SCOTTISH EQUITABLE PLC. Supplementary report of the. Chief Actuary

Transcription

1 SCOTTISH EQUITABLE PLC Supplementary report of the Chief Actuary on the proposed transfer of business from BlackRock Life Limited to Scottish Equitable plc pursuant to Part VII of the Financial Services and Markets Act 2000 James Crispin FFA Chief Actuary (Scottish Equitable) June 2018 Page 1 of 18

2 Contents 1. INTRODUCTION DEVELOPMENTS IN SE THE SCHEME AND RELATED DEVELOPMENTS SE RISK MANAGEMENT UPDATED SE FINANCIAL IMPACTS CONCLUSION Page 2 of 18

3 REPORT OF THE CHIEF ACTUARY 1. INTRODUCTION 1.1. In my capacity as Chief Actuary, I prepared a report dated February 2018 (the Main Report ) in which I reviewed the impact on policyholders in Scottish Equitable plc ( SE ) of the proposed transfer (the Transfer ) of certain unitised defined contribution pensions policies which are currently liabilities of BlackRock Life Limited ( BLL ) to the Non-Profit Sub-Fund ( NPSF ) of SE The Transfer is to take effect by means of a court approved insurance business transfer scheme (the Scheme ) under Part VII of the Financial Services and Markets Act 2000 ( FSMA ) In my Main Report ( Report of the Chief Actuary dated February 2018) which was prepared for the Board of SE (the SE Board ) I considered the Transfer from the perspective of both the existing policyholders of SE and the policyholders transferring from BLL and considered whether the Transfer has any materially adverse impact on these policyholders Following the Directions Hearing held on 7 March 2018, subsequent correspondence with transferring policyholders, and further discussion with regulatory authorities, it is intended that the High Court will be asked to approve the proposed Transfer at a hearing on 21 June The proposed Scheme Effective Date ( SED ) is 1 July Within this context, the purpose of this Supplementary Chief Actuary s report is to consider: Any material changes that have been made to the Scheme or other material developments that have taken place in the period since my last report. Updated financial information including updated consideration of the solvency position of SE after the Transfer. Objections and comments on the proposal that have been received as a result of the communication with policyholders and other stakeholders. Whether the conclusions presented in my Main Report remain valid This report is written for the SE Board in my capacity as Chief Actuary for SE, and should be read in conjunction with my Main Report, the Scheme, the With-Profits Actuary s report dated February 2018, the With-Profits Actuary s supplementary report, the report by the Independent Expert ( IE ), Nick Dumbreck, dated 2 March 2018, and the supplementary report by the IE. Status and Disclosure 1.7. I am a Fellow of the Institute & Faculty of Actuaries, having qualified in 1996, and hold a Chief Actuary (Life) Practising Certificate issued by the Institute & Faculty of Actuaries. I have over 26 years of experience working in the UK life assurance industry, including 6 years of working for SE, becoming Actuarial Function Holder in 2014, and then Chief Actuary when the new EU Solvency II framework came into effect on 1 January I am an employee of Aegon UK Corporate Services Ltd ( AUKCS ), an Aegon UK Group service company which provides services to SE. SE is a significant part of the Group to which the service company provides services. Page 3 of 18

4 1.9. Details of any Aegon interests: As an employee of AUKCS I am subject to a similar pay and benefits structure as Identified Staff in the organisation. I have no individual performance incentives directly related to the success or otherwise of this Part VII transfer. As part of the 2014 and 2015 bonus schemes 50% of bonuses were awarded as Aegon N.V. shares vesting in May 2018 and May 2019 respectively. Similarly 60% of the 2016 bonus award was awarded in shares vesting in May 2020, and 67% of the 2017 bonus was awarded in shares vesting in May I have an ISA with Aegon as a customer of Aegon Investment Solutions Ltd. I have a Group Personal Pension policy with SE as part of the company s Staff Pension Arrangements I consider myself to be free from conflict that would prevent me from assessing the impact of the Scheme on policyholder benefits and the security of those benefits. Other advice and opinions Mr Nick Dumbreck of Milliman LLP has continued to act in the capacity of Independent Expert. In finalising this Supplementary Chief Actuary s report, I have read a draft of his supplementary report and considered his conclusions. A copy of this report has also been provided to Mr Dumbreck In addition, I have read and considered the supplementary report of the With-Profits Actuary, Mr Alan McBride. A copy of this Supplementary Chief Actuary s report has also been provided to Mr McBride. Definitions and abbreviations A list of the defined terms and abbreviations used in this report is included in Annex A. Defined terms used but not defined in this report have the same meaning as those used in the Scheme document and the IE s Report unless otherwise highlighted. Compliance with Technical Actuarial Standards This report has been prepared in accordance with, and complies with, Technical Actuarial Standards TAS 100: Principals for Technical Actuarial Work, and TAS 200: Insurance issued by the Financial Reporting Council and applicable from 1 July Review of actuarial work With effect from 1 July 2015, actuaries are required to comply with the requirements of Actuarial Professional Standard X2: Review of Actuarial Work. In this regard therefore, this document has been reviewed by a suitably qualified actuary employed by AUKCS. Page 4 of 18

