Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2018shares | |
Document and Entity Information | |
Entity Registrant Name | PRUDENTIAL PLC |
Entity Central Index Key | 0001116578 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2018 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | Yes |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 2,593,044,409 |
Document Fiscal Year Focus | 2018 |
Document Fiscal Period Focus | FY |
Consolidated income statements
Consolidated income statements - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Consolidated income statements | ||||
Gross premiums earned | £ 47,224 | £ 44,005 | £ 38,981 | |
Outward reinsurance premiums | [1] | (14,023) | (2,062) | (2,020) |
Earned premiums, net of reinsurance | 33,201 | 41,943 | 36,961 | |
Investment return | (10,263) | 42,189 | 32,511 | |
Other income | [2] | 1,993 | 2,258 | 2,246 |
Total revenue, net of reinsurance | 24,931 | 86,390 | 71,718 | |
Benefits and claims | [1] | (27,411) | (71,854) | (60,948) |
Outward reinsurers' share of benefits and claims | [1] | 13,554 | 2,193 | 2,412 |
Movement in unallocated surplus of with-profits funds | 1,289 | (2,871) | (830) | |
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (12,568) | (72,532) | (59,366) | |
Acquisition costs and other operating expenditure | [2] | (8,855) | (9,993) | (8,724) |
Finance costs: interest on core structural borrowings of shareholder-financed businesses | (410) | (425) | (360) | |
(Loss) gain on disposal of businesses and corporate transactions | (80) | 223 | ||
Remeasurement of the sold Korea life business | 5 | (238) | ||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | (21,913) | (82,722) | (68,688) | |
Share of profits from joint ventures and associates, net of related tax | 291 | 302 | 182 | |
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | [3],[4] | 3,309 | 3,970 | 3,212 |
Less tax credit (charge) attributable to policyholders' returns | 326 | (674) | (937) | |
Profit (loss) before tax attributable to shareholders | [4] | 3,635 | 3,296 | 2,275 |
Total tax credit (charge) attributable to policyholders and shareholders | (296) | (1,580) | (1,291) | |
Adjustment to remove tax (credit) charge attributable to policyholders' returns | (326) | 674 | 937 | |
Tax charge attributable to shareholders' returns | (622) | (906) | (354) | |
Profit for the year | 3,013 | 2,390 | 1,921 | |
Attributable to: | ||||
Equity holders of the Company | 3,010 | 2,389 | 1,921 | |
Non-controlling interests | 3 | 1 | ||
Profit for the year | £ 3,013 | £ 2,390 | £ 1,921 | |
Based on profit attributable to the equity holders of the Company: | ||||
Basic (per share) | £ 1.169 | £ 0.931 | £ 0.750 | |
Diluted (per share) | £ 1.168 | £ 0.930 | £ 0.750 | |
[1] | Outward reinsurance premiums include the £(12,149) million paid during the year in respect of the reinsurance of the UK annuity portfolio. The associated increase in reinsurance assets is included in outward reinsurers’ share of benefits and claims and the consequential change to policyholder liabilities is included in benefits and claims. See note D1.1 for further details. | |||
[2] | The 2017 and 2016 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 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 with-profits funds after adjusting for taxes borne by policyholders. |
Consolidated income statements
Consolidated income statements (Parenthetical) - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
IFRS Statement [Line Items] | ||||
Outward reinsurance premiums | [1] | £ (14,023) | £ (2,062) | £ (2,020) |
UK and Europe insurance operations | Shareholder annuity portfolio being sold to Rothesay Life | ||||
IFRS Statement [Line Items] | ||||
Outward reinsurance premiums | £ (12,149) | |||
[1] | Outward reinsurance premiums include the £(12,149) million paid during the year in respect of the reinsurance of the UK annuity portfolio. The associated increase in reinsurance assets is included in outward reinsurers’ share of benefits and claims and the consequential change to policyholder liabilities is included in benefits and claims. See note D1.1 for further details. |
Consolidated statements of comp
Consolidated statements of comprehensive income - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Consolidated statements of comprehensive income | |||
Profit for the year | £ 3,013 | £ 2,390 | £ 1,921 |
Exchange movements on foreign operations and net investment hedges: | |||
Exchange movements arising during the year | 344 | (404) | 1,148 |
Cumulative exchange (gain) loss of sold business recycled through profit or loss | (61) | ||
Related tax | 5 | (5) | 13 |
Exchange movements on foreign operations and net investment hedges | 349 | (470) | 1,161 |
Net unrealised valuation movements on securities of US insurance operations classified as available-for-sale: | |||
Net unrealised holding (losses) gains arising in the year | (1,606) | 591 | 241 |
(Deduct net gains) add back net losses included in the income statement on disposal and impairment | (11) | 26 | (269) |
Total | (1,617) | 617 | (28) |
Related change in amortisation of deferred acquisition costs | 246 | (76) | 76 |
Related tax | 288 | (55) | (17) |
Net unrealised valuation movements on securities of US insurance operations classified as available-for-sale | (1,083) | 486 | 31 |
Total | (734) | 16 | 1,192 |
Shareholders' share of actuarial gains and losses on defined benefit pension schemes: | |||
Actuarial gains and losses on defined benefit pension schemes | 134 | 200 | (181) |
Related tax | (23) | (33) | 26 |
Actuarial gains and losses on defined benefit pension schemes, net of tax | 111 | 167 | (155) |
(Deduct) add amount attributable to UK with-profit funds transferred to unallocated surplus of with-profit funds, net of related tax | (38) | (78) | 62 |
Shareholders' share of actuarial gains and losses on defined benefit pension schemes | 73 | 89 | (93) |
Total other comprehensive income (loss) | (661) | 105 | 1,099 |
Total comprehensive income for the year | 2,352 | 2,495 | 3,020 |
Attributable to: | |||
Equity holders of the Company | 2,348 | 2,494 | 3,020 |
Non-controlling interests | 4 | 1 | |
Total comprehensive income for the year | £ 2,352 | £ 2,495 | £ 3,020 |
Consolidated statement of chang
Consolidated statement of changes in equity - GBP (£) £ in Millions | Shareholders' equity | Share capital | Share premium | Retained earnings | Translation reserve | Available-for-sale securities reserves | Non-controlling interests | Total |
Reserves | ||||||||
Profit for the year | £ 1,921 | £ 1,921 | £ 1,921 | |||||
Other comprehensive income: | ||||||||
Exchange movements on foreign operations and net investment hedges, net of tax | 1,161 | £ 1,161 | 1,161 | |||||
Net unrealised valuation movements, net of related change in amortisation of deferred acquisition costs and related tax | 31 | £ 31 | 31 | |||||
Shareholders' share of actuarial gains and losses on defined benefit pension schemes, net of related tax | (93) | (93) | (93) | |||||
Total other comprehensive income (loss) | 1,099 | (93) | 1,161 | 31 | 1,099 | |||
Total comprehensive income for the year | 3,020 | 1,828 | 1,161 | 31 | 3,020 | |||
Dividends | (1,267) | (1,267) | (1,267) | |||||
Reserve movements in respect of share-based payments | (51) | (51) | (51) | |||||
Share capital and share premium | ||||||||
New share capital subscribed | 13 | £ 1 | £ 12 | 13 | ||||
Treasury shares | ||||||||
Movement in own shares in respect of share-based payment plans | 2 | 2 | 2 | |||||
Movement in Prudential plc shares purchased by unit trusts consolidated under IFRS | (6) | (6) | (6) | |||||
Net increase (decrease) in equity | 1,711 | 1 | 12 | 506 | 1,161 | 31 | 1,711 | |
Equity at beginning of year at Dec. 31, 2015 | 12,955 | 128 | 1,915 | 10,436 | 149 | 327 | £ 1 | 12,956 |
Equity at end of year at Dec. 31, 2016 | 14,666 | 129 | 1,927 | 10,942 | 1,310 | 358 | 1 | 14,667 |
Reserves | ||||||||
Profit for the year | 2,389 | 2,389 | 1 | 2,390 | ||||
Other comprehensive income: | ||||||||
Exchange movements on foreign operations and net investment hedges, net of tax | (470) | (470) | (470) | |||||
Net unrealised valuation movements, net of related change in amortisation of deferred acquisition costs and related tax | 486 | 486 | 486 | |||||
Shareholders' share of actuarial gains and losses on defined benefit pension schemes, net of related tax | 89 | 89 | 89 | |||||
Total other comprehensive income (loss) | 105 | 89 | (470) | 486 | 105 | |||
Total comprehensive income for the year | 2,494 | 2,478 | (470) | 486 | 1 | 2,495 | ||
Dividends | (1,159) | (1,159) | (1,159) | |||||
Reserve movements in respect of share-based payments | 89 | 89 | 89 | |||||
Change in non-controlling interests | 5 | 5 | ||||||
Share capital and share premium | ||||||||
New share capital subscribed | 21 | 21 | 21 | |||||
Treasury shares | ||||||||
Movement in own shares in respect of share-based payment plans | (15) | (15) | (15) | |||||
Movement in Prudential plc shares purchased by unit trusts consolidated under IFRS | (9) | (9) | (9) | |||||
Net increase (decrease) in equity | 1,421 | 21 | 1,384 | (470) | 486 | 6 | 1,427 | |
Equity at end of year at Dec. 31, 2017 | 16,087 | 129 | 1,948 | 12,326 | 840 | 844 | 7 | 16,094 |
Reserves | ||||||||
Profit for the year | 3,010 | 3,010 | 3 | 3,013 | ||||
Other comprehensive income: | ||||||||
Exchange movements on foreign operations and net investment hedges, net of tax | 348 | 348 | 1 | 349 | ||||
Net unrealised valuation movements, net of related change in amortisation of deferred acquisition costs and related tax | (1,083) | (1,083) | (1,083) | |||||
Shareholders' share of actuarial gains and losses on defined benefit pension schemes, net of related tax | 73 | 73 | 73 | |||||
Total other comprehensive income (loss) | (662) | 73 | 348 | (1,083) | 1 | (661) | ||
Total comprehensive income for the year | 2,348 | 3,083 | 348 | (1,083) | 4 | 2,352 | ||
Dividends | (1,244) | (1,244) | (1,244) | |||||
Reserve movements in respect of share-based payments | 69 | 69 | 69 | |||||
Change in non-controlling interests | 7 | 7 | ||||||
Movements in respect of option to acquire non-controlling interests | (109) | (109) | (109) | |||||
Share capital and share premium | ||||||||
New share capital subscribed | 17 | 1 | 16 | 17 | ||||
Treasury shares | ||||||||
Movement in own shares in respect of share-based payment plans | 29 | 29 | 29 | |||||
Movement in Prudential plc shares purchased by unit trusts consolidated under IFRS | 52 | 52 | 52 | |||||
Net increase (decrease) in equity | 1,162 | 1 | 16 | 1,880 | 348 | (1,083) | 11 | 1,173 |
Equity at end of year at Dec. 31, 2018 | £ 17,249 | £ 130 | £ 1,964 | £ 14,206 | £ 1,188 | £ (239) | £ 18 | £ 17,267 |
Consolidated statements of fina
Consolidated statements of financial position - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Assets | |||||
Goodwill | £ 1,857 | £ 1,482 | £ 1,628 | ||
Deferred acquisition costs and other intangible assets | 11,923 | 11,011 | |||
Property, plant and equipment | 1,409 | 789 | 743 | ||
Reinsurers' share of insurance contract liabilities | 11,144 | 9,673 | |||
Deferred tax assets | 2,595 | 2,627 | |||
Current tax recoverable | 618 | 613 | |||
Accrued investment income | 2,749 | 2,676 | |||
Other debtors | 4,088 | 2,963 | |||
Investment properties | 17,925 | 16,497 | 14,646 | ||
Investment in joint ventures and associates accounted for using the equity method | 1,733 | 1,416 | |||
Loans | 18,010 | 17,042 | |||
Equity securities and portfolio holdings in unit trusts | [1] | 214,733 | 223,391 | ||
Debt securities | [1] | 175,356 | 171,374 | ||
Derivative assets | 3,494 | 4,801 | |||
Other investments | [1] | 6,512 | 5,622 | ||
Deposits | 11,796 | 11,236 | |||
Assets held for sale | [2] | 10,578 | 38 | ||
Cash and cash equivalents | 12,125 | 10,690 | 10,065 | £ 7,782 | |
Total assets | 508,645 | 493,941 | |||
Equity | |||||
Shareholders' equity | 17,249 | 16,087 | |||
Non-controlling interests | 18 | 7 | |||
Total equity | 17,267 | 16,094 | 14,667 | £ 12,956 | |
Liabilities | |||||
Insurance contract liabilities | 322,666 | 328,172 | 316,436 | ||
Investment contract liabilities with discretionary participation features | 67,413 | 62,677 | |||
Investment contract liabilities without discretionary participation features | 19,222 | 20,394 | |||
Unallocated surplus of with-profits funds | 15,845 | 16,951 | £ 14,317 | ||
Core structural borrowings of shareholder-financed businesses | 7,664 | 6,280 | |||
Operational borrowings attributable to shareholder-financed businesses | 998 | 1,791 | |||
Borrowings attributable to with-profits businesses | 3,940 | 3,716 | |||
Obligations under funding, securities lending and sale and repurchase agreements | 6,989 | 5,662 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 11,651 | 8,889 | |||
Deferred tax liabilities | 4,022 | 4,715 | |||
Current tax liabilities | 568 | 537 | |||
Accruals, deferred income and other liabilities | 15,248 | 14,185 | |||
Provisions | 1,078 | 1,123 | |||
Derivative liabilities | 3,506 | 2,755 | |||
Liabilities held for sale | [2] | 10,568 | |||
Total liabilities | 491,378 | 477,847 | |||
Total equity and liabilities | £ 508,645 | £ 493,941 | |||
[1] | Included within equity securities and portfolio holdings in unit trusts, debt securities and other investments are £8,278 million (31 December 2017: £8,232 million) of lent securities and assets subject to repurchase agreements. | ||||
[2] | Assets held for sale of £10,578 million include £10,568 million in respect of the reinsured UK annuity business. A corresponding amount is reflected in liabilities held for sale. See note D1.1 for further details. |
Consolidated statements of fi_2
Consolidated statements of financial position (Parenthetical) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
IFRS Statement [Line Items] | |||
Lent securities and assets subject to repurchase agreements, included within equity securities and portfolio holdings in unit trusts, debt securities and other investments | £ 8,278 | £ 8,232 | |
Assets held for sale | [1] | 10,578 | £ 38 |
UK and Europe insurance operations | Shareholder annuity portfolio being sold to Rothesay Life | |||
IFRS Statement [Line Items] | |||
Assets held for sale | £ 10,568 | ||
[1] | Assets held for sale of £10,578 million include £10,568 million in respect of the reinsured UK annuity business. A corresponding amount is reflected in liabilities held for sale. See note D1.1 for further details. |
Consolidated statements of cash
Consolidated statements of cash flows - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Cash flows from operating activities | ||||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | [1],[2] | £ 3,309 | £ 3,970 | £ 3,212 |
Adjustments to profit before tax for non-cash movements in operating assets and liabilities: | ||||
Investments | 15,456 | (49,771) | (37,824) | |
Other non-investment and non-cash assets | (3,503) | (968) | (2,490) | |
Policyholder liabilities (including unallocated surplus) | (17,392) | 44,877 | 31,135 | |
Other liabilities (including operational borrowings) | 4,344 | 3,360 | 7,861 | |
Interest income and expense and dividend income included in result before tax | (7,861) | (8,994) | (9,749) | |
Operating cash items: | ||||
Interest receipts and payments | 5,793 | 6,900 | 7,886 | |
Dividend receipts | 2,361 | 2,612 | 2,286 | |
Tax paid | [3] | (625) | (915) | (950) |
Other non-cash items | 582 | 549 | 834 | |
Net cash flows from operating activities | 2,464 | 1,620 | 2,201 | |
Cash flows from investing activities | ||||
Purchases of property, plant and equipment | (289) | (134) | (348) | |
Proceeds from disposal of property, plant and equipment | 4 | 102 | ||
Acquisition of businesses and intangibles | [4] | (504) | (351) | (303) |
Sale of businesses | [4] | 1,301 | ||
Net cash flows from investing activities | (789) | 816 | (549) | |
Equity capital: | ||||
Issues of ordinary share capital | 17 | 21 | 13 | |
Dividends paid | (1,244) | (1,159) | (1,267) | |
Net cash flows from financing activities | (544) | (1,702) | (371) | |
Net increase in cash and cash equivalents | 1,131 | 734 | 1,281 | |
Cash and cash equivalents at beginning of year | 10,690 | 10,065 | 7,782 | |
Effect of exchange rate changes on cash and cash equivalents | 304 | (109) | 1,002 | |
Cash and cash equivalents at end of year | 12,125 | 10,690 | 10,065 | |
Shareholder-backed | ||||
Structural borrowings of the Group: | ||||
Issue of subordinated debt, net of costs | [5] | 1,630 | 565 | 1,227 |
Redemption of subordinated debt | [5] | (434) | (751) | |
Fees paid to modify terms and conditions of senior debt | [5] | (33) | ||
Interest paid | [5] | (376) | (369) | (335) |
With-profits | ||||
Structural borrowings of the Group: | ||||
Redemption of subordinated debt | (100) | |||
Interest paid | [6] | £ (4) | £ (9) | £ (9) |
[1] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. | |||
[2] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. This is principally because the corporate taxes of the Group include those on the income of consolidated with-profits and unit-linked funds that, through adjustments to benefits, are borne by policyholders. These amounts are required to be included in the tax charge of the Company under IAS 12. Consequently, the profit before all taxes measure is not representative of pre-tax profits attributable to shareholders. Profit before all taxes is determined after deducting the cost of policyholder benefits and movements in the liability for unallocated surplus of with-profits funds after adjusting for taxes borne by policyholders. | |||
[3] | Tax paid includes £134 million (2017: £298 million; 2016: £226 million) paid on profits taxable at policyholder rather than shareholder rates. | |||
[4] | Cash flows arising from the ‘acquisition of businesses and intangibles’ and ‘sale of businesses’ include amounts paid for distribution rights and cash flows arising from the acquisitions and disposals of businesses (including subsidiaries acquired and disposed by with-profits funds for investment purposes). | |||
[5] | Structural borrowings of shareholder-financed businesses exclude borrowings to support short-term fixed income securities programmes, non-recourse borrowings of investment subsidiaries of shareholder-financed businesses and other borrowings of shareholder-financed businesses. Cash flows in respect of these borrowings are included within cash flows from operating activities. | |||
[6] | Interest paid on structural borrowings of with-profits businesses relates 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 UK 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. |
Consolidated statements of ca_2
Consolidated statements of cash flows (Parenthetical) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Tax paid | |||
Tax paid on profits taxable at policyholder rather than shareholder rates | £ 134 | £ 298 | £ 226 |
Core structural borrowings of shareholder-financed businesses | |||
Changes in the carrying value of the structural borrowings of shareholder-financed businesses are analysed as follows: | |||
Balance at beginning of period | 6,280 | 6,798 | |
Issue of subordinated debt, net of costs | 1,630 | 565 | |
Redemption of subordinated debt | (434) | (751) | |
Modification of debt | (33) | ||
Foreign exchange movement | 210 | (341) | |
Other movements | 11 | 9 | |
Balance at end of period | 7,664 | 6,280 | £ 6,798 |
100m 8.5% undated subordinated guaranteed bonds of Scottish Amicable Finance plc | |||
Changes in the carrying value of the structural borrowings of shareholder-financed businesses are analysed as follows: | |||
Balance at beginning of period | 100 | ||
Balance at end of period | 100 | ||
Interest paid on structural borrowings of with-profits businesses | |||
Face amount | £ 100 | £ 100 | |
Interest rate (as a percent) | 8.50% | 8.50% |
Background and critical account
Background and critical accounting policies | 12 Months Ended |
Dec. 31, 2018 | |
Background and critical accounting policies | |
Background and critical accounting policies | A Background and critical accounting policies A1 Basis of preparation and exchange rates Prudential plc (‘the Company’) together with its subsidiaries (collectively, ‘the Group’ or ‘Prudential’) is an international financial services group. The Group has operations in Asia, the US, the UK and Europe, and Africa. Prudential offers a wide range of retail financial products and services and asset management services throughout these operations. The retail financial products and services primarily include life insurance, pensions and annuities as well as collective investment schemes. On 14 March 2018, the Company announced its intention to demerge M&GPrudential, its UK and Europe business, from Prudential plc resulting in two separately-listed companies. While it remains the intention to demerge the business, M&GPrudential has not been disclosed separately as available for distribution at 31 December 2018, as the business does not satisfy the criteria of being immediately available for sale under IFRS 5, ‘Non-current Assets Held for Sale and Discontinued Operations’. Basis of preparation These statements have been prepared in accordance with IFRS Standards as issued by the International Accounting Standards Board (IASB) and as endorsed by the European Union (EU) as required by EU law (IAS Regulation EC1606/2032). EU-endorsed IFRS Standards may differ from IFRS Standards issued by the IASB if, at any point in time, new or amended IFRS Standards have not been endorsed by the EU. At 31 December 2018, there were no unendorsed standards effective for the three years ended 31 December 2018 which impact the consolidated financial information of the Group. There were no differences between IFRS Standards endorsed by the EU and IFRS Standards issued by the IASB in terms of their application to the Group. These statements have been prepared on a going concern basis. The Group IFRS accounting policies are the same as those applied for the year ended 31 December 2017 with the exception of the adoption of the new and amended accounting standards as described in note A2. Exchange rates The exchange rates applied for balances and transactions in currency other than the presentational currency of the Group, pounds sterling (GBP), were: Closing Average rate Closing Average rate Closing Average rate Opening rate at for rate at for rate at for rate at 31 Dec 2018 31 Dec 2017 31 Dec 2016 1 Jan 2016 Local currency: £ Hong Kong 9.97 10.46 10.57 10.04 9.58 10.52 11.42 Indonesia 18,314.37 18,987.65 18,353.44 17,249.38 16,647.30 18,026.11 20,317.71 Malaysia 5.26 5.38 5.47 5.54 5.54 5.61 6.33 Singapore 1.74 1.80 1.81 1.78 1.79 1.87 2.09 China 8.74 8.82 8.81 8.71 8.59 8.99 9.57 India 88.92 91.25 86.34 83.90 83.86 91.02 97.51 Vietnam 29,541.15 30,732.53 30,719.60 29,279.71 28,136.99 30,292.79 33,140.64 Thailand 41.47 43.13 44.09 43.71 44.25 47.80 53.04 US 1.27 1.34 1.35 1.29 1.24 1.35 1.47 The exchange movement arising during 2018 recognised in other comprehensive income is: 2018 £m 2017 £m 2016 £m Asia operations * 222 (295) 785 US operations 329 (477) 853 UK and Europe operations — 3 1 Unallocated to a segment (other funds)† (207) 304 (491) 344 (465) 1,148 * 2017 included the recycling of the cumulative exchange gain of the sold Korea life business of £61 million to the income statement. † The exchange rate movement unallocated to a segment mainly reflects the translation of currency borrowings, issued by the Group parent company, that have been designated as a net investment hedge against the currency risk of the Group’s investment in the US operations. The consolidated financial statements do not represent Prudential’s statutory accounts for the purposes of the UK Companies Act. These financial statements are based on the prescribed formats. The Group’s external auditors have reported on the 2018, 2017 and 2016 statutory accounts. Statutory accounts for 2017 and 2016 have been delivered to the UK Registrar of Companies and those for 2018 will be delivered following the Company’s Annual General Meeting. The auditor’s reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498(2) or (3) of the UK Companies Act 2006. A2 New accounting pronouncements in 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’. The main impacts of IFRS 15 for Prudential are to revenue recognition for 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. The only impact on the prior periods presented is a minor reclassification in the consolidated income statement to present certain expenses (such as rebates to clients of asset management fees) as a deduction against revenue. Revenue has been reduced by £234 million in 2018 (2017: £172 million; 2016: £124 million) with a corresponding deduction in expenses. IFRS 9, ‘Financial Instruments’ and amendments to IFRS 4, ‘ Insurance Contracts’ The IASB published a complete version of IFRS 9 in July 2014 with the exception of macro hedge accounting 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 for temporary exemption under the amendments to IFRS 4 from applying IFRS 9 and has accordingly deferred the adoption of IFRS 9. See note A3.2 for further details on IFRS 9, including the disclosures associated with the temporary exemption. In November 2018, the IASB tentatively decided that the effective date of IFRS 17 should be delayed by one year from periods ending on or after 1 January 2021 to 1 January 2022. The IASB also tentatively decided that IFRS 9 could be delayed for insurers by an additional year to keep the effective date of IFRS 9 and IFRS 17 aligned. These changes are yet to be finalised and the Group continues to monitor developments. Other new accounting pronouncements In addition to the above, the following new accounting pronouncements are also effective from 1 January 2018: — — — — These pronouncements have had no effect on the Group’s financial statements. A3 Accounting policies A3.1 Critical accounting policies, estimates and judgements This note presents the critical accounting policies, accounting estimates and judgements applied in preparing the Group’s consolidated financial statements. Other significant accounting policies are presented in note E1. All accounting policies are applied consistently for both years presented and normally are not subject to changes unless new accounting standards, interpretations or amendments are introduced by the IASB. The preparation of these financial statements requires Prudential to make estimates and judgements about the amounts of assets, liabilities, revenues and expenses, which are both recognised and unrecognised (eg contingent liabilities) in the primary financial statements. Prudential evaluates its estimates, including those related to long-term business provisioning and the fair value of assets as required. Below are set out those critical accounting policies the application of which requires the Group to make critical estimates and judgements. Also set out are further critical accounting policies affecting the presentation of the Group’s results and other items that require the application of critical estimates and judgements. (a) Critical accounting policies with linked critical estimates and judgements Classification of insurance and investment contracts IFRS 4 requires contracts written by insurers to be classified as either ‘insurance’ contracts or ‘investment’ contracts. The classification of the contract determines its accounting. Impacts £433 billion of reported liabilities, requiring classification. Judgement is applied in considering whether the material features of a contract gives rise to the transfer of significant insurance risk. Contracts that transfer significant insurance risk to the Group are classified as insurance contracts. This judgement is made at the point of contract inception and is not revisited. For the majority of the Group’s contracts, classification is based on a readily identifiable scenario that demonstrates a significant difference in cash flows if the covered event occurs (as opposed to does not occur) reducing the level of judgement involved. Contracts that transfer financial risk to the Group but not significant insurance risk are classified as investment contracts. Furthermore, some contracts, both insurance and investment, contain discretionary participating features representing the contractual right to receive additional benefits as a supplement to guaranteed benefits that (i) are likely to be a significant portion of the total contract benefits; (ii) have an amount or timing contractually at the discretion of the insurer; and (iii) are contractually based on asset or fund performance, as discussed in IFRS 4. Insurance contracts and investment contracts with discretionary participation features are accounted for under IFRS 4. Investment contracts without such discretionary participation features are accounted for as financial instruments under IAS 39. Insurance business units Insurance contracts and investment contracts with discretionary participation features Investment contracts without discretionary participation features Asia – With-profits contracts – Non-participating term contracts – Whole life contracts – Unit-linked policies – Accident and health policies – Minor amounts for a number of small categories of business US – Variable annuity contracts – Fixed annuity contracts – Fixed index annuity contracts – Group payout annuity contracts – Life insurance contracts – Guaranteed investment contracts (GICs) – Minor amounts of ‘annuity certain’ contracts UK and Europe – With-profits contracts – Bulk and individual annuity business – Non-participating term contracts – Certain unit-linked savings and similar contracts £433 billion of liabilities. 15. As used in these consolidated financial statements, the terms ‘grandfathered’ FRS 27 and the ‘grandfathered’ ABI SORP refer to the requirements of these pronouncements prior to their withdrawal. Measurement of policyholder liabilities and unallocated surplus of with-profits The measurement basis of policyholder liabilities is dependent upon the classification of the contracts under IFRS 4 described above. Impacts £433 billion of liabilities. Policyholder liabilities are estimated based on a number of actuarial assumptions (eg mortality, morbidity, policyholder behaviour and expenses). IFRS 4 permits the continued usage of previously applied Generally Accepted Accounting Practices (GAAP) for insurance contracts and investment contracts with discretionary participating features. A modified statutory basis of reporting was adopted by the Group on first time adoption of IFRS in 2005. This was set out in the Statement of Recommended Practice issued by the Association of British Insurers (ABI SORP). An exception was for UK regulated with-profits funds which were measured under FRS 27, ‘Life Assurance’ as discussed below. FRS 27 and the ABI SORP were withdrawn for the accounting periods beginning in or after 2015. As used in these consolidated financial statements, the terms ‘grandfathered’ FRS 27 and the ‘grandfathered’ ABI SORP refer to the requirements of these pronouncements prior to their withdrawal. For investment contracts that do not contain discretionary participating features, IAS 39 is applied and, where the contract includes an investment management element, IFRS 15, ‘Revenue’, applies. The policies applied in each business unit are noted below. When measuring policyholder contract liabilities a number of assumptions are applied to estimate future amounts due to or from the policyholder. The nature of assumption varies by product and among the most significant are assumed rates of policyholders’ mortality, particularly in respect of annuities sold in the UK, and policyholder behaviour, particularly in the US. Additional details of valuation methodologies and assumptions applied for material product types are discussed in note C4.2. Measurement of insurance contract liabilities and investment contract liabilities with discretionary participation features. Asia insurance operations The policyholder liabilities for businesses in Asia are generally determined in accordance with methods prescribed by local GAAP adjusted to comply, where necessary, with the modified statutory basis. Refinements to the local reserving methodology are generally treated as changes in estimates, dependent on their nature. In some operations, Taiwan and India, US GAAP principles are applied. While the basis of valuation of liabilities in this business is in accordance with the requirements of the ‘grandfathered’ ABI SORP, it may differ from that determined on the modified statutory basis for the UK and Europe insurance operations with the same features. The sensitivity of Asia insurance operations to variations in key estimates and assumptions, including mortality and morbidity, is discussed in note C7.2. US insurance operations (Jackson) The policyholder liabilities for Jackson’s conventional protection-type policies are determined under US GAAP principles with locked in assumptions for mortality, interest, policy lapses and expenses along with provisions for adverse deviations. For other policies, the policyholder liabilities include the policyholder account balance. For those investment contracts in the US with fixed and guaranteed terms, the Group uses the amortised cost model to measure the liability. The US has no investment contracts with discretionary participation features. The sensitivity of US insurance operations to variations in key estimates and assumptions, including policyholder behaviour, is discussed in note C7.3. UK and Europe insurance operations The UK regulated with-profits funds’ liabilities are the realistic basis liabilities in accordance with ‘grandfathered’ FRS 27. The realistic basis requires the value of liabilities to be calculated as: – – – The with-profits benefits reserve is primarily based on the retrospective calculation of accumulated asset shares but is adjusted to reflect future policyholder benefits and other charges and expenses. Asset shares broadly reflect the policyholders’ share of the with-profits fund assets attributable to their policies. The future policy-related liabilities must include a market consistent valuation of costs of guarantees, options and smoothing, less any related charges, and this amount is determined using either a stochastic approach, hedging costs or a series of deterministic projections with attributed probabilities. The shareholders’ share of future costs of bonuses is included within the liabilities for unallocated surplus. Shareholders’ share of profit is recognised in line with the distribution of bonuses to policyholders. For the purposes of local regulations, segregated accounts are established for linked business for which policyholder benefits are wholly or partly determined by reference to specific investments or to an investment-related index. The interest rates used in establishing policyholder benefit provisions for pension annuities in the course of payment are adjusted each reporting period and include an allowance for credit risk (see note B3). Mortality rates used in establishing policyholder benefits are based on published mortality tables adjusted to reflect actual experience. The sensitivity of the UK and Europe insurance operations to variations in key estimates and assumptions, including annuitant mortality, is discussed in note C7.4. Measurement of investment contract liabilities without discretionary participation features. Investment contracts without discretionary participation features are measured in accordance with IAS 39 to reflect the deposit nature of the arrangement, with premiums and claims reflected as deposits and withdrawals and taken directly to the statement of financial position as movements in the financial liability balance. Incremental, directly attributable acquisition costs relating to the investment management element of these contracts are capitalised and amortised in line with the related revenue. If the contracts involve up-front charges, this income is also deferred and amortised through the income statement in line with contractual service provision in accordance with IFRS 15. Investment contracts without fixed and guaranteed terms are classified as financial instruments and designated as fair value through profit or loss because the resulting liabilities are managed and their performance is evaluated on a fair value basis. Where the contract includes a surrender option its carrying value is subject to a minimum carrying value equal to its surrender value. Other investment contracts are measured at amortised cost. Measurement of unallocated surplus of with-profits funds. Represents the excess of assets over policyholder liabilities that are determined in accordance with the Group's accounting policies and are based on local GAAP for the Group’s with-profits funds in the UK, Hong Kong and Malaysia that have yet to be appropriated between policyholders and shareholders. The unallocated surplus is recorded wholly as a liability with no allocation to equity. The annual excess (shortfall) of income over expenditure of the with-profits funds, after declaration and attribution of the cost of bonuses to policyholders and shareholders, is transferred to (from) the unallocated surplus each year through a charge (credit) to the income statement. The balance retained in the unallocated surplus represents cumulative income arising on the with-profits business that has not been allocated to policyholders or shareholders. The balance of the unallocated surplus is determined after full provision for deferred tax on unrealised appreciation on investments. Liability adequacy test. The Group performs adequacy testing on its insurance liabilities to ensure that the carrying amounts (net of related deferred acquisition costs) and, where relevant, present value of acquired in-force business is sufficient to cover current estimates of future cash flows. Any deficiency is immediately charged to the income statement. Jackson’s liabilities for insurance contracts, which include those for separate accounts (reflecting separate account assets), policyholder account values and guarantees measured as described in note C4.2 and the associated deferred acquisition cost asset are measured under US GAAP and liability adequacy testing is performed in this context. Under US GAAP, most of Jackson’s products are accounted for under Accounting Standards Codification Topic 944, Financial Services – Insurance of the Financial Accounting Standards Board (ASC 944) whereby deferred acquisition costs are amortised in line with expected gross profits. Recoverability of the deferred acquisition costs in the balance sheet is tested against the projected value of future profits using current estimates and therefore no additional liability adequacy test is required by IFRS 4. The DAC recoverability test is performed in line with US GAAP requirements which in practice is at a grouped level of those contracts managed together. (b) Further critical accounting policies Measurement and presentation of derivatives and debt securities of US insurance operations Jackson holds a number of derivative instruments and debt securities. The selection of the accounting approach for these items significantly affects the volatility of IFRS profit before tax. £(2,014) million of the US income statement investment return arises from such derivatives and debt securities. Jackson enters into derivative instruments to mitigate economic exposures. The Group has considered whether it is appropriate to undertake the necessary operational changes to qualify for hedge accounting so as to achieve matching of value movements in hedging instruments and hedged items in the performance statements. The key factors considered in this assessment were the complexity of asset and liability matching in Jackson’s product range and the difficulty and cost of applying the macro hedge provisions under IAS 39 (which are more suited to banking arrangements) to Jackson’s derivative book. The Group has decided that, except for occasional circumstances, applying hedge accounting using IAS 39 to derivative instruments held by Jackson would not improve the relevance or reliability of the financial statements to such an extent that would justify the difficulty and cost of applying these provisions. As a result of this decision, the total income statement results are more volatile as the movements in the fair value of Jackson’s derivatives are reflected within it. This volatility is reflected in the level of short-term fluctuations in investment returns, as shown in notes B1.1 and B1.2. Under IAS 39, unless carried at amortised cost (subject to impairment provisions where appropriate) under the held-to-maturity category, debt securities are also carried at fair value. The Group has chosen not to classify any financial assets as held-to-maturity. Debt securities of Jackson are designated as available-for-sale with value movements, unless impaired, being recorded as movements within other comprehensive income. Impairments are recorded in the income statement. Presentation of results before tax Profit before tax is a significant IFRS income statement item. The Group has chosen to present a measure of profit before tax attributable to shareholders which distinguishes between tax attributable to policyholders and unallocated surplus and tax borne by shareholders, to support understanding of the performance of the Group. Profit before tax attributable to shareholders is £3,635 million and compares to profit before tax of £3,309 million. The total tax charge for the Group reflects tax that, in addition to relating to shareholders’ profits, is also attributable to policyholders and unallocated surplus of with-profits funds and unit-linked policies. Further detail is provided in note B4. Reported profit before the total tax charge is not representative of pre-tax profits attributable to shareholders. Accordingly, in order to provide a measure of pre-tax profits attributable to shareholders the Group has chosen to adopt an income statement presentation of the tax charge and pre-tax results that distinguishes between policyholder and shareholder components. Segmental analysis of results and earnings attributable to shareholders The Group uses adjusted IFRS operating profit based on longer-term investment returns as the segmental measure of its results. Total segmental adjusted IFRS operating profit based on longer-term investment returns is £5,717 million and is shown in note B1.1. The basis of calculation of adjusted IFRS operating profit based on longer-term investment returns is disclosed in note B1.3. For shareholder-backed business, with the exception of debt securities held by Jackson and assets classified as loans and receivables at amortised cost, all financial investments and investment property are designated as assets at fair value through profit or loss. Short-term fluctuations in fair value affect the result for the year and the Group provides additional analysis of results before and after the effects of short-term fluctuations in investment returns, together with other items that are of a short-term, volatile or one-off nature. The effects of short-term fluctuations include asymmetric impacts where the measurement bases of the liabilities and associated derivatives used to manage the Jackson annuity business differ as described in note B1.2. Short-term fluctuations in investment returns on assets held by with-profits funds in the UK, Hong Kong, Malaysia and Singapore, do not affect directly reported shareholder results. This is because (i) the unallocated surplus of with-profits funds is accounted for as a liability and (ii) excess or deficits of income and expenditure of the funds over the required surplus for distribution are transferred to or from policyholder liabilities (including the unallocated surplus). (c) Further critical estimates or judgements Deferred acquisition costs for insurance contracts The Group applies judgement in determining qualifying costs that should be capitalised (ie those costs of acquiring new insurance business that meet the criteria under the Group’s accounting policy for deferred acquisition costs). The Group estimates projected future profits/margins to assess whether adjustments to the carrying value or amortisation profile of deferred acquisition cost assets are necessary. Except for acquisition costs of with-profits contracts of the UK regulated with-profits funds, which are accounted for under the ‘grandfathered’ FRS 27, costs of acquiring new insurance business are accounted for in a way that is consistent with the principles of the ‘grandfathered’ ABI SORP with deferral and amortisation against margins in future revenues on the related insurance policies. In general, this deferral is shown by an explicit carrying value in the balance sheet. However, in some Asia operations the deferral is implicit through the reserving methodology. The recoverability of the deferred acquisition costs is measured and is deemed impaired if the projected margins (which are estimated based on a number of assumptions similar to those underlying policyholder liabilities) are less than the carrying value. To the extent that the future margins differ from those anticipated, then an adjustment to the carrying value will be necessary either through an impairment (if the projected margins are lower than carrying value) or through a change in the amortisation profile. £10.1 billion of deferred acquisition costs as per note C5.2(b). Asia insurance operations For those business units applying US GAAP to insurance assets and liabilities, as permitted by the ‘grandfathered’ ABI SORP, principles similar to those set out in the US insurance operations paragraph below are applied to the deferral and amortisation of acquisition costs. For other territories in Asia, the general principles of the ‘grandfathered’ ABI SORP are applied with, as described above, deferral of acquisition costs being either explicit or implicit through the reserving basis. US insurance operations The most material estimates and assumptions applied in the measurement and amortisation of deferred acquisition cost balances relate to the US insurance operations. The Group’s US insurance operations apply FASB ASU 2010-26 on ‘Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts’ and capitalise only those incremental costs directly relating to successfully acquiring a contract. For term life business, acquisition costs are deferred and amortised in line with expected premiums. For annuity and interest-sensitive life business, acquisition costs are deferred and amortised in line with expected gross profits on the relevant contracts. For fixed and fixed index annuity and interest-sensitive life business, the key assumption is the long-term spread between the earned rate on investments and the rate credited to policyholders. In addition, expected gross profits depend on mortality assumptions, assumed unit costs and lapses (including the related charges), all of which are based on a combination of Jackson’s actual experience, industry benchmarking and future expectations. A detailed analysis of actual mortality, lapse and expenses experience is performed using internally developed experience studies. For US variable annuity business, a key assumption is the long-term investment return from the separate accounts. Jackson uses a mean reversion methodology that sets the projected level of return for each of the next five years such that these returns in combination with the actual rates of return for the preceding three years, including the current year, average the assumed long-term annual return (gross of asset management fees and other charges to policyholders, but net of external fund management fees) over the eight year period. Projected returns after the mean reversion period revert back to the long-term investment return. For further details on current balances, assumptions and sensitivity, refer to note C5.2(b) and C7.3 (iv). To ensure that the methodology in extreme market movements produces future expected returns that are realistic, the mean reversion technique has a cap and floor feature whereby the projected returns in each of the next five years can be no more than 15 per cent per annum and no less than 0 per cent per annum (both gross of asset management fees and other charges to policyholders, but net of external fund management fees) in each year. Jackson makes certain adjustments to the deferred acquisition costs which are recognised directly in other comprehensive income (‘shadow accounting’) to match the recognition of unrealised gains or losses on available-for-sale securities causing the adjustments. More precisely, shadow deferred acquisition costs adjustments reflect the change in deferred acquisition costs that would have arisen if the assets held in the statement of financial position had been sold, crystallising unrealised gains or losses, and the proceeds reinvested at the yields currently available in the market. UK and Europe insurance operations For UK regulated with-profits funds where ‘grandfathered’ FRS 27 is applied, these costs are expensed as incurred. The majority of the UK shareholder-backed business is individual and group annuity business where the deferral of acquisition costs is negligible. Financial investments – Valuation Financial investments held at fair value represent £401.3 billion of the Group’s total assets. Financial investments held at amortised cost represent £13.3 billion of the Group’s total assets. The Group estimates the fair value of financial investments, that are not actively traded, using quotations from independent third parties or internally developed pricing models. The Group holds the majority of its financial investments at fair value (either through profit and loss or available-for-sale). Information on the inclusion within the income statement of gains/losses arising on debt securities classified as available-for-sale is included in note E1(e)(i). Financial investments held at amortised cost primarily comprise loans and deposits. Determination of fair value The Group uses current bid prices to value its investments having quoted prices. Actively traded investments without quoted prices are valued using prices provided by third parties as described further in note C3.1. Financial investments measured at fair value are classified into a three-level hierarchy as described in note C3.1(b). If the market for a financial investment of the Group is not active, the Group establishes fair value by using quotations from independent third parties, such as brokers or pricing services, or by using internally developed pricing models. Priority is given to publicly available prices from independent sources when available, but overall the source of pricing and/or the valuation technique is chosen with the |
Analysis of performance by segm
Analysis of performance by segment | 12 Months Ended |
Dec. 31, 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 Note 2018 £m 2017 £m 2016 £m Asia: Insurance operations B3(i) 1,982 1,799 1,503 Asset management 182 176 141 Total Asia 2,164 1,975 1,644 US: Jackson (US insurance operations) 1,911 2,214 2,052 Asset management 8 10 (4) Total US 1,919 2,224 2,048 UK and Europe: UK and Europe insurance operations: B3(iii) Long-term business 1,138 861 799 General insurance commission note (i) 19 17 29 Total UK and Europe insurance operations 1,157 878 828 UK and Europe asset management note (iv) 477 500 425 Total UK and Europe 1,634 1,378 1,253 Total segment profit 5,717 5,577 4,945 Other income and expenditure: Investment return and other income 52 11 28 Interest payable on core structural borrowings (410) (425) (360) Corporate expenditure note (ii) (367) (361) (334) SII implementation costs — — (28) Total other income and expenditure (725) (775) (694) Restructuring costs (165) (103) (38) Interest received from tax settlement — — 43 Adjusted IFRS operating profit based on longer-term investment returns 4,827 4,699 4,256 Short-term fluctuations in investment returns on shareholder-backed business B1.2 (558) (1,563) (1,678) Amortisation of acquisition accounting adjustments note (iii) (46) (63) (76) (Loss) gain on disposal of businesses and corporate transactions D1.1 (588) 223 (227) Profit before tax 3,635 3,296 2,275 Tax charge attributable to shareholders’ returns B4 (622) (906) (354) Profit for the year 3,013 2,390 1,921 Attributable to: Equity holders of the Company 3,010 2,389 1,921 Non-controlling interests 3 1 — Basic earnings per share (in pence) Note Based on adjusted IFRS operating profit based on longer-term investment returns note (v) B5 156.6p 145.2p 131.3p Based on profit for the year B5 116.9p 93.1p 75.0p Notes (i) The majority of the general insurance commission is not expected to recur in future years. (ii) Corporate expenditure as shown above is primarily for Group Head Office and Asia Regional Head Office. (iii) Amortisation of acquisition accounting adjustments principally relate to the REALIC business of Jackson which was acquired in 2012. (iv) UK and Europe asset management adjusted IFRS operating profit based on longer-term investment returns: 2018 £m 2017 £m 2016 £m Asset management fee income 1,098 1,027 900 Other income 2 7 23 Staff costs* (384) (400) (332) Other costs* (270) (202) (212) Underlying profit before performance-related fees 446 432 379 Share of associate results 16 15 13 Performance-related fees 15 53 33 Total UK and Europe asset management adjusted IFRS operating profit based on longer-term investment returns 477 500 425 * (v) Tax charges have been reflected as operating and non-operating in the same way as for the pre-tax items. Further details on tax charges are provided in note B4. B1.2 Short-term fluctuations in investment returns on shareholder-backed business 2018 £m 2017 £m 2016 £m Asia operations note (i) (512) (1) (225) US operations note (ii) (100) (1,568) (1,455) UK and Europe operations note (iii) 34 (14) 206 Other operations note (iv) 20 20 (204) Total (558) (1,563) (1,678) (i) Asia operations In Asia, the negative short-term fluctuations of £(512) million (2017: negative £(1) million; 2016: negative £(225) million) principally reflect net value movements on assets and related liabilities following increases in bond yields and falls in equity markets during the year , especially in those countries where policyholder liabilities use a valuation interest rate which does not reflect all movements in interest rates in the period. (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 £(114) million as shown in note C5.2(a) (2017: credit of £462 million; 2016: credit of £565 million) and comprise amounts in respect of the following items: 2018 £m 2017 £m 2016 £m Net equity hedge result note (a) (58) (1,490) (1,587) Other than equity-related derivatives note (b) (64) (36) (126) Debt securities note (c) (31) (73) 201 Equity-type investments: actual less longer-term return 38 12 35 Other items 15 19 22 Total (100) (1,568) (1,455) Notes (a) Net equity hedge result The net equity hedge result relates to the accounting effect of market movements on both the 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. The variable annuity guarantees are valued in accordance with either Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures (formerly FAS 157) or ASC Topic 944, Financial Services – Insurance (formerly SOP 03-01) depending on the type of guarantee. Both approaches 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. The method under FAS 157 requires this fee assessment to be fixed at the time of issue. As the fees included within the initial fee assessment are earned, they are included in non-operating profit to match the corresponding movement in the guarantee liability. As the Group applies US GAAP for the measured value of the product guarantees this item also includes asymmetric impacts where the measurement bases of the liabilities and associated derivatives used to manage the Jackson annuity business differ as described in note B1.3(c) below. The net equity hedge result therefore includes significant accounting mismatches and other factors that do not represent the 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 2016 £m Fair value movements on equity hedge instruments* 299 (1,871) (1,786) Accounting value movements on the variable and fixed index annuity guarantee liabilities † (894) (99) (188) Fee assessments net of claim payments 537 480 387 Total (58) (1,490) (1,587) * Held to manage equity exposures of the variable annuity guarantees and fixed index annuity options. † The accounting value movements on the variable and fixed index annuity guarantee liabilities reflect the impact of market movements and changes in economic and actuarial assumptions. Actuarial assumptions include consideration of persistency, mortality and the expected utilisation of certain features attaching to variable annuity contracts. Assumptions are updated annually via a comparison to experience and after applying expert judgement for how experience may change in the future. Routine updates in 2018 reduced profit before tax (after allowing related changed to DAC amortisation) by £143 million (2017: £382 million). (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 2016 £m (Charges) credits in the year: Losses on sales of impaired and deteriorating bonds (4) (3) (94) Defaults — — (4) Bond write-downs (4) (2) (35) Recoveries/reversals 19 10 15 Total credits (charge) in the year 11 5 (118) Risk margin allowance deducted from adjusted IFRS operating profit based on longer-term investment returns* 77 86 89 88 91 (29) Interest-related realised (losses) gains: Losses arising in the year (8) (43) 376 Less: Amortisation of gains and losses arising in current and prior years to adjusted IFRS operating profit based on longer-term investment returns (116) (140) (135) (124) (183) 241 Related amortisation of deferred acquisition costs 5 19 (11) Total short-term fluctuations related to debt securities (31) (73) 201 * 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 adjusted IFRS operating profit based on longer-term investment returns 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 adjusted IFRS operating profit based on longer-term investment returns of Jackson for 2018 is based on an average annual risk margin reserve of 18 basis points (2017: 21 basis points; 2016: 21 basis points) on average book values of US$57.1 billion (2017: US$55.3 billion; 2016: US$56.4 billion) as shown below: Moody’s rating category (or equivalent under NAIC ratings of mortgage-backed securities) 2018 2017 2016 Average Average Average book Annual book Annual book Annual value RMR expected loss value RMR expected loss value RMR expected loss US$m % US$m £m US$m % US$m £m US$m % US$m £m A3 or higher 29,982 0.10 (31) (23) 27,277 0.12 (33) (25) 29,051 0.12 (36) (27) Baa1, 2 or 3 25,814 0.21 (55) (40) 26,626 0.22 (58) (45) 25,964 0.24 (62) (46) Ba1, 2 or 3 1,042 0.98 (10) (8) 1,046 1.03 (11) (8) 1,051 1.07 (11) (8) B1, 2 or 3 289 2.64 (8) (6) 318 2.70 (9) (7) 312 2.95 (9) (7) Below B3 11 3.69 - - 23 3.78 (1) (1) 40 3.81 (2) (1) Total 57,138 0.18 (104) (77) 55,290 0.21 (112) (86) 56,418 0.21 (120) (89) Related amortisation of deferred acquisition costs (see below) 22 15 21 15 23 17 Risk margin reserve charge to adjusted IFRS operating profit for longer-term credit-related losses (82) (62) (91) (71) (97) (72) Consistent with the basis of measurement of insurance assets and liabilities for Jackson’s IFRS results, the charges and credits to adjusted IFRS 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 £(1,371) million for net unrealised losses on debt securities classified as available-for-sale net of related amortisation of deferred acquisition costs (2017: credit of £541 million; 2016: credit of £48 million). Temporary market value movements do not reflect defaults or impairments. Additional details of the movement in the value of the Jackson portfolio are included in note C3.2(b). (iii) UK and Europe operations The positive short-term fluctuations in investment returns for the UK and Europe operations of £34 million (2017: negative £14 million; 2016: positive £206 million) mainly arises from unrealised gains on equity options held to hedge the value of future shareholder transfers from the with-profits fund partially offset by losses on corporate bonds backing capital to support the remaining annuity business, given the increase in interest rates and credit spreads in 2018. (iv) Other operations The positive short-term fluctuations in investment returns for other operations of £20 million (2017: positive £20 million; 2016: negative £(204) 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&GPrudential 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 with 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 profit or 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’. Performance measure The performance measure of operating segments utilised by the Company is adjusted IFRS operating profit attributable to shareholders based on longer-term investment returns, as described below. This measurement basis distinguishes adjusted IFRS operating profit based on longer-term investment returns from other constituents of the total profit as follows: – – – Determination of adjusted IFRS operating profit based on longer-term investment returns for investment and liability movements: (a) General principles (i) UK-style with-profits business The adjusted IFRS operating profit based on longer-term investment returns reflects the statutory transfer gross of attributable tax. Value movements in the underlying assets of the with-profits funds do not affect directly the determination of adjusted IFRS operating profit based on longer-term investment returns. (ii) Unit-linked business The policyholder unit liabilities are directly reflective of the underlying asset value movements. Accordingly, the adjusted IFRS operating profit based on longer-term investment returns reflect the current period value movements in both the unit liabilities and the backing assets. (iii) US variable annuity and fixed index annuity business This business has guarantee liabilities which are measured on a combination of fair value and other US GAAP derived principles. These liabilities are subject to an extensive derivative programme to manage equity and interest rate exposures whose fair value movements pass through the income statement each period. The principles for determination of the adjusted IFRS operating profit based on longer-term investment returns and short-term fluctuations are as discussed in section (c) below. (iv) Business where policyholder liabilities are sensitive to market conditions Under IFRS, the degree to which the carrying values of liabilities to policyholders are sensitive to current market conditions varies between business units depending upon the nature of the ‘grandfathered’ measurement basis. In general, in those instances where the liabilities are particularly sensitive to routine changes in market conditions, the accounting basis is such that the impact of market movements on the assets and liabilities is broadly equivalent in the income statement, and adjusted IFRS operating profit based on longer-term investment returns is not distorted. In these circumstances, there is no need for the movement in the liability to be bifurcated between the elements that relate to longer-term market conditions and short-term effects. However, movements in liabilities for some types of business do require bifurcation to ensure that at the net level (ie after allocated investment return and charge for policyholder benefits) the adjusted IFRS operating profit based on longer-term investment returns reflects longer-term market returns. Examples of where such bifurcation is necessary are in Hong Kong and for UK shareholder-backed annuity business, as explained in sections b(i) and d(i), respectively. For other types of Asia’s non-participating business, expected longer-term investment returns are used to determine the movement in policyholder liabilities for determining adjusted IFRS operating profit based on longer-term investment returns. (v) Other shareholder-financed business For long-term insurance business, where assets and liabilities are held for the long term, the accounting basis for insurance liabilities under current IFRS can lead to profits that include the effects of short-term fluctuations in market conditions, which may not be representative of trends in underlying performance. Therefore, the following key elements are applied to the results of the Group’s shareholder-financed businesses to determine adjusted IFRS operating profit based on longer-term investment returns. Except in the case of assets backing liabilities which are directly matched (such as unit-linked business) or closely correlated with value movements (as discussed below) adjusted IFRS operating profit based on longer-term investment returns for shareholder-financed business is determined on the basis of expected longer-term investment returns. Longer-term investment returns comprise actual income receivable for the period (interest/dividend income) and for both debt and equity-type securities longer-term capital returns. Debt securities and loans In principle, for debt securities and loans, the longer-term capital returns comprise two elements: – – At 31 December 2018, the level of unamortised interest-related realised gains and losses related to previously sold bonds for the Group was a net gain of £629 million (2017: £855 million; 2016: £969 million). Equity-type securities For equity-type securities, the longer-term rates of return are estimates of the long-term trend investment returns for income and capital having regard to past performance, current trends and future expectations. Equity-type securities held for shareholder-financed businesses other than the UK annuity business, unit-linked and US variable annuity separate accounts are principally relevant for the US and Asia insurance operations. Different rates apply to different categories of equity-type securities. Derivative value movements Generally, derivative value movements are excluded from adjusted IFRS operating profit based on longer-term investment returns . The exception is where the derivative value movements broadly offset changes in the accounting value of other assets and liabilities included in adjusted IFRS operating profit based on longer-term investment returns. The principal example of derivatives whose value movements are excluded from adjusted IFRS operating profit based on longer-term investment returns arises in Jackson, as discussed below in section (c). (b) Asia insurance operations (i) Business where policyholder liabilities are sensitive to market conditions For certain Asia non-participating business, for example in Hong Kong, the economic features are more akin to asset management products with policyholder liabilities reflecting asset shares over the contract term. Consequently, for these products, the charge for policyholder benefits in the adjusted IFRS operating profit based on longer-term investment returns reflects the asset share feature rather than volatile movements that would otherwise be reflected if the local regulatory basis (also applied for IFRS basis) was used. For certain other types of non-participating business expected longer-term investment returns are used to determine the movement in policyholder liabilities for determining adjusted IFRS operating profit based on longer-term investment returns. (ii) Other Asia shareholder-financed business Debt securities For this business, the realised gains and losses are principally interest related. Accordingly, all realised gains and losses to date for these operations are amortised over the period to the date those securities would otherwise have matured, with no explicit risk margin reserve charge. Equity-type securities For Asia insurance operations, investments in equity securities held for non-linked shareholder-backed business amounted to £2,146 million as at 31 December 2018 (31 December 2017: £1,759 million; 31 December 2016: £1,405 million). The rates of return applied in 2018 ranged from 5.3 per cent to 17.6 per cent (2017: 4.3 per cent to 17.2 per cent; 2016: 3.2 per cent to 13.9 per cent) with the rates applied varying by business unit. These rates are broadly stable from period to period but may be different between countries reflecting, for example, differing expectations of inflation in each business unit. The assumptions are for the returns expected to apply in equilibrium conditions. The assumed rates of return do not reflect any cyclical variability in economic performance and are not set by reference to prevailing asset valuations. The longer-term investment returns for the Asia insurance joint ventures accounted for using the equity method are determined on a similar basis as the other Asia insurance operations described above. (c) US insurance operations (i) Separate account business For such business the policyholder unit liabilities are directly reflective of the asset value movements. Accordingly, the adjusted IFRS operating profit based on longer-term investment returns reflect the current period value movements in unit liabilities and the backing assets. (ii) US variable and fixed index annuity business The following value movements for Jackson's variable and fixed index annuity business are excluded from adjusted IFRS operating profit based on longer-term investment returns. See note B1.2 note (ii): – – – – – Guaranteed benefit options for the ‘not for life’ portion of GMWB and equity index options for the fixed index annuity business The ‘not for life’ portion of GMWB guaranteed benefit option liabilities is measured under the US GAAP basis applied for IFRS in a manner consistent with IAS 39 under which the projected future growth rate of the account balance is based on current swap rates (rather than expected rates of return) with only a portion of the expected future guarantee fees included. Reserve value movements on these liabilities are sensitive to changes to levels of equity markets, implied volatility and interest rates. The equity index option for fixed index annuity business is measured under the US GAAP basis applied for IFRS in a manner consistent with IAS 39 under which the projected future growth is based on current swap rates. Guaranteed benefit option for variable annuity guarantee minimum income benefit The GMIB liability, which is substantially reinsured, subject to a deductible and annual claim limits, is accounted for using ‘grandfathered’ US GAAP. This accounting basis substantially does not recognise the effects of market movements. The corresponding reinsurance asset is measured under the ‘grandfathered’ US GAAP basis applied for IFRS in a manner consistent with IAS 39, ‘Financial Instruments: Recognition and Measurement’, and the asset is therefore recognised at fair value. As the GMIB is economically reinsured, the mark to market element of the reinsurance asset is included as a component of short-term fluctuations in investment returns. (iii) Other derivative value movements The principal example of non-equity based derivatives (for example, interest rate swaps and swaptions) whose value movements are excluded from adjusted IFRS operating profit based on longer-term investment returns, arises in Jackson. Non-equity based derivatives are primarily held by Jackson as part of a broadly-based hedging programme for features of Jackson’s bond portfolio (for which value movements are booked in the statement of other comprehensive income rather than the income statement), product liabilities (for which US GAAP accounting as ‘grandfathered’ under IFRS 4 does not fully reflect the economic features being hedged), and the interest rate exposure attaching to equity-based product options. (iv) Other US shareholder-financed business Debt securities The distinction between impairment losses and interest-related realised gains and losses is of particular relevance to Jackson. Jackson has used the ratings by Nationally Recognised Statistical Ratings Organisations (NRSRO) or ratings resulting from the regulatory ratings detail issued by the National Association of Insurance Commissioners (NAIC) to determine the average annual risk margin reserve to apply to debt securities held to back general account business. Debt securities held to back separate account and reinsurance funds withheld are not subject to risk margin reserve charge. Further details of the risk margin reserve charge, as well as the amortisation of interest-related realised gains and losses, for Jackson are shown in note B1.2 note (ii)(c). Equity-type securities As at 31 December 2018, the equity-type securities for US insurance non-separate account operations amounted to £1,359 million (31 December 2017: £946 million; 31 December 2016: £1,323 million). For these operations, the longer-term rates of return for income and capital applied in the years indicated, which reflect the combination of the average risk-free rates over the year and appropriate risk premiums are as follows: Equity-type securities such as common and preferred stock and portfolio holdings in mutual funds 6.7 % to 7.2 % 6.1 % to 6.5 % 5.5 % to 6.5 % Other equity-type securities such as investments in limited partnerships and private equity funds 8.7 % to 9.2 % 8.1 % to 8.5 % 7.5 % to 8.5 % (d) UK and Europe insurance operations (i) Shareholder-backed annuity business For this business, policyholder liabilities are determined by reference to current interest rates. The value movements of the assets covering liabilities are closely correlated with the related change in liabilities. Accordingly, asset value movements are recorded within the ‘adjusted IFRS operating profit based on longer-term investment returns’. Policyholder liabilities include a margin for credit risk. Variations between actual and best estimate expected impairments are recorded as a component of short-term fluctuations in investment returns. The adjusted IFRS operating profit based on longer-term investment returns reflects the impact of value movements on policyholder liabilities for shareholder-backed annuity business within The Prudential Assurance Company Limited (PAC) after adjustments to allocate the following elements of the movement to the category of ‘short-term fluctuations in investment returns’: – – – Credit experience reflects the impact of defaults and other similar experience, such as asset exchanges arising from debt restructuring by issuers that include effectively an element of permanent impairment of the security held. Positive or negative experience compared with assumptions is included within short-term fluctuations in investment returns without further adjustment. The effects of other changes to credit risk provisioning are included in the adjusted IFRS operating profit based on longer-term investment returns, as is the net effect of changes to the valuation rate of interest due to portfolio rebalancing to align more closely with management benchmark. (ii) Non-linked shareholder-financed business For debt securities backing non-linked shareholder-financed business of the UK and Europe insurance operations (other than the annuity business) the realised gains and losses are principally interest related. Accordingly, all realised gains and losses to date for these operations are being amortised over the period to the date those securities would otherwise have matured, with no explicit risk margin reserve charge. (e) Fund management and other non-insurance businesses For these businesses, the particular features applicable for life assurance noted above do not apply and therefore the adjusted IFRS operating profit based on longer-term investment returns is not determined on the basis described above. Instead, realised gains and losses are generally included in adjusted IFRS operating profit based on longer-term investment returns with temporary unrealised gains and losses being included in short-term fluctuations. In some instances, realised gains and losses on derivatives and other financial instruments are amortised to adjusted IFRS operating profit based on longer-term investment returns over a time period that reflects the underlying economic substance of the arrangements. B1.4 Segmental income statement 2018 £m Unallocated to a segment UK and Total (other Group Asia US Europe segment operations) total note (ix) Gross premiums earned note(iv) 16,469 17,656 13,061 47,186 38 47,224 Outward reinsurance premiums note(i) (575) (309) (13,137) (14,021) (2) (14,023) Earned premiums, net of reinsurance 15,894 17,347 (76) 33,165 36 33,201 Other income note(ii),(iii) 309 50 1,595 1,954 39 1,993 Total external revenue note(v),(vi) 16,203 17,397 1,519 35,119 75 35,194 Intra-group revenue 42 50 3 95 (95) — Interest income note(vii) 1,086 2,016 3,039 6,141 51 6,192 Other investment return note B1.5 (3,240) (6,804) (6,476) (16,520) 65 (16,455) Total revenue, net of reinsurance 14,091 12,659 (1,915) 24,835 96 24,931 Benefits and claims and movements in unallocated surplus of with-profits funds, net of reinsurance note(i),(iv) (8,736) (8,790) 4,977 (12,549) (19) (12,568) Acquisition costs and other operating expenditure note B2, note(iii),(iv) (3,866) (2,077) (2,360) (8,303) (552) (8,855) Interest on core structural borrowings — (15) — (15) (395) (410) Loss on disposal of businesses and corporate transactions note D1.1 (11) (38) — (49) (31) (80) Total charges, net of reinsurance and loss on disposal of businesses (12,613) (10,920) 2,617 (20,916) (997) (21,913) Share of profit from joint ventures and associates, net of related tax 239 — 52 291 — 291 Profit (loss) before tax (being tax attributable to shareholders’ and policyholders’ returns) note(viii) 1,717 1,739 754 4,210 (901) 3,309 Tax (charge) credit attributable to policyholders’ returns (80) — 406 326 — 326 Profit (loss) before tax attributable to shareholders 1,637 1,739 1,160 4,536 (901) 3,635 Analysis of profit (loss) before tax Adjusted IFRS operating profit (loss) based on longer-term investment returns 2,164 1,919 1,634 5,717 (890) 4,827 Short-term fluctuations in investment returns on shareholder-backed business (512) (100) 34 (578) 20 (558) Amortisation of acquisition accounting adjustments (4) (42) — (46) — (46) Loss on disposal of businesses and corporate transactions note D1.1 (11) (38) (508) (557) (31) (588) 1,637 1,739 1,160 4,536 (901) 3,635 2017 £m Unallocated to a segment UK and Total (other Group Asia US Europe segment operations) total note (ix) Gross premiums earned 15,688 15,164 13,126 43,978 27 44,005 Outward reinsurance premiums (656) (352) (1,050) (2,058) (4) (2,062) Earned premiums, net of reinsurance 15,032 14,812 12,076 41,920 23 41,943 Other income note (ii),(iii) 307 669 1,234 2,210 48 2,258 Total external revenue note (v),(vi) 15,339 15,481 13,310 44,130 71 44,201 Intra-group revenue 40 64 5 109 (109) — Interest income note (vii) 932 2,085 3,413 6,430 67 6,497 Other investment return note B1.5 8,063 16,448 11,171 35,682 10 35,692 Total revenue, net of reinsurance 24,374 34,078 27,899 86,351 39 86,390 Benefits and claims and movements in unallocated surplus of with-profits funds, net of reinsurance (18,291) (31,205) (23,025) (72,521) (11) (72,532) Acquisition costs and other operating expenditure note B2, note(iii) (4,053) (2,257) (3,206) (9,516) (477) (9,993) Interest on core structural borrowings — (16) — (16) (409) (425) Gain on disposal of businesses and corporate transactions note D1.1 61 162 — 223 — 223 Re-measurement of the sold Korea life business 5 — — 5 — 5 Total charges, net of reinsurance and gain on disposal of business (22,278) (33,316) (26,231) (81,825) (897) (82,722) Share of profit from joint ventures and associates, net of related tax 181 — 121 302 — 302 Profit (loss) before tax (being tax attributable to shareholders’ and policyholders’ returns) note (viii) 2,277 762 1,789 4,828 (858) 3,970 Tax charge attributable to policyholders’ returns (249) — (425) (674) — (674) Profit (loss) before tax attributable to shareholders 2,028 762 1,364 4,154 (858) 3,296 Analysis of profit (loss) before tax Adjusted IFRS operating profit (loss) based on longer-term investment returns 1,975 2,224 1,378 |
Acquisition costs and other exp
Acquisition costs and other expenditure | 12 Months Ended |
Dec. 31, 2018 | |
Acquisition costs and other expenditure | |
Acquisition costs and other expenditure | B2 Acquisition costs and other expenditure 2018 £m 2017 £m 2016 £m Acquisition costs incurred for insurance policies (3,438) (3,712) (3,687) Acquisition costs deferred less amortisation of acquisition costs 59 911 923 Administration costs and other expenditure* (5,380) (6,208) (5,398) Movements in amounts attributable to external unit holders of consolidated investment funds (96) (984) (562) Total acquisition costs and other expenditure (8,855) (9,993) (8,724) * Following the adoption of IFRS 15, the 2017 and 2016 comparative results have been re-presented as described in note A2. The 2018 administration costs and other expenditure includes a credit of £0.4 billion for the negative ceding commissions arising from the group payout annuity business reinsurance agreement entered into by Jackson with John Hancock Life during the year. Total acquisition costs and other expenditure includes: (a) Total depreciation and amortisation expense of £(1,136) million (2017: £(288) million; 2016: £(242) million) is included in ‘Administration costs and other expenditure’ and ‘Acquisition costs deferred less amortisation of acquisition costs’ and relates primarily to amortisation of deferred acquisition costs of insurance contracts and asset management contracts. (b) The charge for non-deferred acquisition costs and the amortisation of those costs that were previously deferred was £(3,379) million (2017: £(2,801) million; 2016: £(2,764) million).These amounts comprise £(3,367) million and £(12) million for insurance and investment contracts respectively (2017: £(2,772) million and £(29) million; 2016: £(2,734) million and £(30) million respectively). (c) Movements in amounts attributable to external unit holders are in respect of those OEICs and unit trusts which are required to be consolidated and comprise a credit of £201 million (2017: charge of £(719) million; 2016: £(485) million) for the UK and Europe insurance operations and a charge of £(297) million (2017: £(265) million; 2016: £(77) million) for Asia insurance operations. (d) All fee expenses relating to financial liabilities held at amortised cost in 2018, 2017 and 2016 are part of the determination of the effective interest rate and are included in ‘Administration costs and other expenditure’ above. (e) The segmental analysis of interest expense (other than interest expense in core structural borrowings) and depreciation and amortisation included within total acquisition costs and other expenditure was as follows: Other interest expense Depreciation and amortisation 2018 £m 2017 £m 2016 £m 2018 £m 2017 £m 2016 £m Asia operations: Insurance — — — (228) (230) (201) Asset management — — — (4) (3) (2) US operations: Insurance (159) (116) (56) (830) 20 94 Asset management — — — (6) (7) (3) UK and Europe operations: Insurance (94) (85) (102) (61) (59) (121) Asset management — — — (5) (7) (7) Total segment (253) (201) (158) (1,134) (286) (240) Unallocated to a segment (other operations) (29) (39) (27) (2) (2) (2) Group total (282) (240) (185) (1,136) (288) (242) B2.1 Staff and employment costs The average number of staff employed by the Group during the years shown was: Asia operations 16,798 15,477 15,439 US operations 4,285 4,564 4,447 UK and Europe operations* 7,123 7,110 6,381 Total 28,206 27,151 26,267 * The UK and Europe staff numbers include staff from central operations and Africa which are unallocated to a segment. The costs of employment were: 2018 £m 2017 £m 2016 £m Wages and salaries 1,656 1,774 1,483 Social security costs 116 129 110 Defined benefit schemes* (29) (3) 213 Defined contribution schemes 95 85 79 Total 1,838 1,985 1,885 * The (credit) charge incorporates the effect of actuarial gains and losses. B2.2 Share-based payment (a) Description of the plans The Group operates a number of share award and share option plans that provides Prudential plc shares, or ADRs, to participants upon vesting. The plans in operation include the Prudential Long Term Incentive Plan (PLTIP), Annual Incentive Plan (AIP), savings-related share option schemes, share purchase plans and deferred bonus plans. Some of these plans are participated in by Executive Directors, the details of which are described in the Compensation and Employee section. In addition, the following information is provided. Share scheme Description Prudential Corporation Asia Long-Term Incentive Plan (PCA LTIP) The PCA LTIP provides eligible employees with conditional awards. Awards are discretionary and on a year-by-year basis determined by Prudential’s full year financial results and the employee’s contribution to the business. Awards vest after three years subject to the employee being in employment. Vesting of awards may also be subject to performance conditions. All awards are made in Prudential shares, or ADRs, except for countries where share awards are not feasible due to securities and/or tax reasons, where awards will be replaced by the cash value of the shares that would otherwise have vested. Prudential Agency Long-Term Incentive Plan Certain agents in Asia are eligible to be granted awards under the Prudential Agency Long-Term Incentive Plan. These awards are structured in a similar way to the PCA LTIP described above. Restricted Share Plan (RSP) The Company operates the RSP for certain employees. Awards under this plan are discretionary, and the vesting of awards may be subject to performance conditions. All awards are made in Prudential shares or ADRs. Deferred bonus plans The Company operates a number of deferred bonus schemes including the Group Deferred Bonus Plan (GDBP), the Prudential Corporation Asia Deferred Bonus Plan (PCA DBP), the Prudential Capital Deferred Bonus Plan (PruCap DBP) and other arrangements. There are no performance conditions attached to deferred share awards made under these arrangements. Savings-related share option schemes Employees and eligible agents in a number of geographies are eligible for plans similar to the HMRC-approved Save As You Earn (SAYE) share option scheme in the UK. Eligible employees participate in the International Savings-Related Share Option Scheme while eligible agents based in certain regions of Asia can participate in the International Savings-Related Share Option Scheme for Non-Employees. Share purchase plans Eligible employees outside the UK are invited to participate in arrangements similar to the Company’s HMRC-approved UK SIP, which allows the purchase of Prudential plc shares. Staff based in Ireland are eligible to participate in the Share Participation Plan. Staff based in Asia are eligible to participate in the Prudential Corporation Asia All Employee Share Purchase Plan. (b) Outstanding options and awards The following table shows movement in outstanding options and awards under the Group’s share-based compensation plans at 31 December: Options outstanding under SAYE Awards outstanding under schemes incentive plans 2018 2017 2016 Weighted Weighted average average Weighted Number exercise Number exercise Number average Number of options price of options price of options exercise of awards millions £ millions £ millions price millions Beginning of year: 6.4 11.74 7.1 10.74 8.8 9.44 33.6 30.2 28.4 Granted 0.3 13.94 1.4 14.55 1.4 11.04 10.7 12.7 13.9 Exercised (1.4) 10.85 (1.7) 10.07 (2.0) 7.30 (8.7) (7.3) (10.5) Forfeited (0.1) 12.25 (0.1) 10.83 (0.1) 9.95 (2.6) (1.3) (1.5) Cancelled (0.2) 12.43 (0.2) 11.19 (0.8) 6.45 — (0.1) (0.1) Lapsed/Expired (0.1) 12.60 (0.1) 10.86 (0.2) 9.64 (0.2) (0.6) — End of year 4.9 12.10 6.4 11.74 7.1 10.74 32.8 33.6 30.2 Options immediately exercisable, end of year 0.8 10.37 0.4 11.06 0.6 8.53 The weighted average share price of Prudential plc for the year ended 31 December 2018 was £17.36 compared to £17.51 for the year ended 31 December 2017 and £13.56 for the year ended 31 December 2016. The following table provides a summary of the range of exercise prices for Prudential plc options outstanding at 31 December: Outstanding Exercisable Weighted average Number remaining Weighted average Number Weighted average outstanding contractual life exercise exercisable exercise (millions) (years)* prices £ (millions) prices £ Between £4 and £5 — — 0.1 — — 0.4 — — 4.66 — — 0.1 — — 4.66 Between £6 and £7 — — 0.2 — 0.4 1.4 — 6.29 6.29 — — — — 6.29 6.29 Between £9 and £10 0.3 0.5 1.1 0.4 1.4 1.4 9.01 9.01 9.01 0.3 — 0.5 9.01 — 9.01 Between £11 and £12 3.0 4.5 5.7 1.6 2.2 2.9 11.19 11.21 11.27 0.5 0.4 — 11.11 11.55 — Between £13 and £14 0.3 — — 4.1 — — 13.94 — — — — — — — — Between £14 and £15 1.3 1.4 — 2.6 3.9 — 14.55 14.55 — — — — — — — 4.9 6.4 7.1 2.1 2.5 2.6 12.10 11.74 10.74 0.8 0.4 0.6 10.37 11.06 8.53 * The years shown above for weighted average remaining contractual life include the time period from end of vesting period to expiration of contract. (c) Fair value of options and awards The fair value amounts estimated on the date of grant relating to all options and awards were determined by using the following assumptions: 2018 2017 2016 Prudential Prudential LTIP SAYE Other LTIP / RSP SAYE Other Prudential SAYE Other (TSR) options awards (TSR) options awards LTIP (TSR) options awards Dividend yield (%) — 2.52 — — 2.85 — — 3.19 — Expected volatility (%) 24.03 21.09 — 23.17 20.15 — 29.36 25.41 — Risk-free interest rate (%) 1.19 0.97 — 0.62 0.56 — 0.12 0.15 — Expected option life (years) — 3.94 — — 3.49 — — 3.70 — Weighted average exercise price (£) — 13.94 — — 14.55 — — 11.04 — Weighted average share price at grant date (£) 17.46 16.64 — 16.80 17.74 — 12.82 13.94 — Weighted average fair value at grant date (£) 6.64 3.29 17.04 8.30 3.29 16.12 4.41 3.05 12.57 The compensation costs for all awards and options are recognised in net income over the plans’ respective vesting periods. The Group uses the Black-Scholes model to value all options and awards other than those which have TSR performance conditions attached (some Prudential LTIP and RSP awards) for which the Group uses a Monte Carlo model in order to allow for the impact of these conditions. These models are used to calculate fair values for share options and awards at the grant date based on the quoted market price of the stock at the measurement date, the amount, if any, that the employees are required to pay, the dividend yield, expected volatility, risk-free interest rates and exercise prices. For all options and awards, the expected volatility is based on the market implied volatilities as quoted on Bloomberg. The Prudential specific at-the-money implied volatilities are adjusted to allow for the different terms and discounted exercise price on SAYE options by using information on the volatility surface of the FTSE 100. Risk-free interest rates are taken from government bond spot rates with projections for two-year, three-year and five-year terms to match corresponding vesting periods. Dividend yields are determined as the average yield over a period of 12 months up to and including the date of grant. For awards with a TSR condition, volatilities and correlations between Prudential and a basket of 15 competitor companies is required. For grants in 2018, the average volatility for the basket of competitors was 21.32 per cent. Correlations for the basket are calculated for each pairing from the log of daily TSR returns for the three years prior to the valuation date. Market implied volatilities are used for both Prudential and the basket of competitors. Changes to the subjective input assumptions could materially affect the fair value estimate. (d) Share-based payment expense charged to the income statement Total expense recognised in the year in the consolidated financial statements relating to share-based compensation is as follows: 2018 £m 2017 £m 2016 £m Share-based compensation expense 158 126 Amount accounted for as equity-settled 158 127 The Group has no liabilities outstanding at the year-end relating to awards which are settled in cash. B2.3 Key management remuneration Key management constitutes the Directors of Prudential plc as they have authority and responsibility for planning, directing and controlling the activities of the Group. Total key management remuneration is analysed in the following table: 2018 £m 2017 £m 2016 £m Salaries and short-term benefits 16.2 17.9 20.7 Post-employment benefits 1.3 1.3 1.3 Share-based payments 14.5 14.1 18.7 32.0 33.3 40.7 The share-based payments charge comprises £9.7 million (2017: £8.3 million; 2016: £12.9 million), which is determined in accordance with IFRS 2, ‘Share-based Payment’ (see note B2.2) and £4.8 million (2017: £5.8 million; 2016: £5.8 million) of deferred share awards. Total key management remuneration includes total Directors’ remuneration of £31.8 million (2017: £40.2 million; 2016: £37.9 million) less LTIP releases of £9.5 million (2017: £15.2 million; 2016: £10.1 million) as shown in the ‘Compensation and Employees’ section. Further information on Directors’ remuneration is given in the ‘Compensation and Employees’ section. B2.4 Fees payable to the auditor 2018 £m 2017 £m 2016 £m Fees payable to the Company’s auditor for the audit of the Company’s annual accounts 2.1 2.1 2.0 Fees payable to the Company’s auditor and its associates for other services: Audit of subsidiaries pursuant to legislation 9.2 8.3 7.5 Tax compliance services — — 0.1 Audit-related assurance services* 4.7 4.3 3.9 Other assurance services 1.1 1.5 2.1 Services relating to corporate finance transactions 0.2 0.4 — All other services 1.0 0.7 0.6 Total fees paid to the auditor 18.3 17.3 16.2 * Of the audit-related assurance service fees of £4.7 million in 2018, £1.4 million relates to services that are required by law. In addition, there were fees incurred by pension schemes of £0.2 million (2017: £0.1 million; 2016: £0.1 million) for audit services and £nil (2017: £nil; 2016: £0.1 million) for other assurance services. |
Effect of changes and other acc
Effect of changes and other accounting matters on insurance assets and liabilities | 12 Months Ended |
Dec. 31, 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 2018 results: (i) Asia insurance operations In 2018, the adjusted IFRS operating profit based on longer-term investment returns for Asia insurance operations included a net credit of £94 million (2017: £75 million; 2016: £67 million) representing a small number of items that are not expected to reoccur, including the non-recurring impact of a refinement to the run-off of the allowance for prudence within technical provisions within Singapore. (ii) US insurance operations Changes in the policyholder liabilities held for variable and fixed index annuity guarantees are reported as part of non-operating profit and are as described in note B1.2. (iii) UK and Europe insurance operations Annuity and other shareholder-backed business Allowance for credit risk For IFRS reporting, the results for UK shareholder-backed annuity business are particularly sensitive to the allowance made for credit risk. The allowance is reflected in the deduction from the valuation rate of interest for discounting projected future annuity payments to policyholders that would have otherwise applied. The credit risk allowance comprises an amount for long-term best estimate defaults and additional provisions for credit risk premium, the cost of downgrades and short-term defaults. The IFRS credit risk allowance made for the UK shareholder-backed fixed and linked annuity business equated to 40 basis points at 31 December 2018 (31 December 2017: 42 basis points; 31 December 2016: 43 basis points). The allowance represented 22 per cent of the bond spread over swap rates (31 December 2017: 28 per cent; 31 December 2016: 26 per cent). The reserves for credit risk allowance at 31 December 2018 for the UK shareholder-backed business were £0.9 billion (31 December 2017: £1.6 billion; 31 December 2016: £1.7 billion). The 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 D1.1 for further details. Other assumption changes For the shareholder-backed business, in addition to the movement in the credit risk allowance discussed above, the net effect of routine changes to assumptions in 2018 was a credit of £437 million (2017: credit of £173 million; 2016: credit of £16 million).This included, among other items, a benefit to adjusted IFRS operating profit based on longer-term investment returns of £441 million (2017: £204 million), relating to changes to annuitant mortality assumptions to reflect current mortality experience, which has shown a slowdown in life expectancy improvements in recent periods, and the adoption of the Continuous Mortality Investigation (CMI) 2016 model (2017: adoption of 2015 model). Further information on changes to mortality assumptions is given in note C4.1(d). Longevity reinsurance and other management actions Aside from the aforementioned reinsurance agreement with Rothesay Life, no new longevity reinsurance transactions were undertaken in 2018 (2017: longevity reinsurance transactions covering £0.6 billion of IFRS annuity liabilities contributed £31 million to profit; 2016: longevity reinsurance transactions covering £5.4 billion of IFRS annuity liabilities contributed £197 million to profit). Other management actions generated profits of £58 million (2017: £245 million; 2016: £135 million). With-profits sub-fund For the with-profits sub-fund, the aggregate effect of assumption and other non-recurring changes in 2018 was a net gain to unallocated surplus of £394 million (2017: net charge of £(58) million; 2016: net charge of £(78) million) including the effect of mortality assumption changes. |
Tax charge
Tax charge | 12 Months Ended |
Dec. 31, 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 2016 £m Current Deferred Tax charge tax tax Total Total Total Attributable to shareholders: Asia operations (199) (78) (277) (253) (256) US operations (87) (168) (255) (508) 66 UK and Europe (255) 39 (216) (267) (275) Other operations 125 1 126 122 111 Tax charge attributable to shareholders’ returns (416) (206) (622) (906) (354) Attributable to policyholders: Asia operations (92) 12 (80) (249) (155) UK and Europe (188) 594 406 (425) (782) Tax (charge) credit attributable to policyholders’ returns (280) 606 326 (674) (937) Total tax charge (696) 400 (296) (1,580) (1,291) The principal reason for the decrease in the tax charge attributable to shareholders’ returns is the inclusion in 2017 of a £445 million deferred tax charge arising on the remeasurement of the US net deferred tax assets from 35 per cent to 21 per cent following the enactment of the US tax reform package, the Tax Cuts and Jobs Act. The movement from a charge of £674 million to a credit of £326 million in the tax charge attributable to policyholders’ returns mainly reflects a decrease in the deferred tax liabilities on unrealised gains on investments in the with-profits funds of the UK and Europe and of Asia compared to 2017. The reconciliation of the expected to actual tax charge attributable to shareholders is provided in (b) below. The tax credit attributable to policyholders of £326 million above is equal to the loss before tax attributable to policyholders of £326 million. This is the result of accounting for policyholder income after the deduction of expenses and movement on unallocated surpluses and on an after-tax basis. The total tax charge comprises: 2018 £m 2017 £m 2016 £m Current tax expense: Corporation tax (677) (746) (1,464) Adjustments in respect of prior years (19) 50 87 Total current tax charge (696) (696) (1,377) Deferred tax arising from: Origination and reversal of temporary differences 385 (531) 64 Impact of changes in local statutory tax rates 8 (353) 6 Credit in respect of a previously unrecognised tax loss, tax credit or temporary difference from a prior period 7 — 16 Total deferred tax credit (charge) 400 (884) 86 Total tax charge (296) (1,580) (1,291) The current tax charge of £696 million (2017: £696 million; 2016: £1,377 million) includes £65 million (2017: £59 million; 2016: £53 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 years on either (i) 5 per cent of the net insurance premium or (ii) the estimated assessable profits, depending on the nature of the business written. The total deferred tax charge arises as follows: 2018 £m 2017 £m 2016 £m Unrealised gains and losses on investments 667 (185) (437) Short-term temporary differences (198) (526) 573 Balances relating to investment and insurance contracts (91) (156) (90) Unused tax losses 23 (12) 36 Capital allowances (1) (5) 4 Deferred tax credit (charge) 400 (884) 86 The movement in unrealised gains and losses in investments from a charge of £185 million in 2017 to a credit of £667 million in 2018 reflects adverse stock market movements in 2018. The principal reason for the reduction in the tax charge attributable to short-term temporary differences from £526 million in 2017 to £198 million in 2018 is the remeasurement of US deferred tax balances in 2017 from 35 per cent to 21 per cent. In 2018, a tax charge of £(270) million (2017: charge of £(93) million; 2016: credit of £10 million) has been taken through other comprehensive income. (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. 2018 £m Total Percentage Asia US UK and Other* attributable to impact operations operations Europe operations shareholders on ETR Adjusted IFRS operating profit (loss) based on longer-term investment returns 2,164 1,919 1,634 (890) 4,827 Non-operating loss (527) (180) (474) (11) (1,192) Profit (loss) before tax 1,637 1,739 1,160 (901) 3,635 Expected tax rate 22 % 21 % 19 % 19 % 21 % Tax at the expected rate 360 365 220 (171) 774 21.3 % Effects of recurring tax reconciliation items: Income not taxable or taxable at concessionary rates (34) (17) (6) (2) (59) (1.6) % Deductions not allowable for tax purposes 39 3 15 10 67 1.8 % Items related to taxation of life insurance businesses note (ii) (13) (83) (2) — (98) (2.7) % Deferred tax adjustments (11) — 2 (30) (39) (1.1) % Effect of results of joint ventures and associates note (iii) (63) — (3) 2 (64) (1.8) % Irrecoverable withholding taxes note (iv) — — — 47 47 1.3 % Other (3) — 3 3 3 0.1 % Total (85) (97) 9 30 (143) (4.0) % Effects of non-recurring tax reconciliation items: Adjustments to tax charge in relation to prior years — (17) (11) 14 (14) (0.4) % Movements in provisions for open tax matters note (v) 2 4 (2) 1 5 0.2 % Total 2 (13) (13) 15 (9) (0.2) % Total actual tax charge (credit) 277 255 216 (126) 622 17.1 % Analysed into: Tax on adjusted IFRS operating profit based on longer-term investment returns 308 301 313 (130) 792 Tax on non-operating profit (31) (46) (97) 4 (170) Actual tax rate: Adjusted IFRS operating profit based on longer-term investment returns: Including non-recurring tax reconciling items 14 % 16 % 19 % 15 % 16 % Excluding non-recurring tax reconciling items 14 % 16 % 20 % 16 % 16 % Total profit 17 % 15 % 19 % 14 % 17 % * Notes (i) Impact of US tax reform The 2018 tax charge for US operations reflects the full impact of the US tax reform package, the Tax Cuts and Jobs Act, which was enacted in December 2017 and took effect from 1 January 2018. The expected tax rate of 21 per cent reflects the reduced US corporate income tax rate compared to 35 per cent for 2017. The benefit of the dividend received deduction (shown in Items related to the taxation of life insurance businesses) is lower in 2018 than 2017 reflecting the changes to how this deduction is computed. In 2017, the reduction in the US corporate income tax rate gave rise to a £445 million unfavourable reconciling item in US operations relating to the remeasurement of the net deferred tax asset attributable to shareholders and a £134 million benefit recognised in other comprehensive income. (ii) Items related to taxation of life insurance businesses The £83 million (2017: £238 million; 2016: £159 million) reconciling item in US operations reflects the impact of the dividend received deduction on the taxation of profits from variable annuity business. The principal reason for the reduction in the Asia operations reconciling items from £92 million at 2017 to £13 million at 2018 reflects non-operating investment losses in Hong Kong which do not attract tax relief offsetting the benefit of operating profits due to the taxable profit being computed as 5 per cent of net insurance premiums. (iii) 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. (iv) Irrecoverable withholding taxes The £47 million (2017: £54 million; 2016: £36 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. (v) 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 (5) Other movements* (5) At 31 December 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. 2017 £m Total Percentage Asia US UK and Other attributable to impact operations operations Europe operations* shareholders on ETR Adjusted IFRS operating profit (loss) based on longer-term investment returns 1,975 2,224 1,378 (878) 4,699 Non-operating profit (loss) 53 (1,462) (14) 20 (1,403) Profit (loss) before tax 2,028 762 1,364 (858) 3,296 Expected tax rate 21 % 35 % 19 % 19 % 24 % Tax at the expected rate 426 267 259 (163) 789 23.9 % Effects of recurring tax reconciliation items: Income not taxable or taxable at concessionary rates (64) (11) (2) (14) (91) (2.8) % Deductions not allowable for tax purposes 26 6 13 10 55 1.7 % Items related to taxation of life insurance businesses (92) (238) (2) — (332) (10.1) % Deferred tax adjustments 11 17 (1) (5) 22 0.7 % Effect of results of joint ventures and associates (52) — (3) — (55) (1.7) % Irrecoverable withholding taxes — — — 54 54 1.6 % Other (10) — 6 (1) (5) (0.1) % Total (181) (226) 11 44 (352) (10.7) % Effects of non-recurring tax reconciliation items: Adjustments to tax charge in relation to prior years (3) (15) (3) (3) (24) (0.7) % Movements in provisions for open tax matters 19 25 — — 44 1.3 % Impact of US tax reform — 445 — — 445 13.5 % Adjustments in relation to business disposals (8) 12 — — 4 0.1 % Total 8 467 (3) (3) 469 14.2 % Total actual tax charge (credit) 253 508 267 (122) 906 27.4 % Analysed into: Tax on adjusted IFRS operating profit based on longer-term investment returns 276 548 268 (121) 971 Tax on non-operating profit (23) (40) (1) (1) (65) Actual tax rate: Adjusted IFRS operating profit based on longer-term investment returns: Including non-recurring tax reconciling items 14 % 25 % 19 % 14 % 21 % Excluding non-recurring tax reconciling items 13 % 24 % 20 % 13 % 20 % Total profit 12 % 67 % 20 % 14 % 27 % * Other operations include restructuring costs. 2016 £m UK Total Percentage Asia US and Other* attributable to impact on operations operations Europe operations shareholders ETR Adjusted IFRS operating profit (loss) based on longer-term investment returns 1,644 2,048 1,253 (689) 4,256 Non-operating (loss) profit (460) (1,523) 206 (204) (1,981) Profit (loss) before tax 1,184 525 1,459 (893) 2,275 Expected tax rate 22 % 35 % 20 % 20 % 24 % Tax at the expected rate 260 184 292 (179) 557 24.4 % Effects of recurring tax reconciliation items: Income not taxable or taxable at concessionary rates (31) (18) (13) (5) (67) (2.9) % Deductions not allowable for tax purposes 20 8 10 22 60 2.6 % Items related to taxation of life insurance businesses (20) (159) (1) — (180) (7.9) % Deferred tax adjustments (11) — 2 (14) (23) % Effect of results of joint ventures and associates (44) — (2) — (46) (2.0) % Irrecoverable withholding taxes — — — 36 36 1.6 % Other 3 — — (7) (4) (0.1) % Total (83) (169) (4) 32 (224) (9.7) % Effects of non-recurring tax reconciliation items: Adjustments to tax charge in relation to prior years 1 (81) (7) 5 (82) (3.6) % Movements in provisions for open tax matters 20 — — 31 51 2.2 % Impact of changes in local statutory tax rates — — (6) — (6) (0.2) % Write-down of Korea life business 58 — — — 58 2.5 % Total 79 (81) (13) 36 21 0.9 % Total actual tax charge (credit) 256 (66) 275 (111) 354 15.6 % Analysed into: Tax on adjusted IFRS operating profit based on longer-term investment returns 271 467 244 (88) 894 Tax on non-operating profit (15) (533) 31 (23) (540) Actual tax rate: Adjusted IFRS operating profit based on longer-term investment returns: Including non-recurring tax reconciling items 16 % 23 % 19 % 13 % 21 % Excluding non-recurring tax reconciling items 15 % 27 % 21 % 18 % 22 % Total profit 22 % (13) % 19 % 12 % 16 % * Other operations include restructuring costs. The 2016 expected and actual tax rates as shown include the impact of the re-measurement loss on the held for sale Korea life business. The 2016 tax rates for Asia operations and Group, excluding the impact of the held for sale Korea life business are as follows: Asia Attributable to operations shareholders Expected tax rate on total profit % 24 % Actual tax rate: Operating profit based on longer-term investment returns 16 % 21 % Total profit 18 % 14 % Due to the requirements of the financial reporting standards IAS 1 ‘Presentation of Financial Statements’ and IAS 12 ‘Income Taxes’, the profit (loss) before tax and tax charge reflect the aggregate of amounts that are attributable to shareholders and policyholders. Profit (loss) before tax comprises profit attributable to shareholders and pre-tax profit attributable to policyholders of linked and with-profits funds and unallocated surplus of with-profits funds. The total tax charge for linked and with-profits business includes tax expense on unit-linked and with-profits funds attributable to policyholders, the unallocated surplus of with-profits funds and the shareholders’ profits. This feature arises from the basis of taxation applied to life and pension business, principally in the UK, but with similar bases applying in certain Asia operations, and is explained in the ’Basis of taxation for UK life and pension business’ section below. Furthermore, the basis of preparation of Prudential’s financial statements incorporates the additional feature that, as permitted under IFRS 4, the residual equity of the Group’s with-profits funds, ie unallocated surplus, is recorded as a liability with transfers to and from that liability reflected in pre-tax profits. This gives rise to anomalous effective tax rates for profits attributable to policyholders (as described in the ‘Profits attributable to policyholders and related tax’ section below). In meeting the reconciliation requirements set out in paragraph 81(c) of IAS 12, the presentation shown in this disclosure note seeks to ensure that the explanation of the relationship between tax expense and accounting profit draw properly the distinction between the elements of the profit and tax charge that are attributable to policyholders and shareholders as explained in the ‘Profits attributable to policyholders and related tax’ and ‘Reconciliation of tax charge on profit attributable to shareholders’ sections respectively. Due to the nature of the basis of taxation of UK life and pension business (as described in the ‘Basis of taxation for UK life and pension business’ section below), and the significance of the results of the business to the Group, it is inappropriate to seek to explain the effective tax rate on profit before tax by the traditional approach that would apply for other industries. The shareholder elements are the components of the profit and tax charge that are of most direct relevance to investors, and it is this aspect that the IAS 12 reconciliation requirement is seeking to explain for companies that do not need to account for both with-profits and unit-linked funds, where tax is borne by the Company on the policyholders’ behalf and which is not contemplated by the IFRS requirement. Basis of taxation for UK life and pension business Different rules apply under UK tax law for taxing pension business and life insurance business and there are detailed rules for apportioning the investment return and profits of the fund between the types of business. The investment return referable to pension business, and some other less significant classes of business, is exempt from taxation, but tax is charged on the profit that shareholders derive from writing such business at the corporate rate of tax. The rules for taxing life insurance business are more complex. Initially, the UK regime seeks to tax the investment return less management expenses (I-E) on this business as it arises. However, in determining the actual tax charge, a calculation of the shareholder profits for taxation purposes from writing life insurance business also has to be made and compared with the I-E profit. If the shareholder profit is higher than the I-E amount, extra income is attributable to the I-E calculation until the I-E profit equals the shareholder profit. If on the other hand, the I-E profit is the greater, then an amount equal to the shareholder profit is taxed at the corporate rate of tax, with the remainder of the I-E profit being taxed at the policyholder rate of tax. The purpose of this approach is to ensure that the Company is always at a minimum taxed on the profit, as defined for taxation purposes by reference to the Company’s IFRS results, that it has earned. The shareholders’ portion of the long-term business is taxed at the shareholders’ rate, with the remaining portion taxed at rates applicable to the policyholders. Profits attributable to policyholders and related tax As noted above, it is necessary under IFRS requirements to include the total tax charge of the Company (both policyholder and shareholder elements) in the tax charge disclosed in the income statement. The tax expense attributable to policyholders is a combination of current and deferred tax charges and reflects the nature of the income and expenditure of the with-profits and unit-linked funds. The current tax charge element reflects the element for the funds, determined on the I-E basis (as described in the ‘Basis of taxation for UK life and pension business’ section above) that is attributable to policyholders. For policyholder deferred tax, normally the most significant element reflects the movement on unrealised appreciation on investments. These investments are accounted for under IAS 39 on a fair value through profit or loss basis with attaching deferred tax charges or credits. For with-profits business, total pre-tax profits reflect the aggregate of profits attributable to policyholders and shareholders. However, amounts attributable to the equity of with-profits funds are carried in the liability for unallocated surplus. Also, as described in the ‘Basis of taxation for UK life and pension business’ section above, UK with-profits business is taxed on a basis that affects policyholders’ unallocated surplus of with-profits funds and shareholders. For the PAC with-profits sub-fund, transfers to and from unallocated surplus are recorded in the income statement, so that after charging the total tax borne by the fund, the net balance reflects the statutory transfer from the fund for the year. The statutory transfer represents 10 per cent of the actuarially determined surplus for the year that is attributable to shareholders. For SAIF, similar transfers are made. However, in the case of SAIF, a net nil balance is derived, reflecting the lack of shareholder interest in the financial performance of the fund (other than through asset management arrangements). The accounting anomaly that arises under IFRS is that due to the fact that the net of tax profit attributable to with-profits policyholders is zero, the Company’s presentation of pre-tax profit attributable to policyholders reflects an amount that is the mirror image of the tax charge attributable to policyholders. For unit-linked business, pre-tax profits also reflect the aggregate of profits attributable to policyholders and shareholders. The pre-tax profits attributable to policyholders represent fees earned that are used to pay tax borne by the Company on policyholders’ behalf. The net of tax profit attributable to policyholders for unit-linked business is thus zero. In summary, for accounting purposes, in all cases and for all reporting periods, the apparent effective rate for profit attributable to policyholders and unallocated surplus is 100 per cent. However, it is to be noted that the 100 per cent rate does not reflect a rate paid on the profits attributable to policyholders. It instead reflects the basis of accounting for unallocated surplus coupled with the distinction made for performance reporting between sources of profit attributable to shareholders, policyholders and unallocated surplus and IFRS requirements in respect of reporting of all pre-tax profits and all tax charges irrespective of policyholder or shareholder economic interest. |
Earnings per share
Earnings per share | 12 Months Ended |
Dec. 31, 2018 | |
Earnings per share | |
Earnings per share | B5 Earnings per share 2018 Net of tax Before Non- and non- Basic Diluted tax Tax controlling controlling earnings earnings £m £m interests interests per share per share Note B1.1 B4 £m £m Pence Pence Based on adjusted IFRS operating profit based on longer-term investment returns 4,827 (792) (3) 4,032 156.6 p 156.5 p Short-term fluctuations in investment returns on shareholder-backed business B1.2 (558) 53 — (505) (19.7) p (19.7) p Amortisation of acquisition accounting adjustments (46) 9 — (37) (1.4) p (1.4) p Loss on disposal of businesses and corporate transactions D1.1 (588) 108 — (480) (18.6) p (18.6) p Based on profit for the year 3,635 (622) (3) 3,010 116.9 p 116.8 p 2017 Net of tax Before Non- and non- Basic Diluted tax Tax controlling controlling earnings earnings £m £m interests interests per share per share Note B1.1 B4 £m £m Pence Pence Based on adjusted IFRS operating profit based on longer-term investment returns 4,699 (971) (1) 3,727 145.2 p 145.1 p Short-term fluctuations in investment returns on shareholder-backed business B1.2 (1,563) 572 — (991) (38.6) p (38.6) p Amortisation of acquisition accounting adjustments (63) 20 — (43) (1.7) p (1.7) p Cumulative exchange gain on the sold Korea life business recycled from other comprehensive income 61 — — 61 2.4 p 2.4 p Profit attaching to the disposal of businesses D1.1 162 (82) — 80 3.1 p 3.1 p Impact of US tax reform B4 — (445) — (445) (17.3) p (17.3) p Based on profit for the year 3,296 (906) (1) 2,389 93.1 p 93.0 p 2016 Net of tax Before Non- and non- Basic Diluted tax Tax controlling controlling earnings earnings £m £m interests interests per share per share Note B1.1 B4 £m £m Pence Pence Based on adjusted operating profit based on longer-term investment returns 4,256 (894) — 3,362 131.3 p 131.2 p Short-term fluctuations in investment returns on shareholder-backed business B1.2 (1,678) 519 — (1,159) (45.3) p (45.2) p Amortisation of acquisition accounting adjustments (76) — (51) (2.0) p (2.0) p (Loss) gain on disposal of businesses and corporate transactions D1.1 (227) (4) — (231) (9.0) p (9.0) p Based on profit for the year 2,275 (354) — 1,921 75.0 p 75.0 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: Weighted average number (in millions) of shares for calculation of: Basic earnings per share 2,575 2,567 2,560 Shares under option at end of year 5 6 7 Number of shares that would have been issued at fair value on assumed option price (4) (5) (5) Diluted earnings per share 2,576 2,568 2,562 |
Dividends
Dividends | 12 Months Ended |
Dec. 31, 2018 | |
Dividends | |
Dividends | B6 Dividends 2018 2017 2016 Pence per Pence per Pence per share £m share £m share £m Dividends relating to reporting year: First interim ordinary dividend 15.67 p 406 14.50 p 375 12.93 p 333 Second interim ordinary dividend 33.68 p 873 32.50 p 841 30.57 p 789 Total 49.35 p 1,279 47.00 p 1,216 43.50 p 1,122 Dividends paid in reporting year: Current year first interim ordinary dividend 15.67 p 404 14.50 p 373 12.93 p 332 Second interim ordinary dividend for prior year 32.50 p 840 30.57 p 786 26.47 p 679 Special dividend for prior year — — — — 10.00 p 256 Total 48.17 p 1,244 45.07 p 1,159 49.40 p 1,267 Dividend per share For the year ended 31 December 2017 the second interim ordinary dividend of 32.50 pence per ordinary share was paid to eligible shareholders on 18 May 2018. The 2018 first interim ordinary dividend of 15.67 pence per ordinary share was paid to eligible shareholders on 27 September 2018. The second interim ordinary dividend for the year ended 31 December 2018 of 33.68 pence per ordinary share will be paid on 17 May 2019 in sterling to shareholders on the UK register and the Irish branch register on 29 March 2019 (Record Date), and in Hong Kong dollars to shareholders on the Hong Kong branch register at 4.30pm Hong Kong time on the Record Date (HK Shareholders). Holders of US American Depositary Receipts (US Shareholders) will be paid their dividends in US dollars on or about 24 May 2019. The second interim ordinary dividend will be paid on or about 24 May 2019 in Singapore dollars to shareholders with shares standing to the credit of their securities accounts with The Central Depository (Pte) Limited (CDP) at 5.00pm Singapore time on the Record Date (SG Shareholders). The dividend payable to the HK Shareholders will be translated using the exchange rate quoted by the WM Company at the close of business on 12 March 2019. The exchange rate at which the dividend payable to the SG Shareholders will be translated into Singapore dollars, will be determined by CDP. Shareholders on the 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 | 12 Months Ended |
Dec. 31, 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 31 Dec 2018 £m Elimination of intra- Unallocated group to a segment debtors UK and (central and Group Asia US Europe operations) creditors total By operating segment Note C2.1 C2.2 C2.3 note (iv) Assets Goodwill C5.1 498 — 1,359 — — 1,857 Deferred acquisition costs and other intangible assets C5.2 2,937 8,747 195 44 — 11,923 Property, plant and equipment 129 246 1,031 3 — 1,409 Reinsurers' share of insurance contract liabilities 2,777 6,662 2,812 2 (1,109) 11,144 Deferred tax assets C8.1 119 2,295 126 55 — 2,595 Current tax recoverable C8.2 26 311 244 118 (81) 618 Accrued investment income note (i) 664 498 1,511 76 — 2,749 Other debtors note (i) 2,978 238 4,189 1,968 (5,285) 4,088 Investment properties 5 6 17,914 — — 17,925 Investment in joint ventures and associates accounted for using the equity method D6 991 — 742 — — 1,733 Loans C3.3 1,377 11,066 5,567 — — 18,010 Equity securities and portfolio holdings in unit trusts 32,150 128,657 53,810 116 — 214,733 Debt securities C3.2 45,839 41,594 85,956 1,967 — 175,356 Derivative assets 296 574 2,513 111 — 3,494 Other investments — 927 5,585 — — 6,512 Deposits 1,224 92 10,320 160 — 11,796 Assets held for sale* — — 10,578 — — 10,578 Cash and cash equivalents note (ii) 2,189 3,005 4,749 2,182 — 12,125 Total assets 94,199 204,918 209,201 6,802 (6,475) 508,645 Total equity 6,428 5,624 8,700 (3,485) — 17,267 Liabilities Insurance contract liabilities C4.1 72,349 182,432 68,957 37 (1,109) 322,666 Investment contract liabilities with discretionary participation features C4.1 375 — 67,038 — — 67,413 Investment contract liabilities without discretionary participation features C4.1 492 3,168 15,560 2 — 19,222 Unallocated surplus of with-profits funds C4.1 2,511 — 13,334 — — 15,845 Core structural borrowings of shareholder-financed businesses C6.1 — 196 — 7,468 — 7,664 Operational borrowings attributable to shareholder-financed businesses C6.2 61 328 106 503 — 998 Borrowings attributable to with-profits businesses C6.2 19 — 3,921 — — 3,940 Obligations under funding, securities lending and sale and repurchase agreements — 5,765 1,224 — — 6,989 Net asset value attributable to unit holders of consolidated unit trusts and similar funds 2,617 — 9,013 21 — 11,651 Deferred tax liabilities C8.1 1,257 1,688 1,061 16 — 4,022 Current tax liabilities C8.2 133 115 326 75 (81) 568 Accruals, deferred income and other liabilities note (iii) 7,641 5,324 6,442 1,126 (5,285) 15,248 Provisions C11 251 23 743 61 — 1,078 Derivative liabilities C3.4 65 255 2,208 978 — 3,506 Liabilities held for sale* — — 10,568 — — 10,568 Total liabilities 87,771 199,294 200,501 10,287 (6,475) 491,378 Total equity and liabilities 94,199 204,918 209,201 6,802 (6,475) 508,645 * Assets held for sale of £10,578 million includes £10,568 million in respect of the reinsured UK annuity business. The corresponding policyholder and other liabilities of £10,568 million is reflected in liabilities held for sale (see note D1.1). 31 Dec 2017 £m Elimination of intra- Unallocated group to a segment debtors UK and (central and Group Asia US Europe operations) creditors Total By operating segment Note C2.1 C2.2 C2.3 note (iv) Assets Goodwill C5.1 305 — 1,177 — — 1,482 Deferred acquisition costs and other intangible assets C5.2 2,540 8,219 210 42 — 11,011 Property, plant and equipment 125 214 447 3 — 789 Reinsurers' share of insurance contract liabilities 1,960 6,424 2,521 3 (1,235) 9,673 Deferred tax assets C8.1 112 2,300 157 58 — 2,627 Current tax recoverable C8.2 58 298 244 93 (80) 613 Accrued investment income note (i) 595 492 1,558 31 — 2,676 Other debtors note (i) 2,675 248 3,118 2,121 (5,199) 2,963 Investment properties 5 5 16,487 — — 16,497 Investment in joint ventures and associates accounted for using the equity method D6 912 — 504 — — 1,416 Loans C3.3 1,317 9,630 5,986 109 — 17,042 Equity securities and portfolio holdings in unit trusts 29,976 130,630 62,670 115 — 223,391 Debt securities C3.2 40,982 35,378 92,707 2,307 — 171,374 Derivative assets 113 1,611 2,954 123 — 4,801 Other investments — 848 4,774 — — 5,622 Deposits 1,291 43 9,540 362 — 11,236 Assets held for sale D1 — — 38 — — 38 Cash and cash equivalents note (ii) 1,934 1,658 5,808 1,290 — 10,690 Total assets 84,900 197,998 210,900 6,657 (6,514) 493,941 Total equity 5,926 5,248 8,245 (3,325) — 16,094 Liabilities Insurance contract liabilities C4.1 63,468 177,728 88,180 31 (1,235) 328,172 Investment contract liabilities with discretionary participation features C4.1 337 — 62,340 — — 62,677 Investment contract liabilities without discretionary participation features C4.1 328 2,996 17,069 1 — 20,394 Unallocated surplus of with-profits funds C4.1 3,474 — 13,477 — — 16,951 Core structural borrowings of shareholder-financed businesses C6.1 — 184 — 6,096 — 6,280 Operational borrowings attributable to shareholder-financed businesses C6.2 50 508 148 1,085 — 1,791 Borrowings attributable to with-profits businesses C6.2 10 — 3,706 — — 3,716 Obligations under funding, securities lending and sale and repurchase agreements — 4,304 1,358 — — 5,662 Net asset value attributable to unit holders of consolidated unit trusts and similar funds 3,631 — 5,243 15 — 8,889 Deferred tax liabilities C8.1 1,152 1,845 1,703 15 — 4,715 Current tax liabilities C8.2 122 47 377 71 (80) 537 Accruals, deferred income and other liabilities note (iii) 6,069 5,109 6,609 1,597 (5,199) 14,185 Provisions C11 254 24 784 61 — 1,123 Derivative liabilities C3.4 79 5 1,661 1,010 — 2,755 Total liabilities 78,974 192,750 202,655 9,982 (6,514) 477,847 Total equity and liabilities 84,900 197,998 210,900 6,657 (6,514) 493,941 Notes (i) Accrued investment income and other debtors 31 Dec 2018 £m 31 Dec 2017 £m Interest receivable 1,744 1,789 Other 1,005 887 Total accrued investment income 2,749 2,676 Other debtors comprises: Amounts due from Policyholders 452 408 Intermediaries 3 4 Reinsurers 218 134 Other 3,415 2,417 Total other debtors 4,088 2,963 Total accrued investment income and other debtors 6,837 5,639 Analysed as: Expected to be settled within one year 6,151 4,957 Expected to be settled after one year 686 682 Total accrued investment income and other debtors 6,837 5,639 (ii) Cash and cash equivalents 31 Dec 2018 £m 31 Dec 2017 £m Cash 5,759 6,623 Cash equivalents 6,366 4,067 Total cash and cash equivalents 12,125 10,690 Analysed as: Held centrally and available for general use by the Group 349 328 Other funds not available for general use by the Group, including funds held for the benefit of policyholders 11,776 10,362 Total cash and cash equivalents 12,125 10,690 The Group’s cash and cash equivalents are held in the following currencies: pounds sterling 32 per cent, US dollars 38 per cent, Euro 15 per cent and other currencies 15 per cent (2017: pounds sterling 31 per cent, US dollars 28 per cent, Euro 24 per cent and other currencies 17 per cent). (iii) Accruals, deferred income and other liabilities 31 Dec 2018 £m 31 Dec 2017 £m Accruals and deferred income 1,700 1,233 Other creditors 7,074 7,289 Creditors arising from direct insurance and reinsurance operations 2,363 2,296 Interest payable 117 100 Funds withheld under reinsurance of the REALIC business 2,941 2,664 Other items 1,053 603 Total accruals, deferred income and other liabilities 15,248 14,185 (iv) Unallocated to a segment includes central operations, Prudential Capital and Africa operations as per note B1.3. |
Analysis of segment statement o
Analysis of segment statement of financial position by business type | 12 Months Ended |
Dec. 31, 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 C2.1 Asia 31 Dec 31 Dec 2018 £m 2017 £m Insurance Unit-linked With-profits assets and Other Asset Note business* liabilities business Total management Eliminations Total Total Assets Goodwill — — 251 251 247 — 498 305 Deferred acquisition costs and other intangible assets 56 — 2,870 2,926 11 — 2,937 2,540 Property, plant and equipment 90 — 34 124 5 — 129 125 Reinsurers’ share of insurance contract liabilities 63 — 2,714 2,777 — — 2,777 1,960 Deferred tax assets — 1 108 109 10 — 119 112 Current tax recoverable — 2 23 25 1 — 26 58 Accrued investment income 254 51 327 632 32 — 664 595 Other debtors 1,676 730 535 2,941 77 (40) 2,978 2,675 Investment properties — — 5 5 — — 5 5 Investment in joint ventures and associates accounted for using the equity method — — 827 827 164 — 991 912 Loans C3.3 792 — 585 1,377 — — 1,377 1,317 Equity securities and portfolio holdings in unit trusts 17,165 12,804 2,146 32,115 35 — 32,150 29,976 Debt securities C3.2 27,204 3,981 14,583 45,768 71 — 45,839 40,982 Derivative assets 201 4 91 296 — — 296 113 Deposits 250 455 458 1,163 61 — 1,224 1,291 Cash and cash equivalents 870 326 874 2,070 119 — 2,189 1,934 Total assets 48,621 18,354 26,431 93,406 833 (40) 94,199 84,900 Total equity — — 5,868 5,868 560 — 6,428 5,926 Liabilities Insurance contract liabilities 40,389 15,876 16,084 72,349 — — 72,349 63,468 Investment contract liabilities with discretionary participation features C4.1 ( b ) 375 — — 375 — — 375 337 Investment contract liabilities without discretionary participation features C4.1 ( b ) — 492 — 492 — — 492 328 Unallocated surplus of with-profits funds 2,511 — — 2,511 — — 2,511 3,474 Operational borrowings attributable to shareholder-financed businesses — 50 11 61 — — 61 50 Borrowings attributable to with-profits businesses 19 — — 19 — — 19 10 Net asset value attributable to unit holders of consolidated unit trusts and similar funds 1,242 1,024 351 2,617 — — 2,617 3,631 Deferred tax liabilities 812 21 422 1,255 2 — 1,257 1,152 Current tax liabilities 27 — 93 120 13 — 133 122 Accruals, deferred income and other liabilities 3,138 889 3,475 7,502 179 (40) 7,641 6,069 Provisions 57 — 115 172 79 — 251 254 Derivative liabilities 51 2 12 65 — — 65 79 Total liabilities 48,621 18,354 20,563 87,538 273 (40) 87,771 78,974 Total equity and liabilities 48,621 18,354 26,431 93,406 833 (40) 94,199 84,900 * C2.2 US 31 Dec 31 Dec 2018 £m 2017 £m Insurance Variable annuity Fixed separate account annuity, assets and GICs and other Asset Note liabilities business Total management Eliminations Total Total Assets Goodwill — — — — — — — Deferred acquisition costs and other intangible assets — 8,747 8,747 — — 8,747 8,219 Property, plant and equipment — 243 243 3 — 246 214 Reinsurers’ share of insurance contract liabilities — 6,662 6,662 — — 6,662 6,424 Deferred tax assets — 2,271 2,271 24 — 2,295 2,300 Current tax recoverable — 309 309 2 — 311 298 Accrued investment income — 493 493 5 — 498 492 Other debtors — 230 230 76 (68) 238 248 Investment properties — 6 6 — — 6 5 Loans C3.3 — 11,066 11,066 — — 11,066 9,630 Equity securities and portfolio holdings in unit trusts 128,220 433 128,653 4 — 128,657 130,630 Debt securities C3.2 — 41,594 41,594 — — 41,594 35,378 Derivative assets — 574 574 — — 574 1,611 Other investments — 926 926 1 — 927 848 Deposits — — — 92 — 92 43 Cash and cash equivalents — 2,976 2,976 29 — 3,005 1,658 Total assets 128,220 76,530 204,750 236 (68) 204,918 197,998 Total equity — 5,584 5,584 40 — 5,624 5,248 Liabilities Insurance contract liabilities 128,220 54,212 182,432 — — 182,432 177,728 Investment contract liabilities without discretionary participation features C4.1 ( c ) — 3,168 3,168 — — 3,168 2,996 Core structural borrowings of shareholder-financed businesses — 196 196 — — 196 184 Operational borrowings attributable to shareholder-financed businesses — 328 328 — — 328 508 Obligations under funding, securities lending and sale and repurchase agreements — 5,765 5,765 — — 5,765 4,304 Net asset value attributable to unit holders of consolidated unit trusts and similar funds — — — — — — — Deferred tax liabilities — 1,688 1,688 — — 1,688 1,845 Current tax liabilities — 114 114 1 — 115 47 Accruals, deferred income and other liabilities — 5,197 5,197 195 (68) 5,324 5,109 Provisions — 23 23 — — 23 24 Derivative liabilities — 255 255 — — 255 5 Total liabilities 128,220 70,946 199,166 196 (68) 199,294 192,750 Total equity and liabilities 128,220 76,530 204,750 236 (68) 204,918 197,998 C2.3 UK and Europe 31 Dec 31 Dec 2018 £m 2017 £m Insurance Other funds and subsidiaries Annuity and Unit-linked other With-profits assets and long-term Asset Note business* liabilities business Total Management Eliminations Total Total Assets Goodwill 206 — — 206 1,153 — 1,359 1,177 Deferred acquisition costs and other intangible assets 83 — 94 177 18 — 195 210 Property, plant and equipment 895 — 39 934 97 — 1,031 447 Reinsurers' share of insurance contract liabilities 1,131 115 1,566 2,812 — — 2,812 2,521 Deferred tax assets 61 — 45 106 20 — 126 157 Current tax recoverable 58 6 174 238 6 — 244 244 Accrued investment income 1,010 116 378 1,504 7 — 1,511 1,558 Other debtors 2,102 575 641 3,318 1,011 (140) 4,189 3,118 Investment properties 15,635 618 1,661 17,914 — — 17,914 16,487 Investment in joint ventures and associates accounted for using the equity method 705 — — 705 37 — 742 504 Loans C3.3 3,853 — 1,714 5,567 — — 5,567 5,986 Equity securities and portfolio holdings in unit trusts 41,090 12,477 20 53,587 223 — 53,810 62,670 Debt securities C3.2 53,798 10,512 21,646 85,956 — — 85,956 92,707 Derivative assets 1,957 1 555 2,513 — — 2,513 2,954 Other investments 5,573 10 1 5,584 1 — 5,585 4,774 Deposits 8,530 1,101 689 10,320 — — 10,320 9,540 Assets held for sale 10 — 10,568 10,578 — — 10,578 38 Cash and cash equivalents 3,520 190 688 4,398 351 — 4,749 5,808 Total assets 140,217 25,721 40,479 206,417 2,924 (140) 209,201 210,900 Total equity — — 6,540 6,540 2,160 — 8,700 8,245 Liabilities Insurance contract liabilities C4.1(d) 43,775 5,219 19,963 68,957 — — 68,957 88,180 Investment contract liabilities with discretionary participation features C4.1(d) 67,018 — 20 67,038 — — 67,038 62,340 Investment contract liabilities without discretionary participation features C4.1(d) 2 15,498 60 15,560 — — 15,560 17,069 Unallocated surplus of with-profits funds 13,334 — — 13,334 — — 13,334 13,477 Operational borrowings attributable to shareholder-financed businesses — 4 102 106 — — 106 148 Borrowings attributable to with-profits businesses 3,921 — — 3,921 — — 3,921 3,706 Obligations under funding, securities lending and sale and repurchase agreements 999 — 225 1,224 — — 1,224 1,358 Net asset value attributable to unit holders of consolidated unit trusts and similar funds 4,349 4,643 21 9,013 — — 9,013 5,243 Deferred tax liabilities 892 — 147 1,039 22 — 1,061 1,703 Current tax liabilities 29 — 269 298 28 — 326 377 Accruals deferred income and other liabilities 4,601 354 1,141 6,096 486 (140) 6,442 6,609 Provisions 32 — 484 516 227 — 743 784 Derivative liabilities 1,265 3 939 2,207 1 — 2,208 1,661 Liabilities held for sale — — 10,568 10,568 — — 10,568 — Total liabilities 140,217 25,721 33,939 199,877 764 (140) 200,501 202,655 Total equity and liabilities 140,217 25,721 40,479 206,417 2,924 (140) 209,201 210,900 * |
Group assets and liabilities -
Group assets and liabilities - measurement | 12 Months Ended |
Dec. 31, 2018 | |
Group assets and liabilities - measurement | |
