RBS 2004 Annual Report Download - page 163

section
03
161
Annual Report and Accounts 2004
Notes on the accounts
Financial
statements
21 Other assets
2004 2003*
£m £m
Trading derivatives (see Note 39) 17,884 14,087
Other 4,371 3,720
22,255 17,807
*restated (see page 139)
22 Long-term assurance business
The long-term assurance assets and liabilities attributable to policyholders comprise:
2004 2003
£m £m
Investments 4,309 4,005
Value of in-force policies 418 413
4,727 4,418
Long-term assurance business attributable to shareholders* (927) (861)
3,800 3,557
The increase in the shareholders’ interest in the long-term assurance business included in the profit and loss account is calculated
as follows:
2004 2003
£m £m
Increase in value for the year before tax 94 73
Tax (28) (22)
Increase in value for the year after tax 66 51
* 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:
2004 2003
%%
Risk discount rate (net of tax) 8.0 8.5
Growth of unit-linked funds (gross of tax) 6.9 6.7
Growth of non-unit-linked funds (gross of tax) 4.7 5.0
Basic tax rate 20.0 20.0
Shareholder taxation – life 30.0 30.0
Expense inflation 3.5 3.5
23 Deposits by banks
2004 2003
£m £m
Repayable on demand 30,279 20,995
With agreed maturity dates or periods of notice, by remaining maturity
– three months or less 53,296 42,300
– one year or less but over three months 10,474 2,268
– five years or less but over one year 3,675 122
– over five years 1,357 1,638
99,081 67,323
Banking business 59,399 41,061
Trading business 39,682 26,262