Strategic Report | Governance | Financial Statements | 165
3. INSURANCE SERVICE EXPENSES continued During the year the following services were provided by the Group’s auditor at costs as detailed below:
Year ended 31 December 2023 £000
Year ended 31 December 2022 £000
Auditor remuneration Fees payable for the audit of the Parent Company and consolidated accounts
676
616
Fees payable for other services The audit of the Company’s subsidiaries pursuant to legislation
2,555
3,042
792
Audit-related assurance services
705
– 1
Other assurance services
48
Other non-audit services not covered above
1
Total
4,024
4,412
Fees payable for the audit of the Company’s subsidiaries pursuant to legislation includes fees of £789,000 (2022: £1,700,000) 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.
4. NET EXPENSES FROM REINSURANCE CONTRACTS
Year ended 31 December 2022 (restated) £m
Year ended 31 December 2023 £m
27
Contractual service margin recognised for services received Change in risk adjustment for non-financial risk for risk expired Expected net settlements and reinsurance expenses Actual net settlements and reinsurance expenses
25
4
5
27
12
(17)
(12)
Total
41
30
Contractual service margin recognised for services received The CSM release for reinsurance contracts is recognised based on coverage units in a similar manner to the CSM in respect of the underlying contracts. For reinsurance swaps, the coverage units are calculated based on the cash flows of the floating (receiving) leg only. Change in reinsurance risk adjustment for non-financial risk for risk expired The reinsurance risk adjustment is based on the floating leg cash flows, and hence the behaviour of the risk adjustment, including its release, is similar to the movement on the underlying contracts that are reinsured. Actual vs. Expected incurred reinsurance claims and other reinsurance service expenses Actual reinsurance claims and expenses of £17m (2022: £12m) were lower than the expected value of £27m (2022: £12m) as a result of reductions in longevity experience during the year.
5. INVESTMENT RETURN
Year ended 31 December 2022 (restated) £m
Year ended 31 December 2023 £m
806 244
Interest income on assets designated on initial recognition at FVTPL Interest income on assets mandatorily measured at FVTPL: LTMs
473 165
54
Interest income on assets at amortised cost
–
424 278 365
Movement in fair value of financial assets designated on initial recognition at FVTPL Movement in fair value of financial assets mandatorily measured at FVTPL: LTMs Movement in fair value of financial assets mandatorily measured at FVTPL: Derivatives
(3,143) (1,578) (1,106)
2
Foreign exchange gains/(losses) on amortised cost assets
–
Total
2,173
(5,189)
Interest income and change in valuation of investments is reported separately for assets classified in a portfolio at FVTPL and assets classified in an amortised cost portfolio. The majority of the Group’s investments are classified at FVTPL; a separate amortised cost portfolio of sovereign gilts was entered into during the year as explained in note 1.6.1.
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