5 Structure of report This report is structured as follows: - Section 2 considers developments that have taken place within the operations of SE since my Main Report; - Section 3 considers changes that have been made to the Scheme and other related developments (including the objections that have been received in response to the policyholder communications exercise) since my Main Report was finalised; - Section 4 provides an update on the SE approach to risk management; - Section 5 provides updated information on the financial position of SE before and after the Transfer; - Section 6 summarises my conclusions; and - Annex A lists the defined terms and abbreviations used in this report. Summary of key conclusions I have updated my review of the potential impact of the Scheme on the security and benefit expectations of existing SE policyholders and of transferring BLL policyholders. My conclusion remains that the Scheme will not result in a materially adverse impact on the security, benefit expectations and servicing of existing SE policyholders compared to the status quo. I also remain satisfied that the benefit security, benefit expectations, and standard of servicing for the transferring BLL policyholders will be maintained at an appropriate level following the Transfer. Page 5 of 18

6 2. DEVELOPMENTS IN SE 2.1. In Section 3 of my Main Report, I provided information on the operations of SE, including details of recent initiatives. In addition to the events that I have previously mentioned, I note the following developments that have also taken place: In order to help support Aegon UK plc, its parent company, achieve its corporate objectives, SE paid a dividend of 150m to Scottish Equitable Holdings Ltd on 29 May Subsequent to the payment of this dividend, Aegon UK plc repaid to SE an existing loan of 50m. The impact of this dividend and loan repayment was to reduce SE s solvency coverage and this has been reflected in the figures shown in Section 5 of this report. We continue to carry out a number of Asset and Liability Management activities over H which are expected to help ensure we remain within our Risk Appetite for market risks, improve our liquidity position and either have a neutral or positive impact on capital position In addition to these specific developments, SE has experienced some evolution of its in-force portfolio through policy exits (for example due to maturities, lapses/surrenders, and deaths) and new business. Market movements have also affected the underlying financial position of SE. The impact of these changes is reflected in the discussion contained in Section 5 of this report Taking these developments into account, I am satisfied that there has not been a material change to the nature of the business undertaken by SE or to the risk profile of SE compared to that which I discussed in Section 3 and Section 7 of my Main Report. I therefore do not discuss the relative risk profile of SE before and after the Transfer further in this report. Page 6 of 18

7 3. THE SCHEME AND RELATED DEVELOPMENTS 3.1. This section considers the developments that have taken place since the Main Report was finalised in relation to: The Scheme itself. The objections that have been received in response to the policyholder communications exercise. Fund restructuring. Taxation. EEA regulator notifications. Transfer of policyholder records and administration from BlackRock to SE. Changes to the Scheme 3.2. There have been some minor changes to the Scheme compared to the version on which my Main Report was based. These changes do not change my conclusions as set out in that report. Notification to policyholders 3.3. Following approval at the Directions Hearing on 7 March 2018, the communications plan outlined in my Main Report (see Sections 8.14 to 8.19) has been put into effect. SE s application for a waiver was granted in respect of the requirement to write to all SE policyholders to inform them of the proposed Transfer. Notifications to the transferring BLL policyholders, plus the other Part VII notification requirements, including notices in national and international newspapers, have been carried out by BLL in their role as the transferor. The communications exercise has included direct mailing, press adverts, and web content Following the communications exercise, up to 25 May 2018, no letters, s, or calls have been received by SE in respect of the Transfer A policyholder concern will be recorded as an objection where the policyholder singly or severally: Self-categorises their Part VII communication as an objection; Indicates they wish to attend or be represented at Court to raise a concern; Raises a meaningful material transfer related point that goes beyond a technical query or clarification; or Demonstrates a depth of concern, without initially formally objecting, that requires a considered response worthy of being shared with the Regulators and High Court At the point of finalising this report, no objections have been made to SE in respect of the proposed Transfer Up to 25 May, BLL have received 21 objections, representing 0.01% of the number of transferring policyholders. Further details of these objections, and BLL s response to the objecting policyholders can be found in the BLL Supplementary Chief Actuary s report, with additional detail included in the supplementary report of the IE. The Page 7 of 18

