FINANCIAL STATEMENTS
STRATEGIC REPORT
GOVERNANCE
4 OTHER OPERATING EXPENSES continued During the year the following services were provided by the Group’s auditor at costs as detailed below:
Year ended 31 December
Year ended 31 December
2021 £000 550
2020 £000 540
Fees payable for the audit of the Parent Company and consolidated accounts
Fees payable for other services: The audit of the Company’s subsidiaries pursuant to legislation
1,876
1,618
656
Audit-related assurance services
842
65
Other assurance services
65
–
Other non-audit services not covered above
1
3,147
3,066
Auditor remuneration
Fees payable to other audit firms: The audit of the Company’s subsidiaries pursuant to legislation
– –
60
Corporate finance services
146
Total
3,147
3,272 Fees payable for the audit of the Company’s subsidiaries pursuant to legislation includes fees of £455,000 for audit activities related to the implementation of IFRS 17. Audit-related assurance services mainly include fees relating to the audit of the Group’s Solvency II regulatory returns and review procedures in relation to the Group’s interim results. The fees payable to other audit firms during 2020 noted above includes fees paid to KPMG in relation to the 2020 audit of the Group’s South African subsidiaries and fees paid to KPMG in relation to corporate finance services carried out during 2019.
5 FINANCE COSTS
Year ended 31 December 2021 £m
Year ended 31 December 2020 £m
78.7 55.6
Interest payable on deposits received from reinsurers
107.7
Interest payable on subordinated debt
47.3
2.5
Other interest payable Total finance costs
4.0
136.8
159.0
The interest payable on deposits received from reinsurers is as defined by the respective reinsurance treaties and calculated with reference to the risk-adjusted yield on the relevant backing asset portfolio.
6 SEGMENTAL REPORTING Segmental analysis
The insurance segment writes insurance products for the retirement market – which include Guaranteed Income for Life Solutions, Defined Benefit De-risking Solutions, Care Plans and Protection − and invests the premiums received from these contracts in debt and other fixed income securities, gilts, liquidity funds and Lifetime Mortgage advances. The professional services business, HUB, is included with other corporate companies in the Other segment. This business is not currently sufficiently significant to separate from other companies’ results. The Other segment also includes the Group’s corporate activities that are primarily involved in managing the Group’s liquidity, capital and investment activities. The Group operates in one material geographical segment which is the United Kingdom. Adjusted operating profit The Group reports adjusted operating profit as an alternative measure of profit which is used for decision making and performance measurement. The Board believes that adjusted operating profit, which excludes effects of short-term economic and investment changes, provides a better view of the longer-term performance and development of the business and aligns with the long-term nature of the products. Underlying operating profit represents a combination of both the profit generated from new business written in the year and profit expected to emerge from the in-force book of business based on current assumptions. Actual operating experience, where different from that assumed at the start of the year, and the impacts of changes to future operating assumptions applied in the year, are then also included in arriving at adjusted operating profit. New business profits represent expected investment returns on the financial instruments assumed to be newly purchased to back that business after allowances for expected movements in liabilities and deduction of acquisition costs. Profits arising from the in-force book of business represent the expected return on surplus assets, the expected unwind of prudent reserves above best estimates for mortality, expenses, and corporate bond defaults.
137
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