS 19 pension asset (liability) on the Group statement of financial position* 234 (62) (71) (1) 100 236 (137) (42) (1) 56 * At 30 June 2018, the PSPS pension asset of £234 million (31 December 2017: £236 million) and the other schemes’ pension liabilities of £134 million (31 December 2017: £180 million) are included within ‘Other debtors’ and ‘Provisions’ respectively in the consolidated statement of financial position. |
Schedule of movements on the pension scheme deficit determined on the economic basis | Half year 2018 £m Actuarial gains Surplus (Charge) and losses Surplus (deficit) in credit to in other (deficit) in schemes at income comprehensive Contributions schemes at 1 Jan 2018 statement income paid 30 Jun 2018 All schemes Underlying position (without the effect of IFRIC 14) Surplus (deficit) 692 (15) 267 27 971 Less: amount attributable to PAC with-profits fund (473) 4 (144) (10) (623) Shareholders' share: Gross of tax surplus (deficit) 219 (11) 123 17 348 Related tax (42) 2 (24) (3) (67) Net of shareholders' tax 177 (9) 99 14 281 Application of IFRIC 14 for the derecognition of PSPS surplus Derecognition of surplus (485) (6) (166) — (657) Less: amount attributable to PAC with-profits fund 363 4 117 — 484 Shareholders' share: Gross of tax (122) (2) (49) — (173) Related tax 23 — 10 — 33 Net of shareholders' tax (99) (2) (39) — (140) With the effect of IFRIC 14 Surplus (deficit) 207 (21) 101 27 314 Less: amount attributable to PAC with-profits fund (110) 8 (27) (10) (139) Shareholders' share: Gross of tax surplus (deficit) 97 (13) 74 17 175 Related tax (19) 2 (14) (3) (34) Net of shareholders' tax 78 (11) 60 14 141 |
Share capital, share premium 48
Share capital, share premium and own shares (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Share capital, share premium and own shares | |
Schedule of reconciliation of issued shares | 30 Jun 2018 31 Dec 2017 Number of Share Share Number of Share Share ordinary shares capital premium ordinary shares capital premium £m £m £m £m Issued shares of 5p each fully paid: At 1 January 2,587,175,445 129 1,948 2,581,061,573 129 1,927 Shares issued under share-based schemes 4,697,422 — 6 6,113,872 — 21 At end of period 2,591,872,867 129 1,954 2,587,175,445 129 1,948 |
Summary of options outstanding under save as you earn schemes to subscribe for shares | Number of shares Share price Exercisable to subscribe for range by year from to 30 June 2018 5,851,810 629 p 1,455 p 31 December 2017 6,448,853 629 p 1,455 p |
Summary of purchases of own shares in respect of employee incentive plans | Number of shares purchased Cost (in millions) £m Half year 2018 1.8 32.2 Full year 2017 3.9 66.1 |
Held for sale and corporate t49
Held for sale and corporate transactions (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Held for sale and corporate transactions | |
Schedule of assets and liabilities held for sale | 2018 £m 2017 £m Half year Half year Loss arising on reinsurance of part of UK shareholder-backed annuity portfolio note (i) (513) — Other transactions note (ii) (57) 61 (570) 61 Notes (i) 2018 £m Half year Assets Reinsurers’ share of insurance contract liabilities 11,928 Other debtors 49 Assets held for sale 11,977 Liabilities Policyholder liabilities 11,928 Accruals, deferred income and other liabilities 49 Liabilities held for sale 11,977 (ii) |
BACKGROUND - Exchange rates app
BACKGROUND - Exchange rates applied (Details) | 6 Months Ended | ||
Jun. 30, 2018₫ / £$ / £฿ / £$ / £RM / £₨ / £Rp / £$ / £¥ / £ | Jun. 30, 2017₫ / £$ / £฿ / £$ / £RM / £₨ / £Rp / £$ / £¥ / £ | Dec. 31, 2017₫ / £$ / £฿ / £$ / £RM / £₨ / £Rp / £$ / £¥ / £ | |
Hong Kong | |||
Exchange rates | |||
Opening / Closing rate | 10.36 | 10.14 | 10.57 |
Average rate | 10.78 | 9.80 | |
Indonesia | |||
Exchange rates | |||
Opening / Closing rate | Rp / £ | 18,919.18 | 17,311.76 | 18,353.44 |
Average rate | Rp / £ | 18,938.64 | 16,793.63 | |
Malaysia | |||
Exchange rates | |||
Opening / Closing rate | RM / £ | 5.33 | 5.58 | 5.47 |
Average rate | RM / £ | 5.42 | 5.53 | |
Singapore | |||
Exchange rates | |||
Opening / Closing rate | 1.80 | 1.79 | 1.81 |
Average rate | 1.83 | 1.77 | |
China | |||
Exchange rates | |||
Opening / Closing rate | ¥ / £ | 8.75 | 8.81 | 8.81 |
Average rate | ¥ / £ | 8.76 | 8.66 | |
India | |||
Exchange rates | |||
Opening / Closing rate | ₨ / £ | 90.46 | 83.96 | 86.34 |
Average rate | ₨ / £ | 90.37 | 82.77 | |
Vietnam | |||
Exchange rates | |||
Opening / Closing rate | ₫ / £ | 30,310.96 | 29,526.43 | 30,719.60 |
Average rate | ₫ / £ | 31,329.01 | 28,612.70 | |
Thailand | |||
Exchange rates | |||
Opening / Closing rate | ฿ / £ | 43.74 | 44.13 | 44.09 |
Average rate | ฿ / £ | 43.66 | 43.72 | |
US dollars | |||
Exchange rates | |||
Opening / Closing rate | 1.32 | 1.30 | 1.35 |
Average rate | 1.38 | 1.26 |
BACKGROUND - New accounting pro
BACKGROUND - New accounting pronouncements (Details) - GBP (£) £ in Millions | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | ||
New accounting pronouncements | |||
Other income | [1] | £ 1,105 | £ 1,137 |
Increase (decrease) due to reclassification of rebates under IFRS 15 | |||
New accounting pronouncements | |||
Other income | £ 82 | £ (85) | |
[1] | The half year 2017 comparative results have been re-presented from those previously published for the deduction of certain expenses against revenue following the adoption of IFRS 15 (see note A2). |
Analysis of performance by se52
Analysis of performance by segment - Profit before tax (Details) - GBP (£) £ / shares in Units, £ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Analysis of operating segments | ||
Other income and expenditure: Interest payable on core structural borrowings | £ (189) | £ (216) |
Operating profit (loss) based on longer-term investment returns | 2,405 | 2,358 |
Short-term fluctuations in investment returns on shareholder-backed business | (113) | (573) |
Amortisation of acquisition accounting adjustments | (22) | (32) |
(Loss) gain on disposal of businesses and corporate transactions | (570) | 61 |
Profit before tax attributable to shareholders | 1,700 | 1,814 |
Tax charge attributable to shareholders' returns | (344) | (309) |
Profit for the period | 1,356 | 1,505 |
Attributable to: | ||
Equity holders of the Company | 1,355 | £ 1,505 |
Non-controlling interests | £ 1 | |
Basic earnings per share | ||
Based on operating profit based on longer-term investment returns | £ 0.768 | £ 0.700 |
Based on profit for the period | £ 0.527 | £ 0.587 |
Operating segments | ||
Analysis of operating segments | ||
Operating profit (loss) based on longer-term investment returns | £ 2,796 | £ 2,771 |
Operating segments | Asia | ||
Analysis of operating segments | ||
Operating profit (loss) based on longer-term investment returns | 1,016 | 953 |
Short-term fluctuations in investment returns on shareholder-backed business | (326) | 41 |
Profit before tax attributable to shareholders | 678 | 1,051 |
Tax charge attributable to shareholders' returns | (139) | (144) |
Operating segments | Asia insurance operations | ||
Analysis of operating segments | ||
Operating profit (loss) based on longer-term investment returns | 927 | 870 |
Operating segments | Asia asset management | ||
Analysis of operating segments | ||
Operating profit (loss) based on longer-term investment returns | 89 | 83 |
Operating segments | US | ||
Analysis of operating segments | ||
Operating profit (loss) based on longer-term investment returns | 1,002 | 1,073 |
Short-term fluctuations in investment returns on shareholder-backed business | 244 | (754) |
Profit before tax attributable to shareholders | 1,186 | 291 |
Tax charge attributable to shareholders' returns | (216) | (46) |
Operating segments | Jackson (US insurance operations) | ||
Analysis of operating segments | ||
Operating profit (loss) based on longer-term investment returns | 1,001 | 1,079 |
Operating segments | Asset management (US) | ||
Analysis of operating segments | ||
Operating profit (loss) based on longer-term investment returns | 1 | (6) |
Operating segments | UK and Europe | ||
Analysis of operating segments | ||
Operating profit (loss) based on longer-term investment returns | 778 | 745 |
Short-term fluctuations in investment returns on shareholder-backed business | (122) | 42 |
Profit before tax attributable to shareholders | 143 | 787 |
Tax charge attributable to shareholders' returns | (26) | (150) |
Operating segments | UK and Europe insurance operations | ||
Analysis of operating segments | ||
Operating profit (loss) based on longer-term investment returns | 506 | 497 |
Operating segments | Long-term business (UK and Europe insurance operations) | ||
Analysis of operating segments | ||
Operating profit (loss) based on longer-term investment returns | 487 | 480 |
Operating segments | General insurance commission (UK and Europe insurance operations) | ||
Analysis of operating segments | ||
Operating profit (loss) based on longer-term investment returns | 19 | 17 |
Operating segments | UK and Europe asset management | ||
Analysis of operating segments | ||
Operating profit (loss) based on longer-term investment returns | 272 | 248 |
Other income and expenditure | ||
Analysis of operating segments | ||
Restructuring costs | (62) | (31) |
Other income and expenditure: Investment return and other income | 33 | 6 |
Other income and expenditure: Interest payable on core structural borrowings | (189) | (216) |
Other income and expenditure: Corporate expenditure | (173) | (172) |
Total other income and expenditure | £ (329) | £ (382) |
Analysis of performance by se53
Analysis of performance by segment - Asset management (Details) - GBP (£) £ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Operating profit based on longer-term investment returns: | ||
Operating profit based on longer-term investment returns | £ 2,405 | £ 2,358 |
Operating segments | ||
Operating profit based on longer-term investment returns: | ||
Operating profit based on longer-term investment returns | 2,796 | 2,771 |
Operating segments | UK and Europe asset management | ||
Operating profit based on longer-term investment returns: | ||
Asset management fee income | 552 | 491 |
Other income | 1 | 4 |
Staff costs | (190) | (166) |
Other costs | (107) | (95) |
Underlying profit before performance-related fees | 256 | 234 |
Share of associate results | 8 | 8 |
Performance-related fees | 8 | 6 |
Operating profit based on longer-term investment returns | £ 272 | £ 248 |
Analysis of performance by se54
Analysis of performance by segment - Short-term fluctuations in investment returns (Details) - GBP (£) £ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Analysis of operating segments | ||
Short-term fluctuations in investment returns on shareholder-backed business | £ (113) | £ (573) |
Operating segments | Asia | ||
Analysis of operating segments | ||
Short-term fluctuations in investment returns on shareholder-backed business | (326) | 41 |
Operating segments | US | ||
Analysis of operating segments | ||
Short-term fluctuations in investment returns on shareholder-backed business | 244 | (754) |
Operating segments | UK and Europe | ||
Analysis of operating segments | ||
Short-term fluctuations in investment returns on shareholder-backed business | (122) | 42 |
Operations within segments | Jackson (US insurance operations) | ||
Analysis of operating segments | ||
Short-term fluctuations in investment returns on shareholder-backed business | 244 | (754) |
Operations within segments | Jackson (US insurance operations) | Net equity hedge result | ||
Analysis of operating segments | ||
Fair value movements on equity hedge instruments | (375) | (1,126) |
Accounting value movements on the variable and fixed index annuity guarantee liabilities | 505 | 111 |
Fee assessments net of claim payments | 253 | 233 |
Short-term fluctuations in investment returns on shareholder-backed business | 383 | (782) |
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 | (183) | 12 |
Operations within segments | Jackson (US insurance operations) | Debt securities | ||
Analysis of operating segments | ||
Short-term fluctuations in investment returns on shareholder-backed business | 6 | 5 |
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 | 31 | 1 |
Operations within segments | Jackson (US insurance operations) | Other items | ||
Analysis of operating segments | ||
Short-term fluctuations in investment returns on shareholder-backed business | 7 | 10 |
Operations within segments | Jackson (US insurance operations) | Amortisation to the income statement, Non-operating profit | ||
Analysis of operating segments | ||
Related credit (charge) for amortisation of deferred acquisition costs | (199) | 231 |
Unallocated to a segment (other operations) | ||
Analysis of operating segments | ||
Short-term fluctuations in investment returns on shareholder-backed business | £ 91 | £ 98 |
Analysis of performance by se55
Analysis of performance by segment - Short-term fluctuations related to debt securities - (Details) - GBP (£) £ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Interest-related realised (losses) gains: | ||
Total short-term fluctuations related to debt securities | £ (113) | £ (573) |
Operations within segments | Jackson (US insurance operations) | ||
Interest-related realised (losses) gains: | ||
Total short-term fluctuations related to debt securities | 244 | (754) |
Operations within segments | Jackson (US insurance operations) | Debt securities | ||
(Charges) credits in the period: | ||
Losses on sales of impaired and deteriorating bonds | (1) | (2) |
Bond write-downs | (2) | (1) |
Recoveries/reversals | 18 | 7 |
Total credits in the period | 15 | 4 |
Less: Risk margin allowance deducted from operating profit based on longer-term investment returns | 38 | 46 |
Total credits, net of risk margin allowance | 53 | 50 |
Interest-related realised (losses) gains: | ||
Gains (losses) arising in the period | 8 | 23 |
Less: Amortisation of gains and losses arising in current and prior periods to operating profit based on longer-term investment returns | (57) | (72) |
Total interest-related realised (losses) gains | (49) | (49) |
Related amortisation of deferred acquisition costs | 2 | 4 |
Total short-term fluctuations related to debt securities | £ 6 | £ 5 |
Analysis of performance by se56
Analysis of performance by segment - Risk margin reserve (Details) £ in Millions, $ in Millions | 6 Months Ended | ||||||
Jun. 30, 2018USD ($) | Jun. 30, 2018GBP (£) | Jun. 30, 2017USD ($) | Jun. 30, 2017GBP (£) | Jun. 30, 2018GBP (£) | Dec. 31, 2017GBP (£) | ||
Risk margin reserve | |||||||
Debt securities | £ | [1] | £ 160,305 | £ 171,374 | ||||
Jackson (US insurance operations) | Debt securities | |||||||
Risk margin reserve | |||||||
RMR (as a percent) | 0.19% | 0.21% | 0.19% | ||||
Annual expected loss | $ (104) | £ (75) | $ (116) | £ (92) | |||
Related amortisation of deferred acquisition costs | 22 | 15 | 22 | 17 | |||
Risk margin reserve charge to operating profit for longer-term credit related losses | (82) | (60) | (94) | (75) | |||
Pre-tax net unrealised gains (losses) on debt securities classified as available-for-sale | £ | (1,149) | 462 | |||||
Jackson (US insurance operations) | Debt securities | Cost/Gross amount | Average | |||||||
Risk margin reserve | |||||||
Debt securities | $ 54,895 | $ 55,839 | |||||
Jackson (US insurance operations) | Debt securities | A3 or higher | |||||||
Risk margin reserve | |||||||
RMR (as a percent) | 0.11% | 0.13% | 0.11% | ||||
Annual expected loss | $ (29) | (21) | $ (35) | (28) | |||
Jackson (US insurance operations) | Debt securities | A3 or higher | Cost/Gross amount | Average | |||||||
Risk margin reserve | |||||||
Debt securities | $ 26,260 | $ 27,848 | |||||
Jackson (US insurance operations) | Debt securities | Baa1, 2 or 3 | |||||||
Risk margin reserve | |||||||
RMR (as a percent) | 0.20% | 0.23% | 0.20% | ||||
Annual expected loss | $ (57) | (41) | $ (60) | (47) | |||
Jackson (US insurance operations) | Debt securities | Baa1, 2 or 3 | Cost/Gross amount | Average | |||||||
Risk margin reserve | |||||||
Debt securities | $ 27,337 | $ 26,601 | |||||
Jackson (US insurance operations) | Debt securities | Ba1, 2 or 3 | |||||||
Risk margin reserve | |||||||
RMR (as a percent) | 1.01% | 1.03% | 1.01% | ||||
Annual expected loss | $ (10) | (7) | $ (11) | (9) | |||
Jackson (US insurance operations) | Debt securities | Ba1, 2 or 3 | Cost/Gross amount | Average | |||||||
Risk margin reserve | |||||||
Debt securities | $ 978 | $ 1,052 | |||||
Jackson (US insurance operations) | Debt securities | B1, 2 or 3 | |||||||
Risk margin reserve | |||||||
RMR (as a percent) | 2.61% | 2.75% | 2.61% | ||||
Annual expected loss | $ (8) | £ (6) | $ (9) | (7) | |||
Jackson (US insurance operations) | Debt securities | B1, 2 or 3 | Cost/Gross amount | Average | |||||||
Risk margin reserve | |||||||
Debt securities | $ 309 | $ 311 | |||||
Jackson (US insurance operations) | Debt securities | Below B3 | |||||||
Risk margin reserve | |||||||
RMR (as a percent) | 3.71% | 3.80% | 3.71% | ||||
Annual expected loss | $ (1) | £ (1) | |||||
Jackson (US insurance operations) | Debt securities | Below B3 | Cost/Gross amount | Average | |||||||
Risk margin reserve | |||||||
Debt securities | $ 11 | $ 27 | |||||
[1] | Included within equity securities and portfolio holdings in unit trusts, debt securities and other investments are £8,993 million of lent securities as at 30 June 2018 (31 December 2017: £8,232 million). |
Analysis of performance by se57
Analysis of performance by segment - Performance measure - (Details) £ in Millions | 6 Months Ended | |
Jun. 30, 2018GBP (£)segment | Jun. 30, 2017GBP (£) | |
Analysis of operating segments | ||
Number of operating segments | segment | 3 | |
Unamortised interest-related realised gains and losses related to previously sold bonds | £ 818 | £ 876 |
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) | 5.10% | 4.70% |
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% | 17.20% |
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) | 6.70% | 6.20% |
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) | 7.00% | 6.50% |
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) | 8.70% | 8.20% |
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) | 9.00% | 8.50% |
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 | £ 1,622 | £ 1,535 |
Operations within segments | Jackson (US insurance operations) | Non-linked shareholder-backed | Equity-type securities | ||
Equity-type securities | ||
Financial investments | £ 1,187 | £ 1,256 |
Analysis of performance by se58
Analysis of performance by segment - Additional segmental analysis of revenue (Details) - GBP (£) £ in Millions | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | ||
Analysis of operating segments | |||
Gross premiums earned | £ 21,341 | £ 22,105 | |
Outward reinsurance premiums | [1] | (12,961) | (947) |
Earned premiums, net of reinsurance | 8,380 | 21,158 | |
Other income | [2] | 1,105 | 1,137 |
Total revenue | 9,485 | 22,295 | |
Interest income | 3,009 | 3,355 | |
Other investment return | (1,575) | 17,274 | |
Total revenue, net of reinsurance | 10,919 | 42,924 | |
Operating segments excluding intra-group amounts | |||
Analysis of operating segments | |||
Gross premiums earned | 21,327 | 22,105 | |
Outward reinsurance premiums | (12,961) | (947) | |
Earned premiums, net of reinsurance | 8,366 | 21,158 | |
Other income | 1,091 | 1,113 | |
Total revenue | 9,457 | 22,271 | |
Operating segments | |||
Analysis of operating segments | |||
Interest income | 2,983 | 3,322 | |
Other investment return | (1,695) | 17,180 | |
Total revenue, net of reinsurance | 10,798 | 42,825 | |
Unallocated to a segment (other operations) - including intra-group eliminations | |||
Analysis of operating segments | |||
Total revenue, net of reinsurance | 121 | 99 | |
Elimination of intra-group amounts | |||
Analysis of operating segments | |||
Total revenue | (53) | (52) | |
Unallocated to a segment (other operations) | |||
Analysis of operating segments | |||
Gross premiums earned | 14 | ||
Earned premiums, net of reinsurance | 14 | ||
Other income | 14 | 24 | |
Total revenue | 28 | 24 | |
Interest income | 26 | 33 | |
Other investment return | 120 | 94 | |
Asia | Operating segments excluding intra-group amounts | |||
Analysis of operating segments | |||
Gross premiums earned | 7,736 | 7,697 | |
Outward reinsurance premiums | (222) | (243) | |
Earned premiums, net of reinsurance | 7,514 | 7,454 | |
Other income | 157 | 159 | |
Total revenue | 7,671 | 7,613 | |
Asia | Operating segments | |||
Analysis of operating segments | |||
Interest income | 513 | 486 | |
Other investment return | (1,703) | 4,317 | |
Total revenue, net of reinsurance | 6,501 | 12,435 | |
Asia | Elimination of intra-group amounts | |||
Analysis of operating segments | |||
Total revenue | (20) | (19) | |
US | Operating segments excluding intra-group amounts | |||
Analysis of operating segments | |||
Gross premiums earned | 7,036 | 7,997 | |
Outward reinsurance premiums | (141) | (168) | |
Earned premiums, net of reinsurance | 6,895 | 7,829 | |
Other income | 44 | 374 | |
Total revenue | 6,939 | 8,203 | |
US | Operating segments | |||
Analysis of operating segments | |||
Interest income | 940 | 1,082 | |
Other investment return | 1,486 | 7,254 | |
Total revenue, net of reinsurance | 9,397 | 16,570 | |
US | Elimination of intra-group amounts | |||
Analysis of operating segments | |||
Total revenue | (32) | (31) | |
Asset management (US) | Operations within segments | |||
Analysis of operating segments | |||
Broker-dealer fees income | 305 | ||
UK and Europe | Provision for review of past annuity sales | |||
Analysis of operating segments | |||
Income recognized for expected insurance recoveries | 166 | ||
UK and Europe | Operating segments excluding intra-group amounts | |||
Analysis of operating segments | |||
Gross premiums earned | 6,555 | 6,411 | |
Outward reinsurance premiums | (12,598) | (536) | |
Earned premiums, net of reinsurance | (6,043) | 5,875 | |
Other income | 890 | 580 | |
Total revenue | (5,153) | 6,455 | |
UK and Europe | Operating segments | |||
Analysis of operating segments | |||
Interest income | 1,530 | 1,754 | |
Other investment return | (1,478) | 5,609 | |
Total revenue, net of reinsurance | (5,100) | 13,820 | |
UK and Europe | Elimination of intra-group amounts | |||
Analysis of operating segments | |||
Total revenue | (1) | (2) | |
UK and Europe | Shareholder annuity portfolio being sold to Rothesay Life | |||
Analysis of operating segments | |||
Outward reinsurance premiums | (12,130) | ||
Asset management operations | |||
Analysis of operating segments | |||
Other income | £ 764 | £ 643 | |
[1] | Outward reinsurance premiums of £(12,961) million includes the £(12,130) million paid during the period in respect of the reinsurance of the UK annuity portfolio. See note D1 for further details. | ||
[2] | The half year 2017 comparative results have been re-presented from those previously published for the deduction of certain expenses against revenue following the adoption of IFRS 15 (see note A2). |
Acquisition costs and other e59
Acquisition costs and other expenditure - Components (Details) - GBP (£) £ in Millions | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | ||
Acquisition costs and other expenditure | |||
Acquisition costs incurred for insurance policies | £ (1,648) | £ (1,920) | |
Acquisition costs deferred less amortisation of acquisition costs | (61) | 399 | |
Administration costs and other expenditure | (2,705) | (2,970) | |
Movements in amounts attributable to external unit holders of consolidated investment funds | (121) | (754) | |
Total acquisition costs and other expenditure | [1] | (4,535) | (5,245) |
Depreciation of property, plant and equipment | £ (54) | £ (60) | |
[1] | The half year 2017 comparative results have been re-presented from those previously published for the deduction of certain expenses against revenue following the adoption of IFRS 15 (see note A2). |
Effect of changes and other a60
Effect of changes and other accounting matters on insurance assets and liabilities (Details) - GBP (£) £ in Millions | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
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 | £ 69 | £ 54 | |
UK and Europe insurance operations | Shareholder annuity portfolio being sold to Rothesay Life | |||
Effect of changes and other accounting matters on insurance | |||
Insurance contract liabilities | £ 12,000 | ||
Profit from additional longevity reinsurance transactions | £ (513) | ||
UK and Europe insurance operations | Shareholder-backed annuity | |||
Effect of changes and other accounting matters on insurance | |||
Credit risk allowance (as a percent) | 0.44% | 0.43% | |