8 main themes of the objections received by BLL are as follows: Concerns over the relative investment performance of SE over that of BlackRock Group; Concerns over the continuity of administration and service levels; Concerns over the level of charges to policies; Concerns over a negative perception of SE; Concerns over the impact of the proposed fund restructuring activity; and General concerns over the process followed including a non-specific desire to opt out of the Scheme and remain with BLL I also note that in addition to notifying policyholders: European Economic Area ( EEA ) states have been notified directly of the proposals; and Independent Financial Advisers ( IFA ) advised through the regular Aegon IFA news update and consultants supporting the transferring business have been briefed by BLL. In light of the response from certain EEA regulators, SE has provided notifications of the intention to provide services in their states Overall, having reviewed the nature of the objections, I am satisfied that the concerns raised do not alter my consideration of policyholder benefits or policyholder security and/or that the concerns can be adequately addressed with reference to the features of the Transfer. I am therefore satisfied that my previous conclusions (i.e. that the Scheme will not result in a materially adverse impact on the security of existing SE policyholders compared to the status quo, and that the benefit security, benefit expectations, and standard of servicing for the transferring BLL policyholders will be maintained at an appropriate level following the Transfer) are not affected by the objections received. Fund restructuring Section 3 of my Main Report describes the programme of fund restructuring agreed between SE and BLL in respect of many of the assets to which SE s existing business and the transferring business are linked. The result of the restructuring activity is to move the funds from BLL long-term insurance funds into mutual funds. This will result in the reduction of SE s reinsurance counterparty credit risk ( RCCR ) to BLL Section 9 of my Main Report concluded that the changes in policyholder protection resulting from the Transfer and planned fund restructuring activity do not represent a materially adverse change to transferring policyholders benefit security. Page 8 of 18

9 3.12. The table below shows an updated summary as at 31 December 2017 of the planned fund restructuring activity in respect of SE s existing exposure to BLL, and the exposure it will have post-transfer. Figures at 31 December 2017 ( bn) Existing BLL Exposure New BLL Exposure Received under Transfer restructuring New BLL Exposure Received under Transfer no restructuring New External Long-Term Insurance Fund Exposure (Non- BLL) Received under Transfer Pre Transfer and Fund Restructuring Long- Term Insurance Mutual Total Immediately Post-Transfer (at SED) Long- Term Insurance Mutual Total After Additional Fund Restructuring (post-sed) Long- Term Insurance Mutual Total Total (Transfer) Total (Transfer + Existing BLL) : Note that the restructure of this 3.2bn was completed during Q The table shows that: The initial phase of fund restructuring activity completed in March this year has removed the majority of SE s existing 4.2bn exposure to BLL long-term insurance funds prior to the SED, with further restructuring post-sed removing almost all of the remaining existing exposure. Of the 16.1bn of unit funds moving to SE under the Transfer (which comprises c. 14.9bn of BLL funds and c. 1.2bn of funds held in other external entities; primarily Standard Life and Legal & General), at SED, there will be 6.7bn exposure to external long-term insurance funds, including those with BLL, and hence SE s exposure to RCCR will increase. Further restructuring of transferring BLL funds planned for post SED will reduce SE s exposure to external long-term insurance funds resulting from the Transfer to 4.6bn The impact of this planned fund restructuring activity on SE s solvency position is considered in Section 5 of this report. Sections 8 and 9 of my Main Report discuss the impact of the planned fund restructuring on existing SE policyholders and Page 9 of 18

