Our Accounts 95
Notes to the Financial Statements continued
31 December 2012
25. Long-term insurance and investment contract liabilities valuation assumptions (continued)
Mortality rate tables 2012 2011
Conventional Life Business 75% AM80 Females -3 75% AM80 Females -3
Conventional Pensions Business 60% AM80 Females -3 65% AM80 Females -3
Conventional Industrial Branch Business 80% up to age 80, rising linearly 80% up to age 80, rising linearly to
to 100% at age 100 ELT16 100% at age 100 ELT16
Non Unitised Accumulating Pensions Business 65% AM80 65% AM80
Unitised Accumulating Life Business 80% AM80/AF80 80% AM80/AF80
Unitised Accumulating Pensions Business 80% AM80 80% AM80
Unitised Accumulating Bond Business 80% AM80 80% AM80
Unitised Accumulating Life ISA Business 80% AM80 select/AF80 select 80% AM80 select/AF80 select
Annuities in Payment Males: RMV00 CMI_2009 2% LT Males: RMV00 CMI_2009 2% LT
Females: RFV00 CMI_2009 1.5% LT Females: RFV00 CMI_2009 1.5% LT
Per policy expenses – regular premiums 2012 2011
Conventional Life Business £34.90 £32.60
Conventional Pensions Business £45.30 £42.00
Conventional Industrial Branch Business £6.80 £6.90
Non Unitised Accumulating Pensions Business £28.30 £26.30
Unitised Accumulating Life Business £40.50 £36.50
Unitised Accumulating Pensions Business £45.30 £42.00
Unitised Accumulating Bond Business £42.80 £37.50
Unitised Accumulating Life ISA Business £49.20 £43.40
Annuities in Payment £48.20 £43.40
Statements and Reviews
A percentage of these amounts is used for single premium and paid up policies.
Persistency - lapses, surrenders and paid up rates
A review of persistency is carried out annually. Assumptions for each product class are adjusted where necessary to reflect more recent
experience as evidenced in the persistency trend analysis or to reflect expected future trends as a result of anticipated future events.
Options and guarantees
There are no guaranteed annuity or financial options within the Society participating contract funds. There is an additional reserve
calculated on a market consistent basis to cover market value restricter (MVR) free guarantees on with-profits bonds.
Our Businesses
Bonuses
The cost of bonuses incurred during the year ended 31 December 2012 was £96.3m (2011: £84.6m) of which £19.6m (2011: £22.5m)
was included in the long-term insurance contract liabilities and £76.7m (2011: £62.1m) was included in Gross benefits and claims paid
in the Statement of Comprehensive Income.
ii) Non participating insurance contracts
Risk Management
Interest rate 2012 2011
Non-profit temporary assurances (original LVFS) 2.40% 1.90%
Non-profit temporary assurances Yield Curve* 2.50%*
Whole of life assurances Yield Curve* 2.50%*
Permanent health insurance:
a) active lives Yield Curve* 2.50%*
b) claims reserves Yield Curve* 2.50%*
Corporate Governance
Critical illness Yield Curve* 2.50%*
Other assurances Yield Curve* 2.50%*
Annuities in payment Yield Curve* + 1.2% 4.00%
* Adjusted by a margin for risk and uncertainty which varies by product line.
Our Accounts