Group assets and liabilities - measurement | C3.1 Group assets and liabilities – measurement (a) Determination of fair value The fair values of the financial instruments for which fair valuation is required under IFRS are determined by the use of current market bid prices for exchange-quoted investments or by using quotations from independent third parties such as brokers and pricing services or by using appropriate valuation techniques. The estimated fair value of derivative financial instruments reflects the estimated amount the Group would receive or pay in an arm’s-length transaction. This amount is determined using quoted prices if exchange listed, quotations from independent third parties or valued internally using standard market practices. Other than the loans which have been designated at fair value through profit or loss, the loans and receivables have been shown net of provisions for impairment. The fair value of loans have been estimated from discounted cash flows expected to be received. The discount rate is updated for the market rate of interest where applicable. The fair value of investment properties is based on market values as assessed by professionally qualified external valuers or by the Group’s qualified surveyors. The fair value of the subordinated and senior debt issued by the parent company is determined using quoted prices from independent third parties. The fair value of financial liabilities (other than derivative financial instruments) is determined using discounted cash flows of the amounts expected to be paid. (b) Fair value measurement hierarchy of Group assets and liabilities Assets and liabilities carried at fair value on the statement of financial position The table below shows the assets and liabilities carried at fair value analysed by level of the IFRS 13, ‘Fair Value Measurement’ defined fair value hierarchy. This hierarchy is based on the inputs to the fair value measurement and reflects the lowest level input that is significant to that measurement. Financial instruments at fair value 31 Dec 2018 £m Level 1 Level 2 Level 3 Quoted prices Valuation based Valuation based (unadjusted) on significant on significant in active observable unobservable markets market inputs market inputs Total Analysis of financial investments, net of derivative liabilities by business type With-profits Loans - - 1,703 1,703 Equity securities and portfolio holdings in unit trusts 52,320 5,447 488 58,255 Debt securities 31,210 48,981 811 81,002 Other investments (including derivative assets) 143 3,263 4,325 7,731 Derivative liabilities (85) (1,231) - (1,316) Total financial investments, net of derivative liabilities 83,588 56,460 7,327 147,375 Percentage of total 57 % 38 % 5 % 100 % Unit-linked and variable annuity separate account Equity securities and portfolio holdings in unit trusts 152,987 505 9 153,501 Debt securities 4,766 9,727 - 14,493 Other investments (including derivative assets) 6 3 6 15 Derivative liabilities (2) (3) - (5) Total financial investments, net of derivative liabilities 157,757 10,232 15 168,004 Percentage of total 94 % 6 % % 100 % Non-linked shareholder-backed Loans - - 3,050 3,050 Equity securities and portfolio holdings in unit trusts 2,957 2 18 2,977 Debt securities 17,687 61,803 371 79,861 Other investments (including derivative assets) 61 1,258 941 2,260 Derivative liabilities (2) (1,760) (423) (2,185) Total financial investments, net of derivative liabilities 20,703 61,303 3,957 85,963 Percentage of total 24 % 71 % 5 % 100 % Group total analysis, including other financial liabilities held at fair value Loans - - 4,753 4,753 Equity securities and portfolio holdings in unit trusts 208,264 5,954 515 214,733 Debt securities 53,663 120,511 1,182 175,356 Other investments (including derivative assets) 210 4,524 5,272 10,006 Derivative liabilities (89) (2,994) (423) (3,506) Total financial investments, net of derivative liabilities 262,048 127,995 11,299 401,342 Investment contract liabilities without discretionary participation features held at fair value - (16,054) - (16,054) Borrowings attributable to with-profits businesses - - (1,606) (1,606) Net asset value attributable to unit holders of consolidated unit trusts and similar funds (6,852) (3,811) (988) (11,651) Other financial liabilities held at fair value - (2) (3,404) (3,406) Total financial instruments at fair value 255,196 108,128 5,301 368,625 Percentage of total 70 % 29 % 1 % 100 % 31 Dec 2017 £m Level 1 Level 2 Level 3 Quoted prices Valuation based Valuation based (unadjusted) on significant on significant in active observable unobservable markets market inputs market inputs Total Analysis of financial investments, net of derivative liabilities by business type 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 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 businesses — — (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 £40,849 million (31 December 2017: £35,293 million) of debt securities classified as available-for-sale. Investment properties at fair value 31 Dec £m Level 1 Level 2 Level 3 Valuation based Valuation based Quoted prices on significant on significant (unadjusted) in observable unobservable active markets market inputs market inputs Total 2018 — — 17,925 17,925 2017 — — 16,497 16,497 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. 31 Dec 2018 £m Total Total fair carrying Level 1 Level 2 Level 3 value value Valuation Valuation based on based on Quoted prices significant significant (unadjusted) in observable unobservable active markets market inputs market inputs Assets Loans note (i) — 2,898 10,768 13,666 13,257 Liabilities Investment contract liabilities without discretionary participation features — — (3,157) (3,157) (3,168) Core structural borrowings of shareholder-financed businesses note (ii) — (7,847) — (7,847) (7,664) Operational borrowings attributable to shareholder-financed businesses — (994) (4) (998) (998) Borrowings attributable to the with-profits funds — (2,035) (68) (2,103) (2,334) Obligations under funding, securities lending and sale and repurchase agreements — (1,258) (5,750) (7,008) (6,989) 31 Dec 2017 £m Total Total fair carrying Level 1 Level 2 Level 3 value value Valuation Valuation based on based on Quoted prices significant significant (unadjusted) in observable unobservable active markets market inputs market inputs Assets Loans note (i) — 2,756 10,183 12,939 12,205 Liabilities Investment contract liabilities without discretionary participation features — — (3,032) (3,032) (2,997) Core structural borrowings of shareholder-financed businesses note (ii) — (7,023) — (7,023) (6,280) Operational borrowings attributable to shareholder-financed businesses — (1,788) (3) (1,791) (1,791) Borrowings attributable to the with-profits funds — (1,761) (71) (1,832) (1,829) Obligations under funding, securities lending and sale and repurchase agreements — (1,410) (4,318) (5,728) (5,662) Notes (i) The carrying value of loans and receivables are reported net of allowance for loan losses of £46 million (31 December 2017: £28 million). (ii) As at 31 December 2018, £376 million (31 December 2017: £312 million) of convertible bonds were included in debt securities and £981 million (31 December 2017: £1,311 million) were included in borrowings. The fair value of the assets and liabilities in the table above, with the exception of the subordinated and senior debt issued by the parent company, has been estimated from the discounted cash flows expected to be received or paid. Where appropriate, the observable market interest rate has been used and the assets and liabilities are classified within level 2. Otherwise, they are included as level 3 assets or liabilities. The fair value included for the subordinated and senior debt issued by the parent company is determined using quoted prices from independent third parties. (c) Valuation approach for level 2 fair valued assets and liabilities A significant proportion of the Group’s level 2 assets are corporate bonds, structured securities and other non-national government debt securities. These assets, in line with market practice, are generally valued using a designated independent pricing service or quote from third-party brokers. These valuations are subject to a number of monitoring controls, such as comparison to multiple pricing sources where available, monthly price variances, stale price reviews and variance analysis on prices achieved on subsequent trades. When prices are not available from pricing services, quotes are sourced directly from brokers. Prudential seeks to obtain a number of quotes from different brokers so as to obtain the most comprehensive information available on their executability. Where quotes are sourced directly from brokers, the price used in the valuation is normally selected from one of the quotes based on a number of factors, including the timeliness and regularity of the quotes and the accuracy of the quotes considering the spreads provided. The selected quote is the one which best represents an executable quote for the security at the measurement date. Generally, no adjustment is made to the prices obtained from independent third parties. Adjustment is made in only limited circumstances, where it is determined that the third-party valuations obtained do not reflect fair value (eg either because the value is stale and/or the values are extremely diverse in range). These are usually securities which are distressed or that could be subject to a debt restructure or where reliable market prices are no longer available due to an inactive market or market dislocation. In these instances, prices are derived using internal valuation techniques including those as described below in this note with the objective of arriving at a fair value measurement that reflects the price at which an orderly transaction would take place between market participants on the measurement date. The techniques used require a number of assumptions relating to variables such as credit risk and interest rates. Examples of such variables include an average credit spread based on the corporate bond universe and the relevant duration of the asset being valued. Prudential determines the input assumptions based on the best available information at the measurement dates. Securities valued in such manner are classified as level 3 where these significant inputs are not based on observable market data. Of the total level 2 debt securities of £120,511 million at 31 December 2018 (31 December 2017: £115,141 million), £15,425 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 31 December 2018. Financial instruments at fair value £m Total gains (losses) Total recorded net gains as other (losses) in compre- Transfers Transfers At income hensive into out of At 2018 1 Jan statement* income Purchases Sales Settled Issued level 3 level 3 31 Dec Loans 4,837 (78) 162 62 (178) (331) 279 — — 4,753 Equity securities and portfolio holdings in unit trusts 371 38 8 125 (35) — — 8 — 515 Debt securities 654 (7) — 666 (131) — — — — 1,182 Other investments (including derivative assets) 4,424 405 54 1,202 (813) — — — — 5,272 Derivative liabilities (512) 27 (1) — – — — — 63 (423) Total financial investments, net of derivative liabilities 9,774 385 223 2,055 (1,157) (331) 279 8 63 11,299 Borrowings attributable to with-profits businesses (1,887) (23) — — — 304 — — — (1,606) Net asset value attributable to unit holders of consolidated unit trusts and similar funds (413) 67 31 — — 57 (697) — (33) (988) Other financial liabilities (3,031) 5 (170) — — 273 (481) — — (3,404) Total financial instruments at fair value 4,443 434 84 2,055 (1,157) 303 (899) 8 30 5,301 2017 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 businesses — (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 * Of the total net gains and (losses) in the income statement of £434 million (2017: £(402) million), £398 million (2017: £(139) million) relates to net unrealised gains and losses of financial instruments still held at the end of the year, which can be analysed as follows: 2018 £m 2017 £m Loans (71) 20 Equity securities 38 (12) Debt securities (16) (5) Other investments 370 (22) Derivative liabilities 27 4 Borrowings attributable to with-profit operations (23) (13) Net asset value attributable to unit holders of consolidated unit trusts and similar funds 67 (123) Other financial liabilities 6 12 Total 398 (139) Other assets at fair value – investment properties £m Total (losses) in Total other gains in compre- Transfers Transfers At income hensive into out of At 1 Jan statement* income Purchases Sales level 3 level 3 31 Dec 2018 16,497 97 — 1,509 (178) — — 17,925 2017 14,646 415 (21) 2,048 (591) — — 16,497 * Of the total net gains in the income statement of £97 million (2017: £415 million), £149 million (2017: £394 million) relates to net unrealised gains of investment properties still held at the end of the year. Valuation approach for level 3 fair valued assets and liabilities Financial instruments at fair value Investments valued using valuation techniques include financial investments which by their nature do not have an externally quoted price based on regular trades, and financial investments for which markets are no longer active as a result of market conditions, eg market illiquidity. The valuation techniques used include comparison to recent arm’s-length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option adjusted spread models and, if applicable, enterprise valuation. These techniques may include a number of assumptions relating to variables such as credit risk and interest rates. Changes in assumptions relating to these variables could positively or negatively impact the reported fair value of these instruments. When determining the inputs into the valuation techniques used priority is given to publicly available prices from independent sources when available, but overall the source of pricing is chosen with the objective of arriving at a fair value measurement that reflects the price at which an orderly transaction would take place between market participants on the measurement date. The fair value estimates are made at a specific point in time, based upon available market information and judgements about the financial instruments, including estimates of the timing and amount of expected future cash flows and the credit standing of counterparties. Such estimates do not reflect any premium or discount that could result from offering for sale at one time a significant volume of a particular financial instrument, nor do they consider the tax impact of the realisation of unrealised gains or losses from selling the financial instrument being fair valued. In accordance with the Group’s risk management framework, the estimated fair value of derivative financial instruments valued internally using standard market practices are subject to assessment against external counterparties’ valuations. At 31 December 2018, the Group held £5,301 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 principal financial assets, net of corresponding liabilities, classified as fair value within level 3 as of 31 December 2018 are described below: (i) £1,702 million of loans (31 December 2017: £1,983 million) and a corresponding £1,606 million (31 December 2017: £1,887 million) of borrowings are held by a subsidiary of the Group’s UK with-profits fund, attaching to a portfolio of buy-to-let mortgages and other loans financed largely by external third-party (non-recourse) borrowings. See note C3.3(c) for further details. The Group’s exposure is limited to the investment held by the UK with-profits fund, rather than to the individual loans and borrowings themselves. The fair value movements of these loans and borrowings have no effect on shareholders’ profit and equity. The most significant non observable inputs to the mortgage fair value are the level of future defaults and prepayments by the mortgage holders. (ii) Loans of £2,783 million at 31 December 2018 (31 December 2017: £2,512 million), measured as the loan outstanding balance, plus accrued investment income, attached to acquired REALIC business and held to back the liabilities for funds withheld under reinsurance arrangements. The funds withheld liability of £2,941 million at 31 December 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. (iii) Excluding the above, the level 3 fair valued financial assets net of financial liabilities are £5,363 million (31 December 2017: £4,499 million). Of this amount, a net liability of £(298) million (31 December 2017: net liability 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 £582 million (31 December 2017: £500 million), which are either valued on a discounted cash flow method with an internally developed discount rate or on external prices adjusted to reflect the specific known conditions relating to these securities (eg distressed securities or securities which were being restructured). (b) Private equity and venture investments in both debt and equity securities of £512 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 are principally held by consolidated investment funds that are managed on behalf of third parties. (c) Equity release mortgage loan investments of £268 million and a corresponding loan liability backed by these investments of £(354) million (31 December 2017: £302 million loan investments and a corresponding liability of £(385) 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 £(898) 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 £(423) 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 £15 million (31 December 2017: £164 million). Of the internally valued net liability referred to above of £(298) million (31 December 2017: net liability of £(117) million): - A net liability of £(53) million (31 December 2017: net asset £67 million) is held by the Group’s participating funds and therefore shareholders’ profit and equity are not impacted by movements in the valuation of these financial instruments; and - A net liability of £(245) million (31 December 2017: £(184) million) is held to support non-linked shareholder-backed business. If the value of all the level 3 instruments held to support non-linked shareholder-backed business valued internally decreased by 10 per cent, the change in valuation would be £24 million (31 December 2017: £18 million), which would reduce shareholders’ equity by this amount before tax. All this amount passes through the income statement substantially as part of short-term fluctuations in investment returns outside of adjusted IFRS operating profit based on longer-term investment returns. Other assets at fair value – investment properties The investment properties of the Group are principally held by the UK and Europe insurance operations that are valued taking into account advice from professionally qualified external valuers using the Royal Institution of Chartered Surveyors (RICS) valuation standards. An ‘income capitalisation’ technique is predominantly applied for these properties. This technique calculates the value through the yield and rental value depending on factors such as the lease length, building quality, covenant and location. The variables used are compared to recent transactions with similar features to those of the Group’s investment properties. As the comparisons are not with properties that are virtually identical to the Group’s investment properties, adjustments are made by the valuers where appropriate to the variables used. Changes in assumptions relating to these variables could positively or negatively impact the reported fair value of the properties. (e) Transfers into and transfers out of levels The Group’s policy is to recognise transfers into and transfers out of levels as of the end of each half year reporting period except for material transfers which are recognised as of the date of the event or change in circumstances that caused the transfer. 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 the year, the transfers between levels within the Group’s portfolio were primarily transfers from level 1 to level 2 of £908 million and transfers from level 2 to level 1 of £976 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 into level 3 during the year were £8 million and the transfers out of level 3 were £30 million. These transfers were primarily between levels 3 and 2 for derivative liabilities. (f) Valuation processes applied by the Group The Group’s valuation policies, procedures and analyses for instruments categorised as level 3 are overseen by business unit committees as part of the Group’s wider financial reporting governance processes. The procedures undertaken include approval of valuation methodologies, verification processes, and resolution of significant or complex valuation issues. In undertaking these activities the Group makes use of the extensive expertise of its asset management functions. In addition, the Group has minimum standards for independent price verification to ensure valuation accuracy is regularly independently verified. Adherence to this policy is monitored across the business units. |
Debt securities
Debt securities | 12 Months Ended |
Dec. 31, 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 & 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’. 31 Dec 2018 £m BBB+ to AAA AA+ to AA- A+ to A- BBB- Below BBB- Other Total Asia With-profits 2,873 12,379 4,142 3,760 1,747 2,303 27,204 Unit-linked 817 100 492 1,431 426 715 3,981 Non-linked shareholder-backed 1,034 3,552 3,717 2,934 2,202 1,144 14,583 Asset management 11 — 60 — — — 71 US Non-linked shareholder-backed 678 7,383 10,286 14,657 1,429 7,161 41,594 UK and Europe With-profits 6,890 9,332 11,779 14,712 2,891 8,194 53,798 Unit-linked 1,041 2,459 2,215 3,501 395 901 10,512 Non-linked shareholder-backed 3,007 6,413 4,651 1,515 158 5,902 21,646 Other operations 619 1,089 151 41 49 18 1,967 Total debt securities 16,970 42,707 37,493 42,551 9,297 26,338 175,356 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 Standard &Poor’s, 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 of 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: Asia - non-linked shareholder-backed 31 Dec 2018 £m 31 Dec 2017 £m Internally rated: Government bonds 25 Corporate bonds – rated as investment grade by local external ratings agencies 959 Other 69 Total Asia non-linked shareholder-backed 1,053 31 Dec 2018 £m 31 Dec 2017 £m Mortgage -backed Other US securities securities Total Total Implicit ratings of other US debt securities based on NAIC* valuations (see below): NAIC 1 2,148 2,858 5,006 3,918 NAIC 2 2 2,116 2,118 1,794 NAIC 3-6 2 35 37 57 Total US† 2,152 5,009 7,161 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 £1,947 million at 31 December 2018 have credit ratings issued by Standard & Poor’s of BBB- or above and hence are designated as investment grade. Other securities totalling £4,974 million at 31 December 2018 with NAIC ratings 1 or 2 are also designated as investment grade. UK and Europe 31 Dec 2018 £m 31 Dec 2017 £m Internal ratings or unrated: AAA to A- 8,150 7,994 BBB to B- 3,034 3,141 Below B- or unrated 3,813 2,436 Total UK and Europe 14,997 13,571 (b) Additional analysis of US insurance operations debt securities 31 Dec 2018 £m 31 Dec 2017 £m Corporate and government security and commercial loans: Government 5,465 4,835 Publicly traded and SEC Rule 144A securities* 26,196 22,849 Non-SEC Rule 144A securities 6,329 4,468 Asset-backed securities (see note (e)) 3,604 3,226 Total US debt securities † 41,594 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: 31 Dec 2018 £m 31 Dec 2017 £m Available-for-sale 40,849 35,293 Fair value through profit or loss 745 85 Total US debt securities 41,594 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 was from a net unrealised gain of £1,205 million to a net unrealised loss of £414 million as analysed in the table below. Reflected as part of movement in other comprehensive income Foreign Changes in exchange unrealised translation appreciation † £m £m £m £m Assets fair valued at below book value Book value* 25,330 6,325 Unrealised gain (loss) (925) (43) (776) (106) Fair value (as included in statement of financial position) 24,405 6,219 Assets fair valued at or above book value Book value* 15,933 27,763 Unrealised gain (loss) 511 41 (841) 1,311 Fair value (as included in statement of financial position) 16,444 29,074 Total Book value* 41,263 34,088 Net unrealised gain (loss) (414) (2) (1,617) 1,205 Fair value (as included in the footnote above in the overview table and the statement of financial position) 40,849 35,293 * Book value represents cost/amortised cost of the debt securities. † Translated at the average rate of US$1.3352:£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 fair value of the debt securities in a gross unrealised loss position for various percentages of book value: 31 Dec 2018 £m 31 Dec 2017 £m Fair Unrealised Fair Unrealised value loss value loss Between 90% and 100% 23,662 (809) 6,170 (95) Between 80% and 90% 707 (104) 36 (6) Below 80%: Other asset-backed securities — — 10 (4) Corporate bonds 36 (12) 3 (1) 36 (12) 13 (5) Total 24,405 (925) 6,219 (106) (ii) Unrealised losses by maturity of security 31 Dec 2018 £m 31 Dec 2017 £m 1 year to 5 years (72) (7) 5 years to 10 years (436) (41) More than 10 years (372) (39) Mortgage-backed and other debt securities (45) (19) Total (925) (106) (iii) Age analysis of unrealised losses for the periods indicated 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: 31 Dec 2018 £m 31 Dec 2017 £m Non- Non- investment Investment investment Investment grade grade Total grade grade Total Less than 6 months (20) (141) (161) (4) (31) (35) 6 months to 1 year (22) (440) (462) (1) (4) (5) 1 year to 2 years (10) (142) (152) — (49) (49) 2 years to 3 years — (123) (123) (1) (6) (7) More than 3 years (2) (25) (27) — (10) (10) Total (54) (871) (925) (6) (100) (106) The age analysis as at 31 December, of the securities whose fair values were below 80 per cent of the book value: 31 Dec 2018 £m 31 Dec 2017 £m Fair Unrealised Fair Unrealised Age analysis value loss value loss Less than 3 months 32 (10) 2 — 3 months to 6 months 2 (1) 1 (1) More than 6 months 2 (1) 10 (4) Total 36 (12) 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 are as follows: 31 Dec 2018 £m 31 Dec 2017 £m Shareholder-backed business Asia operations note (i) 121 118 US operations note (ii) 3,604 3,226 UK and Europe operations (2018: 42% AAA, 13% AA) note (iii) 1,406 1,070 Other operations note (iv) 445 589 5,576 5,003 With-profits business Asia operations note (i) 235 233 UK and Europe operations (2018: 66% AAA, 12% AA) note (iii) 5,270 5,658 5,505 5,891 Total 11,081 10,894 Notes (i) Asia operations The Asia operations’ exposure to asset-backed securities is primarily held by the with-profits businesses. Of the £235 million (31 December 2017: £233 million), 99.8 per cent (2017: 98.2 per cent) are investment grade. (ii) US operations US operations’ exposure to asset-backed securities at 31 December comprises: 31 Dec 2018 £m 31 Dec 2017 £m RMBS: Sub-prime (2018: 1% AAA, 6% AA, 2% A) 96 112 Alt-A (2018: 3% AAA, 42% A) 105 126 Prime including agency (2018: 14% AAA, 62% AA, 10% A) 441 440 CMBS (2018: 80% AAA, 15% AA, 2% A) 1,945 1,579 CDO funds (2018: 13% AA, 24% A), including £nil exposure to sub-prime 13 28 Other ABS (2018: 20% AAA, 14% AA, 49% A), including £77 million exposure to sub-prime 1,004 941 Total 3,604 3,226 (i) 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 businesses, £1,823 million (31 December 2017: £1,913 million) relates to exposure to the US markets with the remaining exposure being primarily to the UK market. (ii) Other operations Other operations’ exposure to asset-backed securities is held by Prudential Capital with no sub-prime exposure. Of the £445 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 are analysed as follows: Exposure to sovereign debts 31 Dec 2018 £m 31 Dec 2017 £m Shareholder- Shareholder- backed With-profits backed With-profits business funds business funds Italy — 57 58 63 Spain 36 18 34 18 France — 50 23 38 Germany* 239 281 693 301 Other Eurozone 103 34 82 31 Total Eurozone 378 440 890 451 United Kingdom 3,226 3,013 5,918 3,287 United States† 5,647 11,858 5,078 10,156 Other, including Asia 5,142 2,745 4,638 2,143 Total 14,393 18,056 16,524 16,037 * Including bonds guaranteed by the federal government. † The exposure to the United States sovereign debt comprises holdings of the US, the UK and Europe and Asia insurance operations. Exposure to bank debt securities 31 Dec 2018 £m 31 Dec 2017 £m Senior debt Subordinated debt Shareholder-backed business Covered Senior Total Tier 1 Tier 2 Total Total Total Spain 42 64 106 — — — 106 68 France 20 119 139 14 3 17 156 86 Germany 30 — 30 6 89 95 125 117 Netherlands — 69 69 3 1 4 73 71 Other Eurozone 15 2 17 — — — 17 15 Total Eurozone 107 254 361 23 93 116 477 357 United Kingdom 550 623 1,173 9 164 173 1,346 1,382 United States — 2,614 2,614 1 52 53 2,667 2,619 Other, including Asia — 759 759 109 369 478 1,237 1,163 Total 657 4,250 4,907 142 678 820 5,727 5,521 With-profits funds Italy — 38 38 — — — 38 31 Spain — 17 17 — — — 17 16 France 6 250 256 1 95 96 352 286 Germany 140 46 186 14 29 43 229 180 Netherlands — 253 253 12 1 13 266 199 Other Eurozone — 74 74 — — — 74 27 Total Eurozone 146 678 824 27 125 152 976 739 United Kingdom 909 850 1,759 2 433 435 2,194 1,938 United States — 2,418 2,418 1 311 312 2,730 2,518 Other, including Asia 575 1,459 2,034 339 452 791 2,825 2,531 Total 1,630 5,405 7,035 369 1,321 1,690 8,725 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. (g) Impairment of US available-for-sale debt securities and other financial assets In accordance with the Group’s accounting policy set out in note A3.1, impairment reviews were performed for available-for-sale securities and loans and receivables. During the year ended 31 December 2018, a credit for recoveries net of impairment of £13 million (2017: credit of £1 million; 2016: charge of £(44) million) was recognised. This includes £15 million (2017: £8 million; 2016: charge of £(20) million) for available-for-sale securities held by Jackson, offset by a charge of £2 million (2017: £7 million; 2016: charge of £(24) million) for loans and receivables held across the Group. Jackson, with the support of internal credit analysts, regularly monitors and reports on the credit quality of its holdings of debt securities. In addition, there is a periodic review of its investments on a case-by-case basis to determine whether any decline in fair value represents an impairment. Investments in structured securities are subject to a review of their future estimated cash flows, including expected and stress case scenarios, to identify potential shortfalls in contractual payments (both interest and principal). Impairment charges are recorded on structured securities when the Company forecasts a contractual payment shortfall. Situations where such a shortfall would not lead to a recognition of a loss are rare. The impairment loss reflects the difference between the fair value and book value. In 2018, the Group realised gross losses on sales of available-for-sale securities of £43 million (2017: £155 million; 2016: £152 million) with 49 per cent (2017: 97 per cent; 2016: 59 per cent) of these losses related to the disposal of fixed maturity securities of the top 10 individual issuers, which were disposed of to limit future credit loss exposure. Of the £43 million (2017: £155 million; 2016: £152 million), £4 million (2017: £3 million; 2016: £94 million) relates to losses on sales of impaired and deteriorating securities. The effect of changes in the key assumptions that underpin the assessment of whether impairment has taken place depends on the factors described in note A3.1. A key indicator of whether such impairment may arise in future, and the potential amounts at risk, is the profile of gross unrealised losses for fixed maturity securities accounted for on an available-for-sale basis by reference to the time periods by which the securities have been held continuously in an unrealised loss position and by reference to the maturity date of the securities concerned. For 2018, the amount of gross unrealised losses for fixed maturity securities classified as available-for-sale under IFRS in an unrealised loss position was £925 million (2017: £106 million; 2016: £675 million). Note B1.2 provides further details on the impairment charges and unrealised losses of Jackson’s available-for-sale securities. |
Loans portfolio
Loans portfolio | 12 Months Ended |
Dec. 31, 2018 | |
Loans portfolio | |
Loans portfolio | C3.3 Loans portfolio (a) Overview of loans portfolio Loans are accounted for at amortised cost net of impairment except for: – – The amounts included in the statement of financial position are analysed as follows: 31 Dec 2018 £m 31 Dec 2017 £m Mortgage Policy Other Mortgage Policy Other loans* loans † loans‡ Total loans* loans † loans‡ Total Asia With-profits — 727 65 792 — 613 112 725 Non-linked shareholder-backed 156 226 203 585 177 216 199 592 US Non-linked shareholder-backed 7,385 3,681 — 11,066 6,236 3,394 — 9,630 UK and Europe With-profits 2,461 3 1,389 3,853 2,441 4 1,823 4,268 Non-linked shareholder-backed 1,655 — 59 1,714 1,681 — 37 1,718 Other operations — — — — — — 109 109 Total loans securities 11,657 4,637 1,716 18,010 10,535 4,227 2,280 17,042 * All mortgage loans are secured by properties. † In the US £2,783 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. (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 £14.0 million (2017: £12.6 million). The portfolio has a current estimated average loan to value of 53 per cent (2017: 55 per cent). Jackson had no mortgage loans where the contractual terms of the agreements had been restructured at the end of both 2018 and 2017. (c) Additional information on UK mortgage loans The UK with-profits fund invests in an entity that holds a portfolio of buy-to-let mortgage loans. The vehicle financed its acquisitions through the issue of debt instruments, largely to external parties, securitised upon the loans acquired. These third-party borrowings have no recourse to any other assets of the Group and the Group’s exposure is limited to the amount invested by the UK with-profits fund. By carrying value, £1,237 million of the £1,655 million (31 December 2017: £1,267 million 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 33 per cent (31 December 2017: 31 per cent). |
Financial instruments - additio
Financial instruments - additional information | 12 Months Ended |
Dec. 31, 2018 | |
Financial instruments - additional information | |
Financial instruments - additional information | C3.4 Financial instruments – additional information C3.4(a) Financial risk (i) Liquidity analysis Contractual maturities of financial liabilities on an undiscounted cash flow basis The following table sets out the contractual maturities for applicable classes of financial liabilities, excluding derivative liabilities and investment contracts that are separately presented. The financial liabilities are included in the column relating to the contractual maturities at the undiscounted cash flows (including contractual interest payments) due to be paid assuming conditions are consistent with those of year end. 31 Dec 2018 £m Total After 1 After 5 After 10 After 15 carrying 1 year year to years to years to years to Over No stated value or less 5 years 10 years 15 years 20 years 20 years maturity Total Financial liabilities Core structural borrowings of shareholder-financed businesses C6.1 7,664 298 1,759 1,526 1,843 1,070 6,573 2,924 15,993 Operational borrowings attributable to shareholder-financed businesses C6.2 998 839 91 68 — — — — 998 Borrowings attributable to with-profits funds C6.2 3,940 701 1,246 719 274 142 2,086 — 5,168 Obligations under funding, securities lending and sale and repurchase agreements 6,989 6,989 — — — — — — 6,989 Accruals, deferred income and other liabilities 15,248 10,844 470 71 90 109 352 3,535 15,471 Net asset value attributable to unit holders of consolidated unit trusts and similar funds 11,651 11,651 — — — — — — 11,651 Total 46,490 31,322 3,566 2,384 2,207 1,321 9,011 6,459 56,270 31 Dec 2017 £m Total After 1 After 5 After 10 After 15 carrying 1 year year to years to years to years to Over No stated value or less 5 years 10 years 15 years 20 years 20 years maturity Total Financial liabilities Core structural borrowings of shareholder-financed businesses C6.1 6,280 473 784 1,350 1,389 576 3,324 3,160 11,056 Operational borrowings attributable to shareholder-financed businesses C6.2 1,791 1,130 597 69 — — — — 1,796 Borrowings attributable to with-profits funds C6.2 3,716 905 922 32 29 29 1,810 104 3,831 Obligations under funding, securities lending and sale and repurchase agreements 5,662 5,662 — — — — — — 5,662 Accruals, deferred income and other liabilities 14,185 10,088 469 68 85 106 320 3,267 14,403 Net asset value attributable to unit holders of consolidated unit trusts and similar funds 8,889 8,889 — — — — — — 8,889 Total 40,523 27,147 2,772 1,519 1,503 711 5,454 6,531 45,637 Maturity analysis of derivatives The following table shows the gross and net derivative positions together with a maturity profile of the net derivative position: Carrying value of net derivatives £m Maturity profile of net derivative position £m Net After 1 After 3 Derivative Derivative derivative 1 year year to years to After 5 assets liabilities position or less 3 years 5 years years Total 2018 3,494 (3,506) (12) 292 (8) (4) 30 310 2017 4,801 (2,755) 2,046 2,359 (16) (9) (1) 2,333 The majority of derivative assets and liabilities have been included at fair value within the one year or less column, representing the basis on which they are managed (ie to manage principally asset or liability value exposures). The Group has no cash flow hedges and, in general, contractual maturities are not considered essential for an understanding of the timing of the cash flows for these instruments. The only exception is certain identified interest rate swaps which are expected to be held until maturity for the purposes of matching cash flows on separately held assets and liabilities. For these instruments the undiscounted cash flows (including contractual interest amounts) due to be paid under the swap contract assuming conditions are consistent with those at year end are included in the column relating to the contractual maturity of the derivative. Maturity analysis of investment contracts The table below shows the maturity profile for investment contracts on undiscounted cash flow projections of expected benefit payments. £billion Total After 1 After 5 After 10 After 15 undis- Total 1 year year to years to years to years to Over counted carrying or less 5 years 10 years 15 years 20 years 20 years value value 31 Dec 2018 8 31 29 20 12 17 117 87 31 Dec 2017 8 29 27 19 13 14 110 83 The undiscounted cash flow in maturity profile above excludes certain corporate unit-linked business with gross policyholder liabilities with a carrying value of £11 billion (31 December 2017: £12 billion) which have no stated maturity but which are repayable on demand. Most investment contracts have options to surrender early, often subject to surrender or other penalties. Therefore, most contracts can be said to have a contractual maturity of less than one year, but the additional charges and term of the contracts mean these are unlikely to be exercised in practice and the more useful information is to present information on expected payment. The vast majority of the Group’s financial assets are held to back the Group’s policyholder liabilities. Although asset/liability matching is an important component of managing policyholder liabilities (both those classified as insurance and those classified as investments), this profile is mainly relevant for managing market risk rather than liquidity risk. Within each business unit this asset/liability matching is performed on a portfolio-by-portfolio basis. In terms of liquidity risk, a large proportion of the policyholder liabilities contain discretionary surrender values or surrender charges, meaning that many of the Group’s liabilities are expected to be held for the long term. Much of the Group’s investment portfolios are in marketable securities, which can therefore be converted quickly to liquid assets. For the reasons provided above, an analysis of the Group’s assets by contractual maturity is not considered meaningful to evaluate the nature and extent of the Group’s liquidity risk. (ii) Credit risk The Group’s maximum exposure to credit risk of financial instruments before any allowance for collateral or allocation of losses to policyholders is represented by the carrying value of financial instruments on the balance sheet that have exposures to credit risk comprising cash and cash equivalents, deposits, debt securities, loans and derivative assets, and other debtors, the carrying value of which are disclosed at the start of this note and note C3.4(b) below for derivative assets. The collateral in place in relation to derivatives is described in note C3.4(c) below. Note C3.3 describes the security for the loans held by the Group. The Group’s exposure to credit risk is further discussed in note C7 below. Of the total loans and receivables held, £27 million (31 December 2017: £23 million) are past their due date but are not impaired. Of the total past due but not impaired, £22 million are less than one year past their due date (31 December 2017: £17 million). The Group expects full recovery of these loans and receivables. Financial assets that would have been past due or impaired had the terms not been renegotiated amounted to £23 million (31 December 2017: £22 million). In addition, during 2018 and 2017 the Group did not take possession of any other collateral held as security. Further details of collateral and pledges are provided in note C3.4(c) below. (iii) Foreign exchange risk As at 31 December 2018, the Group held 26 per cent (31 December 2017: 24 per cent) and 13 per cent (31 December 2017: 16 per cent) of its financial assets and financial liabilities respectively, in currencies, mainly US dollar and Euro, other than the functional currency of the relevant business unit. Of these financial assets, 49 per cent (31 December 2017: 52 per cent) are held by the UK with-profits fund, allowing the fund to obtain exposure to foreign equity markets. Of these financial liabilities, 28 per cent (31 December 2017: 28 per cent) are held by the UK with-profits fund, mainly relating to foreign currency borrowings. The exchange risks inherent in these exposures are mitigated through the use of derivatives, mainly forward currency contracts (note C3.4(b) below). The amount of exchange gain recognised in the income statement in 2018, except for those arising on financial instruments measured at fair value through profit or loss, is £281 million (2017: £112 million loss; 2016: £1,005 million gain) mainly arising on investments of the UK with-profits fund. C3.4(b) Derivatives and hedging Derivatives The Group enters into a variety of exchange traded and over-the-counter derivative financial instruments, including futures, options, forward currency contracts and swaps such as interest rate swaps, cross-currency swaps, swaptions and credit default swaps. All over-the-counter derivative transactions, with the exception of some Asia transactions, are conducted under standardised ISDA (International Swaps and Derivatives Association Inc) master agreements and the Group has collateral agreements between the individual Group entities and relevant counterparties in place under each of these market master agreements. Under Article 11 of the European Market Infrastructure Regulation on derivatives, central counterparties and trade repositories (‘EMIR’) and Commission Delegated Regulation (EU) 2016/2251 supplementing EMIR, market participants transacting in non-cleared OTC derivatives are required to exchange collateral to cover variation and initial margin. However, trades between counterparties belonging to the same group are exempt from these margin requirements subject to certain criteria. Prudential Capital plc (Legal Entity Identifier reference (‘LEI’) CHW8NHK268SFPTV63Z64) has entered into such derivative agreements with the following six entities in the Group. These counterparty pairings meet the criteria to be eligible for intra-group exemptions to the margin requirements and have been approved by the Financial Conduct Authority: 31 Dec 2018 Legal Entity Identifier Relationship between Aggregate notional of Counterparty (LEI) parties Type of exemption OTC derivatives contract £m Prudential plc 5493001Z3ZE83NG Part of the same group Full 3,633 K8Y12 holding company Prudential Holdings Limited 549300JVAI8CZD4 Part of the same group Full 56 HD451 holding company Prudential (US HoldCo1) Limited 549300JNYGDP2X Part of the same group Full 2,717 OLWR47 holding company Prudential Corporation Holdings Limited 549300KDOPLFHA Part of the same group Full 927 W51H26 holding company Prudential Lifetime Mortgages Limited 5493001GSK4HF84 Part of the same group Full 37 IOB02 holding company 549300I8LYOK91H Part of the same group Full 7 Prudential Distribution Limited BX439 holding company Derivatives are used for efficient portfolio management to obtain cost effective and management of exposure to various markets in accordance with the Group’s investment strategies and to manage exposure to interest rate, currency, credit and other business risks. The Group also uses interest rate derivatives to reduce exposure to interest rate volatility. In particular: – – – Hedging The Group has formally assessed and documented the effectiveness of the following net investment hedges under IAS 39. At 31 December 2018, the Group has designated perpetual subordinated capital securities totalling US$3.7 billion (31 December 2017: US$4.3 billion) as a net investment hedge to hedge the currency risks related to the net investment in Jackson. The carrying value of the subordinated capital securities was £2,909 million as at 31 December 2018 (31 December 2017: £3,140 million). The foreign exchange loss of £199 million (2017: gain of £325 million) on translation of the borrowings to pounds sterling at the statement of financial position date is recognised in the translation reserve in shareholders’ equity. This net investment hedge was 100 per cent effective. The Group has no cash flow hedges or fair value hedges in place. C3.4(c) Derecognition, collateral and offsetting Securities lending and reverse repurchase agreements The Group has entered into securities lending (including repurchase agreements) whereby blocks of securities are loaned to third parties, primarily major brokerage firms. Typically, the value of collateral assets granted to the Group in these transactions is in excess of the value of securities lent, with the excess determined by the quality of the collateral assets granted. Collateral requirements are calculated on a daily basis. The loaned securities are not removed from the Group’s consolidated statement of financial position, rather they are retained within the appropriate investment classification. Collateral typically consists of cash, debt securities, equity securities and letters of credit. At 31 December 2018, the Group has £8,278 million (31 December 2017: £8,232 million) of lent securities and assets subject to repurchase agreements, of which £8,245 million (31 December 2017: £8,182 million) related to the UK with-profits fund. The cash and securities collateral held or pledged under such agreements were £8,750 million (31 December 2017: £8,733 million) of which £8,662 million (31 December 2017: £8,679 million) was held by the UK with-profits fund. At 31 December 2018, the Group had entered into reverse repurchase transactions under which it purchased securities and had taken on the obligation to resell the securities. The fair value of the collateral held in respect of these transactions was £10,633 million (31 December 2017: £10,550 million). Collateral and pledges under derivative transactions At 31 December 2018, the Group had pledged £3,265 million (31 December 2017: £2,302 million) for liabilities and held collateral of £2,012 million (31 December 2017: £3,958 million) in respect of over-the-counter derivative transactions. These transactions are conducted under terms that are usual and customary to collateralised transactions including, where relevant, standard securities lending and repurchase agreements. The Group has entered into collateral arrangements in relation to over-the-counter derivative transactions, which permit sale or re-pledging of underlying collateral. During the year, the Group has not sold any collateral held (2017: nil). As of 31 December 2018, the value of collateral re-pledged by the Group amounted to £698 million (31 December 2017: £852 million). All over-the-counter derivative transactions, with the exception of some Asia transactions, are conducted under standardised International Swaps and Derivatives Association (ISDA) master agreements. The collateral management for these transactions is conducted under the usual and customary terms and conditions set out in the Credit Support Annex to the ISDA master agreement. Other collateral At 31 December 2018, the Group had pledged collateral of £2,793 million (31 December 2017: £3,412 million) in respect of other transactions. This principally arises from Jackson’s membership of the Federal Home Loan Bank of Indianapolis primarily for the purpose of participating in the bank’s collateralised loan advance programme with short-term and long-term funding facilities. Offsetting assets and liabilities The Group’s derivative instruments, repurchase agreements and securities lending agreements are subject to master netting arrangements and collateral arrangements. A master netting arrangement with a counterparty creates a right of offset for amounts due to and due from that same counterparty that is enforceable in the event of a default or bankruptcy. The Group recognises amounts subject to master netting arrangements on a gross basis within the consolidated balance sheets. The following tables present the gross and net information about the Group’s financial instruments subject to master netting arrangements: 31 Dec 2018 £m Gross amount Related amounts not offset included in the in the consolidated statement of consolidated financial position statement of Financial Securities financial position instruments Cash collateral note (i) note (ii) collateral note (iii) Net amount Financial assets: Derivative assets 3,229 (1,261) (1,687) (166) 115 Reverse repurchase agreements 11,597 — — (11,606) (9) Total financial assets 14,826 (1,261) (1,687) (11,772) 106 Financial liabilities: Derivative liabilities (3,189) 1,261 710 1,058 (160) Securities lending and repurchase agreements (1,258) — 34 1,205 (19) Total financial liabilities (4,447) 1,261 744 2,263 (179) 31 Dec 2017 £m Gross amount Related amounts not offset included in the in the consolidated statement of consolidated financial position statement of Financial Securities financial position instruments Cash collateral note (i) note (ii) collateral note (iii) Net amount Financial assets: Derivative assets 4,718 (946) (2,641) (984) 147 Reverse repurchase agreements 10,280 — — (10,270) 10 Total financial assets 14,998 (946) (2,641) (11,254) 157 Financial liabilities: Derivative liabilities (2,301) 946 420 893 (42) Securities lending and repurchase agreements (1,410) — 52 1,332 (26) Total financial liabilities (3,711) 946 472 2,225 (68) Notes (i) The Group has not offset any of the amounts included in the consolidated statement of financial position. (ii) Represents the amount that could be offset under master netting or similar arrangements where the Group does not satisfy the full criteria to offset on the consolidated statement of financial position. (iii) Excludes initial margin amounts for exchange-traded derivatives. In the tables above, the amounts of assets or liabilities included in the consolidated statement of financial position would be offset first by financial instruments that have the right of offset under master netting or similar arrangements with any remaining amount reduced by the amount of cash and securities collateral. The actual amount of collateral may be greater than amounts presented in the tables. |
Policyholder liabilities and un
Policyholder liabilities and unallocated surplus | 12 Months Ended |
Dec. 31, 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 UK and Asia US Europe £m £m £m Total note C4.1(b) note C4.1(c) note C4.1(d) £m At 1 January 2017 62,784 177,626 169,304 409,714 Comprising: Policyholder liabilities on the consolidated statement of financial position note (i) 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 note(ii) 6,401 — — 6,401 Premiums 11,863 15,219 14,810 41,892 Surrenders (3,079) (10,017) (6,939) (20,035) Maturities/deaths (1,909) (2,065) (7,135) (11,109) Net flows 6,875 3,137 736 10,748 Shareholders’ transfers post-tax (54) — (233) (287) Investment-related items and other movements 8,182 16,251 11,146 35,579 Foreign exchange translation differences (3,948) (16,290) 113 (20,125) At 31 December 2017/1 January 2018 73,839 180,724 181,066 435,629 Comprising: Policyholder liabilities on the consolidated statement of financial position note (i) (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 note (ii) 7,467 — — 7,467 Reclassification of reinsured UK annuity contracts as held for sale note(iii) — — (10,858) (10,858) Premiums 13,187 13,940 14,011 41,138 Surrenders (2,793) (12,141) (6,780) (21,714) Maturities/deaths (1,978) (2,012) (6,796) (10,786) Net flows 8,416 (213) 435 8,638 Addition for closed block of group payout annuities in the US note (iv) — 4,143 — 4,143 Shareholders' transfers post-tax (65) — (259) (324) Investment-related items and other movements (2,784) (9,999) (5,481) (18,264) Foreign exchange translation differences 3,357 10,945 (14) 14,288 At 31 December 2018 82,763 185,600 164,889 433,252 Comprising: Policyholder liabilities on the consolidated statement of financial position note (i) (excludes £39 million classified as unallocated to a segment) 72,107 185,600 151,555 409,262 Unallocated surplus of with-profits funds on the consolidated statement of financial position 2,511 — 13,334 15,845 Group's share of policyholder liabilities of joint ventures and associate note (ii) 8,145 — — 8,145 Average policyholder liability balances note (v) 2018 75,309 182,126 162,287 419,722 2017 65,241 179,175 162,622 407,038 Notes (i) The policyholder liabilities of the Asia insurance operations of £72,107 million (31 December 2017: £62,898 million), shown in the table above, is after deducting the intra-group reinsurance liabilities ceded by the UK and Europe insurance operations of £1,109 million (31 December 2017: £1,235 million) to the Hong Kong with-profits business. Including this amount total Asia policyholder liabilities are £73,216 million (31 December 2017: £64,133 million). (ii) The Group’s investments in joint ventures and associate are accounted for on an equity method basis in the Group’s balance sheet. The Group’s share of the policyholder liabilities as shown above relate to life businesses in China, India and of the Takaful business in Malaysia. (iii) The reclassification as held for sale of the reinsured UK annuity business that will be transferred to Rothesay life once the Part VII process is complete reflects the value of policyholder liabilities held at 1 January 2018. (iv) In October 2018, Jackson entered into an agreement with John Hancock Life to reinsure 100 per cent of the group payout annuity business. The transaction resulted in an increase to policyholder liabilities of Jackson £4.1 billion at the inception of the contract. (v) Averages have been based on opening and closing balances and adjusted for acquisitions, disposals and corporate transactions arising in the year and exclude unallocated surplus of with-profits funds. The items above represent the amount attributable to changes in policyholder liabilities and unallocated surplus of with-profits funds as a result of each of the components listed. The policyholder liabilities shown include investment contracts without discretionary participation features (as defined in IFRS 4) and their full movement in the year but exclude liabilities that have not been allocated to a reporting segment. The items above are shown gross of external reinsurance. The analysis includes the impact of premiums, claims and investment movements on policyholders’ liabilities. The impact does not represent premiums, claims and investment movements as reported in the income statement. For example, the premiums shown above will exclude any deductions for fees/charges. Claims (surrenders, maturities and deaths) represent the policyholder liabilities provision released rather than the claim amount paid to the policyholder. (ii) Analysis of movements in policyholder liabilities for shareholder-backed business UK and Asia US Europe Total £m £m £m £m At 1 January 2017 32,851 177,626 56,158 266,635 Premiums 6,064 15,219 2,283 23,566 Surrenders (2,755) (10,017) (2,433) (15,205) Maturities/deaths (1,008) (2,065) (2,571) (5,644) Net flows note (i) 2,301 3,137 (2,721) 2,717 Investment-related items and other movements 3,797 16,251 2,930 22,978 Foreign exchange translation differences (1,547) (16,290) — (17,837) At 31 December 2017/1 January 2018 37,402 180,724 56,367 274,493 Comprising: - Policyholder liabilities on the consolidated statement of financial position (excludes £32 million classified as unallocated to a segment) 29,935 180,724 56,367 267,026 - Group’s share of policyholder liabilities relating to joint ventures and associate 7,467 — — 7,467 Reclassification of reinsured UK annuity contracts as held for sale note (ii) — — (10,858) (10,858) Premiums 6,752 13,940 1,486 22,178 Surrenders (2,455) (12,141) (2,016) (16,612) Maturities/deaths (1,046) (2,012) (2,244) (5,302) Net flows note (i) 3,251 (213) (2,774) 264 Addition for closed block of group payout annuities in the US note (iii) — 4,143 — 4,143 Investment-related items and other movements (1,204) (9,999) (1,975) (13,178) Foreign exchange translation differences 1,148 10,945 — 12,093 At 31 December 2018 40,597 185,600 40,760 266,957 Comprising: - Policyholder liabilities on the consolidated statement of financial position (excludes £39 million classified as unallocated to a segment) 32,452 185,600 40,760 258,812 - Group's share of policyholder liabilities relating to joint ventures and associate 8,145 — — 8,145 Notes (i) Including net flows of the Group’s insurance joint ventures and associate. (ii) The reclassification as held for sale of the reinsured UK annuity business that will be transferred to Rothesay life once the Part VII process is complete reflects those policyholder liabilities held at 1 January 2018. (iii) In October 2018, Jackson entered into an agreement with John Hancock Life to reinsure 100 per cent of the group payout annuity business. The transaction resulted in an increase to policyholder liabilities of Jackson £4.1 billion at the inception of the contract. (iii) Movement in insurance contract liabilities and unallocated surplus of with-profits funds Further analysis of the movement in the year of the Group’s insurance contract liabilities, gross and reinsurance share, investment contracts and unallocated surplus of with-profits funds (excluding those held by joint ventures and associate) is provided below: Insurance contract liabilities Reinsurers’ Investment Unallocated Gross share contracts surplus of with- £m £m £m £m At 1 January 2017 (316,436) 10,051 (72,560) (14,317) Income and expense included in the income statement (31,106) 365 (11,179) (2,871) Other movements including amounts included in other comprehensive income note (i) (35) — 374 (78) Foreign exchange translation differences 19,405 (743) 294 315 At 31 December 2017/1 January 2018 (328,172) 9,673 (83,071) (16,951) Income and expense included in the income statement 8,994 11,440 (4,009) 1,289 Other movements including amounts included in other comprehensive incomenote (i) 10,502 (10,502) 643 (38) Foreign exchange translation differences (13,990) 533 (198) (145) At 31 December 2018 (322,666) 11,144 (86,635) (15,845) Notes (i) Other movements include premiums received and claims paid on investment contracts without discretionary participating features, which are taken directly to the statement of financial position in accordance with IAS 39, changes in the unallocated surplus of with-profits funds resulting from actuarial gains and losses on the Group’s defined benefit pension schemes, which are recognised directly in other comprehensive income and balance sheet reallocations which totalled £10,502 million in 2018 (2017: £(35) million). The 2018 amount represents the reclassification of the reinsured UK annuity business as held for sale value as at 31 December 2018. (ii) Includes reinsurers’ share of claims outstanding of £1,005 million (2017: £953 million). (iii) This comprises investment contracts with discretionary participation features of £67,413 million (2017: £62,677 million) and investment contracts without discretionary participation features of £19,222 million (2017: £20,394 million). The total charge for benefit and claims shown in the income statement comprises the amounts shown as ‘income and expense included in the income statement’ in the table above together with claims paid of £32,396 million in the period (2017: £29,497 million) net of amounts attributable to reinsurers of £2,114 million (2017: £1,828 million). In 2017, the income statement charge also included the change in reserves for the held for sale Korea business of £72 million. (iv) Reinsurers’ share of insurance contract liabilities 31 Dec 2018 £m 31 Dec 2017 £m UK and Unallocated to Asia US Europe a segment Total Total Insurance contract liabilities 2,675 5,910 1,554 — 10,139 8,720 Claims outstanding 102 752 149 2 1,005 953 Total 2,777 6,662 1,703 2 11,144 9,673 The Group cedes certain business to other insurance companies. Although the ceding of insurance does not relieve the Group from its liability to its policyholders, the Group participates in such agreements for the purpose of managing its loss exposure. The Group evaluates the financial condition of its reinsurers and monitors concentration of credit risk from similar geographic regions, activities or economic characteristics of the reinsurers to minimise its exposure from reinsurer insolvencies. Of the reinsurers’ share of insurance contract liabilities balance of £11,144 million at 31 December 2018 (31 December 2017: £9,673 million), 86 per cent (31 December 2017: 97 per cent) of the balance were from reinsurers with Standard & Poor’s rating A- and above. The reinsurers’ share of insurance contract liabilities for Asia primarily relates to protection business written in Hong Kong. The reinsurance asset for Jackson as shown in the table above primarily relates to certain fully collateralised former REALIC business retained by Swiss Re through 100 per cent reinsurance agreements. Apart from the reinsurance of REALIC business, the principal reinsurance ceded by Jackson outside the Group is on term-life insurance, direct and assumed accident and health business and GMIB variable annuity guarantees. Net commissions received on ceded business and claims incurred ceded to external reinsurers totalled £7 million and £489 million respectively during 2018 (2017: £28 million and £526 million respectively). There were no deferred gains or losses on reinsurance contracts in either 2018 or 2017. Further information on the reinsurance agreement with Rothesay Life entered into by the Group’s UK and Europe insurance business in 2018 and longevity reinsurance transactions on certain aspects of the UK’s annuity business in 2017 is provided in notes D1.1 and B3 (iii). The gains and losses recognised in profit or loss for the other reinsurance contracts written in the year were immaterial. C4.1(b) Asia insurance operations (i) Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds A reconciliation of the total policyholder liabilities and unallocated surplus of with-profits funds of Asia insurance operations from the beginning of the year to the end of the year is as follows: With-profits business Unit-linked Other £m liabilities business Total note (vi) £m £m £m 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 note (i) — 3,218 3,183 6,401 Premiums New business 1,143 1,298 999 3,440 In-force 4,656 1,637 2,130 8,423 5,799 2,935 3,129 11,863 Surrenders note (ii) (324) (2,288) (467) (3,079) Maturities/deaths (901) (150) (858) (1,909) Net flows note (iii) 4,574 497 1,804 6,875 Shareholders’ transfers post-tax (54) — — (54) Investment-related items and other movements 4,385 2,830 967 8,182 Foreign exchange translation differences note (v) (2,401) (807) (740) (3,948) At 31 December 2017/1 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 associatenote (i) — 3,764 3,703 7,467 Premiums New business 1,155 1,426 1,085 3,666 In-force 5,280 1,767 2,474 9,521 6,435 3,193 3,559 13,187 Surrenders note (ii) (338) (1,904) (551) (2,793) Maturities/deaths (932) (140) (906) (1,978) Net flows note (iii) 5,165 1,149 2,102 8,416 Shareholders' transfers post-tax (65) — — (65) Investment-related items and other movements note (iv) (1,580) (1,425) 221 (2,784) Foreign exchange translation differences note (v) 2,209 431 717 3,357 At 31 December 2018 42,166 20,182 20,415 82,763 Comprising: - Policyholder liabilities on the consolidated statement of financial position 39,655 16,368 16,084 72,107 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 2,511 — — 2,511 - Group's share of policyholder liabilities relating to joint ventures and associate note (i) — 3,814 4,331 8,145 Average policyholder liability balances note (vii) 2018 36,309 20,105 18,895 75,309 2017 30,115 18,767 16,359 65,241 Notes (i) 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. (ii) The rate of surrenders for shareholder-backed business (expressed as a percentage of opening liabilities) was 6.6 per cent in 2018 (2017: 8.4 per cent). (iii) Net flows have increased by £1,541 million to £8,416 million in 2018 predominantly reflecting continued growth of the in-force book. (iv) Investment-related items and other movements for 2018 primarily represent unrealised investments losses following unfavourable equity markets in the year and rising interest rates. (v) Movements in the year have been translated at the average exchange rates for the year. The closing balance has been translated at the closing spot rates as at the end of the year. Differences upon retranslation are included in foreign exchange translation differences. (vi) The policyholder liabilities of the with-profits business of £39,655 million, shown in the table above, is after deducting the intra-group reinsurance liabilities ceded by the UK and Europe insurance operations of £1,109 million to the Hong Kong with-profits business (31 December 2017: £1,235 million). Including this amount the Asia with-profits policyholder liabilities are £40,764 million (31 December 2017: £34,198 million). (vii) Averages have been based on opening and closing balances and exclude unallocated surplus of with-profits funds. (ii) Duration of liabilities The table below shows the carrying value of policyholder liabilities and the maturity profile of the cash flows on a discounted basis, taking account of expected future premiums and investment returns: 31 Dec 2018 £m 31 Dec 2017 £m Policyholder liabilities 72,107 62,898 Expected maturity: 31 Dec 2018 % 31 Dec 2017 % 0 to 5 years 20 21 5 to 10 years 19 19 10 to 15 years 15 16 15 to 20 years 12 12 20 to 25 years 10 10 Over 25 years 24 22 (iii) Summary policyholder liabilities (net of reinsurance) and unallocated surplus At 31 December 2018, the policyholder liabilities and unallocated surplus for Asia operations excluding joint ventures and after deducting intra-group reinsurance liabilities ceded by UK and Europe of £74,618 million (2017: £66,372 million), net of external reinsurance of £2,777 million (2017: £1,960 million), comprised the following: 2018 £m 2017 £m Hong Kong 34,545 29,411 Indonesia 3,680 3,762 Malaysia 5,447 5,014 Singapore 18,154 17,432 Taiwan 4,203 3,729 Other operations 5,812 5,064 Total Asia operations 71,841 64,412 C4.1(c) US insurance operations (i) Analysis of movements in policyholder liabilities A reconciliation of the total policyholder liabilities of US insurance operations from the beginning of the year to the end of the year is as follows: US insurance operations Variable annuity separate Fixed annuity, account GICs and other liabilities business Total £m £m £m At 1 January 2017 120,411 57,215 177,626 Premiums 11,529 3,690 15,219 Surrenders (6,997) (3,020) (10,017) Maturities/deaths (1,026) (1,039) (2,065) Net flows note (ii) 3,506 (369) 3,137 Transfers from general to separate account 2,096 (2,096) — Investment-related items and other movements 15,956 295 16,251 Foreign exchange translation differences note (i) (11,441) (4,849) (16,290) At 31 December 2017/1 January 2018 130,528 50,196 180,724 Premiums 10,969 2,971 13,940 Surrenders (8,797) (3,344) (12,141) Maturities/deaths (1,085) (927) (2,012) Net flows note (ii) 1,087 (1,300) (213) Addition for closed block of group payout annuities in the US note (iii) — 4,143 4,143 Transfers from general to separate account 530 (530) — Investment-related items and other movements note (iv) (11,561) 1,562 (9,999) Foreign exchange translation differences note (i) 7,636 3,309 10,945 At 31 December 2018 128,220 57,380 185,600 Average policyholder liability balances note (v) 2018 129,374 52,752 182,126 2017 125,469 53,706 179,175 Notes (i) Movements in the year have been translated at an average rate of US$1.34: £1.00 (2017: US$1.29: £1.00). The closing balances have been translated at closing rate of US$1.27: £1.00 (2017: US$1.35: £1.00). Differences upon retranslation are included in foreign exchange translation differences. (ii) Net outflows were £213 million (2017: inflows £3,137 million), with positive inflows to variable annuities business as new business exceeds withdrawals and surrenders offset by outflows from fixed annuity, GICs and other business as the portfolio matures. (iii) In October 2018, Jackson entered into an agreement with John Hancock Life to reinsure 100 per cent of the group payout annuity business. The transaction resulted in an increase to policyholder liabilities of Jackson £4.1 billion at the inception of the contract. (iv) Negative investment-related items and other movements in variable annuity separate account liabilities of £(11,561) million for 2018 primarily reflects the decrease in equity and bond values during the year. Fixed annuity, GIC and other business investment and other movements of £1,562 million primarily reflect the interest credited to the policyholder accounts and increase in the guarantee reserves in the year. (v) Averages have been based on opening and closing balances and adjusted for acquisitions, disposals and corporate transactions arising in the year. (ii) Duration of liabilities The table below shows the carrying value of policyholder liabilities and maturity profile of the cash flows on a discounted basis for 2018 and 2017: 31 Dec 2018 31 Dec 2017 Fixed annuity Fixed annuity and other Variable and other Variable business annuity business annuity (including GICs separate (including GICs separate and similar account and similar account contracts) liabilities Total contracts) liabilities Total £m £m £m £m £m £m Policyholder liabilities 57,380 128,220 185,600 50,196 130,528 180,724 Expected maturity: % % % % % % 0 to 5 years 51 40 43 50 42 44 5 to 10 years 24 28 27 25 29 28 10 to 15 years 12 16 15 12 15 14 15 to 20 years 7 9 8 7 8 8 20 to 25 years 3 4 4 3 4 4 Over 25 years 3 3 3 3 2 2 (iii) Aggregate account values The table below shows the distribution of account values for fixed annuities (fixed interest rate and fixed index), the fixed account portion of variable annuities, and interest-sensitive life business within the range of minimum guaranteed interest rates as described in note C4.2(b). Fixed annuities and the fixed account portion of variable annuities Interest-sensitive life business £m £m Minimum guaranteed interest rate 31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017 > 0% - 1.0% 7,584 6,887 — — > 1.0% - 2.0% 6,789 7,385 — — > 2.0% - 3.0% 10,075 9,799 229 221 > 3.0% - 4.0% 1,274 1,272 2,394 2,341 > 4.0% - 5.0% 1,794 1,744 2,106 2,059 > 5.0% - 6.0% 225 220 1,703 1,651 Total 27,741 27,307 6,432 6,272 C4.1(d) UK and Europe insurance operations (i) Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds A reconciliation of the total policyholder liabilities and unallocated surplus of with-profits funds of UK and Europe insurance operations from the beginning of the year to the end of the year is as follows: Shareholder-backed funds and subsidiaries Annuity With-profits and other sub-funds Unit-linked long-term £m liabilities business Total note (v) £m £m £m At 1 January 2017 113,146 22,119 34,039 169,304 Comprising: – Policyholder liabilities on the consolidated statement of financial position 101,496 22,119 34,039 157,654 – Unallocated surplus of with-profits funds on the consolidated statement of financial position 11,650 — — 11,650 Premiums 12,527 1,923 360 14,810 Surrenders (4,506) (2,342) (91) (6,939) Maturities/deaths (4,564) (612) (1,959) (7,135) Net flows note (i) 3,457 (1,031) (1,690) 736 Shareholders’ transfers post-tax (233) — — (233) Switches (192) 192 — — Investment-related items and other movements 8,408 1,865 873 11,146 Foreign exchange translation differences 113 — — 113 At 31 December 2017/1 January 2018 124,699 23,145 33,222 181,066 Comprising: – Policyholder liabilities on the consolidated statement of financial position 111,222 23,145 33,222 167,589 – Unallocated surplus of with-profits funds on the consolidated statement of financial position 13,477 — — 13,477 Reclassification of reinsured UK annuity contracts as held for sale note (ii) — — (10,858) (10,858) Premiums 12,525 1,147 339 14,011 Surrenders (4,764) (1,950) (66) (6,780) Maturities/deaths (4,552) (619) (1,625) (6,796) Net flows note (i) 3,209 (1,422) (1,352) 435 Shareholders' transfers post-tax (259) — — (259) Switches (165) 165 — — Investment-related items and other movements note (iii) (3,341) (1,171) (969) (5,481) Foreign exchange translation differences (14) — — (14) At 31 December 2018 124,129 20,717 20,043 164,889 Comprising: – Policyholder liabilities on the consolidated statement of financial position 110,795 20,717 20,043 151,555 – Unallocated surplus of with-profits funds on the consolidated statement of financial position 13,334 — — 13,334 Average policyholder liability balances note (iv) 2018 111,009 21,931 29,347 162,287 2017 106,359 22,632 33,631 162,622 Notes (i) Net inflows were £435 million (31 December 2017: net inflows of £736 million ). Inflows into the with-profits business were offset by outflows from both the annuity business, as the closed book matures, and the unit-linked business. The levels of inflows/outflows for the 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 year. (ii) The reclassification as held for sale of the reinsured UK annuity business that will be transferred to Rothesay life once the Part VII process is complete reflects the value policyholder liabilities held at 1 January 2018. (iii) Investment-related items and other movements for with-profits business principally comprise investment return attributable to policyholders reflecting falling equity markets in the later quarter of the year. For shareholder-backed annuity and other long-term business, investment-related items and other movements include the effect of movements in interest rates and credit spreads. (iv) Averages have been based on opening and closing balances and adjusted for acquisitions, disposals and corporate transactions arising in the year and exclude unallocated surplus of with-profits funds. (v) Includes the Scottish Amicable Insurance Fund. (ii) Duration of liabilities With the exception of most unitised with-profits bonds and other whole of life contracts, the majority of the contracts of UK and Europe insurance operations have a contract term. In effect, the maturity term of the other contracts reflects the earlier of death, maturity, or the policy lapsing. In addition, as described in note A3.1, with-profits contract liabilities include projected future bonuses based on current investment values. The actual amounts payable will vary with future investment performance of SAIF and the WPSF. The following tables show the carrying value of the policyholder liabilities and the maturity profile of the cash flows, on a discounted basis: 31 Dec 2018 £m Annuity business With-profits business (insurance contracts) Other Total Non- profit annuities Shareholder Insurance Investment within -backed Insurance Investments contracts contracts Total WPSF annuity Total contracts contracts Total Policyholder liabilities 34,242 67,020 101,262 9,533 19,119 28,652 6,063 15,578 21,641 151,555 31 Dec 2018 % Expected maturity: 0 to 5 years 34 37 36 33 27 29 44 32 36 35 5 to 10 years 23 27 26 26 23 24 25 24 24 25 10 to 15 years 16 17 17 17 19 18 15 18 17 17 15 to 20 years 11 9 10 11 14 13 8 12 11 10 20 to 25 years 7 4 5 6 9 8 4 7 6 6 over 25 years 9 6 6 7 8 8 4 7 6 7 31 Dec 2017 £m Policyholder liabilities 38,285 62,328 100,613 10,609 32,572 43,181 6,714 17,081 23,795 167,589 31 Dec 2017 % Expected maturity: 0 to 5 years 33 37 36 31 26 27 41 31 34 34 5 to 10 years 23 27 25 24 23 23 26 22 23 25 10 to 15 years 16 17 17 17 18 18 15 18 17 17 15 to 20 years 11 10 10 11 13 13 9 13 12 11 20 to 25 years 7 4 5 7 9 9 5 8 7 6 over 25 years 10 5 7 10 11 10 4 8 7 7 – – – – – (iii) Annuitant mortality Mortality assumptions for UK annuity business are set in light of recent population and internal experience, with an allowance for expected future mortality improvements. Given the long-term nature of annuity business, longevity remains a significant assumption in determining policyholder liabilities. The assumptions used reference recent population mortality data, with specific risk factors applied on a per policy basis to reflect the features of the Company’s portfolio. The recent declining mortality improvements observed in population data were considered as part of the judgement exercised in setting the 2018 mortality basis. New mortality projection models are released regularly by the Continuous Mortality Investigation (CMI). The CMI 2016 model was used to produce the 2018 results, the CMI 2015 model was used to produce the 2017 results and the CMI 2014 model was used to produce the 2016 results. The default calibration of CMI 2016 was adopted to reflect the Company’s view of future mortality improvements based on a range of possible outcomes , with an appropriate margin for prudence. The mortality improvement assumptions used are summarised in the table below: Year ended CMI Model, with calibration to reflect future mortality improvements 31 December 2018 CMI 2016 For males: with a long-term improvement rate of 2.25% pa For females: with a long-term improvement rate of 2.00% pa 31 December 2017 CMI 2015 For males: with a long-term improvement rate of 2.25% pa For females: with a long-term improvement rate of 2.00% pa 31 December 2016 CMI 2014 For males: with a long-term improvement rate of 2.25% pa* For females: with a long-term improvement rate of 1.50% pa* * For annuities in deferment, the tables used were AM92 – four years (males) and AF92 – four years (females) for 2018, 2017 and 2016. C4.2 Products and determining contract liabilities C4.2(a) Asia Contract type Description Material features Determination of liabilities With-profits and participating contracts Provides savings and/or protection where the basic sum assured can be enhanced by a profit share (or bonus) from the underlying fund as determined at the discretion of the Company. Participating products often offer a guaranteed maturity or surrender value. Declared regular bonuses are guaranteed once vested. Future bonus rates and cash dividends are not guaranteed. Market value adjustments and surrender penalties are used for certain products where the law permits such adjustments. Guarantees are predominantly supported by segregated life funds and their estates. With-profits contracts are predominantly sold in Hong Kong, Malaysia and Singapore. The total value of the with-profits funds is driven by the underlying asset valuation with movements reflected principally in the accounting value of policyholder liabilities and unallocated surplus. In Taiwan and India, US GAAP is applied for measuring insurance assets and liabilities. The other Asia operations principally adopt a gross premium valuation method. Term, whole life and endowment assurance Non-participating savings and/or protection where the benefits are guaranteed, or determined by a set of defined market-related parameters. These products often offer a guaranteed maturity and surrender value. It is common in Asia for regulations or market-driven demand and competition to provide some form of capital value protection and minimum crediting interest rate guarantees. This is reflected within the guaranteed maturity and surrender values. Guarantees are borne by shareholders. The approach to determining the contract liabilities is generally driven by the local solvency basis. A gross premium valuation method is used in those countries where a risk-based capital framework is adopted for local solvency. Under the gross premium valuation method, all cash flows are valued explicitly using best estimate assumptions with a suitable margin for prudence. This is achieved either through adding an explicit allowance for assumptions to deviate from best estimate or by applying an overlay constraint so that on day one no negative reserves (ie where future premium inflows are expected to exceed prudent future claims and outflows) are derived at an individual policyholder level, or a combination of both. In Vietnam, the Company uses an estimation basis aligned substantially to that used by the countries applying the gross premium valuation method. For India and Taiwan, US GAAP is applied for measuring insurance liabilities. For these businesses, the future policyholder benefit provisions for non-linked business are determined using the net level premium method, with an allowance for surrenders, maintenance and claims expenses. Rates of interest used in establishing the policyholder benefit provisions vary by operation depending on the circumstances attaching to each block of business. The other Asia operations principally adopt a net premium valuation method to determine the future policyholder benefit provisions. Unit-linked Combines savings with protection, the cash value of the policy depends on the value of the underlying unitised funds. The attaching liabilities reflect the unit value obligation driven by the value of the investments of the unit fund. Additional technical provisions are held for guaranteed benefits beyond the unit fund value using a gross premium valuation method. These additional provisions are recognised as a component of other busine |
Intangible assets
Intangible assets | 12 Months Ended |
Dec. 31, 2018 | |
Intangible assets | |
Intangible assets | C5 Intangible assets C5.1 Goodwill 31 Dec 2018 £m 31 Dec 2017 £m Attributable to: Shareholders With-profits Total Total Carrying value at beginning of year 1,458 24 1,482 1,628 Acquisition of TMB Asset Management Co., Ltd. in Thailand (see note D1.2) 181 — 181 — Other additions in the year (see below) — 195 195 9 Disposals/reclassifications to held for sale — (10) (10) (155) Exchange differences 12 (3) 9 — Carrying value at end of year 1,651 206 1,857 1,482 Comprising: M&G – attributable to shareholders 1,153 1,153 Other – attributable to shareholders 498 305 Goodwill – attributable to shareholders 1,651 1,458 Venture fund investments – attributable to with-profits funds 206 24 1,857 1,482 During 2018, the UK with-profits fund, via its venture fund holdings managed by M&GPrudential asset management, made a small number of acquisitions that are consolidated by the Group resulting in an addition to goodwill of £195 million. As these transactions are within the with-profits fund, they have no impact on shareholders’ profit or equity for the year ended 31 December 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 2018 would not have been materially different. Impairment testing Goodwill does not generate cash flows independently of other groups of assets and thus is assigned to cash-generating units for the purposes of impairment testing. These cash-generating units are based upon how management monitors the business and represent the lowest level to which goodwill can be allocated on a reasonable basis. Assessment of whether goodwill may be impaired Goodwill is tested for impairment by comparing the cash-generating unit’s carrying amount, including any goodwill, with its recoverable amount. The Group’s methodology of assessing whether goodwill may be impaired for acquired life and asset management operations is discussed below: M&G The recoverable amount for the M&G business (which is part of the UK and Europe operating segment) has been determined by calculating the value in use of M&G Group Limited and its subsidiaries (considered to be a cash-generating unit during 2018). This has been calculated by aggregating the present value of future cash The discounted cash flow valuation has been based on a three-year plan prepared by M&G, and approved by management, and cash flow projections for later years. The value in use is particularly sensitive to a number of key assumptions as follows: – – – – Management believes that any reasonable change in the key assumptions would not cause the recoverable amount of M&G to fall below its carrying amount. Other goodwill attributable to shareholders Other goodwill attributable to shareholders represents amounts allocated to entities in Asia in respect of both acquired asset management and life businesses. The goodwill in respect of asset management businesses at 31 December 2018 comprised mainly the goodwill arising from the acquisition of TMB Asset Management Co., Ltd. in Thailand during the year (see note D1.2). At 31 December 2018, the recoverable amount of this business has been determined by using a discounted cash flow valuation. For acquired life businesses, the Company routinely compares the aggregate of net asset value and acquired goodwill on an IFRS basis of acquired life business with the value of the current in-force business as determined using the EEV methodology. Any excess of IFRS over EEV carrying value is then compared with EEV basis value of current and projected future new business to determine whether there is any indication that the goodwill in the IFRS statement of financial position may be impaired. The methodology and assumptions underpinning the Group’s EEV basis of reporting are included in the EEV basis supplementary information in this Annual Report. Venture fund investments Goodwill for venture fund investments is tested for impairment by comparing the business’s carrying value, including goodwill to its recoverable amount (fair value less costs to sell). The accumulated impairment of goodwill as at 31 December 2018 was £4.7 million (31 December 2017: nil), wholly attributable to with-profits funds. C5.2 Deferred acquisition costs and other intangible assets 31 Dec 2018 £m 31 Dec 2017 £m Deferred acquisition costs and other intangible assets attributable to shareholders note (i) 11,784 10,866 Other intangible assets, including computer software, attributable to with-profits funds 139 145 Total of deferred acquisition costs and other intangible assets 11,923 11,011 (i) Deferred acquisition costs and other intangible assets attributable to shareholders Total deferred acquisition costs and other intangible assets attributable to shareholders comprise: 31 Dec 2018 £m 31 Dec 2017 £m Deferred acquisition costs related to insurance contracts as classified under IFRS 4 10,017 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 78 63 Deferred acquisition costs related to insurance and investment contracts note (ii) 10,095 9,233 Present value of acquired in-force policies for insurance contracts as classified under IFRS 4 (PVIF) 34 36 Distribution rights and other intangibles 1,655 1,597 Present value of acquired in-force (PVIF) and other intangibles attributable to shareholders note (iii) 1,689 1,633 Total of deferred acquisition costs and other intangible assets note (a) 11,784 10,866 Notes (a) Total deferred acquisition costs and other intangible assets can be further analysed by business operations as follows: 31 Dec 2018 £m 31 Dec 2017 £m Deferred acquisition costs UK and All PVIF and Asia US Europe asset other insurance insurance insurance management intangibles * Total Total note (b) Balance at 1 January 946 8,197 84 6 1,633 10,866 10,755 Additions 419 569 15 15 230 1,248 1,240 Amortisation to the income statement:note (c)† Adjusted IFRS operating profit based on longer-term investment returns (148) (683) (11) (3) (179) (1,024) (709) Non-operating profit — (114) — — (4) (118) 455 (148) (797) (11) (3) (183) (1,142) (254) Disposals and transfers — — — — (14) (14) — Exchange differences and other movements 47 512 (2) — 23 580 (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† — 246 — — — 246 (76) Balance at 31 December 1,264 8,727 86 18 1,689 11,784 10,866 * 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. Software rights include additions of £34 million, amortisation of £32 million, foreign exchange losses of £7 million and a balance at 31 December 2018 of £62 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 Standards Codification Topic 944, Financial Services – Insurance, of the Financial Accounting Standards Board 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 (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 (see note C7.3(iv)). (b) The DAC amount in respect of US insurance operations comprises amounts in respect of: 31 Dec 2018 £m 31 Dec 2017 £m Variable annuity business 8,477 8,208 Other business 299 278 Cumulative shadow DAC (for unrealised gains booked in other comprehensive income)* (49) (289) Total DAC for US operations 8,727 8,197 * *A gain of £246 million (2017: a loss of £(76) million) for shadow DAC amortisation is booked within other comprehensive income to reflect the impact from the negative unrealised valuation movement in 2018 of £1,617 million (2017: positive unrealised valuation movement of £617 million). These adjustments reflect movement from period to period, in the changes to the pattern of reported gross profits that would have occurred if the assets reflected in the statement of financial position had been sold, crystallising the unrealised gains and losses, and the proceeds reinvested at the yields currently available in the market. At 31 December 2018, the cumulative shadow DAC balance as shown in the table above was negative £49 million (31 December 2017: negative £289 million). (c) Sensitivity of amortisation charge The amortisation charge to the income statement is reflected in both adjusted IFRS operating profit based on longer-term investment returns and short-term fluctuations in investment returns. The amortisation charge to adjusted IFRS operating profit based on longer-term investment returns in a reporting period comprises: — A core amount that reflects a relatively stable proportion of underlying premiums or profit; and — 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 2018, the DAC amortisation charge for adjusted IFRS operating profit based on longer-term investment returns of US insurance operations was determined after including a debit for accelerated amortisation of £194 million (2017: credit for decelerated amortisation of £86 million). The acceleration arising in 2018 reflects a mechanical increase 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 2018 is driven both by the actual separate return in the year being lower than that assumed and by the lower than expected return in 2015 falling out of the eight-year period in effect reversing the deceleration experienced in 2015 under the mean reversion formula. The application of the mean reversion formula (described in note A3.1) has the effect of dampening the impact of equity market movements on DAC amortisation while the mean reversion assumption lies within the corridor. At 31 December 2018, it would take approximate movements in separate account values of more than either negative 22 per cent or positive 57 per cent (31 December 2017: negative 32 per cent or positive 37 per cent) for the mean reversion assumption to move outside the corridor. (ii) Deferred acquisition costs related to insurance and investment contracts The movements in deferred acquisition costs relating to insurance and investment contracts are as follows: 2018 £m 2017 £m Investment Investment Insurance management Insurance management contracts note contracts note DAC at 1 January 9,170 63 9,114 64 Additions 991 26 1,000 11 Amortisation (947) (11) (77) (12) Exchange differences 557 — (791) — Change in shadow DAC related to movement in unrealised appreciation of Jackson’s securities classified as available-for-sale 246 — (76) — DAC at 31 December 10,017 78 9,170 63 Note All of the additions are through internal development. The carrying amount of the balance comprises the following gross and accumulated amortisation amounts: 2018 £m 2017 £m Gross amount 181 156 Accumulated amortisation (103) (93) Net book amount 78 63 (iii) Present value of acquired in-force (PVIF) and other intangibles attributable to shareholders 2018 £m 2017 £m Other Other intangibles intangibles Distribution (including Distribution (including PVIF rights software) Total PVIF rights software) Total note (a) note (b) note (c) note (a) note (b) note (c) At 1 January Cost 227 1,793 363 2,383 226 1,628 321 2,175 Accumulated amortisation (191) (312) (247) (750) (183) (196) (219) (598) 36 1,481 116 1,633 43 1,432 102 1,577 Additions — 181 49 230 — 173 56 229 Amortisation charge (4) (142) (37) (183) (7) (121) (37) (165) Disposals and transfers — — (14) (14) — — — — Exchange differences and other movements 2 18 3 23 — (3) (5) (8) At 31 December 34 1,538 117 1,689 36 1,481 116 1,633 Comprising: Cost 232 1,999 313 2,544 227 1,793 363 2,383 Accumulated amortisation (198) (461) (196) (855) (191) (312) (247) (750) 34 1,538 117 1,689 36 1,481 116 1,633 Notes (a) All of the PVIF balances relate to insurance contracts. The PVIF attaching to investment contracts have been fully amortised. Amortisation is charged over the period of provision of asset management services as those profits emerge. (b) Distribution rights relate to fees paid in relation to the bancassurance partnership arrangements for the bank distribution of Prudential’s insurance products for a fixed period of time. The distribution rights amounts are amortised on a basis to reflect the pattern in which the future economic benefits are expected to be consumed by reference to new business production levels. (c) Software is amortised over its useful economic life, which generally represents the licence period of the software acquired. |
Borrowings
Borrowings | 12 Months Ended |
Dec. 31, 2018 | |
Borrowings | |
Borrowings | C6 Borrowings C6.1 Core structural borrowings of shareholder-financed businesses 31 Dec 2018 £m 31 Dec 2017 £m Holding company operations: note (i) US$250m 6.75% Notes (Tier 1) note (vi) 196 185 US$300m 6.5% Notes (Tier 1) note (vi) 235 222 US$700m 5.25% Notes (Tier 2) 550 517 US$550m 7.75% Notes (Tier 1) note (v) — 407 US$1,000m 5.25% Notes (Tier 2) 780 731 US$725m 4.375% Notes (Tier 2) 565 530 US$750m 4.875% Notes (Tier 2) 583 548 Perpetual Subordinated Capital Securities 2,909 3,140 €20m Medium Term Notes 2023 (Tier 2) note (vii) 18 18 £435m 6.125% Notes 2031 (Tier 2) 431 430 £400m 11.375% Notes 2039 (Tier 2) 399 397 £600m 5% Notes 2055 (Tier 2) 591 591 £700m 5.7% Notes 2063 (Tier 2) 696 696 £750m 5.625% Notes 2051 (Tier 2) note (iv) 743 — £500m 6.25% Notes 2068 (Tier 2 )note (iv) 498 — US$500m 6.5% Notes 2048 (Tier 2) note (iv) 391 — Subordinated Notes 3,767 2,132 Subordinated debt total 6,676 5,272 Senior debt: note (ii) £300m 6.875% Bonds 2023 294 300 £250m 5.875% Bonds 2029 223 249 Bank loan note (iii) 275 — Holding company total 7,468 5,821 Prudential Capital bank loan note (iii) — 275 Jackson US$250m 8.15% Surplus Notes 2027 note (viii) 196 184 Total (per consolidated statement of financial position) 7,664 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$3,725 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. In 2018, as part of its preparation to demerge M&GPrudential, the Group made certain modifications to the terms and conditions of the senior bonds with bondholders’ consent. The amendment to the terms and conditions will avoid an event of a technical default on the bonds, should the demerger proceed. The fees paid to bondholders have been adjusted to the carrying value of the bonds and will be amortised in subsequent periods. No other adjustments were made to the carrying value of the debt as a result of the modification. (iii) The bank loan of £275 million is drawn at a cost of 12-month GBP LIBOR plus 0.33 per cent. The loan , held by Prudential Capital as of 31 December 2017, was renewed in December 2018, with Prudential plc becoming the new holder. The loan matures on 20 December 2022 with an option to repay annually. (iv) In October 2018, the Company issued the following three substitutable core structural borrowings as part of the process required before demerger to rebalance debt across M&GPrudential and Prudential (see below): - - - (v) In December 2018, the Company paid £434 million to redeem its US$550 million 7.75 per cent Tier 1 perpetual subordinated notes. (vi) These borrowings can be converted, in whole or in part, at the Company’s option and subject to certain conditions, on any interest payment date, into one or more series of Prudential preference shares. (vii) The €20 million borrowings were issued at 20-year Euro Constant Maturity Swap (capped at 6.5 per cent). These have been swapped into borrowings of £14 million with interest payable at three-month GBP LIBOR plus 1.2 per cent. (viii) Jackson’s borrowings are unsecured and subordinated to all present and future indebtedness, policy claims and other creditor claims of Jackson. Prior to the demerger, the Group expects to rebalance its debt capital across Prudential and M&GPrudential. This will include the ultimate holding company of M&GPrudential becoming an issuer of new debt, including debt substituted from Prudential, and Prudential redeeming some of its existing debt. Following these actions, the overall absolute quantum of debt across Prudential and M&GPrudential is currently expected to increase, by an amount which is not considered to be material in the context of the Group’s total outstanding debt as at 30 June 2018, before any substitutable debt had been issued, of £7.6 billion (comprising the Group’s core structural borrowings of £6.4 billion and shareholder borrowings from short-term fixed income securities programme of £1.2 billion). At the time of the demerger, Prudential expects M&GPrudential to be holding around £3.5 billion of subordinated debt. This expectation is subject to the M&GPrudential capital risk appetite being approved by the Board of the ultimate holding company of M&GPrudential, once fully constituted to include independent non-executive directors, and reflects the current operating environment and economic conditions, material changes in which may lead to a different outcome. C6.2 Other borrowings (i) Operational borrowings attributable to shareholder-financed businesses 31 Dec 2018 £m 31 Dec 2017 £m Commercial Paper 472 485 Medium Term Notes 2018 — 600 Borrowings in respect of short-term fixed income securities programmes 472 1,085 Bank loans and overdrafts 90 70 Obligations under finance leases 19 5 Other borrowings 417 631 Other borrowings note 526 706 Total 998 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. (ii) Borrowings attributable to with-profits businesses 31 Dec 2018 £m 31 Dec 2017 £m Non-recourse borrowings of consolidated investment funds* 3,845 3,570 £100m 8.5% undated subordinated guaranteed bonds of Scottish Amicable Finance plc † — 100 Other borrowings (including obligations under finance leases) 95 46 Total 3,940 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 these 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. C6.3 Maturity analysis The following table sets out the remaining contractual maturity analysis of the Group’s borrowings as recognised in the statement of financial position: Shareholder-financed businesses With-profits businesses Core structural borrowings Operational borrowings Borrowings 31 Dec 2018 £m 31 Dec 2017 £m 31 Dec 2018 £m 31 Dec 2017 £m 31 Dec 2018 £m 31 Dec 2017 £m Less than 1 year — 275 840 1,723 573 351 1 to 2 years — — 89 1 71 371 2 to 3 years — — 1 1 90 184 3 to 4 years 275 — — — 5 59 4 to 5 years 312 — — — 102 1 Over 5 years 7,077 6,005 68 66 3,099 2,750 Total 7,664 6,280 998 1,791 3,940 3,716 |
Risk and sensitivity analysis
Risk and sensitivity analysis | 12 Months Ended |
Dec. 31, 2018 | |
Risk and sensitivity analysis | |
Risk and sensitivity analysis | C7 Risk and sensitivity analysis C7.1 Group overview The Group’s risk framework and the management of the risk, including those attached to the Group’s financial statements including financial assets, financial liabilities and insurance liabilities, together with the inter-relationship with the management of capital have been included in the audited sections of ‘Group Risk Framework’. The financial and insurance assets and liabilities on the Group’s balance sheet are, to varying degrees, subject to market and insurance risk and other changes of experience assumptions that may have a material effect on IFRS basis profit or loss and shareholders’ equity. The market and insurance risks, including how they affect Group’s operations and how these are managed are discussed in the ‘Group Risk Framework’. The most significant items that the IFRS shareholders’ profit or loss and shareholders’ equity for the Group’s life assurance business are sensitive to, are shown in the following tables. The distinction between direct and indirect exposure is not intended to indicate the relative size of the sensitivity. Type of business Market and credit risk Insurance and Investments/derivatives Liabilities/unallocated Other exposure Asia insurance operations (see also section C7.2) All business Currency risk Mortality and morbidity risk Persistency risk With-profits business Net neutral direct exposure (indirect exposure only) Investment performance subject to smoothing through declared bonuses Unit-linked business Net neutral direct exposure (indirect exposure only) Investment performance through asset management fees Non-participating business Asset/liability mismatch risk Credit risk Interest rates for those operations where the basis of insurance liabilities is sensitive to current market movements Interest rate and price risk US insurance operations (see also section C7.3) All business Currency risk Persistency risk Variable annuity business Net effect of market risk arising from incidence of guarantee features and variability of asset management fees offset by derivative hedging programme Risk that utilisation of withdrawal benefits or lapse levels differ from those assumed in pricing Fixed index annuity business Derivative hedge programme to the extent not fully hedged against liability Incidence of equity participation features Fixed index annuities, Fixed annuities and GIC business Credit risk Interest rate risk Profit and loss and shareholders’ equity are volatile for these risks as they affect the values of derivatives and embedded derivatives and impairment losses. In addition, shareholders’ equity is volatile for the incidence of these risks on unrealised appreciation of fixed income securities classified as available-for-sale under IAS 39 Spread difference between earned rate and rate credited to policyholders Lapse risk, but the effects of extreme events may be mitigated by the application of market value adjustments UK and Europe insurance operations (see also section C7.4) With-profits business Net neutral direct exposure (indirect exposure only) Investment performance subject to smoothing through declared bonuses Persistency risk to future shareholder transfers SAIF sub-fund Net neutral direct exposure (indirect exposure only) Asset management fees earned Unit-linked business Net neutral direct exposure (indirect exposure only) Investment performance through asset management fees Persistency risk Asset/liability mismatch risk Shareholder-backed annuity business Credit risk for assets covering liabilities and shareholder capital Mortality experience and assumptions for longevity Interest rate risk for assets in excess of liabilities, ie assets representing shareholder capital Detailed analyses of sensitivity of IFRS basis profit or loss and shareholders’ equity to key market and other risks by business unit are provided in notes C7.2, C7.3, C7.4 and C7.5. The sensitivity analyses provided show the effect on profit or loss and shareholders’ equity to changes in the relevant risk variables, all of which are reasonably possible at the relevant balance sheet date. In the equity risk sensitivity analysis shown below, the Group has considered the impact of an instantaneous 20 per cent fall in equity markets. If equity markets were to fall by more than 20 per cent, the Group believes that this would not be an instantaneous fall but rather would be expected to occur over a period of time during which the Group would be able to put mitigating management actions in place. In addition, the equity risk sensitivity analysis provided assumed that all equity indices fall by the same percentage. Impact of diversification on risk exposure The Group benefits from diversification benefits achieved through the geographical spread of the Group’s operations and, within those operations, through a broad mix of product types. Relevant correlation factors include: Correlation across geographic regions: – – Correlation across risk factors: – – – – The sensitivities below do not reflect that assets and liabilities are actively managed and may vary at the time any actual market movement occurs. There are strategies in place to minimise the exposure to market fluctuations. For example, as market indices fluctuate, Prudential would take certain actions including selling investments, changing investment portfolio allocation and adjusting bonuses credited to policyholders. In addition, these analyses do not consider the effect of market changes on new business generated in the future. Other limitations on the sensitivities include: the use of hypothetical market movements to demonstrate potential risk that only represent Prudential’s view of reasonably possible near-term market changes and that cannot be predicted with any certainty; the assumption that interest rates in all countries move identically; the assumption that all global currencies move in tandem with the US dollar against pound sterling; and the lack of consideration of the inter-relation of interest rates, equity markets and foreign currency exchange rates. C7.2 Asia insurance operations Exposure and sensitivity of IFRS basis profit and shareholders’ equity to market and other risks The Asia operations sell with-profits and unit-linked policies, and the investment portfolio of the with-profits funds contains a proportion of equities. Non-participating business is largely backed by debt securities or deposits. The Group’s exposure to market risk arising from its Asia operations is therefore at modest levels. This reflects the fact that the Asia operations have a balanced portfolio of with-profits, unit-linked and other types of business. In Asia, adverse persistency experience can impact the IFRS profitability of certain types of business written in the region. This risk is managed at a business unit level through regular monitoring of experience and the implementation of management actions as necessary. These actions could include product enhancements, increased management focus on premium collection, as well as other customer retention efforts. The potential financial impact of lapses is often mitigated through the specific features of the products, eg surrender charges, or through the availability of premium holiday or partial withdrawal policy features. In summary, for Asia operations, the adjusted IFRS operating profit based on longer-term investment returns is mainly affected by the impact of market levels on unit-linked persistency, and other insurance risks. At the total IFRS profit level the Asia result is affected by short-term value movements on the asset portfolio for non-linked shareholder-backed business. (i) Sensitivity to risks other than foreign exchange risk Interest rate risk Excluding its with-profits and unit-linked businesses, the results of the Asia business are sensitive to the movements in interest rates. For the purposes of analysing sensitivity to variations in interest rates, reference has been made to the movements in the 10-year government bond rates of the territories. At 31 December 2018, 10-year government bond rates vary from territory to territory and range from 0.9 per cent to 8.1 per cent (31 December 2017: 1.0 per cent to 7.5 per cent). For the sensitivity analysis as shown in the table below, the reasonably possible interest rate movement used is 1 per cent for all local business units. The estimated sensitivity to the decrease and increase in interest rates is as follows: 2018 £m 2017 £m Decrease Increase Decrease Increase of 1% of 1% of 1% of 1% Profit before tax attributable to shareholders 312 (338) 2 (443) Related deferred tax (where applicable) (15) 26 (7) 20 Net effect on profit and shareholders’ equity 297 (312) (5) (423) The pre-tax impacts, if they arose, would mostly be recorded within the category short-term fluctuations in investments returns in the Group’s segmental analysis of profit before tax. The degree of sensitivity of the results of the non-linked shareholder-backed business of the Asia operations to movements in interest rates depends upon the degree to which the liabilities under the ‘grandfathered’ IFRS 4 measurement basis reflects market interest rates from period-to-period. For example for countries applying US GAAP the results can be more sensitive as the effect of interest rate movements on the backing investments may not be offset by liability movements. In addition, the degree of sensitivity of the results shown in the table above is dependent on the interest rate level at that point of time. An additional factor to the direction of the sensitivity of the Asia operations as a whole is movement in the country mix. Equity price risk The non-linked shareholder-backed business has limited exposure to equity and property investment (31 December 2018: £2,151 million; 31 December 2017: £1,764 million). Generally, changes in equity and property investment values are not directly offset by movements in non-linked policyholder liabilities. The estimated sensitivity to a 10 per cent and 20 per cent change in equity and property prices for shareholder-backed Asia other business (including those held by the Group’s joint venture and associate businesses), which would be reflected in the short-term fluctuation component of the Group’s segmental analysis of profit before tax, is as follows: 2018 £m 2017 £m Decrease Decrease of 20% of 10% of 20% of 10% Profit before tax attributable to shareholders (557) (279) (478) (239) Related deferred tax (where applicable) 17 8 7 4 Net effect on profit and shareholders’ equity (540) (271) (471) (235) A 10 or 20 per cent increase in equity and property values would have an approximately equal and opposite effect on profit and shareholders’ equity to the sensitivities shown above. Insurance risk Many of the business units in Asia are exposed to mortality/morbidity risk and provision is made within policyholder liabilities on a prudent regulatory basis to cover the potential exposure. If these prudent assumptions were strengthened by 5 per cent then it is estimated that post-tax profit and shareholders’ equity would be decreased by approximately £57 million (2017: £66 million). Mortality and morbidity have a broadly symmetrical effect on the portfolio and any weakening of these assumptions would have a similar equal and opposite impact. (ii) Sensitivity to foreign exchange risk Consistent with the Group’s accounting policies, the profits of the Asia insurance operations are translated at average exchange rates and shareholders’ equity at the closing rate for the reporting period. For 2018, the rates for the most significant operations are given in note A1. A 10 per cent increase (strengthening of the pound sterling) or decrease (weakening of the pound sterling) in these rates would have reduced or increased profit before tax attributable to shareholders, profit for the year and shareholders’ equity, excluding goodwill attributable to Asia insurance operations respectively as follows: A 10% increase in local A 10% decrease in local currency to £ exchange rates currency to £ exchange rates 2018 £m 2017 £m 2018 £m 2017 £m Profit before tax attributable to shareholders (134) (155) 164 189 Profit for the year (113) (135) 138 165 Shareholders’ equity, excluding goodwill, attributable to Asia operations (543) (492) 664 601 C7.3 US insurance operations Exposure and sensitivity of IFRS basis profit and shareholders’ equity to market and other risks Jackson’s reported adjusted IFRS operating profit based on longer-term investment returns is sensitive to market conditions, both with respect to income earned on spread-based products and indirectly with respect to income earned on variable annuity asset management fees. Jackson’s main exposures to market risk are to interest rate risk and equity risk. Jackson is exposed primarily to the following risks: Risks Risk of loss Equity risk — Related to the incidence of benefits related to guarantees issued in connection with its variable annuity contracts; and — Related to meeting contractual accumulation requirements in fixed index annuity contracts. Interest rate risk — Related to meeting guaranteed rates of accumulation on fixed annuity products following a sustained fall in interest rates; — Related to increases in the present value of projected benefits related to guarantees issued in connection with its variable annuity contracts following a sustained fall in interest rates especially if in conjunction with a fall in equity markets; — Related to the surrender value guarantee features attached to the Company’s fixed annuity products and to policyholder withdrawals following a sharp and sustained increase in interest rates; and — The risk of mismatch between the expected duration of certain annuity liabilities and prepayment risk and extension risk inherent in mortgage-backed securities. Jackson’s derivative programme is used to manage interest rate risk associated with a broad range of products and equity market risk attaching to its equity-based products. Movements in equity markets, equity volatility, interest rates and credit spreads materially affect the carrying value of derivatives that are used to manage the liabilities to policyholders and backing investment assets. Movements in the carrying value of derivatives combined with the use of US GAAP measurement (as ‘grandfathered’ under IFRS 4) for the insurance contracts assets and liabilities, which is largely insensitive to current period market movements, mean that the Jackson total profit (ie including short-term fluctuations in investment returns) is sensitive to market movements. In addition to these effects the Jackson shareholders’ equity is sensitive to the impact of interest rate and credit spread movements on the value of fixed income securities. Movements in unrealised appreciation on these securities are included as movement in shareholders’ equity (ie outside the income statement). Jackson enters into financial derivative transactions, including those noted below, to reduce and manage business risks. These transactions manage the risk of a change in the value, yield, price, cash flows or quantity of, or a degree of exposure, with respect to assets, liabilities or future cash flows, which Jackson has acquired or incurred. Jackson uses free-standing derivative instruments for hedging purposes. Additionally, certain liabilities, primarily trust instruments supported by funding agreements, fixed index annuities, certain variable annuity guaranteed benefit features and reinsured Guaranteed Minimum Income Benefit variable annuity features are similar to derivatives. Jackson does not account for such items as either fair value or cash flow hedges as might be permitted if the specific hedge documentation requirements of IAS 39 were followed. Financial derivatives are carried at fair value, including derivatives embedded in certain host liabilities where these are required to be valued separately. The principal types of derivatives used by Jackson and their purpose are as follows: Derivative Purpose Interest rate swaps These generally involve the exchange of fixed and floating payments over the period for which Jackson holds the instrument without an exchange of the underlying principal amount. These agreements are used to hedge Jackson’s exposure to movements in interest rates. Swaption contracts These contracts provide the purchaser with the right, but not the obligation, to require the writer to pay the present value of a long-duration interest rate swap at future exercise dates. Jackson both purchases and writes swaptions in order to hedge against significant movements in interest rates. Treasury futures contracts These derivatives are used to hedge Jackson’s exposure to movements in interest rates. Equity index futures contracts and equity index options These derivatives (including various call and put options and options contingent on interest rates and currency exchange rates) are used to hedge Jackson’s obligations associated with its issuance of certain VA guarantees. Some of these annuities and guarantees contain embedded options that are fair valued for financial reporting purposes. Cross-currency swaps Cross-currency swaps, which embody spot and forward currency swaps and additionally, in some cases, interest rate swaps and equity index swaps, are entered into for the purpose of hedging Jackson’s foreign currency denominated funding agreements supporting trust instrument obligations. Credit default swaps These swaps represent agreements under which the buyer has purchased default protection on certain underlying corporate bonds held in its portfolio. These contracts allow Jackson to sell the protected bonds at par value to the counterparty if a default event occurs in exchange for periodic payments made by Jackson for the life of the agreement. The estimated sensitivity of Jackson’s profit and shareholders’ equity to equity and interest rate risks provided below is net of the related changes in amortisation of DAC. The effect on the related changes in amortisation of DAC provided is based on the current ‘grandfathered’ US GAAP DAC basis but does not include any effect from an acceleration or deceleration of amortisation of DAC. (i) Jackson had variable annuity contracts with guarantees, for which the net amount at risk (NAR) is defined as the amount of guaranteed benefit in excess of current account value, as follows: Period Net Weighted until Minimum Account amount average expected return value at risk attained age annuitisation 31 December 2018 % £m £m Years Years Return of net deposits plus a minimum return GMDB - % 98,653 4,437 66.5 years GMWB - premium only % 1,924 62 GMWB * - % † 197 20 GMAB - premium only % 26 — Highest specified anniversary account value minus withdrawals post-anniversary GMDB 8,531 1,113 67.1 years GMWB - highest anniversary only 2,220 314 GMWB * 535 89 Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary GMDB - % 5,454 1,217 69.5 years GMIB‡ - % 1,256 648 0.1 years GMWB * - % † 91,788 16,835 Period Net Weighted until Minimum Account amount average expected return value at risk attained age annuitisation 31 December 2017 % £m £m Years Years Return of net deposits plus a minimum return GMDB - 6 % 100,451 1,665 66.0 years GMWB - premium only % 2,133 20 GMWB* - 5 % † 235 13 GMAB - premium only % 38 — Highest specified anniversary account value minus withdrawals post-anniversary GMDB 9,099 96 66.5 years GMWB - highest anniversary only 2,447 51 GMWB* 667 47 Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary GMDB - 6 % 5,694 426 69.0 years GMIB‡ - 6 % 1,484 436 0.4 years GMWB* - 8 % † 93,227 4,393 * Amounts shown for GMWB comprise sums for the ‘not for life’ portion (where the guaranteed withdrawal base less the account value equals to the net amount at risk (NAR)), and a ‘for life’ portion (where the NAR has been estimated as the present value of future expected benefit payment remaining after the amount of the ‘not for life’ guaranteed benefits is zero). † Ranges shown based on simple interest. The upper limits of 5 per cent or 8 per cent simple interest are approximately equal to 4.1 per cent and 6 per cent respectively, on a compound interest basis over a typical 10-year bonus period. For example 1 + 10 × 0.05 is similar to 1.04 growing at a compound rate of 4 per cent for a further nine years. ‡ The GMIB guarantees are substantially reinsured. Account balances of contracts with guarantees were invested in variable separate accounts as follows: Mutual fund type: 31 Dec 2018 £m 31 Dec 2017 £m Equity 78,387 80,843 Bond 13,901 13,976 Balanced 19,903 19,852 Money market 824 681 Total 113,015 115,352 As noted above, Jackson is exposed to equity risk through the options embedded in the fixed index annuity liabilities and guarantees included in certain variable annuity benefits as illustrated above. This risk is managed using an equity hedging programme to minimise the risk of a significant economic impact as a result of increases or decreases in equity market levels. Jackson purchases futures and options that hedge the risks inherent in these products, while also considering the impact of rising and falling guaranteed benefit fees. Due to the nature of valuation under IFRS of the free-standing derivatives and the variable annuity guarantee features, this hedge, while highly effective on an economic basis, would not automatically offset within the financial statements as the impact of equity market movements resets the free-standing derivatives immediately while the hedged liabilities reset more slowly and fees are recognised prospectively in the period in which they are earned. In addition to the exposure explained above, Jackson is also exposed to equity risk from its holding of equity securities, partnerships in investment pools and other financial derivatives. The estimated sensitivity of Jackson’s profit and shareholders’ equity to immediate increases and decreases in equity markets is shown below. The sensitivities are shown net of related changes in DAC amortisation, as described above. 31 Dec 2018 £m 31 Dec 2017 £m Decrease Increase Decrease Increase of 20% of 10% of 20% of 10% of 20% of 10% of 20% of 10% Pre-tax profit, net of related changes in amortisation of DAC 1,058 427 58 (125) 1,107 336 619 262 Related deferred tax effects (222) (90) (12) 26 (233) (71) (130) (55) Net sensitivity of profit after tax and shareholders’ equity * 836 337 46 (99) 874 265 489 207 * The table above has been prepared to exclude the impact of the instantaneous equity movements on the separate account fees. In addition, the sensitivity movements shown include those relating to the fixed index annuity and the reinsurance of GMIB guarantees. The above table provides sensitivity movements at a point in time while the actual impact on financial results would vary contingent upon the volume of new product sales and lapses, changes to the derivative portfolio, correlation of market returns and various other factors including volatility, interest rates and elapsed time. The directional movements in the sensitivities reflect the hedging programme in place at 31 December 2018 and 2017. (ii) Except in the circumstances of interest rate scenarios where the guarantee rates included in contract terms are higher than crediting rates that can be supported from assets held to cover liabilities, the accounting measurement of fixed annuity liabilities of Jackson’s products is not generally sensitive to interest rate risk. This position derives from the nature of the products and the US GAAP basis of measurement. The GMWB features attached to variable annuity business (other than ‘for life’ components) are accounted for under US GAAP at fair-value and, therefore, will be sensitive to changes in interest rates. Debt securities and related derivatives are marked to fair value. Value movements on derivatives, again net of related changes to amortisation of DAC and deferred tax, are recorded within the income statement. Fair value movements on debt securities, net of related changes to amortisation of DAC and deferred tax, are recorded within other comprehensive income. The estimated sensitivity of these items and policyholder liabilities to a 1 per cent and 2 per cent decrease and increase in interest rates is as follows: 31 Dec 2018 £m 31 Dec 2017 £m Decrease Increase Decrease Increase of 2% of 1% of 1% of 2% of 2% of 1% of 1% of 2% Profit and loss: Pre-tax profit effect (net of related changes in amortisation of DAC) (3,535) (1,718) 1,201 2,210 (4,079) (1,911) 1,373 2,533 Related effect on charge for deferred tax 742 361 (252) (464) 857 401 (288) (532) Net profit effect (2,793) (1,357) 949 1,746 (3,222) (1,510) 1,085 2,001 Other comprehensive income: Direct effect on carrying value of debt securities (net of related changes in amortisation of DAC) 4,134 2,346 (2,346) (4,134) 3,063 1,700 (1,700) (3,063) Related effect on movement in deferred tax (868) (493) 493 868 (643) (357) 357 643 Net effect 3,266 1,853 (1,853) (3,266) 2,420 1,343 (1,343) (2,420) Total net effect on shareholders’ equity 473 496 (904) (1,520) (802) (167) (258) (419) These sensitivities are shown for interest rates in isolation only and do not include other movements in credit risk that may affect credit spreads and valuations of debt securities. Similar to the sensitivity to equity risk, the sensitivity movements provided in the table above are at a point in time and reflect the hedging programme in place on the balance sheet date, while the actual impact on financial results would vary contingent upon a number of factors. (iii) Sensitivity to foreign exchange risk Consistent with the Group’s accounting policies, the profits of the Group’s US operations are translated at average exchange rates and shareholders’ equity at the closing rate for the reporting period. For 2018, the average and closing rates were US$1.34 (31 December 2017: US$1.29) and US$1. 27 (31 December 2017: US$1.35) to £1.00 sterling respectively. A 10 per cent increase (weakening of the dollar) or decrease (strengthening of the dollar) in these rates would reduce or increase profit before tax attributable to shareholders, profit for the year and shareholders’ equity attributable to US insurance operations respectively as follows: A 10% increase in US$:£ A 10% decrease in US$:£ exchange rates exchange rates 2018 £m 2017 £m 2018 £m 2017 £m Profit before tax attributable to shareholders (159) (54) 194 66 Profit for the year (136) (20) 166 24 Shareholders’ equity attributable to US insurance operations (508) (456) 620 557 (iv) Other sensitivities The total profit of Jackson is sensitive to market risk on the assets covering liabilities other than variable annuity business segregated in the separate accounts. For term business, acquisition costs are deferred and amortised in line with expected premiums. For annuity and interest-sensitive life business, acquisition costs are deferred and amortised in line with expected gross profits on the relevant contracts. For interest-sensitive business, the key assumption is the expected long-term spread between the earned rate and the rate credited to policyholders. In addition, expected gross profits depend on mortality assumptions, assumed unit costs and terminations other than deaths (including the related charges) all of which are based on a combination of actual experience of Jackson, industry benchmarking and future expectations. A detailed analysis of actual experience is measured by internally developed expense, mortality and persistency studies. For variable annuity business, an assumption made is the expected long-term level of separate account returns, which for 2018 was 7.4 per cent (2017: 7.4 per cent). The impact of using this return is reflected in two principal ways, namely: – – Jackson is sensitive to mortality risk, lapse risk and other types of policyholder behaviour, such as the utilisation of its GMWB product features. Jackson’s persistency assumptions reflect a combination of recent experience for each relevant line of business and expert judgement, especially where a lack of relevant and credible experience data exists. These assumptions vary by relevant factors, such as product, policy duration, attained age and for variable annuity lapse assumptions, the extent to which guaranteed benefits are 'in the money’ relative to policy account values. Changes in these assumptions, which are assessed on an annual basis after considering recent experience, could have a material impact on policyholder liabilities and therefore on profit before tax. See further information in note B1.2. In addition, in the absence of hedging, equity and interest rate movements can both cause a loss directly or an increased future sensitivity to policyholder behaviour. Jackson has an extensive derivative programme that seeks to manage the exposure to such altered equity markets and interest rates. C7.4 UK and Europe insurance operations Exposure and sensitivity of IFRS basis profit and shareholders’ equity to market and other risks The IFRS basis results of the shareholder-backed business for the UK and Europe insurance operations are most sensitive to the following factors: – Asset/liability matching; – Default rate experience; – Annuitant mortality; and – The difference between the rates of return on corporate bonds and risk-free rates. Further details are described below. The adjusted IFRS operating profit based on longer-term investment returns for UK and Europe insurance operations is sensitive to changes in longevity assumptions affecting the carrying value of liabilities to policyholders for UK shareholder-backed annuity business. At the total IFRS profit level, the result is particularly sensitive to temporary value movements on assets backing the capital of the shareholder-backed annuity business. With-profits business With-profits sub-fund business The shareholder results of the UK with-profits business (including non-participating annuity business of the with-profits sub-fund) are only sensitive to market risk through the indirect effect of investment performance on declared policyholder bonuses. The investment assets of UK with-profits funds are subject to market risk. Changes in their carrying value, net of related changes to asset-share liabilities of with-profits contracts, affect the level of unallocated surplus of the fund. Therefore, the level of unallocated surplus is particularly sensitive to the level of investment returns on the portion of the assets that represents surplus. However, as unallocated surplus is accounted for as a liability under IFRS, movements in its value do not affect shareholders’ profit and equity. The shareholder results of the UK with-profits fund are currently one-ninth of the cost of bonuses declared to with-profits policyholders. For certain unitised with-profits products, such as the PruFund range of funds, the bonuses represent the policyholders’ net return based on the smoothed unit price of the selected investment fund. Investment performance is a key driver of bonuses declared, and hence the shareholder results. Due to the ‘smoothed’ basis of bonus declaration, the sensitivity to short-term investment performance is relatively low. However, longer-term investment performance and persistency trends may affect future shareholder transfers. Shareholder-backed annuity business Profits from shareholder-backed annuity business are most sensitive to: – – – – – – In addition, the level of profit is affected by change in the level of reinsurance cover. A decrease in assumed mortality rates of 1 per cent would decrease pre-tax profit by approximately £37 million (2017: £66 million). A decrease in credit default assumptions of five basis points would increase pre-tax profit by £99 million (2017: £198 million). A decrease in renewal expenses (excluding asset management expenses) of 5 per cent would increase pre-tax profit by £21 million (2017: £40 million). The effect on profit would be approximately symmetrical for changes in assumptions that are directionally opposite to those explained above. The net effect on profit after tax and shareholders’ equity from all the changes in assumptions as described above would be an increase of approximately £69 million (2017: £143 million). See C4.1(d)(iii) for further details on mortality assumptions. Unit-linked and other business Unit-linked and other business represents a comparatively small proportion of the in-force business of the |
Tax assets and liabilities
Tax assets and liabilities | 12 Months Ended |
Dec. 31, 2018 | |
Tax assets and liabilities | |
Tax assets and liabilities | C8 Tax assets and liabilities C8.1 Deferred tax The statement of financial position contains the following deferred tax assets and liabilities in relation to: 2018 £m Movement Other through movements other including Movement in comprehensive foreign income income and currency At 1 Jan statement equity movements At 31 Dec Deferred tax assets Unrealised losses or gains on investments 14 1 93 5 113 Balances relating to investment and insurance contracts 1 — — — 1 Short-term temporary differences 2,532 (266) (8) 81 2,339 Capital allowances 14 — — 1 15 Unused tax losses 66 23 — 38 127 Total 2,627 (242) 85 125 2,595 Deferred tax liabilities Unrealised losses or gains on investments (1,748) 666 195 20 (867) Balances relating to investment and insurance contracts (872) (91) — (39) (1,002) Short-term temporary differences (2,041) 68 (15) (109) (2,097) Capital allowances (54) (1) — (1) (56) Total (4,715) 642 180 (129) (4,022) Of the short-term temporary differences of £2,339 million relating to deferred tax assets, £2,194 million relating to the US insurance operations is expected to be recovered in line with the run off of the in-force book, and the remaining balances of the £145 million are expected to be recovered within 10 years. The deferred tax balances at 31 December 2018 and 2017 arise in the following parts of the Group: Deferred tax assets Deferred tax liabilities 2018 £m 2017 £m 2018 £m 2017 £m Asia operations 119 112 (1,257) (1,152) US operations 2,295 2,300 (1,688) (1,845) UK and Europe 126 157 (1,061) (1,703) Other operations 55 58 (16) (15) Total 2,595 2,627 (4,022) (4,715) Under IAS 12 ‘Income Taxes’, deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability settled, based on the tax rates (and laws) that have been enacted or are substantively enacted at the end of the reporting period. Deferred tax assets are recognised to the extent that they are regarded as recoverable, that is to the extent that, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying temporary differences can be deducted. The taxation regimes applicable across the Group often apply separate rules to trading and capital profits and losses. The distinction between temporary differences that arise from items of either a trading or capital nature may affect the recognition of deferred tax assets. For the 2018 results and financial position at 31 December 2018 the following tax benefits have not been recognised: 31 Dec 2018 31 Dec 2017 Tax benefit £m Losses £bn Tax benefit £m Losses £bn Capital losses 49 0.2 79 0.4 Trading losses 49 0.2 74 0.3 Of the unrecognised trading losses, losses of £34 million will expire within the next ten years, the rest have no expiry date. Some of the Group’s businesses are located in jurisdictions in which a withholding tax charge is incurred upon the distribution of earnings. Deferred tax liabilities of £117 million (2017: £120 million) have not been recognised in respect of such withholding taxes as the Group is able to control the timing of the distributions and it is probable that the timing differences will not reverse in the foreseeable future. C8.2 Current tax Of the £618 million (31 December 2017: £613 million) current tax recoverable, the majority is expected to be recovered in one year or less. The current tax recoverable includes £112 million in relation to the litigation relating to the historic tax treatment of dividends received from overseas portfolio investments of life insurance companies. The Prudential Assurance Company Limited (“PAC”) was the test case for the litigation. In July 2018, the UK Supreme Court ruled in PAC’s favour on most of the substantive issues. PAC and HM Revenue & Customs (“HMRC”) are working through the mechanics of implementing the Supreme Court decision. PAC expects to receive full and final repayment from HMRC in 2019. The current tax liability of £568 million (31 December 2017: £537 million) includes £149 million (31 December 2017: £139 million) of provisions for uncertain tax matters. Further detail is provided in note B4. |
Defined benefit pension schemes
Defined benefit pension schemes | 12 Months Ended |
Dec. 31, 2018 | |
Defined benefit pension schemes | |
Defined benefit pension schemes | C9 Defined benefit pension schemes (i) Background and summary economic and IAS 19 financial positions The Group’s businesses operate a number of pension schemes. The specific features of these schemes vary in accordance with the regulations of the country in which the employees are located, although they are, in general, funded by the Group and based either on a cash balance formula or on years of service and salary earned in the last year or years of employment. The largest defined benefit scheme is the principal UK scheme, namely the Prudential Staff Pension Scheme (PSPS). PSPS accounts for 82 per cent (2017: 82 per cent) of the underlying scheme liabilities of the Group’s defined benefit schemes. The Group also operates two smaller UK defined benefit schemes in respect of Scottish Amicable (SASPS) and M&G (M&GGPS). In addition, there are two small defined benefit schemes in Taiwan which have negligible deficits. Under IAS 19, ‘Employee Benefits’ and IFRIC 14 ‘IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction’, the Group is only able to recognise a surplus to the extent that it is able to access the surplus either through an unconditional right of refund or through reduced future contributions relating to ongoing service of active members. The Group has no unconditional right of refund to any surplus in PSPS. Accordingly, the PSPS surplus recognised is restricted to the present value of the economic benefit to the Group from the difference between the estimated future ongoing contributions and the full future cost of service for the active members. In contrast, the Group is able to access the surplus of SASPS and M&GGPS. Therefore, the amounts recognised for these schemes are the IAS 19 valuation amount (either a surplus or deficit). The Group asset/liability in respect of defined benefit pension schemes is as follows: 31 Dec 2018 £m 31 Dec 2017 £m Other Other PSPS SASPS M&GGPS schemes Total PSPS SASPS M&GGPS schemes Total note (a) note (b) note (a) note (b) Underlying economic surplus (deficit) 908 (79) 131 (1) 959 721 (137) 109 (1) 692 Less: unrecognised surplus (677) — — — (677) (485) — — — (485) Economic surplus (deficit) (including investment in Prudential insurance policies) note (c) 231 (79) 131 (1) 282 236 (137) 109 (1) 207 Attributable to: UK with-profits fund 162 (32) — — 130 165 (55) — — 110 Shareholder-backed business 69 (47) 131 (1) 152 71 (82) 109 (1) 97 Consolidation adjustment against policyholder liabilities for investment in Prudential insurance policies — — (225) — (225) — — (151) — (151) IAS 19 pension asset (liability) on the Group statement of financial position note (d) 231 (79) (94) (1) 57 236 (137) (42) (1) 56 Notes (a) No deficit or other funding is required for PSPS. Deficit funding, where applicable, is apportioned in the ratio of 70/30 between the UK with-profits fund and shareholder-backed business following detailed considerations in 2005 of the sourcing of previous contributions. Employer contributions for ongoing service of current employees are apportioned in the ratio relevant to current activity. (b) The deficit of SASPS has been allocated 40 per cent to the UK with-profits fund and 60 per cent to the shareholders’ fund as at 31 December 2018 and 2017. (c) The underlying position on an economic basis reflects the assets (including investments in Prudential insurance policies that are offset against liabilities to policyholders on the Group consolidation) and the liabilities of the schemes. (d) At 31 December 2018, the PSPS pension asset of £231 million (31 December 2017: £236 million) and the other schemes’ pension liabilities of £174 million (31 December 2017: £180 million) are included within ‘Other debtors’ and ‘Provisions’ respectively on the consolidated statement of financial position. Triennial actuarial valuations In respect of PSPS the contributions into the scheme are payable at the minimum level required under the scheme rules. Excluding expenses, the contributions are payable at approximately £5 million per annum for on-going service of active members of the scheme. No deficit or other funding is required. Deficit funding for PSPS, when applicable, is apportioned in the ratio of 70/30 between the UK with-profits fund and shareholder-backed operations based on the sourcing of previous contributions. Employer contributions for on-going service of current employees are apportioned in the ratio relevant to current activity. In respect of SASPS it has been agreed with the Trustees that the level of deficit funding should be £26.0 million per annum from 1 January 2018 until 31 March 2027, or earlier if the scheme’s funding level reaches 100 per cent before this date, to eliminate the actuarial deficit. The deficit funding will be reviewed every three years at subsequent valuations. In respect of M&GGPS it has been agreed with the Trustees that no deficit funding is required from 1 January 2016. Defined benefit pension schemes in the UK are generally required to be subject to full actuarial valuations every three years in order to assess the appropriate level of funding for schemes in relation to their commitments. These valuations include assessments of the likely rate of return on the assets held within the separate trustee administered funds. The actuarial valuation differs from the IAS 19 accounting basis valuation in a number of respects, including the discount rate assumption where IAS 19 prescribes a rate based on high-quality corporate bonds while a more ‘prudent’ assumption is used for the actuarial valuation. Risks to which the defined benefit schemes expose the Group Responsibility of making good of any deficit that may arise in the schemes lies with the employers of the schemes, which are subsidiaries of the Group. Accordingly, the pension schemes expose the Group to a number of risks and the most significant of which are interest rate and investment risk, inflation risk and mortality risk. Corporate governance The Group’s UK pension schemes are established under trust and are subject to UK legal requirements; this includes being subject to regulation by ‘The Pension Regulator’ in accordance with the Pension Act 1995. Each scheme has a corporate trustee to which some directors are appointed by Group employers with the remaining directors nominated by members in accordance with UK legal requirements. The trustees have the ultimate responsibility to ensure that the scheme is managed in accordance with the Trust Deed & Rules. The trustees act in the best interests of the schemes’ beneficiaries; this includes taking appropriate account of each employer’s legal obligation and financial ability to support the schemes, when setting investment strategy and when agreeing funding with the employers. The employers’ contribution commitments are formally updated at each triennial valuation; between valuations funding levels and employer strength continue to be monitored, with the Trustees being able to bring forward the next triennial valuation if they consider it appropriate to do so. All of the Group’s three UK defined benefit pension schemes (PSPS, SASPS and M&GGPS) are final salary schemes, which are closed to new entrants. The Trustees of each scheme set the general investment policy and specify any restrictions on types of investment and the degrees of divergence permitted from the benchmark, but delegate the responsibility for selection and realisation of specific investments to the Investment Managers. The Trustees consult the Principal Employer (eg The Prudential Assurance Company Limited for PSPS) on the investment principles, but the ultimate responsibility for the investment of the assets of the scheme lies with the Trustees. The Trustees of each of the schemes manage the investment strategy of the scheme to achieve an acceptable balance between investing in the assets that most closely match the expected benefit payments and assets that are expected to achieve a greater return in the hope of reducing the contributions required or providing additional benefits to members. For PSPS, a significant portion of the scheme assets are invested in liability matching assets such as bonds and gilts, including index-linked gilts, to partially hedge against inflation. In addition, PSPS has maintained a portfolio of interest rate and inflation swaps to match more closely the duration and inflation profile of its assets to its liabilities. The risks arising from SASPS and M&GGPS are managed through a diversified mix of investments. Both schemes have invested in a mix of both return-seeking assets, such as equities and property and matching assets including leveraged liability driven investment portfolios to reflect the liability profile of the scheme. (ii) Assumptions The actuarial assumptions used in determining benefit obligations and the net periodic benefit costs for the years shown were as follows: 31 Dec 2018 % 31 Dec 2017 % 31 Dec 2016 % Discount rate* 2.8 2.5 2.6 Rate of increase in salaries 3.3 3.1 3.2 Rate of inflation † : Retail prices index (RPI) 3.3 3.1 3.2 Consumer prices index (CPI) 2.3 2.1 2.2 Rate of increase of pensions in payment for inflation: PSPS: Guaranteed (maximum 5%) 2.5 2.5 2.5 Guaranteed (maximum 2.5%) 2.5 2.5 2.5 Discretionary 2.5 2.5 2.5 Other schemes 3.3 3.1 3.2 * The discount rate has been determined by reference to an ‘AA’ corporate bond index, adjusted where applicable to allow for the difference in duration between the index and the pension liabilities. † The rate of inflation reflects the long-term assumption for UK RPI or CPI depending on the tranche of the schemes. The calculations are based on current mortality estimates with an allowance made for expected future improvements in mortality. This allowance reflected the CMI 2015 Core projections model (2017: CMI 2014 projections model, with scheme-specific calibrations). In 2018, for members post retirement long-term mortality improvement rates of 1.75 per cent per annum (2017: 1.75 per cent per annum) and 1.50 per cent per annum (2017: 1.25 per cent per annum) were applied for males and females, respectively. (iii) Estimated pension scheme surpluses and deficits This section illustrates the financial position of the Group’s defined benefit pension schemes on an economic basis and the IAS 19 basis. The underlying pension position on an economic basis reflects the assets (including investments in Prudential policies that are offset against liabilities to policyholders on the Group consolidation) and the liabilities of the schemes. The IAS 19 basis excludes the investments in Prudential policies. At 31 December 2018, M&GGPS held investments in Prudential insurance policies of £225 million (31 December 2017: £151 million). Movements on the pension scheme surplus determined on the economic basis are as follows, with the effect of the application of IFRIC 14 being shown separately: 2018 £m Surplus Actuarial gains Surplus (deficit) and losses (deficit) in schemes (Charge) credit in other in schemes at 1 Jan to income comprehensive Contributions at 31 Dec statement income paid All schemes Underlying position (without the effect of IFRIC 14) Surplus (deficit) 692 (88) 303 52 959 Less: amount attributable to UK with-profits fund (473) 38 (178) (20) (633) Shareholders' share: Gross of tax surplus (deficit) 219 (50) 125 32 326 Related tax (42) 10 (24) (6) (62) Net of shareholders' tax 177 (40) 101 26 264 Application of IFRIC 14 for the derecognition of PSPS surplus Derecognition of surplus (485) (13) (179) — (677) Less: amount attributable to UK with-profits fund 363 8 132 — 503 Shareholders' share: Gross of tax (122) (5) (47) — (174) Related tax 23 1 9 — 33 Net of shareholders' tax (99) (4) (38) — (141) With the effect of IFRIC 14 Surplus (deficit) 207 (101) 124 52 282 Less: amount attributable to UK with-profits fund (110) 46 (46) (20) (130) Shareholders' share: Gross of tax surplus (deficit) 97 (55) 78 32 152 Related tax (19) 11 (15) (6) (29) Net of shareholders' tax 78 (44) 63 26 123 Underlying investments of the schemes On the ‘economic basis’, after including the underlying assets represented by the investments in Prudential insurance policies as scheme assets, the plans’ assets comprise the following investments: 31 Dec 2018 31 Dec 2017 Other Other PSPS schemes Total PSPS schemes Total £m £m £m % £m £m £m % Equities UK 8 6 14 — 9 67 76 1 Overseas 204 53 257 3 226 272 498 6 Bonds* Government 4,596 538 5,134 61 5,040 655 5,695 63 Corporate 1,586 454 2,040 24 1,491 248 1,739 20 Asset-backed securities 263 12 275 3 164 — 164 2 Derivatives 103 4 107 1 188 (6) 182 2 Properties 143 143 286 3 140 130 270 3 Other assets 172 198 370 5 216 77 293 3 Total value of assets† 7,075 1,408 8,483 100 7,474 1,443 8,917 100 * 87 per cent of the bonds are investment grade (2017: 89 per cent). † 94 per cent of the total value of the scheme assets are derived from quoted prices in an active market (31 December 2017: 96 per cent). None of the scheme assets included shares in Prudential plc or property occupied by the Prudential Group. The IAS 19 basis plan assets at 31 December 2018 of £8,258 million (31 December 2017: £8,766 million) is different from the economic basis plan assets of £8,483 million (31 December 2017: £8,917 million) as shown above due to the exclusion of investment in Prudential insurance policies by M&GGPS as described above. The movements in the IAS 19 pension schemes’ surplus and deficit between scheme assets and liabilities as consolidated in the financial statements were: Attributable to policyholders and shareholders Other adjustments including Effect of for Present Net surplus IFRIC 14 investments value (deficit) for Economic in Prudential IAS 19 of benefit (without derecognition basis net insurance basis net Plan obligations the effect of PSPS surplus policies surplus assets note (a) of IFRIC 14) surplus (deficit) note (b) (deficit) 2018 £m Net surplus (deficit), beginning of year 8,917 (8,225) 692 (485) 207 (151) 56 GMP equalisation provision note (e) — (53) (53) — (53) — (53) Current service cost — (44) (44) — (44) — (44) Net interest on net defined benefit liability (asset) 217 (200) 17 (13) 4 (4) — Administration expenses (8) — (8) — (8) — (8) Benefit payments (475) 475 — — — — — Employers' contributions note (c) 52 — 52 — 52 — 52 Employees' contributions 1 (1) — — — — — Actuarial gains and losses note (d) (221) 524 303 (179) 124 10 134 Transfer into investment in Prudential insurance policies — — — — — (80) (80) Net surplus (deficit), end of year 8,483 (7,524) 959 (677) 282 (225) 57 2017 £m Net surplus (deficit), beginning of year 9,006 (8,443) 563 (558) 5 (134) (129) Current service cost — (46) (46) — (46) — (46) Net interest on net defined benefit liability (asset) 228 (214) 14 (14) — (3) (3) Administration expenses (8) — (8) — (8) — (8) Benefit payments (479) 479 — — — — — Employers' contributions note (c) 50 — 50 — 50 — 50 Employees' contributions 1 (1) — — — — — Actuarial gains and losses note (d) 119 — 119 87 206 (6) 200 Transfer into investment in Prudential insurance policies — — — — — (8) (8) Net surplus (deficit), end of year 8,917 (8,225) 692 (485) 207 (151) 56 2016 £m Net surplus (deficit), beginning of year 7,819 (6,858) 961 (800) 161 (77) 84 Current service cost — (34) (34) — (34) — (34) Net interest on net defined benefit liability (asset) 292 (254) 38 (32) 6 (3) 3 Administration expenses (5) — (5) — (5) — (5) Benefit payments (350) 350 — — — — — Employers' contributions note (c) 45 — 45 — 45 — 45 Employees' contributions 2 (2) — — — — — Actuarial gains and losses note (d) 1,203 (1,645) (442) 274 (168) (13) (181) Transfer into investment in Prudential insurance policies — — — — — (41) (41) Net surplus (deficit), end of year 9,006 (8,443) 563 (558) 5 (134) (129) Notes (a) Maturity profile of the benefit obligations The weighted average duration of the benefit obligations of the schemes is 18.4 years (2017: 18.6 years). The following table provides an expected maturity analysis of the benefit obligations: All schemes £m After After After After 1 year 5 years 10 years 15 years Over 20 1 year or less to 5 years to 10 years to 15 years to 20 years years Total 31 Dec 2018 257 1,142 1,593 1,641 1,631 7,426 13,690 31 Dec 2017 255 1,108 1,589 1,667 1,661 7,889 14,169 (b) The adjustments for investments in Prudential insurance policies are consolidation adjustments for intra-group assets and liabilities with no impact to adjusted IFRS operating profit based on longer-term investment returns. (c) Total employer contributions expected to be paid into the Group defined benefit schemes for the year ending 31 December 2019 amount to £52 million (2018: £50 million). (d) The actuarial gains and losses attributable to policyholders and shareholders as shown in the table above are analysed as follows: 2018 £m 2017 £m 2016 £m Actuarial gains and losses Return on the scheme assets less amount included in interest income (221) 119 1,203 Gains (losses) on changes in demographic assumptions 168 (10) (18) Gains (losses) on changes in financial assumptions 330 (101) (1,733) Experience gains on scheme liabilities 26 111 106 303 119 (442) Effect of derecognition of PSPS surplus (179) 87 274 Consolidation adjustment for investments in Prudential insurance policies and other adjustments 10 (6) (13) 134 200 (181) (e) In October 2018, the High Court ruled that pension schemes are required to equalise benefits for the effect of guaranteed minimum pensions (GMPs). GMPs are a minimum benefit that schemes that were contracted-out on a salary-related basis between 1978 and 1997 are required to provide. In light of this Court ruling, at 31 December 2018, the Group has recognised an estimated allowance for GMP equalisation within the IAS 19 valuation for all the three UK schemes (£31 million for PSPS, £17 million for SASPS and £5 million for M&GGPS). These costs are allocated between the UK with-profits fund and the shareholders’ fund on the basis of 70:30 for PSPS, 40:60 for SASPS and with M&GGPS being wholly attributable to the shareholders’ fund. The impact on shareholders profit before tax is £24 million (before taking into account any charge to PSPS surplus restriction) and on shareholders’ equity post tax is £12 million. The losses of £1,733 million in 2016 on change in financial assumptions primarily reflect the effect of the decrease in the discount rate used in determining the scheme liabilities from 3.8 per cent in 2015 to 2.6 per cent in 2016. These 2016 losses were partially offset by the increase in the return on the scheme assets, which was greater than the amount included in interest income by £1,203 million. (iv) Sensitivity of the pension scheme liabilities to key variables The sensitivity information below is based on the core scheme liabilities and assumptions at the balance sheet date. The sensitivities are calculated based on a change in one assumption with all other assumptions being held constant. As such, interdependencies between the assumptions are excluded. The impact of the rate of inflation assumption sensitivity includes the impact of inflation on the rate of increase in salaries and rate of increase of pensions in payment. The sensitivities of the underlying pension scheme liabilities as shown below do not directly equate to the impact on the profit or loss attributable to shareholders or shareholders’ equity due to the effect of the application of IFRIC 14 on PSPS and the allocation of a share of the interest in the financial position of PSPS and SASPS to the UK with-profits fund as described above. Sensitivity change in Assumption applied assumption Impact of sensitivity on scheme liabilities on IAS 19 basis 2018 2017 Discount rate 2.8 % 2.5 % Decrease by 0.2% Increase in scheme liabilities by: PSPS 3.5 % 3.5 % Other schemes 5.0 % 5.4 % Discount rate 2.8 % 2.5 % Increase by 0.2% Decrease in scheme liabilities by: PSPS 3.3 % 3.4 % Other schemes 4.7 % 4.9 % Rate of inflation 3.3 % 3.1 % RPI: Decrease by 0.2% Decrease in scheme liabilities by: 2.3 % 2.1 % CPI: Decrease by 0.2% PSPS 0.6 % 0.6 % with consequent reduction Other schemes 3.9 % 3.9 % in salary increases Mortality rate Increase life expectancy by 1 year Increase in scheme liabilities by: PSPS 3.9 % 4.0 % Other schemes 3.9 % 3.8 % |