Credit risk allowance as percentage of bond spread over swap rates | 26.00% | 28.00% | |
Reserves for credit risk allowance | £ 1,100 | 1,600 | |
Profits from other management actions | 63 | £ 157 | |
UK and Europe insurance operations | Shareholder-backed annuity | Provision for review of past annuity sales | |||
Effect of changes and other accounting matters on insurance | |||
Gross provision before costs incurred | £ 400 | ||
Further amount provided during the period | 0 | ||
Amount to be recovered from professional indemnity insurers | 166 | ||
UK and Europe insurance operations | Shareholder-backed annuity | IFRS annuity liabilities covered by longevity reinsurance transactions | |||
Effect of changes and other accounting matters on insurance | |||
Liabilities under additional longevity reinsurance transactions | £ 2,018,000 | 600 | |
Profit from additional longevity reinsurance transactions | £ 31 |
Tax charge - By nature of expen
Tax charge - By nature of expense (Details) - GBP (£) £ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Tax charge attributable to shareholders: | ||
Current tax attributable to shareholders | £ (90) | |
Deferred tax attributable to shareholders | (254) | |
Tax charge attributable to shareholders' returns | (344) | £ (309) |
Tax charge attributable to policyholders: | ||
Current tax attributable to policyholders | (111) | |
Deferred tax attributable to policyholders | 78 | |
Tax charge attributable to policyholders' returns | (33) | (393) |
Total current tax charge | (201) | 427 |
Total deferred tax charge | (176) | |
Total tax charge | (377) | (702) |
Hong Kong | ||
Tax charge attributable to policyholders: | ||
Total current tax charge | £ 28 | £ 37 |
Current tax charge (as a percent) | 16.50% | |
Percentage of net insurance premium used to calculate income tax charge | 5.00% | 5.00% |
Operating segments | Asia | ||
Tax charge attributable to shareholders: | ||
Current tax attributable to shareholders | £ (90) | |
Deferred tax attributable to shareholders | (49) | |
Tax charge attributable to shareholders' returns | (139) | £ (144) |
Tax charge attributable to policyholders: | ||
Current tax attributable to policyholders | (47) | |
Deferred tax attributable to policyholders | 4 | |
Tax charge attributable to policyholders' returns | (43) | (131) |
Operating segments | US | ||
Tax charge attributable to shareholders: | ||
Deferred tax attributable to shareholders | (216) | |
Tax charge attributable to shareholders' returns | (216) | (46) |
Operating segments | UK and Europe | ||
Tax charge attributable to shareholders: | ||
Current tax attributable to shareholders | (43) | |
Deferred tax attributable to shareholders | 17 | |
Tax charge attributable to shareholders' returns | (26) | (150) |
Tax charge attributable to policyholders: | ||
Current tax attributable to policyholders | (64) | |
Deferred tax attributable to policyholders | 74 | |
Tax charge attributable to policyholders' returns | 10 | (262) |
Unallocated to a segment (other operations) | ||
Tax charge attributable to shareholders: | ||
Current tax attributable to shareholders | 43 | |
Deferred tax attributable to shareholders | (6) | |
Tax charge attributable to shareholders' returns | £ 37 | £ 31 |
Tax charge - Reconciliation of
Tax charge - Reconciliation of effective tax rate (Details) - GBP (£) £ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Reconciliation of effective tax rate | ||
Operating profit (loss) based on longer-term investment returns | £ 2,405 | £ 2,358 |
Non-operating (loss) profit | (705) | (544) |
Profit (loss) before tax, attributable to shareholders | £ 1,700 | £ 1,814 |
Expected tax rate, attributable to shareholders (as a percent) | 22.00% | 22.00% |
Tax at the expected rate, attributable to shareholders | £ 367 | £ 402 |
Tax at the expected rate, attributable to shareholders, percentage impact on ETR | 21.60% | 22.20% |
Effects of recurring tax reconciliation items: | ||
Income not taxable or taxable at concessionary rates | £ (20) | £ (31) |
Income not taxable or taxable at concessionary rates, percentage impact on ETR | (1.20%) | (1.70%) |
Deductions not allowable for tax purposes | £ 26 | £ 18 |
Deductions not allowable for tax purposes, percentage impact on ETR | 1.50% | 1.00% |
Items related to taxation of life insurance businesses | £ (35) | £ (130) |
Items related to taxation of life insurance businesses, percentage impact on ETR | (2.10%) | (7.20%) |
Deferred tax adjustments | £ (17) | £ 3 |
Deferred tax adjustments, percentage impact on ETR | (1.00%) | 0.20% |
Effect of results of joint ventures and associates | £ (22) | £ (20) |
Effect of results of joint ventures and associates, percentage impact on ETR | (1.30%) | (1.10%) |
Irrecoverable withholding taxes | £ 26 | £ 29 |
Irrecoverable withholding taxes, percentage impact on ETR | 1.50% | 1.60% |
Other | £ 5 | £ 10 |
Other, percentage impact on ETR | 0.40% | 0.50% |
Total effects of recurring tax reconciliation items | £ (37) | £ (121) |
Total effects of recurring tax reconciliation items, percentage impact on ETR | (2.20%) | (6.70%) |
Effects of non-recurring tax reconciliation items: | ||
Adjustments to tax charge in relation to prior years | £ 6 | £ 4 |
Adjustments to tax charge in relation to prior years, percentage impact on ETR | 0.40% | 0.20% |
Movements in provisions for open tax matters | £ 8 | £ 32 |
Movements in provisions for open tax matters, percentage impact on ETR | 0.40% | 1.70% |
Cumulative exchange gains on the sold Korea life business recycled from other comprehensive income | £ (8) | |
Cumulative exchange gains on the sold Korea life business recycled from other comprehensive income, percentage impact on ETR | (0.40%) | |
Total effects of non-recurring tax reconciliation items | £ 14 | £ 28 |
Total effects of non-recurring tax reconciliation items, percentage impact on ETR | 0.80% | 1.50% |
Total actual tax charge (credit), attributable to shareholders | £ 344 | £ 309 |
Total actual tax charge (credit), attributable to shareholders, percentage impact on ETR | 20.20% | 17.00% |
Analysed into: | ||
Tax on operating profit based on longer-term investment returns | £ 429 | £ 563 |
Tax on non-operating profit | £ (85) | £ (254) |
Actual tax rate: | ||
Operating profit based on longer-term investment returns, including non-recurring tax reconciling items (as a percent) | 18.00% | 24.00% |
Operating profit based on longer-term investment returns, excluding non-recurring tax reconciling items (as a percent) | 17.00% | 22.00% |
Total profit attributable to shareholders (as a percent) | 20.00% | 17.00% |
Hong Kong | ||
Effects of non-recurring tax reconciliation items: | ||
Percentage of net insurance premium used to calculate income tax charge | 5.00% | 5.00% |
Operating segments | ||
Reconciliation of effective tax rate | ||
Operating profit (loss) based on longer-term investment returns | £ 2,796 | £ 2,771 |
Unallocated to a segment (other operations) | ||
Reconciliation of effective tax rate | ||
Operating profit (loss) based on longer-term investment returns | (391) | (413) |
Non-operating (loss) profit | 84 | 98 |
Profit (loss) before tax, attributable to shareholders | £ (307) | £ (315) |
Expected tax rate, attributable to shareholders (as a percent) | 19.00% | 19.00% |
Tax at the expected rate, attributable to shareholders | £ (58) | £ (60) |
Effects of recurring tax reconciliation items: | ||
Income not taxable or taxable at concessionary rates | (3) | (2) |
Deductions not allowable for tax purposes | 1 | 3 |
Deferred tax adjustments | (8) | |
Irrecoverable withholding taxes | 26 | 29 |
Other | 2 | (1) |
Total effects of recurring tax reconciliation items | 18 | 29 |
Effects of non-recurring tax reconciliation items: | ||
Adjustments to tax charge in relation to prior years | 3 | |
Total effects of non-recurring tax reconciliation items | 3 | |
Total actual tax charge (credit), attributable to shareholders | (37) | (31) |
Analysed into: | ||
Tax on operating profit based on longer-term investment returns | (49) | (50) |
Tax on non-operating profit | £ 12 | £ 19 |
Actual tax rate: | ||
Operating profit based on longer-term investment returns, including non-recurring tax reconciling items (as a percent) | 13.00% | 12.00% |
Operating profit based on longer-term investment returns, excluding non-recurring tax reconciling items (as a percent) | 13.00% | 12.00% |
Total profit attributable to shareholders (as a percent) | 12.00% | 10.00% |
Asia | Operating segments | ||
Reconciliation of effective tax rate | ||
Operating profit (loss) based on longer-term investment returns | £ 1,016 | £ 953 |
Non-operating (loss) profit | (338) | 98 |
Profit (loss) before tax, attributable to shareholders | £ 678 | £ 1,051 |
Expected tax rate, attributable to shareholders (as a percent) | 22.00% | 20.00% |
Tax at the expected rate, attributable to shareholders | £ 149 | £ 210 |
Effects of recurring tax reconciliation items: | ||
Income not taxable or taxable at concessionary rates | (11) | (19) |
Deductions not allowable for tax purposes | 23 | 9 |
Items related to taxation of life insurance businesses | (2) | (43) |
Deferred tax adjustments | (9) | 4 |
Effect of results of joint ventures and associates | (20) | (19) |
Other | 3 | |
Total effects of recurring tax reconciliation items | (19) | (65) |
Effects of non-recurring tax reconciliation items: | ||
Adjustments to tax charge in relation to prior years | 1 | |
Movements in provisions for open tax matters | 8 | 7 |
Cumulative exchange gains on the sold Korea life business recycled from other comprehensive income | (8) | |
Total effects of non-recurring tax reconciliation items | 9 | (1) |
Total actual tax charge (credit), attributable to shareholders | 139 | 144 |
Analysed into: | ||
Tax on operating profit based on longer-term investment returns | 151 | 152 |
Tax on non-operating profit | £ (12) | £ (8) |
Actual tax rate: | ||
Operating profit based on longer-term investment returns, including non-recurring tax reconciling items (as a percent) | 15.00% | 16.00% |
Operating profit based on longer-term investment returns, excluding non-recurring tax reconciling items (as a percent) | 14.00% | 15.00% |
Total profit attributable to shareholders (as a percent) | 21.00% | 14.00% |
Asia insurance operations | Operating segments | ||
Reconciliation of effective tax rate | ||
Operating profit (loss) based on longer-term investment returns | £ 927 | £ 870 |
US | Operating segments | ||
Reconciliation of effective tax rate | ||
Operating profit (loss) based on longer-term investment returns | 1,002 | 1,073 |
Non-operating (loss) profit | 184 | (782) |
Profit (loss) before tax, attributable to shareholders | £ 1,186 | £ 291 |
Expected tax rate, attributable to shareholders (as a percent) | 21.00% | 35.00% |
Tax at the expected rate, attributable to shareholders | £ 249 | £ 102 |
Effects of recurring tax reconciliation items: | ||
Income not taxable or taxable at concessionary rates | (5) | (10) |
Deductions not allowable for tax purposes | 1 | |
Items related to taxation of life insurance businesses | (34) | (85) |
Other | 2 | 4 |
Total effects of recurring tax reconciliation items | (36) | (91) |
Effects of non-recurring tax reconciliation items: | ||
Adjustments to tax charge in relation to prior years | 3 | 10 |
Movements in provisions for open tax matters | 25 | |
Total effects of non-recurring tax reconciliation items | 3 | 35 |
Total actual tax charge (credit), attributable to shareholders | 216 | 46 |
Analysed into: | ||
Tax on operating profit based on longer-term investment returns | 177 | 321 |
Tax on non-operating profit | £ 39 | £ (275) |
Actual tax rate: | ||
Operating profit based on longer-term investment returns, including non-recurring tax reconciling items (as a percent) | 18.00% | 30.00% |
Operating profit based on longer-term investment returns, excluding non-recurring tax reconciling items (as a percent) | 17.00% | 27.00% |
Total profit attributable to shareholders (as a percent) | 18.00% | 16.00% |
UK and Europe | Operating segments | ||
Reconciliation of effective tax rate | ||
Operating profit (loss) based on longer-term investment returns | £ 778 | £ 745 |
Non-operating (loss) profit | (635) | 42 |
Profit (loss) before tax, attributable to shareholders | £ 143 | £ 787 |
Expected tax rate, attributable to shareholders (as a percent) | 19.00% | 19.00% |
Tax at the expected rate, attributable to shareholders | £ 27 | £ 150 |
Effects of recurring tax reconciliation items: | ||
Income not taxable or taxable at concessionary rates | (1) | |
Deductions not allowable for tax purposes | 1 | 6 |
Items related to taxation of life insurance businesses | 1 | (2) |
Deferred tax adjustments | (1) | |
Effect of results of joint ventures and associates | (2) | (1) |
Other | 1 | 4 |
Total effects of recurring tax reconciliation items | 6 | |
Effects of non-recurring tax reconciliation items: | ||
Adjustments to tax charge in relation to prior years | (1) | (6) |
Total effects of non-recurring tax reconciliation items | (1) | (6) |
Total actual tax charge (credit), attributable to shareholders | 26 | 150 |
Analysed into: | ||
Tax on operating profit based on longer-term investment returns | 150 | 140 |
Tax on non-operating profit | £ (124) | £ 10 |
Actual tax rate: | ||
Operating profit based on longer-term investment returns, including non-recurring tax reconciling items (as a percent) | 19.00% | 19.00% |
Operating profit based on longer-term investment returns, excluding non-recurring tax reconciling items (as a percent) | 19.00% | 20.00% |
Total profit attributable to shareholders (as a percent) | 18.00% | 19.00% |
Tax charge - Provision for open
Tax charge - Provision for open tax matters (Details) £ in Millions | 6 Months Ended |
Jun. 30, 2018GBP (£) | |
Movements in provisions for open tax matters | |
Provision for open tax matters at beginning of period | £ (139) |
Tax charge attributable to shareholders | (8) |
Other movements | (2) |
Provision for open tax matters at end of period | £ (149) |
Earnings per share - Calculatio
Earnings per share - Calculation (Details) - GBP (£) £ / shares in Units, £ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Before tax | ||
Based on operating profit based on longer-term investment returns | £ 2,405 | £ 2,358 |
Short-term fluctuations in investment returns on shareholder-backed business | (113) | (573) |
Amortisation of acquisition accounting adjustments | (22) | (32) |
(Loss) profit attaching to disposal of businesses and corporate transactions | (570) | 61 |
Cumulative exchange gain recycled from other comprehensive income | 61 | |
Profit before tax attributable to shareholders | 1,700 | 1,814 |
Tax | ||
Based on operating profit based on longer-term investment returns | (429) | (563) |
Short-term fluctuations in investment returns on shareholder-backed business | (24) | 248 |
Amortisation of acquisition accounting adjustments | 4 | 6 |
(Loss) attaching to disposal of businesses and corporate transactions | 105 | |
Based on profit for the period | (344) | (309) |
Non-controlling interests | ||
Based on operating profit based on longer-term investment returns | (1) | |
Based on profit for the period | (1) | |
Net of tax and non-controlling interests | ||
Based on operating profit based on longer-term investment returns | 1,975 | 1,795 |
Short-term fluctuations in investment returns on shareholder-backed business | (137) | (325) |
Amortisation of acquisition accounting adjustments | (18) | (26) |
(Loss) attaching to disposal of businesses and corporate transactions | (465) | |
Cumulative exchange gain (loss) on sold business, recycled from other comprehensive income | 61 | |
Profit for the period attributable to equity holders of the Company | £ 1,355 | £ 1,505 |
Basic earnings per share | ||
Based on operating profit based on longer-term investment returns (in GBP per share) | £ 0.768 | £ 0.700 |
Short-term fluctuations in investment returns on shareholder-backed business (in GBP per share) | (0.053) | (0.127) |
Amortisation of acquisition accounting adjustments (in GBP per share) | (0.007) | (0.010) |
(Loss) attaching to disposal of businesses and corporate transactions (in GBP per share) | (0.181) | |
Cumulative exchange gain (loss) on sold business, recycled from other comprehensive income (in GBP per share) | 0.024 | |
Based on profit for the period (in GBP per share) | 0.527 | 0.587 |
Diluted earnings per share | ||
Based on operating profit based on longer-term investment returns (in GBP per share) | 0.767 | 0.699 |
Short-term fluctuations in investment returns on shareholder-backed business (in GBP per share) | (0.053) | (0.127) |
Amortisation of acquisition accounting adjustments (in GBP per share) | (0.007) | (0.010) |
(Loss) attaching to disposal of businesses and corporate transactions (in GBP per share) | (0.181) | |
Cumulative exchange gain (loss) on sold business, recycled from other comprehensive income (in GBP per share) | 0.024 | |
Based on profit for the period (in GBP per share) | £ 0.526 | £ 0.586 |
Earnings per share - Weighted a
Earnings per share - Weighted average shares (Details) - shares shares in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Weighted average number of shares for calculating earnings per share | ||
Basic earnings per share | 2,573 | 2,565 |
Diluted earnings per share | 2,574 | 2,567 |
Dividends (Details)
Dividends (Details) - GBP (£) £ / shares in Units, £ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Dividends relating to reporting period: | ||
First interim ordinary dividend (in GBP per share) | £ 0.1567 | £ 0.1450 |
First interim ordinary dividend | £ 406 | £ 375 |
Dividends paid in reporting period: | ||
Second interim ordinary dividend/final ordinary dividend for prior year (in GBP per share) | £ 0.3250 | £ 0.3057 |
Second interim ordinary dividend/final ordinary dividend for prior year | £ 840 | £ 786 |
Analysis of Group statement o67
Analysis of Group statement of financial position by segment (Details) - GBP (£) £ in Millions | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | |
Assets | |||||
Goodwill | £ 1,620 | £ 1,482 | £ 1,628 | ||
Deferred acquisition costs and other intangible assets | 11,359 | 11,011 | |||
Property, plant and equipment | 951 | 789 | |||
Reinsurers' share of insurance contract liabilities | 9,620 | 9,673 | |||
Deferred tax assets | 2,435 | 2,627 | |||
Current tax recoverable | 626 | 613 | |||
Accrued investment income | 2,574 | 2,676 | |||
Other debtors | 3,519 | 2,963 | |||
Investment properties | 17,605 | 16,497 | |||
Investment in joint ventures and associates accounted for using the equity method | 1,554 | 1,416 | |||
Loans | 16,922 | 17,042 | |||
Equity securities and portfolio holdings in unit trusts | [1] | 229,707 | 223,391 | ||
Debt securities | [1] | 160,305 | 171,374 | ||
Derivative assets | 3,428 | 4,801 | |||
Other investments | [1] | 6,059 | 5,622 | ||
Deposits | 12,412 | 11,236 | |||
Assets held for sale | [2] | 12,024 | 38 | ||
Cash and cash equivalents | 8,450 | 10,690 | £ 9,893 | 10,065 | |
Total assets | 501,170 | 493,941 | |||
Total equity | 15,890 | 16,094 | £ 15,450 | £ 14,667 | |
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 405,482 | 411,243 | |||
Unallocated surplus of with-profits funds | 17,283 | 16,951 | |||
Core structural borrowings of shareholder-financed operations | 6,367 | 6,280 | |||
Operational borrowings attributable to shareholder-financed operations | 1,618 | 1,791 | |||
Borrowings attributable to with-profits operations | 3,589 | 3,716 | |||
Obligations under funding, securities lending and sale and repurchase agreements | 7,128 | 5,662 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 9,358 | 8,889 | |||
Deferred tax liabilities | 4,443 | 4,715 | |||
Current tax liabilities | 415 | 537 | |||
Accruals deferred income and other liabilities | 13,551 | 14,185 | |||
Provisions | 920 | 1,123 | |||
Derivative liabilities | 3,149 | 2,755 | |||
Liabilities held for sale | 11,977 | ||||
Total liabilities | 485,280 | 477,847 | |||
Total equity and liabilities | 501,170 | 493,941 | |||
Operating segments | Asia | |||||
Assets | |||||
Goodwill | 306 | 305 | |||
Deferred acquisition costs and other intangible assets | 2,614 | 2,540 | |||
Property, plant and equipment | 123 | 125 | |||
Reinsurers' share of insurance contract liabilities | 2,258 | 1,960 | |||
Deferred tax assets | 112 | 112 | |||
Current tax recoverable | 23 | 58 | |||
Accrued investment income | 611 | 595 | |||
Other debtors | 2,429 | 2,675 | |||
Investment properties | 5 | 5 | |||
Investment in joint ventures and associates accounted for using the equity method | 867 | 912 | |||
Loans | 1,337 | 1,317 | |||
Equity securities and portfolio holdings in unit trusts | 30,926 | 29,976 | |||
Debt securities | 42,256 | 40,982 | |||
Derivative assets | 191 | 113 | |||
Deposits | 1,203 | 1,291 | |||
Cash and cash equivalents | 2,177 | 1,934 | |||
Total assets | 87,438 | 84,900 | |||
Total equity | 5,741 | 5,926 | |||
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 66,821 | 64,133 | |||
Unallocated surplus of with-profits funds | 3,766 | 3,474 | |||
Operational borrowings attributable to shareholder-financed operations | 17 | 50 | |||
Borrowings attributable to with-profits operations | 32 | 10 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 3,550 | 3,631 | |||
Deferred tax liabilities | 1,174 | 1,152 | |||
Current tax liabilities | 155 | 122 | |||
Accruals deferred income and other liabilities | 5,920 | 6,069 | |||
Provisions | 175 | 254 | |||
Derivative liabilities | 87 | 79 | |||
Total liabilities | 81,697 | 78,974 | |||
Total equity and liabilities | 87,438 | 84,900 | |||
Operating segments | US | |||||
Assets | |||||
Deferred acquisition costs and other intangible assets | 8,503 | 8,219 | |||
Property, plant and equipment | 237 | 214 | |||
Reinsurers' share of insurance contract liabilities | 6,436 | 6,424 | |||
Deferred tax assets | 2,144 | 2,300 | |||
Current tax recoverable | 298 | 298 | |||
Accrued investment income | 460 | 492 | |||
Other debtors | 242 | 248 | |||
Investment properties | 5 | 5 | |||
Loans | 9,815 | 9,630 | |||
Equity securities and portfolio holdings in unit trusts | 135,837 | 130,630 | |||
Debt securities | 36,115 | 35,378 | |||
Derivative assets | 816 | 1,611 | |||
Other investments | 901 | 848 | |||
Deposits | 17 | 43 | |||
Cash and cash equivalents | 1,174 | 1,658 | |||
Total assets | 203,000 | 197,998 | |||
Total equity | 5,100 | 5,248 | |||
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 185,150 | 180,724 | |||
Core structural borrowings of shareholder-financed operations | 189 | 184 | |||
Operational borrowings attributable to shareholder-financed operations | 262 | 508 | |||
Obligations under funding, securities lending and sale and repurchase agreements | 5,612 | 4,304 | |||
Deferred tax liabilities | 1,653 | 1,845 | |||
Current tax liabilities | 22 | 47 | |||
Accruals deferred income and other liabilities | 4,914 | 5,109 | |||
Provisions | 19 | 24 | |||
Derivative liabilities | 79 | 5 | |||
Total liabilities | 197,900 | 192,750 | |||
Total equity and liabilities | 203,000 | 197,998 | |||
Operating segments | UK and Europe | |||||
Assets | |||||
Goodwill | 1,314 | 1,177 | |||
Deferred acquisition costs and other intangible assets | 199 | 210 | |||
Property, plant and equipment | 588 | 447 | |||
Reinsurers' share of insurance contract liabilities | 2,104 | 2,521 | |||
Deferred tax assets | 130 | 157 | |||
Current tax recoverable | 255 | 244 | |||
Accrued investment income | 1,471 | 1,558 | |||
Other debtors | 3,580 | 3,118 | |||
Investment properties | 17,595 | 16,487 | |||
Investment in joint ventures and associates accounted for using the equity method | 687 | 504 | |||
Loans | 5,664 | 5,986 | |||
Equity securities and portfolio holdings in unit trusts | 62,832 | 62,670 | |||
Debt securities | 79,744 | 92,707 | |||
Derivative assets | 2,305 | 2,954 | |||
Other investments | 5,158 | 4,774 | |||
Deposits | 11,020 | 9,540 | |||
Assets held for sale | 12,024 | 38 | |||
Cash and cash equivalents | 3,420 | 5,808 | |||
Total assets | 210,090 | 210,900 | |||
Total equity | 8,046 | 8,245 | |||
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 154,655 | 167,589 | |||
Unallocated surplus of with-profits funds | 13,517 | 13,477 | |||
Operational borrowings attributable to shareholder-financed operations | 130 | 148 | |||
Borrowings attributable to with-profits operations | 3,557 | 3,706 | |||
Obligations under funding, securities lending and sale and repurchase agreements | 1,516 | 1,358 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 5,781 | 5,243 | |||
Deferred tax liabilities | 1,602 | 1,703 | |||
Current tax liabilities | 194 | 377 | |||
Accruals deferred income and other liabilities | 6,349 | 6,609 | |||
Provisions | 684 | 784 | |||
Derivative liabilities | 2,082 | 1,661 | |||
