Our Accounts 121
Notes to the financial statements continued
31 December 2012
46. Unallocated divisible surplus
Accounting for the Unallocated divisible surplus
The Unallocated divisible surplus represents the excess of assets over and above the long-term insurance contract liabilities and other
liabilities. It represents amounts that have yet to be formally declared as bonuses for the participating contract policyholders together
with the free assets of the Society and Group. Any profit or loss for the year arising through the Statement of Comprehensive Income
(for the Society and for the Group) is transferred to or from the Unallocated divisible surplus.
UK regulations, the Group’s Principles and Practices of Financial Management, and the terms and conditions of participating contracts
set out the bases for the determination of the amounts on which the participating additional discretionary contract benefits are based
and within which the Group may exercise its discretion as to the quantum and timing of their payment to contract holders.
Group Society
2012 2011 2012 2011
£m £m £m £m
Balance at 1 January 958.4 966.4 1,055.1 1,078.6
Transfer to the Statement of Comprehensive Income (97.5) (8.0) (176.5) (23.5)
Balance at 31 December 860.9 958.4 878.6 1,055.1
Cumulative goodwill of £199.8m in the Group (£62.2m in the Society) arising on acquisitions prior to 1998 has been eliminated against
the Unallocated divisible surplus. This goodwill would be recognised in the Statement of Comprehensive Income should there be a
subsequent disposal of the business to which it relates.
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