Share capital, share premium an
Share capital, share premium and own shares | 12 Months Ended |
Dec. 31, 2018 | |
Share capital, share premium and own shares | |
Share capital, share premium and own shares | C10 Share capital, share premium and own shares 2018 2017 Issued shares of 5p each Number of ordinary Share Share Number of ordinary Share Share fully paid shares capital premium shares capital premium £m £m £m £m At 1 January 2,587,175,445 129 1,948 2,581,061,573 129 1,927 Shares issued under share-based schemes 5,868,964 1 16 6,113,872 — 21 At 31 December 2,593,044,409 130 1,964 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 31 December 2018, there were options outstanding under save as you earn schemes to subscribe for shares as follows: Number of shares to Share price range subscribe for from to Exercisable by year 31 Dec 2018 4,885,804 901 p 1,455 p 31 Dec 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 £170 million as at 31 December 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 31 December 2018, 9.6 million (31 December 2017: 11.4 million) Prudential plc shares with a market value of £135 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 2018 was 14.9 million which was in March 2018. The Company purchased the following number of shares in respect of employee incentive plans. The shares purchased each month are as follows: Number 2018 share price Number 2017 share price of shares Low High Cost of shares Low High Cost £ £ £ £ £ £ January 51,555 19.18 19.40 996,536 62,388 15.83 16.02 989,583 February 55,765 17.91 18.10 1,004,362 65,706 15.70 16.09 1,052,657 March 55,623 18.25 18.54 1,025,238 70,139 16.40 16.54 1,159,950 April 1,664,334 16.67 17.95 29,113,556 3,090,167 16.58 16.80 51,369,760 May 63,334 18.91 19.38 1,216,136 55,744 17.50 17.62 979,645 June 181,995 18.21 18.65 3,335,725 182,780 17.52 18.00 3,269,447 July 55,888 17.68 17.86 993,779 51,984 17.72 17.93 927,452 August 60,384 18.04 18.10 1,090,283 55,857 18.30 18.73 1,025,802 September 82,612 16.95 16.98 1,400,868 51,226 17.45 17.97 912,151 October 148,209 15.62 16.84 2,477,127 136,563 17.99 18.22 2,483,879 November 67,162 15.95 15.96 1,071,633 53,951 18.38 18.40 992,123 December 73,744 13.99 14.30 1,045,278 53,519 18.26 18.47 986,000 Total 2,560,605 44,770,521 3,930,024 66,148,449 The Group has consolidated a number of authorised investment funds where it is deemed to control these funds under IFRS. Some of these funds hold shares in Prudential plc. The total number of shares held by these funds at 31 December 2018 was 3.0 million (31 December 2017: 6.4 million) and the cost of acquiring these shares of £20 million (2017: £71 million) is included in the cost of own shares. The market value of these shares as at 31 December 2018 was £42 million (31 December 2017: £121 million). During 2018, these funds made net disposals of 3,368,506 Prudential shares (2017: acquisitions of 372,029) for a net decrease of £50.5 million to book cost (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 2018 or 2017. |
Provisions
Provisions | 12 Months Ended |
Dec. 31, 2018 | |
Provisions | |
Provisions | C11 Provisions 31 Dec 2018 £m 31 Dec 2017 £m Provision in respect of defined benefit pension schemes C9 174 180 Other provisions note 904 943 Total provisions 1,078 1,123 Note Analysis of other provisions: 2018 £m 2017 £m At 1 January 943 659 Charged to income statement: Additional provisions 229 542 Unused amounts released (18) (9) Used during the year (262) (239) Exchange differences 12 (10) Total at 31 December 904 943 Other provisions comprise staff benefits provisions of £409 million (31 December 2017: £453 million) that are generally expected to be paid out within the next three years, other provisions of £171 million (31 December 2017: £121 million) and a provision for review of past annuity sales after utilisation during the year of £324 million (31 December 2017: £369 million). Prudential has agreed with the Financial Conduct Authority (FCA) to review annuities sold without advice after 1 July 2008 to its contract-based defined contribution pension customers. The review 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, was established at 31 December 2017 to cover the costs of undertaking the review and any related redress and following a reassessment, no change has been made in 2018. The majority of the provision will be utilised in 2019. The ultimate amount that will be expended by the Group on the review will remain uncertain until the project is completed. If the population subject to redress increased or decreased by 10 per cent, then the provision would be expected to increase or decrease by circa 7 per cent accordingly. Additionally, in 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 31 December 2018. |
Capital
Capital | 12 Months Ended |
Dec. 31, 2018 | |
Capital | |
Capital | C12 Capital C12.1 Group objectives, policies and processes for managing capital (i) Capital measure The Group manages its Group Solvency II own funds as its measure of capital. At 31 December 2018 estimated Group Solvency II own funds are £30.2 billion (31 December 2017: £26.4 billion). (ii) External capital requirements Solvency II is the Group’s consolidated capital regime. Solvency II is a risk-based solvency framework required under the European Solvency II Directive as implemented by the Prudential Regulatory Authority in the UK. The Solvency II surplus represents the aggregated capital held by the Group less Solvency Capital Requirements. (iii) Meeting of capital management objectives The Group Solvency Capital Requirement has been met during 2018. As well as holding sufficient capital to meet Solvency II requirements at Group level, the Group also closely manages the cash it holds within its central holding companies so that it can: – Maintain flexibility, fund new opportunities and absorb shock events; – Fund dividends; and – Cover central costs and debt payments. More details on holding company cash flows and balances are given in section II(a) of the Additional unaudited financial information. While the Group at a consolidated level is subject to the Solvency II requirements, at a business unit level capital is defined by local capital regulations and local business needs. Each of the Group’s long-term business operations is capitalised to a sufficiently strong level for its individual circumstances. The Group manages its assets, liabilities and capital locally, in accordance with local regulatory requirements and reflecting the different types of liabilities in each business unit. As a result of the diversity of products offered by Prudential and the different regulatory regimes under which it operates, the Group employs differing methods of asset/liability and capital management, depending on the business concerned. Stochastic modelling of assets and liabilities is undertaken in the UK, US and Asia to assess the economic capital requirements. A stochastic approach models the inter-relationship between asset and liability movements, taking into account asset correlation, management actions and policyholder behaviour under a large number of alternative economic scenarios. In addition, reserve adequacy testing under a range of scenarios and dynamic solvency testing is carried out, including under certain scenarios mandated by the UK, US and Asia regulators. The sensitivity of liabilities and other components of total capital vary depending upon the type of business concerned and this conditions the approach to asset/liability management. (iv) Post demerger In August 2018, the Group announced that the Hong Kong Insurance Authority would become its lead regulator upon successful completion of the demerger. The European Solvency II regime will no longer be applicable to Prudential plc group and it is proactively engaging with the Hong Kong Insurance Authority on the supervisory framework that will apply to the Group after the demerger. C12.2 Local capital regulations (i) Asia insurance operations The estimated available capital position for Asia life insurance operations excluding with-profits funds with reconciliation to shareholders equity is shown below: 31 Dec 2018 £m 31 Dec 2017 £m IFRS shareholders' equity 5,525 Adjustments to local regulatory basis Remove deferred acquisition costs, goodwill and other intangibles (1,850) (1,515) Other adjustments 631 306 Total adjustments (1,219) (1,209) Total available capital of life assurance businesses on a local regulatory basis excluding with-profits funds note 4,649 4,316 Note The available capital resources on a local regulatory basis as at 31 December 2018 excludes the with-profits business of Hong Kong, Singapore and Malaysia of £11,524 million (31 December 2017: £10,253 million). The capital requirements of significant operations are: China A risk-based capital, risk management and governance framework, known as the China Risk Oriented Solvency System (C-ROSS), applies in China. Under C-ROSS, insurers are required to maintain a core solvency ratio (core capital over minimum capital) and a comprehensive solvency ratio (actual capital over minimum capital) of not lower than 50 per cent and 100 per cent, respectively. The actual capital is the difference between the admitted assets and admitted liabilities. Hong Kong The capital requirement varies by underlying risk and duration of liabilities, but is generally determined as a percentage of mathematical reserves and capital at risk. Mathematical reserves are based on a best estimate basis with prudent margins for adverse deviations, discounted at a valuation interest rate based on a blend between the risk-adjusted portfolio yield and the reinvestment rate. Indonesia Solvency capital is determined using a risk-based capital approach. Insurance companies in Indonesia are expected to maintain the level of net assets above 100 per cent of solvency capital. Malaysia A risk-based capital framework applies in Malaysia. The local regulator, Bank Negara Malaysia (BNM), has set a Supervisory Target Capital Level of 130 per cent below which supervisory actions of increasing intensity will be taken. Each insurer is also required to set its own Individual Target Capital Level to reflect its own risk profile and this is expected to be higher than the Supervisory Target Capital Level. Market liberalisation measures were introduced by BNM in April 2009, which increases the limit from 49 per cent to 70 per cent on foreign equity ownership for insurance companies and Takaful operators in Malaysia. A higher foreign equity limit beyond 70 per cent for insurance companies will be considered by BNM on a case by case basis for companies who support expansion of insurance provision to the most vulnerable in Malaysian society. Singapore A risk-based capital framework applies in Singapore. A registered insurer incorporated in Singapore is required at all times to maintain a minimum level of paid-up ordinary share capital and to ensure that its financial resources are not less than the greater of (i) the total risk requirement arising from the assets and liabilities of the insurer, calculated in accordance with the Singapore Insurance Act; or (ii) a minimum amount of S$5 million (Singapore dollars). The regulator also has the authority to direct that the insurer satisfy additional capital adequacy requirements in addition to those set forth under the Singapore Insurance Act if it considers such additional requirements appropriate. (ii) US insurance operations The estimated capital position for Jackson with reconciliation to shareholders’ equity is shown below: 31 Dec 2018 £m 31 Dec 2017 £m IFRS shareholders' equity 5,584 5,013 Adjustments to regulatory basis Deferred acquisition costs (8,727) (8,197) Jackson surplus notes 196 184 Investment and policyholder liabilities valuation differences between IFRS and regulatory basis for Jackson 7,217 5,325 Other adjustments* 63 818 Total adjustments (1,251) (1,870) Total available capital of life assurance businesses on a local regulatory basis 4,333 3,143 * The regulatory framework for Jackson is governed by the requirements of the US NAIC approved Risk-Based Capital standards. Under these requirements life insurance companies report using a formula-based capital standard which includes components calculated by applying after-tax factors to various asset, premium and reserve items and a separate model-based component for market risk associated primarily with variable annuity products. The after-tax factors were adjusted to reflect the impact of US Tax Reform during 2018. Jackson had a permitted practice in effect as granted by the local regulator allowing Jackson to carry certain interest rate swaps at book value, as if statutory hedge accounting were in place, instead of at fair value as would have been otherwise required. Jackson is required to demonstrate the effectiveness of its interest rate swap programme pursuant to the Michigan Insurance Code. The total effect of this permitted practice, net of tax, was to decrease statutory surplus by £129 million (31 December 2017: £355 million). Under the equivalence provisions of Solvency II, Jackson is incorporated into the Group’s Solvency II position at a level equal to available capital in excess of 100 per cent of the US local minimum risk-based capital requirement level at which corrective action commences. (iii) UK and Europe insurance operations Insurance operations in the UK and Europe are subject to Solvency II capital requirements on an individual basis. These have been met during 2018. (iv) Asset management operations – regulatory and other surplus Certain asset management subsidiaries of the Group are subject to local regulatory requirements. The movement in the year of the estimated surplus regulatory capital position of those subsidiaries, combined with the movement in the IFRS basis shareholders’ funds for unregulated asset management operations, is as follows: 2018 £m 2017 £m M&G Eastspring Regulatory and other surplus Prudential US Investments Total Total Beginning of year 419 235 222 876 814 Gains during the year 364 23 138 525 586 Movement in capital requirement (10) — 5 (5) (73) Capital injection 88 — 13 101 6 Distributions made to the parent company (197) (97) (104) (398) (433) Exchange and other movements — (121) 20 (101) (24) End of year 664 40 294 998 876 C12.3 Transferability of available capital In the UK, PAC is required to meet the Solvency II capital requirements as a company as a whole, ie covering both its ring-fenced with-profits funds and non-profit funds. Further, the surplus of the with-profits funds is ring-fenced from the shareholder balance sheet with restrictions as to its distribution. Distributions from the with-profits funds to shareholders continue to reflect the shareholders’ one-ninth share of the cost of declared policyholders’ bonuses. For Jackson, capital retention is maintained at a level consistent with an appropriate rating by Standard & Poor’s. Currently Jackson is rated AA. Jackson can pay dividends on its capital stock only out of earned surplus unless prior regulatory approval is obtained. Furthermore, dividends that exceed the greater of statutory net gain from operations less net realised investments losses for the prior year or 10 per cent of Jackson’s prior year end statutory surplus, excluding any increase arising from the application of permitted practices, require prior regulatory approval. For Asia subsidiaries, the amounts retained within the companies are at levels that provide an appropriate level of capital strength in excess of the local regulatory minimum. The businesses in Asia may, in general, remit dividends to UK parent entities, provided the statutory insurance fund meets the local regulatory solvency requirements. For with-profits funds, the excess of assets over liabilities is retained within the funds, with distribution to shareholders tied to the shareholders’ share of declared bonuses. Available capital of the non-insurance business units is transferable after taking account of an appropriate level of operating capital, based on local regulatory solvency requirements, over and above base liabilities. |
Property, plant and equipment
Property, plant and equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, plant and equipment | |
Property, plant and equipment | C13 Property, plant and equipment Property, plant and equipment comprise Group occupied properties and tangible assets. A reconciliation of the carrying amount of these items from the beginning of the year to the end of the year is as follows: 2018 £m 2017 £m Group Group occupied Tangible occupied Tangible property assets Total property assets Total At 1 January Cost 367 1,041 1,408 439 1,077 1,516 Accumulated depreciation (72) (547) (619) (88) (685) (773) Net book amount 295 494 789 351 392 743 Year ended 31 December Opening net book amount 295 494 789 351 392 743 Exchange differences 13 10 23 (8) (14) (22) Depreciation and impairment charge (10) (127) (137) (22) (94) (116) Additions 35 254 289 17 117 134 Arising on acquisitions of subsidiaries 4 518 522 — 178 178 Disposals and transfers (8) (69) (77) (43) (85) (128) Closing net book amount 329 1,080 1,409 295 494 789 At 31 December Cost 412 1,641 2,053 367 1,041 1,408 Accumulated depreciation (83) (561) (644) (72) (547) (619) Net book amount 329 1,080 1,409 295 494 789 Tangible assets Of the £1,080 million (31 December 2017: £494 million) of tangible assets, £856 million (31 December 2017: £360 million) were held by the Group’s with-profits businesses, primarily by the consolidated subsidiaries for venture fund and other investment purposes of the UK with-profits fund. Capital expenditure: property, plant and equipment by segment The capital expenditure of £254 million (2017: £117 million) arose as follows: £52 million (2017: £55 million) in Asia, £14 million (2017: £19 million) in US and £187 million (2017: £41 million) in UK and Europe with the remaining balance of £1 million (2017: £2 million) arising from unallocated corporate expenditure. |
Investment properties
Investment properties | 12 Months Ended |
Dec. 31, 2018 | |
Investment properties | |
Investment properties | C14 Investment properties Investment properties principally relate to the UK with-profits fund and are carried at fair value. A reconciliation of the carrying amount of investment properties at the beginning and end of the year is set out below: 2018 £m 2017 £m At 1 January 16,497 14,646 Additions: Resulting from property acquisitions 1,326 2,009 Resulting from expenditure capitalised 183 39 Disposals (178) (591) Net gain from fair value adjustments 149 415 Net foreign exchange differences (52) (21) At 31 December 17,925 16,497 The 2018 income statement includes rental income from investment properties of £927 million (2017: £876 million) and direct operating expenses including repairs and maintenance arising from these properties of £56 million (2017: £82 million). Investment properties of £5,825 million (31 December 2017: £5,689 million) are held under finance leases. The present value of minimum lease payments under these leases is £42 million (31 December 2017: £43 million) and 76 per cent (31 December 2017: 73 per cent) of lease payments are due in over five years. The Group’s policy is to let investment properties to tenants through operating leases. Minimum future rentals to be received on non-cancellable operating leases of the Group’s freehold investment properties are receivable in the following periods: 2018 £m 2017 £m Less than 1 year 314 322 1 to 5 years 1,077 1,073 Over 5 years 2,242 2,286 Total 3,633 3,681 The total minimum future rentals to be received on non-cancellable sub-leases for the Group’s investment properties held under finance leases at 31 December 2018 are £1,596 million (31 December 2017: £1,527 million). |
Corporate transactions
Corporate transactions | 12 Months Ended |
Dec. 31, 2018 | |
Corporate transactions | |
Corporate transactions | D Other notes D1 Corporate transactions D1.1 Gains (losses) on disposal of businesses and corporate transactions ‘(Loss) gain on disposal of businesses and corporate transactions’ comprises the following: 2018 £m 2017 £m Loss arising on reinsurance of part of UK shareholder-backed annuity portfolio note (i) (508) — Other transactions note (ii) (80) 223 (588) 223 Notes (i) Loss arising on reinsurance of part of UK shareholder-backed annuity portfolio In March 2018, M&GPrudential announced the reinsurance of £12.0 billion (as at 31 December 2017) of its shareholder -backed annuity portfolio to Rothesay Life. Under the terms of the agreement, M&GPrudential 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 most of the portfolio to Rothesay Life by 30 June 2019. The reinsurance agreement became effective on 14 March 2018. A reinsurance premium of £12,149 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 £(508) million was recognised in 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’. The assets and liabilities of the M&GPrudential annuity business classified as held for sale on the statement of financial position are as follows: 31 Dec 2018 £m Assets Reinsurer's share of insurance contract liabilities 10,502 Other assets (including cash and cash equivalents) 66 Assets held for sale 10,568 Liabilities Policyholder liabilities 10,502 Other liabilities 66 Liabilities held for sale 10,568 (ii) Other transactions Other transaction costs of £80 million incurred by the Group in 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&GPrudential from Prudential plc, resulting in two separately listed entities. In 2017, the Group completed its disposal of its Korea life business, realising a gain of £61 million 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 2017. Together these two transactions generated a gain on disposal of businesses and corporate transactions of £223 million. D1.2 Acquisition of TMB Asset Management Co., Ltd. in Thailand In September 2018, the Group completed its initial acquisition of 65 per cent of TMB Asset Management Co., Ltd. (TMBAM), an asset management company in Thailand, from TMB Bank Public Limited (TMB) for £197 million. The terms of the sale agreement include a call option exercisable (by the Group) after three years and a put option exercisable (by TMB) after four years which, if exercised, triggers the purchase of the remaining 35 per cent of the business. The put option, in line with IFRS, has been recognised as a financial liability and a reduction in shareholders’ equity of £106 million as of the acquisition date, being the discounted expected consideration payable for the remaining 35 per cent (£109 million as of 31 December 2018). The fair value of the acquired assets, assumed liabilities and resulting goodwill are shown in the table below: 31 Dec 2018 £m Assets Intangible assets 5 Other assets 26 Cash and cash equivalents 2 Total assets 33 Other liabilities (10) Non-controlling interests (7) Net assets acquired and liabilities assumed 16 Goodwill arising on acquisition* 181 Purchase consideration 197 * The goodwill on acquisition of £ 181 million (retranslated to £186 million at 31 December 2018) is mainly attributable to the expected benefits from new customers and synergies. Refer to note C5.1 for changes to the carrying amount of goodwill during the year. The acquisition of TMBAM contributed £18 million to revenue and £5 million to Asia’s adjusted IFRS operating profit based on longer-term investment returns and profit before tax of the Group for the post-acquisition period from 27 September to 31 December 2018. There is no material impact on the Group’s revenue and profit for 2018 if the acquisition had occurred on 1 January 2018. |
Contingencies and related oblig
Contingencies and related obligations | 12 Months Ended |
Dec. 31, 2018 | |
Contingencies and related obligations | |
Contingencies and related obligations | D2 Contingencies and related obligations Litigation and regulatory matters In addition to the matters set out in note C11 in relation to the Financial Conduct Authority review of past annuity sales, the Group is involved in various litigation and regulatory issues. These may from time to time include class actions involving Jackson. While the outcome of such litigation and regulatory issues cannot be predicted with certainty, the Company believes that their ultimate outcome will not have a material adverse effect on the Group’s financial condition, results of operations, or cash flows. Guarantees Guarantee funds in both the UK and the US provide for payments to be made to policyholders on behalf of insolvent life insurance companies and are financed by payments assessed on solvent insurance companies based on location, volume and types of business. The estimated reserve for future guarantee fund assessments is not significant. The directors believe that sufficient provision has been made on the balance sheet for all anticipated payments for known insolvencies. The Group has provided other guarantees and commitments to third-parties entered into in the normal course of business but the Group does not consider that the amounts involved are significant. Support for with-profits sub-funds by shareholders’ funds PAC is liable to meet its obligations to with-profits policyholders even if the assets of the with-profits sub-funds are insufficient to do so. The assets, represented by the unallocated surplus of with-profits funds, in excess of amounts expected to be paid for future terminal bonuses and related shareholder transfers (‘the excess assets’) in the with-profits sub-funds could be materially depleted over time by, for example, a significant or sustained equity market downturn, costs of significant fundamental strategic change or a material increase in the pension mis-selling provision. In the unlikely circumstance that the depletion of the excess assets within the long-term fund was such that the Group’s ability to satisfy policyholders’ reasonable expectations was adversely affected, it might become necessary to restrict the annual distribution to shareholders or to contribute shareholders’ funds to the with-profits sub-funds to provide financial support. Matters relating to with-profits sub-funds: – – In addition, certain pensions products within this sub-fund have guaranteed annuity rates at retirement, for which a provision of £361 million was held within the sub-fund (31 December 2017: £503 million ); and – Intra-group capital support arrangements Prudential and PAC have put in place intra-group arrangements to formalise circumstances in which capital support would be made available by Prudential. While Prudential considers it unlikely that such support will be required, the arrangements are intended to provide additional comfort to PAC and its policyholders. In addition, Prudential has put in place intra-group arrangements to formalise undertakings by Prudential to the regulators of the Hong Kong subsidiaries regarding their solvency levels. |
Post balance sheet events
Post balance sheet events | 12 Months Ended |
Dec. 31, 2018 | |
Post balance sheet events | |
Post balance sheet events | D3 Post balance sheet events Dividends The second interim ordinary dividend for the year ended 31 December 2018, that was approved by the Board of Directors after 31 December 2018, is described in note B6. Renewal of strategic bancassurance alliance with United Overseas Bank Limited In January 2019, the Group announced the renewal of its regional strategic bancassurance alliance with United Overseas Bank Limited (UOB). The new agreement extends the original alliance, which commenced in 2010 to 2034 and increases the geographical scope to include a fifth market, Vietnam, alongside the existing markets across Singapore, Malaysia, Thailand and Indonesia. As part of this transaction, Prudential has agreed to pay UOB an initial fee of £662 million (translated using a Singapore dollar: £ foreign exchange rate of 1.7360) for distribution rights which is not dependent on future sales volumes. This amount will be paid in three instalments of £230 million in February 2019, £331 million in January 2020 and £101 million in January 2021. In line with the Group’s policy, these amounts will be capitalised as a distribution rights intangible asset. |
Related party transactions
Related party transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related party transactions | |
Related party transactions | D4 Related party transactions Transactions between the Company and its subsidiaries are eliminated on consolidation. The Company has transactions and outstanding balances with certain unit trusts, Open-Ended Investment Companies (OEICs), collateralised debt obligations and similar entities that are not consolidated and where a Group company acts as manager, which are regarded as related parties for the purposes of IAS 24. The balances are included in the Group’s statement of financial position at fair value or amortised cost in accordance with IAS 39 classifications. The transactions are included in the income statement and include amounts paid on issue of shares or units, amounts received on cancellation of shares or units and amounts paid in respect of the periodic charge and administration fee. In addition, there are no material transactions between the Group’s joint ventures and associates, which are accounted for on an equity method basis, and other Group companies. Executive officers and Directors of the Company may from time to time purchase insurance, asset management or annuity products marketed by Group companies in the ordinary course of business on substantially the same terms as those prevailing at the time for comparable transactions with other persons. In 2018, 2017 and 2016, other transactions with Directors were not deemed to be significant both by virtue of their size and in the context of the Directors’ financial positions. All of these transactions are on terms broadly equivalent to those that prevail in arm’s length transactions. Apart from these transactions with Directors, no Director had interests in shares, transactions or arrangements that require disclosure, other than those given in ‘Compensation and Employees’. Key management remuneration is disclosed in note B2.3. |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2018 | |
Commitments | |
Commitments | D5 Commitments Operating leases and capital commitments The Group leases various offices to conduct its business. Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. 2018 £m 2017 £m Future minimum lease payments for non-cancellable operating leases fall due during the following periods: Not later than 1 year 120 113 Later than 1 year and not later than 5 years 404 284 Later than 5 years 408 118 Future minimum sub-lease rentals received for non-cancellable operating leases for land and buildings 42 56 Minimum lease rental payments included in consolidated income statement 139 123 In addition, the Group has provided, from time to time, certain guarantees and commitments to third parties including funding the purchase or development of land and buildings and other related matters. The contractual obligations to purchase or develop investment properties at 31 December 2018 were £615 million (31 December 2017: £176 million). At 31 December 2018, Jackson has unfunded commitments of £664 million (31 December 2017: £414 million) related to its investments in limited partnerships and £345 million (31 December 2017: £214 million) related to commercial mortgage loans and other fixed maturities. These commitments were entered into in the normal course of business and a material adverse impact on the operations is not expected to arise from them. At 31 December 2018, UK and Europe’s insurance operations had unfunded commitments of £3,997 million (31 December 2017: £3,225 million) related to private equity and infrastructure funds. In addition, Prudential Capital had unfunded commitments of £155 million (31 December 2017: £162 million) related to its bridging loans. These commitments were entered into in the normal course of business and no material adverse impact on the operations is expected to arise. |
Investments in subsidiary under
Investments in subsidiary undertakings, joint ventures and associates | 12 Months Ended |
Dec. 31, 2018 | |
Investments in subsidiary undertakings, joint ventures and associates | |
Investments in subsidiary undertakings, joint ventures and associates | D6 Investments in subsidiary undertakings, joint ventures and associates (a) Dividend restrictions and minimum capital requirements Certain Group subsidiaries and joint ventures are subject to restrictions on the amount of funds they may transfer in the form of cash dividends or otherwise to the parent company. Under UK company law, UK companies can only declare dividends if they have sufficient distributable reserves. Further, UK insurance companies are required to maintain solvency margins in accordance with the rules of the Prudential Regulation Authority. M& GPrudential's asset management company, M&G Investment Management Ltd, is also required to maintain capital in accordance with regulatory requirements before making any distribution to the parent company. Jackson is subject to state laws that limit the dividends payable to its parent company based on statutory capital, surplus and prior year earnings. Dividends in excess of these limitations require prior regulatory approval. The Group’s subsidiaries, joint ventures and associates in Asia may remit dividends to the Group, in general, provided the statutory insurance fund meets the capital adequacy standard required under local statutory regulations and has sufficient distributable reserves. For further details on local capital regulations in Asia please refer to note C12.2. (b) Investments in joint ventures and associates Joint ventures represent arrangements where the controlling parties through contractual or other agreement have the rights to the net assets of the arrangements. The Group has shareholder-backed joint venture insurance and asset management businesses in China with CITIC Group, and a joint venture asset management business in India with ICICI Bank. In addition, there is an asset management joint venture in Hong Kong with Bank of China International Holdings Limited (BOCI) and Takaful insurance joint venture in Malaysia. The Group has various joint ventures relating to property investments held by the UK with-profits fund. The results of these joint ventures are reflected in the movement in the unallocated surplus of the UK with-profits funds and therefore do not affect shareholders’ results. For the Group’s joint ventures that are accounted for by using the equity method, the net of tax results of these operations are included in the Group’s profit before tax. The Group’s associates, which are also accounted for under the equity method, include the Indian insurance entity (with the majority shareholder being ICICI Bank) and PPM South Africa. In addition, the Group has investments in Open-Ended Investment Companies (OEICs), unit trusts, funds holding collateralised debt obligations, property unit trusts and venture capital investments of the UK with-profits funds where the Group has significant influence. As allowed under IAS 28, these investments are accounted for on a fair value through profit or loss basis. The aggregate fair value of associates accounted for at fair value through profit or loss, where there are published price quotations, is approximately £1.2 billion at 31 December 2018 (31 December 2017: £2.4 billion). For joint ventures and associates accounted for using the equity method, the 12 months financial information of these investments up to 31 December (covering the same period as that of the Group) has been used in these consolidated financial statements. The Group’s share of the profits (including short-term fluctuations in investment returns), net of related tax, and carrying amount of interest in joint ventures and associates, which are equity accounted as shown in the consolidated income statement comprises the following: Joint ventures and associates 2018 £m 2017 £m 2016 £m Shareholder-backed business 255 196 161 UK with-profits fund (prior to offsetting effect in movement in unallocated surplus) 36 106 21 Total 291 302 182 Asia UK and Europe Total Asset Asset segment and Share of profits from joint ventures and associates, net of related tax Insurance management Insurance management Group total 2018 178 61 36 16 291 2017 121 60 106 15 302 2016 94 54 21 13 182 There is no other comprehensive income in the joint ventures and associates. There has been no unrecognised share of losses of a joint venture or associate that the Group has stopped recognising in the total income. The joint ventures have no significant contingent liabilities or capital commitments to which the Group is exposed nor does the Group have any significant contingent liabilities or capital commitments in relation to its interests in the joint ventures. (c) Related undertakings In accordance with Section 409 of the Companies Act 2006 a list of Prudential Group’s subsidiaries, joint ventures, associates and significant holdings (being holdings of more than 20 per cent) along with the classes of shares held, the registered office address and the country of incorporation and the effective percentage of equity owned at 31 December 2018 is disclosed below. The definitions of a subsidiary undertaking, joint venture and associate in accordance with the Companies Act 2006 are different from the definition under IFRS. As a result, the related undertakings included within the list below may not be the same as the undertakings consolidated in the Group IFRS financial statements. The Group’s consolidation policy is described in note A3.1(b). Direct subsidiary undertakings of the parent company, Prudential plc (shares held directly or via nominees) Key to share classes: Abbreviation Class of share held LBG Limited by Guarantee LPI Limited Partnership Interest MI Membership Interest NSB Non-stock basis OS Ordinary Shares PI Partnership Interest PS Preference Shares U Units Name of entity Classes of Proportion Registered office address and country of incorporation M&G Prudential Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Prudential (US Holdco1) Limited OS 100.00% Prudential Capital Holding Company Limited OS 100.00% Prudential Corporation Asia Limited OS 100.00% 13th Floor, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong Prudential Group Holdings Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Other subsidiaries, joint ventures, associates and significant holdings of the Group – no shares held directly by the parent company, Prudential plc or its nominees: Classes of shares Proportion Name of entity held held Registered office address and country of incorporation 95th Avenue Retail Building, LLC MI 100.00% 901 S., Ste. 201, Second St., Springfield, IL, 62704-7909, United States Aberdeen Standard Singapore Equity OS 57.73% 21 Church Street, Capital Square 2, #01-01, Singapore 049480 Aberdeen Standard Cash Creation OS 22.91% 28th Floor Bangkok City Tower, 179 South Sathorn Road, Thungmahamek, Sathorn, Bangkok 10120, Thailand Allied Life Brokerage Agency, Inc OS 100.00% 400 East Court Avenue, Des Moines, IA 50309, USA ANRP II (AIV VI FC), L.P. LPI 36.58% Cayman Corporate Centre, 27 Hospital Road, George Town, KY-9008, Cayman Islands BOCHK Aggressive Growth Fund OS 57.19% 27th Floor, Bank of China Tower, 1 Garden Road, Central and Western District, Hong Kong BOCHK Asia Pacific Equity Fund U 27.18% 12th Floor and 25th Floor, Citicorp Centre, 18 Whitfield Road, Causeway Bay, Wan Chai, Hong Kong BOCHK Balanced Growth Fund OS 49.07% BOCHK China Equity Fund OS 66.00% BOCHK Conservative Growth Fund OS 54.00% BOCHK Global Bond Fund OS 30.25% 27/F Bank of China Tower, 1 Garden Road, Central and Western District, Hong Kong BOCHK Investment Funds - BOCHK Hong Kong Equity Fund U 20.25% 12th Floor, 25th Floor, Citicorp Centre, 18 Whitfield Road, Causeway Bay, Wan Chai , Hong Kong BOCI - Prudential Asset Management Limited OS 36.00% 27th Floor, Bank of China Tower, 1 Garden Road, Central and Western District, Hong Kong BOCI - Prudential Trustee Limited OS 36.00% 12th Floor and 25th Floor, Citicorp Centre, 18 Whitfield Road, Causeway Bay, Wan Chai, Hong Kong Brier Capital LLC OS 100.00% 1 Corporate Way, Lansing, MI 48951, USA Brooke (Holdco 1) Inc OS 100.00% 1105 North Market Street, Suite 1300, Wilmington, DE 19801, USA Brooke Life Insurance Company OS 100.00% 1 Corporate Way, Lansing, MI 48951, USA BWAT Retail Nominee (1) Limited OS 50.00% Laurence Pountney Hill, London, EC4R 0HH, UK BWAT Retail Nominee (2) Limited OS 50.00% Calvin F1 GP Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Calvin F2 GP Limited OS 100.00% Canada Property (Trustee) No 1 Limited OS 100.00% Lime Grove House, Green Street, St Helier, JE1 2ST, Jersey Canada Property Holdings Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Cardinal Distribution Park Management Limited OS 66.00% 5th Floor Cavendish House, 39 Waterloo Street, Birmingham, B2 5PP, UK Carraway Guildford (Nominee A) Limited OS 100.00% 13 Castle Street, St Helier, Jersey, JE4 5UT Carraway Guildford (Nominee B) Limited OS 100.00% Carraway Guildford General Partner Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Carraway Guildford Investments Unit Trust OS 100.00% 13 Castle Street, St Helier, Jersey, JE4 5UT Carraway Guildford LP LPI 100.00% Lloyds Chambers, 1 Portsoken Street, London, E1 8HZ, UK Centaurus Retail LLP LPI 50.00% 40 Broadway, London, SW1H 0BU, UK Centre Capital Non-Qualified Investors IV AIV Orion, LP LPI 76.80% 2711 Centreville Road, Suite 400, Wilmington, DE 19808, USA Centre Capital Non-Qualified Investors IV AIV-ELS, LP LPI 76.53% Centre Capital Non-Qualified Investors IV AIV-RA, LP LPI 31.92% Centre Capital Non-Qualified Investors IV, LP LPI 73.06% Centre Capital Non-Qualified Investors V AIV-ELS LP LPI 73.16% Centre Capital Non-Qualified Investors V LP LPI 67.16% CEP IV-A Chicago AIV LP LPI 31.92% 615 South Dupont Highway, Dover, DE 19901, USA CEP IV-A CWV AIV LP LPI 31.95% 850 New Burton Road, Suite 201, Dover, DE 19904, USA CEP IV-A Davenport AIV LP LPI 31.92% 615 South Dupont Highway, Dover, DE 19901, USA CEP IV-A Indy AIV LP LPI 31.92% CEP IV-A NMR AIV LP LPI 31.92% CEP IV-A WBCT AIV LP LPI 31.91% CF Prudential European QIS Fund OS 97.89% 17 Rochester Row, London, SW1P 1QT, UK CF Prudential Japanese QIS Fund OS 97.99% CF Prudential North American QIS Fund OS 98.87% 135 Bishopsgate, London, EC2M 3UR, UK CF Prudential Pacific Markets Trust Fund OS 98.31% Laurence Pountney Hill, London, EC4R 0HH, UK CF Prudential UK Growth QIS Fund OS 98.92% 17 Rochester Row, London, SW1P 1QT, UK CITIC-CP Asset Management Co., Ltd. MI 26.95% No.128 North Zhangjiabang Road, Pudong District, Shanghai, China CITIC-Prudential Fund Management Co., Ltd. MI 49.00% Level 9, HSBC Building, Shanghai IFC, 8 Century Avenue, Pudong, Shanghai, China CITIC-Prudential Life Insurance Company Limited MI 50.00% East Tower, World Financial Centre, No. 1 East Third Ring Middle Road, Chaoyang District, Beijing, China Clairvest Equity Partners IV-A LP LPI 31.87% 22 St Clair Avenue East, Suite 1700, Toronto, ON M4T 2S3, Canada Cribbs Causeway JV Limited OS 50.00% 40 Broadway, London, SW1H 0BU, UK Cribbs Causeway Merchants Association Limited LBG 100.00% The Mall at Cribbs Causeway, Bristol, BS34 5DG, UK Cribbs Mall Nominee (1) Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Curian Capital, LLC OS 100.00% 1 Corporate Way, Lansing, MI 48951, USA Curian Clearing LLC (Michigan) OS 100.00% Digital Infrastructure Investment Partners GP LLP LPI 65.00% Laurence Pountney Hill, London, EC4R 0HH, UK Digital Infrastructure Investment Partners GP1 Limited OS 100.00% Digital Infrastructure Investment Partners LP LPI 100.00% Digital Infrastructure Investment Partners SLP GP LLP LPI 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Digital Infrastructure Investment Partners SLP GP1 Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Digital Infrastructure Investment Partners SLP GP2 Limited OS 100.00% Eastspring Al-Wara' Investments Berhad OS 100.00% Level 25, Menara Hong Leong, No.6 Jalan Damanlela, Bukit Damansara, 50490 Kuala Lumpur, Wilayah Persekutuan, Malaysia Eastspring Asset Management Korea Co. Ltd. OS 100.00% 15th Floor, Shinhan Investment Tower, 70 Yoidae-ro, Youngdungpo-gu, Seoul 07325, Korea Eastspring Infrastructure Debt Fund L.P. PI 100.00% PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands Eastspring Investments - Japan Equity Fund U 89.84% 26, boulevard Royal, Luxembourg, L-2449, Luxembourg Eastspring Investment Management (Shanghai) Company Limited OS 100.00% 3/F Azia Center, 1233 Lujiazui Ring Road, Shanghai 200120, PRC Eastspring Investments - Asian Local Bond Fund OS 97.95% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments - Asian Smaller Companies Fund OS 99.71% Eastspring Investments - Developed and Emerging Asia Equity Fund OS 100.00% Eastspring Investments - Emerging Europe, Middle East and Africa Dynamic Fund OS 100.00% Eastspring Investments - Global Emerging Markets Customized Equity Fund OS 99.90% Eastspring Investments - Global Emerging Markets Dynamic Fund OS 94.89% Eastspring Investments - Global Low Volatility Equity Fund OS 98.67% Eastspring Investments - Global Technology Fund OS 78.82% Eastspring Investments - Japan Fundamental Value Fund OS 98.69% Eastspring Investments - Pan European Fund OS 52.83% 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Singapore 018983 Eastspring Investments - US High Yield Bond Fund OS 31.43% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments (Hong Kong) Limited OS 100.00% 13th Floor, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong Eastspring Investments (Luxembourg) SA OS 100.00% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments (Singapore) Limited OS 100.00% 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Singapore 018983 Eastspring Investments Asia Pacific Equity Fund OS 99.98% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments Asian Bond Fund OS 89.69% Eastspring Investments Asian Dynamic Fund OS 84.57% Eastspring Investments Asian Equity Fund OS 68.69% Eastspring Investments Asian Equity Income Fund OS 77.26% Eastspring Investments Asian High Yield Bond Fund OS 49.64% Eastspring Investments Asian High Yield Bond MY Fund OS 81.00% Eastspring Investments Asian Infrastructure Equity Fund OS 44.47% Eastspring Investments Asian Investment Grade Bond Fund OS 100.00% Eastspring Investments Asian Low Volatility Equity Fund OS 90.00% Eastspring Investments Asian Property Securities Fund OS 95.08% Eastspring Investments- Asian Total Return Bond Fund U 99.13% 26, boulevard Royal, Luxembourg, L-2449, Luxembourg Eastspring Investments Berhad OS 100.00% Level 25, Menara Hong Leong, No.6 Jalan Damanlela, Bukit Damansara, 50490 Kuala Lumpur, Wilayah Persekutuan, Malaysia Eastspring Investments China Equity Fund OS 53.72% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments Dragon Peacock Fund OS 35.18% Eastspring Investments European Inv Grade Bond Fund OS 99.76% Eastspring Investments Fund Management Limited Liability Company MI 100.00% 23rd Floor, Saigon Trade Center, 37 Ton Duc Thang Street, District 1, Ho Chi Minh City, Vietnam Eastspring Investments Global Emerging Markets Bond Fund OS 95.43% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments Global Equity Navigator Fund OS 99.99% Eastspring Investments Global Market Navigator Fund OS 98.88% Eastspring Investments Greater China Equity Fund OS 94.13% Eastspring Investments Hong Kong Equity Fund OS 99.89% Eastspring Investments Incorporated OS 100.00% 874 Walker Road, Suite C, Dover, DE 19904, USA Eastspring Investments India Consumer Equity Open Limited OS 100.00% 3rd Floor, 355 NEX, Rue du Savoir, Cybercity Ebene 72201, Mauritius Eastspring Investments India Equity Fund OS 69.74% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments India Equity Open Limited OS 100.00% 3rd Floor, 355 NEX, Rue du Savoir, Cybercity Ebene 72201, Mauritius Eastspring Investments India Infrastructure Equity Open Limited OS 100.00% Eastspring Investments Latin American Equity Fund OS 91.89% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments Limited OS 100.00% Marunouchi Park Building, 6-1 Marunouchi 2-chome, Chiyoda-Ku, Tokyo, Japan Eastspring Investments Global Multi Asset Income Plus Growth Fund OS 100.00% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments North America Value Fund OS 99.84% Eastspring Investments Services Pte. Ltd. OS 100.00% 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Singapore 018983 Eastspring Investments SICAV-FIS - Alternative Investments Fund OS 100.00% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments SICAV-FIS - Asia Pacific Loan Fund OS 100.00% Eastspring Investments SICAV-FIS Africa Equity Fund U 100.00% Eastspring Investments SICAV-FIS Universal USD Bond Fund OS 99.94% Eastspring Investments SICAV-FIS Universal USD Bond II Fund OS 100.00% Eastspring Investments US Bond Fund OS 32.87% Eastspring Investments US Corporate Bond Fund OS 89.61% Eastspring Investments US Equity Income Fund U 99.50% Eastspring Investments US High Inv Grade Bond Fund OS 92.77% Eastspring Investments US Investment Grade Bond Fund OS 56.87% Eastspring Investments US Strategic Income Bond Fund OS 100.00% Eastspring Investments US Total Return Bond Fund OS 100.00% Eastspring Investments Unit Trust - Dragon Peacock Fund U 97.40% Eastspring Investments (Singapore) Limited, Marina Bay Financial Centre, 10, Marina Boulevard, #32-01, Singapore 018983, Singapore Eastspring Investments UT Singapore ASEAN Equity Fund OS 100.00% 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Singapore 018983 Eastspring Investments UT Singapore Select Bond Fund OS 85.39% Eastspring Investments World Value Equity Fund OS 92.28% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Overseas Investment Fund Management (Shanghai) Company Limited OS 100.00% Unit 306-308, 3/F Azia Center, 1233 Lujiazui Ring Road, China (Shanghai) Pilot Free Trade Zone, China Eastspring Real Assets Partners OS 100.00% PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands Eastspring Securities Investment Trust Co., Ltd. OS 99.54% 4th Floor, No. 1 Songzhi Road, Taipei 110, Taiwan Edger Investments Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Edinburgh Park (Management) Limited LBG 100.00% 1 Exchange Crescent, Conference Square, Edinburgh, EH3 8UL, UK Embankment GP Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Embankment Nominee 1 Limited OS 100.00% Embankment Nominee 2 Limited OS 100.00% Empire Holding SARL (In liquidation) OS 100.00% 5, rue Guilllaume Kroll, L-1882, Luxembourg European Specialist Investment Funds - M&G Total Return Credit Investment Fund OS 26.13% 80, route d'Esch, L-1470, Luxembourg Falan GP Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Fashion Square ECO LP (In liquidation) LPI 100.00% 1209 Orange Street, Wilmington, DE 19801, USA Fidelity Funds - Japan Fund OS 23.56% 2A, Rue Albert Borschette, BP 274, Luxembourg, L-1246, Luxembourg First State China Focus Fund OS 60.97% 70 Sir John Rogerson’s Quay Dublin 2 D02 R296 Ireland First State Global Property A OS 42.35% Ground Floor, Tower 1, Darling Park, 201 Sussex Street, Sydney, NSW 2001, Australia Five Hotel Holding, LLC MI 100.00% CT Corporation System, 208 South LaSalle Street, Suite 814, Chicago, IL 60604, USA Folios III Designated Activity Company OS 60.00% Fourth Floor, 76 Lower Baggot Street, Dublin 2 Foudry Properties Limited OS 50.00% Clearwater Court, Vastern Road, Reading RG1 8DB, UK Fubon China Currency Fund OS 25.10% 8F, No.108, Sec. 1, Dunhua S. Rd., Songshan Dist., Taipei Fubon Global Investment Grade Bond Fund OS 47.80% 8F, No.108, Sec. 1, Dunhua S. Rd., Songshan Dist., Taipei Furnival Insurance Company PCC Limited OS 100.00% Third Floor, La Plaiderie Chambers, La Plaiderie, St Peter Port, Guernsey, GY1 1WG Genny GP 1 LLP LPI 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Genny GP 2 Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Genny GP Limited OS 100.00% George Digital GP 1 LLP LPI 100.00% George Digital GP 2 Limited OS 100.00% George Digital GP Limited OS 100.00% GGE GP Limited OS 100.00% Green GP Limited OS 100.00% Greenpark (Reading) General Partner Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Greenpark (Reading) Nominee No. 1 Limited OS 100.00% GreenPark (Reading) Nominee No. 2 Limited OS 100.00% GS Twenty Two Limited OS 100.00% Hermitage Management LLC OS 100.00% 1 Corporate Way, Lansing, MI 48951, USA Holborn Bars Nominees Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Holtwood Limited (in liquidation) OS 100.00% International House, Castle Hill, Victoria Road, Douglas, IM2 4RB, Isle of Man Hudson Seasons, LLC MI 100.00% 874 Walker Road, Suite C, Dover, DE 19904, USA Hyde Holdco 1 Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK ICICI Prudential Asset Management Company Limited OS 49.00% 12th Floor, Narain Manzil, 23, Barakhamba Road, New Delhi 110001, India ICICI Prudential Life Insurance Company Limited OS 25.82% ICICI PruLife Towers, 1089 Appasaheb Marathe Marg, Prabhadevi, Mumbai 400025, India ICICI Prudential Pension Funds Management Company OS 25.82% ICICI Prudential Trust Limited OS 49.00% 12th Floor, Narain Manzil, 23, Barakhamba Road, New Delhi 110001, India Infracapital (AIRI) GP Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital (Belmond) GP Limited OS 100.00% Infracapital (Bio) GP Limited OS 100.00% Infracapital (Churchill) GP 1 Limited OS 100.00% Governors House, 5 Laurence Pountney Hill, London, EC4R 0HH, England Infracapital (Churchill) GP LLP LPI 100.00% Infracapital (GC) GP Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital (Gigaclear) GP 1 Limited OS 100.00% Infracapital (Gigaclear) GP 2 Limited OS 100.00% Infracapital (Gigaclear) GP LLP LPI 100.00% Infracapital (IT PPP) GP Limited OS 100.00% Infracapital (Leo) GP Limited OS 100.00% Infracapital (Sense) GP Limited OS 100.00% Infracapital (TLSB) GP Limited OS 100.00% Infracapital (TLSB) SLP LP LPI 100.00% Infracapital ABP GP Limited (In liquidation) OS 100.00% Infracapital CI II Limited OS 100.00% Infracapital DF II GP LLP LPI 100.00% Infracapital DF II Limited OS 100.00% Infracapital Employee Feeder GP 1 LLP LPI 100.00% Infracapital Employee Feeder GP 2 LLP LPI 100.00% Infracapital Employee Feeder GP Limited OS 100.00% Infracapital F1 GP2 Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Infracapital F2 GP1 Limited OS 100.00% Infracapital F2 GP2 Limited OS 100.00% Infracapital GP 1 LLP LPI 100.00% Infracapital GP 2 LLP LPI 100.00% Infracapital GP II Limited OS 100.00% Infracapital GP Limited OS 100.00% Infracapital Greenfield DF GP LLP LPI 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Greenfield Partners 1 SLP GP LLP LPI 100.00% Infracapital Greenfield Partners 1 SLP GP1 Limited OS 100.00% Infracapital Greenfield Partners 1 SLP GP2 Limited OS 100.00% Infracapital Greenfield Partners I Employee Feeder GP LLP LPI 100.00% Infracapital Greenfield Partners I GP 1 Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Infracapital Greenfield Partners I GP 2 Limited OS 100.00% Infracapital Greenfield Partners I GP LLP LPI 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Greenfield Partners I LP LPI 26.52% Laurence Pountney Hill, London, EC4R 0HH, UK Infracapital Greenfield Partners I SLP2 GP LLP LPI 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Greenfield Partners I Subholdings GP LLP LPI 100.00% Infracapital Greenfield Partners I Subholdings GP1 Limited OS 100.00% Infracapital Partners II LP LPI 31.56% Laurence Pountney Hill, London, EC4R 0HH, UK Infracapital Partners II Subholdings GP LLP LPI 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Partners II Subholdings GP1 Limited OS 100.00% Infracapital Partners III GP SARL OS 100.00% 6, rue Eugène Ruppert, L-245, Luxembourg Infracapital Partners III Subholdings (Euro) GP LLP LPI 100.00% Governors House, 5 Laurence Pountney Hill, London, EC4R 0HH, England Infracapital Partners III Subholdings (Sterling) GP LLP LPI 100.00% Infracapital Partners III Subholdings GP1 Limited OS 100.00% Infracapital Partners III Subholdings GP2 Limited OS 100.00% Infracapital Partners LP LPI 33.04% Laurence Pountney Hill, London, EC4R 0HH, UK Infracapital RF GP Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Sisu GP Limited OS 100.00% Infracapital SLP II GP LLP LPI 100.00% Infracapital SLP II LP LPI 34.00% Infracapital SLP Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Innisfree M&G PPP LLP LPI 35.00% Boundary House, 91-93 Charterhouse Street, London, EC1M 6HR, UK Innisfree M&G PPP LP LPI 62.22% Invesco Fixed Maturity Selective Emerging Market Bonds 2024 OS 57.31% 22nd Floor, No. 1 Songzhi Road, Taipei, TW-TPE 11047, Taiwan, Province of China INVEST Financial Company Insurance Agency LLC of Illinois OS 100.00% 208 South LaSalle Street, Chicago, IL 60604, USA Jackson Charitable Foundation Inc NSB 100.00% 1 Corporate Way, Lansing, MI 48951, USA Jackson Holdings LLC OS 100.00% 1105 North Market Street, Suite 1300, Wilmington, DE 19801, USA Jackson National Asset Management LLC OS 100.00% 1 Corporate Way, Lansing, MI 48951, USA Jackson National Life (Bermuda) Limited OS 100.00% Cedar House, Hamilton, Bermuda Jackson National Life Distributors LLC OS 100.00% 1209 Orange Street, Wilmington, DE 19801, USA Jackson National Life Insurance Company OS 100.00% 1 Corporate Way, Lansing, MI 48951, USA Jackson National Life Insurance Company of New York OS 100.00% 2900 Westchester Avenue, Suite 305, Purchase, NY 10577, USA Jefferies Capital Partners V, L.P. LPI 21.92% 1209 Orange Street, Wilmington, DE 19801, USA JNL Global Credit LLC OS 100.00% 874 Walker Road, Suite C, City of Dover, County of Kent, State of Delaware 19904, United States Lion Credit Opportunity Fund Public Limited Company - Credit Opportunity Fund XV OS 98.44% 53 Merrion Square South, Dublin 2, D02 PR63, Ireland LIPP SARL (In liquidation) OS 100.00% 5, rue Guilllaume Kroll, L-1882, Luxembourg Livicos Limited (In liquidation) OS 100.00% Montague House, Adelaide Road, Dublin 2, D02 K039, Ireland London Stone Investments F3 Employee Feeder GP LLP LPI 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK London Stone Investments F3 I Limited OS 100.00% London Stone Investments F3 II Limited OS 100.00% London Stone Investments F3 SP GP LLP LPI 100.00% M&G (Guernsey) Limited OS 100.00% Dorey Court, Admiral Park, St. Peter Port, GY1 2HT, Guernsey M&G Alternatives Investment Management Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G Asia Property Fund OS 54.01% 34-38, Avenue de la Liberté, L-1930, Luxembourg M&G Corporate bond Fund OS 30.96% Laurence Pountney Hill, London, EC4R 0HH, UK M&G Dividend Fund OS 58.33% Laurence Pountney Hill, London, EC4R 0HH, UK M&G Episode Macro Fund OS 23.92% M&G European Credit Investment Fund OS 82.48% 80, route d'Esch, L-1470, Luxembourg M&G European High Yield Credit Investment Fund OS 99.99% M&G European Property Fund SICAV-FIS OS 49.74% 34-38, Avenue de la Liberté, L-1930, Luxembourg M&G European Secured Property Income Fund U 23.98% M&G European Select Fund OS 41.53% Laurence Pountney Hill, London, EC4R 0HH, UK M&G (Lux) European Strategic Value Fund OS 79.22% M&G Financial Services Limited OS 100.00% M&G Founders 1 Limited OS 100.00% M&G General Partner Inc OS 100.00% Walker House, 87 Mary Street, Grand Cayman, KY1-9002, Cayman Islands M&G Gilt & Fixed Interest Income Fund OS 49.65% Laurence Pountney Hill, London, EC4R 0HH, UK M&G Group Limited OS 100.00% M&G IMPPP 1 Limited OS 100.00% M&G International Investments Nominees Limited OS 100.00% M&G International Investments SA OS 100.00% 34-38, Avenue de la Liberté, L-1930, Luxembourg M&G International Investments Switzerland AG OS 100.00% Talstrasse 66, 8001 Zurich, Switzerland M&G Investment Funds (10) - M&G Absolute Return Bond Fund OS 41.56% Laurence Pountney Hill, London, EC4R 0HH, UK M&G Investment Funds (10) - M&G Global Listed Infrastructure Fund OS 20.00% M&G Investment Funds (10) - M&G Positive Impact Fund OS 51.96% M&G Investment Funds (4) - M&G Episode Allocation Fund OS 22.35% M&G Investment Funds (7) - M&G Global Convertibles Fund OS 59.02% M&G Investment Management Limited OS 100.00% M&G Investments (Americas) Inc. OS 100.00% 251 Little Falls Drive, Wilmington, DE, 19801 M&G Investments (Australia) Pty Ltd OS 100.00% Level 16, Grosvenor Place, 225 George Street, Sydney, Australia, NSW 2000 M&G Investments (Hong Kong) Limited OS 100.00% 6th Floor, Alexandra House, 18 Chater Road, Central, Hong Kong M&G Investments (Singapore) Pte. Ltd. OS 100.00% 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Singapore 018983 M&G Investments Japan Co., LTD OS 100.00% 3-1 Toranomon, 4 Chome, Minato-ku, Tokyo, Japan M&G Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G Luxembourg SA OS 100.00% 34-38, Avenue de la Liberté, L-1930, Luxembourg M&G Management Services Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G Nominees Limited OS 100.00% M&G PFI 2018 GP LLP LPI 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK M&G PFI 2018 GP1 Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G PFI 2018 GP2 Limited OS 100.00% M&G PFI Carry Partnership 2016 LP LPI 25.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK M&G PFI Partnership 2018 LP LPI 100.00% M&G Platform Nominees Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G Prudential (Holdings) Limited OS 100.00% M&G Prudential Service Company Limited OS 100.00% M&G RE Espana 2016 S.L. OS 100.00% Plaza de Colon, Torre II, Planta 14, 28046, Madrid, Spain M&G RE UKEV (GP1) LLP LPI 100.00% Laurence Pountney Hill, London, EC4R 0HH M&G RE UKEV 1-A LP LPI 100.00% M&G Real Estate Asia Holding Company Pte. Ltd OS 100.00% 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Singapore 018983 M&G Real Estate Asia PTE. Ltd OS 100.00% M&G Real Estate Debt Finance VI Designated Activity Company OS 46.00% 4th Floor, 76 Lower Baggot Street, Dublin 2, D02 Ek81 M&G Real Estate Funds Management SARL OS 100.00% 34-38, Avenue de la Liberté, L-1930, Luxembourg M&G Real Estate Japan Co. Ltd. OS 100.00% Shiroyama Trust Tower, Tokyo, Japan M&G Real Estate Korea Co. Ltd. OS 100.00% Kyobo Building, Seoul, Korea M&G Real Estate Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G Real Estate UK Enhanced Value LP LPI 50.10% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK M&G Real Estate UKEV (GP) LLP LPI 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G RED Employee Feeder GP Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK M&G RED II Employee Feeder GP Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK M&G RED II GP Limited OS 100.00% Third Floor, La Plaiderie Chambers, La Plaiderie, St Peter Port, Guernsey, GY1 1WG M&G RED II SLP GP Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK M&G RED II SLP LP LPI 28.00% M&G RED III Employee Feeder GP Limited OS 100.00% M&G RED III GP Limited OS 100.00% Third Floor, La Plaiderie Chambers, La Plaiderie, St Peter Port, Guernsey, GY1 1WG M&G RED III SLP GP Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK M&G RED III SLP LP LPI 25.00% M&G RED SLP GP Limited OS 100.00% M&G RPF GP Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G RPF Nominee 1 Limited OS 100.00% M&G RPF Nominee 2 Limited OS 100.00% M&G Securities Limited OS 100.00% M&G SIF Management Company (Ireland) Limited OS 100.00% 78 Sir John Rogerson's Quay, Dublin 2, D02 RK57, Ireland M&G Specialty Finance Fund (GP) Sárl OS 100.00% 51, Avenue J.F. Kennedy, L-1855 Luxembourg M&G Specialty Finance Fund Carry Interest Partnership (GP) Sárl OS 100.00% M&G UK Companies Financing Fund II LP LPI 48.32% Laurence Pountney Hill, London, EC4R 0HH, UK M&G UK Property Fund OS 100.00% 16, Boulevard Royal, L-2449, Luxembourg M&G UK Property GP Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G UK Property Nominee 1 Limited OS 100.00% M&G UK Property Nominee 2 Limited OS 100.00% M&G UK Residential Property Fund LPI 58.42% 34-38, avenue de la Liberté, L-1931, Luxembourg M&G UKCF II GP Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G UKEV (SLP) General |
FURTHER ACCOUNTING POLICIES
FURTHER ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
Further accounting policies | |
FURTHER ACCOUNTING POLICIES | E Further accounting policies E1 Other significant accounting policies In addition to the critical accounting polices presented in note A3.1, the following detailed accounting policies are adopted by the Group to prepare the consolidated financial statements. These accounting policies are applied consistently for all years presented and normally are not subject to change unless new accounting standards, interpretations or amendments are introduced by the IASB. (a) Basis of consolidation The Group consolidates those investees it is deemed to control. The Group has control over an investee if all three of the following are met: (1) it has power over an investee; (2) it is exposed to, or has rights to, variable returns from its involvement with the investee; and (3) it has ability to use its power over the investee to affect its own returns. (i) Subsidiaries Subsidiaries are those investees that the Group controls. The majority of the Group’s subsidiaries are corporate entities, but the Group’s insurance operations also invest in a number of limited partnerships. The Group performs a re-assessment of consolidation whenever there is a change in the substance of the relationship between the Group and an investee. Where the Group is deemed to control an entity it is treated as a subsidiary and its results, assets and liabilities are consolidated. Where the Group holds a minority share in an entity, with no control over the entity, the investments are carried at fair value through profit or loss within financial investments in the consolidated statement of financial position. Entities consolidated by the Group include Qualifying Partnerships as defined under the UK Partnerships (Accounts) Regulations 2008 (the ‘Partnerships Act’). Some of these limited partnerships have taken advantage of the exemption under regulation 7 of the Partnerships Act from the financial statements requirements. This is under regulations 4 to 6, on the basis that these limited partnerships are dealt with on a consolidated basis in these financial statements. (ii) Joint ventures and associates Joint ventures are joint arrangements arising from a contractual agreement whereby the Group and other investors have joint control of the net assets of the arrangement. In a number of these arrangements, the Group’s share of the underlying net assets may be less than 50 per cent but the terms of the relevant agreement make it clear that control is jointly exercised between the Group and the third party. Associates are entities over which the Group has significant influence, but it does not control. Generally it is presumed that the Group has significant influence if it holds between 20 per cent and 50 per cent voting rights of the entity. With the exception of those referred to below, the Group accounts for its investments in joint ventures and associates by using the equity method of accounting. The Group’s share of profit or loss of its joint ventures and associates is recognised in the income statement and its share of movements in other comprehensive income is recognised in other comprehensive income. The equity method of accounting does not apply to investments in associates and joint ventures held by the Group’s insurance or investment funds. This includes venture capital business, mutual funds and unit trusts and which, as allowed by IAS 28, ‘Investments in Associates and Joint Ventures’, are carried at fair value through profit or loss. (iii) Structured entities Structured entities are those that have been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity. Voting rights relate to administrative tasks. Relevant activities are directed by means of contractual arrangements. The Group invests in structured entities such as: Open-Ended Investment Companies (OEICs); Unit Trusts (UTs); Limited partnerships; Variable interest entities; Investment vehicles within separate accounts offered through variable annuities; Collateralised debt obligations; Mortgage-backed securities; and Similar asset-backed securities. Open-ended investment companies and unit trusts The Group invests in OEICs and UTs, which invest mainly in equities, bonds, cash and cash equivalents, and properties. The Group’s percentage ownership in these entities can fluctuate on a daily basis according to the participation of the Group and other investors in them. Where the entity is managed by a Group asset manager, and the Group’s ownership holding in the entity exceeds 50 per cent, the Group is judged to have control over the entity. Where the entity is managed by a Group asset manager, and the Group’s ownership holding in the entity is between 20 per cent and 50 per cent, the facts and circumstances of the Group’s involvement in the entity are considered, including the rights to any fees earned by the asset manager from the entity, in forming a judgement as to whether the Group has control over the entity. Where the entity is managed by a Group asset manager, and the Group’s ownership holding in the entity is less than 20 per cent, the Group is judged to not have control over the entity. Where the entity is managed by an asset manager outside the Group, an assessment is made of whether the Group has existing rights that gives it the ability to direct the current activities of the entity and therefore control the entity. In assessing the Group’s ability to direct an entity, the Group considers its ab ility relative to other investors. The Group has a limited number of OEICs and UTs where it considers it has such ability. Where the Group is deemed to control these entities, they are treated as a subsidiary and are consolidated, with the interests of investors other than the Group being classified as liabilities, and appear as net asset value attributable to unit holders of consolidated unit trusts and similar funds. Where the Group does not control these entities (as it is deemed to be acting as an agent) and they do not meet the definition of associates, they are carried at fair value through profit or loss within financial investments in the consolidated statement of financial position. Where the Group’s asset manager sets up OEICs and UTs as part of asset management operations, the Group’s interest is limited to the administration fees charged to manage the assets of such entities. With no participation in these entities, the Group does not retain risks associated with OEICs and UTs. For these open-ended investment companies and unit trusts, the Group is not deemed to control the entities but to be acting as an agent. The Group generates returns and retains the ownership risks in investment vehicles commensurate to its participation and does not have any further exposure to the residual risks of these investment vehicles. Jackson’s separate account assets These are investment vehicles that invest contract holders’ premiums in equity, fixed income, bonds and money market mutual funds. The contract holder retains the underlying returns and the ownership risks related to the underlying investments. The shareholder’s economic interest in separate accounts is limited to the administrative fees charged. The separate accounts are set up as separate regulated entities governed by a Board of Governors or trustees for which the majority of the members are independent of Jackson or any affiliated entity. The independent members are responsible for any decision making that impacts contract holders’ interest and govern the operational activities of the entities’ advisers, including asset managers. Accordingly, the Group does not control these vehicles. These investments are carried at fair value through profit or loss within financial investments in the consolidated statement of financial position. Limited partnerships The Group’s insurance operations invest in a number of limited partnerships, either directly or through unit trusts, through a mix of capital and loans. These limited partnerships are managed by general partners, in which the Group holds equity. Such interest in general partners and limited partnerships provide the Group with voting and similar rights to participate in the governance framework of the relevant activities in which limited partnerships are engaged in. Accounting for the limited partnerships as subsidiaries, joint ventures, associates or other financial investments depends on the terms of each partnership agreement and the shareholdings in the general partners. Other structured entities The Group holds investments in mortgage-backed securities, collateralised debt obligations and similar asset-backed securities, the majority of which are actively traded in a liquid market. The Group consolidates the vehicles that hold the investments where the Group is deemed to control the vehicles. When assessing control over the vehicles, the factors considered include the purpose and design of the vehicle, the Group’s exposure to the variability of returns and the scope of the Group’s ability to direct the relevant activities of the vehicle including any kick-out or removal rights that are held by third parties. The outcome of the control assessment is dependent on the terms and conditions of the respective individual arrangements. The majority of such vehicles are not consolidated. In these cases the Group is not the sponsor of the vehicles in which it holds investments and has no administrative rights over the vehicles’ activities. The Group generates returns and retains the ownership risks commensurate to its holding and its exposure to the investments. Accordingly the Group does not have power over the relevant activities of such vehicles and all are carried at fair value through profit or loss within financial investments in the consolidated statement of financial position. The table below provides aggregate carrying amounts of the investments in unconsolidated structured entities reported in the Group’s statement of financial position: 31 December 2018 £m 31 December 2017 £m Separate Other Separate Other account structured account structured OEICs/UTs assets entities OEICs/UTs assets entities Statement of financial position line items Equity securities and portfolio holdings in unit trusts 21,216 128,220 — 20,718 130,528 — Debt securities — — 11,081 — — 10,894 Total 21,216 128,220 11,081 20,718 130,528 10,894 The Group generates returns and retains the ownership risks in these investments commensurate to its participation and does not have any further exposure to the residual risks or losses of the investments or the vehicles in which it holds investments. As at 31 December 2018, the Group does not have an agreement, contractual or otherwise, or intention to provide financial support to structured entities that could expose the Group to a loss. (b) Reinsurance The measurement of reinsurance assets is consistent with the measurement of the underlying direct insurance contracts. The treatment of any gains or losses arising on the purchase of reinsurance contracts is dependent on the underlying accounting basis of the entity concerned. (c) Earned premiums, policy fees and claims paid Premiums for conventional with-profits policies and other protection type insurance policies are recognised as revenue when due. Premiums and annuity considerations for linked policies, unitised with-profits and other investment type policies are recognised as revenue when received or, in the case of unitised or unit-linked policies, when units are issued. These amounts exclude premium taxes and similar duties where Prudential collects and settles taxes borne by the customer. Policy fees charged on linked and unitised with-profits policies for mortality, asset management and policy administration are recognised as revenue when related services are provided. Claims paid include maturities, annuities, surrenders and deaths. Maturity claims are recorded as charges on the policy maturity date. Annuity claims are recorded when each annuity instalment becomes due for payment. Surrenders are charged to the income statement when paid and death claims are recorded when notified. (d) Investment return Investment return included in the income statement principally comprises interest income, dividends, investment appreciation/depreciation (realised and unrealised gains and losses) on investments designated as fair value through profit or loss, and realised gains and losses (including impairment losses) on items held at amortised cost and Jackson’s debt securities designated as available-for-sale. Movements in unrealised appreciation/depreciation of Jackson’s debt securities designated as available-for-sale are recorded in other comprehensive income. Interest income is recognised as it accrues, taking into account the effective yield on investments. Dividends on equity securities are recognised on the ex-dividend date and rental income is recognised on an accrual basis. (e) Financial investments other than instruments classified as long-term business contracts (i) Investment classification The Group holds financial investments in accordance with IAS 39, whereby subject to specific criteria, financial instruments are required to be accounted for under one of the following categories: Financial assets and liabilities at fair value through profit or loss – this comprises assets and liabilities designated by management as fair value through profit or loss on inception and derivatives that are held for trading. These investments are measured at fair value with all changes thereon being recognised in investment return in the income statement; Financial investments on an available-for-sale basis – this comprises assets that are designated by management as available-for-sale and/or do not fall into any of the other categories. These assets are initially recognised at fair value plus attributable transaction costs. Available-for-sale assets are subsequently measured at fair value. Interest income is recognised on an effective interest basis in the income statement. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset. Except for foreign exchange gains and losses on debt securities, which are included in the income statement, unrealised gains and losses are recognised in other comprehensive income. Upon disposal or impairment, accumulated unrealised gains and losses are transferred from other comprehensive income to the income statement as realised gains or losses; and Loans and receivables – except for those designated as at fair value through profit or loss or available-for-sale, these instruments comprise non-quoted investments that have fixed or determinable payments. These instruments include loans collateralised by mortgages, deposits, loans to policyholders and other unsecured loans and receivables. These investments are initially recognised at fair value plus transaction costs. Subsequently, these instruments are carried at amortised cost using the effective interest method. The Group uses the trade date method to account for regular purchases and sales of financial assets. See note A3.1 for further details of valuation of financial investments. (ii) Derivatives and hedge accounting Derivative financial instruments are used to reduce or manage investment, interest rate and currency exposures, to facilitate efficient portfolio management and for investment purposes. The Group may designate certain derivatives as hedges. For hedges of net investments in foreign operations, the effective portion of any change in fair value of derivatives or other financial instruments designated as net investment hedges is recognised in other comprehensive income. The ineffective portion of changes in the fair value of the hedging instrument is recorded in the income statement. The Group does not regularly seek to apply fair value or cash flow hedging treatment under IAS 39. The Group has no fair value and cash flows hedges under IAS 39 at 31 December 2018 and 2017. All derivatives that are not designated as hedging instruments are carried at fair value, with movements in fair value being recorded in the income statement. The primary areas of the Group’s continuing operations where derivative instruments are held are the UK with-profits funds and annuity business, and Jackson. For UK with-profits funds the derivative programme is used for the purposes of efficient portfolio management or reduction in investment risk. For shareholder-backed UK annuity business the derivatives are held to contribute to the matching as far as practical, of asset returns and duration with those of liabilities to policyholders. The carrying value of these liabilities is sensitive to the return on the matching financial assets including derivatives held. For Jackson’s derivative programme see note A3.1. (iii) Guaranteed benefit options and embedded derivatives Jackson’s variable annuity products with guaranteed benefit options are within the scope of IFRS 4 and are accounted for using ‘grandfathered’ US GAAP (See C4.2(b)). This results in liabilities for Guaranteed Minimum Withdrawal Benefit (‘not for life’) and Guaranteed Minimum Accumulation benefit options being bifurcated and measured at fair value in a manner consistent with IAS 39. Embedded derivatives are embedded within other non-derivative host financial instruments and insurance contracts to create hybrid instruments. Embedded derivatives meeting the definition of an insurance contract are accounted for under IFRS 4. Where economic characteristics and risks of the embedded derivatives are not closely related to the economic characteristics and risks of the host instrument, and where the hybrid instrument is not measured at fair value with the changes in fair value recognised in the income statement, the embedded derivative is bifurcated and carried at fair value as a derivative measured in accordance with IAS 39. In addition, the Group applies the option under IFRS 4 to not separate and fair value surrender options embedded in host contracts and with-profits investment contracts whose strike price is either a fixed amount or a fixed amount plus interest. (iv) Securities lending and reverse repurchase agreements The Group is party to various securities lending agreements (including repurchase agreements) under which securities are loaned to third parties on a short-term basis. The loaned securities are not derecognised; rather, they continue to be recognised within the appropriate investment classification. The Group’s policy is that collateral in excess of 100 per cent of the fair value of securities loaned is required from all securities’ borrowers and typically consists of cash, debt securities, equity securities or letters of credit. In cases where the Group takes possession of the collateral under its securities lending programme, the collateral, and corresponding obligation to return such collateral, are recognised in the consolidated statement of financial position. The Group is also party to various reverse repurchase agreements under which securities are purchased from third parties with an obligation to resell the securities. The securities are not recognised as investments in the statement of financial position. (v) Derecognition of financial assets and liabilities The Group’s policy is to derecognise financial assets when it is deemed that substantially all the risks and rewards of ownership have been transferred. The Group derecognises financial liabilities only when the obligation specified in the contract is discharged, cancelled or has expired. (vi) Financial liabilities designated at fair value through profit or loss Consistent with the Group’s risk management and investment strategy and the nature of the products concerned, the Group has designated under IAS 39 classification certain financial liabilities at fair value through profit or loss as these instruments are managed and their performance evaluated on a fair value basis. These instruments include liabilities related to consolidated collateralised debt obligations, net assets attributable to unit holders of consolidated unit trusts and similar funds and policyholder liabilities for investment contracts without discretionary participation features for UK and Asia. (f) Segments Under IFRS 8, ‘Operating Segments’, the Group determines and presents operating segments based on the information that is internally provided to the Group Executive Committee which is the Group’s chief operating decision maker. The operating segments identified by the Group reflect the Group’s organisational structure, which is by business units Asia, US and UK and Europe. All business units contain both insurance and asset management operations. Further information on the Group’s operating segments is provided in note B1.3. (g) Borrowings Although initially recognised at fair value, net of transaction costs, borrowings, excluding liabilities of consolidated collateralised debt obligations, are subsequently accounted for on an amortised cost basis using the effective interest method. Under the effective interest method, the difference between the redemption value of the borrowing and the initial proceeds (net of related issue costs) is amortised through the income statement to the date of maturity or for hybrid debt, over the expected life of the instrument. (h) Investment properties Investments in leasehold and freehold properties not for occupation by the Group, including properties under development for future use as investment properties, are carried at fair value, with changes in fair value included in the income statement. Properties are valued annually either by the Group’s qualified surveyors or by taking into consideration the advice of professional external valuers using the Royal Institution of Chartered Surveyors valuation standards. Each property is externally valued at least once every three years. Leases of investment property where the Group has substantially all the risks and rewards of ownership are classified as finance leases (leasehold property). Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. (i) Pension schemes For the Group’s defined benefit schemes, if the present value of the defined benefit obligation exceeds the fair value of the scheme assets, then a liability is recorded in the Group’s statement of financial position. By contrast, if the fair value of the assets exceeds the present value of the defined benefit obligation then the surplus will only be recognised if the nature of the arrangements under the trust deed, and funding arrangements between the Trustee and the Company, support the availability of refunds or recoverability through agreed reductions in future contributions. In addition, if there is a constructive obligation for the Company to pay deficit funding, this is also recognised such that the financial position recorded for the scheme reflects the higher of any underlying IAS 19 deficit and the obligation for deficit funding. The Group utilises the projected unit credit method to calculate the defined benefit obligation. This method sees each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Estimated future cash flows are then discounted at a high-quality corporate bond rate, adjusted to allow for the difference in duration between the bond index and the pension liabilities where appropriate, to determine its present value. These calculations are performed by independent actuaries. The plan assets of the Group’s pension schemes include several insurance contracts that have been issued by the Group. These assets are excluded from plan assets in determining the pension surplus or deficit recognised in the consolidated statement of financial position. The aggregate of the actuarially determined service costs of the currently employed personnel, and the net interest on the net defined benefit liability (asset) at the start of the period, is charged to the income statement. Actuarial and other gains and losses as a result of changes in assumptions or experience variances are recognised as other comprehensive income. Contributions to the Group’s defined contribution schemes are expensed when due. (j) Share-based payments and related movements in own shares The Group offers share award and option plans for certain key employees and a Save As You Earn plan for all UK and certain overseas employees. Shares held in trust relating to these plans are conditionally gifted to employees. The compensation expense charged to the income statement is primarily based upon the fair value of the options granted, the vesting period and the vesting conditions. The Company has established trusts to facilitate the delivery of Prudential plc shares under employee incentive plans and savings-related share option schemes. The cost to the Company of acquiring these treasury shares held in trusts is shown as a deduction from shareholders’ equity. (k) Tax Prudential is subject to tax in numerous jurisdictions and the calculation of the total tax charge inherently involves a degree of estimation and judgement. Current tax expense is charged or credited based upon amounts estimated to be payable or recoverable as a result of taxable amounts for the current year and adjustments made in relation to prior years. The positions taken in tax returns where applicable tax regulation is subject to interpretation are recognised in full in the determination of the tax charge in the financial statements if the Group considers that it is probable that the taxation authority will accept those positions. Otherwise, provisions are established based on management’s estimate and judgement of the likely amount of the liability, or recovery by providing for the single best estimate of the most likely outcome or the weighted average expected value where there are multiple outcomes. The total tax charge includes tax expense attributable to both policyholders and shareholders. The tax expense attributable to policyholders comprises the tax on the income of the consolidated with-profits and unit-linked funds. In certain jurisdictions, such as the UK, life insurance companies are taxed on both their shareholders’ profits and on their policyholders’ insurance and investment returns on certain insurance and investment products. Although both types of tax are included in the total tax charge in the Group’s consolidated income statement, they are presented separately in the consolidated income statement to provide the most relevant information about tax that the Group pays on its profits. Deferred taxes are provided under the liability method for all relevant temporary differences. IAS 12, ‘Income Taxes’ does not require all temporary differences to be provided for, in particular, the Group does not provide for deferred tax on undistributed earnings of subsidiaries where the Group is able to control the timing of the distribution and the temporary difference created is not expected to reverse in the foreseeable future. Deferred tax assets are only recognised when it is more likely than not that future taxable profits will be available against which these losses can be utilised. Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability settled, based on tax rates (and laws) that have been enacted or are substantively enacted at the end of the reporting period. (l) Business acquisitions and disposals Business acquisitions are accounted for by applying the purchase method of accounting, which adjusts the net assets of the acquired company to fair value at the date of purchase. The excess of the acquisition consideration over the fair value of the assets and liabilities of the acquired entity is recorded as goodwill. Expenses related to acquiring new subsidiaries are charged to the income statement in the period in which they are incurred. Income and expenses of acquired entities are included in the income statement from the date of acquisition. Income and expenses of entities sold during the period are included in the income statement up to the date of disposal. The gain or loss on disposal is calculated as the difference between sale proceeds net of selling costs, less the net assets of the entity at the date of disposal, adjusted for foreign exchange movements attaching to the sold entity that are required to be recycled to the income statement under IAS 21. Where the Group writes a put option over its non-controlling interests as part of its business acquisition, which if exercised triggers the purchase by the Group of the non-controlling interests, the put option is recognised as a financial liability at the acquisition date with a corresponding amount, deducted directly from shareholder’s equity. Any subsequent changes to the carrying amount of the put liability are also recognised within equity. (m) Goodwill Goodwill arising on acquisitions of subsidiaries and businesses is capitalised and carried on the Group statement of financial position as an intangible asset at initial value less any accumulated impairment losses. Goodwill impairment testing is conducted annually and when there is an indication of impairment. For the purposes of impairment testing, goodwill is allocated to cash generating units. For further details see note C5.1. (n) Intangible assets Intangible assets acquired on the purchase of a subsidiary or portfolio of contracts are measured at fair value on acquisition. Deferred acquisition costs are accounted for as described in note A3.1(c). Other intangible assets, such as distribution rights and software, are valued initially at the price paid to acquire them and are subsequently carried at cost less amortisation and any accumulated impairment losses.The amortisation methods for distribution rights and software are as described in note C5.2(iii). For other intangibles, amortisation follows the pattern in which the future economic benefits are expected to be consumed.If the pattern cannot be determined reliably, a straight-line method is applied. Amortisation of intangible assets is charged to the ‘acquisition costs and other expenditure’ line in the consolidated income statement. Impairment testing is conducted when there is an indication of impairment. (o) Cash and cash equivalents Cash and cash equivalents consist of cash at bank and in hand, deposits held at call with banks, treasury bills and other short-term highly liquid investments with less than 90 days maturity from the date of acquisition. (p) Shareholders’ dividends Interim dividends are recorded in the period in which they are paid. Final dividends are recorded in the period in which they are approved by shareholders. (q) Share capital Shares are classified as equity when their terms do not create an obligation to transfer assets. The difference between the proceeds received on issue of the shares, net of share issue costs, and the nominal value of the shares issued, is credited to share premium. Where the Company purchases shares for the purposes of employee incentive plans, the consideration paid, net of issue costs, is deducted from retained earnings. Upon issue or sale any consideration received is credited to retained earnings net of related costs. (r) Foreign exchange The Group’s consolidated financial statements are presented in pounds sterling, the Group’s presentation currency. Accordingly, the results and financial position of foreign subsidiaries must be translated into the presentation currency of the Group from their functional currencies, ie the currency of the primary economic environment in which the entity operates. All assets and liabilities of foreign subsidiaries are converted at year end exchange rates while all income and expenses are converted at average exchange rates where this is a reasonable approximation of the rates prevailing on transaction dates. The impact of these currency translations is recorded as a separate component in the statement of comprehensive income. Foreign currency borrowings that are used to provide a hedge against Group equity investments in overseas subsidiaries are translated at year end exchange rates and movements recognised in other comprehensive income. Other foreign currency monetary items are translated at year en |
Condensed Financial Information
Condensed Financial Information of Registrant Prudential plc | 12 Months Ended |
Dec. 31, 2018 | |
Condensed Financial Information of Registrant Prudential plc | |
Condensed Financial Information of Registrant Prudential plc | Schedule II Condensed Financial Information of Registrant Prudential plc Profit and Loss Accounts (FRS 101 Basis) Years ended 31 December 2018 £m 2017 £m 2016 £m Investment income, including dividends received from subsidiary undertakings 1,757 1,413 Investment expenses and charges (414) (479) Other charges: Corporate expenditure (217) (212) Foreign currency exchange gains (losses) (10) 3 Profit on ordinary activities before tax 1,116 725 Tax credit on profit on ordinary activities 119 115 Profit for the financial year 1,235 840 Other comprehensive income: Items that will not be reclassified to profit or loss Actuarial gains recognised in respect of the defined benefit pension scheme 34 4 Related tax (6) — 28 4 Total comprehensive income for the year 1,263 844 The accompanying notes are an integral part of this condensed financial information Schedule II Condensed Financial Information of Registrant Prudential plc Statements of Financial Position (FRS 101 Basis) 31 December 2018 £m 2017 £m Fixed assets Investments in subsidiary undertakings 10,825 10,798 Current assets Debtors: Amounts owed by subsidiary undertakings 5,904 4,732 Other debtors 5 5 Tax recoverable 42 40 Derivative assets 5 5 Pension asset 69 71 Cash at bank and in hand 22 143 6,047 4,996 Liabilities: amounts falling due within one year Commercial paper (472) (485) Other borrowings — (600) Derivative liabilities (423) (443) Amounts owed to subsidiary undertakings (936) (715) Tax payable (10) (10) Deferred tax liability (12) (12) Accruals and deferred income (101) (79) (1,954) (2,344) Net current assets 4,093 2,652 Total assets less current liabilities 14,918 13,450 Liabilities: amounts falling due after more than one year Subordinated liabilities (6,676) (5,272) Debenture loans (517) (549) Other borrowings (275) — (7,468) (5,821) Total net assets 7,450 7,629 Capital and reserves Share capital 130 129 Share premium 1,964 1,948 Profit and loss account 5,356 5,552 Shareholders’ funds 7,450 7,629 The accompanying notes are an integral part of this condensed financial information Schedule II Condensed Financial Information of Registrant Prudential plc Statements of Changes in Equity (FRS 101 basis) Share Share Profit and Total £m capital premium loss account equity Balance at 1 January 2016 128 1,915 5,866 7,909 Total comprehensive income for the year Profit for the year — — 840 840 Actuarial gains recognised in respect of the defined benefit pension scheme — — 4 4 Total comprehensive income for the year — — 844 844 Transactions with owners, recorded directly in equity New share capital subscribed 1 12 — 13 Share based payment transactions — — 6 6 Dividends — — (1,267) (1,267) Total contributions by and distributions to owners 1 12 (1,261) (1,248) Balance at 31 December 2016 129 1,927 5,449 7,505 Balance at 1 January 2017 129 1,927 5,449 7,505 Total comprehensive income for the year Profit for the year — — 1,235 1,235 Actuarial gains recognised in respect of the defined benefit pension scheme — — 28 28 Total comprehensive income for the year — — 1,263 1,263 Transactions with owners, recorded directly in equity New share capital subscribed — 21 — 21 Share based payment transactions — — (1) (1) Dividends — — (1,159) (1,159) Total contributions by and distributions to owners — 21 (1,160) (1,139) Balance at 31 December 2017 129 1,948 5,552 7,629 Balance at 1 January 2018 129 1,948 5,552 7,629 Impact of initial application of IFRS 9 — — (9) (9) Total comprehensive income for the year Profit for the year — — 1,041 1,041 Actuarial gains recognised in respect of the defined benefit pension scheme — — 16 16 Total comprehensive income for the year — — 1,057 1,057 Transactions with owners, recorded directly in equity New share capital subscribed 1 16 — 17 Share based payment transactions — — — — Dividends — — (1,244) (1,244) Total contributions by and distributions to owners 1 16 (1,244) (1,227) Balance at 31 December 2018 130 1,964 5,356 7,450 The accompanying notes are an integral part of this condensed financial information Schedule II Condensed Financial Information of Registrant Prudential plc Statements of Cash Flows (FRS 101 Basis) Years ended 31 December 2018 £m 2017 £m 2016 £m Operations Net cash inflow from operating activities before interest and tax 1,534 1,621 Interest paid (409) (339) Taxes received 121 105 Equity dividends paid (1,159) (1,267) Net cash inflow before financing 87 120 Financing Issue of ordinary share capital 21 13 Issue of borrowings 565 1,227 Repayment of borrowings (751) — Movement in commercial paper and other borrowings to support a short-term fixed income securities program (567) (255) Investment in subsidiary undertakings — — Movement in net amount owed by subsidiary undertakings 764 (1,185) Net cash inflow (outflow) from financing 32 (200) Net cash inflow (outflow) for the year 119 (80) Reconciliation of profit on ordinary activities before tax to net cash inflow from operating activities Profit on ordinary activities before tax 1,116 725 Add back: interest charged 424 371 Adjustments for non-cash items: Fair value adjustments on derivatives (4) 122 Pension scheme 11 6 Foreign currency exchange and other movements (27) 404 Decrease (increase) in debtors — 6 (8) Increase (decrease) in creditors 8 1 Net cash inflow from operating activities 1,534 1,621 The accompanying notes are an integral part of this condensed financial information Schedule II Condensed Financial Information of Registrant Prudential plc Notes to the Condensed Financial Statement Schedule 31 December 2018 1 The financial statements of the parent company are prepared in accordance with UK Generally Accepted Accounting Practice, including Financial Reporting Standard 101 Reduced Disclosure Framework (‘FRS 101’). In preparing these financial statements, the Company applies the recognition and measurement requirements in International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board (‘IASB’) and endorsed by the EU but makes amendments where necessary in order to comply with the Companies Act 2006. 2 Investments in subsidiary undertakings Investments in subsidiary undertakings are shown at cost less impairment. Amounts owed by subsidiary undertakings Amounts owed by subsidiary undertakings are shown at cost, less provisions. Upon the adoption of IFRS 9 in 2018, the provisions are determined using the expected credit loss approach. Derivatives Derivative financial instruments are held to manage certain macro-economic exposures. Derivative financial instruments are carried at fair value with changes in fair value included in the profit and loss account. Borrowings Borrowings are initially recognised at fair value, net of transaction costs, and subsequently accounted for on an amortised cost basis using the effective interest method. Under the effective interest method, the difference between the redemption value of the borrowing and the initial proceeds, net of transaction costs, is amortised through the profit and loss account to the date of maturity or, for subordinated debt, over the expected life of the instrument. Where modifications to borrowings do not result in a substantial difference to the terms of the instrument, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining expected life of the modified instrument. Dividends Interim dividends are recorded in the period in which they are paid. Share premium The difference between the proceeds received on issue of shares and the nominal value of the shares issued is credited to the share premium account. Foreign currency translation Assets and liabilities denominated in foreign currencies, including borrowings that have been used to finance or provide a hedge against Group equity investments in overseas subsidiaries, are translated at year end exchange rates. The impact of these currency translations is recorded within the profit and loss account for the year. Tax Current tax expense is charged or credited to operations based upon amounts estimated to be payable or recoverable as a result of taxable amounts for the current year. To the extent that losses of an individual UK company are not offset in any one year, they can be carried back for one year or carried forward indefinitely to be offset against profits arising from the same company. Deferred tax assets and liabilities are recognised in accordance with the provisions of IAS 12, ‘Income Taxes’. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that future taxable profits will be available against which these losses can be utilised. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. The Group’s UK subsidiaries each file separate tax returns. In accordance with UK tax legislation, where one domestic UK company is a 75 per cent owned subsidiary of another UK company or both are 75 per cent owned subsidiaries of a common parent, the companies are considered to be within the same UK tax group. For companies within the same tax group, trading profits and losses arising in the same accounting period may be offset for the purposes of determining current and deferred taxes. Pensions The Company assumes a portion of the pension surplus or deficit of the Group’s main pension scheme, the Prudential Staff Pension Scheme (‘PSPS’). The Company applies the requirements of IAS 19 ‘Employee Benefits’ (as revised in 2011) for the accounting of its interest in the PSPS surplus or deficit. A pension surplus or deficit is recorded as the difference between the present value of the scheme liabilities and the fair value of the scheme assets. The Company’s share of pension surplus is recognised to the extent that the Company is able to recover a surplus either through reduced contributions in the future or through refunds from the scheme. The assets and liabilities of the defined benefit pension schemes of the Prudential Group are subject to a full triennial actuarial valuation using the projected unit method. Estimated future cash flows are then discounted at a high quality corporate bond yield, adjusted to allow for the difference in duration between the bond index and the pension liabilities, where appropriate, to determine their present value. These calculations are performed by independent actuaries. The aggregate of the actuarially determined service costs of the currently employed personnel and the net income (interest) on the net scheme assets (liabilities) at the start of the period, is recognised in the profit or loss account. Actuarial gains and losses as a result of the changes in assumptions, experience variances or the return on scheme assets excluding amounts included in the net deferred benefit asset (liability) are recorded in other comprehensive income. Share-based payments The Group offers share award and option plans for certain key employees and a Save As You Earn (‘SAYE’) plan for all UK and certain overseas employees. The share-based payment plans operated by the Group are mainly equity-settled. Under IFRS 2 ‘Share-based payment’, where the Company, as the parent company, has the obligation to settle the options or awards of its equity instruments to employees of its subsidiary undertakings, and such share-based payments are accounted for as equity-settled in the Group financial statements, the Company records an increase in the investment in subsidiary undertakings for the value of the share options and awards granted with a corresponding credit entry recognised directly in equity. The value of the share options and awards granted is based upon the fair value of the options and awards at the grant date, the vesting period and the vesting conditions. 3 The parent company received dividends totalling £1,495 million from its consolidated subsidiary undertakings in 2018 (2017: £1,685 million; 2016: £1,318 million). 4 The parent company financial statements are prepared in accordance with FRS 101 and the Group financial statements are prepared in accordance with IFRS as issued by the IASB and endorsed by the EU. At 31 December 2018, there were no differences between FRS 101 and IFRS as issued by the IASB and endorsed by the EU in terms of their application to the parent company. The tables below provide a reconciliation between the FRS 101 parent company results and the IFRS Group results. 2018 £m 2017 £m 2016 £m Profit after tax Profit for the financial year of the Company (including dividends from subsidiaries) in accordance with FRS 101 and IFRS 1,041 1,235 840 Accounting policy difference* 5 — — Share in the IFRS result of the Group, net of distributions to the Company† 1,964 1,154 1,081 Profit after tax of the Group attributable to shareholders in accordance with IFRS 3,010 2,389 1,921 2018 £m 2017 £m Net equity Shareholders’ equity of the Company in accordance with FRS 101 and IFRS 7,450 7,629 Accounting policy difference* 14 — Share in the IFRS net equity of the Group† 9,785 8,458 Shareholders’ equity of the Group in accordance with IFRS 17,249 16,087 * † The profit for the financial year of the parent company in accordance with IFRS includes dividends received in the year from subsidiary undertakings (note 3). As stated in note 2, under FRS 101, the parent company accounts for its investments in subsidiary undertakings at cost less impairment. For the purpose of this reconciliation, no adjustment is made to the parent company in respect of any valuation adjustments to shares in subsidiary undertakings that would be eliminated on consolidation. 5 In certain instances the parent company has guaranteed that its subsidiaries will meet their obligations when they fall due for payment. 6 The second interim ordinary dividend for the year ended 31 December 2018, which was approved by the Board of Directors after 31 December 2018, is described in note B6 of the Group financial statements. |
Background and critical accou_2
Background and critical accounting policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting policies | |
Basis of preparation | Basis of preparation These statements have been prepared in accordance with IFRS Standards as issued by the International Accounting Standards Board (IASB) and as endorsed by the European Union (EU) as required by EU law (IAS Regulation EC1606/2032). EU-endorsed IFRS Standards may differ from IFRS Standards issued by the IASB if, at any point in time, new or amended IFRS Standards have not been endorsed by the EU. At 31 December 2018, there were no unendorsed standards effective for the three years ended 31 December 2018 which impact the consolidated financial information of the Group. There were no differences between IFRS Standards endorsed by the EU and IFRS Standards issued by the IASB in terms of their application to the Group. These statements have been prepared on a going concern basis. The Group IFRS accounting policies are the same as those applied for the year ended 31 December 2017 with the exception of the adoption of the new and amended accounting standards as described in note A2. |
Classification of insurance and investment contracts; measurement of policyholder liabilities and unallocated surplus of with-profits; earned premiums, policy fees and claims paid | - Judgement is applied in considering whether the material features of a contract gives rise to the transfer of significant insurance risk. Classification of insurance and investment contracts IFRS 4 requires contracts written by insurers to be classified as either ‘insurance’ contracts or ‘investment’ contracts. The classification of the contract determines its accounting. Impacts £433 billion of reported liabilities, requiring classification. Judgement is applied in considering whether the material features of a contract gives rise to the transfer of significant insurance risk. Contracts that transfer significant insurance risk to the Group are classified as insurance contracts. This judgement is made at the point of contract inception and is not revisited. For the majority of the Group’s contracts, classification is based on a readily identifiable scenario that demonstrates a significant difference in cash flows if the covered event occurs (as opposed to does not occur) reducing the level of judgement involved. Contracts that transfer financial risk to the Group but not significant insurance risk are classified as investment contracts. Furthermore, some contracts, both insurance and investment, contain discretionary participating features representing the contractual right to receive additional benefits as a supplement to guaranteed benefits that (i) are likely to be a significant portion of the total contract benefits; (ii) have an amount or timing contractually at the discretion of the insurer; and (iii) are contractually based on asset or fund performance, as discussed in IFRS 4. Insurance contracts and investment contracts with discretionary participation features are accounted for under IFRS 4. Investment contracts without such discretionary participation features are accounted for as financial instruments under IAS 39. Insurance business units Insurance contracts and investment contracts with discretionary participation features Investment contracts without discretionary participation features Asia – With-profits contracts – Non-participating term contracts – Whole life contracts – Unit-linked policies – Accident and health policies – Minor amounts for a number of small categories of business US – Variable annuity contracts – Fixed annuity contracts – Life insurance contracts – Guaranteed investment contracts (GICs) – Minor amounts of ‘annuity certain’ contracts UK and Europe – With-profits contracts – Bulk and individual annuity business – Non-participating term contracts – Certain unit-linked savings and similar contracts Measurement of policyholder liabilities and unallocated surplus of with-profits Due to their significance to the Group’s business, the measurement of policyholder liabilities and unallocated surplus of with-profits is a critical accounting policy. The measurement basis of policyholder liabilities is dependent upon the classification of the contracts under IFRS 4 described above. Impacts £433 billion of liabilities. Critical estimates – Policyholder liabilities are estimated based on a number of actuarial assumptions (mortality, morbidity, policyholder behavior etc.). IFRS 4 permits the continued usage of previously applied Generally Accepted Accounting Practices (GAAP) for insurance contracts and investment contracts with discretionary participating features. A modified statutory basis of reporting was adopted by the Group on first time adoption of IFRS in 2005. This was set out in the Statement of Recommended Practice issued by Association of British Insurers (ABI SORP). An exception was for UK regulated with-profits funds which were measured under FRS 27 as discussed below. FRS 27 and the ABI SORP were withdrawn in the UK for the accounting periods beginning in or after 2015. As used in these consolidated financial statements, the terms ‘FRS 27’ and the ‘ABI SORP’ refer to the requirements of these pronouncements prior to their withdrawal. For investment contracts that do not contain discretionary participating features, IAS 39 is applied and, where the contract includes an investment management element, IFRS 15, ‘Revenue’, applies. The policies applied in each business unit are noted below. When measuring policyholder contract liabilities a number of assumptions are applied to estimate future amounts due to or from the policyholder. The nature of assumption varies by product and among the most significant are assumed rates of policyholders’ mortality, particularly in respect of annuities sold in the UK, and policyholder behaviour, particularly in the US. Additional details of valuation methodologies and assumptions applied for material product types are discussed in note C4.2. Measurement of insurance contract liabilities and investment contracts liabilities with discretionary participation features. Asia insurance operations The policyholder liabilities for businesses in Asia are generally determined in accordance with methods prescribed by local GAAP adjusted to comply, where necessary, with the modified statutory basis. Refinements to the local reserving methodology are generally treated as changes in estimates, dependent on their nature. In some operations, Taiwan and India, US GAAP principles are applied. While the basis of valuation of liabilities in this business is in accordance with the requirements of the ABI SORP, it may differ from that determined on the modified statutory basis for the UK and Europe insurance operations with the same features. The sensitivity of Asia insurance operations to variations in key estimates and assumptions, including mortality and morbidity, is discussed in note C7.2. US insurance operations (Jackson) The policyholder liabilities for Jackson’s conventional protection-type policies are determined under US GAAP principles with locked in assumptions for mortality, interest, policy lapses and expenses along with provisions for adverse deviations. For other policies, the policyholder liabilities include the policyholder account balance. For those investment contracts in the US with fixed and guaranteed terms, the Group uses the amortised cost model to measure the liability. The US has no investment contracts with discretionary participation features. The sensitivity of US insurance operations to variations in key estimates and assumptions, including policyholder behaviour, is discussed in note C7.3. UK and Europe insurance operations The UK regulated with-profits funds’ liabilities are the realistic basis liabilities in accordance with FRS 27. The realistic basis requires the value of liabilities to be calculated as: – – – The with-profits benefits reserve is primarily based on the retrospective calculation of accumulated asset shares but is adjusted to reflect future policyholder benefits and other charges and expenses. Asset shares broadly reflect the policyholders’ share of the with-profits fund assets attributable to their policies. The future policy-related liabilities must include a market consistent valuation of costs of guarantees, options and smoothing, less any related charges, and this amount is determined using either a stochastic approach, hedging costs or a series of deterministic projections with attributed probabilities. The shareholders’ share of future costs of bonuses is included within the liabilities for unallocated surplus. Shareholders’ share of profit is recognised in line with the distribution of bonuses to policyholders. For the purposes of local regulations, segregated accounts are established for linked business for which policyholder benefits are wholly or partly determined by reference to specific investments or to an investment-related index. The interest rates used in establishing policyholder benefit provisions for pension annuities in the course of payment are adjusted each year. Mortality rates used in establishing policyholder benefits are based on published mortality tables adjusted to reflect actual experience. The sensitivity of the UK and Europe insurance operations to variations in key estimates and assumptions, including annuitant mortality, is discussed in note C7.4. Measurement of investment contracts without discretionary participation features liabilities. Investment contracts without discretionary participation features are measured in accordance with IAS 39 to reflect the deposit nature of the arrangement, with premiums and claims reflected as deposits and withdrawals and taken directly to the statement of financial position as movements in the financial liability balance. Incremental, directly attributable acquisition costs relating to the investment management element of these contracts are capitalised and amortised in line with the related revenue. If the contracts involve up-front charges, this income is also deferred and amortised through the income statement in line with contractual service provision in accordance with IFRS 15. Investment contracts without fixed and guaranteed terms are classified as financial instruments and designated as fair value through profit or loss because the resulting liabilities are managed and their performance is evaluated on a fair value basis. Where the contract includes a surrender option its carrying value is subject to a minimum carrying value equal to its surrender value. Other investment contracts are measured at amortised cost. Measurement of unallocated surplus of with-profits funds. Represents the excess of assets over policyholder liabilities that are determined in accordance with the Group's accounting policies and are based on local GAAP for the Group’s with-profits funds in the UK, Hong Kong and Malaysia that have yet to be appropriated between policyholders and shareholders. The unallocated surplus is recorded wholly as a liability with no allocation to equity. The annual excess (shortfall) of income over expenditure of the with-profits funds, after declaration and attribution of the cost of bonuses to policyholders and shareholders, is transferred to (from) the unallocated surplus each year through a charge (credit) to the income statement. The balance retained in the unallocated surplus represents cumulative income arising on the with-profits business that has not been allocated to policyholders or shareholders. The balance of the unallocated surplus is determined after full provision for deferred tax on unrealised appreciation on investments. Liability adequacy test. The Group performs adequacy testing on its insurance liabilities to ensure that the carrying amounts (net of related deferred acquisition costs) and, where relevant, present value of acquired in-force business is sufficient to cover current estimates of future cash flows. Any deficiency is immediately charged to the income statement. Jackson’s liabilities for insurance contracts, which include those for separate accounts (reflecting separate account assets), policyholder account values and guarantees measured as described in note C4.2 and the associated deferred acquisition cost asset are measured under US GAAP and liability adequacy testing is performed in this context. Under US GAAP, most of Jackson’s products are accounted for under Accounting Standards Codification Topic 944, Financial Services – Insurance of the Financial Accounting Standards Board (ASC 944) whereby deferred acquisition costs are amortised in line with expected gross profits. Recoverability of the deferred acquisition costs in the balance sheet is tested against the projected value of future profits using current estimates and therefore no additional liability adequacy test is required by IFRS 4. The DAC recoverability test is performed in line with US GAAP requirements which in practice is at a grouped level of those contracts managed together. (c) Earned premiums, policy fees and claims paid Premiums for conventional with-profits policies and other protection type insurance policies are recognised as revenue when due. Premiums and annuity considerations for linked policies, unitised with-profits and other investment type policies are recognised as revenue when received or, in the case of unitised or unit-linked policies, when units are issued. These amounts exclude premium taxes and similar duties where Prudential collects and settles taxes borne by the customer. Policy fees charged on linked and unitised with-profits policies for mortality, asset management and policy administration are recognised as revenue when related services are provided. Claims paid include maturities, annuities, surrenders and deaths. Maturity claims are recorded as charges on the policy maturity date. Annuity claims are recorded when each annuity instalment becomes due for payment. Surrenders are charged to the income statement when paid and death claims are recorded when notified. |
Measurement and presentation of derivatives and debt securities of US insurance operations; financial instruments other than instruments classified as long-term business contracts | Measurement and presentation of derivatives and debt securities of US insurance operations Jackson holds a number of derivative instruments and debt securities. The selection of the accounting approach for these items significantly affects the volatility of IFRS profit before tax. £(2,014) million of the US income statement investment return arises from such derivatives and debt securities. Jackson enters into derivative instruments to mitigate economic exposures. The Group has considered whether it is appropriate to undertake the necessary operational changes to qualify for hedge accounting so as to achieve matching of value movements in hedging instruments and hedged items in the performance statements. The key factors considered in this assessment were the complexity of asset and liability matching in Jackson’s product range and the difficulty and cost of applying the macro hedge provisions under IAS 39 (which are more suited to banking arrangements) to Jackson’s derivative book. The Group has decided that, except for occasional circumstances, applying hedge accounting using IAS 39 to derivative instruments held by Jackson would not improve the relevance or reliability of the financial statements to such an extent that would justify the difficulty and cost of applying these provisions. As a result of this decision, the total income statement results are more volatile as the movements in the fair value of Jackson’s derivatives are reflected within it. This volatility is reflected in the level of short-term fluctuations in investment returns, as shown in notes B1.1 and B1.2. Under IAS 39, unless carried at amortised cost (subject to impairment provisions where appropriate) under the held-to-maturity category, debt securities are also carried at fair value. The Group has chosen not to classify any financial assets as held-to-maturity. Debt securities of Jackson are designated as available-for-sale with value movements, unless impaired, being recorded as movements within other comprehensive income. Impairments are recorded in the income statement. (e) Financial investments other than instruments classified as long-term business contracts (i) Investment classification The Group holds financial investments in accordance with IAS 39, whereby subject to specific criteria, financial instruments are required to be accounted for under one of the following categories: – – Available-for-sale assets are subsequently measured at fair value. Interest income is recognised on an effective interest basis in the income statement. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset. Except for foreign exchange gains and losses on debt securities, which are included in the income statement, unrealised gains and losses are recognised in other comprehensive income. Upon disposal or impairment, accumulated unrealised gains and losses are transferred from other comprehensive income to the income statement as realised gains or losses; and – The Group uses the trade date method to account for regular purchases and sales of financial assets. See note A3.1 for further details of valuation of financial investments. (ii) Derivatives and hedge accounting Derivative financial instruments are used to reduce or manage investment, interest rate and currency exposures, to facilitate efficient portfolio management and for investment purposes. The Group may designate certain derivatives as hedges. For hedges of net investments in foreign operations, the effective portion of any change in fair value of derivatives or other financial instruments designated as net investment hedges is recognised in other comprehensive income. The ineffective portion of changes in the fair value of the hedging instrument is recorded in the income statement. The Group does not regularly seek to apply fair value or cash flow hedging treatment under IAS 39. The Group has no fair value and cash flows hedges under IAS 39 at 31 December 2018 and 2017. All derivatives that are not designated as hedging instruments are carried at fair value, with movements in fair value being recorded in the income statement. The primary areas of the Group’s continuing operations where derivative instruments are held are the UK with-profits funds and annuity business, and Jackson. For UK with-profits funds the derivative programme is used for the purposes of efficient portfolio management or reduction in investment risk. For shareholder-backed UK annuity business the derivatives are held to contribute to the matching as far as practical, of asset returns and duration with those of liabilities to policyholders. The carrying value of these liabilities is sensitive to the return on the matching financial assets including derivatives held. For Jackson’s derivative programme see note A3.1. (iii) Embedded derivatives Embedded derivatives are present in host contracts issued by various Group companies, in particular Jackson. They are embedded within other non-derivative host financial instruments and insurance contracts to create hybrid instruments. Embedded derivatives meeting the definition of an insurance contract are accounted for under IFRS 4. Where economic characteristics and risks of the embedded derivatives are not closely related to the economic characteristics and risks of the host instrument, and where the hybrid instrument is not measured at fair value with the changes in fair value recognised in the income statement, the embedded derivative is bifurcated and carried at fair value as a derivative measured in accordance with IAS 39. In addition, the Group applies the option under IFRS 4 to not separate and fair value surrender options embedded in host contracts and with-profits investment contracts whose strike price is either a fixed amount or a fixed amount plus interest. (iv) Securities lending and reverse repurchase agreements The Group is party to various securities lending agreements (including repurchase agreements) under which securities are loaned to third parties on a short-term basis. The loaned securities are not derecognised; rather, they continue to be recognised within the appropriate investment classification. The Group’s policy is that collateral in excess of 100 per cent of the fair value of securities loaned is required from all securities’ borrowers and typically consists of cash, debt securities, equity securities or letters of credit. In cases where the Group takes possession of the collateral under its securities lending programme, the collateral, and corresponding obligation to return such collateral, are recognised in the consolidated statement of financial position. The Group is also party to various reverse repurchase agreements under which securities are purchased from third parties with an obligation to resell the securities. The securities are not recognised as investments in the statement of financial position. (v) Derecognition of financial assets and liabilities The Group’s policy is to derecognise financial assets when it is deemed that substantially all the risks and rewards of ownership have been transferred. The Group derecognises financial liabilities only when the obligation specified in the contract is discharged, cancelled or has expired. (vi) Financial liabilities designated at fair value through profit or loss Consistent with the Group’s risk management and investment strategy and the nature of the products concerned, the Group has designated under IAS 39 classification certain financial liabilities at fair value through profit or loss as these instruments are managed and their performance evaluated on a fair value basis. These instruments include liabilities related to consolidated collateralised debt obligations and net assets attributable to unit holders of consolidated unit trusts and similar funds. |
Presentation of results before tax | Presentation of results before tax Profit before tax is a significant IFRS income statement item. The Group has chosen to present a measure of profit before tax attributable to shareholders which distinguishes between tax attributable to policyholders and unallocated surplus and tax borne by shareholders, to support understanding of the performance of the Group. Profit before tax attributable to shareholders is £3,635 million and compares to profit before tax of £3,309 million. The total tax charge for the Group reflects tax that, in addition to relating to shareholders’ profits, is also attributable to policyholders and unallocated surplus of with-profits funds and unit-linked policies. Further detail is provided in note B4. Reported profit before the total tax charge is not representative of pre-tax profits attributable to shareholders. Accordingly, in order to provide a measure of pre-tax profits attributable to shareholders the Group has chosen to adopt an income statement presentation of the tax charge and pre-tax results that distinguishes between policyholder and shareholder components. |
Segmental analysis of results and earnings attributable to shareholders; Segments | Segmental analysis of results and earnings attributable to shareholders The Group uses operating profit based on longer-term investment returns as the segmental measure of its results. Total segmental operating profit is £5,717 million and is shown in note B1.1. The basis of calculation of operating profit is disclosed in note B1.3. For shareholder-backed business, with the exception of debt securities held by Jackson and assets classified as loans and receivables at amortised cost, all financial investments and investment property are designated as assets at fair value through profit or loss. Short-term fluctuations in fair value affect the result for the year and the Group provides additional analysis of results before and after the effects of short-term fluctuations in investment returns, together with other items that are of a short-term, volatile or one-off nature. The effects of short-term fluctuations include asymmetric impacts where the measurement bases of the liabilities and associated derivatives used to manage the Jackson annuity business differ as described in note B1.2. Short-term fluctuations in investment returns on assets held by with-profits funds in the UK, Hong Kong, Malaysia and Singapore, do not affect directly reported shareholder results. This is because (i) the unallocated surplus of with-profits funds is accounted for as a liability and (ii) excess or deficits of income and expenditure of the funds over the required surplus for distribution are transferred to or from policyholder liabilities (including the unallocated surplus). (f) Segments Under IFRS 8 ‘Operating Segments’, the Group determines and presents operating segments based on the information that is internally provided to the Group Executive Committee which is the Group’s chief operating decision maker. The operating segments identified by the Group reflect the Group’s organisational structure, which, following a reorganisation during the year, is by business units Asia, US and UK and Europe. All business units contain both insurance and asset management operations. Further information on the Group’s operating segments is provided in note B1.3. |
