1 Segmental Analysis
 2 Jackson National Life
 3 Investment Return
 4 Investment Income
 5 Policyholder Bonuses
 6 Net Operating Expenses
 7 Investment Expenses and Charges
 8 Tax
 9 Acquisitions and Disposals
 10 Information on Staff
 11 Directors’ Remuneration
 12 Fees Payable to Audit Firms
 13 Land and Buildings
 14 Investments in Participating Interests
 15 Other Financial Investments
 16 Assets Held to Cover Linked Liabilities
 17 Share Capital and Share Premium
 18 Group Profit and Loss Account Reserve
19 Long-term Business Provision
 20 Borrowings
 21 Reclassification of Certain Liabilities
 22 Investments of the Company
 23 Profit of the Company
 24 Subsidiary Undertakings
 25 Contingent Liabilities
 26 Cash Flow
 27 Post Balance Sheet Event

 

 

 

 

19 Long-term Business Provision

The principal valuation methods and assumptions are as follows:

(i) UK operations and Prudential Asia
The main relevant products are with-profits deposit administration, other unitised and non-unitised with-profits contracts and non-profit pension annuities in course of payment. The calculation of the provision is based on fund value in the case of deposit administration and unitised contracts and the net premium method for non-unitised contracts. No explicit provision is made for future bonuses but the provision includes the cost of bonuses added following the valuation at the end of 1998.

The assumed interest rates for UK with-profits contracts valued by the net premium method range from 3%-5% whilst the rates of interest for pension annuities in course of payment range from 4.75%-5.3%. Mortality rates are based on recognised mortality tables suitably adjusted to reflect actual experience.

Additional provisions are held to meet the expenses, compensation costs and guarantees arising in respect of the FSA pensions review and to meet costs associated with guaranteed annuity options offered by Scottish Amicable Life Assurance Society.

(ii) Jackson National Life
The main relevant products are interest sensitive deferred annuities and whole life contracts, guaranteed investment contracts, equity linked indexed deferred annuities and term assurance.

The interest sensitive and guaranteed investment products are valued at policyholder account value. Equity linked indexed deferred annuities are valued at a basic liability equal to the policyholder guaranteed account value. Options are purchased which match very closely the liabilities arising from any excess of indexed values over guaranteed values, and the valuation of these options matches the valuation of the additional liabilities relating to any such excess.

The term assurances are valued on a net premium method, with allowance made for discontinuances and claim expenses. Mortality rates are based on published tables suitably adjusted to reflect actual experience. Rates of interest vary between 6.0% and 9.5%.

 

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