10 transferring BLL policyholders The planned restructuring of unit funds summarised above has changed slightly from that presented in my Main Report, with 0.9bn of SE s existing exposure to BLL now planned to be restructured post SED. The decision to delay part of this planned restructuring until post SED was made following the completion of detailed work on the logistics of the full fund restructuring plan. All other planned fund restructuring activity is proceeding in line with plans and there have been no issues relating to the implementation process In addition to the Fund Restructuring activity with BlackRock, a further 0.9bn of reinsured fund links with Baillie Gifford was restructured in April 2018 at their request There have been no material changes to the form or terms of the planned fund restructuring activity versus my Main Report and therefore my conclusion remains that any changes in policyholder protection resulting from the Transfer and planned fund restructuring activity do not represent a materially adverse change to transferring policyholders benefit security. Taxation The Transfer will result in a small subset of transferring policyholders changing PAYE scheme, with all other variables (PAYE operation, number of payroll IDs etc.) remaining unchanged. This change of PAYE scheme will have no detrimental effect on the affected transferring policyholders Confirmations and clearances have been received from HMRC that the transaction is not for an unallowable purpose for corporation tax purposes which means the main purpose of the transaction (or one of the main purposes) is not to obtain a tax advantage. Confirmation has been received that the transfer of going concern treatment (i.e. no VAT) will apply for VAT purposes if the arrangements are implemented as described to HMRC. Quality of administration As mentioned in my Main Report, the administration and systems for the majority of the transferring business will not change as a result of the Transfer, with business being serviced by the same staff using the same systems and processes as prior to the Transfer and prior to the outsource agreement between SE and BLL being put in place. No changes were made to the servicing approach or standards when SE took over the servicing of the business, and no changes will be made as a result of the Transfer The exception to this is the UTADS policyholders currently serviced using a legacy BlackRock system (see 6.12 of my Main Report). The administration for these UTADS policyholders will be moved to the Prestige platform as a result of the Transfer. As the UTADS business is investment only in nature, the administration of the business involves only fund management rather than administration of individual member records. Other investment only business is currently administered on Prestige, and the teams responsible have received training to allow them to administer the UTADS policies on Prestige following the migration. Client Relationship Managers will continue to check customer satisfaction on a regular basis and any complaints or issues will be investigated in line with operational procedures Although the majority of the transferring business will be administered on the same systems as used prior to the Transfer, a degree of migration and testing is required Page 10 of 18

11 to move the administration to Aegon editions of the systems in question. Additionally the Transfer will result in a change to the fund accountant used. No issues have been identified in the migration and testing carried out to date and detailed plans are in place to ensure migration is completed prior to completion of the Transfer Based on the progress to date, I am still satisfied that the service for transferring BLL policyholders will not be adversely affected. There will be no changes resulting from the Transfer to the service received by existing SE policyholders. Conclusions on the overall impact of the Scheme on policyholder benefit expectations and policy servicing Taking into account the discussion above, and the developments in SE outlined in Section 2, I am satisfied that no new material factors relating to how benefits payable to policyholders may be affected by the Scheme have emerged I am satisfied that no new material factors relating to how policies will be serviced after the Transfer have emerged and that, as a result, I am satisfied that my previous conclusion (i.e. standard of servicing for the transferring BLL policyholders will be maintained at an appropriate level following the Transfer) remains appropriate In Section 5 of this report, I consider the impact of the developments summarised in this Section, and in Section 2, on the financial positions of SE, and further review the appropriateness of my previous conclusion that the Scheme will not have a materially adverse impact on the security of existing SE policyholders compared to the status quo, and that the benefit security of transferring BLL policyholders will be maintained at an appropriate level following the Transfer. Page 11 of 18

12 4. SE RISK MANAGEMENT 4.1. As the SE risk management approach formed an important consideration in the discussion contained in my Main Report, I consider it useful to reiterate the SE approach to risk and capital management and, in particular, the requirement under the SE capital management policy to maintain extra capital above its regulatory capital requirements. This additional capital aims to protect SE from breaching its regulatory capital requirements following a range of adverse events considered as part of setting the target level of capital under the capital management policy. This policy is unchanged since and continues to operate as described in my Main Report, and will not be changed as a result of the Scheme. Page 12 of 18