Deferred acquisition costs for insurance contracts | Deferred acquisition costs for insurance contracts The Group applies judgement in determining qualifying costs that should be capitalised (ie those costs of acquiring new insurance business that meet the criteria under the Group’s accounting policy for deferred acquisition costs). The Group estimates projected future profits/margins to assess whether adjustments to the carrying value or amortisation profile of deferred acquisition cost assets are necessary. Except for acquisition costs of with-profits contracts of the UK regulated with-profits funds, which are accounted for under the ‘grandfathered’ FRS 27, costs of acquiring new insurance business are accounted for in a way that is consistent with the principles of the ‘grandfathered’ ABI SORP with deferral and amortisation against margins in future revenues on the related insurance policies. In general, this deferral is shown by an explicit carrying value in the balance sheet. However, in some Asia operations the deferral is implicit through the reserving methodology. The recoverability of the deferred acquisition costs is measured and is deemed impaired if the projected margins (which are estimated based on a number of assumptions similar to those underlying policyholder liabilities) are less than the carrying value. To the extent that the future margins differ from those anticipated, then an adjustment to the carrying value will be necessary either through an impairment (if the projected margins are lower than carrying value) or through a change in the amortisation profile. £10.1 billion of deferred acquisition costs as per note C5.2(b). Asia insurance operations For those business units applying US GAAP to insurance assets and liabilities, as permitted by the ‘grandfathered’ ABI SORP, principles similar to those set out in the US insurance operations paragraph below are applied to the deferral and amortisation of acquisition costs. For other territories in Asia, the general principles of the ‘grandfathered’ ABI SORP are applied with, as described above, deferral of acquisition costs being either explicit or implicit through the reserving basis. US insurance operations The most material estimates and assumptions applied in the measurement and amortisation of deferred acquisition cost balances relate to the US insurance operations. The Group’s US insurance operations apply FASB ASU 2010-26 on ‘Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts’ and capitalise only those incremental costs directly relating to successfully acquiring a contract. For term life business, acquisition costs are deferred and amortised in line with expected premiums. For annuity and interest-sensitive life business, acquisition costs are deferred and amortised in line with expected gross profits on the relevant contracts. For fixed and fixed index annuity and interest-sensitive life business, the key assumption is the long-term spread between the earned rate on investments and the rate credited to policyholders. In addition, expected gross profits depend on mortality assumptions, assumed unit costs and lapses (including the related charges), all of which are based on a combination of Jackson’s actual experience, industry benchmarking and future expectations. A detailed analysis of actual mortality, lapse and expenses experience is performed using internally developed experience studies. For US variable annuity business, a key assumption is the long-term investment return from the separate accounts. Jackson uses a mean reversion methodology that sets the projected level of return for each of the next five years such that these returns in combination with the actual rates of return for the preceding three years, including the current year, average the assumed long-term annual return (gross of asset management fees and other charges to policyholders, but net of external fund management fees) over the eight year period. Projected returns after the mean reversion period revert back to the long-term investment return. For further details on current balances, assumptions and sensitivity, refer to note C5.2(b) and C7.3 (iv). To ensure that the methodology in extreme market movements produces future expected returns that are realistic, the mean reversion technique has a cap and floor feature whereby the projected returns in each of the next five years can be no more than 15 per cent per annum and no less than 0 per cent per annum (both gross of asset management fees and other charges to policyholders, but net of external fund management fees) in each year. Jackson makes certain adjustments to the deferred acquisition costs which are recognised directly in other comprehensive income (‘shadow accounting’) to match the recognition of unrealised gains or losses on available-for-sale securities causing the adjustments. More precisely, shadow deferred acquisition costs adjustments reflect the change in deferred acquisition costs that would have arisen if the assets held in the statement of financial position had been sold, crystallising unrealised gains or losses, and the proceeds reinvested at the yields currently available in the market. UK and Europe insurance operations For UK regulated with-profits funds where ‘grandfathered’ FRS 27 is applied, these costs are expensed as incurred. The majority of the UK shareholder-backed business is individual and group annuity business where the deferral of acquisition costs is negligible. |
Financial Investments - Valuation | Financial investments – Valuation Financial investments held at fair value represent £401.3 billion of the Group’s total assets. Financial investments held at amortised cost represent £13.3 billion of the Group’s total assets. The Group estimates the fair value of financial investments, that are not actively traded, using quotations from independent third parties or internally developed pricing models. The Group holds the majority of its financial investments at fair value (either through profit and loss or available-for-sale). Information on the inclusion within the income statement of gains/losses arising on debt securities classified as available-for-sale is included in note E1(e)(i). Financial investments held at amortised cost primarily comprise loans and deposits. Determination of fair value The Group uses current bid prices to value its investments having quoted prices. Actively traded investments without quoted prices are valued using prices provided by third parties as described further in note C3.1. Financial investments measured at fair value are classified into a three-level hierarchy as described in note C3.1(b). If the market for a financial investment of the Group is not active, the Group establishes fair value by using quotations from independent third parties, such as brokers or pricing services, or by using internally developed pricing models. Priority is given to publicly available prices from independent sources when available, but overall the source of pricing and/or the valuation technique is chosen with the objective of arriving at a fair value measurement which reflects the price at which an orderly transaction would take place between market participants on the measurement date. The valuation techniques include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option-adjusted spread models and, if applicable, enterprise valuation and may include a number of assumptions relating to variables such as credit risk and interest rates. Changes in assumptions relating to these variables could positively or negatively impact the reported fair value of these financial investments. Details of the financial investments classified as ‘level 3’ to which valuation techniques are applied, and the sensitivity of profit before tax to a change in these items’ valuation, are presented in note C3.1(d). Determination of impaired value In estimating the present value of future cash flows for determining the impaired value of instruments held at amortised cost, the Group looks at the expected cash flows of the assets and applies historical loss experience of assets with similar credit risks that has been adjusted for conditions in the historical loss experience which no longer exist, or for conditions that are expected to arise. The estimated future cash flows are discounted using the financial asset’s effective interest rate and exclude credit losses that have not yet been incurred. In estimating any required impairment for US residential mortgage-backed and other asset-backed securities held as available-for-sale, the expected value of future cash flows is determined using a model, the key assumptions of which include how much of the currently delinquent loans will eventually default and assumed loss severity. Further details of the assumptions and estimates applied in assessing impairment of US available-for-sale securities are given in note C3.2(g). |
Financial Investments - Determining impairment in relation to financial assets | Financial investments - Determining impairment in relation to financial assets The Group applies judgement to assess whether factors such as the severity and duration of the decline in fair value, the financial condition and the prospects of the issuer indicate an impairment in value of financial investments classified as ‘available-for-sale’ or ‘at amortised cost’. If evidence for impairment exists, valuation techniques, including estimates, are then applied in determining the impaired value. The Group estimates the impaired value of financial investments based on its expectation of discounted future cash flows. Affects £54.2 billion of assets. For financial investments classified as ‘available for sale’ or ‘at amortised cost’, if a loss event that will have a detrimental effect on cash flows is identified, an impairment loss is recognised in the income statement. The loss recognised is determined as the difference between the book cost and the fair value of the relevant impairment assets. The loss comprises the effect of the expected loss of contractual cash flows and any additional market-price driven temporary reductions in values. Available-for-sale securities The Group’s review of fair value involves several factors, including economic conditions, credit loss experience, other issuer-specific developments and future cash flows. These assessments are based on the best available information at the time. Factors such as market liquidity, the widening of bid/ask spreads and a change in cash flow assumptions can contribute to future price volatility. If actual experience differs negatively from the assumptions and other considerations used in the consolidated financial statements, unrealised losses currently in equity may be recognised in the income statement in future periods. Additional details on the methodology and estimates used to determine impairments of the available-for-sale securities of Jackson are described in note C3.2(g). The majority of the US insurance operation’s debt securities portfolio is accounted for on an available-for-sale basis. The consideration of evidence of impairment requires management’s judgement. In making this determination a range of market and industry indicators are considered including the severity and duration of the decline in fair value and the financial condition and prospects of the issuer. For US residential mortgage-backed and other asset-backed securities, all of which are classified as available-for-sale, impairment is estimated using a model of expected future cash flows. Key assumptions used in the model include assumptions about how much of the currently delinquent loans will eventually default and assumed loss severity. Assets held at amortised cost When assets held at amortised cost are subject to impairment testing estimated future cash flows are compared to the carrying value of the asset. In estimating future cash flows, the Group looks at the expected cash flows of the assets and applies historical loss experience of assets with similar credit risks that has been adjusted for conditions in the historical loss experience which no longer exist, or for conditions that are expected to arise. The estimated future cash flows are discounted using the financial asset’s original or variable effective interest rate and exclude credit losses that have not yet been incurred. Reversal of impairment losses If, in subsequent periods, an impaired debt security held on an available-for-sale basis or an impaired loan or receivable recovers in value (in part or in full), and this recovery can be objectively related to an event occurring after the impairment, then any amount determined to have been recovered is reversed through the income statement. |
Intangible Assets - Carrying value of distribution rights; Intangible assets | – To determine the impaired value the Group estimates the discounted future expected cash flows arising from distribution rights. Intangible assets – Carrying value of distribution rights Critical judgement - The Group applies judgement to assess whether the factors such as the financial performance of the distribution arrangement, changes in relevant legislation and regulatory requirements indicate evidence of impairment of intangible assets representing distribution rights. Critical estimate – To determine the impaired value the Group estimates the discounted future expected cash flows arising from distribution rights. Affects £1.7 billion of assets. Distribution rights relate to fees paid under bancassurance partnership arrangements for bank distribution of products for the term of the contractual agreement with the bank partner. Distribution rights impairment testing is conducted when there is an indication of impairment. To ensure any required impairment is recognised in the current period the Group monitors a number of internal and external factors, including indications that the financial performance of the arrangement is likely to be worse than originally expected and changes in relevant legislation and regulatory requirements that could impact the Group’s ability to continue to sell new business through the bancassurance channel, and then applies judgement to assess whether these factors indicate impairment has occurred. If an impairment has occurred, an impairment charge is recognised for the difference between the carrying value and recoverable amount of the asset. The recoverable amount is the greater of fair value less costs to sell and value in use. Value in use is calculated as the present value of future expected cash flows from the asset or the cash generating unit to which it is allocated. (n) Intangible assets Intangible assets acquired on the purchase of a subsidiary or portfolio of contracts are measured at fair value on acquisition. Deferred acquisition costs are accounted for as described in note A3.1(c) above. Other intangible assets, such as distribution rights and software, are valued initially at the price paid to acquire them and are subsequently carried at cost less amortisation and any accumulated impairment losses. Distribution rights relate to fees paid under bancassurance partnership arrangements for bank distribution of products for the term of the contract. Amounts for distribution rights are amortised on a basis to reflect the pattern in which the future economic benefits are expected to be consumed by reference to new business production levels. The same principles apply to determining the amortisation method for other intangible assets unless the pattern cannot be determined reliably, in which case a straight line method is applied. Amortisation of intangible assets is charged to the ‘acquisition costs and other expenditure’ line in the consolidated income statement. Impairment testing is conducted when there is an indication of impairment. |
New accounting pronouncements | 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’. The main impacts of IFRS 15 for Prudential are to revenue recognition for 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. The only impact on the prior periods presented is a minor reclassification in the consolidated income statement to present certain expenses (such as rebates to clients of asset management fees) as a deduction against revenue. Revenue has been reduced by £234 million in 2018 (2017: £172 million; 2016: £124 million) with a corresponding deduction in expenses. IFRS 9, ‘Financial Instruments’ and amendments to IFRS 4, ‘ Insurance Contracts’ The IASB published a complete version of IFRS 9 in July 2014 with the exception of macro hedge accounting 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 for temporary exemption under the amendments to IFRS 4 from applying IFRS 9 and has accordingly deferred the adoption of IFRS 9. See note A3.2 for further details on IFRS 9, including the disclosures associated with the temporary exemption. In November 2018, the IASB tentatively decided that the effective date of IFRS 17 should be delayed by one year from periods ending on or after 1 January 2021 to 1 January 2022. The IASB also tentatively decided that IFRS 9 could be delayed for insurers by an additional year to keep the effective date of IFRS 9 and IFRS 17 aligned. These changes are yet to be finalised and the Group continues to monitor developments. Other new accounting pronouncements In addition to the above, the following new accounting pronouncements are also effective from 1 January 2018: — — — — These pronouncements have had no effect on the Group’s financial statements. |
Basis of consolidation | (a) Basis of consolidation The Group consolidates those investees it is deemed to control. The Group has control over an investee if all three of the following are met: (1) it has power over an investee; (2) it is exposed to, or has rights to, variable returns from its involvement with the investee; and (3) it has ability to use its power over the investee to affect its own returns. (i) Subsidiaries Subsidiaries are those investees that the Group controls. The majority of the Group’s subsidiaries are corporate entities, but the Group’s insurance operations also invest in a number of limited partnerships. The Group performs a re-assessment of consolidation whenever there is a change in the substance of the relationship between the Group and an investee. Where the Group is deemed to control an entity it is treated as a subsidiary and its results, assets and liabilities are consolidated. Where the Group holds a minority share in an entity, with no control over the entity, the investments are carried at fair value through profit or loss within financial investments in the consolidated statement of financial position. Entities consolidated by the Group include Qualifying Partnerships as defined under the UK Partnerships (Accounts) Regulations 2008 (the ‘Partnerships Act’). Some of these limited partnerships have taken advantage of the exemption under regulation 7 of the Partnerships Act from the financial statements requirements. This is under regulations 4 to 6, on the basis that these limited partnerships are dealt with on a consolidated basis in these financial statements. (ii) Joint ventures and associates Joint ventures are joint arrangements arising from a contractual agreement whereby the Group and other investors have joint control of the net assets of the arrangement. In a number of these arrangements, the Group’s share of the underlying net assets may be less than 50 per cent but the terms of the relevant agreement make it clear that control is jointly exercised between the Group and the third party. Associates are entities over which the Group has significant influence, but it does not control. Generally it is presumed that the Group has significant influence if it holds between 20 per cent and 50 per cent voting rights of the entity. With the exception of those referred to below, the Group accounts for its investments in joint ventures and associates by using the equity method of accounting. The Group’s share of profit or loss of its joint ventures and associates is recognised in the income statement and its share of movements in other comprehensive income is recognised in other comprehensive income. The equity method of accounting does not apply to investments in associates and joint ventures held by the Group’s insurance or investment funds. This includes venture capital business, mutual funds and unit trusts and which, as allowed by IAS 28, ‘Investments in Associates and Joint Ventures’, are carried at fair value through profit or loss. (iii) Structured entities Structured entities are those that have been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity. Voting rights relate to administrative tasks. Relevant activities are directed by means of contractual arrangements. The Group invests in structured entities such as: Open-Ended Investment Companies (OEICs); Unit Trusts (UTs); Limited partnerships; Variable interest entities; Investment vehicles within separate accounts offered through variable annuities; Collateralised debt obligations; Mortgage-backed securities; and Similar asset-backed securities. Open-ended investment companies and unit trusts The Group invests in OEICs and UTs, which invest mainly in equities, bonds, cash and cash equivalents, and properties. The Group’s percentage ownership in these entities can fluctuate on a daily basis according to the participation of the Group and other investors in them. Where the entity is managed by a Group asset manager, and the Group’s ownership holding in the entity exceeds 50 per cent, the Group is judged to have control over the entity. Where the entity is managed by a Group asset manager, and the Group’s ownership holding in the entity is between 20 per cent and 50 per cent, the facts and circumstances of the Group’s involvement in the entity are considered, including the rights to any fees earned by the asset manager from the entity, in forming a judgement as to whether the Group has control over the entity. Where the entity is managed by a Group asset manager, and the Group’s ownership holding in the entity is less than 20 per cent, the Group is judged to not have control over the entity. Where the entity is managed by an asset manager outside the Group, an assessment is made of whether the Group has existing rights that gives it the ability to direct the current activities of the entity and therefore control the entity. In assessing the Group’s ability to direct an entity, the Group considers its ab ility relative to other investors. The Group has a limited number of OEICs and UTs where it considers it has such ability. Where the Group is deemed to control these entities, they are treated as a subsidiary and are consolidated, with the interests of investors other than the Group being classified as liabilities, and appear as net asset value attributable to unit holders of consolidated unit trusts and similar funds. Where the Group does not control these entities (as it is deemed to be acting as an agent) and they do not meet the definition of associates, they are carried at fair value through profit or loss within financial investments in the consolidated statement of financial position. Where the Group’s asset manager sets up OEICs and UTs as part of asset management operations, the Group’s interest is limited to the administration fees charged to manage the assets of such entities. With no participation in these entities, the Group does not retain risks associated with OEICs and UTs. For these open-ended investment companies and unit trusts, the Group is not deemed to control the entities but to be acting as an agent. The Group generates returns and retains the ownership risks in investment vehicles commensurate to its participation and does not have any further exposure to the residual risks of these investment vehicles. Jackson’s separate account assets These are investment vehicles that invest contract holders’ premiums in equity, fixed income, bonds and money market mutual funds. The contract holder retains the underlying returns and the ownership risks related to the underlying investments. The shareholder’s economic interest in separate accounts is limited to the administrative fees charged. The separate accounts are set up as separate regulated entities governed by a Board of Governors or trustees for which the majority of the members are independent of Jackson or any affiliated entity. The independent members are responsible for any decision making that impacts contract holders’ interest and govern the operational activities of the entities’ advisers, including asset managers. Accordingly, the Group does not control these vehicles. These investments are carried at fair value through profit or loss within financial investments in the consolidated statement of financial position. Limited partnerships The Group’s insurance operations invest in a number of limited partnerships, either directly or through unit trusts, through a mix of capital and loans. These limited partnerships are managed by general partners, in which the Group holds equity. Such interest in general partners and limited partnerships provide the Group with voting and similar rights to participate in the governance framework of the relevant activities in which limited partnerships are engaged in. Accounting for the limited partnerships as subsidiaries, joint ventures, associates or other financial investments depends on the terms of each partnership agreement and the shareholdings in the general partners. Other structured entities The Group holds investments in mortgage-backed securities, collateralised debt obligations and similar asset-backed securities, the majority of which are actively traded in a liquid market. The Group consolidates the vehicles that hold the investments where the Group is deemed to control the vehicles. When assessing control over the vehicles, the factors considered include the purpose and design of the vehicle, the Group’s exposure to the variability of returns and the scope of the Group’s ability to direct the relevant activities of the vehicle including any kick-out or removal rights that are held by third parties. The outcome of the control assessment is dependent on the terms and conditions of the respective individual arrangements. The majority of such vehicles are not consolidated. In these cases the Group is not the sponsor of the vehicles in which it holds investments and has no administrative rights over the vehicles’ activities. The Group generates returns and retains the ownership risks commensurate to its holding and its exposure to the investments. Accordingly the Group does not have power over the relevant activities of such vehicles and all are carried at fair value through profit or loss within financial investments in the consolidated statement of financial position. The table below provides aggregate carrying amounts of the investments in unconsolidated structured entities reported in the Group’s statement of financial position: 31 December 2018 £m 31 December 2017 £m Separate Other Separate Other account structured account structured OEICs/UTs assets entities OEICs/UTs assets entities Statement of financial position line items Equity securities and portfolio holdings in unit trusts 21,216 128,220 — 20,718 130,528 — Debt securities — — 11,081 — — 10,894 Total 21,216 128,220 11,081 20,718 130,528 10,894 The Group generates returns and retains the ownership risks in these investments commensurate to its participation and does not have any further exposure to the residual risks or losses of the investments or the vehicles in which it holds investments. As at 31 December 2018, the Group does not have an agreement, contractual or otherwise, or intention to provide financial support to structured entities that could expose the Group to a loss. |
Reinsurance | (b) Reinsurance The measurement of reinsurance assets is consistent with the measurement of the underlying direct insurance contracts. The treatment of any gains or losses arising on the purchase of reinsurance contracts is dependent on the underlying accounting basis of the entity concerned. |
Investment return | (d) Investment return Investment return included in the income statement principally comprises interest income, dividends, investment appreciation/depreciation (realised and unrealised gains and losses) on investments designated as fair value through profit or loss, and realised gains and losses (including impairment losses) on items held at amortised cost and Jackson’s debt securities designated as available-for-sale. Movements in unrealised appreciation/depreciation of Jackson’s debt securities designated as available-for-sale are recorded in other comprehensive income. Interest income is recognised as it accrues, taking into account the effective yield on investments. Dividends on equity securities are recognised on the ex-dividend date and rental income is recognised on an accrual basis. |
Borrowings | (g) Borrowings Although initially recognised at fair value, net of transaction costs, borrowings, excluding liabilities of consolidated collateralised debt obligations, are subsequently accounted for on an amortised cost basis using the effective interest method. Under the effective interest method, the difference between the redemption value of the borrowing and the initial proceeds (net of related issue costs) is amortised through the income statement to the date of maturity or for hybrid debt, over the expected life of the instrument. |
Investment properties | (h) Investment properties Investments in leasehold and freehold properties not for occupation by the Group, including properties under development for future use as investment properties, are carried at fair value, with changes in fair value included in the income statement. Properties are valued annually either by the Group’s qualified surveyors or by taking into consideration the advice of professional external valuers using the Royal Institution of Chartered Surveyors valuation standards. Each property is externally valued at least once every three years. Leases of investment property where the Group has substantially all the risks and rewards of ownership are classified as finance leases (leasehold property). Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. |
Pension schemes; Pensions | (i) Pension schemes For the Group’s defined benefit schemes, if the present value of the defined benefit obligation exceeds the fair value of the scheme assets, then a liability is recorded in the Group’s statement of financial position. By contrast, if the fair value of the assets exceeds the present value of the defined benefit obligation then the surplus will only be recognised if the nature of the arrangements under the trust deed, and funding arrangements between the Trustee and the Company, support the availability of refunds or recoverability through agreed reductions in future contributions. In addition, if there is a constructive obligation for the Company to pay deficit funding, this is also recognised such that the financial position recorded for the scheme reflects the higher of any underlying IAS 19 deficit and the obligation for deficit funding. The Group utilises the projected unit credit method to calculate the defined benefit obligation. This method sees each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Estimated future cash flows are then discounted at a high-quality corporate bond rate, adjusted to allow for the difference in duration between the bond index and the pension liabilities where appropriate, to determine its present value. These calculations are performed by independent actuaries. The plan assets of the Group’s pension schemes include several insurance contracts that have been issued by the Group. These assets are excluded from plan assets in determining the pension surplus or deficit recognised in the consolidated statement of financial position. The aggregate of the actuarially determined service costs of the currently employed personnel, and the net interest on the net defined benefit liability (asset) at the start of the period, is charged to the income statement. Actuarial and other gains and losses as a result of changes in assumptions or experience variances are recognised as other comprehensive income. Contributions to the Group’s defined contribution schemes are expensed when due. |
Share-based payments and related movements in own shares | (j) Share-based payments and related movements in own shares The Group offers share award and option plans for certain key employees and a Save As You Earn plan for all UK and certain overseas employees. Shares held in trust relating to these plans are conditionally gifted to employees. The compensation expense charged to the income statement is primarily based upon the fair value of the options granted, the vesting period and the vesting conditions. The Company has established trusts to facilitate the delivery of Prudential plc shares under employee incentive plans and savings-related share option schemes. The cost to the Company of acquiring these treasury shares held in trusts is shown as a deduction from shareholders’ equity. |
Tax | (k) Tax Prudential is subject to tax in numerous jurisdictions and the calculation of the total tax charge inherently involves a degree of estimation and judgement. Current tax expense is charged or credited based upon amounts estimated to be payable or recoverable as a result of taxable amounts for the current year and adjustments made in relation to prior years. The positions taken in tax returns where applicable tax regulation is subject to interpretation are recognised in full in the determination of the tax charge in the financial statements if the Group considers that it is probable that the taxation authority will accept those positions. Otherwise, provisions are established based on management’s estimate and judgement of the likely amount of the liability, or recovery by providing for the single best estimate of the most likely outcome or the weighted average expected value where there are multiple outcomes. The total tax charge includes tax expense attributable to both policyholders and shareholders. The tax expense attributable to policyholders comprises the tax on the income of the consolidated with-profits and unit-linked funds. In certain jurisdictions, such as the UK, life insurance companies are taxed on both their shareholders’ profits and on their policyholders’ insurance and investment returns on certain insurance and investment products. Although both types of tax are included in the total tax charge in the Group’s consolidated income statement, they are presented separately in the consolidated income statement to provide the most relevant information about tax that the Group pays on its profits. Deferred taxes are provided under the liability method for all relevant temporary differences. IAS 12, ‘Income Taxes’ does not require all temporary differences to be provided for, in particular, the Group does not provide for deferred tax on undistributed earnings of subsidiaries where the Group is able to control the timing of the distribution and the temporary difference created is not expected to reverse in the foreseeable future. Deferred tax assets are only recognised when it is more likely than not that future taxable profits will be available against which these losses can be utilised. Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability settled, based on tax rates (and laws) that have been enacted or are substantively enacted at the end of the reporting period. |
Business acquisitions | (l) Business acquisitions and disposals Business acquisitions are accounted for by applying the purchase method of accounting, which adjusts the net assets of the acquired company to fair value at the date of purchase. The excess of the acquisition consideration over the fair value of the assets and liabilities of the acquired entity is recorded as goodwill. Expenses related to acquiring new subsidiaries are charged to the income statement in the period in which they are incurred. Income and expenses of acquired entities are included in the income statement from the date of acquisition. Income and expenses of entities sold during the period are included in the income statement up to the date of disposal. The gain or loss on disposal is calculated as the difference between sale proceeds net of selling costs, less the net assets of the entity at the date of disposal, adjusted for foreign exchange movements attaching to the sold entity that are required to be recycled to the income statement under IAS 21. Where the Group writes a put option over its non-controlling interests as part of its business acquisition, which if exercised triggers the purchase by the Group of the non-controlling interests, the put option is recognised as a financial liability at the acquisition date with a corresponding amount, deducted directly from shareholder’s equity. Any subsequent changes to the carrying amount of the put liability are also recognised within equity. |
Disposals | (l) Business acquisitions and disposals Business acquisitions are accounted for by applying the purchase method of accounting, which adjusts the net assets of the acquired company to fair value at the date of purchase. The excess of the acquisition consideration over the fair value of the assets and liabilities of the acquired entity is recorded as goodwill. Expenses related to acquiring new subsidiaries are charged to the income statement in the period in which they are incurred. Income and expenses of acquired entities are included in the income statement from the date of acquisition. Income and expenses of entities sold during the period are included in the income statement up to the date of disposal. The gain or loss on disposal is calculated as the difference between sale proceeds net of selling costs, less the net assets of the entity at the date of disposal, adjusted for foreign exchange movements attaching to the sold entity that are required to be recycled to the income statement under IAS 21. Where the Group writes a put option over its non-controlling interests as part of its business acquisition, which if exercised triggers the purchase by the Group of the non-controlling interests, the put option is recognised as a financial liability at the acquisition date with a corresponding amount, deducted directly from shareholder’s equity. Any subsequent changes to the carrying amount of the put liability are also recognised within equity. |
Goodwill | (m) Goodwill Goodwill arising on acquisitions of subsidiaries and businesses is capitalised and carried on the Group statement of financial position as an intangible asset at initial value less any accumulated impairment losses. Goodwill impairment testing is conducted annually and when there is an indication of impairment. For the purposes of impairment testing, goodwill is allocated to cash generating units. For further details see note C5.1. |
Cash and cash equivalents | (o) Cash and cash equivalents Cash and cash equivalents consist of cash at bank and in hand, deposits held at call with banks, treasury bills and other short-term highly liquid investments with less than 90 days maturity from the date of acquisition. |
Shareholders' dividends; Dividends | (p) Shareholders’ dividends Interim dividends are recorded in the period in which they are paid. Final dividends are recorded in the period in which they are approved by shareholders. |
Share capital; Share premium | (q) Share capital Shares are classified as equity when their terms do not create an obligation to transfer assets. The difference between the proceeds received on issue of the shares, net of share issue costs, and the nominal value of the shares issued, is credited to share premium. Where the Company purchases shares for the purposes of employee incentive plans, the consideration paid, net of issue costs, is deducted from retained earnings. Upon issue or sale any consideration received is credited to retained earnings net of related costs. |
Foreign exchange; Foreign currency translation | (r) Foreign exchange The Group’s consolidated financial statements are presented in pounds sterling, the Group’s presentation currency. Accordingly, the results and financial position of foreign subsidiaries must be translated into the presentation currency of the Group from their functional currencies, ie the currency of the primary economic environment in which the entity operates. All assets and liabilities of foreign subsidiaries are converted at year end exchange rates while all income and expenses are converted at average exchange rates where this is a reasonable approximation of the rates prevailing on transaction dates. The impact of these currency translations is recorded as a separate component in the statement of comprehensive income. Foreign currency borrowings that are used to provide a hedge against Group equity investments in overseas subsidiaries are translated at year end exchange rates and movements recognised in other comprehensive income. Other foreign currency monetary items are translated at year end exchange rates with changes recognised in the income statement. Foreign currency transactions are translated at the spot rate prevailing at the time. |
Earnings per share | (s) Earnings per share Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year, excluding those held in employee share trusts and consolidated unit trusts and OEICs, which are treated as cancelled. For diluted earnings per share, the weighted average number of shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group’s only class of potentially dilutive ordinary shares are those share options granted to employees where the exercise price is less than the average market price of the Company’s ordinary shares during the year. No adjustment is made if the impact is anti-dilutive overall. |
Prudential plc | |
Accounting policies | |
Basis of preparation | 1 The financial statements of the parent company are prepared in accordance with UK Generally Accepted Accounting Practice, including Financial Reporting Standard 101 Reduced Disclosure Framework (‘FRS 101’). In preparing these financial statements, the Company applies the recognition and measurement requirements in International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board (‘IASB’) and endorsed by the EU but makes amendments where necessary in order to comply with the Companies Act 2006. |
Investments in and amounts owed by subsidiary undertakings | Investments in subsidiary undertakings Investments in subsidiary undertakings are shown at cost less impairment. Amounts owed by subsidiary undertakings Amounts owed by subsidiary undertakings are shown at cost, less provisions. Upon the adoption of IFRS 9 in 2018, the provisions are determined using the expected credit loss approach. |
Derivatives | Derivatives Derivative financial instruments are held to manage certain macro-economic exposures. Derivative financial instruments are carried at fair value with changes in fair value included in the profit and loss account. |
Borrowings | Borrowings Borrowings are initially recognised at fair value, net of transaction costs, and subsequently accounted for on an amortised cost basis using the effective interest method. Under the effective interest method, the difference between the redemption value of the borrowing and the initial proceeds, net of transaction costs, is amortised through the profit and loss account to the date of maturity or, for subordinated debt, over the expected life of the instrument. Where modifications to borrowings do not result in a substantial difference to the terms of the instrument, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining expected life of the modified instrument. |
Pension schemes; Pensions | Pensions The Company assumes a portion of the pension surplus or deficit of the Group’s main pension scheme, the Prudential Staff Pension Scheme (‘PSPS’). The Company applies the requirements of IAS 19 ‘Employee Benefits’ (as revised in 2011) for the accounting of its interest in the PSPS surplus or deficit. A pension surplus or deficit is recorded as the difference between the present value of the scheme liabilities and the fair value of the scheme assets. The Company’s share of pension surplus is recognised to the extent that the Company is able to recover a surplus either through reduced contributions in the future or through refunds from the scheme. The assets and liabilities of the defined benefit pension schemes of the Prudential Group are subject to a full triennial actuarial valuation using the projected unit method. Estimated future cash flows are then discounted at a high quality corporate bond yield, adjusted to allow for the difference in duration between the bond index and the pension liabilities, where appropriate, to determine their present value. These calculations are performed by independent actuaries. The aggregate of the actuarially determined service costs of the currently employed personnel and the net income (interest) on the net scheme assets (liabilities) at the start of the period, is recognised in the profit or loss account. Actuarial gains and losses as a result of the changes in assumptions, experience variances or the return on scheme assets excluding amounts included in the net deferred benefit asset (liability) are recorded in other comprehensive income. |
Share-based payments and related movements in own shares | Share-based payments The Group offers share award and option plans for certain key employees and a Save As You Earn (‘SAYE’) plan for all UK and certain overseas employees. The share-based payment plans operated by the Group are mainly equity-settled. Under IFRS 2 ‘Share-based payment’, where the Company, as the parent company, has the obligation to settle the options or awards of its equity instruments to employees of its subsidiary undertakings, and such share-based payments are accounted for as equity-settled in the Group financial statements, the Company records an increase in the investment in subsidiary undertakings for the value of the share options and awards granted with a corresponding credit entry recognised directly in equity. The value of the share options and awards granted is based upon the fair value of the options and awards at the grant date, the vesting period and the vesting conditions. |
Tax | Tax Current tax expense is charged or credited to operations based upon amounts estimated to be payable or recoverable as a result of taxable amounts for the current year. To the extent that losses of an individual UK company are not offset in any one year, they can be carried back for one year or carried forward indefinitely to be offset against profits arising from the same company. Deferred tax assets and liabilities are recognised in accordance with the provisions of IAS 12, ‘Income Taxes’. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that future taxable profits will be available against which these losses can be utilised. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. The Group’s UK subsidiaries each file separate tax returns. In accordance with UK tax legislation, where one domestic UK company is a 75 per cent owned subsidiary of another UK company or both are 75 per cent owned subsidiaries of a common parent, the companies are considered to be within the same UK tax group. For companies within the same tax group, trading profits and losses arising in the same accounting period may be offset for the purposes of determining current and deferred taxes. |
Shareholders' dividends; Dividends | Dividends Interim dividends are recorded in the period in which they are paid. |
Share capital; Share premium | Share premium The difference between the proceeds received on issue of shares and the nominal value of the shares issued is credited to the share premium account. |
Foreign exchange; Foreign currency translation | Foreign currency translation Assets and liabilities denominated in foreign currencies, including borrowings that have been used to finance or provide a hedge against Group equity investments in overseas subsidiaries, are translated at year end exchange rates. The impact of these currency translations is recorded within the profit and loss account for the year. |
Background and critical accou_3
Background and critical accounting policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Background and critical accounting policies | |
Schedule of exchange rates applied and exchange movement recognised in other comprehensive income | The exchange rates applied for balances and transactions in currency other than the presentational currency of the Group, pounds sterling (GBP), were: Closing Average rate Closing Average rate Closing Average rate Opening rate at for rate at for rate at for rate at 31 Dec 2018 31 Dec 2017 31 Dec 2016 1 Jan 2016 Local currency: £ Hong Kong 9.97 10.46 10.57 10.04 9.58 10.52 11.42 Indonesia 18,314.37 18,987.65 18,353.44 17,249.38 16,647.30 18,026.11 20,317.71 Malaysia 5.26 5.38 5.47 5.54 5.54 5.61 6.33 Singapore 1.74 1.80 1.81 1.78 1.79 1.87 2.09 China 8.74 8.82 8.81 8.71 8.59 8.99 9.57 India 88.92 91.25 86.34 83.90 83.86 91.02 97.51 Vietnam 29,541.15 30,732.53 30,719.60 29,279.71 28,136.99 30,292.79 33,140.64 Thailand 41.47 43.13 44.09 43.71 44.25 47.80 53.04 US 1.27 1.34 1.35 1.29 1.24 1.35 1.47 The exchange movement arising during 2018 recognised in other comprehensive income is: 2018 £m 2017 £m 2016 £m Asia operations * 222 (295) 785 US operations 329 (477) 853 UK and Europe operations — 3 1 Unallocated to a segment (other funds)† (207) 304 (491) 344 (465) 1,148 * 2017 included the recycling of the cumulative exchange gain of the sold Korea life business of £61 million to the income statement. † The exchange rate movement unallocated to a segment mainly reflects the translation of currency borrowings, issued by the Group parent company, that have been designated as a net investment hedge against the currency risk of the Group’s investment in the US operations. |
Schedule of financial assets on the Group's statement of financial position that pass the SPPI test of IFRS 9 | Financial assets that pass All other financial assets, the SPPI test net of derivative liabilities Movement in Movement in Fair value at the fair value Fair value at the fair value Financial assets on the Group’s statement of financial 31 Dec 2018 during the year 31 Dec 2018 during the year position £m £m £m £m Accrued investment income 2,749 — — — Other debtors 4,088 — — — Loans (1) 11,914 (493) 6,505 (175) Equity securities and portfolio holdings in unit trusts — — 214,733 (16,359) Debt securities (2) 39,522 (1,574) 135,834 (3,343) Derivative assets, net of derivative liabilities — — (12) (941) Other investments — — 6,512 466 Deposits 11,796 — — — Cash and cash equivalents 12,125 — — — Total financial assets, net of derivative liabilities 82,194 (2,067) 363,572 (20,352) Further information on the loans and debt securities that pass the SPPI test (1) The loans that pass the SPPI test in the table above are primarily carried at amortised cost under IAS 39. Further information on these loans is as provided in note C3.3. (2) The debt securities that pass the SPPI test in the table above are wholly held by Jackson and are classified as available-for-sale under IAS 39. The credit ratings of these securities, analysed on the same basis of those disclosed in note C3.2, are as follows: 31 Dec 2018 £m BBB+ to Below Total Jackson AAA AA+ to AA- A+ to A- BBB- BBB- Other fair value Debt securities that pass the SPPI test 652 7,252 10,214 14,315 843 6,246 39,522 |
Schedule of financial assets held by the Group's joint ventures and associates that pass the SPPI test of IFRS 9 | Financial assets that pass All other financial assets, net of the SPPI test derivative liabilities Movement in Movement in Fair value at the fair value Fair value at the fair value Financial assets held by the Group’s joint ventures and 31 Dec 2018 during the year 31 Dec 2018 during the year associates accounted for using the equity method £m £m £m £m Accrued investment income 131 — — — Other debtors 212 — — — Loans 117 — — — Equity securities and portfolio holdings in unit trusts — — 3,677 (281) Debt securities — — 4,247 86 Deposits 355 — — — Cash and cash equivalents 396 — — — Total financial assets, net of derivative liabilities 1,211 — 7,924 (195) |
Analysis of performance by se_2
Analysis of performance by segment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Analysis of performance by segment | |
Schedule of segment results - profit before tax | Note 2018 £m 2017 £m 2016 £m Asia: Insurance operations B3(i) 1,982 1,799 1,503 Asset management 182 176 141 Total Asia 2,164 1,975 1,644 US: Jackson (US insurance operations) 1,911 2,214 2,052 Asset management 8 10 (4) Total US 1,919 2,224 2,048 UK and Europe: UK and Europe insurance operations: B3(iii) Long-term business 1,138 861 799 General insurance commission note (i) 19 17 29 Total UK and Europe insurance operations 1,157 878 828 UK and Europe asset management note (iv) 477 500 425 Total UK and Europe 1,634 1,378 1,253 Total segment profit 5,717 5,577 4,945 Other income and expenditure: Investment return and other income 52 11 28 Interest payable on core structural borrowings (410) (425) (360) Corporate expenditure note (ii) (367) (361) (334) SII implementation costs — — (28) Total other income and expenditure (725) (775) (694) Restructuring costs (165) (103) (38) Interest received from tax settlement — — 43 Adjusted IFRS operating profit based on longer-term investment returns 4,827 4,699 4,256 Short-term fluctuations in investment returns on shareholder-backed business B1.2 (558) (1,563) (1,678) Amortisation of acquisition accounting adjustments note (iii) (46) (63) (76) (Loss) gain on disposal of businesses and corporate transactions D1.1 (588) 223 (227) Profit before tax 3,635 3,296 2,275 Tax charge attributable to shareholders’ returns B4 (622) (906) (354) Profit for the year 3,013 2,390 1,921 Attributable to: Equity holders of the Company 3,010 2,389 1,921 Non-controlling interests 3 1 — Basic earnings per share (in pence) Note Based on adjusted IFRS operating profit based on longer-term investment returns note (v) B5 156.6p 145.2p 131.3p Based on profit for the year B5 116.9p 93.1p 75.0p Notes (i) The majority of the general insurance commission is not expected to recur in future years. (ii) Corporate expenditure as shown above is primarily for Group Head Office and Asia Regional Head Office. (iii) Amortisation of acquisition accounting adjustments principally relate to the REALIC business of Jackson which was acquired in 2012. (iv) UK and Europe asset management adjusted IFRS operating profit based on longer-term investment returns: 2018 £m 2017 £m 2016 £m Asset management fee income 1,098 1,027 900 Other income 2 7 23 Staff costs* (384) (400) (332) Other costs* (270) (202) (212) Underlying profit before performance-related fees 446 432 379 Share of associate results 16 15 13 Performance-related fees 15 53 33 Total UK and Europe asset management adjusted IFRS operating profit based on longer-term investment returns 477 500 425 * (v) Tax charges have been reflected as operating and non-operating in the same way as for the pre-tax items. Further details on tax charges are provided in note B4. |
Schedule of UK and Europe asset management operating profit based on longer-term investments returns | 2018 £m 2017 £m 2016 £m Asset management fee income 1,098 1,027 900 Other income 2 7 23 Staff costs* (384) (400) (332) Other costs* (270) (202) (212) Underlying profit before performance-related fees 446 432 379 Share of associate results 16 15 13 Performance-related fees 15 53 33 Total UK and Europe asset management adjusted IFRS operating profit based on longer-term investment returns 477 500 425 * (v) |
Schedules of short-term fluctuations in investment returns on shareholder-backed business | 2018 £m 2017 £m 2016 £m Asia operations note (i) (512) (1) (225) US operations note (ii) (100) (1,568) (1,455) UK and Europe operations note (iii) 34 (14) 206 Other operations note (iv) 20 20 (204) Total (558) (1,563) (1,678) (i) Asia operations In Asia, the negative short-term fluctuations of £(512) million (2017: negative £(1) million; 2016: negative £(225) million) principally reflect net value movements on assets and related liabilities following increases in bond yields and falls in equity markets during the year , especially in those countries where policyholder liabilities use a valuation interest rate which does not reflect all movements in interest rates in the period. (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 £(114) million as shown in note C5.2(a) (2017: credit of £462 million; 2016: credit of £565 million) and comprise amounts in respect of the following items: 2018 £m 2017 £m 2016 £m Net equity hedge result note (a) (58) (1,490) (1,587) Other than equity-related derivatives note (b) (64) (36) (126) Debt securities note (c) (31) (73) 201 Equity-type investments: actual less longer-term return 38 12 35 Other items 15 19 22 Total (100) (1,568) (1,455) Notes (a) Net equity hedge result The net equity hedge result relates to the accounting effect of market movements on both the 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. The variable annuity guarantees are valued in accordance with either Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures (formerly FAS 157) or ASC Topic 944, Financial Services – Insurance (formerly SOP 03-01) depending on the type of guarantee. Both approaches 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. The method under FAS 157 requires this fee assessment to be fixed at the time of issue. As the fees included within the initial fee assessment are earned, they are included in non-operating profit to match the corresponding movement in the guarantee liability. As the Group applies US GAAP for the measured value of the product guarantees this item also includes asymmetric impacts where the measurement bases of the liabilities and associated derivatives used to manage the Jackson annuity business differ as described in note B1.3(c) below. The net equity hedge result therefore includes significant accounting mismatches and other factors that do not represent the 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 2016 £m Fair value movements on equity hedge instruments* 299 (1,871) (1,786) Accounting value movements on the variable and fixed index annuity guarantee liabilities † (894) (99) (188) Fee assessments net of claim payments 537 480 387 Total (58) (1,490) (1,587) * Held to manage equity exposures of the variable annuity guarantees and fixed index annuity options. † The accounting value movements on the variable and fixed index annuity guarantee liabilities reflect the impact of market movements and changes in economic and actuarial assumptions. Actuarial assumptions include consideration of persistency, mortality and the expected utilisation of certain features attaching to variable annuity contracts. Assumptions are updated annually via a comparison to experience and after applying expert judgement for how experience may change in the future. Routine updates in 2018 reduced profit before tax (after allowing related changed to DAC amortisation) by £143 million (2017: £382 million). (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 2016 £m (Charges) credits in the year: Losses on sales of impaired and deteriorating bonds (4) (3) (94) Defaults — — (4) Bond write-downs (4) (2) (35) Recoveries/reversals 19 10 15 Total credits (charge) in the year 11 5 (118) Risk margin allowance deducted from adjusted IFRS operating profit based on longer-term investment returns* 77 86 89 88 91 (29) Interest-related realised (losses) gains: Losses arising in the year (8) (43) 376 Less: Amortisation of gains and losses arising in current and prior years to adjusted IFRS operating profit based on longer-term investment returns (116) (140) (135) (124) (183) 241 Related amortisation of deferred acquisition costs 5 19 (11) Total short-term fluctuations related to debt securities (31) (73) 201 * 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 adjusted IFRS operating profit based on longer-term investment returns 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 adjusted IFRS operating profit based on longer-term investment returns of Jackson for 2018 is based on an average annual risk margin reserve of 18 basis points (2017: 21 basis points; 2016: 21 basis points) on average book values of US$57.1 billion (2017: US$55.3 billion; 2016: US$56.4 billion) as shown below: Moody’s rating category (or equivalent under NAIC ratings of mortgage-backed securities) 2018 2017 2016 Average Average Average book Annual book Annual book Annual value RMR expected loss value RMR expected loss value RMR expected loss US$m % US$m £m US$m % US$m £m US$m % US$m £m A3 or higher 29,982 0.10 (31) (23) 27,277 0.12 (33) (25) 29,051 0.12 (36) (27) Baa1, 2 or 3 25,814 0.21 (55) (40) 26,626 0.22 (58) (45) 25,964 0.24 (62) (46) Ba1, 2 or 3 1,042 0.98 (10) (8) 1,046 1.03 (11) (8) 1,051 1.07 (11) (8) B1, 2 or 3 289 2.64 (8) (6) 318 2.70 (9) (7) 312 2.95 (9) (7) Below B3 11 3.69 - - 23 3.78 (1) (1) 40 3.81 (2) (1) Total 57,138 0.18 (104) (77) 55,290 0.21 (112) (86) 56,418 0.21 (120) (89) Related amortisation of deferred acquisition costs (see below) 22 15 21 15 23 17 Risk margin reserve charge to adjusted IFRS operating profit for longer-term credit-related losses (82) (62) (91) (71) (97) (72) Consistent with the basis of measurement of insurance assets and liabilities for Jackson’s IFRS results, the charges and credits to adjusted IFRS 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 £(1,371) million for net unrealised losses on debt securities classified as available-for-sale net of related amortisation of deferred acquisition costs (2017: credit of £541 million; 2016: credit of £48 million). Temporary market value movements do not reflect defaults or impairments. Additional details of the movement in the value of the Jackson portfolio are included in note C3.2(b). (iii) UK and Europe operations The positive short-term fluctuations in investment returns for the UK and Europe operations of £34 million (2017: negative £14 million; 2016: positive £206 million) mainly arises from unrealised gains on equity options held to hedge the value of future shareholder transfers from the with-profits fund partially offset by losses on corporate bonds backing capital to support the remaining annuity business, given the increase in interest rates and credit spreads in 2018. (iv) Other operations The positive short-term fluctuations in investment returns for other operations of £20 million (2017: positive £20 million; 2016: negative £(204) million) include unrealised value movements on financial instruments held outside of the main life operations. |
Schedule of average annual risk margin reserve | Moody’s rating category (or equivalent under NAIC ratings of mortgage-backed securities) 2018 2017 2016 Average Average Average book Annual book Annual book Annual value RMR expected loss value RMR expected loss value RMR expected loss US$m % US$m £m US$m % US$m £m US$m % US$m £m A3 or higher 29,982 0.10 (31) (23) 27,277 0.12 (33) (25) 29,051 0.12 (36) (27) Baa1, 2 or 3 25,814 0.21 (55) (40) 26,626 0.22 (58) (45) 25,964 0.24 (62) (46) Ba1, 2 or 3 1,042 0.98 (10) (8) 1,046 1.03 (11) (8) 1,051 1.07 (11) (8) B1, 2 or 3 289 2.64 (8) (6) 318 2.70 (9) (7) 312 2.95 (9) (7) Below B3 11 3.69 - - 23 3.78 (1) (1) 40 3.81 (2) (1) Total 57,138 0.18 (104) (77) 55,290 0.21 (112) (86) 56,418 0.21 (120) (89) Related amortisation of deferred acquisition costs (see below) 22 15 21 15 23 17 Risk margin reserve charge to adjusted IFRS operating profit for longer-term credit-related losses (82) (62) (91) (71) (97) (72) |
Schedule of equity-type securities | Equity-type securities such as common and preferred stock and portfolio holdings in mutual funds 6.7 % to 7.2 % 6.1 % to 6.5 % 5.5 % to 6.5 % Other equity-type securities such as investments in limited partnerships and private equity funds 8.7 % to 9.2 % 8.1 % to 8.5 % 7.5 % to 8.5 % |
Schedule of segmental income statements | 2018 £m Unallocated to a segment UK and Total (other Group Asia US Europe segment operations) total note (ix) Gross premiums earned note(iv) 16,469 17,656 13,061 47,186 38 47,224 Outward reinsurance premiums note(i) (575) (309) (13,137) (14,021) (2) (14,023) Earned premiums, net of reinsurance 15,894 17,347 (76) 33,165 36 33,201 Other income note(ii),(iii) 309 50 1,595 1,954 39 1,993 Total external revenue note(v),(vi) 16,203 17,397 1,519 35,119 75 35,194 Intra-group revenue 42 50 3 95 (95) — Interest income note(vii) 1,086 2,016 3,039 6,141 51 6,192 Other investment return note B1.5 (3,240) (6,804) (6,476) (16,520) 65 (16,455) Total revenue, net of reinsurance 14,091 12,659 (1,915) 24,835 96 24,931 Benefits and claims and movements in unallocated surplus of with-profits funds, net of reinsurance note(i),(iv) (8,736) (8,790) 4,977 (12,549) (19) (12,568) Acquisition costs and other operating expenditure note B2, note(iii),(iv) (3,866) (2,077) (2,360) (8,303) (552) (8,855) Interest on core structural borrowings — (15) — (15) (395) (410) Loss on disposal of businesses and corporate transactions note D1.1 (11) (38) — (49) (31) (80) Total charges, net of reinsurance and loss on disposal of businesses (12,613) (10,920) 2,617 (20,916) (997) (21,913) Share of profit from joint ventures and associates, net of related tax 239 — 52 291 — 291 Profit (loss) before tax (being tax attributable to shareholders’ and policyholders’ returns) note(viii) 1,717 1,739 754 4,210 (901) 3,309 Tax (charge) credit attributable to policyholders’ returns (80) — 406 326 — 326 Profit (loss) before tax attributable to shareholders 1,637 1,739 1,160 4,536 (901) 3,635 Analysis of profit (loss) before tax Adjusted IFRS operating profit (loss) based on longer-term investment returns 2,164 1,919 1,634 5,717 (890) 4,827 Short-term fluctuations in investment returns on shareholder-backed business (512) (100) 34 (578) 20 (558) Amortisation of acquisition accounting adjustments (4) (42) — (46) — (46) Loss on disposal of businesses and corporate transactions note D1.1 (11) (38) (508) (557) (31) (588) 1,637 1,739 1,160 4,536 (901) 3,635 2017 £m Unallocated to a segment UK and Total (other Group Asia US Europe segment operations) total note (ix) Gross premiums earned 15,688 15,164 13,126 43,978 27 44,005 Outward reinsurance premiums (656) (352) (1,050) (2,058) (4) (2,062) Earned premiums, net of reinsurance 15,032 14,812 12,076 41,920 23 41,943 Other income note (ii),(iii) 307 669 1,234 2,210 48 2,258 Total external revenue note (v),(vi) 15,339 15,481 13,310 44,130 71 44,201 Intra-group revenue 40 64 5 109 (109) — Interest income note (vii) 932 2,085 3,413 6,430 67 6,497 Other investment return note B1.5 8,063 16,448 11,171 35,682 10 35,692 Total revenue, net of reinsurance 24,374 34,078 27,899 86,351 39 86,390 Benefits and claims and movements in unallocated surplus of with-profits funds, net of reinsurance (18,291) (31,205) (23,025) (72,521) (11) (72,532) Acquisition costs and other operating expenditure note B2, note(iii) (4,053) (2,257) (3,206) (9,516) (477) (9,993) Interest on core structural borrowings — (16) — (16) (409) (425) Gain on disposal of businesses and corporate transactions note D1.1 61 162 — 223 — 223 Re-measurement of the sold Korea life business 5 — — 5 — 5 Total charges, net of reinsurance and gain on disposal of business (22,278) (33,316) (26,231) (81,825) (897) (82,722) Share of profit from joint ventures and associates, net of related tax 181 — 121 302 — 302 Profit (loss) before tax (being tax attributable to shareholders’ and policyholders’ returns) note (viii) 2,277 762 1,789 4,828 (858) 3,970 Tax charge attributable to policyholders’ returns (249) — (425) (674) — (674) Profit (loss) before tax attributable to shareholders 2,028 762 1,364 4,154 (858) 3,296 Analysis of profit (loss) before tax Adjusted IFRS operating profit (loss) based on longer-term investment returns 1,975 2,224 1,378 5,577 (878) 4,699 Short-term fluctuations in investment returns on shareholder-backed business (1) (1,568) (14) (1,583) 20 (1,563) Amortisation of acquisition accounting adjustments (7) (56) — (63) — (63) Gain on disposal of businesses and corporate transactions note D1.1 61 162 — 223 — 223 2,028 762 1,364 4,154 (858) 3,296 2016 £m Unallocated to a segment UK and Total (other Group Asia US Europe segment operations) total note (ix) Gross premiums earned 14,006 14,685 10,290 38,981 — 38,981 Outward reinsurance premiums (648) (367) (1,005) (2,020) — (2,020) Earned premiums, net of reinsurance 13,358 14,318 9,285 36,961 — 36,961 Other income note (ii),(iii) 253 684 1,222 2,159 87 2,246 Total external revene note (v),(vi) 13,611 15,002 10,507 39,120 87 39,207 Intra-group revenue 27 53 4 84 (84) — Interest income note (vii) 875 2,151 4,517 7,543 104 7,647 Other investment return note B1.5 2,042 5,461 17,578 25,081 (217) 24,864 Total revenue, net of reinsurance 16,555 22,667 32,606 71,828 (110) 71,718 Benefits and claims and movements in unallocated surplus of with-profits funds, net of reinsurance (11,442) (20,214) (27,710) (59,366) — (59,366) Acquisition costs and other operating expenditure note B2, note (iii) (3,684) (1,913) (2,689) (8,286) (438) (8,724) Interest on core structural borrowings — (15) — (15) (345) (360) Remeasurement of the sold Korea life business note D1 (238) — — (238) — (238) Total charges, net of reinsurance and gain (loss) on disposal of businesses (15,364) (22,142) (30,399) (67,905) (783) (68,688) Share of profit from joint ventures and associates, net of related tax 148 — 34 182 — 182 Profit (loss) before tax (being tax attributable to shareholders’ and policyholders’ returns) note (viii) 1,339 525 2,241 4,105 (893) 3,212 Tax charge attributable to policyholders’ returns (155) — (782) (937) — (937) Profit (loss) before tax attributable to shareholders 1,184 525 1,459 3,168 (893) 2,275 Analysis of profit (loss) before tax Adjusted IFRS operating profit (loss) based on longer-term investment returns 1,644 2,048 1,253 4,945 (689) 4,256 Short-term fluctuations in investment returns on shareholder-backed business (225) (1,455) 206 (1,474) (204) (1,678) Amortisation of acquisition accounting adjustments (8) (68) — (76) — (76) Loss on disposal of businesses and corporate transactions note D1 (227) — — (227) — (227) 1,184 525 1,459 3,168 (893) 2,275 Notes (i) Outward reinsurance premiums of £(14,023) million includes the £(12,149) million paid during the year in respect of the reinsurance of the UK annuity portfolio. The associated increase in reinsurance assets is included in outward reinsurers’ share of benefits and claims and the consequential change in policyholder liabilities is included in benefits and claims. See note D1.1 for further details. (ii) Included within other income is revenue from the Group’s asset management business of £1,489 million (2017: £1,371 million; 2016: £1,147 million). The remaining other income includes revenue from external customers. Other income also includes £20 million (2017: £7 million; 2016: £8 million) relating to financial instruments that are not held at fair value through profit or loss. The 2017 and 2016 comparative also included amounts for broker-dealer fees generated by the US broker-dealer network which was disposed of in August 2017, amounting to £542 million and £550 million respectively. (iii) Following the adoption of IFRS 15, the 2017 and 2016 comparative results have been re-presented as described in note A2. (iv) In October 2018, Jackson entered into a 100 per cent reinsurance agreement with John Hancock Life Insurance Company (John Hancock USA) to acquire a closed block of group payout annuity business. The transaction resulted in an addition to gross premiums earned of £3.7 billion and a corresponding increase in benefits and claims of £4.1 billion for the increase in policyholder liabilities and a decrease in other operating expenditure for negative ceding commissions of £0.4 billion at the inception of the contract. There was no material impact on adjusted IFRS operating profit based on longer-term investment returns or total profit as a result of the transaction. (v) In Asia, external revenue from no one individual market exceeds 10 per cent of the Group total except for Hong Kong in 2018, 2017 and 2016. Total external revenue of Hong Kong is £7,719 million (2017: £7,269 million; 2016: £6,313 million). (vi) Total external revenue shown in the tables above is all from external customers except for £166 million within the 2018 amount for UK and Europe of £1,519 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 C11. (vii) Interest income includes £4 million (2017: £3 million; 2016: £3 million) accrued in respect of impaired securities. (viii) This measure is the formal profit (loss) before tax measure under IFRS but is not the result attributable to shareholders. (ix) Unallocated to a segment includes central operations (Group and Asia Regional Head Offices and Group borrowings), Prudential Capital and Africa operations. In addition, this column includes intra-group eliminations, including the elimination of the intra-group reinsurance contract between the UK with-profits and Asia with-profits businesses. (x) Due to the nature of the business of the Group, there is no reliance on any major customers. |
Schedule of other investment return | 2018 £m 2017 £m 2016 £m Realised and unrealised (losses) gains on securities at fair value through profit or loss (19,665) 33,121 28,489 Realised and unrealised (losses) on derivatives at fair value through profit or loss (941) (1,624) (7,050) Realised gains (losses) on available-for-sale securities, previously recognised in other comprehensive income* 11 (26) 270 Realised (losses) gains on loans (4) 9 91 Dividends 2,362 2,654 2,283 Other investment income 1,782 1,558 781 Other investment return (16,455) 35,692 24,864 * Including impairment. |
Schedule of additional analysis of performance by segment | B1.6(a) Asia 2018 £m 2017 £m 2016 £m Asset Insurance management Eliminations Total Total Total Earned premiums, net of reinsurance 15,894 — — 15,894 15,032 13,358 Other income 99 210 — 309 307 253 Total external revenue 15,993 210 — 16,203 15,339 13,611 Intra-group revenue — 158 (116) 42 40 27 Interest income 1,083 3 — 1,086 932 875 Other investment return (3,240) — — (3,240) 8,063 2,042 Total revenue, net of reinsurance 13,836 371 (116) 14,091 24,374 16,555 Benefits and claims and movements in unallocated surplus of with-profits funds, net of reinsurance (8,736) — — (8,736) (18,291) (11,442) Acquisition costs and other expenditure note B2 (3,732) (250) 116 (3,866) (4,053) (3,684) (Loss) gain on disposal of businesses and corporate transactions note D1.1 (11) — — (11) 61 — Remeasurement of the sold Korea life business note D1.1 — — — — 5 (238) Total charges, net of reinsurance and (loss) gain on disposal of businesses (12,479) (250) 116 (12,613) (22,278) (15,364) Share of profit from joint ventures and associates, net of related tax 178 61 — 239 181 148 Profit before tax (being tax attributable to shareholders’ and policyholders’ returns) 1,535 182 — 1,717 2,277 1,339 Tax charge attributable to policyholders’ returns (80) — — (80) (249) (155) Profit before tax attributable to shareholders 1,455 182 — 1,637 2,028 1,184 Analysis of profit (loss) before tax Adjusted IFRS operating profit based on longer-term investment returns 1,982 182 — 2,164 1,975 1,644 Short-term fluctuations in investment returns on shareholder-backed business (512) — — (512) (1) (225) Amortisation of acquisition accounting adjustments (4) — — (4) (7) (8) (Loss) gain on disposal of businesses and corporate transactions note D1.1 (11) — — (11) 61 (227) 1,455 182 — 1,637 2,028 1,184 B1.6(b) US 2018 £m 2017 £m 2016 £m Asset Insurance management Eliminations Total Total Total Earned premiums, net of reinsurance note (ii) 17,347 — — 17,347 14,812 14,318 Other income 5 45 — 50 669 684 Total external revenue 17,352 45 — 17,397 15,481 15,002 Intra-group revenue — 118 (68) 50 64 53 Interest income 2,016 — — 2,016 2,085 2,151 Other investment return (6,784) (20) — (6,804) 16,448 5,461 Total revenue, net of reinsurance 12,584 143 (68) 12,659 34,078 22,667 Benefits and claims note (ii) (8,790) — — (8,790) (31,205) (20,214) Interest on core structural borrowings (15) — — (15) (16) (15) Acquisition costs and other operating expenditure note B2, note (ii) (2,010) (135) 68 (2,077) (2,257) (1,913) (Loss) gain on disposal of businesses and corporate transactions note D1.1 — (38) — (38) 162 — Total charges, net of reinsurance and gain on disposal of businesses (10,815) (173) 68 (10,920) (33,316) (22,142) Profit before tax 1,769 (30) — 1,739 762 525 Analysis of profit (loss) before tax Adjusted IFRS operating profit based on longer-term investment returns 1,911 8 — 1,919 2,224 2,048 Short-term fluctuations in investment returns on shareholder-backed business (100) — — (100) (1,568) (1,455) Amortisation of acquisition accounting adjustments (42) — — (42) (56) (68) (Loss) gain on disposal of businesses and corporate transactions note D1.1 — (38) — (38) 162 — 1,769 (30) — 1,739 762 525 Notes (i) In 2017, the US total revenue and total charges included NPH broker dealer fees of £542 million (2016: £550 million) within other income and other operating expenditure, respectively. The Group disposed of its US independent broker-dealer network in August 2017. (ii) In October 2018, Jackson entered into an agreement with John Hancock Life to reinsure 100 per cent of the group payout annuity business. The transaction resulted in an addition to gross premiums earned of £3.7 billion and a corresponding increase in benefits and claims of £4.1 billion for the increase in policyholder liabilities and a decrease in other operating expenditure for negative ceding commissions of £0.4 billion at the inception of the contract. There was no material impact on adjusted IFRS operating profit based on longer-term investment returns or total profit as a result of the transaction. |
Acquisition costs and other e_2
Acquisition costs and other expenditure (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Acquisition costs and other expenditure | |
Schedule of acquisition costs and other expenditure | 2018 £m 2017 £m 2016 £m Acquisition costs incurred for insurance policies (3,438) (3,712) (3,687) Acquisition costs deferred less amortisation of acquisition costs 59 911 923 Administration costs and other expenditure* (5,380) (6,208) (5,398) Movements in amounts attributable to external unit holders of consolidated investment funds (96) (984) (562) Total acquisition costs and other expenditure (8,855) (9,993) (8,724) |
Schedule of segmental analysis of other interest expense and depreciation and amortisation | Other interest expense Depreciation and amortisation 2018 £m 2017 £m 2016 £m 2018 £m 2017 £m 2016 £m Asia operations: Insurance — — — (228) (230) (201) Asset management — — — (4) (3) (2) US operations: Insurance (159) (116) (56) (830) 20 94 Asset management — — — (6) (7) (3) UK and Europe operations: Insurance (94) (85) (102) (61) (59) (121) Asset management — — — (5) (7) (7) Total segment (253) (201) (158) (1,134) (286) (240) Unallocated to a segment (other operations) (29) (39) (27) (2) (2) (2) Group total (282) (240) (185) (1,136) (288) (242) |
Schedule of average number of staff employed | Asia operations 16,798 15,477 15,439 US operations 4,285 4,564 4,447 UK and Europe operations* 7,123 7,110 6,381 Total 28,206 27,151 26,267 * The UK and Europe staff numbers include staff from central operations and Africa which are unallocated to a segment. |
Schedule of costs of employment | 2018 £m 2017 £m 2016 £m Wages and salaries 1,656 1,774 1,483 Social security costs 116 129 110 Defined benefit schemes* (29) (3) 213 Defined contribution schemes 95 85 79 Total 1,838 1,985 1,885 * The (credit) charge incorporates the effect of actuarial gains and losses. |
Schedule of movement in outstanding options and awards | Options outstanding under SAYE Awards outstanding under schemes incentive plans 2018 2017 2016 Weighted Weighted average average Weighted Number exercise Number exercise Number average Number of options price of options price of options exercise of awards millions £ millions £ millions price millions Beginning of year: 6.4 11.74 7.1 10.74 8.8 9.44 33.6 30.2 28.4 Granted 0.3 13.94 1.4 14.55 1.4 11.04 10.7 12.7 13.9 Exercised (1.4) 10.85 (1.7) 10.07 (2.0) 7.30 (8.7) (7.3) (10.5) Forfeited (0.1) 12.25 (0.1) 10.83 (0.1) 9.95 (2.6) (1.3) (1.5) Cancelled (0.2) 12.43 (0.2) 11.19 (0.8) 6.45 — (0.1) (0.1) Lapsed/Expired (0.1) 12.60 (0.1) 10.86 (0.2) 9.64 (0.2) (0.6) — End of year 4.9 12.10 6.4 11.74 7.1 10.74 32.8 33.6 30.2 Options immediately exercisable, end of year 0.8 10.37 0.4 11.06 0.6 8.53 |
Summary of the range of exercise prices for options outstanding | Outstanding Exercisable Weighted average Number remaining Weighted average Number Weighted average outstanding contractual life exercise exercisable exercise (millions) (years)* prices £ (millions) prices £ Between £4 and £5 — — 0.1 — — 0.4 — — 4.66 — — 0.1 — — 4.66 Between £6 and £7 — — 0.2 — 0.4 1.4 — 6.29 6.29 — — — — 6.29 6.29 Between £9 and £10 0.3 0.5 1.1 0.4 1.4 1.4 9.01 9.01 9.01 0.3 — 0.5 9.01 — 9.01 Between £11 and £12 3.0 4.5 5.7 1.6 2.2 2.9 11.19 11.21 11.27 0.5 0.4 — 11.11 11.55 — Between £13 and £14 0.3 — — 4.1 — — 13.94 — — — — — — — — Between £14 and £15 1.3 1.4 — 2.6 3.9 — 14.55 14.55 — — — — — — — 4.9 6.4 7.1 2.1 2.5 2.6 12.10 11.74 10.74 0.8 0.4 0.6 10.37 11.06 8.53 * The years shown above for weighted average remaining contractual life include the time period from end of vesting period to expiration of contract. |
Schedule of assumptions used to estimate fair value amounts on date of grant relating to all options and awards | 2018 2017 2016 Prudential Prudential LTIP SAYE Other LTIP / RSP SAYE Other Prudential SAYE Other (TSR) options awards (TSR) options awards LTIP (TSR) options awards Dividend yield (%) — 2.52 — — 2.85 — — 3.19 — Expected volatility (%) 24.03 21.09 — 23.17 20.15 — 29.36 25.41 — Risk-free interest rate (%) 1.19 0.97 — 0.62 0.56 — 0.12 0.15 — Expected option life (years) — 3.94 — — 3.49 — — 3.70 — Weighted average exercise price (£) — 13.94 — — 14.55 — — 11.04 — Weighted average share price at grant date (£) 17.46 16.64 — 16.80 17.74 — 12.82 13.94 — Weighted average fair value at grant date (£) 6.64 3.29 17.04 8.30 3.29 16.12 4.41 3.05 12.57 |
Schedule of expense recognised relating to share-based compensation | 2018 £m 2017 £m 2016 £m Share-based compensation expense 158 126 Amount accounted for as equity-settled 158 127 |
Schedule of key management remuneration | 2018 £m 2017 £m 2016 £m Salaries and short-term benefits 16.2 17.9 20.7 Post-employment benefits 1.3 1.3 1.3 Share-based payments 14.5 14.1 18.7 32.0 33.3 40.7 |
Schedule of fees payable to the auditor | 2018 £m 2017 £m 2016 £m Fees payable to the Company’s auditor for the audit of the Company’s annual accounts 2.1 2.1 2.0 Fees payable to the Company’s auditor and its associates for other services: Audit of subsidiaries pursuant to legislation 9.2 8.3 7.5 Tax compliance services — — 0.1 Audit-related assurance services* 4.7 4.3 3.9 Other assurance services 1.1 1.5 2.1 Services relating to corporate finance transactions 0.2 0.4 — All other services 1.0 0.7 0.6 Total fees paid to the auditor 18.3 17.3 16.2 |
Tax charge (Tables)
Tax charge (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Tax charge | |
Schedule of total tax charge in the income statement | 2018 £m 2017 £m 2016 £m Current Deferred Tax charge tax tax Total Total Total Attributable to shareholders: Asia operations (199) (78) (277) (253) (256) US operations (87) (168) (255) (508) 66 UK and Europe (255) 39 (216) (267) (275) Other operations 125 1 126 122 111 Tax charge attributable to shareholders’ returns (416) (206) (622) (906) (354) Attributable to policyholders: Asia operations (92) 12 (80) (249) (155) UK and Europe (188) 594 406 (425) (782) Tax (charge) credit attributable to policyholders’ returns (280) 606 326 (674) (937) Total tax charge (696) 400 (296) (1,580) (1,291) |
Schedule of components total tax charge | 2018 £m 2017 £m 2016 £m Current tax expense: Corporation tax (677) (746) (1,464) Adjustments in respect of prior years (19) 50 87 Total current tax charge (696) (696) (1,377) Deferred tax arising from: Origination and reversal of temporary differences 385 (531) 64 Impact of changes in local statutory tax rates 8 (353) 6 Credit in respect of a previously unrecognised tax loss, tax credit or temporary difference from a prior period 7 — 16 Total deferred tax credit (charge) 400 (884) 86 Total tax charge (296) (1,580) (1,291) |
Schedule of deferred tax charge | 2018 £m 2017 £m 2016 £m Unrealised gains and losses on investments 667 (185) (437) Short-term temporary differences (198) (526) 573 Balances relating to investment and insurance contracts (91) (156) (90) Unused tax losses 23 (12) 36 Capital allowances (1) (5) 4 Deferred tax credit (charge) 400 (884) 86 |
Reconciliation of shareholder effective tax rate | 2018 £m Total Percentage Asia US UK and Other* attributable to impact operations operations Europe operations shareholders on ETR Adjusted IFRS operating profit (loss) based on longer-term investment returns 2,164 1,919 1,634 (890) 4,827 Non-operating loss (527) (180) (474) (11) (1,192) Profit (loss) before tax 1,637 1,739 1,160 (901) 3,635 Expected tax rate 22 % 21 % 19 % 19 % 21 % Tax at the expected rate 360 365 220 (171) 774 21.3 % Effects of recurring tax reconciliation items: Income not taxable or taxable at concessionary rates (34) (17) (6) (2) (59) (1.6) % Deductions not allowable for tax purposes 39 3 15 10 67 1.8 % Items related to taxation of life insurance businesses note (ii) (13) (83) (2) — (98) (2.7) % Deferred tax adjustments (11) — 2 (30) (39) (1.1) % Effect of results of joint ventures and associates note (iii) (63) — (3) 2 (64) (1.8) % Irrecoverable withholding taxes note (iv) — — — 47 47 1.3 % Other (3) — 3 3 3 0.1 % Total (85) (97) 9 30 (143) (4.0) % Effects of non-recurring tax reconciliation items: Adjustments to tax charge in relation to prior years — (17) (11) 14 (14) (0.4) % Movements in provisions for open tax matters note (v) 2 4 (2) 1 5 0.2 % Total 2 (13) (13) 15 (9) (0.2) % Total actual tax charge (credit) 277 255 216 (126) 622 17.1 % Analysed into: Tax on adjusted IFRS operating profit based on longer-term investment returns 308 301 313 (130) 792 Tax on non-operating profit (31) (46) (97) 4 (170) Actual tax rate: Adjusted IFRS operating profit based on longer-term investment returns: Including non-recurring tax reconciling items 14 % 16 % 19 % 15 % 16 % Excluding non-recurring tax reconciling items 14 % 16 % 20 % 16 % 16 % Total profit 17 % 15 % 19 % 14 % 17 % * Notes (i) Impact of US tax reform The 2018 tax charge for US operations reflects the full impact of the US tax reform package, the Tax Cuts and Jobs Act, which was enacted in December 2017 and took effect from 1 January 2018. The expected tax rate of 21 per cent reflects the reduced US corporate income tax rate compared to 35 per cent for 2017. The benefit of the dividend received deduction (shown in Items related to the taxation of life insurance businesses) is lower in 2018 than 2017 reflecting the changes to how this deduction is computed. In 2017, the reduction in the US corporate income tax rate gave rise to a £445 million unfavourable reconciling item in US operations relating to the remeasurement of the net deferred tax asset attributable to shareholders and a £134 million benefit recognised in other comprehensive income. (ii) Items related to taxation of life insurance businesses The £83 million (2017: £238 million; 2016: £159 million) reconciling item in US operations reflects the impact of the dividend received deduction on the taxation of profits from variable annuity business. The principal reason for the reduction in the Asia operations reconciling items from £92 million at 2017 to £13 million at 2018 reflects non-operating investment losses in Hong Kong which do not attract tax relief offsetting the benefit of operating profits due to the taxable profit being computed as 5 per cent of net insurance premiums. (iii) 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. (iv) Irrecoverable withholding taxes The £47 million (2017: £54 million; 2016: £36 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. (v) 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 (5) Other movements* (5) At 31 December 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. 2017 £m Total Percentage Asia US UK and Other attributable to impact operations operations Europe operations* shareholders on ETR Adjusted IFRS operating profit (loss) based on longer-term investment returns 1,975 2,224 1,378 (878) 4,699 Non-operating profit (loss) 53 (1,462) (14) 20 (1,403) Profit (loss) before tax 2,028 762 1,364 (858) 3,296 Expected tax rate 21 % 35 % 19 % 19 % 24 % Tax at the expected rate 426 267 259 (163) 789 23.9 % Effects of recurring tax reconciliation items: Income not taxable or taxable at concessionary rates (64) (11) (2) (14) (91) (2.8) % Deductions not allowable for tax purposes 26 6 13 10 55 1.7 % Items related to taxation of life insurance businesses (92) (238) (2) — (332) (10.1) % Deferred tax adjustments 11 17 (1) (5) 22 0.7 % Effect of results of joint ventures and associates (52) — (3) — (55) (1.7) % Irrecoverable withholding taxes — — — 54 54 1.6 % Other (10) — 6 (1) (5) (0.1) % Total (181) (226) 11 44 (352) (10.7) % Effects of non-recurring tax reconciliation items: Adjustments to tax charge in relation to prior years (3) (15) (3) (3) (24) (0.7) % Movements in provisions for open tax matters 19 25 — — 44 1.3 % Impact of US tax reform — 445 — — 445 13.5 % Adjustments in relation to business disposals (8) 12 — — 4 0.1 % Total 8 467 (3) (3) 469 14.2 % Total actual tax charge (credit) 253 508 267 (122) 906 27.4 % Analysed into: Tax on adjusted IFRS operating profit based on longer-term investment returns 276 548 268 (121) 971 Tax on non-operating profit (23) (40) (1) (1) (65) Actual tax rate: Adjusted IFRS operating profit based on longer-term investment returns: Including non-recurring tax reconciling items 14 % 25 % 19 % 14 % 21 % Excluding non-recurring tax reconciling items 13 % 24 % 20 % 13 % 20 % Total profit 12 % 67 % 20 % 14 % 27 % * Other operations include restructuring costs. 2016 £m UK Total Percentage Asia US and Other* attributable to impact on operations operations Europe operations shareholders ETR Adjusted IFRS operating profit (loss) based on longer-term investment returns 1,644 2,048 1,253 (689) 4,256 Non-operating (loss) profit (460) (1,523) 206 (204) (1,981) Profit (loss) before tax 1,184 525 1,459 (893) 2,275 Expected tax rate 22 % 35 % 20 % 20 % 24 % Tax at the expected rate 260 184 292 (179) 557 24.4 % Effects of recurring tax reconciliation items: Income not taxable or taxable at concessionary rates (31) (18) (13) (5) (67) (2.9) % Deductions not allowable for tax purposes 20 8 10 22 60 2.6 % Items related to taxation of life insurance businesses (20) (159) (1) — (180) (7.9) % Deferred tax adjustments (11) — 2 (14) (23) % Effect of results of joint ventures and associates (44) — (2) — (46) (2.0) % Irrecoverable withholding taxes — — — 36 36 1.6 % Other 3 — — (7) (4) (0.1) % Total (83) (169) (4) 32 (224) (9.7) % Effects of non-recurring tax reconciliation items: Adjustments to tax charge in relation to prior years 1 (81) (7) 5 (82) (3.6) % Movements in provisions for open tax matters 20 — — 31 51 2.2 % Impact of changes in local statutory tax rates — — (6) — (6) (0.2) % Write-down of Korea life business 58 — — — 58 2.5 % Total 79 (81) (13) 36 21 0.9 % Total actual tax charge (credit) 256 (66) 275 (111) 354 15.6 % Analysed into: Tax on adjusted IFRS operating profit based on longer-term investment returns 271 467 244 (88) 894 Tax on non-operating profit (15) (533) 31 (23) (540) Actual tax rate: Adjusted IFRS operating profit based on longer-term investment returns: Including non-recurring tax reconciling items 16 % 23 % 19 % 13 % 21 % Excluding non-recurring tax reconciling items 15 % 27 % 21 % 18 % 22 % Total profit 22 % (13) % 19 % 12 % 16 % * 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 (5) Other movements* (5) At 31 December 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. |
Schedule of tax rates for Asia insurance and Group, excluding the held for sale Korea life business | Asia Attributable to operations shareholders Expected tax rate on total profit % 24 % Actual tax rate: Operating profit based on longer-term investment returns 16 % 21 % Total profit 18 % 14 % |
Earnings per share (Tables)
Earnings per share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings per share | |
Schedule of earnings per share | 2018 Net of tax Before Non- and non- Basic Diluted tax Tax controlling controlling earnings earnings £m £m interests interests per share per share Note B1.1 B4 £m £m Pence Pence Based on adjusted IFRS operating profit based on longer-term investment returns 4,827 (792) (3) 4,032 156.6 p 156.5 p Short-term fluctuations in investment returns on shareholder-backed business B1.2 (558) 53 — (505) (19.7) p (19.7) p Amortisation of acquisition accounting adjustments (46) 9 — (37) (1.4) p (1.4) p Loss on disposal of businesses and corporate transactions D1.1 (588) 108 — (480) (18.6) p (18.6) p Based on profit for the year 3,635 (622) (3) 3,010 116.9 p 116.8 p 2017 Net of tax Before Non- and non- Basic Diluted tax Tax controlling controlling earnings earnings £m £m interests interests per share per share Note B1.1 B4 £m £m Pence Pence Based on adjusted IFRS operating profit based on longer-term investment returns 4,699 (971) (1) 3,727 145.2 p 145.1 p Short-term fluctuations in investment returns on shareholder-backed business B1.2 (1,563) 572 — (991) (38.6) p (38.6) p Amortisation of acquisition accounting adjustments (63) 20 — (43) (1.7) p (1.7) p Cumulative exchange gain on the sold Korea life business recycled from other comprehensive income 61 — — 61 2.4 p 2.4 p Profit attaching to the disposal of businesses D1.1 162 (82) — 80 3.1 p 3.1 p Impact of US tax reform B4 — (445) — (445) (17.3) p (17.3) p Based on profit for the year 3,296 (906) (1) 2,389 93.1 p 93.0 p 2016 Net of tax Before Non- and non- Basic Diluted tax Tax controlling controlling earnings earnings £m £m interests interests per share per share Note B1.1 B4 £m £m Pence Pence Based on adjusted operating profit based on longer-term investment returns 4,256 (894) — 3,362 131.3 p 131.2 p Short-term fluctuations in investment returns on shareholder-backed business B1.2 (1,678) 519 — (1,159) (45.3) p (45.2) p Amortisation of acquisition accounting adjustments (76) — (51) (2.0) p (2.0) p (Loss) gain on disposal of businesses and corporate transactions D1.1 (227) (4) — (231) (9.0) p (9.0) p Based on profit for the year 2,275 (354) — 1,921 75.0 p 75.0 p |
Summary of weighted average number of shares for calculating earnings per share | Weighted average number (in millions) of shares for calculation of: Basic earnings per share 2,575 2,567 2,560 Shares under option at end of year 5 6 7 Number of shares that would have been issued at fair value on assumed option price (4) (5) (5) Diluted earnings per share 2,576 2,568 2,562 |
Dividends (Tables)
Dividends (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Dividends | |
Schedule of dividends | 2018 2017 2016 Pence per Pence per Pence per share £m share £m share £m Dividends relating to reporting year: First interim ordinary dividend 15.67 p 406 14.50 p 375 12.93 p 333 Second interim ordinary dividend 33.68 p 873 32.50 p 841 30.57 p 789 Total 49.35 p 1,279 47.00 p 1,216 43.50 p 1,122 Dividends paid in reporting year: Current year first interim ordinary dividend 15.67 p 404 14.50 p 373 12.93 p 332 Second interim ordinary dividend for prior year 32.50 p 840 30.57 p 786 26.47 p 679 Special dividend for prior year — — — — 10.00 p 256 Total 48.17 p 1,244 45.07 p 1,159 49.40 p 1,267 |
Analysis of Group statement o_2
Analysis of Group statement of financial position by segment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Analysis of Group statement of financial position by segment | |
Schedule of financial position by segment | 31 Dec 2018 £m Elimination of intra- Unallocated group to a segment debtors UK and (central and Group Asia US Europe operations) creditors total By operating segment Note C2.1 C2.2 C2.3 note (iv) Assets Goodwill C5.1 498 — 1,359 — — 1,857 Deferred acquisition costs and other intangible assets C5.2 2,937 8,747 195 44 — 11,923 Property, plant and equipment 129 246 1,031 3 — 1,409 Reinsurers' share of insurance contract liabilities 2,777 6,662 2,812 2 (1,109) 11,144 Deferred tax assets C8.1 119 2,295 126 55 — 2,595 Current tax recoverable C8.2 26 311 244 118 (81) 618 Accrued investment income note (i) 664 498 1,511 76 — 2,749 Other debtors note (i) 2,978 238 4,189 1,968 (5,285) 4,088 Investment properties 5 6 17,914 — — 17,925 Investment in joint ventures and associates accounted for using the equity method D6 991 — 742 — — 1,733 Loans C3.3 1,377 11,066 5,567 — — 18,010 Equity securities and portfolio holdings in unit trusts 32,150 128,657 53,810 116 — 214,733 Debt securities C3.2 45,839 41,594 85,956 1,967 — 175,356 Derivative assets 296 574 2,513 111 — 3,494 Other investments — 927 5,585 — — 6,512 Deposits 1,224 92 10,320 160 — 11,796 Assets held for sale* — — 10,578 — — 10,578 Cash and cash equivalents note (ii) 2,189 3,005 4,749 2,182 — 12,125 Total assets 94,199 204,918 209,201 6,802 (6,475) 508,645 Total equity 6,428 5,624 8,700 (3,485) — 17,267 Liabilities Insurance contract liabilities C4.1 72,349 182,432 68,957 37 (1,109) 322,666 Investment contract liabilities with discretionary participation features C4.1 375 — 67,038 — — 67,413 Investment contract liabilities without discretionary participation features C4.1 492 3,168 15,560 2 — 19,222 Unallocated surplus of with-profits funds C4.1 2,511 — 13,334 — — 15,845 Core structural borrowings of shareholder-financed businesses C6.1 — 196 — 7,468 — 7,664 Operational borrowings attributable to shareholder-financed businesses C6.2 61 328 106 503 — 998 Borrowings attributable to with-profits businesses C6.2 19 — 3,921 — — 3,940 Obligations under funding, securities lending and sale and repurchase agreements — 5,765 1,224 — — 6,989 Net asset value attributable to unit holders of consolidated unit trusts and similar funds 2,617 — 9,013 21 — 11,651 Deferred tax liabilities C8.1 1,257 1,688 1,061 16 — 4,022 Current tax liabilities C8.2 133 115 326 75 (81) 568 Accruals, deferred income and other liabilities note (iii) 7,641 5,324 6,442 1,126 (5,285) 15,248 Provisions C11 251 23 743 61 — 1,078 Derivative liabilities C3.4 65 255 2,208 978 — 3,506 Liabilities held for sale* — — 10,568 — — 10,568 Total liabilities 87,771 199,294 200,501 10,287 (6,475) 491,378 Total equity and liabilities 94,199 204,918 209,201 6,802 (6,475) 508,645 * Assets held for sale of £10,578 million includes £10,568 million in respect of the reinsured UK annuity business. The corresponding policyholder and other liabilities of £10,568 million is reflected in liabilities held for sale (see note D1.1). 31 Dec 2017 £m Elimination of intra- Unallocated group to a segment debtors UK and (central and Group Asia US Europe operations) creditors Total By operating segment Note C2.1 C2.2 C2.3 note (iv) Assets Goodwill C5.1 305 — 1,177 — — 1,482 Deferred acquisition costs and other intangible assets C5.2 2,540 8,219 210 42 — 11,011 Property, plant and equipment 125 214 447 3 — 789 Reinsurers' share of insurance contract liabilities 1,960 6,424 2,521 3 (1,235) 9,673 Deferred tax assets C8.1 112 2,300 157 58 — 2,627 Current tax recoverable C8.2 58 298 244 93 (80) 613 Accrued investment income note (i) 595 492 1,558 31 — 2,676 Other debtors note (i) 2,675 248 3,118 2,121 (5,199) 2,963 Investment properties 5 5 16,487 — — 16,497 Investment in joint ventures and associates accounted for using the equity method D6 912 — 504 — — 1,416 Loans C3.3 1,317 9,630 5,986 109 — 17,042 Equity securities and portfolio holdings in unit trusts 29,976 130,630 62,670 115 — 223,391 Debt securities C3.2 40,982 35,378 92,707 2,307 — 171,374 Derivative assets 113 1,611 2,954 123 — 4,801 Other investments — 848 4,774 — — 5,622 Deposits 1,291 43 9,540 362 — 11,236 Assets held for sale D1 — — 38 — — 38 Cash and cash equivalents note (ii) 1,934 1,658 5,808 1,290 — 10,690 Total assets 84,900 197,998 210,900 6,657 (6,514) 493,941 Total equity 5,926 5,248 8,245 (3,325) — 16,094 Liabilities Insurance contract liabilities C4.1 63,468 177,728 88,180 31 (1,235) 328,172 Investment contract liabilities with discretionary participation features C4.1 337 — 62,340 — — 62,677 Investment contract liabilities without discretionary participation features C4.1 328 2,996 17,069 1 — 20,394 Unallocated surplus of with-profits funds C4.1 3,474 — 13,477 — — 16,951 Core structural borrowings of shareholder-financed businesses C6.1 — 184 — 6,096 — 6,280 Operational borrowings attributable to shareholder-financed businesses C6.2 50 508 148 1,085 — 1,791 Borrowings attributable to with-profits businesses C6.2 10 — 3,706 — — 3,716 Obligations under funding, securities lending and sale and repurchase agreements — 4,304 1,358 — — 5,662 Net asset value attributable to unit holders of consolidated unit trusts and similar funds 3,631 — 5,243 15 — 8,889 Deferred tax liabilities C8.1 1,152 1,845 1,703 15 — 4,715 Current tax liabilities C8.2 122 47 377 71 (80) 537 Accruals, deferred income and other liabilities note (iii) 6,069 5,109 6,609 1,597 (5,199) 14,185 Provisions C11 254 24 784 61 — 1,123 Derivative liabilities C3.4 79 5 1,661 1,010 — 2,755 Total liabilities 78,974 192,750 202,655 9,982 (6,514) 477,847 Total equity and liabilities 84,900 197,998 210,900 6,657 (6,514) 493,941 |
Schedule of accrued investment income and other debtors | 31 Dec 2018 £m 31 Dec 2017 £m Interest receivable 1,744 1,789 Other 1,005 887 Total accrued investment income 2,749 2,676 Other debtors comprises: Amounts due from Policyholders 452 408 Intermediaries 3 4 Reinsurers 218 134 Other 3,415 2,417 Total other debtors 4,088 2,963 Total accrued investment income and other debtors 6,837 5,639 Analysed as: Expected to be settled within one year 6,151 4,957 Expected to be settled after one year 686 682 Total accrued investment income and other debtors 6,837 5,639 |
Schedule of cash and cash equivalents | 31 Dec 2018 £m 31 Dec 2017 £m Cash 5,759 6,623 Cash equivalents 6,366 4,067 Total cash and cash equivalents 12,125 10,690 Analysed as: Held centrally and available for general use by the Group 349 328 Other funds not available for general use by the Group, including funds held for the benefit of policyholders 11,776 10,362 Total cash and cash equivalents 12,125 10,690 |
Schedule of accruals, deferred income and other liabilities | 31 Dec 2018 £m 31 Dec 2017 £m Accruals and deferred income 1,700 1,233 Other creditors 7,074 7,289 Creditors arising from direct insurance and reinsurance operations 2,363 2,296 Interest payable 117 100 Funds withheld under reinsurance of the REALIC business 2,941 2,664 Other items 1,053 603 Total accruals, deferred income and other liabilities 15,248 14,185 |
Analysis of segment statement_2
Analysis of segment statement of financial position by business type (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Asia | |
Disclosure of operating segments [line items] | |
Schedule of segment statement of financial position by business type | 31 Dec 31 Dec 2018 £m 2017 £m Insurance Unit-linked With-profits assets and Other Asset Note business* liabilities business Total management Eliminations Total Total Assets Goodwill — — 251 251 247 — 498 305 Deferred acquisition costs and other intangible assets 56 — 2,870 2,926 11 — 2,937 2,540 Property, plant and equipment 90 — 34 124 5 — 129 125 Reinsurers’ share of insurance contract liabilities 63 — 2,714 2,777 — — 2,777 1,960 Deferred tax assets — 1 108 109 10 — 119 112 Current tax recoverable — 2 23 25 1 — 26 58 Accrued investment income 254 51 327 632 32 — 664 595 Other debtors 1,676 730 535 2,941 77 (40) 2,978 2,675 Investment properties — — 5 5 — — 5 5 Investment in joint ventures and associates accounted for using the equity method — — 827 827 164 — 991 912 Loans C3.3 792 — 585 1,377 — — 1,377 1,317 Equity securities and portfolio holdings in unit trusts 17,165 12,804 2,146 32,115 35 — 32,150 29,976 Debt securities C3.2 27,204 3,981 14,583 45,768 71 — 45,839 40,982 Derivative assets 201 4 91 296 — — 296 113 Deposits 250 455 458 1,163 61 — 1,224 1,291 Cash and cash equivalents 870 326 874 2,070 119 — 2,189 1,934 Total assets 48,621 18,354 26,431 93,406 833 (40) 94,199 84,900 Total equity — — 5,868 5,868 560 — 6,428 5,926 Liabilities Insurance contract liabilities 40,389 15,876 16,084 72,349 — — 72,349 63,468 Investment contract liabilities with discretionary participation features C4.1 ( b ) 375 — — 375 — — 375 337 Investment contract liabilities without discretionary participation features C4.1 ( b ) — 492 — 492 — — 492 328 Unallocated surplus of with-profits funds 2,511 — — 2,511 — — 2,511 3,474 Operational borrowings attributable to shareholder-financed businesses — 50 11 61 — — 61 50 Borrowings attributable to with-profits businesses 19 — — 19 — — 19 10 Net asset value attributable to unit holders of consolidated unit trusts and similar funds 1,242 1,024 351 2,617 — — 2,617 3,631 Deferred tax liabilities 812 21 422 1,255 2 — 1,257 1,152 Current tax liabilities 27 — 93 120 13 — 133 122 Accruals, deferred income and other liabilities 3,138 889 3,475 7,502 179 (40) 7,641 6,069 Provisions 57 — 115 172 79 — 251 254 Derivative liabilities 51 2 12 65 — — 65 79 Total liabilities 48,621 18,354 20,563 87,538 273 (40) 87,771 78,974 Total equity and liabilities 48,621 18,354 26,431 93,406 833 (40) 94,199 84,900 * |
US | |
Disclosure of operating segments [line items] | |
Schedule of segment statement of financial position by business type | 31 Dec 31 Dec 2018 £m 2017 £m Insurance Variable annuity Fixed separate account annuity, assets and GICs and other Asset Note liabilities business Total management Eliminations Total Total Assets Goodwill — — — — — — — Deferred acquisition costs and other intangible assets — 8,747 8,747 — — 8,747 8,219 Property, plant and equipment — 243 243 3 — 246 214 Reinsurers’ share of insurance contract liabilities — 6,662 6,662 — — 6,662 6,424 Deferred tax assets — 2,271 2,271 24 — 2,295 2,300 Current tax recoverable — 309 309 2 — 311 298 Accrued investment income — 493 493 5 — 498 492 Other debtors — 230 230 76 (68) 238 248 Investment properties — 6 6 — — 6 5 Loans C3.3 — 11,066 11,066 — — 11,066 9,630 Equity securities and portfolio holdings in unit trusts 128,220 433 128,653 4 — 128,657 130,630 Debt securities C3.2 — 41,594 41,594 — — 41,594 35,378 Derivative assets — 574 574 — — 574 1,611 Other investments — 926 926 1 — 927 848 Deposits — — — 92 — 92 43 Cash and cash equivalents — 2,976 2,976 29 — 3,005 1,658 Total assets 128,220 76,530 204,750 236 (68) 204,918 197,998 Total equity — 5,584 5,584 40 — 5,624 5,248 Liabilities Insurance contract liabilities 128,220 54,212 182,432 — — 182,432 177,728 Investment contract liabilities without discretionary participation features C4.1 ( c ) — 3,168 3,168 — — 3,168 2,996 Core structural borrowings of shareholder-financed businesses — 196 196 — — 196 184 Operational borrowings attributable to shareholder-financed businesses — 328 328 — — 328 508 Obligations under funding, securities lending and sale and repurchase agreements — 5,765 5,765 — — 5,765 4,304 Net asset value attributable to unit holders of consolidated unit trusts and similar funds — — — — — — — Deferred tax liabilities — 1,688 1,688 — — 1,688 1,845 Current tax liabilities — 114 114 1 — 115 47 Accruals, deferred income and other liabilities — 5,197 5,197 195 (68) 5,324 5,109 Provisions — 23 23 — — 23 24 Derivative liabilities — 255 255 — — 255 5 Total liabilities 128,220 70,946 199,166 196 (68) 199,294 192,750 Total equity and liabilities 128,220 76,530 204,750 236 (68) 204,918 197,998 |
UK and Europe | |
Disclosure of operating segments [line items] | |
Schedule of segment statement of financial position by business type | 31 Dec 31 Dec 2018 £m 2017 £m Insurance Other funds and subsidiaries Annuity and Unit-linked other With-profits assets and long-term Asset Note business* liabilities business Total Management Eliminations Total Total Assets Goodwill 206 — — 206 1,153 — 1,359 1,177 Deferred acquisition costs and other intangible assets 83 — 94 177 18 — 195 210 Property, plant and equipment 895 — 39 934 97 — 1,031 447 Reinsurers' share of insurance contract liabilities 1,131 115 1,566 2,812 — — 2,812 2,521 Deferred tax assets 61 — 45 106 20 — 126 157 Current tax recoverable 58 6 174 238 6 — 244 244 Accrued investment income 1,010 116 378 1,504 7 — 1,511 1,558 Other debtors 2,102 575 641 3,318 1,011 (140) 4,189 3,118 Investment properties 15,635 618 1,661 17,914 — — 17,914 16,487 Investment in joint ventures and associates accounted for using the equity method 705 — — 705 37 — 742 504 Loans C3.3 3,853 — 1,714 5,567 — — 5,567 5,986 Equity securities and portfolio holdings in unit trusts 41,090 12,477 20 53,587 223 — 53,810 62,670 Debt securities C3.2 53,798 10,512 21,646 85,956 — — 85,956 92,707 Derivative assets 1,957 1 555 2,513 — — 2,513 2,954 Other investments 5,573 10 1 5,584 1 — 5,585 4,774 Deposits 8,530 1,101 689 10,320 — — 10,320 9,540 Assets held for sale 10 — 10,568 10,578 — — 10,578 38 Cash and cash equivalents 3,520 190 688 4,398 351 — 4,749 5,808 Total assets 140,217 25,721 40,479 206,417 2,924 (140) 209,201 210,900 Total equity — — 6,540 6,540 2,160 — 8,700 8,245 Liabilities Insurance contract liabilities C4.1(d) 43,775 5,219 19,963 68,957 — — 68,957 88,180 Investment contract liabilities with discretionary participation features C4.1(d) 67,018 — 20 67,038 — — 67,038 62,340 Investment contract liabilities without discretionary participation features C4.1(d) 2 15,498 60 15,560 — — 15,560 17,069 Unallocated surplus of with-profits funds 13,334 — — 13,334 — — 13,334 13,477 Operational borrowings attributable to shareholder-financed businesses — 4 102 106 — — 106 148 Borrowings attributable to with-profits businesses 3,921 — — 3,921 — — 3,921 3,706 Obligations under funding, securities lending and sale and repurchase agreements 999 — 225 1,224 — — 1,224 1,358 Net asset value attributable to unit holders of consolidated unit trusts and similar funds 4,349 4,643 21 9,013 — — 9,013 5,243 Deferred tax liabilities 892 — 147 1,039 22 — 1,061 1,703 Current tax liabilities 29 — 269 298 28 — 326 377 Accruals deferred income and other liabilities 4,601 354 1,141 6,096 486 (140) 6,442 6,609 Provisions 32 — 484 516 227 — 743 784 Derivative liabilities 1,265 3 939 2,207 1 — 2,208 1,661 Liabilities held for sale — — 10,568 10,568 — — 10,568 — Total liabilities 140,217 25,721 33,939 199,877 764 (140) 200,501 202,655 Total equity and liabilities 140,217 25,721 40,479 206,417 2,924 (140) 209,201 210,900 * |
Group assets and liabilities _2
Group assets and liabilities - measurement (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Financial instruments | |
Schedule of investment properties at fair value | 31 Dec £m Level 1 Level 2 Level 3 Valuation based Valuation based Quoted prices on significant on significant (unadjusted) in observable unobservable active markets market inputs market inputs Total 2018 — — 17,925 17,925 2017 — — 16,497 16,497 |
Schedule of reconciliation of movements in level 3 financial instruments measured at fair value | £m Total gains (losses) Total recorded net gains as other (losses) in compre- Transfers Transfers At income hensive into out of At 2018 1 Jan statement* income Purchases Sales Settled Issued level 3 level 3 31 Dec Loans 4,837 (78) 162 62 (178) (331) 279 — — 4,753 Equity securities and portfolio holdings in unit trusts 371 38 8 125 (35) — — 8 — 515 Debt securities 654 (7) — 666 (131) — — — — 1,182 Other investments (including derivative assets) 4,424 405 54 1,202 (813) — — — — 5,272 Derivative liabilities (512) 27 (1) — – — — — 63 (423) Total financial investments, net of derivative liabilities 9,774 385 223 2,055 (1,157) (331) 279 8 63 11,299 Borrowings attributable to with-profits businesses (1,887) (23) — — — 304 — — — (1,606) Net asset value attributable to unit holders of consolidated unit trusts and similar funds (413) 67 31 — — 57 (697) — (33) (988) Other financial liabilities (3,031) 5 (170) — — 273 (481) — — (3,404) Total financial instruments at fair value 4,443 434 84 2,055 (1,157) 303 (899) 8 30 5,301 2017 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 businesses — (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 * Of the total net gains and (losses) in the income statement of £434 million (2017: £(402) million), £398 million (2017: £(139) million) relates to net unrealised gains and losses of financial instruments still held at the end of the year, which can be analysed as follows: |
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 Loans (71) 20 Equity securities 38 (12) Debt securities (16) (5) Other investments 370 (22) Derivative liabilities 27 4 Borrowings attributable to with-profit operations (23) (13) Net asset value attributable to unit holders of consolidated unit trusts and similar funds 67 (123) Other financial liabilities 6 12 Total 398 (139) |
Schedule of reconciliation of movements in level 3 investment properties measured at fair value | £m Total (losses) in Total other gains in compre- Transfers Transfers At income hensive into out of At 1 Jan statement* income Purchases Sales level 3 level 3 31 Dec 2018 16,497 97 — 1,509 (178) — — 17,925 2017 14,646 415 (21) 2,048 (591) — — 16,497 * Of the total net gains in the income statement of £97 million (2017: £415 million), £149 million (2017: £394 million) relates to net unrealised gains of investment properties still held at the end of the year. |
At fair value | |
Financial instruments | |
Schedule of fair value of assets and liabilities | 31 Dec 2018 £m Level 1 Level 2 Level 3 Quoted prices Valuation based Valuation based (unadjusted) on significant on significant in active observable unobservable markets market inputs market inputs Total Analysis of financial investments, net of derivative liabilities by business type With-profits Loans - - 1,703 1,703 Equity securities and portfolio holdings in unit trusts 52,320 5,447 488 58,255 Debt securities 31,210 48,981 811 81,002 Other investments (including derivative assets) 143 3,263 4,325 7,731 Derivative liabilities (85) (1,231) - (1,316) Total financial investments, net of derivative liabilities 83,588 56,460 7,327 147,375 Percentage of total 57 % 38 % 5 % 100 % Unit-linked and variable annuity separate account Equity securities and portfolio holdings in unit trusts 152,987 505 9 153,501 Debt securities 4,766 9,727 - 14,493 Other investments (including derivative assets) 6 3 6 15 Derivative liabilities (2) (3) - (5) Total financial investments, net of derivative liabilities 157,757 10,232 15 168,004 Percentage of total 94 % 6 % % 100 % Non-linked shareholder-backed Loans - - 3,050 3,050 Equity securities and portfolio holdings in unit trusts 2,957 2 18 2,977 Debt securities 17,687 61,803 371 79,861 Other investments (including derivative assets) 61 1,258 941 2,260 Derivative liabilities (2) (1,760) (423) (2,185) Total financial investments, net of derivative liabilities 20,703 61,303 3,957 85,963 Percentage of total 24 % 71 % 5 % 100 % Group total analysis, including other financial liabilities held at fair value Loans - - 4,753 4,753 Equity securities and portfolio holdings in unit trusts 208,264 5,954 515 214,733 Debt securities 53,663 120,511 1,182 175,356 Other investments (including derivative assets) 210 4,524 5,272 10,006 Derivative liabilities (89) (2,994) (423) (3,506) Total financial investments, net of derivative liabilities 262,048 127,995 11,299 401,342 Investment contract liabilities without discretionary participation features held at fair value - (16,054) - (16,054) Borrowings attributable to with-profits businesses - - (1,606) (1,606) Net asset value attributable to unit holders of consolidated unit trusts and similar funds (6,852) (3,811) (988) (11,651) Other financial liabilities held at fair value - (2) (3,404) (3,406) Total financial instruments at fair value 255,196 108,128 5,301 368,625 Percentage of total 70 % 29 % 1 % 100 % 31 Dec 2017 £m Level 1 Level 2 Level 3 Quoted prices Valuation based Valuation based (unadjusted) on significant on significant in active observable unobservable markets market inputs market inputs Total Analysis of financial investments, net of derivative liabilities by business type 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 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 businesses — — (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 and their fair value | |
Financial instruments | |
Schedule of fair value of assets and liabilities | 31 Dec 2018 £m Total Total fair carrying Level 1 Level 2 Level 3 value value Valuation Valuation based on based on Quoted prices significant significant (unadjusted) in observable unobservable active markets market inputs market inputs Assets Loans note (i) — 2,898 10,768 13,666 13,257 Liabilities Investment contract liabilities without discretionary participation features — — (3,157) (3,157) (3,168) Core structural borrowings of shareholder-financed businesses note (ii) — (7,847) — (7,847) (7,664) Operational borrowings attributable to shareholder-financed businesses — (994) (4) (998) (998) Borrowings attributable to the with-profits funds — (2,035) (68) (2,103) (2,334) Obligations under funding, securities lending and sale and repurchase agreements — (1,258) (5,750) (7,008) (6,989) 31 Dec 2017 £m Total Total fair carrying Level 1 Level 2 Level 3 value value Valuation Valuation based on based on Quoted prices significant significant (unadjusted) in observable unobservable active markets market inputs market inputs Assets Loans note (i) — 2,756 10,183 12,939 12,205 Liabilities Investment contract liabilities without discretionary participation features — — (3,032) (3,032) (2,997) Core structural borrowings of shareholder-financed businesses note (ii) — (7,023) — (7,023) (6,280) Operational borrowings attributable to shareholder-financed businesses — (1,788) (3) (1,791) (1,791) Borrowings attributable to the with-profits funds — (1,761) (71) (1,832) (1,829) Obligations under funding, securities lending and sale and repurchase agreements — (1,410) (4,318) (5,728) (5,662) Notes (i) The carrying value of loans and receivables are reported net of allowance for loan losses of £46 million (31 December 2017: £28 million). (ii) As at 31 December 2018, £376 million (31 December 2017: £312 million) of convertible bonds were included in debt securities and £981 million (31 December 2017: £1,311 million) were included in borrowings. |
Debt securities (Tables)
Debt securities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt securities | |
Financial investments | |
Schedule of securities analysed according to external credit ratings | 31 Dec 2018 £m BBB+ to AAA AA+ to AA- A+ to A- BBB- Below BBB- Other Total Asia With-profits 2,873 12,379 4,142 3,760 1,747 2,303 27,204 Unit-linked 817 100 492 1,431 426 715 3,981 Non-linked shareholder-backed 1,034 3,552 3,717 2,934 2,202 1,144 14,583 Asset management 11 — 60 — — — 71 US Non-linked shareholder-backed 678 7,383 10,286 14,657 1,429 7,161 41,594 UK and Europe With-profits 6,890 9,332 11,779 14,712 2,891 8,194 53,798 Unit-linked 1,041 2,459 2,215 3,501 395 901 10,512 Non-linked shareholder-backed 3,007 6,413 4,651 1,515 158 5,902 21,646 Other operations 619 1,089 151 41 49 18 1,967 Total debt securities 16,970 42,707 37,493 42,551 9,297 26,338 175,356 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" | Asia - non-linked shareholder-backed 31 Dec 2018 £m 31 Dec 2017 £m Internally rated: Government bonds 25 Corporate bonds – rated as investment grade by local external ratings agencies 959 Other 69 Total Asia non-linked shareholder-backed 1,053 31 Dec 2018 £m 31 Dec 2017 £m Mortgage -backed Other US securities securities Total Total Implicit ratings of other US debt securities based on NAIC* valuations (see below): NAIC 1 2,148 2,858 5,006 3,918 NAIC 2 2 2,116 2,118 1,794 NAIC 3-6 2 35 37 57 Total US† 2,152 5,009 7,161 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 £1,947 million at 31 December 2018 have credit ratings issued by Standard & Poor’s of BBB- or above and hence are designated as investment grade. Other securities totalling £4,974 million at 31 December 2018 with NAIC ratings 1 or 2 are also designated as investment grade. UK and Europe 31 Dec 2018 £m 31 Dec 2017 £m Internal ratings or unrated: AAA to A- 8,150 7,994 BBB to B- 3,034 3,141 Below B- or unrated 3,813 2,436 Total UK and Europe 14,997 13,571 |
Debt securities | Jackson (US insurance operations) | |
Financial investments | |
Schedule of additional analysis of securities | (a) 31 Dec 2018 £m 31 Dec 2017 £m Corporate and government security and commercial loans: Government 5,465 4,835 Publicly traded and SEC Rule 144A securities* 26,196 22,849 Non-SEC Rule 144A securities 6,329 4,468 Asset-backed securities (see note (e)) 3,604 3,226 Total US debt securities † 41,594 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: 31 Dec 2018 £m 31 Dec 2017 £m Available-for-sale 40,849 35,293 Fair value through profit or loss 745 85 Total US debt securities 41,594 35,378 |
Schedule of movements in unrealised gains and losses on available-for-sale securities | Reflected as part of movement in other comprehensive income Foreign Changes in exchange unrealised translation appreciation † £m £m £m £m Assets fair valued at below book value Book value* 25,330 6,325 Unrealised gain (loss) (925) (43) (776) (106) Fair value (as included in statement of financial position) 24,405 6,219 Assets fair valued at or above book value Book value* 15,933 27,763 Unrealised gain (loss) 511 41 (841) 1,311 Fair value (as included in statement of financial position) 16,444 29,074 Total Book value* 41,263 34,088 Net unrealised gain (loss) (414) (2) (1,617) 1,205 Fair value (as included in the footnote above in the overview table and the statement of financial position) 40,849 35,293 * Book value represents cost/amortised cost of the debt securities. † Translated at the average rate of US$1.3352:£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 fair value of the debt securities in a gross unrealised loss position for various percentages of book value: 31 Dec 2018 £m 31 Dec 2017 £m Fair Unrealised Fair Unrealised value loss value loss Between 90% and 100% 23,662 (809) 6,170 (95) Between 80% and 90% 707 (104) 36 (6) Below 80%: Other asset-backed securities — — 10 (4) Corporate bonds 36 (12) 3 (1) 36 (12) 13 (5) Total 24,405 (925) 6,219 (106) (ii) Unrealised losses by maturity of security 31 Dec 2018 £m 31 Dec 2017 £m 1 year to 5 years (72) (7) 5 years to 10 years (436) (41) More than 10 years (372) (39) Mortgage-backed and other debt securities (45) (19) Total (925) (106) (iii) Age analysis of unrealised losses for the periods indicated 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: 31 Dec 2018 £m 31 Dec 2017 £m Non- Non- investment Investment investment Investment grade grade Total grade grade Total Less than 6 months (20) (141) (161) (4) (31) (35) 6 months to 1 year (22) (440) (462) (1) (4) (5) 1 year to 2 years (10) (142) (152) — (49) (49) 2 years to 3 years — (123) (123) (1) (6) (7) More than 3 years (2) (25) (27) — (10) (10) Total (54) (871) (925) (6) (100) (106) The age analysis as at 31 December, of the securities whose fair values were below 80 per cent of the book value: 31 Dec 2018 £m 31 Dec 2017 £m Fair Unrealised Fair Unrealised Age analysis value loss value loss Less than 3 months 32 (10) 2 — 3 months to 6 months 2 (1) 1 (1) More than 6 months 2 (1) 10 (4) Total 36 (12) 13 (5) |
Asset-backed securities | |
Financial investments | |
Schedule of additional analysis of securities | (d) 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 are as follows: 31 Dec 2018 £m 31 Dec 2017 £m Shareholder-backed business Asia operations note (i) 121 118 US operations note (ii) 3,604 3,226 UK and Europe operations (2018: 42% AAA, 13% AA) note (iii) 1,406 1,070 Other operations note (iv) 445 589 5,576 5,003 With-profits business Asia operations note (i) 235 233 UK and Europe operations (2018: 66% AAA, 12% AA) note (iii) 5,270 5,658 5,505 5,891 Total 11,081 10,894 Notes (i) Asia operations The Asia operations’ exposure to asset-backed securities is primarily held by the with-profits businesses. Of the £235 million (31 December 2017: £233 million), 99.8 per cent (2017: 98.2 per cent) are investment grade. (ii) US operations US operations’ exposure to asset-backed securities at 31 December comprises: 31 Dec 2018 £m 31 Dec 2017 £m RMBS: Sub-prime (2018: 1% AAA, 6% AA, 2% A) 96 112 Alt-A (2018: 3% AAA, 42% A) 105 126 Prime including agency (2018: 14% AAA, 62% AA, 10% A) 441 440 CMBS (2018: 80% AAA, 15% AA, 2% A) 1,945 1,579 CDO funds (2018: 13% AA, 24% A), including £nil exposure to sub-prime 13 28 Other ABS (2018: 20% AAA, 14% AA, 49% A), including £77 million exposure to sub-prime 1,004 941 Total 3,604 3,226 (i) 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 businesses, £1,823 million (31 December 2017: £1,913 million) relates to exposure to the US markets with the remaining exposure being primarily to the UK market. (ii) Other operations Other operations’ exposure to asset-backed securities is held by Prudential Capital with no sub-prime exposure. Of the £445 million, 99 per cent (31 December 2017: 96 per cent) are graded AAA. |
Sovereign debt | |
Financial investments | |
Schedule of additional analysis of securities | 31 Dec 2018 £m 31 Dec 2017 £m Shareholder- Shareholder- backed With-profits backed With-profits business funds business funds Italy — 57 58 63 Spain 36 18 34 18 France — 50 23 38 Germany* 239 281 693 301 Other Eurozone 103 34 82 31 Total Eurozone 378 440 890 451 United Kingdom 3,226 3,013 5,918 3,287 United States† 5,647 11,858 5,078 10,156 Other, including Asia 5,142 2,745 4,638 2,143 Total 14,393 18,056 16,524 16,037 * Including bonds guaranteed by the federal government. † The exposure to the United States sovereign debt comprises holdings of the US, the UK and Europe and Asia insurance operations. |
Bank debt securities | |
Financial investments | |
Schedule of additional analysis of securities | 31 Dec 2018 £m 31 Dec 2017 £m Senior debt Subordinated debt Shareholder-backed business Covered Senior Total Tier 1 Tier 2 Total Total Total Spain 42 64 106 — — — 106 68 France 20 119 139 14 3 17 156 86 Germany 30 — 30 6 89 95 125 117 Netherlands — 69 69 3 1 4 73 71 Other Eurozone 15 2 17 — — — 17 15 Total Eurozone 107 254 361 23 93 116 477 357 United Kingdom 550 623 1,173 9 164 173 1,346 1,382 United States — 2,614 2,614 1 52 53 2,667 2,619 Other, including Asia — 759 759 109 369 478 1,237 1,163 Total 657 4,250 4,907 142 678 820 5,727 5,521 With-profits funds Italy — 38 38 — — — 38 31 Spain — 17 17 — — — 17 16 France 6 250 256 1 95 96 352 286 Germany 140 46 186 14 29 43 229 180 Netherlands — 253 253 12 1 13 266 199 Other Eurozone — 74 74 — — — 74 27 Total Eurozone 146 678 824 27 125 152 976 739 United Kingdom 909 850 1,759 2 433 435 2,194 1,938 United States — 2,418 2,418 1 311 312 2,730 2,518 Other, including Asia 575 1,459 2,034 339 452 791 2,825 2,531 Total 1,630 5,405 7,035 369 1,321 1,690 8,725 7,726 |
Loans portfolio (Tables)
Loans portfolio (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Loans | |
Financial investments | |
Schedule of amounts included in the statement of financial position | 31 Dec 2018 £m 31 Dec 2017 £m Mortgage Policy Other Mortgage Policy Other loans* loans † loans‡ Total loans* loans † loans‡ Total Asia With-profits — 727 65 792 — 613 112 725 Non-linked shareholder-backed 156 226 203 585 177 216 199 592 US Non-linked shareholder-backed 7,385 3,681 — 11,066 6,236 3,394 — 9,630 UK and Europe With-profits 2,461 3 1,389 3,853 2,441 4 1,823 4,268 Non-linked shareholder-backed 1,655 — 59 1,714 1,681 — 37 1,718 Other operations — — — — — — 109 109 Total loans securities 11,657 4,637 1,716 18,010 10,535 4,227 2,280 17,042 * All mortgage loans are secured by properties. † In the US £2,783 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. |
Financial instruments - addit_2
Financial instruments - additional information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Financial instruments - additional information | |
Schedule of contractual maturities of financial liabilities, excluding derivative liabilities and investment contracts, on an undiscounted cash flow basis | 31 Dec 2018 £m Total After 1 After 5 After 10 After 15 carrying 1 year year to years to years to years to Over No stated value or less 5 years 10 years 15 years 20 years 20 years maturity Total Financial liabilities Core structural borrowings of shareholder-financed businesses C6.1 7,664 298 1,759 1,526 1,843 1,070 6,573 2,924 15,993 Operational borrowings attributable to shareholder-financed businesses C6.2 998 839 91 68 — — — — 998 Borrowings attributable to with-profits funds C6.2 3,940 701 1,246 719 274 142 2,086 — 5,168 Obligations under funding, securities lending and sale and repurchase agreements 6,989 6,989 — — — — — — 6,989 Accruals, deferred income and other liabilities 15,248 10,844 470 71 90 109 352 3,535 15,471 Net asset value attributable to unit holders of consolidated unit trusts and similar funds 11,651 11,651 — — — — — — 11,651 Total 46,490 31,322 3,566 2,384 2,207 1,321 9,011 6,459 56,270 31 Dec 2017 £m Total After 1 After 5 After 10 After 15 carrying 1 year year to years to years to years to Over No stated value or less 5 years 10 years 15 years 20 years 20 years maturity Total Financial liabilities Core structural borrowings of shareholder-financed businesses C6.1 6,280 473 784 1,350 1,389 576 3,324 3,160 11,056 Operational borrowings attributable to shareholder-financed businesses C6.2 1,791 1,130 597 69 — — — — 1,796 Borrowings attributable to with-profits funds C6.2 3,716 905 922 32 29 29 1,810 104 3,831 Obligations under funding, securities lending and sale and repurchase agreements 5,662 5,662 — — — — — — 5,662 Accruals, deferred income and other liabilities 14,185 10,088 469 68 85 106 320 3,267 14,403 Net asset value attributable to unit holders of consolidated unit trusts and similar funds 8,889 8,889 — — — — — — 8,889 Total 40,523 27,147 2,772 1,519 1,503 711 5,454 6,531 45,637 |
Schedule of maturity profile of net derivative positions | Carrying value of net derivatives £m Maturity profile of net derivative position £m Net After 1 After 3 Derivative Derivative derivative 1 year year to years to After 5 assets liabilities position or less 3 years 5 years years Total 2018 3,494 (3,506) (12) 292 (8) (4) 30 310 2017 4,801 (2,755) 2,046 2,359 (16) (9) (1) 2,333 |
Schedule of maturity profile for investment contracts | £billion Total After 1 After 5 After 10 After 15 undis- Total 1 year year to years to years to years to Over counted carrying or less 5 years 10 years 15 years 20 years 20 years value value 31 Dec 2018 8 31 29 20 12 17 117 87 31 Dec 2017 8 29 27 19 13 14 110 83 |
Schedule of derivative agreements eligible for intra-group exemptions to margin requirements | 31 Dec 2018 Legal Entity Identifier Relationship between Aggregate notional of Counterparty (LEI) parties Type of exemption OTC derivatives contract £m Prudential plc 5493001Z3ZE83NG Part of the same group Full 3,633 K8Y12 holding company Prudential Holdings Limited 549300JVAI8CZD4 Part of the same group Full 56 HD451 holding company Prudential (US HoldCo1) Limited 549300JNYGDP2X Part of the same group Full 2,717 OLWR47 holding company Prudential Corporation Holdings Limited 549300KDOPLFHA Part of the same group Full 927 W51H26 holding company Prudential Lifetime Mortgages Limited 5493001GSK4HF84 Part of the same group Full 37 IOB02 holding company 549300I8LYOK91H Part of the same group Full 7 Prudential Distribution Limited BX439 holding company |
Schedule of gross and net information about financial instruments subject to master netting arrangements | 31 Dec 2018 £m Gross amount Related amounts not offset included in the in the consolidated statement of consolidated financial position statement of Financial Securities financial position instruments Cash collateral note (i) note (ii) collateral note (iii) Net amount Financial assets: Derivative assets 3,229 (1,261) (1,687) (166) 115 Reverse repurchase agreements 11,597 — — (11,606) (9) Total financial assets 14,826 (1,261) (1,687) (11,772) 106 Financial liabilities: Derivative liabilities (3,189) 1,261 710 1,058 (160) Securities lending and repurchase agreements (1,258) — 34 1,205 (19) Total financial liabilities (4,447) 1,261 744 2,263 (179) 31 Dec 2017 £m Gross amount Related amounts not offset included in the in the consolidated statement of consolidated financial position statement of Financial Securities financial position instruments Cash collateral note (i) note (ii) collateral note (iii) Net amount Financial assets: Derivative assets 4,718 (946) (2,641) (984) 147 Reverse repurchase agreements 10,280 — — (10,270) 10 Total financial assets 14,998 (946) (2,641) (11,254) 157 Financial liabilities: Derivative liabilities (2,301) 946 420 893 (42) Securities lending and repurchase agreements (1,410) — 52 1,332 (26) Total financial liabilities (3,711) 946 472 2,225 (68) Notes (i) The Group has not offset any of the amounts included in the consolidated statement of financial position. (ii) Represents the amount that could be offset under master netting or similar arrangements where the Group does not satisfy the full criteria to offset on the consolidated statement of financial position. (iii) Excludes initial margin amounts for exchange-traded derivatives. |
Policyholder liabilities and _2
Policyholder liabilities and unallocated surplus (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Policyholder liabilities and unallocated surplus | |
Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds | UK and Asia US Europe £m £m £m Total note C4.1(b) note C4.1(c) note C4.1(d) £m At 1 January 2017 62,784 177,626 169,304 409,714 Comprising: Policyholder liabilities on the consolidated statement of financial position note (i) 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 note(ii) 6,401 — — 6,401 Premiums 11,863 15,219 14,810 41,892 Surrenders (3,079) (10,017) (6,939) (20,035) Maturities/deaths (1,909) (2,065) (7,135) (11,109) Net flows 6,875 3,137 736 10,748 Shareholders’ transfers post-tax (54) — (233) (287) Investment-related items and other movements 8,182 16,251 11,146 35,579 Foreign exchange translation differences (3,948) (16,290) 113 (20,125) At 31 December 2017/1 January 2018 73,839 180,724 181,066 435,629 Comprising: Policyholder liabilities on the consolidated statement of financial position note (i) (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 note (ii) 7,467 — — 7,467 Reclassification of reinsured UK annuity contracts as held for sale note(iii) — — (10,858) (10,858) Premiums 13,187 13,940 14,011 41,138 Surrenders (2,793) (12,141) (6,780) (21,714) Maturities/deaths (1,978) (2,012) (6,796) (10,786) Net flows 8,416 (213) 435 8,638 Addition for closed block of group payout annuities in the US note (iv) — 4,143 — 4,143 Shareholders' transfers post-tax (65) — (259) (324) Investment-related items and other movements (2,784) (9,999) (5,481) (18,264) Foreign exchange translation differences 3,357 10,945 (14) 14,288 At 31 December 2018 82,763 185,600 164,889 433,252 Comprising: Policyholder liabilities on the consolidated statement of financial position note (i) (excludes £39 million classified as unallocated to a segment) 72,107 185,600 151,555 409,262 Unallocated surplus of with-profits funds on the consolidated statement of financial position 2,511 — 13,334 15,845 Group's share of policyholder liabilities of joint ventures and associate note (ii) 8,145 — — 8,145 Average policyholder liability balances note (v) 2018 75,309 182,126 162,287 419,722 2017 65,241 179,175 162,622 407,038 Notes (i) The policyholder liabilities of the Asia insurance operations of £72,107 million (31 December 2017: £62,898 million), shown in the table above, is after deducting the intra-group reinsurance liabilities ceded by the UK and Europe insurance operations of £1,109 million (31 December 2017: £1,235 million) to the Hong Kong with-profits business. Including this amount total Asia policyholder liabilities are £73,216 million (31 December 2017: £64,133 million). (ii) The Group’s investments in joint ventures and associate are accounted for on an equity method basis in the Group’s balance sheet. The Group’s share of the policyholder liabilities as shown above relate to life businesses in China, India and of the Takaful business in Malaysia. (iii) The reclassification as held for sale of the reinsured UK annuity business that will be transferred to Rothesay life once the Part VII process is complete reflects the value of policyholder liabilities held at 1 January 2018. (iv) In October 2018, Jackson entered into an agreement with John Hancock Life to reinsure 100 per cent of the group payout annuity business. The transaction resulted in an increase to policyholder liabilities of Jackson £4.1 billion at the inception of the contract. (v) Averages have been based on opening and closing balances and adjusted for acquisitions, disposals and corporate transactions arising in the year and exclude unallocated surplus of with-profits funds. |
Further analysis of insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with profit funds | Insurance contract liabilities Reinsurers’ Investment Unallocated Gross share contracts surplus of with- £m £m £m £m At 1 January 2017 (316,436) 10,051 (72,560) (14,317) Income and expense included in the income statement (31,106) 365 (11,179) (2,871) Other movements including amounts included in other comprehensive income note (i) (35) — 374 (78) Foreign exchange translation differences 19,405 (743) 294 315 At 31 December 2017/1 January 2018 (328,172) 9,673 (83,071) (16,951) Income and expense included in the income statement 8,994 11,440 (4,009) 1,289 Other movements including amounts included in other comprehensive incomenote (i) 10,502 (10,502) 643 (38) Foreign exchange translation differences (13,990) 533 (198) (145) At 31 December 2018 (322,666) 11,144 (86,635) (15,845) Notes (i) Other movements include premiums received and claims paid on investment contracts without discretionary participating features, which are taken directly to the statement of financial position in accordance with IAS 39, changes in the unallocated surplus of with-profits funds resulting from actuarial gains and losses on the Group’s defined benefit pension schemes, which are recognised directly in other comprehensive income and balance sheet reallocations which totalled £10,502 million in 2018 (2017: £(35) million). The 2018 amount represents the reclassification of the reinsured UK annuity business as held for sale value as at 31 December 2018. (ii) Includes reinsurers’ share of claims outstanding of £1,005 million (2017: £953 million). (iii) This comprises investment contracts with discretionary participation features of £67,413 million (2017: £62,677 million) and investment contracts without discretionary participation features of £19,222 million (2017: £20,394 million). The total charge for benefit and claims shown in the income statement comprises the amounts shown as ‘income and expense included in the income statement’ in the table above together with claims paid of £32,396 million in the period (2017: £29,497 million) net of amounts attributable to reinsurers of £2,114 million (2017: £1,828 million). In 2017, the income statement charge also included the change in reserves for the held for sale Korea business of £72 million. (iii) Reinsurers’ share of insurance contract liabilities 31 Dec 2018 £m 31 Dec 2017 £m UK and Unallocated to Asia US Europe a segment Total Total Insurance contract liabilities 2,675 5,910 1,554 — 10,139 8,720 Claims outstanding 102 752 149 2 1,005 953 Total 2,777 6,662 1,703 2 11,144 9,673 |
