RBS 2003 Annual Report Download - page 163

161
Annual Report and Accounts 2003
Notes on the accounts
21 Other assets
2003 2002
£m £m
Trading derivatives (see Note 39) 14,087 13,210
Other 4,349 3,719
18,436 16,929
22 Long-term assurance business
The long-term assurance assets and liabilities attributable to policyholders comprise:
2003 2002
£m £m
Investments 4,005 9,536
Value of in-force policies 413 386
4,418 9,922
Long-term assurance business attributable to shareholders* (861) (811)
3,557 9,111
The increase in the shareholders’ interest in the long-term assurance business included in the profit and loss account is calculated
as follows:
2003 2002
£m £m
Increase in value for the year before tax 73 61
Tax (22) (18)
Increase in value for the year after tax 51 43
The decline in long-term assurance assets and liabilities results from the transfer of the pension managed fund business of NatWest
Life to another third party life company.
* The value of the long-term assurance business is calculated by discounting estimated future flows of statutory profits from in-force
business at a discount rate that includes a risk margin. The future flows are based on prudent assumptions about long-term
economic and business experience determined with the advice of qualified actuaries. The risk margin is designed to reflect
uncertainties in expected future flows.
The key assumptions used are:
2003 2002
%%
Risk discount rate (net of tax) 8.50 8.50
Growth of unit-linked funds (gross of tax) 6.70 6.75
Growth of non-unit-linked funds (gross of tax) 5.00 5.00
Basic tax rate 20.00 22.00
Shareholder taxation – life 30.00 30.00
Expense inflation 3.50 3.50