Liabilities held for sale | 11,977 | ||||
Total liabilities | 202,044 | 202,655 | |||
Total equity and liabilities | 210,090 | 210,900 | |||
Unallocated to a segment (other operations) | |||||
Assets | |||||
Deferred acquisition costs and other intangible assets | 43 | ||||
Property, plant and equipment | 3 | ||||
Reinsurers' share of insurance contract liabilities | 3 | ||||
Deferred tax assets | 49 | ||||
Current tax recoverable | 115 | ||||
Accrued investment income | 32 | ||||
Other debtors | 1,722 | ||||
Loans | 106 | 109 | |||
Equity securities and portfolio holdings in unit trusts | 112 | ||||
Debt securities | 2,190 | 2,307 | |||
Derivative assets | 116 | ||||
Deposits | 172 | ||||
Cash and cash equivalents | 1,679 | ||||
Total assets | 6,342 | ||||
Total equity | (2,997) | ||||
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 37 | £ 32 | |||
Core structural borrowings of shareholder-financed operations | 6,178 | ||||
Operational borrowings attributable to shareholder-financed operations | 1,209 | ||||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 27 | ||||
Deferred tax liabilities | 14 | ||||
Current tax liabilities | 109 | ||||
Accruals deferred income and other liabilities | 822 | ||||
Provisions | 42 | ||||
Derivative liabilities | 901 | ||||
Total liabilities | 9,339 | ||||
Total equity and liabilities | 6,342 | ||||
Elimination of intra-group amounts | |||||
Assets | |||||
Reinsurers' share of insurance contract liabilities | (1,181) | ||||
Current tax recoverable | (65) | ||||
Other debtors | (4,454) | ||||
Total assets | (5,700) | ||||
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | (1,181) | ||||
Current tax liabilities | (65) | ||||
Accruals deferred income and other liabilities | (4,454) | ||||
Total liabilities | (5,700) | ||||
Total equity and liabilities | £ (5,700) | ||||
[1] | Included within equity securities and portfolio holdings in unit trusts, debt securities and other investments are £8,993 million of lent securities as at 30 June 2018 (31 December 2017: £8,232 million). | ||||
[2] | Assets held for sale of £12,024 million includes £11,977 million in respect of the reinsured UK annuity business (see note D1). |
Analysis of Group statement o68
Analysis of Group statement of financial position by segment - Notes (Details) - GBP (£) £ in Millions | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | ||
Analysis of Group statement of financial position by segment | |||
Assets held for sale | [1] | £ 12,024 | £ 38 |
Property, plant and equipment | 951 | 789 | |
Additions to property, plant and equipment | 167 | 134 | |
Premiums receivable | 595 | 547 | |
Accruals deferred income and other liabilities | 13,551 | 14,185 | |
Assets | 501,170 | 493,941 | |
Policyholder liabilities | 405,482 | 411,243 | |
UK and Europe insurance operations | Shareholder annuity portfolio being sold to Rothesay Life | |||
Analysis of Group statement of financial position by segment | |||
Assets held for sale | 11,977 | ||
Accruals deferred income and other liabilities | £ 49 | ||
Expected to be settled within one year | |||
Analysis of Group statement of financial position by segment | |||
Premiums receivable due (as a percent) | 89.00% | ||
Accruals deferred income and other liabilities | £ 8,435 | 9,305 | |
Expected to be settled after one year | |||
Analysis of Group statement of financial position by segment | |||
Premiums receivable due (as a percent) | 11.00% | ||
With-profits | |||
Analysis of Group statement of financial position by segment | |||
Property, plant and equipment | £ 605 | £ 492 | |
[1] | Assets held for sale of £12,024 million includes £11,977 million in respect of the reinsured UK annuity business (see note D1). |
Analysis of segment statement69
Analysis of segment statement of financial position by business type (Details) - GBP (£) £ in Millions | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | |
Assets | |||||
Goodwill | £ 1,620 | £ 1,482 | £ 1,628 | ||
Deferred acquisition costs and other intangible assets | 11,359 | 11,011 | |||
Property, plant and equipment | 951 | 789 | |||
Reinsurers' share of insurance contract liabilities | 9,620 | 9,673 | |||
Deferred tax assets | 2,435 | 2,627 | |||
Current tax recoverable | 626 | 613 | |||
Accrued investment income | 2,574 | 2,676 | |||
Other debtors | 3,519 | 2,963 | |||
Investment properties | 17,605 | 16,497 | |||
Investment in joint ventures and associates accounted for using the equity method | 1,554 | 1,416 | |||
Loans | 16,922 | 17,042 | |||
Equity securities and portfolio holdings in unit trusts | [1] | 229,707 | 223,391 | ||
Debt securities | [1] | 160,305 | 171,374 | ||
Derivative assets | 3,428 | 4,801 | |||
Deposits | 12,412 | 11,236 | |||
Assets held for sale | [2] | 12,024 | 38 | ||
Other investments | [1] | 6,059 | 5,622 | ||
Cash and cash equivalents | 8,450 | 10,690 | £ 9,893 | 10,065 | |
Total assets | 501,170 | 493,941 | |||
Total equity | 15,890 | 16,094 | 15,450 | £ 14,667 | |
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 405,482 | 411,243 | |||
Unallocated surplus of with-profits funds | 17,283 | 16,951 | |||
Core structural borrowings of shareholder-financed operations | 6,367 | 6,280 | |||
Operational borrowings attributable to shareholder-financed operations | 1,618 | 1,791 | |||
Borrowings attributable to with-profits operations | 3,589 | 3,716 | |||
Obligations under funding, securities lending and sale and repurchase agreements | 7,128 | 5,662 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 9,358 | 8,889 | |||
Deferred tax liabilities | 4,443 | 4,715 | |||
Current tax liabilities | 415 | 537 | |||
Accruals, deferred income and other liabilities | 13,551 | 14,185 | |||
Provisions | 920 | 1,123 | |||
Derivative liabilities | 3,149 | 2,755 | |||
Liabilities held for sale | 11,977 | ||||
Total liabilities | 485,280 | 477,847 | |||
Total equity and liabilities | 501,170 | 493,941 | |||
With-profits | |||||
Assets | |||||
Goodwill | 161 | 24 | |||
Deferred acquisition costs and other intangible assets | 149 | 145 | |||
Property, plant and equipment | 605 | 492 | |||
Operating segments | Asia | |||||
Assets | |||||
Goodwill | 306 | 305 | |||
Deferred acquisition costs and other intangible assets | 2,614 | 2,540 | |||
Property, plant and equipment | 123 | 125 | |||
Reinsurers' share of insurance contract liabilities | 2,258 | 1,960 | |||
Deferred tax assets | 112 | 112 | |||
Current tax recoverable | 23 | 58 | |||
Accrued investment income | 611 | 595 | |||
Other debtors | 2,429 | 2,675 | |||
Investment properties | 5 | 5 | |||
Investment in joint ventures and associates accounted for using the equity method | 867 | 912 | |||
Loans | 1,337 | 1,317 | |||
Equity securities and portfolio holdings in unit trusts | 30,926 | 29,976 | |||
Debt securities | 42,256 | 40,982 | |||
Derivative assets | 191 | 113 | |||
Deposits | 1,203 | 1,291 | |||
Cash and cash equivalents | 2,177 | 1,934 | |||
Total assets | 87,438 | 84,900 | |||
Total equity | 5,741 | 5,926 | |||
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 66,821 | 64,133 | |||
Unallocated surplus of with-profits funds | 3,766 | 3,474 | |||
Operational borrowings attributable to shareholder-financed operations | 17 | 50 | |||
Borrowings attributable to with-profits operations | 32 | 10 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 3,550 | 3,631 | |||
Deferred tax liabilities | 1,174 | 1,152 | |||
Current tax liabilities | 155 | 122 | |||
Accruals, deferred income and other liabilities | 5,920 | 6,069 | |||
Provisions | 175 | 254 | |||
Derivative liabilities | 87 | 79 | |||
Total liabilities | 81,697 | 78,974 | |||
Total equity and liabilities | 87,438 | 84,900 | |||
Operating segments | Asia asset management | |||||
Assets | |||||
Debt securities | 40 | ||||
Operating segments | US | |||||
Assets | |||||
Deferred acquisition costs and other intangible assets | 8,503 | 8,219 | |||
Property, plant and equipment | 237 | 214 | |||
Reinsurers' share of insurance contract liabilities | 6,436 | 6,424 | |||
Deferred tax assets | 2,144 | 2,300 | |||
Current tax recoverable | 298 | 298 | |||
Accrued investment income | 460 | 492 | |||
Other debtors | 242 | 248 | |||
Investment properties | 5 | 5 | |||
Loans | 9,815 | 9,630 | |||
Equity securities and portfolio holdings in unit trusts | 135,837 | 130,630 | |||
Debt securities | 36,115 | 35,378 | |||
Derivative assets | 816 | 1,611 | |||
Deposits | 17 | 43 | |||
Other investments | 901 | 848 | |||
Cash and cash equivalents | 1,174 | 1,658 | |||
Total assets | 203,000 | 197,998 | |||
Total equity | 5,100 | 5,248 | |||
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 185,150 | 180,724 | |||
Core structural borrowings of shareholder-financed operations | 189 | 184 | |||
Operational borrowings attributable to shareholder-financed operations | 262 | 508 | |||
Obligations under funding, securities lending and sale and repurchase agreements | 5,612 | 4,304 | |||
Deferred tax liabilities | 1,653 | 1,845 | |||
Current tax liabilities | 22 | 47 | |||
Accruals, deferred income and other liabilities | 4,914 | 5,109 | |||
Provisions | 19 | 24 | |||
Derivative liabilities | 79 | 5 | |||
Total liabilities | 197,900 | 192,750 | |||
Total equity and liabilities | 203,000 | 197,998 | |||
Operating segments | UK and Europe | |||||
Assets | |||||
Goodwill | 1,314 | 1,177 | |||
Deferred acquisition costs and other intangible assets | 199 | 210 | |||
Property, plant and equipment | 588 | 447 | |||
Reinsurers' share of insurance contract liabilities | 2,104 | 2,521 | |||
Deferred tax assets | 130 | 157 | |||
Current tax recoverable | 255 | 244 | |||
Accrued investment income | 1,471 | 1,558 | |||
Other debtors | 3,580 | 3,118 | |||
Investment properties | 17,595 | 16,487 | |||
Investment in joint ventures and associates accounted for using the equity method | 687 | 504 | |||
Loans | 5,664 | 5,986 | |||
Equity securities and portfolio holdings in unit trusts | 62,832 | 62,670 | |||
Debt securities | 79,744 | 92,707 | |||
Derivative assets | 2,305 | 2,954 | |||
Deposits | 11,020 | 9,540 | |||
Assets held for sale | 12,024 | 38 | |||
Other investments | 5,158 | 4,774 | |||
Cash and cash equivalents | 3,420 | 5,808 | |||
Total assets | 210,090 | 210,900 | |||
Total equity | 8,046 | 8,245 | |||
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 154,655 | 167,589 | |||
Unallocated surplus of with-profits funds | 13,517 | 13,477 | |||
Operational borrowings attributable to shareholder-financed operations | 130 | 148 | |||
Borrowings attributable to with-profits operations | 3,557 | 3,706 | |||
Obligations under funding, securities lending and sale and repurchase agreements | 1,516 | 1,358 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 5,781 | 5,243 | |||
Deferred tax liabilities | 1,602 | 1,703 | |||
Current tax liabilities | 194 | 377 | |||
Accruals, deferred income and other liabilities | 6,349 | 6,609 | |||
Provisions | 684 | 784 | |||
Derivative liabilities | 2,082 | 1,661 | |||
Liabilities held for sale | 11,977 | ||||
Total liabilities | 202,044 | 202,655 | |||
Total equity and liabilities | 210,090 | 210,900 | |||
Operating segments | With-profits | Asia | |||||
Assets | |||||
Loans | 757 | 725 | |||
Operating segments | With-profits | Asia insurance operations | |||||
Assets | |||||
Debt securities | 24,923 | 24,432 | |||
Operating segments | With-profits | UK and Europe | |||||
Assets | |||||
Loans | 3,943 | 4,268 | |||
Debt securities | 51,064 | 50,661 | |||
Operating segments | Unit-linked | Asia insurance operations | |||||
Assets | |||||
Debt securities | 3,771 | 3,507 | |||
Operating segments | Unit-linked | UK and Europe | |||||
Assets | |||||
Debt securities | 6,536 | 6,711 | |||
Operations within segments | Asia insurance operations | |||||
Assets | |||||
Goodwill | 245 | ||||
Deferred acquisition costs and other intangible assets | 2,609 | ||||
Property, plant and equipment | 120 | ||||
Reinsurers' share of insurance contract liabilities | 2,258 | ||||
Deferred tax assets | 105 | ||||
Current tax recoverable | 23 | ||||
Accrued investment income | 579 | ||||
Other debtors | 2,382 | ||||
Investment properties | 5 | ||||
Investment in joint ventures and associates accounted for using the equity method | 723 | ||||
Loans | 1,337 | ||||
Equity securities and portfolio holdings in unit trusts | 30,887 | ||||
Debt securities | 42,216 | ||||
Derivative assets | 191 | ||||
Deposits | 1,170 | ||||
Cash and cash equivalents | 2,066 | ||||
Total assets | 86,916 | ||||
Total equity | 5,327 | ||||
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 66,821 | £ 59,619 | |||
Unallocated surplus of with-profits funds | 3,766 | ||||
Operational borrowings attributable to shareholder-financed operations | 17 | ||||
Borrowings attributable to with-profits operations | 32 | ||||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 3,550 | ||||
Deferred tax liabilities | 1,174 | ||||
Current tax liabilities | 143 | ||||
Accruals, deferred income and other liabilities | 5,874 | ||||
Provisions | 125 | ||||
Derivative liabilities | 87 | ||||
Total liabilities | 81,589 | ||||
Total equity and liabilities | 86,916 | ||||
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 | 7 | ||||
Accrued investment income | 32 | ||||
Other debtors | 76 | ||||
Investment in joint ventures and associates accounted for using the equity method | 144 | ||||
Equity securities and portfolio holdings in unit trusts | 39 | ||||
Debt securities | 40 | ||||
Deposits | 33 | ||||
Cash and cash equivalents | 111 | ||||
Total assets | 551 | ||||
Total equity | 414 | ||||
Liabilities | |||||
Current tax liabilities | 12 | ||||
Accruals, deferred income and other liabilities | 75 | ||||
Provisions | 50 | ||||
Total liabilities | 137 | ||||
Total equity and liabilities | 551 | ||||
Operations within segments | Jackson (US insurance operations) | |||||
Assets | |||||
Deferred acquisition costs and other intangible assets | 8,503 | ||||
Property, plant and equipment | 234 | ||||
Reinsurers' share of insurance contract liabilities | 6,436 | ||||
Deferred tax assets | 2,056 | ||||
Current tax recoverable | 292 | ||||
Accrued investment income | 438 | ||||
Other debtors | 236 | ||||
Investment properties | 5 | ||||
Loans | 9,815 | ||||
Equity securities and portfolio holdings in unit trusts | 135,835 | ||||
Debt securities | 36,115 | ||||
Derivative assets | 816 | ||||
Other investments | 898 | ||||
Cash and cash equivalents | 836 | ||||
Total assets | 202,515 | ||||
Total equity | 4,896 | ||||
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 185,150 | ||||
Core structural borrowings of shareholder-financed operations | 189 | ||||
Operational borrowings attributable to shareholder-financed operations | 262 | ||||
Obligations under funding, securities lending and sale and repurchase agreements | 5,612 | ||||
Deferred tax liabilities | 1,652 | ||||
Current tax liabilities | 21 | ||||
Accruals, deferred income and other liabilities | 4,642 | ||||
Provisions | 12 | ||||
Derivative liabilities | 79 | ||||
Total liabilities | 197,619 | ||||
Total equity and liabilities | 202,515 | ||||
Operations within segments | Asset management (US) | |||||
Assets | |||||
Property, plant and equipment | 3 | ||||
Deferred tax assets | 88 | ||||
Current tax recoverable | 6 | ||||
Accrued investment income | 22 | ||||
Other debtors | 76 | ||||
Equity securities and portfolio holdings in unit trusts | 2 | ||||
Deposits | 17 | ||||
Other investments | 3 | ||||
Cash and cash equivalents | 338 | ||||
Total assets | 555 | ||||
Total equity | 204 | ||||
Liabilities | |||||
Deferred tax liabilities | 1 | ||||
Current tax liabilities | 1 | ||||
Accruals, deferred income and other liabilities | 342 | ||||
Provisions | 7 | ||||
Total liabilities | 351 | ||||
Total equity and liabilities | 555 | ||||
Operations within segments | UK and Europe asset management | |||||
Assets | |||||
Goodwill | 1,153 | ||||
Deferred acquisition costs and other intangible assets | 6 | ||||
Property, plant and equipment | 36 | ||||
Deferred tax assets | 21 | ||||
Accrued investment income | 8 | ||||
Other debtors | 909 | ||||
Investment in joint ventures and associates accounted for using the equity method | 38 | ||||
Equity securities and portfolio holdings in unit trusts | 155 | ||||
Cash and cash equivalents | 409 | ||||
Total assets | 2,735 | ||||
Total equity | 2,014 | ||||
Liabilities | |||||
Deferred tax liabilities | 24 | ||||
Current tax liabilities | 45 | ||||
Accruals, deferred income and other liabilities | 459 | ||||
Provisions | 193 | ||||
Total liabilities | 721 | ||||
Total equity and liabilities | 2,735 | ||||
Operations within segments | UK and Europe with-profits sub-funds | UK and Europe insurance operations | |||||
Assets | |||||
Goodwill | 161 | ||||
Deferred acquisition costs and other intangible assets | 101 | ||||
Property, plant and equipment | 519 | ||||
Reinsurers' share of insurance contract liabilities | 1,213 | ||||
Deferred tax assets | 65 | ||||
Current tax recoverable | 58 | ||||
Accrued investment income | 993 | ||||
Other debtors | 1,725 | ||||
Investment properties | 15,293 | ||||
Investment in joint ventures and associates accounted for using the equity method | 649 | ||||
Loans | 3,943 | ||||
Equity securities and portfolio holdings in unit trusts | 47,590 | ||||
Debt securities | 51,064 | ||||
Derivative assets | 1,844 | ||||
Deposits | 8,853 | ||||
Assets held for sale | 47 | ||||
Other investments | 5,147 | ||||
Cash and cash equivalents | 2,280 | ||||
Total assets | 141,545 | ||||
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 112,339 | ||||
Unallocated surplus of with-profits funds | 13,517 | ||||
Borrowings attributable to with-profits operations | 3,557 | ||||
Obligations under funding, securities lending and sale and repurchase agreements | 1,193 | ||||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 3,998 | ||||
Deferred tax liabilities | 1,353 | ||||
Current tax liabilities | 21 | ||||
Accruals, deferred income and other liabilities | 4,549 | ||||
Provisions | 25 | ||||
Derivative liabilities | 993 | ||||
Total liabilities | 141,545 | ||||
Total equity and liabilities | 141,545 | ||||
Operations within segments | UK and Europe other funds and subsidiaries | UK and Europe insurance operations | |||||
Assets | |||||
Goodwill | 161 | ||||
Deferred acquisition costs and other intangible assets | 193 | ||||
Property, plant and equipment | 552 | ||||
Reinsurers' share of insurance contract liabilities | 2,104 | ||||
Deferred tax assets | 109 | ||||
Current tax recoverable | 255 | ||||
Accrued investment income | 1,463 | ||||
Other debtors | 2,780 | ||||
Investment properties | 17,595 | ||||
Investment in joint ventures and associates accounted for using the equity method | 649 | ||||
Loans | 5,664 | ||||
Equity securities and portfolio holdings in unit trusts | 62,677 | ||||
Debt securities | 79,744 | ||||
Derivative assets | 2,305 | ||||
Deposits | 11,020 | ||||
Assets held for sale | 12,024 | ||||
Other investments | 5,158 | ||||
Cash and cash equivalents | 3,011 | ||||
Total assets | 207,464 | ||||
Total equity | 6,032 | ||||
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 154,655 | ||||
Unallocated surplus of with-profits funds | 13,517 | ||||
Operational borrowings attributable to shareholder-financed operations | 130 | ||||
Borrowings attributable to with-profits operations | 3,557 | ||||
Obligations under funding, securities lending and sale and repurchase agreements | 1,516 | ||||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 5,781 | ||||
Deferred tax liabilities | 1,578 | ||||
Current tax liabilities | 149 | ||||
Accruals, deferred income and other liabilities | 5,999 | ||||
Provisions | 491 | ||||
Derivative liabilities | 2,082 | ||||
Liabilities held for sale | 11,977 | ||||
Total liabilities | 201,432 | ||||
Total equity and liabilities | 207,464 | ||||
Operations within segments | With-profits | Asia insurance operations | |||||
Assets | |||||
Deferred acquisition costs and other intangible assets | 48 | ||||
Property, plant and equipment | 86 | ||||
Reinsurers' share of insurance contract liabilities | 79 | ||||
Accrued investment income | 266 | ||||
Other debtors | 1,599 | ||||
Loans | 757 | ||||
Equity securities and portfolio holdings in unit trusts | 16,673 | ||||
Debt securities | 24,923 | ||||
Derivative assets | 136 | ||||
Deposits | 271 | ||||
Cash and cash equivalents | 722 | ||||
Total assets | 45,560 | ||||
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 36,282 | ||||
Unallocated surplus of with-profits funds | 3,766 | ||||
Borrowings attributable to with-profits operations | 32 | ||||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 2,042 | ||||
Deferred tax liabilities | 782 | ||||
Current tax liabilities | 54 | ||||
Accruals, deferred income and other liabilities | 2,526 | ||||
Provisions | 26 | ||||
Derivative liabilities | 50 | ||||
Total liabilities | 45,560 | ||||
Total equity and liabilities | 45,560 | ||||
Operations within segments | With-profits | Scottish Amicable Insurance Fund | UK and Europe insurance operations | |||||
Assets | |||||
Total assets | 5,310 | 5,768 | |||
Liabilities | |||||
Total liabilities | 5,310 | 5,768 | |||
Operations within segments | With-profits | PAC with-profits fund | UK and Europe insurance operations | |||||
Liabilities | |||||
Non-profits annuities liabilities | 10,200 | £ 10,600 | |||
Operations within segments | Unit-linked | Asia insurance operations | |||||
Assets | |||||
Current tax recoverable | 4 | ||||
Accrued investment income | 57 | ||||
Other debtors | 232 | ||||
Equity securities and portfolio holdings in unit trusts | 12,592 | ||||
Debt securities | 3,771 | ||||
Derivative assets | 3 | ||||
Deposits | 369 | ||||
Cash and cash equivalents | 524 | ||||
Total assets | 17,552 | ||||
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 16,094 | ||||
Operational borrowings attributable to shareholder-financed operations | 10 | ||||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 1,273 | ||||
Deferred tax liabilities | 30 | ||||
Accruals, deferred income and other liabilities | 137 | ||||
Derivative liabilities | 8 | ||||
Total liabilities | 17,552 | ||||
Total equity and liabilities | 17,552 | ||||
Operations within segments | Unit-linked | UK and Europe other funds and subsidiaries | UK and Europe insurance operations | |||||
Assets | |||||
Reinsurers' share of insurance contract liabilities | 126 | ||||
Accrued investment income | 96 | ||||
Other debtors | 399 | ||||
Investment properties | 647 | ||||
Equity securities and portfolio holdings in unit trusts | 15,072 | ||||
Debt securities | 6,536 | ||||
Derivative assets | 1 | ||||
Deposits | 1,330 | ||||
Other investments | 10 | ||||
Cash and cash equivalents | 138 | ||||
Total assets | 24,355 | ||||
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 22,198 | ||||
Operational borrowings attributable to shareholder-financed operations | 4 | ||||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 1,697 | ||||
Current tax liabilities | 48 | ||||
Accruals, deferred income and other liabilities | 403 | ||||
Derivative liabilities | 5 | ||||
Total liabilities | 24,355 | ||||
Total equity and liabilities | 24,355 | ||||
Operations within segments | Other business | Asia insurance operations | |||||
Assets | |||||
Goodwill | 245 | ||||
Deferred acquisition costs and other intangible assets | 2,561 | ||||
Property, plant and equipment | 34 | ||||
Reinsurers' share of insurance contract liabilities | 2,179 | ||||
Deferred tax assets | 105 | ||||
Current tax recoverable | 19 | ||||
Accrued investment income | 256 | ||||
Other debtors | 551 | ||||
Investment properties | 5 | ||||
Investment in joint ventures and associates accounted for using the equity method | 723 | ||||
Loans | 580 | ||||
Equity securities and portfolio holdings in unit trusts | 1,622 | ||||
Debt securities | 13,522 | ||||
Derivative assets | 52 | ||||
Deposits | 530 | ||||
Cash and cash equivalents | 820 | ||||
Total assets | 23,804 | ||||
Total equity | 5,327 | ||||
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 14,445 | ||||
Operational borrowings attributable to shareholder-financed operations | 7 | ||||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 235 | ||||
Deferred tax liabilities | 362 | ||||
Current tax liabilities | 89 | ||||
Accruals, deferred income and other liabilities | 3,211 | ||||
Provisions | 99 | ||||
Derivative liabilities | 29 | ||||
Total liabilities | 18,477 | ||||
Total equity and liabilities | 23,804 | ||||
Operations within segments | Variable annuity separate account | Jackson (US insurance operations) | |||||
Assets | |||||
Equity securities and portfolio holdings in unit trusts | 135,546 | ||||
Total assets | 135,546 | ||||
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 135,546 | ||||