Schedule of products and determination of contract liabilities | C4.2(a) Asia Contract type Description Material features Determination of liabilities With-profits and participating contracts Provides savings and/or protection where the basic sum assured can be enhanced by a profit share (or bonus) from the underlying fund as determined at the discretion of the Company. Participating products often offer a guaranteed maturity or surrender value. Declared regular bonuses are guaranteed once vested. Future bonus rates and cash dividends are not guaranteed. Market value adjustments and surrender penalties are used for certain products where the law permits such adjustments. Guarantees are predominantly supported by segregated life funds and their estates. With-profits contracts are predominantly sold in Hong Kong, Malaysia and Singapore. The total value of the with-profits funds is driven by the underlying asset valuation with movements reflected principally in the accounting value of policyholder liabilities and unallocated surplus. In Taiwan and India, US GAAP is applied for measuring insurance assets and liabilities. The other Asia operations principally adopt a gross premium valuation method. Term, whole life and endowment assurance Non-participating savings and/or protection where the benefits are guaranteed, or determined by a set of defined market-related parameters. These products often offer a guaranteed maturity and surrender value. It is common in Asia for regulations or market-driven demand and competition to provide some form of capital value protection and minimum crediting interest rate guarantees. This is reflected within the guaranteed maturity and surrender values. Guarantees are borne by shareholders. The approach to determining the contract liabilities is generally driven by the local solvency basis. A gross premium valuation method is used in those countries where a risk-based capital framework is adopted for local solvency. Under the gross premium valuation method, all cash flows are valued explicitly using best estimate assumptions with a suitable margin for prudence. This is achieved either through adding an explicit allowance for assumptions to deviate from best estimate or by applying an overlay constraint so that on day one no negative reserves (ie where future premium inflows are expected to exceed prudent future claims and outflows) are derived at an individual policyholder level, or a combination of both. In Vietnam, the Company uses an estimation basis aligned substantially to that used by the countries applying the gross premium valuation method. For India and Taiwan, US GAAP is applied for measuring insurance liabilities. For these businesses, the future policyholder benefit provisions for non-linked business are determined using the net level premium method, with an allowance for surrenders, maintenance and claims expenses. Rates of interest used in establishing the policyholder benefit provisions vary by operation depending on the circumstances attaching to each block of business. The other Asia operations principally adopt a net premium valuation method to determine the future policyholder benefit provisions. Unit-linked Combines savings with protection, the cash value of the policy depends on the value of the underlying unitised funds. The attaching liabilities reflect the unit value obligation driven by the value of the investments of the unit fund. Additional technical provisions are held for guaranteed benefits beyond the unit fund value using a gross premium valuation method. These additional provisions are recognised as a component of other business liabilities. Health and protection Health and protection features are offered as supplements to the products listed above or sold as standalone products. Protection covers mortality or morbidity benefits including health, disability, critical illness and accident coverage. The determination of the liabilities of health and protection contracts are driven by the local solvency basis. A gross premium valuation method is used in those countries where a risk-based capital framework is adopted for local solvency. Under the gross premium valuation method, all cash flows are valued explicitly using best estimate assumptions with a suitable margin for prudence. This is achieved either through adding an explicit allowance for assumptions to deviate from best estimate or by applying an overlay constraint so that on day one no negative reserves (ie where future premium inflows are expected to exceed prudent future claims and outflows) are derived at an individual policyholder level, or a combination of both. C4.2(b) US Contract type Description Material features Determination of liabilities Fixed interest rate annuities Fixed interest rate annuities are primarily deferred annuity products that are used for asset accumulation in retirement planning and for providing income in retirement. At 31 December 2018, fixed interest rate annuities accounted for 7 per cent (2017: 7 per cent) of policy and contract liabilities of Jackson. The policyholder of a fixed interest rate annuity pays Jackson a premium, which is credited to the policyholder’s account. Periodically, interest is credited to the policyholder’s account and in some cases administrative charges are deducted from the policyholder’s account. Jackson makes benefit payments at a future date as specified in the policy based on the value of the policyholder’s account at that date. The policy provides that at Jackson’s discretion it may reset the interest rate, subject to a guaranteed minimum. Approximately 64 per cent (2017: 60 per cent) of the fixed interest rate annuities Jackson wrote in 2018 provide for a (positive or negative) market value adjustment (MVA) on surrender. This formula-based adjustment approximates the change in value that assets supporting the product would realise as interest rates move. Guaranteed minimum interest rate. At 31 December 2018, Jackson had fixed interest rate annuities totalling £12.6 billion (2017: £12.6 billion) in account value with minimum guaranteed rates ranging from 1.0 per cent to 5.5 per cent and a 2.91 per cent average guaranteed rate (2017: 1.0 per cent to 5.5 per cent and a 2.93 per cent average guaranteed rate). As explained in note A3.1 all of Jackson’s insurance liabilities are based on US GAAP. An overview of the deferral and amortisation of acquisition costs for Jackson is provided in note C5.2(b). With minor exceptions the following is applied to most of Jackson’s contracts. Contracts are accounted for as investment contracts as defined for US GAAP purposes by applying a retrospective deposit method to determine the liability for policyholder benefits. This is then augmented by: – Any amounts that have been assessed to compensate the insurer for services to be performed over future periods (ie deferred income); – Any amounts previously assessed against policyholders that are refundable on termination of the contract; and – Any probable future loss on the contract (ie premium deficiency). Capitalised acquisition costs and deferred income for these contracts are amortised over the life of the book of contracts. The present value of the estimated gross profits is computed using the rate of interest that accrues to policyholder balances (sometimes referred to as the contract rate). Estimated gross profits include estimates of the following, each of which will be determined based on the best estimate of amounts over the life of the book of contracts without provision for adverse deviation: – Amounts expected to be assessed for mortality less benefit claims in excess of related policyholder balances; – Amounts expected to be assessed for contract administration less costs incurred for contract administration; – Amounts expected to be earned from the investment of policyholder balances less interest credited to policyholder balances; – Amounts expected to be assessed against policyholder balances upon termination of contracts (sometimes referred to as surrender charges); and – Other expected assessments and credits. The interest guarantees are not explicitly valued but are reflected as they are earned in the current account liability value. Fixed index annuities Fixed index annuities vary in structure but are generally deferred annuities that enable policyholders to obtain a portion of an equity-linked return (based on participation rates and caps), and provide a guaranteed minimum return. Fixed index annuities accounted for 5 per cent (2017: 5 per cent) of Jackson’s policy and contract liabilities at 31 December 2018. Jackson hedges the equity return risk on fixed index products using offsetting equity exposure in the variable annuity product. The cost of hedging is taken into account in setting the index participation rates or caps. Guaranteed minimum rates are generally set at 1.0 to 3.0 per cent. At 31 December 2018, Jackson had fixed index annuities allocated to indexed funds totalling £6.0 billion (31 December 2017: £6.3 billion) in account value with minimum guaranteed rates on index accounts ranging from 1.0 per cent to 3.0 per cent and a 1.77 per cent average guaranteed rate (2017: 1.0 per cent to 3.0 per cent and a 1.77 per cent average guarantee rate). Jackson offers an optional lifetime income rider, which can be elected for an additional fee. Jackson also offers fixed interest accounts on some fixed index annuity products. At 31 December 2018, fixed interest accounts of fixed index annuities totalled £2.7 billion (2017: £2.5 billion) in account value. Minimum guaranteed rates on fixed interest accounts range from 1.0 per cent to 3.0 per cent and a 2.57 per cent average guaranteed rate (2017: 1.0 per cent to 3.0 per cent and a 2.58 per cent average guaranteed rate). The liability for policyholder benefits that represent the guaranteed minimum return is determined similarly to the liabilities of the fixed interest annuity above. The equity-linked return option within the contract is treated as an embedded liability under US GAAP and therefore this element of the liability is recognised at fair value. The liability for the lifetime income rider is determined each period end by estimating the expected value of benefits in excess of the projected account balance and recognising the excess on a prorated basis over the life of the contract based on total expected assessments. Group pay-out annuities Group payout annuities consist of a block of defined benefit annuity plans assumed from John Hancock USA. A single premium payment from an employer (contract holder) funds the pension benefits for its employees (participants). The contracts are tailored to meet the requirements of the specific pension plan being covered. This is a closed block of business from two standpoints: (1) John Hancock USA is no longer selling new contracts and (2) contract holders (companies) are no longer adding additional participants to these defined benefit pension plans. The majority of participants are in the payout phase, but there are some participants in the deferral phase. The contracts provide annuity payments that meet the requirements of the specific pension plan being covered. In some cases, the contracts have pre-retirement death and/or withdrawal benefits, pre-retirement surviving spouse benefits, and/or subsidised early retirement benefits. The liability for future benefits is determined under US GAAP methodology for limited-payment contracts, using assumptions as of the acquisition date as to mortality and expense plus provisions for adverse deviation. Variable annuities Variable annuities are deferred annuities that have the same tax advantages and payout options as fixed interest rate and fixed index annuities. They are also used for asset accumulation in retirement planning and to provide income in retirement. At 31 December 2018, variable annuities accounted for 75 per cent (2017: 77 per cent) of Jackson’s policy and contract liabilities. The rate of return depends upon the performance of the selected fund portfolio. Policyholders may allocate their investment to either the fixed account or a selection of variable accounts. Subject to benefit guarantees, investment risk on the variable account is borne by the policyholder, while investment risk on the fixed account is borne by Jackson through guaranteed minimum fixed rates of return. At 31 December 2018, 5 per cent (2017: 5 per cent) of variable annuity funds were in fixed accounts. Jackson had variable annuity funds in fixed accounts totalling £6.4 billion (2017: £5.9 billion) with minimum guaranteed rates ranging from 1.0 per cent to 3.0 per cent and a 1.70 per cent average guaranteed rate (2017: 1.0 per cent to 3.0 per cent and a 1.68 per cent average guaranteed rate). Jackson offers a choice of guaranteed benefit options within its variable annuity product portfolio, which can be elected for additional fees. These guaranteed benefits might be expressed as the return of either: (a) total deposits made to the contract adjusted for any partial withdrawals, (b) total deposits made to the contract adjusted for any partial withdrawals, plus a minimum return, or (c) the highest contract value on a specified anniversary date adjusted for any withdrawals following that contract anniversary. Jackson hedges these risks using derivative instruments as described in note C7.3. The benefit guarantee types are set out below: The general principles for fixed annuity and fixed index annuity also apply to variable annuities. The impact of any fixed account interest guarantees is reflected as they are earned in the current account value. Jackson regularly evaluates estimates used and adjusts the benefit guarantee liability balances, with a related charge or credit to benefit expense if actual experience or other evidence suggests that earlier assumptions should be revised. Benefits that are payable in the event of death (guaranteed minimum death benefit). The liability for Guaranteed Minimum Death Benefit (GMDB) is determined each period end by estimating the expected value of benefits in excess of the projected account balance and recognising the excess rateably over the life of the contract based on total expected assessments. At 31 December 2018, these liabilities were valued using a series of stochastic investment performance scenarios, a mean investment return of 7.4 per cent (2017: 7.4 per cent) net of external fund management fees, and assumptions for policyholder behaviour, mortality and expense that are similar to those used in amortising the capitalised acquisition costs. Benefits that are payable upon the depletion of funds (guaranteed minimum withdrawal benefit). The liability for the Guaranteed Minimum Withdrawal Benefit (GMWB) ‘for life’ portion is determined similarly to GMDB above. Provisions for benefits under Guaranteed Minimum Withdrawal Benefit ‘not for life’ features are recognised at fair value under US GAAP. Non-performance risk is incorporated into the fair value calculation through the use of discount interest rates sourced from an AA corporate credit curve as a proxy for Jackson’s own credit risk. Other risk margins, particularly for policyholder behaviour and long-term volatility, are also incorporated into the model through the use of explicitly conservative assumptions. On a periodic basis, Jackson validates the resulting fair values based on comparisons to other models and market movements. Benefits that are payable at annuitisation (guaranteed minimum income benefit). This feature is no longer offered and existing coverage is substantially reinsured, subject to deductibles and annual claim limits. The direct Guaranteed Minimum Income Benefit (GMIB) liability is determined by estimating the expected value of the annuitisation benefits in excess of the projected account balance at the date of annuitisation and recognising the excess rateably over the life of the contract based on total expected assessments. Guaranteed Minimum Income Benefits are reinsured, subject to a deductible and annual claim limits. Due to the net settlement provisions of the reinsurance agreement, under the ‘grandfathered’ US GAAP, it is recognised at fair value with the change in fair value included as a component of short-term fluctuations. Volatility and non-performance risk is considered as per GMWB above. Benefits that are payable at the end of a specified period (guaranteed minimum accumulation benefit). This feature is no longer offered. Provisions for Guaranteed Minimum Accumulation Benefit (GMAB) are recognised at fair value under US GAAP. Volatility and non-performance risk is considered as per GMWB above. Life insurance Life products include term life, traditional life and interest-sensitive life (universal life and variable universal life). Life insurance products accounted for 9 per cent (2017: 9 per cent) of Jackson’s policy and contract liabilities at 31 December 2018. Jackson discontinued new sales of life insurance products in 2012. Term life provides protection for a defined period and a benefit that is payable to a designated beneficiary upon death of the insured. Traditional life provides protection for either a defined period or until a stated age and includes a predetermined cash value. Universal life provides permanent individual life insurance for the life of the insured and includes a savings element. Variable universal life is a type of life insurance policy that combines death benefit protection with the ability for the policyholder account to be invested in separate account funds. For certain fixed universal life plans, additional provisions are held to reflect the existence of guarantees offered in the past that are no longer supported by earnings on the existing asset portfolio, or for situations where future mortality charges are not expected to be sufficient to provide for future mortality costs. Excluding the business that is subject to the retrocession treaties at 31 December 2018, Jackson had interest-sensitive life business in force with total account value of £6.4 billion (2017: £6.3 billion), with minimum guaranteed interest rates ranging from 2.5 per cent to 6.0 per cent with a 4.67 per cent average guaranteed rate (2017: 2.5 per cent to 6.0 per cent with a 4.67 per cent average guaranteed rate). For term and traditional life insurance contracts, provisions for future policy benefits are determined under US GAAP using the net level premium method and assumptions as of the issue date as to mortality, interest, policy lapses and expenses plus provisions for adverse deviation for directly sold business and assumptions at purchase for acquired business. For universal life and variable universal life a retrospective deposit method is used to determine the liability for policyholder benefits. This is then augmented by additional liabilities to account for no-lapse guarantees, profits followed by losses, contract features such as persistency bonuses, and cost of interest rate guarantees. Institutional products Institutional products are: guaranteed investment contracts (GICs), funding agreements (including agreements issued in conjunction with Jackson’s participation in the US Federal Home Loan Bank programme) and Medium Term Note funding agreements. At 31 December 2018 institutional products accounted for 1 per cent of contract liabilities (31 December 2017: 1 per cent). GICs feature a lump sum policyholder deposit on which interest is paid at a rate fixed at inception. Market value adjustments are made to the value of any early withdrawals. Funding agreements feature either lump sum or periodic policyholder deposits. Interest is paid at a fixed or index linked rate. Funding agreements have a duration of between one and 30 years. In 2018 and 2017 there were no funding agreements terminable by the policyholder with less than 90 days’ notice. Institutional products are classified as investment contracts, and are accounted for as financial liabilities. The currency risk on contracts that represent currency obligations other than US dollars are hedged using cross-currency swaps. C4.2(c) UK and Europe |
Shareholder-backed | |
Policyholder liabilities and unallocated surplus | |
Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds | UK and Asia US Europe Total £m £m £m £m At 1 January 2017 32,851 177,626 56,158 266,635 Premiums 6,064 15,219 2,283 23,566 Surrenders (2,755) (10,017) (2,433) (15,205) Maturities/deaths (1,008) (2,065) (2,571) (5,644) Net flows note (i) 2,301 3,137 (2,721) 2,717 Investment-related items and other movements 3,797 16,251 2,930 22,978 Foreign exchange translation differences (1,547) (16,290) — (17,837) At 31 December 2017/1 January 2018 37,402 180,724 56,367 274,493 Comprising: - Policyholder liabilities on the consolidated statement of financial position (excludes £32 million classified as unallocated to a segment) 29,935 180,724 56,367 267,026 - Group’s share of policyholder liabilities relating to joint ventures and associate 7,467 — — 7,467 Reclassification of reinsured UK annuity contracts as held for sale note (ii) — — (10,858) (10,858) Premiums 6,752 13,940 1,486 22,178 Surrenders (2,455) (12,141) (2,016) (16,612) Maturities/deaths (1,046) (2,012) (2,244) (5,302) Net flows note (i) 3,251 (213) (2,774) 264 Addition for closed block of group payout annuities in the US note (iii) — 4,143 — 4,143 Investment-related items and other movements (1,204) (9,999) (1,975) (13,178) Foreign exchange translation differences 1,148 10,945 — 12,093 At 31 December 2018 40,597 185,600 40,760 266,957 Comprising: - Policyholder liabilities on the consolidated statement of financial position (excludes £39 million classified as unallocated to a segment) 32,452 185,600 40,760 258,812 - Group's share of policyholder liabilities relating to joint ventures and associate 8,145 — — 8,145 Notes (i) Including net flows of the Group’s insurance joint ventures and associate. (ii) The reclassification as held for sale of the reinsured UK annuity business that will be transferred to Rothesay life once the Part VII process is complete reflects those policyholder liabilities held at 1 January 2018. (iii) In October 2018, Jackson entered into an agreement with John Hancock Life to reinsure 100 per cent of the group payout annuity business. The transaction resulted in an increase to policyholder liabilities of Jackson £4.1 billion at the inception of the contract. Movement in insurance contract liabilities and unallocated surplus of with-profits funds |
Asia insurance operations | |
Policyholder liabilities and unallocated surplus | |
Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds | With-profits business Unit-linked Other £m liabilities business Total note (vi) £m £m £m 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 note (i) — 3,218 3,183 6,401 Premiums New business 1,143 1,298 999 3,440 In-force 4,656 1,637 2,130 8,423 5,799 2,935 3,129 11,863 Surrenders note (ii) (324) (2,288) (467) (3,079) Maturities/deaths (901) (150) (858) (1,909) Net flows note (iii) 4,574 497 1,804 6,875 Shareholders’ transfers post-tax (54) — — (54) Investment-related items and other movements 4,385 2,830 967 8,182 Foreign exchange translation differences note (v) (2,401) (807) (740) (3,948) At 31 December 2017/1 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 associatenote (i) — 3,764 3,703 7,467 Premiums New business 1,155 1,426 1,085 3,666 In-force 5,280 1,767 2,474 9,521 6,435 3,193 3,559 13,187 Surrenders note (ii) (338) (1,904) (551) (2,793) Maturities/deaths (932) (140) (906) (1,978) Net flows note (iii) 5,165 1,149 2,102 8,416 Shareholders' transfers post-tax (65) — — (65) Investment-related items and other movements note (iv) (1,580) (1,425) 221 (2,784) Foreign exchange translation differences note (v) 2,209 431 717 3,357 At 31 December 2018 42,166 20,182 20,415 82,763 Comprising: - Policyholder liabilities on the consolidated statement of financial position 39,655 16,368 16,084 72,107 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 2,511 — — 2,511 - Group's share of policyholder liabilities relating to joint ventures and associate note (i) — 3,814 4,331 8,145 Average policyholder liability balances note (vii) 2018 36,309 20,105 18,895 75,309 2017 30,115 18,767 16,359 65,241 Notes (i) 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. (ii) The rate of surrenders for shareholder-backed business (expressed as a percentage of opening liabilities) was 6.6 per cent in 2018 (2017: 8.4 per cent). (iii) Net flows have increased by £1,541 million to £8,416 million in 2018 predominantly reflecting continued growth of the in-force book. (iv) Investment-related items and other movements for 2018 primarily represent unrealised investments losses following unfavourable equity markets in the year and rising interest rates. (v) Movements in the year have been translated at the average exchange rates for the year. The closing balance has been translated at the closing spot rates as at the end of the year. Differences upon retranslation are included in foreign exchange translation differences. (vi) The policyholder liabilities of the with-profits business of £39,655 million, shown in the table above, is after deducting the intra-group reinsurance liabilities ceded by the UK and Europe insurance operations of £1,109 million to the Hong Kong with-profits business (31 December 2017: £1,235 million). Including this amount the Asia with-profits policyholder liabilities are £40,764 million (31 December 2017: £34,198 million). (vii) Averages have been based on opening and closing balances and exclude unallocated surplus of with-profits funds. |
Schedule of carrying value of policyholder liabilities and maturity profile of cash flows on a discounted basis | 31 Dec 2018 £m 31 Dec 2017 £m Policyholder liabilities 72,107 62,898 Expected maturity: 31 Dec 2018 % 31 Dec 2017 % 0 to 5 years 20 21 5 to 10 years 19 19 10 to 15 years 15 16 15 to 20 years 12 12 20 to 25 years 10 10 Over 25 years 24 22 |
Summary of policyholder liabilities (net of reinsurance) and unallocated surplus, by geographical area | 2018 £m 2017 £m Hong Kong 34,545 29,411 Indonesia 3,680 3,762 Malaysia 5,447 5,014 Singapore 18,154 17,432 Taiwan 4,203 3,729 Other operations 5,812 5,064 Total Asia operations 71,841 64,412 |
Jackson (US insurance operations) | |
Policyholder liabilities and unallocated surplus | |
Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds | Variable annuity separate Fixed annuity, account GICs and other liabilities business Total £m £m £m At 1 January 2017 120,411 57,215 177,626 Premiums 11,529 3,690 15,219 Surrenders (6,997) (3,020) (10,017) Maturities/deaths (1,026) (1,039) (2,065) Net flows note (ii) 3,506 (369) 3,137 Transfers from general to separate account 2,096 (2,096) — Investment-related items and other movements 15,956 295 16,251 Foreign exchange translation differences note (i) (11,441) (4,849) (16,290) At 31 December 2017/1 January 2018 130,528 50,196 180,724 Premiums 10,969 2,971 13,940 Surrenders (8,797) (3,344) (12,141) Maturities/deaths (1,085) (927) (2,012) Net flows note (ii) 1,087 (1,300) (213) Addition for closed block of group payout annuities in the US note (iii) — 4,143 4,143 Transfers from general to separate account 530 (530) — Investment-related items and other movements note (iv) (11,561) 1,562 (9,999) Foreign exchange translation differences note (i) 7,636 3,309 10,945 At 31 December 2018 128,220 57,380 185,600 Average policyholder liability balances note (v) 2018 129,374 52,752 182,126 2017 125,469 53,706 179,175 Notes (i) Movements in the year have been translated at an average rate of US$1.34: £1.00 (2017: US$1.29: £1.00). The closing balances have been translated at closing rate of US$1.27: £1.00 (2017: US$1.35: £1.00). Differences upon retranslation are included in foreign exchange translation differences. (ii) Net outflows were £213 million (2017: inflows £3,137 million), with positive inflows to variable annuities business as new business exceeds withdrawals and surrenders offset by outflows from fixed annuity, GICs and other business as the portfolio matures. (iii) In October 2018, Jackson entered into an agreement with John Hancock Life to reinsure 100 per cent of the group payout annuity business. The transaction resulted in an increase to policyholder liabilities of Jackson £4.1 billion at the inception of the contract. (iv) Negative investment-related items and other movements in variable annuity separate account liabilities of £(11,561) million for 2018 primarily reflects the decrease in equity and bond values during the year. Fixed annuity, GIC and other business investment and other movements of £1,562 million primarily reflect the interest credited to the policyholder accounts and increase in the guarantee reserves in the year. (v) Averages have been based on opening and closing balances and adjusted for acquisitions, disposals and corporate transactions arising in the year. |
Schedule of carrying value of policyholder liabilities and maturity profile of cash flows on a discounted basis | 31 Dec 2018 31 Dec 2017 Fixed annuity Fixed annuity and other Variable and other Variable business annuity business annuity (including GICs separate (including GICs separate and similar account and similar account contracts) liabilities Total contracts) liabilities Total £m £m £m £m £m £m Policyholder liabilities 57,380 128,220 185,600 50,196 130,528 180,724 Expected maturity: % % % % % % 0 to 5 years 51 40 43 50 42 44 5 to 10 years 24 28 27 25 29 28 10 to 15 years 12 16 15 12 15 14 15 to 20 years 7 9 8 7 8 8 20 to 25 years 3 4 4 3 4 4 Over 25 years 3 3 3 3 2 2 |
Schedule of account values within ranges of minimum guaranteed interest rates | Fixed annuities and the fixed account portion of variable annuities Interest-sensitive life business £m £m Minimum guaranteed interest rate 31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017 > 0% - 1.0% 7,584 6,887 — — > 1.0% - 2.0% 6,789 7,385 — — > 2.0% - 3.0% 10,075 9,799 229 221 > 3.0% - 4.0% 1,274 1,272 2,394 2,341 > 4.0% - 5.0% 1,794 1,744 2,106 2,059 > 5.0% - 6.0% 225 220 1,703 1,651 Total 27,741 27,307 6,432 6,272 |
UK and Europe insurance operations | |
Policyholder liabilities and unallocated surplus | |
Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds | Shareholder-backed funds and subsidiaries Annuity With-profits and other sub-funds Unit-linked long-term £m liabilities business Total note (v) £m £m £m At 1 January 2017 113,146 22,119 34,039 169,304 Comprising: – Policyholder liabilities on the consolidated statement of financial position 101,496 22,119 34,039 157,654 – Unallocated surplus of with-profits funds on the consolidated statement of financial position 11,650 — — 11,650 Premiums 12,527 1,923 360 14,810 Surrenders (4,506) (2,342) (91) (6,939) Maturities/deaths (4,564) (612) (1,959) (7,135) Net flows note (i) 3,457 (1,031) (1,690) 736 Shareholders’ transfers post-tax (233) — — (233) Switches (192) 192 — — Investment-related items and other movements 8,408 1,865 873 11,146 Foreign exchange translation differences 113 — — 113 At 31 December 2017/1 January 2018 124,699 23,145 33,222 181,066 Comprising: – Policyholder liabilities on the consolidated statement of financial position 111,222 23,145 33,222 167,589 – Unallocated surplus of with-profits funds on the consolidated statement of financial position 13,477 — — 13,477 Reclassification of reinsured UK annuity contracts as held for sale note (ii) — — (10,858) (10,858) Premiums 12,525 1,147 339 14,011 Surrenders (4,764) (1,950) (66) (6,780) Maturities/deaths (4,552) (619) (1,625) (6,796) Net flows note (i) 3,209 (1,422) (1,352) 435 Shareholders' transfers post-tax (259) — — (259) Switches (165) 165 — — Investment-related items and other movements note (iii) (3,341) (1,171) (969) (5,481) Foreign exchange translation differences (14) — — (14) At 31 December 2018 124,129 20,717 20,043 164,889 Comprising: – Policyholder liabilities on the consolidated statement of financial position 110,795 20,717 20,043 151,555 – Unallocated surplus of with-profits funds on the consolidated statement of financial position 13,334 — — 13,334 Average policyholder liability balances note (iv) 2018 111,009 21,931 29,347 162,287 2017 106,359 22,632 33,631 162,622 Notes (i) Net inflows were £435 million (31 December 2017: net inflows of £736 million ). Inflows into the with-profits business were offset by outflows from both the annuity business, as the closed book matures, and the unit-linked business. The levels of inflows/outflows for the 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 year. (ii) The reclassification as held for sale of the reinsured UK annuity business that will be transferred to Rothesay life once the Part VII process is complete reflects the value policyholder liabilities held at 1 January 2018. (iii) Investment-related items and other movements for with-profits business principally comprise investment return attributable to policyholders reflecting falling equity markets in the later quarter of the year. For shareholder-backed annuity and other long-term business, investment-related items and other movements include the effect of movements in interest rates and credit spreads. (iv) Averages have been based on opening and closing balances and adjusted for acquisitions, disposals and corporate transactions arising in the year and exclude unallocated surplus of with-profits funds. (v) Includes the Scottish Amicable Insurance Fund. |
Schedule of carrying value of policyholder liabilities and maturity profile of cash flows on a discounted basis | 31 Dec 2018 £m Annuity business With-profits business (insurance contracts) Other Total Non- profit annuities Shareholder Insurance Investment within -backed Insurance Investments contracts contracts Total WPSF annuity Total contracts contracts Total Policyholder liabilities 34,242 67,020 101,262 9,533 19,119 28,652 6,063 15,578 21,641 151,555 31 Dec 2018 % Expected maturity: 0 to 5 years 34 37 36 33 27 29 44 32 36 35 5 to 10 years 23 27 26 26 23 24 25 24 24 25 10 to 15 years 16 17 17 17 19 18 15 18 17 17 15 to 20 years 11 9 10 11 14 13 8 12 11 10 20 to 25 years 7 4 5 6 9 8 4 7 6 6 over 25 years 9 6 6 7 8 8 4 7 6 7 31 Dec 2017 £m Policyholder liabilities 38,285 62,328 100,613 10,609 32,572 43,181 6,714 17,081 23,795 167,589 31 Dec 2017 % Expected maturity: 0 to 5 years 33 37 36 31 26 27 41 31 34 34 5 to 10 years 23 27 25 24 23 23 26 22 23 25 10 to 15 years 16 17 17 17 18 18 15 18 17 17 15 to 20 years 11 10 10 11 13 13 9 13 12 11 20 to 25 years 7 4 5 7 9 9 5 8 7 6 over 25 years 10 5 7 10 11 10 4 8 7 7 – – – – – |
Schedule of anticipated mortality improvements for annuities in payment | Year ended CMI Model, with calibration to reflect future mortality improvements 31 December 2018 CMI 2016 For males: with a long-term improvement rate of 2.25% pa For females: with a long-term improvement rate of 2.00% pa 31 December 2017 CMI 2015 For males: with a long-term improvement rate of 2.25% pa For females: with a long-term improvement rate of 2.00% pa 31 December 2016 CMI 2014 For males: with a long-term improvement rate of 2.25% pa* For females: with a long-term improvement rate of 1.50% pa* * |
Schedule of smoothing of investment return for policyholder bonuses | 2018 £m 2017 £m 2016 £m Net income of the fund: Investment return (2,261) 9,985 13,185 Claims incurred (8,776) (8,449) (7,410) Movement in policyholder liabilities (554) (10,011) (11,824) Add back policyholder bonuses for the year (as shown below) 2,345 2,071 1,934 Claims incurred and movement in policyholder liabilities (including charge for provision for asset shares and excluding policyholder bonuses) (6,985) (16,389) (17,300) Earned premiums, net of reinsurance 12,505 12,508 9,261 Other income 36 35 177 Acquisition costs and other expenditure (1,170) (1,732) (1,288) Share of profits from investment joint ventures 36 106 22 Tax credit (charge) 273 (440) (739) Net income of the fund before movement in unallocated surplus 2,434 4,073 3,318 Movement in unallocated surplus 170 (1,769) (1,169) Surplus for distribution 2,604 2,304 2,149 Surplus for distribution allocated as follows: – 90% policyholders’ bonus (as shown above) 2,345 2,071 1,934 – 10% shareholders’ transfers 259 233 215 2,604 2,304 2,149 |
Intangible assets (Tables)
Intangible assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Intangible assets | |
Reconciliation of goodwill and goodwill components | 31 Dec 2018 £m 31 Dec 2017 £m Attributable to: Shareholders With-profits Total Total Carrying value at beginning of year 1,458 24 1,482 1,628 Acquisition of TMB Asset Management Co., Ltd. in Thailand (see note D1.2) 181 — 181 — Other additions in the year (see below) — 195 195 9 Disposals/reclassifications to held for sale — (10) (10) (155) Exchange differences 12 (3) 9 — Carrying value at end of year 1,651 206 1,857 1,482 Comprising: M&G – attributable to shareholders 1,153 1,153 Other – attributable to shareholders 498 305 Goodwill – attributable to shareholders 1,651 1,458 Venture fund investments – attributable to with-profits funds 206 24 1,857 1,482 |
Schedule of deferred acquisition costs and other intangible assets | 31 Dec 2018 £m 31 Dec 2017 £m Deferred acquisition costs and other intangible assets attributable to shareholders note (i) 11,784 10,866 Other intangible assets, including computer software, attributable to with-profits funds 139 145 Total of deferred acquisition costs and other intangible assets 11,923 11,011 |
Shareholder-backed | |
Intangible assets | |
Schedule of deferred acquisition costs and other intangible assets | 31 Dec 2018 £m 31 Dec 2017 £m Deferred acquisition costs related to insurance contracts as classified under IFRS 4 10,017 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 78 63 Deferred acquisition costs related to insurance and investment contracts note (ii) 10,095 9,233 Present value of acquired in-force policies for insurance contracts as classified under IFRS 4 (PVIF) 34 36 Distribution rights and other intangibles 1,655 1,597 Present value of acquired in-force (PVIF) and other intangibles attributable to shareholders note (iii) 1,689 1,633 Total of deferred acquisition costs and other intangible assets note (a) 11,784 10,866 |
Reconciliation of deferred acquisition costs and other intangible assets | 31 Dec 2018 £m 31 Dec 2017 £m Deferred acquisition costs UK and All PVIF and Asia US Europe asset other insurance insurance insurance management intangibles * Total Total note (b) Balance at 1 January 946 8,197 84 6 1,633 10,866 10,755 Additions 419 569 15 15 230 1,248 1,240 Amortisation to the income statement:note (c)† Adjusted IFRS operating profit based on longer-term investment returns (148) (683) (11) (3) (179) (1,024) (709) Non-operating profit — (114) — — (4) (118) 455 (148) (797) (11) (3) (183) (1,142) (254) Disposals and transfers — — — — (14) (14) — Exchange differences and other movements 47 512 (2) — 23 580 (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† — 246 — — — 246 (76) Balance at 31 December 1,264 8,727 86 18 1,689 11,784 10,866 * 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. Software rights include additions of £34 million, amortisation of £32 million, foreign exchange losses of £7 million and a balance at 31 December 2018 of £62 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 Standards Codification Topic 944, Financial Services – Insurance, of the Financial Accounting Standards Board 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 (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 (see note C7.3(iv)). |
Reconciliation of deferred acquisition costs relating to insurance and investment contracts | 2018 £m 2017 £m Investment Investment Insurance management Insurance management contracts note contracts note DAC at 1 January 9,170 63 9,114 64 Additions 991 26 1,000 11 Amortisation (947) (11) (77) (12) Exchange differences 557 — (791) — Change in shadow DAC related to movement in unrealised appreciation of Jackson’s securities classified as available-for-sale 246 — (76) — DAC at 31 December 10,017 78 9,170 63 Note All of the additions are through internal development. The carrying amount of the balance comprises the following gross and accumulated amortisation amounts: 2018 £m 2017 £m Gross amount 181 156 Accumulated amortisation (103) (93) Net book amount 78 63 |
Reconciliation of PVIF and other intangibles | 2018 £m 2017 £m Other Other intangibles intangibles Distribution (including Distribution (including PVIF rights software) Total PVIF rights software) Total note (a) note (b) note (c) note (a) note (b) note (c) At 1 January Cost 227 1,793 363 2,383 226 1,628 321 2,175 Accumulated amortisation (191) (312) (247) (750) (183) (196) (219) (598) 36 1,481 116 1,633 43 1,432 102 1,577 Additions — 181 49 230 — 173 56 229 Amortisation charge (4) (142) (37) (183) (7) (121) (37) (165) Disposals and transfers — — (14) (14) — — — — Exchange differences and other movements 2 18 3 23 — (3) (5) (8) At 31 December 34 1,538 117 1,689 36 1,481 116 1,633 Comprising: Cost 232 1,999 313 2,544 227 1,793 363 2,383 Accumulated amortisation (198) (461) (196) (855) (191) (312) (247) (750) 34 1,538 117 1,689 36 1,481 116 1,633 Notes (a) All of the PVIF balances relate to insurance contracts. The PVIF attaching to investment contracts have been fully amortised. Amortisation is charged over the period of provision of asset management services as those profits emerge. (b) Distribution rights relate to fees paid in relation to the bancassurance partnership arrangements for the bank distribution of Prudential’s insurance products for a fixed period of time. The distribution rights amounts are amortised on a basis to reflect the pattern in which the future economic benefits are expected to be consumed by reference to new business production levels. (c) Software is amortised over its useful economic life, which generally represents the licence period of the software acquired. |
Jackson (US insurance operations) | Shareholder-backed | |
Intangible assets | |
Schedule of DAC components | 31 Dec 2018 £m 31 Dec 2017 £m Variable annuity business 8,477 8,208 Other business 299 278 Cumulative shadow DAC (for unrealised gains booked in other comprehensive income)* (49) (289) Total DAC for US operations 8,727 8,197 * *A gain of £246 million (2017: a loss of £(76) million) for shadow DAC amortisation is booked within other comprehensive income to reflect the impact from the negative unrealised valuation movement in 2018 of £1,617 million (2017: positive unrealised valuation movement of £617 million). These adjustments reflect movement from period to period, in the changes to the pattern of reported gross profits that would have occurred if the assets reflected in the statement of financial position had been sold, crystallising the unrealised gains and losses, and the proceeds reinvested at the yields currently available in the market. At 31 December 2018, the cumulative shadow DAC balance as shown in the table above was negative £49 million (31 December 2017: negative £289 million). |
Borrowings (Tables)
Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Borrowings | |
Schedule of remaining contractual maturities of the Group's borrowings | Shareholder-financed businesses With-profits businesses Core structural borrowings Operational borrowings Borrowings 31 Dec 2018 £m 31 Dec 2017 £m 31 Dec 2018 £m 31 Dec 2017 £m 31 Dec 2018 £m 31 Dec 2017 £m Less than 1 year — 275 840 1,723 573 351 1 to 2 years — — 89 1 71 371 2 to 3 years — — 1 1 90 184 3 to 4 years 275 — — — 5 59 4 to 5 years 312 — — — 102 1 Over 5 years 7,077 6,005 68 66 3,099 2,750 Total 7,664 6,280 998 1,791 3,940 3,716 |
Core structural borrowings of shareholder-financed businesses | |
Borrowings | |
Schedule of borrowings | 31 Dec 2018 £m 31 Dec 2017 £m Holding company operations: note (i) US$250m 6.75% Notes (Tier 1) note (vi) 196 185 US$300m 6.5% Notes (Tier 1) note (vi) 235 222 US$700m 5.25% Notes (Tier 2) 550 517 US$550m 7.75% Notes (Tier 1) note (v) — 407 US$1,000m 5.25% Notes (Tier 2) 780 731 US$725m 4.375% Notes (Tier 2) 565 530 US$750m 4.875% Notes (Tier 2) 583 548 Perpetual Subordinated Capital Securities 2,909 3,140 €20m Medium Term Notes 2023 (Tier 2) note (vii) 18 18 £435m 6.125% Notes 2031 (Tier 2) 431 430 £400m 11.375% Notes 2039 (Tier 2) 399 397 £600m 5% Notes 2055 (Tier 2) 591 591 £700m 5.7% Notes 2063 (Tier 2) 696 696 £750m 5.625% Notes 2051 (Tier 2) note (iv) 743 — £500m 6.25% Notes 2068 (Tier 2 )note (iv) 498 — US$500m 6.5% Notes 2048 (Tier 2) note (iv) 391 — Subordinated Notes 3,767 2,132 Subordinated debt total 6,676 5,272 Senior debt: note (ii) £300m 6.875% Bonds 2023 294 300 £250m 5.875% Bonds 2029 223 249 Bank loan note (iii) 275 — Holding company total 7,468 5,821 Prudential Capital bank loan note (iii) — 275 Jackson US$250m 8.15% Surplus Notes 2027 note (viii) 196 184 Total (per consolidated statement of financial position) 7,664 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$3,725 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. In 2018, as part of its preparation to demerge M&GPrudential, the Group made certain modifications to the terms and conditions of the senior bonds with bondholders’ consent. The amendment to the terms and conditions will avoid an event of a technical default on the bonds, should the demerger proceed. The fees paid to bondholders have been adjusted to the carrying value of the bonds and will be amortised in subsequent periods. No other adjustments were made to the carrying value of the debt as a result of the modification. (iii) The bank loan of £275 million is drawn at a cost of 12-month GBP LIBOR plus 0.33 per cent. The loan , held by Prudential Capital as of 31 December 2017, was renewed in December 2018, with Prudential plc becoming the new holder. The loan matures on 20 December 2022 with an option to repay annually. (iv) In October 2018, the Company issued the following three substitutable core structural borrowings as part of the process required before demerger to rebalance debt across M&GPrudential and Prudential (see below): - - - (v) In December 2018, the Company paid £434 million to redeem its US$550 million 7.75 per cent Tier 1 perpetual subordinated notes. (vi) These borrowings can be converted, in whole or in part, at the Company’s option and subject to certain conditions, on any interest payment date, into one or more series of Prudential preference shares. (vii) The €20 million borrowings were issued at 20-year Euro Constant Maturity Swap (capped at 6.5 per cent). These have been swapped into borrowings of £14 million with interest payable at three-month GBP LIBOR plus 1.2 per cent. (viii) Jackson’s borrowings are unsecured and subordinated to all present and future indebtedness, policy claims and other creditor claims of Jackson. |
Operational borrowings attributable to shareholder-financed businesses | |
Borrowings | |
Schedule of borrowings | 31 Dec 2018 £m 31 Dec 2017 £m Commercial Paper 472 485 Medium Term Notes 2018 — 600 Borrowings in respect of short-term fixed income securities programmes 472 1,085 Bank loans and overdrafts 90 70 Obligations under finance leases 19 5 Other borrowings 417 631 Other borrowings note 526 706 Total 998 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 businesses | |
Borrowings | |
Schedule of borrowings | 31 Dec 2018 £m 31 Dec 2017 £m Non-recourse borrowings of consolidated investment funds* 3,845 3,570 £100m 8.5% undated subordinated guaranteed bonds of Scottish Amicable Finance plc † — 100 Other borrowings (including obligations under finance leases) 95 46 Total 3,940 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 these 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. |
Risk and sensitivity analysis (
Risk and sensitivity analysis (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Risk and sensitivity analysis | |
Schedule of significant items of risk sensitivity | Type of business Market and credit risk Insurance and Investments/derivatives Liabilities/unallocated Other exposure Asia insurance operations (see also section C7.2) All business Currency risk Mortality and morbidity risk Persistency risk With-profits business Net neutral direct exposure (indirect exposure only) Investment performance subject to smoothing through declared bonuses Unit-linked business Net neutral direct exposure (indirect exposure only) Investment performance through asset management fees Non-participating business Asset/liability mismatch risk Credit risk Interest rates for those operations where the basis of insurance liabilities is sensitive to current market movements Interest rate and price risk US insurance operations (see also section C7.3) All business Currency risk Persistency risk Variable annuity business Net effect of market risk arising from incidence of guarantee features and variability of asset management fees offset by derivative hedging programme Risk that utilisation of withdrawal benefits or lapse levels differ from those assumed in pricing Fixed index annuity business Derivative hedge programme to the extent not fully hedged against liability Incidence of equity participation features Fixed index annuities, Fixed annuities and GIC business Credit risk Interest rate risk Profit and loss and shareholders’ equity are volatile for these risks as they affect the values of derivatives and embedded derivatives and impairment losses. In addition, shareholders’ equity is volatile for the incidence of these risks on unrealised appreciation of fixed income securities classified as available-for-sale under IAS 39 Spread difference between earned rate and rate credited to policyholders Lapse risk, but the effects of extreme events may be mitigated by the application of market value adjustments UK and Europe insurance operations (see also section C7.4) With-profits business Net neutral direct exposure (indirect exposure only) Investment performance subject to smoothing through declared bonuses Persistency risk to future shareholder transfers SAIF sub-fund Net neutral direct exposure (indirect exposure only) Asset management fees earned Unit-linked business Net neutral direct exposure (indirect exposure only) Investment performance through asset management fees Persistency risk Asset/liability mismatch risk Shareholder-backed annuity business Credit risk for assets covering liabilities and shareholder capital Mortality experience and assumptions for longevity Interest rate risk for assets in excess of liabilities, ie assets representing shareholder capital |
Asia insurance operations | Interest rate risk | |
Risk and sensitivity analysis | |
Schedule of estimated sensitivity to risk | 2018 £m 2017 £m Decrease Increase Decrease Increase of 1% of 1% of 1% of 1% Profit before tax attributable to shareholders 312 (338) 2 (443) Related deferred tax (where applicable) (15) 26 (7) 20 Net effect on profit and shareholders’ equity 297 (312) (5) (423) |
Asia insurance operations | Equity price risk | |
Risk and sensitivity analysis | |
Schedule of estimated sensitivity to risk | 2018 £m 2017 £m Decrease Decrease of 20% of 10% of 20% of 10% Profit before tax attributable to shareholders (557) (279) (478) (239) Related deferred tax (where applicable) 17 8 7 4 Net effect on profit and shareholders’ equity (540) (271) (471) (235) |
Asia insurance operations | Foreign exchange risk | |
Risk and sensitivity analysis | |
Schedule of estimated sensitivity to risk | A 10% increase in local A 10% decrease in local currency to £ exchange rates currency to £ exchange rates 2018 £m 2017 £m 2018 £m 2017 £m Profit before tax attributable to shareholders (134) (155) 164 189 Profit for the year (113) (135) 138 165 Shareholders’ equity, excluding goodwill, attributable to Asia operations (543) (492) 664 601 |
Jackson (US insurance operations) | |
Risk and sensitivity analysis | |
Schedule of significant items of risk sensitivity | Risks Risk of loss Equity risk — Related to the incidence of benefits related to guarantees issued in connection with its variable annuity contracts; and — Related to meeting contractual accumulation requirements in fixed index annuity contracts. Interest rate risk — Related to meeting guaranteed rates of accumulation on fixed annuity products following a sustained fall in interest rates; — Related to increases in the present value of projected benefits related to guarantees issued in connection with its variable annuity contracts following a sustained fall in interest rates especially if in conjunction with a fall in equity markets; — Related to the surrender value guarantee features attached to the Company’s fixed annuity products and to policyholder withdrawals following a sharp and sustained increase in interest rates; and — The risk of mismatch between the expected duration of certain annuity liabilities and prepayment risk and extension risk inherent in mortgage-backed securities. |
Schedule of principal types of derivatives used and their purpose | Derivative Purpose Interest rate swaps These generally involve the exchange of fixed and floating payments over the period for which Jackson holds the instrument without an exchange of the underlying principal amount. These agreements are used to hedge Jackson’s exposure to movements in interest rates. Swaption contracts These contracts provide the purchaser with the right, but not the obligation, to require the writer to pay the present value of a long-duration interest rate swap at future exercise dates. Jackson both purchases and writes swaptions in order to hedge against significant movements in interest rates. Treasury futures contracts These derivatives are used to hedge Jackson’s exposure to movements in interest rates. Equity index futures contracts and equity index options These derivatives (including various call and put options and options contingent on interest rates and currency exchange rates) are used to hedge Jackson’s obligations associated with its issuance of certain VA guarantees. Some of these annuities and guarantees contain embedded options that are fair valued for financial reporting purposes. Cross-currency swaps Cross-currency swaps, which embody spot and forward currency swaps and additionally, in some cases, interest rate swaps and equity index swaps, are entered into for the purpose of hedging Jackson’s foreign currency denominated funding agreements supporting trust instrument obligations. Credit default swaps These swaps represent agreements under which the buyer has purchased default protection on certain underlying corporate bonds held in its portfolio. These contracts allow Jackson to sell the protected bonds at par value to the counterparty if a default event occurs in exchange for periodic payments made by Jackson for the life of the agreement. |
Jackson (US insurance operations) | Interest rate risk | |
Risk and sensitivity analysis | |
Schedule of estimated sensitivity to risk | 31 Dec 2018 £m 31 Dec 2017 £m Decrease Increase Decrease Increase of 2% of 1% of 1% of 2% of 2% of 1% of 1% of 2% Profit and loss: Pre-tax profit effect (net of related changes in amortisation of DAC) (3,535) (1,718) 1,201 2,210 (4,079) (1,911) 1,373 2,533 Related effect on charge for deferred tax 742 361 (252) (464) 857 401 (288) (532) Net profit effect (2,793) (1,357) 949 1,746 (3,222) (1,510) 1,085 2,001 Other comprehensive income: Direct effect on carrying value of debt securities (net of related changes in amortisation of DAC) 4,134 2,346 (2,346) (4,134) 3,063 1,700 (1,700) (3,063) Related effect on movement in deferred tax (868) (493) 493 868 (643) (357) 357 643 Net effect 3,266 1,853 (1,853) (3,266) 2,420 1,343 (1,343) (2,420) Total net effect on shareholders’ equity 473 496 (904) (1,520) (802) (167) (258) (419) |
Jackson (US insurance operations) | Equity price risk | |
Risk and sensitivity analysis | |
Schedule of net amount at risk for variable annuity contracts with guarantees | Period Net Weighted until Minimum Account amount average expected return value at risk attained age annuitisation 31 December 2018 % £m £m Years Years Return of net deposits plus a minimum return GMDB - % 98,653 4,437 66.5 years GMWB - premium only % 1,924 62 GMWB * - % † 197 20 GMAB - premium only % 26 — Highest specified anniversary account value minus withdrawals post-anniversary GMDB 8,531 1,113 67.1 years GMWB - highest anniversary only 2,220 314 GMWB * 535 89 Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary GMDB - % 5,454 1,217 69.5 years GMIB‡ - % 1,256 648 0.1 years GMWB * - % † 91,788 16,835 Period Net Weighted until Minimum Account amount average expected return value at risk attained age annuitisation 31 December 2017 % £m £m Years Years Return of net deposits plus a minimum return GMDB - 6 % 100,451 1,665 66.0 years GMWB - premium only % 2,133 20 GMWB* - 5 % † 235 13 GMAB - premium only % 38 — Highest specified anniversary account value minus withdrawals post-anniversary GMDB 9,099 96 66.5 years GMWB - highest anniversary only 2,447 51 GMWB* 667 47 Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary GMDB - 6 % 5,694 426 69.0 years GMIB‡ - 6 % 1,484 436 0.4 years GMWB* - 8 % † 93,227 4,393 * Amounts shown for GMWB comprise sums for the ‘not for life’ portion (where the guaranteed withdrawal base less the account value equals to the net amount at risk (NAR)), and a ‘for life’ portion (where the NAR has been estimated as the present value of future expected benefit payment remaining after the amount of the ‘not for life’ guaranteed benefits is zero). † Ranges shown based on simple interest. The upper limits of 5 per cent or 8 per cent simple interest are approximately equal to 4.1 per cent and 6 per cent respectively, on a compound interest basis over a typical 10-year bonus period. For example 1 + 10 × 0.05 is similar to 1.04 growing at a compound rate of 4 per cent for a further nine years. ‡ The GMIB guarantees are substantially reinsured. Account balances of contracts with guarantees were invested in variable separate accounts as follows: Mutual fund type: 31 Dec 2018 £m 31 Dec 2017 £m Equity 78,387 80,843 Bond 13,901 13,976 Balanced 19,903 19,852 Money market 824 681 Total 113,015 115,352 |
Schedule of estimated sensitivity to risk | 31 Dec 2018 £m 31 Dec 2017 £m Decrease Increase Decrease Increase of 20% of 10% of 20% of 10% of 20% of 10% of 20% of 10% Pre-tax profit, net of related changes in amortisation of DAC 1,058 427 58 (125) 1,107 336 619 262 Related deferred tax effects (222) (90) (12) 26 (233) (71) (130) (55) Net sensitivity of profit after tax and shareholders’ equity * 836 337 46 (99) 874 265 489 207 * The table above has been prepared to exclude the impact of the instantaneous equity movements on the separate account fees. In addition, the sensitivity movements shown include those relating to the fixed index annuity and the reinsurance of GMIB guarantees. |
Jackson (US insurance operations) | Foreign exchange risk | |
Risk and sensitivity analysis | |
Schedule of estimated sensitivity to risk | A 10% increase in US$:£ A 10% decrease in US$:£ exchange rates exchange rates 2018 £m 2017 £m 2018 £m 2017 £m Profit before tax attributable to shareholders (159) (54) 194 66 Profit for the year (136) (20) 166 24 Shareholders’ equity attributable to US insurance operations (508) (456) 620 557 |
UK and Europe insurance operations | Non-linked shareholder-backed | Interest rate risk | |
Risk and sensitivity analysis | |
Schedule of estimated sensitivity to risk | 31 Dec 2018 £m 31 Dec 2017 £m A A An An A A An An decrease decrease increase increase decrease decrease increase increase of 2 % of 1 % of 1 % of 2 % of 2 % of 1 % of 1 % of 2 % Carrying value of debt securities and derivatives 7,369 3,317 (2,792) (5,193) 13,497 5,805 (4,659) (8,541) Policyholder liabilities (4,784) (2,162) 1,801 3,317 (9,426) (4,210) 3,443 6,295 Related deferred tax effects (446) (199) 171 323 (658) (254) 190 348 Net sensitivity of profit after tax and shareholders’ equity 2,139 956 (820) (1,553) 3,413 1,341 (1,026) (1,898) In addition, the shareholder-backed portfolio of UK non-linked insurance operations (covering policyholder liabilities and shareholders’ equity) includes equity securities and investment properties. Excluding any offsetting effects on the measurement of policyholder liabilities, a fall in their value would have given rise to the following effects on pre-tax profit, profit after tax and shareholders’ equity. 2018 £m 2017 £m A decrease A decrease A decrease A decrease of 20% of 10% of 20% of 10% Pre-tax profit (336) (168) (332) (166) Related deferred tax effects 57 29 57 28 Net sensitivity of profit after tax and shareholders’ equity (279) (139) (275) (138) |
Tax assets and liabilities (Tab
Tax assets and liabilities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Tax assets and liabilities | |
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 31 Dec Deferred tax assets Unrealised losses or gains on investments 14 1 93 5 113 Balances relating to investment and insurance contracts 1 — — — 1 Short-term temporary differences 2,532 (266) (8) 81 2,339 Capital allowances 14 — — 1 15 Unused tax losses 66 23 — 38 127 Total 2,627 (242) 85 125 2,595 Deferred tax liabilities Unrealised losses or gains on investments (1,748) 666 195 20 (867) Balances relating to investment and insurance contracts (872) (91) — (39) (1,002) Short-term temporary differences (2,041) 68 (15) (109) (2,097) Capital allowances (54) (1) — (1) (56) Total (4,715) 642 180 (129) (4,022) Deferred tax assets Deferred tax liabilities 2018 £m 2017 £m 2018 £m 2017 £m Asia operations 119 112 (1,257) (1,152) US operations 2,295 2,300 (1,688) (1,845) UK and Europe 126 157 (1,061) (1,703) Other operations 55 58 (16) (15) Total 2,595 2,627 (4,022) (4,715) |
Schedule of tax benefits not recognised | 31 Dec 2018 31 Dec 2017 Tax benefit £m Losses £bn Tax benefit £m Losses £bn Capital losses 49 0.2 79 0.4 Trading losses 49 0.2 74 0.3 |
Defined benefit pension schem_2
Defined benefit pension schemes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Defined benefit pension schemes | |
Schedule of recognised asset/liability in respect of defined benefit pension schemes | 31 Dec 2018 £m 31 Dec 2017 £m Other Other PSPS SASPS M&GGPS schemes Total PSPS SASPS M&GGPS schemes Total note (a) note (b) note (a) note (b) Underlying economic surplus (deficit) 908 (79) 131 (1) 959 721 (137) 109 (1) 692 Less: unrecognised surplus (677) — — — (677) (485) — — — (485) Economic surplus (deficit) (including investment in Prudential insurance policies) note (c) 231 (79) 131 (1) 282 236 (137) 109 (1) 207 Attributable to: UK with-profits fund 162 (32) — — 130 165 (55) — — 110 Shareholder-backed business 69 (47) 131 (1) 152 71 (82) 109 (1) 97 Consolidation adjustment against policyholder liabilities for investment in Prudential insurance policies — — (225) — (225) — — (151) — (151) IAS 19 pension asset (liability) on the Group statement of financial position note (d) 231 (79) (94) (1) 57 236 (137) (42) (1) 56 Notes (a) No deficit or other funding is required for PSPS. Deficit funding, where applicable, is apportioned in the ratio of 70/30 between the UK with-profits fund and shareholder-backed business following detailed considerations in 2005 of the sourcing of previous contributions. Employer contributions for ongoing service of current employees are apportioned in the ratio relevant to current activity. (b) The deficit of SASPS has been allocated 40 per cent to the UK with-profits fund and 60 per cent to the shareholders’ fund as at 31 December 2018 and 2017. (c) The underlying position on an economic basis reflects the assets (including investments in Prudential insurance policies that are offset against liabilities to policyholders on the Group consolidation) and the liabilities of the schemes. (d) At 31 December 2018, the PSPS pension asset of £231 million (31 December 2017: £236 million) and the other schemes’ pension liabilities of £174 million (31 December 2017: £180 million) are included within ‘Other debtors’ and ‘Provisions’ respectively on the consolidated statement of financial position. |
Schedule of actuarial assumptions used in determining benefit obligations and the net periodic benefit costs | 31 Dec 2018 % 31 Dec 2017 % 31 Dec 2016 % Discount rate* 2.8 2.5 2.6 Rate of increase in salaries 3.3 3.1 3.2 Rate of inflation † : Retail prices index (RPI) 3.3 3.1 3.2 Consumer prices index (CPI) 2.3 2.1 2.2 Rate of increase of pensions in payment for inflation: PSPS: Guaranteed (maximum 5%) 2.5 2.5 2.5 Guaranteed (maximum 2.5%) 2.5 2.5 2.5 Discretionary 2.5 2.5 2.5 Other schemes 3.3 3.1 3.2 * The discount rate has been determined by reference to an ‘AA’ corporate bond index, adjusted where applicable to allow for the difference in duration between the index and the pension liabilities. † The rate of inflation reflects the long-term assumption for UK RPI or CPI depending on the tranche of the schemes. |
Schedule of movements on the pension scheme surplus determined on the economic basis | 2018 £m Surplus Actuarial gains Surplus (deficit) and losses (deficit) in schemes (Charge) credit in other in schemes at 1 Jan to income comprehensive Contributions at 31 Dec statement income paid All schemes Underlying position (without the effect of IFRIC 14) Surplus (deficit) 692 (88) 303 52 959 Less: amount attributable to UK with-profits fund (473) 38 (178) (20) (633) Shareholders' share: Gross of tax surplus (deficit) 219 (50) 125 32 326 Related tax (42) 10 (24) (6) (62) Net of shareholders' tax 177 (40) 101 26 264 Application of IFRIC 14 for the derecognition of PSPS surplus Derecognition of surplus (485) (13) (179) — (677) Less: amount attributable to UK with-profits fund 363 8 132 — 503 Shareholders' share: Gross of tax (122) (5) (47) — (174) Related tax 23 1 9 — 33 Net of shareholders' tax (99) (4) (38) — (141) With the effect of IFRIC 14 Surplus (deficit) 207 (101) 124 52 282 Less: amount attributable to UK with-profits fund (110) 46 (46) (20) (130) Shareholders' share: Gross of tax surplus (deficit) 97 (55) 78 32 152 Related tax (19) 11 (15) (6) (29) Net of shareholders' tax 78 (44) 63 26 123 |
Schedule of underlying investments of the plan assets | 31 Dec 2018 31 Dec 2017 Other Other PSPS schemes Total PSPS schemes Total £m £m £m % £m £m £m % Equities UK 8 6 14 — 9 67 76 1 Overseas 204 53 257 3 226 272 498 6 Bonds* Government 4,596 538 5,134 61 5,040 655 5,695 63 Corporate 1,586 454 2,040 24 1,491 248 1,739 20 Asset-backed securities 263 12 275 3 164 — 164 2 Derivatives 103 4 107 1 188 (6) 182 2 Properties 143 143 286 3 140 130 270 3 Other assets 172 198 370 5 216 77 293 3 Total value of assets† 7,075 1,408 8,483 100 7,474 1,443 8,917 100 * 87 per cent of the bonds are investment grade (2017: 89 per cent). † 94 per cent of the total value of the scheme assets are derived from quoted prices in an active market (31 December 2017: 96 per cent). None of the scheme assets included shares in Prudential plc or property occupied by the Prudential Group. The IAS 19 basis plan assets at 31 December 2018 of £8,258 million (31 December 2017: £8,766 million) is different from the economic basis plan assets of £8,483 million (31 December 2017: £8,917 million) as shown above due to the exclusion of investment in Prudential insurance policies by M&GGPS as described above. |
Schedule of movements in pension schemes' surplus and deficit between scheme assets and liabilities | Other adjustments including Effect of for Present Net surplus IFRIC 14 investments value (deficit) for Economic in Prudential IAS 19 of benefit (without derecognition basis net insurance basis net Plan obligations the effect of PSPS surplus policies surplus assets note (a) of IFRIC 14) surplus (deficit) note (b) (deficit) 2018 £m Net surplus (deficit), beginning of year 8,917 (8,225) 692 (485) 207 (151) 56 GMP equalisation provision note (e) — (53) (53) — (53) — (53) Current service cost — (44) (44) — (44) — (44) Net interest on net defined benefit liability (asset) 217 (200) 17 (13) 4 (4) — Administration expenses (8) — (8) — (8) — (8) Benefit payments (475) 475 — — — — — Employers' contributions note (c) 52 — 52 — 52 — 52 Employees' contributions 1 (1) — — — — — Actuarial gains and losses note (d) (221) 524 303 (179) 124 10 134 Transfer into investment in Prudential insurance policies — — — — — (80) (80) Net surplus (deficit), end of year 8,483 (7,524) 959 (677) 282 (225) 57 2017 £m Net surplus (deficit), beginning of year 9,006 (8,443) 563 (558) 5 (134) (129) Current service cost — (46) (46) — (46) — (46) Net interest on net defined benefit liability (asset) 228 (214) 14 (14) — (3) (3) Administration expenses (8) — (8) — (8) — (8) Benefit payments (479) 479 — — — — — Employers' contributions note (c) 50 — 50 — 50 — 50 Employees' contributions 1 (1) — — — — — Actuarial gains and losses note (d) 119 — 119 87 206 (6) 200 Transfer into investment in Prudential insurance policies — — — — — (8) (8) Net surplus (deficit), end of year 8,917 (8,225) 692 (485) 207 (151) 56 2016 £m Net surplus (deficit), beginning of year 7,819 (6,858) 961 (800) 161 (77) 84 Current service cost — (34) (34) — (34) — (34) Net interest on net defined benefit liability (asset) 292 (254) 38 (32) 6 (3) 3 Administration expenses (5) — (5) — (5) — (5) Benefit payments (350) 350 — — — — — Employers' contributions note (c) 45 — 45 — 45 — 45 Employees' contributions 2 (2) — — — — — Actuarial gains and losses note (d) 1,203 (1,645) (442) 274 (168) (13) (181) Transfer into investment in Prudential insurance policies — — — — — (41) (41) Net surplus (deficit), end of year 9,006 (8,443) 563 (558) 5 (134) (129) Notes (a) Maturity profile of the benefit obligations The weighted average duration of the benefit obligations of the schemes is 18.4 years (2017: 18.6 years). The following table provides an expected maturity analysis of the benefit obligations: All schemes £m After After After After 1 year 5 years 10 years 15 years Over 20 1 year or less to 5 years to 10 years to 15 years to 20 years years Total 31 Dec 2018 257 1,142 1,593 1,641 1,631 7,426 13,690 31 Dec 2017 255 1,108 1,589 1,667 1,661 7,889 14,169 (b) The adjustments for investments in Prudential insurance policies are consolidation adjustments for intra-group assets and liabilities with no impact to adjusted IFRS operating profit based on longer-term investment returns. (c) Total employer contributions expected to be paid into the Group defined benefit schemes for the year ending 31 December 2019 amount to £52 million (2018: £50 million). (d) The actuarial gains and losses attributable to policyholders and shareholders as shown in the table above are analysed as follows: 2018 £m 2017 £m 2016 £m Actuarial gains and losses Return on the scheme assets less amount included in interest income (221) 119 1,203 Gains (losses) on changes in demographic assumptions 168 (10) (18) Gains (losses) on changes in financial assumptions 330 (101) (1,733) Experience gains on scheme liabilities 26 111 106 303 119 (442) Effect of derecognition of PSPS surplus (179) 87 274 Consolidation adjustment for investments in Prudential insurance policies and other adjustments 10 (6) (13) 134 200 (181) (e) In October 2018, the High Court ruled that pension schemes are required to equalise benefits for the effect of guaranteed minimum pensions (GMPs). GMPs are a minimum benefit that schemes that were contracted-out on a salary-related basis between 1978 and 1997 are required to provide. In light of this Court ruling, at 31 December 2018, the Group has recognised an estimated allowance for GMP equalisation within the IAS 19 valuation for all the three UK schemes (£31 million for PSPS, £17 million for SASPS and £5 million for M&GGPS). These costs are allocated between the UK with-profits fund and the shareholders’ fund on the basis of 70:30 for PSPS, 40:60 for SASPS and with M&GGPS being wholly attributable to the shareholders’ fund. The impact on shareholders profit before tax is £24 million (before taking into account any charge to PSPS surplus restriction) and on shareholders’ equity post tax is £12 million. |
Schedule of expected maturity analysis of the benefit obligations | All schemes £m After After After After 1 year 5 years 10 years 15 years Over 20 1 year or less to 5 years to 10 years to 15 years to 20 years years Total 31 Dec 2018 257 1,142 1,593 1,641 1,631 7,426 13,690 31 Dec 2017 255 1,108 1,589 1,667 1,661 7,889 14,169 (b) |
Schedule of actuarial gains and losses attributable to policyholders and shareholders | 2018 £m 2017 £m 2016 £m Actuarial gains and losses Return on the scheme assets less amount included in interest income (221) 119 1,203 Gains (losses) on changes in demographic assumptions 168 (10) (18) Gains (losses) on changes in financial assumptions 330 (101) (1,733) Experience gains on scheme liabilities 26 111 106 303 119 (442) Effect of derecognition of PSPS surplus (179) 87 274 Consolidation adjustment for investments in Prudential insurance policies and other adjustments 10 (6) (13) 134 200 (181) |
Schedule of sensitivities of the underlying pension scheme liabilities to key variables | Sensitivity change in Assumption applied assumption Impact of sensitivity on scheme liabilities on IAS 19 basis 2018 2017 Discount rate 2.8 % 2.5 % Decrease by 0.2% Increase in scheme liabilities by: PSPS 3.5 % 3.5 % Other schemes 5.0 % 5.4 % Discount rate 2.8 % 2.5 % Increase by 0.2% Decrease in scheme liabilities by: PSPS 3.3 % 3.4 % Other schemes 4.7 % 4.9 % Rate of inflation 3.3 % 3.1 % RPI: Decrease by 0.2% Decrease in scheme liabilities by: 2.3 % 2.1 % CPI: Decrease by 0.2% PSPS 0.6 % 0.6 % with consequent reduction Other schemes 3.9 % 3.9 % in salary increases Mortality rate Increase life expectancy by 1 year Increase in scheme liabilities by: PSPS 3.9 % 4.0 % Other schemes 3.9 % 3.8 % |
Share capital, share premium _2
Share capital, share premium and own shares (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Share capital, share premium and own shares | |
Schedule of reconciliation of issued shares | 2018 2017 Issued shares of 5p each Number of ordinary Share Share Number of ordinary Share Share fully paid shares capital premium shares capital premium £m £m £m £m At 1 January 2,587,175,445 129 1,948 2,581,061,573 129 1,927 Shares issued under share-based schemes 5,868,964 1 16 6,113,872 — 21 At 31 December 2,593,044,409 130 1,964 2,587,175,445 129 1,948 |
Summary of options outstanding under save as you earn schemes to subscribe for shares | Number of shares to Share price range subscribe for from to Exercisable by year 31 Dec 2018 4,885,804 901 p 1,455 p 31 Dec 2017 6,448,853 629 p 1,455 p |
Summary of purchases of own shares in respect of employee incentive plans | Number 2018 share price Number 2017 share price of shares Low High Cost of shares Low High Cost £ £ £ £ £ £ January 51,555 19.18 19.40 996,536 62,388 15.83 16.02 989,583 February 55,765 17.91 18.10 1,004,362 65,706 15.70 16.09 1,052,657 March 55,623 18.25 18.54 1,025,238 70,139 16.40 16.54 1,159,950 April 1,664,334 16.67 17.95 29,113,556 3,090,167 16.58 16.80 51,369,760 May 63,334 18.91 19.38 1,216,136 55,744 17.50 17.62 979,645 June 181,995 18.21 18.65 3,335,725 182,780 17.52 18.00 3,269,447 July 55,888 17.68 17.86 993,779 51,984 17.72 17.93 927,452 August 60,384 18.04 18.10 1,090,283 55,857 18.30 18.73 1,025,802 September 82,612 16.95 16.98 1,400,868 51,226 17.45 17.97 912,151 October 148,209 15.62 16.84 2,477,127 136,563 17.99 18.22 2,483,879 November 67,162 15.95 15.96 1,071,633 53,951 18.38 18.40 992,123 December 73,744 13.99 14.30 1,045,278 53,519 18.26 18.47 986,000 Total 2,560,605 44,770,521 3,930,024 66,148,449 |
Provisions (Tables)
Provisions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Provisions | |
Schedule of total provisions | 31 Dec 2018 £m 31 Dec 2017 £m Provision in respect of defined benefit pension schemes C9 174 180 Other provisions note 904 943 Total provisions 1,078 1,123 |
Schedule of analysis of other provisions | 2018 £m 2017 £m At 1 January 943 659 Charged to income statement: Additional provisions 229 542 Unused amounts released (18) (9) Used during the year (262) (239) Exchange differences 12 (10) Total at 31 December 904 943 |
Capital (Tables)
Capital (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Asia insurance operations | |
Group objectives, policies and processes for managing capital | |
Reconciliation of estimated available capital position to shareholders' equity | 31 Dec 2018 £m 31 Dec 2017 £m IFRS shareholders' equity 5,525 Adjustments to local regulatory basis Remove deferred acquisition costs, goodwill and other intangibles (1,850) (1,515) Other adjustments 631 306 Total adjustments (1,219) (1,209) Total available capital of life assurance businesses on a local regulatory basis excluding with-profits funds note 4,649 4,316 |
Jackson (US insurance operations) | |
Group objectives, policies and processes for managing capital | |
Reconciliation of estimated available capital position to shareholders' equity | 31 Dec 2018 £m 31 Dec 2017 £m IFRS shareholders' equity 5,584 5,013 Adjustments to regulatory basis Deferred acquisition costs (8,727) (8,197) Jackson surplus notes 196 184 Investment and policyholder liabilities valuation differences between IFRS and regulatory basis for Jackson 7,217 5,325 Other adjustments* 63 818 Total adjustments (1,251) (1,870) Total available capital of life assurance businesses on a local regulatory basis 4,333 3,143 |
Asset management operations | |
Group objectives, policies and processes for managing capital | |
Reconciliation of regulatory and other surplus | 2018 £m 2017 £m M&G Eastspring Regulatory and other surplus Prudential US Investments Total Total Beginning of year 419 235 222 876 814 Gains during the year 364 23 138 525 586 Movement in capital requirement (10) — 5 (5) (73) Capital injection 88 — 13 101 6 Distributions made to the parent company (197) (97) (104) (398) (433) Exchange and other movements — (121) 20 (101) (24) End of year 664 40 294 998 876 |
Property, plant and equipment (
Property, plant and equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, plant and equipment | |
Reconciliation of the carrying amount of property, plant and equipment | 2018 £m 2017 £m Group Group occupied Tangible occupied Tangible property assets Total property assets Total At 1 January Cost 367 1,041 1,408 439 1,077 1,516 Accumulated depreciation (72) (547) (619) (88) (685) (773) Net book amount 295 494 789 351 392 743 Year ended 31 December Opening net book amount 295 494 789 351 392 743 Exchange differences 13 10 23 (8) (14) (22) Depreciation and impairment charge (10) (127) (137) (22) (94) (116) Additions 35 254 289 17 117 134 Arising on acquisitions of subsidiaries 4 518 522 — 178 178 Disposals and transfers (8) (69) (77) (43) (85) (128) Closing net book amount 329 1,080 1,409 295 494 789 At 31 December Cost 412 1,641 2,053 367 1,041 1,408 Accumulated depreciation (83) (561) (644) (72) (547) (619) Net book amount 329 1,080 1,409 295 494 789 |
Investment properties (Tables)
Investment properties (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Investment properties | |
Reconciliation of the carrying amount of investment properties | 2018 £m 2017 £m At 1 January 16,497 14,646 Additions: Resulting from property acquisitions 1,326 2,009 Resulting from expenditure capitalised 183 39 Disposals (178) (591) Net gain from fair value adjustments 149 415 Net foreign exchange differences (52) (21) At 31 December 17,925 16,497 |
Schedule of minimum future rentals receivable on non-cancellable operating leases of freehold investment properties | 2018 £m 2017 £m Less than 1 year 314 322 1 to 5 years 1,077 1,073 Over 5 years 2,242 2,286 Total 3,633 3,681 |
Corporate transactions (Tables)
Corporate transactions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Corporate transactions | |
Schedule of (loss) gain on disposal of businesses and corporate transactions | 2018 £m 2017 £m Loss arising on reinsurance of part of UK shareholder-backed annuity portfolio note (i) (508) — Other transactions note (ii) (80) 223 (588) 223 |
Schedule of assets and liabilities held for sale | 31 Dec 2018 £m Assets Reinsurer's share of insurance contract liabilities 10,502 Other assets (including cash and cash equivalents) 66 Assets held for sale 10,568 Liabilities Policyholder liabilities 10,502 Other liabilities 66 Liabilities held for sale 10,568 |
Acquisition of TMB Asset Management Co. Ltd. in Thailand | 31 Dec 2018 £m Assets Intangible assets 5 Other assets 26 Cash and cash equivalents 2 Total assets 33 Other liabilities (10) Non-controlling interests (7) Net assets acquired and liabilities assumed 16 Goodwill arising on acquisition* 181 Purchase consideration 197 * The goodwill on acquisition of £ 181 million (retranslated to £186 million at 31 December 2018) is mainly attributable to the expected benefits from new customers and synergies. Refer to note C5.1 for changes to the carrying amount of goodwill during the year. |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments | |
Schedule of future minimum lease payments for non-cancellable operating leases | 2018 £m 2017 £m Future minimum lease payments for non-cancellable operating leases fall due during the following periods: Not later than 1 year 120 113 Later than 1 year and not later than 5 years 404 284 Later than 5 years 408 118 Future minimum sub-lease rentals received for non-cancellable operating leases for land and buildings 42 56 Minimum lease rental payments included in consolidated income statement 139 123 |
Investments in subsidiary und_2
Investments in subsidiary undertakings, joint ventures and associates (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Investments in subsidiary undertakings, joint ventures and associates | |
Schedule of group's share of the profits , net of related tax, and carrying amount of interest in joint ventures and associates, which are equity accounted | Joint ventures and associates 2018 £m 2017 £m 2016 £m Shareholder-backed business 255 196 161 UK with-profits fund (prior to offsetting effect in movement in unallocated surplus) 36 106 21 Total 291 302 182 Asia UK and Europe Total Asset Asset segment and Share of profits from joint ventures and associates, net of related tax Insurance management Insurance management Group total 2018 178 61 36 16 291 2017 121 60 106 15 302 2016 94 54 21 13 182 |
Schedule of direct subsidiary undertakings of the parent company | Direct subsidiary undertakings of the parent company, Prudential plc (shares held directly or via nominees) Key to share classes: Abbreviation Class of share held LBG Limited by Guarantee LPI Limited Partnership Interest MI Membership Interest NSB Non-stock basis OS Ordinary Shares PI Partnership Interest PS Preference Shares U Units Name of entity Classes of Proportion Registered office address and country of incorporation M&G Prudential Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Prudential (US Holdco1) Limited OS 100.00% Prudential Capital Holding Company Limited OS 100.00% Prudential Corporation Asia Limited OS 100.00% 13th Floor, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong Prudential Group Holdings Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK |
Schedule of other subsidiaries, joint ventures, associates and significant holdings | D6 Investments in subsidiary undertakings, joint ventures and associates (a) Dividend restrictions and minimum capital requirements Certain Group subsidiaries and joint ventures are subject to restrictions on the amount of funds they may transfer in the form of cash dividends or otherwise to the parent company. Under UK company law, UK companies can only declare dividends if they have sufficient distributable reserves. Further, UK insurance companies are required to maintain solvency margins in accordance with the rules of the Prudential Regulation Authority. M& GPrudential's asset management company, M&G Investment Management Ltd, is also required to maintain capital in accordance with regulatory requirements before making any distribution to the parent company. Jackson is subject to state laws that limit the dividends payable to its parent company based on statutory capital, surplus and prior year earnings. Dividends in excess of these limitations require prior regulatory approval. The Group’s subsidiaries, joint ventures and associates in Asia may remit dividends to the Group, in general, provided the statutory insurance fund meets the capital adequacy standard required under local statutory regulations and has sufficient distributable reserves. For further details on local capital regulations in Asia please refer to note C12.2. (b) Investments in joint ventures and associates Joint ventures represent arrangements where the controlling parties through contractual or other agreement have the rights to the net assets of the arrangements. The Group has shareholder-backed joint venture insurance and asset management businesses in China with CITIC Group, and a joint venture asset management business in India with ICICI Bank. In addition, there is an asset management joint venture in Hong Kong with Bank of China International Holdings Limited (BOCI) and Takaful insurance joint venture in Malaysia. The Group has various joint ventures relating to property investments held by the UK with-profits fund. The results of these joint ventures are reflected in the movement in the unallocated surplus of the UK with-profits funds and therefore do not affect shareholders’ results. For the Group’s joint ventures that are accounted for by using the equity method, the net of tax results of these operations are included in the Group’s profit before tax. The Group’s associates, which are also accounted for under the equity method, include the Indian insurance entity (with the majority shareholder being ICICI Bank) and PPM South Africa. In addition, the Group has investments in Open-Ended Investment Companies (OEICs), unit trusts, funds holding collateralised debt obligations, property unit trusts and venture capital investments of the UK with-profits funds where the Group has significant influence. As allowed under IAS 28, these investments are accounted for on a fair value through profit or loss basis. The aggregate fair value of associates accounted for at fair value through profit or loss, where there are published price quotations, is approximately £1.2 billion at 31 December 2018 (31 December 2017: £2.4 billion). For joint ventures and associates accounted for using the equity method, the 12 months financial information of these investments up to 31 December (covering the same period as that of the Group) has been used in these consolidated financial statements. The Group’s share of the profits (including short-term fluctuations in investment returns), net of related tax, and carrying amount of interest in joint ventures and associates, which are equity accounted as shown in the consolidated income statement comprises the following: Joint ventures and associates 2018 £m 2017 £m 2016 £m Shareholder-backed business 255 196 161 UK with-profits fund (prior to offsetting effect in movement in unallocated surplus) 36 106 21 Total 291 302 182 Asia UK and Europe Total Asset Asset segment and Share of profits from joint ventures and associates, net of related tax Insurance management Insurance management Group total 2018 178 61 36 16 291 2017 121 60 106 15 302 2016 94 54 21 13 182 There is no other comprehensive income in the joint ventures and associates. There has been no unrecognised share of losses of a joint venture or associate that the Group has stopped recognising in the total income. The joint ventures have no significant contingent liabilities or capital commitments to which the Group is exposed nor does the Group have any significant contingent liabilities or capital commitments in relation to its interests in the joint ventures. (c) Related undertakings In accordance with Section 409 of the Companies Act 2006 a list of Prudential Group’s subsidiaries, joint ventures, associates and significant holdings (being holdings of more than 20 per cent) along with the classes of shares held, the registered office address and the country of incorporation and the effective percentage of equity owned at 31 December 2018 is disclosed below. The definitions of a subsidiary undertaking, joint venture and associate in accordance with the Companies Act 2006 are different from the definition under IFRS. As a result, the related undertakings included within the list below may not be the same as the undertakings consolidated in the Group IFRS financial statements. The Group’s consolidation policy is described in note A3.1(b). Direct subsidiary undertakings of the parent company, Prudential plc (shares held directly or via nominees) Key to share classes: Abbreviation Class of share held LBG Limited by Guarantee LPI Limited Partnership Interest MI Membership Interest NSB Non-stock basis OS Ordinary Shares PI Partnership Interest PS Preference Shares U Units Name of entity Classes of Proportion Registered office address and country of incorporation M&G Prudential Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Prudential (US Holdco1) Limited OS 100.00% Prudential Capital Holding Company Limited OS 100.00% Prudential Corporation Asia Limited OS 100.00% 13th Floor, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong Prudential Group Holdings Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Other subsidiaries, joint ventures, associates and significant holdings of the Group – no shares held directly by the parent company, Prudential plc or its nominees: Classes of shares Proportion Name of entity held held Registered office address and country of incorporation 95th Avenue Retail Building, LLC MI 100.00% 901 S., Ste. 201, Second St., Springfield, IL, 62704-7909, United States Aberdeen Standard Singapore Equity OS 57.73% 21 Church Street, Capital Square 2, #01-01, Singapore 049480 Aberdeen Standard Cash Creation OS 22.91% 28th Floor Bangkok City Tower, 179 South Sathorn Road, Thungmahamek, Sathorn, Bangkok 10120, Thailand Allied Life Brokerage Agency, Inc OS 100.00% 400 East Court Avenue, Des Moines, IA 50309, USA ANRP II (AIV VI FC), L.P. LPI 36.58% Cayman Corporate Centre, 27 Hospital Road, George Town, KY-9008, Cayman Islands BOCHK Aggressive Growth Fund OS 57.19% 27th Floor, Bank of China Tower, 1 Garden Road, Central and Western District, Hong Kong BOCHK Asia Pacific Equity Fund U 27.18% 12th Floor and 25th Floor, Citicorp Centre, 18 Whitfield Road, Causeway Bay, Wan Chai, Hong Kong BOCHK Balanced Growth Fund OS 49.07% BOCHK China Equity Fund OS 66.00% BOCHK Conservative Growth Fund OS 54.00% BOCHK Global Bond Fund OS 30.25% 27/F Bank of China Tower, 1 Garden Road, Central and Western District, Hong Kong BOCHK Investment Funds - BOCHK Hong Kong Equity Fund U 20.25% 12th Floor, 25th Floor, Citicorp Centre, 18 Whitfield Road, Causeway Bay, Wan Chai , Hong Kong BOCI - Prudential Asset Management Limited OS 36.00% 27th Floor, Bank of China Tower, 1 Garden Road, Central and Western District, Hong Kong BOCI - Prudential Trustee Limited OS 36.00% 12th Floor and 25th Floor, Citicorp Centre, 18 Whitfield Road, Causeway Bay, Wan Chai, Hong Kong Brier Capital LLC OS 100.00% 1 Corporate Way, Lansing, MI 48951, USA Brooke (Holdco 1) Inc OS 100.00% 1105 North Market Street, Suite 1300, Wilmington, DE 19801, USA Brooke Life Insurance Company OS 100.00% 1 Corporate Way, Lansing, MI 48951, USA BWAT Retail Nominee (1) Limited OS 50.00% Laurence Pountney Hill, London, EC4R 0HH, UK BWAT Retail Nominee (2) Limited OS 50.00% Calvin F1 GP Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Calvin F2 GP Limited OS 100.00% Canada Property (Trustee) No 1 Limited OS 100.00% Lime Grove House, Green Street, St Helier, JE1 2ST, Jersey Canada Property Holdings Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Cardinal Distribution Park Management Limited OS 66.00% 5th Floor Cavendish House, 39 Waterloo Street, Birmingham, B2 5PP, UK Carraway Guildford (Nominee A) Limited OS 100.00% 13 Castle Street, St Helier, Jersey, JE4 5UT Carraway Guildford (Nominee B) Limited OS 100.00% Carraway Guildford General Partner Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Carraway Guildford Investments Unit Trust OS 100.00% 13 Castle Street, St Helier, Jersey, JE4 5UT Carraway Guildford LP LPI 100.00% Lloyds Chambers, 1 Portsoken Street, London, E1 8HZ, UK Centaurus Retail LLP LPI 50.00% 40 Broadway, London, SW1H 0BU, UK Centre Capital Non-Qualified Investors IV AIV Orion, LP LPI 76.80% 2711 Centreville Road, Suite 400, Wilmington, DE 19808, USA Centre Capital Non-Qualified Investors IV AIV-ELS, LP LPI 76.53% Centre Capital Non-Qualified Investors IV AIV-RA, LP LPI 31.92% Centre Capital Non-Qualified Investors IV, LP LPI 73.06% Centre Capital Non-Qualified Investors V AIV-ELS LP LPI 73.16% Centre Capital Non-Qualified Investors V LP LPI 67.16% CEP IV-A Chicago AIV LP LPI 31.92% 615 South Dupont Highway, Dover, DE 19901, USA CEP IV-A CWV AIV LP LPI 31.95% 850 New Burton Road, Suite 201, Dover, DE 19904, USA CEP IV-A Davenport AIV LP LPI 31.92% 615 South Dupont Highway, Dover, DE 19901, USA CEP IV-A Indy AIV LP LPI 31.92% CEP IV-A NMR AIV LP LPI 31.92% CEP IV-A WBCT AIV LP LPI 31.91% CF Prudential European QIS Fund OS 97.89% 17 Rochester Row, London, SW1P 1QT, UK CF Prudential Japanese QIS Fund OS 97.99% CF Prudential North American QIS Fund OS 98.87% 135 Bishopsgate, London, EC2M 3UR, UK CF Prudential Pacific Markets Trust Fund OS 98.31% Laurence Pountney Hill, London, EC4R 0HH, UK CF Prudential UK Growth QIS Fund OS 98.92% 17 Rochester Row, London, SW1P 1QT, UK CITIC-CP Asset Management Co., Ltd. MI 26.95% No.128 North Zhangjiabang Road, Pudong District, Shanghai, China CITIC-Prudential Fund Management Co., Ltd. MI 49.00% Level 9, HSBC Building, Shanghai IFC, 8 Century Avenue, Pudong, Shanghai, China CITIC-Prudential Life Insurance Company Limited MI 50.00% East Tower, World Financial Centre, No. 1 East Third Ring Middle Road, Chaoyang District, Beijing, China Clairvest Equity Partners IV-A LP LPI 31.87% 22 St Clair Avenue East, Suite 1700, Toronto, ON M4T 2S3, Canada Cribbs Causeway JV Limited OS 50.00% 40 Broadway, London, SW1H 0BU, UK Cribbs Causeway Merchants Association Limited LBG 100.00% The Mall at Cribbs Causeway, Bristol, BS34 5DG, UK Cribbs Mall Nominee (1) Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Curian Capital, LLC OS 100.00% 1 Corporate Way, Lansing, MI 48951, USA Curian Clearing LLC (Michigan) OS 100.00% Digital Infrastructure Investment Partners GP LLP LPI 65.00% Laurence Pountney Hill, London, EC4R 0HH, UK Digital Infrastructure Investment Partners GP1 Limited OS 100.00% Digital Infrastructure Investment Partners LP LPI 100.00% Digital Infrastructure Investment Partners SLP GP LLP LPI 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Digital Infrastructure Investment Partners SLP GP1 Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Digital Infrastructure Investment Partners SLP GP2 Limited OS 100.00% Eastspring Al-Wara' Investments Berhad OS 100.00% Level 25, Menara Hong Leong, No.6 Jalan Damanlela, Bukit Damansara, 50490 Kuala Lumpur, Wilayah Persekutuan, Malaysia Eastspring Asset Management Korea Co. Ltd. OS 100.00% 15th Floor, Shinhan Investment Tower, 70 Yoidae-ro, Youngdungpo-gu, Seoul 07325, Korea Eastspring Infrastructure Debt Fund L.P. PI 100.00% PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands Eastspring Investments - Japan Equity Fund U 89.84% 26, boulevard Royal, Luxembourg, L-2449, Luxembourg Eastspring Investment Management (Shanghai) Company Limited OS 100.00% 3/F Azia Center, 1233 Lujiazui Ring Road, Shanghai 200120, PRC Eastspring Investments - Asian Local Bond Fund OS 97.95% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments - Asian Smaller Companies Fund OS 99.71% Eastspring Investments - Developed and Emerging Asia Equity Fund OS 100.00% Eastspring Investments - Emerging Europe, Middle East and Africa Dynamic Fund OS 100.00% Eastspring Investments - Global Emerging Markets Customized Equity Fund OS 99.90% Eastspring Investments - Global Emerging Markets Dynamic Fund OS 94.89% Eastspring Investments - Global Low Volatility Equity Fund OS 98.67% Eastspring Investments - Global Technology Fund OS 78.82% Eastspring Investments - Japan Fundamental Value Fund OS 98.69% Eastspring Investments - Pan European Fund OS 52.83% 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Singapore 018983 Eastspring Investments - US High Yield Bond Fund OS 31.43% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments (Hong Kong) Limited OS 100.00% 13th Floor, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong Eastspring Investments (Luxembourg) SA OS 100.00% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments (Singapore) Limited OS 100.00% 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Singapore 018983 Eastspring Investments Asia Pacific Equity Fund OS 99.98% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments Asian Bond Fund OS 89.69% Eastspring Investments Asian Dynamic Fund OS 84.57% Eastspring Investments Asian Equity Fund OS 68.69% Eastspring Investments Asian Equity Income Fund OS 77.26% Eastspring Investments Asian High Yield Bond Fund OS 49.64% Eastspring Investments Asian High Yield Bond MY Fund OS 81.00% Eastspring Investments Asian Infrastructure Equity Fund OS 44.47% Eastspring Investments Asian Investment Grade Bond Fund OS 100.00% Eastspring Investments Asian Low Volatility Equity Fund OS 90.00% Eastspring Investments Asian Property Securities Fund OS 95.08% Eastspring Investments- Asian Total Return Bond Fund U 99.13% 26, boulevard Royal, Luxembourg, L-2449, Luxembourg Eastspring Investments Berhad OS 100.00% Level 25, Menara Hong Leong, No.6 Jalan Damanlela, Bukit Damansara, 50490 Kuala Lumpur, Wilayah Persekutuan, Malaysia Eastspring Investments China Equity Fund OS 53.72% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments Dragon Peacock Fund OS 35.18% Eastspring Investments European Inv Grade Bond Fund OS 99.76% Eastspring Investments Fund Management Limited Liability Company MI 100.00% 23rd Floor, Saigon Trade Center, 37 Ton Duc Thang Street, District 1, Ho Chi Minh City, Vietnam Eastspring Investments Global Emerging Markets Bond Fund OS 95.43% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments Global Equity Navigator Fund OS 99.99% Eastspring Investments Global Market Navigator Fund OS 98.88% Eastspring Investments Greater China Equity Fund OS 94.13% Eastspring Investments Hong Kong Equity Fund OS 99.89% Eastspring Investments Incorporated OS 100.00% 874 Walker Road, Suite C, Dover, DE 19904, USA Eastspring Investments India Consumer Equity Open Limited OS 100.00% 3rd Floor, 355 NEX, Rue du Savoir, Cybercity Ebene 72201, Mauritius Eastspring Investments India Equity Fund OS 69.74% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments India Equity Open Limited OS 100.00% 3rd Floor, 355 NEX, Rue du Savoir, Cybercity Ebene 72201, Mauritius Eastspring Investments India Infrastructure Equity Open Limited OS 100.00% Eastspring Investments Latin American Equity Fund OS 91.89% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments Limited OS 100.00% Marunouchi Park Building, 6-1 Marunouchi 2-chome, Chiyoda-Ku, Tokyo, Japan Eastspring Investments Global Multi Asset Income Plus Growth Fund OS 100.00% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments North America Value Fund OS 99.84% Eastspring Investments Services Pte. Ltd. OS 100.00% 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Singapore 018983 Eastspring Investments SICAV-FIS - Alternative Investments Fund OS 100.00% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Investments SICAV-FIS - Asia Pacific Loan Fund OS 100.00% Eastspring Investments SICAV-FIS Africa Equity Fund U 100.00% Eastspring Investments SICAV-FIS Universal USD Bond Fund OS 99.94% Eastspring Investments SICAV-FIS Universal USD Bond II Fund OS 100.00% Eastspring Investments US Bond Fund OS 32.87% Eastspring Investments US Corporate Bond Fund OS 89.61% Eastspring Investments US Equity Income Fund U 99.50% Eastspring Investments US High Inv Grade Bond Fund OS 92.77% Eastspring Investments US Investment Grade Bond Fund OS 56.87% Eastspring Investments US Strategic Income Bond Fund OS 100.00% Eastspring Investments US Total Return Bond Fund OS 100.00% Eastspring Investments Unit Trust - Dragon Peacock Fund U 97.40% Eastspring Investments (Singapore) Limited, Marina Bay Financial Centre, 10, Marina Boulevard, #32-01, Singapore 018983, Singapore Eastspring Investments UT Singapore ASEAN Equity Fund OS 100.00% 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Singapore 018983 Eastspring Investments UT Singapore Select Bond Fund OS 85.39% Eastspring Investments World Value Equity Fund OS 92.28% 26, Boulevard Royal, L-2449, Luxembourg Eastspring Overseas Investment Fund Management (Shanghai) Company Limited OS 100.00% Unit 306-308, 3/F Azia Center, 1233 Lujiazui Ring Road, China (Shanghai) Pilot Free Trade Zone, China Eastspring Real Assets Partners OS 100.00% PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands Eastspring Securities Investment Trust Co., Ltd. OS 99.54% 4th Floor, No. 1 Songzhi Road, Taipei 110, Taiwan Edger Investments Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Edinburgh Park (Management) Limited LBG 100.00% 1 Exchange Crescent, Conference Square, Edinburgh, EH3 8UL, UK Embankment GP Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Embankment Nominee 1 Limited OS 100.00% Embankment Nominee 2 Limited OS 100.00% Empire Holding SARL (In liquidation) OS 100.00% 5, rue Guilllaume Kroll, L-1882, Luxembourg European Specialist Investment Funds - M&G Total Return Credit Investment Fund OS 26.13% 80, route d'Esch, L-1470, Luxembourg Falan GP Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Fashion Square ECO LP (In liquidation) LPI 100.00% 1209 Orange Street, Wilmington, DE 19801, USA Fidelity Funds - Japan Fund OS 23.56% 2A, Rue Albert Borschette, BP 274, Luxembourg, L-1246, Luxembourg First State China Focus Fund OS 60.97% 70 Sir John Rogerson’s Quay Dublin 2 D02 R296 Ireland First State Global Property A OS 42.35% Ground Floor, Tower 1, Darling Park, 201 Sussex Street, Sydney, NSW 2001, Australia Five Hotel Holding, LLC MI 100.00% CT Corporation System, 208 South LaSalle Street, Suite 814, Chicago, IL 60604, USA Folios III Designated Activity Company OS 60.00% Fourth Floor, 76 Lower Baggot Street, Dublin 2 Foudry Properties Limited OS 50.00% Clearwater Court, Vastern Road, Reading RG1 8DB, UK Fubon China Currency Fund OS 25.10% 8F, No.108, Sec. 1, Dunhua S. Rd., Songshan Dist., Taipei Fubon Global Investment Grade Bond Fund OS 47.80% 8F, No.108, Sec. 1, Dunhua S. Rd., Songshan Dist., Taipei Furnival Insurance Company PCC Limited OS 100.00% Third Floor, La Plaiderie Chambers, La Plaiderie, St Peter Port, Guernsey, GY1 1WG Genny GP 1 LLP LPI 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Genny GP 2 Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Genny GP Limited OS 100.00% George Digital GP 1 LLP LPI 100.00% George Digital GP 2 Limited OS 100.00% George Digital GP Limited OS 100.00% GGE GP Limited OS 100.00% Green GP Limited OS 100.00% Greenpark (Reading) General Partner Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Greenpark (Reading) Nominee No. 1 Limited OS 100.00% GreenPark (Reading) Nominee No. 2 Limited OS 100.00% GS Twenty Two Limited OS 100.00% Hermitage Management LLC OS 100.00% 1 Corporate Way, Lansing, MI 48951, USA Holborn Bars Nominees Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Holtwood Limited (in liquidation) OS 100.00% International House, Castle Hill, Victoria Road, Douglas, IM2 4RB, Isle of Man Hudson Seasons, LLC MI 100.00% 874 Walker Road, Suite C, Dover, DE 19904, USA Hyde Holdco 1 Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK ICICI Prudential Asset Management Company Limited OS 49.00% 12th Floor, Narain Manzil, 23, Barakhamba Road, New Delhi 110001, India ICICI Prudential Life Insurance Company Limited OS 25.82% ICICI PruLife Towers, 1089 Appasaheb Marathe Marg, Prabhadevi, Mumbai 400025, India ICICI Prudential Pension Funds Management Company OS 25.82% ICICI Prudential Trust Limited OS 49.00% 12th Floor, Narain Manzil, 23, Barakhamba Road, New Delhi 110001, India Infracapital (AIRI) GP Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital (Belmond) GP Limited OS 100.00% Infracapital (Bio) GP Limited OS 100.00% Infracapital (Churchill) GP 1 Limited OS 100.00% Governors House, 5 Laurence Pountney Hill, London, EC4R 0HH, England Infracapital (Churchill) GP LLP LPI 100.00% Infracapital (GC) GP Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital (Gigaclear) GP 1 Limited OS 100.00% Infracapital (Gigaclear) GP 2 Limited OS 100.00% Infracapital (Gigaclear) GP LLP LPI 100.00% Infracapital (IT PPP) GP Limited OS 100.00% Infracapital (Leo) GP Limited OS 100.00% Infracapital (Sense) GP Limited OS 100.00% Infracapital (TLSB) GP Limited OS 100.00% Infracapital (TLSB) SLP LP LPI 100.00% Infracapital ABP GP Limited (In liquidation) OS 100.00% Infracapital CI II Limited OS 100.00% Infracapital DF II GP LLP LPI 100.00% Infracapital DF II Limited OS 100.00% Infracapital Employee Feeder GP 1 LLP LPI 100.00% Infracapital Employee Feeder GP 2 LLP LPI 100.00% Infracapital Employee Feeder GP Limited OS 100.00% Infracapital F1 GP2 Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Infracapital F2 GP1 Limited OS 100.00% Infracapital F2 GP2 Limited OS 100.00% Infracapital GP 1 LLP LPI 100.00% Infracapital GP 2 LLP LPI 100.00% Infracapital GP II Limited OS 100.00% Infracapital GP Limited OS 100.00% Infracapital Greenfield DF GP LLP LPI 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Greenfield Partners 1 SLP GP LLP LPI 100.00% Infracapital Greenfield Partners 1 SLP GP1 Limited OS 100.00% Infracapital Greenfield Partners 1 SLP GP2 Limited OS 100.00% Infracapital Greenfield Partners I Employee Feeder GP LLP LPI 100.00% Infracapital Greenfield Partners I GP 1 Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Infracapital Greenfield Partners I GP 2 Limited OS 100.00% Infracapital Greenfield Partners I GP LLP LPI 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Greenfield Partners I LP LPI 26.52% Laurence Pountney Hill, London, EC4R 0HH, UK Infracapital Greenfield Partners I SLP2 GP LLP LPI 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Greenfield Partners I Subholdings GP LLP LPI 100.00% Infracapital Greenfield Partners I Subholdings GP1 Limited OS 100.00% Infracapital Partners II LP LPI 31.56% Laurence Pountney Hill, London, EC4R 0HH, UK Infracapital Partners II Subholdings GP LLP LPI 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Partners II Subholdings GP1 Limited OS 100.00% Infracapital Partners III GP SARL OS 100.00% 6, rue Eugène Ruppert, L-245, Luxembourg Infracapital Partners III Subholdings (Euro) GP LLP LPI 100.00% Governors House, 5 Laurence Pountney Hill, London, EC4R 0HH, England Infracapital Partners III Subholdings (Sterling) GP LLP LPI 100.00% Infracapital Partners III Subholdings GP1 Limited OS 100.00% Infracapital Partners III Subholdings GP2 Limited OS 100.00% Infracapital Partners LP LPI 33.04% Laurence Pountney Hill, London, EC4R 0HH, UK Infracapital RF GP Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK Infracapital Sisu GP Limited OS 100.00% Infracapital SLP II GP LLP LPI 100.00% Infracapital SLP II LP LPI 34.00% Infracapital SLP Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK Innisfree M&G PPP LLP LPI 35.00% Boundary House, 91-93 Charterhouse Street, London, EC1M 6HR, UK Innisfree M&G PPP LP LPI 62.22% Invesco Fixed Maturity Selective Emerging Market Bonds 2024 OS 57.31% 22nd Floor, No. 1 Songzhi Road, Taipei, TW-TPE 11047, Taiwan, Province of China INVEST Financial Company Insurance Agency LLC of Illinois OS 100.00% 208 South LaSalle Street, Chicago, IL 60604, USA Jackson Charitable Foundation Inc NSB 100.00% 1 Corporate Way, Lansing, MI 48951, USA Jackson Holdings LLC OS 100.00% 1105 North Market Street, Suite 1300, Wilmington, DE 19801, USA Jackson National Asset Management LLC OS 100.00% 1 Corporate Way, Lansing, MI 48951, USA Jackson National Life (Bermuda) Limited OS 100.00% Cedar House, Hamilton, Bermuda Jackson National Life Distributors LLC OS 100.00% 1209 Orange Street, Wilmington, DE 19801, USA Jackson National Life Insurance Company OS 100.00% 1 Corporate Way, Lansing, MI 48951, USA Jackson National Life Insurance Company of New York OS 100.00% 2900 Westchester Avenue, Suite 305, Purchase, NY 10577, USA Jefferies Capital Partners V, L.P. LPI 21.92% 1209 Orange Street, Wilmington, DE 19801, USA JNL Global Credit LLC OS 100.00% 874 Walker Road, Suite C, City of Dover, County of Kent, State of Delaware 19904, United States Lion Credit Opportunity Fund Public Limited Company - Credit Opportunity Fund XV OS 98.44% 53 Merrion Square South, Dublin 2, D02 PR63, Ireland LIPP SARL (In liquidation) OS 100.00% 5, rue Guilllaume Kroll, L-1882, Luxembourg Livicos Limited (In liquidation) OS 100.00% Montague House, Adelaide Road, Dublin 2, D02 K039, Ireland London Stone Investments F3 Employee Feeder GP LLP LPI 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK London Stone Investments F3 I Limited OS 100.00% London Stone Investments F3 II Limited OS 100.00% London Stone Investments F3 SP GP LLP LPI 100.00% M&G (Guernsey) Limited OS 100.00% Dorey Court, Admiral Park, St. Peter Port, GY1 2HT, Guernsey M&G Alternatives Investment Management Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G Asia Property Fund OS 54.01% 34-38, Avenue de la Liberté, L-1930, Luxembourg M&G Corporate bond Fund OS 30.96% Laurence Pountney Hill, London, EC4R 0HH, UK M&G Dividend Fund OS 58.33% Laurence Pountney Hill, London, EC4R 0HH, UK M&G Episode Macro Fund OS 23.92% M&G European Credit Investment Fund OS 82.48% 80, route d'Esch, L-1470, Luxembourg M&G European High Yield Credit Investment Fund OS 99.99% M&G European Property Fund SICAV-FIS OS 49.74% 34-38, Avenue de la Liberté, L-1930, Luxembourg M&G European Secured Property Income Fund U 23.98% M&G European Select Fund OS 41.53% Laurence Pountney Hill, London, EC4R 0HH, UK M&G (Lux) European Strategic Value Fund OS 79.22% M&G Financial Services Limited OS 100.00% M&G Founders 1 Limited OS 100.00% M&G General Partner Inc OS 100.00% Walker House, 87 Mary Street, Grand Cayman, KY1-9002, Cayman Islands M&G Gilt & Fixed Interest Income Fund OS 49.65% Laurence Pountney Hill, London, EC4R 0HH, UK M&G Group Limited OS 100.00% M&G IMPPP 1 Limited OS 100.00% M&G International Investments Nominees Limited OS 100.00% M&G International Investments SA OS 100.00% 34-38, Avenue de la Liberté, L-1930, Luxembourg M&G International Investments Switzerland AG OS 100.00% Talstrasse 66, 8001 Zurich, Switzerland M&G Investment Funds (10) - M&G Absolute Return Bond Fund OS 41.56% Laurence Pountney Hill, London, EC4R 0HH, UK M&G Investment Funds (10) - M&G Global Listed Infrastructure Fund OS 20.00% M&G Investment Funds (10) - M&G Positive Impact Fund OS 51.96% M&G Investment Funds (4) - M&G Episode Allocation Fund OS 22.35% M&G Investment Funds (7) - M&G Global Convertibles Fund OS 59.02% M&G Investment Management Limited OS 100.00% M&G Investments (Americas) Inc. OS 100.00% 251 Little Falls Drive, Wilmington, DE, 19801 M&G Investments (Australia) Pty Ltd OS 100.00% Level 16, Grosvenor Place, 225 George Street, Sydney, Australia, NSW 2000 M&G Investments (Hong Kong) Limited OS 100.00% 6th Floor, Alexandra House, 18 Chater Road, Central, Hong Kong M&G Investments (Singapore) Pte. Ltd. OS 100.00% 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Singapore 018983 M&G Investments Japan Co., LTD OS 100.00% 3-1 Toranomon, 4 Chome, Minato-ku, Tokyo, Japan M&G Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G Luxembourg SA OS 100.00% 34-38, Avenue de la Liberté, L-1930, Luxembourg M&G Management Services Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G Nominees Limited OS 100.00% M&G PFI 2018 GP LLP LPI 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK M&G PFI 2018 GP1 Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G PFI 2018 GP2 Limited OS 100.00% M&G PFI Carry Partnership 2016 LP LPI 25.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK M&G PFI Partnership 2018 LP LPI 100.00% M&G Platform Nominees Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G Prudential (Holdings) Limited OS 100.00% M&G Prudential Service Company Limited OS 100.00% M&G RE Espana 2016 S.L. OS 100.00% Plaza de Colon, Torre II, Planta 14, 28046, Madrid, Spain M&G RE UKEV (GP1) LLP LPI 100.00% Laurence Pountney Hill, London, EC4R 0HH M&G RE UKEV 1-A LP LPI 100.00% M&G Real Estate Asia Holding Company Pte. Ltd OS 100.00% 10 Marina Boulevard, #32-01, Marina Bay Financial Centre, Singapore 018983 M&G Real Estate Asia PTE. Ltd OS 100.00% M&G Real Estate Debt Finance VI Designated Activity Company OS 46.00% 4th Floor, 76 Lower Baggot Street, Dublin 2, D02 Ek81 M&G Real Estate Funds Management SARL OS 100.00% 34-38, Avenue de la Liberté, L-1930, Luxembourg M&G Real Estate Japan Co. Ltd. OS 100.00% Shiroyama Trust Tower, Tokyo, Japan M&G Real Estate Korea Co. Ltd. OS 100.00% Kyobo Building, Seoul, Korea M&G Real Estate Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G Real Estate UK Enhanced Value LP LPI 50.10% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK M&G Real Estate UKEV (GP) LLP LPI 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G RED Employee Feeder GP Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK M&G RED II Employee Feeder GP Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK M&G RED II GP Limited OS 100.00% Third Floor, La Plaiderie Chambers, La Plaiderie, St Peter Port, Guernsey, GY1 1WG M&G RED II SLP GP Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK M&G RED II SLP LP LPI 28.00% M&G RED III Employee Feeder GP Limited OS 100.00% M&G RED III GP Limited OS 100.00% Third Floor, La Plaiderie Chambers, La Plaiderie, St Peter Port, Guernsey, GY1 1WG M&G RED III SLP GP Limited OS 100.00% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK M&G RED III SLP LP LPI 25.00% M&G RED SLP GP Limited OS 100.00% M&G RPF GP Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G RPF Nominee 1 Limited OS 100.00% M&G RPF Nominee 2 Limited OS 100.00% M&G Securities Limited OS 100.00% M&G SIF Management Company (Ireland) Limited OS 100.00% 78 Sir John Rogerson's Quay, Dublin 2, D02 RK57, Ireland M&G Specialty Finance Fund (GP) Sárl OS 100.00% 51, Avenue J.F. Kennedy, L-1855 Luxembourg M&G Specialty Finance Fund Carry Interest Partnership (GP) Sárl OS 100.00% M&G UK Companies Financing Fund II LP LPI 48.32% Laurence Pountney Hill, London, EC4R 0HH, UK M&G UK Property Fund OS 100.00% 16, Boulevard Royal, L-2449, Luxembourg M&G UK Property GP Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G UK Property Nominee 1 Limited OS 100.00% M&G UK Property Nominee 2 Limited OS 100.00% M&G UK Residential Property Fund LPI 58.42% 34-38, avenue de la Liberté, L-1931, Luxembourg M&G UKCF II GP Limited OS 100.00% Laurence Pountney Hill, London, EC4R 0HH, UK M&G UKEV (SLP) General |
FURTHER ACCOUNTING POLICIES (Ta
FURTHER ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Further accounting policies | |
Schedule of investments in unconsolidated structured entities | 31 December 2018 £m 31 December 2017 £m Separate Other Separate Other account structured account structured OEICs/UTs assets entities OEICs/UTs assets entities Statement of financial position line items Equity securities and portfolio holdings in unit trusts 21,216 128,220 — 20,718 130,528 — Debt securities — — 11,081 — — 10,894 Total 21,216 128,220 11,081 20,718 130,528 10,894 |
Background and critical accou_4
Background and critical accounting policies - Exchange rates applied (Details) | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2018₫ / £ | Dec. 31, 2018₫ / £$ / £ | Dec. 31, 2018₫ / £฿ / £ | Dec. 31, 2018₫ / £$ / £ | Dec. 31, 2018₫ / £RM / £ | Dec. 31, 2018₫ / £₨ / £ | Dec. 31, 2018₫ / £Rp / £ | Dec. 31, 2018₫ / £$ / £ | Dec. 31, 2018₫ / £¥ / £ | Dec. 31, 2017₫ / £ | Dec. 31, 2017₫ / £$ / £ | Dec. 31, 2017₫ / £฿ / £ | Dec. 31, 2017₫ / £$ / £ | Dec. 31, 2017₫ / £RM / £ | Dec. 31, 2017₫ / £₨ / £ | Dec. 31, 2017₫ / £Rp / £ | Dec. 31, 2017₫ / £$ / £ | Dec. 31, 2017₫ / £¥ / £ | Dec. 31, 2016₫ / £ | Dec. 31, 2016₫ / £$ / £ | Dec. 31, 2016₫ / £฿ / £ | Dec. 31, 2016₫ / £$ / £ | Dec. 31, 2016₫ / £RM / £ | Dec. 31, 2016₫ / £₨ / £ | Dec. 31, 2016₫ / £Rp / £ | Dec. 31, 2016₫ / £$ / £ | Dec. 31, 2016₫ / £¥ / £ | Dec. 31, 2018$ / £ | Dec. 31, 2018฿ / £ | Dec. 31, 2018$ / £ | Dec. 31, 2018RM / £ | Dec. 31, 2018₨ / £ | Dec. 31, 2018Rp / £ | Dec. 31, 2018$ / £ | Dec. 31, 2018¥ / £ | Dec. 31, 2017$ / £ | Dec. 31, 2017฿ / £ | Dec. 31, 2017$ / £ | Dec. 31, 2017RM / £ | Dec. 31, 2017₨ / £ | Dec. 31, 2017Rp / £ | Dec. 31, 2017$ / £ | Dec. 31, 2017¥ / £ | Dec. 31, 2016$ / £ | Dec. 31, 2016฿ / £ | Dec. 31, 2016$ / £ | Dec. 31, 2016RM / £ | Dec. 31, 2016₨ / £ | Dec. 31, 2016Rp / £ | Dec. 31, 2016$ / £ | Dec. 31, 2016¥ / £ | Dec. 31, 2015₫ / £ | Dec. 31, 2015$ / £ | Dec. 31, 2015฿ / £ | Dec. 31, 2015$ / £ | Dec. 31, 2015RM / £ | Dec. 31, 2015₨ / £ | Dec. 31, 2015Rp / £ | Dec. 31, 2015$ / £ | Dec. 31, 2015¥ / £ | |
Background and critical accounting policies | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Opening / Closing rate | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 28,136.99 | 28,136.99 | 28,136.99 | 28,136.99 | 28,136.99 | 28,136.99 | 28,136.99 | 28,136.99 | 28,136.99 | 1.27 | 41.47 | 1.74 | 5.26 | 88.92 | 18,314.37 | 9.97 | 8.74 | 1.35 | 44.09 | 1.81 | 5.47 | 86.34 | 18,353.44 | 10.57 | 8.81 | 1.24 | 44.25 | 1.79 | 5.54 | 83.86 | 16,647.30 | 9.58 | 8.59 | 33,140.64 | 1.47 | 53.04 | 2.09 | 6.33 | 97.51 | 20,317.71 | 11.42 | 9.57 |
Average rate | 30,732.53 | 1.34 | 43.13 | 1.80 | 5.38 | 91.25 | 18,987.65 | 10.46 | 8.82 | 29,279.71 | 1.29 | 43.71 | 1.78 | 5.54 | 83.90 | 17,249.38 | 10.04 | 8.71 | 30,292.79 | 1.35 | 47.80 | 1.87 | 5.61 | 91.02 | 18,026.11 | 10.52 | 8.99 |
Background and critical accou_5
Background and critical accounting policies - Exchange movement (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Exchange movement arising recognised in other comprehensive income | |||
Exchange difference, before related tax, recognized in other comprehensive income | £ 344 | £ (465) | £ 1,148 |
Cumulative exchange gain of sold business | 61 | ||
Operating segments | Asia | |||
Exchange movement arising recognised in other comprehensive income | |||
Exchange difference, before related tax, recognized in other comprehensive income | 222 | (295) | 785 |
Cumulative exchange gain of sold business | 61 | ||
Operating segments | US | |||
Exchange movement arising recognised in other comprehensive income | |||
Exchange difference, before related tax, recognized in other comprehensive income | 329 | (477) | 853 |
Operating segments | UK and Europe | |||
Exchange movement arising recognised in other comprehensive income | |||
Exchange difference, before related tax, recognized in other comprehensive income | 3 | 1 | |
Unallocated to a segment (central or other operations) | |||
Exchange movement arising recognised in other comprehensive income | |||
Exchange difference, before related tax, recognized in other comprehensive income | £ (207) | £ 304 | £ (491) |
Background and critical accou_6
Background and critical accounting policies - IFRS 15, Revenue from Contracts with Customers (Details) - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
New accounting pronouncements in 2018 | ||||
Revenue | £ 24,931 | £ 86,390 | £ 71,718 | |
Acquisition costs and other expenditure | [1] | 8,855 | 9,993 | 8,724 |
Restatement resulting from adoption of IFRS 15 | ||||
New accounting pronouncements in 2018 | ||||
Revenue | (234) | (172) | (124) | |
Acquisition costs and other expenditure | £ (234) | £ (172) | £ (124) | |
[1] | The 2017 and 2016 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. |
Background and critical accou_7
Background and critical accounting policies - Various accounting policies (Details) - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Critical accounting policies and estimates | ||||
Profit (loss) before tax, attributable to shareholders | [1] | £ 3,635 | £ 3,296 | £ 2,275 |
Profit (loss) before tax | [1],[2] | 3,309 | 3,970 | 3,212 |
Total segmental operating profit | 4,827 | 4,699 | 4,256 | |
Operating segments | ||||
Critical accounting policies and estimates | ||||
Profit (loss) before tax, attributable to shareholders | 4,536 | 4,154 | 3,168 | |
Profit (loss) before tax | 4,210 | 4,828 | 4,105 | |
Total segmental operating profit | 5,717 | 5,577 | 4,945 | |
Operating segments excluding intra-group amounts | ||||
Critical accounting policies and estimates | ||||
Liabilities requiring classification as relating to insurance or investment contracts | 433,252 | 435,629 | 409,714 | |
Jackson (US insurance operations) | ||||
Critical accounting policies and estimates | ||||
Income statement investment return | (2,014) | |||
Jackson (US insurance operations) | Operating segments | ||||
Critical accounting policies and estimates | ||||
Total segmental operating profit | 1,911 | 2,214 | 2,052 | |
Jackson (US insurance operations) | Operating segments excluding intra-group amounts | ||||
Critical accounting policies and estimates | ||||
Liabilities requiring classification as relating to insurance or investment contracts | £ 185,600 | £ 180,724 | £ 177,626 | |
[1] | 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 with-profits funds after adjusting for taxes borne by policyholders. | |||
[2] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. |
Background and critical accou_8
Background and critical accounting policies - Policies - Deferred acquisition costs (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Jackson (US insurance operations) | ||
Critical accounting policies and estimates | ||
Deferred acquisition costs for insurance contracts | £ 8,727 | £ 8,197 |
Shareholder-backed | ||
Critical accounting policies and estimates | ||
Deferred acquisition costs for insurance contracts | £ 10,095 | £ 9,233 |
Shareholder-backed | Jackson (US insurance operations) | Variable annuities | ||
Critical accounting policies and estimates | ||
Assumptions for amortisation of deferred acquisition costs - period for projected level of investment return | 5 years | |
Assumptions for amortisation of deferred acquisition costs - preceding period of actual investment return | 3 years | |
Assumptions for amortisation of deferred acquisition costs - investment return realisation period | 8 years | |
Shareholder-backed | Jackson (US insurance operations) | Maximum | Variable annuities | ||
Critical accounting policies and estimates | ||
Projected long-term level of returns | 15.00% | |
Shareholder-backed | Jackson (US insurance operations) | Minimum | Variable annuities | ||
Critical accounting policies and estimates | ||
Projected long-term level of returns | 0.00% |
Background and critical accou_9
Background and critical accounting policies - Policies - investments (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
At fair value | ||
Financial instruments | ||
Financial investments at fair value | £ 401,342 | £ 407,270 |
Assets and liabilities at amortised cost and their fair value | ||
Financial instruments | ||
Financial investments | £ 13,300 |
Background and critical acco_10
Background and critical accounting policies - Policies - impairment (Details) £ in Billions | Dec. 31, 2018GBP (£) |
Distribution rights | |
Assets subject to impairment estimates | |
Intangible assets | £ 1.7 |
Available-for-sale securities and assets held at amortised cost | |
Assets subject to impairment estimates | |
Financial investments | £ 54.2 |
Background and critical acco_11
Background and critical accounting policies - New accounting pronouncements (Details) | Dec. 31, 2018 |
Background and critical accounting policies | |
Percentage of the Group's investments valued at FVTPL | 85.00% |
Background and critical acco_12
Background and critical accounting policies - Financial assets presentation based on SPPI test of IFRS 9 (Details) £ in Millions | 12 Months Ended |
Dec. 31, 2018GBP (£) | |
Financial assets | |
Fair value of financial assets that pass the SPPI test | £ 82,194 |
Movement in the fair value of financial assets that pass the SPPI test | (2,067) |
Fair value of all other financial assets, net of derivative liabilities | 363,572 |
Movement in the fair value of all other financial assets, net of derivative liabilities | (20,352) |
Joint ventures and associates accounted for using equity method | |
Financial assets | |
Fair value of financial assets that pass the SPPI test | 1,211 |
Fair value of all other financial assets, net of derivative liabilities | 7,924 |
Movement in the fair value of all other financial assets, net of derivative liabilities | (195) |
Accrued investment income | |
Financial assets | |
Fair value of financial assets that pass the SPPI test | 2,749 |
Accrued investment income | Joint ventures and associates accounted for using equity method | |
Financial assets | |
Fair value of financial assets that pass the SPPI test | 131 |
Other debtors | |
Financial assets | |
Fair value of financial assets that pass the SPPI test | 4,088 |
Other debtors | Joint ventures and associates accounted for using equity method | |
Financial assets | |
Fair value of financial assets that pass the SPPI test | 212 |
Loans | |
Financial assets | |
Fair value of financial assets that pass the SPPI test | 11,914 |
Movement in the fair value of financial assets that pass the SPPI test | (493) |
Fair value of all other financial assets, net of derivative liabilities | 6,505 |
Movement in the fair value of all other financial assets, net of derivative liabilities | (175) |
Loans | Joint ventures and associates accounted for using equity method | |
Financial assets | |
Fair value of financial assets that pass the SPPI test | 117 |
Equity securities and portfolio holdings in unit trusts | |
Financial assets | |
Fair value of all other financial assets, net of derivative liabilities | 214,733 |
Movement in the fair value of all other financial assets, net of derivative liabilities | (16,359) |
Equity securities and portfolio holdings in unit trusts | Joint ventures and associates accounted for using equity method | |
Financial assets | |
Fair value of all other financial assets, net of derivative liabilities | 3,677 |
Movement in the fair value of all other financial assets, net of derivative liabilities | (281) |
Debt securities | |
Financial assets | |
Fair value of financial assets that pass the SPPI test | 39,522 |
Movement in the fair value of financial assets that pass the SPPI test | (1,574) |
Fair value of all other financial assets, net of derivative liabilities | 135,834 |
Movement in the fair value of all other financial assets, net of derivative liabilities | (3,343) |
Debt securities | Joint ventures and associates accounted for using equity method | |
Financial assets | |
Fair value of all other financial assets, net of derivative liabilities | 4,247 |
Movement in the fair value of all other financial assets, net of derivative liabilities | 86 |
Debt securities | AAA | |
Financial assets | |
Fair value of financial assets that pass the SPPI test | 652 |
Debt securities | AA+ to AA- | |
Financial assets | |
Fair value of financial assets that pass the SPPI test | 7,252 |
Debt securities | A+ to A- | |
Financial assets | |
Fair value of financial assets that pass the SPPI test | 10,214 |
Debt securities | BBB+ to BBB- | |
Financial assets | |
Fair value of financial assets that pass the SPPI test | 14,315 |
Debt securities | Below BBB- | |
Financial assets | |
Fair value of financial assets that pass the SPPI test | 843 |
Debt securities | Other | |
Financial assets | |
Fair value of financial assets that pass the SPPI test | 6,246 |
Derivative assets, net of derivative liabilities | |
Financial assets | |
Fair value of all other financial assets, net of derivative liabilities | (12) |
Movement in the fair value of all other financial assets, net of derivative liabilities | (941) |
Other investments | |
Financial assets | |
Fair value of all other financial assets, net of derivative liabilities | 6,512 |
Movement in the fair value of all other financial assets, net of derivative liabilities | 466 |
Deposits | |
Financial assets | |
Fair value of financial assets that pass the SPPI test | 11,796 |
Deposits | Joint ventures and associates accounted for using equity method | |
Financial assets | |
Fair value of financial assets that pass the SPPI test | 355 |
Cash and cash equivalents | |
Financial assets | |
Fair value of financial assets that pass the SPPI test | 12,125 |
Cash and cash equivalents | Joint ventures and associates accounted for using equity method | |
Financial assets | |
Fair value of financial assets that pass the SPPI test | £ 396 |
Background and critical acco_13
Background and critical accounting policies - IFRS 16, Leases - Estimated impact on adoption (Details) - IFRS 16, Leases - Forecast £ in Millions | Jan. 01, 2019GBP (£) |
IFRS 16, Leases | |
Lease liabilities | £ 800 |
Right-of-use assets | 800 |
Retained earnings | £ 0 |
Analysis of performance by se_3
Analysis of performance by segment - Profit before tax (Details) - GBP (£) £ / shares in Units, £ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Other income and expenditure | ||||
Interest payable on core structural borrowings | £ (410) | £ (425) | £ (360) | |
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 4,827 | 4,699 | 4,256 | |
Short-term fluctuations in investment returns on shareholder-backed business | (558) | (1,563) | (1,678) | |
Amortisation of acquisition accounting adjustments | (46) | (63) | (76) | |
(Loss) gain on disposal of businesses and corporate transactions | (588) | 223 | (227) | |
Profit (loss) before tax attributable to shareholders | [1] | 3,635 | 3,296 | 2,275 |
Tax charge attributable to shareholders' returns | (622) | (906) | (354) | |
Profit for the year | 3,013 | 2,390 | 1,921 | |
Attributable to: | ||||
Equity holders of the Company | 3,010 | 2,389 | £ 1,921 | |
Non-controlling interests | £ 3 | £ 1 | ||
Basic earnings per share | ||||
Based on adjusted IFRS operating profit based on longer-term investment returns | £ 1.566 | £ 1.452 | £ 1.313 | |
Based on profit for the year | £ 1.169 | £ 0.931 | £ 0.750 | |
Operating segments | ||||
Other income and expenditure | ||||
Interest payable on core structural borrowings | £ (15) | £ (16) | £ (15) | |
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 5,717 | 5,577 | 4,945 | |
Short-term fluctuations in investment returns on shareholder-backed business | (578) | (1,583) | (1,474) | |
Amortisation of acquisition accounting adjustments | (46) | (63) | (76) | |
(Loss) gain on disposal of businesses and corporate transactions | (557) | 223 | (227) | |
Profit (loss) before tax attributable to shareholders | 4,536 | 4,154 | 3,168 | |
Operating segments | Asia | ||||
Other income and expenditure | ||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 2,164 | 1,975 | 1,644 | |
Short-term fluctuations in investment returns on shareholder-backed business | (512) | (1) | (225) | |
Amortisation of acquisition accounting adjustments | (4) | (7) | (8) | |
(Loss) gain on disposal of businesses and corporate transactions | (11) | 61 | (227) | |
Profit (loss) before tax attributable to shareholders | 1,637 | 2,028 | 1,184 | |
Tax charge attributable to shareholders' returns | (277) | (253) | (256) | |
Operating segments | Asia insurance operations | ||||
Other income and expenditure | ||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 1,982 | 1,799 | 1,503 | |
Operating segments | Asia asset management | ||||
Other income and expenditure | ||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 182 | 176 | 141 | |
Operating segments | US | ||||
Other income and expenditure | ||||
Interest payable on core structural borrowings | (15) | (16) | (15) | |
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 1,919 | 2,224 | 2,048 | |
Short-term fluctuations in investment returns on shareholder-backed business | (100) | (1,568) | (1,455) | |
Amortisation of acquisition accounting adjustments | (42) | (56) | (68) | |
(Loss) gain on disposal of businesses and corporate transactions | (38) | 162 | ||
Profit (loss) before tax attributable to shareholders | 1,739 | 762 | 525 | |
Tax charge attributable to shareholders' returns | (255) | (508) | 66 | |
Operating segments | Jackson (US insurance operations) | ||||
Other income and expenditure | ||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 1,911 | 2,214 | 2,052 | |
Short-term fluctuations in investment returns on shareholder-backed business | (100) | (1,568) | (1,455) | |
Operating segments | Asset management (US) | ||||
Other income and expenditure | ||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 8 | 10 | (4) | |
Operating segments | UK and Europe | ||||
Other income and expenditure | ||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 1,634 | 1,378 | 1,253 | |
Short-term fluctuations in investment returns on shareholder-backed business | 34 | (14) | 206 | |
(Loss) gain on disposal of businesses and corporate transactions | (508) | |||
Profit (loss) before tax attributable to shareholders | 1,160 | 1,364 | 1,459 | |
Tax charge attributable to shareholders' returns | (216) | (267) | (275) | |
Operating segments | UK and Europe insurance operations | ||||
Other income and expenditure | ||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 1,157 | 878 | 828 | |
Operating segments | Long-term business (UK and Europe insurance operations) | ||||
Other income and expenditure | ||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 1,138 | 861 | 799 | |
Operating segments | General insurance commission (UK and Europe insurance operations) | ||||
Other income and expenditure | ||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 19 | 17 | 29 | |
Operating segments | UK and Europe asset management | ||||
Other income and expenditure | ||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 477 | 500 | 425 | |
Other income and expenditure | ||||
Other income and expenditure | ||||
Investment return and other income | 52 | 11 | 28 | |
Interest payable on core structural borrowings | (410) | (425) | (360) | |
Corporate expenditure | (367) | (361) | (334) | |
SII implementation costs | (28) | |||
Total other income and expenditure | (725) | (775) | (694) | |
Restructuring costs | £ (165) | £ (103) | (38) | |
Interest received from tax settlement | £ 43 | |||
[1] | 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 with-profits funds after adjusting for taxes borne by policyholders. |
Analysis of performance by se_4
Analysis of performance by segment - UK and Europe asset management (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating profit based on longer-term investment returns: | |||
Staff costs | £ (1,838) | £ (1,985) | £ (1,885) |
Adjusted IFRS operating profit based on longer-term investment returns | 4,827 | 4,699 | 4,256 |
Operating segments | |||
Operating profit based on longer-term investment returns: | |||
Adjusted IFRS operating profit based on longer-term investment returns | 5,717 | 5,577 | 4,945 |
Operating segments | UK and Europe asset management | |||
Operating profit based on longer-term investment returns: | |||
Asset management fee income | 1,098 | 1,027 | 900 |
Other income | 2 | 7 | 23 |
Staff costs | (384) | (400) | (332) |
Other costs | (270) | (202) | (212) |
Underlying profit before performance-related fees | 446 | 432 | 379 |
Share of associate results | 16 | 15 | 13 |
Performance-related fees | 15 | 53 | 33 |
Adjusted IFRS operating profit based on longer-term investment returns | 477 | £ 500 | £ 425 |
Staff and other costs incurred preparing for Brexit | £ 27 |
Analysis of performance by se_5
Analysis of performance by segment - Short-term fluctuations in investment returns (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | £ (558) | £ (1,563) | £ (1,678) |
Operating segments | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | (578) | (1,583) | (1,474) |
Operating segments | Asia | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | (512) | (1) | (225) |
Operating segments | US | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | (100) | (1,568) | (1,455) |
Operating segments | Jackson (US insurance operations) | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | (100) | (1,568) | (1,455) |
Operating segments | Jackson (US insurance operations) | Net equity hedge result | |||
Analysis of operating segments | |||
Fair value movements on equity hedge instruments | 299 | (1,871) | (1,786) |
Accounting value movements on the variable and fixed index annuity guarantee liabilities | (894) | (99) | (188) |
Fee assessments net of claim payments | 537 | 480 | 387 |
Short-term fluctuations in investment returns on shareholder-backed business | (58) | (1,490) | (1,587) |
Reduction in profit before tax from routine updates to actuarial assumptions for guarantee liabilities | 143 | 382 | |
Operating segments | Jackson (US insurance operations) | Other than equity-related derivatives | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | (64) | (36) | (126) |
Operating segments | Jackson (US insurance operations) | Debt securities | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | (31) | (73) | 201 |
Operating 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 | 38 | 12 | 35 |
Operating segments | Jackson (US insurance operations) | Other items | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | 15 | 19 | 22 |
Operating segments | Jackson (US insurance operations) | Amortisation to the income statement, Non-operating profit | |||
Analysis of operating segments | |||
Related credit for amortisation of deferred acquisition costs | (114) | 462 | 565 |
Operating segments | UK and Europe | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | 34 | (14) | 206 |
Unallocated to a segment (central or other operations) | |||
Analysis of operating segments | |||
Short-term fluctuations in investment returns on shareholder-backed business | £ 20 | £ 20 | £ (204) |
Analysis of performance by se_6
Analysis of performance by segment - Short-term fluctuations related to debt securities - (Details) £ in Millions, $ in Millions | 12 Months Ended | |||||
Dec. 31, 2018USD ($) | Dec. 31, 2018GBP (£) | Dec. 31, 2017USD ($) | Dec. 31, 2017GBP (£) | Dec. 31, 2016USD ($) | Dec. 31, 2016GBP (£) | |
Interest-related realised (losses) gains: | ||||||
Total short-term fluctuations related to debt securities | £ (558) | £ (1,563) | £ (1,678) | |||
Jackson (US insurance operations) | Debt securities | ||||||
(Charges) credits in the year: | ||||||
Risk margin allowance deducted from adjusted IFRS operating profit based on longer-term investment returns | $ 104 | 77 | $ 112 | 86 | $ 120 | 89 |
Operating segments | ||||||
Interest-related realised (losses) gains: | ||||||
Total short-term fluctuations related to debt securities | (578) | (1,583) | (1,474) | |||
Operating segments | Jackson (US insurance operations) | ||||||
Interest-related realised (losses) gains: | ||||||
Total short-term fluctuations related to debt securities | (100) | (1,568) | (1,455) | |||
Operating segments | Jackson (US insurance operations) | Debt securities | ||||||
(Charges) credits in the year: | ||||||
Losses on sales of impaired and deteriorating bonds | (4) | (3) | (94) | |||
Defaults | (4) | |||||
Bond write-downs | (4) | (2) | (35) | |||
Recoveries/reversals | 19 | 10 | 15 | |||
Total credits (charge) in the year | 11 | 5 | (118) | |||
Risk margin allowance deducted from adjusted IFRS operating profit based on longer-term investment returns | 77 | 86 | 89 | |||
Total credits (charge) in the year, net of risk margin allowance | 88 | 91 | (29) | |||
Interest-related realised (losses) gains: | ||||||
Losses arising in the year | (8) | (43) | 376 | |||
Less: Amortisation of gains and losses arising in current and prior years to adjusted IFRS operating profit based on longer-term investment returns | (116) | (140) | (135) | |||
Total interest-related realised (losses) gains | (124) | (183) | 241 | |||
Related amortisation of deferred acquisition costs | 5 | 19 | (11) | |||
Total short-term fluctuations related to debt securities | £ (31) | £ (73) | £ 201 |
Analysis of performance by se_7
Analysis of performance by segment - Risk margin reserve (Details) £ in Millions, $ in Millions | 12 Months Ended | ||||||||
Dec. 31, 2018USD ($) | Dec. 31, 2018GBP (£) | Dec. 31, 2017USD ($) | Dec. 31, 2017GBP (£) | Dec. 31, 2016USD ($) | Dec. 31, 2016GBP (£) | Dec. 31, 2018GBP (£) | Dec. 31, 2017GBP (£) | ||
Risk margin reserve | |||||||||
Debt securities | £ | [1] | £ 175,356 | £ 171,374 | ||||||
Jackson (US insurance operations) | Debt securities | |||||||||
Risk margin reserve | |||||||||
RMR (as a percent) | 0.18% | 0.21% | 0.21% | 0.18% | 0.21% | ||||
Annual expected loss | $ (104) | £ (77) | $ (112) | £ (86) | $ (120) | £ (89) | |||
Related amortisation of deferred acquisition costs | 22 | 15 | 21 | 15 | 23 | 17 | |||
Risk margin reserve charge to adjusted IFRS operating profit for longer-term credit related losses | (82) | (62) | (91) | (71) | (97) | (72) | |||
Pre-tax net unrealised losses on debt securities classified as available-for-sale | £ | (1,371) | 541 | 48 | ||||||
Jackson (US insurance operations) | Debt securities | Cost/Gross amount | Average | |||||||||
Risk margin reserve | |||||||||
Debt securities | $ 57,138 | $ 55,290 | $ 56,418 | ||||||
Jackson (US insurance operations) | Debt securities | A3 or higher | |||||||||
Risk margin reserve | |||||||||
RMR (as a percent) | 0.10% | 0.12% | 0.12% | 0.10% | 0.12% | ||||
Annual expected loss | $ (31) | (23) | $ (33) | (25) | $ (36) | (27) | |||
Jackson (US insurance operations) | Debt securities | A3 or higher | Cost/Gross amount | Average | |||||||||
Risk margin reserve | |||||||||
Debt securities | $ 29,982 | $ 27,277 | $ 29,051 | ||||||
Jackson (US insurance operations) | Debt securities | Baa1, 2 or 3 | |||||||||
Risk margin reserve | |||||||||
RMR (as a percent) | 0.21% | 0.22% | 0.24% | 0.21% | 0.22% | ||||
Annual expected loss | $ (55) | (40) | $ (58) | (45) | $ (62) | (46) | |||
Jackson (US insurance operations) | Debt securities | Baa1, 2 or 3 | Cost/Gross amount | Average | |||||||||
Risk margin reserve | |||||||||
Debt securities | $ 25,814 | $ 26,626 | $ 25,964 | ||||||
Jackson (US insurance operations) | Debt securities | Ba1, 2 or 3 | |||||||||
Risk margin reserve | |||||||||
RMR (as a percent) | 0.98% | 1.03% | 1.07% | 0.98% | 1.03% | ||||
Annual expected loss | $ (10) | (8) | $ (11) | (8) | $ (11) | (8) | |||
Jackson (US insurance operations) | Debt securities | Ba1, 2 or 3 | Cost/Gross amount | Average | |||||||||
Risk margin reserve | |||||||||
Debt securities | $ 1,042 | $ 1,046 | $ 1,051 | ||||||
Jackson (US insurance operations) | Debt securities | B1, 2 or 3 | |||||||||
Risk margin reserve | |||||||||
RMR (as a percent) | 2.64% | 2.70% | 2.95% | 2.64% | 2.70% | ||||
Annual expected loss | $ (8) | £ (6) | $ (9) | (7) | $ (9) | (7) | |||
Jackson (US insurance operations) | Debt securities | B1, 2 or 3 | Cost/Gross amount | Average | |||||||||
Risk margin reserve | |||||||||
Debt securities | $ 289 | $ 318 | $ 312 | ||||||
Jackson (US insurance operations) | Debt securities | Below B3 | |||||||||
Risk margin reserve | |||||||||
RMR (as a percent) | 3.69% | 3.78% | 3.81% | 3.69% | 3.78% | ||||
Annual expected loss | $ (1) | £ (1) | $ (2) | £ (1) | |||||
Jackson (US insurance operations) | Debt securities | Below B3 | Cost/Gross amount | Average | |||||||||
Risk margin reserve | |||||||||
Debt securities | $ 11 | $ 23 | $ 40 | ||||||
[1] | Included within equity securities and portfolio holdings in unit trusts, debt securities and other investments are £8,278 million (31 December 2017: £8,232 million) of lent securities and assets subject to repurchase agreements. |
Analysis of performance by se_8
Analysis of performance by segment - Performance measure - (Details) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018GBP (£)segment | Dec. 31, 2017GBP (£) | Dec. 31, 2016GBP (£) | |
Analysis of operating segments | |||
Number of operating segments | segment | 3 | ||
Unamortised interest-related realised gains and losses related to previously sold bonds | £ 629 | £ 855 | £ 969 |
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) | 5.30% | 4.30% | 3.20% |
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) | 17.60% | 17.20% | 13.90% |
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% | 6.10% | 5.50% |
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) | 7.20% | 6.50% | 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% | 8.10% | 7.50% |
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) | 9.20% | 8.50% | 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 | £ 2,146 | £ 1,759 | £ 1,405 |
Operations within segments | Jackson (US insurance operations) | Non-linked shareholder-backed | Equity-type securities | |||
Equity-type securities | |||
Financial investments | £ 1,359 | £ 946 | £ 1,323 |
Analysis of performance by se_9
Analysis of performance by segment - Segmental income statement (Details) - GBP (£) £ in Millions | 1 Months Ended | 12 Months Ended | |||
Oct. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Analysis of operating segments | |||||
Gross premiums earned | £ 47,224 | £ 44,005 | £ 38,981 | ||
Outward reinsurance premiums | [1] | (14,023) | (2,062) | (2,020) | |
Earned premiums, net of reinsurance | 33,201 | 41,943 | 36,961 | ||
Other income | [2] | 1,993 | 2,258 | 2,246 | |
Total revenue | 35,194 | 44,201 | 39,207 | ||
Interest income | 6,192 | 6,497 | 7,647 | ||
Other investment return | (16,455) | 35,692 | 24,864 | ||
Total revenue, net of reinsurance | 24,931 | 86,390 | 71,718 | ||
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (12,568) | (72,532) | (59,366) | ||
Acquisition costs and other operating expenditure | [2] | (8,855) | (9,993) | (8,724) | |
Interest payable on core structural borrowings | (410) | (425) | (360) | ||
(Loss) gain on disposal of businesses and corporate transactions | (80) | 223 | |||
Remeasurement of the sold Korea life business | 5 | (238) | |||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | (21,913) | (82,722) | (68,688) | ||
Share of profits from joint ventures and associates, net of related tax | 291 | 302 | 182 | ||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | [3],[4] | 3,309 | 3,970 | 3,212 | |
Tax credit (charge) attributable to policyholders' returns | 326 | (674) | (937) | ||
Profit (loss) before tax attributable to shareholders | [4] | 3,635 | 3,296 | 2,275 | |
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 4,827 | 4,699 | 4,256 | ||
Short-term fluctuations in investment returns on shareholder-backed business | (558) | (1,563) | (1,678) | ||
Amortisation of acquisition accounting adjustments | (46) | (63) | (76) | ||
(Loss) gain on disposal of businesses and corporate transactions | (588) | 223 | (227) | ||
Profit (loss) before tax attributable to shareholders | [4] | 3,635 | 3,296 | 2,275 | |
Income from financial instruments that are not held at fair value through profit or loss | 20 | 7 | 8 | ||
Interest income accrued in respect of impaired securities | 4 | 3 | 3 | ||
Hong Kong | |||||
Analysis of operating segments | |||||
Total revenue | 7,719 | 7,269 | 6,313 | ||
Operating segments excluding intra-group amounts | |||||
Analysis of operating segments | |||||
Gross premiums earned | 47,186 | 43,978 | |||
Outward reinsurance premiums | (14,021) | (2,058) | |||
Earned premiums, net of reinsurance | 33,165 | 41,920 | 36,961 | ||
Other income | 1,954 | 2,210 | 2,159 | ||
Total revenue | 35,119 | 44,130 | 39,120 | ||
Operating segments | |||||
Analysis of operating segments | |||||
Gross premiums earned | 38,981 | ||||
Outward reinsurance premiums | (2,020) | ||||
Interest income | 6,141 | 6,430 | 7,543 | ||
Other investment return | (16,520) | 35,682 | 25,081 | ||
Total revenue, net of reinsurance | 24,835 | 86,351 | 71,828 | ||
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (12,549) | (72,521) | (59,366) | ||
Acquisition costs and other operating expenditure | (8,303) | (9,516) | (8,286) | ||
Interest payable on core structural borrowings | (15) | (16) | (15) | ||
(Loss) gain on disposal of businesses and corporate transactions | (49) | 223 | |||
Remeasurement of the sold Korea life business | 5 | (238) | |||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | (20,916) | (81,825) | (67,905) | ||
Share of profits from joint ventures and associates, net of related tax | 291 | 302 | 182 | ||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 4,210 | 4,828 | 4,105 | ||
Tax credit (charge) attributable to policyholders' returns | 326 | (674) | (937) | ||
Profit (loss) before tax attributable to shareholders | 4,536 | 4,154 | 3,168 | ||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 5,717 | 5,577 | 4,945 | ||
Short-term fluctuations in investment returns on shareholder-backed business | (578) | (1,583) | (1,474) | ||
Amortisation of acquisition accounting adjustments | (46) | (63) | (76) | ||
(Loss) gain on disposal of businesses and corporate transactions | (557) | 223 | (227) | ||
Profit (loss) before tax attributable to shareholders | 4,536 | 4,154 | 3,168 | ||
Unallocated to a segment (other operations) - including intra-group eliminations | |||||
Analysis of operating segments | |||||
Total revenue, net of reinsurance | 96 | 39 | (110) | ||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | (901) | (858) | (893) | ||
Profit (loss) before tax attributable to shareholders | (901) | (858) | (893) | ||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | (890) | (878) | (689) | ||
Short-term fluctuations in investment returns on shareholder-backed business | 20 | 20 | (204) | ||
(Loss) gain on disposal of businesses and corporate transactions | (31) | ||||
Profit (loss) before tax attributable to shareholders | (901) | (858) | (893) | ||
Elimination of intra-group amounts | |||||
Analysis of operating segments | |||||
Total revenue | (95) | (109) | (84) | ||
Unallocated to a segment (central or other operations) | |||||
Analysis of operating segments | |||||
Gross premiums earned | 38 | 27 | |||
Outward reinsurance premiums | (2) | (4) | |||
Earned premiums, net of reinsurance | 36 | 23 | |||
Other income | 39 | 48 | 87 | ||
Total revenue | 75 | 71 | 87 | ||
Interest income | 51 | 67 | 104 | ||
Other investment return | 65 | 10 | (217) | ||
