SW Funding plc (formerly Scottish Widows plc)

Transcription

1 SW Funding plc (formerly Scottish Widows plc) Annual PRA Insurance Returns for the ended 31 December 2015 IPRU(INS) Appendices 9.1, 9.3, 9.4, 9.4A, 9.6

2 Balance Sheet and Profit and Loss Account Contents Long Term Insurance Business: Revenue Account and Additional Information Form 40 Revenue account 1 Form 41 Analysis of premiums 4 Form 42 Analysis of claims 7 Form 43 Analysis of expenses 10 Form 45 Revenue account for internal linked funds 13 Form 46 Summary of new business 14 Form 47 Analysis of new business 15 Supplementary notes to the return 19 Additional information on controllers 23 Statement of information on the with-profits actuary 24 Directors' Certificate 25 Auditor's Report 26 Any other information contained in the return 28

3 :09:55:33 Long-term insurance business : Revenue account Form 40 Total business / subfund Summary Financial Previous 1 2 Income Earned premiums Investment income receivable before deduction of tax Increase (decrease) in the value of non-linked assets brought into account Increase (decrease) in the value of linked assets ( ) Other income Total income Expenditure Claims incurred Expenses payable Interest payable before the deduction of tax Taxation (106306) (55159) Other expenditure Transfer to (from) non technical account Total expenditure Business transfers - in Business transfers - out Increase (decrease) in fund in financial ( ) 39 ( ) Fund brought forward Fund carried forward (39+49)

4 :09:55:33 Long-term insurance business : Revenue account Form 40 Total business / subfund With Profit Fund Financial Previous 1 2 Income Earned premiums Investment income receivable before deduction of tax Increase (decrease) in the value of non-linked assets brought into account Increase (decrease) in the value of linked assets (458414) Other income Total income Expenditure Claims incurred Expenses payable Interest payable before the deduction of tax Taxation Other expenditure Transfer to (from) non technical account 26 Total expenditure Business transfers - in 31 Business transfers - out Increase (decrease) in fund in financial ( ) 39 ( ) Fund brought forward Fund carried forward (39+49) 59 (0)

5 :09:55:33 Long-term insurance business : Revenue account Form 40 Total business / subfund Non Participating Fund Financial Previous 1 2 Income Earned premiums Investment income receivable before deduction of tax Increase (decrease) in the value of non-linked assets brought into account Increase (decrease) in the value of linked assets ( ) Other income Total income Expenditure Claims incurred Expenses payable Interest payable before the deduction of tax Taxation (111932) (66510) Other expenditure Transfer to (from) non technical account Total expenditure Business transfers - in Business transfers - out Increase (decrease) in fund in financial ( ) 39 ( ) Fund brought forward Fund carried forward (39+49)

6 :09:55:33 Long-term insurance business : Analysis of premiums Form 41 Total business / subfund Summary UK Life UK Pension Overseas Total Financial Total Previous Gross Regular premiums Single premiums Reinsurance - external Regular premiums ( ) ( ) Single premiums Reinsurance - intra-group Regular premiums Single premiums Net of reinsurance Regular premiums Single premiums Total Gross Reinsurance ( ) ( ) Net

7 :09:55:33 Long-term insurance business : Analysis of premiums Form 41 Total business / subfund With Profit Fund UK Life UK Pension Overseas Total Financial Total Previous Gross Regular premiums Single premiums Reinsurance - external Regular premiums Single premiums 14 Reinsurance - intra-group Regular premiums 15 Single premiums 16 Net of reinsurance Regular premiums Single premiums Total Gross Reinsurance Net

8 :09:55:33 Long-term insurance business : Analysis of premiums Form 41 Total business / subfund Non Participating Fund UK Life UK Pension Overseas Total Financial Total Previous Gross Regular premiums Single premiums Reinsurance - external Regular premiums ( ) ( ) Single premiums Reinsurance - intra-group Regular premiums Single premiums Net of reinsurance Regular premiums Single premiums Total Gross Reinsurance ( ) ( ) Net

9 :09:55:33 Long-term insurance business : Analysis of claims Form 42 Total business / subfund Summary UK Life UK Pension Overseas Total Financial Total Previous Gross Death or disability lump sums Disability periodic payments Surrender or partial surrender Annuity payments Lump sums on maturity Total Reinsurance - external Death or disability lump sums Disability periodic payments Surrender or partial surrender Annuity payments 24 Lump sums on maturity Total Reinsurance - intra-group Death or disability lump sums Disability periodic payments 32 Surrender or partial surrender Annuity payments Lump sums on maturity Total Net of reinsurance Death or disability lump sums Disability periodic payments Surrender or partial surrender Annuity payments Lump sums on maturity Total

