Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2020 | |
Document and Entity Information | |
Entity Registrant Name | PRUDENTIAL PLC |
Entity Central Index Key | 0001116578 |
Document Type | 6-K |
Document Period End Date | Jun. 30, 2020 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | Q2 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Income Statements - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | ||
Continuing operations: | |||
Gross premiums earned | $ 19,842 | $ 21,081 | |
Outward reinsurance premiums | (30,149) | (673) | |
Earned premiums, net of reinsurance | (10,307) | 20,408 | |
Investment return | 3,910 | 31,873 | |
Other income | 333 | 258 | |
Total revenue, net of reinsurance | (6,064) | 52,539 | |
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance | 9,855 | (47,448) | |
Acquisition costs and other expenditure | (3,032) | (3,508) | |
Finance costs: interest on core structural borrowings of shareholder-financed businesses | (163) | (293) | |
Gain attaching to corporate transactions | 17 | ||
Total charges net of reinsurance | 6,660 | (51,232) | |
Share of profit from joint ventures and associates net of related tax | 133 | 137 | |
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | [1] | 729 | 1,444 |
Remove tax charge attributable to policyholders' returns | (66) | (285) | |
Profit before tax attributable to shareholders' returns | 663 | 1,159 | |
Total tax charge attributable to shareholders' and policyholders' returns | (195) | (286) | |
Remove tax charge attributable to policyholders' returns | 66 | 285 | |
Tax charge attributable to shareholders' returns | (129) | (1) | |
Profit from continuing operations | 534 | 1,158 | |
Profit from discontinued operations | [2] | 835 | |
Profit for the period | 534 | 1,993 | |
Attributable to: | |||
Equity holders of the Company From continuing operations | 512 | 1,152 | |
Equity holders of the Company From discontinued operations | 835 | ||
Non-controlling interests from continuing operations | 22 | 6 | |
Profit for the period | $ 534 | $ 1,993 | |
Basic | |||
Based on profit from continuing operations (in USD per share) | $ 0.197 | $ 0.446 | |
Based on profit from discontinued operations (in USD per share) | 0.323 | ||
Total (in USD per share) | 0.197 | 0.769 | |
Diluted | |||
Based on profit from continuing operations (in USD per share) | 0.197 | 0.446 | |
Based on profit from discontinued operations (in USD per share) | 0.323 | ||
Total (in USD per share) | 0.197 | 0.769 | |
Dividends relating to reporting period: | |||
First interim ordinary dividend (in USD per share) | 0.0537 | 0.2029 | |
Dividends paid in reporting period: | |||
Second interim ordinary dividend for prior year (in USD per share) | $ 0.2597 | $ 0.4289 | |
[1] | This measure is the formal profit before tax measure under IFRS. It is not the result attributable to shareholders principally because total corporate tax of the Group includes those on the income of consolidated with-profits and unit-linked funds that, through adjustments to benefits, are borne by policyholders. These amounts are required to be included in the tax charge of the Company under IAS 12. Consequently, the IFRS profit before tax measure is not representative of pre-tax profit attributable to shareholders as it is determined after deducting the cost of policyholder benefits and movements in the liability for unallocated surplus of with-profits funds after adjusting for tax borne by policyholders. | ||
[2] | Discontinued operations for half year 2019 related to the UK and Europe operations (M&G plc) that were demerged from the Group in October 2019. |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Unaudited Condensed Consolidated Statements of Comprehensive Income | ||
Profit for the period | $ 534 | $ 1,158 |
Exchange movements on foreign operations and net investment hedges: | ||
Exchange movements arising during the period | (201) | 45 |
Related tax | 1 | |
Exchange movements on foreign operations and net investment hedges | (201) | 46 |
Unrealised gains arising in the period (before the impact of Jackson's reinsurance transaction with Athene): | ||
Net unrealised gains on holdings arising in the period | 2,737 | 3,411 |
Deduct net gains included in the income statement on disposal and impairment | (197) | (25) |
Total | 2,540 | 3,386 |
Related change in amortisation of deferred acquisition costs | (287) | (560) |
Related tax | (472) | (593) |
Total | 1,781 | 2,233 |
Impact of Jackson's reinsurance transaction with Athene: | ||
Gains recycled to the income statement on transfer of debt securities to Athene | (2,817) | |
Related change in amortisation of deferred acquisition costs | 535 | |
Related tax | 479 | |
Total | (1,803) | |
Total valuation movements on available-for-sale debt securities. | (22) | 2,233 |
Total items that may be reclassified subsequently to profit or loss | (223) | 2,279 |
Shareholders' share of actuarial gains and losses on defined benefit pension schemes: | ||
Net actuarial losses on defined benefit pension schemes | (112) | |
Related tax | 18 | |
Total items that will not be reclassified to profit or loss | (94) | |
Other comprehensive (loss) income | (223) | 2,185 |
Total comprehensive income for the period from continuing operations | 311 | 3,343 |
Total comprehensive income for the period from discontinued operations | 839 | |
Total comprehensive income for the period | 311 | 4,182 |
Attributable to: | ||
Equity holders of the Company From continuing operations | 290 | 3,337 |
Equity holders of the Company From discontinued operations | 839 | |
Non-controlling interests from continuing operations | 21 | 6 |
Total comprehensive income for the period | $ 311 | $ 4,182 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statement of Changes in Equity - USD ($) $ in Millions | Shareholders' equity | Share capital | Share premium | Retained earnings | Translation reserve | Available-for-sale securities reserves | Non-controlling interests | Total |
Reserves | ||||||||
Profit for the period | $ 1,152 | $ 1,152 | $ 6 | $ 1,158 | ||||
Other comprehensive income (loss) | 2,185 | (94) | $ 46 | $ 2,233 | 2,185 | |||
Total comprehensive income for the period from continuing operations | 3,337 | 1,058 | 46 | 2,233 | 6 | 3,343 | ||
Total comprehensive income from discontinued operations for the period | 839 | 838 | 1 | 839 | ||||
Total comprehensive income for the period | 4,176 | 1,896 | 47 | 2,233 | 6 | 4,182 | ||
Dividends | (1,108) | (1,108) | (1,108) | |||||
Reserve movements in respect of share-based payments | 3 | 3 | 3 | |||||
Share capital and share premium | ||||||||
New share capital subscribed | 13 | $ 13 | 13 | |||||
Foreign exchange translation differences due to change in presentation currency | (4) | $ (1) | (3) | (4) | ||||
Treasury shares | ||||||||
Movement in own shares in respect of share-based payment plans | (12) | (12) | (12) | |||||
Movement in Prudential plc shares purchased by unit trusts consolidated under IFRS | 1 | 1 | 1 | |||||
Net increase (decrease) in equity | 3,069 | (1) | 10 | 780 | 47 | 2,233 | 6 | 3,075 |
Balance at beginning of period at Dec. 31, 2018 | 21,968 | 166 | 2,502 | 21,817 | (2,050) | (467) | 23 | 21,991 |
Balance at end of period at Jun. 30, 2019 | 25,037 | 165 | 2,512 | 22,597 | (2,003) | 1,766 | 29 | 25,066 |
Share capital and share premium | ||||||||
New share capital subscribed | 22 | |||||||
Foreign exchange translation differences due to change in presentation currency | 6 | 101 | ||||||
Balance at beginning of period at Dec. 31, 2018 | 21,968 | 166 | 2,502 | 21,817 | (2,050) | (467) | 23 | 21,991 |
Balance at end of period at Dec. 31, 2019 | 19,477 | 172 | 2,625 | 13,575 | 893 | 2,212 | 192 | 19,669 |
Reserves | ||||||||
Profit for the period | 512 | 512 | 22 | 534 | ||||
Other comprehensive income (loss) | (222) | (200) | (22) | (1) | (223) | |||
Total comprehensive income for the period from continuing operations | 311 | |||||||
Total comprehensive income for the period | 290 | 512 | (200) | (22) | 21 | 311 | ||
Dividends | (674) | (674) | (16) | (690) | ||||
Reserve movements in respect of share-based payments | 29 | 29 | 29 | |||||
Effect of transactions relating to non-controlling interests | 32 | 32 | 32 | |||||
Share capital and share premium | ||||||||
New share capital subscribed | 10 | 10 | 10 | |||||
Treasury shares | ||||||||
Movement in own shares in respect of share-based payment plans | (54) | (54) | (54) | |||||
Net increase (decrease) in equity | (367) | 10 | (155) | (200) | (22) | 5 | (362) | |
Balance at end of period at Jun. 30, 2020 | $ 19,110 | $ 172 | $ 2,635 | $ 13,420 | $ 693 | $ 2,190 | $ 197 | $ 19,307 |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statements of Financial Position - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 | |
Assets | |||
Goodwill | $ 942 | $ 969 | |
Deferred acquisition costs and other intangible assets | 18,604 | 17,476 | |
Property, plant and equipment | 964 | 1,065 | |
Reinsurers' share of insurance contract liabilities | [1] | 44,918 | 13,856 |
Deferred tax assets | 4,259 | 4,075 | |
Current tax recoverable | 387 | 492 | |
Accrued investment income | 1,517 | 1,641 | |
Other debtors | 3,211 | 2,054 | |
Investment properties | 23 | 25 | |
Investment in joint ventures and associates accounted for using the equity method | 1,507 | 1,500 | |
Loans | 14,910 | 16,583 | |
Equity securities and holdings in collective investment schemes | [2] | 234,698 | 247,281 |
Debt securities | [2] | 121,462 | 134,570 |
Derivative assets | 2,459 | 1,745 | |
Other investments | [2] | 1,569 | 1,302 |
Deposits | 3,351 | 2,615 | |
Cash and cash equivalents | 8,384 | 6,965 | |
Total assets | 463,165 | 454,214 | |
Equity | |||
Shareholders' equity | 19,110 | 19,477 | |
Non-controlling interests | 197 | 192 | |
Total equity | 19,307 | 19,669 | |
Liabilities | |||
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) | 391,924 | 385,678 | |
Unallocated surplus of with-profits funds | 5,512 | 4,750 | |
Core structural borrowings of shareholder-financed businesses | 6,499 | 5,594 | |
Operational borrowings | 2,245 | 2,645 | |
Obligations under funding, securities lending and sale and repurchase agreements | 9,085 | 8,901 | |
Net asset value attributable to unit holders of consolidated investment funds | 5,967 | 5,998 | |
Deferred tax liabilities | 5,278 | 5,237 | |
Current tax liabilities | 428 | 396 | |
Accruals, deferred income and other liabilities | 16,208 | 14,488 | |
Provisions | 245 | 466 | |
Derivative liabilities | 467 | 392 | |
Total liabilities | 443,858 | 434,545 | |
Total equity and liabilities | $ 463,165 | $ 454,214 | |
[1] | At 30 June 2020, reinsurers’ share of insurance contract liabilities include $27.7 billion in respect of the reinsurance of substantially all of Jackson’s in-force fixed and fixed indexed annuity liabilities to Athene Life Re Ltd, as discussed in note D1. | ||
[2] | Included within equity securities and holdings in collective investment schemes, debt securities and other investments are $265 million of lent securities as at 30 June 2020 (31 December 2019: $90 million). |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Statements of Financial Position (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 | |
Statement | |||
Reinsurers' share of insurance contract liabilities | [1] | $ 44,918 | $ 13,856 |
Lent securities | 265 | $ 90 | |
Athene Life Re Ltd | In-force fixed and fixed indexed annuity | US insurance operations | |||
Statement | |||
Reinsurers' share of insurance contract liabilities | $ 27,700 | ||
[1] | At 30 June 2020, reinsurers’ share of insurance contract liabilities include $27.7 billion in respect of the reinsurance of substantially all of Jackson’s in-force fixed and fixed indexed annuity liabilities to Athene Life Re Ltd, as discussed in note D1. |
Unaudited Condensed Consolida_6
Unaudited Condensed Consolidated Statements of Cash Flow - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | ||
Cash flows from operating activities | |||
Profit before tax (being tax attributable to shareholders' and policyholders' returns) | [1] | $ 729 | $ 1,444 |
Adjustments to profit before tax for non-cash movements in operating assets and liabilities: | |||
Investments | 24,670 | (38,673) | |
Other non-investment and non-cash assets | (32,617) | (2,685) | |
Policyholder liabilities (including unallocated surplus) | 8,188 | 34,702 | |
Other liabilities (including operational borrowings) | 1,466 | 4,072 | |
Other items | [2] | (327) | 102 |
Net cash flows from operating activities | 2,109 | (1,038) | |
Cash flows from investing activities | |||
Net cash flows from purchases and disposals of property, plant and equipment | (43) | (21) | |
Net cash flows from other investing activities | [3] | (733) | (102) |
Net cash flows from investing activities | (776) | (123) | |
Equity capital: | |||
Issues of ordinary share capital | 10 | 13 | |
External dividends: | |||
Dividends paid to the Company's shareholders | (674) | (1,108) | |
Dividends paid to non-controlling interests | (16) | ||
Net cash flows from financing activities | 145 | (2,070) | |
Net increase (decrease) in cash and cash equivalents from continuing operations | 1,478 | (3,231) | |
Net cash flows from discontinued operations | [4] | 292 | |
Cash and cash equivalents at beginning of period | 6,965 | 15,442 | |
Effect of exchange rate changes on cash and cash equivalents | (59) | 10 | |
Cash and cash equivalents at end of period | 8,384 | 12,513 | |
Comprising: | |||
Cash and cash equivalents from continuing operations | 8,384 | 6,628 | |
Cash and cash equivalents from discontinued operations | 5,885 | ||
Shareholder-backed | |||
Structural borrowings of shareholder-financed operations: | |||
Issuance of debt, net of costs | [5] | 982 | |
Redemption of subordinated debt | [5] | (504) | |
Fees paid to modify terms and conditions of debt issued by the Group | [5] | (182) | |
Interest paid | [5] | $ (157) | $ (289) |
[1] | This measure is the formal profit before tax measure under IFRS. It is not the result attributable to shareholders principally because total corporate tax of the Group includes those on the income of consolidated with-profits and unit-linked funds that, through adjustments to benefits, are borne by policyholders. These amounts are required to be included in the tax charge of the Company under IAS 12. Consequently, the IFRS profit before tax measure is not representative of pre-tax profit attributable to shareholders as it is determined after deducting the cost of policyholder benefits and movements in the liability for unallocated surplus of with-profits funds after adjusting for tax borne by policyholders. | ||