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (19) | (11) | |||
Acquisition costs and other operating expenditure | (552) | (477) | (438) | ||
Interest payable on core structural borrowings | (395) | (409) | (345) | ||
(Loss) gain on disposal of businesses and corporate transactions | (31) | ||||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | (997) | (897) | (783) | ||
Profit (loss) before tax attributable to shareholders | (901) | (858) | (893) | ||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | (890) | (878) | (689) | ||
Short-term fluctuations in investment returns on shareholder-backed business | 20 | 20 | (204) | ||
Profit (loss) before tax attributable to shareholders | (901) | (858) | (893) | ||
Asia | Operating segments excluding intra-group amounts | |||||
Analysis of operating segments | |||||
Gross premiums earned | 16,469 | 15,688 | |||
Outward reinsurance premiums | (575) | (656) | |||
Earned premiums, net of reinsurance | 15,894 | 15,032 | 13,358 | ||
Other income | 309 | 307 | 253 | ||
Total revenue | 16,203 | 15,339 | 13,611 | ||
Asia | Operating segments | |||||
Analysis of operating segments | |||||
Gross premiums earned | 14,006 | ||||
Outward reinsurance premiums | (648) | ||||
Interest income | 1,086 | 932 | 875 | ||
Other investment return | (3,240) | 8,063 | 2,042 | ||
Total revenue, net of reinsurance | 14,091 | 24,374 | 16,555 | ||
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (8,736) | (18,291) | (11,442) | ||
Acquisition costs and other operating expenditure | (3,866) | (4,053) | (3,684) | ||
(Loss) gain on disposal of businesses and corporate transactions | (11) | 61 | |||
Remeasurement of the sold Korea life business | 5 | (238) | |||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | (12,613) | (22,278) | (15,364) | ||
Share of profits from joint ventures and associates, net of related tax | 239 | 181 | 148 | ||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 1,717 | 2,277 | 1,339 | ||
Tax credit (charge) attributable to policyholders' returns | (80) | (249) | (155) | ||
Profit (loss) before tax attributable to shareholders | 1,637 | 2,028 | 1,184 | ||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 2,164 | 1,975 | 1,644 | ||
Short-term fluctuations in investment returns on shareholder-backed business | (512) | (1) | (225) | ||
Amortisation of acquisition accounting adjustments | (4) | (7) | (8) | ||
(Loss) gain on disposal of businesses and corporate transactions | (11) | 61 | (227) | ||
Profit (loss) before tax attributable to shareholders | 1,637 | 2,028 | 1,184 | ||
Asia | Elimination of intra-group amounts | |||||
Analysis of operating segments | |||||
Total revenue | (42) | (40) | (27) | ||
US | Operating segments excluding intra-group amounts | |||||
Analysis of operating segments | |||||
Gross premiums earned | 17,656 | 15,164 | |||
Outward reinsurance premiums | (309) | (352) | |||
Earned premiums, net of reinsurance | 17,347 | 14,812 | 14,318 | ||
Other income | 50 | 669 | 684 | ||
Total revenue | 17,397 | 15,481 | 15,002 | ||
US | Operating segments | |||||
Analysis of operating segments | |||||
Gross premiums earned | 14,685 | ||||
Outward reinsurance premiums | (367) | ||||
Interest income | 2,016 | 2,085 | 2,151 | ||
Other investment return | (6,804) | 16,448 | 5,461 | ||
Total revenue, net of reinsurance | 12,659 | 34,078 | 22,667 | ||
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (8,790) | (31,205) | (20,214) | ||
Acquisition costs and other operating expenditure | (2,077) | (2,257) | (1,913) | ||
Interest payable on core structural borrowings | (15) | (16) | (15) | ||
(Loss) gain on disposal of businesses and corporate transactions | (38) | 162 | |||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | (10,920) | (33,316) | (22,142) | ||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 1,739 | 762 | 525 | ||
Profit (loss) before tax attributable to shareholders | 1,739 | 762 | 525 | ||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 1,919 | 2,224 | 2,048 | ||
Short-term fluctuations in investment returns on shareholder-backed business | (100) | (1,568) | (1,455) | ||
Amortisation of acquisition accounting adjustments | (42) | (56) | (68) | ||
(Loss) gain on disposal of businesses and corporate transactions | (38) | 162 | |||
Profit (loss) before tax attributable to shareholders | 1,739 | 762 | 525 | ||
US | Elimination of intra-group amounts | |||||
Analysis of operating segments | |||||
Total revenue | (50) | (64) | (53) | ||
Jackson (US insurance operations) | |||||
Analysis of operating profit | |||||
Percentage of reinsurance agreement | 100.00% | ||||
Jackson (US insurance operations) | Operating segments excluding intra-group amounts | |||||
Analysis of operating segments | |||||
Earned premiums, net of reinsurance | 17,347 | ||||
Other income | 5 | ||||
Total revenue | 17,352 | ||||
Jackson (US insurance operations) | Operating segments | |||||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 1,911 | 2,214 | 2,052 | ||
Short-term fluctuations in investment returns on shareholder-backed business | (100) | (1,568) | (1,455) | ||
Jackson (US insurance operations) | Operations within segments | |||||
Analysis of operating segments | |||||
Gross premiums earned | £ 3,700 | ||||
Interest income | 2,016 | ||||
Other investment return | (6,784) | ||||
Total revenue, net of reinsurance | 12,584 | ||||
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | 4,100 | (8,790) | |||
Acquisition costs and other operating expenditure | £ 400 | (2,010) | |||
Interest payable on core structural borrowings | (15) | ||||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | (10,815) | ||||
Profit (loss) before tax attributable to shareholders | 1,769 | ||||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 1,911 | ||||
Short-term fluctuations in investment returns on shareholder-backed business | (100) | ||||
Amortisation of acquisition accounting adjustments | (42) | ||||
Profit (loss) before tax attributable to shareholders | 1,769 | ||||
Percentage of reinsurance agreement | 100.00% | ||||
Asset management (US) | Operating segments excluding intra-group amounts | |||||
Analysis of operating segments | |||||
Other income | 45 | ||||
Total revenue | 45 | ||||
Asset management (US) | Operating segments | |||||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 8 | 10 | (4) | ||
Broker-dealer fees income | 542 | 550 | |||
Asset management (US) | Operations within segments | |||||
Analysis of operating segments | |||||
Other investment return | (20) | ||||
Total revenue, net of reinsurance | 143 | ||||
Acquisition costs and other operating expenditure | (135) | ||||
(Loss) gain on disposal of businesses and corporate transactions | (38) | ||||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | (173) | ||||
Profit (loss) before tax attributable to shareholders | (30) | ||||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 8 | ||||
(Loss) gain on disposal of businesses and corporate transactions | (38) | ||||
Profit (loss) before tax attributable to shareholders | (30) | ||||
Broker-dealer fees income | 542 | 550 | |||
UK and Europe | Provision for review of past annuity sales | |||||
Analysis of operating profit | |||||
Income recognized for expected insurance recoveries | 166 | ||||
UK and Europe | Shareholder annuity portfolio being sold to Rothesay Life | |||||
Analysis of operating segments | |||||
Outward reinsurance premiums | (12,149) | ||||
UK and Europe | Operating segments excluding intra-group amounts | |||||
Analysis of operating segments | |||||
Gross premiums earned | 13,061 | 13,126 | |||
Outward reinsurance premiums | (13,137) | (1,050) | |||
Earned premiums, net of reinsurance | (76) | 12,076 | 9,285 | ||
Other income | 1,595 | 1,234 | 1,222 | ||
Total revenue | 1,519 | 13,310 | 10,507 | ||
UK and Europe | Operating segments | |||||
Analysis of operating segments | |||||
Gross premiums earned | 10,290 | ||||
Outward reinsurance premiums | (1,005) | ||||
Interest income | 3,039 | 3,413 | 4,517 | ||
Other investment return | (6,476) | 11,171 | 17,578 | ||
Total revenue, net of reinsurance | (1,915) | 27,899 | 32,606 | ||
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | 4,977 | (23,025) | (27,710) | ||
Acquisition costs and other operating expenditure | (2,360) | (3,206) | (2,689) | ||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | 2,617 | (26,231) | (30,399) | ||
Share of profits from joint ventures and associates, net of related tax | 52 | 121 | 34 | ||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 754 | 1,789 | 2,241 | ||
Tax credit (charge) attributable to policyholders' returns | 406 | (425) | (782) | ||
Profit (loss) before tax attributable to shareholders | 1,160 | 1,364 | 1,459 | ||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 1,634 | 1,378 | 1,253 | ||
Short-term fluctuations in investment returns on shareholder-backed business | 34 | (14) | 206 | ||
(Loss) gain on disposal of businesses and corporate transactions | (508) | ||||
Profit (loss) before tax attributable to shareholders | 1,160 | 1,364 | 1,459 | ||
UK and Europe | Elimination of intra-group amounts | |||||
Analysis of operating segments | |||||
Total revenue | (3) | (5) | (4) | ||
Asset management operations | |||||
Analysis of operating segments | |||||
Other income | £ 1,489 | £ 1,371 | £ 1,147 | ||
[1] | Outward reinsurance premiums include the £(12,149) million paid during the year in respect of the reinsurance of the UK annuity portfolio. The associated increase in reinsurance assets is included in outward reinsurers’ share of benefits and claims and the consequential change to policyholder liabilities is included in benefits and claims. See note D1.1 for further details. | ||||
[2] | The 2017 and 2016 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 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 with-profits funds after adjusting for taxes borne by policyholders. |
Analysis of performance by s_10
Analysis of performance by segment - Other investment return (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Analysis of operating segments | |||
Realised gains (losses) on available-for-sale securities, previously recognised in other comprehensive income | £ 11 | £ (26) | £ 270 |
Realised (losses) gains on loans | (4) | 9 | 91 |
Dividends | 2,362 | 2,654 | 2,283 |
Other investment income | 1,782 | 1,558 | 781 |
Other investment return | (16,455) | 35,692 | 24,864 |
Realized gains and losses on investments recognised in the income statement | 8,200 | 5,700 | (1,600) |
Securities | |||
Analysis of operating segments | |||
Realised and unrealised (losses) gains on investments at fair value through profit or loss | (19,665) | 33,121 | 28,489 |
Derivatives | |||
Analysis of operating segments | |||
Realised and unrealised (losses) gains on investments at fair value through profit or loss | £ (941) | £ (1,624) | £ (7,050) |
Analysis of performance by s_11
Analysis of performance by segment - Additional analysis of performance by segment components (Details) - GBP (£) £ in Millions | 1 Months Ended | 12 Months Ended | |||
Oct. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Additional analysis of performance by segment | |||||
Earned premiums, net of reinsurance | £ 33,201 | £ 41,943 | £ 36,961 | ||
Other income | [1] | 1,993 | 2,258 | 2,246 | |
Total revenue | 35,194 | 44,201 | 39,207 | ||
Interest income | 6,192 | 6,497 | 7,647 | ||
Other investment return | (16,455) | 35,692 | 24,864 | ||
Total revenue, net of reinsurance | 24,931 | 86,390 | 71,718 | ||
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (12,568) | (72,532) | (59,366) | ||
Interest payable on core structural borrowings | (410) | (425) | (360) | ||
Acquisition costs and other operating expenditure | [1] | (8,855) | (9,993) | (8,724) | |
(Loss) gain on disposal of businesses and corporate transactions | (80) | 223 | |||
Remeasurement of the sold Korea life business | 5 | (238) | |||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | (21,913) | (82,722) | (68,688) | ||
Share of profits from joint ventures and associates, net of related tax | 291 | 302 | 182 | ||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | [2],[3] | 3,309 | 3,970 | 3,212 | |
Tax credit (charge) attributable to policyholders' returns | 326 | (674) | (937) | ||
Profit (loss) before tax attributable to shareholders | [3] | 3,635 | 3,296 | 2,275 | |
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 4,827 | 4,699 | 4,256 | ||
Short-term fluctuations in investment returns | (558) | (1,563) | (1,678) | ||
Amortisation of acquisition accounting adjustments | (46) | (63) | (76) | ||
(Loss) gain on disposal of businesses and corporate transactions | (588) | 223 | (227) | ||
Profit (loss) before tax attributable to shareholders | [3] | 3,635 | 3,296 | 2,275 | |
Gross premiums earned | 47,224 | 44,005 | 38,981 | ||
Outward reinsurance premiums | [4] | (14,023) | (2,062) | (2,020) | |
Jackson (US insurance operations) | |||||
Analysis of operating profit | |||||
Percentage of reinsurance agreement | 100.00% | ||||
UK and Europe | Shareholder annuity portfolio being sold to Rothesay Life | |||||
Analysis of operating profit | |||||
Outward reinsurance premiums | (12,149) | ||||
UK and Europe insurance operations | Shareholder annuity portfolio being sold to Rothesay Life | |||||
Analysis of operating profit | |||||
Outward reinsurance premiums | (12,149) | ||||
Operating segments excluding intra-group amounts | |||||
Additional analysis of performance by segment | |||||
Earned premiums, net of reinsurance | 33,165 | 41,920 | 36,961 | ||
Other income | 1,954 | 2,210 | 2,159 | ||
Total revenue | 35,119 | 44,130 | 39,120 | ||
Analysis of operating profit | |||||
Gross premiums earned | 47,186 | 43,978 | |||
Outward reinsurance premiums | (14,021) | (2,058) | |||
Operating segments excluding intra-group amounts | Asia | |||||
Additional analysis of performance by segment | |||||
Earned premiums, net of reinsurance | 15,894 | 15,032 | 13,358 | ||
Other income | 309 | 307 | 253 | ||
Total revenue | 16,203 | 15,339 | 13,611 | ||
Analysis of operating profit | |||||
Gross premiums earned | 16,469 | 15,688 | |||
Outward reinsurance premiums | (575) | (656) | |||
Operating segments excluding intra-group amounts | Asia insurance operations | |||||
Additional analysis of performance by segment | |||||
Earned premiums, net of reinsurance | 15,894 | ||||
Other income | 99 | ||||
Total revenue | 15,993 | ||||
Operating segments excluding intra-group amounts | Asia asset management | |||||
Additional analysis of performance by segment | |||||
Other income | 210 | ||||
Total revenue | 210 | ||||
Operating segments excluding intra-group amounts | US | |||||
Additional analysis of performance by segment | |||||
Earned premiums, net of reinsurance | 17,347 | 14,812 | 14,318 | ||
Other income | 50 | 669 | 684 | ||
Total revenue | 17,397 | 15,481 | 15,002 | ||
Analysis of operating profit | |||||
Gross premiums earned | 17,656 | 15,164 | |||
Outward reinsurance premiums | (309) | (352) | |||
Operating segments excluding intra-group amounts | Jackson (US insurance operations) | |||||
Additional analysis of performance by segment | |||||
Earned premiums, net of reinsurance | 17,347 | ||||
Other income | 5 | ||||
Total revenue | 17,352 | ||||
Operating segments excluding intra-group amounts | Asset management (US) | |||||
Additional analysis of performance by segment | |||||
Other income | 45 | ||||
Total revenue | 45 | ||||
Operating segments excluding intra-group amounts | UK and Europe | |||||
Additional analysis of performance by segment | |||||
Earned premiums, net of reinsurance | (76) | 12,076 | 9,285 | ||
Other income | 1,595 | 1,234 | 1,222 | ||
Total revenue | 1,519 | 13,310 | 10,507 | ||
Analysis of operating profit | |||||
Gross premiums earned | 13,061 | 13,126 | |||
Outward reinsurance premiums | (13,137) | (1,050) | |||
Operating segments excluding intra-group amounts | UK and Europe insurance operations | |||||
Additional analysis of performance by segment | |||||
Earned premiums, net of reinsurance | (76) | ||||
Other income | 347 | ||||
Total revenue | 271 | ||||
Operating segments excluding intra-group amounts | UK and Europe asset management | |||||
Additional analysis of performance by segment | |||||
Other income | 1,248 | ||||
Total revenue | 1,248 | ||||
Operating segments | |||||
Additional analysis of performance by segment | |||||
Interest income | 6,141 | 6,430 | 7,543 | ||
Other investment return | (16,520) | 35,682 | 25,081 | ||
Total revenue, net of reinsurance | 24,835 | 86,351 | 71,828 | ||
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (12,549) | (72,521) | (59,366) | ||
Interest payable on core structural borrowings | (15) | (16) | (15) | ||
Acquisition costs and other operating expenditure | (8,303) | (9,516) | (8,286) | ||
(Loss) gain on disposal of businesses and corporate transactions | (49) | 223 | |||
Remeasurement of the sold Korea life business | 5 | (238) | |||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | (20,916) | (81,825) | (67,905) | ||
Share of profits from joint ventures and associates, net of related tax | 291 | 302 | 182 | ||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 4,210 | 4,828 | 4,105 | ||
Tax credit (charge) attributable to policyholders' returns | 326 | (674) | (937) | ||
Profit (loss) before tax attributable to shareholders | 4,536 | 4,154 | 3,168 | ||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 5,717 | 5,577 | 4,945 | ||
Short-term fluctuations in investment returns | (578) | (1,583) | (1,474) | ||
Amortisation of acquisition accounting adjustments | (46) | (63) | (76) | ||
(Loss) gain on disposal of businesses and corporate transactions | (557) | 223 | (227) | ||
Profit (loss) before tax attributable to shareholders | 4,536 | 4,154 | 3,168 | ||
Gross premiums earned | 38,981 | ||||
Outward reinsurance premiums | (2,020) | ||||
Operating segments | Asia | |||||
Additional analysis of performance by segment | |||||
Interest income | 1,086 | 932 | 875 | ||
Other investment return | (3,240) | 8,063 | 2,042 | ||
Total revenue, net of reinsurance | 14,091 | 24,374 | 16,555 | ||
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (8,736) | (18,291) | (11,442) | ||
Acquisition costs and other operating expenditure | (3,866) | (4,053) | (3,684) | ||
(Loss) gain on disposal of businesses and corporate transactions | (11) | 61 | |||
Remeasurement of the sold Korea life business | 5 | (238) | |||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | (12,613) | (22,278) | (15,364) | ||
Share of profits from joint ventures and associates, net of related tax | 239 | 181 | 148 | ||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 1,717 | 2,277 | 1,339 | ||
Tax credit (charge) attributable to policyholders' returns | (80) | (249) | (155) | ||
Profit (loss) before tax attributable to shareholders | 1,637 | 2,028 | 1,184 | ||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 2,164 | 1,975 | 1,644 | ||
Short-term fluctuations in investment returns | (512) | (1) | (225) | ||
Amortisation of acquisition accounting adjustments | (4) | (7) | (8) | ||
(Loss) gain on disposal of businesses and corporate transactions | (11) | 61 | (227) | ||
Profit (loss) before tax attributable to shareholders | 1,637 | 2,028 | 1,184 | ||
Gross premiums earned | 14,006 | ||||
Outward reinsurance premiums | (648) | ||||
Operating segments | Asia insurance operations | |||||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 1,982 | 1,799 | 1,503 | ||
Operating segments | Asia asset management | |||||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 182 | 176 | 141 | ||
Operating segments | US | |||||
Additional analysis of performance by segment | |||||
Interest income | 2,016 | 2,085 | 2,151 | ||
Other investment return | (6,804) | 16,448 | 5,461 | ||
Total revenue, net of reinsurance | 12,659 | 34,078 | 22,667 | ||
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (8,790) | (31,205) | (20,214) | ||
Interest payable on core structural borrowings | (15) | (16) | (15) | ||
Acquisition costs and other operating expenditure | (2,077) | (2,257) | (1,913) | ||
(Loss) gain on disposal of businesses and corporate transactions | (38) | 162 | |||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | (10,920) | (33,316) | (22,142) | ||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 1,739 | 762 | 525 | ||
Profit (loss) before tax attributable to shareholders | 1,739 | 762 | 525 | ||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 1,919 | 2,224 | 2,048 | ||
Short-term fluctuations in investment returns | (100) | (1,568) | (1,455) | ||
Amortisation of acquisition accounting adjustments | (42) | (56) | (68) | ||
(Loss) gain on disposal of businesses and corporate transactions | (38) | 162 | |||
Profit (loss) before tax attributable to shareholders | 1,739 | 762 | 525 | ||
Gross premiums earned | 14,685 | ||||
Outward reinsurance premiums | (367) | ||||
Operating segments | Jackson (US insurance operations) | |||||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 1,911 | 2,214 | 2,052 | ||
Short-term fluctuations in investment returns | (100) | (1,568) | (1,455) | ||
Operating segments | Asset management (US) | |||||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 8 | 10 | (4) | ||
NPH broker-dealer fees included in gross revenue | 542 | 550 | |||
Operating segments | UK and Europe | |||||
Additional analysis of performance by segment | |||||
Interest income | 3,039 | 3,413 | 4,517 | ||
Other investment return | (6,476) | 11,171 | 17,578 | ||
Total revenue, net of reinsurance | (1,915) | 27,899 | 32,606 | ||
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | 4,977 | (23,025) | (27,710) | ||
Acquisition costs and other operating expenditure | (2,360) | (3,206) | (2,689) | ||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | 2,617 | (26,231) | (30,399) | ||
Share of profits from joint ventures and associates, net of related tax | 52 | 121 | 34 | ||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 754 | 1,789 | 2,241 | ||
Tax credit (charge) attributable to policyholders' returns | 406 | (425) | (782) | ||
Profit (loss) before tax attributable to shareholders | 1,160 | 1,364 | 1,459 | ||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 1,634 | 1,378 | 1,253 | ||
Short-term fluctuations in investment returns | 34 | (14) | 206 | ||
(Loss) gain on disposal of businesses and corporate transactions | (508) | ||||
Profit (loss) before tax attributable to shareholders | 1,160 | 1,364 | 1,459 | ||
Gross premiums earned | 10,290 | ||||
Outward reinsurance premiums | (1,005) | ||||
Operating segments | UK and Europe insurance operations | |||||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 1,157 | 878 | 828 | ||
Operating segments | UK and Europe asset management | |||||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 477 | 500 | 425 | ||
Operations within segments | Asia insurance operations | |||||
Additional analysis of performance by segment | |||||
Interest income | 1,083 | ||||
Other investment return | (3,240) | ||||
Total revenue, net of reinsurance | 13,836 | ||||
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | (8,736) | ||||
Acquisition costs and other operating expenditure | (3,732) | ||||
(Loss) gain on disposal of businesses and corporate transactions | (11) | ||||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | (12,479) | ||||
Share of profits from joint ventures and associates, net of related tax | 178 | ||||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 1,535 | ||||
Tax credit (charge) attributable to policyholders' returns | (80) | ||||
Profit (loss) before tax attributable to shareholders | 1,455 | ||||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 1,982 | ||||
Short-term fluctuations in investment returns | (512) | ||||
Amortisation of acquisition accounting adjustments | (4) | ||||
(Loss) gain on disposal of businesses and corporate transactions | (11) | ||||
Profit (loss) before tax attributable to shareholders | 1,455 | ||||
Operations within segments | Asia asset management | |||||
Additional analysis of performance by segment | |||||
Interest income | 3 | ||||
Total revenue, net of reinsurance | 371 | ||||
Acquisition costs and other operating expenditure | (250) | ||||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | (250) | ||||
Share of profits from joint ventures and associates, net of related tax | 61 | ||||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 182 | ||||
Profit (loss) before tax attributable to shareholders | 182 | ||||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 182 | ||||
Profit (loss) before tax attributable to shareholders | 182 | ||||
Operations within segments | Jackson (US insurance operations) | |||||
Additional analysis of performance by segment | |||||
Interest income | 2,016 | ||||
Other investment return | (6,784) | ||||
Total revenue, net of reinsurance | 12,584 | ||||
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | £ 4,100 | (8,790) | |||
Interest payable on core structural borrowings | (15) | ||||
Acquisition costs and other operating expenditure | £ 400 | (2,010) | |||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | (10,815) | ||||
Profit (loss) before tax attributable to shareholders | 1,769 | ||||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 1,911 | ||||
Short-term fluctuations in investment returns | (100) | ||||
Amortisation of acquisition accounting adjustments | (42) | ||||
Profit (loss) before tax attributable to shareholders | 1,769 | ||||
Percentage of reinsurance agreement | 100.00% | ||||
Gross premiums earned | £ 3,700 | ||||
Operations within segments | Asset management (US) | |||||
Additional analysis of performance by segment | |||||
Other investment return | (20) | ||||
Total revenue, net of reinsurance | 143 | ||||
Acquisition costs and other operating expenditure | (135) | ||||
(Loss) gain on disposal of businesses and corporate transactions | (38) | ||||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | (173) | ||||
Profit (loss) before tax attributable to shareholders | (30) | ||||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 8 | ||||
(Loss) gain on disposal of businesses and corporate transactions | (38) | ||||
Profit (loss) before tax attributable to shareholders | (30) | ||||
NPH broker-dealer fees included in gross revenue | 542 | 550 | |||
Operations within segments | UK and Europe insurance operations | |||||
Additional analysis of performance by segment | |||||
Interest income | 3,038 | ||||
Other investment return | (6,459) | ||||
Total revenue, net of reinsurance | (3,150) | ||||
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | 4,977 | ||||
Acquisition costs and other operating expenditure | (1,571) | ||||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | 3,406 | ||||
Share of profits from joint ventures and associates, net of related tax | 36 | ||||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 292 | ||||
Tax credit (charge) attributable to policyholders' returns | 406 | ||||
Profit (loss) before tax attributable to shareholders | 698 | ||||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 1,157 | ||||
Short-term fluctuations in investment returns | 49 | ||||
(Loss) gain on disposal of businesses and corporate transactions | (508) | ||||
Profit (loss) before tax attributable to shareholders | 698 | ||||
Operations within segments | UK and Europe asset management | |||||
Additional analysis of performance by segment | |||||
Interest income | 1 | ||||
Other investment return | (17) | ||||
Total revenue, net of reinsurance | 1,399 | ||||
Acquisition costs and other operating expenditure | (953) | ||||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | (953) | ||||
Share of profits from joint ventures and associates, net of related tax | 16 | ||||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 462 | ||||
Profit (loss) before tax attributable to shareholders | 462 | ||||
Analysis of operating profit | |||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | 477 | ||||
Short-term fluctuations in investment returns | (15) | ||||
Profit (loss) before tax attributable to shareholders | 462 | ||||
Revenue after deducting commissions | 1,102 | 1,087 | 956 | ||
Elimination of intra-segment amounts | Asia | |||||
Additional analysis of performance by segment | |||||
Total revenue | 116 | ||||
Total revenue, net of reinsurance | (116) | ||||
Acquisition costs and other operating expenditure | 116 | ||||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | 116 | ||||
Elimination of intra-segment amounts | Asia asset management | |||||
Additional analysis of performance by segment | |||||
Total revenue | (158) | ||||
Elimination of intra-segment amounts | US | |||||
Additional analysis of performance by segment | |||||
Total revenue | 68 | ||||
Total revenue, net of reinsurance | (68) | ||||
Acquisition costs and other operating expenditure | 68 | ||||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | 68 | ||||
Elimination of intra-segment amounts | Asset management (US) | |||||
Additional analysis of performance by segment | |||||
Total revenue | (118) | ||||
Elimination of intra-segment amounts | UK and Europe | |||||
Additional analysis of performance by segment | |||||
Total revenue | 164 | ||||
Total revenue, net of reinsurance | (164) | ||||
Acquisition costs and other operating expenditure | 164 | ||||
Total charges, net of reinsurance and (loss) gain on disposal of businesses | 164 | ||||
Elimination of intra-segment amounts | UK and Europe asset management | |||||
Additional analysis of performance by segment | |||||
Total revenue | (167) | ||||
Elimination of intra-group amounts | |||||
Additional analysis of performance by segment | |||||
Total revenue | (95) | (109) | (84) | ||
Elimination of intra-group amounts | Asia | |||||
Additional analysis of performance by segment | |||||
Total revenue | (42) | (40) | (27) | ||
Elimination of intra-group amounts | US | |||||
Additional analysis of performance by segment | |||||
Total revenue | (50) | (64) | (53) | ||
Elimination of intra-group amounts | UK and Europe | |||||
Additional analysis of performance by segment | |||||
Total revenue | £ (3) | £ (5) | £ (4) | ||
[1] | The 2017 and 2016 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. | ||||
[2] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. | ||||
[3] | 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 with-profits funds after adjusting for taxes borne by policyholders. | ||||
[4] | Outward reinsurance premiums include the £(12,149) million paid during the year in respect of the reinsurance of the UK annuity portfolio. The associated increase in reinsurance assets is included in outward reinsurers’ share of benefits and claims and the consequential change to policyholder liabilities is included in benefits and claims. See note D1.1 for further details. |
Acquisition costs and other e_3
Acquisition costs and other expenditure - Components (Details) - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Acquisition costs and other expenditure | ||||
Acquisition costs incurred for insurance policies | £ (3,438) | £ (3,712) | £ (3,687) | |
Acquisition costs deferred less amortisation of acquisition costs | 59 | 911 | 923 | |
Administration costs and other expenditure | (5,380) | (6,208) | (5,398) | |
Movements in amounts attributable to external unit holders of consolidated investment funds | (96) | (984) | (562) | |
Total acquisition costs and other expenditure | [1] | (8,855) | (9,993) | (8,724) |
Credit for negative ceding commissions | 400 | |||
Depreciation and amortisation expense | (1,136) | (288) | (242) | |
Charge for non-deferred acquisition costs and amortisation of costs that were deferred | (3,379) | (2,801) | (2,764) | |
UK and Europe insurance operations | ||||
Acquisition costs and other expenditure | ||||
Movements in amounts attributable to external unit holders of consolidated investment funds | 201 | (719) | (485) | |
Asia insurance operations | ||||
Acquisition costs and other expenditure | ||||
Movements in amounts attributable to external unit holders of consolidated investment funds | (297) | (265) | (77) | |
Insurance contracts | ||||
Acquisition costs and other expenditure | ||||
Charge for non-deferred acquisition costs and amortisation of costs that were deferred | (3,367) | (2,772) | (2,734) | |
Investment contracts | ||||
Acquisition costs and other expenditure | ||||
Charge for non-deferred acquisition costs and amortisation of costs that were deferred | £ (12) | £ (29) | £ (30) | |
[1] | The 2017 and 2016 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 e_4
Acquisition costs and other expenditure - Interest expense, depreciation and amortisation (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Acquisition costs and other expenditure | |||
Other interest expense | £ (282) | £ (240) | £ (185) |
Depreciation and amortisation expense | (1,136) | (288) | (242) |
Operating segments | |||
Acquisition costs and other expenditure | |||
Other interest expense | (253) | (201) | (158) |
Depreciation and amortisation expense | (1,134) | (286) | (240) |
Operations within segments | Asia insurance operations | |||
Acquisition costs and other expenditure | |||
Depreciation and amortisation expense | (228) | (230) | (201) |
Operations within segments | Asia asset management | |||
Acquisition costs and other expenditure | |||
Depreciation and amortisation expense | (4) | (3) | (2) |
Operations within segments | Jackson (US insurance operations) | |||
Acquisition costs and other expenditure | |||
Other interest expense | (159) | (116) | (56) |
Depreciation and amortisation expense | (830) | 20 | 94 |
Operations within segments | Asset management (US) | |||
Acquisition costs and other expenditure | |||
Depreciation and amortisation expense | (6) | (7) | (3) |
Operations within segments | UK and Europe insurance operations | |||
Acquisition costs and other expenditure | |||
Other interest expense | (94) | (85) | (102) |
Depreciation and amortisation expense | (61) | (59) | (121) |
Operations within segments | UK and Europe asset management | |||
Acquisition costs and other expenditure | |||
Depreciation and amortisation expense | (5) | (7) | (7) |
Unallocated to a segment (central or other operations) | |||
Acquisition costs and other expenditure | |||
Other interest expense | (29) | (39) | (27) |
Depreciation and amortisation expense | £ (2) | £ (2) | £ (2) |
Acquisition costs and other e_5
Acquisition costs and other expenditure - Staff and employment costs (Details) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018GBP (£)employee | Dec. 31, 2017GBP (£)employee | Dec. 31, 2016GBP (£)employee | |
Acquisition costs and other expenditure | |||
Average number of staff employed by the Group during the year | employee | 28,206 | 27,151 | 26,267 |
Costs of employment | |||
Wages and salaries | £ 1,656 | £ 1,774 | £ 1,483 |
Social security costs | 116 | 129 | 110 |
Defined benefit schemes | (29) | (3) | 213 |
Defined contribution schemes | 95 | 85 | 79 |
Total costs of employment | £ 1,838 | £ 1,985 | £ 1,885 |
Asia | |||
Acquisition costs and other expenditure | |||
Average number of staff employed by the Group during the year | employee | 16,798 | 15,477 | 15,439 |
US | |||
Acquisition costs and other expenditure | |||
Average number of staff employed by the Group during the year | employee | 4,285 | 4,564 | 4,447 |
UK and Europe | |||
Acquisition costs and other expenditure | |||
Average number of staff employed by the Group during the year | employee | 7,123 | 7,110 | 6,381 |
Acquisition costs and other e_6
Acquisition costs and other expenditure - Share-based payment plans (Details) | 12 Months Ended |
Dec. 31, 2018 | |
PCA LTIP | |
Share-based payment | |
Vesting period of awards | 3 years |
Acquisition costs and other e_7
Acquisition costs and other expenditure - Outstanding options and awards (Details) EquityInstruments in Millions | 12 Months Ended | ||
Dec. 31, 2018GBP (£)OptionsEquityInstruments | Dec. 31, 2017GBP (£)OptionsEquityInstruments | Dec. 31, 2016GBP (£)OptionsEquityInstruments | |
Number of options | |||
Beginning of year | 6,000,000 | 7,000,000 | |
End of year | 5,000,000 | 6,000,000 | 7,000,000 |
Number of awards | |||
Weighted average share price | £ | £ 17.36 | £ 17.51 | £ 13.56 |
SAYE options | |||
Number of options | |||
Beginning of year | 6,448,853 | 7,100,000 | 8,800,000 |
Granted | 300,000 | 1,400,000 | 1,400,000 |
Exercised | (1,400,000) | (1,700,000) | (2,000,000) |
Forfeited | (100,000) | (100,000) | (100,000) |
Cancelled | (200,000) | (200,000) | (800,000) |
Lapsed/Expired | (100,000) | (100,000) | (200,000) |
End of year | 4,885,804 | 6,448,853 | 7,100,000 |
Options immediately exercisable, end of year | 800,000 | 400,000 | 600,000 |
Weighted average exercise price | |||
Beginning of year | £ | £ 11.74 | £ 10.74 | £ 9.44 |
Granted | £ | 13.94 | 14.55 | 11.04 |
Exercised | £ | 10.85 | 10.07 | 7.30 |
Forfeited | £ | 12.25 | 10.83 | 9.95 |
Cancelled | £ | 12.43 | 11.19 | 6.45 |
Lapsed/Expired | £ | 12.60 | 10.86 | 9.64 |
End of year | £ | 12.10 | 11.74 | 10.74 |
Options immediately exercisable, end of year | £ | £ 10.37 | £ 11.06 | £ 8.53 |
Incentive plans | |||
Number of awards | |||
Beginning of year | EquityInstruments | 33.6 | 30.2 | 28.4 |
Granted | EquityInstruments | 10.7 | 12.7 | 13.9 |
Exercised | EquityInstruments | (8.7) | (7.3) | (10.5) |
Forfeited | EquityInstruments | (2.6) | (1.3) | (1.5) |
Cancelled | EquityInstruments | (0.1) | (0.1) | |
Lapsed/Expired | EquityInstruments | (0.2) | (0.6) | |
End of year | EquityInstruments | 32.8 | 33.6 | 30.2 |
Acquisition costs and other e_8
Acquisition costs and other expenditure - Exercise price ranges for options (Details) | Dec. 31, 2018GBP (£)OptionsY | Dec. 31, 2017GBP (£)OptionsY | Dec. 31, 2016GBP (£)OptionsY | Dec. 31, 2015GBP (£)Options |
Summary of options exercise price range | ||||
Outstanding - Number outstanding | Options | 5,000,000 | 6,000,000 | 7,000,000 | |
SAYE options | ||||
Summary of options exercise price range | ||||
Outstanding - Number outstanding | Options | 4,885,804 | 6,448,853 | 7,100,000 | 8,800,000 |
Outstanding - Weighted average remaining contractual life (years) | Y | 2.1 | 2.5 | 2.6 | |
Outstanding - Weighted average exercise prices | £ 12.10 | £ 11.74 | £ 10.74 | £ 9.44 |
Exercisable - Number exercisable | Options | 800,000 | 400,000 | 600,000 | |
Exercisable - Weighted average exercise prices | £ 10.37 | £ 11.06 | £ 8.53 | |
SAYE options | Minimum | ||||
Summary of options exercise price range | ||||
Exercise price | 9.01 | 6.29 | ||
SAYE options | Maximum | ||||
Summary of options exercise price range | ||||
Exercise price | 14.55 | 14.55 | ||
SAYE options | Between 4 and 5 | ||||
Summary of options exercise price range | ||||
Outstanding - Number outstanding | Options | 100,000 | |||
Outstanding - Weighted average remaining contractual life (years) | Y | 0.4 | |||
Outstanding - Weighted average exercise prices | £ 4.66 | |||
Exercisable - Number exercisable | Options | 100,000 | |||
Exercisable - Weighted average exercise prices | £ 4.66 | |||
SAYE options | Between 4 and 5 | Minimum | ||||
Summary of options exercise price range | ||||
Exercise price | 4 | 4 | 4 | |
SAYE options | Between 4 and 5 | Maximum | ||||
Summary of options exercise price range | ||||
Exercise price | 5 | £ 5 | £ 5 | |
SAYE options | Between 6 and 7 | ||||
Summary of options exercise price range | ||||
Outstanding - Number outstanding | Options | 200,000 | |||
Outstanding - Weighted average remaining contractual life (years) | Y | 0.4 | 1.4 | ||
Outstanding - Weighted average exercise prices | £ 6.29 | £ 6.29 | ||
Exercisable - Weighted average exercise prices | 6.29 | 6.29 | ||
SAYE options | Between 6 and 7 | Minimum | ||||
Summary of options exercise price range | ||||
Exercise price | 6 | 6 | 6 | |
SAYE options | Between 6 and 7 | Maximum | ||||
Summary of options exercise price range | ||||
Exercise price | £ 7 | £ 7 | £ 7 | |
SAYE options | Between 9 and 10 | ||||
Summary of options exercise price range | ||||
Outstanding - Number outstanding | Options | 300,000 | 500,000 | 1,100,000 | |
Outstanding - Weighted average remaining contractual life (years) | Y | 0.4 | 1.4 | 1.4 | |
Outstanding - Weighted average exercise prices | £ 9.01 | £ 9.01 | £ 9.01 | |
Exercisable - Number exercisable | Options | 300,000 | 500,000 | ||
Exercisable - Weighted average exercise prices | £ 9.01 | £ 9.01 | ||
SAYE options | Between 9 and 10 | Minimum | ||||
Summary of options exercise price range | ||||
Exercise price | 9 | 9 | 9 | |
SAYE options | Between 9 and 10 | Maximum | ||||
Summary of options exercise price range | ||||
Exercise price | £ 10 | £ 10 | £ 10 | |
SAYE options | Between 11 and 12 | ||||
Summary of options exercise price range | ||||
Outstanding - Number outstanding | Options | 3,000,000 | 4,500,000 | 5,700,000 | |
Outstanding - Weighted average remaining contractual life (years) | Y | 1.6 | 2.2 | 2.9 | |
Outstanding - Weighted average exercise prices | £ 11.19 | £ 11.21 | £ 11.27 | |
Exercisable - Number exercisable | Options | 500,000 | 400,000 | ||
Exercisable - Weighted average exercise prices | £ 11.11 | £ 11.55 | ||
SAYE options | Between 11 and 12 | Minimum | ||||
Summary of options exercise price range | ||||
Exercise price | 11 | 11 | 11 | |
SAYE options | Between 11 and 12 | Maximum | ||||
Summary of options exercise price range | ||||
Exercise price | £ 12 | 12 | 12 | |
SAYE options | Between 13 and 14 | ||||
Summary of options exercise price range | ||||
Outstanding - Number outstanding | Options | 300,000 | |||
Outstanding - Weighted average remaining contractual life (years) | Y | 4.1 | |||
Outstanding - Weighted average exercise prices | £ 13.94 | |||
SAYE options | Between 13 and 14 | Minimum | ||||
Summary of options exercise price range | ||||
Exercise price | 13 | 13 | 13 | |
SAYE options | Between 13 and 14 | Maximum | ||||
Summary of options exercise price range | ||||
Exercise price | £ 14 | £ 14 | 14 | |
SAYE options | Between 14 and 15 | ||||
Summary of options exercise price range | ||||
Outstanding - Number outstanding | Options | 1,300,000 | 1,400,000 | ||
Outstanding - Weighted average remaining contractual life (years) | Y | 2.6 | 3.9 | ||
Outstanding - Weighted average exercise prices | £ 14.55 | £ 14.55 | ||
SAYE options | Between 14 and 15 | Minimum | ||||
Summary of options exercise price range | ||||
Exercise price | 14 | 14 | 14 | |
SAYE options | Between 14 and 15 | Maximum | ||||
Summary of options exercise price range | ||||
Exercise price | £ 15 | £ 15 | £ 15 |
Acquisition costs and other e_9
Acquisition costs and other expenditure - Fair value of options and awards (Details) | 12 Months Ended | ||
Dec. 31, 2018GBP (£)entityY | Dec. 31, 2017GBP (£)Y | Dec. 31, 2016GBP (£)Y | |
Share-based payment | |||
Basis for risk-free interest rate - government bond term one | 2 years | ||
Basis for risk-free interest rate - government bond term two | 3 years | ||
Basis for risk-free interest rate - government bond term three | 5 years | ||
Dividend yield period | 12 months | ||
Volatility assumption - number of competitors in basket | entity | 15 | ||
Volatility assumption - average volatility for basket of competitors (as a percent) | 21.32% | ||
Volatility assumption - period of correlations for basket of competitors | 3 years | ||
Prudential LTIP (TSR) | |||
Share-based payment | |||
Expected volatility (as a percent) | 24.03% | 23.17% | 29.36% |
Risk-free interest rate (as a percent) | 1.19% | 0.62% | 0.12% |
Weighted average share price at grant date | £ 17.46 | £ 16.80 | £ 12.82 |
Weighted-average fair value at grant date | £ 6.64 | £ 8.30 | £ 4.41 |
SAYE options | |||
Share-based payment | |||
Dividend yield (as a percent) | 2.52% | 2.85% | 3.19% |
Expected volatility (as a percent) | 21.09% | 20.15% | 25.41% |
Risk-free interest rate (as a percent) | 0.97% | 0.56% | 0.15% |
Expected option life | Y | 3.94 | 3.49 | 3.70 |
Weighted average exercise price | £ 13.94 | £ 14.55 | £ 11.04 |
Weighted average share price at grant date | 16.64 | 17.74 | 13.94 |
Weighted average fair value at grant date | 3.29 | 3.29 | 3.05 |
Other awards | |||
Share-based payment | |||
Weighted-average fair value at grant date | £ 17.04 | £ 16.12 | £ 12.57 |
Acquisition costs and other _10
Acquisition costs and other expenditure - Share-based payment expense (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based payment expense charged to the income statement | |||
Share-based compensation expense | £ 143 | £ 158 | £ 126 |
Amount accounted for as equity-settled | 143 | £ 158 | £ 127 |
Liabilities relating to awards which are settled in cash | £ 0 |
Acquisition costs and other _11
Acquisition costs and other expenditure - Key management remuneration (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Key management remuneration | |||
Salaries and short-term benefits | £ 16.2 | £ 17.9 | £ 20.7 |
Post-employment benefits | 1.3 | 1.3 | 1.3 |
Share-based payments | 14.5 | 14.1 | 18.7 |
Total key management remuneration | 32 | 33.3 | 40.7 |
Share-based payments in accordance with IFRS 2 | 9.7 | 8.3 | 12.9 |
Deferred share awards | 4.8 | 5.8 | 5.8 |
Total directors' remuneration | 31.8 | 40.2 | 37.9 |
LTIP releases | £ 9.5 | £ 15.2 | £ 10.1 |
Acquisition costs and other _12
Acquisition costs and other expenditure - Fees payable to the auditor (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Fees payable to the auditor | |||
Fees payable to the Company's auditor for the audit of the Company's annual accounts | £ 2.1 | £ 2.1 | £ 2 |
Fees payable to the Company's auditor and its associates for other services: | |||
Audit of subsidiaries pursuant to legislation | 9.2 | 8.3 | 7.5 |
Audit-related assurance services | 4.7 | 4.3 | 3.9 |
Tax compliance services | 0.1 | ||
Other assurance services | 1.1 | 1.5 | 2.1 |
Services relating to corporate finance transactions | 0.2 | 0.4 | |
All other services | 1 | 0.7 | 0.6 |
Total fees paid to the auditor | 18.3 | 17.3 | 16.2 |
Audit-related assurance service fees, required by law | 1.4 | ||
Pension schemes audit services | 0.2 | 0.1 | 0.1 |
Pension schemes other assurance services | £ 0 | £ 0 | £ 0.1 |
Effect of changes and other a_2
Effect of changes and other accounting matters on insurance assets and liabilities (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Effect of changes and other accounting matters on insurance | |||
Insurance contract liabilities | £ 322,666 | £ 328,172 | £ 316,436 |
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 | 94 | 75 | 67 |
UK and Europe insurance operations | UK and Europe with-profits sub-funds | |||
Effect of changes and other accounting matters on insurance | |||
Aggregate effect of assumption and other non-recurring changes | 394 | (58) | £ (78) |
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 | £ (508) | ||
UK and Europe insurance operations | Shareholder-backed annuity | |||
Effect of changes and other accounting matters on insurance | |||
Credit risk allowance (as a percent) | 0.40% | 0.42% | 0.43% |
Credit risk allowance as percentage of bond spread over swap rates | 22.00% | 28.00% | 26.00% |
Reserves for credit risk allowance | £ 900 | £ 1,600 | £ 1,700 |
Net effect of changes to assumptions | 437 | 173 | 16 |
Liabilities under additional longevity reinsurance transactions | 0 | 600 | 5,400 |
Profit from additional longevity reinsurance transactions | 31 | 197 | |
Profits generated by other management actions | 58,000 | 245 | £ 135 |
UK and Europe insurance operations | Shareholder-backed annuity | Annuitant mortality assumptions | |||
Effect of changes and other accounting matters on insurance | |||
Net effect of changes to assumptions | £ 441 | £ 204 |
Tax charge - Income statement (
Tax charge - Income statement (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Tax charge attributable to shareholders: | |||
Current tax attributable to shareholders | £ (416) | ||
Deferred tax attributable to shareholders | (206) | ||
Tax charge attributable to shareholders' returns | (622) | £ (906) | £ (354) |
Tax charge attributable to policyholders: | |||
Current tax to attributable policyholders | (280) | ||
Deferred tax attributable to policyholders | 606 | ||
Tax credit (charge) attributable to policyholders' returns | 326 | (674) | (937) |
Total current tax charge | (696) | (696) | (1,377) |
Total deferred tax credit (charge) | 400 | (884) | 86 |
Total tax charge | (296) | (1,580) | (1,291) |
Loss before tax attributable to policyholders | 326 | ||
Operating segments | |||
Tax charge attributable to policyholders: | |||
Tax credit (charge) attributable to policyholders' returns | 326 | (674) | (937) |
Operating segments | Asia | |||
Tax charge attributable to shareholders: | |||
Current tax attributable to shareholders | (199) | ||
Deferred tax attributable to shareholders | (78) | ||
Tax charge attributable to shareholders' returns | (277) | (253) | (256) |
Tax charge attributable to policyholders: | |||
Current tax to attributable policyholders | (92) | ||
Deferred tax attributable to policyholders | 12 | ||
Tax credit (charge) attributable to policyholders' returns | (80) | (249) | (155) |
Operating segments | US | |||
Tax charge attributable to shareholders: | |||
Current tax attributable to shareholders | (87) | ||
Deferred tax attributable to shareholders | (168) | ||
Tax charge attributable to shareholders' returns | £ (255) | (508) | 66 |
US tax reform | |||
Deferred tax charge on remeasurement of net deferred tax assets, attributable to shareholders' returns | £ 445 | ||
Tax rate (as a percent) | 21.00% | 35.00% | |
Operating segments | UK and Europe | |||
Tax charge attributable to shareholders: | |||
Current tax attributable to shareholders | £ (255) | ||
Deferred tax attributable to shareholders | 39 | ||
Tax charge attributable to shareholders' returns | (216) | £ (267) | (275) |
Tax charge attributable to policyholders: | |||
Current tax to attributable policyholders | (188) | ||
Deferred tax attributable to policyholders | 594 | ||
Tax credit (charge) attributable to policyholders' returns | 406 | (425) | (782) |
Unallocated to a segment (central or other operations) | |||
Tax charge attributable to shareholders: | |||
Current tax attributable to shareholders | 125 | ||
Deferred tax attributable to shareholders | 1 | ||
Tax charge attributable to shareholders' returns | £ 126 | £ 122 | £ 111 |
Tax charge - Components (Detail
Tax charge - Components (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current tax expense: | |||
Corporation tax | £ (677) | £ (746) | £ (1,464) |
Adjustments in respect of prior years | (19) | 50 | 87 |
Total current tax charge | (696) | (696) | (1,377) |
Deferred tax arising from: | |||
Origination and reversal of temporary differences | 385 | (531) | 64 |
Impact of changes in local statutory tax rates | 8 | (353) | 6 |
Credit in respect of a previously unrecognised tax loss, tax credit or temporary difference from a prior period | 7 | 16 | |
Total deferred tax credit (charge) | 400 | (884) | 86 |
Total tax charge | (296) | (1,580) | (1,291) |
Hong Kong | |||
Current tax expense: | |||
Total current tax charge | £ (65) | £ (59) | £ (53) |
Deferred tax arising from: | |||
Current tax charge (as a percent) | 16.50% | ||
Percentage of net insurance premium used to calculate income tax charge | 5.00% |
Tax charge - Deferred tax charg
Tax charge - Deferred tax charge (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Deferred tax credit (charge) | |||
Deferred tax credit (charge) | £ 400 | £ (884) | £ 86 |
Deferred tax charge (credit) taken through other comprehensive income | 270 | 93 | (10) |
Unrealised gains and losses on investments | |||
Deferred tax credit (charge) | |||
Deferred tax credit (charge) | 667 | (185) | (437) |
Short-term temporary differences | |||
Deferred tax credit (charge) | |||
Deferred tax credit (charge) | (198) | (526) | 573 |
Balances relating to investment and insurance contracts | |||
Deferred tax credit (charge) | |||
Deferred tax credit (charge) | (91) | (156) | (90) |
Unused tax losses | |||
Deferred tax credit (charge) | |||
Deferred tax credit (charge) | 23 | (12) | 36 |
Capital allowances | |||
Deferred tax credit (charge) | |||
Deferred tax credit (charge) | £ (1) | £ (5) | £ 4 |
Tax charge - Reconciliation of
Tax charge - Reconciliation of effective tax rate (Details) - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Reconciliation of effective tax rate | ||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | £ 4,827 | £ 4,699 | £ 4,256 | |
Non-operating profit (loss) | (1,192) | (1,403) | (1,981) | |
Profit (loss) before tax, attributable to shareholders | [1] | £ 3,635 | £ 3,296 | £ 2,275 |
Expected tax rate, attributable to shareholders (as a percent) | 21.00% | 24.00% | 24.00% | |
Tax at the expected rate, attributable to shareholders | £ 774 | £ 789 | £ 557 | |
Tax at the expected rate, attributable to shareholders, percentage impact on ETR | 21.30% | 23.90% | 24.40% | |
Effects of recurring tax reconciliation items: | ||||
Income not taxable or taxable at concessionary rates | £ (59) | £ (91) | £ (67) | |
Income not taxable or taxable at concessionary rates, percentage impact on ETR | (1.60%) | (2.80%) | (2.90%) | |
Deductions not allowable for tax purposes | £ 67 | £ 55 | £ 60 | |
Deductions not allowable for tax purposes, percentage impact on ETR | 1.80% | 1.70% | 2.60% | |
Items related to taxation of life insurance businesses | £ (98) | £ (332) | £ (180) | |
Items related to taxation of life insurance businesses, percentage impact on ETR | (2.70%) | (10.10%) | (7.90%) | |
Deferred tax adjustments | £ (39) | £ 22 | £ (23) | |
Deferred tax adjustments, percentage impact on ETR | (1.10%) | 0.70% | (1.00%) | |
Effect of results of joint ventures and associates | £ (64) | £ (55) | £ (46) | |
Effect of results of joint ventures and associates, percentage impact on ETR | (1.80%) | (1.70%) | (2.00%) | |
Irrecoverable withholding taxes | £ 47 | £ 54 | £ 36 | |
Irrecoverable withholding taxes, percentage impact on ETR | 1.30% | 1.60% | 1.60% | |
Other | £ 3 | £ (5) | £ (4) | |
Other, percentage impact on ETR | 0.10% | (0.10%) | (0.10%) | |
Total effects of recurring tax reconciliation items | £ (143) | £ (352) | £ (224) | |
Total tax rate, Effects of recurring tax reconciliation items | (4.00%) | (10.70%) | (9.70%) | |
Effects of non-recurring tax reconciliation items: | ||||
Adjustments to tax charge in relation to prior years | £ (14) | £ (24) | £ (82) | |
Adjustments to tax charge in relation to prior years, percentage impact on ETR | (0.40%) | (0.70%) | (3.60%) | |
Movements in provisions for open tax matters | £ 5 | £ 44 | £ 51 | |
Movements in provisions for open tax matters, percentage impact on ETR | 0.20% | 1.30% | 2.20% | |
Impact of US tax reform | £ 445 | |||
Impact of US tax reform, percentage impact on ETR | 13.50% | |||
Adjustments in relation to business disposals/Write-down of Korea life business | £ 4 | £ 58 | ||
Adjustments in relation to business disposals/Write-down of Korea life business, percentage impact on ETR | 0.10% | 2.50% | ||
Impact of changes in local statutory tax rates | £ (6) | |||
Impact of changes in local statutory tax rates, percentage impact on ETR | (0.20%) | |||
Total effects of non-recurring tax reconciliation items | £ (9) | £ 469 | £ 21 | |
Total tax rate, Effects of non-recurring tax reconciliation items | (0.20%) | 14.20% | 0.90% | |
Total actual tax charge (credit), attributable to shareholders | £ 622 | £ 906 | £ 354 | |
Total actual tax charge (credit), attributable to shareholders, percentage impact on ETR | 17.10% | 27.40% | 15.60% | |
Analysed into: | ||||
Tax on adjusted IFRS operating profit based on longer-term investment returns | £ 792 | £ 971 | £ 894 | |
Tax on non-operating profit | £ (170) | £ (65) | £ (540) | |
Actual tax rate: | ||||
Adjusted IFRS operating profit based on longer-term investment returns, including non-recurring tax reconciling items (as a percent) | 16.00% | 21.00% | 21.00% | |
Operating profit based on longer-term investment returns, excluding non-recurring tax reconciling items (as a percent) | 16.00% | 20.00% | 22.00% | |
Total profit attributable to shareholders (as a percent) | 17.00% | 27.00% | 16.00% | |
Statutory transfer from unallocated surplus, percentage of actuarially determined surplus attributable to shareholders | 10.00% | |||
Net of tax profit attributable to with-profits policyholders | £ 0 | £ 0 | £ 0 | |
Hong Kong | ||||
Actual tax rate: | ||||
Percentage of net insurance premium used to calculate income tax charge | 5.00% | |||
Operating segments | ||||
Reconciliation of effective tax rate | ||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | £ 5,717 | 5,577 | 4,945 | |
Profit (loss) before tax, attributable to shareholders | 4,536 | 4,154 | 3,168 | |
Unallocated to a segment (central or other operations) | ||||
Reconciliation of effective tax rate | ||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | (890) | (878) | (689) | |
Non-operating profit (loss) | (11) | 20 | (204) | |
Profit (loss) before tax, attributable to shareholders | £ (901) | £ (858) | £ (893) | |
Expected tax rate, attributable to shareholders (as a percent) | 19.00% | 19.00% | 20.00% | |
Tax at the expected rate, attributable to shareholders | £ (171) | £ (163) | £ (179) | |
Effects of recurring tax reconciliation items: | ||||
Income not taxable or taxable at concessionary rates | (2) | (14) | (5) | |
Deductions not allowable for tax purposes | 10 | 10 | 22 | |
Deferred tax adjustments | (30) | (5) | (14) | |
Effect of results of joint ventures and associates | 2 | |||
Irrecoverable withholding taxes | 47 | 54 | 36 | |
Other | 3 | (1) | (7) | |
Total effects of recurring tax reconciliation items | 30 | 44 | 32 | |
Effects of non-recurring tax reconciliation items: | ||||
Adjustments to tax charge in relation to prior years | 14 | (3) | 5 | |
Movements in provisions for open tax matters | 1 | 31 | ||
Total effects of non-recurring tax reconciliation items | 15 | (3) | 36 | |
Total actual tax charge (credit), attributable to shareholders | (126) | (122) | (111) | |
Analysed into: | ||||
Tax on adjusted IFRS operating profit based on longer-term investment returns | (130) | (121) | (88) | |
Tax on non-operating profit | £ 4 | £ (1) | £ (23) | |
Actual tax rate: | ||||
Adjusted IFRS operating profit based on longer-term investment returns, including non-recurring tax reconciling items (as a percent) | 15.00% | 14.00% | 13.00% | |
Operating profit based on longer-term investment returns, excluding non-recurring tax reconciling items (as a percent) | 16.00% | 13.00% | 18.00% | |
Total profit attributable to shareholders (as a percent) | 14.00% | 14.00% | 12.00% | |
Excluding held for sale business | ||||
Actual tax rate: | ||||
Adjusted IFRS operating profit based on longer-term investment returns, including non-recurring tax reconciling items (as a percent) | 24.00% | |||
Operating profit based on longer-term investment returns, excluding non-recurring tax reconciling items (as a percent) | 21.00% | |||
Total profit attributable to shareholders (as a percent) | 14.00% | |||
Asia | Operating segments | ||||
Reconciliation of effective tax rate | ||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | £ 2,164 | £ 1,975 | £ 1,644 | |
Non-operating profit (loss) | (527) | 53 | (460) | |
Profit (loss) before tax, attributable to shareholders | £ 1,637 | £ 2,028 | £ 1,184 | |
Expected tax rate, attributable to shareholders (as a percent) | 22.00% | 21.00% | 22.00% | |
Tax at the expected rate, attributable to shareholders | £ 360 | £ 426 | £ 260 | |
Effects of recurring tax reconciliation items: | ||||
Income not taxable or taxable at concessionary rates | (34) | (64) | (31) | |
Deductions not allowable for tax purposes | 39 | 26 | 20 | |
Items related to taxation of life insurance businesses | (13) | (92) | (20) | |
Deferred tax adjustments | (11) | 11 | (11) | |
Effect of results of joint ventures and associates | (63) | (52) | (44) | |
Other | (3) | (10) | 3 | |
Total effects of recurring tax reconciliation items | (85) | (181) | (83) | |
Effects of non-recurring tax reconciliation items: | ||||
Adjustments to tax charge in relation to prior years | (3) | 1 | ||
Movements in provisions for open tax matters | 2 | 19 | 20 | |
Adjustments in relation to business disposals/Write-down of Korea life business | (8) | 58 | ||
Total effects of non-recurring tax reconciliation items | 2 | 8 | 79 | |
Total actual tax charge (credit), attributable to shareholders | 277 | 253 | 256 | |
Analysed into: | ||||
Tax on adjusted IFRS operating profit based on longer-term investment returns | 308 | 276 | 271 | |
Tax on non-operating profit | £ (31) | £ (23) | £ (15) | |
Actual tax rate: | ||||
Adjusted IFRS operating profit based on longer-term investment returns, including non-recurring tax reconciling items (as a percent) | 14.00% | 14.00% | 16.00% | |
Operating profit based on longer-term investment returns, excluding non-recurring tax reconciling items (as a percent) | 14.00% | 13.00% | 15.00% | |
Total profit attributable to shareholders (as a percent) | 17.00% | 12.00% | 22.00% | |
Asia | Excluding held for sale business | ||||
Actual tax rate: | ||||
Adjusted IFRS operating profit based on longer-term investment returns, including non-recurring tax reconciling items (as a percent) | 22.00% | |||
Operating profit based on longer-term investment returns, excluding non-recurring tax reconciling items (as a percent) | 16.00% | |||
Total profit attributable to shareholders (as a percent) | 18.00% | |||
US | Operating segments | ||||
Reconciliation of effective tax rate | ||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | £ 1,919 | £ 2,224 | £ 2,048 | |
Non-operating profit (loss) | (180) | (1,462) | (1,523) | |
Profit (loss) before tax, attributable to shareholders | £ 1,739 | £ 762 | £ 525 | |
Expected tax rate, attributable to shareholders (as a percent) | 21.00% | 35.00% | 35.00% | |
Tax at the expected rate, attributable to shareholders | £ 365 | £ 267 | £ 184 | |
Effects of recurring tax reconciliation items: | ||||
Income not taxable or taxable at concessionary rates | (17) | (11) | (18) | |
Deductions not allowable for tax purposes | 3 | 6 | 8 | |
Items related to taxation of life insurance businesses | (83) | (238) | (159) | |
Deferred tax adjustments | 17 | |||
Total effects of recurring tax reconciliation items | (97) | (226) | (169) | |
Effects of non-recurring tax reconciliation items: | ||||
Adjustments to tax charge in relation to prior years | (17) | (15) | (81) | |
Movements in provisions for open tax matters | 4 | 25 | ||
Impact of US tax reform | 445 | |||
Adjustments in relation to business disposals/Write-down of Korea life business | 12 | |||
Total effects of non-recurring tax reconciliation items | (13) | 467 | (81) | |
Total actual tax charge (credit), attributable to shareholders | 255 | 508 | (66) | |
Analysed into: | ||||
Tax on adjusted IFRS operating profit based on longer-term investment returns | 301 | 548 | 467 | |
Tax on non-operating profit | £ (46) | £ (40) | £ (533) | |
Actual tax rate: | ||||
Adjusted IFRS operating profit based on longer-term investment returns, including non-recurring tax reconciling items (as a percent) | 16.00% | 25.00% | 23.00% | |
Operating profit based on longer-term investment returns, excluding non-recurring tax reconciling items (as a percent) | 16.00% | 24.00% | 27.00% | |
Total profit attributable to shareholders (as a percent) | 15.00% | 67.00% | (13.00%) | |
Impact of US tax reform | ||||
Tax rate (as a percent) | 21.00% | 35.00% | ||
Deferred tax charge on remeasurement of net deferred tax assets, attributable to shareholders' returns | £ 445 | |||
Benefit reflected through reserves in other comprehensive income | 134 | |||
UK and Europe | Operating segments | ||||
Reconciliation of effective tax rate | ||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | £ 1,634 | 1,378 | £ 1,253 | |
Non-operating profit (loss) | (474) | (14) | 206 | |
Profit (loss) before tax, attributable to shareholders | £ 1,160 | £ 1,364 | £ 1,459 | |
Expected tax rate, attributable to shareholders (as a percent) | 19.00% | 19.00% | 20.00% | |
Tax at the expected rate, attributable to shareholders | £ 220 | £ 259 | £ 292 | |
Effects of recurring tax reconciliation items: | ||||
Income not taxable or taxable at concessionary rates | (6) | (2) | (13) | |
Deductions not allowable for tax purposes | 15 | 13 | 10 | |
Items related to taxation of life insurance businesses | (2) | (2) | (1) | |
Deferred tax adjustments | 2 | (1) | 2 | |
Effect of results of joint ventures and associates | (3) | (3) | (2) | |
Other | 3 | 6 | ||
Total effects of recurring tax reconciliation items | 9 | 11 | (4) | |
Effects of non-recurring tax reconciliation items: | ||||
Adjustments to tax charge in relation to prior years | (11) | (3) | (7) | |
Movements in provisions for open tax matters | (2) | |||
Impact of changes in local statutory tax rates | (6) | |||
Total effects of non-recurring tax reconciliation items | (13) | (3) | (13) | |
Total actual tax charge (credit), attributable to shareholders | 216 | 267 | 275 | |
Analysed into: | ||||
Tax on adjusted IFRS operating profit based on longer-term investment returns | 313 | 268 | 244 | |
Tax on non-operating profit | £ (97) | £ (1) | £ 31 | |
Actual tax rate: | ||||
Adjusted IFRS operating profit based on longer-term investment returns, including non-recurring tax reconciling items (as a percent) | 19.00% | 19.00% | 19.00% | |
Operating profit based on longer-term investment returns, excluding non-recurring tax reconciling items (as a percent) | 20.00% | 20.00% | 21.00% | |
Total profit attributable to shareholders (as a percent) | 19.00% | 20.00% | 19.00% | |
[1] | 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 with-profits funds after adjusting for taxes borne by policyholders. |
Tax charge - Provision for open
Tax charge - Provision for open tax matters (Details) £ in Millions | 12 Months Ended |
Dec. 31, 2018GBP (£) | |
Movements in provisions for open tax matters | |
Provision for open tax matters at beginning of period | £ (139) |
Tax charge attributable to shareholders | (5) |
Other movements | (5) |
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 | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Before tax | ||||
Adjusted IFRS operating profit (loss) based on longer-term investment returns | £ 4,827 | £ 4,699 | £ 4,256 | |
Short-term fluctuations in investment returns on shareholder-backed business | (558) | (1,563) | (1,678) | |
Amortisation of acquisition accounting adjustments | (46) | (63) | (76) | |
Cumulative exchange gain on sold business recycled from other comprehensive income | 61 | |||
(Loss) gain to disposal of businesses and corporate transactions | (588) | 162 | 227 | |
Profit (loss) before tax attributable to shareholders | [1] | 3,635 | 3,296 | 2,275 |
Tax | ||||
Based on operating profit based on longer-term investment returns | (792) | (971) | (894) | |
Short-term fluctuations in investment returns on shareholder-backed business | 53 | 572 | 519 | |
Amortisation of acquisition accounting adjustments | 9 | 20 | (25) | |
(Loss) profit attaching to disposal of businesses and corporate transactions | 108 | (82) | (4) | |
Impact of US Tax Reform | (445) | |||
Based on profit for the year | (622) | (906) | (354) | |
Non-controlling interests | ||||
Based on operating profit based on longer-term investment returns | (3) | (1) | ||
Based on profit for the year | (3) | (1) | ||
Net of tax and non-controlling interests | ||||
Based on operating profit based on longer-term investment returns | 4,032 | 3,727 | 3,362 | |
Short-term fluctuations in investment returns on shareholder-backed business | (505) | (991) | (1,159) | |
Amortisation of acquisition accounting adjustments | (37) | (43) | (51) | |
Cumulative exchange gain on sold business recycled from other comprehensive income | 61 | |||
(Loss) profit attaching to disposal of businesses and corporate transactions | (480) | 80 | 231 | |
Impact of US Tax Reform | (445) | |||
Profit for the year attributable to equity holders of the Company | £ 3,010 | £ 2,389 | £ 1,921 | |
Basic earnings per share | ||||
Based on operating profit based on longer-term investment returns (in GBP per share) | £ 1.566 | £ 1.452 | £ 1.313 | |
Short-term fluctuations in investment returns on shareholder-backed business (in GBP per share) | (0.197) | (0.386) | (0.453) | |
Amortisation of acquisition accounting adjustments (in GBP per share) | (0.014) | (0.017) | (0.020) | |
Cumulative exchange gain on sold business recycled from other comprehensive income (in GBP per share) | 0.024 | |||
(Loss) profit attaching to disposal of businesses and corporate transactions (in GBP per share) | (0.186) | 0.031 | (0.090) | |
Impact of US Tax Reform (in GBP per share) | (0.173) | |||
Based on profit for the year (in GBP per share) | 1.169 | 0.931 | 0.750 | |
Diluted earnings per share | ||||
Based on operating profit based on longer-term investment returns (in GBP per share) | 1.565 | 1.451 | 1.312 | |
Short-term fluctuations in investment returns on shareholder-backed business (in GBP per share) | (0.197) | (0.386) | (0.452) | |
Amortisation of acquisition accounting adjustments (in GBP per share) | (0.014) | (0.017) | (0.020) | |
Cumulative exchange gain on sold business recycled from other comprehensive income (in GBP per share) | 0.024 | |||
(Loss) profit attaching to disposal of businesses and corporate transactions (in GBP per share) | (0.186) | 0.031 | (0.090) | |
Impact of US Tax Reform (in GBP per share) | (0.173) | |||
Based on profit for the year (in GBP per share) | £ 1.168 | £ 0.930 | £ 0.750 | |
[1] | 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 with-profits funds after adjusting for taxes borne by policyholders. |
Earnings per share - Weighted a
Earnings per share - Weighted average shares (Details) shares in Millions, Options in Millions | 12 Months Ended | ||
Dec. 31, 2018Optionsshares | Dec. 31, 2017Optionsshares | Dec. 31, 2016Optionsshares | |
Weighted average number of shares for calculating earnings per share | |||
Basic earnings per share | 2,575 | 2,567 | 2,560 |
Shares under option | Options | 5 | 6 | 7 |
Number of shares that would have been issued at fair value on assumed option price | (4) | (5) | (5) |
Diluted earnings per share | 2,576 | 2,568 | 2,562 |
Dividends (Details)
Dividends (Details) - GBP (£) £ / shares in Units, £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Dividends relating to reporting year: | |||
First interim ordinary dividend (in GBP per share) | £ 0.1567 | £ 0.1450 | £ 0.1293 |
Second interim ordinary dividend (in GBP per share) | 0.3368 | 0.3250 | 0.3057 |
Total (in GBP per share) | £ 0.4935 | £ 0.4700 | £ 0.4350 |
First interim ordinary dividend | £ 406 | £ 375 | £ 333 |
Second interim ordinary dividend | 873 | 841 | 789 |
Total | £ 1,279 | £ 1,216 | £ 1,122 |
Dividends paid in reporting year: | |||
Current year first interim ordinary dividend (in GBP per share) | £ 0.1567 | £ 0.1450 | £ 0.1293 |
Second interim ordinary dividend/final ordinary dividend for prior year (in GBP per share) | 0.3250 | 0.3057 | 0.2647 |
Special dividend for prior year (in GBP per share) | 0.1000 | ||
Total (in GBP per share) | £ 0.4817 | £ 0.4507 | £ 49.4000 |
Current year first interim ordinary dividend | £ 404 | £ 373 | £ 332 |
Second interim ordinary dividend/final ordinary dividend for prior year | 840 | 786 | 679 |
Special dividend for prior year | 256 | ||
Total | £ 1,244 | £ 1,159 | £ 1,267 |
Analysis of Group statement o_3
Analysis of Group statement of financial position by segment (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Assets | |||||
Goodwill | £ 1,857 | £ 1,482 | £ 1,628 | ||
Deferred acquisition costs and other intangible assets | 11,923 | 11,011 | |||
Property, plant and equipment | 1,409 | 789 | 743 | ||
Reinsurers' share of insurance contract liabilities | 11,144 | 9,673 | |||
Deferred tax assets | 2,595 | 2,627 | |||
Current tax recoverable | 618 | 613 | |||
Accrued investment income | 2,749 | 2,676 | |||
Other debtors | 4,088 | 2,963 | |||
Investment properties | 17,925 | 16,497 | 14,646 | ||
Investment in joint ventures and associates accounted for using the equity method | 1,733 | 1,416 | |||
Loans | 18,010 | 17,042 | |||
Equity securities and portfolio holdings in unit trusts | [1] | 214,733 | 223,391 | ||
Debt securities | [1] | 175,356 | 171,374 | ||
Derivative assets | 3,494 | 4,801 | |||
Other investments | [1] | 6,512 | 5,622 | ||
Deposits | 11,796 | 11,236 | |||
Assets held for sale | [2] | 10,578 | 38 | ||
Cash and cash equivalents | 12,125 | 10,690 | 10,065 | £ 7,782 | |
Total assets | 508,645 | 493,941 | |||
Total equity | 17,267 | 16,094 | 14,667 | £ 12,956 | |
Liabilities | |||||
Insurance contract liabilities | 322,666 | 328,172 | 316,436 | ||
Investment contract liabilities with discretionary participation features | 67,413 | 62,677 | |||
Investment contract liabilities without discretionary participation features | 19,222 | 20,394 | |||
Unallocated surplus of with-profits funds | 15,845 | 16,951 | £ 14,317 | ||
Core structural borrowings of shareholder-financed businesses | 7,664 | 6,280 | |||
Operational borrowings attributable to shareholder-financed businesses | 998 | 1,791 | |||
Borrowings attributable to with-profits businesses | 3,940 | 3,716 | |||
Obligations under funding, securities lending and sale and repurchase agreements | 6,989 | 5,662 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 11,651 | 8,889 | |||
Deferred tax liabilities | 4,022 | 4,715 | |||
Current tax liabilities | 568 | 537 | |||
Accruals deferred income and other liabilities | 15,248 | 14,185 | |||
Provisions | 1,078 | 1,123 | |||
Derivative liabilities | 3,506 | 2,755 | |||
Liabilities held for sale | [2] | 10,568 | |||
Total liabilities | 491,378 | 477,847 | |||
Total equity and liabilities | 508,645 | 493,941 | |||
Unallocated to a segment (central or other operations) | |||||
Assets | |||||
Deferred acquisition costs and other intangible assets | 44 | 42 | |||
Property, plant and equipment | 3 | 3 | |||
Reinsurers' share of insurance contract liabilities | 2 | 3 | |||
Deferred tax assets | 55 | 58 | |||
Current tax recoverable | 118 | 93 | |||
Accrued investment income | 76 | 31 | |||
Other debtors | 1,968 | 2,121 | |||
Loans | 109 | ||||
Equity securities and portfolio holdings in unit trusts | 116 | 115 | |||
Debt securities | 1,967 | 2,307 | |||
Derivative assets | 111 | 123 | |||
Deposits | 160 | 362 | |||
Cash and cash equivalents | 2,182 | 1,290 | |||
Total assets | 6,802 | 6,657 | |||
Total equity | (3,485) | (3,325) | |||
Liabilities | |||||
Insurance contract liabilities | 37 | 31 | |||
Investment contract liabilities without discretionary participation features | 2 | 1 | |||
Core structural borrowings of shareholder-financed businesses | 7,468 | 6,096 | |||
Operational borrowings attributable to shareholder-financed businesses | 503 | 1,085 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 21 | 15 | |||
Deferred tax liabilities | 16 | 15 | |||
Current tax liabilities | 75 | 71 | |||
Accruals deferred income and other liabilities | 1,126 | 1,597 | |||
Provisions | 61 | 61 | |||
Derivative liabilities | 978 | 1,010 | |||
Total liabilities | 10,287 | 9,982 | |||
Total equity and liabilities | 6,802 | 6,657 | |||
Elimination of intra-group amounts | |||||
Assets | |||||
Reinsurers' share of insurance contract liabilities | (1,109) | (1,235) | |||
Current tax recoverable | (81) | (80) | |||
Other debtors | (5,285) | (5,199) | |||
Total assets | (6,475) | (6,514) | |||
Liabilities | |||||
Insurance contract liabilities | (1,109) | (1,235) | |||
Current tax liabilities | (81) | (80) | |||
Accruals deferred income and other liabilities | (5,285) | (5,199) | |||
Total liabilities | (6,475) | (6,514) | |||
Total equity and liabilities | (6,475) | (6,514) | |||
Asia | Operating segments | |||||
Assets | |||||
Goodwill | 498 | 305 | |||
Deferred acquisition costs and other intangible assets | 2,937 | 2,540 | |||
Property, plant and equipment | 129 | 125 | |||
Reinsurers' share of insurance contract liabilities | 2,777 | 1,960 | |||
Deferred tax assets | 119 | 112 | |||
Current tax recoverable | 26 | 58 | |||
Accrued investment income | 664 | 595 | |||
Other debtors | 2,978 | 2,675 | |||
Investment properties | 5 | 5 | |||
Investment in joint ventures and associates accounted for using the equity method | 991 | 912 | |||
Loans | 1,377 | 1,317 | |||
Equity securities and portfolio holdings in unit trusts | 32,150 | 29,976 | |||
Debt securities | 45,839 | 40,982 | |||
Derivative assets | 296 | 113 | |||
Deposits | 1,224 | 1,291 | |||
Cash and cash equivalents | 2,189 | 1,934 | |||
Total assets | 94,199 | 84,900 | |||
Total equity | 6,428 | 5,926 | |||
Liabilities | |||||
Insurance contract liabilities | 72,349 | 63,468 | |||
Investment contract liabilities with discretionary participation features | 375 | 337 | |||
Investment contract liabilities without discretionary participation features | 492 | 328 | |||
Unallocated surplus of with-profits funds | 2,511 | 3,474 | |||
Operational borrowings attributable to shareholder-financed businesses | 61 | 50 | |||
Borrowings attributable to with-profits businesses | 19 | 10 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 2,617 | 3,631 | |||
Deferred tax liabilities | 1,257 | 1,152 | |||
Current tax liabilities | 133 | 122 | |||
Accruals deferred income and other liabilities | 7,641 | 6,069 | |||
Provisions | 251 | 254 | |||
Derivative liabilities | 65 | 79 | |||
Total liabilities | 87,771 | 78,974 | |||
Total equity and liabilities | 94,199 | 84,900 | |||
US | Operating segments | |||||
Assets | |||||
Deferred acquisition costs and other intangible assets | 8,747 | 8,219 | |||
Property, plant and equipment | 246 | 214 | |||
Reinsurers' share of insurance contract liabilities | 6,662 | 6,424 | |||
Deferred tax assets | 2,295 | 2,300 | |||
Current tax recoverable | 311 | 298 | |||
Accrued investment income | 498 | 492 | |||
Other debtors | 238 | 248 | |||
Investment properties | 6 | 5 | |||
Loans | 11,066 | 9,630 | |||
Equity securities and portfolio holdings in unit trusts | 128,657 | 130,630 | |||
Debt securities | 41,594 | 35,378 | |||
Derivative assets | 574 | 1,611 | |||
Other investments | 927 | 848 | |||
Deposits | 92 | 43 | |||
Cash and cash equivalents | 3,005 | 1,658 | |||
Total assets | 204,918 | 197,998 | |||
Total equity | 5,624 | 5,248 | |||
Liabilities | |||||
Insurance contract liabilities | 182,432 | 177,728 | |||
Investment contract liabilities without discretionary participation features | 3,168 | 2,996 | |||
Core structural borrowings of shareholder-financed businesses | 196 | 184 | |||
Operational borrowings attributable to shareholder-financed businesses | 328 | 508 | |||
Obligations under funding, securities lending and sale and repurchase agreements | 5,765 | 4,304 | |||
Deferred tax liabilities | 1,688 | 1,845 | |||
Current tax liabilities | 115 | 47 | |||
Accruals deferred income and other liabilities | 5,324 | 5,109 | |||
Provisions | 23 | 24 | |||
Derivative liabilities | 255 | 5 | |||
Total liabilities | 199,294 | 192,750 | |||
Total equity and liabilities | 204,918 | 197,998 | |||
UK and Europe | Shareholder annuity portfolio being sold to Rothesay Life | |||||
Assets | |||||
Assets held for sale | 10,568 | ||||
Liabilities | |||||
Policyholder and other liabilities | 10,568 | ||||
UK and Europe | Operating segments | |||||
Assets | |||||
Goodwill | 1,359 | 1,177 | |||
Deferred acquisition costs and other intangible assets | 195 | 210 | |||
Property, plant and equipment | 1,031 | 447 | |||
Reinsurers' share of insurance contract liabilities | 2,812 | 2,521 | |||
Deferred tax assets | 126 | 157 | |||
Current tax recoverable | 244 | 244 | |||
Accrued investment income | 1,511 | 1,558 | |||
Other debtors | 4,189 | 3,118 | |||
Investment properties | 17,914 | 16,487 | |||
Investment in joint ventures and associates accounted for using the equity method | 742 | 504 | |||
Loans | 5,567 | 5,986 | |||
Equity securities and portfolio holdings in unit trusts | 53,810 | 62,670 | |||
Debt securities | 85,956 | 92,707 | |||
Derivative assets | 2,513 | 2,954 | |||
Other investments | 5,585 | 4,774 | |||
Deposits | 10,320 | 9,540 | |||
Assets held for sale | 10,578 | 38 | |||
Cash and cash equivalents | 4,749 | 5,808 | |||
Total assets | 209,201 | 210,900 | |||
Total equity | 8,700 | 8,245 | |||
Liabilities | |||||
Insurance contract liabilities | 68,957 | 88,180 | |||
Investment contract liabilities with discretionary participation features | 67,038 | 62,340 | |||
Investment contract liabilities without discretionary participation features | 15,560 | 17,069 | |||
Unallocated surplus of with-profits funds | 13,334 | 13,477 | |||
Operational borrowings attributable to shareholder-financed businesses | 106 | 148 | |||
Borrowings attributable to with-profits businesses | 3,921 | 3,706 | |||
Obligations under funding, securities lending and sale and repurchase agreements | 1,224 | 1,358 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 9,013 | 5,243 | |||
Deferred tax liabilities | 1,061 | 1,703 | |||
Current tax liabilities | 326 | 377 | |||
Accruals deferred income and other liabilities | 6,442 | 6,609 | |||
Provisions | 743 | 784 | |||
Derivative liabilities | 2,208 | 1,661 | |||
Liabilities held for sale | 10,568 | ||||
Total liabilities | 200,501 | 202,655 | |||
Total equity and liabilities | £ 209,201 | £ 210,900 | |||
[1] | Included within equity securities and portfolio holdings in unit trusts, debt securities and other investments are £8,278 million (31 December 2017: £8,232 million) of lent securities and assets subject to repurchase agreements. | ||||
[2] | Assets held for sale of £10,578 million include £10,568 million in respect of the reinsured UK annuity business. A corresponding amount is reflected in liabilities held for sale. See note D1.1 for further details. |
Analysis of Group statement o_4
Analysis of Group statement of financial position by segment - Accrued investment income and other debtors (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Accrued investment income and other debtors | ||
Interest receivable | £ 1,744 | £ 1,789 |
Other | 1,005 | 887 |
Total accrued investment income | 2,749 | 2,676 |
Other debtors comprises: | ||
Amounts due from Reinsurers | 218 | 134 |
Other | 3,415 | 2,417 |
Total other debtors | 4,088 | 2,963 |
Total accrued investment income and other debtors | 6,837 | 5,639 |
Policyholders | ||
Other debtors comprises: | ||
Amounts due from Policyholders and Intermediaries | 452 | 408 |
Intermediaries | ||
Other debtors comprises: | ||
Amounts due from Policyholders and Intermediaries | 3 | 4 |
Expected to be settled within one year | ||
Other debtors comprises: | ||
Total accrued investment income and other debtors | 6,151 | 4,957 |
Expected to be settled after one year | ||
Other debtors comprises: | ||
Total accrued investment income and other debtors | £ 686 | £ 682 |
Analysis of Group statement o_5
Analysis of Group statement of financial position by segment - Cash and cash equivalents (Details) - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash and cash equivalents | ||||
Cash | £ 5,759 | £ 6,623 | ||
Cash equivalents | 6,366 | 4,067 | ||
Total cash and cash equivalents | 12,125 | 10,690 | £ 10,065 | £ 7,782 |
Held centrally and available for general use by the Group | 349 | 328 | ||
Other funds not available for general use by the Group, including funds held for the benefit of policyholders | £ 11,776 | £ 10,362 | ||
Pounds sterling | ||||
Cash and cash equivalents | ||||
Percentage of cash and cash equivalents held in respective currencies | 32.00% | 31.00% | ||
US dollars | ||||
Cash and cash equivalents | ||||
Percentage of cash and cash equivalents held in respective currencies | 38.00% | 28.00% | ||
Euro | ||||
Cash and cash equivalents | ||||
Percentage of cash and cash equivalents held in respective currencies | 15.00% | 24.00% | ||
Other | ||||
Cash and cash equivalents | ||||
Percentage of cash and cash equivalents held in respective currencies | 15.00% | 17.00% |
Analysis of Group statement o_6
Analysis of Group statement of financial position by segment - Accruals, deferred income and other liabilities (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Analysis of Group statement of financial position by segment | ||
Accruals and deferred income | £ 1,700 | £ 1,233 |
Other creditors | 7,074 | 7,289 |
Creditors arising from direct insurance and reinsurance operations | 2,363 | 2,296 |
Interest payable | 117 | 100 |
Funds withheld under reinsurance of the REALIC business | 2,941 | 2,664 |
Other items | 1,053 | 603 |
Total accruals, deferred income and other liabilities | £ 15,248 | £ 14,185 |
Analysis of segment statement_3
Analysis of segment statement of financial position by business type (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Assets | |||||
Goodwill | £ 1,857 | £ 1,482 | £ 1,628 | ||
Deferred acquisition costs and other intangible assets | 11,923 | 11,011 | |||
Property, plant and equipment | 1,409 | 789 | 743 | ||
Reinsurers' share of insurance contract liabilities | 11,144 | 9,673 | |||
Deferred tax assets | 2,595 | 2,627 | |||
Current tax recoverable | 618 | 613 | |||
Accrued investment income | 2,749 | 2,676 | |||
Other debtors | 4,088 | 2,963 | |||
Investment properties | 17,925 | 16,497 | 14,646 | ||
Investment in joint ventures and associates accounted for using the equity method | 1,733 | 1,416 | |||
Loans | 18,010 | 17,042 | |||
Equity securities and portfolio holdings in unit trusts | [1] | 214,733 | 223,391 | ||
Debt securities | [1] | 175,356 | 171,374 | ||
Derivative assets | 3,494 | 4,801 | |||
Deposits | 11,796 | 11,236 | |||
Assets held for sale | [2] | 10,578 | 38 | ||
Other investments | [1] | 6,512 | 5,622 | ||
Cash and cash equivalents | 12,125 | 10,690 | 10,065 | £ 7,782 | |
Total assets | 508,645 | 493,941 | |||
Total equity | 17,267 | 16,094 | 14,667 | £ 12,956 | |
Liabilities | |||||
Insurance contract liabilities | 322,666 | 328,172 | 316,436 | ||
Investment contract liabilities with discretionary participation features | 67,413 | 62,677 | |||
Investment contract liabilities without discretionary participation features | 19,222 | 20,394 | |||
Unallocated surplus of with-profits funds | 15,845 | 16,951 | £ 14,317 | ||
Core structural borrowings of shareholder-financed businesses | 7,664 | 6,280 | |||
Operational borrowings attributable to shareholder-financed businesses | 998 | 1,791 | |||
Borrowings attributable to with-profits businesses | 3,940 | 3,716 | |||
Obligations under funding, securities lending and sale and repurchase agreements | 6,989 | 5,662 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 11,651 | 8,889 | |||
Deferred tax liabilities | 4,022 | 4,715 | |||
Current tax liabilities | 568 | 537 | |||
Accruals, deferred income and other liabilities | 15,248 | 14,185 | |||
Provisions | 1,078 | 1,123 | |||
Derivative liabilities | 3,506 | 2,755 | |||
Liabilities held for sale | [2] | 10,568 | |||
Total liabilities | 491,378 | 477,847 | |||
Total equity and liabilities | 508,645 | 493,941 | |||
With-profits | |||||
Assets | |||||
Goodwill | 206 | 24 | |||
Deferred acquisition costs and other intangible assets | 139 | 145 | |||
Operating segments | Asia | |||||
Assets | |||||
Goodwill | 498 | 305 | |||
Deferred acquisition costs and other intangible assets | 2,937 | 2,540 | |||
Property, plant and equipment | 129 | 125 | |||
Reinsurers' share of insurance contract liabilities | 2,777 | 1,960 | |||
Deferred tax assets | 119 | 112 | |||
Current tax recoverable | 26 | 58 | |||
Accrued investment income | 664 | 595 | |||
Other debtors | 2,978 | 2,675 | |||
Investment properties | 5 | 5 | |||
Investment in joint ventures and associates accounted for using the equity method | 991 | 912 | |||
Loans | 1,377 | 1,317 | |||
Equity securities and portfolio holdings in unit trusts | 32,150 | 29,976 | |||
Debt securities | 45,839 | 40,982 | |||
Derivative assets | 296 | 113 | |||
Deposits | 1,224 | 1,291 | |||
Cash and cash equivalents | 2,189 | 1,934 | |||
Total assets | 94,199 | 84,900 | |||
Total equity | 6,428 | 5,926 | |||
Liabilities | |||||
Insurance contract liabilities | 72,349 | 63,468 | |||
Investment contract liabilities with discretionary participation features | 375 | 337 | |||
Investment contract liabilities without discretionary participation features | 492 | 328 | |||
Unallocated surplus of with-profits funds | 2,511 | 3,474 | |||
Operational borrowings attributable to shareholder-financed businesses | 61 | 50 | |||
Borrowings attributable to with-profits businesses | 19 | 10 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 2,617 | 3,631 | |||
Deferred tax liabilities | 1,257 | 1,152 | |||
Current tax liabilities | 133 | 122 | |||
Accruals, deferred income and other liabilities | 7,641 | 6,069 | |||
Provisions | 251 | 254 | |||
Derivative liabilities | 65 | 79 | |||
Total liabilities | 87,771 | 78,974 | |||
Total equity and liabilities | 94,199 | 84,900 | |||
Operating segments | Asia asset management | |||||
Assets | |||||
Debt securities | 71 | ||||
Operating segments | US | |||||
Assets | |||||
Deferred acquisition costs and other intangible assets | 8,747 | 8,219 | |||
Property, plant and equipment | 246 | 214 | |||
Reinsurers' share of insurance contract liabilities | 6,662 | 6,424 | |||
Deferred tax assets | 2,295 | 2,300 | |||
Current tax recoverable | 311 | 298 | |||
Accrued investment income | 498 | 492 | |||
Other debtors | 238 | 248 | |||
Investment properties | 6 | 5 | |||
Loans | 11,066 | 9,630 | |||
Equity securities and portfolio holdings in unit trusts | 128,657 | 130,630 | |||
Debt securities | 41,594 | 35,378 | |||
Derivative assets | 574 | 1,611 | |||
Deposits | 92 | 43 | |||
Other investments | 927 | 848 | |||
Cash and cash equivalents | 3,005 | 1,658 | |||
Total assets | 204,918 | 197,998 | |||
Total equity | 5,624 | 5,248 | |||
Liabilities | |||||
Insurance contract liabilities | 182,432 | 177,728 | |||
Investment contract liabilities without discretionary participation features | 3,168 | 2,996 | |||
Core structural borrowings of shareholder-financed businesses | 196 | 184 | |||
Operational borrowings attributable to shareholder-financed businesses | 328 | 508 | |||
Obligations under funding, securities lending and sale and repurchase agreements | 5,765 | 4,304 | |||
Deferred tax liabilities | 1,688 | 1,845 | |||
Current tax liabilities | 115 | 47 | |||
Accruals, deferred income and other liabilities | 5,324 | 5,109 | |||
Provisions | 23 | 24 | |||
Derivative liabilities | 255 | 5 | |||
Total liabilities | 199,294 | 192,750 | |||
Total equity and liabilities | 204,918 | 197,998 | |||
Operating segments | UK and Europe | |||||
Assets | |||||
Goodwill | 1,359 | 1,177 | |||
Deferred acquisition costs and other intangible assets | 195 | 210 | |||
Property, plant and equipment | 1,031 | 447 | |||
Reinsurers' share of insurance contract liabilities | 2,812 | 2,521 | |||
Deferred tax assets | 126 | 157 | |||
Current tax recoverable | 244 | 244 | |||
Accrued investment income | 1,511 | 1,558 | |||
Other debtors | 4,189 | 3,118 | |||
Investment properties | 17,914 | 16,487 | |||
Investment in joint ventures and associates accounted for using the equity method | 742 | 504 | |||
Loans | 5,567 | 5,986 | |||
Equity securities and portfolio holdings in unit trusts | 53,810 | 62,670 | |||
Debt securities | 85,956 | 92,707 | |||
Derivative assets | 2,513 | 2,954 | |||
Deposits | 10,320 | 9,540 | |||
Assets held for sale | 10,578 | 38 | |||
Other investments | 5,585 | 4,774 | |||
Cash and cash equivalents | 4,749 | 5,808 | |||
Total assets | 209,201 | 210,900 | |||
Total equity | 8,700 | 8,245 | |||
Liabilities | |||||
Insurance contract liabilities | 68,957 | 88,180 | |||
Investment contract liabilities with discretionary participation features | 67,038 | 62,340 | |||
Investment contract liabilities without discretionary participation features | 15,560 | 17,069 | |||
Unallocated surplus of with-profits funds | 13,334 | 13,477 | |||
Operational borrowings attributable to shareholder-financed businesses | 106 | 148 | |||
Borrowings attributable to with-profits businesses | 3,921 | 3,706 | |||
Obligations under funding, securities lending and sale and repurchase agreements | 1,224 | 1,358 | |||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 9,013 | 5,243 | |||
Deferred tax liabilities | 1,061 | 1,703 | |||
Current tax liabilities | 326 | 377 | |||
Accruals, deferred income and other liabilities | 6,442 | 6,609 | |||
Provisions | 743 | 784 | |||
Derivative liabilities | 2,208 | 1,661 | |||
Liabilities held for sale | 10,568 | ||||
Total liabilities | 200,501 | 202,655 | |||
Total equity and liabilities | 209,201 | 210,900 | |||
Operating segments | With-profits | Asia | |||||
Assets | |||||
Loans | 792 | 725 | |||
Operating segments | With-profits | Asia insurance operations | |||||
Assets | |||||
Debt securities | 27,204 | 24,432 | |||
Operating segments | With-profits | UK and Europe | |||||
Assets | |||||
Loans | 3,853 | 4,268 | |||
Debt securities | 53,798 | 50,661 | |||
Operating segments | Unit-linked | Asia insurance operations | |||||
Assets | |||||
Debt securities | 3,981 | 3,507 | |||
Operating segments | Unit-linked | UK and Europe | |||||
Assets | |||||
Debt securities | 10,512 | 6,711 | |||
Operations within segments | Asia insurance operations | |||||
Assets | |||||
Goodwill | 251 | ||||
Deferred acquisition costs and other intangible assets | 2,926 | ||||
Property, plant and equipment | 124 | ||||
Reinsurers' share of insurance contract liabilities | 2,777 | ||||
Deferred tax assets | 109 | ||||
Current tax recoverable | 25 | ||||
Accrued investment income | 632 | ||||
Other debtors | 2,941 | ||||
Investment properties | 5 | ||||
Investment in joint ventures and associates accounted for using the equity method | 827 | ||||
Loans | 1,377 | ||||
Equity securities and portfolio holdings in unit trusts | 32,115 | ||||
Debt securities | 45,768 | ||||
Derivative assets | 296 | ||||
Deposits | 1,163 | ||||
Cash and cash equivalents | 2,070 | ||||
Total assets | 93,406 | ||||
Total equity | 5,868 | 5,525 | |||
Liabilities | |||||
Insurance contract liabilities | 72,349 | ||||
Investment contract liabilities with discretionary participation features | 375 | ||||
Investment contract liabilities without discretionary participation features | 492 | ||||
Unallocated surplus of with-profits funds | 2,511 | ||||
Operational borrowings attributable to shareholder-financed businesses | 61 | ||||
Borrowings attributable to with-profits businesses | 19 | ||||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 2,617 | ||||
Deferred tax liabilities | 1,255 | ||||
Current tax liabilities | 120 | ||||
Accruals, deferred income and other liabilities | 7,502 | ||||
Provisions | 172 | ||||
Derivative liabilities | 65 | ||||
Total liabilities | 87,538 | ||||
Total equity and liabilities | 93,406 | ||||
Operations within segments | Asia asset management | |||||
Assets | |||||
Goodwill | 247 | ||||
Deferred acquisition costs and other intangible assets | 11 | ||||
Property, plant and equipment | 5 | ||||
Deferred tax assets | 10 | ||||
Current tax recoverable | 1 | ||||
Accrued investment income | 32 | ||||
Other debtors | 77 | ||||
Investment in joint ventures and associates accounted for using the equity method | 164 | ||||
Equity securities and portfolio holdings in unit trusts | 35 | ||||
Debt securities | 71 | ||||
Deposits | 61 | ||||
Cash and cash equivalents | 119 | ||||
Total assets | 833 | ||||
Total equity | 560 | ||||
Liabilities | |||||
Deferred tax liabilities | 2 | ||||
Current tax liabilities | 13 | ||||
Accruals, deferred income and other liabilities | 179 | ||||
Provisions | 79 | ||||
Total liabilities | 273 | ||||
Total equity and liabilities | 833 | ||||
Operations within segments | Jackson (US insurance operations) | |||||
Assets | |||||
Deferred acquisition costs and other intangible assets | 8,747 | ||||
Property, plant and equipment | 243 | ||||
Reinsurers' share of insurance contract liabilities | 6,662 | ||||
Deferred tax assets | 2,271 | ||||
Current tax recoverable | 309 | ||||
Accrued investment income | 493 | ||||
Other debtors | 230 | ||||
Investment properties | 6 | ||||
Loans | 11,066 | ||||
Equity securities and portfolio holdings in unit trusts | 128,653 | ||||
Debt securities | 41,594 | ||||
Derivative assets | 574 | ||||
Other investments | 926 | ||||
Cash and cash equivalents | 2,976 | ||||
Total assets | 204,750 | ||||
Total equity | 5,584 | 5,013 | |||
Liabilities | |||||
Insurance contract liabilities | 182,432 | ||||
Investment contract liabilities without discretionary participation features | 3,168 | ||||
Core structural borrowings of shareholder-financed businesses | 196 | 184 | |||
Operational borrowings attributable to shareholder-financed businesses | 328 | ||||
Obligations under funding, securities lending and sale and repurchase agreements | 5,765 | ||||
Deferred tax liabilities | 1,688 | ||||
Current tax liabilities | 114 | ||||
Accruals, deferred income and other liabilities | 5,197 | ||||
Provisions | 23 | ||||
Derivative liabilities | 255 | ||||
Total liabilities | 199,166 | ||||
Total equity and liabilities | 204,750 | ||||
Operations within segments | Asset management (US) | |||||
Assets | |||||
Property, plant and equipment | 3 | ||||
Deferred tax assets | 24 | ||||
Current tax recoverable | 2 | ||||
Accrued investment income | 5 | ||||
Other debtors | 76 | ||||
Equity securities and portfolio holdings in unit trusts | 4 | ||||
Deposits | 92 | ||||
Other investments | 1 | ||||
Cash and cash equivalents | 29 | ||||
Total assets | 236 | ||||
Total equity | 40 | ||||
Liabilities | |||||
Current tax liabilities | 1 | ||||
Accruals, deferred income and other liabilities | 195 | ||||
Total liabilities | 196 | ||||
Total equity and liabilities | 236 | ||||
Operations within segments | UK and Europe insurance operations | |||||
Assets | |||||
Goodwill | 206 | ||||
Deferred acquisition costs and other intangible assets | 177 | ||||
Property, plant and equipment | 934 | ||||
Reinsurers' share of insurance contract liabilities | 2,812 | ||||
Deferred tax assets | 106 | ||||
Current tax recoverable | 238 | ||||
Accrued investment income | 1,504 | ||||
Other debtors | 3,318 | ||||
Investment properties | 17,914 | ||||
Investment in joint ventures and associates accounted for using the equity method | 705 | ||||
Loans | 5,567 | ||||
Equity securities and portfolio holdings in unit trusts | 53,587 | ||||
Debt securities | 85,956 | ||||
Derivative assets | 2,513 | ||||
Deposits | 10,320 | ||||
Assets held for sale | 10,578 | ||||
Other investments | 5,584 | ||||
Cash and cash equivalents | 4,398 | ||||
Total assets | 206,417 | ||||
Total equity | 6,540 | ||||
Liabilities | |||||
Insurance contract liabilities | 68,957 | ||||
Investment contract liabilities with discretionary participation features | 67,038 | ||||
Investment contract liabilities without discretionary participation features | 15,560 | ||||
Unallocated surplus of with-profits funds | 13,334 | ||||
Operational borrowings attributable to shareholder-financed businesses | 106 | ||||
Borrowings attributable to with-profits businesses | 3,921 | ||||
Obligations under funding, securities lending and sale and repurchase agreements | 1,224 | ||||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 9,013 | ||||
Deferred tax liabilities | 1,039 | ||||
Current tax liabilities | 298 | ||||
Accruals, deferred income and other liabilities | 6,096 | ||||
Provisions | 516 | ||||
Derivative liabilities | 2,207 | ||||
Liabilities held for sale | 10,568 | ||||
Total liabilities | 199,877 | ||||
Total equity and liabilities | 206,417 | ||||
Operations within segments | UK and Europe asset management | |||||
Assets | |||||
Goodwill | 1,153 | ||||
Deferred acquisition costs and other intangible assets | 18 | ||||
Property, plant and equipment | 97 | ||||
Deferred tax assets | 20 | ||||
Current tax recoverable | 6 | ||||
Accrued investment income | 7 | ||||
Other debtors | 1,011 | ||||
Investment in joint ventures and associates accounted for using the equity method | 37 | ||||
Equity securities and portfolio holdings in unit trusts | 223 | ||||
Other investments | 1 | ||||
Cash and cash equivalents | 351 | ||||
Total assets | 2,924 | ||||
Total equity | 2,160 | ||||
Liabilities | |||||
Deferred tax liabilities | 22 | ||||
Current tax liabilities | 28 | ||||
Accruals, deferred income and other liabilities | 486 | ||||
Provisions | 227 | ||||
Derivative liabilities | 1 | ||||
Total liabilities | 764 | ||||
Total equity and liabilities | 2,924 | ||||
Operations within segments | UK and Europe with-profits sub-funds | UK and Europe insurance operations | |||||
Assets | |||||
Goodwill | 206 | ||||
Deferred acquisition costs and other intangible assets | 83 | ||||
Property, plant and equipment | 895 | ||||
Reinsurers' share of insurance contract liabilities | 1,131 | ||||
Deferred tax assets | 61 | ||||
Current tax recoverable | 58 | ||||
Accrued investment income | 1,010 | ||||
Other debtors | 2,102 | ||||
Investment properties | 15,635 | ||||
Investment in joint ventures and associates accounted for using the equity method | 705 | ||||
Loans | 3,853 | ||||
Equity securities and portfolio holdings in unit trusts | 41,090 | ||||
Debt securities | 53,798 | ||||
Derivative assets | 1,957 | ||||
Deposits | 8,530 | ||||
Assets held for sale | 10 | ||||
Other investments | 5,573 | ||||
Cash and cash equivalents | 3,520 | ||||
Total assets | 140,217 | ||||
Liabilities | |||||
Insurance contract liabilities | 43,775 | ||||
Investment contract liabilities with discretionary participation features | 67,018 | ||||
Investment contract liabilities without discretionary participation features | 2 | ||||
Unallocated surplus of with-profits funds | 13,334 | ||||
Borrowings attributable to with-profits businesses | 3,921 | ||||
Obligations under funding, securities lending and sale and repurchase agreements | 999 | ||||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 4,349 | ||||
Deferred tax liabilities | 892 | ||||
Current tax liabilities | 29 | ||||
Accruals, deferred income and other liabilities | 4,601 | ||||
Provisions | 32 | ||||
Derivative liabilities | 1,265 | ||||
Total liabilities | 140,217 | ||||
Total equity and liabilities | 140,217 | ||||
Operations within segments | With-profits | Asia insurance operations | |||||
Assets | |||||
Deferred acquisition costs and other intangible assets | 56 | ||||
Property, plant and equipment | 90 | ||||
Reinsurers' share of insurance contract liabilities | 63 | ||||
Accrued investment income | 254 | ||||
Other debtors | 1,676 | ||||
Loans | 792 | ||||
Equity securities and portfolio holdings in unit trusts | 17,165 | ||||
Debt securities | 27,204 | ||||
Derivative assets | 201 | ||||
Deposits | 250 | ||||
Cash and cash equivalents | 870 | ||||
Total assets | 48,621 | ||||
Liabilities | |||||
Insurance contract liabilities | 40,389 | ||||
Investment contract liabilities with discretionary participation features | 375 | ||||
Unallocated surplus of with-profits funds | 2,511 | ||||
Borrowings attributable to with-profits businesses | 19 | ||||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 1,242 | ||||
Deferred tax liabilities | 812 | ||||
Current tax liabilities | 27 | ||||
Accruals, deferred income and other liabilities | 3,138 | ||||
Provisions | 57 | ||||
Derivative liabilities | 51 | ||||
Total liabilities | 48,621 | ||||
Total equity and liabilities | 48,621 | ||||
Operations within segments | With-profits | Scottish Amicable Insurance Fund | UK and Europe insurance operations | |||||
Assets | |||||
Total assets | 4,844 | 5,768 | |||
Operations within segments | With-profits | UK with-profits fund | UK and Europe insurance operations | |||||
Liabilities | |||||
Non-profits annuities liabilities | 9,500 | £ 10,600 | |||
Operations within segments | Unit-linked | Asia insurance operations | |||||
Assets | |||||
Deferred tax assets | 1 | ||||
Current tax recoverable | 2 | ||||
Accrued investment income | 51 | ||||
Other debtors | 730 | ||||
Equity securities and portfolio holdings in unit trusts | 12,804 | ||||
Debt securities | 3,981 | ||||
Derivative assets | 4 | ||||
Deposits | 455 | ||||
Cash and cash equivalents | 326 | ||||
Total assets | 18,354 | ||||
Liabilities | |||||
Insurance contract liabilities | 15,876 | ||||
Investment contract liabilities without discretionary participation features | 492 | ||||
Operational borrowings attributable to shareholder-financed businesses | 50 | ||||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 1,024 | ||||
Deferred tax liabilities | 21 | ||||
Accruals, deferred income and other liabilities | 889 | ||||
Derivative liabilities | 2 | ||||
Total liabilities | 18,354 | ||||
Total equity and liabilities | 18,354 | ||||
Operations within segments | Unit-linked | UK and Europe other funds and subsidiaries | UK and Europe insurance operations | |||||
Assets | |||||
Reinsurers' share of insurance contract liabilities | 115 | ||||
Current tax recoverable | 6 | ||||
Accrued investment income | 116 | ||||
Other debtors | 575 | ||||
Investment properties | 618 | ||||
Equity securities and portfolio holdings in unit trusts | 12,477 | ||||
Debt securities | 10,512 | ||||
Derivative assets | 1 | ||||
Deposits | 1,101 | ||||
Other investments | 10 | ||||
Cash and cash equivalents | 190 | ||||
Total assets | 25,721 | ||||
Liabilities | |||||
Insurance contract liabilities | 5,219 | ||||
Investment contract liabilities without discretionary participation features | 15,498 | ||||
Operational borrowings attributable to shareholder-financed businesses | 4 | ||||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 4,643 | ||||
Accruals, deferred income and other liabilities | 354 | ||||
Derivative liabilities | 3 | ||||
Total liabilities | 25,721 | ||||
Total equity and liabilities | 25,721 | ||||
Operations within segments | Other business | Asia insurance operations | |||||
Assets | |||||
Goodwill | 251 | ||||
Deferred acquisition costs and other intangible assets | 2,870 | ||||
Property, plant and equipment | 34 | ||||
Reinsurers' share of insurance contract liabilities | 2,714 | ||||
Deferred tax assets | 108 | ||||
Current tax recoverable | 23 | ||||
Accrued investment income | 327 | ||||
Other debtors | 535 | ||||
Investment properties | 5 | ||||
Investment in joint ventures and associates accounted for using the equity method | 827 | ||||
Loans | 585 | ||||
Equity securities and portfolio holdings in unit trusts | 2,146 | ||||
Debt securities | 14,583 | ||||
Derivative assets | 91 | ||||
Deposits | 458 | ||||
Cash and cash equivalents | 874 | ||||
Total assets | 26,431 | ||||
Total equity | 5,868 | ||||
Liabilities | |||||
Insurance contract liabilities | 16,084 | ||||
Operational borrowings attributable to shareholder-financed businesses | 11 | ||||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 351 | ||||
Deferred tax liabilities | 422 | ||||
Current tax liabilities | 93 | ||||
Accruals, deferred income and other liabilities | 3,475 | ||||
Provisions | 115 | ||||
Derivative liabilities | 12 | ||||
Total liabilities | 20,563 | ||||
Total equity and liabilities | 26,431 | ||||
Operations within segments | Variable annuity separate account | Jackson (US insurance operations) | |||||
Assets | |||||
Equity securities and portfolio holdings in unit trusts | 128,220 | ||||
Total assets | 128,220 | ||||
Liabilities | |||||
Insurance contract liabilities | 128,220 | ||||
Total liabilities | 128,220 | ||||
Total equity and liabilities | 128,220 | ||||
Operations within segments | Fixed annuity, GIC and other business | Jackson (US insurance operations) | |||||
Assets | |||||
Deferred acquisition costs and other intangible assets | 8,747 | ||||
Property, plant and equipment | 243 | ||||
Reinsurers' share of insurance contract liabilities | 6,662 | ||||
Deferred tax assets | 2,271 | ||||
Current tax recoverable | 309 | ||||
Accrued investment income | 493 | ||||
Other debtors | 230 | ||||
Investment properties | 6 | ||||
Loans | 11,066 | ||||
Equity securities and portfolio holdings in unit trusts | 433 | ||||
Debt securities | 41,594 | ||||
Derivative assets | 574 | ||||
Other investments | 926 | ||||
Cash and cash equivalents | 2,976 | ||||
Total assets | 76,530 | ||||
Total equity | 5,584 | ||||
Liabilities | |||||
Insurance contract liabilities | 54,212 | ||||
Investment contract liabilities without discretionary participation features | 3,168 | ||||
Core structural borrowings of shareholder-financed businesses | 196 | ||||
Operational borrowings attributable to shareholder-financed businesses | 328 | ||||
Obligations under funding, securities lending and sale and repurchase agreements | 5,765 | ||||
Deferred tax liabilities | 1,688 | ||||
Current tax liabilities | 114 | ||||
Accruals, deferred income and other liabilities | 5,197 | ||||
Provisions | 23 | ||||
Derivative liabilities | 255 | ||||
Total liabilities | 70,946 | ||||
Total equity and liabilities | 76,530 | ||||
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 | 94 | ||||
Property, plant and equipment | 39 | ||||
Reinsurers' share of insurance contract liabilities | 1,566 | ||||
Deferred tax assets | 45 | ||||
Current tax recoverable | 174 | ||||
Accrued investment income | 378 | ||||
Other debtors | 641 | ||||
Investment properties | 1,661 | ||||
Loans | 1,714 | ||||
Equity securities and portfolio holdings in unit trusts | 20 | ||||
Debt securities | 21,646 | ||||
Derivative assets | 555 | ||||
Deposits | 689 | ||||
Assets held for sale | 10,568 | ||||
Other investments | 1 | ||||
Cash and cash equivalents | 688 | ||||
Total assets | 40,479 | ||||
Total equity | 6,540 | ||||
Liabilities | |||||
Insurance contract liabilities | 19,963 | ||||
Investment contract liabilities with discretionary participation features | 20 | ||||
Investment contract liabilities without discretionary participation features | 60 | ||||
Operational borrowings attributable to shareholder-financed businesses | 102 | ||||
Obligations under funding, securities lending and sale and repurchase agreements | 225 | ||||
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | 21 | ||||
Deferred tax liabilities | 147 | ||||
Current tax liabilities | 269 | ||||
Accruals, deferred income and other liabilities | 1,141 | ||||
Provisions | 484 | ||||
Derivative liabilities | 939 | ||||
Liabilities held for sale | 10,568 | ||||
Total liabilities | 33,939 | ||||
Total equity and liabilities | 40,479 | ||||
Elimination of intra-segment amounts | Asia | |||||
Assets | |||||
Other debtors | (40) | ||||
Total assets | (40) | ||||
Liabilities | |||||
Accruals, deferred income and other liabilities | (40) | ||||
Total liabilities | (40) | ||||
Total equity and liabilities | (40) | ||||
Elimination of intra-segment amounts | US | |||||
Assets | |||||
Other debtors | (68) | ||||
Total assets | (68) | ||||
Liabilities | |||||
Accruals, deferred income and other liabilities | (68) | ||||
Total liabilities | (68) | ||||
Total equity and liabilities | (68) | ||||
Elimination of intra-segment amounts | UK and Europe | |||||
Assets | |||||
Other debtors | (140) | ||||
Total assets | (140) | ||||
Liabilities | |||||
Accruals, deferred income and other liabilities | (140) | ||||
Total liabilities | (140) | ||||
Total equity and liabilities | £ (140) | ||||
[1] | Included within equity securities and portfolio holdings in unit trusts, debt securities and other investments are £8,278 million (31 December 2017: £8,232 million) of lent securities and assets subject to repurchase agreements. | ||||
[2] | Assets held for sale of £10,578 million include £10,568 million in respect of the reinsured UK annuity business. A corresponding amount is reflected in liabilities held for sale. See note D1.1 for further details. |
Group assets and liabilities _3
Group assets and liabilities - measurement - Carried at fair value (Details) - At fair value - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 401,342 | £ 407,270 | |
Total financial instruments at fair value | £ 368,625 | £ 376,066 | |
Percentage of total | 100.00% | 100.00% | |
Loans | |||
Financial instruments | |||
Financial assets | £ 4,753 | £ 4,837 | |
Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | 214,733 | 223,391 | |
Debt securities | |||
Financial instruments | |||
Financial assets | 175,356 | 171,374 | |
Financial assets classified as available-for-sale | 40,849 | 35,293 | |
Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 10,006 | 10,423 | |
Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (3,506) | (2,755) | |
Investment contract liabilities without discretionary participation features held at fair value | |||
Financial instruments | |||
Financial liabilities | (16,054) | (17,397) | |
Borrowings attributable to with-profits businesses | |||
Financial instruments | |||
Financial liabilities | (1,606) | (1,887) | |
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | (11,651) | (8,889) | |
Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | (3,406) | (3,031) | |
Level 1 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 262,048 | 273,681 | |
Total financial instruments at fair value | £ 255,196 | £ 268,845 | |
Percentage of total | 70.00% | 72.00% | |
Level 1 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 208,264 | £ 218,083 | |
Level 1 | Debt securities | |||
Financial instruments | |||
Financial assets | 53,663 | 55,579 | |
Level 1 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 210 | 87 | |
Level 1 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (89) | (68) | |
Level 1 | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | (6,852) | (4,836) | |
Level 2 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 127,995 | 123,815 | |
Total financial instruments at fair value | £ 108,128 | £ 102,778 | |
Percentage of total | 29.00% | 27.00% | |
Level 2 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 5,954 | £ 4,937 | |
Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 120,511 | 115,141 | |
Level 2 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 4,524 | 5,912 | |
Level 2 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (2,994) | (2,175) | |
Level 2 | Investment contract liabilities without discretionary participation features held at fair value | |||
Financial instruments | |||
Financial liabilities | (16,054) | (17,397) | |
Level 2 | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | (3,811) | (3,640) | |
Level 2 | Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | (2) | ||
Level 3 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 11,299 | 9,774 | |
Total financial instruments at fair value | £ 5,301 | £ 4,443 | £ 4,593 |
Percentage of total | 1.00% | 1.00% | |
Level 3 | Loans | |||
Financial instruments | |||
Financial assets | £ 4,753 | £ 4,837 | 2,699 |
Level 3 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | 515 | 371 | 722 |
Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 1,182 | 654 | 942 |
Level 3 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 5,272 | 4,424 | 4,480 |
Level 3 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (423) | (512) | (516) |
Level 3 | Borrowings attributable to with-profits businesses | |||
Financial instruments | |||
Financial liabilities | (1,606) | (1,887) | |
Level 3 | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | (988) | (413) | (883) |
Level 3 | Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | (3,404) | (3,031) | £ (2,851) |
With-profits | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 147,375 | £ 145,847 | |
Percentage of total | 100.00% | 100.00% | |
With-profits | Loans | |||
Financial instruments | |||
Financial assets | £ 1,703 | £ 2,023 | |
With-profits | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | 58,255 | 62,168 | |
With-profits | Debt securities | |||
Financial instruments | |||
Financial assets | 81,002 | 75,093 | |
With-profits | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 7,731 | 7,246 | |
With-profits | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (1,316) | (683) | |
With-profits | Level 1 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 83,588 | £ 86,490 | |
Percentage of total | 57.00% | 60.00% | |
With-profits | Level 1 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 52,320 | £ 57,347 | |
With-profits | Level 1 | Debt securities | |||
Financial instruments | |||
Financial assets | 31,210 | 29,143 | |
With-profits | Level 1 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 143 | 68 | |
With-profits | Level 1 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (85) | (68) | |
With-profits | Level 2 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 56,460 | £ 53,095 | |
Percentage of total | 38.00% | 36.00% | |
With-profits | Level 2 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 5,447 | £ 4,470 | |
With-profits | Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 48,981 | 45,602 | |
With-profits | Level 2 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 3,263 | 3,638 | |
With-profits | Level 2 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (1,231) | (615) | |
With-profits | Level 3 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 7,327 | £ 6,262 | |
Percentage of total | 5.00% | 4.00% | |
With-profits | Level 3 | Loans | |||
Financial instruments | |||
Financial assets | £ 1,703 | £ 2,023 | |
With-profits | Level 3 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | 488 | 351 | |
With-profits | Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 811 | 348 | |
With-profits | Level 3 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 4,325 | 3,540 | |
Unit-linked and variable annuity separate account | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 168,004 | £ 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 | £ 153,501 | £ 159,098 | |
Unit-linked and variable annuity separate account | Debt securities | |||
Financial instruments | |||
Financial assets | 14,493 | 10,219 | |
Unit-linked and variable annuity separate account | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 15 | 24 | |
Unit-linked and variable annuity separate account | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (5) | (1) | |
Unit-linked and variable annuity separate account | Level 1 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 157,757 | £ 163,636 | |
Percentage of total | 94.00% | 97.00% | |
Unit-linked and variable annuity separate account | Level 1 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 152,987 | £ 158,631 | |
Unit-linked and variable annuity separate account | Level 1 | Debt securities | |||
Financial instruments | |||
Financial assets | 4,766 | 4,993 | |
Unit-linked and variable annuity separate account | Level 1 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 6 | 12 | |
Unit-linked and variable annuity separate account | Level 1 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (2) | ||
Unit-linked and variable annuity separate account | Level 2 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 10,232 | £ 5,686 | |
Percentage of total | 6.00% | 3.00% | |
Unit-linked and variable annuity separate account | Level 2 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 505 | £ 457 | |
Unit-linked and variable annuity separate account | Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 9,727 | 5,226 | |
Unit-linked and variable annuity separate account | Level 2 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 3 | 4 | |
Unit-linked and variable annuity separate account | Level 2 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (3) | (1) | |
Unit-linked and variable annuity separate account | Level 3 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 15 | £ 18 | |
Percentage of total | 0.00% | 0.00% | |
Unit-linked and variable annuity separate account | Level 3 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 9 | £ 10 | |
Unit-linked and variable annuity separate account | Level 3 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 6 | 8 | |
Non-linked shareholder-backed | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 85,963 | £ 92,083 | |
Percentage of total | 100.00% | 100.00% | |
Non-linked shareholder-backed | Loans | |||
Financial instruments | |||
Financial assets | £ 3,050 | £ 2,814 | |
Non-linked shareholder-backed | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | 2,977 | 2,125 | |
Non-linked shareholder-backed | Debt securities | |||
Financial instruments | |||
Financial assets | 79,861 | 86,062 | |
Non-linked shareholder-backed | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 2,260 | 3,153 | |
Non-linked shareholder-backed | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (2,185) | (2,071) | |
Non-linked shareholder-backed | Level 1 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 20,703 | £ 23,555 | |
Percentage of total | 24.00% | 25.00% | |
Non-linked shareholder-backed | Level 1 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 2,957 | £ 2,105 | |
Non-linked shareholder-backed | Level 1 | Debt securities | |||
Financial instruments | |||
Financial assets | 17,687 | 21,443 | |
Non-linked shareholder-backed | Level 1 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 61 | 7 | |
Non-linked shareholder-backed | Level 1 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (2) | ||
Non-linked shareholder-backed | Level 2 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 61,303 | £ 65,034 | |
Percentage of total | 71.00% | 71.00% | |
Non-linked shareholder-backed | Level 2 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | £ 2 | £ 10 | |
Non-linked shareholder-backed | Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 61,803 | 64,313 | |
Non-linked shareholder-backed | Level 2 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 1,258 | 2,270 | |
Non-linked shareholder-backed | Level 2 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (1,760) | (1,559) | |
Non-linked shareholder-backed | Level 3 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | £ 3,957 | £ 3,494 | |
Percentage of total | 5.00% | 4.00% | |
Non-linked shareholder-backed | Level 3 | Loans | |||
Financial instruments | |||
Financial assets | £ 3,050 | £ 2,814 | |
Non-linked shareholder-backed | Level 3 | Equity securities and portfolio holdings in unit trusts | |||
Financial instruments | |||
Financial assets | 18 | 10 | |
Non-linked shareholder-backed | Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 371 | 306 | |
Non-linked shareholder-backed | Level 3 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 941 | 876 | |
Non-linked shareholder-backed | Level 3 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | £ (423) | £ (512) |
Group assets and liabilities _4
Group assets and liabilities - measurement - Investment properties (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Group assets and liabilities - measurement | |||
Investment properties at fair value | £ 508,645 | £ 493,941 | |
Investment properties | At fair value | |||
Group assets and liabilities - measurement | |||
Investment properties at fair value | 17,925 | 16,497 | |
Level 3 | Investment properties | At fair value | |||
Group assets and liabilities - measurement | |||
Investment properties at fair value | £ 17,925 | £ 16,497 | £ 14,646 |
Group assets and liabilities _5
Group assets and liabilities - measurement - Fair value disclosed (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Financial instruments | |||
Financial liabilities, carrying value | £ (46,490) | £ (40,523) | |
Debt securities | [1] | 175,356 | 171,374 |
Core structural borrowings of shareholder-financed businesses | 7,664 | 6,280 | |
Core structural borrowings of shareholder-financed businesses | |||
Financial instruments | |||
Financial liabilities, carrying value | (7,664) | (6,280) | |
Operational borrowings attributable to shareholder-financed businesses | |||
Financial instruments | |||
Financial liabilities, carrying value | (998) | (1,791) | |
Borrowings attributable to with-profits businesses | |||
Financial instruments | |||
Financial liabilities, carrying value | (3,940) | (3,716) | |
Obligations under funding, securities lending and sale and repurchase agreements | |||
Financial instruments | |||
Financial liabilities, carrying value | (6,989) | (5,662) | |
Assets and liabilities at amortised cost and their fair value | |||
Financial instruments | |||
Financial assets, carrying value | 13,300 | ||
Assets and liabilities at amortised cost and their fair value | Loans | |||
Financial instruments | |||
Financial assets, fair value | 13,666 | 12,939 | |
Financial assets, carrying value | 13,257 | 12,205 | |
Allowance for loan losses | 46 | 28 | |
Assets and liabilities at amortised cost and their fair value | Investment contract liabilities without discretionary participation features held at fair value | |||
Financial instruments | |||
Financial liabilities, fair value | (3,157) | (3,032) | |
Financial liabilities, carrying value | (3,168) | (2,997) | |
Assets and liabilities at amortised cost and their fair value | Core structural borrowings of shareholder-financed businesses | |||
Financial instruments | |||
Financial liabilities, fair value | (7,847) | (7,023) | |
Financial liabilities, carrying value | (7,664) | (6,280) | |
Assets and liabilities at amortised cost and their fair value | Operational borrowings attributable to shareholder-financed businesses | |||
Financial instruments | |||
Financial liabilities, fair value | (998) | (1,791) | |
Financial liabilities, carrying value | (998) | (1,791) | |
Assets and liabilities at amortised cost and their fair value | Borrowings attributable to with-profits businesses | |||
Financial instruments | |||
Financial liabilities, fair value | (2,103) | (1,832) | |
Financial liabilities, carrying value | (2,334) | (1,829) | |
Assets and liabilities at amortised cost and their fair value | Obligations under funding, securities lending and sale and repurchase agreements | |||
Financial instruments | |||
Financial liabilities, fair value | (7,008) | (5,728) | |
Financial liabilities, carrying value | (6,989) | (5,662) | |
Assets and liabilities at amortised cost and their fair value | Convertible bonds | |||
Financial instruments | |||
Debt securities | 376 | 312 | |
Core structural borrowings of shareholder-financed businesses | 981 | 1,311 | |
Assets and liabilities at amortised cost and their fair value | Level 2 | Loans | |||
Financial instruments | |||
Financial assets, fair value | 2,898 | 2,756 | |
Assets and liabilities at amortised cost and their fair value | Level 2 | Core structural borrowings of shareholder-financed businesses | |||
Financial instruments | |||
Financial liabilities, fair value | (7,847) | (7,023) | |
Assets and liabilities at amortised cost and their fair value | Level 2 | Operational borrowings attributable to shareholder-financed businesses | |||
Financial instruments | |||
Financial liabilities, fair value | (994) | (1,788) | |
Assets and liabilities at amortised cost and their fair value | Level 2 | Borrowings attributable to with-profits businesses | |||
Financial instruments | |||
Financial liabilities, fair value | (2,035) | (1,761) | |
Assets and liabilities at amortised cost and their fair value | Level 2 | Obligations under funding, securities lending and sale and repurchase agreements | |||
Financial instruments | |||
Financial liabilities, fair value | (1,258) | (1,410) | |
Assets and liabilities at amortised cost and their fair value | Level 3 | Loans | |||
Financial instruments | |||
Financial assets, fair value | 10,768 | 10,183 | |
Assets and liabilities at amortised cost and their fair value | Level 3 | Investment contract liabilities without discretionary participation features held at fair value | |||
Financial instruments | |||
Financial liabilities, fair value | (3,157) | (3,032) | |
Assets and liabilities at amortised cost and their fair value | Level 3 | Operational borrowings attributable to shareholder-financed businesses | |||
Financial instruments | |||
Financial liabilities, fair value | (4) | (3) | |
Assets and liabilities at amortised cost and their fair value | Level 3 | Borrowings attributable to with-profits businesses | |||
Financial instruments | |||
Financial liabilities, fair value | (68) | (71) | |
Assets and liabilities at amortised cost and their fair value | Level 3 | Obligations under funding, securities lending and sale and repurchase agreements | |||
Financial instruments | |||
Financial liabilities, fair value | £ (5,750) | £ (4,318) | |
[1] | Included within equity securities and portfolio holdings in unit trusts, debt securities and other investments are £8,278 million (31 December 2017: £8,232 million) of lent securities and assets subject to repurchase agreements. |
Group assets and liabilities _6
Group assets and liabilities - measurement - Valuation approach for level 2 (Details) - At fair value - Debt securities - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Group assets and liabilities - measurement | ||
Financial assets | £ 175,356 | £ 171,374 |
Level 2 | ||
Group assets and liabilities - measurement | ||
Financial assets | 120,511 | 115,141 |
Level 2 | Internal valuation | ||
Group assets and liabilities - measurement | ||
Financial assets | £ 15,425 | £ 13,910 |
Group assets and liabilities _7
Group assets and liabilities - measurement - Level 3 financial instruments (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
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 | £ 398 | £ (139) |
At fair value | ||
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 | 368,625 | 376,066 |
At fair value | Level 3 | ||
Reconciliation of movements in level 3 net financial instruments measured at fair value | ||
Financial instruments at beginning of period | 4,443 | 4,593 |
Total gains/(losses) in income statement | 434 | (402) |
Total (losses)/gains recorded as other comprehensive income | 84 | (134) |
Purchases | 2,055 | 3,245 |
Sales | (1,157) | (1,715) |
Settled | 303 | 1,326 |
Issued | (899) | (2,298) |
Transfers into level 3 | 8 | (80) |
Transfers out of level 3 | 30 | (92) |
Financial instruments at end of period | 5,301 | 4,443 |
Net unrealised gains (losses) of financial instruments still held at end of year | 398 | (139) |
At fair value | Financial investments, net of derivative liabilities | Level 3 | ||
Reconciliation of movements in level 3 net financial instruments measured at fair value | ||
Financial instruments at beginning of period | 9,774 | 8,327 |
Total gains/(losses) in income statement | 385 | 156 |
Total (losses)/gains recorded as other comprehensive income | 223 | (384) |
Purchases | 2,055 | 3,258 |
Sales | (1,157) | (1,715) |
Settled | (331) | (317) |
Issued | 279 | 236 |
Transfers into level 3 | 8 | 305 |
Transfers out of level 3 | 63 | (92) |
Financial instruments at end of period | 11,299 | 9,774 |
At fair value | Loans | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 4,837 | |
Assets at end of period | 4,753 | 4,837 |
At fair value | 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 | (78) | 17 |
Total (losses)/gains recorded as other comprehensive income | 162 | (235) |
Purchases | 62 | 2,129 |
Sales | (178) | |
Settled | (331) | (311) |
Issued | 279 | 236 |
Transfers into level 3 | 302 | |
Assets at end of period | 4,753 | 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 | (71) | 20 |
At fair value | Equity securities and portfolio holdings in unit trusts | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 223,391 | |
Assets at end of period | 214,733 | 223,391 |
At fair value | Equity securities and portfolio holdings in unit trusts | Level 3 | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 371 | 722 |
Total gains/(losses) in income statement | 38 | 11 |
Total (losses)/gains recorded as other comprehensive income | 8 | (5) |
Purchases | 125 | 186 |
Sales | (35) | (468) |
Settled | (6) | |
Transfers into level 3 | 8 | 1 |
Transfers out of Level 3 | (70) | |
Assets at end of period | 515 | 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 | 38 | (12) |
At fair value | 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 | 175,356 | 171,374 |
At fair value | 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 | (7) | 51 |
Total (losses)/gains recorded as other comprehensive income | (11) | |
Purchases | 666 | 216 |
Sales | (131) | (522) |
Transfers out of Level 3 | (22) | |
Assets at end of period | 1,182 | 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 | (16) | (5) |
At fair value | 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 | 10,006 | 10,423 |
At fair value | Other investments (including derivative assets) | Level 3 | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 4,424 | 4,480 |
Total gains/(losses) in income statement | 405 | 73 |
Total (losses)/gains recorded as other comprehensive income | 54 | (133) |
Purchases | 1,202 | 727 |
Sales | (813) | (725) |
Transfers into level 3 | 2 | |
Assets at end of period | 5,272 | 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 | 370 | (22) |
At fair value | 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 | (3,506) | (2,755) |
At fair value | 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 | 27 | 4 |
Total (losses)/gains recorded as other comprehensive income | (1) | |
Transfers out of level 3 | 63 | |
Liabilities at end of period | (423) | (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 | 27 | 4 |
At fair value | Borrowings attributable to with-profits businesses | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (1,887) | |
Liabilities at end of period | (1,606) | (1,887) |
At fair value | Borrowings attributable to with-profits businesses | 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 | (23) | (13) |
Settled | 304 | 115 |
Issued | (1,989) | |
Liabilities at end of period | (1,606) | (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 | (23) | (13) |
At fair value | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (8,889) | |
Liabilities at end of period | (11,651) | (8,889) |
At fair value | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | Level 3 | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (413) | (883) |
Total gains/(losses) in income statement | 67 | (559) |
Total (losses)/gains recorded as other comprehensive income | 31 | |
Purchases | (13) | |
Settled | 57 | 1,276 |
Issued | (697) | (234) |
Transfers out of level 3 | (33) | |
Liabilities at end of period | (988) | (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 | 67 | (123) |
At fair value | 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 | (3,406) | (3,031) |
At fair value | 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 | 5 | 14 |
Total (losses)/gains recorded as other comprehensive income | (170) | 250 |
Settled | 273 | 252 |
Issued | (481) | (311) |
Transfers into level 3 | (385) | |
Liabilities at end of period | (3,404) | (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 | £ 6 | £ 12 |
Group assets and liabilities _8
Group assets and liabilities - measurement - Level 3 investment properties (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | £ 493,941 | |
Assets at end of period | 508,645 | £ 493,941 |
At fair value | Level 3 | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Net unrealised gains of investment properties still held at end of year | 149 | 394 |
At fair value | Investment properties | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 16,497 | |
Assets at end of period | 17,925 | 16,497 |
At fair value | Investment properties | Level 3 | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 16,497 | 14,646 |
Total gains in income statement | 97 | 415 |
Total (losses)/gains recorded as other comprehensive income | (21) | |
Purchases | 1,509 | 2,048 |
Sales | (178) | (591) |
Assets at end of period | £ 17,925 | £ 16,497 |
Group assets and liabilities _9
Group assets and liabilities - measurement - Valuation approach for level 3 (Details) - At fair value - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Financial instruments | |||
Net financial instruments at fair value | £ 368,625 | £ 376,066 | |
Percentage at hierarchy level | 100.00% | 100.00% | |
Loans | |||
Financial instruments | |||
Financial assets | £ 4,753 | £ 4,837 | |
Borrowings attributable to with-profits businesses | |||
Financial instruments | |||
Financial liabilities | 1,606 | 1,887 | |
Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | 3,406 | 3,031 | |
Debt securities | |||
Financial instruments | |||
Financial assets | 175,356 | 171,374 | |
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | 11,651 | 8,889 | |
Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 3,506 | 2,755 | |
Level 2 | |||
Financial instruments | |||
Net financial instruments at fair value | £ 108,128 | £ 102,778 | |
Percentage at hierarchy level | 29.00% | 27.00% | |
Level 2 | Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | £ 2 | ||
Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 120,511 | £ 115,141 | |
Level 2 | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | 3,811 | 3,640 | |
Level 2 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 2,994 | 2,175 | |
Level 3 | |||
Financial instruments | |||
Net financial instruments at fair value | £ 5,301 | £ 4,443 | £ 4,593 |
Percentage at hierarchy level | 1.00% | 1.00% | |
Level 3 | Loans | |||
Financial instruments | |||
Financial assets | £ 4,753 | £ 4,837 | 2,699 |
Level 3 | Borrowings attributable to with-profits businesses | |||
Financial instruments | |||
Financial liabilities | 1,606 | 1,887 | |
Level 3 | Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | 3,404 | 3,031 | 2,851 |
Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 1,182 | 654 | 942 |
Level 3 | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | |||
Financial instruments | |||
Financial liabilities | 988 | 413 | 883 |
Level 3 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 423 | 512 | £ 516 |
With-profits | Loans | |||
Financial instruments | |||
Financial assets | 1,703 | 2,023 | |
With-profits | Debt securities | |||
Financial instruments | |||
Financial assets | 81,002 | 75,093 | |
With-profits | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 1,316 | 683 | |
With-profits | Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 48,981 | 45,602 | |
With-profits | Level 2 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 1,231 | 615 | |
With-profits | Level 3 | Loans | |||
Financial instruments | |||
Financial assets | 1,703 | 2,023 | |
With-profits | Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 811 | 348 | |
Non-linked shareholder-backed | Loans | |||
Financial instruments | |||
Financial assets | 3,050 | 2,814 | |
Non-linked shareholder-backed | Debt securities | |||
Financial instruments | |||
Financial assets | 79,861 | 86,062 | |
Non-linked shareholder-backed | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 2,185 | 2,071 | |
Non-linked shareholder-backed | Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 61,803 | 64,313 | |
Non-linked shareholder-backed | Level 2 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 1,760 | 1,559 | |
Non-linked shareholder-backed | Level 3 | Loans | |||
Financial instruments | |||
Financial assets | 3,050 | 2,814 | |
Non-linked shareholder-backed | Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 371 | 306 | |
Non-linked shareholder-backed | Level 3 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 423 | 512 | |
Subsidiary of UK with-profits fund for acquisition of buy-to-let mortgage loans | Level 3 | Loans | |||
Financial instruments | |||
Financial assets | 1,702 | 1,983 | |
Subsidiary of UK with-profits fund for acquisition of buy-to-let mortgage loans | Level 3 | Borrowings attributable to with-profits businesses | |||
Financial instruments | |||
Financial liabilities | 1,606 | 1,887 | |
REALIC of Jacksonville Plans, Inc | Level 3 | Loans | |||
Financial instruments | |||
Financial assets | 2,783 | 2,512 | |
REALIC of Jacksonville Plans, Inc | Level 3 | Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | 2,941 | 2,664 | |
Entity excluding REALIC | Level 3 | |||
Financial instruments | |||
Net financial instruments at fair value | 5,363 | 4,499 | |
Internal valuation | Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 15,425 | 13,910 | |
Internal valuation | Entity excluding REALIC | Level 3 | |||
Financial instruments | |||
Net financial instruments at fair value | £ (298) | £ (117) | |
Percentage using valuation method | 0.10% | 0.10% | |
Internal valuation | Entity excluding REALIC | Level 3 | Lifetime (equity-release) mortgages | |||
Financial instruments | |||
Financial assets | £ 268 | £ 302 | |
Financial liabilities | 354 | 385 | |
Internal valuation | Entity excluding REALIC | Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 582 | 500 | |
Internal valuation | Entity excluding REALIC | Level 3 | Private equity and venture investments | |||
Financial instruments | |||
Financial assets | 512 | 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 | 898 | 403 | |
Internal valuation | Entity excluding REALIC | Level 3 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | 423 | 512 | |
Internal valuation | Entity excluding REALIC | Level 3 | Other sundry individual financial investments | |||
Financial instruments | |||
Financial assets | 15 | 164 | |
Internal valuation | Entity excluding REALIC | With-profits | Level 3 | |||
Financial instruments | |||
Net financial instruments at fair value | (53) | 67 | |
Internal valuation | Entity excluding REALIC | Non-linked shareholder-backed | Level 3 | |||
Financial instruments | |||
Net financial instruments at fair value | £ (245) | £ (184) | |
Reasonably possible decrease in valuation (as a percent) | 10.00% | 10.00% | |
Amount of reasonably possible decrease in valuation | £ 24 | £ 18 |
Group assets and liabilities_10
Group assets and liabilities - measurement - Transfers between levels (Details) - At fair value - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Level 3 | ||
Disclosure of detailed information about financial instruments [line items] | ||
Transfers into level 3 | £ 8 | £ (80) |
Transfers out of level 3 | (30) | £ 92 |
Equity and debt securities | ||
Disclosure of detailed information about financial instruments [line items] | ||
Transfers from level 1 to level 2 | 908 | |
Transfers from level 2 to level 1 | £ 976 |
Debt securities - Credit rating
Debt securities - Credit rating analysis (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Financial investments | |||
Debt securities | [1] | £ 175,356 | £ 171,374 |
AAA | |||
Financial investments | |||
Debt securities | 16,970 | 17,412 | |
AA+ to AA- | |||
Financial investments | |||
Debt securities | 42,707 | 44,400 | |
A+ to A- | |||
Financial investments | |||
Debt securities | 37,493 | 39,941 | |
BBB+ to BBB- | |||
Financial investments | |||
Debt securities | 42,551 | 37,927 | |
Below BBB- | |||
Financial investments | |||
Debt securities | 9,297 | 8,323 | |
Other | |||
Financial investments | |||
Debt securities | 26,338 | 23,371 | |
Operating segments | Asia insurance operations | With-profits | |||
Financial investments | |||
Debt securities | 27,204 | 24,432 | |
Operating segments | Asia insurance operations | Unit-linked | |||
Financial investments | |||
Debt securities | 3,981 | 3,507 | |
Operating segments | Asia insurance operations | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 14,583 | 13,043 | |
Operating segments | Asia insurance operations | AAA | With-profits | |||
Financial investments | |||
Debt securities | 2,873 | 2,504 | |
Operating segments | Asia insurance operations | AAA | Unit-linked | |||
Financial investments | |||
Debt securities | 817 | 528 | |
Operating segments | Asia insurance operations | AAA | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 1,034 | 990 | |
Operating segments | Asia insurance operations | AA+ to AA- | With-profits | |||
Financial investments | |||
Debt securities | 12,379 | 10,641 | |
Operating segments | Asia insurance operations | AA+ to AA- | Unit-linked | |||
Financial investments | |||
Debt securities | 100 | 103 | |
Operating segments | Asia insurance operations | AA+ to AA- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 3,552 | 2,925 | |
Operating segments | Asia insurance operations | A+ to A- | With-profits | |||
Financial investments | |||
Debt securities | 4,142 | 3,846 | |
