STRATEGIC REPORT
GOVERNANCE
financial statements
6 SEGMENTAL REPORTING continued New business profits represent expected investment returns on 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. Segmental reporting and reconciliation to financial information Year ended 31 December 2022 Year ended 31 December 2021 Insurance £m Other £m Total £m Insurance £m Other £m Total £m New business operating profit 233.2 – 233.2 224.7 – 224.7 In-force operating profit 113.1 2.9 116.0 87.3 2.7 90.0 Other Group companies’ operating results – (15.2) (15.2) – (15.1) (15.1) Development expenditure (9.4) (2.3) (11.7) (4.2) (2.6) (6.8) Reinsurance and financing costs (87.5) 14.2 (73.3) (89.1) 6.0 (83.1) Underlying operating profit 249.4 (0.4) 249.0 218.7 (9.0) 209.7 Operating experience and assumption changes 86.9 – 86.9 28.0 – 28.0 Adjusted operating profit/(loss) before tax 336.3 (0.4) 335.9 246.7 (9.0) 237.7 Non-recurring and project expenditure (11.7) (0.4) (12.1) (14.8) (0.2) (15.0) Investment and economic (losses)/profits (658.5) 19.3 (639.2) (248.6) (2.6) (251.2) Interest adjustment to reflect IFRS accounting for Tier 1 notes as equity 27.3 (11.3) 16.0 28.1 (3.0) 25.1 Profit/(loss) before amortisation costs and tax (306.6) 7.2 (299.4) 11.4 (14.8) (3.4) Amortisation of acquired intangibles – (18.0) (18.0) – (18.0) (18.0) Loss before tax (306.6) (10.8) (317.4) 11.4 (32.8) (21.4)
Investment and economic losses of £639.2m in 2022 (2021: £251.2m), were principally driven by rising interest rates.
Product information analysis Premium information relating to the Group’s products is presented below:
Year ended 31 December 2022 £m
Year ended 31 December 2021 £m
2,566.9
Defined Benefit De-risking Solutions (“DB”) Guaranteed Income for Life contracts (“GIfL”)
1,934.6
519.7 258.6
688.2
Defined benefit de-risking partnering (“DB partnering”)
–
44.1
Care Plans (“CP”)
51.1
2.0
Protection
2.2
Gross premiums written
3,391.3
2,676.1
Drawdown and Lifetime Mortgage (“LTM”) products are accounted for as investment contracts and financial investments respectively in the statement of financial position. An analysis of the amounts advanced during the year for these products is shown below: Year ended 31 December 2022 £m Year ended 31 December 2021 £m LTM advances 538.3 528.2 Drawdown deposits and other investment products 14.0 1.1 Reconciliation of gross premiums written to Retirement Income sales Retirement Income sales is a collective term for GIfL, DB and Care Plan and can be seen in the Business Review on page 25. Year ended 31 December 2022 £m Year ended 31 December 2021 £m Gross premiums written 3,391.3 2,676.1 Protection sales excluded from Retirement Income sales (2.0) (2.2) DB partnering funded (258.6) – Retirement Income sales 3,130.7 2,673.9
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