[2] | The adjusting items to profit before tax included within other items are adjustments in respect of non-cash items together with operational interest receipts and payments, dividend receipts and tax paid. | ||
[3] | Net cash flows from other investing activities include amounts paid for distribution rights and cash flows arising from the acquisitions and disposals of businesses. | ||
[4] | Discontinued operations for half year 2019 related to the UK and Europe operations (M&G plc) that were demerged from the Group in October 2019. The half year 2019 cash flows shown above are presented excluding any transactions between continuing and discontinued operations. | ||
[5] | Structural borrowings of shareholder-financed businesses exclude borrowings to support short-term fixed income securities programmes, non-recourse borrowings of investment subsidiaries of shareholder-financed businesses and other borrowings of shareholder-financed businesses. Cash flows in respect of these borrowings are included within cash flows from operating activities. |
Unaudited Condensed Consolida_7
Unaudited Condensed Consolidated Statements of Cash Flows (Parenthetical) - Core structural borrowings of shareholder-financed businesses - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Changes in the carrying value of the structural borrowings of shareholder-financed businesses are analysed as follows: | ||
Balance at beginning of period | $ 5,594 | $ 9,761 |
Issue of debt | 982 | |
Redemption of debt | (504) | |
Foreign exchange movement | (84) | (6) |
Demerger of UK and Europe operations | 219 | |
Other movements | 7 | |
Balance at end of period | $ 6,499 | $ 9,470 |
Basis of preparation
Basis of preparation | 6 Months Ended |
Jun. 30, 2020 | |
Basis of preparation | |
Basis of preparation | A Basis of preparation A1 Basis of preparation and exchange rates These condensed consolidated interim financial statements for the six months ended 30 June 2020 have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’ as issued by the International Accounting Standards Board (IASB) and as endorsed by the European Union (EU). The Group’s policy for preparing this interim financial information is to use the accounting policies adopted by the Group in its last consolidated financial statements, as updated by any changes in accounting policies it intends to make in its next consolidated financial statements as a result of new or amended IFRS and other policy improvements. EU-endorsed IFRS may differ from IFRSs issued by the IASB if, at any point in time, new or amended IFRS have not been endorsed by the EU. At 30 June 2020, there were no unendorsed standards effective for the period ended 30 June 2020 which impacted the condensed consolidated financial statements of the Group, and there were no differences between IFRS endorsed by the EU and IFRS issued by the IASB in terms of their application to the Group. The IFRS basis results for half year 2020 and half year 2019 are unaudited. The 2019 full year IFRS basis results have been derived from Prudential’s 2019 audited consolidated financial statements filed with the Securities and Exchange Commission on Form 20-F. These 2019 consolidated financial statements do not represent Prudential’s statutory accounts for the purpose of the UK Companies Act 2006. The auditors have reported on the 2019 statutory accounts which have been delivered to the Registrar of Companies. The auditors’ report was: (i) unqualified; (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report; and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006. Going concern basis of accounting Prudential aims to meet the savings and investment needs of its customers, which by their very nature can often be over a timeframe of many years. The Group as a whole and each of its life assurance operations are subject to extensive regulation and supervision, which are designed primarily to reinforce the Group's management of its long-term solvency, liquidity and viability to ensure that it can continue to meet obligations to policyholders. Risk management is core to the Group's activities. In assessing going concern, the Directors took account of the Group's principal risks and the mitigations available to it which are described under the Group Risk Framework heading. After making sufficient enquiries the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue their operations for a period of at least 12 months from the date that these interim financial statements are approved. No material uncertainties that may cast significant doubt on the ability of the Group to continue as a going concern have been identified. In half year 2020, the Covid-19 pandemic has impacted the global economy and the Group's individual markets to varying degrees and at different periods, and the full extent of the longer-term impacts are currently uncertain. The Directors have made the assessment of going concern taking into account both the Group's current performance and the Group's outlook. In particular, the Directors considered the adequacy of the Group's solvency, liquidity and financial performance using revised projections from the previous business plan that reflected the shift in market conditions as a result of Covid-19 together with the impact of targeted related management actions. In terms of liquidity, at 30 June 2020, the Group had central cash and short-term investment balances of $1.9 billion as set out in 'Explanation of performance and Other Financial Measures'. This amount has been subject to stress testing that assumes the closure of short-term debt markets, as well as additional calls on liquidity by the business units. This stress testing allows for the fact that the Group has undrawn liquidity facilities of $2.6 billion available to it. To factor in the uncertainty of the longer-term impacts of Covid-19, a number of stress scenarios have been assessed, for example scenarios of different durations of lockdown and the associated recovery back to a normalised level of sales, with stress scenarios assuming a significant overall contraction in sales and worsened market conditions compared to 2019. The Directors noted the effect of a number of stresses on the Group's capital position, including those set out in note I(i) Group capital position within Additional Financial Information. The Group was considered to have sufficient regulatory capital to meet stressed changes in market conditions that are severe but plausible. For the Group's US operations, the beneficial impact on the local RBC solvency position of the equity investment by Athene Life Re Ltd in July 2020 (as discussed in note D3) was also factored into the assessment. The Directors therefore consider it appropriate to continue to adopt the going concern basis of accounting in preparing these interim financial statements for the period ended 30 June 2020. Exchange rates The exchange rates applied for balances and transactions in the presentation currency of the Group, US dollars ($), and other currencies were: $: Local currency Closing rate as at period end Average rate for the period to date 30 Jun 2020 31 Dec 2019 Half year 2020 Half year 2019 China 7.07 6.97 7.03 6.78 Hong Kong 7.75 7.79 7.76 7.84 Indonesia 14,285.00 13,882.50 14,574.24 14,192.79 Malaysia 4.29 4.09 4.25 4.12 Singapore 1.40 1.34 1.40 1.36 Thailand 30.87 29.75 31.62 31.61 UK 0.81 0.75 0.79 0.77 Vietnam 23,206.00 23,172.50 23,303.21 23,253.04 The accounting policies applied by the Group in determining the IFRS basis results in this report are the same as those previously applied in the Group’s consolidated financial statements for the year ended 31 December 2019, as disclosed in the 2019 Form 20‑F, aside from those discussed in note A2 below. A2 New accounting pronouncements in 2020 The IASB has issued the following new accounting pronouncements to be effective from 1 January 2020: - - - The adoption of these pronouncements have had no significant impact on the Group financial statements. |
Analysis of performance by segm
Analysis of performance by segment | 6 Months Ended |
Jun. 30, 2020 | |
Analysis of performance by segment | |
Analysis of performance by segment | B EARNINGS PERFORMANCE B1 Analysis of performance by segment B1.1 Segment results 2020 $m 2019 $m Note Half year Half year Continuing operations: Asia Insurance operations 1,590 1,417 Asset management 143 133 Total Asia 1,733 1,550 US Insurance operations (Jackson) 1,256 1,556 Asset management 10 16 Total US 1,266 1,572 Other income and expenditure: Investment return and other income 18 32 Interest payable on core structural borrowings (163) (293) Corporate expenditure note(i) (205) (212) Total other income and expenditure (350) (473) Restructuring and IFRS 17 implementation costs (108) (30) Adjusted operating profit B1.3 2,541 2,619 Short-term fluctuations in investment returns on shareholder-backed business B1.2 (2,706) (1,455) Amortisation of acquisition accounting adjustments note (ii) (18) (22) Gain attaching to corporate transactions D1 846 17 Profit before tax attributable to shareholders 663 1,159 Tax charge attributable to shareholders' returns B4 (129) (1) Profit for the period from continuing operations 534 1,158 Profit for the period from discontinued operations — 835 Profit for the period 534 1,993 Attributable to: Equity holders of the Company From continuing operations 512 1,152 From discontinued operations — 835 Non-controlling interests from continuing operations 22 6 534 1,993 Basic earnings per share (in cents) Note Half year Half year B5 Based on adjusted operating profit, net of tax, from continuing operations note (iii) 79.0 ¢ 84.5 ¢ Based on profit for the period from continuing operations 19.7 ¢ 44.6 ¢ Based on profit for the period from discontinued operations — 32.3 ¢ Notes (i) Corporate expenditure as shown above is primarily for head office functions in London and Hong Kong. (ii) Amortisation of acquisition accounting adjustments principally relate to the REALIC business of Jackson which was acquired in 2012. (iii) Tax charges have been reflected as operating and non-operating in the same way as for the pre-tax items. Further details on tax charges are provided in note B4. B1.2 Short-term fluctuations in investment returns on shareholder-backed business 2020 $m 2019 $m Half year Half year Asia operations note (i) (448) 544 US operations note (ii) (2,288) (1,968) Other operations 30 (31) Total (2,706) (1,455) (i) Asia operations In Asia, the negative short-term fluctuations of $(448) million (half year 2019: positive $544 million) reflect the net value movements on shareholders’ assets and policyholder liabilities arising from market movements in the period. In half year 2020 falling interest rates in certain parts of Asia led to lower discount rates on policyholder liabilities under the local reserving basis applied, which were not fully offset by unrealised bond gains in the period. This together with the effect of falling equity markets led to the overall negative short-term investment fluctuations in Asia. (ii) US operations The short-term fluctuations in investment returns in the US are reported net of the related charge for amortisation of deferred acquisition costs (DAC) of $(50) million as shown in note C4.2 (half year 2019: credit of $616 million) and comprise amounts in respect of the following items: 2020 $m 2019 $m Half year Half year Net equity hedge result note (a) (4,378) (2,529) Other than equity-related derivatives note (b) 2,114 560 Debt securities note (c) 175 14 Equity-type investments: actual less longer-term return (128) (9) Other items (71) (4) Total net of related DAC amortisation (2,288) (1,968) Notes (a) The purpose of the inclusion of net equity hedge result in short-term fluctuations in investment returns is to segregate the amount included in pre-tax profit that relates to the accounting effect of market movements on both the value of guarantees in Jackson’s products including variable annuities and on the related derivatives used to manage the exposures inherent in these guarantees. The level of fees recognised in non-operating profit is determined by reference to that allowed for within the reserving basis. The variable annuity guarantees are valued in accordance with either Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures or ASC Topic 944, Financial Services – Insurance depending on the type of guarantee. Both approaches require an entity to determine the total fee (‘the fee assessment’) that is expected to fund future projected benefit payments arising using the assumptions applicable for that method. The method under ASC Topic 820 requires this fee assessment to be fixed at the time of issue. As the fees included within the initial fee assessment are earned, they are included in non-operating profit to match the corresponding movement in the guarantee liability. Other guarantee fees are included in operating profit, which in half year 2020 was $350 million (half year 2019: $341 million), pre-tax and net of related DAC amortisation. As the Group applies US GAAP for the measured value of the product guarantees, the net equity hedge result also includes asymmetric impacts where the measurement bases of the liabilities and associated derivatives used to manage the Jackson annuity business differ. The net equity hedge result therefore includes significant accounting mismatches and other factors that do not represent the economic result. These other factors include: – – – The net equity hedge result can be summarised as follows: 2020 $m 2019 $m Half year Half year Fair value movements on equity hedge instruments (301) (3,190) Accounting value movements on the variable and fixed indexed annuity guarantee liabilities* (4,503) 294 Fee assessments net of claim payments 426 367 Total net of related DAC amortisation (4,378) (2,529) * The value movement on the variable annuity guarantees and fixed indexed annuity options is discussed in 'Explanation of Performance and Other Financial Measures'. (b) The fluctuations for other than equity-related derivatives comprise the net effect of: – – – The free-standing, other than equity-related derivatives, are held to manage interest rate exposures and durations within the general account and the variable annuity guarantees and fixed indexed annuity embedded options described in note (a) above. Accounting mismatches arise because of differences between the measurement basis and presentation of the derivatives, which are fair valued with movements recorded in the income