Operating segments | Asia insurance operations | A+ to A- | Unit-linked | |||
Financial investments | |||
Debt securities | 492 | 510 | |
Operating segments | Asia insurance operations | A+ to A- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 3,717 | 3,226 | |
Operating segments | Asia insurance operations | BBB+ to BBB- | With-profits | |||
Financial investments | |||
Debt securities | 3,760 | 3,234 | |
Operating segments | Asia insurance operations | BBB+ to BBB- | Unit-linked | |||
Financial investments | |||
Debt securities | 1,431 | 1,429 | |
Operating segments | Asia insurance operations | BBB+ to BBB- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 2,934 | 2,970 | |
Operating segments | Asia insurance operations | Below BBB- | With-profits | |||
Financial investments | |||
Debt securities | 1,747 | 1,810 | |
Operating segments | Asia insurance operations | Below BBB- | Unit-linked | |||
Financial investments | |||
Debt securities | 426 | 372 | |
Operating segments | Asia insurance operations | Below BBB- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 2,202 | 1,879 | |
Operating segments | Asia insurance operations | Other | With-profits | |||
Financial investments | |||
Debt securities | 2,303 | 2,397 | |
Operating segments | Asia insurance operations | Other | Unit-linked | |||
Financial investments | |||
Debt securities | 715 | 565 | |
Operating segments | Asia insurance operations | Other | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 1,144 | 1,053 | |
Operating segments | Asia asset management | |||
Financial investments | |||
Debt securities | 71 | ||
Operating segments | Asia asset management | AAA | |||
Financial investments | |||
Debt securities | 11 | ||
Operating segments | Asia asset management | A+ to A- | |||
Financial investments | |||
Debt securities | 60 | ||
Operating segments | US | |||
Financial investments | |||
Debt securities | 41,594 | 35,378 | |
Operating segments | US | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 41,594 | 35,378 | |
Operating segments | US | AAA | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 678 | 368 | |
Operating segments | US | AA+ to AA- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 7,383 | 6,352 | |
Operating segments | US | A+ to A- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 10,286 | 9,578 | |
Operating segments | US | BBB+ to BBB- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 14,657 | 12,311 | |
Operating segments | US | Below BBB- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 1,429 | 1,000 | |
Operating segments | US | Other | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 7,161 | 5,769 | |
Operating segments | UK and Europe | |||
Financial investments | |||
Debt securities | 85,956 | 92,707 | |
Operating segments | UK and Europe | With-profits | |||
Financial investments | |||
Debt securities | 53,798 | 50,661 | |
Operating segments | UK and Europe | Unit-linked | |||
Financial investments | |||
Debt securities | 10,512 | 6,711 | |
Operating segments | UK and Europe | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 21,646 | 35,335 | |
Operating segments | UK and Europe | AAA | With-profits | |||
Financial investments | |||
Debt securities | 6,890 | 6,492 | |
Operating segments | UK and Europe | AAA | Unit-linked | |||
Financial investments | |||
Debt securities | 1,041 | 670 | |
Operating segments | UK and Europe | AAA | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 3,007 | 5,118 | |
Operating segments | UK and Europe | AA+ to AA- | With-profits | |||
Financial investments | |||
Debt securities | 9,332 | 9,378 | |
Operating segments | UK and Europe | AA+ to AA- | Unit-linked | |||
Financial investments | |||
Debt securities | 2,459 | 2,732 | |
Operating segments | UK and Europe | AA+ to AA- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 6,413 | 11,005 | |
Operating segments | UK and Europe | A+ to A- | With-profits | |||
Financial investments | |||
Debt securities | 11,779 | 11,666 | |
Operating segments | UK and Europe | A+ to A- | Unit-linked | |||
Financial investments | |||
Debt securities | 2,215 | 1,308 | |
Operating segments | UK and Europe | A+ to A- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 4,651 | 9,625 | |
Operating segments | UK and Europe | BBB+ to BBB- | With-profits | |||
Financial investments | |||
Debt securities | 14,712 | 12,856 | |
Operating segments | UK and Europe | BBB+ to BBB- | Unit-linked | |||
Financial investments | |||
Debt securities | 3,501 | 1,793 | |
Operating segments | UK and Europe | BBB+ to BBB- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 1,515 | 3,267 | |
Operating segments | UK and Europe | Below BBB- | With-profits | |||
Financial investments | |||
Debt securities | 2,891 | 2,877 | |
Operating segments | UK and Europe | Below BBB- | Unit-linked | |||
Financial investments | |||
Debt securities | 395 | 91 | |
Operating segments | UK and Europe | Below BBB- | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 158 | 258 | |
Operating segments | UK and Europe | Other | |||
Financial investments | |||
Debt securities | 14,997 | 13,571 | |
Operating segments | UK and Europe | Other | With-profits | |||
Financial investments | |||
Debt securities | 8,194 | 7,392 | |
Operating segments | UK and Europe | Other | Unit-linked | |||
Financial investments | |||
Debt securities | 901 | 117 | |
Operating segments | UK and Europe | Other | Non-linked shareholder-backed | |||
Financial investments | |||
Debt securities | 5,902 | 6,062 | |
Unallocated to a segment (central or other operations) | |||
Financial investments | |||
Debt securities | 1,967 | 2,307 | |
Unallocated to a segment (central or other operations) | AAA | |||
Financial investments | |||
Debt securities | 619 | 742 | |
Unallocated to a segment (central or other operations) | AA+ to AA- | |||
Financial investments | |||
Debt securities | 1,089 | 1,264 | |
Unallocated to a segment (central or other operations) | A+ to A- | |||
Financial investments | |||
Debt securities | 151 | 182 | |
Unallocated to a segment (central or other operations) | BBB+ to BBB- | |||
Financial investments | |||
Debt securities | 41 | 67 | |
Unallocated to a segment (central or other operations) | Below BBB- | |||
Financial investments | |||
Debt securities | 49 | 36 | |
Unallocated to a segment (central or other operations) | Other | |||
Financial investments | |||
Debt securities | £ 18 | £ 16 | |
[1] | Included within equity securities and portfolio holdings in unit trusts, debt securities and other investments are £8,278 million (31 December 2017: £8,232 million) of lent securities and assets subject to repurchase agreements. |
Debt securities - Credit rati_2
Debt securities - Credit rating classified as Other (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Financial investments | |||
Debt securities | [1] | £ 175,356 | £ 171,374 |
Other | |||
Financial investments | |||
Debt securities | 26,338 | 23,371 | |
Operating segments | US | |||
Financial investments | |||
Debt securities | 41,594 | 35,378 | |
Operating segments | UK and Europe | |||
Financial investments | |||
Debt securities | 85,956 | 92,707 | |
Operating segments | UK and Europe | Other | |||
Financial investments | |||
Debt securities | 14,997 | 13,571 | |
Operating segments | UK and Europe | Internal rating AAA to A- | Other | |||
Financial investments | |||
Debt securities | 8,150 | 7,994 | |
Operating segments | UK and Europe | Internal rating BBB to B- | Other | |||
Financial investments | |||
Debt securities | 3,034 | 3,141 | |
Operating segments | UK and Europe | Internal rating Below B- or unrated | Other | |||
Financial investments | |||
Debt securities | 3,813 | 2,436 | |
Operating segments | Non-linked shareholder-backed | Asia insurance operations | |||
Financial investments | |||
Debt securities | 14,583 | 13,043 | |
Operating segments | Non-linked shareholder-backed | Asia insurance operations | Other | |||
Financial investments | |||
Debt securities | 1,144 | 1,053 | |
Operating segments | Non-linked shareholder-backed | Asia insurance operations | Government bonds | Other | |||
Financial investments | |||
Debt securities | 36 | 25 | |
Operating segments | Non-linked shareholder-backed | Asia insurance operations | Corporate bonds | Other | |||
Financial investments | |||
Debt securities | 978 | 959 | |
Operating segments | Non-linked shareholder-backed | Asia insurance operations | Other securities | Other | |||
Financial investments | |||
Debt securities | 130 | 69 | |
Operating segments | Non-linked shareholder-backed | US | |||
Financial investments | |||
Debt securities | 41,594 | 35,378 | |
Operating segments | Non-linked shareholder-backed | US | Other | |||
Financial investments | |||
Debt securities | 7,161 | 5,769 | |
Operating segments | Non-linked shareholder-backed | US | NAIC 1 | Other | |||
Financial investments | |||
Debt securities | 5,006 | 3,918 | |
Operating segments | Non-linked shareholder-backed | US | NAIC 2 | Other | |||
Financial investments | |||
Debt securities | 2,118 | 1,794 | |
Operating segments | Non-linked shareholder-backed | US | NAIC 3-6 | Other | |||
Financial investments | |||
Debt securities | 37 | 57 | |
Operating segments | Non-linked shareholder-backed | US | Mortgage-backed securities | Other | |||
Financial investments | |||
Debt securities | 2,152 | ||
Operating segments | Non-linked shareholder-backed | US | Mortgage-backed securities | Investment grade | Other | |||
Financial investments | |||
Debt securities | 1,947 | ||
Operating segments | Non-linked shareholder-backed | US | Mortgage-backed securities | NAIC 1 | Other | |||
Financial investments | |||
Debt securities | 2,148 | ||
Operating segments | Non-linked shareholder-backed | US | Mortgage-backed securities | NAIC 2 | Other | |||
Financial investments | |||
Debt securities | 2 | ||
Operating segments | Non-linked shareholder-backed | US | Mortgage-backed securities | NAIC 3-6 | Other | |||
Financial investments | |||
Debt securities | 2 | ||
Operating segments | Non-linked shareholder-backed | US | Other securities | Other | |||
Financial investments | |||
Debt securities | 5,009 | ||
Operating segments | Non-linked shareholder-backed | US | Other securities | NAIC 1 | Other | |||
Financial investments | |||
Debt securities | 2,858 | ||
Operating segments | Non-linked shareholder-backed | US | Other securities | NAIC 2 | Other | |||
Financial investments | |||
Debt securities | 2,116 | ||
Operating segments | Non-linked shareholder-backed | US | Other securities | NAIC 1 or 2 | Other | |||
Financial investments | |||
Debt securities | 4,974 | ||
Operating segments | Non-linked shareholder-backed | US | Other securities | NAIC 3-6 | Other | |||
Financial investments | |||
Debt securities | 35 | ||
Operating segments | Non-linked shareholder-backed | UK and Europe | |||
Financial investments | |||
Debt securities | 21,646 | 35,335 | |
Operating segments | Non-linked shareholder-backed | UK and Europe | Other | |||
Financial investments | |||
Debt securities | 5,902 | 6,062 | |
Operating segments | With-profits | Asia insurance operations | |||
Financial investments | |||
Debt securities | 27,204 | 24,432 | |
Operating segments | With-profits | Asia insurance operations | Other | |||
Financial investments | |||
Debt securities | 2,303 | 2,397 | |
Operating segments | With-profits | UK and Europe | |||
Financial investments | |||
Debt securities | 53,798 | 50,661 | |
Operating segments | With-profits | UK and Europe | Other | |||
Financial investments | |||
Debt securities | £ 8,194 | £ 7,392 | |
[1] | Included within equity securities and portfolio holdings in unit trusts, debt securities and other investments are £8,278 million (31 December 2017: £8,232 million) of lent securities and assets subject to repurchase agreements. |
Debt securities - US operations
Debt securities - US operations (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Financial investments | |||
Debt securities | [1] | £ 175,356 | £ 171,374 |
Operating segments | US | |||
Financial investments | |||
Debt securities | 41,594 | 35,378 | |
Operating segments | US | Available-for-sale | |||
Financial investments | |||
Debt securities | 40,849 | 35,293 | |
Operating segments | US | Fair value through profit or loss | |||
Financial investments | |||
Debt securities | 745 | 85 | |
Operating segments | US | Government | |||
Financial investments | |||
Debt securities | 5,465 | 4,835 | |
Operating segments | US | Publicly traded and SEC rule 144A securities | |||
Financial investments | |||
Debt securities | 26,196 | 22,849 | |
Operating segments | US | Non-SEC Rule 144A securities | |||
Financial investments | |||
Debt securities | 6,329 | 4,468 | |
Operating segments | US | Asset-backed securities | |||
Financial investments | |||
Debt securities | £ 3,604 | £ 3,226 | |
[1] | Included within equity securities and portfolio holdings in unit trusts, debt securities and other investments are £8,278 million (31 December 2017: £8,232 million) of lent securities and assets subject to repurchase agreements. |
Debt securities - Movements in
Debt securities - Movements in unrealised gains and losses (Details) £ in Millions | 12 Months Ended | |||||||||||||||||||||||||||
Dec. 31, 2018₫ / £ | Dec. 31, 2018$ / £ | Dec. 31, 2018฿ / £ | Dec. 31, 2018$ / £ | Dec. 31, 2018RM / £ | Dec. 31, 2018₨ / £ | Dec. 31, 2018Rp / £ | Dec. 31, 2018$ / £ | Dec. 31, 2018¥ / £ | Dec. 31, 2018GBP (£) | Dec. 31, 2017₫ / £ | Dec. 31, 2017$ / £ | Dec. 31, 2017฿ / £ | Dec. 31, 2017$ / £ | Dec. 31, 2017RM / £ | Dec. 31, 2017₨ / £ | Dec. 31, 2017Rp / £ | Dec. 31, 2017$ / £ | Dec. 31, 2017¥ / £ | Dec. 31, 2016₫ / £ | Dec. 31, 2016$ / £ | Dec. 31, 2016฿ / £ | Dec. 31, 2016$ / £ | Dec. 31, 2016RM / £ | Dec. 31, 2016₨ / £ | Dec. 31, 2016Rp / £ | Dec. 31, 2016$ / £ | Dec. 31, 2016¥ / £ | |
Available-for-sale securities | ||||||||||||||||||||||||||||
Average rate | 30,732.53 | 1.34 | 43.13 | 1.80 | 5.38 | 91.25 | 18,987.65 | 10.46 | 8.82 | 29,279.71 | 1.29 | 43.71 | 1.78 | 5.54 | 83.90 | 17,249.38 | 10.04 | 8.71 | 30,292.79 | 1.35 | 47.80 | 1.87 | 5.61 | 91.02 | 18,026.11 | 10.52 | 8.99 | |
Jackson (US insurance operations) | ||||||||||||||||||||||||||||
Available-for-sale securities | ||||||||||||||||||||||||||||
Average rate | $ / £ | 1.34 | 1.29 | ||||||||||||||||||||||||||
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 | 40,849 | |||||||||||||||||||||||||||
Average rate | $ / £ | 1.3352 | |||||||||||||||||||||||||||
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 | 41,263 | |||||||||||||||||||||||||||
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 | (2) | |||||||||||||||||||||||||||
Changes in unrealised appreciation reflected as part of movement in other comprehensive income | (1,617) | |||||||||||||||||||||||||||
Available-for-sale debt securities at end of period | (414) | |||||||||||||||||||||||||||
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 | 24,405 | |||||||||||||||||||||||||||
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 | 25,330 | |||||||||||||||||||||||||||
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 | (43) | |||||||||||||||||||||||||||
Changes in unrealised appreciation reflected as part of movement in other comprehensive income | (776) | |||||||||||||||||||||||||||
Available-for-sale debt securities at end of period | (925) | |||||||||||||||||||||||||||
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 | 16,444 | |||||||||||||||||||||||||||
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 | 15,933 | |||||||||||||||||||||||||||
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 | 41 | |||||||||||||||||||||||||||
Changes in unrealised appreciation reflected as part of movement in other comprehensive income | (841) | |||||||||||||||||||||||||||
Available-for-sale debt securities at end of period | £ 511 |
Debt securities - Unrealised lo
Debt securities - Unrealised loss positions (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Available-for-sale securities | |||
Unrealised loss | £ (925) | £ (106) | £ (675) |
Jackson (US insurance operations) | Debt securities | |||
Available-for-sale securities | |||
Fair value | 40,849 | 35,293 | |
Unrealised loss | (925) | (106) | |
Jackson (US insurance operations) | 1 to 5 years | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (72) | (7) | |
Jackson (US insurance operations) | 5 years to 10 years | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (436) | (41) | |
Jackson (US insurance operations) | More than 10 years | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (372) | (39) | |
Jackson (US insurance operations) | Mortgage-backed and other debt securities | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (45) | (19) | |
Jackson (US insurance operations) | Between 90% and 100% | Debt securities | |||
Available-for-sale securities | |||
Fair value | 23,662 | 6,170 | |
Unrealised loss | (809) | (95) | |
Jackson (US insurance operations) | Between 80% and 90% | Debt securities | |||
Available-for-sale securities | |||
Fair value | 707 | 36 | |
Unrealised loss | (104) | (6) | |
Jackson (US insurance operations) | Below 80% | Debt securities | |||
Available-for-sale securities | |||
Fair value | 36 | 13 | |
Unrealised loss | (12) | (5) | |
Jackson (US insurance operations) | Below 80% | Other asset-backed securities | |||
Available-for-sale securities | |||
Fair value | 10 | ||
Unrealised loss | (4) | ||
Jackson (US insurance operations) | Below 80% | Corporate bonds | |||
Available-for-sale securities | |||
Fair value | 36 | 3 | |
Unrealised loss | (12) | (1) | |
Jackson (US insurance operations) | Assets fair valued at below book value | Debt securities | |||
Available-for-sale securities | |||
Fair value | 24,405 | 6,219 | |
Unrealised loss | (925) | (106) | |
Jackson (US insurance operations) | Assets fair valued at below book value | Non-investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (54) | (6) | |
Jackson (US insurance operations) | Assets fair valued at below book value | Investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (871) | (100) | |
Jackson (US insurance operations) | Assets fair valued at below book value | Below 80% | Debt securities | |||
Available-for-sale securities | |||
Fair value | 36 | 13 | |
Unrealised loss | (12) | (5) | |
Jackson (US insurance operations) | Less than 6 months | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (161) | (35) | |
Jackson (US insurance operations) | Less than 6 months | Non-investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (20) | (4) | |
Jackson (US insurance operations) | Less than 6 months | Investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (141) | (31) | |
Jackson (US insurance operations) | 6 months to 1 year | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (462) | (5) | |
Jackson (US insurance operations) | 6 months to 1 year | Non-investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (22) | (1) | |
Jackson (US insurance operations) | 6 months to 1 year | Investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (440) | (4) | |
Jackson (US insurance operations) | 1 year to 2 years | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (152) | (49) | |
Jackson (US insurance operations) | 1 year to 2 years | Non-investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (10) | ||
Jackson (US insurance operations) | 1 year to 2 years | Investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (142) | (49) | |
Jackson (US insurance operations) | 2 years to 3 years | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (123) | (7) | |
Jackson (US insurance operations) | 2 years to 3 years | Non-investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (1) | ||
Jackson (US insurance operations) | 2 years to 3 years | Investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (123) | (6) | |
Jackson (US insurance operations) | More than 3 years | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (27) | (10) | |
Jackson (US insurance operations) | More than 3 years | Non-investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (2) | ||
Jackson (US insurance operations) | More than 3 years | Investment grade | Debt securities | |||
Available-for-sale securities | |||
Unrealised loss | (25) | (10) | |
Jackson (US insurance operations) | Less than 3 months | Below 80% | Debt securities | |||
Available-for-sale securities | |||
Fair value | 32 | 2 | |
Unrealised loss | (10) | ||
Jackson (US insurance operations) | 3 months to 6 months | Below 80% | Debt securities | |||
Available-for-sale securities | |||
Fair value | 2 | 1 | |
Unrealised loss | (1) | (1) | |
Jackson (US insurance operations) | 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 | Dec. 31, 2018 | Dec. 31, 2017 |
Financial investments | ||
Asset-backed securities | £ 11,081 | £ 10,894 |
Shareholder-backed | ||
Financial investments | ||
Asset-backed securities | £ 5,576 | 5,003 |
Shareholder-backed | AAA | UK and Europe | ||
Financial investments | ||
Percentage for credit rating category | 42.00% | |
Shareholder-backed | AA | UK and Europe | ||
Financial investments | ||
Percentage for credit rating category | 13.00% | |
Shareholder-backed | RMBS Sub-prime | AAA | US | ||
Financial investments | ||
Percentage for credit rating category | 1.00% | |
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 | 2.00% | |
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 | 42.00% | |
Shareholder-backed | Prime including agency | AAA | US | ||
Financial investments | ||
Percentage for credit rating category | 14.00% | |
Shareholder-backed | Prime including agency | AA | US | ||
Financial investments | ||
Percentage for credit rating category | 62.00% | |
Shareholder-backed | Prime including agency | A | US | ||
Financial investments | ||
Percentage for credit rating category | 10.00% | |
Shareholder-backed | CMBS | AAA | US | ||
Financial investments | ||
Percentage for credit rating category | 80.00% | |
Shareholder-backed | CMBS | AA | US | ||
Financial investments | ||
Percentage for credit rating category | 15.00% | |
Shareholder-backed | CMBS | A | US | ||
Financial investments | ||
Percentage for credit rating category | 2.00% | |
Shareholder-backed | CDO funds | AA | US | ||
Financial investments | ||
Percentage for credit rating category | 13.00% | |
Shareholder-backed | CDO funds | A | US | ||
Financial investments | ||
Percentage for credit rating category | 24.00% | |
Shareholder-backed | Other asset-backed securities | AAA | US | ||
Financial investments | ||
Percentage for credit rating category | 20.00% | |
Shareholder-backed | Other asset-backed securities | AA | US | ||
Financial investments | ||
Percentage for credit rating category | 14.00% | |
Shareholder-backed | Other asset-backed securities | A | US | ||
Financial investments | ||
Percentage for credit rating category | 49.00% | |
Shareholder-backed | Operating segments | Asia | ||
Financial investments | ||
Asset-backed securities | £ 121 | 118 |
Shareholder-backed | Operating segments | US | ||
Financial investments | ||
Asset-backed securities | 3,604 | 3,226 |
Shareholder-backed | Operating segments | UK and Europe | ||
Financial investments | ||
Asset-backed securities | 1,406 | 1,070 |
Shareholder-backed | Operating segments | RMBS Sub-prime | US | ||
Financial investments | ||
Asset-backed securities | 96 | 112 |
Shareholder-backed | Operating segments | Alt-A | US | ||
Financial investments | ||
Asset-backed securities | 105 | 126 |
Shareholder-backed | Operating segments | Prime including agency | US | ||
Financial investments | ||
Asset-backed securities | 441 | 440 |
Shareholder-backed | Operating segments | CMBS | US | ||
Financial investments | ||
Asset-backed securities | 1,945 | 1,579 |
Shareholder-backed | Operating segments | CDO funds | US | ||
Financial investments | ||
Asset-backed securities | 13 | 28 |
Shareholder-backed | Operating segments | CDO funds | US | Sub-prime | ||
Financial investments | ||
Asset-backed securities | 0 | |
Shareholder-backed | Operating segments | Other asset-backed securities | US | ||
Financial investments | ||
Asset-backed securities | 1,004 | 941 |
Shareholder-backed | Operating segments | Other asset-backed securities | US | Sub-prime | ||
Financial investments | ||
Asset-backed securities | 77 | |
Shareholder-backed | Unallocated to a segment (central or other operations) | ||
Financial investments | ||
Asset-backed securities | 445 | £ 589 |
Shareholder-backed | Unallocated to a segment (central or other operations) | Sub-prime | ||
Financial investments | ||
Asset-backed securities | £ 0 | |
Shareholder-backed | Unallocated to a segment (central or other operations) | AAA | ||
Financial investments | ||
Percentage for credit rating category | 99.00% | 96.00% |
With-profits | ||
Financial investments | ||
Asset-backed securities | £ 5,505 | £ 5,891 |
With-profits | Asia | Investment grade | ||
Financial investments | ||
Percentage for credit rating category | 99.80% | 98.20% |
With-profits | AAA | UK and Europe | ||
Financial investments | ||
Percentage for credit rating category | 66.00% | |
With-profits | AA | UK and Europe | ||
Financial investments | ||
Percentage for credit rating category | 12.00% | |
With-profits | Operating segments | Asia | ||
Financial investments | ||
Asset-backed securities | £ 235 | £ 233 |
With-profits | Operating segments | UK and Europe | ||
Financial investments | ||
Asset-backed securities | 5,270 | 5,658 |
With-profits | Operating segments | UK and Europe | US | ||
Financial investments | ||
Asset-backed securities | £ 1,823 | £ 1,913 |
Debt securities - Group soverei
Debt securities - Group sovereign debt and bank debt exposure (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Shareholder-backed | ||
Financial investments | ||
Sovereign debt exposure | £ 14,393 | £ 16,524 |
Bank debt instruments held | 5,727 | 5,521 |
Shareholder-backed | Eurozone | ||
Financial investments | ||
Sovereign debt exposure | 378 | 890 |
Bank debt instruments held | 477 | 357 |
Shareholder-backed | Italy | ||
Financial investments | ||
Sovereign debt exposure | 58 | |
Shareholder-backed | Spain | ||
Financial investments | ||
Sovereign debt exposure | 36 | 34 |
Bank debt instruments held | 106 | 68 |
Shareholder-backed | France | ||
Financial investments | ||
Sovereign debt exposure | 23 | |
Bank debt instruments held | 156 | 86 |
Shareholder-backed | Germany | ||
Financial investments | ||
Sovereign debt exposure | 239 | 693 |
Bank debt instruments held | 125 | 117 |
Shareholder-backed | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 73 | 71 |
Shareholder-backed | Other Eurozone | ||
Financial investments | ||
Sovereign debt exposure | 103 | 82 |
Bank debt instruments held | 17 | 15 |
Shareholder-backed | UK | ||
Financial investments | ||
Sovereign debt exposure | 3,226 | 5,918 |
Bank debt instruments held | 1,346 | 1,382 |
Shareholder-backed | US | ||
Financial investments | ||
Sovereign debt exposure | 5,647 | 5,078 |
Bank debt instruments held | 2,667 | 2,619 |
Shareholder-backed | Other, including Asia | ||
Financial investments | ||
Sovereign debt exposure | 5,142 | 4,638 |
Bank debt instruments held | 1,237 | 1,163 |
Shareholder-backed | Senior debt | ||
Financial investments | ||
Bank debt instruments held | 4,907 | |
Shareholder-backed | Senior debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 361 | |
Shareholder-backed | Senior debt | Spain | ||
Financial investments | ||
Bank debt instruments held | 106 | |
Shareholder-backed | Senior debt | France | ||
Financial investments | ||
Bank debt instruments held | 139 | |
Shareholder-backed | Senior debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 30 | |
Shareholder-backed | Senior debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 69 | |
Shareholder-backed | Senior debt | Other Eurozone | ||
Financial investments | ||
Bank debt instruments held | 17 | |
Shareholder-backed | Senior debt | UK | ||
Financial investments | ||
Bank debt instruments held | 1,173 | |
Shareholder-backed | Senior debt | US | ||
Financial investments | ||
Bank debt instruments held | 2,614 | |
Shareholder-backed | Senior debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 759 | |
Shareholder-backed | Covered senior debt | ||
Financial investments | ||
Bank debt instruments held | 657 | |
Shareholder-backed | Covered senior debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 107 | |
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 | 20 | |
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 | 550 | |
Shareholder-backed | Other senior debt | ||
Financial investments | ||
Bank debt instruments held | 4,250 | |
Shareholder-backed | Other senior debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 254 | |
Shareholder-backed | Other senior debt | Spain | ||
Financial investments | ||
Bank debt instruments held | 64 | |
Shareholder-backed | Other senior debt | France | ||
Financial investments | ||
Bank debt instruments held | 119 | |
Shareholder-backed | Other senior debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 69 | |
Shareholder-backed | Other senior debt | Other Eurozone | ||
Financial investments | ||
Bank debt instruments held | 2 | |
Shareholder-backed | Other senior debt | UK | ||
Financial investments | ||
Bank debt instruments held | 623 | |
Shareholder-backed | Other senior debt | US | ||
Financial investments | ||
Bank debt instruments held | 2,614 | |
Shareholder-backed | Other senior debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 759 | |
Shareholder-backed | Subordinated debt | ||
Financial investments | ||
Bank debt instruments held | 820 | |
Shareholder-backed | Subordinated debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 116 | |
Shareholder-backed | Subordinated debt | France | ||
Financial investments | ||
Bank debt instruments held | 17 | |
Shareholder-backed | Subordinated debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 95 | |
Shareholder-backed | Subordinated debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 4 | |
Shareholder-backed | Subordinated debt | UK | ||
Financial investments | ||
Bank debt instruments held | 173 | |
Shareholder-backed | Subordinated debt | US | ||
Financial investments | ||
Bank debt instruments held | 53 | |
Shareholder-backed | Subordinated debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 478 | |
Shareholder-backed | Tier 1 subordinated debt | ||
Financial investments | ||
Bank debt instruments held | 142 | |
Shareholder-backed | Tier 1 subordinated debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 23 | |
Shareholder-backed | Tier 1 subordinated debt | France | ||
Financial investments | ||
Bank debt instruments held | 14 | |
Shareholder-backed | Tier 1 subordinated debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 6 | |
Shareholder-backed | Tier 1 subordinated debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 3 | |
Shareholder-backed | Tier 1 subordinated debt | UK | ||
Financial investments | ||
Bank debt instruments held | 9 | |
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 | 109 | |
Shareholder-backed | Tier 2 subordinated debt | ||
Financial investments | ||
Bank debt instruments held | 678 | |
Shareholder-backed | Tier 2 subordinated debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 93 | |
Shareholder-backed | Tier 2 subordinated debt | France | ||
Financial investments | ||
Bank debt instruments held | 3 | |
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 | 1 | |
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 | 52 | |
Shareholder-backed | Tier 2 subordinated debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 369 | |
With-profits | ||
Financial investments | ||
Sovereign debt exposure | 18,056 | 16,037 |
Bank debt instruments held | 8,725 | 7,726 |
With-profits | Eurozone | ||
Financial investments | ||
Sovereign debt exposure | 440 | 451 |
Bank debt instruments held | 976 | 739 |
With-profits | Italy | ||
Financial investments | ||
Sovereign debt exposure | 57 | 63 |
Bank debt instruments held | 38 | 31 |
With-profits | Spain | ||
Financial investments | ||
Sovereign debt exposure | 18 | 18 |
Bank debt instruments held | 17 | 16 |
With-profits | France | ||
Financial investments | ||
Sovereign debt exposure | 50 | 38 |
Bank debt instruments held | 352 | 286 |
With-profits | Germany | ||
Financial investments | ||
Sovereign debt exposure | 281 | 301 |
Bank debt instruments held | 229 | 180 |
With-profits | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 266 | 199 |
With-profits | Other Eurozone | ||
Financial investments | ||
Sovereign debt exposure | 34 | 31 |
Bank debt instruments held | 74 | 27 |
With-profits | UK | ||
Financial investments | ||
Sovereign debt exposure | 3,013 | 3,287 |
Bank debt instruments held | 2,194 | 1,938 |
With-profits | US | ||
Financial investments | ||
Sovereign debt exposure | 11,858 | 10,156 |
Bank debt instruments held | 2,730 | 2,518 |
With-profits | Other, including Asia | ||
Financial investments | ||
Sovereign debt exposure | 2,745 | 2,143 |
Bank debt instruments held | 2,825 | £ 2,531 |
With-profits | Senior debt | ||
Financial investments | ||
Bank debt instruments held | 7,035 | |
With-profits | Senior debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 824 | |
With-profits | Senior debt | Italy | ||
Financial investments | ||
Bank debt instruments held | 38 | |
With-profits | Senior debt | Spain | ||
Financial investments | ||
Bank debt instruments held | 17 | |
With-profits | Senior debt | France | ||
Financial investments | ||
Bank debt instruments held | 256 | |
With-profits | Senior debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 186 | |
With-profits | Senior debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 253 | |
With-profits | Senior debt | Other Eurozone | ||
Financial investments | ||
Bank debt instruments held | 74 | |
With-profits | Senior debt | UK | ||
Financial investments | ||
Bank debt instruments held | 1,759 | |
With-profits | Senior debt | US | ||
Financial investments | ||
Bank debt instruments held | 2,418 | |
With-profits | Senior debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 2,034 | |
With-profits | Covered senior debt | ||
Financial investments | ||
Bank debt instruments held | 1,630 | |
With-profits | Covered senior debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 146 | |
With-profits | Covered senior debt | France | ||
Financial investments | ||
Bank debt instruments held | 6 | |
With-profits | Covered senior debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 140 | |
With-profits | Covered senior debt | UK | ||
Financial investments | ||
Bank debt instruments held | 909 | |
With-profits | Covered senior debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 575 | |
With-profits | Other senior debt | ||
Financial investments | ||
Bank debt instruments held | 5,405 | |
With-profits | Other senior debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 678 | |
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 | 17 | |
With-profits | Other senior debt | France | ||
Financial investments | ||
Bank debt instruments held | 250 | |
With-profits | Other senior debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 46 | |
With-profits | Other senior debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 253 | |
With-profits | Other senior debt | Other Eurozone | ||
Financial investments | ||
Bank debt instruments held | 74 | |
With-profits | Other senior debt | UK | ||
Financial investments | ||
Bank debt instruments held | 850 | |
With-profits | Other senior debt | US | ||
Financial investments | ||
Bank debt instruments held | 2,418 | |
With-profits | Other senior debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 1,459 | |
With-profits | Subordinated debt | ||
Financial investments | ||
Bank debt instruments held | 1,690 | |
With-profits | Subordinated debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 152 | |
With-profits | Subordinated debt | France | ||
Financial investments | ||
Bank debt instruments held | 96 | |
With-profits | Subordinated debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 43 | |
With-profits | Subordinated debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 13 | |
With-profits | Subordinated debt | UK | ||
Financial investments | ||
Bank debt instruments held | 435 | |
With-profits | Subordinated debt | US | ||
Financial investments | ||
Bank debt instruments held | 312 | |
With-profits | Subordinated debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 791 | |
With-profits | Tier 1 subordinated debt | ||
Financial investments | ||
Bank debt instruments held | 369 | |
With-profits | Tier 1 subordinated debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 27 | |
With-profits | Tier 1 subordinated debt | France | ||
Financial investments | ||
Bank debt instruments held | 1 | |
With-profits | Tier 1 subordinated debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 14 | |
With-profits | Tier 1 subordinated debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 12 | |
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 | 1 | |
With-profits | Tier 1 subordinated debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | 339 | |
With-profits | Tier 2 subordinated debt | ||
Financial investments | ||
Bank debt instruments held | 1,321 | |
With-profits | Tier 2 subordinated debt | Eurozone | ||
Financial investments | ||
Bank debt instruments held | 125 | |
With-profits | Tier 2 subordinated debt | France | ||
Financial investments | ||
Bank debt instruments held | 95 | |
With-profits | Tier 2 subordinated debt | Germany | ||
Financial investments | ||
Bank debt instruments held | 29 | |
With-profits | Tier 2 subordinated debt | Netherlands | ||
Financial investments | ||
Bank debt instruments held | 1 | |
With-profits | Tier 2 subordinated debt | UK | ||
Financial investments | ||
Bank debt instruments held | 433 | |
With-profits | Tier 2 subordinated debt | US | ||
Financial investments | ||
Bank debt instruments held | 311 | |
With-profits | Tier 2 subordinated debt | Other, including Asia | ||
Financial investments | ||
Bank debt instruments held | £ 452 |
Debt securities - Impairment of
Debt securities - Impairment of US available-for-sale debt securities (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Financial investments | |||
Realised gross losses on sales of available-for-sale securities | £ 43 | £ 155 | £ 152 |
Percentage of realised gross losses related to top 10 individual issuers | 49.00% | 97.00% | 59.00% |
Unrealised loss | £ 925 | £ 106 | £ 675 |
Impaired financial assets | |||
Financial investments | |||
Net credit (charge) for impairment net of reversals | 13 | 1 | (44) |
Impaired financial assets | Available-for-sale | |||
Financial investments | |||
Net credit (charge) for impairment net of reversals | 15 | 8 | (20) |
Impaired financial assets | Loans and receivables | |||
Financial investments | |||
Net credit (charge) for impairment net of reversals | (2) | (7) | (24) |
Impaired and deteriorating financial assets | |||
Financial investments | |||
Realised gross losses on sales of available-for-sale securities | £ 4 | £ 3 | £ 94 |
Loans portfolio - Components (D
Loans portfolio - Components (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Financial investments | ||
Loans | £ 18,010 | £ 17,042 |
Mortgage loans | ||
Financial investments | ||
Loans | 11,657 | 10,535 |
Policy loans | ||
Financial investments | ||
Loans | 4,637 | 4,227 |
Other loans | ||
Financial investments | ||
Loans | £ 1,716 | £ 2,280 |
UK and Europe | Non-linked shareholder-backed | Lifetime (equity-release) mortgages | Average | ||
Financial investments | ||
Estimated loan to value (as a percent) | 33.00% | 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 | £ 14 | £ 12.6 |
Estimated loan to value (as a percent) | 53.00% | 55.00% |
Operating segments | Asia | ||
Financial investments | ||
Loans | £ 1,377 | £ 1,317 |
Operating segments | Asia | With-profits | ||
Financial investments | ||
Loans | 792 | 725 |
Operating segments | Asia | With-profits | Policy loans | ||
Financial investments | ||
Loans | 727 | 613 |
Operating segments | Asia | With-profits | Other loans | ||
Financial investments | ||
Loans | 65 | 112 |
Operating segments | Asia | Non-linked shareholder-backed | ||
Financial investments | ||
Loans | 585 | 592 |
Operating segments | Asia | Non-linked shareholder-backed | Mortgage loans | ||
Financial investments | ||
Loans | 156 | 177 |
Operating segments | Asia | Non-linked shareholder-backed | Policy loans | ||
Financial investments | ||
Loans | 226 | 216 |
Operating segments | Asia | Non-linked shareholder-backed | Other loans | ||
Financial investments | ||
Loans | 203 | 199 |
Operating segments | US | ||
Financial investments | ||
Loans | 11,066 | 9,630 |
Operating segments | US | Non-linked shareholder-backed | ||
Financial investments | ||
Loans | 11,066 | 9,630 |
Operating segments | US | Non-linked shareholder-backed | Mortgage loans | ||
Financial investments | ||
Loans | 7,385 | 6,236 |
Operating segments | US | Non-linked shareholder-backed | Policy loans | ||
Financial investments | ||
Loans | 3,681 | 3,394 |
Accounted for at fair value through profit or loss | 2,783 | 2,512 |
Operating segments | UK and Europe | ||
Financial investments | ||
Loans | 5,567 | 5,986 |
Operating segments | UK and Europe | With-profits | ||
Financial investments | ||
Loans | 3,853 | 4,268 |
Operating segments | UK and Europe | With-profits | Mortgage loans | ||
Financial investments | ||
Loans | 2,461 | 2,441 |
Operating segments | UK and Europe | With-profits | Policy loans | ||
Financial investments | ||
Loans | 3 | 4 |
Operating segments | UK and Europe | With-profits | Other loans | ||
Financial investments | ||
Loans | 1,389 | 1,823 |
Operating segments | UK and Europe | Non-linked shareholder-backed | ||
Financial investments | ||
Loans | 1,714 | 1,718 |
Operating segments | UK and Europe | Non-linked shareholder-backed | Mortgage loans | ||
Financial investments | ||
Loans | 1,655 | 1,681 |
Amount related to lifetime (equity release) mortgage business | 1,237 | 1,267 |
Operating segments | UK and Europe | Non-linked shareholder-backed | Other loans | ||
Financial investments | ||
Loans | £ 59 | 37 |
Unallocated to a segment (central or other operations) | ||
Financial investments | ||
Loans | 109 | |
Unallocated to a segment (central or other operations) | Other loans | ||
Financial investments | ||
Loans | £ 109 |
Financial instruments - addit_3
Financial instruments - additional information - Maturity of financial liabilities (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Carrying value | £ 46,490 | £ 40,523 |
Contractual maturities | 56,270 | 45,637 |
Core structural borrowings of shareholder-financed businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Carrying value | 7,664 | 6,280 |
Contractual maturities | 15,993 | 11,056 |
Operational borrowings attributable to shareholder-financed businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Carrying value | 998 | 1,791 |
Contractual maturities | 998 | 1,796 |
Borrowings attributable to with-profits businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Carrying value | 3,940 | 3,716 |
Contractual maturities | 5,168 | 3,831 |
Obligations under funding, securities lending and sale and repurchase agreements | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Carrying value | 6,989 | 5,662 |
Contractual maturities | 6,989 | 5,662 |
Accruals, deferred income and other liabilities | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Carrying value | 15,248 | 14,185 |
Contractual maturities | 15,471 | 14,403 |
Net asset value attributable to unit holders of consolidated unit trusts and similar funds | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Carrying value | 11,651 | 8,889 |
Contractual maturities | 11,651 | 8,889 |
Expected to be settled within one year | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 31,322 | 27,147 |
Expected to be settled within one year | Core structural borrowings of shareholder-financed businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 298 | 473 |
Expected to be settled within one year | Operational borrowings attributable to shareholder-financed businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 839 | 1,130 |
Expected to be settled within one year | Borrowings attributable to with-profits businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 701 | 905 |
Expected to be settled within one year | Obligations under funding, securities lending and sale and repurchase agreements | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 6,989 | 5,662 |
Expected to be settled within one year | Accruals, deferred income and other liabilities | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 10,844 | 10,088 |
Expected to be settled within one year | Net asset value attributable to unit holders of consolidated unit trusts and similar funds | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 11,651 | 8,889 |
1 to 5 years | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 3,566 | 2,772 |
1 to 5 years | Core structural borrowings of shareholder-financed businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 1,759 | 784 |
1 to 5 years | Operational borrowings attributable to shareholder-financed businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 91 | 597 |
1 to 5 years | Borrowings attributable to with-profits businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 1,246 | 922 |
1 to 5 years | Accruals, deferred income and other liabilities | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 470 | 469 |
5 years to 10 years | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 2,384 | 1,519 |
5 years to 10 years | Core structural borrowings of shareholder-financed businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 1,526 | 1,350 |
5 years to 10 years | Operational borrowings attributable to shareholder-financed businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 68 | 69 |
5 years to 10 years | Borrowings attributable to with-profits businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 719 | 32 |
5 years to 10 years | Accruals, deferred income and other liabilities | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 71 | 68 |
After 10 years to 15 years | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 2,207 | 1,503 |
After 10 years to 15 years | Core structural borrowings of shareholder-financed businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 1,843 | 1,389 |
After 10 years to 15 years | Borrowings attributable to with-profits businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 274 | 29 |
After 10 years to 15 years | Accruals, deferred income and other liabilities | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 90 | 85 |
After 15 years to 20 years | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 1,321 | 711 |
After 15 years to 20 years | Core structural borrowings of shareholder-financed businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 1,070 | 576 |
After 15 years to 20 years | Borrowings attributable to with-profits businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 142 | 29 |
After 15 years to 20 years | Accruals, deferred income and other liabilities | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 109 | 106 |
Over 20 years | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 9,011 | 5,454 |
Over 20 years | Core structural borrowings of shareholder-financed businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 6,573 | 3,324 |
Over 20 years | Borrowings attributable to with-profits businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 2,086 | 1,810 |
Over 20 years | Accruals, deferred income and other liabilities | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 352 | 320 |
No stated maturity | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 6,459 | 6,531 |
No stated maturity | Core structural borrowings of shareholder-financed businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 2,924 | 3,160 |
No stated maturity | Borrowings attributable to with-profits businesses | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | 104 | |
No stated maturity | Accruals, deferred income and other liabilities | ||
Contractual maturities of financial liabilities on an undiscounted cash flow basis | ||
Contractual maturities | £ 3,535 | £ 3,267 |
Financial instruments - addit_4
Financial instruments - additional information - Maturity analysis of derivatives (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Maturity analysis of derivatives | ||
Derivative assets | £ 3,494 | £ 4,801 |
Derivative liabilities | (3,506) | (2,755) |
Net derivative position | (12) | 2,046 |
Maturity profile of net derivative position | 310 | 2,333 |
Expected to be settled within one year | ||
Maturity analysis of derivatives | ||
Maturity profile of net derivative position | 292 | 2,359 |
After 1 year to 3 years | ||
Maturity analysis of derivatives | ||
Maturity profile of net derivative position | (8) | (16) |
After 3 years to 5 years | ||
Maturity analysis of derivatives | ||
Maturity profile of net derivative position | (4) | (9) |
Over 5 years | ||
Maturity analysis of derivatives | ||
Maturity profile of net derivative position | £ 30 | £ (1) |
Financial instruments - addit_5
Financial instruments - additional information - Maturity analysis of investment contracts (Details) - Investment contracts - GBP (£) £ in Billions | Dec. 31, 2018 | Dec. 31, 2017 |
Maturity profile for investment contracts on undiscounted cash flow projections of expected benefit payments | ||
Undiscounted value | £ 117 | £ 110 |
Policyholder liabilities | 87 | 83 |
Expected to be settled within one year | ||
Maturity profile for investment contracts on undiscounted cash flow projections of expected benefit payments | ||
Undiscounted value | 8 | 8 |
1 to 5 years | ||
Maturity profile for investment contracts on undiscounted cash flow projections of expected benefit payments | ||
Undiscounted value | 31 | 29 |
5 years to 10 years | ||
Maturity profile for investment contracts on undiscounted cash flow projections of expected benefit payments | ||
Undiscounted value | 29 | 27 |
After 10 years to 15 years | ||
Maturity profile for investment contracts on undiscounted cash flow projections of expected benefit payments | ||
Undiscounted value | 20 | 19 |
After 15 years to 20 years | ||
Maturity profile for investment contracts on undiscounted cash flow projections of expected benefit payments | ||
Undiscounted value | 12 | 13 |
Over 20 years | ||
Maturity profile for investment contracts on undiscounted cash flow projections of expected benefit payments | ||
Undiscounted value | 17 | 14 |
Unit-linked | On demand | ||
Maturity profile for investment contracts on undiscounted cash flow projections of expected benefit payments | ||
Policyholder liabilities | £ 11 | £ 12 |
Financial instruments - addit_6
Financial instruments - additional information - Credit risk (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Credit risk | ||
Financial assets not past due or impaired due to renegotiation of terms | £ 23 | £ 22 |
Past due date but not impaired | ||
Credit risk | ||
Loans and receivables | 27 | 23 |
Past due date but not impaired | Less than one year past due date | ||
Credit risk | ||
Loans and receivables | £ 22 | £ 17 |
Financial instruments - addit_7
Financial instruments - additional information - Foreign exchange risk (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Foreign exchange risk | |||
Amount of exchange gain (loss) recognised | £ 281 | £ (112) | £ 1,005 |
Foreign exchange risk | |||
Foreign exchange risk | |||
Percentage of financial assets in other than functional currencies | 26.00% | 24.00% | |
Percentage of financial liabilities in other than functional currencies | 13.00% | 16.00% | |
Foreign exchange risk | UK with-profits fund | |||
Foreign exchange risk | |||
Percentage of non-functional currency financial assets held by fund | 49.00% | 52.00% | |
Percentage of non-functional currency financial liabilities held by fund | 28.00% | 28.00% |
Financial instruments - addit_8
Financial instruments - additional information - Derivatives and hedging (Details) £ in Millions, $ in Billions | Dec. 31, 2018USD ($) | Dec. 31, 2018GBP (£) | Dec. 31, 2017USD ($) | Dec. 31, 2017GBP (£) |
Net investment hedge | Subordinated capital securities | ||||
Derivatives and hedging | ||||
Notional amount | $ | $ 3.7 | $ 4.3 | ||
Net investment of hedging instruments | £ 2,909 | £ 3,140 | ||
Foreign exchange gain (loss) recognised in shareholders' equity | £ 199 | £ 325 | ||
Effectiveness of hedging | 100.00% | 100.00% | 100.00% | 100.00% |
Cash flow hedges | ||||
Derivatives and hedging | ||||
Notional amount | £ 0 | £ 0 | ||
Fair value hedges | ||||
Derivatives and hedging | ||||
Notional amount | 0 | £ 0 | ||
Prudential Capital Plc | Prudential plc | OTC derivative contracts exempt from margin requirements | ||||
Derivatives and hedging | ||||
Notional amount | 3,633 | |||
Prudential Capital Plc | Prudential Holdings Limited | OTC derivative contracts exempt from margin requirements | ||||
Derivatives and hedging | ||||
Notional amount | 56 | |||
Prudential Capital Plc | Prudential (US Holdco1) Limited | OTC derivative contracts exempt from margin requirements | ||||
Derivatives and hedging | ||||
Notional amount | 2,717 | |||
Prudential Capital Plc | Prudential Corporation Holdings Limited | OTC derivative contracts exempt from margin requirements | ||||
Derivatives and hedging | ||||
Notional amount | 927 | |||
Prudential Capital Plc | Prudential Lifetime Mortgages Limited | OTC derivative contracts exempt from margin requirements | ||||
Derivatives and hedging | ||||
Notional amount | 37 | |||
Prudential Capital Plc | Prudential Distribution Limited | OTC derivative contracts exempt from margin requirements | ||||
Derivatives and hedging | ||||
Notional amount | £ 7 |
Financial instruments - addit_9
Financial instruments - additional information - Derecognition and collateral (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2018 | |
Securities lending and reverse repurchase agreements | ||
Lent securities and assets subject to repurchase | £ 8,232 | £ 8,278 |
Cash and securities collateral held or pledged under repurchase and securities lending agreements | 8,733 | 8,750 |
Collateral held in respect of reverse repurchase agreements | 10,550 | 10,633 |
Credit risk, over-the-counter derivative transactions | ||
Collateral and pledges | ||
Amount of assets pledged as collateral for liabilities | 2,302 | 3,265 |
Amount of collateral held | 3,958 | 2,012 |
Sale of collateral held | 0 | |
Collateral re-pledged | 852 | 698 |
Credit risk, funding agreements and other transactions | ||
Collateral and pledges | ||
Amount of assets pledged as collateral for liabilities | 3,412 | 2,793 |
UK with-profits fund | ||
Securities lending and reverse repurchase agreements | ||
Lent securities and assets subject to repurchase | 8,182 | 8,245 |
Cash and securities collateral held or pledged under repurchase and securities lending agreements | £ 8,679 | £ 8,662 |
Financial instruments - addi_10
Financial instruments - additional information - Offsetting assets and liabilities (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Financial assets: | ||
Financial assets, gross amount included in the consolidated statement of financial position | £ 14,826 | £ 14,998 |
Financial assets, financial instruments not offset in the consolidated statement of financial position | (1,261) | (946) |
Financial assets, cash collateral not offset in the consolidated statement of financial position | (1,687) | (2,641) |
Financial assets, securities collateral not offset in the consolidated statement of financial position | (11,772) | (11,254) |
Net amount of financial assets | 106 | 157 |
Financial liabilities: | ||
Financial liabilities, gross amount included in the consolidated statement of financial position | (4,447) | (3,711) |
Financial liabilities, financial instruments not offset in the consolidated statement of financial position | 1,261 | 946 |
Financial liabilities, cash collateral not offset in the consolidated statement of financial position | 744 | 472 |
Financial liabilities, securities collateral not offset in the consolidated statement of financial position | 2,263 | 2,225 |
Net amount of financial liabilities | (179) | (68) |
Derivative liabilities | ||
Financial liabilities: | ||
Financial liabilities, gross amount included in the consolidated statement of financial position | (3,189) | (2,301) |
Financial liabilities, financial instruments not offset in the consolidated statement of financial position | 1,261 | 946 |
Financial liabilities, cash collateral not offset in the consolidated statement of financial position | 710 | 420 |
Financial liabilities, securities collateral not offset in the consolidated statement of financial position | 1,058 | 893 |
Net amount of financial liabilities | (160) | (42) |
Securities lending and repurchase agreements | ||
Financial liabilities: | ||
Financial liabilities, gross amount included in the consolidated statement of financial position | (1,258) | (1,410) |
Financial liabilities, cash collateral not offset in the consolidated statement of financial position | 34 | 52 |
Financial liabilities, securities collateral not offset in the consolidated statement of financial position | 1,205 | 1,332 |
Net amount of financial liabilities | (19) | (26) |
Derivative assets | ||
Financial assets: | ||
Financial assets, gross amount included in the consolidated statement of financial position | 3,229 | 4,718 |
Financial assets, financial instruments not offset in the consolidated statement of financial position | (1,261) | (946) |
Financial assets, cash collateral not offset in the consolidated statement of financial position | (1,687) | (2,641) |
Financial assets, securities collateral not offset in the consolidated statement of financial position | (166) | (984) |
Net amount of financial assets | 115 | 147 |
Reverse repurchase agreements | ||
Financial assets: | ||
Financial assets, gross amount included in the consolidated statement of financial position | 11,597 | 10,280 |
Financial assets, securities collateral not offset in the consolidated statement of financial position | (11,606) | (10,270) |
Net amount of financial assets | £ (9) | £ 10 |
Policyholder liabilities and _3
Policyholder liabilities and unallocated surplus - Analysis of movements (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Oct. 31, 2018 | |
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Unallocated surplus of with-profits funds on the consolidated statement of financial position | £ 16,951 | £ 14,317 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 15,845 | 16,951 | |
Operating segments excluding intra-group amounts | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Beginning Balance | 435,629 | 409,714 | |
Policyholder liabilities on the consolidated statement of financial position | 411,211 | 388,996 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 16,951 | 14,317 | |
Group's share of policyholder liabilities of joint ventures and associates | 7,467 | 6,401 | |
Reclassification of reinsured UK annuity contracts as held for sale | (10,858) | ||
Premiums | 41,138 | 41,892 | |
Surrenders | (21,714) | (20,035) | |
Maturities/deaths | (10,786) | (11,109) | |
Net flows | 8,638 | 10,748 | |
Addition for closed block of group payout annuities in the US | 4,143 | ||
Shareholders' transfers post-tax | (324) | (287) | |
Investment-related items and other movements | (18,264) | 35,579 | |
Foreign exchange translation differences | 14,288 | (20,125) | |
Ending Balance | 433,252 | 435,629 | |
Policyholder liabilities on the consolidated statement of financial position | 409,262 | 411,211 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 15,845 | 16,951 | |
Group's share of policyholder liabilities of joint ventures and associates | 8,145 | 7,467 | |
Average Policy liability | 419,722 | 407,038 | |
Operating segments excluding intra-group amounts | Shareholder-backed | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Policyholder liabilities | 274,493 | 266,635 | |
Policyholder liabilities on the consolidated statement of financial position | 267,026 | ||
Group's share of policyholder liabilities of joint ventures and associates | 7,467 | ||
Reclassification of reinsured UK annuity contracts as held for sale | (10,858) | ||
Premiums | 22,178 | 23,566 | |
Surrenders | (16,612) | (15,205) | |
Maturities/deaths | (5,302) | (5,644) | |
Net flows | 264 | 2,717 | |
Addition for closed block of group payout annuities in the US | 4,143 | ||
Investment-related items and other movements | (13,178) | 22,978 | |
Foreign exchange translation differences | 12,093 | (17,837) | |
Policyholder liabilities | 266,957 | 274,493 | |
Policyholder liabilities on the consolidated statement of financial position | 258,812 | 267,026 | |
Group's share of policyholder liabilities of joint ventures and associates | 8,145 | 7,467 | |
Unallocated to a segment (central or other operations) | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Policyholder liabilities on the consolidated statement of financial position | 32 | ||
Policyholder liabilities on the consolidated statement of financial position | 39 | 32 | |
Unallocated to a segment (central or other operations) | Shareholder-backed | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Policyholder liabilities on the consolidated statement of financial position | 32 | ||
Policyholder liabilities on the consolidated statement of financial position | 39 | 32 | |
Deductions for intra-group reinsurance | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Policyholder liabilities on the consolidated statement of financial position | (1,235) | ||
Policyholder liabilities on the consolidated statement of financial position | (1,109) | (1,235) | |
Asia insurance operations | Operating segments excluding intra-group amounts | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Beginning Balance | 73,839 | 62,784 | |
Policyholder liabilities on the consolidated statement of financial position | 62,898 | 53,716 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 3,474 | 2,667 | |
Group's share of policyholder liabilities of joint ventures and associates | 7,467 | 6,401 | |
Premiums | 13,187 | 11,863 | |
Surrenders | (2,793) | (3,079) | |
Maturities/deaths | (1,978) | (1,909) | |
Net flows | 8,416 | 6,875 | |
Shareholders' transfers post-tax | (65) | (54) | |
Investment-related items and other movements | (2,784) | 8,182 | |
Foreign exchange translation differences | 3,357 | (3,948) | |
Ending Balance | 82,763 | 73,839 | |
Policyholder liabilities on the consolidated statement of financial position | 72,107 | 62,898 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 2,511 | 3,474 | |
Group's share of policyholder liabilities of joint ventures and associates | 8,145 | 7,467 | |
Average Policy liability | 75,309 | 65,241 | |
Asia insurance operations | Operating segments excluding intra-group amounts | Shareholder-backed | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Policyholder liabilities | 37,402 | 32,851 | |
Policyholder liabilities on the consolidated statement of financial position | 29,935 | ||
Group's share of policyholder liabilities of joint ventures and associates | 7,467 | ||
Premiums | 6,752 | 6,064 | |
Surrenders | (2,455) | (2,755) | |
Maturities/deaths | (1,046) | (1,008) | |
Net flows | 3,251 | 2,301 | |
Investment-related items and other movements | (1,204) | 3,797 | |
Foreign exchange translation differences | 1,148 | (1,547) | |
Policyholder liabilities | 40,597 | 37,402 | |
Policyholder liabilities on the consolidated statement of financial position | 32,452 | 29,935 | |
Group's share of policyholder liabilities of joint ventures and associates | 8,145 | 7,467 | |
Asia insurance operations | Operations within segments | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Policyholder liabilities on the consolidated statement of financial position | 64,133 | ||
Policyholder liabilities on the consolidated statement of financial position | 73,216 | 64,133 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 2,511 | ||
Jackson (US insurance operations) | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Percentage of reinsurance agreement | 100.00% | ||
Jackson (US insurance operations) | Operating segments excluding intra-group amounts | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Beginning Balance | 180,724 | 177,626 | |
Policyholder liabilities on the consolidated statement of financial position | 180,724 | 177,626 | |
Premiums | 13,940 | 15,219 | |
Surrenders | (12,141) | (10,017) | |
Maturities/deaths | (2,012) | (2,065) | |
Net flows | (213) | 3,137 | |
Addition for closed block of group payout annuities in the US | 4,143 | ||
Investment-related items and other movements | (9,999) | 16,251 | |
Foreign exchange translation differences | 10,945 | (16,290) | |
Ending Balance | 185,600 | 180,724 | |
Policyholder liabilities on the consolidated statement of financial position | 185,600 | 180,724 | |
Average Policy liability | 182,126 | 179,175 | |
Jackson (US insurance operations) | Operating segments excluding intra-group amounts | Shareholder-backed | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Policyholder liabilities | 180,724 | 177,626 | |
Policyholder liabilities on the consolidated statement of financial position | 180,724 | ||
Premiums | 13,940 | 15,219 | |
Surrenders | (12,141) | (10,017) | |
Maturities/deaths | (2,012) | (2,065) | |
Net flows | (213) | 3,137 | |
Addition for closed block of group payout annuities in the US | 4,143 | ||
Investment-related items and other movements | (9,999) | 16,251 | |
Foreign exchange translation differences | 10,945 | (16,290) | |
Policyholder liabilities | 185,600 | 180,724 | |
Policyholder liabilities on the consolidated statement of financial position | 185,600 | 180,724 | |
Jackson (US insurance operations) | Operations within segments | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Percentage of reinsurance agreement | 100.00% | ||
UK and Europe insurance operations | Operating segments excluding intra-group amounts | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Beginning Balance | 181,066 | 169,304 | |
Policyholder liabilities on the consolidated statement of financial position | 167,589 | 157,654 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 13,477 | 11,650 | |
Reclassification of reinsured UK annuity contracts as held for sale | (10,858) | ||
Premiums | 14,011 | 14,810 | |
Surrenders | (6,780) | (6,939) | |
Maturities/deaths | (6,796) | (7,135) | |
Net flows | 435 | 736 | |
Shareholders' transfers post-tax | (259) | (233) | |
Investment-related items and other movements | (5,481) | 11,146 | |
Foreign exchange translation differences | (14) | 113 | |
Ending Balance | 164,889 | 181,066 | |
Policyholder liabilities on the consolidated statement of financial position | 151,555 | 167,589 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 13,334 | 13,477 | |
Average Policy liability | 162,287 | 162,622 | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Shareholder-backed | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Policyholder liabilities | 56,367 | 56,158 | |
Policyholder liabilities on the consolidated statement of financial position | 56,367 | ||
Reclassification of reinsured UK annuity contracts as held for sale | (10,858) | ||
Premiums | 1,486 | 2,283 | |
Surrenders | (2,016) | (2,433) | |
Maturities/deaths | (2,244) | (2,571) | |
Net flows | (2,774) | (2,721) | |
Investment-related items and other movements | (1,975) | 2,930 | |
Policyholder liabilities | 40,760 | 56,367 | |
Policyholder liabilities on the consolidated statement of financial position | 40,760 | £ 56,367 | |
UK and Europe insurance operations | Operations within segments | |||
Analysis of movements in policyholder liabilities and unallocated surplus | |||
Unallocated surplus of with-profits funds on the consolidated statement of financial position | £ 13,334 |
Policyholder liabilities and _4
Policyholder liabilities and unallocated surplus - Movement by gross, reinsurers' share and unallocated surplus (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | ||
Insurance contract liabilities at beginning of period | £ (328,172) | £ (316,436) |
Income and expense included in the income statement and other comprehensive income | 8,994 | (31,106) |
Other movements including amounts included in other comprehensive income | 10,502 | (35) |
Foreign exchange translation differences | (13,990) | 19,405 |
Insurance contract liabilities at end of period | (322,666) | (328,172) |
Investment contract liabilities at beginning of period | (83,071) | (72,560) |
Income and expense included in the income statement | (4,009) | (11,179) |
Other movements including amounts included in other comprehensive income | 643 | 374 |
Foreign exchange translation differences | (198) | 294 |
Investment contract liabilities at end of period | (86,635) | (83,071) |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | (16,951) | (14,317) |
Income and expense included in the income statement and other comprehensive income | 1,289 | (2,871) |
Other movements including amounts included in other comprehensive income | (38) | (78) |
Foreign exchange translation differences | (145) | 315 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | (15,845) | (16,951) |
Claims outstanding | 1,005 | 953 |
Investment contract liabilities with discretionary participation features | 67,413 | 62,677 |
Investment contract liabilities without discretionary participation features | 19,222 | 20,394 |
Claims paid | 32,396 | 29,497 |
Change in reserves for held for sale Korea business | 72 | |
Reinsurers' share | ||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | ||
Insurance contract liabilities at beginning of period | 9,673 | 10,051 |
Income and expense included in the income statement and other comprehensive income | 11,440 | 365 |
Other movements including amounts included in other comprehensive income | (10,502) | |
Foreign exchange translation differences | 533 | (743) |
Insurance contract liabilities at end of period | 11,144 | 9,673 |
Claims paid | £ 2,114 | £ 1,828 |
Policyholder liabilities and _5
Policyholder liabilities and unallocated surplus - Reinsurers' share of insurance contract liabilities (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Oct. 31, 2018 | |
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | |||
Insurance contract liabilities | £ 10,139 | £ 8,720 | |
Claims outstanding | 1,005 | 953 | |
Total reinsurers' share of insurance contract liabilities | 11,144 | 9,673 | |
Net commission on ceded business | 7 | 28 | |
Claims incurred on ceded business | 489 | 526 | |
Remaining unamortised gains (losses) arising on buying reinsurance | £ 0 | £ 0 | |
Standard & Poor's rating A- and above | |||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | |||
Percentage of ceded insurance contract liabilities per credit rating of reinsurer | 86.00% | 97.00% | |
Jackson (US insurance operations) | |||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | |||
Percentage of reinsurance agreement coverage | 100.00% | ||
Jackson (US insurance operations) | REALIC of Jacksonville Plans, Inc | |||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | |||
Percentage of reinsurance agreement coverage | 100.00% | ||
Operating segments net of eliminations | Asia insurance operations | |||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | |||
Insurance contract liabilities | £ 2,675 | ||
Claims outstanding | 102 | ||
Total reinsurers' share of insurance contract liabilities | 2,777 | ||
Operating segments net of eliminations | Jackson (US insurance operations) | |||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | |||
Insurance contract liabilities | 5,910 | ||
Claims outstanding | 752 | ||
Total reinsurers' share of insurance contract liabilities | 6,662 | ||
Operating segments net of eliminations | UK and Europe insurance operations | |||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | |||
Insurance contract liabilities | 1,554 | ||
Claims outstanding | 149 | ||
Total reinsurers' share of insurance contract liabilities | 1,703 | ||
Unallocated to a segment (central or other operations) | |||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | |||
Claims outstanding | 2 | ||
Total reinsurers' share of insurance contract liabilities | £ 2 | £ 3 |
Policyholder liabilities and _6
Policyholder liabilities and unallocated surplus - Analysis of movements, Asia (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Unallocated surplus of with-profits funds on the consolidated statement of financial position | £ 16,951 | £ 14,317 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 15,845 | 16,951 |
Operating segments excluding intra-group amounts | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 435,629 | 409,714 |
Policyholder liabilities on the consolidated statement of financial position | 411,211 | 388,996 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 16,951 | 14,317 |
Group's share of policyholder liabilities of joint ventures and associates | 7,467 | 6,401 |
Premiums | 41,138 | 41,892 |
Surrenders | (21,714) | (20,035) |
Maturities/deaths | (10,786) | (11,109) |
Net flows | 8,638 | 10,748 |
Shareholders' transfers post-tax | (324) | (287) |
Investment-related items and other movements | (18,264) | 35,579 |
Foreign exchange translation differences | 14,288 | (20,125) |
Ending Balance | 433,252 | 435,629 |
Policyholder liabilities on the consolidated statement of financial position | 409,262 | 411,211 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 15,845 | 16,951 |
Group's share of policyholder liabilities of joint ventures and associates | 8,145 | 7,467 |
Average Policy liability | 419,722 | 407,038 |
Operating segments excluding intra-group amounts | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 267,026 | |
Group's share of policyholder liabilities of joint ventures and associates | 7,467 | |
Premiums | 22,178 | 23,566 |
Surrenders | (16,612) | (15,205) |
Maturities/deaths | (5,302) | (5,644) |
Net flows | 264 | 2,717 |
Investment-related items and other movements | (13,178) | 22,978 |
Foreign exchange translation differences | 12,093 | (17,837) |
Policyholder liabilities on the consolidated statement of financial position | 258,812 | 267,026 |
Group's share of policyholder liabilities of joint ventures and associates | 8,145 | 7,467 |
Deductions for intra-group reinsurance | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | (1,235) | |
Policyholder liabilities on the consolidated statement of financial position | (1,109) | (1,235) |
Deductions for intra-group reinsurance | With-profits | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | (1,235) | |
Policyholder liabilities on the consolidated statement of financial position | £ (1,109) | £ (1,235) |
Asia insurance operations | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Percentage rate of surrender | 6.60% | 8.40% |
Asia insurance operations | Operating segments excluding intra-group amounts | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | £ 73,839 | £ 62,784 |
Policyholder liabilities on the consolidated statement of financial position | 62,898 | 53,716 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 3,474 | 2,667 |
Group's share of policyholder liabilities of joint ventures and associates | 7,467 | 6,401 |
New business | 3,666 | 3,440 |
In-force | 9,521 | 8,423 |
Premiums | 13,187 | 11,863 |
Surrenders | (2,793) | (3,079) |
Maturities/deaths | (1,978) | (1,909) |
Net flows | 8,416 | 6,875 |
Shareholders' transfers post-tax | (65) | (54) |
Investment-related items and other movements | (2,784) | 8,182 |
Foreign exchange translation differences | 3,357 | (3,948) |
Ending Balance | 82,763 | 73,839 |
Policyholder liabilities on the consolidated statement of financial position | 72,107 | 62,898 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 2,511 | 3,474 |
Group's share of policyholder liabilities of joint ventures and associates | 8,145 | 7,467 |
Average Policy liability | 75,309 | 65,241 |
Net flow increase (decrease) | 1,541 | |
Asia insurance operations | Operating segments excluding intra-group amounts | With-profits | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 36,437 | 29,933 |
Policyholder liabilities on the consolidated statement of financial position | 32,963 | 27,266 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 3,474 | 2,667 |
New business | 1,155 | 1,143 |
In-force | 5,280 | 4,656 |
Premiums | 6,435 | 5,799 |
Surrenders | (338) | (324) |
Maturities/deaths | (932) | (901) |
Net flows | 5,165 | 4,574 |
Shareholders' transfers post-tax | (65) | (54) |
Investment-related items and other movements | (1,580) | 4,385 |
Foreign exchange translation differences | 2,209 | (2,401) |
Ending Balance | 42,166 | 36,437 |
Policyholder liabilities on the consolidated statement of financial position | 39,655 | 32,963 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 2,511 | 3,474 |
Average Policy liability | 36,309 | 30,115 |
Asia insurance operations | Operating segments excluding intra-group amounts | Unit-linked | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 20,027 | 17,507 |
Policyholder liabilities on the consolidated statement of financial position | 16,263 | 14,289 |
Group's share of policyholder liabilities of joint ventures and associates | 3,764 | 3,218 |
New business | 1,426 | 1,298 |
In-force | 1,767 | 1,637 |
Premiums | 3,193 | 2,935 |
Surrenders | (1,904) | (2,288) |
Maturities/deaths | (140) | (150) |
Net flows | 1,149 | 497 |
Investment-related items and other movements | (1,425) | 2,830 |
Foreign exchange translation differences | 431 | (807) |
Ending Balance | 20,182 | 20,027 |
Policyholder liabilities on the consolidated statement of financial position | 16,368 | 16,263 |
Group's share of policyholder liabilities of joint ventures and associates | 3,814 | 3,764 |
Average Policy liability | 20,105 | 18,767 |
Asia insurance operations | Operating segments excluding intra-group amounts | Other business | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 17,375 | 15,344 |
Policyholder liabilities on the consolidated statement of financial position | 13,672 | 12,161 |
Group's share of policyholder liabilities of joint ventures and associates | 3,703 | 3,183 |
New business | 1,085 | 999 |
In-force | 2,474 | 2,130 |
Premiums | 3,559 | 3,129 |
Surrenders | (551) | (467) |
Maturities/deaths | (906) | (858) |
Net flows | 2,102 | 1,804 |
Investment-related items and other movements | 221 | 967 |
Foreign exchange translation differences | 717 | (740) |
Ending Balance | 20,415 | 17,375 |
Policyholder liabilities on the consolidated statement of financial position | 16,084 | 13,672 |
Group's share of policyholder liabilities of joint ventures and associates | 4,331 | 3,703 |
Average Policy liability | 18,895 | 16,359 |
Asia insurance operations | Operating segments excluding intra-group amounts | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 29,935 | |
Group's share of policyholder liabilities of joint ventures and associates | 7,467 | |
Premiums | 6,752 | 6,064 |
Surrenders | (2,455) | (2,755) |
Maturities/deaths | (1,046) | (1,008) |
Net flows | 3,251 | 2,301 |
Investment-related items and other movements | (1,204) | 3,797 |
Foreign exchange translation differences | 1,148 | (1,547) |
Policyholder liabilities on the consolidated statement of financial position | 32,452 | 29,935 |
Group's share of policyholder liabilities of joint ventures and associates | 8,145 | 7,467 |
Asia insurance operations | Operations within segments | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 64,133 | |
Policyholder liabilities on the consolidated statement of financial position | 73,216 | 64,133 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 2,511 | |
Asia insurance operations | Operations within segments | With-profits | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 34,198 | |
Policyholder liabilities on the consolidated statement of financial position | 40,764 | £ 34,198 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | £ 2,511 |
Policyholder liabilities and _7
Policyholder liabilities and unallocated surplus - Asia liabilities by duration (Details) - Operating segments excluding intra-group amounts - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Liabilities | |||
Policyholder liabilities | £ 409,262 | £ 411,211 | £ 388,996 |
Asia insurance operations | |||
Liabilities | |||
Policyholder liabilities | £ 72,107 | £ 62,898 | £ 53,716 |
Asia insurance operations | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 20.00% | 21.00% | |
Asia insurance operations | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 19.00% | 19.00% | |
Asia insurance operations | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 15.00% | 16.00% | |
Asia insurance operations | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 12.00% | 12.00% | |
Asia insurance operations | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 10.00% | 10.00% | |
Asia insurance operations | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 24.00% | 22.00% |
Policyholder liabilities and _8
Policyholder liabilities and unallocated surplus - Asia liabilities by geographic area (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Liabilities | ||
Reinsurers' share of insurance contract liabilities | £ 11,144 | £ 9,673 |
Asia insurance operations | Operating segments excluding intra-group amounts | ||
Liabilities | ||
Policyholder liabilities and unallocated surplus, excluding joint ventures and after deducting intra-group reinsurance liabilities | 74,618 | 66,372 |
Reinsurers' share of insurance contract liabilities | 2,777 | 1,960 |
Policyholder liabilities and unallocated surplus, net of reinsurance, excluding joint ventures | 71,841 | 64,412 |
Hong Kong | Asia insurance operations | Operating segments excluding intra-group amounts | ||
Liabilities | ||
Policyholder liabilities and unallocated surplus, net of reinsurance, excluding joint ventures | 34,545 | 29,411 |
Indonesia | Asia insurance operations | Operating segments excluding intra-group amounts | ||
Liabilities | ||
Policyholder liabilities and unallocated surplus, net of reinsurance, excluding joint ventures | 3,680 | 3,762 |
Malaysia | Asia insurance operations | Operating segments excluding intra-group amounts | ||
Liabilities | ||
Policyholder liabilities and unallocated surplus, net of reinsurance, excluding joint ventures | 5,447 | 5,014 |
Singapore | Asia insurance operations | Operating segments excluding intra-group amounts | ||
Liabilities | ||
Policyholder liabilities and unallocated surplus, net of reinsurance, excluding joint ventures | 18,154 | 17,432 |
Taiwan | Asia insurance operations | Operating segments excluding intra-group amounts | ||
Liabilities | ||
Policyholder liabilities and unallocated surplus, net of reinsurance, excluding joint ventures | 4,203 | 3,729 |
Other operations | Asia insurance operations | Operating segments excluding intra-group amounts | ||
Liabilities | ||
Policyholder liabilities and unallocated surplus, net of reinsurance, excluding joint ventures | £ 5,812 | £ 5,064 |
Policyholder liabilities and _9
Policyholder liabilities and unallocated surplus - Analysis of movements, US (Details) £ in Millions | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2018₫ / £ | Dec. 31, 2018₫ / £$ / £ | Dec. 31, 2018₫ / £฿ / £ | Dec. 31, 2018₫ / £$ / £ | Dec. 31, 2018₫ / £RM / £ | Dec. 31, 2018₫ / £₨ / £ | Dec. 31, 2018₫ / £Rp / £ | Dec. 31, 2018₫ / £$ / £ | Dec. 31, 2018₫ / £¥ / £ | Dec. 31, 2018GBP (£)₫ / £ | Dec. 31, 2017₫ / £ | Dec. 31, 2017₫ / £$ / £ | Dec. 31, 2017₫ / £฿ / £ | Dec. 31, 2017₫ / £$ / £ | Dec. 31, 2017₫ / £RM / £ | Dec. 31, 2017₫ / £₨ / £ | Dec. 31, 2017₫ / £Rp / £ | Dec. 31, 2017₫ / £$ / £ | Dec. 31, 2017₫ / £¥ / £ | Dec. 31, 2017GBP (£)₫ / £ | Dec. 31, 2016₫ / £ | Dec. 31, 2016₫ / £$ / £ | Dec. 31, 2016₫ / £฿ / £ | Dec. 31, 2016₫ / £$ / £ | Dec. 31, 2016₫ / £RM / £ | Dec. 31, 2016₫ / £₨ / £ | Dec. 31, 2016₫ / £Rp / £ | Dec. 31, 2016₫ / £$ / £ | Dec. 31, 2016₫ / £¥ / £ | Dec. 31, 2016GBP (£)₫ / £ | Dec. 31, 2018$ / £ | Dec. 31, 2018฿ / £ | Dec. 31, 2018$ / £ | Dec. 31, 2018RM / £ | Dec. 31, 2018₨ / £ | Dec. 31, 2018Rp / £ | Dec. 31, 2018$ / £ | Dec. 31, 2018¥ / £ | Dec. 31, 2018GBP (£) | Oct. 31, 2018 | Dec. 31, 2017$ / £ | Dec. 31, 2017฿ / £ | Dec. 31, 2017$ / £ | Dec. 31, 2017RM / £ | Dec. 31, 2017₨ / £ | Dec. 31, 2017Rp / £ | Dec. 31, 2017$ / £ | Dec. 31, 2017¥ / £ | Dec. 31, 2017GBP (£) | Dec. 31, 2016$ / £ | Dec. 31, 2016฿ / £ | Dec. 31, 2016$ / £ | Dec. 31, 2016RM / £ | Dec. 31, 2016₨ / £ | Dec. 31, 2016Rp / £ | Dec. 31, 2016$ / £ | Dec. 31, 2016¥ / £ | Dec. 31, 2015₫ / £ | Dec. 31, 2015$ / £ | Dec. 31, 2015฿ / £ | Dec. 31, 2015$ / £ | Dec. 31, 2015RM / £ | Dec. 31, 2015₨ / £ | Dec. 31, 2015Rp / £ | Dec. 31, 2015$ / £ | Dec. 31, 2015¥ / £ | |
Analysis of movements in policyholder liabilities and unallocated surplus | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average exchange rate | 30,732.53 | 1.34 | 43.13 | 1.80 | 5.38 | 91.25 | 18,987.65 | 10.46 | 8.82 | 29,279.71 | 1.29 | 43.71 | 1.78 | 5.54 | 83.90 | 17,249.38 | 10.04 | 8.71 | 30,292.79 | 1.35 | 47.80 | 1.87 | 5.61 | 91.02 | 18,026.11 | 10.52 | 8.99 | |||||||||||||||||||||||||||||||||||||||
Closing exchange rate | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 28,136.99 | 28,136.99 | 28,136.99 | 28,136.99 | 28,136.99 | 28,136.99 | 28,136.99 | 28,136.99 | 28,136.99 | 28,136.99 | 1.27 | 41.47 | 1.74 | 5.26 | 88.92 | 18,314.37 | 9.97 | 8.74 | 1.35 | 44.09 | 1.81 | 5.47 | 86.34 | 18,353.44 | 10.57 | 8.81 | 1.24 | 44.25 | 1.79 | 5.54 | 83.86 | 16,647.30 | 9.58 | 8.59 | 33,140.64 | 1.47 | 53.04 | 2.09 | 6.33 | 97.51 | 20,317.71 | 11.42 | 9.57 | |||
Operating segments excluding intra-group amounts | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Analysis of movements in policyholder liabilities and unallocated surplus | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Policyholder liabilities on the consolidated statement of financial position | £ 411,211 | £ 388,996 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Premiums | 41,138 | 41,892 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Surrenders | (21,714) | (20,035) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maturities/deaths | (10,786) | (11,109) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net flows | 8,638 | 10,748 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance accepted on closed block of group annuities | 4,143 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment-related items and other movements | (18,264) | 35,579 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange translation differences | 14,288 | (20,125) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Policyholder liabilities on the consolidated statement of financial position | 409,262 | 411,211 | £ 388,996 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average Policy liability | £ 419,722 | £ 407,038 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jackson (US insurance operations) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Analysis of movements in policyholder liabilities and unallocated surplus | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average exchange rate | $ / £ | 1.34 | 1.29 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Closing exchange rate | $ / £ | 1.27 | 1.35 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of reinsurance agreement coverage | 100.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jackson (US insurance operations) | John Hancock Life Insurance Company and its New York affiliate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Analysis of movements in policyholder liabilities and unallocated surplus | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of reinsurance agreement coverage | 100.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 180,724 | 177,626 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Premiums | 13,940 | 15,219 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Surrenders | (12,141) | (10,017) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maturities/deaths | (2,012) | (2,065) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net flows | (213) | 3,137 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance accepted on closed block of group annuities | 4,143 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment-related items and other movements | (9,999) | 16,251 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange translation differences | 10,945 | (16,290) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Policyholder liabilities on the consolidated statement of financial position | 185,600 | 180,724 | 177,626 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average Policy liability | 182,126 | 179,175 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jackson (US insurance operations) | Operating segments excluding intra-group amounts | Variable annuity separate account | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Analysis of movements in policyholder liabilities and unallocated surplus | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Policyholder liabilities on the consolidated statement of financial position | 130,528 | 120,411 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Premiums | 10,969 | 11,529 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Surrenders | (8,797) | (6,997) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maturities/deaths | (1,085) | (1,026) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net flows | 1,087 | 3,506 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers from general to separate account | 530 | 2,096 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment-related items and other movements | (11,561) | 15,956 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange translation differences | 7,636 | (11,441) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Policyholder liabilities on the consolidated statement of financial position | 128,220 | 130,528 | 120,411 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average Policy liability | 129,374 | 125,469 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jackson (US insurance operations) | Operating segments excluding intra-group amounts | Fixed annuity, GIC and other business | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Analysis of movements in policyholder liabilities and unallocated surplus | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Policyholder liabilities on the consolidated statement of financial position | 50,196 | 57,215 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Premiums | 2,971 | 3,690 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Surrenders | (3,344) | (3,020) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maturities/deaths | (927) | (1,039) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net flows | (1,300) | (369) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance accepted on closed block of group annuities | 4,143 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers from general to separate account | (530) | (2,096) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment-related items and other movements | 1,562 | 295 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange translation differences | 3,309 | (4,849) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Policyholder liabilities on the consolidated statement of financial position | £ 57,380 | £ 50,196 | £ 57,215 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average Policy liability | £ 52,752 | £ 53,706 |
Policyholder liabilities and_10
Policyholder liabilities and unallocated surplus - US liabilities by duration (Details) - Operating segments excluding intra-group amounts - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Liabilities | |||
Policyholder liabilities | £ 409,262 | £ 411,211 | £ 388,996 |
Jackson (US insurance operations) | |||
Liabilities | |||
Policyholder liabilities | £ 185,600 | £ 180,724 | 177,626 |
Jackson (US insurance operations) | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 43.00% | 44.00% | |
Jackson (US insurance operations) | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 27.00% | 28.00% | |
Jackson (US insurance operations) | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 15.00% | 14.00% | |
Jackson (US insurance operations) | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 8.00% | 8.00% | |
Jackson (US insurance operations) | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 4.00% | 4.00% | |
Jackson (US insurance operations) | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 3.00% | 2.00% | |
Jackson (US insurance operations) | Fixed annuity, GIC and other business | |||
Liabilities | |||
Policyholder liabilities | £ 57,380 | £ 50,196 | 57,215 |
Jackson (US insurance operations) | Fixed annuity, GIC and other business | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 51.00% | 50.00% | |
Jackson (US insurance operations) | Fixed annuity, GIC and other business | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 24.00% | 25.00% | |
Jackson (US insurance operations) | Fixed annuity, GIC and other business | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 12.00% | 12.00% | |
Jackson (US insurance operations) | Fixed annuity, GIC and other business | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 7.00% | 7.00% | |
Jackson (US insurance operations) | Fixed annuity, GIC and other business | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 3.00% | 3.00% | |
Jackson (US insurance operations) | Fixed annuity, GIC and other business | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 3.00% | 3.00% | |
Jackson (US insurance operations) | Variable annuity separate account | |||
Liabilities | |||
Policyholder liabilities | £ 128,220 | £ 130,528 | £ 120,411 |
Jackson (US insurance operations) | Variable annuity separate account | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 40.00% | 42.00% | |
Jackson (US insurance operations) | Variable annuity separate account | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 28.00% | 29.00% | |
Jackson (US insurance operations) | Variable annuity separate account | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 16.00% | 15.00% | |
Jackson (US insurance operations) | Variable annuity separate account | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 9.00% | 8.00% | |
Jackson (US insurance operations) | Variable annuity separate account | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 4.00% | 4.00% | |
Jackson (US insurance operations) | Variable annuity separate account | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 3.00% | 2.00% |
Policyholder liabilities and_11
Policyholder liabilities and unallocated surplus - Aggregate account values (Details) - Jackson (US insurance operations) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Fixed annuities and the fixed account portion of variable annuities | ||
Liabilities | ||
Aggregate account value | £ 27,741 | £ 27,307 |
Fixed annuities and the fixed account portion of variable annuities | > 0% - 1.0% | ||
Liabilities | ||
Aggregate account value | 7,584 | 6,887 |
Fixed annuities and the fixed account portion of variable annuities | > 1.0% - 2.0% | ||
Liabilities | ||
Aggregate account value | 6,789 | 7,385 |
Fixed annuities and the fixed account portion of variable annuities | > 2.0% - 3.0% | ||
Liabilities | ||
Aggregate account value | 10,075 | 9,799 |
Fixed annuities and the fixed account portion of variable annuities | > 3.0% - 4.0% | ||
Liabilities | ||
Aggregate account value | 1,274 | 1,272 |
Fixed annuities and the fixed account portion of variable annuities | > 4.0% - 5.0% | ||
Liabilities | ||
Aggregate account value | 1,794 | 1,744 |
Fixed annuities and the fixed account portion of variable annuities | > 5.0% - 6.0% | ||
Liabilities | ||
Aggregate account value | 225 | 220 |
Interest-sensitive life business | ||
Liabilities | ||
Aggregate account value | 6,432 | 6,272 |
Interest-sensitive life business | > 2.0% - 3.0% | ||
Liabilities | ||
Aggregate account value | 229 | 221 |
Interest-sensitive life business | > 3.0% - 4.0% | ||
Liabilities | ||
Aggregate account value | 2,394 | 2,341 |
Interest-sensitive life business | > 4.0% - 5.0% | ||
Liabilities | ||
Aggregate account value | 2,106 | 2,059 |
Interest-sensitive life business | > 5.0% - 6.0% | ||
Liabilities | ||
Aggregate account value | £ 1,703 | £ 1,651 |
Policyholder liabilities and_12
Policyholder liabilities and unallocated surplus - Analysis of movements, UK and Europe (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Unallocated surplus of with-profits funds on the consolidated statement of financial position | £ 16,951 | £ 14,317 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 15,845 | 16,951 |
Operating segments excluding intra-group amounts | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 435,629 | 409,714 |
Policyholder liabilities on the consolidated statement of financial position | 411,211 | 388,996 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 16,951 | 14,317 |
Reclassification of reinsured UK annuity contracts as held for sale | (10,858) | |
Premiums | 41,138 | 41,892 |
Surrenders | (21,714) | (20,035) |
Maturities/deaths | (10,786) | (11,109) |
Net flows | 8,638 | 10,748 |
Shareholders' transfers post-tax | (324) | (287) |
Investment-related items and other movements | (18,264) | 35,579 |
Foreign exchange translation differences | 14,288 | (20,125) |
Ending Balance | 433,252 | 435,629 |
Policyholder liabilities on the consolidated statement of financial position | 409,262 | 411,211 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 15,845 | 16,951 |
Average Policy liability | 419,722 | 407,038 |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 181,066 | 169,304 |
Policyholder liabilities on the consolidated statement of financial position | 167,589 | 157,654 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 13,477 | 11,650 |
Reclassification of reinsured UK annuity contracts as held for sale | (10,858) | |
Premiums | 14,011 | 14,810 |
Surrenders | (6,780) | (6,939) |
Maturities/deaths | (6,796) | (7,135) |
Net flows | 435 | 736 |
Shareholders' transfers post-tax | (259) | (233) |
Investment-related items and other movements | (5,481) | 11,146 |
Foreign exchange translation differences | (14) | 113 |
Ending Balance | 164,889 | 181,066 |
Policyholder liabilities on the consolidated statement of financial position | 151,555 | 167,589 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 13,334 | 13,477 |
Average Policy liability | 162,287 | 162,622 |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 100,613 | |
Policyholder liabilities on the consolidated statement of financial position | 101,262 | 100,613 |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | UK and Europe with-profits sub-funds | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 124,699 | 113,146 |
Policyholder liabilities on the consolidated statement of financial position | 111,222 | 101,496 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 13,477 | 11,650 |
Premiums | 12,525 | 12,527 |
Surrenders | (4,764) | (4,506) |
Maturities/deaths | (4,552) | (4,564) |
Net flows | 3,209 | 3,457 |
Shareholders' transfers post-tax | (259) | (233) |
Switches | (165) | (192) |
Investment-related items and other movements | (3,341) | 8,408 |
Foreign exchange translation differences | (14) | 113 |
Ending Balance | 124,129 | 124,699 |
Policyholder liabilities on the consolidated statement of financial position | 110,795 | 111,222 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 13,334 | 13,477 |
Average Policy liability | 111,009 | 106,359 |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | UK and Europe other funds and subsidiaries | Unit-linked | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 23,145 | 22,119 |
Policyholder liabilities on the consolidated statement of financial position | 23,145 | 22,119 |
Premiums | 1,147 | 1,923 |
Surrenders | (1,950) | (2,342) |
Maturities/deaths | (619) | (612) |
Net flows | (1,422) | (1,031) |
Switches | 165 | 192 |
Investment-related items and other movements | (1,171) | 1,865 |
Ending Balance | 20,717 | 23,145 |
Policyholder liabilities on the consolidated statement of financial position | 20,717 | 23,145 |
Average Policy liability | 21,931 | 22,632 |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | UK and Europe other funds and subsidiaries | Annuity and other long term business | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 33,222 | 34,039 |
Policyholder liabilities on the consolidated statement of financial position | 33,222 | 34,039 |
Reclassification of reinsured UK annuity contracts as held for sale | (10,858) | |
Premiums | 339 | 360 |
Surrenders | (66) | (91) |
Maturities/deaths | (1,625) | (1,959) |
Net flows | (1,352) | (1,690) |
Investment-related items and other movements | (969) | 873 |
Ending Balance | 20,043 | 33,222 |
Policyholder liabilities on the consolidated statement of financial position | 20,043 | 33,222 |
Average Policy liability | £ 29,347 | £ 33,631 |
Policyholder liabilities and_13
Policyholder liabilities and unallocated surplus - UK and Europe liabilities by duration (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Investment contracts | |||
Liabilities | |||
Policyholder liabilities | £ 87,000 | £ 83,000 | |
Operating segments excluding intra-group amounts | |||
Liabilities | |||
Policyholder liabilities | 409,262 | 411,211 | £ 388,996 |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | |||
Liabilities | |||
Policyholder liabilities | £ 151,555 | £ 167,589 | £ 157,654 |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 35.00% | 34.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 25.00% | 25.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 17.00% | 17.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 10.00% | 11.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 6.00% | 6.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 7.00% | 7.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | |||
Liabilities | |||
Policyholder liabilities | £ 101,262 | £ 100,613 | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 36.00% | 36.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 26.00% | 25.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 17.00% | 17.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 10.00% | 10.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 5.00% | 5.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 6.00% | 7.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | Insurance contracts | |||
Liabilities | |||
Policyholder liabilities | £ 34,242 | £ 38,285 | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | Insurance contracts | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 34.00% | 33.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | Insurance contracts | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 23.00% | 23.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | Insurance contracts | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 16.00% | 16.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | Insurance contracts | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 11.00% | 11.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | Insurance contracts | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 7.00% | 7.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | Insurance contracts | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 9.00% | 10.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | Investment contracts | |||
Liabilities | |||
Policyholder liabilities | £ 67,020 | £ 62,328 | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | Investment contracts | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 37.00% | 37.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | Investment contracts | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 27.00% | 27.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | Investment contracts | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 17.00% | 17.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | Investment contracts | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 9.00% | 10.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | Investment contracts | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 4.00% | 4.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | With-profits | Investment contracts | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 6.00% | 5.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | |||
Liabilities | |||
Policyholder liabilities | £ 28,652 | £ 43,181 | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 29.00% | 27.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 24.00% | 23.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 18.00% | 18.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 13.00% | 13.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 8.00% | 9.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 8.00% | 10.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | Non-profit annuities within WPSF | |||
Liabilities | |||
Policyholder liabilities | £ 9,533 | £ 10,609 | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | Non-profit annuities within WPSF | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 33.00% | 31.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | Non-profit annuities within WPSF | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 26.00% | 24.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | Non-profit annuities within WPSF | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 17.00% | 17.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | Non-profit annuities within WPSF | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 11.00% | 11.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | Non-profit annuities within WPSF | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 6.00% | 7.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | Non-profit annuities within WPSF | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 7.00% | 10.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | Shareholder-backed annuity | |||
Liabilities | |||
Policyholder liabilities | £ 19,119 | £ 32,572 | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | Shareholder-backed annuity | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 27.00% | 26.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | Shareholder-backed annuity | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 23.00% | 23.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | Shareholder-backed annuity | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 19.00% | 18.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | Shareholder-backed annuity | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 14.00% | 13.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | Shareholder-backed annuity | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 9.00% | 9.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Annuity business | Shareholder-backed annuity | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 8.00% | 11.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | |||
Liabilities | |||
Policyholder liabilities | £ 21,641 | £ 23,795 | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 36.00% | 34.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 24.00% | 23.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 17.00% | 17.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 11.00% | 12.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 6.00% | 7.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 6.00% | 7.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | Insurance contracts | |||
Liabilities | |||
Policyholder liabilities | £ 6,063 | £ 6,714 | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | Insurance contracts | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 44.00% | 41.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | Insurance contracts | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 25.00% | 26.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | Insurance contracts | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 15.00% | 15.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | Insurance contracts | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 8.00% | 9.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | Insurance contracts | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 4.00% | 5.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | Insurance contracts | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 4.00% | 4.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | Investment contracts | |||
Liabilities | |||
Policyholder liabilities | £ 15,578 | £ 17,081 | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | Investment contracts | 0 to 5 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 32.00% | 31.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | Investment contracts | 5 years to 10 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 24.00% | 22.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | Investment contracts | After 10 years to 15 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 18.00% | 18.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | Investment contracts | After 15 years to 20 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 12.00% | 13.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | Investment contracts | 20 to 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 7.00% | 8.00% | |
UK and Europe insurance operations | Operating segments excluding intra-group amounts | Other business | Investment contracts | Over 25 years | |||
Liabilities | |||
Percentage of policyholder liabilities | 7.00% | 8.00% |
Policyholder liabilities and_14
Policyholder liabilities and unallocated surplus - Annuitant mortality (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Liabilities | |||
Uplift per annum to initial rates of mortality improvement | 0.25% | ||
Male | |||
Liabilities | |||
Mortality improvement rate assumption | 2.25% | 2.25% | 2.25% |
Female | |||
Liabilities | |||
Mortality improvement rate assumption | 2.00% | 2.00% | 1.50% |
UK and Europe insurance operations | Male | |||
Liabilities | |||
Number of years for annuities in deferment | 4 years | 4 years | 4 years |
UK and Europe insurance operations | Female | |||
Liabilities | |||
Number of years for annuities in deferment | 4 years | 4 years | 4 years |
Policyholder liabilities and_15
Policyholder liabilities and unallocated surplus - Products and determining contract liabilities (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Liabilities | ||
Provisions | £ 1,078 | £ 1,123 |
Jackson (US insurance operations) | Fixed interest rate annuities | ||
Liabilities | ||
Percentage of policy and contract liabilities | 7.00% | 7.00% |
Account value | £ 12,600 | £ 12,600 |
Average guaranteed rate | 2.91% | 2.93% |
Percentage of market value adjustment | 64.00% | 60.00% |
Jackson (US insurance operations) | Fixed interest rate annuities | Minimum | ||
Liabilities | ||
Minimum guaranteed interest rate | 1.00% | 1.00% |
Jackson (US insurance operations) | Fixed interest rate annuities | Maximum | ||
Liabilities | ||
Minimum guaranteed interest rate | 5.50% | 5.50% |
Jackson (US insurance operations) | Fixed index annuities | ||
Liabilities | ||
Percentage of policy and contract liabilities | 5.00% | 5.00% |
Account value | £ 6,000 | £ 6,300 |
Average guaranteed rate | 1.77% | 1.77% |
Jackson (US insurance operations) | Fixed index annuities | Minimum | ||
Liabilities | ||
Minimum guaranteed interest rate | 1.00% | 1.00% |
Jackson (US insurance operations) | Fixed index annuities | Maximum | ||
Liabilities | ||
Minimum guaranteed interest rate | 3.00% | 3.00% |
Jackson (US insurance operations) | Fixed interest accounts of fixed index annuities | ||
Liabilities | ||
Account value | £ 2,700 | £ 2,500 |
Average guaranteed rate | 2.57% | 2.58% |
Jackson (US insurance operations) | Fixed interest accounts of fixed index annuities | Minimum | ||
Liabilities | ||
Minimum guaranteed interest rate | 1.00% | 1.00% |
Jackson (US insurance operations) | Fixed interest accounts of fixed index annuities | Maximum | ||
Liabilities | ||
Minimum guaranteed interest rate | 3.00% | 3.00% |
Jackson (US insurance operations) | Variable annuities | ||
Liabilities | ||
Percentage of policy and contract liabilities | 75.00% | 77.00% |
Percentage of variable annuity funds | 5.00% | 5.00% |
Mean investment return | 7.40% | 7.40% |
Jackson (US insurance operations) | Variable annuities in fixed accounts | ||
Liabilities | ||
Account value | £ 6,400 | £ 5,900 |
Average guaranteed rate | 1.70% | 1.68% |
Jackson (US insurance operations) | Variable annuities in fixed accounts | Minimum | ||
Liabilities | ||
Minimum guaranteed interest rate | 1.00% | 1.00% |
Jackson (US insurance operations) | Variable annuities in fixed accounts | Maximum | ||
Liabilities | ||
Minimum guaranteed interest rate | 3.00% | 3.00% |
Jackson (US insurance operations) | Life insurance contracts | ||
Liabilities | ||
Percentage of policy and contract liabilities | 9.00% | 9.00% |
Account value | £ 6,400 | £ 6,300 |
Average guaranteed rate | 4.67% | 4.67% |
Jackson (US insurance operations) | Life insurance contracts | Minimum | ||
Liabilities | ||
Minimum guaranteed interest rate | 2.50% | 2.50% |
Jackson (US insurance operations) | Life insurance contracts | Maximum | ||
Liabilities | ||
Minimum guaranteed interest rate | 6.00% | 6.00% |
Jackson (US insurance operations) | Institutional products | ||
Liabilities | ||
Percentage of policy and contract liabilities | 1.00% | 1.00% |
Minimum notice period for funding agreement termination by the policyholder | 90 days | |
Jackson (US insurance operations) | Institutional products | Minimum | ||
Liabilities | ||
Number of years funding agreements | 1 year | |
Jackson (US insurance operations) | Institutional products | Maximum | ||
Liabilities | ||
Number of years funding agreements | 30 years | |
UK and Europe insurance operations | SAIF with-profits | ||
Liabilities | ||
Minimum benefit on death or maturity of premium accumulated | 4.00% | |
Provisions | £ 361 | £ 503 |
Policyholder liabilities and_16
Policyholder liabilities and unallocated surplus - Determination of bonus rates (Details) - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Net income of the fund: | ||||
Investment return | £ (10,263) | £ 42,189 | £ 32,511 | |
Claims incurred | [1] | (27,411) | (71,854) | (60,948) |
Earned premiums, net of reinsurance | 33,201 | 41,943 | 36,961 | |
Other income | [2] | 1,993 | 2,258 | 2,246 |
Acquisition costs and other expenditure | [2] | (8,855) | (9,993) | (8,724) |
Share of profits from investment joint ventures | 291 | 302 | 182 | |
Total tax credit (charge) attributable to policyholders and shareholders | (296) | (1,580) | (1,291) | |
UK | UK with-profits fund | ||||
Net income of the fund: | ||||
Investment return | (2,261) | 9,985 | 13,185 | |
Claims incurred | (8,776) | (8,449) | (7,410) | |
Movement in policyholder liabilities | (554) | (10,011) | (11,824) | |
Add back policyholder bonuses for the year (as shown below) | 2,345 | 2,071 | 1,934 | |
Claims incurred and movement in policyholder liabilities (including charge for provision for asset shares and excluding policyholder bonuses) | (6,985) | (16,389) | (17,300) | |
Earned premiums, net of reinsurance | 12,505 | 12,508 | 9,261 | |
Other income | 36 | 35 | 177 | |
Acquisition costs and other expenditure | (1,170) | (1,732) | (1,288) | |
Share of profits from investment joint ventures | 36 | 106 | 22 | |
Total tax credit (charge) attributable to policyholders and shareholders | 273 | (440) | (739) | |
Net income of the fund before movement in unallocated surplus | 2,434 | 4,073 | 3,318 | |
Movement in unallocated surplus | 170 | (1,769) | (1,169) | |
Surplus for distribution | 2,604 | 2,304 | 2,149 | |
Surplus for distribution allocated as follows: | ||||
- 90% policyholders' bonus (as shown above) | 2,345 | 2,071 | 1,934 | |
- 10% shareholders' transfers | 259 | 233 | 215 | |
Surplus for distribution | £ 2,604 | £ 2,304 | £ 2,149 | |
Percentage of surplus distribution allocated as policyholders' bonus | 90.00% | 90.00% | 90.00% | |
Percentage of surplus distribution allocated as shareholders' transfers | 10.00% | 10.00% | 10.00% | |
[1] | Outward reinsurance premiums include the £(12,149) million paid during the year in respect of the reinsurance of the UK annuity portfolio. The associated increase in reinsurance assets is included in outward reinsurers’ share of benefits and claims and the consequential change to policyholder liabilities is included in benefits and claims. See note D1.1 for further details. | |||
[2] | The 2017 and 2016 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. |
Intangible assets - Goodwill re
Intangible assets - Goodwill reconciliation (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Changes in goodwill: | ||
Carrying value at beginning of year | £ 1,482 | £ 1,628 |
Disposals/reclassifications to held for sale | (10) | (155) |
Exchange differences | 9 | |
Carrying value at end of year | 1,857 | 1,482 |
TMB Asset Management Co. Ltd. | ||
Changes in goodwill: | ||
Acquisition/additions in the year | (181) | |
Carrying value at end of year | 181 | |
Other acquisitions | ||
Changes in goodwill: | ||
Acquisition/additions in the year | 195 | 9 |
Shareholder-backed | ||
Changes in goodwill: | ||
Carrying value at beginning of year | 1,458 | |
Exchange differences | 12 | |
Carrying value at end of year | 1,651 | 1,458 |
Shareholder-backed | TMB Asset Management Co. Ltd. | ||
Changes in goodwill: | ||
Acquisition/additions in the year | (181) | |
With-profits | ||
Changes in goodwill: | ||
Carrying value at beginning of year | 24 | |
Disposals/reclassifications to held for sale | (10) | |
Exchange differences | (3) | |
Carrying value at end of year | 206 | £ 24 |
With-profits | Other acquisitions | ||
Changes in goodwill: | ||
Acquisition/additions in the year | £ 195 |
Intangible assets - Goodwill al
Intangible assets - Goodwill allocation (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill allocation | |||
Goodwill | £ 1,857 | £ 1,482 | £ 1,628 |
Shareholder-backed | |||
Goodwill allocation | |||
Goodwill | 1,651 | 1,458 | |
Shareholder-backed | M&G | |||
Goodwill allocation | |||
Goodwill | 1,153 | 1,153 | |
Shareholder-backed | Other | |||
Goodwill allocation | |||
Goodwill | 498 | 305 | |
With-profits | |||
Goodwill allocation | |||
Goodwill | 206 | 24 | |
With-profits | Venture funds investments | |||
Goodwill allocation | |||
Goodwill | 206 | £ 24 | |
With-profits | UK with-profits fund | |||
Goodwill allocation | |||
Addition to goodwill | £ 195 |
Intangible assets - M&G cash-ge
Intangible assets - M&G cash-generating unit (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash-generating units | |||
Goodwill | £ 1,857 | £ 1,482 | £ 1,628 |
With-profits | |||
Cash-generating units | |||
Goodwill | £ 206 | £ 24 | |
M&G | |||
Cash-generating units | |||
Period of discounted cash flow valuation | 3 years | ||
Assumed growth rate | 1.70% | 1.70% | |
M&G - retail and institutional business | |||
Cash-generating units | |||
Risk discount rate | 12.00% | 12.00% | |
Pre-tax discount rate | 15.00% | 15.00% | |
Venture funds investments | With-profits | |||
Cash-generating units | |||
Goodwill | £ 206 | £ 24 | |
Venture funds investments | With-profits | Accumulated impairment | |||
Cash-generating units | |||
Goodwill | £ 4.7 | £ 0 |
Intangible assets - Deferred ac
Intangible assets - Deferred acquisition costs and other intangible assets (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred acquisition costs and other intangible assets | |||
Total of deferred acquisition costs and other intangible assets | £ 11,923 | £ 11,011 | |
Shareholder-backed | |||
Deferred acquisition costs and other intangible assets | |||
Deferred acquisition costs | 10,095 | 9,233 | |
Intangible assets other than goodwill | 1,689 | 1,633 | £ 1,577 |
Total of deferred acquisition costs and other intangible assets | 11,784 | 10,866 | 10,755 |
Shareholder-backed | PVIF | |||
Deferred acquisition costs and other intangible assets | |||
Intangible assets other than goodwill | 34 | 36 | 43 |
Shareholder-backed | Distribution rights and other intangible assets | |||
Deferred acquisition costs and other intangible assets | |||
Intangible assets other than goodwill | 1,655 | 1,597 | |
Shareholder-backed | Insurance contracts | |||
Deferred acquisition costs and other intangible assets | |||
Deferred acquisition costs | 10,017 | 9,170 | 9,114 |
Shareholder-backed | Investment contracts | |||
Deferred acquisition costs and other intangible assets | |||
Deferred acquisition costs | 78 | 63 | £ 64 |
With-profits | |||
Deferred acquisition costs and other intangible assets | |||
Total of deferred acquisition costs and other intangible assets | £ 139 | £ 145 |
Intangible assets - Changes in
Intangible assets - Changes in DAC and other intangibles (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Movements in deferred acquisition costs | |||
At beginning of year | £ 11,011 | ||
At end of year | 11,923 | £ 11,011 | |
Shareholder-backed | |||
Movements in deferred acquisition costs | |||
At beginning of year | 10,866 | 10,755 | |
Additions | 1,248 | 1,240 | |
Amortisation to the income statement | (1,142) | (254) | |
Disposals and transfers | (14) | ||
Exchange differences and other movements | 580 | (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 | 246 | (76) | |
At end of year | 11,784 | 10,866 | |
PVIF and other intangibles | |||
Additions | 230 | 229 | |
Amortisation | 183 | 165 | |
Intangible assets | 1,689 | 1,633 | £ 1,577 |
Shareholder-backed | Amortisation to income statement, Adjusted IFRS operating profit based on longer-term investment returns | |||
Movements in deferred acquisition costs | |||
Amortisation to the income statement | (1,024) | (709) | |
Shareholder-backed | Amortisation to the income statement, Non-operating profit | |||
Movements in deferred acquisition costs | |||
Amortisation to the income statement | (118) | 455 | |
Shareholder-backed | PVIF and other intangibles | |||
Movements in deferred acquisition costs | |||
At beginning of year | 1,633 | ||
Additions | 230 | ||
Amortisation to the income statement | (183) | ||
Disposals and transfers | (14) | ||
Exchange differences and other movements | 23 | ||
At end of year | 1,689 | 1,633 | |
Shareholder-backed | PVIF and other intangibles | Amortisation to income statement, Adjusted IFRS operating profit based on longer-term investment returns | |||
Movements in deferred acquisition costs | |||
Amortisation to the income statement | (179) | ||
Shareholder-backed | PVIF and other intangibles | Amortisation to the income statement, Non-operating profit | |||
Movements in deferred acquisition costs | |||
Amortisation to the income statement | (4) | ||
Shareholder-backed | Software | |||
PVIF and other intangibles | |||
Additions | 34 | ||
Amortisation | 32 | ||
Foreign exchange losses | 7 | ||
Intangible assets | 62 | ||
Shareholder-backed | Asia insurance operations | Deferred acquisition costs | |||
Movements in deferred acquisition costs | |||
At beginning of year | 946 | ||
Additions | 419 | ||
Amortisation to the income statement | (148) | ||
Exchange differences and other movements | 47 | ||
At end of year | 1,264 | £ 946 | |
Shareholder-backed | Asia insurance operations | Deferred acquisition costs | Amortisation to income statement, Adjusted IFRS operating profit based on longer-term investment returns | |||
Movements in deferred acquisition costs | |||
Amortisation to the income statement | £ (148) | ||
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) | Deferred acquisition costs | |||
Movements in deferred acquisition costs | |||
At beginning of year | £ 8,197 | ||
Additions | 569 | ||
Amortisation to the income statement | (797) | ||
Exchange differences and other movements | 512 | ||
Amortisation of DAC related to net unrealised valuation movements on the US insurance operation's available-for-sale securities recognised within other comprehensive income | 246 | ||
At end of year | 8,727 | £ 8,197 | |
Shareholder-backed | Jackson (US insurance operations) | Deferred acquisition costs | Amortisation to income statement, Adjusted IFRS operating profit based on longer-term investment returns | |||
Movements in deferred acquisition costs | |||
Amortisation to the income statement | (683) | ||
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 | (114) | ||
Shareholder-backed | General insurance commission (UK and Europe insurance operations) | Deferred acquisition costs | |||
Movements in deferred acquisition costs | |||
At beginning of year | 84 | ||
Additions | 15 | ||
Amortisation to the income statement | (11) | ||
Exchange differences and other movements | (2) | ||
At end of year | 86 | 84 | |
Shareholder-backed | General insurance commission (UK and Europe insurance operations) | Deferred acquisition costs | Amortisation to income statement, Adjusted IFRS operating profit based on longer-term investment returns | |||
Movements in deferred acquisition costs | |||
Amortisation to the income statement | (11) | ||
Shareholder-backed | Asset management operations | Deferred acquisition costs | |||
Movements in deferred acquisition costs | |||
At beginning of year | 6 | ||
Additions | 15 | ||
Amortisation to the income statement | (3) | ||
At end of year | 18 | £ 6 | |
Shareholder-backed | Asset management operations | Deferred acquisition costs | Amortisation to income statement, Adjusted IFRS operating profit based on longer-term investment returns | |||
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 | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
DAC amounts | |||
Gain (loss) for altered shadow DAC amortisation | £ 246 | £ (76) | £ 76 |
Jackson (US insurance operations) | |||
DAC amounts | |||
Deferred acquisition costs | 8,727 | 8,197 | |
Shareholder-backed | |||
DAC amounts | |||
Deferred acquisition costs | 10,095 | 9,233 | |
Shareholder-backed | Jackson (US insurance operations) | |||
DAC amounts | |||
Gain (loss) for altered shadow DAC amortisation | 246 | (76) | |
Positive (negative) unrealised valuation movement | £ (1,617) | £ 617 | |
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 | £ (49) | £ (289) | |
Shareholder-backed | Jackson (US insurance operations) | Amortisation to income statement, Adjusted IFRS operating profit based on longer-term investment returns | |||
DAC amounts | |||
(Credit) charge for (decelerated) accelerated amortisation | £ (194) | £ (86) | |
Shareholder-backed | Jackson (US insurance operations) | Variable annuities | |||
DAC amounts | |||
Assumptions for amortisation of deferred acquisition costs - period for projected level of investment return | 5 years | ||
Assumptions for amortisation of deferred acquisition costs - preceding period of actual investment return | 3 years | ||
Assumption for long-term investment returns (as a percent) | 7.40% | ||
Assumptions for amortisation of deferred acquisition costs - investment return realisation period | 8 years | ||
Maximum decrease in separate account values for mean reversion assumption to remain within the corridor (as a percent) | 22.00% | 32.00% | |
Maximum increase in separate account values for mean reversion assumption to remain within the corridor (as a percent) | 57.00% | 37.00% | |
Shareholder-backed | Jackson (US insurance operations) | Variable annuities | Amount before cumulative shadow DAC | |||
DAC amounts | |||
Deferred acquisition costs | £ 8,477 | £ 8,208 | |
Shareholder-backed | Jackson (US insurance operations) | Other business | Amount before cumulative shadow DAC | |||
DAC amounts | |||
Deferred acquisition costs | £ 299 | £ 278 |
Intangible assets - With-profit
Intangible assets - With-profits (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
DAC amounts | ||
Deferred acquisition costs and other intangible assets | £ 11,923 | £ 11,011 |
Distribution rights | ||
DAC amounts | ||
Intangible assets | 1,700 | |
With-profits | ||
DAC amounts | ||
Deferred acquisition costs and other intangible assets | £ 139 | £ 145 |
Intangible Assets - DAC for ins
Intangible Assets - DAC for insurance and investment contracts (Details) - Shareholder-backed - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Movements in deferred acquisition costs | ||
DAC at the beginning of the period | £ 9,233 | |
Change in shadow DAC related to movement in unrealised appreciation of Jackson's securities classified as available-for-sale | 246 | £ (76) |
DAC at the end of the period | 10,095 | 9,233 |
Insurance contracts | ||
Movements in deferred acquisition costs | ||
DAC at the beginning of the period | 9,170 | 9,114 |
Additions | 991 | 1,000 |
Amortisation | (947) | (77) |
Exchange differences | 557 | (791) |
Change in shadow DAC related to movement in unrealised appreciation of Jackson's securities classified as available-for-sale | 246 | (76) |
DAC at the end of the period | 10,017 | 9,170 |
Investment contracts | ||
Movements in deferred acquisition costs | ||
DAC at the beginning of the period | 63 | 64 |
Additions | 26 | 11 |
Amortisation | (11) | (12) |
DAC at the end of the period | 78 | 63 |
Investment contracts | Cost/Gross amount | ||
Movements in deferred acquisition costs | ||
DAC at the beginning of the period | 156 | |
DAC at the end of the period | 181 | 156 |
Investment contracts | Accumulated amortisation | ||
Movements in deferred acquisition costs | ||
DAC at the beginning of the period | (93) | |
DAC at the end of the period | £ (103) | £ (93) |
Intangible Assets - PVIF and ot
Intangible Assets - PVIF and other intangibles (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Distribution rights | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the end of the period | £ 1,700 | |
Shareholder-backed | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | 1,633 | £ 1,577 |
Additions | 230 | 229 |
Amortisation charge | (183) | (165) |
Disposals and transfers | (14) | |
Exchange differences and other movements | 23 | (8) |
Balance at the end of the period | 1,689 | 1,633 |
Shareholder-backed | Cost/Gross amount | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | 2,383 | 2,175 |
Balance at the end of the period | 2,544 | 2,383 |
Shareholder-backed | Accumulated amortisation | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | (750) | (598) |
Balance at the end of the period | (855) | (750) |
Shareholder-backed | PVIF | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | 36 | 43 |
Amortisation charge | (4) | (7) |
Exchange differences and other movements | 2 | |
Balance at the end of the period | 34 | 36 |
Shareholder-backed | PVIF | Cost/Gross amount | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | 227 | 226 |
Balance at the end of the period | 232 | 227 |
Shareholder-backed | PVIF | Accumulated amortisation | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | (191) | (183) |
Balance at the end of the period | (198) | (191) |
Shareholder-backed | Distribution rights | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | 1,481 | 1,432 |
Additions | 181 | 173 |
Amortisation charge | (142) | (121) |
Exchange differences and other movements | 18 | (3) |
Balance at the end of the period | 1,538 | 1,481 |
Shareholder-backed | Distribution rights | Cost/Gross amount | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | 1,793 | 1,628 |
Balance at the end of the period | 1,999 | 1,793 |
Shareholder-backed | Distribution rights | Accumulated amortisation | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | (312) | (196) |
Balance at the end of the period | (461) | (312) |
Shareholder-backed | Other intangibles (including software) | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | 116 | 102 |
Additions | 49 | 56 |
Amortisation charge | (37) | (37) |
Disposals and transfers | (14) | |
Exchange differences and other movements | 3 | (5) |
Balance at the end of the period | 117 | 116 |
Shareholder-backed | Other intangibles (including software) | Cost/Gross amount | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | 363 | 321 |
Balance at the end of the period | 313 | 363 |
Shareholder-backed | Other intangibles (including software) | Accumulated amortisation | ||
Present value of acquired in-force (PVIF) and other intangibles | ||
Balance at the beginning of the period | (247) | (219) |
Balance at the end of the period | £ (196) | £ (247) |
Borrowings - Core Structural Bo
Borrowings - Core Structural Borrowings (Details) € in Millions, £ in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2018GBP (£) | Oct. 31, 2018USD ($)item | Oct. 31, 2018GBP (£)item | Dec. 31, 2018GBP (£) | Dec. 31, 2017GBP (£) | Dec. 31, 2018EUR (€) | Dec. 31, 2018USD ($) | Dec. 31, 2018GBP (£) | Jun. 30, 2018GBP (£) | Dec. 31, 2017EUR (€) | Dec. 31, 2017USD ($) | Dec. 31, 2017GBP (£) | Dec. 31, 2016GBP (£) | |
Core structural borrowings of shareholder-financed businesses | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 7,664 | £ 6,400 | £ 6,280 | £ 6,798 | |||||||||
Number of substitutable borrowings issued | item | 3 | 3 | |||||||||||
Payment for redemption of debt | £ 434 | £ 751 | |||||||||||
Holding company total | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | 7,468 | 5,821 | |||||||||||
Subordinated debt total | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | 6,676 | 5,272 | |||||||||||
Perpetual Subordinated Capital Securities | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | 2,909 | 3,140 | |||||||||||
Perpetual Subordinated Capital Securities | Net investment hedge | |||||||||||||
Borrowings | |||||||||||||
Face amount | $ | $ 3,725 | $ 4,275 | |||||||||||
US$250m 6.75% Notes (Tier 1) | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 196 | £ 185 | |||||||||||
Face amount | $ | $ 250 | $ 250 | |||||||||||
Interest rate (as a percent) | 6.75% | 6.75% | 6.75% | 6.75% | 6.75% | 6.75% | |||||||
US$300m 6.5% Notes (Tier 1) | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 235 | £ 222 | |||||||||||
Face amount | $ | $ 300 | $ 300 | |||||||||||
Interest rate (as a percent) | 6.50% | 6.50% | 6.50% | 6.50% | 6.50% | 6.50% | |||||||
US$700m 5.25% Notes (Tier 2) | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 550 | £ 517 | |||||||||||
Face amount | $ | $ 700 | $ 700 | |||||||||||
Interest rate (as a percent) | 5.25% | 5.25% | 5.25% | 5.25% | 5.25% | 5.25% | |||||||
US$550m 7.75% Notes (Tier 1) | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 407 | ||||||||||||
Face amount | $ | $ 550 | $ 550 | |||||||||||
Interest rate (as a percent) | 7.75% | 7.75% | 7.75% | 7.75% | 7.75% | 7.75% | |||||||
Payment for redemption of debt | £ 434 | ||||||||||||
US$1,000m 5.25% Notes (Tier 2) | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 780 | £ 731 | |||||||||||
Face amount | $ | $ 1,000 | $ 1,000 | |||||||||||
Interest rate (as a percent) | 5.25% | 5.25% | 5.25% | 5.25% | 5.25% | 5.25% | |||||||
US$725m 4.375% Notes (Tier 2) | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 565 | £ 530 | |||||||||||
Face amount | $ | $ 725 | $ 725 | |||||||||||
Interest rate (as a percent) | 4.375% | 4.375% | 4.375% | 4.375% | 4.375% | 4.375% | |||||||
US$750m 4.875% Notes (Tier 2) | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 583 | £ 548 | |||||||||||
Face amount | $ | $ 750 | $ 750 | |||||||||||
Interest rate (as a percent) | 4.875% | 4.875% | 4.875% | 4.875% | 4.875% | 4.875% | |||||||
Subordinated Notes | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 3,767 | £ 2,132 | |||||||||||
20m Medium Term Notes 2023 (Tier 2) | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 18 | 18 | |||||||||||
Face amount | € | € 20 | € 20 | |||||||||||
Adjustment to interest rate basis (as a percent) | 1.20% | 1.20% | 1.20% | ||||||||||
Term of Euro Constant Maturity Swap | 20 years | ||||||||||||
Interest rate cap (as a percent) | 6.50% | 6.50% | 6.50% | ||||||||||
Borrowing swapped into | £ 14 | ||||||||||||
435m 6.125% Notes 2031 (Tier 2) | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | 431 | 430 | |||||||||||
Face amount | £ 435 | £ 435 | |||||||||||
Interest rate (as a percent) | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | |||||||
400m 11.375% Notes 2039 (Tier 2) | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 399 | £ 397 | |||||||||||
Face amount | £ 400 | £ 400 | |||||||||||
Interest rate (as a percent) | 11.375% | 11.375% | 11.375% | 11.375% | 11.375% | 11.375% | |||||||
600m 5% Notes 2055 (Tier 2) | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 591 | £ 591 | |||||||||||
Face amount | £ 600 | £ 600 | |||||||||||
Interest rate (as a percent) | 5.00% | 5.00% | 5.00% | 5.00% | 5.00% | 5.00% | |||||||
700m 5.7% Notes 2063 (Tier 2) | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 696 | £ 696 | |||||||||||
Face amount | £ 700 | £ 700 | |||||||||||
Interest rate (as a percent) | 5.70% | 5.70% | 5.70% | 5.70% | 5.70% | 5.70% | |||||||
750m 5.625% Notes 2051 (Tier 2) | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 743 | ||||||||||||
Face amount | £ 750 | ||||||||||||
Interest rate (as a percent) | 5.625% | 5.625% | 5.625% | ||||||||||
Proceeds, net of costs | £ 743 | ||||||||||||
500m 6.25% Notes 2068 (Tier 2) | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 498 | ||||||||||||
Face amount | £ 500 | ||||||||||||
Interest rate (as a percent) | 6.25% | 6.25% | 6.25% | ||||||||||
Proceeds, net of costs | 498 | ||||||||||||
US$500m 6.5% Notes 2048 (Tier 2) | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 391 | ||||||||||||
Face amount | £ 500 | ||||||||||||
Interest rate (as a percent) | 6.50% | 6.50% | 6.50% | ||||||||||
Proceeds, net of costs | $ 498 | £ 389 | |||||||||||
Senior debt: 300m 6.875% Bonds 2023 | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 294 | £ 300 | |||||||||||
Face amount | £ 300 | £ 300 | |||||||||||
Interest rate (as a percent) | 6.875% | 6.875% | 6.875% | 6.875% | 6.875% | 6.875% | |||||||
Senior debt: 250m 5.875% Bonds 2029 | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 223 | £ 249 | |||||||||||
Face amount | £ 250 | £ 250 | |||||||||||
Interest rate (as a percent) | 5.875% | 5.875% | 5.875% | 5.875% | 5.875% | 5.875% | |||||||
Bank loan | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 275 | ||||||||||||
Prudential Capital Bank Loan | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 275 | ||||||||||||
Face amount | £ 275 | ||||||||||||
Interest rate basis | 12-month GBP LIBOR | ||||||||||||
Adjustment to interest rate basis (as a percent) | 0.33% | 0.33% | 0.33% | ||||||||||
Jackson US$250m 8.15% Surplus Notes 2027 | |||||||||||||
Borrowings | |||||||||||||
Borrowings per consolidated statement of financial position | £ 196 | 184 | |||||||||||
Face amount | £ 250 | £ 250 | |||||||||||
Interest rate (as a percent) | 8.15% | 8.15% | 8.15% | 8.15% | 8.15% | 8.15% |
Borrowings - Demerger (Details)
Borrowings - Demerger (Details) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Core structural borrowings of shareholder-financed businesses | |||||
Borrowings | |||||
Borrowings per consolidated statement of financial position | £ 7,664 | £ 6,400 | £ 6,280 | £ 6,798 | |
Borrowings in respect of short-term fixed income securities programmes | |||||
Borrowings | |||||
Borrowings per consolidated statement of financial position | £ 472 | 1,200 | £ 1,085 | ||
M&G Prudential Limited | Subordinated debt | Forecast | |||||
Borrowings | |||||
Borrowings per consolidated statement of financial position | £ 3,500 | ||||
Shareholder-backed | |||||
Borrowings | |||||
Borrowings per consolidated statement of financial position | £ 7,600 |
Borrowings - Operational borrow
Borrowings - Operational borrowings (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Operational borrowings attributable to shareholder-financed businesses | |||
Borrowings | |||
Borrowings | £ 998 | £ 1,791 | |
Borrowings in respect of short-term fixed income securities programmes | |||
Borrowings | |||
Borrowings | 472 | £ 1,200 | 1,085 |
Commercial Paper | |||
Borrowings | |||
Borrowings | 472 | 485 | |
Medium Term Notes | |||
Borrowings | |||
Borrowings | 600 | ||
Total other borrowings | |||
Borrowings | |||
Borrowings | 526 | 706 | |
Bank loans and overdrafts | |||
Borrowings | |||
Borrowings | 90 | 70 | |
Obligations under finance leases | |||
Borrowings | |||
Borrowings | 19 | 5 | |
Other borrowings | |||
Borrowings | |||
Borrowings | £ 417 | £ 631 |
Borrowings - With-profits busin
Borrowings - With-profits businesses (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Borrowings attributable to with-profits businesses | ||
Disclosure of detailed information about borrowings [line items] | ||
Borrowings | £ 3,940 | £ 3,716 |
Non-recourse borrowings of consolidated investment funds | ||
Disclosure of detailed information about borrowings [line items] | ||
Borrowings | 3,845 | 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 (including obligations under finance leases) | ||
Disclosure of detailed information about borrowings [line items] | ||
Borrowings | £ 95 | £ 46 |
Borrowings - Maturity analysis
Borrowings - Maturity analysis (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Core structural borrowings of shareholder-financed businesses | ||||
Remaining contractual maturity analysis of the Group's borrowings | ||||
Borrowings per consolidated statement of financial position | £ 7,664 | £ 6,400 | £ 6,280 | £ 6,798 |
Core structural borrowings of shareholder-financed businesses | Expected to be settled within one year | ||||
Remaining contractual maturity analysis of the Group's borrowings | ||||
Borrowings per consolidated statement of financial position | 275 | |||
Core structural borrowings of shareholder-financed businesses | 3 to 4 years | ||||
Remaining contractual maturity analysis of the Group's borrowings | ||||
Borrowings per consolidated statement of financial position | 275 | |||
Core structural borrowings of shareholder-financed businesses | 4 to 5 years | ||||
Remaining contractual maturity analysis of the Group's borrowings | ||||
Borrowings per consolidated statement of financial position | 312 | |||
Core structural borrowings of shareholder-financed businesses | Over 5 years | ||||
Remaining contractual maturity analysis of the Group's borrowings | ||||
Borrowings per consolidated statement of financial position | 7,077 | 6,005 | ||
Operational borrowings attributable to shareholder-financed businesses | ||||
Remaining contractual maturity analysis of the Group's borrowings | ||||
Borrowings per consolidated statement of financial position | 998 | 1,791 | ||
Operational borrowings attributable to shareholder-financed businesses | Expected to be settled within one year | ||||
Remaining contractual maturity analysis of the Group's borrowings | ||||
Borrowings per consolidated statement of financial position | 840 | 1,723 | ||
Operational borrowings attributable to shareholder-financed businesses | 1 to 2 years | ||||
Remaining contractual maturity analysis of the Group's borrowings | ||||
Borrowings per consolidated statement of financial position | 89 | 1 | ||
Operational borrowings attributable to shareholder-financed businesses | 2 to 3 years | ||||
Remaining contractual maturity analysis of the Group's borrowings | ||||
Borrowings per consolidated statement of financial position | 1 | 1 | ||
Operational borrowings attributable to shareholder-financed businesses | Over 5 years | ||||
Remaining contractual maturity analysis of the Group's borrowings | ||||
Borrowings per consolidated statement of financial position | 68 | 66 | ||
Borrowings attributable to with-profits businesses | ||||
Remaining contractual maturity analysis of the Group's borrowings | ||||
Borrowings per consolidated statement of financial position | 3,940 | 3,716 | ||
Borrowings attributable to with-profits businesses | Expected to be settled within one year | ||||
