RBS 2007 Annual Report Download - page 171
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169
RBS Group • Annual Report and Accounts 2007
Financial statements
Group
2007 2006
Gross performance of life business (life contracts) £m £m
Opening net assets 579 707
Transfer to shareholders funds — (185)
Profit from existing business:
Expected return 35 26
Experience variances (23) (3)
12 23
New business contribution (1) 512
Operating assumption changes 6 5
Investment return variances (14) 1
Economic assumption changes — (1)
Other 16 17
Closing net assets 604 579
Note:
(1) New business contribution represents the present value of future profits on new insurance contract business written during the year.
Group
Life Investment
contracts contracts
Movement in provision for liabilities under life contracts and under linked and other investment contracts £m £m
At 1 January 2006 2,299 2,296
Premiums received 588 83
Fees and expenses (30) (19)
Investment return 235 182
Actuarial adjustments (454) —
Account balances paid on surrender and other terminations in the year (429) (296)
At 1 January 2007 2,209 2,246
Acquisition of subsidiaries 2,275 3,245
Premiums received 784 140
Fees and expenses (30) (25)
Investment return 251 93
Actuarial adjustments (493) —
Account balances paid on surrender and other terminations in the year (468) (320)
Exchange and other adjustments 168 176
At 31 December 2007 4,696 5,555
Investment contracts are presented within customer deposits.
Changes in assumptions during the year were not material to the profit recognised.
Group
2007 2006
Assets backing linked liabilities £m £m
Debt securities 2,899 1,540
Equity securities 6,863 2,243
Cash and cash equivalents 68 76
The associated liabilities are:
Linked contracts classified as insurance contracts 4,398 1,713
Linked contracts classified as investment contracts 5,432 2,146
There are no options and guarantees relating to life assurance contracts that could in aggregate have a material effect on the
amount, timing and uncertainty of the Group’s future cash flows.