Just Annual Report and Accounts 2023

Strategic Report | Governance | Financial Statements | 197

26. INSURANCE CONTRACTS AND RELATED REINSURANCE continued (d) Movements analysis – reinsurance contracts (i) Reinsurance contracts analysis of remaining coverage Year ended 31 December 2023

Remaining coverage £m

Incurred claims £m

Total £m 776

Opening reinsurance contract asset (restated) Opening reinsurance contract liability (restated)

769

7

(114)

(7)

(121)

Net opening balance

655

655

Changes in the statement of comprehensive income Reinsurance expenses

(857)

(857)

816 816

816

Claims recovered

Net expenses from reinsurance contracts Net finance expenses from reinsurance contracts

(857)

(41)

108

108

Total changes in the statement of comprehensive income

(749)

816

67

Cash flows Premiums paid Claims received Total cash flows

1,196

1,196

(900) (900)

(900)

1,196 1,136

296

7

1,143

Closing reinsurance contract asset Closing reinsurance contract liability

(34)

(91) (84)

(125)

Net closing balance

1,102

1,018

Remaining coverage £m

Incurred claims £m

Total £m 716

Year ended 31 December 2022 (restated)

Opening reinsurance contract asset Opening reinsurance contract liability

700

16

(159)

(6)

(165)

Net opening balance

541

10

551

Changes in the statement of comprehensive income Reinsurance expenses

(599)

(599)

Claims recovered

569 569

569

Net expenses from reinsurance contracts Net finance expenses from reinsurance contracts

(599)

(30) (91)

(91)

Total changes in the statement of comprehensive income

(690)

569

(121)

Cash flows Premiums paid Claims received Total cash flows

804

804

(579) (579)

(579)

804 769

225 776

Closing reinsurance contract asset Closing reinsurance contract liability

7

(114)

(7)

(121)

Net closing balance

655

655

Liabilities for remaining coverage represent the present value of reinsurance cash flows due for payment in future years adjusted for non-financial risk, together with the value of unamortised CSM. Incurred claims represent the value of net reinsurance settlements on longevity swaps, facultative reinsurance, and other reinsurance arrangements during the period. As noted in note 1.5.3, reinsurance contracts in each legal entity are allocated to either a portfolio of treaties transferring longevity and inflation risks, or a portfolio transferring longevity risk alone. Portfolios may be in either net asset or liability positions including CSM. Within the table above, the value of fixed legs of longevity swaps are presented as Reinsurance expenses and Premiums paid, and the value of floated legs of longevity swaps are presented as Claims recovered and Claims received. The net expenses from reinsurance contracts in 2023 of £41m (2022: £30m) are explained in note 4. Premiums paid of £1,196m in 2023 mainly represented new quota share premiums of £397m and current year fixed leg values on longevity swaps of £761m (2022: £246m and £525m respectively).

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