Setting new standards - Friends Life

PARENT COMPANY ACCOUNTS
ABBREVIATIONS AND DEFINITIONS
Notes to the consolidated accounts continued
(a) Review of mortgage endowment sales
Provision has been established for the estimated likely cost of redress, including administrative costs, arising from the review of the suitability
of mortgage endowment policies. In addition to the accounting provision of £20m (2005: £49m), an actuarial reserve of £17m (2005: £60m)
was held in insurance contracts liabilities of FPLP’s With-Profits Fund in respect of estimated further complaints.
There is considerable uncertainty involved in the calculation of this provision which has been calculated on a best estimate basis taking into
account Group and industry experience. The majority of the mortgage endowment redress provision is expected to be settled in the next
12 months.
(b) Other
Other provisions consist of £14m (2005: £18m) in respect of vacant properties, £9m (2005: £9m) in respect of potential claims on share
entitlements not claimed following demutualisation, £3m (2005: £13m) in respect of the estimated likely cost of redress arising from a
review of other sales, and other £17m (2005: £22m). In addition to the accounting provision in respect of other sales, an actuarial reserve of
£23m (2005: £20m) is held within insurance contract liabilities.
35. Insurance payables, other payables and deferred income
2006 2005
£m £m
Creditors arising out of direct insurance operations 161 100
Creditors arising out of reinsurance operations 18 29
Accruals and deferred income 99 87
Investments purchased for subsequent settlement 78 71
Deferred front end fees 66 101
Employee benefits 33 30
Other payables 127 79
Total insurance payables, other payables and deferred income 582 497
All insurance payables and other payables are repayable within a period of one year except for deferred front end fees which are analysed:
current £24m (2005: £13m) and non-current £42m (2005: £88m). The estimated fair values of insurance payables and other payables are
equal to the amounts held on the balance sheet at each reporting date.
Friends Provident Annual Report & Accounts 2006 155