statement, and the exposures they are intended to manage. (c) Short-term fluctuations related to debt securities is analysed below: 2020 $m 2019 $m Half year Half year Credits (charges) in the period: Losses on sales of impaired and deteriorating bonds (148) (24) Bond write-downs (31) (1) Recoveries/reversals 1 1 Total credits (charges) in the period (178) (24) Risk margin allowance deducted from adjusted operating profit* 55 54 (123) 30 Interest-related realised gains (losses): Gains (losses) arising in the period † 369 42 Amortisation of gains and losses arising in current and prior periods to adjusted operating profit (67) (59) 302 (17) Related amortisation of deferred acquisition costs (4) 1 Total short-term fluctuations related to debt securities net of related DAC amortisation 175 14 * The debt securities of Jackson are held in the general account of the business. Realised gains and losses are recorded in the income statement with normalised returns included in adjusted operating profit with variations from period to period included in the short-term fluctuations category. The risk margin reserve charge for longer-term credit-related losses included in adjusted operating profit of Jackson for half year 2020 is based on an average annual risk margin reserve of 18 basis points (half year 2019: 18 basis points) on average book values of $62.3 billion (half year 2019: $60.0 billion) as shown below: Moody’s rating category (or equivalent under NAIC ratings of mortgage-backed securities) Half year 2020 Half year 2019 Average Annual Average Annual book expected book expected value RMR loss value RMR loss $m % $m $m % $m A3 or higher 39,118 0.10 (40) 34,318 0.10 (36) Baa1, 2 or 3 21,521 0.24 (51) 24,385 0.23 (55) Ba1, 2 or 3 1,383 0.74 (10) 1,008 0.93 (10) B1, 2 or 3 200 2.39 (5) 246 2.62 (6) Below B3 108 3.36 (4) 37 3.42 (1) Total 62,330 0.18 (110) 59,994 0.18 (108) Related amortisation of deferred acquisition costs 20 18 Risk margin reserve charge to adjusted operating profit for longer-term credit-related losses (90) (90) † Excluding the realised gains that are part of the gain arising in respect of the reinsured Jackson's in-force fixed and fixed indexed annuity liabilities to Athene Life Re Ltd, as discussed in note D1. In addition to the accounting for realised gains and losses described above for Jackson general account debt securities, included within the statement of other comprehensive income is a pre-tax gain of $2,253 million for net unrealised gains arising during the period on debt securities classified as available-for-sale net of related amortisation of deferred acquisition costs (half year 2019: gain of $2,826 million), together with a pre-tax loss of $(2,282) million for the recycling of the gains on transfer of debt securities to Athene (see note D1) to the income statement, net of related amortisation of deferred acquisition costs. Temporary market value movements do not reflect defaults or impairments. Additional details of the movement in the value of the Jackson portfolio are included in note C1.1. B1.3 Determining operating segments and performance measure of operating segments Operating segments The Group's operating segments for financial reporting purposes are defined and presented in accordance with IFRS 8 ‘Operating Segments’ on the basis of the management reporting structure and its financial management information. Under the Group's management and reporting structure, its chief operating decision maker is the Group Executive Committee (GEC). In the management structure, responsibility is delegated to the Chief Executive Officers of the Group’s Asia and US business units for the day-to-day management of their business units (within the framework set out in the Group Governance Manual). Financial management information used by the GEC aligns with these business segments. These operating segments derive revenue from both insurance and asset management activities. Operations which do not form part of any business unit are reported as ‘Unallocated to a segment’. These include head office costs in London and Hong Kong. The Group’s Africa operations and treasury function do not form part of any operating segment under the structure, and their assets and liabilities and profit or loss before tax are not material to the overall financial position of the Group. The Group’s treasury function and Africa operations are therefore also reported as ‘Unallocated to a segment’. Performance measure The performance measure of operating segments utilised by the Company is adjusted IFRS operating profit based on longer-term investment returns (adjusted operating profit) , as described below. This measurement basis distinguishes adjusted operating profit from other constituents of total profit or loss for the period as follows: – – – The determination of adjusted operating profit for investment and liability movements is as described in note B1.3 of the Group’s consolidated financial statements for the year ended 31 December 2019. For Group debt securities at 30 June 2020 held by the insurance operations in Asia and the US, the level of unamortised interest-related realised gains and losses related to previously sold bonds for the Group was a net gain of $1,301 million (30 June 2019: net gain of $738 million). For equity-type securities, the longer-term rates of return are estimates of the long-term trend investment returns for income and capital having regard to past performance, current trends and future expectations. Different rates apply to different categories of equity-type securities. – – Half year Half year Equity-type securities such as common and preferred stock and portfolio holdings in mutual funds 4.9% to 5.8 % 6.0 % to 6.7 % Other equity-type securities such as investments in limited partnerships and private equity funds 6.9% to 7.8 % 8.0 % to 8.7 % |
Acquisition costs and other exp
Acquisition costs and other expenditure | 6 Months Ended |
Jun. 30, 2020 | |
Acquisition costs and other expenditure | |
Acquisition costs and other expenditure | B2 Acquisition costs and other expenditure 2020 $m 2019 $m Half year Half year Acquisition costs incurred for insurance policies (1,433) (2,109) Acquisition costs deferred note C4.2 614 625 Amortisation of acquisition costs note (i) (470) 376 Recoveries for expenses associated with Jackson's business ceded to Athenenote (ii) 1,231 — Administration costs and other expenditure note (iii) (2,584) (2,291) Movements in amounts attributable to external unit holders of consolidated investment funds (390) (109) Total acquisition costs and other expenditure (3,032) (3,508) Notes (i) The charge of $(470) million in half year 2020 includes $(313) million arising in the US which includes $(764) million for the write-off of the deferred acquisition costs held for the in-force fixed and fixed indexed annuity liabilities reinsured to Athene. Offsetting this amount is a credit of $814 million (half year 2019: $616 million) recorded in non-operating profit largely as a result of the losses arising from market effects on variable annuity guarantee liabilities and associated hedging. (ii) As part of the reinsurance transaction with Athene Life Re Ltd discussed in note D1, Jackson received $1,231 million of ceding commission as a recovery for past acquisition expenses associated with the business ceded. (iii) Included in total administration costs and other expenditure is depreciation of property, plant and equipment of $(109) million (half year 2019: $(107) million), of which $(72) million (half year 2019: $(66) million) relates to the right-of-use assets recognised under IFRS 16. |
Additional segmental analysis o
Additional segmental analysis of revenue | 6 Months Ended |
Jun. 30, 2020 | |
Additional segmental analysis of revenue | |
Additional segmental analysis of revenue | B3 Additional segmental analysis of revenue Half year 2020 $m Unallocated Total to a Group Asia US segment segment total Gross premiums earned 10,890 8,892 19,782 60 19,842 Outward reinsurance premiums note (i) 50 (30,195) (30,145) (4) (30,149) Earned premiums, net of reinsurance 10,940 (21,303) (10,363) 56 (10,307) Other income note (ii) 285 28 313 20 333 Total external revenue 11,225 (21,275) (10,050) 76 (9,974) Intra-group revenue — 17 17 (17) — Interest income 883 1,283 2,166 22 2,188 Other investment return 3,235 (1,575) 1,660 62 1,722 Total revenue, net of reinsurance 15,343 (21,550) (6,207) 143 (6,064) Half year 2019 $m Unallocated Total to a Group Asia US segment segment total Gross premiums earned 11,458 9,588 21,046 35 21,081 Outward reinsurance premiums (499) (170) (669) (4) (673) Earned premiums, net of reinsurance 10,959 9,418 20,377 31 20,408 Other income note (ii) 228 14 242 16 258 Total external revenue 11,187 9,432 20,619 47 20,666 Intra-group revenue 21 31 52 (52) — Interest income 805 1,460 2,265 27 2,292 Other investment return 8,826 20,732 29,558 23 29,581 Total revenue, net of reinsurance 20,839 31,655 52,494 45 52,539 Notes (i) In half year 2020, outward reinsurance premiums include $(30,150) million paid during the period in respect of the reinsurance of substantially all of Jackson's in-force fixed and fixed indexed annuity liabilities to Athene Life Re Ltd. See note D1 for further details. Also included in outward reinsurance premiums for half year 2020 is a credit of $542 million for the recapture of previously reinsured business in Asia. (ii) Other income comprises income from external customers and consists primarily of revenue from the Group’s asset management business of $261 million (half year 2019: $198 million). The remaining other income consists primarily of policy fee revenue from external customers. |
Tax charge
Tax charge | 6 Months Ended |
Jun. 30, 2020 | |
Tax charge | |
Tax charge | B4 Tax charge B4.1 Total tax charge by nature The total tax charge in the income statement is as follows: 2020 $m 2019 $m Current Deferred Half year Half year Tax charge tax tax Total Total Attributable to shareholders: Asia operations (103) (127) (230) (244) US operations (70) 183 113 143 Other operations (16) 4 (12) 100 Tax (charge) credit attributable to shareholders' returns (189) 60 (129) (1) Attributable to policyholders: Asia operations (69) 3 (66) (285) Total tax (charge) credit (258) 63 (195) (286) The principal reason for the increase in the tax charge attributable to shareholders’ returns is the losses arising in Other operations where, following the demerger of M&G plc, it is unlikely that relief will be available in future periods. The principal reason for the decrease in the tax charge attributable to policyholders' returns reflects the reduction in deferred tax liabilities in Singapore following the clarification of tax filing requirements. B4.2 Reconciliation of shareholder effective tax rate In the reconciliation below, the expected tax rates reflect the corporation tax rates that are expected to apply to the taxable profit or loss of the relevant business. Where there are profits or losses of more than one jurisdiction, the expected tax rates reflect the corporation tax rates weighted by reference to the amount of profit or loss contributing to the aggregate business result. 2020 2019 Half year Half year Total Percentage Total Percentage Asia US Other attributable to impact attributable to impact operations operations operations shareholders on ETR shareholders on ETR $m $m $m $m % $m % note (iv) Adjusted operating profit (loss) 1,733 1,266 (458) 2,541 2,619 Non-operating (loss) profit (450) (1,458) 30 (1,878) (1,460) Profit (loss) before tax 1,283 (192) (428) 663 1,159 Expected tax rate: 20 % 21 % 18 % 21 % Tax at the expected rate 257 (40) (77) 140 21.1 % 232 20.0 % Effects of recurring tax reconciliation items: Income not taxable or taxable at concessionary rates (31) (14) — (45) (6.8) % (70) (6.0) % Deductions not allowable for tax purposes 12 6 3 21 3.2 % 26 2.2 % Items related to taxation of life insurance businesses note (i) 7 (62) — (55) (8.3) % (179) (15.4) % Deferred tax adjustments 3 — — 3 0.5 % (12) (1.0) % Unrecognised tax losses note (ii) — — 72 72 10.9 % — — Effect of results of joint ventures and associates (31) — (6) (37) (5.6) % (35) (3.0) % Irrecoverable withholding taxes — — 26 26 3.9 % 27 2.3 % Other 3 13 (6) 10 1.5 % 5 0.4 % Total (37) (57) 89 (5) (0.7) % (238) (20.5) % Effects of non-recurring tax reconciliation items: Adjustments to tax charge in relation to prior years 21 — — 21 3.1 % 20 1.7 % Movements in provisions for open tax matters note (iii) (12) — — (12) (1.8) % 8 0.7 % Demerger related activities — — — — — 4 0.4 % Impact of carry back of US losses — (16) — (16) (2.4) % — — Impact of changes in local statutory tax rates 1 — — 1 0.2 % — — Adjustments in relation to business disposals — — — — — (25) (2.2) % Total 10 (16) — (6) (0.9) % 7 0.6 % Total actual tax charge (credit) 230 (113) 12 129 19.5 % 1 0.1 % Analysed into: Tax on adjusted operating profit (loss) 260 195 12 467 430 Tax on non-operating (loss) profit (30) (308) — (338) (429) Actual tax rate on: Adjusted operating profit (loss): Including non-recurring tax reconciling items 15 % 15 % (3) % 18 % 16 % Excluding non-recurring tax reconciling items 14 % 15 % (3) % 18 % 16 % Total profit (loss) 18 % 59 % (3) % 19 % 0 % Notes (i) The $62 million reconciling item in US operations reflects the impact of the dividend received deduction on the taxation of profits from variable annuity business. The $7 million adverse reconciling item in Asia operations reflects non tax deductible investment related marked-to-market losses. (ii) The $72 million adverse reconciling item in unrecognised tax losses reflects losses arising where it is unlikely that relief for the losses will be available in future periods. (iii) The statement of financial position contains the following provisions in relation to open tax matters. Half year 2020 $m At beginning of period 198 Movements in the current period included in tax charge attributable to shareholders (12) Provisions utilised in the period (34) Other movements* (3) At end of period 149 * Other movements include interest arising on open tax matters and amounts included in the Group’s share of profits from joint ventures and associates, net of related tax. (iv) Half year 2019 % Total Asia US Other attributable to operations operations operations shareholders Tax rate on adjusted operating profit (loss) % % % % Tax rate on profit (loss) before tax % % % % |
Earnings per share
Earnings per share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings per share | |