Total liabilities | 135,546 | ||||
Total equity and liabilities | 135,546 | ||||
Operations within segments | Fixed annuity, GIC and other business | Jackson (US insurance operations) | |||||
Assets | |||||
Deferred acquisition costs and other intangible assets | 8,503 | ||||
Property, plant and equipment | 234 | ||||
Reinsurers' share of insurance contract liabilities | 6,436 | ||||
Deferred tax assets | 2,056 | ||||
Current tax recoverable | 292 | ||||
Accrued investment income | 438 | ||||
Other debtors | 236 | ||||
Investment properties | 5 | ||||
Loans | 9,815 | ||||
Equity securities and portfolio holdings in unit trusts | 289 | ||||
Debt securities | 36,115 | ||||
Derivative assets | 816 | ||||
Other investments | 898 | ||||
Cash and cash equivalents | 836 | ||||
Total assets | 66,969 | ||||
Total equity | 4,896 | ||||
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 49,604 | ||||
Core structural borrowings of shareholder-financed operations | 189 | ||||
Operational borrowings attributable to shareholder-financed operations | 262 | ||||
Obligations under funding, securities lending and sale and repurchase agreements | 5,612 | ||||
Deferred tax liabilities | 1,652 | ||||
Current tax liabilities | 21 | ||||
Accruals, deferred income and other liabilities | 4,642 | ||||
Provisions | 12 | ||||
Derivative liabilities | 79 | ||||
Total liabilities | 62,073 | ||||
Total equity and liabilities | 66,969 | ||||
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 | 92 | ||||
Property, plant and equipment | 33 | ||||
Reinsurers' share of insurance contract liabilities | 765 | ||||
Deferred tax assets | 44 | ||||
Current tax recoverable | 197 | ||||
Accrued investment income | 374 | ||||
Other debtors | 656 | ||||
Investment properties | 1,655 | ||||
Loans | 1,721 | ||||
Equity securities and portfolio holdings in unit trusts | 15 | ||||
Debt securities | 22,144 | ||||
Derivative assets | 460 | ||||
Deposits | 837 | ||||
Assets held for sale | 11,977 | ||||
Other investments | 1 | ||||
Cash and cash equivalents | 593 | ||||
Total assets | 41,564 | ||||
Total equity | 6,032 | ||||
Liabilities | |||||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 20,118 | ||||
Operational borrowings attributable to shareholder-financed operations | 126 | ||||
Obligations under funding, securities lending and sale and repurchase agreements | 323 | ||||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 86 | ||||
Deferred tax liabilities | 225 | ||||
Current tax liabilities | 80 | ||||
Accruals, deferred income and other liabilities | 1,047 | ||||
Provisions | 466 | ||||
Derivative liabilities | 1,084 | ||||
Liabilities held for sale | 11,977 | ||||
Total liabilities | 35,532 | ||||
Total equity and liabilities | 41,564 | ||||
Elimination of intra-segment amounts | Asia | |||||
Assets | |||||
Other debtors | (29) | ||||
Total assets | (29) | ||||
Liabilities | |||||
Accruals, deferred income and other liabilities | (29) | ||||
Total liabilities | (29) | ||||
Total equity and liabilities | (29) | ||||
Elimination of intra-segment amounts | US | |||||
Assets | |||||
Other debtors | (70) | ||||
Total assets | (70) | ||||
Liabilities | |||||
Accruals, deferred income and other liabilities | (70) | ||||
Total liabilities | (70) | ||||
Total equity and liabilities | (70) | ||||
Elimination of intra-segment amounts | UK and Europe | |||||
Assets | |||||
Other debtors | (109) | ||||
Total assets | (109) | ||||
Liabilities | |||||
Accruals, deferred income and other liabilities | (109) | ||||
Total liabilities | (109) | ||||
Total equity and liabilities | £ (109) | ||||
[1] | Included within equity securities and portfolio holdings in unit trusts, debt securities and other investments are £8,993 million of lent securities as at 30 June 2018 (31 December 2017: £8,232 million). | ||||
[2] | Assets held for sale of £12,024 million includes £11,977 million in respect of the reinsured UK annuity business (see note D1). |
Group assets and liabilities 70
Group assets and liabilities - measurement - Carried at fair value (Details) - At fair value - GBP (£) £ in Millions | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 401,133 | £ 407,270 | |
Total financial instruments at fair value | £ 370,157 | £ 376,066 | |
Percentage of total | 100.00% | 100.00% | |
Loans | |||
Financial instruments | |||
Financial assets | £ 4,783 | £ 4,837 | |
Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | 229,707 | 223,391 | |
Debt securities | |||
Financial instruments | |||
Financial assets | 160,305 | 171,374 | |
Financial assets classified as available-for-sale | 35,860 | 35,293 | |
Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 9,487 | 10,423 | |
Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (3,149) | (2,755) | |
Investment contract liabilities without discretionary participation features held at fair value | |||
Financial instruments | |||
Financial liabilities | (16,713) | (17,397) | |
Borrowings attributable to with-profits operations | |||
Financial instruments | |||
Financial liabilities | (1,746) | (1,887) | |
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | (9,358) | (8,889) | |
Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | (3,159) | (3,031) | |
Level 1 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 276,761 | 273,681 | |
Total financial instruments at fair value | £ 271,577 | £ 268,845 | |
Percentage of total | 74.00% | 72.00% | |
Level 1 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 223,938 | £ 218,083 | |
Level 1 | Debt securities | |||
Financial instruments | |||
Financial assets | 52,760 | 55,579 | |
Level 1 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 113 | 87 | |
Level 1 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (50) | (68) | |
Level 1 | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | (5,184) | (4,836) | |
Level 2 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 114,036 | 123,815 | |
Total financial instruments at fair value | £ 93,916 | £ 102,778 | |
Percentage of total | 25.00% | 27.00% | |
Level 2 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 5,251 | £ 4,937 | |
Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 106,892 | 115,141 | |
Level 2 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 4,592 | 5,912 | |
Level 2 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (2,699) | (2,175) | |
Level 2 | Investment contract liabilities without discretionary participation features held at fair value | |||
Financial instruments | |||
Financial liabilities | (16,713) | (17,397) | |
Level 2 | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | (3,407) | (3,640) | |
Level 3 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 10,336 | 9,774 | |
Total financial instruments at fair value | £ 4,664 | £ 4,443 | £ 4,593 |
Percentage of total | 1.00% | 1.00% | |
Level 3 | Loans | |||
Financial instruments | |||
Financial assets | £ 4,783 | £ 4,837 | 2,699 |
Level 3 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | 518 | 371 | 722 |
Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 653 | 654 | 942 |
Level 3 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 4,782 | 4,424 | 4,480 |
Level 3 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (400) | (512) | (516) |
Level 3 | Borrowings attributable to with-profits operations | |||
Financial instruments | |||
Financial liabilities | (1,746) | (1,887) | |
Level 3 | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | (767) | (413) | (883) |
Level 3 | Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | (3,159) | (3,031) | £ (2,851) |
With-profits | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 148,182 | £ 145,847 | |
Percentage of total | 100.00% | 100.00% | |
With-profits | Loans | |||
Financial instruments | |||
Financial assets | £ 1,848 | £ 2,023 | |
With-profits | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | 64,263 | 62,168 | |
With-profits | Debt securities | |||
Financial instruments | |||
Financial assets | 75,987 | 75,093 | |
With-profits | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 7,127 | 7,246 | |
With-profits | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (1,043) | (683) | |
With-profits | Level 1 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 88,741 | £ 86,490 | |
Percentage of total | 60.00% | 60.00% | |
With-profits | Level 1 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 59,025 | £ 57,347 | |
With-profits | Level 1 | Debt securities | |||
Financial instruments | |||
Financial assets | 29,680 | 29,143 | |
With-profits | Level 1 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 76 | 68 | |
With-profits | Level 1 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (40) | (68) | |
With-profits | Level 2 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 52,882 | £ 53,095 | |
Percentage of total | 36.00% | 36.00% | |
With-profits | Level 2 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 4,748 | £ 4,470 | |
With-profits | Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 45,952 | 45,602 | |
With-profits | Level 2 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 3,185 | 3,638 | |
With-profits | Level 2 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (1,003) | (615) | |
With-profits | Level 3 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 6,559 | £ 6,262 | |
Percentage of total | 4.00% | 4.00% | |
With-profits | Level 3 | Loans | |||
Financial instruments | |||
Financial assets | £ 1,848 | £ 2,023 | |
With-profits | Level 3 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | 490 | 351 | |
With-profits | Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 355 | 348 | |
With-profits | Level 3 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 3,866 | 3,540 | |
Unit-linked and variable annuity separate account | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 173,518 | £ 169,340 | |
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 | £ 163,210 | £ 159,098 | |
Unit-linked and variable annuity separate account | Debt securities | |||
Financial instruments | |||
Financial assets | 10,307 | 10,219 | |
Unit-linked and variable annuity separate account | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 14 | 24 | |
Unit-linked and variable annuity separate account | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (13) | (1) | |
Unit-linked and variable annuity separate account | Level 1 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 167,854 | £ 163,636 | |
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 | £ 162,698 | £ 158,631 | |
Unit-linked and variable annuity separate account | Level 1 | Debt securities | |||
Financial instruments | |||
Financial assets | 5,162 | 4,993 | |
Unit-linked and variable annuity separate account | Level 1 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 3 | 12 | |
Unit-linked and variable annuity separate account | Level 1 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (9) | ||
Unit-linked and variable annuity separate account | Level 2 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 5,639 | £ 5,686 | |
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 | £ 494 | £ 457 | |
Unit-linked and variable annuity separate account | Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 5,145 | 5,226 | |
Unit-linked and variable annuity separate account | Level 2 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 4 | 4 | |
Unit-linked and variable annuity separate account | Level 2 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (4) | (1) | |
Unit-linked and variable annuity separate account | Level 3 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 25 | £ 18 | |
Percentage of total | 0.00% | ||
Unit-linked and variable annuity separate account | Level 3 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | 18 | £ 10 | |
Unit-linked and variable annuity separate account | Level 3 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 7 | 8 | |
Non-linked shareholder-backed | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 79,433 | £ 92,083 | |
Percentage of total | 100.00% | 100.00% | |
Non-linked shareholder-backed | Loans | |||
Financial instruments | |||
Financial assets | £ 2,935 | £ 2,814 | |
Non-linked shareholder-backed | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | 2,234 | 2,125 | |
Non-linked shareholder-backed | Debt securities | |||
Financial instruments | |||
Financial assets | 74,011 | 86,062 | |
Non-linked shareholder-backed | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 2,346 | 3,153 | |
Non-linked shareholder-backed | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (2,093) | (2,071) | |
Non-linked shareholder-backed | Level 1 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 20,166 | £ 23,555 | |
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 | £ 2,215 | £ 2,105 | |
Non-linked shareholder-backed | Level 1 | Debt securities | |||
Financial instruments | |||
Financial assets | 17,918 | 21,443 | |
Non-linked shareholder-backed | Level 1 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 34 | 7 | |
Non-linked shareholder-backed | Level 1 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (1) | ||
Non-linked shareholder-backed | Level 2 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 55,515 | £ 65,034 | |
Percentage of total | 70.00% | 71.00% | |
Non-linked shareholder-backed | Level 2 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 9 | £ 10 | |
Non-linked shareholder-backed | Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 55,795 | 64,313 | |
Non-linked shareholder-backed | Level 2 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 1,403 | 2,270 | |
Non-linked shareholder-backed | Level 2 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (1,692) | (1,559) | |
Non-linked shareholder-backed | Level 3 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 3,752 | £ 3,494 | |
Percentage of total | 5.00% | 4.00% | |
Non-linked shareholder-backed | Level 3 | Loans | |||
Financial instruments | |||
Financial assets | £ 2,935 | £ 2,814 | |
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 | 298 | 306 | |
Non-linked shareholder-backed | Level 3 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 909 | 876 | |
Non-linked shareholder-backed | Level 3 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | £ (400) | £ (512) |
Group assets and liabilities 71
Group assets and liabilities - measurement - Fair value disclosed (Details) - Assets and liabilities at amortised cost for which fair value is disclosed - GBP (£) £ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Loans | ||
Financial instruments | ||
Financial assets, carrying value | £ 12,139 | £ 12,205 |
Financial assets, fair value | 12,710 | 12,939 |
Investment contract liabilities without discretionary participation features held at fair value | ||
Financial instruments | ||
Financial liabilities, carrying value | (3,001) | (2,997) |
Financial liabilities, fair value | (3,003) | (3,032) |
Core structural borrowings of shareholder-financed operations | ||
Financial instruments | ||
Financial liabilities, carrying value | (6,367) | (6,280) |
Financial liabilities, fair value | (6,518) | (7,032) |
Operational borrowings attributable to shareholder-financed operations | ||
Financial instruments | ||
Financial liabilities, carrying value | (1,618) | (1,791) |
Financial liabilities, fair value | (1,618) | (1,791) |
Borrowings attributable to with-profits operations | ||
Financial instruments | ||
Financial liabilities, carrying value | (1,843) | (1,829) |
Financial liabilities, fair value | (1,768) | (1,832) |
Obligations under funding, securities lending and sale and repurchase agreements | ||
Financial instruments | ||
Financial liabilities, carrying value | (7,128) | (5,662) |
Financial liabilities, fair value | £ (7,126) | £ (5,828) |
Group assets and liabilities 72
Group assets and liabilities - measurement - Valuation approach for level 2 (Details) - At fair value - Debt securities - GBP (£) £ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Group assets and liabilities - measurement | ||
Financial assets | £ 160,305 | £ 171,374 |
Level 2 | ||
Group assets and liabilities - measurement | ||
Financial assets | 106,892 | 115,141 |
Level 2 | Internal valuation | ||
Group assets and liabilities - measurement | ||
Financial assets | £ 13,871 | £ 13,910 |
Group assets and liabilities 73
Group assets and liabilities - measurement - Level 3 financial instruments (Details) - At fair value - GBP (£) £ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Reconciliation of movements in level 3 net financial instruments measured at fair value | ||
Financial instruments at beginning of period | £ 376,066 | |
Financial instruments at end of period | 370,157 | £ 376,066 |
Level 3 | ||
Reconciliation of movements in level 3 net financial instruments measured at fair value | ||
Financial instruments at beginning of period | 4,443 | 4,593 |
Total gains/(losses) in income statement | 289 | (402) |
Total gains/(losses) recorded as other comprehensive income | 36 | (134) |
Purchases | 719 | 3,245 |
Sales | (473) | (1,715) |
Settled | 45 | 1,326 |
Issued | (450) | (2,298) |
Transfers into level 3 | 0 | (80) |
Transfers out of level 3 | (55) | (92) |
Financial instruments at end of period | 4,664 | 4,443 |
Net unrealised gains (losses) of financial instruments still held at end of year | 210 | (139) |
Financial investments, net of derivative liabilities | Level 3 | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 9,774 | |
Total gains/(losses) in income statement | 337 | |
Total gains/(losses) recorded as other comprehensive income | 104 | |
Purchases | 719 | |
Sales | (473) | |
Settled | (223) | |
Issued | 43 | |
Transfers out of Level 3 | 55 | |
Assets at end of period | 10,336 | 9,774 |
Reconciliation of movements in level 3 net financial instruments measured at fair value | ||
Financial instruments at beginning of period | 9,774 | 8,327 |
Total gains/(losses) in income statement | 156 | |
Total gains/(losses) recorded as other comprehensive income | (384) | |
Purchases | 3,258 | |
Sales | (1,715) | |
Settled | (317) | |
Issued | 236 | |
Transfers into level 3 | 305 | |
Transfers out of level 3 | (92) | |
Financial instruments at end of period | 9,774 | |
Loans | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 4,837 | |
Assets at end of period | 4,783 | 4,837 |
Loans | Level 3 | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 4,837 | 2,699 |
Total gains/(losses) in income statement | 59 | 17 |
Total gains/(losses) recorded as other comprehensive income | 65 | (235) |
Purchases | 2 | 2,129 |
Settled | (223) | (311) |
Issued | 43 | 236 |
Transfers into level 3 | 302 | |
Assets at end of period | 4,783 | 4,837 |
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 | (23) | 20 |
Equity securities and portfolio holdings in unit trusts | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 223,391 | |
Assets at end of period | 229,707 | 223,391 |
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 | 371 | 722 |
Total gains/(losses) in income statement | 43 | 11 |
Total gains/(losses) recorded as other comprehensive income | (7) | (5) |
Purchases | 112 | 186 |
Sales | (1) | (468) |
Settled | (6) | |
Transfers into level 3 | 1 | |
Transfers out of Level 3 | (70) | |
Assets at end of period | 518 | 371 |
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 | 43 | (12) |
Debt securities | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 171,374 | |
Assets at end of period | 160,305 | 171,374 |
Debt securities | Level 3 | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 654 | 942 |
Total gains/(losses) in income statement | (10) | 51 |
Total gains/(losses) recorded as other comprehensive income | (11) | |
Purchases | 55 | 216 |
Sales | (46) | (522) |
Transfers out of Level 3 | (22) | |
Assets at end of period | 653 | 654 |
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 | (10) | (5) |
Other investments (including derivative assets) | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 10,423 | |
Assets at end of period | 9,487 | 10,423 |
Other investments (including derivative assets) | Level 3 | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 4,424 | 4,480 |
Total gains/(losses) in income statement | 188 | 73 |
Total gains/(losses) recorded as other comprehensive income | 46 | (133) |
Purchases | 550 | 727 |
Sales | (426) | (725) |
Transfers into level 3 | 2 | |
Assets at end of period | 4,782 | 4,424 |
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 | 109 | (22) |
Derivative liabilities | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (2,755) | |
Liabilities at end of period | (3,149) | (2,755) |
Derivative liabilities | Level 3 | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (512) | (516) |
Total gains/(losses) in income statement | 57 | 4 |
Transfers out of level 3 | 55 | |
Liabilities at end of period | (400) | (512) |
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 | 57 | 4 |
Borrowings attributable to with-profits operations | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (1,887) | |
Liabilities at end of period | (1,746) | (1,887) |
Borrowings attributable to with-profits operations | Level 3 | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (1,887) | |
Total gains/(losses) in income statement | (2) | (13) |
Settled | 143 | 115 |
Issued | (1,989) | |
Liabilities at end of period | (1,746) | (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 | (2) | (13) |
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 | (8,889) | |
Liabilities at end of period | (9,358) | (8,889) |
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 | (413) | (883) |
Total gains/(losses) in income statement | 38 | (559) |
Purchases | (13) | |
Settled | 22 | 1,276 |
Issued | (414) | (234) |
Liabilities at end of period | (767) | (413) |
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 | 38 | (123) |
Other financial liabilities | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (3,031) | |
Liabilities at end of period | (3,159) | (3,031) |
Other financial liabilities | Level 3 | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (3,031) | (2,851) |
Total gains/(losses) in income statement | (84) | 14 |
Total gains/(losses) recorded as other comprehensive income | (68) | 250 |
Settled | 103 | 252 |
Issued | (79) | (311) |
Transfers into level 3 | (385) | |
Liabilities at end of period | (3,159) | (3,031) |
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 | £ (2) | £ 12 |
Group assets and liabilities 74
Group assets and liabilities - measurement - Valuation approach for level 3 (Details) - At fair value - GBP (£) £ in Millions | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Financial instruments | |||
Net financial instruments at fair value | £ 370,157 | £ 376,066 | |
Percentage at hierarchy level | 100.00% | 100.00% | |
Loans | |||
Financial instruments | |||
Financial assets | £ 4,783 | £ 4,837 | |
Borrowings attributable to with-profits operations | |||
Financial instruments | |||
Financial liabilities | 1,746 | 1,887 | |
Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | 3,159 | 3,031 | |
Debt securities | |||
Financial instruments | |||
Financial assets | 160,305 | 171,374 | |
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | 9,358 | 8,889 | |
Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 3,149 | 2,755 | |
Level 3 | |||
Financial instruments | |||
Net financial instruments at fair value | £ 4,664 | £ 4,443 | £ 4,593 |
Percentage at hierarchy level | 1.00% | 1.00% | |
Level 3 | Loans | |||
Financial instruments | |||
Financial assets | £ 4,783 | £ 4,837 | 2,699 |
Level 3 | Borrowings attributable to with-profits operations | |||
Financial instruments | |||
Financial liabilities | 1,746 | 1,887 | |
Level 3 | Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | 3,159 | 3,031 | 2,851 |
Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 653 | 654 | 942 |
Level 3 | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | 767 | 413 | 883 |
Level 3 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 400 | 512 | £ 516 |
With-profits | Loans | |||
Financial instruments | |||
Financial assets | 1,848 | 2,023 | |
With-profits | Debt securities | |||
Financial instruments | |||
Financial assets | 75,987 | 75,093 | |
With-profits | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 1,043 | 683 | |
With-profits | Level 3 | Loans | |||
Financial instruments | |||
Financial assets | 1,848 | 2,023 | |
With-profits | Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 355 | 348 | |
Non-linked shareholder-backed | Loans | |||
Financial instruments | |||
Financial assets | 2,935 | 2,814 | |
Non-linked shareholder-backed | Debt securities | |||
Financial instruments | |||
Financial assets | 74,011 | 86,062 | |
Non-linked shareholder-backed | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 2,093 | 2,071 | |