10 :09:55:33 Long-term insurance business : Analysis of claims Form 42 Total business / subfund With Profit Fund UK Life UK Pension Overseas Total Financial Total Previous Gross Death or disability lump sums Disability periodic payments Surrender or partial surrender Annuity payments Lump sums on maturity Total Reinsurance - external Death or disability lump sums 21 Disability periodic payments Surrender or partial surrender 23 Annuity payments 24 Lump sums on maturity 25 Total Reinsurance - intra-group Death or disability lump sums 31 Disability periodic payments 32 Surrender or partial surrender 33 Annuity payments 34 Lump sums on maturity 35 Total 36 Net of reinsurance Death or disability lump sums Disability periodic payments Surrender or partial surrender Annuity payments Lump sums on maturity Total

11 :09:55:33 Long-term insurance business : Analysis of claims Form 42 Total business / subfund Non Participating Fund UK Life UK Pension Overseas Total Financial Total Previous Gross Death or disability lump sums Disability periodic payments Surrender or partial surrender Annuity payments Lump sums on maturity Total Reinsurance - external Death or disability lump sums Disability periodic payments Surrender or partial surrender Annuity payments 24 Lump sums on maturity Total Reinsurance - intra-group Death or disability lump sums Disability periodic payments 32 Surrender or partial surrender Annuity payments Lump sums on maturity Total Net of reinsurance Death or disability lump sums Disability periodic payments Surrender or partial surrender Annuity payments Lump sums on maturity Total

12 :09:55:33 Long-term insurance business : Analysis of expenses Form 43 Total business / subfund Summary UK Life UK Pension Overseas Total Financial Total Previous Gross Commission - acquisition Commission - other Management - acquisition Management - maintenance Management - other Total Reinsurance - external Commission - acquisition 21 Commission - other 22 Management - acquisition 23 Management - maintenance 24 Management - other 25 Total 26 Reinsurance - intra-group Commission - acquisition 31 Commission - other Management - acquisition 33 Management - maintenance 34 Management - other 35 Total Net of reinsurance Commission - acquisition Commission - other Management - acquisition Management - maintenance Management - other Total

13 :09:55:33 Long-term insurance business : Analysis of expenses Form 43 Total business / subfund With Profit Fund UK Life UK Pension Overseas Total Financial Total Previous Gross Commission - acquisition Commission - other Management - acquisition Management - maintenance Management - other Total Reinsurance - external Commission - acquisition 21 Commission - other 22 Management - acquisition 23 Management - maintenance 24 Management - other 25 Total 26 Reinsurance - intra-group Commission - acquisition 31 Commission - other 32 Management - acquisition 33 Management - maintenance 34 Management - other 35 Total 36 Net of reinsurance Commission - acquisition Commission - other Management - acquisition Management - maintenance Management - other Total

14 :09:55:33 Long-term insurance business : Analysis of expenses Form 43 Total business / subfund Non Participating Fund UK Life UK Pension Overseas Total Financial Total Previous Gross Commission - acquisition Commission - other Management - acquisition Management - maintenance Management - other Total Reinsurance - external Commission - acquisition 21 Commission - other 22 Management - acquisition 23 Management - maintenance 24 Management - other 25 Total 26 Reinsurance - intra-group Commission - acquisition 31 Commission - other Management - acquisition 33 Management - maintenance 34 Management - other 35 Total Net of reinsurance Commission - acquisition Commission - other Management - acquisition Management - maintenance Management - other Total

15 :09:55:33 Long-term insurance business : Revenue account for internal linked funds Form 45 Total business Financial Previous 1 2 Income Value of total creation of units Investment income attributable to the funds before deduction of tax Increase (decrease) in the value of investments in the financial Other income (469987) Total income Expenditure Value of total cancellation of units Charges for management Charges in respect of tax on investment income Taxation on realised capital gains Increase (decrease) in amount set aside for tax on capital gains not yet realised Other expenditure (5675) Total expenditure Increase (decrease) in funds in financial (19-29) Internal linked fund brought forward Internal linked funds carried forward (39+49) 39 ( )