Earnings per share | B5 Earnings per share Half year 2020 Net of tax and Basic Diluted Non- controlling non- controlling earnings earnings Before tax Tax interests interests per share per share $m $m $m $m cents cents Based on profit for the period 663 (129) (22) 512 19.7 ¢ 19.7 ¢ Short-term fluctuations in investment returns on shareholder-backed business 2,706 (513) — 2,193 84.4 ¢ 84.4 ¢ Amortisation of acquisition accounting adjustments 18 (3) — 15 0.6 ¢ 0.6 ¢ Gain attaching to corporate transactions (846) 178 — (668) (25.7) ¢ (25.7) ¢ Based on adjusted operating profit 2,541 (467) (22) 2,052 79.0 ¢ 79.0 ¢ Half year 2019 Net of tax and Basic Diluted Non-controlling non-controlling earnings earnings Before tax Tax interests interests per share per share $m $m $m $m cents cents Based on profit for the period 1,987 76.9 ¢ 76.9 ¢ Profit for the period from discontinued operations (835) (32.3) ¢ (32.3) ¢ Based on profit for the period from continuing operations 1,159 (1) (6) 1,152 44.6 ¢ 44.6 ¢ Short-term fluctuations in investment returns on shareholder-backed business 1,455 (407) — 1,048 40.6 ¢ 40.6 ¢ Amortisation of acquisition accounting adjustments 22 (4) — 18 0.7 ¢ 0.7 ¢ Gain attaching to corporate transactions (17) (18) — (35) (1.4) ¢ (1.4) ¢ Based on adjusted operating profit from continuing operations 2,619 (430) (6) 2,183 84.5 ¢ 84.5 ¢ Earnings per share are calculated based on earnings attributable to ordinary shareholders, after related tax and non-controlling interests. The weighted average number of shares for calculating earnings per share, which excludes those held in employee share trusts and consolidated investment funds, is set out as below: Number of shares (in millions) Weighted average number of shares for calculation of: Half year Half year Basic earnings per share 2,596 2,583 Shares under option at end of period 2 4 Shares that would have been issued at fair value on assumed option price (2) (3) Diluted earnings per share 2,596 2,584 |
Dividends
Dividends | 6 Months Ended |
Jun. 30, 2020 | |
Dividends | |
Dividends | B6 Dividends Half year 2020 Half year 2019 Cents per share $m Cents per share $m Dividends relating to reporting period: First interim ordinary dividend ¢ 20.29 ¢ 526 Dividends paid in reporting period: Second interim ordinary dividend for prior year 25.97 ¢ 674 42.89 ¢ 1,108 In addition to the dividends shown in the table above, on 21 October 2019, following approval by the Group’s shareholders, Prudential plc demerged its UK and Europe operations (M&G plc) via a dividend in specie of $7,379 million. Dividend per share The 2020 first interim dividend of 5.37 cents per ordinary share will be paid on 28 September 2020 to shareholders in the UK on the register at 6.00pm BST and to shareholders on the Hong Kong branch register at 4.30pm Hong Kong time on 21 August 2020 (Record Date). Shareholders holding shares on the UK or Hong Kong share registers will continue to receive their dividend payments in either pounds sterling or Hong Kong dollars respectively, unless they elect otherwise. Shareholders holding shares on the UK or Hong Kong registers may elect to receive dividend payments in US dollars. Elections must be made through the relevant UK or Hong Kong share registrar on or before 7 September and 11 September 2020 respectively.The corresponding amount per share in pounds sterling and Hong Kong dollars is expected to be announced on or about 17 September 2020.The US dollar to pound sterling and Hong Kong dollar conversion rates will be determined by the actual rates achieved by Prudential buying those currencies during the two working days preceding the subsequent announcement. Holders of US American Depositary Receipts (US Shareholders) will be paid their dividends in US dollars on or about 28 September 2020. The 2020 first interim dividend will be paid on or about 5 October 2020 to shareholders with shares standing to the credit of their securities accounts with The Central Depository (Pte) Limited (CDP) at 5.00pm Singapore time on the Record Date (SG Shareholders). The exchange rate at which the dividend payable to the SG Shareholders will be translated from US dollars into Singapore dollars, will be determined by CDP. Shareholders on the UK register are eligible to participate in a Dividend Reinvestment Plan. |
Group assets and liabilities by
Group assets and liabilities by business type | 6 Months Ended |
Jun. 30, 2020 | |
Group assets and liabilities by business type | |
Group assets and liabilities by business type | C FINANCIAL POSITION C1 Group assets and liabilities by business type The analysis below is structured to show the investments and other assets and liabilities of the Group by reference to the differing degrees of policyholder and shareholder economic interest of the different types of business. The Group has streamlined its disclosures relating to the investments, other assets and liabilities of the Group in these condensed consolidated financial statements, including combining various disclosures into a single section within this note and further analysis of the categories of debt securities. The 2019 comparative information, in particular that relating to investments, has been re-presented from previously published information to conform to the current period’s format and the altered approach to credit ratings analysis described below. Debt securities are analysed below according to the issuing government for sovereign debt and to credit ratings for the rest of the securities. In 2020, to align more closely with the internal risk management analysis, the Group altered the compilation of its credit ratings analysis to use the middle of the Standard & Poor’s, Moody’s and Fitch ratings, where available. Where ratings are not available from these rating agencies, NAIC ratings (for the US), local external rating agencies’ ratings and lastly internal ratings have been used. Securities with none of the ratings listed above are classified as unrated and included under the ‘below BBB- and unrated’ category. The total securities (excluding sovereign debt) that were unrated at 30 June 2020 were $788 million (31 December 2019: $648 million). Previously, Standard & Poor’s ratings were used where available and if not, Moody’s and then Fitch were used as alternatives. Additionally, government debt is shown separately from the rating breakdowns in order to provide a more focused view of the credit portfolio. In the table below, AAA is the highest possible rating. Investment grade financial assets are classified within the range of AAA to BBB- ratings. Financial assets which fall outside this range are classified as below BBB-. 30 Jun 2020 $m Asia insurance Elimination Unit-linked Asia of intra-group With-profits assets and Other Asset Total Unallocated debtors and Group business liabilities business manage-ment Elimina-tions Asia US to a segment creditors total note (i) note (ii) Debt securities note (ix), note C1.1 Sovereign debt Indonesia 381 580 455 — — 1,416 — — — 1,416 Singapore 2,788 525 904 88 — 4,305 — — — 4,305 Thailand — — 1,567 16 — 1,583 — — — 1,583 United Kingdom — 7 — — — 7 — 154 — 161 United States 24,656 23 2,356 — — 27,035 5,371 — — 32,406 Vietnam — 14 2,789 — — 2,803 — — — 2,803 Other (predominantly Asia) 1,816 687 3,216 13 — 5,732 19 140 — 5,891 Subtotal 29,641 1,836 11,287 117 — 42,881 5,390 294 — 48,565 Other government bonds AAA 1,464 103 479 — — 2,046 447 — — 2,493 AA+ to AA- 353 34 101 — — 488 519 — — 1,007 A+ to A- 524 113 226 — — 863 191 — — 1,054 BBB+ to BBB- 466 88 248 8 — 810 2 — — 812 Below BBB- and unrated 104 17 331 — — 452 — 1 — 453 Subtotal 2,911 355 1,385 8 — 4,659 1,159 1 — 5,819 Corporate bonds AAA 1,122 270 504 — — 1,896 265 — — 2,161 AA+ to AA- 1,575 273 1,712 2 — 3,562 973 — — 4,535 A+ to A- 6,670 808 4,723 — — 12,201 11,792 — — 23,993 BBB+ to BBB- 7,806 1,043 3,389 — — 12,238 14,036 — — 26,274 Below BBB- and unrated 2,835 655 945 3 — 4,438 2,046 7 — 6,491 Subtotal 20,008 3,049 11,273 5 — 34,335 29,112 7 — 63,454 Asset-backed securities AAA 108 16 23 — — 147 2,227 — — 2,374 AA+ to AA- 36 6 8 — — 50 184 — — 234 A+ to A- 17 — 25 — — 42 575 — — 617 BBB+ to BBB- 15 — 10 — — 25 193 — — 218 Below BBB- and unrated 6 — — — — 6 175 — — 181 Subtotal 182 22 66 — — 270 3,354 — — 3,624 Total debt securities 52,742 5,262 24,011 130 — 82,145 39,015 302 — 121,462 Loans Mortgage loans note C1.2 — — 158 — — 158 8,119 — — 8,277 Policy loans 1,189 — 324 — — 1,513 4,705 8 — 6,226 Other loans 389 — 18 — — 407 — — — 407 Total loans 1,578 — 500 — — 2,078 12,824 8 — 14,910 Equity securities and holdings in collective investment schemes Direct equities 14,493 10,345 1,537 56 — 26,431 263 4 — 26,698 Collective investment schemes 13,455 6,097 4,175 10 — 23,737 36 7 — 23,780 US separate account assets note (iii) — — — — — - 184,220 — — 184,220 Total equity securities and holdings in collective investment schemes 27,948 16,442 5,712 66 — 50,168 184,519 11 — 234,698 Other financial investments note (iv) 991 572 1,817 97 — 3,477 3,827 75 — 7,379 Total financial Investments 83,259 22,276 32,040 293 — 137,868 240,185 396 — 378,449 Investment properties — — 7 — — 7 7 9 — 23 Investments in joint ventures and associates accounted for using the equity method — — 1,268 239 — 1,507 — — — 1,507 Cash and cash equivalents 913 599 1,242 132 — 2,886 2,493 3,005 — 8,384 Reinsurers' share of insurance contract liabilities note (v) 211 — 8,709 — — 8,920 35,993 5 — 44,918 Other assets note (vi) 1,954 482 8,051 799 (33) 11,253 17,942 3,828 (3,139) 29,884 Total assets 86,337 23,357 51,317 1,463 (33) 162,441 296,620 7,243 (3,139) 463,165 Shareholders' equity — — 10,535 994 — 11,529 8,955 (1,374) — 19,110 Non-controlling interests — — 2 159 — 161 - 36 — 197 Total equity — — 10,537 1,153 — 11,690 8,955 (1,338) — 19,307 Contract liabilities and unallocated surplus of with-profits funds note (iii) 76,647 21,376 33,541 — — 131,564 265,655 217 — 397,436 Core structural borrowings — — — — — — 250 6,249 — 6,499 Operational borrowings 243 15 111 25 — 394 1,212 639 — 2,245 Other liabilities note (vii) 9,447 1,966 7,128 285 (33) 18,793 20,548 1,476 (3,139) 37,678 Total liabilities 86,337 23,357 40,780 310 (33) 150,751 287,665 8,581 (3,139) 443,858 Total equity and liabilities 86,337 23,357 51,317 1,463 (33) 162,441 296,620 7,243 (3,139) 463,165 31 Dec 2019 $m Asia insurance Elimination Unit-linked Asia of intra-group With-profits assets and Other Asset Total Unallocated debtors and Group business liabilities business manage-ment Elimina-tions Asia US to a segment creditors total note (i) note (ii) Debt securities note (ix),note C1.1 Sovereign debt Indonesia 222 610 488 — — 1,320 — — — 1,320 Singapore 3,514 554 708 94 — 4,870 — — — 4,870 Thailand — — 1,398 19 — 1,417 — — — 1,417 United Kingdom — 7 — — — 7 — 615 — 622 United States 20,479 113 2,827 — — 23,419 6,160 597 — 30,176 Vietnam 1 15 2,900 — — 2,916 — — — 2,916 Other (predominantly Asia) 1,745 665 2,809 13 — 5,232 9 116 — 5,357 Subtotal 25,961 1,964 11,130 126 — 39,181 6,169 1,328 — 46,678 Other government bonds AAA 1,752 81 538 — — 2,371 977 — — 3,348 AA+ to AA- 135 8 78 — — 221 495 — — 716 A+ to A- 890 159 389 — — 1,438 245 — — 1,683 BBB+ to BBB- 356 88 201 — — 645 4 — — 649 Below BBB- and unrated 31 9 381 — — 421 — 2 — 423 Subtotal 3,164 345 1,587 — — 5,096 1,721 2 — 6,819 Corporate bonds AAA 732 384 516 — — 1,632 341 — — 1,973 AA+ to AA- 1,574 441 1,908 — — 3,923 1,566 — — 5,489 A+ to A- 5,428 542 5,063 — — 11,033 17,784 — — 28,817 BBB+ to BBB- 5,443 883 3,497 — — 9,823 22,775 — — 32,598 Below BBB- and unrated 2,111 569 781 3 — 3,464 2,157 2 — 5,623 Subtotal 15,288 2,819 11,765 3 — 29,875 44,623 2 — 74,500 Asset-backed securities AAA 236 19 104 — — 359 3,658 — — 4,017 AA+ to AA- 132 6 46 — — 184 780 — — 964 A+ to A- 1 — 14 — — 15 1,006 — — 1,021 BBB+ to BBB- — — — — — — 359 — — 359 Below BBB- and unrated — — — — — — 212 — — 212 Subtotal 369 25 164 — — 558 6,015 — — 6,573 Total debt securities 44,782 5,153 24,646 129 — 74,710 58,528 1,332 — 134,570 Loans Mortgage loans note C1.2 — — 165 — — 165 9,904 — — 10,069 Policy loans 1,089 — 316 — — 1,405 4,707 9 — 6,121 Other loans 374 — 19 — — 393 — — — 393 Total loans 1,463 — 500 — — 1,963 14,611 9 — 16,583 Equity securities and holdings in collective investment schemes Direct equities 14,143 12,440 1,793 59 — 28,435 150 4 — 28,589 Collective investment schemes 15,230 6,652 1,680 14 — 23,576 40 6 — 23,622 US separate account assets note (iii) — — — — — — 195,070 — — 195,070 Total equity securities and holdings in collective investment schemes 29,373 19,092 3,473 73 — 52,011 195,260 10 — 247,281 Other financial investments note (iv) 963 383 1,363 106 — 2,815 2,791 56 — 5,662 Total financial Investments 76,581 24,628 29,982 308 — 131,499 271,190 1,407 — 404,096 Investment properties — — 7 — — 7 7 11 — 25 Investments in joint ventures and associates accounted for using the equity method — — 1,263 237 — 1,500 — — — 1,500 Cash and cash equivalents 963 356 1,015 156 — 2,490 1,960 2,515 — 6,965 Reinsurers' share of insurance contract liabilities note (v) 152 — 5,306 — — 5,458 8,394 4 — 13,856 Other assets note (vi) 1,277 237 6,983 826 (35) 9,288 17,696 3,440 (2,652) 27,772 Total assets 78,973 25,221 44,556 1,527 (35) 150,242 299,247 7,377 (2,652) 454,214 Shareholders' equity — — 9,801 1,065 — 10,866 8,929 (318) — 19,477 Non-controlling interests — — 2 153 — 155 — 37 — 192 Total equity — — 9,803 1,218 — 11,021 8,929 (281) — 19,669 Contract liabilities and unallocated surplus of with-profits funds note (iii) 70,308 23,571 26,814 — — 120,693 269,549 186 — 390,428 Core structural borrowings — — — — — — 250 5,344 — 5,594 Operational borrowings 302 21 123 27 — 473 1,501 671 — 2,645 Other liabilities note (vii) 8,363 1,629 7,816 282 (35) 18,055 19,018 1,457 (2,652) 35,878 Total liabilities 78,973 25,221 34,753 309 (35) 139,221 290,318 7,658 (2,652) 434,545 Total equity and liabilities 78,973 25,221 44,556 1,527 (35) 150,242 299,247 7,377 (2,652) 454,214 Notes (i) The with-profits business of Asia comprises the with-profits assets and liabilities of the Hong Kong, Malaysia and Singapore operations. ‘Other business’ includes assets and liabilities of other participating businesses and other non-linked shareholder-backed business. (ii) Further analysis of the shareholders’ equity by business type of the US operations is provided below: 30 Jun 2020 $m 2019 $m Asset 31 Dec Insurance management Total Total Shareholders' equity 8,943 12 8,955 8,929 (iii) The US separate account assets comprise investments in mutual funds attaching to the variable annuity business that are held in the separate account. The related liabilities are reported in contract liabilities at an