Non-linked shareholder-backed | Level 3 | Loans | |||
Financial instruments | |||
Financial assets | 2,935 | 2,814 | |
Non-linked shareholder-backed | Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 298 | 306 | |
Non-linked shareholder-backed | Level 3 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 400 | 512 | |
Subsidiary of UK with-profits fund for acquisition of buy-to-let mortgage loans | Level 3 | Loans | |||
Financial instruments | |||
Financial assets | 1,808 | ||
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 | 1,746 | ||
REALIC of Jacksonville Plans, Inc | Level 3 | |||
Financial instruments | |||
Net financial instruments at fair value | (155) | (152) | |
REALIC of Jacksonville Plans, Inc | Level 3 | Loans | |||
Financial instruments | |||
Financial assets | 2,638 | 2,512 | |
REALIC of Jacksonville Plans, Inc | Level 3 | Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | 2,793 | 2,664 | |
Entity excluding REALIC | Level 3 | |||
Financial instruments | |||
Net financial instruments at fair value | 4,819 | 4,595 | |
Internal valuation | Entity excluding REALIC | Level 3 | |||
Financial instruments | |||
Net financial instruments at fair value | £ (312) | £ 117 | |
Percentage using valuation method | 0.10% | 0.10% | |
Internal valuation | Entity excluding REALIC | Level 3 | Lifetime (equity-release) mortgages | |||
Financial instruments | |||
Financial assets | £ 297 | £ 302 | |
Internal valuation | Entity excluding REALIC | Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 494 | 500 | |
Internal valuation | Entity excluding REALIC | Level 3 | Private equity and venture investments | |||
Financial instruments | |||
Financial assets | 255 | 217 | |
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 | 735 | 403 | |
Internal valuation | Entity excluding REALIC | Level 3 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 400 | 512 | |
Internal valuation | Entity excluding REALIC | Level 3 | Other sundry individual financial investments | |||
Financial instruments | |||
Financial assets | 74 | 81 | |
Internal valuation | Entity excluding REALIC | With-profits | Level 3 | |||
Financial instruments | |||
Net financial instruments at fair value | (214) | 67 | |
Internal valuation | Entity excluding REALIC | Non-linked shareholder-backed | Level 3 | |||
Financial instruments | |||
Net financial instruments at fair value | £ (98) | £ (184) | |
Reasonably possible decrease in valuation (as a percent) | 10.00% | 10.00% | |
Amount of reasonably possible decrease in valuation | £ 10 | £ 18 |
Group assets and liabilities 75
Group assets and liabilities - measurement - Transfers between levels (Details) - At fair value - GBP (£) £ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Level 3 | ||
Disclosure of detailed information about financial instruments [line items] | ||
Transfers into level 3 | £ 0 | £ (80) |
Transfers out of level 3 | 55 | £ 92 |
Equity and debt securities | ||
Disclosure of detailed information about financial instruments [line items] | ||
Transfers from level 1 to level 2 | 621 | |
Transfers from level 2 to level 1 | £ 312 |
Debt securities - Credit rating
Debt securities - Credit rating analysis (Details) - GBP (£) £ in Millions | Jun. 30, 2018 | Dec. 31, 2017 | |
Financial investments | |||
Debt securities | [1] | £ 160,305 | £ 171,374 |
AAA | |||
Financial investments | |||
Debt securities | 16,019 | 17,412 | |
AA+ to AA- | |||
Financial investments | |||
Debt securities | 39,403 | 44,400 | |
A+ to A- | |||
Financial investments | |||
Debt securities | 35,788 | 39,941 | |
BBB+ to BBB- | |||
Financial investments | |||
Debt securities | 37,415 | 37,927 | |
Below BBB- | |||
Financial investments | |||
Debt securities | 9,117 | 8,323 | |
Other | |||
Financial investments | |||
Debt securities | 22,563 | 23,371 | |
Operating segments | Asia insurance operations | With-profits | |||
Financial investments | |||
Debt securities | 24,923 | 24,432 | |
Operating segments | Asia insurance operations | Unit-linked | |||
Financial investments | |||
Debt securities | 3,771 | 3,507 | |
Operating segments | Asia insurance operations | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 13,522 | 13,043 | |
Operating segments | Asia insurance operations | AAA | With-profits | |||
Financial investments | |||
Debt securities | 2,496 | 2,504 | |
Operating segments | Asia insurance operations | AAA | Unit-linked | |||
Financial investments | |||
Debt securities | 726 | 528 | |
Operating segments | Asia insurance operations | AAA | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 948 | 990 | |
Operating segments | Asia insurance operations | AA+ to AA- | With-profits | |||
Financial investments | |||
Debt securities | 11,425 | 10,641 | |
Operating segments | Asia insurance operations | AA+ to AA- | Unit-linked | |||
Financial investments | |||
Debt securities | 147 | 103 | |
Operating segments | Asia insurance operations | AA+ to AA- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 3,138 | 2,925 | |
Operating segments | Asia insurance operations | A+ to A- | With-profits | |||
Financial investments | |||
Debt securities | 3,983 | 3,846 | |
Operating segments | Asia insurance operations | A+ to A- | Unit-linked | |||
Financial investments | |||
Debt securities | 489 | 510 | |
Operating segments | Asia insurance operations | A+ to A- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 3,234 | 3,226 | |
Operating segments | Asia insurance operations | BBB+ to BBB- | With-profits | |||
Financial investments | |||
Debt securities | 3,351 | 3,234 | |
Operating segments | Asia insurance operations | BBB+ to BBB- | Unit-linked | |||
Financial investments | |||
Debt securities | 1,326 | 1,429 | |
Operating segments | Asia insurance operations | BBB+ to BBB- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 3,063 | 2,970 | |
Operating segments | Asia insurance operations | Below BBB- | With-profits | |||
Financial investments | |||
Debt securities | 1,768 | 1,810 | |
Operating segments | Asia insurance operations | Below BBB- | Unit-linked | |||
Financial investments | |||
Debt securities | 441 | 372 | |
Operating segments | Asia insurance operations | Below BBB- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 2,040 | 1,879 | |
Operating segments | Asia insurance operations | Other | With-profits | |||
Financial investments | |||
Debt securities | 1,900 | 2,397 | |
Operating segments | Asia insurance operations | Other | Unit-linked | |||
Financial investments | |||
Debt securities | 642 | 565 | |
Operating segments | Asia insurance operations | Other | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 1,099 | 1,053 | |
Operating segments | Asia asset management | |||
Financial investments | |||
Debt securities | 40 | ||
Operating segments | Asia asset management | AAA | |||
Financial investments | |||
Debt securities | 12 | ||
Operating segments | Asia asset management | A+ to A- | |||
Financial investments | |||
Debt securities | 28 | ||
Operating segments | US | |||
Financial investments | |||
Debt securities | 36,115 | 35,378 | |
Operating segments | US | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 36,115 | 35,378 | |
Operating segments | US | AAA | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 442 | 368 | |
Operating segments | US | AA+ to AA- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 6,338 | 6,352 | |
Operating segments | US | A+ to A- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 9,439 | 9,578 | |
Operating segments | US | BBB+ to BBB- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 13,148 | 12,311 | |
Operating segments | US | Below BBB- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 1,035 | 1,000 | |
Operating segments | US | Other | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 5,713 | 5,769 | |
Operating segments | UK and Europe | |||
Financial investments | |||
Debt securities | 79,744 | 92,707 | |
Operating segments | UK and Europe | With-profits | |||
Financial investments | |||
Debt securities | 51,064 | 50,661 | |
Operating segments | UK and Europe | Unit-linked | |||
Financial investments | |||
Debt securities | 6,536 | 6,711 | |
Operating segments | UK and Europe | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 22,144 | 35,335 | |
Operating segments | UK and Europe | AAA | With-profits | |||
Financial investments | |||
Debt securities | 7,091 | 6,492 | |
Operating segments | UK and Europe | AAA | Unit-linked | |||
Financial investments | |||
Debt securities | 358 | 670 | |
Operating segments | UK and Europe | AAA | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 3,273 | 5,118 | |
Operating segments | UK and Europe | AA+ to AA- | With-profits | |||
Financial investments | |||
Debt securities | 8,723 | 9,378 | |
Operating segments | UK and Europe | AA+ to AA- | Unit-linked | |||
Financial investments | |||
Debt securities | 2,099 | 2,732 | |
Operating segments | UK and Europe | AA+ to AA- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 6,296 | 11,005 | |
Operating segments | UK and Europe | A+ to A- | With-profits | |||
Financial investments | |||
Debt securities | 11,606 | 11,666 | |
Operating segments | UK and Europe | A+ to A- | Unit-linked | |||
Financial investments | |||
Debt securities | 1,694 | 1,308 | |
Operating segments | UK and Europe | A+ to A- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 5,138 | 9,625 | |
Operating segments | UK and Europe | BBB+ to BBB- | With-profits | |||
Financial investments | |||
Debt securities | 13,544 | 12,856 | |
Operating segments | UK and Europe | BBB+ to BBB- | Unit-linked | |||
Financial investments | |||
Debt securities | 1,448 | 1,793 | |
Operating segments | UK and Europe | BBB+ to BBB- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 1,496 | 3,267 | |
Operating segments | UK and Europe | Below BBB- | With-profits | |||
Financial investments | |||
Debt securities | 2,847 | 2,877 | |
Operating segments | UK and Europe | Below BBB- | Unit-linked | |||
Financial investments | |||
Debt securities | 718 | 91 | |
Operating segments | UK and Europe | Below BBB- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 223 | 258 | |
Operating segments | UK and Europe | Other | |||
Financial investments | |||
Debt securities | 13,190 | 13,571 | |
Operating segments | UK and Europe | Other | With-profits | |||
Financial investments | |||
Debt securities | 7,253 | 7,392 | |
Operating segments | UK and Europe | Other | Unit-linked | |||
Financial investments | |||
Debt securities | 219 | 117 | |
Operating segments | UK and Europe | Other | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 5,718 | 6,062 | |
Unallocated to a segment (other operations) | |||
Financial investments | |||
Debt securities | 2,190 | 2,307 | |
Unallocated to a segment (other operations) | AAA | |||
Financial investments | |||
Debt securities | 673 | 742 | |
Unallocated to a segment (other operations) | AA+ to AA- | |||
Financial investments | |||
Debt securities | 1,237 | 1,264 | |
Unallocated to a segment (other operations) | A+ to A- | |||
Financial investments | |||
Debt securities | 177 | 182 | |
Unallocated to a segment (other operations) | BBB+ to BBB- | |||
Financial investments | |||
Debt securities | 39 | 67 | |
Unallocated to a segment (other operations) | Below BBB- | |||
Financial investments | |||
Debt securities | 45 | 36 | |
Unallocated to a segment (other operations) | Other | |||
Financial investments | |||
Debt securities | £ 19 | £ 16 | |
[1] | Included within equity securities and portfolio holdings in unit trusts, debt securities and other investments are £8,993 million of lent securities as at 30 June 2018 (31 December 2017: £8,232 million). |
Debt securities - Credit rati77
Debt securities - Credit rating classified as Other (Details) - GBP (£) £ in Millions | Jun. 30, 2018 | Dec. 31, 2017 | |
Financial investments | |||
Debt securities | [1] | £ 160,305 | £ 171,374 |
Other | |||
Financial investments | |||
Debt securities | 22,563 | 23,371 | |
Operating segments | US | |||
Financial investments | |||
Debt securities | 36,115 | 35,378 | |
Operating segments | UK and Europe | |||
Financial investments | |||
Debt securities | 79,744 | 92,707 | |
Operating segments | UK and Europe | Other | |||
Financial investments | |||
Debt securities | 13,190 | 13,571 | |
Operating segments | UK and Europe | Internal rating AAA to A- | Other | |||
Financial investments | |||
Debt securities | 7,828 | 7,994 | |
Operating segments | UK and Europe | Internal rating BBB to B- | Other | |||
Financial investments | |||
Debt securities | 2,866 | 3,141 | |
Operating segments | UK and Europe | Internal rating Below B- or unrated | Other | |||
Financial investments | |||
Debt securities | 2,496 | 2,436 | |
Operating segments | Non-linked shareholder-backed | Asia insurance operations | |||
Financial investments | |||
Debt securities | 13,522 | 13,043 | |
Operating segments | Non-linked shareholder-backed | Asia insurance operations | Other | |||
Financial investments | |||
Debt securities | 1,099 | 1,053 | |
Operating segments | Non-linked shareholder-backed | Asia insurance operations | Government bonds | Other | |||
Financial investments | |||
Debt securities | 23 | 25 | |
Operating segments | Non-linked shareholder-backed | Asia insurance operations | Corporate bonds | Other | |||
Financial investments | |||
Debt securities | 1,006 | 959 | |
Operating segments | Non-linked shareholder-backed | Asia insurance operations | Other securities | Other | |||
Financial investments | |||
Debt securities | 70 | 69 | |
Operating segments | Non-linked shareholder-backed | US | |||
Financial investments | |||
Debt securities | 36,115 | 35,378 | |
Operating segments | Non-linked shareholder-backed | US | Other | |||
Financial investments | |||
Debt securities | 5,713 | 5,769 | |
Operating segments | Non-linked shareholder-backed | US | NAIC 1 | Other | |||
Financial investments | |||
Debt securities | 3,903 | 3,918 | |
Operating segments | Non-linked shareholder-backed | US | NAIC 2 | Other | |||
Financial investments | |||
Debt securities | 1,781 | 1,794 | |
Operating segments | Non-linked shareholder-backed | US | NAIC 3-6 | Other | |||
Financial investments | |||
Debt securities | 29 | 57 | |
Operating segments | Non-linked shareholder-backed | US | Mortgage-backed securities | Other | |||
Financial investments | |||
Debt securities | 1,819 | ||
Operating segments | Non-linked shareholder-backed | US | Mortgage-backed securities | NAIC 1 | Other | |||
Financial investments | |||
Debt securities | 1,802 | ||
Operating segments | Non-linked shareholder-backed | US | Mortgage-backed securities | NAIC 2 | Other | |||
Financial investments | |||
Debt securities | 14 | ||
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 | Mortgage-backed securities | Investment grade | Other | |||
Financial investments | |||
Debt securities | 1,545 | ||
Operating segments | Non-linked shareholder-backed | US | Other securities | Other | |||
Financial investments | |||
Debt securities | 3,894 | ||
Operating segments | Non-linked shareholder-backed | US | Other securities | NAIC 1 | Other | |||
Financial investments | |||
Debt securities | 2,101 | ||
Operating segments | Non-linked shareholder-backed | US | Other securities | NAIC 2 | Other | |||
Financial investments | |||
Debt securities | 1,767 | ||
Operating segments | Non-linked shareholder-backed | US | Other securities | NAIC 3-6 | Other | |||
Financial investments | |||
Debt securities | 26 | ||
Operating segments | Non-linked shareholder-backed | US | Other securities | Investment grade | Other | |||
Financial investments | |||
Debt securities | 3,868 | ||
Operating segments | Non-linked shareholder-backed | UK and Europe | |||
Financial investments | |||
Debt securities | 22,144 | 35,335 | |
Operating segments | Non-linked shareholder-backed | UK and Europe | Other | |||
Financial investments | |||
Debt securities | 5,718 | 6,062 | |
Operating segments | With-profits | Asia insurance operations | |||
Financial investments | |||
Debt securities | 24,923 | 24,432 | |
Operating segments | With-profits | Asia insurance operations | Other | |||
Financial investments | |||
Debt securities | 1,900 | 2,397 | |
Operating segments | With-profits | UK and Europe | |||
Financial investments | |||
Debt securities | 51,064 | 50,661 | |
Operating segments | With-profits | UK and Europe | Other | |||
Financial investments | |||
Debt securities | £ 7,253 | £ 7,392 | |
[1] | Included within equity securities and portfolio holdings in unit trusts, debt securities and other investments are £8,993 million of lent securities as at 30 June 2018 (31 December 2017: £8,232 million). |
Debt securities - US operations
Debt securities - US operations (Details) - GBP (£) £ in Millions | Jun. 30, 2018 | Dec. 31, 2017 | |
Financial investments | |||
Debt securities | [1] | £ 160,305 | £ 171,374 |
Operating segments | US | |||
Financial investments | |||
Debt securities | 36,115 | 35,378 | |
Operating segments | US | Available-for-sale | |||
Financial investments | |||
Debt securities | 35,860 | 35,293 | |
Operating segments | US | Government | |||
Financial investments | |||
Debt securities | 4,737 | 4,835 | |
Operating segments | US | Publicly traded and SEC rule 144A securities | |||
Financial investments | |||
Debt securities | 23,346 | 22,849 | |
Operating segments | US | Non-SEC Rule 144A securities | |||
Financial investments | |||
Debt securities | 4,659 | 4,468 | |
Operating segments | US | Asset-backed securities | |||
Financial investments | |||
Debt securities | £ 3,373 | £ 3,226 | |
[1] | Included within equity securities and portfolio holdings in unit trusts, debt securities and other investments are £8,993 million of lent securities as at 30 June 2018 (31 December 2017: £8,232 million). |
Debt securities - Movements in
Debt securities - Movements in unrealised gains and losses (Details) £ in Millions | 6 Months Ended | |
Jun. 30, 2018GBP (£)$ / £ | Jun. 30, 2017$ / £ | |
US dollars | ||
Available-for-sale securities | ||
Average rate | $ / £ | 1.38 | 1.26 |
Jackson (US insurance operations) | US dollars | ||
Available-for-sale securities | ||
Average rate | $ / £ | 1.38 | 1.26 |
Jackson (US insurance operations) | Debt securities | ||
Available-for-sale securities | ||
Available-for-sale debt securities at beginning of period | £ 35,293 | |
Available-for-sale debt securities at end of period | £ 35,860 | |
Jackson (US insurance operations) | Debt securities | US dollars | ||
Available-for-sale securities | ||
Average rate | $ / £ | 1.38 | |
Jackson (US insurance operations) | Cost/Gross amount | Debt securities | ||
Available-for-sale securities | ||
Available-for-sale debt securities at beginning of period | £ 34,088 | |
Available-for-sale debt securities at end of period | 36,107 | |
Jackson (US insurance operations) | Unrealised gain (loss) | Debt securities | ||
Available-for-sale securities | ||
Available-for-sale debt securities at beginning of period | 1,205 | |
Foreign exchange translation reflected as part of movement in other comprehensive income | (31) | |
Changes in unrealised appreciation reflected as part of movement in other comprehensive income | (1,421) | |
Available-for-sale debt securities at end of period | (247) | |
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 | 6,219 | |
Available-for-sale debt securities at end of period | 22,397 | |
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 | 6,325 | |
Available-for-sale debt securities at end of period | 23,159 | |
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 | (106) | |
Foreign exchange translation reflected as part of movement in other comprehensive income | (30) | |
Changes in unrealised appreciation reflected as part of movement in other comprehensive income | (626) | |
Available-for-sale debt securities at end of period | (762) | |
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 | 29,074 | |
Available-for-sale debt securities at end of period | 13,463 | |
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 | 27,763 | |
Available-for-sale debt securities at end of period | 12,948 | |
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 | 1,311 | |
Foreign exchange translation reflected as part of movement in other comprehensive income | (1) | |
Changes in unrealised appreciation reflected as part of movement in other comprehensive income | (795) | |
Available-for-sale debt securities at end of period | £ 515 |
Debt securities - Unrealised lo
Debt securities - Unrealised loss positions (Details) - Jackson (US insurance operations) - GBP (£) £ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Debt securities | ||
Available-for-sale securities | ||
Fair value | £ 35,860 | £ 35,293 |
Unrealised loss | (762) | (106) |
Non-investment grade | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (23) | (6) |
Investment grade | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (739) | (100) |
1 to 5 years | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (65) | (7) |
5 years to 10 years | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (348) | (41) |
More than 10 years | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (297) | (39) |
Mortgage-backed and other debt securities | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (52) | (19) |
Between 90% and 100% | Debt securities | ||
Available-for-sale securities | ||
Fair value | 22,187 | 6,170 |
Unrealised loss | (729) | (95) |
Between 80% and 90% | Debt securities | ||
Available-for-sale securities | ||
Fair value | 195 | 36 |
Unrealised loss | (29) | (6) |
Below 80% | Debt securities | ||
Available-for-sale securities | ||
Fair value | 15 | 13 |
Unrealised loss | (4) | (5) |
Below 80% | Other than mortgage-backed securities | ||
Available-for-sale securities | ||
Fair value | 10 | |
Unrealised loss | (4) | |
Below 80% | Corporate bonds | ||
Available-for-sale securities | ||
Fair value | 15 | 3 |
Unrealised loss | (4) | (1) |
Assets fair valued at below book value | Debt securities | ||
Available-for-sale securities | ||
Fair value | 22,397 | 6,219 |
Unrealised loss | (762) | (106) |
Less than 6 months | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (432) | (35) |
Less than 6 months | Non-investment grade | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (14) | (4) |
Less than 6 months | Investment grade | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (418) | (31) |
6 months to 1 year | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (155) | (5) |
6 months to 1 year | Non-investment grade | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (7) | (1) |
6 months to 1 year | Investment grade | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (148) | (4) |
1 year to 2 years | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (149) | (49) |
1 year to 2 years | Non-investment grade | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (1) | |
1 year to 2 years | Investment grade | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (148) | (49) |
2 years to 3 years | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (1) | (7) |
2 years to 3 years | Non-investment grade | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (1) | |
2 years to 3 years | Investment grade | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (1) | (6) |
More than 3 years | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (25) | (10) |
More than 3 years | Non-investment grade | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (1) | |
More than 3 years | Investment grade | Debt securities | ||
Available-for-sale securities | ||
Unrealised loss | (24) | (10) |
Less than 3 months | Below 80% | Debt securities | ||
Available-for-sale securities | ||
Fair value | 13 | 2 |
Unrealised loss | (3) | |
3 months to 6 months | Below 80% | Debt securities | ||
Available-for-sale securities | ||
Fair value | 1 | |
Unrealised loss | (1) | |
More than 6 months | Below 80% | Debt securities | ||
Available-for-sale securities | ||
Fair value | 2 | 10 |
Unrealised loss | £ (1) | £ (4) |
Debt securities - Asset-backed
Debt securities - Asset-backed securities (Details) - GBP (£) £ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Financial investments | ||
Asset-backed securities | £ 10,543 | £ 10,894 |
Shareholder-backed | ||
Financial investments | ||
Asset-backed securities | £ 4,937 | 5,003 |
Shareholder-backed | AAA | UK insurance operations | ||
Financial investments | ||
Percentage for credit rating category | 33.00% | |
Shareholder-backed | AA | UK insurance operations | ||
Financial investments | ||
Percentage for credit rating category | 15.00% | |
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 | 6.00% | |
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 | 2.00% | |
Shareholder-backed | Prime including agency | AAA | US | ||