16 :09:55:33 Long-term insurance business : Summary of new business Form 46 Total business UK Life UK Pension Overseas Total Financial Total Previous Number of new policyholders/ scheme members for direct insurance business Regular premium business Single premium business Total Amount of new regular premiums Direct insurance business External reinsurance 22 Intra-group reinsurance 23 Total Amount of new single premiums Direct insurance business External reinsurance 26 Intra-group reinsurance 27 Total

17 :09:55:33 Long-term insurance business : Analysis of new business (Sheet 1) Form 47 Total business UK Life / Direct Insurance Business Product code number Product description Regular premium business Number of policyholders / scheme members Amount of premiums Number of policyholders / scheme members Amount of premiums Regular premium non-profit WL/EA OB 48 Single premium business 325 Level term assurance Decreasing term assurance Accelerated critical illness (guaranteed premiums) 345 Accelerated critical illness (reviewable premiums) Stand-alone critical illness (reviewable premiums) Income protection non-profit (guaranteed premiums) Income protection non-profit (reviewable premiums) 370 Long-term care policy Miscellaneous protection rider Annuity non-profit (PLA) 410 Group Life Collective Life Collective Life (Income Protection) 420 Group income protection 55

18 :09:55:33 Long-term insurance business : Analysis of new business (Sheet 2) Form 47 Total business UK Life / Direct Insurance Business Product code number Product description Regular premium business Number of policyholders / scheme members Amount of premiums Number of policyholders / scheme members Amount of premiums Group critical illness Single premium business 500 Life UWP single premium - FOB Growth 500 Life UWP single premium - FOB Income 505 Life UWP whole life regular premium Life UWP endowment regular premium - savings 700 Life property linked single premium Life property linked whole life regular premium Life property linked endowment regular premium - savings Life property linked endowment regular premium - target cash

19 :09:55:33 Long-term insurance business : Analysis of new business (Sheet 1) Form 47 Total business UK Pension / Direct Insurance Business Product code number Product description Regular premium business Number of policyholders / scheme members Amount of premiums Number of policyholders / scheme members Amount of premiums Conventional deferred annuity with-profits - increments 138 Single premium business 180 Group conventional deferred annuity with-profits - increments 325 Level term assurance 400 Annuity non-profit (CPA) Annuity non-profit (bulk transfer) Annuity non-profit (CPA impaired life) Group life 411 Group Death in Service Dependents' Annuituies 525 Individual pensions UWP Individual pensions UWP - increments Group money purchase pensions UWP Group money purchase pensions UWP - increments DWP national insurance rebates UWP 725 Individual pensions property linked Individual pensions property linked - annuities 43

20 :09:55:33 Long-term insurance business : Analysis of new business (Sheet 2) Form 47 Total business UK Pension / Direct Insurance Business Product code number Product description Regular premium business Number of policyholders / scheme members Amount of premiums Single premium business Number of policyholders / scheme members Amount of premiums Individual pensions property linked - increments Group money purchase pensions property linked Group money purchase pensions property linked - increments DWP national insurance rebates property linked Income drawdown property linked Trustee investment plan Index linked annuity 906 Index linked annuity (bulk transfer)

21 Returns under Insurance Companies Legislation SW FUNDING PLC (formerly Scottish Widows plc) Supplementary notes to appendices 9.1 and 9.3 *4002* Other income and expenditure a) With Profit Fund Other income consists of the following amounts: Surplus relating to transferred policies in the Non-Participating Fund 46,984 Other income 46,984 Other expenditure consists of the following amounts: Annual management charges allocated to the Non-Participating Fund 56,546 Share of policyholder bonuses allocated to the Non-Participating Fund 8,000 Other expenditure adjustments 6,244 Other expenditure 70,790 19

22 Returns under Insurance Companies Legislation SW FUNDING PLC (formerly Scottish Widows plc) Supplementary notes to appendices 9.1 and 9.3 b) Non-Participating Fund Other income consists of the following amounts: Annual management charges levied on Unit-linked Funds 151,858 Annual management charges allocated from the With-Profit Fund 56,546 Share of policyholder bonuses allocated from the With-Profit Fund 8,000 Other income adjustments 1,060 Other income 217,464 Other expenditure consists of the following amounts: Impairment of subsidiaries 104,654 Transfer of surplus relating to transferred policies to the With-Profit Fund 46,984 Other expenditure adjustments 14,093 Other expenditure 165,731 The transfers and payments noted above, other than in respect of annual management charges on unit-linked funds, have been made in accordance with the Scheme covering the transfer of business from Scottish Widows Fund & Life Assurance Society to SW Funding plc. The annual management charges on unit-linked funds are received in accordance with the relevant reinsurance treaty. 20