amount equal to the separate account assets. (iv) Other financial investments comprise derivative assets, other investments and deposits. (v) Reinsurers’ share of contract liabilities includes the reinsurance ceded in respect of the acquired REALIC business by the Group’s US insurance operations and at 30 June 2020 also includes amounts ceded in respect of the reinsurance of substantially all of Jackson’s in-force fixed and fixed indexed annuity liabilities to Athene Life Re Ltd, as discussed in note D1. (vi) Of total ‘Other assets’ at 30 June 2020, there are: – Property, plant and equipment (PPE) of $964 million (31 December 2019: $1,065 million). During the period, the Group made additions of $51 million of PPE (full year 2019: $160 million), of which $8 million relates to right-of-use assets (full year 2019: $96 million). – Premiums receivable of $778 million (31 December 2019: $794 million), of which $734 million (31 December 2019: $738 million) are due within one year. (vii) Within ’Other liabilities’ at 30 June 2020 is accruals, deferred income and other liabilities of $16,208 million (31 December 2019: $14,488 million), of which $11,213 million (31 December 2019: $9,172 million) are due within one year. (viii) The credit ratings, information or data contained in this report which are attributed and specifically provided by Standard & Poor's, Moody's and Fitch Solutions and their respective affiliates and suppliers ('Content Providers') is referred to here as the 'Content'. Reproduction of any Content in any form is prohibited except with the prior written permission of the relevant party. The Content Providers do not guarantee the accuracy, adequacy, completeness, timeliness or availability of any Content and are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such Content. The Content Providers expressly disclaim liability for any damages, costs, expenses, legal fees, or losses (including lost income or lost profit and opportunity costs) in connection with any use of the Content. A reference to a particular investment or security, a rating or any observation concerning an investment that is part of the Content is not a recommendation to buy, sell or hold any such investment or security, nor does it address the suitability of an investment or security and should not be relied on as investment advice. |
Additional analysis of debt sec
Additional analysis of debt securities | 6 Months Ended |
Jun. 30, 2020 | |
Additional analysis of debt securities | |
Additional analysis of debt securities | C1.1 Additional analysis of debt securities This note provides additional analysis of the Group’s debt securities. With the exception of certain debt securities classified as ‘available-for-sale’ under IAS 39, which primarily relate to US insurance operations as disclosed below, the Group’s debt securities are carried at fair value through profit or loss. (a) Holdings by consolidated investment funds of the Group Of the $121,462 million of Group’s debt securities at 30 June 2020 (31 December 2019: $134,570 million), the following amounts were held by the consolidated investment funds of the Group: 30 Jun 2020 $m 2019 $m Asia US Group total 31 Dec Debt securities held by consolidated investment funds 17,219 1,244 18,463 22,113 (b) Additional analysis of US debt securities Debt securities for US operations included in the statement of financial position comprise: 2020 $m 2019 $m 30 Jun 31 Dec Available-for-sale 37,597 57,091 Fair value through profit and loss 1,418 1,437 Total US debt securities 39,015 58,528 The corporate bonds held by the US insurance operations comprise: 2020 $m 2019 $m 30 Jun 31 Dec Publicly traded and SEC Rule 144A securities* 21,215 34,781 Non-SEC Rule 144A securities 7,897 9,842 Total US corporate bonds 29,112 44,623 * A 1990 SEC rule that facilitates the resale of privately placed securities under Rule 144A that are without SEC registration to qualified institutional investors. The rule was designed to develop a more liquid and efficient institutional resale market for unregistered securities. (c) Movements in unrealised gains and losses on Jackson available-for-sale debt securities The movement in the statement of financial position value for debt securities classified as available-for-sale from a net unrealised gain of $3,496 million at 31 December 2019 to a net unrealised gain of $3,219 million at 30 June 2020 is analysed in the table below. Changes in unrealised appreciation reflected in other comprehensive income Gains recycled to income statement on Unrealised gains transfer of debt (losses) arising in 30 Jun 2020 $m securities to Athene the period 31 Dec 2019 $m note D1 Assets fair valued at below book value Book value* 2,188 3,121 Unrealised gain (loss) (109) (82) (27) Fair value (as included in statement of financial position) 2,079 3,094 Assets fair valued at or above book value Book value* 32,190 50,474 Unrealised gain (loss) 3,328 (2,817) 2,622 3,523 Fair value (as included in statement of financial position) 35,518 53,997 Total Book value* 34,378 53,595 Net unrealised gain (loss) 3,219 (2,817) 2,540 3,496 Fair value (as included in the footnote above in the overview table and the statement of financial position) 37,597 57,091 * Book value represents cost or amortised cost of the debt securities. Jackson debt securities classified as available-for-sale in an unrealised loss position (i) Fair value of securities as a percentage of book value The following table shows the fair value of the debt securities in a gross unrealised loss position for various percentages of book value: 30 Jun 2020 $m 31 Dec 2019 $m Fair Unrealised Fair Unrealised value loss value loss Between 90% and 100 % 1,871 (62) 3,083 (25) Between 80% and 90% 111 (17) 11 (2) Below 80% 97 (30) - - Total 2,079 (109) 3,094 (27) (ii) Unrealised losses by maturity of security 2020 $m 2019 $m 30 Jun 31 Dec 1 year to 5 years (30) (1) 5 years to 10 years (39) (12) More than 10 years (20) (7) Mortgage-backed and other debt securities (20) (7) Total (109) (27) (iii) Age analysis of unrealised losses for the periods indicated The following table shows the age analysis of all the unrealised losses in the portfolio by reference to the length of time the securities have been in an unrealised loss position: 30 Jun 2020 $m 31 Dec 2019 $m Non- Non- investment Investment investment Investment Age analysis grade grade* Total grade grade* Total Less than 6 months (24) (80) (104) (1) (20) (21) 6 months to 1 year (3) (1) (4) (1) (1) (2) 1 year to 2 years — — — — (1) (1) 2 years to 3 years (1) — (1) — (1) (1) More than 3 years — — — — (2) (2) Total (28) (81) (109) (2) (25) (27) * For Standard and Poor's, Moody’s and Fitch rated debt securities, those with ratings range from AAA to BBB- are designated as investment grade. For NAIC rated debt securities, those with ratings 1 or 2 are designated as investment grade. Further, the following table shows the age analysis of the securities whose fair values were below 80 per cent of the book value: 30 Jun 2020 $m 31 Dec 2019 $m Fair Unrealised Fair Unrealised Age analysis value loss value loss Less than 3 months 60 (17) — — 3 months to 6 months 37 (13) — — Total below 80% 97 (30) — — (d) Asset-backed securities The Group’s holdings in asset-backed securities (ABS) comprise residential mortgage-backed securities (RMBS), commercial mortgage-backed securities (CMBS), collateralised debt obligations (CDO) funds and other asset-backed securities. The US operations' exposure to asset-backed securities comprises: 2020 $m 2019 $m 30 Jun 31 Dec RMBS Sub-prime (30 Jun 2020: 2% AAA) 35 93 Alt-A (30 Jun 2020: 35% AAA, 39% A) 14 116 Prime including agency (30 Jun 2020: 85% AAA, 6% AA, 5% A) 263 862 CMBS (30 Jun 2020: 86% AAA, 5% AA, 3% A) 1,646 3,080 CDO funds (30 Jun 2020: 81% AAA, 9% AA, 5% A), $nil exposure to sub-prime 397 696 Other ABS (30 Jun 2020: 26% AAA, 5% AA, 48% A), $35 million exposure to sub-prime 999 1,168 Total US asset-backed securities 3,354 6,015 (e) Group bank debt exposure The Group exposures held by the shareholder-backed business and with-profits funds in bank debt securities are analysed below. The table excludes assets held to cover linked liabilities and those of the consolidated investment funds. Exposure to bank debt securities 30 Jun 2020 $m 2019 $m Senior debt Subordinated debt 31 Dec Group Shareholder-backed business Total Tier 1 Tier 2 Total total Group total Asia 549 572 329 901 1,450 993 Eurozone 223 — 26 26 249 337 United Kingdom 352 7 91 98 450 723 United States 1,565 5 52 57 1,622 3,134 Other 259 — 137 137 396 647 Total 2,948 584 635 1,219 4,167 5,834 With-profits funds Asia 534 87 572 659 1,193 1,130 Eurozone 77 — 101 101 178 131 United Kingdom 182 1 105 106 288 155 United States 670 2 15 17 687 34 Other 116 — 262 262 378 284 Total 1,579 90 1,055 1,145 2,724 1,734 |
Additional analysis of loans po
Additional analysis of loans portfolio | 6 Months Ended |
Jun. 30, 2020 | |
Additional analysis of loans portfolio | |
Additional analysis of loans portfolio | C1.2 Additional analysis of US mortgage loans In the US, mortgage loans of $8,119 million at 30 June 2020 31 December 2019: $9,904 million) are all commercial mortgage loans that are secured by the following property types: industrial, multi-family residential, suburban office, retail or hotel. The average loan size is $18.6 million (31 December 2019: $19.3 million). The portfolio has a current estimated average loan to value of 55 per cent (31 December 2019: 54 per cent). At 30 June 2020, Jackson had mortgage loans with a carrying value of $947 million where the contractual terms of the agreements had been restructured to grant forbearance for a period of no longer than six months (30 June and 31 December 2019: nil). Under IAS 39, restructured loans are reviewed for impairment with an impairment recorded if the expected cash flows under the newly restructured terms discounted at the original yield (the pre-structured interest rate) are below the carrying value of the loan. No impairment is recorded for these loans in half year 2020 as the expected cash flows and interest rate did not materially change under the restructured terms. |
Fair value measurement
Fair value measurement | 6 Months Ended |
Jun. 30, 2020 | |
Fair value measurement | |
Fair value measurement | C2 Fair value measurement (a) Determination of fair value The fair values of the financial instruments for which fair valuation is required under IFRS are determined by the use of current market bid prices for exchange-quoted investments, or by using quotations from independent third parties, such as brokers and pricing services or by using appropriate valuation techniques. The estimated fair value of derivative financial instruments reflects the estimated amount the Group would receive or pay in an arm’s length transaction. This amount is determined using quoted prices if exchange listed, quotations from independent third parties or valued internally using standard market practices. Other than the loans which have been designated at fair value through profit or loss, the carrying value of loans and receivables is presented net of provisions for impairment. The fair value of loans is estimated from discounted cash flows expected to be received. The discount rate used is updated for the market rate of interest where applicable. The fair value of the subordinated and senior debt issued by the parent company is determined using quoted prices from independent third parties. The fair value of financial liabilities (other than subordinated debt, senior debt and derivative financial instruments) is determined using discounted cash flows of the amounts expected to be paid. Valuation approach for level 2 fair valued assets and liabilities A significant proportion of the Group’s level 2 assets are corporate bonds, structured securities and other non-national government debt securities. These assets, in line with market practice, are generally valued using a designated independent pricing service or quote from third-party brokers. These valuations are subject to a number of monitoring controls, such as comparison to multiple pricing sources where available, monthly price variances, stale price reviews and variance analysis on prices achieved on subsequent trades. For further detail on the valuation approach for level 2 fair valued assets and liabilities, refer to note C3.1 of the Group IFRS financial statement for the year ended 31 December 2019. Valuation approach for level 3 fair valued assets and liabilities Investments valued using valuation techniques include financial investments which by their nature do not have an externally quoted price based on regular trades, and financial investments for which markets are no longer active as a result of market conditions, eg market illiquidity. The valuation techniques used include comparison to recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option-adjusted spread models and, if applicable, enterprise valuation. The Group’s valuation policies, procedures and analyses for instruments categorised as level 3 are overseen by Business Unit committees as part of the Group’s wider financial reporting governance processes. The procedures undertaken include approval of valuation methodologies, verification processes, and resolution of significant or complex valuation issues. In undertaking these activities the Group makes use of the extensive expertise of its asset management functions. In addition, the Group has minimum standards for independent price verification to ensure valuation accuracy is regularly independently verified. Adherence to this policy is monitored across the business units. (b) Fair value measurement hierarchy of Group assets and liabilities Assets and liabilities carried at fair value on the statement of financial position The table below shows the assets and liabilities carried at fair value analysed by level of the IFRS 13 ‘Fair Value Measurement’ defined fair value hierarchy. This hierarchy is based on the inputs to the fair value measurement and reflects the lowest level input that is significant to that measurement. All assets and liabilities held at fair value are classified as fair value through profit or loss, except for $37,752 million (31 December 2019: $58,302 million) of debt securities classified as available-for-sale, principally in the US operations. All assets and liabilities held at fair value are measured on a recurring basis. As of 30 June 2020, the Group did not have any financial instruments that are measured at fair value on a non-recurring basis. Financial instruments at