Financial investments | ||
Percentage for credit rating category | 5.00% | |
Shareholder-backed | Prime including agency | AA | US | ||
Financial investments | ||
Percentage for credit rating category | 67.00% | |
Shareholder-backed | Prime including agency | A | US | ||
Financial investments | ||
Percentage for credit rating category | 8.00% | |
Shareholder-backed | CMBS | AAA | US | ||
Financial investments | ||
Percentage for credit rating category | 83.00% | |
Shareholder-backed | CMBS | AA | US | ||
Financial investments | ||
Percentage for credit rating category | 16.00% | |
Shareholder-backed | CMBS | A | US | ||
Financial investments | ||
Percentage for credit rating category | 1.00% | |
Shareholder-backed | CDO funds | AAA | US | ||
Financial investments | ||
Percentage for credit rating category | 13.00% | |
Shareholder-backed | CDO funds | AA | US | ||
Financial investments | ||
Percentage for credit rating category | 87.00% | |
Shareholder-backed | Other asset-backed securities | AAA | US | ||
Financial investments | ||
Percentage for credit rating category | 16.00% | |
Shareholder-backed | Other asset-backed securities | AA | US | ||
Financial investments | ||
Percentage for credit rating category | 16.00% | |
Shareholder-backed | Other asset-backed securities | A | US | ||
Financial investments | ||
Percentage for credit rating category | 53.00% | |
Shareholder-backed | Operating segments | Asia | ||
Financial investments | ||
Asset-backed securities | £ 97 | 118 |
Shareholder-backed | Operating segments | US | ||
Financial investments | ||
Asset-backed securities | 3,373 | 3,226 |
Shareholder-backed | Operating segments | UK insurance operations | ||
Financial investments | ||
Asset-backed securities | 960 | 1,070 |
Shareholder-backed | Operating segments | RMBS Sub-prime | US | ||
Financial investments | ||
Asset-backed securities | 105 | 112 |
Shareholder-backed | Operating segments | Alt-A | US | ||
Financial investments | ||
Asset-backed securities | 117 | 126 |
Shareholder-backed | Operating segments | Prime including agency | US | ||
Financial investments | ||
Asset-backed securities | 425 | 440 |
Shareholder-backed | Operating segments | CMBS | US | ||
Financial investments | ||
Asset-backed securities | 1,638 | 1,579 |
Shareholder-backed | Operating segments | CDO funds | US | ||
Financial investments | ||
Asset-backed securities | 11 | 28 |
Shareholder-backed | Operating segments | Other asset-backed securities | US | ||
Financial investments | ||
Asset-backed securities | 1,077 | 941 |
Shareholder-backed | Operating segments | Other asset-backed securities | US | Sub-prime | ||
Financial investments | ||
Asset-backed securities | 93 | |
Shareholder-backed | Unallocated to a segment (other operations) | ||
Financial investments | ||
Asset-backed securities | 507 | £ 589 |
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 | 99.00% | 96.00% |
With-profits | ||
Financial investments | ||
Asset-backed securities | £ 5,606 | £ 5,891 |
With-profits | Asia | Investment grade | ||
Financial investments | ||
Percentage for credit rating category | 100.00% | 98.00% |
With-profits | AAA | UK insurance operations | ||
Financial investments | ||
Percentage for credit rating category | 65.00% | |
With-profits | AA | UK insurance operations | ||
Financial investments | ||
Percentage for credit rating category | 10.00% | |
With-profits | Operating segments | Asia | ||
Financial investments | ||
Asset-backed securities | £ 192 | £ 233 |
With-profits | Operating segments | UK insurance operations | ||
Financial investments | ||
Asset-backed securities | 5,414 | 5,658 |
With-profits | Operating segments | UK insurance operations | US | ||
Financial investments | ||
Asset-backed securities | £ 1,833 | £ 1,913 |
Debt securities - Group soverei
Debt securities - Group sovereign debt and bank debt exposure (Details) - GBP (£) £ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Shareholder-backed | ||
Financial investments | ||
Sovereign debt exposure | £ 14,447 | £ 16,524 |
Bank debt instruments held | 5,339 | 5,521 |
Shareholder-backed | Eurozone | ||
Financial investments | ||
Sovereign debt exposure | 799 | 890 |
Bank debt instruments held | 344 | 357 |
Shareholder-backed | Italy | ||
Financial investments | ||
Sovereign debt exposure | 58 | |
Shareholder-backed | Spain | ||
Financial investments | ||
Sovereign debt exposure | 36 | 34 |
Bank debt instruments held | 78 | 68 |
Shareholder-backed | France | ||
Financial investments | ||
Sovereign debt exposure | 23 | 23 |
Bank debt instruments held | 81 | 86 |
Shareholder-backed | Germany | ||
Financial investments | ||
Sovereign debt exposure | 663 | 693 |
Bank debt instruments held | 119 | 117 |
Shareholder-backed | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 51 | 71 |
Shareholder-backed | Other Eurozone | ||
Financial investments | ||
Sovereign debt exposure | 77 | 82 |
Bank debt instruments held | 15 | 15 |
Shareholder-backed | UK | ||
Financial investments | ||
Sovereign debt exposure | 3,482 | 5,918 |
Bank debt instruments held | 1,289 | 1,382 |
Shareholder-backed | US | ||
Financial investments | ||
Sovereign debt exposure | 5,243 | 5,078 |
Bank debt instruments held | 2,495 | 2,619 |
Shareholder-backed | Other, including Asia | ||
Financial investments | ||
Sovereign debt exposure | 4,923 | 4,638 |
Bank debt instruments held | 1,211 | 1,163 |
Shareholder-backed | Senior debt | ||
Financial investments | ||
Bank debt instruments held | 4,466 | |
Shareholder-backed | Senior debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 232 | |
Shareholder-backed | Senior debt | Spain | ||
Financial investments | ||
Bank debt instruments held | 78 | |
Shareholder-backed | Senior debt | France | ||
Financial investments | ||
Bank debt instruments held | 64 | |
Shareholder-backed | Senior debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 30 | |
Shareholder-backed | Senior debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 45 | |
Shareholder-backed | Senior debt | Other Eurozone | ||
Financial investments | ||
Bank debt instruments held | 15 | |
Shareholder-backed | Senior debt | UK | ||
Financial investments | ||
Bank debt instruments held | 1,120 | |
Shareholder-backed | Senior debt | US | ||
Financial investments | ||
Bank debt instruments held | 2,399 | |
Shareholder-backed | Senior debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 715 | |
Shareholder-backed | Covered Senior debt | ||
Financial investments | ||
Bank debt instruments held | 705 | |
Shareholder-backed | Covered Senior debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 114 | |
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 | 27 | |
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 | 575 | |
Shareholder-backed | Covered Senior debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 16 | |
Shareholder-backed | Other Senior debt | ||
Financial investments | ||
Bank debt instruments held | 3,761 | |
Shareholder-backed | Other Senior debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 118 | |
Shareholder-backed | Other Senior debt | Spain | ||
Financial investments | ||
Bank debt instruments held | 36 | |
Shareholder-backed | Other Senior debt | France | ||
Financial investments | ||
Bank debt instruments held | 37 | |
Shareholder-backed | Other Senior debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 45 | |
Shareholder-backed | Other Senior debt | UK | ||
Financial investments | ||
Bank debt instruments held | 545 | |
Shareholder-backed | Other Senior debt | US | ||
Financial investments | ||
Bank debt instruments held | 2,399 | |
Shareholder-backed | Other Senior debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 699 | |
Shareholder-backed | Subordinated debt | ||
Financial investments | ||
Bank debt instruments held | 873 | |
Shareholder-backed | Subordinated debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 112 | |
Shareholder-backed | Subordinated debt | France | ||
Financial investments | ||
Bank debt instruments held | 17 | |
Shareholder-backed | Subordinated debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 89 | |
Shareholder-backed | Subordinated debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 6 | |
Shareholder-backed | Subordinated debt | UK | ||
Financial investments | ||
Bank debt instruments held | 169 | |
Shareholder-backed | Subordinated debt | US | ||
Financial investments | ||
Bank debt instruments held | 96 | |
Shareholder-backed | Subordinated debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 496 | |
Shareholder-backed | Tier 1 Subordinated debt | ||
Financial investments | ||
Bank debt instruments held | 124 | |
Shareholder-backed | Tier 1 Subordinated debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 13 | |
Shareholder-backed | Tier 1 Subordinated debt | France | ||
Financial investments | ||
Bank debt instruments held | 13 | |
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 | 105 | |
Shareholder-backed | Tier 2 Subordinated debt | ||
Financial investments | ||
Bank debt instruments held | 749 | |
Shareholder-backed | Tier 2 Subordinated debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 99 | |
Shareholder-backed | Tier 2 Subordinated debt | France | ||
Financial investments | ||
Bank debt instruments held | 4 | |
Shareholder-backed | Tier 2 Subordinated debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 89 | |
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 | 164 | |
Shareholder-backed | Tier 2 Subordinated debt | US | ||
Financial investments | ||
Bank debt instruments held | 95 | |
Shareholder-backed | Tier 2 Subordinated debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 391 | |
With-profits | ||
Financial investments | ||
Sovereign debt exposure | 16,392 | 16,037 |
Bank debt instruments held | 8,191 | 7,726 |
With-profits | Eurozone | ||
Financial investments | ||
Sovereign debt exposure | 429 | 451 |
Bank debt instruments held | 838 | 739 |
With-profits | Italy | ||
Financial investments | ||
Sovereign debt exposure | 60 | 63 |
Bank debt instruments held | 38 | 31 |
With-profits | Spain | ||
Financial investments | ||
Sovereign debt exposure | 18 | 18 |
Bank debt instruments held | 21 | 16 |
With-profits | France | ||
Financial investments | ||
Sovereign debt exposure | 6 | 38 |
Bank debt instruments held | 318 | 286 |
With-profits | Germany | ||
Financial investments | ||
Sovereign debt exposure | 315 | 301 |
Bank debt instruments held | 207 | 180 |
With-profits | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 227 | 199 |
With-profits | Other Eurozone | ||
Financial investments | ||
Sovereign debt exposure | 30 | 31 |
Bank debt instruments held | 27 | 27 |
With-profits | UK | ||
Financial investments | ||
Sovereign debt exposure | 3,130 | 3,287 |
Bank debt instruments held | 2,032 | 1,938 |
With-profits | US | ||
Financial investments | ||
Sovereign debt exposure | 10,519 | 10,156 |
Bank debt instruments held | 2,533 | 2,518 |
With-profits | Other, including Asia | ||
Financial investments | ||
Sovereign debt exposure | 2,314 | 2,143 |
Bank debt instruments held | 2,788 | £ 2,531 |
With-profits | Senior debt | ||
Financial investments | ||
Bank debt instruments held | 6,608 | |
With-profits | Senior debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 727 | |
With-profits | Senior debt | Italy | ||
Financial investments | ||
Bank debt instruments held | 38 | |
With-profits | Senior debt | Spain | ||
Financial investments | ||
Bank debt instruments held | 21 | |
With-profits | Senior debt | France | ||
Financial investments | ||
Bank debt instruments held | 253 | |
With-profits | Senior debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 172 | |
With-profits | Senior debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 216 | |
With-profits | Senior debt | Other Eurozone | ||
Financial investments | ||
Bank debt instruments held | 27 | |
With-profits | Senior debt | UK | ||
Financial investments | ||
Bank debt instruments held | 1,662 | |
With-profits | Senior debt | US | ||
Financial investments | ||
Bank debt instruments held | 2,188 | |
With-profits | Senior debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 2,031 | |
With-profits | Covered Senior debt | ||
Financial investments | ||
Bank debt instruments held | 1,594 | |
With-profits | Covered Senior debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 149 | |
With-profits | Covered Senior debt | France | ||
Financial investments | ||
Bank debt instruments held | 8 | |
With-profits | Covered Senior debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 141 | |
With-profits | Covered Senior debt | UK | ||
Financial investments | ||
Bank debt instruments held | 865 | |
With-profits | Covered Senior debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 580 | |
With-profits | Other Senior debt | ||
Financial investments | ||
Bank debt instruments held | 5,014 | |
With-profits | Other Senior debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 578 | |
With-profits | Other Senior debt | Italy | ||
Financial investments | ||
Bank debt instruments held | 38 | |
With-profits | Other Senior debt | Spain | ||
Financial investments | ||
Bank debt instruments held | 21 | |
With-profits | Other Senior debt | France | ||
Financial investments | ||
Bank debt instruments held | 245 | |
With-profits | Other Senior debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 31 | |
With-profits | Other Senior debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 216 | |
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 | 797 | |
With-profits | Other Senior debt | US | ||
Financial investments | ||
Bank debt instruments held | 2,188 | |
With-profits | Other Senior debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 1,451 | |
With-profits | Subordinated debt | ||
Financial investments | ||
Bank debt instruments held | 1,583 | |
With-profits | Subordinated debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 111 | |
With-profits | Subordinated debt | France | ||
Financial investments | ||
Bank debt instruments held | 65 | |
With-profits | Subordinated debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 35 | |
With-profits | Subordinated debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 11 | |
With-profits | Subordinated debt | UK | ||
Financial investments | ||
Bank debt instruments held | 370 | |
With-profits | Subordinated debt | US | ||
Financial investments | ||
Bank debt instruments held | 345 | |
With-profits | Subordinated debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 757 | |
With-profits | Tier 1 Subordinated debt | ||
Financial investments | ||
Bank debt instruments held | 383 | |
With-profits | Tier 1 Subordinated debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 7 | |
With-profits | Tier 1 Subordinated debt | France | ||
Financial investments | ||
Bank debt instruments held | 2 | |
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 | 2 | |
With-profits | Tier 1 Subordinated debt | US | ||
Financial investments | ||
Bank debt instruments held | 47 | |
With-profits | Tier 1 Subordinated debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 327 | |
With-profits | Tier 2 Subordinated debt | ||
Financial investments | ||
Bank debt instruments held | 1,200 | |
With-profits | Tier 2 Subordinated debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 104 | |
With-profits | Tier 2 Subordinated debt | France | ||
Financial investments | ||
Bank debt instruments held | 63 | |
With-profits | Tier 2 Subordinated debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 35 | |
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 | 368 | |
With-profits | Tier 2 Subordinated debt | US | ||
Financial investments | ||
Bank debt instruments held | 298 | |
With-profits | Tier 2 Subordinated debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | £ 430 |
Loans portfolio - Components (D
Loans portfolio - Components (Details) - GBP (£) £ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Financial investments | ||
Loans | £ 16,922 | £ 17,042 |
Mortgage loans | ||
Financial investments | ||
Loans | 10,415 | 10,535 |
Policy loans | ||
Financial investments | ||
Loans | 4,396 | 4,227 |
Other loans | ||
Financial investments | ||
Loans | £ 2,111 | £ 2,280 |
UK and Europe | Non-linked shareholder-backed | Lifetime (equity-release) mortgages | Average | ||
Financial investments | ||
Estimated loan to value (as a percent) | 32.00% | 31.00% |
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 | £ 13.3 | £ 12.6 |
Estimated loan to value (as a percent) | 55.00% | 55.00% |
Operating segments | Asia | ||
Financial investments | ||
Loans | £ 1,337 | £ 1,317 |
Operating segments | Asia | With-profits | ||
Financial investments | ||
Loans | 757 | 725 |
Operating segments | Asia | With-profits | Policy loans | ||
Financial investments | ||
Loans | 652 | 613 |
Operating segments | Asia | With-profits | Other loans | ||
Financial investments | ||
Loans | 105 | 112 |
Operating segments | Asia | Non-linked shareholder-backed | ||
Financial investments | ||
Loans | 580 | 592 |
Operating segments | Asia | Non-linked shareholder-backed | Mortgage loans | ||
Financial investments | ||
Loans | 170 | 177 |
Operating segments | Asia | Non-linked shareholder-backed | Policy loans | ||
Financial investments | ||
Loans | 217 | 216 |
Operating segments | Asia | Non-linked shareholder-backed | Other loans | ||
Financial investments | ||
Loans | 193 | 199 |
Operating segments | US | ||
Financial investments | ||
Loans | 9,815 | 9,630 |
Operating segments | US | Non-linked shareholder-backed | ||
Financial investments | ||
Loans | 9,815 | 9,630 |
Operating segments | US | Non-linked shareholder-backed | Mortgage loans | ||
Financial investments | ||
Loans | 6,292 | 6,236 |
Operating segments | US | Non-linked shareholder-backed | Policy loans | ||
Financial investments | ||
Loans | 3,523 | 3,394 |
Accounted for at fair value through profit or loss | 2,638 | 2,512 |
Operating segments | UK and Europe | ||
Financial investments | ||
Loans | 5,664 | 5,986 |
Operating segments | UK and Europe | With-profits | ||
Financial investments | ||
Loans | 3,943 | 4,268 |
Operating segments | UK and Europe | With-profits | Mortgage loans | ||
Financial investments | ||
Loans | 2,267 | 2,441 |
Operating segments | UK and Europe | With-profits | Policy loans | ||
Financial investments | ||
Loans | 4 | 4 |
Operating segments | UK and Europe | With-profits | Other loans | ||
Financial investments | ||
Loans | 1,672 | 1,823 |
Operating segments | UK and Europe | Non-linked shareholder-backed | ||
Financial investments | ||
Loans | 1,721 | 1,718 |
Operating segments | UK and Europe | Non-linked shareholder-backed | Mortgage loans | ||
Financial investments | ||
Loans | £ 1,686 | £ 1,681 |
Percentage related to lifetime (equity release) mortgage business | 99.99% | 99.98% |
Operating segments | UK and Europe | Non-linked shareholder-backed | Other loans | ||
Financial investments | ||
Loans | £ 35 | £ 37 |
Unallocated to a segment (other operations) | ||
Financial investments | ||
Loans | 106 | 109 |
Unallocated to a segment (other operations) | Other loans | ||
Financial investments | ||
Loans | £ 106 | £ 109 |
Policyholder liabilities and 84
Policyholder liabilities and unallocated surplus - Analysis of movements (Details) - GBP (£) £ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position, beginning balance | £ 411,243 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, beginning balance | 16,951 | |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 405,482 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, ending balance | 17,283 | |
Operating segments excluding intra-group amounts | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Total Beginning Balance | 435,629 | £ 409,714 |
Policyholder liabilities on the consolidated statement of financial position, beginning balance | 411,211 | 388,996 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, beginning balance | 16,951 | 14,317 |
Group's share of policyholder liabilities of joint ventures and associates, beginning balance | 7,467 | 6,401 |
Reclassification of reinsured UK annuity contracts as held for sale | (12,002) | |
Premiums | 20,322 | 21,603 |
Surrenders | (10,946) | (10,395) |
Maturities/deaths | (5,413) | (5,532) |
Net flows | 3,963 | 5,676 |
Shareholders' transfers post-tax | (154) | (142) |
Investment-related items and other movements | (2,253) | 16,626 |
Foreign exchange translation differences | 5,154 | (10,834) |
Total Ending Balance | 430,337 | 421,040 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 405,445 | 398,980 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, ending balance | 17,283 | 15,090 |
Group's share of policyholder liabilities of joint ventures and associates, ending balance | 7,609 | 6,970 |
Average Policy liability | 415,866 | 400,674 |
Operating segments excluding intra-group amounts | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities, beginning balance | 274,493 | 266,635 |
Reclassification of reinsured UK annuity contracts as held for sale | (12,002) | |
Premiums | 11,058 | 12,607 |
Surrenders | (8,536) | (7,906) |
Maturities/deaths | (2,790) | (2,894) |
Net flows | (268) | 1,807 |
Investment-related items and other movements | (1,057) | 10,536 |
Foreign exchange translation differences | 4,448 | (9,668) |
Policyholder liabilities, ending balance | 265,614 | 269,310 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 258,005 | 262,340 |
Group's share of policyholder liabilities of joint ventures and associates, ending balance | 7,609 | 6,970 |
Unallocated to a segment (other operations) | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position, beginning balance | 32 | |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 37 | |
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, ending balance | 37 | |
Deductions for intra-group reinsurance | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position, ending balance | (1,181) | 1,271 |
Asia insurance operations | Operating segments excluding intra-group amounts | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Total Beginning Balance | 73,839 | 62,784 |
Policyholder liabilities on the consolidated statement of financial position, beginning balance | 62,898 | 53,716 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, beginning balance | 3,474 | 2,667 |
Group's share of policyholder liabilities of joint ventures and associates, beginning balance | 7,467 | 6,401 |
Premiums | 6,247 | 5,699 |
Surrenders | (1,547) | (1,508) |
Maturities/deaths | (838) | (880) |
Net flows | 3,862 | 3,311 |
Shareholders' transfers post-tax | (27) | (27) |
Investment-related items and other movements | (1,349) | 4,288 |
Foreign exchange translation differences | 690 | (2,035) |
Total Ending Balance | 77,015 | 68,321 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 65,640 | 58,348 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, ending balance | 3,766 | 3,003 |
Group's share of policyholder liabilities of joint ventures and associates, ending balance | 7,609 | 6,970 |
Average Policy liability | 71,807 | 62,718 |
Asia insurance operations | Operating segments excluding intra-group amounts | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities, beginning balance | 37,402 | 32,851 |
Premiums | 3,266 | 2,801 |
Surrenders | (1,383) | (1,335) |
Maturities/deaths | (420) | (450) |
Net flows | 1,463 | 1,016 |
Investment-related items and other movements | (718) | 1,912 |
Foreign exchange translation differences | 1 | (739) |
Policyholder liabilities, ending balance | 38,148 | 35,040 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 30,539 | 28,070 |
Group's share of policyholder liabilities of joint ventures and associates, ending balance | 7,609 | 6,970 |
Asia insurance operations | Operations within segments | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position, ending balance | 66,821 | 59,619 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, ending balance | 3,766 | |
Jackson (US insurance operations) | Operating segments excluding intra-group amounts | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Total Beginning Balance | 180,724 | 177,626 |
Policyholder liabilities on the consolidated statement of financial position, beginning balance | 180,724 | 177,626 |
Premiums | 7,111 | 8,148 |
Surrenders | (5,953) | (5,071) |
Maturities/deaths | (1,076) | (1,119) |
Net flows | 82 | 1,958 |
Investment-related items and other movements | (103) | 7,124 |
Foreign exchange translation differences | 4,447 | (8,929) |
Total Ending Balance | 185,150 | 177,779 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 185,150 | 177,779 |
Average Policy liability | 182,937 | 177,702 |
