Strategic Report Governance
Financial Statements
211
2. INVESTMENTS IN GROUP UNDERTAKINGS
Shares in Group undertakings 2024 £m
Shares in Group undertakings 2023 £m
At 1 January
855
849
Additions
6
6
At 31 December
861
855
Details of the Company’s investments in the ordinary shares of subsidiary undertakings are given in note 31 to the Group financial statements. Additions to shares in Group undertakings relate to the cost of share-based payments for services provided by employees of subsidiary undertakings to be satisfied by shares issued by the Company. Investments in Group undertakings are assessed annually for any indication of impairment. Impairment testing has been carried out to assess the recoverable amount of the investments in JRL and PLACL at 31 December 2024. The carrying amount of the investment at 31 December 2024 for JRL was £513m and for PLACL was £272m. The recoverable amounts for both entities were calculated to be in excess of this amount, indicating that no impairment of the Company’s investment in JRL or PLACL was required. The calculation of value-in-use for JRL and PLACL uses cash flow projections based on the emergence of surplus for in-force business on a Solvency II basis, together with new business cash flows on a Solvency II basis set out in the Group’s business plan approved by the Board. The pre-tax discount rates used were 12.1% for JRL and 11.1% for PLACL. The discount rates were determined using a weighted average cost of capital approach, adjusted for specific risks attributable to the businesses, with the lower rate used for PLACL reflecting that it is largely closed to new business. A one percentage point increase in the discount rates used would reduce the headroom of the excess of the value-in-use above the cost of investment of JRL and PLACL by 16% and 14% respectively. The Directors have not identified a reasonably possible change in assumptions which would result in the carrying amount of the Group’s investment in JRL or PLACL to exceed its recoverable amount.
3. LOANS TO GROUP UNDERTAKINGS
2024 £m
2023 £m
At 1 January
1,011
1,000
Additions
250
13
Repayments
(300)
–
Loss allowance for expected credit losses
–
(2)
At 31 December
961
1,011
Details of the Company’s loans to Group undertakings are as follows:
31 December 2024 £m 31 December 2023 £m
9.375% perpetual restricted Tier 1 contingent convertible debt (call option in April 2024) issued by JRL in April 2019 9.375% perpetual restricted Tier 1 contingent convertible debt (call option in April 2024) issued by PLACL in April 2019 9.75% perpetual restricted Tier 1 contingent convertible debt (call option in March 2031) issued by JRL in April 2024
–
250
–
50
250
–
7.0% 10.5-year subordinated debt 2031 (Tier 2) issued by JRL in November 2020 7.0% 10.5-year subordinated debt 2031 (Tier 2) issued by PLACL in November 2020 8.2% 10-year subordinated debt 2030 (Tier 2) issued by JRL in May 2020 8.125% 10-year subordinated debt 2029 (Tier 2) issued by JRL in October 2019 8.125% 10-year subordinated debt 2029 (Tier 2) issued by PLACL in October 2019 9.0% 10-year subordinated debt 2026 (Tier 2) issued by JRL in October 2016 5.0% 7-year subordinated debt 2025 (Tier 3) issued by JRL in December 2018¹
76
76
102 103
102 103
25
25
102 254
102 254
51
51
963
1,013
Less: Loss allowance for expected credit losses
(2)
(2)
Total
961
1,011
1 Included in current assets.
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