RBS 2005 Annual Report Download - page 174
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172
Notes on the accounts
(ii) Provisions for unearned premiums and unexpired short term insurance risks
Group
Gross Reinsurance Net
Unearned premium provision £m £m £m
At 1 January 2004 2,472 (125) 2,347
Increase in the year 423 — 423
Release in the year —2727
At 31 December 2004 2,895 (98) 2,797
Release in the year (12) 71 59
At 31 December 2005 2,883 (27) 2,856
Performance of life business (life contracts) in 2005
Group
2005
£m
Opening net assets 772
New business contribution 34
Profit from existing business:
Expected return 16
Experience variances (13)
3
Investment return variances 7
Economic assumption changes (15)
Other 23
Closing net assets 824
New business contribution represents the present value of future profits on new insurance contract business written during the year.
Movement in provision for liabilities under life contracts and investment contracts (net of reinsurance)
Group
Life Investment
contracts contracts
£m £m
At 1 January 2005 2,041 2,102
Implementation of IAS 32, IAS 39 and IFRS 4 on 1 January 2005 47
Premiums received 429 86
Fees and expenses (11) (21)
Investment return 252 333
Actuarial adjustments (91) —
Account balances paid on surrender and other terminations in the year (368) (204)
At 31 December 2005 2,299 2,296
Following implementation of IFRS 4 ‘Insurance Contracts’ on 1 January 2005, investment contracts have been reclassified as
customer accounts.
Changes in assumptions during the year were not material to the profit recognised.
Notes on the accounts continued
27 Insurance liabilities (continued)