fair value 30 Jun 2020 $m Level 1 Level 2 Level 3 Valuation Valuation Quoted prices based on based on (unadjusted) significant significant in active observable unobservable markets market inputs market inputs Total Loans — — 3,606 3,606 Equity securities and holdings in collective investment schemes 230,670 3,554 474 234,698 Debt securities 64,300 57,091 71 121,462 Other investments (including derivative assets) 109 2,350 1,569 4,028 Derivative liabilities (65) (402) — (467) Total financial investments, net of derivative liabilities 295,014 62,593 5,720 363,327 Investment contract liabilities without discretionary participation features held at fair value — (936) — (936) Net asset value attributable to unit holders of consolidated investment funds (5,521) (8) (438) (5,967) Other financial liabilities held at fair value — — (3,743) (3,743) Total financial instruments at fair value 289,493 61,649 1,539 352,681 Percentage of total (%) 82 % 18 % 0 % 100 % Analysed by business type: Financial investments, net of derivative liabilities at fair value: With-profits 67,290 12,963 314 80,567 Unit-linked and variable annuity separate account 204,723 1,208 — 205,931 Non-linked shareholder-backed business 23,001 48,422 5,406 76,829 Total financial investments, net of derivative liabilities at fair value 295,014 62,593 5,720 363,327 Other financial liabilities at fair value (5,521) (944) (4,181) (10,646) Group total financial instruments at fair value 289,493 61,649 1,539 352,681 31 Dec 2019 $m Level 1 Level 2 Level 3 Valuation Valuation Quoted prices based on based on (unadjusted) significant significant in active observable unobservable markets market inputs market inputs Total Loans — — 3,587 3,587 Equity securities and holdings in collective investment schemes 243,285 3,720 276 247,281 Debt securities 67,927 66,637 6 134,570 Other investments (including derivative assets) 70 1,676 1,301 3,047 Derivative liabilities (185) (207) — (392) Total financial investments, net of derivative liabilities 311,097 71,826 5,170 388,093 Investment contract liabilities without discretionary participation features held at fair value — (1,011) — (1,011) Net asset value attributable to unit holders of consolidated investment funds (5,973) (23) (2) (5,998) Other financial liabilities held at fair value — — (3,760) (3,760) Total financial instruments at fair value 305,124 70,792 1,408 377,324 Percentage of total (%) 81 % 19 % 0 % 100 % Analysed by business type: Financial investments, net of derivative liabilities at fair value: With-profits 66,061 7,762 260 74,083 Unit-linked and variable annuity separate account 217,838 1,486 — 219,324 Non-linked shareholder-backed business 27,198 62,578 4,910 94,686 Total financial investments, net of derivative liabilities at fair value 311,097 71,826 5,170 388,093 Other financial liabilities at fair value (5,973) (1,034) (3,762) (10,769) Group total financial instruments at fair value 305,124 70,792 1,408 377,324 Assets and liabilities at amortised cost and their fair value The table below shows the financial assets and liabilities carried at amortised cost on the statement of financial position and their fair value. Cash deposits, accrued income, other debtors, accruals, deferred income and other liabilities are excluded from the analysis below. These are carried at amortised cost, which approximates fair value. 2020 $m 2019 $m 30 Jun 31 Dec Carrying Fair Carrying Fair value value value value Assets Loans 11,304 11,435 12,996 13,511 Liabilities Investment contract liabilities without discretionary participation features (3,730) (3,793) (3,891) (3,957) Core structural borrowings of shareholder-financed businesses (6,499) (7,087) (5,594) (6,227) Operational borrowings (excluding lease liabilities) (1,703) (1,703) (2,015) (2,015) Obligations under funding, securities lending and sale and repurchase agreements (9,085) (9,442) (8,901) (9,135) Total (9,713) (10,590) (7,405) (7,823) (c) Fair value measurements for level 3 fair valued assets and liabilities Reconciliation of movements in level 3 assets and liabilities measured at fair value The following table reconciles the value of level 3 fair valued assets and liabilities at the beginning of the period to that presented at the end of the period. Total investment return recorded in the income statement represents interest and dividend income, realised gains and losses, unrealised gains and losses on the assets classified at fair value through profit and loss and foreign exchange movements on an individual entity’s overseas investments. Total gains and losses recorded in other comprehensive income includes unrealised gains and losses on debt securities held as available-for-sale principally within Jackson and foreign exchange movements arising from the retranslation of the Group’s overseas subsidiaries and branches. Half year 2020 $m Net asset Equity value securities attributable and Other to unit holdings in investments holders of collective (including consolidated Other Reconciliation of movements in level 3 assets investment Debt derivative investment financial and liabilities measured at fair value Loans schemes securities assets) funds liabilities Total Balance at beginning of period 3,587 276 6 1,301 (2) (3,760) 1,408 Total gains (losses) in income statement* 120 (44) (6) (170) 134 (91) (57) Total gains (losses) recorded in other comprehensive income — (4) — — — — (4) Purchases and other additions — 348 20 484 (583) — 269 Sales — (102) (2) (46) 13 — (137) Issues 52 — — — — (53) (1) Settlements (153) — — — — 161 8 Transfers into level 3 — — 53 — — — 53 Balance at end of period 3,606 474 71 1,569 (438) (3,743) 1,539 Full year 2019 $m Net asset Equity value securities attributable and Other Borrowings to unit holdings in investments attributable holders of collective (including to with- consolidated Other Reconciliation of movements in level 3 assets investment Debt derivative Derivative profits investment financial and liabilities measured at fair value Loans schemes securities assets) liabilities businesses funds liabilities Total Balance at beginning of year 6,054 656 1,505 6,714 (539) (2,045) (1,258) (4,335) 6,752 Demerger of UK and Europe operations (2,509) (440) (1,498) (5,513) — 2,045 1,258 451 (6,206) Total gains (losses) in income statement* 1 (11) 6 30 539 — — (28) 537 Total gains (losses) recorded in other comprehensive income — 3 — (6) — — — (11) (14) Purchases — 69 — 269 — — (2) — 336 Sales — (1) (7) (193) — — — — (201) Issues 275 — — — — — — (143) 132 Settlements (234) — — — — — — 306 72 Balance at end of year 3,587 276 6 1,301 — — (2) (3,760) 1,408 * Of the total net gains and (losses) in the income statement of $(57) million at half year 2020 (full year 2019: $537 million), $(103) million (full year 2019: $19 million) relates to net unrealised gains and losses of financial instruments still held at the end of the period, which can be analysed as follows: 2020 $m 2019 $m 30 Jun 31 Dec Equity securities and holdings in collective investment schemes (72) (11) Debt securities (5) — Other investments (157) 34 Net asset value attributable to unit holders of consolidated investment funds 132 — Other financial liabilities (1) (4) Total (103) 19 At 30 June 2020, the Group held $1,539 million (31 December 2019: $1,408 million) of net financial instruments at fair value within level 3. This represents less than 0.5 per cent (31 December 2019: 1 per cent) of the total fair valued financial assets net of financial liabilities. Included within these net assets and liabilities are policy loans of $3,606 million at 30 June 2020 (31 December 2019: $3,587 million) measured as the loan outstanding balance, plus accrued investment income, attached to acquired REALIC business and held to back the liabilities for funds withheld under reinsurance arrangements. The funds withheld liability of $3,743 million at 30 June 2020 (31 December 2019: $3,760 million) is also classified within level 3. The fair value of the liabilities is equal to the fair value of the underlying assets held as collateral, which primarily consist of policy loans and debt securities. The assets and liabilities offset and therefore their movements have no impact on shareholders' profit and equity. Excluding the loans and funds withheld liability under Jackson's REALIC reinsurance arrangements as described above, which amounted to a net liability at 30 June 2020 of $(137) million (31 December 2019: $(173) million), the level 3 fair valued financial assets net of financial liabilities were a net asset of $1,676 million at 30 June 2020 (31 December 2019: $1,581 million). Of this amount, equity securities of $2 million are internally valued, representing less than 0.1 per cent of the total fair valued financial assets net of financial liabilities (31 December 2019: nil). Internal valuations are inherently more subjective than external valuations. Level 3 financial assets net of financial liabilities comprise the following: – Private equity investments in both equity securities and limited partnerships within other financial investments of $1,687 million (31 December 2019: $1,301 million) consisting of investments held by Jackson which are primarily externally valued in accordance with International Private Equity and Venture Capital Association guidelines using the proportion of the company's investment in each fund as shown in external valuation reports; – Equity securities and holdings in collective investment schemes of $356 million (31 December 2019: $276 million) consisting primarily of property and infrastructure funds held by the Asia participating funds, which are externally valued using the net asset value of the invested entities; - – Other sundry individual financial instruments of a net asset of $71 million (31 December 2019: net asset of $6 million). Of the net asset of $1,676 million at 30 June 2020 (31 December 2019: $1,581 million) referred to above: – A net asset of $314 million (31 December 2019: $258 million) is held by the Group's Asia participating funds and therefore shareholders' profit and equity are not impacted by movements in the valuation of these financial instruments ; and – A net asset of $1,362 million (31 December 2019: $1,323 million) is held to support non-linked shareholder-backed business. The majority of these instruments ($1,360 million out of the $1,362 million) are externally valued and are therefore inherently less subjective than internal valuations. These instruments consist primarily of private equity investments held by Jackson as described above. If the value of all these Level 3 financial instruments decreased by 10 per cent, the change in valuation would be $(136) million (31 December 2019: $(132) million), which would reduce shareholders' equity by this amount before tax. All of this amount would pass through the income statement substantially as part of short-term fluctuations in investment returns outside of adjusted operating profit. (d) The Group’s policy is to recognise transfers into and transfers out of levels as of the end of each half year reporting period except for material transfers which are recognised as of the date of the event or change in circumstances that caused the transfer. Transfers are deemed to have occurred when there is a material change in the observed valuation inputs or a change in the level of trading activities of the securities. During half year 2020, the transfers between levels within the Group’s portfolio, were primarily transfers from level 1 to level 2 of $4,232 million and transfers from level 2 to level 1 of $1,843 million. These transfers which relate to equity securities and debt securities arose to reflect the change in the observed valuation inputs and in certain cases, the change in the level of trading activities of the securities. There were transfers into level 3 of $53 million in the period. |
Policyholder liabilities and un
Policyholder liabilities and unallocated surplus | 6 Months Ended |
Jun. 30, 2020 | |
Policyholder liabilities and unallocated surplus | |
Policyholder liabilities and unallocated surplus | C3 Policyholder liabilities and unallocated surplus C3.1 Group overview (i) Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds notes (a),(b) Half year 2020 $m Asia US Total note C3.2 note C3.3 At 1 January 2020 132,570 269,549 402,119 Comprising: - Policyholder liabilities on the consolidated statement of financial position (excludes $186 million classified as unallocated to a segment) 115,943 269,549 385,492 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 4,750 — 4,750 - Group's share of policyholder liabilities of joint ventures and associate note(d) 11,877 — 11,877 Net flows: Premiums 9,746 8,865 18,611 Surrenders (2,083) (7,455) (9,538) Maturities/deaths (1,153) (1,793) (2,946) Net flows note(d) 6,510 (383) 6,127 Shareholders' transfers post-tax (54) — (54) Investment-related items and other movements 6,526 (3,511) 3,015 Foreign exchange translation differences (1,580) — (1,580) At 30 June 2020 143,972 265,655 409,627 Comprising: - Policyholder liabilities on the consolidated statement of financial position (excludes $217 million classified as unallocated to a segment) 126,052 265,655 391,707 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 5,512 — 5,512 - Group's share of policyholder liabilities of joint ventures and associate note (d) 12,408 — 12,408 Half year 2019 $m Discontinued Asia US UK and Total note C3.2 note C3.3 Europe At 1 January 2019 105,408 236,380 210,002 551,790 Comprising: - Policyholder liabilities on the consolidated statement of financial position (excludes $50 million classified as unallocated to a segment) note (c) 91,836 236,380 193,020 521,236 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,198 — 16,982 20,180 - Group's share of policyholder liabilities of joint ventures and associate note (d) 10,374 — — 10,374 Reclassification of UK and Europe liabilities as held for distribution — — (210,002) (210,002) Net flows: Premiums 9,800 9,136 — 18,936 Surrenders (1,982) (8,279) — (10,261) Maturities/deaths (1,278) (1,744) — (3,022) Net flows note(d) 6,540 (887) — 5,653 Shareholders' transfers post-tax (49) — — (49) Investment-related items and other movements 7,947 21,786 — 29,733 Foreign exchange translation differences 547 — — 547 At 30 June 2019 120,393 257,279 — 377,672 Comprising: - Policyholder liabilities on the consolidated statement of financial position (excludes $61 million classified as unallocated to a segment) note (c) 105,593 257,279 — 362,872 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,747 — — 3,747 - Group's