Remaining contractual maturity analysis of the Group's borrowings | ||||
Borrowings per consolidated statement of financial position | 573 | 351 | ||
Borrowings attributable to with-profits businesses | 1 to 2 years | ||||
Remaining contractual maturity analysis of the Group's borrowings | ||||
Borrowings per consolidated statement of financial position | 71 | 371 | ||
Borrowings attributable to with-profits businesses | 2 to 3 years | ||||
Remaining contractual maturity analysis of the Group's borrowings | ||||
Borrowings per consolidated statement of financial position | 90 | 184 | ||
Borrowings attributable to with-profits businesses | 3 to 4 years | ||||
Remaining contractual maturity analysis of the Group's borrowings | ||||
Borrowings per consolidated statement of financial position | 5 | 59 | ||
Borrowings attributable to with-profits businesses | 4 to 5 years | ||||
Remaining contractual maturity analysis of the Group's borrowings | ||||
Borrowings per consolidated statement of financial position | 102 | 1 | ||
Borrowings attributable to with-profits businesses | Over 5 years | ||||
Remaining contractual maturity analysis of the Group's borrowings | ||||
Borrowings per consolidated statement of financial position | £ 3,099 | £ 2,750 |
Risk and sensitivity analysis -
Risk and sensitivity analysis - Overview (Details) | Dec. 31, 2018 |
Equity price risk | Maximum | |
Risk and sensitivity analysis | |
Instantaneous decrease in risk assumption considered in analysis | 20.00% |
Risk and sensitivity analysis_2
Risk and sensitivity analysis - Asia, interest rate sensitivity (Details) - Asia insurance operations - Non-linked shareholder-backed - Interest rate risk - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 1.00% | 1.00% |
Change in profit before tax attributable to shareholders, decrease in assumption | £ 312 | £ 2 |
Change in related deferred tax (where applicable), decrease in assumption | (15) | (7) |
Net effect on profit and shareholders' equity, decrease in assumption | £ 297 | £ (5) |
Reasonably possible increase in assumption (as a percent) | 1.00% | 1.00% |
Change in profit before tax attributable to shareholders, increase in assumption | £ (338) | £ (443) |
Change in related deferred tax (where applicable), increase in assumption | 26 | 20 |
Net effect on profit and shareholders' equity, increase in assumption | £ (312) | £ (423) |
10-year government bond rates | Minimum | ||
Risk and sensitivity analysis | ||
Reference rate (as a percent) | 0.90% | 1.00% |
10-year government bond rates | Maximum | ||
Risk and sensitivity analysis | ||
Reference rate (as a percent) | 8.10% | 7.50% |
Risk and sensitivity analysis_3
Risk and sensitivity analysis - Asia, equity price sensitivity (Details) - Asia insurance operations - Non-linked shareholder-backed - Equity price risk - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Risk and sensitivity analysis | ||
Exposure to equity and property investment | £ 2,151 | £ 1,764 |
20% change | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 20.00% | 20.00% |
Change in profit before tax attributable to shareholders, decrease in assumption | £ (557) | £ (478) |
Change in related deferred tax (where applicable), decrease in assumption | 17 | 7 |
Net effect on profit and shareholders' equity, decrease in assumption | £ (540) | £ (471) |
10% change | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 10.00% | 10.00% |
Change in profit before tax attributable to shareholders, decrease in assumption | £ (279) | £ (239) |
Change in related deferred tax (where applicable), decrease in assumption | 8 | 4 |
Net effect on profit and shareholders' equity, decrease in assumption | £ (271) | £ (235) |
Risk and sensitivity analysis_4
Risk and sensitivity analysis - Asia, insurance risk sensitivity (Details) - Asia insurance operations - Mortality rates - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Risk and sensitivity analysis | ||
Reasonably possible increase in assumption (as a percent) | 5.00% | 5.00% |
Effect on post-tax profit and shareholders' equity, increase in assumption | £ (57) | £ (66) |
Risk and sensitivity analysis_5
Risk and sensitivity analysis - Asia, foreign exchange sensitivity (Details) - Asia insurance operations - Foreign exchange risk - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Risk and sensitivity analysis | ||
Reasonably possible increase in assumption (as a percent) | 10.00% | 10.00% |
Change in profit before tax attributable to shareholders, increase in assumption | £ (134) | £ (155) |
Change in profit for the year, increase in assumption | (113) | (135) |
Change in shareholders' equity, excluding goodwill, increase in assumption | £ (543) | £ (492) |
Reasonably possible decrease in assumption (as a percent) | 10.00% | 10.00% |
Change in profit before tax attributable to shareholders, decrease in assumption | £ 164 | £ 189 |
Change in profit for the year, decrease in assumption | 138 | 165 |
Change in shareholders' equity, excluding goodwill, decrease in assumption | £ 664 | £ 601 |
Risk and sensitivity analysis_6
Risk and sensitivity analysis - US, variable annuity guarantees (Details) - Jackson (US insurance operations) - Variable annuities - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
GMDB | Return of net deposits plus a minimum return | ||
Risk and sensitivity analysis | ||
Account value | £ 98,653 | £ 100,451 |
Net amount at risk | £ 4,437 | £ 1,665 |
Weighted average attained age | 66 years 6 months | 66 years |
GMDB | Return of net deposits plus a minimum return | Minimum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 0.00% | 0.00% |
GMDB | Return of net deposits plus a minimum return | Maximum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 6.00% | 6.00% |
GMDB | Highest specified anniversary account value minus withdrawals post-anniversary | ||
Risk and sensitivity analysis | ||
Account value | £ 8,531 | £ 9,099 |
Net amount at risk | £ 1,113 | £ 96 |
Weighted average attained age | 67 years 1 month 6 days | 66 years 6 months |
GMDB | Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary | ||
Risk and sensitivity analysis | ||
Account value | £ 5,454 | £ 5,694 |
Net amount at risk | £ 1,217 | £ 426 |
Weighted average attained age | 69 years 6 months | 69 years |
GMDB | Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary | Minimum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 0.00% | 0.00% |
GMDB | Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary | Maximum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 6.00% | 6.00% |
GMIB | Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary | ||
Risk and sensitivity analysis | ||
Account value | £ 1,256 | £ 1,484 |
Net amount at risk | £ 648 | £ 436 |
Period until expected annuitisation | 1 month 6 days | 4 months 24 days |
GMIB | Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary | Minimum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 0.00% | 0.00% |
GMIB | Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary | Maximum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 6.00% | 6.00% |
GMWB | Return of net deposits plus a minimum return | ||
Risk and sensitivity analysis | ||
Account value | £ 197 | £ 235 |
Net amount at risk | £ 20 | £ 13 |
GMWB | Return of net deposits plus a minimum return | Minimum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 0.00% | 0.00% |
GMWB | Return of net deposits plus a minimum return | Maximum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 5.00% | 5.00% |
Compound interest equivalent of minimum return (as a percent) | 4.10% | |
Bonus period for compound interest equivalent of minimum return | 10 years | |
GMWB | Return of net deposits - premium only | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 0.00% | 0.00% |
Account value | £ 1,924 | £ 2,133 |
Net amount at risk | 62 | 20 |
GMWB | Highest specified anniversary account value minus withdrawals post-anniversary | ||
Risk and sensitivity analysis | ||
Account value | 535 | 667 |
Net amount at risk | 89 | 47 |
GMWB | Highest specified anniversary account value only | ||
Risk and sensitivity analysis | ||
Account value | 2,220 | 2,447 |
Net amount at risk | 314 | 51 |
GMWB | Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary | ||
Risk and sensitivity analysis | ||
Account value | 91,788 | 93,227 |
Net amount at risk | £ 16,835 | £ 4,393 |
GMWB | Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary | Minimum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 0.00% | 0.00% |
GMWB | Combination net deposits plus minimum return, highest specified anniversary account value minus withdrawals post-anniversary | Maximum | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 8.00% | 8.00% |
Compound interest equivalent of minimum return (as a percent) | 6.00% | |
Bonus period for compound interest equivalent of minimum return | 10 years | |
GMAB | Return of net deposits - premium only | ||
Risk and sensitivity analysis | ||
Minimum return (as a percent) | 0.00% | 0.00% |
Account value | £ 26 | £ 38 |
Risk and sensitivity analysis_7
Risk and sensitivity analysis - US, separate account balances (Details) - Jackson (US insurance operations) - Variable annuities - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Mutual funds | ||
Risk and sensitivity analysis | ||
Guarantee contract account balance in variable separate accounts | £ 113,015 | £ 115,352 |
Equity mutual funds | ||
Risk and sensitivity analysis | ||
Guarantee contract account balance in variable separate accounts | 78,387 | 80,843 |
Bond mutual funds | ||
Risk and sensitivity analysis | ||
Guarantee contract account balance in variable separate accounts | 13,901 | 13,976 |
Balanced mutual funds | ||
Risk and sensitivity analysis | ||
Guarantee contract account balance in variable separate accounts | 19,903 | 19,852 |
Money market mutual funds | ||
Risk and sensitivity analysis | ||
Guarantee contract account balance in variable separate accounts | £ 824 | £ 681 |
Risk and sensitivity analysis_8
Risk and sensitivity analysis - US, equity price sensitivity (Details) - Jackson (US insurance operations) - Equity price risk - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
20% change | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 20.00% | 20.00% |
Change in pre-tax profit, net of related changes in amortisation of DAC, decrease in assumption | £ 1,058 | £ 1,107 |
Change in related deferred tax, decrease in assumption | (222) | (233) |
Net effect on profit and shareholders' equity, decrease in assumption | £ 836 | £ 874 |
Reasonably possible increase in assumption (as a percent) | 20.00% | 20.00% |
Change in pre-tax profit, net of related changes in amortisation of DAC, increase in assumption | £ 58 | £ 619 |
Change in related deferred tax, increase in assumption | (12) | (130) |
Net effect on profit and shareholders' equity, increase in assumption | £ 46 | £ 489 |
10% change | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 10.00% | 10.00% |
Change in pre-tax profit, net of related changes in amortisation of DAC, decrease in assumption | £ 427 | £ 336 |
Change in related deferred tax, decrease in assumption | (90) | (71) |
Net effect on profit and shareholders' equity, decrease in assumption | £ 337 | £ 265 |
Reasonably possible increase in assumption (as a percent) | 10.00% | 10.00% |
Change in pre-tax profit, net of related changes in amortisation of DAC, increase in assumption | £ (125) | £ 262 |
Change in related deferred tax, increase in assumption | 26 | (55) |
Net effect on profit and shareholders' equity, increase in assumption | £ (99) | £ 207 |
Risk and sensitivity analysis_9
Risk and sensitivity analysis - US, interest rate sensitivity (Details) - Jackson (US insurance operations) - Interest rate risk - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
2% change | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 2.00% | 2.00% |
Change in pre-tax profit, net of related changes in amortisation of DAC, decrease in assumption | £ (3,535) | £ (4,079) |
Change in related deferred tax, decrease in assumption | 742 | 857 |
Net profit effect, decrease in assumption | (2,793) | (3,222) |
Direct effect on carrying value of debt securities (net of related changes in amortisation of DAC), decrease in assumption | 4,134 | 3,063 |
Related effect on movement in deferred tax, decrease in assumption | (868) | (643) |
Net OCI effect, decrease in assumption | 3,266 | 2,420 |
Net effect on profit and shareholders' equity, decrease in assumption | £ 473 | £ (802) |
Reasonably possible increase in assumption (as a percent) | 2.00% | 2.00% |
Change in pre-tax profit, net of related changes in amortisation of DAC, increase in assumption | £ 2,210 | £ 2,533 |
Change in related deferred tax, increase in assumption | (464) | (532) |
Net profit effect, increase in assumption | 1,746 | 2,001 |
Direct effect on carrying value of debt securities (net of related changes in amortisation of DAC), increase in assumption | (4,134) | (3,063) |
Related effect on movement in deferred tax, increase in assumption | 868 | 643 |
Net OCI effect, increase in assumption | (3,266) | (2,420) |
Net effect on profit and shareholders' equity, increase in assumption | £ (1,520) | £ (419) |
1% change | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 1.00% | 1.00% |
Change in pre-tax profit, net of related changes in amortisation of DAC, decrease in assumption | £ (1,718) | £ (1,911) |
Change in related deferred tax, decrease in assumption | 361 | 401 |
Net profit effect, decrease in assumption | (1,357) | (1,510) |
Direct effect on carrying value of debt securities (net of related changes in amortisation of DAC), decrease in assumption | 2,346 | 1,700 |
Related effect on movement in deferred tax, decrease in assumption | (493) | (357) |
Net OCI effect, decrease in assumption | 1,853 | 1,343 |
Net effect on profit and shareholders' equity, decrease in assumption | £ 496 | £ (167) |
Reasonably possible increase in assumption (as a percent) | 1.00% | 1.00% |
Change in pre-tax profit, net of related changes in amortisation of DAC, increase in assumption | £ 1,201 | £ 1,373 |
Change in related deferred tax, increase in assumption | (252) | (288) |
Net profit effect, increase in assumption | 949 | 1,085 |
Direct effect on carrying value of debt securities (net of related changes in amortisation of DAC), increase in assumption | (2,346) | (1,700) |
Related effect on movement in deferred tax, increase in assumption | 493 | 357 |
Net OCI effect, increase in assumption | (1,853) | (1,343) |
Net effect on profit and shareholders' equity, increase in assumption | £ (904) | £ (258) |
Risk and sensitivity analysi_10
Risk and sensitivity analysis - US, foreign exchange and other sensitivity (Details) £ in Millions | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2018₫ / £ | Dec. 31, 2018₫ / £$ / £ | Dec. 31, 2018₫ / £฿ / £ | Dec. 31, 2018₫ / £$ / £ | Dec. 31, 2018₫ / £RM / £ | Dec. 31, 2018₫ / £₨ / £ | Dec. 31, 2018₫ / £Rp / £ | Dec. 31, 2018₫ / £$ / £ | Dec. 31, 2018₫ / £¥ / £ | Dec. 31, 2018₫ / £ | Dec. 31, 2017₫ / £ | Dec. 31, 2017₫ / £$ / £ | Dec. 31, 2017₫ / £฿ / £ | Dec. 31, 2017₫ / £$ / £ | Dec. 31, 2017₫ / £RM / £ | Dec. 31, 2017₫ / £₨ / £ | Dec. 31, 2017₫ / £Rp / £ | Dec. 31, 2017₫ / £$ / £ | Dec. 31, 2017₫ / £¥ / £ | Dec. 31, 2017₫ / £ | Dec. 31, 2016₫ / £ | Dec. 31, 2016₫ / £$ / £ | Dec. 31, 2016₫ / £฿ / £ | Dec. 31, 2016₫ / £$ / £ | Dec. 31, 2016₫ / £RM / £ | Dec. 31, 2016₫ / £₨ / £ | Dec. 31, 2016₫ / £Rp / £ | Dec. 31, 2016₫ / £$ / £ | Dec. 31, 2016₫ / £¥ / £ | Dec. 31, 2018$ / £ | Dec. 31, 2018฿ / £ | Dec. 31, 2018$ / £ | Dec. 31, 2018RM / £ | Dec. 31, 2018₨ / £ | Dec. 31, 2018Rp / £ | Dec. 31, 2018$ / £ | Dec. 31, 2018¥ / £ | Dec. 31, 2018 | Dec. 31, 2018GBP (£) | Dec. 31, 2017$ / £ | Dec. 31, 2017฿ / £ | Dec. 31, 2017$ / £ | Dec. 31, 2017RM / £ | Dec. 31, 2017₨ / £ | Dec. 31, 2017Rp / £ | Dec. 31, 2017$ / £ | Dec. 31, 2017¥ / £ | Dec. 31, 2017 | Dec. 31, 2017GBP (£) | Dec. 31, 2016$ / £ | Dec. 31, 2016฿ / £ | Dec. 31, 2016$ / £ | Dec. 31, 2016RM / £ | Dec. 31, 2016₨ / £ | Dec. 31, 2016Rp / £ | Dec. 31, 2016$ / £ | Dec. 31, 2016¥ / £ | Dec. 31, 2015₫ / £ | Dec. 31, 2015$ / £ | Dec. 31, 2015฿ / £ | Dec. 31, 2015$ / £ | Dec. 31, 2015RM / £ | Dec. 31, 2015₨ / £ | Dec. 31, 2015Rp / £ | Dec. 31, 2015$ / £ | Dec. 31, 2015¥ / £ | |
Risk and sensitivity analysis | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average foreign exchange rate | 30,732.53 | 1.34 | 43.13 | 1.80 | 5.38 | 91.25 | 18,987.65 | 10.46 | 8.82 | 29,279.71 | 1.29 | 43.71 | 1.78 | 5.54 | 83.90 | 17,249.38 | 10.04 | 8.71 | 30,292.79 | 1.35 | 47.80 | 1.87 | 5.61 | 91.02 | 18,026.11 | 10.52 | 8.99 | |||||||||||||||||||||||||||||||||||||||
Closing foreign exchange rate | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 29,541.15 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 30,719.60 | 28,136.99 | 28,136.99 | 28,136.99 | 28,136.99 | 28,136.99 | 28,136.99 | 28,136.99 | 28,136.99 | 28,136.99 | 1.27 | 41.47 | 1.74 | 5.26 | 88.92 | 18,314.37 | 9.97 | 8.74 | 1.35 | 44.09 | 1.81 | 5.47 | 86.34 | 18,353.44 | 10.57 | 8.81 | 1.24 | 44.25 | 1.79 | 5.54 | 83.86 | 16,647.30 | 9.58 | 8.59 | 33,140.64 | 1.47 | 53.04 | 2.09 | 6.33 | 97.51 | 20,317.71 | 11.42 | 9.57 | ||||
Jackson (US insurance operations) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk and sensitivity analysis | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average foreign exchange rate | $ / £ | 1.34 | 1.29 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Closing foreign exchange rate | $ / £ | 1.27 | 1.35 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jackson (US insurance operations) | Variable annuities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk and sensitivity analysis | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expected long-term level of separate account returns (as a percent) | 7.40% | 7.40% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jackson (US insurance operations) | Foreign exchange risk | US dollars | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk and sensitivity analysis | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reasonably possible increase in assumption (as a percent) | 10.00% | 10.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in profit before tax attributable to shareholders, increase in assumption | £ (159) | £ (54) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in profit for the year, increase in assumption | (136) | (20) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in shareholders' equity, increase in assumption | (508) | (456) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reasonably possible decrease in assumption (as a percent) | 10.00% | 10.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in profit before tax attributable to shareholders, decrease in assumption | 194 | 66 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in profit for the year, decrease in assumption | 166 | 24 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in shareholders' equity, decrease in assumption | £ 620 | £ 557 |
Risk and sensitivity analysi_11
Risk and sensitivity analysis - UK and Europe, shareholder-backed annuity sensitivity (Details) - UK and Europe insurance operations - Shareholder-backed annuity - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Insurance risk | ||
Risk and sensitivity analysis | ||
Net effect on profit after tax and shareholders' equity, decreases in combination of assumptions | £ 69 | £ 143 |
Mortality rates | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 1.00% | 1.00% |
Change in pre-tax profit, decrease in assumption | £ (37) | £ (66) |
Credit default rates | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 0.05% | 0.05% |
Change in pre-tax profit, decrease in assumption | £ 99 | £ 198 |
Renewal expenses | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 5.00% | 5.00% |
Change in pre-tax profit, decrease in assumption | £ 21 | £ 40 |
Risk and sensitivity analysi_12
Risk and sensitivity analysis - UK and Europe, interest rate sensitivity (Details) - UK and Europe insurance operations - Non-linked shareholder-backed - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Shareholder-backed annuity | ||
Risk and sensitivity analysis | ||
Percentage of business liabilities | 95.00% | 98.00% |
2% change | Interest rate risk | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 2.00% | 2.00% |
Change in carrying value of debt securities and derivatives, decrease in assumption | £ 7,369 | £ 13,497 |
Change in policyholder liabilities, decrease in assumption | (4,784) | (9,426) |
Change in related deferred tax, decrease in assumption | (446) | (658) |
Net effect on profit and shareholders' equity, decrease in assumption | £ 2,139 | £ 3,413 |
Reasonably possible increase in assumption (as a percent) | 2.00% | 2.00% |
Change in carrying value of debt securities and derivatives, increase in assumption | £ (5,193) | £ (8,541) |
Change in policyholder liabilities, increase in assumption | 3,317 | 6,295 |
Change in related deferred tax, increase in assumption | 323 | 348 |
Net effect on profit and shareholders' equity, increase in assumption | £ (1,553) | £ (1,898) |
1% change | Interest rate risk | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 1.00% | 1.00% |
Change in carrying value of debt securities and derivatives, decrease in assumption | £ 3,317 | £ 5,805 |
Change in policyholder liabilities, decrease in assumption | (2,162) | (4,210) |
Change in related deferred tax, decrease in assumption | (199) | (254) |
Net effect on profit and shareholders' equity, decrease in assumption | £ 956 | £ 1,341 |
Reasonably possible increase in assumption (as a percent) | 1.00% | 1.00% |
Change in carrying value of debt securities and derivatives, increase in assumption | £ (2,792) | £ (4,659) |
Change in policyholder liabilities, increase in assumption | 1,801 | 3,443 |
Change in related deferred tax, increase in assumption | 171 | 190 |
Net effect on profit and shareholders' equity, increase in assumption | £ (820) | £ (1,026) |
Risk and sensitivity analysi_13
Risk and sensitivity analysis - UK and Europe, equity securities and investment properties sensitivity (Details) - UK and Europe insurance operations - Non-linked shareholder-backed - Equity securities and investment properties in portfolio - Portfolio value risk - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
20% change | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 20.00% | 20.00% |
Change in pre-tax profit, decrease in assumption | £ (336) | £ (332) |
Change in related deferred tax, decrease in assumption | 57 | 57 |
Net effect on profit and shareholders' equity, decrease in assumption | £ (279) | £ (275) |
10% change | ||
Risk and sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 10.00% | 10.00% |
Change in pre-tax profit, decrease in assumption | £ (168) | £ (166) |
Change in related deferred tax, decrease in assumption | 29 | 28 |
Net effect on profit and shareholders' equity, decrease in assumption | £ (139) | £ (138) |
Risk and sensitivity analysi_14
Risk and sensitivity analysis - Asset management and other operations (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Risk and sensitivity analysis | |||
Debt securities | [1] | £ 175,356 | £ 171,374 |
Eastspring Investments and US asset management operations | Foreign exchange risk | |||
Risk and sensitivity analysis | |||
Reasonably possible increase in assumption (as a percent) | 10.00% | 10.00% | |
Change in profit before tax attributable to shareholders, increase in assumption | £ 10 | £ 30 | |
Change in shareholders' equity, excluding goodwill, increase in assumption | 43 | 53 | |
Unallocated to a segment (central or other operations) | |||
Risk and sensitivity analysis | |||
Debt securities | 1,967 | 2,307 | |
Unallocated to a segment (central or other operations) | Prudential Capital Plc | |||
Risk and sensitivity analysis | |||
Debt securities | 1,884 | £ 2,238 | |
Unallocated to a segment (central or other operations) | Derivatives for managing foreign currency movements and macroeconomic exposures | |||
Risk and sensitivity analysis | |||
Reasonably possible fair value movement from sensitivity to exchanges rates, interest rates and inflation rates | £ 150 | ||
[1] | Included within equity securities and portfolio holdings in unit trusts, debt securities and other investments are £8,278 million (31 December 2017: £8,232 million) of lent securities and assets subject to repurchase agreements. |
Tax assets and liabilities - De
Tax assets and liabilities - Deferred tax in statement of financial position (Details) £ in Millions | 12 Months Ended |
Dec. 31, 2018GBP (£) | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the beginning of the year | £ 2,627 |
Movement in income statement | (242) |
Movement through Other comprehensive income and equity | 85 |
Other movements including foreign currency movements | 125 |
Deferred tax assets at the end of the year | 2,595 |
Deferred tax liabilities in statement of financial position | |
Deferred tax liabilities at the beginning of the year | (4,715) |
Movement in income statement | 642 |
Movement through Other comprehensive income and equity | 180 |
Other movements including foreign currency movements | (129) |
Deferred tax liabilities at the end of the year | (4,022) |
Unrealised gains and losses 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 | 93 |
Other movements including foreign currency movements | 5 |
Deferred tax assets at the end of the year | 113 |
Deferred tax liabilities in statement of financial position | |
Deferred tax liabilities at the beginning of the year | (1,748) |
Movement in income statement | 666 |
Movement through Other comprehensive income and equity | 195 |
Other movements including foreign currency movements | 20 |
Deferred tax liabilities at the end of the year | (867) |
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 |
Movement in income statement | 0 |
Movement through Other comprehensive income and equity | 0 |
Other movements including foreign currency movements | 0 |
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 | (91) |
Movement through Other comprehensive income and equity | 0 |
Other movements including foreign currency movements | (39) |
Deferred tax liabilities at the end of the year | (1,002) |
Short-term temporary differences | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the beginning of the year | 2,532 |
Movement in income statement | (266) |
Movement through Other comprehensive income and equity | (8) |
Other movements including foreign currency movements | 81 |
Deferred tax assets at the end of the year | 2,339 |
Deferred tax liabilities in statement of financial position | |
Deferred tax liabilities at the beginning of the year | (2,041) |
Movement in income statement | 68 |
Movement through Other comprehensive income and equity | (15) |
Other movements including foreign currency movements | (109) |
Deferred tax liabilities at the end of the year | (2,097) |
Short-term temporary differences | Jackson (US insurance operations) | |
Deferred tax liabilities in statement of financial position | |
Deferred tax assets expected to be recovered in line with the run off of the in-force book | 2,194 |
Short-term temporary differences | Within 10 years | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the end of the year | 145 |
Capital allowances | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the beginning of the year | 14 |
Movement in income statement | 0 |
Movement through Other comprehensive income and equity | 0 |
Other movements including foreign currency movements | 1 |
Deferred tax assets at the end of the year | 15 |
Deferred tax liabilities in statement of financial position | |
Deferred tax liabilities at the beginning of the year | (54) |
Movement in income statement | (1) |
Movement through Other comprehensive income and equity | 0 |
Other movements including foreign currency movements | (1) |
Deferred tax liabilities at the end of the year | (56) |
Unused tax losses | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the beginning of the year | 66 |
Movement in income statement | 23 |
Movement through Other comprehensive income and equity | 0 |
Other movements including foreign currency movements | 38 |
Deferred tax assets at the end of the year | £ 127 |
Tax assets and liabilities - _2
Tax assets and liabilities - Deferred tax by segment (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Disclosure of deferred tax in statement of financial position and by Group's operations | ||
Deferred tax assets | £ 2,595 | £ 2,627 |
Deferred tax liabilities | (4,022) | (4,715) |
Unallocated to a segment (central or other operations) | ||
Disclosure of deferred tax in statement of financial position and by Group's operations | ||
Deferred tax assets | 55 | 58 |
Deferred tax liabilities | (16) | (15) |
Asia | Operating segments | ||
Disclosure of deferred tax in statement of financial position and by Group's operations | ||
Deferred tax assets | 119 | 112 |
Deferred tax liabilities | (1,257) | (1,152) |
US | Operating segments | ||
Disclosure of deferred tax in statement of financial position and by Group's operations | ||
Deferred tax assets | 2,295 | 2,300 |
Deferred tax liabilities | (1,688) | (1,845) |
UK and Europe | Operating segments | ||
Disclosure of deferred tax in statement of financial position and by Group's operations | ||
Deferred tax assets | 126 | 157 |
Deferred tax liabilities | £ (1,061) | £ (1,703) |
Tax assets and liabilities - Ta
Tax assets and liabilities - Tax benefits not recognized (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Disclosure of deferred tax in statement of financial position and by Group's operations | ||
Deferred tax liabilities not recognized in jurisdictions where a withholding charge is incurred upon distribution of earnings | £ 117 | £ 120 |
Capital losses | ||
Disclosure of deferred tax in statement of financial position and by Group's operations | ||
Tax benefit not recognized | 49 | 79 |
Losses for which tax benefits have not been recognised | 200 | 400 |
Trading losses | ||
Disclosure of deferred tax in statement of financial position and by Group's operations | ||
Tax benefit not recognized | 49 | 74 |
Losses for which tax benefits have not been recognised | 200 | £ 300 |
Trading losses | Within 10 years | ||
Disclosure of deferred tax in statement of financial position and by Group's operations | ||
Losses for which tax benefits have not been recognised | £ 34 |
Tax assets and liabilities - Cu
Tax assets and liabilities - Current tax (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Tax assets and liabilities | ||
Current tax recoverable | £ 618 | £ 613 |
Current tax recoverable relating to litigation | 112 | |
Current tax liability | 568 | 537 |
Provision for uncertain tax matters | £ 149 | £ 139 |
Defined benefit pension schem_3
Defined benefit pension schemes - Background (Details) - plan | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
PSPS | ||
Defined benefit pension schemes | ||
Percentage of the underlying liabilities of the Group's defined benefit schemes | 82.00% | 82.00% |
Smaller UK defined benefit schemes | ||
Defined benefit pension schemes | ||
Number of plans | 2 | |
Other schemes | Taiwan | ||
Defined benefit pension schemes | ||
Number of plans | 2 |
Defined benefit pension schem_4
Defined benefit pension schemes - Summary economic and IAS 19 positions (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Defined benefit pension schemes | ||||
Pension asset | £ 231 | £ 236 | ||
Pension liability | 174 | 180 | ||
Pension plans | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | 57 | 56 | £ (129) | £ 84 |
Pension plans | Surplus (deficit) (without the effect of IFRIC 14) | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | 959 | 692 | 563 | 961 |
Pension plans | Effect of IFRIC 14 for derecognition of PSPS surplus | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | (677) | (485) | (558) | (800) |
Pension plans | Economic basis net surplus (deficit) | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | 282 | 207 | 5 | 161 |
Economic surplus (deficit) attributable to: PAC with-profits fund | 130 | 110 | ||
Economic surplus (deficit) attributable to: Shareholder-backed business | 152 | 97 | ||
Pension plans | Other adjustments including for investments in Prudential insurance policies | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | (225) | (151) | £ (134) | £ (77) |
PSPS | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | 231 | 236 | ||
Deficit or other funding required | £ 0 | £ 0 | ||
Percentage allocated to UK with-profits fund | 70.00% | 70.00% | ||
Percentage allocated to shareholder-backed business | 30.00% | 30.00% | ||
PSPS | Surplus (deficit) (without the effect of IFRIC 14) | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | £ 908 | £ 721 | ||
PSPS | Effect of IFRIC 14 for derecognition of PSPS surplus | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | (677) | (485) | ||
PSPS | Economic basis net surplus (deficit) | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | 231 | 236 | ||
Economic surplus (deficit) attributable to: PAC with-profits fund | 162 | 165 | ||
Economic surplus (deficit) attributable to: Shareholder-backed business | 69 | 71 | ||
SASPS | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | £ (79) | £ (137) | ||
Percentage allocated to UK with-profits fund | 40.00% | 40.00% | ||
Percentage allocated to shareholder-backed business | 60.00% | 60.00% | ||
SASPS | Surplus (deficit) (without the effect of IFRIC 14) | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | £ (79) | £ (137) | ||
SASPS | Economic basis net surplus (deficit) | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | (79) | (137) | ||
Economic surplus (deficit) attributable to: PAC with-profits fund | (32) | (55) | ||
Economic surplus (deficit) attributable to: Shareholder-backed business | (47) | (82) | ||
M&GGPS | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | (94) | (42) | ||
M&GGPS | Surplus (deficit) (without the effect of IFRIC 14) | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | 131 | 109 | ||
M&GGPS | Economic basis net surplus (deficit) | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | 131 | 109 | ||
Economic surplus (deficit) attributable to: Shareholder-backed business | 131 | 109 | ||
M&GGPS | Other adjustments including for investments in Prudential insurance policies | ||||
Defined benefit pension schemes | ||||
Pension asset (liability) | (225) | (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 business | £ (1) | £ (1) |
Defined benefit pension schem_5
Defined benefit pension schemes - Actuarial valuations (Details) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018GBP (£)plan | Dec. 31, 2017 | Dec. 31, 2016GBP (£) | |
Pension plans | |||
Defined benefit pension schemes | |||
Required actuarial valuations (in years) | 3 years | ||
Pension plans | UK | |||
Defined benefit pension schemes | |||
Number of plans | plan | 3 | ||
PSPS | |||
Defined benefit pension schemes | |||
Contributions payable per annum | £ 5 | ||
Annual deficit funding required | £ 0 | ||
Percentage allocated to UK with-profits fund | 70.00% | 70.00% | |
Percentage allocated to shareholder-backed business | 30.00% | 30.00% | |
SASPS | |||
Defined benefit pension schemes | |||
Annual deficit funding required | £ 26 | ||
Percentage allocated to UK with-profits fund | 40.00% | 40.00% | |
Percentage allocated to shareholder-backed business | 60.00% | 60.00% | |
Funding level to eliminate deficit funding requirement (as a percent) | 100.00% | ||
Required actuarial valuations (in years) | 3 years | ||
M&GGPS | |||
Defined benefit pension schemes | |||
Annual deficit funding required | £ 0 |
Defined benefit pension schem_6
Defined benefit pension schemes - Actuarial assumptions (Details) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Defined benefit pension schemes | ||||
Long-term mortality improvement rate for males | 1.75% | 1.75% | ||
Long-term mortality improvement rate for females | 1.50% | 1.25% | ||
Pension plans | ||||
Defined benefit pension schemes | ||||
Discount rate | 2.80% | 2.50% | 2.60% | 3.80% |
Rate of increase in salaries | 3.30% | 3.10% | 3.20% | |
Rate of inflation - Retail prices index (RPI) | 3.30% | 3.10% | 3.20% | |
Rate of inflation - Consumer prices index (CPI) | 2.30% | 2.10% | 2.20% | |
PSPS: Guaranteed (maximum 5%) | ||||
Defined benefit pension schemes | ||||
Rate of increase of pensions in payment for inflation | 2.50% | 2.50% | 2.50% | |
PSPS: Guaranteed (maximum 5%) | Maximum | ||||
Defined benefit pension schemes | ||||
Rate of increase of pensions in payment for inflation | 5.00% | 5.00% | 5.00% | |
PSPS: Guaranteed (maximum 2.5%) | ||||
Defined benefit pension schemes | ||||
Rate of increase of pensions in payment for inflation | 2.50% | 2.50% | 2.50% | |
PSPS: Guaranteed (maximum 2.5%) | Maximum | ||||
Defined benefit pension schemes | ||||
Rate of increase of pensions in payment for inflation | 2.50% | 2.50% | 2.50% | |
PSPS: Discretionary | ||||
Defined benefit pension schemes | ||||
Rate of increase of pensions in payment for inflation | 2.50% | 2.50% | 2.50% | |
Other schemes | ||||
Defined benefit pension schemes | ||||
Rate of increase of pensions in payment for inflation | 3.30% | 3.10% | 3.20% |
Defined benefit pension schem_7
Defined benefit pension schemes - Estimated surpluses and deficits (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Pension plans | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | £ 56 | £ (129) | £ 84 |
Actuarial gains and losses in other comprehensive income | 134 | 200 | (181) |
Contributions paid | 52 | 50 | 45 |
Net surplus (deficit), end of year | 57 | 56 | (129) |
Pension plans | Surplus (deficit) (without the effect of IFRIC 14) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 692 | 563 | 961 |
(Charge) credit to income statement | (88) | ||
Actuarial gains and losses in other comprehensive income | 303 | 119 | (442) |
Contributions paid | 52 | 50 | 45 |
Net surplus (deficit), end of year | 959 | 692 | 563 |
Pension plans | Less: amount attributable to UK 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 | 38 | ||
Actuarial gains and losses in other comprehensive income | (178) | ||
Contributions paid | 20 | ||
Net surplus (deficit), end of year | (633) | (473) | |
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 | (50) | ||
Actuarial gains and losses in other comprehensive income | 125 | ||
Contributions paid | 32 | ||
Net surplus (deficit), end of year | 326 | 219 | |
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 | 10 | ||
Actuarial gains and losses in other comprehensive income | (24) | ||
Contributions paid | 6 | ||
Net surplus (deficit), end of year | (62) | (42) | |
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 | (40) | ||
Actuarial gains and losses in other comprehensive income | 101 | ||
Contributions paid | 26 | ||
Net surplus (deficit), end of year | 264 | 177 | |
Pension plans | Effect of IFRIC 14 for derecognition of PSPS surplus | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | (485) | (558) | (800) |
(Charge) credit to income statement | (13) | ||
Actuarial gains and losses in other comprehensive income | (179) | 87 | 274 |
Net surplus (deficit), end of year | (677) | (485) | (558) |
Pension plans | Less: amount attributable to Uk with-profits fund (application of IFRIC 14) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 363 | ||
(Charge) credit to income statement | 8 | ||
Actuarial gains and losses in other comprehensive income | 132 | ||
Net surplus (deficit), end of year | 503 | 363 | |
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 | (5) | ||
Actuarial gains and losses in other comprehensive income | (47) | ||
Net surplus (deficit), end of year | (174) | (122) | |
Pension plans | Shareholders' share related tax (application of IFRIC 14) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 23 | ||
(Charge) credit to income statement | 1 | ||
Actuarial gains and losses in other comprehensive income | 9 | ||
Net surplus (deficit), end of year | 33 | 23 | |
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 | (4) | ||
Actuarial gains and losses in other comprehensive income | (38) | ||
Net surplus (deficit), end of year | (141) | (99) | |
Pension plans | Economic basis net surplus (deficit) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 207 | 5 | 161 |
(Charge) credit to income statement | (101) | ||
Actuarial gains and losses in other comprehensive income | 124 | 206 | (168) |
Contributions paid | 52 | 50 | 45 |
Net surplus (deficit), end of year | 282 | 207 | £ 5 |
Pension plans | Less: amount attributable to Uk 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 | 46 | ||
Actuarial gains and losses in other comprehensive income | (46) | ||
Contributions paid | 20 | ||
Net surplus (deficit), end of year | (130) | (110) | |
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 | (55) | ||
Actuarial gains and losses in other comprehensive income | 78 | ||
Contributions paid | 32 | ||
Net surplus (deficit), end of year | 152 | 97 | |
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 | 11 | ||
Actuarial gains and losses in other comprehensive income | (15) | ||
Contributions paid | 6 | ||
Net surplus (deficit), end of year | (29) | (19) | |
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 | (44) | ||
Actuarial gains and losses in other comprehensive income | 63 | ||
Contributions paid | 26 | ||
Net surplus (deficit), end of year | 123 | 78 | |
M&GGPS | |||
Defined benefit pension schemes | |||
Investments in Prudential insurance policies | 225 | 151 | |
Net surplus (deficit), beginning of year | (42) | ||
Net surplus (deficit), end of year | (94) | (42) | |
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 | 131 | 109 | |
M&GGPS | Economic basis net surplus (deficit) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 109 | ||
Net surplus (deficit), end of year | £ 131 | £ 109 |
Defined benefit pension schem_8
Defined benefit pension schemes - Investments (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Pension plans | |||
Defined benefit pension schemes | |||
Total value of assets | £ 8,483 | £ 8,917 | |
Investment (as a percent) | 100.00% | 100.00% | |
Bonds investment graded (as a percent) | 87.00% | 89.00% | |
Value of scheme assets derived from quoted prices in active market (as a percent) | 94.00% | 96.00% | |
Shares in Prudential plc included in scheme assets | £ 0 | £ 0 | |
Property occupied by the Prudential Group included in plan assets | £ 0 | 0 | |
IAS 19 basis plan assets | 8,258 | 8,766 | |
Pension plans | UK equities | |||
Defined benefit pension schemes | |||
Equities | 14 | £ 76 | |
Investment (as a percent) | 1.00% | ||
Pension plans | Overseas equities | |||
Defined benefit pension schemes | |||
Equities | £ 257 | £ 498 | |
Investment (as a percent) | 3.00% | 6.00% | |
Pension plans | Government bonds | |||
Defined benefit pension schemes | |||
Bonds | £ 5,134 | £ 5,695 | |
Investment (as a percent) | 61.00% | 63.00% | |
Pension plans | Corporate bonds | |||
Defined benefit pension schemes | |||
Bonds | £ 2,040 | £ 1,739 | |
Investment (as a percent) | 24.00% | 20.00% | |
Pension plans | Asset-backed securities | |||
Defined benefit pension schemes | |||
Asset-backed securities | £ 275 | £ 164 | |
Investment (as a percent) | 3.00% | 2.00% | |
Pension plans | Derivatives | |||
Defined benefit pension schemes | |||
Derivatives | £ 107 | £ 182 | |
Investment (as a percent) | 1.00% | 2.00% | |
Pension plans | Investment properties | |||
Defined benefit pension schemes | |||
Properties | £ 286 | £ 270 | |
Investment (as a percent) | 3.00% | 3.00% | |
Pension plans | Other assets | |||
Defined benefit pension schemes | |||
Other assets | £ 370 | £ 293 | |
Investment (as a percent) | 5.00% | 3.00% | |
PSPS | |||
Defined benefit pension schemes | |||
Total value of assets | £ 7,075 | £ 7,474 | |
PSPS | UK equities | |||
Defined benefit pension schemes | |||
Equities | 8 | 9 | |
PSPS | Overseas equities | |||
Defined benefit pension schemes | |||
Equities | 204 | 226 | |
PSPS | Government bonds | |||
Defined benefit pension schemes | |||
Bonds | 4,596 | 5,040 | |
PSPS | Corporate bonds | |||
Defined benefit pension schemes | |||
Bonds | 1,586 | 1,491 | |
PSPS | Asset-backed securities | |||
Defined benefit pension schemes | |||
Asset-backed securities | 263 | 164 | |
PSPS | Derivatives | |||
Defined benefit pension schemes | |||
Derivatives | 103 | 188 | |
PSPS | Investment properties | |||
Defined benefit pension schemes | |||
Properties | 143 | 140 | |
PSPS | Other assets | |||
Defined benefit pension schemes | |||
Other assets | 172 | 216 | |
Other schemes | |||
Defined benefit pension schemes | |||
Total value of assets | 1,408 | 1,443 | |
Other schemes | UK equities | |||
Defined benefit pension schemes | |||
Equities | 6 | 67 | |
Other schemes | Overseas equities | |||
Defined benefit pension schemes | |||
Equities | 53 | 272 | |
Other schemes | Government bonds | |||
Defined benefit pension schemes | |||
Bonds | 538 | 655 | |
Other schemes | Corporate bonds | |||
Defined benefit pension schemes | |||
Bonds | 454 | 248 | |
Other schemes | Asset-backed securities | |||
Defined benefit pension schemes | |||
Asset-backed securities | 12 | ||
Other schemes | Derivatives | |||
Defined benefit pension schemes | |||
Derivatives | 4 | (6) | |
Other schemes | Investment properties | |||
Defined benefit pension schemes | |||
Properties | 143 | 130 | |
Other schemes | Other assets | |||
Defined benefit pension schemes | |||
Other assets | £ 198 | £ 77 |
Defined benefit pension schem_9
Defined benefit pension schemes - Movement and deficit (Details) - Pension plans - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | £ 56 | £ (129) | £ 84 |
GMP equalisation provision | (53) | ||
Current service cost | (44) | (46) | (34) |
Net interest on net defined benefit liability (asset) | (3) | 3 | |
Administration expenses | (8) | (8) | (5) |
Employers' contributions | 52 | 50 | 45 |
Actuarial gains and losses | 134 | 200 | (181) |
Transfer into investment in Prudential insurance policies | (80) | (8) | (41) |
Net surplus (deficit), end of year | 57 | 56 | (129) |
Plan assets | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 8,917 | 9,006 | 7,819 |
Net interest on net defined benefit liability (asset) | 217 | 228 | 292 |
Administration expenses | (8) | (8) | (5) |
Benefit payments | (475) | (479) | (350) |
Employers' contributions | 52 | 50 | 45 |
Employees' contributions | 1 | 1 | 2 |
Actuarial gains and losses | (221) | 119 | 1,203 |
Net surplus (deficit), end of year | 8,483 | 8,917 | 9,006 |
Present value of benefit obligations | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | (8,225) | (8,443) | (6,858) |
GMP equalisation provision | (53) | ||
Current service cost | (44) | (46) | (34) |
Net interest on net defined benefit liability (asset) | (200) | (214) | (254) |
Benefit payments | 475 | 479 | 350 |
Employees' contributions | (1) | (1) | (2) |
Actuarial gains and losses | 524 | (1,645) | |
Net surplus (deficit), end of year | (7,524) | (8,225) | (8,443) |
Surplus (deficit) (without the effect of IFRIC 14) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 692 | 563 | 961 |
GMP equalisation provision | (53) | ||
Current service cost | (44) | (46) | (34) |
Net interest on net defined benefit liability (asset) | 17 | 14 | 38 |
Administration expenses | (8) | (8) | (5) |
Employers' contributions | 52 | 50 | 45 |
Actuarial gains and losses | 303 | 119 | (442) |
Net surplus (deficit), end of year | 959 | 692 | 563 |
Effect of IFRIC 14 for derecognition of PSPS surplus | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | (485) | (558) | (800) |
Net interest on net defined benefit liability (asset) | (13) | (14) | (32) |
Actuarial gains and losses | (179) | 87 | 274 |
Net surplus (deficit), end of year | (677) | (485) | (558) |
Economic basis net surplus (deficit) | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | 207 | 5 | 161 |
GMP equalisation provision | (53) | ||
Current service cost | (44) | (46) | (34) |
Net interest on net defined benefit liability (asset) | 4 | 6 | |
Administration expenses | (8) | (8) | (5) |
Employers' contributions | 52 | 50 | 45 |
Actuarial gains and losses | 124 | 206 | (168) |
Net surplus (deficit), end of year | 282 | 207 | 5 |
Other adjustments including for investments in Prudential insurance policies | |||
Defined benefit pension schemes | |||
Net surplus (deficit), beginning of year | (151) | (134) | (77) |
Net interest on net defined benefit liability (asset) | (4) | (3) | (3) |
Actuarial gains and losses | 10 | (6) | (13) |
Transfer into investment in Prudential insurance policies | (80) | (8) | (41) |
Net surplus (deficit), end of year | £ (225) | £ (151) | £ (134) |
Defined benefit pension sche_10
Defined benefit pension schemes - Maturity (Details) - Pension plans £ in Millions | Dec. 31, 2018GBP (£) | Dec. 31, 2017GBP (£) | Dec. 31, 2018GBP (£)Y | Dec. 31, 2017GBP (£)Y |
Defined benefit pension schemes | ||||
Weighted average duration of the benefit obligations | Y | 18.4 | 18.6 | ||
Estimated future obligations | £ 13,690 | £ 14,169 | £ 13,690 | £ 14,169 |
Total employer contributions expected to be paid in the next year | 52 | 50 | ||
Expected to be settled within one year | ||||
Defined benefit pension schemes | ||||
Estimated future obligations | 257 | 255 | 257 | 255 |
1 to 5 years | ||||
Defined benefit pension schemes | ||||
Estimated future obligations | 1,142 | 1,108 | 1,142 | 1,108 |
5 years to 10 years | ||||
Defined benefit pension schemes | ||||
Estimated future obligations | 1,593 | 1,589 | 1,593 | 1,589 |
After 10 years to 15 years | ||||
Defined benefit pension schemes | ||||
Estimated future obligations | 1,641 | 1,667 | 1,641 | 1,667 |
After 15 years to 20 years | ||||
Defined benefit pension schemes | ||||
Estimated future obligations | 1,631 | 1,661 | 1,631 | 1,661 |
Over 20 years | ||||
Defined benefit pension schemes | ||||
Estimated future obligations | £ 7,426 | £ 7,889 | £ 7,426 | £ 7,889 |
Defined benefit pension sche_11
Defined benefit pension schemes - Actuarial gains and losses (Details) £ in Millions | 12 Months Ended | ||||
Dec. 31, 2018GBP (£)plan | Dec. 31, 2017GBP (£) | Dec. 31, 2016GBP (£) | Dec. 31, 2015 | ||
Actuarial gains and losses | |||||
Profit (loss) before tax, attributable to shareholders | [1] | £ 3,635 | £ 3,296 | £ 2,275 | |
Profit for the year | 3,013 | 2,390 | 1,921 | ||
Pension plans | |||||
Actuarial gains and losses | |||||
Return on the scheme assets less amount included in interest income | (221) | 119 | 1,203 | ||
Gains (losses) on changes in demographic assumptions | 168 | (10) | (18) | ||
Gains (losses) on changes in financial assumptions | 330 | (101) | (1,733) | ||
Experience gains on scheme liabilities | 26 | 111 | 106 | ||
Effect of derecognition of PSPS surplus | (179) | 87 | 274 | ||
Consolidation adjustment for investments in Prudential insurance policies and other adjustments | 10 | (6) | (13) | ||
Total actuarial gains and losses | £ 134 | £ 200 | £ (181) | ||
Discount rate | 2.80% | 2.50% | 2.60% | 3.80% | |
Pension plans | Surplus (deficit) (without the effect of IFRIC 14) | |||||
Actuarial gains and losses | |||||
Total actuarial gains and losses | £ 303 | £ 119 | £ (442) | ||
Pension plans | UK | |||||
Actuarial gains and losses | |||||
Number of plans | plan | 3 | ||||
PSPS | |||||
Actuarial gains and losses | |||||
GMP equalisation provision for deferred benefit pension | £ 31 | ||||
Costs allocation ratio | 2.33 | ||||
SASPS | |||||
Actuarial gains and losses | |||||
GMP equalisation provision for deferred benefit pension | £ 17 | ||||
Costs allocation ratio | 0.66 | ||||
M&GGPS | |||||
Actuarial gains and losses | |||||
GMP equalisation provision for deferred benefit pension | £ 5 | ||||
Profit (loss) before tax, attributable to shareholders | 24 | ||||
Profit for the year | £ 12 | ||||
[1] | 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 with-profits funds after adjusting for taxes borne by policyholders. |
Defined benefit pension sche_12
Defined benefit pension schemes - Sensitivity (Details) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Pension plans | ||||
Sensitivity of the pension scheme liabilities | ||||
Discount rate | 2.80% | 2.50% | 2.60% | 3.80% |
Rate of inflation - Retail prices index (RPI) | 3.30% | 3.10% | 3.20% | |
Rate of inflation - Consumer prices index (CPI) | 2.30% | 2.10% | 2.20% | |
Pension plans | Discount rate | ||||
Sensitivity of the pension scheme liabilities | ||||
Decrease in assumption | 0.20% | 0.20% | ||
Increase in assumption | 0.20% | 0.20% | ||
Pension plans | Rate of inflation - RPI | ||||
Sensitivity of the pension scheme liabilities | ||||
Decrease in assumption | 0.20% | 0.20% | ||
Pension plans | Rate of inflation - CPI | ||||
Sensitivity of the pension scheme liabilities | ||||
Decrease in assumption | 0.20% | 0.20% | ||
Pension plans | Life expectancy | ||||
Sensitivity of the pension scheme liabilities | ||||
Increase in life expectancy | 1 year | |||
PSPS | Discount rate | ||||
Sensitivity of the pension scheme liabilities | ||||
Impact of decrease in assumption - increase (decrease) in scheme liabilities | 3.50% | 3.50% | ||
Impact of increase in assumption - increase (decrease) in scheme liabilities | (3.30%) | (3.40%) | ||
PSPS | Rate of inflation | ||||
Sensitivity of the pension scheme liabilities | ||||
Impact of decrease in assumption - increase (decrease) in scheme liabilities | (0.60%) | (0.60%) | ||
PSPS | Life expectancy | ||||
Sensitivity of the pension scheme liabilities | ||||
Impact of increase in assumption - increase (decrease) in scheme liabilities | 3.90% | 4.00% | ||
Other schemes | Discount rate | ||||
Sensitivity of the pension scheme liabilities | ||||
Impact of decrease in assumption - increase (decrease) in scheme liabilities | 5.00% | 5.40% | ||
Impact of increase in assumption - increase (decrease) in scheme liabilities | (4.70%) | (4.90%) | ||
Other schemes | Rate of inflation | ||||
Sensitivity of the pension scheme liabilities | ||||
Impact of decrease in assumption - increase (decrease) in scheme liabilities | (3.90%) | (3.90%) | ||
Other schemes | Life expectancy | ||||
Sensitivity of the pension scheme liabilities | ||||
Impact of increase in assumption - increase (decrease) in scheme liabilities | 3.90% | 3.80% |
Share capital, share premium _3
Share capital, share premium and own shares - Share capital and premium (Details) | 12 Months Ended | |||
Dec. 31, 2018GBP (£)Options£ / sharesshares | Dec. 31, 2017GBP (£)Options£ / sharesshares | Dec. 31, 2016GBP (£)Optionsshares | Dec. 31, 2015Options | |
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 | ||
Number of shares issued under share-based schemes | shares | 5,868,964 | 6,113,872 | ||
Number of issued shares at end of year | shares | 2,593,044,409 | 2,587,175,445 | 2,581,061,573 | |
Equity at beginning of year | £ 16,094,000,000 | £ 14,667,000,000 | £ 12,956,000,000 | |
New share capital subscribed | 17,000,000 | 21,000,000 | 13,000,000 | |
Equity at end of year | £ 17,267,000,000 | £ 16,094,000,000 | £ 14,667,000,000 | |
Options outstanding under save as you earn schemes | ||||
Shares under option | Options | 5,000,000 | 6,000,000 | 7,000,000 | |
Share capital | ||||
Disclosure of classes of share capital | ||||
Equity at beginning of year | £ 129,000,000 | £ 129,000,000 | £ 128,000,000 | |
New share capital subscribed | 1,000,000 | 1,000,000 | ||
Equity at end of year | 130,000,000 | 129,000,000 | 129,000,000 | |
Share premium | ||||
Disclosure of classes of share capital | ||||
Equity at beginning of year | 1,948,000,000 | 1,927,000,000 | 1,915,000,000 | |
New share capital subscribed | 16,000,000 | 21,000,000 | 12,000,000 | |
Equity at end of year | £ 1,964,000,000 | £ 1,948,000,000 | £ 1,927,000,000 | |
SAYE options | ||||
Options outstanding under save as you earn schemes | ||||
Shares under option | Options | 4,885,804 | 6,448,853 | 7,100,000 | 8,800,000 |
SAYE options | Minimum | ||||
Options outstanding under save as you earn schemes | ||||
Exercise price | £ 9.01 | £ 6.29 | ||
SAYE options | Maximum | ||||
Options outstanding under save as you earn schemes | ||||
Exercise price | £ 14.55 | £ 14.55 |
Share capital, share premium _4
Share capital, share premium and own shares - Transactions in Prudential plc shares (Details) - GBP (£) | 1 Months Ended | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2018 | Nov. 30, 2018 | Oct. 31, 2018 | Sep. 30, 2018 | Aug. 31, 2018 | Jul. 31, 2018 | Jun. 30, 2018 | May 31, 2018 | Apr. 30, 2018 | Mar. 31, 2018 | Feb. 28, 2018 | Jan. 31, 2018 | Dec. 31, 2017 | Nov. 30, 2017 | Oct. 31, 2017 | Sep. 30, 2017 | Aug. 31, 2017 | Jul. 31, 2017 | Jun. 30, 2017 | May 31, 2017 | Apr. 30, 2017 | Mar. 31, 2017 | Feb. 28, 2017 | Jan. 31, 2017 | Jan. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | |
Transactions in Prudential plc shares | |||||||||||||||||||||||||||
Cost of own shares deducted from retained earnings | £ 170,000,000 | £ 250,000,000 | £ 170,000,000 | £ 250,000,000 | |||||||||||||||||||||||
Shares held in trust for employee incentive plans | |||||||||||||||||||||||||||
Transactions in Prudential plc shares | |||||||||||||||||||||||||||
Number of shares held | 9,600,000 | 14,900,000 | 11,400,000 | 9,600,000 | 11,400,000 | ||||||||||||||||||||||
Market value of shares held | £ 135,000,000 | £ 218,000,000 | £ 135,000,000 | £ 218,000,000 | |||||||||||||||||||||||
Number of shares purchased | 73,744 | 67,162 | 148,209 | 82,612 | 60,384 | 55,888 | 181,995 | 63,334 | 1,664,334 | 55,623 | 55,765 | 51,555 | 53,519 | 53,951 | 136,563 | 51,226 | 55,857 | 51,984 | 182,780 | 55,744 | 3,090,167 | 70,139 | 65,706 | 62,388 | 2,560,605 | 3,930,024 | |
Cost of shares purchased | £ 1,045,278 | £ 1,071,633 | £ 2,477,127 | £ 1,400,868 | £ 1,090,283 | £ 993,779 | £ 3,335,725 | £ 1,216,136 | £ 29,113,556 | £ 1,025,238 | £ 1,004,362 | £ 996,536 | £ 986,000 | £ 992,123 | £ 2,483,879 | £ 912,151 | £ 1,025,802 | £ 927,452 | £ 3,269,447 | £ 979,645 | £ 51,369,760 | £ 1,159,950 | £ 1,052,657 | £ 989,583 | £ 44,770,521 | £ 66,148,449 | |
Shares held in authorized investment funds | |||||||||||||||||||||||||||
Transactions in Prudential plc shares | |||||||||||||||||||||||||||
Cost of own shares deducted from retained earnings | £ 20,000,000 | £ 71,000,000 | £ 20,000,000 | £ 71,000,000 | |||||||||||||||||||||||
Number of shares held | 3,000,000 | 6,400,000 | 3,000,000 | 6,400,000 | |||||||||||||||||||||||
Market value of shares held | £ 42,000,000 | £ 121,000,000 | £ 42,000,000 | £ 121,000,000 | |||||||||||||||||||||||
Net number of shares on acquisitions (disposed) | 3,368,506 | (372,029) | |||||||||||||||||||||||||
Net increase to book cost | £ 50,500,000 | £ 9,400,000 | |||||||||||||||||||||||||
Minimum | Shares held in trust for employee incentive plans | |||||||||||||||||||||||||||
Transactions in Prudential plc shares | |||||||||||||||||||||||||||
Share price | £ 13.99 | £ 15.95 | £ 15.62 | £ 16.95 | £ 18.04 | £ 17.68 | £ 18.21 | £ 18.91 | £ 16.67 | £ 18.25 | £ 17.91 | £ 19.18 | £ 18.26 | £ 18.38 | £ 17.99 | £ 17.45 | £ 18.30 | £ 17.72 | £ 17.52 | £ 17.50 | £ 16.58 | £ 16.40 | £ 15.70 | £ 15.83 | £ 13.99 | £ 18.26 | |
Maximum | Shares held in trust for employee incentive plans | |||||||||||||||||||||||||||
Transactions in Prudential plc shares | |||||||||||||||||||||||||||
Share price | £ 14.30 | £ 15.96 | £ 16.84 | £ 16.98 | £ 18.10 | £ 17.86 | £ 18.65 | £ 19.38 | £ 17.95 | £ 18.54 | £ 18.10 | £ 19.40 | £ 18.47 | £ 18.40 | £ 18.22 | £ 17.97 | £ 18.73 | £ 17.93 | £ 18 | £ 17.62 | £ 16.80 | £ 16.54 | £ 16.09 | £ 16.02 | £ 14.30 | £ 18.47 |
Provisions - Total provisions (
Provisions - Total provisions (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Provisions | |||
Provision in respect of defined benefit pension schemes | £ 174 | £ 180 | |
Other provisions | 904 | 943 | £ 659 |
Total provisions | £ 1,078 | £ 1,123 |
Provisions - Analysis of other
Provisions - Analysis of other provisions (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Analysis of other provisions: | ||
Balance at the beginning of the period | £ 943 | £ 659 |
Charged to income statement: | ||
Additional provisions | 229 | 542 |
Unused amounts released | (18) | (9) |
Used during the year | (262) | (239) |
Exchange differences | 12 | (10) |
Balance at the end of the period | £ 904 | £ 943 |
Provisions - Details of other p
Provisions - Details of other provisions (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Other provisions | |||
Other provisions | £ 904 | £ 943 | £ 659 |
Staff benefits provisions | |||
Other provisions | |||
Other provisions | £ 409 | 453 | |
Expected pay out period of provision | 3 years | ||
Other provisions | |||
Other provisions | |||
Other provisions | £ 171 | 121 | |
Provision for review of past annuity sales | |||
Other provisions | |||
Other provisions | £ 324 | 369 | |
Gross provision, excluding utilisation | £ 400 | ||
Possible percentage increase/decrease in population subject to redress | 10.00% | ||
Percentage increase/decrease in provision based on possible change in population subject to redress | 7.00% | ||
Provision for review of past annuity sales | Maximum | |||
Other provisions | |||
Potential insurance recoveries | £ 166 |
Capital - Capital Measure (Deta
Capital - Capital Measure (Details) - GBP (£) £ in Billions | Dec. 31, 2018 | Dec. 31, 2017 |
Capital | ||
Estimated Group Solvency II own funds | £ 30.2 | £ 26.4 |
Capital - Local capital regulat
Capital - Local capital regulations (Details) £ in Millions, $ in Millions | Mar. 31, 2009 | Apr. 30, 2009 | Dec. 31, 2018SGD ($) | Dec. 31, 2018GBP (£) | Dec. 31, 2017GBP (£) | Dec. 31, 2016GBP (£) | Dec. 31, 2015GBP (£) |
Estimated capital position with reconciliation to shareholders' equity | |||||||
IFRS shareholders' equity | £ 17,267 | £ 16,094 | £ 14,667 | £ 12,956 | |||
Surplus notes | 7,664 | 6,280 | |||||
Asia insurance operations | China | |||||||
Local capital regulations | |||||||
Minimum core solvency ratio | 50.00% | ||||||
Minimum comprehensive solvency ratio | 100.00% | ||||||
Asia insurance operations | Indonesia | |||||||
Local capital regulations | |||||||
Minimum net asset level expressed as a percentage of solvency capital | 100.00% | ||||||
Asia insurance operations | Malaysia | |||||||
Local capital regulations | |||||||
Minimum Supervisory Target Capital Level percentage | 130.00% | ||||||
Percentage of foreign equity ownership | 49.00% | 70.00% | |||||
Asia insurance operations | Singapore | |||||||
Local capital regulations | |||||||
Minimum financial resources required to meet capital adequacy guidelines | $ | $ 5 | ||||||
Jackson (US insurance operations) | |||||||
Local capital regulations | |||||||
Decrease to statutory surplus from permitted practice | £ 129 | 355 | |||||
Solvency II available capital as percentage of local requirement | 100.00% | 100.00% | |||||
Operations within segments | Asia insurance operations | |||||||
Estimated capital position with reconciliation to shareholders' equity | |||||||
IFRS shareholders' equity | £ 5,868 | 5,525 | |||||
Unallocated surplus of with-profits funds | 11,524 | 10,253 | |||||
Remove deferred acquisition costs, goodwill and other intangibles | (1,850) | (1,515) | |||||
Other adjustments | 631 | 306 | |||||
Total adjustments | (1,219) | (1,209) | |||||
Total available capital of life assurance businesses on a local regulatory basis excluding with-profits funds | 4,649 | 4,316 | |||||
Operations within segments | Jackson (US insurance operations) | |||||||
Estimated capital position with reconciliation to shareholders' equity | |||||||
IFRS shareholders' equity | 5,584 | 5,013 | |||||
Deferred acquisition costs | (8,727) | (8,197) | |||||
Surplus notes | 196 | 184 | |||||
Investment and policyholder liabilities valuation differences between IFRS and regulatory basis for Jackson | 7,217 | 5,325 | |||||
Other adjustments | 63 | 818 | |||||
Total adjustments | (1,251) | (1,870) | |||||
Total available capital of life assurance businesses on a local regulatory basis excluding with-profits funds | £ 4,333 | £ 3,143 |
Capital - Asset management oper
Capital - Asset management operations (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Asset management operations | ||
Regulatory and other surplus | ||
Beginning of year | £ 876 | £ 814 |
Gains during the year | 525 | 586 |
Movement in capital requirement | (5) | (73) |
Capital injection | 101 | 6 |
Distributions made to the parent company | (398) | (433) |
Exchange and other movements | (101) | (24) |
End of year | 998 | 876 |
M&G Prudential asset management | ||
Regulatory and other surplus | ||
Beginning of year | 419 | |
Gains during the year | 364 | |
Movement in capital requirement | (10) | |
Capital injection | 88 | |
Distributions made to the parent company | (197) | |
End of year | 664 | 419 |
Asset management (US) | ||
Regulatory and other surplus | ||
Beginning of year | 235 | |
Gains during the year | 23 | |
Distributions made to the parent company | (97) | |
Exchange and other movements | (121) | |
End of year | 40 | 235 |
Asia asset management | ||
Regulatory and other surplus | ||
Beginning of year | 222 | |
Gains during the year | 138 | |
Movement in capital requirement | 5 | |
Capital injection | 13 | |
Distributions made to the parent company | (104) | |
Exchange and other movements | 20 | |
End of year | £ 294 | £ 222 |
Capital - Transferability of av
Capital - Transferability of available capital (Details) | 12 Months Ended |
Dec. 31, 2018 | |
UK and Europe | |
Group objectives, policies and processes for managing capital | |
Shareholders' percentage share of the cost of declared policyholders' bonuses | 0.111 |
Jackson (US insurance operations) | |
Group objectives, policies and processes for managing capital | |
Percentage of prior year end statutory surplus, above which dividends require prior regulatory approval | 10.00% |
Property, plant and equipment_2
Property, plant and equipment (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | £ 789 | £ 743 | |
Exchange differences | 23 | (22) | |
Depreciation and impairment charge | (137) | (116) | |
Additions | 289 | 134 | |
Arising on acquisitions of subsidiaries | 522 | 178 | |
Disposals and transfers | (77) | (128) | |
Property, plant and equipment at end of period | 1,409 | 789 | £ 743 |
Capital expenditures | 289 | 134 | 348 |
Operating segments | UK and Europe | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 447 | ||
Property, plant and equipment at end of period | 1,031 | 447 | |
Operating segments | US | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 214 | ||
Property, plant and equipment at end of period | 246 | 214 | |
Operating segments | Asia | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 125 | ||
Property, plant and equipment at end of period | 129 | 125 | |
Unallocated to a segment (central or other operations) | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 3 | ||
Property, plant and equipment at end of period | 3 | 3 | |
Group occupied property | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 295 | 351 | |
Exchange differences | 13 | (8) | |
Depreciation and impairment charge | (10) | (22) | |
Additions | 35 | 17 | |
Arising on acquisitions of subsidiaries | 4 | ||
Disposals and transfers | (8) | (43) | |
Property, plant and equipment at end of period | 329 | 295 | 351 |
Tangible assets | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 494 | 392 | |
Exchange differences | 10 | (14) | |
Depreciation and impairment charge | (127) | (94) | |
Additions | 254 | 117 | |
Arising on acquisitions of subsidiaries | 518 | 178 | |
Disposals and transfers | (69) | (85) | |
Property, plant and equipment at end of period | 1,080 | 494 | 392 |
Capital expenditures | 254 | 117 | |
Tangible assets | Operating segments | UK and Europe | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Capital expenditures | 187 | 41 | |
Tangible assets | Operating segments | US | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Capital expenditures | 14 | 19 | |
Tangible assets | Operating segments | Asia | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Capital expenditures | 52 | 55 | |
Tangible assets | Unallocated to a segment (central or other operations) | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Capital expenditures | 1 | 2 | |
Tangible assets | With-profits | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 360 | ||
Property, plant and equipment at end of period | 856 | 360 | |
Cost/Gross amount | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 1,408 | 1,516 | |
Property, plant and equipment at end of period | 2,053 | 1,408 | 1,516 |
Cost/Gross amount | Group occupied property | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 367 | 439 | |
Property, plant and equipment at end of period | 412 | 367 | 439 |
Cost/Gross amount | Tangible assets | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | 1,041 | 1,077 | |
Property, plant and equipment at end of period | 1,641 | 1,041 | 1,077 |
Accumulated depreciation | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | (619) | (773) | |
Property, plant and equipment at end of period | (644) | (619) | (773) |
Accumulated depreciation | Group occupied property | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | (72) | (88) | |
Property, plant and equipment at end of period | (83) | (72) | (88) |
Accumulated depreciation | Tangible assets | |||
Reconciliation of the carrying amount of property, plant and equipment | |||
Property, plant and equipment at beginning of period | (547) | (685) | |
Property, plant and equipment at end of period | £ (561) | £ (547) | £ (685) |
Investment properties - Reconci
Investment properties - Reconciliation (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Investment properties | ||
Investment properties at beginning of period | £ 16,497 | £ 14,646 |
Additions: resulting from property acquisitions | 1,326 | 2,009 |
Additions: resulting from expenditure capitalised | 183 | 39 |
Disposals | (178) | (591) |
Net gain from fair value adjustments | 149 | 415 |
Net foreign exchange differences | (52) | (21) |
Investment properties at end of period | £ 17,925 | £ 16,497 |
Investment properties - Income
Investment properties - Income and expenses (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Investment properties | ||
Rental income from investment property | £ 927 | £ 876 |
Direct operating expense including repairs and maintenance | £ 56 | £ 82 |
Investment properties - Lease (
Investment properties - Lease (Details) - Investment properties - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Investment properties | ||
Properties held under finance leases | £ 5,825 | £ 5,689 |
Present value of minimum lease payments due | 42 | 43 |
Minimum future rentals receivable on non-cancellable operating leases of freehold investment properties | 3,633 | 3,681 |
Minimum future rentals receivable on non-cancellable sub-leases for properties held under finance leases | 1,596 | 1,527 |
Expected to be settled within one year | ||
Investment properties | ||
Minimum future rentals receivable on non-cancellable operating leases of freehold investment properties | 314 | 322 |
1 to 5 years | ||
Investment properties | ||
Minimum future rentals receivable on non-cancellable operating leases of freehold investment properties | £ 1,077 | £ 1,073 |
Over 5 years | ||
Investment properties | ||
Percentage of lease payments due | 76.00% | 73.00% |
Minimum future rentals receivable on non-cancellable operating leases of freehold investment properties | £ 2,242 | £ 2,286 |
Corporate transactions - Losses
Corporate transactions - Losses and gains (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
(Loss) gain on disposal of businesses and corporate transactions | |||
Other transactions | £ (80) | £ 223 | |
(Loss) gain on disposal of business and corporate transactions | (588) | £ 223 | £ (227) |
UK and Europe insurance operations | Shareholder annuity portfolio being sold to Rothesay Life | |||
(Loss) gain on disposal of businesses and corporate transactions | |||
Loss arising on reinsurance | £ (508) |
Corporate transactions - M&G Pr
Corporate transactions - M&G Prudential annuity business (Details) - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Reinsurance of part of UK shareholder-backed annuity portfolio | ||||
Insurance contract liabilities | £ 322,666 | £ 328,172 | £ 316,436 | |
Outward reinsurance premium | [1] | 14,023 | 2,062 | £ 2,020 |
Assets | ||||
Reinsurer's share of insurance contract liabilities | 11,144 | 9,673 | ||
Total assets | 508,645 | 493,941 | ||
Liabilities | ||||
Other liabilities | 1,053 | 603 | ||
Total liabilities | 491,378 | 477,847 | ||
UK and Europe insurance operations | Shareholder annuity portfolio being sold to Rothesay Life | ||||
Reinsurance of part of UK shareholder-backed annuity portfolio | ||||
Insurance contract liabilities | £ 12,000 | |||
Outward reinsurance premium | 12,149 | |||
Loss arising on reinsurance | (508) | |||
Assets | ||||
Reinsurer's share of insurance contract liabilities | 10,502 | |||
Other assets (including cash and cash equivalents) | 66 | |||
Total assets | 10,568 | |||
Liabilities | ||||
Policyholder liabilities | 10,502 | |||
Other liabilities | 66 | |||
Total liabilities | £ 10,568 | |||
[1] | Outward reinsurance premiums include the £(12,149) million paid during the year in respect of the reinsurance of the UK annuity portfolio. The associated increase in reinsurance assets is included in outward reinsurers’ share of benefits and claims and the consequential change to policyholder liabilities is included in benefits and claims. See note D1.1 for further details. |
Corporate transactions - Other
Corporate transactions - Other transactions (Details) £ in Millions | 12 Months Ended | |
Dec. 31, 2018GBP (£)entity | Dec. 31, 2017GBP (£) | |
Held for sale and disposal of businesses | ||
(Loss) gain on disposal of businesses and corporate transactions | £ (80) | £ 223 |
PCA Life Insurance Company Ltd. - Korea | ||
Held for sale and disposal of businesses | ||
(Loss) gain on disposal of businesses and corporate transactions | 61 | |
NPH broker-dealer | ||
Held for sale and disposal of businesses | ||
(Loss) gain on disposal of businesses and corporate transactions | £ 162 | |
UK and Europe | ||
Held for sale and disposal of businesses | ||
Number of separately-listed companies expected from demerger | entity | 2 |
Corporate transactions - TMB As
Corporate transactions - TMB Asset Management (Details) - GBP (£) £ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Fair value of acquired assets, assumed liabilities and resulting goodwill | |||||
Non-Controlling interests | £ 18 | £ 18 | £ 7 | ||
Goodwill arising on acquisition | 1,857 | 1,857 | £ 1,482 | £ 1,628 | |
TMB Asset Management Co. Ltd. | |||||
Acquisition | |||||
Percentage of interest acquired | 65.00% | ||||
Period after which call option for purchase of remaining interest is exercisable by the Group | 3 years | ||||
Period after which put option for purchase of remaining interest is exercisable by TMB Bank | 4 years | ||||
Remaining percentage of interest under option | 35.00% | ||||
Impact on equity from put option recognised as a financial liability | £ 106 | 109 | |||
Fair value of acquired assets, assumed liabilities and resulting goodwill | |||||
Intangible assets | 5 | 5 | |||
Other assets | 26 | 26 | |||
Cash and cash equivalents | 2 | 2 | |||
Total assets | 33 | 33 | |||
Other liabilities | (10) | (10) | |||
Non-Controlling interests | (7) | (7) | |||
Net assets acquired and liabilities assumed | 16 | 16 | |||
Goodwill arising on acquisition | 181 | 181 | |||
Purchase consideration | 197 | 197 | |||
Retranslation of goodwill | 186 | £ 186 | |||
Impact of acquisition on the results of the Group | |||||
Revenue - Actual, Post-acquisition period | 18 | ||||
Adjusted IFRS operating profit based on longer-term investment returns / Profit before tax - Actual, Post-acquisition period | £ 5 |
Contingencies and related obl_2
Contingencies and related obligations (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Scottish Amicable Insurance Fund | Pension products with guaranteed annuity rates at retirement | ||
Disclosure of other provisions [line items] | ||
Provision for guaranteed annuities | £ 361 | £ 503 |
UK with-profits fund | Guaranteed annuities | ||
Disclosure of other provisions [line items] | ||
Provision for guaranteed annuities | £ 49 | £ 53 |
Post balance sheet events (Deta
Post balance sheet events (Details) £ in Millions | 1 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||
Jan. 31, 2019GBP (£)£ / $installment | Dec. 31, 2018₫ / £ | Dec. 31, 2018$ / £ | Dec. 31, 2018฿ / £ | Dec. 31, 2018$ / £ | Dec. 31, 2018RM / £ | Dec. 31, 2018₨ / £ | Dec. 31, 2018Rp / £ | Dec. 31, 2018$ / £ | Dec. 31, 2018¥ / £ | Dec. 31, 2017₫ / £ | Dec. 31, 2017$ / £ | Dec. 31, 2017฿ / £ | Dec. 31, 2017$ / £ | Dec. 31, 2017RM / £ | Dec. 31, 2017₨ / £ | Dec. 31, 2017Rp / £ | Dec. 31, 2017$ / £ | Dec. 31, 2017¥ / £ | Dec. 31, 2016₫ / £ | Dec. 31, 2016$ / £ | Dec. 31, 2016฿ / £ | Dec. 31, 2016$ / £ | Dec. 31, 2016RM / £ | Dec. 31, 2016₨ / £ | Dec. 31, 2016Rp / £ | Dec. 31, 2016$ / £ | Dec. 31, 2016¥ / £ | |
Post balance sheet events | ||||||||||||||||||||||||||||
Foreign exchange rate | 30,732.53 | 1.34 | 43.13 | 1.80 | 5.38 | 91.25 | 18,987.65 | 10.46 | 8.82 | 29,279.71 | 1.29 | 43.71 | 1.78 | 5.54 | 83.90 | 17,249.38 | 10.04 | 8.71 | 30,292.79 | 1.35 | 47.80 | 1.87 | 5.61 | 91.02 | 18,026.11 | 10.52 | 8.99 | |
Renewal of strategic bancassurance alliance with United Overseas Bank Limited | ||||||||||||||||||||||||||||
Post balance sheet events | ||||||||||||||||||||||||||||
Initial fee payable | £ 662 | |||||||||||||||||||||||||||
Foreign exchange rate | £ / $ | 1.7360 | |||||||||||||||||||||||||||
Number of instalments | installment | 3 | |||||||||||||||||||||||||||
Initial fee payable in February 2019 | £ 230 | |||||||||||||||||||||||||||
Initial fee payable in January 2020 | 331 | |||||||||||||||||||||||||||
Initial fee payable in January 2021 | £ 101 |
Commitments - Operating leases
Commitments - Operating leases (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Operating leases | ||
Future minimum sub-lease rental received for non-cancellable operating leases for land and buildings | £ 42 | £ 56 |
Minimum lease rental payments included in consolidated income statements | 139 | 123 |
Expected to be settled within one year | ||
Operating leases | ||
Future minimum lease payments for non-cancellable operating leases | 120 | 113 |
1 to 5 years | ||
Operating leases | ||
Future minimum lease payments for non-cancellable operating leases | 404 | 284 |
Over 5 years | ||
Operating leases | ||
Future minimum lease payments for non-cancellable operating leases | £ 408 | £ 118 |
Commitments - Capital commitmen
Commitments - Capital commitments (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Investment properties | ||
Contractual obligations and unfunded commitments | ||
Amount committed | £ 615 | £ 176 |
Jackson (US insurance operations) | Investments in limited partnerships | ||
Contractual obligations and unfunded commitments | ||
Amount committed | 664 | 414 |
Jackson (US insurance operations) | Commercial mortgage loans and other fixed maturities | ||
Contractual obligations and unfunded commitments | ||
Amount committed | 345 | 214 |
UK and Europe insurance operations | Private equity and infrastructure funds | ||
Contractual obligations and unfunded commitments | ||
Amount committed | 3,997 | 3,225 |
UK and Europe insurance operations | Bridging loans | ||
Contractual obligations and unfunded commitments | ||
Amount committed | £ 155 | £ 162 |
Investments in subsidiary und_3
Investments in subsidiary undertakings, joint ventures and associates - Equity method and fair value through profit or loss (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Investments in subsidiary undertakings, joint ventures and associates | |||
Fair value of associates accounted for at fair value through profit or loss | £ 1,200 | £ 2,400 | |
Share of profits from joint ventures and associates, net of related tax | 291 | 302 | £ 182 |
Other comprehensive income in the joint ventures and associates | 0 | 0 | 0 |
Unrecognised share of losses of a joint venture | 0 | 0 | 0 |
Unrecognised share of losses of a associate | 0 | 0 | 0 |
Contingent liabilities in relation to interests in joint ventures | 0 | 0 | 0 |
Capital commitments in relation to interests in joint ventures | 0 | 0 | 0 |
Operating segments | |||
Investments in subsidiary undertakings, joint ventures and associates | |||
Share of profits from joint ventures and associates, net of related tax | 291 | 302 | 182 |
Operating segments | Asia insurance operations | |||
Investments in subsidiary undertakings, joint ventures and associates | |||
Share of profits from joint ventures and associates, net of related tax | 178 | 121 | 94 |
Operating segments | Asia asset management | |||
Investments in subsidiary undertakings, joint ventures and associates | |||
Share of profits from joint ventures and associates, net of related tax | 61 | 60 | 54 |
Operating segments | General insurance commission (UK and Europe insurance operations) | |||
Investments in subsidiary undertakings, joint ventures and associates | |||
Share of profits from joint ventures and associates, net of related tax | 36 | 106 | 21 |
Operating segments | UK and Europe asset management | |||
Investments in subsidiary undertakings, joint ventures and associates | |||
Share of profits from joint ventures and associates, net of related tax | 16 | 15 | 13 |
Shareholder-backed | |||
Investments in subsidiary undertakings, joint ventures and associates | |||
Share of profits from joint ventures and associates, net of related tax | 255 | 196 | 161 |
With-profits | UK with-profits fund | |||
Investments in subsidiary undertakings, joint ventures and associates | |||
Share of profits from joint ventures and associates, net of related tax | £ 36 | £ 106 | £ 21 |
Investments in subsidiary und_4
Investments in subsidiary undertakings, joint ventures and associates - Ownership percentage (Details) | 12 Months Ended | 24 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2016 | Dec. 31, 2018 | |
Aberdeen Standard Cash Creation | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 22.91% | ||
ANRP II (AIV VI FC), L.P. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 36.58% | ||
BOCHK Asia Pacific Equity Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 27.18% | ||
BOCHK Balanced Growth Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 49.07% | ||
BOCHK Global Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 30.25% | ||
BOCHK Investment Funds - BOCHK Hong Kong Equity Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 20.25% | ||
BWAT Retail Nominee (1) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 50.00% | ||
BWAT Retail Nominee (2) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 50.00% | ||
Centaurus Retail LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 50.00% | ||
Centre Capital Non-Qualified Investors IV AIV-RA, LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 31.92% | ||
CEP IV-A Chicago AIV, LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 31.92% | ||
CEP IV-A CWV AIV, LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 31.95% | ||
CEP IV-A Davenport AIV, LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 31.92% | ||
CEP IV-A Indy AIV, LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 31.92% | ||
CEP IV-A NMR AIV, LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 31.92% | ||
CEP IV-A WBCT AIV, LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 31.91% | ||
Clairvest Equity Partners IV-A LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 31.87% | ||
Cribbs Causeway JV Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 50.00% | ||
Eastspring Investments - US High Yield Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 31.43% | ||
Eastspring Investments Asian High Yield Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 49.64% | ||
Eastspring Investments Asian Infrastructure Equity Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 44.47% | ||
Eastspring Investments Dragon Peacock Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 35.18% | ||
Eastspring Investments US Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 32.87% | ||
European Specialist Investment Funds - M&G Total Return Credit Investment Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 26.13% | ||
Fidelity Funds - Japan Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 23.56% | ||
First State Global Property A | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 42.35% | ||
Foudry Properties Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 50.00% | ||
Fubon China Currency Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 25.10% | ||
Fubon Global Investment Grade Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 47.80% | ||
ICICI Prudential Asset Management Company Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 49.00% | ||
ICICI Prudential Life Insurance Company Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 25.82% | ||
ICICI Prudential Pension Funds Management Company | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 25.82% | ||
ICICI Prudential Trust Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 49.00% | ||
Infracapital Greenfield partners I LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 26.52% | ||
Infracapital Partners II LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 31.56% | ||
Infracapital Partners LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 33.04% | ||
Infracapital SLP II LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 34.00% | ||
Innisfree M&G PPP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 35.00% | ||
Jefferies Capital Partners V, L.P. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 21.92% | ||
M&G Corporate Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 30.96% | ||
M&G Episode Macro Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 23.92% | ||
M&G European Property Fund SICAV-FIS | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 49.74% | ||
M&G European Secured Property Income Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 23.98% | ||
M&G European Select Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 41.53% | ||
M&G Gilt & Fixed Interest Income Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 49.65% | ||
M&G Investment Funds (10) - M&G Absolute Return Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 41.56% | ||
M&G Investment Funds (4) - M&G Episode Allocation Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 22.35% | ||
M&G PFI Carry Partnership 2016 LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 25.00% | ||
M&G Real Estate Debt Finance VI Designated Activity Company | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 46.00% | ||
M&G Real Estate UK Enhanced Value LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 50.10% | ||
M&G RED II SLP LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 28.00% | ||
M&G RED III SLP LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 25.00% | ||
M&G UK Companies Financing Fund II LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 48.32% | ||
Manchester JV Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 50.00% | ||
Manulife Asia Pacific Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 20.33% | ||
Manulife China Dim Sum High Yield Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 36.45% | ||
Manulife Superior Selection China Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 21.74% | ||
Manulife USD High Yield Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 25.73% | ||
MCF S.r.l | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 45.00% | ||
Murphy & Partners Fund, LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 21.07% | ||
Nomura Six Years Fixed Maturity Emerging Market Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 43.40% | ||
Oaktree Business Park Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 12.50% | ||
PGF Management Company (Ireland) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 50.00% | ||
PPM America Capital Partners IV, LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 34.50% | ||
PPM America Capital Partners V, LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 34.00% | ||
PPM America Capital Partners VI, LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 32.00% | ||
PPM Managers Partnership CI VII (A) LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 25.00% | ||
Prenetics Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 14.27% | ||
Property Partners (Two Rivers) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 50.00% | ||
Prudential Dynamic 0-30 Portfolio | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 25.49% | ||
Prudential Dynamic 10-40 Portfolio | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 28.77% | ||
Prudential Dynamic 20 - 55 Portfolio | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 34.19% | ||
Prudential Dynamic 40-80 Portfolio | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 34.55% | ||
Prudential Dynamic 60-100 Portfolio | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 30.20% | ||
Prudential Dynamic Focused 20 - 55 Portfolio | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 37.69% | ||
Prudential Pensions Management Zambia Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Portfolio Managers (South Africa) (Pty) Limited | Ordinary shares | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 49.99% | ||
Prudential Portfolio Managers (South Africa) (Pty) Limited | A Class Ordinary shares | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 75.00% | ||
Prudential/M&G UK Companies Financing Fund LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 34.42% | ||
SCB SET Banking Sector Index (Accumulation) | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 28.05% | ||
Schroder Asian Investment Grade Credit | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 49.72% | ||
Schroder Emerging Markets Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 46.83% | ||
Schroder US Dollar Money Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 41.40% | ||
Scotts Spazio Pte. Ltd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 45.00% | ||
Sectordate Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 32.60% | ||
St Edward Homes Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 50.00% | ||
St Edwards Strand Partnership | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 50.00% | ||
Thanachart Long Term Fixed Income | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 27.79% | ||
The Car Auction Unit Trust | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 50.00% | ||
The Heights Management Company Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 50.00% | ||
The St Edward Homes Partnership | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 49.95% | ||
The Strand Property Unit Trust | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 50.00% | ||
The Two Rivers Trust | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 50.00% | ||
Two Rivers LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 50.00% | ||
UOB Smart Global Healthcare | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 24.18% | ||
UOB Smart Millennium Growth Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 33.18% | ||
BOCI - Prudential Asset Management Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 36.00% | ||
BOCI - Prudential Trustee Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 36.00% | ||
CITIC-CP Asset Management Co., Ltd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 26.95% | ||
CITIC-Prudential Fund Management Co., Ltd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 49.00% | ||
CITIC-Prudential Life Insurance Company Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 50.00% | ||
Prudential BSN Takaful Berhad | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 49.00% | 70.00% | 49.00% |
M&G Prudential Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held (as a percent) | 100.00% | ||
Prudential (US Holdco1) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held (as a percent) | 100.00% | ||
Prudential Capital Holding Company Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held (as a percent) | 100.00% | ||
Prudential Corporation Asia Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held (as a percent) | 100.00% | ||
Prudential Group Holdings Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held (as a percent) | 100.00% | ||
95th Avenue Retail Building, LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Aberdeen Standard Singapore Equity | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 57.73% | ||
Allied Life Brokerage Agency, Inc | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
BOCHK Aggressive Growth Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 57.19% | ||
BOCHK China Equity Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 66.00% | ||
BOCHK Conservative Growth Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 54.00% | ||
Brier Capital LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Brooke (Holdco 1) Inc | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Brooke Life Insurance Company | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Calvin F1 GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Calvin F2 GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Canada Property (Trustee) No 1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Canada Property Holdings Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Cardinal Distribution Park Management Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 66.00% | ||
Carraway Guildford (Nominee A) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Carraway Guildford (Nominee B) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Carraway Guildford General Partner Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Carraway Guildford Investments Unit Trust | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Carraway Guildford LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Centre Capital Non-Qualified Investors IV AIV Orion, LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 76.80% | ||
Centre Capital Non-Qualified Investors IV AIV-ELS, LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 76.53% | ||
Centre Capital Non-Qualified Investors IV, LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 73.06% | ||
Centre Capital Non-Qualified Investors V AIV-ELS, LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 73.16% | ||
Centre Capital Non-Qualified Investors V, LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 67.16% | ||
CF Prudential European QIS Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 97.89% | ||
CF Prudential Japanese QIS Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 97.99% | ||
CF Prudential North American QIS Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 98.87% | ||
CF Prudential Pacific Markets Trust Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 98.31% | ||
CF Prudential UK Growth QIS Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 98.92% | ||
Cribbs Causeway Merchants Association Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Cribbs Mall Nominee (1) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Curian Capital, LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Curian Clearing, LLC (Michigan) | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Digital Infrastructure Investment Partners GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 65.00% | ||
Digital Infrastructure Investment Partners GP1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Digital Infrastructure Investment Partners LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Digital Infrastructure Investment Partners SLP GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Digital Infrastructure Investment Partners SLP GP1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Digital Infrastructure Investment Partners SLP GP2 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Al-Wara' Investments Berhad | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Asset Management Korea Co. Ltd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Infrastructure Debt Fund L.P. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments - Japan Equity Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 89.84% | ||
Eastspring Investment Management (Shanghai) Company Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments - Asian Local Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 97.95% | ||
Eastspring Investments - Asian Smaller Companies Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.71% | ||
Eastspring Investments - Developed and Emerging Asia Equity Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments - Emerging Europe, Middle East and Africa Dynamic Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments - Global Emerging Markets Customized Equity Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.90% | ||
Eastspring Investments - Global Emerging Markets Dynamic Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 94.89% | ||
Eastspring Investments - Global Low Volatility Equity Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 98.67% | ||
Eastspring Investments - Global Technology Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 78.82% | ||
Eastspring Investments - Japan Fundamental Value Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 98.69% | ||
Eastspring Investments - Pan European Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 52.83% | ||
Eastspring Investments (Hong Kong) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments (Luxembourg) SA | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments (Singapore) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments Asia Pacific Equity Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.98% | ||
Eastspring Investments Asian Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 89.69% | ||
Eastspring Investments Asian Dynamic Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 84.57% | ||
Eastspring Investments Asian Equity Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 68.69% | ||
Eastspring Investments Asian Equity Income Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 77.26% | ||
Eastspring Investments Asian High Yield Bond MY Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 81.00% | ||
Eastspring Investments Asian Investment Grade Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments Asian Low Volatility Equity Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 90.00% | ||
Eastspring Investments Asian Property Securities Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 95.08% | ||
Eastspring Investments Asian Total Return Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.13% | ||
Eastspring Investments Berhad | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments China Equity Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 53.72% | ||
Eastspring Investments European Inv Grade Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.76% | ||
Eastspring Investments Fund Management Limited Liability Company | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments Global Emerging Markets Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 95.43% | ||
Eastspring Investments Global Equity Navigator Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.99% | ||
Eastspring Investments Global Market Navigator Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 98.88% | ||
Eastspring Investments Greater China Equity Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 94.13% | ||
Eastspring Investments Hong Kong Equity Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.89% | ||
Eastspring Investments Incorporated | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments India Consumer Equity Open Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments India Equity Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 69.74% | ||
Eastspring Investments India Equity Open Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments India Infrastructure Equity Open Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments Latin American Equity Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 91.89% | ||
Eastspring Investments Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments Global Multi Asset Income Plus Growth Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments North America Value Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.84% | ||
Eastspring Investments Services Pte. Ltd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments SICAV-FIS - Alternative Investments Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments SICAV-FIS - Asia Pacific Loan Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments SICAV-FIS Africa Equity Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments SICAV-FIS Universal USD Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.94% | ||
Eastspring Investments SICAV-FIS Universal USD Bond II Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments US Corporate Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 89.61% | ||
Eastspring Investments US Equity Income Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.50% | ||
Eastspring Investments US High Inv Grade Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 92.77% | ||
Eastspring Investments US Investment Grade Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 56.87% | ||
Eastspring Investments US Strategic Income Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments US Total Return Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments Unit Trust - Dragon Peacock Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 97.40% | ||
Eastspring Investments UT Singapore ASEAN Equity Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Investments UT Singapore Select Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 85.39% | ||
Eastspring Investments World Value Equity Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 92.28% | ||
Eastspring Overseas Investment Fund Management (Shanghai) Company Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Real Assets Partners | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Eastspring Securities Investment Trust Co., Ltd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.54% | ||
Edger Investments Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Edinburgh Park (Management) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Embankment GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Embankment Nominee 1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Embankment Nominee 2 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Empire Holding SARL (In liquidation) | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Falan GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Fashion Square ECO LP (In liquidation) | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
First State China Focus Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 60.97% | ||
Five Hotel Holding, LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Folios III Designated Activity Company | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 60.00% | ||
Furnival Insurance Company PCC Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Genny GP 1 LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Genny GP 2 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Genny GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
George Digital GP 1 LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
George Digital GP 2 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
George Digital GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
GGE GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Green GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Greenpark (Reading) General Partner Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Greenpark (Reading) Nominee No. 1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Greenpark (Reading) Nominee No. 2 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
GS Twenty Two Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Hermitage Management, LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Holborn Bars Nominees Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Holtwood Limited (in liquidation) | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Hudson Seasons, LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Hyde Holdco 1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital (AIRI) GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital (Belmond) GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital (Bio) GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital (Churchill) GP 1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital (Churchill) GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital (GC) GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital (Gigaclear) GP 1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital (Gigaclear) GP 2 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital (Gigaclear) GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital (IT PPP) GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital (Leo) GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital (Sense) GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital (TLSB) GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital (TLSB) SLP LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital ABP GP Limited (In liquidation) | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital CI II Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital DF II GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital DF II Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Employee Feeder GP 1 LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Employee Feeder GP 2 LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Employee Feeder GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital F1 GP2 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital F2 GP1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital F2 GP2 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital GP 1 LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital GP 2 LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital GP II Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Greenfield DF GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Greenfield Partners 1 SLP GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Greenfield Partners 1 SLP GP1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Greenfield Partners 1 SLP GP2 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Greenfield Partners I Employee Feeder GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Greenfield Partners I GP 1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Greenfield Partners I GP 2 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Greenfield Partners I GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Greenfield Partners I SLP2 GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Greenfield Partners I Subholdings GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Greenfield Partners I Subholdings GP1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Partners II Subholdings GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Partners II Subholdings GP1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Partners III GP SARL | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Partners III Subholdings (Euro) GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Partners III Subholdings (Sterling) GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Partners III Subholdings GP1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Partners III Subholdings GP2 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital RF GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital Sisu GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital SLP II GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Infracapital SLP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Innisfree M&G PPP LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 62.22% | ||
Invesco Fixed Maturity Selective Emerging Market Bonds 2024 | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 57.31% | ||
INVEST Financial Company Insurance Agency LLC of Illinois | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Jackson Charitable Foundation, Inc | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Jackson Holdings, LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Jackson National Asset Management, LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Jackson National Life (Bermuda) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Jackson National Life Distributors, LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Jackson National Life Insurance Company | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Jackson National Life Insurance Company of New York | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
JNL Global Credit LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Lion Credit Opportunity Fund Public Limited Company - Credit Opportunity Fund XV | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 98.44% | ||
LIPP SARL (In liquidation) | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Livicos Limited (In liquidation) | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
London Stone Investments F3 Employee Feeder GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
London Stone Investments F3 I Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
London Stone Investments F3 II Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
London Stone Investments F3 SP GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G (Guernsey) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Alternatives Investment Management Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Asia Property Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 54.01% | ||
M&G Dividend Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 58.33% | ||
M&G European Credit Investment Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 82.48% | ||
M&G European High Yield Credit Investment Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.99% | ||
M&G (Lux) European Strategic Value Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 79.22% | ||
M&G Financial Services Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Founders 1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G General Partner Inc | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Group Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G IMPPP 1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G International Investments Nominees Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G International Investments SA | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G International Investments Switzerland AG | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Investment Funds (10) - M&G Global Listed Infrastructure Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 20.00% | ||
M&G Investment Funds (10) - M&G Positive Impact Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 51.96% | ||
M&G Investment Funds (7) - M&G Global Convertibles Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 59.02% | ||
M&G Investment Management Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Investments (Americas) Inc. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Investments (Australia) Pty Ltd | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Investments (Hong Kong) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Investments (Singapore) Pte. Ltd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Investments Japan Co., Ltd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Luxembourg SA | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Management Services Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Nominees Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G PFI 2018 GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G PFI 2018 GP1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G PFI 2018 GP2 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G PFI Partnership 2018 LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Platform Nominees Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Prudential (Holdings) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Prudential Service Company Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G RE Espana 2016 S.L. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G RE UKEV (GP1) LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G RE UKEV 1-A LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Real Estate Asia Holding Company Pte. Ltd | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Real Estate Asia Pte. Ltd | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Real Estate Funds Management SARL | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Real Estate Japan Co. Ltd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Real Estate Korea Co. Ltd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Real Estate Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Real Estate UKEV (GP) LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G RED Employee Feeder GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G RED II Employee Feeder GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G RED II GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G RED II SLP GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G RED III Employee Feeder GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G RED III GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G RED III SLP GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G RED SLP GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G RPF GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G RPF Nominee 1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G RPF Nominee 2 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Securities Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G SIF Management Company (Ireland) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Specialty Finance Fund (GP) Sarl | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G Specialty Finance Fund Carry Interest Partnership (GP) Sarl | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G UK Property Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G UK Property GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G UK Property Nominee 1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G UK Property Nominee 2 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G UK Residential Property Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 58.42% | ||
M&G UKCF II GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G UKEV (SLP) General Partner LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
M&G UKEV (SLP) LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Manchester Nominee (1) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Manulife China Offshore Bond Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 51.39% | ||
Minster Court Estate Management Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 75.00% | ||
Mission Plans of America, Inc | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
NAPI REIT, Inc | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.00% | ||
National Planning Holdings, LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
North Sathorn Holdings Company Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Nova Sepadu Sdn. Bhd. (In liquidation) | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 51.00% | ||
Old Kingsway, LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Optimus Point Management Company Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Pacus (UK) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PCA IP Services Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PCA Life Assurance Co. Ltd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.79% | ||
PCA Reinsurance Co. Ltd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PGDS (UK One) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PGDS (US One), LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PPM America Capital Partners III, LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 60.50% | ||
PPM America Capital Partners VII, LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PPM America Private Equity Fund III, LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.81% | ||
PPM America Private Equity Fund IV, LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.84% | ||
PPM America Private Equity Fund V, LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.84% | ||
PPM America Private Equity Fund VI, LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.85% | ||
PPM America Private Equity Fund VII LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PPM America, Inc | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PPM Capital (Holdings) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PPM CLO 2 Ltd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PPM CLO 2018-1 Ltd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PPM CLO 3 Ltd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PPM Finance, Inc | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PPM Funds | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PPM Funds - PPM Core Plus Fixed Income Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.00% | ||
PPM Funds - PPM Credit Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.00% | ||
PPM Funds - PPM Floating Rate Income Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 96.00% | ||
PPM Funds - PPM High Yield Core Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 97.00% | ||
PPM Funds - PPM Strategic Income Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 87.00% | ||
PPM Holdings, Inc | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PPM Loan Management Company LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PPM Loan Management Holding Company LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PPM Managers GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PPM Ventures (Asia) Limited (In liquidation) | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PPMC First Nominees Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Pru Life Insurance Corporation of U.K. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Pru Life UK Asset Management and Trust Corporation | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Pru Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudence Foundation | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudence Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential (Cambodia) Life Assurance Plc | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential / M&G UKCF GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Africa Holdings Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Africa Services Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Assurance Company Singapore (Pte) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Assurance Malaysia Berhad | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held (as a percent) | 100.00% | ||
Proportion held indirectly - related undertakings (as a percent) | 51.00% | ||
Prudential Assurance Uganda Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Capital (Singapore) Pte. Ltd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Capital Plc | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Corporate Pensions Trustee Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Corporation Australasia Holdings Pty Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Corporation Holdings Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Credit Opportunities 1 SARL | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Credit Opportunities GP SARL | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Credit Opportunities Scsp | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Distribution Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Dynamic Focused 0-30 Portfolio | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 53.48% | ||
Prudential Equity Release Mortgages Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Financial Planning Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Financial Services Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Five Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential General Insurance Hong Kong Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Global Services Private Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential GP Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Greenfield GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Greenfield GP1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Greenfield GP2 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Greenfield LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Greenfield SLP GP LLP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Group Pensions Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Group Secretarial Services Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Holborn Life Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Holdings Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Hong Kong Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential International Assurance plc | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential International Management Services Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential International Staff Pensions Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Investment (Luxembourg) 2 SARL | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Investments Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential IP Services Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Leasing Services Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Life Assurance (Lao) Company Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Life Assurance (Thailand) Public Company Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.93% | ||
Prudential Life Assurance Kenya Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Life Assurance Zambia Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Life Insurance Ghana Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Lifetime Mortgages Limited | Ordinary shares | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Lifetime Mortgages Limited | Preference shares | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Loan Investments 1 SARL | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Loan Investments GP SARL | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Loan Investments SCSp | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Mauritius Holdings Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Mortgages Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Nominees Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Pensions Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Polska sp. z.o.o | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Portfolio Management Group Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Portfolio Managers Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Properties Trusty Pty Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Property Holding Limited (In liquidation) | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Property Investment Managers Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Property Investments Limited | Ordinary shares | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Property Investments Limited | Preference shares | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Property Services Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Protect Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Real Estate Investments 1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Real Estate Investments 2 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Real Estate Investments 3 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Retirement Income Limited (In liquidation) | Ordinary shares | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Retirement Income Limited (In liquidation) | Preference shares | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Services Asia Sdn. Bhd. | Ordinary shares | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Services Asia Sdn. Bhd. | Preference shares | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Services Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Services Singapore Pte. Ltd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Singapore Holdings Pte. Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Staff Pensions Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Trustee Company Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential UK Real Estate General Partner Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential UK Real Estate LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential UK Real Estate Nominee 1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential UK Real Estate Nominee 2 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential UK Services Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Unit Trusts Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Venture Managers Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Vietnam Assurance Private Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prudential Vietnam Finance Company Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Prutec Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PT. Eastspring Investments Indonesia | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.95% | ||
PT. Prudential Life Assurance | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 94.62% | ||
PVFC Financial Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
PVM Partnerships Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Randolph Street LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
REALIC of Jacksonville Plans, Inc | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Reksa Dana Eastspring IDR Fixed Income Fund (NDEIFF) | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.95% | ||
Reksa Dana Eastspring Investments Cash Reserve | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 97.31% | ||
Reksa Dana Eastspring Investments IDR High Grade | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 64.64% | ||
Reksa Dana Eastspring Investments Value Discovery | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 86.64% | ||
Reksa Dana Eastspring Investments Yield Discovery | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 98.33% | ||
Reksa Dana Syariah Eastspring Syariah Equity Islamic Asia Pacific USD | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 91.97% | ||
Reksa Dana Syariah Eastspring Syariah Fixed Income Amanah | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 69.58% | ||
Reksa Dana Syariah Eastspring Syariah Money Market Khazanah | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.37% | ||
Rhodium Investment Fund | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Rift GP 1 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Rift GP 2 Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
ROP, Inc | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Schroder Multi-Asset Revolution | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 61.92% | ||
ScotAm Pension Trustees Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Scottish Amicable Finance plc | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Scottish Amicable Holdings Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Scottish Amicable Life Assurance Society | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Scottish Amicable Pensions Investments Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Sealand (No 1) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Sealand (No 2) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Selly Oak Shopping Park (General Partner) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Selly Oak Shopping Park (Nominee 1) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Selly Oak Shopping Park (Nominee 2) Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Selly Oak Shopping Park Limited Partnership | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Silverfleet Capital 2004 LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Silverfleet Capital 2005 LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Silverfleet Capital 2006 LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Silverfleet Capital 2009 LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Silverfleet Capital 2011/12 LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Silverfleet Capital II WPLF | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Smithfield Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
SMLLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Squire Capital I, LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Squire Capital II, LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Squire Reassurance Company II, Inc | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Squire Reassurance Company, LLC | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Sri Han Suria Sdn. Bhd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 51.00% | ||
Stableview Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Staple Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Staple Nominees Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Thanachart Life Assurance Public Company Limited (In liquidation) | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.93% | ||
The First British Fixed Trust Company Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
The Greenpark (Reading) LP | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
The Prudential Assurance Company Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Three Snowhill Birmingham SARL | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
TMB Asset Management Co., Ltd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 65.00% | ||
Two Snowhill Birmingham SARL | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
VFL International Life Company SPC, Ltd. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Wessex Gate Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Westwacker Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 100.00% | ||
Wynnefield Private Equity Partners I, L.P. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.00% | ||
Wynnefield Private Equity Partners II, L.P. | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 99.00% | ||
Zenith-Prudential Life Insurance Company Limited | |||
Investments in subsidiaries, joint ventures, associates and significant holdings | |||
Proportion held indirectly - related undertakings (as a percent) | 51.00% |
Further accounting policies - S
Further accounting policies - Structured entities (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
OEICs/UTs | ||
Unconsolidated structured entities reported in the statement of financial position | ||
Aggregate carrying amount of investments in unconsolidated structured entities | £ 21,216 | £ 20,718 |
OEICs/UTs | Equity securities and portfolio holdings in unit trusts | ||
Unconsolidated structured entities reported in the statement of financial position | ||
Aggregate carrying amount of investments in unconsolidated structured entities | 21,216 | 20,718 |
Separate account assets | ||
Unconsolidated structured entities reported in the statement of financial position | ||
Aggregate carrying amount of investments in unconsolidated structured entities | 128,220 | 130,528 |
Separate account assets | Equity securities and portfolio holdings in unit trusts | ||
Unconsolidated structured entities reported in the statement of financial position | ||
Aggregate carrying amount of investments in unconsolidated structured entities | 128,220 | 130,528 |
Other structured entities | ||
Unconsolidated structured entities reported in the statement of financial position | ||
Aggregate carrying amount of investments in unconsolidated structured entities | 11,081 | 10,894 |
Other structured entities | Debt securities | ||
Unconsolidated structured entities reported in the statement of financial position | ||
Aggregate carrying amount of investments in unconsolidated structured entities | £ 11,081 | £ 10,894 |
Further accounting policies - F
Further accounting policies - Financial investments (Details) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Financial instruments | ||
Minimum cash collateral required as percentage of fair value of securities loaned | 100.00% | |
Fair value hedges | ||
Financial instruments | ||
Notional amount | £ 0 | £ 0 |
Cash flow hedges | ||
Financial instruments | ||
Notional amount | £ 0 | £ 0 |
Further accounting policies - I
Further accounting policies - Investment properties (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Further accounting policies | |
Maximum period between external valuations of investment properties | 3 years |
Condensed Financial Informati_2
Condensed Financial Information of Registrant Prudential plc - Profit and Loss Accounts (Details) - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Profit and Loss Accounts | ||||
Investment income, including dividends received from subsidiary undertakings | £ (10,263) | £ 42,189 | £ 32,511 | |
Other charges: | ||||
Foreign currency exchange gains (losses) | 61 | |||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | [1],[2] | 3,309 | 3,970 | 3,212 |
Tax credit on profit on ordinary activities | (296) | (1,580) | (1,291) | |
Profit for the year attributable to equity holders of the Company | 3,010 | 2,389 | 1,921 | |
Items that will not be reclassified to profit or loss | ||||
Actuarial gains recognised in respect of the defined benefit pension scheme | 134 | 200 | (181) | |
Related tax | (23) | (33) | 26 | |
Total other comprehensive income (loss) | (661) | 105 | 1,099 | |
Total comprehensive income for the year | 2,348 | 2,494 | 3,020 | |
Prudential plc | ||||
Profit and Loss Accounts | ||||
Investment income, including dividends received from subsidiary undertakings | 1,605 | 1,757 | 1,413 | |
Investment expenses and charges | (411) | (414) | (479) | |
Other charges: | ||||
Corporate expenditure | (259) | (217) | (212) | |
Foreign currency exchange gains (losses) | 5 | (10) | 3 | |
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | 940 | 1,116 | 725 | |
Tax credit on profit on ordinary activities | 101 | 119 | 115 | |
Profit for the year attributable to equity holders of the Company | 1,041 | 1,235 | 840 | |
Items that will not be reclassified to profit or loss | ||||
Actuarial gains recognised in respect of the defined benefit pension scheme | 19 | 34 | 4 | |
Related tax | (3) | (6) | ||
Total other comprehensive income (loss) | 16 | 28 | 4 | |
Total comprehensive income for the year | £ 1,057 | £ 1,263 | £ 844 | |
[1] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. | |||
[2] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. This is principally because the corporate taxes of the Group include those on the income of consolidated with-profits and unit-linked funds that, through adjustments to benefits, are borne by policyholders. These amounts are required to be included in the tax charge of the Company under IAS 12. Consequently, the profit before all taxes measure is not representative of pre-tax profits attributable to shareholders. Profit before all taxes is determined after deducting the cost of policyholder benefits and movements in the liability for unallocated surplus of with-profits funds after adjusting for taxes borne by policyholders. |
Condensed Financial Informati_3
Condensed Financial Information of Registrant Prudential plc - Statements of Financial Position (Details) - GBP (£) £ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets | ||
Debtors: Other debtors | £ 4,088 | £ 2,963 |
Tax recoverable | 618 | 613 |
Cash at bank and in hand | 5,759 | 6,623 |
Liabilities: amounts falling due within one year | ||
Deferred tax liability | (4,022) | (4,715) |
Accruals and deferred income | (1,700) | (1,233) |
Capital and reserves | ||
Shareholders' funds | 17,249 | 16,087 |
Prudential plc | ||
Fixed assets | ||
Investments in subsidiary undertakings | 10,825 | 10,798 |
Current assets | ||
Debtors: Amounts owed by subsidiary undertakings | 5,904 | 4,732 |
Debtors: Other debtors | 5 | 5 |
Tax recoverable | 42 | 40 |
Derivative assets | 5 | 5 |
Pension asset | 69 | 71 |
Cash at bank and in hand | 22 | 143 |
Total current assets | 6,047 | 4,996 |
Liabilities: amounts falling due within one year | ||
Commercial paper | (472) | (485) |
Other borrowings | (600) | |
Derivative liabilities | (423) | (443) |
Amounts owed to subsidiary undertakings | (936) | (715) |
Tax payable | (10) | (10) |
Deferred tax liability | (12) | (12) |
Accruals and deferred income | (101) | (79) |
Total current liabilities | (1,954) | (2,344) |
Net current assets | 4,093 | 2,652 |
Total assets less current liabilities | 14,918 | 13,450 |
Liabilities: amounts falling due after more than one year | ||
Subordinated liabilities | (6,676) | (5,272) |
Debenture loans | (517) | (549) |
Other borrowings | (275) | |
Total non-current liabilities | (7,468) | (5,821) |
Total net assets | 7,450 | 7,629 |
Capital and reserves | ||
Share capital | 130 | 129 |
Share premium | 1,964 | 1,948 |
Profit and loss account | 5,356 | 5,552 |
Shareholders' funds | £ 7,450 | £ 7,629 |
Condensed Financial Informati_4
Condensed Financial Information of Registrant Prudential plc - Statements of Changes in Equity (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Equity at beginning of year | £ 16,094 | £ 14,667 | £ 12,956 |
Comprehensive income | |||
Profit for the year | 3,010 | 2,389 | 1,921 |
Actuarial gains recognised in respect of the defined benefit pension scheme | 111 | 167 | (155) |
Total comprehensive income for the year | 2,348 | 2,494 | 3,020 |
Transactions with owners, recorded directly in equity | |||
New share capital subscribed | 17 | 21 | 13 |
Share based payment transactions | 69 | 89 | (51) |
Dividends | (1,244) | (1,159) | (1,267) |
Equity at end of year | 17,267 | 16,094 | 14,667 |
Share capital | |||
Equity at beginning of year | 129 | 129 | 128 |
Transactions with owners, recorded directly in equity | |||
New share capital subscribed | 1 | 1 | |
Equity at end of year | 130 | 129 | 129 |
Share premium | |||
Equity at beginning of year | 1,948 | 1,927 | 1,915 |
Transactions with owners, recorded directly in equity | |||
New share capital subscribed | 16 | 21 | 12 |
Equity at end of year | 1,964 | 1,948 | 1,927 |
Prudential plc | |||
Equity at beginning of year | 7,629 | 7,505 | 7,909 |
Changes in equity | |||
Impact of initial application of IFRS 9 | (9) | ||
Comprehensive income | |||
Profit for the year | 1,041 | 1,235 | 840 |
Actuarial gains recognised in respect of the defined benefit pension scheme | 16 | 28 | 4 |
Total comprehensive income for the year | 1,057 | 1,263 | 844 |
Transactions with owners, recorded directly in equity | |||
New share capital subscribed | 17 | 21 | 13 |
Share based payment transactions | (1) | 6 | |
Dividends | (1,244) | (1,159) | (1,267) |
Total contributions by and distributions to owners | (1,227) | (1,139) | (1,248) |
Equity at end of year | 7,450 | 7,629 | 7,505 |
Prudential plc | Share capital | |||
Equity at beginning of year | 129 | 129 | 128 |
Transactions with owners, recorded directly in equity | |||
New share capital subscribed | 1 | 1 | |
Total contributions by and distributions to owners | 1 | 1 | |
Equity at end of year | 130 | 129 | 129 |
Prudential plc | Share premium | |||
Equity at beginning of year | 1,948 | 1,927 | 1,915 |
Transactions with owners, recorded directly in equity | |||
New share capital subscribed | 16 | 21 | 12 |
Total contributions by and distributions to owners | 16 | 21 | 12 |
Equity at end of year | 1,964 | 1,948 | 1,927 |
Prudential plc | Profit and loss account | |||
Equity at beginning of year | 5,552 | 5,449 | 5,866 |
Changes in equity | |||
Impact of initial application of IFRS 9 | (9) | ||
Comprehensive income | |||
Profit for the year | 1,041 | 1,235 | 840 |
Actuarial gains recognised in respect of the defined benefit pension scheme | 16 | 28 | 4 |
Total comprehensive income for the year | 1,057 | 1,263 | 844 |
Transactions with owners, recorded directly in equity | |||
Share based payment transactions | (1) | 6 | |
Dividends | (1,244) | (1,159) | (1,267) |
Total contributions by and distributions to owners | (1,244) | (1,160) | (1,261) |
Equity at end of year | £ 5,356 | £ 5,552 | £ 5,449 |
Condensed Financial Informati_5
Condensed Financial Information of Registrant Prudential plc - Statements of Cash Flows (Details) - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Operations | ||||
Taxes received | [1] | £ (625) | £ (915) | £ (950) |
Financing | ||||
Issues of ordinary share capital | 17 | 21 | 13 | |
Net cash flows from financing activities | (544) | (1,702) | (371) | |
Reconciliation of profit on ordinary activities before tax to net cash inflow from operating activities | ||||
Profit (loss) before tax | [2],[3] | 3,309 | 3,970 | 3,212 |
Prudential plc | ||||
Operations | ||||
Net cash inflow from operating activities before interest and tax | 1,399 | 1,534 | 1,621 | |
Interest paid | (402) | (409) | (339) | |
Taxes received | 97 | 121 | 105 | |
Equity dividends paid | (1,244) | (1,159) | (1,267) | |
Net cash inflow before financing | (150) | 87 | 120 | |
Financing | ||||
Issues of ordinary share capital | 17 | 21 | 13 | |
Issue of borrowings | 1,597 | 565 | 1,227 | |
Repayments of borrowings | (1,034) | (751) | ||
Movement in commercial paper and other borrowings to support a short-term fixed income securities program | (14) | (567) | (255) | |
Investment in subsidiary undertakings | (88) | |||
Movement in net amount owed by subsidiary undertakings | (449) | 764 | (1,185) | |
Net cash flows from financing activities | 29 | 32 | (200) | |
Net cash inflow (outflow) for the year | (121) | 119 | (80) | |
Reconciliation of profit on ordinary activities before tax to net cash inflow from operating activities | ||||
Profit (loss) before tax | 940 | 1,116 | 725 | |
Add back: interest charged | 418 | 424 | 371 | |
Adjustments for non-cash items: | ||||
Fair value adjustments on derivatives | (21) | (4) | 122 | |
Pension scheme | 21 | 11 | 6 | |
Foreign currency exchange and other movements | 19 | (27) | 404 | |
Decrease (increase) in debtors | 6 | (8) | ||
Increase (decrease) in creditors | 22 | 8 | 1 | |
Net cash inflow from operating activities | £ 1,399 | £ 1,534 | £ 1,621 | |
[1] | Tax paid includes £134 million (2017: £298 million; 2016: £226 million) paid on profits taxable at policyholder rather than shareholder rates. | |||
[2] | This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. | |||
[3] | 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 with-profits funds after adjusting for taxes borne by policyholders. |
Condensed Financial Informati_6
Condensed Financial Information of Registrant Prudential plc - Notes (Details) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Additional information | |||
Dividends received by parent company from consolidated subsidiary undertakings | £ 1,495 | £ 1,685 | £ 1,318 |
Profit after tax of the Group attributable to shareholders in accordance with IFRS | 3,010 | 2,389 | 1,921 |
Shareholders' equity of the Group in accordance with IFRS | 17,249 | 16,087 | |
Accounting policy difference | |||
Additional information | |||
Profit after tax of the Group attributable to shareholders in accordance with IFRS | 5 | ||
Shareholders' equity of the Group in accordance with IFRS | 14 | ||
Prudential plc | |||
Additional information | |||
Profit after tax of the Group attributable to shareholders in accordance with IFRS | 1,041 | 1,235 | 840 |
Shareholders' equity of the Group in accordance with IFRS | 7,450 | 7,629 | |
Share in the IFRS result (net of distributions to the Company) and IFRS net equity of the Group | |||
Additional information | |||
Profit after tax of the Group attributable to shareholders in accordance with IFRS | 1,964 | 1,154 | £ 1,081 |
Shareholders' equity of the Group in accordance with IFRS | £ 9,785 | £ 8,458 |