Glossary of items

Annual Premium Equivalent (APE)

• A measure of new business activity that is calculated as the sum of annualised regular premiums from new business plus 10% of single premiums on new business written during the period.

European Embedded Value (EEV)

• Financial results prepared in accordance with a set of Principles issued by the Chief Financial Officers’ Form of European Insurance Companies in May 2004 and expanded by the Additional Guidance of EEV Disclosures published in October 2005.

Insurance Groups Directive (IGD)

• Groups whose activities are primarily concentrated in the insurance sector are subject to the capital adequacy requirements of the Insurance Groups Directive (IGD), as implemented by the Financial Services Authority (FSA) in the UK. The IGD capital adequacy requirements involve aggregating surplus capital held in regulated subsidiaries from which group borrowings (except those subordinated debt issues that qualify as capital) are deducted. No credit for the benefit of diversification is allowed. The IGD test is passed when this aggregate number is positive.

International Financial Reporting Standards (IFRS)

• These are the set of international accounting standards stating how particular types of transactions and other events should be accounted and reported in financial statements. IFRS are issued by the International Accounting Standards Board.

New Business (NB) Margins

• New business margin is a profit measure used by insurers and is shown on two bases. New business margin represents the ratio of new business contribution to Annual Premium Equivalents (APE) or Present Value of New Business Premiums (PVNBP), expressed as a percentage.

New Business Premiums (NBP)

• New business premiums reflect premiums attaching to covered business and premiums for contracts classified as investment products or other financial instruments under IFRS.