13 5. UPDATED SE FINANCIAL IMPACTS 5.1. This section contains updated information on the financial position of SE before and after the Transfer and supplements the information that was provided in Section 7 of my Main Report. Background context on the solvency measures and the SE capital management policy was provided in my Main Report. Solvency calculations 5.2. My Main Report considered the impact of the Transfer on the Solvency II position of SE as at 30 June The SE solvency assessment as at 31 December 2017 is shown in the tables below. I consider the positions at this date to be suitable for the purpose of assessing the impact of the Scheme on policyholder security The results shown are derived from the regulatory submission of quantitative reporting templates for 31 December 2017 as approved by the SE Board and published on 4 May In calculating the post-transfer financial positions shown below I have placed reliance on data provided by BlackRock on the policies being transferred, including associated data covering the ongoing charges retained by SE following the Transfer. This data was prepared manually as part of a one off exercise for this report. Judgement has been used in some areas of the assessment, however this is not expected to significantly affect the calculated impact, with the key input being the data provided by BlackRock. The data provided by BlackRock has been subject to validation by SE as far as is possible at this time, though there remains the risk of limitations in that data. A small number of issues have been identified with the input data and assumptions as part of the validation carried out ahead of incorporating the valuation of the transferring business into SE s existing reporting framework. These issues are estimated to broadly offset, with their net impact on the post-transfer solvency position presented below being either nil or minorly positive. The issues identified do not affect my conclusions as set out in this report The solvency position shown has been adjusted from the reported 31 December 2017 position to allow for the following items: The pre-sed fund restructuring undertaken in March 2018 to reduce SE s existing exposure to BLL as described in Section The payment on 29 May 2018 of a dividend of 150m by SE to Scottish Equitable Holdings Ltd as described in Section 2.1. The subsequent repayment of a 50m loan by Aegon UK to SE as described in Section Additionally, the solvency position will have moved since 31 December 2017 due to the following: Market movements; Ongoing ALM and investment activity (see Section 2.1); Unwind of existing business; New business written. No allowance has been made for these additional items in the solvency figures presented below and any such allowance would not alter the conclusions of my Page 13 of 18

14 report Taking these items into account, I am not aware of any events since 31 December 2017 (up to the date of this report) that would materially alter the conclusions on the Transfer obtained from the 31 December 2017 position The post-transfer figures shown below consider the position immediately following completion of the Transfer, allowing for the planned pre-transfer restructuring by BLL of transferring funds; and the position which is expected to be reached following further fund restructuring which is planned to complete post-transfer, including the further restructuring of SE s existing pre-transfer exposure to BLL. The figures allow for the subsidy by SE of any additional ongoing fund expenses resulting from fund restructuring (see Section 3 of my Main Report), the additional protections provided by SE to transferring policyholders following the Transfer and fund restructuring (see Section 9 of my Main Report). See Section 3.10 for more detail on fund restructuring. Solvency II position pre-transfer The table below shows the (pro-forma) pre-transfer Solvency II position for SE, allowing for the adjustments described in Section 5.6 above. SII Results ( m) NPSF WPSF WPSF Ringfence SE Plc Own Funds 1, (229) 2,059 SCR 1, ,257 Surplus (deficit) (229) 802 Solvency ratio 167% 476% N/A 164% Note that the WPSF is a stand-alone ring-fenced fund, with any excess assets ultimately being distributed to WPSF policyholders over the remaining life of the fund. As a result, the WPSF surplus shown in the table does not increase surplus at a total SE plc level. Solvency II position post-transfer before additional fund restructuring The table below shows the (pro forma) post-transfer Solvency II position for SE. As described in Section 5.9 above, this allows for the impact of planned pre-transfer restructuring of transferring funds by BLL. SII Results ( m) NPSF WPSF WPSF Ringfence SE Plc Own Funds 2, (229) 2,068 SCR 1, ,369 Surplus (deficit) (229) 698 Solvency ratio 153% 476% N/A 151% Page 14 of 18