23 Returns under Insurance Companies Legislation SW FUNDING PLC (formerly Scottish Widows plc) Supplementary notes to appendices 9.1 and 9.3 *4004* Business transfers out On 31 December 2015 the Company transferred the long-term fund along with the majority of the shareholders fund assets to Scottish Widows Limited ( SWL ), in accordance with a Court Scheme under Part VII of the Financial Services and Markets Act 2000 ( FSMA ). Of the total shown as a business transfer out on Form 40 Line 32, 34,351m is equal to the net of reinsurance mathematical reserves plus declared surplus transferred at the transfer date. No long-term insurance business has been carried on since the end, there is no intention to carry on further any such business The entity is not carrying on general insurance business. *4006* Basis of apportionment between long term funds The company maintains separate With Profits and Non-Participating sub-funds within the Long Term Business Fund. The company maintains separate underlying pools of assets (excluding property) for each fund; therefore there is no requirement to apportion investment return between the funds. Realised and unrealised gains, and investment income, arising on property investments are apportioned pro-rata between the With Profits Fund and the Non-Participating Fund according to the proportionate interest of each sub-fund in the property portfolio. The level of expenses and calculation of tax applicable to the With Profits Fund is governed by the Scheme of Transfer. *4008* Management services Arrangements are in force under which Scottish Widows Services Limited provides management and administration services to SW Funding plc. *4009* Material connected-party transactions The company pays reinsurance premiums to and receives reinsurance claims from a subsidiary company, Scottish Widows Unit Funds Limited, under a reinsurance agreement. The aggregate amount of premiums paid during the was 2,439m. The aggregate amount of claims received during the was 4,428m. *4502* Details of items recorded as Other income or Other expenditure The balance in Form 45 Line 14 relates to the following: SSGA Reinsurance Recapture 6,273,966 Unrealised appreciation on investments 181,074 Other income 32,333 Other income 6,487,373 21

24 Returns under Insurance Companies Legislation SW FUNDING PLC (formerly Scottish Widows plc) Supplementary notes to appendices 9.1 and 9.3 The balance in Form 45 Line 26 relates to the following: Insurance business transfer 12,742,060 Property expenses 461 Overdraft interest paid 34 Other income 12,742,555 22

25 SW FUNDING PLC (formerly Scottish Widows plc) Interim Prudential Sourcebook for Insurers 9.30 Statement required by Rule 9.30: Additional Information on Shareholder Controllers SW Funding plc is a wholly owned and controlled subsidiary of Scottish Widows Financial Services Holdings. Scottish Widows Financial Services Holdings is a wholly owned and controlled subsidiary of Scottish Widows Group Limited. Scottish Widows Group Limited is a wholly owned and controlled subsidiary of Lloyds Bank plc. Lloyds Bank plc is a wholly owned and controlled subsidiary of Lloyds Banking Group plc which was the ultimate shareholder controller of the insurer during the financial period. 23

26 SW FUNDING PLC (formerly Scottish Widows plc) Statement of Information on With-Profits Actuary Mr K Doerr was the With-Profits Actuary throughout (a) Mr Doerr held no interest in any shares or debentures of the company at any time during the. During the Mr Doerr, together with his spouse, had a maximum beneficial interest in 367,493 Lloyds Banking Group plc ordinary shares during the period. Mr Doerr has options to acquire 22,156 Lloyds Banking Group plc ordinary shares, exercisable on 1 June 2016 at a price of 40.62p Mr Doerr is due to be allocated 5,919 Lloyds Banking Group plc ordinary shares in March 2016, 5,240 in March 2017 and 2,982 in March 2018 (up to 100% of each of these is subject to potential clawback). In addition he has a conditional award of up to 79,918 Lloyds Banking Group plc ordinary shares, granted in This is dependent on Lloyds Banking Group performance, and is due to vest in (b) Mr Doerr has an in force Individual Savings Account with a value at 31 December 2015 of 43,311. (c) (i) Mr Doerr s aggregate amount of remuneration and the value of any other benefits under his contract of employment with Scottish Widows and receivable by him during 2015 was 233,894. (ii) No other emolument, pension or compensation as a director of the insurer was received by Mr Doerr during the period. (d) Mr Doerr is also a member of the Scottish Widows Staff Retirement Benefits Scheme which entitles him to specified benefits in common with all other eligible employees of Scottish Widows. The costs of the Scheme are met by Scottish Widows. Mr Doerr was also eligible for Private Medical Insurance. 2. The insurer made a request to the actuary to furnish it with the particulars specified in paragraph (1) of rule Pursuant to that request the actuary supplied the information in item 1 above. 24

