Setting new standards - Friends Life

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FINANCIAL STATEMENTS IFRS FINANCIAL STATEMENTS EEV SUPPLEMENTARY INFORMATION Notes to the consolidated accounts continued Year ended 31 December 2005 Rest of UK the world Total £m £m £m Gross earned premiums 969 8 977 Fee and commission income and income from service activities 243 240 483 Revenue from external customers 1,212 248 1,460 Investment income 6,287 Less premiums ceded to reinsurers (56) Total revenue 7,691 Total assets 40,852 9,234 50,086 Capital expenditure 232 3 235 4. Net earned premiums Year ended 31 December 2006 Gross earned premiums Premiums Total net ceded to earned Single Regular reinsurers premiums £m £m £m £m Protection 1 301 (81) 221 Investment - 315 (1) 314 Individual pensions 10 12 - 22 Group pensions - 19 (1) 18 Annuities 322 - (1) 321 Total 333 647 (84) 896 Year ended 31 December 2005 Gross earned premiums Premiums Total net ceded to earned Single Regular reinsurers premiums £m £m £m £m Protection 2 267 (53) 216 Investment - 365 (2) 363 Individual pensions 9 11 - 20 Group pensions - 23 (1) 22 Annuities 300 - - 300 Total 311 666 (56) 921 90 <strong>Friends</strong> Provident Annual Report & Accounts 2006
PARENT COMPANY ACCOUNTS ABBREVIATIONS AND DEFINITIONS Notes to the consolidated accounts continued 5. Investment income (a) Net investment return 2006 2005 £m £m Interest income 963 938 Dividend income 678 550 Rental income 127 114 Net realised and unrealised gains on assets at fair value: Financial assets through the income statement 1,803 4,547 Investment properties 273 218 Financial derivative instruments (147) (80) Total net investment return 3,697 6,287 (b) Longer-term investment return – underlying profit The longer-term investment return used in arriving at underlying profit before tax is calculated in respect of equity and fixed interest investments by applying the longer-term rate of return for each investment category to the quarterly weighted average of the corresponding assets, after adjusting for the effect of any short-term market movements. The longer-term rates of return are based on assumed gilt and cash returns, adjusted where appropriate to reflect the additional risks associated with the type of investment. The directors have determined the longer-term rates of investment return to be as follows: 2006 2005 % % Equities 7.25 7.50 Government fixed interest 4.25 5.00 Other fixed interest 4.75 5.75 (c) Sensitivity of longer-term investment return – underlying profit 2006 2005 £m £m Longer-term investment return: 43 61 After the impact of a 1% increase in the longer-term rates of investment return 62 81 After the impact of a 1% decrease in the longer-term rates of investment return 26 41 (d) Comparison of longer-term and actual investment return – underlying profit 1 January 2002 to 9 July 2001 to 31 December 2006 31 December 2005 £m £m Actual investment return attributable to shareholders 171 140 Longer-term investment return (378) (380) Cumulative deficit of actual return over longer-term returns (207) (240) <strong>Friends</strong> Provident Annual Report & Accounts 2006 91
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Setting new standards Friends Provi
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ANNUAL REVIEW CORPORATE GOVERNANCE
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Group financial highlights Group
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INTERNATIONAL LIFE & PENSIONS ASSET
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Friends Provident plc Pixham End Do
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