Jackson (US insurance operations) | Operating segments excluding intra-group amounts | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities, beginning balance | 180,724 | 177,626 |
Premiums | 7,111 | 8,148 |
Surrenders | (5,953) | (5,071) |
Maturities/deaths | (1,076) | (1,119) |
Net flows | 82 | 1,958 |
Investment-related items and other movements | (103) | 7,124 |
Foreign exchange translation differences | 4,447 | (8,929) |
Policyholder liabilities, ending balance | 185,150 | 177,779 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 185,150 | 177,779 |
Jackson (US insurance operations) | Operations within segments | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position, ending balance | 185,150 | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Total Beginning Balance | 181,066 | 169,304 |
Policyholder liabilities on the consolidated statement of financial position, beginning balance | 167,589 | 157,654 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, beginning balance | 13,477 | 11,650 |
Reclassification of reinsured UK annuity contracts as held for sale | (12,002) | |
Premiums | 6,964 | 7,756 |
Surrenders | (3,446) | (3,816) |
Maturities/deaths | (3,499) | (3,533) |
Net flows | 19 | 407 |
Shareholders' transfers post-tax | (127) | (115) |
Investment-related items and other movements | (801) | 5,214 |
Foreign exchange translation differences | 17 | 130 |
Total Ending Balance | 168,172 | 174,940 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 154,655 | 162,853 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, ending balance | 13,517 | 12,087 |
Average Policy liability | 161,122 | 160,254 |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities, beginning balance | 56,367 | 56,158 |
Reclassification of reinsured UK annuity contracts as held for sale | (12,002) | |
Premiums | 681 | 1,658 |
Surrenders | (1,200) | (1,500) |
Maturities/deaths | (1,294) | (1,325) |
Net flows | (1,813) | (1,167) |
Investment-related items and other movements | (236) | 1,500 |
Policyholder liabilities, ending balance | 42,316 | 56,491 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | £ 42,316 | £ 56,491 |
Policyholder liabilities and 85
Policyholder liabilities and unallocated surplus - Analysis of movements, Asia (Details) - GBP (£) £ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position, beginning balance | £ 411,243 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, beginning balance | 16,951 | |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 405,482 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, ending balance | 17,283 | |
Operating segments excluding intra-group amounts | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Total Beginning Balance | 435,629 | £ 409,714 |
Policyholder liabilities on the consolidated statement of financial position, beginning balance | 411,211 | 388,996 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, beginning balance | 16,951 | 14,317 |
Group's share of policyholder liabilities of joint ventures and associates, beginning balance | 7,467 | 6,401 |
Premiums | 20,322 | 21,603 |
Surrenders | (10,946) | (10,395) |
Maturities/deaths | (5,413) | (5,532) |
Net flows | 3,963 | 5,676 |
Shareholders' transfers post-tax | (154) | (142) |
Investment-related items and other movements | (2,253) | 16,626 |
Foreign exchange translation differences | 5,154 | (10,834) |
Total Ending Balance | 430,337 | 421,040 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 405,445 | 398,980 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, ending balance | 17,283 | 15,090 |
Group's share of policyholder liabilities of joint ventures and associates, ending balance | 7,609 | 6,970 |
Average Policy liability | 415,866 | 400,674 |
Operating segments excluding intra-group amounts | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Premiums | 11,058 | 12,607 |
Surrenders | (8,536) | (7,906) |
Maturities/deaths | (2,790) | (2,894) |
Net flows | (268) | 1,807 |
Investment-related items and other movements | (1,057) | 10,536 |
Foreign exchange translation differences | 4,448 | (9,668) |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 258,005 | 262,340 |
Group's share of policyholder liabilities of joint ventures and associates, ending balance | 7,609 | 6,970 |
Deductions for intra-group reinsurance | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position, ending balance | £ (1,181) | £ 1,271 |
Asia insurance operations | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Percentage rate of surrender | 3.70% | 4.10% |
Asia insurance operations | Operating segments excluding intra-group amounts | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Total Beginning Balance | £ 73,839 | £ 62,784 |
Policyholder liabilities on the consolidated statement of financial position, beginning balance | 62,898 | 53,716 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, beginning balance | 3,474 | 2,667 |
Group's share of policyholder liabilities of joint ventures and associates, beginning balance | 7,467 | 6,401 |
New business | 1,737 | 1,731 |
In-force | 4,510 | 3,968 |
Premiums | 6,247 | 5,699 |
Surrenders | (1,547) | (1,508) |
Maturities/deaths | (838) | (880) |
Net flows | 3,862 | 3,311 |
Shareholders' transfers post-tax | (27) | (27) |
Investment-related items and other movements | (1,349) | 4,288 |
Foreign exchange translation differences | 690 | (2,035) |
Total Ending Balance | 77,015 | 68,321 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 65,640 | 58,348 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, ending balance | 3,766 | 3,003 |
Group's share of policyholder liabilities of joint ventures and associates, ending balance | 7,609 | 6,970 |
Average Policy liability | 71,807 | £ 62,718 |
Percent of increase in net flows | 17.00% | |
Net flow increase (decrease) | 3,862 | £ 3,311 |
Asia insurance operations | Operating segments excluding intra-group amounts | With-profits | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Total Beginning Balance | 36,437 | 29,933 |
Policyholder liabilities on the consolidated statement of financial position, beginning balance | 32,963 | 27,266 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, beginning balance | 3,474 | 2,667 |
New business | 432 | 676 |
In-force | 2,549 | 2,222 |
Premiums | 2,981 | 2,898 |
Surrenders | (164) | (173) |
Maturities/deaths | (418) | (430) |
Net flows | 2,399 | 2,295 |
Shareholders' transfers post-tax | (27) | (27) |
Investment-related items and other movements | (631) | 2,376 |
Foreign exchange translation differences | 689 | (1,296) |
Total Ending Balance | 38,867 | 33,281 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 35,101 | 30,278 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, ending balance | 3,766 | 3,003 |
Average Policy liability | 34,032 | 28,772 |
Asia insurance operations | Operating segments excluding intra-group amounts | Unit-linked | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Total Beginning Balance | 20,027 | 17,507 |
Policyholder liabilities on the consolidated statement of financial position, beginning balance | 16,263 | 14,289 |
Group's share of policyholder liabilities of joint ventures and associates, beginning balance | 3,764 | 3,218 |
New business | 870 | 527 |
In-force | 841 | 805 |
Premiums | 1,711 | 1,332 |
Surrenders | (1,071) | (1,102) |
Maturities/deaths | (93) | (82) |
Net flows | 547 | 148 |
Investment-related items and other movements | (652) | 1,551 |
Foreign exchange translation differences | (142) | (373) |
Total Ending Balance | 19,780 | 18,833 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 16,094 | 15,326 |
Group's share of policyholder liabilities of joint ventures and associates, ending balance | 3,686 | 3,507 |
Average Policy liability | 19,903 | 18,170 |
Asia insurance operations | Operating segments excluding intra-group amounts | Other business | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Total Beginning Balance | 17,375 | 15,344 |
Policyholder liabilities on the consolidated statement of financial position, beginning balance | 13,672 | 12,161 |
Group's share of policyholder liabilities of joint ventures and associates, beginning balance | 3,703 | 3,183 |
New business | 435 | 528 |
In-force | 1,120 | 941 |
Premiums | 1,555 | 1,469 |
Surrenders | (312) | (233) |
Maturities/deaths | (327) | (368) |
Net flows | 916 | 868 |
Investment-related items and other movements | (66) | 361 |
Foreign exchange translation differences | 143 | (366) |
Total Ending Balance | 18,368 | 16,207 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 14,445 | 12,744 |
Group's share of policyholder liabilities of joint ventures and associates, ending balance | 3,923 | 3,463 |
Average Policy liability | 17,872 | 15,776 |
Asia insurance operations | Operating segments excluding intra-group amounts | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Premiums | 3,266 | 2,801 |
Surrenders | (1,383) | (1,335) |
Maturities/deaths | (420) | (450) |
Net flows | 1,463 | 1,016 |
Investment-related items and other movements | (718) | 1,912 |
Foreign exchange translation differences | 1 | (739) |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 30,539 | 28,070 |
Group's share of policyholder liabilities of joint ventures and associates, ending balance | 7,609 | 6,970 |
Asia insurance operations | Operations within segments | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position, ending balance | 66,821 | 59,619 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, ending balance | 3,766 | |
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, ending balance | 36,282 | |
Policyholder liabilities including intra-group reinsurance liabilities | 36,282 | 31,549 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, ending balance | 3,766 | |
Asia insurance operations | Operations within segments | Unit-linked | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position, ending balance | 16,094 | |
Asia insurance operations | Operations within segments | Other business | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position, ending balance | 14,445 | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Total Beginning Balance | 181,066 | 169,304 |
Policyholder liabilities on the consolidated statement of financial position, beginning balance | 167,589 | 157,654 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, beginning balance | 13,477 | 11,650 |
Premiums | 6,964 | 7,756 |
Surrenders | (3,446) | (3,816) |
Maturities/deaths | (3,499) | (3,533) |
Net flows | 19 | 407 |
Shareholders' transfers post-tax | (127) | (115) |
Investment-related items and other movements | (801) | 5,214 |
Foreign exchange translation differences | 17 | 130 |
Total Ending Balance | 168,172 | 174,940 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 154,655 | 162,853 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, ending balance | 13,517 | 12,087 |
Average Policy liability | 161,122 | 160,254 |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Premiums | 681 | 1,658 |
Surrenders | (1,200) | (1,500) |
Maturities/deaths | (1,294) | (1,325) |
Net flows | (1,813) | (1,167) |
Investment-related items and other movements | (236) | 1,500 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 42,316 | 56,491 |
UK and Europe insurance operations | 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, ending balance | £ 1,181 | £ 1,271 |
Policyholder liabilities and 86
Policyholder liabilities and unallocated surplus - Analysis of movements, US (Details) £ in Millions | 6 Months Ended | ||
Jun. 30, 2018GBP (£)$ / £ | Jun. 30, 2017GBP (£)$ / £ | Dec. 31, 2017$ / £ | |
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Policyholder liabilities on the consolidated statement of financial position, beginning balance | £ 411,243 | ||
Policyholder liabilities on the consolidated statement of financial position, ending balance | £ 405,482 | ||
US dollars | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Average exchange rate | $ / £ | 1.38 | 1.26 | |
Closing exchange rate | $ / £ | 1.32 | 1.30 | 1.35 |
Operating segments excluding intra-group amounts | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Policyholder liabilities on the consolidated statement of financial position, beginning balance | £ 411,211 | £ 388,996 | |
Premiums | 20,322 | 21,603 | |
Surrenders | (10,946) | (10,395) | |
Maturities/deaths | (5,413) | (5,532) | |
Net flows | 3,963 | 5,676 | |
Investment-related items and other movements | (2,253) | 16,626 | |
Foreign exchange translation differences | 5,154 | (10,834) | |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 405,445 | 398,980 | |
Average Policy liability | £ 415,866 | £ 400,674 | |
Jackson (US insurance operations) | US dollars | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Average exchange rate | $ / £ | 1.38 | 1.26 | |
Closing exchange rate | $ / £ | 1.32 | 1.30 | |
Jackson (US insurance operations) | Operating segments excluding intra-group amounts | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Policyholder liabilities on the consolidated statement of financial position, beginning balance | £ 180,724 | £ 177,626 | |
Premiums | 7,111 | 8,148 | |
Surrenders | (5,953) | (5,071) | |
Maturities/deaths | (1,076) | (1,119) | |
Net flows | 82 | 1,958 | |
Investment-related items and other movements | (103) | 7,124 | |
Foreign exchange translation differences | 4,447 | (8,929) | |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 185,150 | 177,779 | |
Average Policy liability | 182,937 | 177,702 | |
Jackson (US insurance operations) | Variable annuity separate account | Operating segments excluding intra-group amounts | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Policyholder liabilities on the consolidated statement of financial position, beginning balance | 130,528 | 120,411 | |
Premiums | 5,528 | 5,981 | |
Surrenders | (4,225) | (3,409) | |
Maturities/deaths | (540) | (541) | |
Net flows | 763 | 2,031 | |
Transfers from general to separate account | 387 | 1,240 | |
Investment-related items and other movements | 582 | 7,236 | |
Foreign exchange translation differences | 3,286 | (6,183) | |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 135,546 | 124,735 | |
Average Policy liability | 133,037 | 122,573 | |
Jackson (US insurance operations) | Fixed annuity, GIC and other business | Operating segments excluding intra-group amounts | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Policyholder liabilities on the consolidated statement of financial position, beginning balance | 50,196 | 57,215 | |
Premiums | 1,583 | 2,167 | |
Surrenders | (1,728) | (1,662) | |
Maturities/deaths | (536) | (578) | |
Net flows | (681) | (73) | |
Transfers from general to separate account | (387) | (1,240) | |
Investment-related items and other movements | (685) | (112) | |
Foreign exchange translation differences | 1,161 | (2,746) | |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 49,604 | 53,044 | |
Average Policy liability | £ 49,900 | £ 55,129 |
Policyholder liabilities and 87
Policyholder liabilities and unallocated surplus - Analysis of movements, UK and Europe (Details) - GBP (£) £ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position, beginning balance | £ 411,243 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, beginning balance | 16,951 | |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 405,482 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, ending balance | 17,283 | |
Operating segments excluding intra-group amounts | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Total Beginning Balance | 435,629 | £ 409,714 |
Policyholder liabilities on the consolidated statement of financial position, beginning balance | 411,211 | 388,996 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, beginning balance | 16,951 | 14,317 |
Reclassification of reinsured UK annuity contracts as held for sale | (12,002) | |
Premiums | 20,322 | 21,603 |
Surrenders | (10,946) | (10,395) |
Maturities/deaths | (5,413) | (5,532) |
Net flows | 3,963 | 5,676 |
Shareholders' transfers post-tax | (154) | (142) |
Investment-related items and other movements | (2,253) | 16,626 |
Foreign exchange translation differences | 5,154 | (10,834) |
Total Ending Balance | 430,337 | 421,040 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 405,445 | 398,980 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, ending balance | 17,283 | 15,090 |
Average Policy liability | 415,866 | 400,674 |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Total Beginning Balance | 181,066 | 169,304 |
Policyholder liabilities on the consolidated statement of financial position, beginning balance | 167,589 | 157,654 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, beginning balance | 13,477 | 11,650 |
Reclassification of reinsured UK annuity contracts as held for sale | (12,002) | |
Premiums | 6,964 | 7,756 |
Surrenders | (3,446) | (3,816) |
Maturities/deaths | (3,499) | (3,533) |
Net flows | 19 | 407 |
Shareholders' transfers post-tax | (127) | (115) |
Investment-related items and other movements | (801) | 5,214 |
Foreign exchange translation differences | 17 | 130 |
Total Ending Balance | 168,172 | 174,940 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 154,655 | 162,853 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, ending balance | 13,517 | 12,087 |
Average Policy liability | 161,122 | 160,254 |
UK and Europe insurance operations | UK and Europe with-profits sub-funds | Operating segments excluding intra-group amounts | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Total Beginning Balance | 124,699 | 113,146 |
Policyholder liabilities on the consolidated statement of financial position, beginning balance | 111,222 | 101,496 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, beginning balance | 13,477 | 11,650 |
Premiums | 6,283 | 6,098 |
Surrenders | (2,246) | (2,316) |
Maturities/deaths | (2,205) | (2,208) |
Net flows | 1,832 | 1,574 |
Shareholders' transfers post-tax | (127) | (115) |
Switches | (89) | (91) |
Investment-related items and other movements | (476) | 3,805 |
Foreign exchange translation differences | 17 | 130 |
Total Ending Balance | 125,856 | 118,449 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 112,339 | 106,362 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position, ending balance | 13,517 | 12,087 |
Average Policy liability | 111,781 | 103,929 |
UK and Europe insurance operations | UK and Europe other funds and subsidiaries | Unit-linked | Operating segments excluding intra-group amounts | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Total Beginning Balance | 23,145 | 22,119 |
Policyholder liabilities on the consolidated statement of financial position, beginning balance | 23,145 | 22,119 |
Premiums | 516 | 1,484 |
Surrenders | (1,163) | (1,472) |
Maturities/deaths | (313) | (323) |
Net flows | (960) | (311) |
Switches | 89 | 91 |
Investment-related items and other movements | (76) | 1,018 |
Total Ending Balance | 22,198 | 22,917 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 22,198 | 22,917 |
Average Policy liability | 22,671 | 22,518 |
UK and Europe insurance operations | UK and Europe other funds and subsidiaries | Annuity and other long term business | Operating segments excluding intra-group amounts | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Total Beginning Balance | 33,222 | 34,039 |
Policyholder liabilities on the consolidated statement of financial position, beginning balance | 33,222 | 34,039 |
Reclassification of reinsured UK annuity contracts as held for sale | (12,002) | |
Premiums | 165 | 174 |
Surrenders | (37) | (28) |
Maturities/deaths | (981) | (1,002) |
Net flows | (853) | (856) |
Investment-related items and other movements | (249) | 391 |
Total Ending Balance | 20,118 | 33,574 |
Policyholder liabilities on the consolidated statement of financial position, ending balance | 20,118 | 33,574 |
Average Policy liability | £ 26,670 | £ 33,807 |
Intangible assets - Goodwill re
Intangible assets - Goodwill reconciliation (Details) - GBP (£) £ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Changes in goodwill: | ||
At beginning of year | £ 1,482 | £ 1,628 |
Disposals/reclassifications to held for sale | (10) | (155) |
Additions in the period | 149 | 9 |
Exchange differences | (1) | |
Net book amount at end of year | 1,620 | 1,482 |
Shareholder-backed | ||
Changes in goodwill: | ||
At beginning of year | 1,458 | |
Exchange differences | 1 | |
Net book amount at end of year | 1,459 | 1,458 |
With-profits | ||
Changes in goodwill: | ||
At beginning of year | 24 | |
Disposals/reclassifications to held for sale | (10) | |
Additions in the period | 149 | |
Exchange differences | (2) | |
Net book amount at end of year | £ 161 | £ 24 |
Intangible assets - Goodwill al
Intangible assets - Goodwill allocation (Details) - GBP (£) £ in Millions | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill allocation | |||
Goodwill | £ 1,620 | £ 1,482 | £ 1,628 |
Addition to goodwill | 149 | 9 | |
Shareholder-backed | |||
Goodwill allocation | |||
Goodwill | 1,459 | 1,458 | |
Shareholder-backed | M&G | |||
Goodwill allocation | |||
Goodwill | 1,153 | 1,153 | |
Shareholder-backed | Other | |||
Goodwill allocation | |||
Goodwill | 306 | 305 | |
With-profits | |||
Goodwill allocation | |||
Goodwill | 161 | 24 | |
Addition to goodwill | 149 | ||
With-profits | Venture funds investments | |||
Goodwill allocation | |||
Goodwill | 161 | £ 24 | |
With-profits | PAC with-profits fund | |||
Goodwill allocation | |||
Addition to goodwill | £ 149 |
Intangible assets - Deferred ac
Intangible assets - Deferred acquisition costs and other intangible assets (Details) - GBP (£) £ in Millions | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred acquisition costs and other intangible assets | |||
Total of deferred acquisition costs and other intangible assets | £ 11,359 | £ 11,011 | |
Shareholder-backed | |||
Deferred acquisition costs and other intangible assets | |||
Deferred acquisition costs | 9,657 | 9,233 | |
Intangible assets other than goodwill | 1,553 | 1,633 | |
Total of deferred acquisition costs and other intangible assets | 11,210 | 10,866 | £ 10,755 |
Shareholder-backed | PVIF | |||
Deferred acquisition costs and other intangible assets | |||
Intangible assets other than goodwill | 35 | 36 | |
Shareholder-backed | Distribution rights and other intangible assets | |||
Deferred acquisition costs and other intangible assets | |||
Intangible assets other than goodwill | 1,518 | 1,597 | |
Shareholder-backed | Insurance contracts | |||
Deferred acquisition costs and other intangible assets | |||
Deferred acquisition costs | 9,596 | 9,170 | |
Shareholder-backed | Investment contracts | |||
Deferred acquisition costs and other intangible assets | |||
Deferred acquisition costs | 61 | 63 | |
With-profits | |||
Deferred acquisition costs and other intangible assets | |||
Total of deferred acquisition costs and other intangible assets | £ 149 | £ 145 |
Intangible assets - Changes in
Intangible assets - Changes in DAC and other intangibles (Details) - GBP (£) £ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Movements in deferred acquisition costs | ||
At beginning of year | £ 11,011 | |
At end of year | 11,359 | £ 11,011 |
Shareholder-backed | ||
Movements in deferred acquisition costs | ||
At beginning of year | 10,866 | 10,755 |
Additions | 511 | 1,240 |
Amortisation to the income statement | (646) | (254) |
Disposals and transfers | (11) | |
Exchange differences and other movements | 218 | (799) |
Amortisation of DAC related to net unrealised valuation movements on the US insurance operation's available-for-sale securities recognised within other comprehensive income | 272 | (76) |
At end of year | 11,210 | 10,866 |
PVIF and other intangibles | ||
Intangible assets | 1,553 | 1,633 |
Shareholder-backed | Amortisation to the income statement, Operating profit | ||
Movements in deferred acquisition costs | ||
Amortisation to the income statement | (447) | (709) |
Shareholder-backed | Amortisation to the income statement, Non-operating profit | ||
Movements in deferred acquisition costs | ||
Amortisation to the income statement | (199) | 455 |
Shareholder-backed | PVIF and other intangibles | ||
Movements in deferred acquisition costs | ||
At beginning of year | 1,633 | |
Disposals and transfers | (11) | |
Exchange differences and other movements | 5 | |
At end of year | 1,633 | |
PVIF and other intangibles | ||
Additions | 14 | |
Amortisation | (88) | |
Intangible assets | 1,553 | |
Shareholder-backed | PVIF and other intangibles | Amortisation to the income statement, Operating profit | ||
Movements in deferred acquisition costs | ||
Amortisation to the income statement | (88) | |
Shareholder-backed | Software | ||
PVIF and other intangibles | ||
Additions | 10 | |
Amortisation | 18 | |