27 SW FUNDING PLC (formerly Scottish Widows plc) Director s Certificate required by IPRU(INS) rule 9.34 and IPRU (INS) Appendix 9.6 We certify that: a) the return has been properly prepared in accordance with the requirements in IPRU (INS), GENPRU and INSPRU; b) we are satisfied that throughout the financial in question, the insurer has complied in all material respects with the requirements of the Fundamental Rules, SYSC as well as the provisions of IPRU(INS), GENPRU and INSPRU. c) in our opinion premiums for contracts entered into during the financial and the resulting income earned are sufficient, under reasonable actuarial methods and assumptions, and taking into account the other financial resources of the insurer that are available for the purpose, to enable the insurer to meet its obligations in respect of those contracts and, in particular, to establish adequate mathematical reserves; d) we have, in preparing the return, taken and paid due regard to- i. advice from every actuary appointed by the insurer to perform the actuarial function in accordance with SUP R The certificate required by IPRU(INS) Appendix 9.6 paragraph 1(1)(b)(ii) in respect of compliance since the end of the financial in question with the requirements in SYSC, Fundamental Rules and the provisions of IPRU(INS), GENPRU and INSPRU and ongoing compliance has not been provided. This is because these requirements have been replaced as from 1 January 2016, the commencement date of Solvency II, so the firm is subject to a new regulatory regime. A Lorenzo A M Parsons C J Thornton Date: 24 March

28 Auditors report: Regulatory Return for a life insurance company SW Funding PLC (formerly Scottish Widows plc) Global Business Independent auditors report to the directors pursuant to rule 9.3(6) of the Interim Prudential Sourcebook for Insurers We have audited the following documents prepared by the insurer pursuant to the Accounts and Statements Rules set out in Part I and Part IV of Chapter 9 to IPRU(INS) the Interim Prudential Sourcebook for Insurers, GENPRU the General Prudential Sourcebook and INSPRU the Prudential Sourcebook for Insurers ( the Rules ) made by the Prudential Regulation Authority under section 137G of the Financial Services and Markets Act 2000: Forms 40, 41, 42, 43 and 45 (including the supplementary notes) on pages 1 to 13 ( the Forms ); We are not required to audit and do not express an opinion on: Forms 46 and 47 (including the supplementary notes) on pages 14 and 15; the statements required by IPRU(INS) rules 9.30 and 9.36 on pages 23 and 24; and the certificate required by IPRU(INS) rule 9.3(5) on page 25. Respective responsibilities of the insurer and its auditors The insurer is responsible for the preparation of the forms to be submitted under IPRU(INS) rule 9.3(5) under the provisions of the Rules. Under IPRU(INS) rule 9.11 the Forms are required to be prepared in the manner specified by the Rules and to state fairly the information provided on the basis required by the Rules. It is our responsibility to form an independent opinion as to whether the Forms meet these requirements, and to report our opinion to you. We also report to you if, in our opinion: adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or the Forms are not in agreement with the accounting records and returns; or we have not received all the information we require for our audit. This report has been prepared for the directors of the insurer to comply with their obligations under IPRU(INS) rule 9.3(6) and for no other purpose. We do not, in providing this report, accept or assume responsibility for any other purpose save where expressly agreed by our prior consent in writing. 26

29 Basis of opinion We conducted our work in accordance with Practice Note 20 'The audit of insurers in the United Kingdom (Revised)' issued by the Auditing Practices Board. Our work included examination, on a test basis, of evidence relevant to the amounts and disclosures in the Forms. The evidence included that previously obtained by us relating to the audit of the financial statements of the insurer for the financial. It also included an assessment of the significant estimates and judgements made by the insurer in the preparation of the Forms. We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Forms are free from material misstatement, whether caused by fraud or other irregularity or error and comply with IPRU(INS) rule Opinion In our opinion the Forms fairly state the information provided on the basis required by the Rules as modified and have been properly prepared in accordance with the provisions of those Rules. PricewaterhouseCoopers LLP Chartered Accountants 24 March

30 SW FUNDING PLC (formerly Scottish Widows plc) Appointed Actuary s Certificate I certify that, in my opinion, the provisions of the Scheme of Transfer have been complied with and been given effect to in all material respects in relation to the Company. K Doerr With-Profits Actuary 24 March