15 Solvency II position post Transfer following additional fund restructuring The table below shows the (pro forma) post-transfer Solvency II position for SE. As described in Section 5.9 above, this allows for the additional impact of planned post- Transfer restructuring of transferring BlackRock funds and of SE s existing exposure to BLL. SII Results ( m) NPSF WPSF WPSF Ringfence SE Plc Own Funds 2, (229) 2,078 SCR 1, ,351 Surplus (deficit) (229) 727 Solvency ratio 156% 476% N/A 154% Impact of Transfer The results show that while the impact of the Transfer is to reduce SE s solvency ratio, the ratio continues to remain within the target range of 140% to 180% as prescribed in the SE capital management policy. This is the case both before and after the additional fund restructuring planned to be implemented after completion of the Transfer. The impact of the Transfer is slightly less negative than presented in my Main Report, largely as a result of increases in the value of unit funds being transferred (primarily due to market improvements) The tables above show that the Transfer does not significantly change SE s Own Funds, with the reduction in Solvency II surplus primarily resulting from the additional SCR requirement in respect of the transferring business. In addition to the RCCR capital which must be held in respect of exposure to funds which are not being restructured, there is a significant capital requirement in respect of market, persistency, and expense risks for the business. As a result, the overall impact of the Transfer is to reduce SE s solvency ratio from its pre-transfer level The figures I have presented do not make allowance for any additional dividend payment that might be paid to Scottish Equitable Holdings Ltd in 2018 subsequent to the date of this report Under SE s dividend policy, subject to a number of constraints, dividend payments are possible to a level which would leave the post dividend solvency ratio at 135%. Any reduction in solvency ratio from the base end-december position presented above will reduce the size of any potential dividend payment (or prevent a dividend being paid at all), with policyholder security ultimately being provided by the target solvency coverage ratio of 140% to 180% as described above. The reduction in solvency ratio which occurs as a result of the Transfer does not take the solvency ratio below the bottom of the target range and does not therefore significantly affect policyholder security when viewed in combination with the dividend policy Given that after completion of the Transfer and any subsequent dividend payments made, SE will continue to comply with its capital management policy, I am satisfied that the benefit security of existing SE policyholders and transferring BLL policyholders will not be materially adversely affected SE has finalised its liquidity pre funding commitments (see Section 7 of my Main report) and has reviewed its liquidity position, management, and monitoring approach to ensure these can be met. Page 15 of 18

16 5.19. The WPSF position is not directly affected by the Transfer as no policies are transferring into or out of the WPSF. Conclusions on the overall financial impact of the Scheme and its impact on policyholder security I therefore do not consider that this updated financial analysis impacts upon the conclusion set out in my Main Report that the security of benefits of the existing SE policyholders is not materially adversely affected by the Scheme and that an appropriate level of security is provided post-transfer for the benefits of transferring BLL policyholders. Page 16 of 18

17 6. CONCLUSION 6.1. I have produced this report in my role as Chief Actuary of SE to consider whether any developments since my Main Report have changed the conclusions I reached in that report Based on the considerations summarised in this report, it continues to be my view that: (i) (ii) (iii) Taking into account the assets and liabilities transferring from BLL, the security of existing SE policyholder benefits will not be materially adversely impacted as a result of the Scheme. The capital management policy of SE provides further comfort that the security of existing SE policyholder benefits will not be materially adversely impacted as a result of the Scheme. The Scheme will not result in material changes to the benefit expectations of any existing SE with-profits, non-profit, or unit-linked policyholders I therefore continue to be satisfied that the Scheme will not result in a materially adverse impact on the security of existing SE policyholders compared to the status quo I also continue to be satisfied that there will be no material change to the servicing that existing SE policyholders will receive as a result of the Scheme I also continue to be satisfied that the benefit security, benefit expectations, and standard of servicing for the transferring BLL policyholders will be maintained at an appropriate level following the Transfer Taking all of the above into account, I continue to be satisfied that the obligations to treat customers fairly will not be materially adversely affected by the Transfer. It is therefore my conclusion that the Transfer may proceed. James Crispin FFA Chief Actuary to Scottish Equitable June Page 17 of 18

18 ANNEX A DEFINED TERMS AND ABBREVIATIONS USED WITHIN THIS REPORT AUKCS BLL EEA Aegon UK Corporate Services Ltd BlackRock Life Limited European Economic Area FSMA Financial Services and Markets Act 2000 HMRC IE IFA NPSF Own Funds SCR SED SE SE Board Solvency II Transfer WPSF HM Revenue and Customs Independent Expert Independent Financial Adviser Non-Profit Sub-Fund which is a separate account in the Long Term Fund maintained in respect of business other than with-profits business This is the difference between the value of a company s assets and the value of its liabilities on a Solvency II basis Solvency Capital Requirement which is regulatory capital that is required to be held by an insurer under Solvency II regulations Scheme Effective Date Scottish Equitable plc Scottish Equitable plc Board Risk based prudential regime for insurance and reinsurance undertakings in the European Union Proposed transfer of certain unitised defined contribution pensions policies from BLL to SE With-Profits Sub-Fund which is a separate account in the Long Term Fund maintained in respect of with-profits business Page 18 of 18