Disposals | 10 | |
Intangible assets | 49 | |
Shareholder-backed | Asia insurance operations | Deferred acquisition costs | ||
Movements in deferred acquisition costs | ||
At beginning of year | 946 | |
Additions | 199 | |
Amortisation to the income statement | (70) | |
Exchange differences and other movements | 6 | |
At end of year | 1,081 | £ 946 |
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 | £ (70) | |
Shareholder-backed | Jackson (US insurance operations) | ||
Movements in deferred acquisition costs | ||
Assumption for long-term investment returns (as a percent) | 7.40% | 7.40% |
Shareholder-backed | Jackson (US insurance operations) | Amortisation to the income statement, Operating profit | ||
Movements in deferred acquisition costs | ||
Assumption for long-term investment returns (as a percent) | 7.40% | |
Shareholder-backed | Jackson (US insurance operations) | Deferred acquisition costs | ||
Movements in deferred acquisition costs | ||
At beginning of year | £ 8,197 | |
Additions | 290 | |
Amortisation to the income statement | (479) | |
Exchange differences and other movements | 206 | |
Amortisation of DAC related to net unrealised valuation movements on the US insurance operation's available-for-sale securities recognised within other comprehensive income | 272 | |
At end of year | 8,486 | £ 8,197 |
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 | (280) | |
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 | (199) | |
Shareholder-backed | General insurance commission (UK and Europe insurance operations) | Deferred acquisition costs | ||
Movements in deferred acquisition costs | ||
At beginning of year | 84 | |
Additions | 7 | |
Amortisation to the income statement | (6) | |
At end of year | 85 | 84 |
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 | (6) | |
Shareholder-backed | Asset management operations | Deferred acquisition costs | ||
Movements in deferred acquisition costs | ||
At beginning of year | 6 | |
Additions | 1 | |
Amortisation to the income statement | (3) | |
Exchange differences and other movements | 1 | |
At end of year | 5 | £ 6 |
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 | £ (3) |
Intangible Assets - DAC for US
Intangible Assets - DAC for US operations (Details) - GBP (£) £ in Millions | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
DAC amounts | |||
Gain (loss) for altered shadow DAC amortisation | £ 272 | £ (69) | |
Shareholder-backed | |||
DAC amounts | |||
Deferred acquisition costs | 9,657 | £ 9,233 | |
Shareholder-backed | Jackson (US insurance operations) | |||
DAC amounts | |||
Deferred acquisition costs | 8,486 | 8,197 | |
Positive (negative) unrealised valuation movement | (1,421) | 617 | |
Gain (loss) for altered shadow DAC amortisation | £ 272 | £ (76) | |
Assumption for long-term investment returns (as a percent) | 7.40% | 7.40% | |
Shareholder-backed | Jackson (US insurance operations) | Cumulative shadow DAC | |||
DAC amounts | |||
Deferred acquisition costs | £ (13) | £ (289) | |
Shareholder-backed | Jackson (US insurance operations) | Amortisation to the income statement, Operating profit | |||
DAC amounts | |||
(Credit) charge for (decelerated) accelerated amortisation | £ 42 | 36 | |
Consecutive period of mechanical reduction in the projected separate account return under the mean-reversion technique | 5 years | ||
Preceding period of adjusted projected separate account return with actual rates of return under mean-reversion technique | 3 years | ||
Assumption for long-term investment returns (as a percent) | 7.40% | ||
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) | 33.10% | ||
Maximum increase in separate account values for mean reversion assumption to remain within the corridor (as a percent) | 34.60% | ||
Shareholder-backed | Jackson (US insurance operations) | Variable annuities | Amount before cumulative shadow DAC | |||
DAC amounts | |||
Deferred acquisition costs | £ 8,258 | 8,208 | |
Shareholder-backed | Jackson (US insurance operations) | Other business | Amount before cumulative shadow DAC | |||
DAC amounts | |||
Deferred acquisition costs | £ 241 | £ 278 |
Borrowings - Core Structural Bo
Borrowings - Core Structural Borrowings (Details) £ in Millions, $ in Millions | 12 Months Ended | |||||
Dec. 31, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2018GBP (£) | Dec. 31, 2017GBP (£) | Jun. 30, 2017GBP (£) | Dec. 31, 2016GBP (£) | |
Core structural borrowings of shareholder-financed operations | ||||||
Borrowings | ||||||
Borrowings per consolidated statement of financial position | £ 6,367 | £ 6,280 | £ 6,614 | £ 6,798 | ||
Holding company total | ||||||
Borrowings | ||||||
Borrowings per consolidated statement of financial position | 5,903 | 5,821 | ||||
Subordinated debt total | ||||||
Borrowings | ||||||
Borrowings per consolidated statement of financial position | 5,354 | 5,272 | ||||
Subordinated debt total | Net investment hedge | ||||||
Borrowings | ||||||
Face amount | $ | $ 4,275 | $ 4,275 | ||||
Perpetual subordinated Capital Securities (Tier 1) | ||||||
Borrowings | ||||||
Borrowings per consolidated statement of financial position | 833 | 814 | ||||
Perpetual subordinated Capital Securities (Tier 2) | ||||||
Borrowings | ||||||
Borrowings per consolidated statement of financial position | 2,388 | 2,326 | ||||
Subordinated Notes | ||||||
Borrowings | ||||||
Borrowings per consolidated statement of financial position | 2,133 | 2,132 | ||||
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% | ||
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% | ||
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% | ||||
Jackson US$250m 8.15% Surplus Notes 2027 | ||||||
Borrowings | ||||||
Borrowings per consolidated statement of financial position | 189 | £ 184 | ||||
Face amount | £ 250 | £ 250 | ||||
Interest rate (as a percent) | 8.15% | 8.15% | 8.15% | 8.15% |
Borrowings - Operational borrow
Borrowings - Operational borrowings (Details) - GBP (£) £ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Operational borrowings attributable to shareholder-financed operations | ||
Borrowings | ||
Borrowings | £ 1,618 | £ 1,791 |
Borrowings in respect of short-term fixed income securities programmes | ||
Borrowings | ||
Borrowings | 1,209 | 1,085 |
Commercial Paper | ||
Borrowings | ||
Borrowings | 909 | 485 |
Medium Term Notes 2018 | ||
Borrowings | ||
Borrowings | 300 | 600 |
Total other borrowings | ||
Borrowings | ||
Borrowings | £ 409 | £ 706 |
Borrowings - With-profits opera
Borrowings - With-profits operations (Details) - GBP (£) £ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Borrowings attributable to with-profits operations | ||
Disclosure of detailed information about borrowings [line items] | ||
Borrowings | £ 3,589 | £ 3,716 |
Non-recourse borrowings of consolidated investment funds | ||
Disclosure of detailed information about borrowings [line items] | ||
Borrowings | 3,521 | 3,570 |
100m 8.5% undated subordinated guaranteed bonds of Scottish Amicable Finance plc | ||
Disclosure of detailed information about borrowings [line items] | ||
Borrowings | 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 | £ 68 | £ 46 |
Deferred tax - Deferred tax in
Deferred tax - Deferred tax in statement of financial position (Details) £ in Millions | 6 Months Ended |
Jun. 30, 2018GBP (£) | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the beginning of the year | £ 2,627 |
Movement in income statement | (280) |
Movement through Other comprehensive income and equity | 44 |
Other movements including foreign currency movements | 44 |
Deferred tax assets at the end of the year | 2,435 |
Deferred tax liabilities in statement of financial position | |
Deferred tax liabilities at the beginning of the year | (4,715) |
Movement in income statement | 104 |
Movement through Other comprehensive income and equity | 175 |
Other movements including foreign currency movements | (7) |
Deferred tax liabilities at the end of the year | (4,443) |
Unrealised losses or gains on investments | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the beginning of the year | 14 |
Movement in income statement | (1) |
Movement through Other comprehensive income and equity | 55 |
Other movements including foreign currency movements | (1) |
Deferred tax assets at the end of the year | 67 |
Deferred tax liabilities in statement of financial position | |
Deferred tax liabilities at the beginning of the year | (1,748) |
Movement in income statement | 126 |
Movement through Other comprehensive income and equity | 186 |
Other movements including foreign currency movements | 32 |
Deferred tax liabilities at the end of the year | (1,404) |
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 | (872) |
Movement in income statement | (49) |
Other movements including foreign currency movements | (4) |
Deferred tax liabilities at the end of the year | (925) |
Short-term temporary differences | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the beginning of the year | 2,498 |
Movement in income statement | (343) |
Movement through Other comprehensive income and equity | (12) |
Other movements including foreign currency movements | 44 |
Deferred tax assets at the end of the year | 2,187 |
Deferred tax liabilities in statement of financial position | |
Deferred tax liabilities at the beginning of the year | (2,041) |
Movement in income statement | 27 |
Movement through Other comprehensive income and equity | (11) |
Other movements including foreign currency movements | (36) |
Deferred tax liabilities at the end of the year | (2,061) |
Capital allowances | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the beginning of the year | 14 |
Movement in income statement | 1 |
Other movements including foreign currency movements | 1 |
Deferred tax assets at the end of the year | 16 |
Deferred tax liabilities in statement of financial position | |
Deferred tax liabilities at the beginning of the year | (54) |
Other movements including foreign currency movements | 1 |
Deferred tax liabilities at the end of the year | (53) |
Unused tax losses | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the beginning of the year | 100 |
Movement in income statement | 63 |
Movement through Other comprehensive income and equity | 1 |
Deferred tax assets at the end of the year | £ 164 |
Deferred tax - Tax benefits not
Deferred tax - Tax benefits not recognized (Details) - GBP (£) £ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Capital losses | ||
Disclosure of deferred tax in statement of financial position and by Group's operations | ||
Tax benefit not recognized | £ 70 | £ 79 |
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 | 42 | 74 |
Losses for which tax benefits have not been recognised | 200 | £ 300 |
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 | £ 38 |
Defined benefit pension schem98
Defined benefit pension schemes - Background (Details) | 6 Months Ended |
Jun. 30, 2018item | |
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 schem99
Defined benefit pension schemes - Summary economic and IAS 19 positions (Details) - GBP (£) £ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Defined benefit pension schemes | ||
Pension asset | £ 234 | £ 236 |
Pension liability | 134 | 180 |
Pension plans | ||
Defined benefit pension schemes | ||
Pension asset (liability) | 100 | 56 |
Pension plans | Surplus (deficit) (without the effect of IFRIC 14) | ||
Defined benefit pension schemes | ||
Pension asset (liability) | 971 | 692 |
Pension plans | Effect of IFRIC 14 for derecognition of PSPS surplus | ||
Defined benefit pension schemes | ||
Pension asset (liability) | (657) | (485) |
Pension plans | Economic basis net surplus (deficit) | ||
Defined benefit pension schemes | ||
Pension asset (liability) | 314 | 207 |
Economic surplus (deficit) attributable to: PAC with-profits fund | 139 | 110 |
Economic surplus (deficit) attributable to: Shareholder-backed operations | 175 | 97 |
Pension plans | Other adjustments including for investments in Prudential insurance policies | ||
Defined benefit pension schemes | ||
Pension asset (liability) | (214) | (151) |
PSPS | ||
Defined benefit pension schemes | ||
Pension asset (liability) | 234 | 236 |
PSPS | Surplus (deficit) (without the effect of IFRIC 14) | ||
Defined benefit pension schemes | ||
Pension asset (liability) | 891 | 721 |
PSPS | Effect of IFRIC 14 for derecognition of PSPS surplus | ||
Defined benefit pension schemes | ||
Pension asset (liability) | (657) | (485) |
PSPS | Economic basis net surplus (deficit) | ||
Defined benefit pension schemes | ||
Pension asset (liability) | 234 | 236 |
Economic surplus (deficit) attributable to: PAC with-profits fund | 164 | 165 |
Economic surplus (deficit) attributable to: Shareholder-backed operations | 70 | 71 |
SASPS | ||
Defined benefit pension schemes | ||
Pension asset (liability) | (62) | (137) |
SASPS | Surplus (deficit) (without the effect of IFRIC 14) | ||
Defined benefit pension schemes | ||
Pension asset (liability) | (62) | (137) |
SASPS | Economic basis net surplus (deficit) | ||
Defined benefit pension schemes | ||
Pension asset (liability) | (62) | (137) |
Economic surplus (deficit) attributable to: PAC with-profits fund | (25) | (55) |
Economic surplus (deficit) attributable to: Shareholder-backed operations | (37) | (82) |
M&GGPS | ||
Defined benefit pension schemes | ||
Pension asset (liability) | (71) | (42) |
M&GGPS | Surplus (deficit) (without the effect of IFRIC 14) | ||
Defined benefit pension schemes | ||
Pension asset (liability) | 143 | 109 |
M&GGPS | Economic basis net surplus (deficit) | ||
Defined benefit pension schemes | ||
Pension asset (liability) | 143 | 109 |
Economic surplus (deficit) attributable to: Shareholder-backed operations | 143 | 109 |
M&GGPS | Other adjustments including for investments in Prudential insurance policies | ||
Defined benefit pension schemes | ||
Pension asset (liability) | (214) | (151) |
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 sche100
Defined benefit pension schemes - Actuarial valuations (Details) | 6 Months Ended |
Jun. 30, 2018 | |
Defined benefit pension schemes | |
Required actuarial valuations (in years) | 3 years |
Defined benefit pension sche101
Defined benefit pension schemes - Estimated surpluses and deficits (Details) - GBP (£) £ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Pension plans | ||
Defined benefit pension schemes | ||
Net surplus (deficit), beginning of year | £ 56 | |
Net surplus (deficit), end of year | 100 | |
Pension plans | Surplus (deficit) (without the effect of IFRIC 14) | ||
Defined benefit pension schemes | ||
Net surplus (deficit), beginning of year | 692 | |
(Charge) credit to income statement | (15) | |
Actuarial gains and losses in other comprehensive income | 267 | |
Contributions paid | 27 | |
Net surplus (deficit), end of year | 971 | |
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 | (473) | |
(Charge) credit to income statement | 4 | |
Actuarial gains and losses in other comprehensive income | (144) | |
Contributions paid | (10) | |
Net surplus (deficit), end of year | (623) | |
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 | 219 | |
(Charge) credit to income statement | (11) | |
Actuarial gains and losses in other comprehensive income | 123 | |
Contributions paid | 17 | |
Net surplus (deficit), end of year | 348 | |
Pension plans | Shareholders' share related tax (without the effect of IFRIC 14) | ||
Defined benefit pension schemes | ||
Net surplus (deficit), beginning of year | (42) | |
(Charge) credit to income statement | 2 | |
Actuarial gains and losses in other comprehensive income | (24) | |
Contributions paid | (3) | |
Net surplus (deficit), end of year | (67) | |
Pension plans | Net of shareholders' tax (without the effect of IFRIC 14) | ||
Defined benefit pension schemes | ||
Net surplus (deficit), beginning of year | 177 | |
(Charge) credit to income statement | (9) | |
Actuarial gains and losses in other comprehensive income | 99 | |
Contributions paid | 14 | |
Net surplus (deficit), end of year | 281 | |
Pension plans | Effect of IFRIC 14 for derecognition of PSPS surplus | ||
Defined benefit pension schemes | ||
Net surplus (deficit), beginning of year | (485) | |
(Charge) credit to income statement | (6) | |
Actuarial gains and losses in other comprehensive income | (166) | |
Net surplus (deficit), end of year | (657) | |
Pension plans | Less: amount attributable to PAC with-profits fund (application of IFRIC 14) | ||
Defined benefit pension schemes | ||
Net surplus (deficit), beginning of year | 363 | |
(Charge) credit to income statement | 4 | |
Actuarial gains and losses in other comprehensive income | 117 | |
Net surplus (deficit), end of year | 484 | |
Pension plans | Shareholders' share, gross of tax (application of IFRIC 14) | ||
Defined benefit pension schemes | ||
Net surplus (deficit), beginning of year | (122) | |
(Charge) credit to income statement | (2) | |
Actuarial gains and losses in other comprehensive income | (49) | |
Net surplus (deficit), end of year | (173) | |
Pension plans | Shareholders' share related tax (application of IFRIC 14) | ||
Defined benefit pension schemes | ||
Net surplus (deficit), beginning of year | 23 | |
Actuarial gains and losses in other comprehensive income | 10 | |
Net surplus (deficit), end of year | 33 | |
Pension plans | Net of shareholders' tax (application of IFRIC 14) | ||
Defined benefit pension schemes | ||
Net surplus (deficit), beginning of year | (99) | |
(Charge) credit to income statement | (2) | |
Actuarial gains and losses in other comprehensive income | (39) | |
Net surplus (deficit), end of year | (140) | |
Pension plans | Economic basis net surplus (deficit) | ||
Defined benefit pension schemes | ||
Net surplus (deficit), beginning of year | 207 | |
(Charge) credit to income statement | (21) | |
Actuarial gains and losses in other comprehensive income | 101 | |
Contributions paid | 27 | |
Net surplus (deficit), end of year | 314 | |
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 | (110) | |
(Charge) credit to income statement | 8 | |
Actuarial gains and losses in other comprehensive income | (27) | |
Contributions paid | (10) | |
Net surplus (deficit), end of year | (139) | |
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 | 97 | |
(Charge) credit to income statement | (13) | |
Actuarial gains and losses in other comprehensive income | 74 | |
Contributions paid | 17 | |
Net surplus (deficit), end of year | 175 | |
Pension plans | Shareholders' share related tax (with the effect of IFRIC 14) | ||
Defined benefit pension schemes | ||
Net surplus (deficit), beginning of year | (19) | |
(Charge) credit to income statement | 2 | |
Actuarial gains and losses in other comprehensive income | (14) | |
Contributions paid | (3) | |
Net surplus (deficit), end of year | (34) | |
Pension plans | Net of shareholders' tax (with the effect of IFRIC 14) | ||
Defined benefit pension schemes | ||
Net surplus (deficit), beginning of year | 78 | |
(Charge) credit to income statement | (11) | |
Actuarial gains and losses in other comprehensive income | 60 | |
Contributions paid | 14 | |
Net surplus (deficit), end of year | 141 | |
M&GGPS | ||
Defined benefit pension schemes | ||
Investments in Prudential insurance policies | 214 | £ 151 |
Net surplus (deficit), beginning of year | (42) | |
Net surplus (deficit), end of year | (71) | |
M&GGPS | Surplus (deficit) (without the effect of IFRIC 14) | ||
Defined benefit pension schemes | ||
Net surplus (deficit), beginning of year | 109 | |
Net surplus (deficit), end of year | 143 | |
M&GGPS | Economic basis net surplus (deficit) | ||
Defined benefit pension schemes | ||
Net surplus (deficit), beginning of year | 109 | |
Net surplus (deficit), end of year | £ 143 |
Share capital, share premium102
Share capital, share premium and own shares - Share capital and premium (Details) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018GBP (£)Options£ / sharesshares | Jun. 30, 2017GBP (£)shares | Dec. 31, 2017GBP (£)Options£ / sharesshares | |
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 | 2,587,175,445 | 2,581,061,573 | 2,581,061,573 |
Number of shares issued under share-based schemes | shares | 4,697,422 | 6,113,872 | |
Number of issued shares at end of year | shares | 2,591,872,867 | 2,587,175,445 | |
Equity at beginning of period | £ 16,094,000,000 | £ 14,667,000,000 | £ 14,667,000,000 |
New share capital subscribed | 6,000,000 | 10,000,000 | |
Equity at end of period | 15,890,000,000 | 15,450,000,000 | 16,094,000,000 |
Share capital | |||
Disclosure of classes of share capital | |||
Equity at beginning of period | 129,000,000 | 129,000,000 | 129,000,000 |
Equity at end of period | 129,000,000 | 129,000,000 | 129,000,000 |
Share premium | |||
Disclosure of classes of share capital | |||
Equity at beginning of period | 1,948,000,000 | 1,927,000,000 | 1,927,000,000 |
New share capital subscribed | 6,000,000 | 10,000,000 | 21,000,000 |
Equity at end of period | £ 1,954,000,000 | £ 1,937,000,000 | £ 1,948,000,000 |
SAYE options | |||
Options outstanding under save as you earn schemes | |||
Shares under option | Options | 5,851,810 | 6,448,853 | |
SAYE options | Minimum | |||
Options outstanding under save as you earn schemes | |||
Exercise price | £ 629 | £ 6.29 | |
SAYE options | Maximum | |||
Options outstanding under save as you earn schemes | |||
Exercise price | £ 1,455 | £ 14.55 |
Share capital, share premium103
Share capital, share premium and own shares - Transactions in Prudential plc shares (Details) - GBP (£) £ in Millions | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | Mar. 31, 2018 | |
Transactions in Prudential plc shares | |||
Cost of own shares deducted from retained earnings | £ 197 | £ 250 | |
Shares held in trust for employee incentive plans | |||
Transactions in Prudential plc shares | |||
Number of shares held | 9,700,000 | 11,400,000 | 14,900,000 |
Market value of shares held | £ 168 | £ 218 | |
Number of shares purchased | 1,800,000 | 3,900,000 | |
Cost of shares purchased | £ 32.2 | £ 66.1 | |
Shares held in authorized investment funds | |||
Transactions in Prudential plc shares | |||
Cost of own shares deducted from retained earnings | £ 46 | £ 71 | |
Number of shares held | 4,800,000 | 6,400,000 | |
Market value of shares held | £ 84 | £ 121 | |
Net number of shares on acquisitions (disposed) | (1,556,423) | 372,029 | |
Net increase (decrease) to book cost | £ (24.4) | £ 9.4 |
Held for sale and corporate 104
Held for sale and corporate transactions (Details) - GBP (£) £ in Millions | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2017 | ||
Held for sale and corporate transactions | |||||
Other transactions | £ (57) | £ 61 | £ 223 | ||
(Loss) gain on disposal of businesses and corporate transactions | (570) | 61 | |||
Outward reinsurance premium | [1] | 12,961 | £ 947 | ||
Assets | |||||
Reinsurers' share of insurance contract liabilities | 9,620 | £ 9,673 | 9,673 | ||
Other debtors | 3,519 | 2,963 | 2,963 | ||
Assets held for sale | [2] | 12,024 | 38 | 38 | |
Liabilities | |||||
Accruals, deferred income and other liabilities | 13,551 | 14,185 | 14,185 | ||
Liabilities held for sale | 11,977 | ||||
NPH broker-dealer | |||||
Held for sale and corporate transactions | |||||
Other transactions | 162 | ||||
Liabilities | |||||
Additional costs related to previous disposal | 57 | ||||
UK and Europe insurance operations | Shareholder annuity portfolio being sold to Rothesay Life | |||||
Held for sale and corporate transactions | |||||
Outward reinsurance premium | 12,130 | ||||
Assets | |||||
Reinsurers' share of insurance contract liabilities | 11,928 | ||||
Other debtors | 49 | ||||
Assets held for sale | 11,977 | ||||
Liabilities | |||||
Policyholder liabilities | 11,928 | ||||
Accruals, deferred income and other liabilities | 49 | ||||
Liabilities held for sale | 11,977 | ||||
UK and Europe insurance operations | Shareholder annuity portfolio being sold to Rothesay Life | |||||
Held for sale and corporate transactions | |||||
Loss arising on reinsurance | £ (513) | ||||
Insurance contract liabilities | £ 12,000 | £ 12,000 | |||
[1] | Outward reinsurance premiums of £(12,961) million includes the £(12,130) million paid during the period in respect of the reinsurance of the UK annuity portfolio. See note D1 for further details. | ||||
[2] | Assets held for sale of £12,024 million includes £11,977 million in respect of the reinsured UK annuity business (see note D1). |
Post balance sheet events (Deta
Post balance sheet events (Details) - Asia asset management - Agreement to acquire TMB Asset Management Co. Ltd. | Jul. 25, 2018 |
Post balance sheet events | |
Percentage of voting equity interests acquired | 65.00% |
Percentage to which ownership may be increased in the future | 100.00% |