share of policyholder liabilities of joint ventures and associate note (d) 11,053 — — 11,053 Average policyholder liability balances note (e) Half year 2020 133,141 267,602 — 400,743 Half year 2019 109,428 246,830 — 356,258 Notes (a) (b) (c) (d) (e) (ii) Analysis of movements in policyholder liabilities for shareholder-backed business Half year 2020 $m Asia US Total At 1 January 2020 62,262 269,549 331,811 Net flows: Premiums 5,155 8,865 14,020 Surrenders (1,702) (7,455) (9,157) Maturities/deaths (477) (1,793) (2,270) Net flows note 2,976 (383) 2,593 Investment-related items and other movements 3,139 (3,511) (372) Foreign exchange translation differences (1,052) — (1,052) At 30 June 2020 67,325 265,655 332,980 Comprising: - Policyholder liabilities on the consolidated statement of financial position 54,917 265,655 320,572 (excludes $217 million classified as unallocated to a segment) - Group's share of policyholder liabilities relating to joint ventures and associate 12,408 — 12,408 Half year 2019 $m Discontinued UK and Asia US Europe Total At 1 January 2019 51,705 236,380 51,911 339,996 Reclassification of UK and Europe liabilities as held for distribution — — (51,911) (51,911) Net flows: Premiums 5,076 9,136 — 14,212 Surrenders (1,714) (8,279) — (9,993) Maturities/deaths (567) (1,744) — (2,311) Net flows note 2,795 (887) — 1,908 Investment-related items and other movements 2,100 21,786 — 23,886 Foreign exchange translation differences 315 — — 315 At 30 June 2019 56,915 257,279 — 314,194 Comprising: - Policyholder liabilities on the consolidated statement of financial position (excludes $61 million classified as unallocated to a segment) 45,862 257,279 — 303,141 - Group's share of policyholder liabilities relating to joint ventures and associate 11,053 — — 11,053 Note Including net flows of the Group’s insurance joint ventures and associate. (iii) Movement in insurance contract liabilities and unallocated surplus of with-profits funds Further analysis of the movement in the period of the Group’s gross contract liabilities, reinsurer's share of insurance contract liabilities and unallocated surplus of with-profits funds (excluding those held by joint ventures and associate) is provided below: Reinsurers' share of insurance Unallocated surplus Contract liabilities contract liabilities of with-profits funds $m $m $m At 1 January 2020 385,678 (13,856) 4,750 Income and expense included in the income statement note (a) 7,555 (31,066) 742 Other movements note (b) (110) — — Foreign exchange translation differences (1,199) 4 20 At 30 June 2020 391,924 (44,918) 5,512 At 1 January 2019 521,286 (14,193) 20,180 Removal of opening balances relating to the discontinued UK and Europe operations note (c) (193,020) 2,169 (16,982) Income and expense included in the income statement 33,996 (880) 655 Other movements note (b) 53 — (116) Foreign exchange translation differences 618 (15) 10 At 30 June 2019 362,933 (12,919) 3,747 Notes (a) The increase in reinsurers' share of insurance contract liabilities in half year 2020 includes $27.7 billion in respect of the reinsurance of substantially all of Jackson's in-force fixed and fixed indexed annuity liabilities to Athene Life Re Ltd, as discussed in note D1. (b) Other movements include premiums received and claims paid on investment contracts without discretionary participating features, which are taken directly to the statement of financial position in accordance with IAS 39. (c) The $2,169 million of reinsurer’s share of insurance contract liabilities excluded the intra-group reinsurance assets for the with-profits business ceded to the Asia insurance operations, which were eliminated on consolidation at 1 January 2019. The total charge for benefit and claims in half year 2020 shown in the income statement comprises the amounts shown as ‘income and expense included in the income statement’ in the table above together with claims paid of $13,504 million in the period and claim amounts attributable to reinsurers of $(590) million. The movement in the gross contract liabilities and the reinsurer's share of insurance contract liabilities during the first half of 2020 includes the impact of a change to the calculation of the valuation interest rate (VIR) used to value long-term insurance liabilities in Hong Kong. The effect of the change to the VIR was such that the implicit duration of liabilities is reduced and closer to best estimate expectations. The change reduced policyholder liabilities (net of reinsurance) of the Hong Kong's shareholder-backed business at 30 June 2020 by $1,039 million. The resulting benefit of $1,039 million in the income statement is included within short-term fluctuations in investment returns in the Group's supplementary analysis of profit. C3.2 Asia insurance operations Half year 2020 $m Shareholder-backed business With-profits Unit-linked Other business liabilities business Total At 1 January 2020 70,308 28,850 33,412 132,570 Comprising: - Policyholder liabilities on the consolidated statement of financial position 65,558 23,571 26,814 115,943 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 4,750 — — 4,750 - Group's share of policyholder liabilities relating to joint ventures and associate note (a) — 5,279 6,598 11,877 Premiums: New business 375 909 1,009 2,293 In-force 4,216 1,148 2,089 7,453 4,591 2,057 3,098 9,746 Surrenders note (b) (381) (1,209) (493) (2,083) Maturities/deaths (676) (87) (390) (1,153) Net flows 3,534 761 2,215 6,510 Shareholders' transfers post tax (54) — — (54) Investment-related items and other movements note (c) 3,387 (2,243) 5,382 6,526 Foreign exchange translation differences note (d) (528) (794) (258) (1,580) At 30 June 2020 76,647 26,574 40,751 143,972 Comprising: - Policyholder liabilities on the consolidated statement of financial position 71,135 21,376 33,541 126,052 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 5,512 — — 5,512 - Group's share of policyholder liabilities relating to joint ventures and associate note (a) — 5,198 7,210 12,408 Half year 2019 $m Shareholder-backed business With-profits Unit-linked Other business liabilities business Total At 1 January 2019 53,703 25,704 26,001 105,408 Comprising: - Policyholder liabilities on the consolidated statement of financial position 50,505 20,846 20,485 91,836 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,198 — — 3,198 - Group's share of policyholder liabilities relating to joint ventures and associate note (a) — 4,858 5,516 10,374 Premiums: New business 769 1,003 1,180 2,952 In-force 3,955 1,206 1,687 6,848 4,724 2,209 2,867 9,800 Surrenders note (b) (268) (1,385) (329) (1,982) Maturities/deaths (711) (89) (478) (1,278) Net flows 3,745 735 2,060 6,540 Shareholders' transfers post-tax (49) — — (49) Investment-related items and other movements note (c) 5,847 753 1,347 7,947 Foreign exchange translation differences note (d) 232 176 139 547 At 30 June 2019 63,478 27,368 29,547 120,393 Comprising: - Policyholder liabilities on the consolidated statement of financial position 59,731 22,392 23,470 105,593 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,747 — — 3,747 - Group's share of policyholder liabilities relating to joint ventures and associate note (a) — 4,976 6,077 11,053 Average policyholder liability balances note (e) Half year 2020 68,347 27,712 37,082 133,141 Half year 2019 55,118 26,536 27,774 109,428 Notes (a) (b) (c) (d) (e) C3.3 US insurance operations Half year 2020 $m Variable annuity General account separate account and other liabilities business Total note (d) At 1 January 2020 195,070 74,479 269,549 Premiums 6,544 2,321 8,865 Surrenders (5,353) (2,102) (7,455) Maturities/deaths (848) (945) (1,793) Net flows note (a) 343 (726) (383) Transfers from separate to general account (1,042) 1,042 — Investment-related items and other movements note (b) (10,151) 6,640 (3,511) At 30 June 2020 184,220 81,435 265,655 Half year 2019 $m Variable annuity General account separate account and other liabilities business Total At 1 January 2019 163,301 73,079 236,380 Premiums 6,032 3,104 9,136 Surrenders (6,008) (2,271) (8,279) Maturities/deaths (782) (962) (1,744) Net flows note (a) (758) (129) (887) Transfers from general to separate account 637 (637) — Investment-related items and other movements 21,737 49 21,786 At 30 June 2019 184,917 72,362 257,279 Average policyholder liability balances note (c) Half year 2020 189,645 77,957 267,602 Half year 2019 174,109 72,721 246,830 Notes (a) (b) (c) (d) |
Intangible assets
Intangible assets | 6 Months Ended |
Jun. 30, 2020 | |
Intangible assets | |
Intangible assets | C4 Intangible assets C4.1 Goodwill Goodwill shown on the consolidated statement of financial position at 30 June 2020 represents amounts allocated to businesses in Asia and Africa in respect of both acquired asset management and life businesses. 2020 $m 2019 $m 30 Jun 31 Dec Carrying value at beginning of period 969 2,365 Reclassification/Demerger of UK and Europe operations — (1,731) Additions in the period — 299 Exchange differences (27) 36 Carrying value at end of period 942 969 C4.2 Deferred acquisition costs and other intangible assets 2020 $m 2019 $m 30 Jun 31 Dec Deferred acquisition costs and other intangible assets attributable to shareholders 18,538 17,409 Other intangible assets, including computer software, attributable to with-profits funds 66 67 Total of deferred acquisition costs and other intangible assets 18,604 17,476 The deferred acquisition costs and other intangible assets attributable to shareholders comprise: 2020 $m 2019 $m 30 Jun 31 Dec Deferred acquisition costs related to insurance contracts as classified under IFRS 4 14,567 14,206 Deferred acquisition costs related to investment management contracts, including life assurance contracts classified as financial instruments and investment management contracts under IFRS 4 34 33 Deferred acquisition costs related to insurance and investment contracts 14,601 14,239 Present value of acquired in-force policies for insurance contracts as classified under IFRS 4 (PVIF) 34 38 Distribution rights and other intangibles 3,903 3,132 Present value of acquired in-force (PVIF) and other intangibles attributable to shareholders 3,937 3,170 Total of deferred acquisition costs and other intangible assets note (a) 18,538 17,409 Notes (a) Total deferred acquisition costs and other intangible assets attributable to shareholders can be further analysed by business operations as follows: 2020 $m 2019 $m Deferred acquisition costs PVIF and other 30 Jun 31 Dec Asia US* intangibles † Total Total Balance at beginning of period: 1,999 12,240 3,170 17,409 15,008 Removal of UK and Europe operations from opening balance — — — — (143) Additions ‡ 261 353 904 1,518 2,601 Amortisation to the income statement: note (c) Adjusted operating profit (157) (363) (111) (631) (792) Non-operating profit (loss) — 50 (2) 48 1,243 (157) (313) (113) (583) 451 Disposals and transfers — — (13) (13) (11) Exchange differences and other movements (30) — (11) (41) 134 Amortisation of DAC related to net unrealised valuation movements on the US insurance operation's available-for-sale securities recognised within other comprehensive income — 248 — 248 (631) Balance at end of period 2,073 12,528 3,937 18,538 17,409 * Under the Group’s application of IFRS 4, US GAAP is used for measuring the insurance assets and liabilities of its US and certain Asia operations. Under US GAAP, most of the US insurance operation’s products are accounted for under Accounting Standard no. 97 of the Financial Accounting Standards Board (FAS 97) whereby deferred acquisition costs are amortised in line with the emergence of actual and expected gross profits which are determined using an assumption for long-term investment returns for the separate account of 7.4 per cent (full year 2019: 7.4 per cent) gross of asset management fees and other charges to policyholders, but net of external fund management fees. The other assumptions impacting expected gross profits include mortality assumptions, lapses, assumed unit costs and future hedge costs. The amounts included in the income statement and other comprehensive income affect the pattern of profit emergence and thus the DAC amortisation attaching. DAC amortisation is allocated to the operating and non-operating components of the Group’s supplementary analysis of profit and other comprehensive income by reference to the underlying items. The charge of $(313) million in half year 2020 in the US operations includes $(764) million for the write-off of the deferred acquisition costs in respect of the reinsured Jackson's in-force fixed and fixed indexed annuity liabilities to Athene Life Re Ltd. † PVIF and other intangibles comprise present value of acquired in-force (PVIF), distribution rights and other intangibles such as software rights. Distribution rights relate to amounts that have been paid or have become unconditionally due for payment as a result of past events in respect of bancassurance partnership arrangements in Asia. These agreements allow for bank distribution of Prudential’s insurance products for a fixed period of time. Software rights include additions of $21 million, amortisation of $(17) million, disposals of $(8) million, foreign exchange of $2 million and closing balance at 30 June 2020 of $83 million (31 December 2019: $85 million). ‡ On 19 March 2020, the Group signed a new bancassurance agreement with TMB Bank for a period of 15 years. This extended exclusive partnership agreement required the novation of TMB Bank's current bancassurance distribution agreement with another insurance group. The agreement cost Thai Baht 24.5 billion, which will be paid in two instalments with Thai Baht 12.0 billion paid in April 2020 and the remainder on 1 January 2021. The amount included in additions in the table above is $788 million. (b) The DAC amount in respect of US arises in the insurance operations which comprises the following amounts: 2020 $m 2019 $m 30 Jun 31 Dec Variable annuity and other business 12,975 12,935 Cumulative shadow DAC (for unrealised gains/losses booked in other comprehensive income)* (447) (695) Total DAC for US operations 12,528 12,240 * A net gain of $248 million (full year 2019: a loss of $(631) million) for shadow DAC amortisation is booked within other comprehensive income to reflect a reduction in shadow DAC of $535 million as a result of the reinsurance of substantially all of Jackson's fixed and fixed annuity business to Athene Life offset by the impact from the positive unrealised valuation movement for half year 2020 of $2,540 million (full year 2019: positive unrealised valuation movement of $4,023 million). These adjustments reflect the movement from period to period, in the changes to the pattern of reported gross profits that would have happened if the assets reflected in the statement of financial position had been sold, crystallising the unrealised gains and losses, and the proceeds reinvested at the yields currently available in the market. (c) Sensitivity of US DAC amortisation charge The amortisation charge to the income statement in respect of the US DAC asset is reflected in both adjusted operating profit and short-term fluctuations in investment returns. The amortisation charge to adjusted operating profit in a reporting period comprises: – A core amount that reflects a relatively stable proportion of underlying premiums or profit; and – An element of acceleration or deceleration arising from market movements differing from expectations. In periods where the cap and floor features of the mean reversion technique (which is used for moderating the effect of short-term volatility in investment returns) are not relevant, the technique operates to dampen the second element above. Nevertheless, extreme market movements can cause material acceleration or deceleration of amortisation in spite of this dampening effect. It is currently estimated that DAC amortisation will accelerate (decelerate) by $17 million for every 1 per cent under (over) the mean reversion rate (set using the calculation described below to give an average over an 8 year period of 7.4 per cent) the annualised actual separate account growth rate differs by. Furthermore, in those periods where the cap or floor is relevant, the mean reversion technique provides no further dampening and additional volatility may result. In half year 2020, the DAC amortisation charge for adjusted operating profit was determined after including a charge for accelerated amortisation of $(32) million (half year 2019: credit for deceleration: $191 million). DAC amortisation for variable annuities is sensitive to separate account performance. The acceleration arising in the first half of 2020 reflects a mechanical increase in the projected separate account return for the next five years under the mean-reversion technique. Under this technique, the projected level of return for each of the next five years is adjusted so that in combination with the actual rates of return for the preceding three years (including the current period) the assumed long-term annual separate account return of 7.4 per cent is realised on average over the entire eight-year period. The application of the mean reversion formula has the effect of dampening the impact of equity market movements on DAC amortisation while the mean reversion assumption lies within the corridor. At 30 June 2020, it would take approximate movements in separate account values of more than either negative 30 per cent or positive 42 per cent for the mean reversion assumption to move outside the corridor. |
Borrowings
Borrowings | 6 Months Ended |
Jun. 30, 2020 | |
Borrowings | |
Borrowings | C5 Borrowings C5.1 Core structural borrowings of shareholder-financed businesses 2020 $m 2019 $m 30 Jun 31 Dec Central operations: Subordinated debt: US$250m 6.75% Notes note (i) 250 250 US$300m 6.5% Notes note (i) 300 300 US$700m 5.25% Notes 700 700 US$1,000m 5.25% Notes 997 996 US$725m 4.375% Notes 723 721 US$750m 4.875% Notes 746 744 €20m Medium Term Notes 2023 22 22 £435m 6.125% Notes 2031 533 571 Senior debt: note (ii) £300m 6.875% Notes 2023 366 392 £250m 5.875% Notes 2029 280 298 $1,000m 3.125% Notes 2030 note (iii) 982 — Bank loans note (iv) $350m Loan 2024 350 350 Total central operations 6,249 5,344 Jackson US$250m 8.15% Surplus Notes 2027 note (v) 250 250 Total core structural borrowings of shareholder-financed businesses 6,499 5,594 Notes (i) These borrowings can be converted, in whole or in part, at the Company’s option and subject to certain conditions, on any interest payment date, into one or more series of Prudential preference shares. (ii) The senior debt ranks above subordinated debt in the event of liquidation. (iii) In April 2020, the Company issued $1,000 million 3.125 per cent senior debt maturing on 14 April 2030 with proceeds, net of costs of $982 million. (iv) The bank loan of $350 million was drawn in November 2019 at a cost of LIBOR plus 0.2 per cent. The loan matures on 7 November 2024. The £275 million bank loan was repaid by the Group in October 2019. (v) Jackson’s borrowings are unsecured and subordinated to all present and future indebtedness, policy claims and other creditor claims of Jackson. C5.2 Operational borrowings 2020 $m 2019 $m 30 Jun 31 Dec Borrowings in respect of short-term fixed income securities programmes – commercial paper 506 520 Lease liabilities under IFRS 16 318 371 Non-recourse borrowings of consolidated investment funds note (a) 1,081 1,045 Other borrowings note (b) 97 406 Operational borrowings attributable to shareholder-financed businesses 2,002 2,342 Lease liabilities under IFRS 16 224 259 Other borrowings 19 44 Operational borrowings attributable to with-profits businesses 243 303 Total operational borrowings 2,245 2,645 Notes (a) (b) |
Sensitivity analysis to key mar
Sensitivity analysis to key market risks | 6 Months Ended |
Jun. 30, 2020 | |
Sensitivity analysis to key market risks | |
Sensitivity analysis to key market risks | C6 Sensitivity analysis to key market risks The Group’s risk framework and the management of risk, including that attached to the Group’s financial statements, have been included under the ‘Group Risk Framework' heading. The following sections set out the sensitivity of the Group’s segmental profit or loss and shareholders’ equity to instantaneous changes in interest rates and equity levels , which are then assumed to remain unchanged for the long term. Further information of the Group’s sensitivity to key risks was set out in the Group’s financial statements for the year ended 31 December 2019. The published sensitivities in notes C6.1 and C6.2 below only allow for limited management actions such as changes to policyholder bonuses, where applicable. If the economic conditions set out in the sensitivities persisted, the financial impacts may differ to the instantaneous impacts shown below. Given the continuous risk management processes in place, management could take additional actions to help mitigate the impact of these stresses, including (but not limited to) rebalancing investment portfolios, further market risk hedging, increased use of reinsurance, repricing of in-force benefits, changes to new business pricing and the mix of new business being sold. The sensitivities reflect all consequential impacts from market movements at the valuation date. In particular, where relevant the 30 June 2020 sensitivities reflect potential tax benefits that would arise under the relief provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act in the US for 2020. C6.1 Sensitivity to interest rate risk The sensitivities shown below are for movements in risk-free rates (based on local government bond yields at the valuation date) in isolation and are subject to a floor of zero. They do not include movements in credit risk that may affect credit spreads and hence the valuation of debt securities and policyholder liabilities. A one-letter credit downgrade in isolation (i.e. ignoring any consequential change in valuation) would not have a material impact on IFRS profit or shareholders' equity. Following the fall in interest rates during the first half of 2020, the estimated sensitivity to a decrease in interest rates at 30 June 2020 has been updated to a decrease of 0.5 per cent. This compares to a 1 per cent change at 31 December 2019. The estimated sensitivity to a decrease and increase in interest rates at 30 June 2020 is as follows: 30 June 2020 Asia insurance $m US insurance $m Decrease of 0.5 % Increase of 1 % Decrease of 0.5 % Increase of 1 % Net effect on shareholders' equity* (1,203) 64 (90) (123) * The effect from the instantaneous changes in interest rates above, if they arose, would impact profit after tax for Asia insurance operations and would mostly be recorded within short-term fluctuations in investment returns. The impact on profit after tax would be the same as the net effect on shareholders' equity. For US insurance operations , the instantaneous changes in interest rates above, if they arose, would cause the net effect on equity shown above through two constituent movements. Firstly, profit after tax, net of related changes in the amortisation of DAC, would be impacted (decrease of 0.5 per cent: $(1,036) million; increase of 1 per cent: $1,577 million), and would mostly be recorded within short-term fluctuations in investment returns. Secondly, the effect would also impact other comprehensive income (decrease of 0.5 per cent: $946 million; increase of 1 per cent: $(1,700) million) in respect of the direct effect on the carrying value of the available-for-sale debt securities, net of related changes in the amortisation of DAC and related tax effects. The estimated sensitivity to a decrease and increase in interest rates at 31 December 2019 is as follows: 31 December 2019 Asia insurance $m US insurance $m Decrease of 1 % Increase of 1 % Decrease of 1 % Increase of 1 % Net effect on shareholders' equity* (702) (718) 20 (553) * The effect from the instantaneous changes in interest rates above, if they arose, would impact profit after tax for Asia insurance operations and would mostly be recorded within short-term fluctuations in investment returns. The impact on profit after tax would be the same as the net effect on shareholders' equity. For US insurance operations , the instantaneous changes in interest rates above, if they arose, would cause the net effect on equity shown above through two constituent movements. Firstly, profit after tax, net of related changes in the amortisation of DAC, would be impacted (decrease of 1 per cent: $(2,224) million; increase of 1 per cent: $1,691 million), and would mostly be recorded within short-term fluctuations in investment returns. Secondly, the effect would also impact other comprehensive income (decrease of 1 per cent: $2,244 million; increase of 1 per cent: $(2,244) million) in respect of the direct effect on the carrying value of the available-for-sale debt securities, net of related changes in the amortisation of DAC and related tax effects . Asia insurance operations The degree of sensitivity of the results of the non-linked shareholder-backed business of the Asia operations to movements in interest rates depends upon the degree to which the liabilities under the ‘grandfathered’ IFRS 4 measurement basis reflects market interest rates from year to year. This varies by local business unit. For example: - certain Asia businesses apply US GAAP, for which the results can be more sensitive as the effect of interest rate movements on the backing investments may not be offset by liability movements; - the level of options and guarantees in the products written in a particular business unit will affect the degree of sensitivity to interest rate movements; and - the degree of sensitivity of the results is dependent on the interest rate level at that point of time. The sensitivity of the Asia operations presented as a whole at a given point in time will also be affected by a change in the relative size of the individual businesses. Following the substantial fall in interest rates over the first half of 2020, at 30 June 2020 the 'decrease of 0.5 per cent' sensitivity is dominated by the impact of interest rate movements on some local business units' policyholder liabilities, which are expected to increase more than the offsetting increase in the value of government and corporate bond investments. This is similar to the effect described in note B1.2(i), with the impacts exacerbated if interest rates were to fall further from the historically low levels at 30 June 2020. Liabilities become less sensitive to interest rates as interest rates rise. If interest rates were to increase by 1 per cent from 30 June 2020 levels, the change in the value of assets is expected to be of a similar magnitude to the change in the value of policyholder liabilities. At higher levels of interest rates, the change in the value of assets is expected to exceed the change in the value of liabilities, as evident in the ‘increase of 1 per cent' sensitivity at 31 December 2019. US insurance operations The GMWB features attached to variable annuity business (other than ‘for life’ components) are accounted for under US GAAP at fair value and, therefore, will be sensitive to changes in interest rates. Debt securities and related derivatives are marked to fair value. Value movements on derivatives, again net of related changes to amortisation of DAC and deferred tax, are recorded within the income statement. Fair value movements on debt securities, net of related changes to amortisation of DAC and deferred tax, are recorded within other comprehensive income. The sensitivity movements provided in the table above are at a point in time and reflect the hedging programme in place on the balance sheet date, while the actual impact on financial results would vary contingent upon a number of factors. Jackson’s hedging programme is primarily focused on managing the economic risks in the business and protecting statutory solvency under larger market movements, and does not explicitly aim to hedge the IFRS accounting results. The magnitude of the impact of the sensitivities on profit after tax at 30 June 2020 is broadly similar to the impact at 31 December 2019, reflecting largely offsetting effects with the impact of more sensitive guarantee liabilities at 30 June 2020 being broadly matched by the impact from a change in the position of Jackson's interest rate hedging at that date. The reduction in the magnitude of the impact of the sensitivities on other comprehensive income, and hence shareholders' equity, reflects the reduction in the volume of available-for-sale debt securities following the Athene reinsurance transaction described in note D1(i). Asset management and other operations The profit for the period of asset management operations is sensitive to the level of assets under management, as this significantly affects the value of management fees earned by the business in the current and future periods. The Group’s asset management and other operations do not hold significant financial investments. At 30 June 2020, the financial investments of the other operations are principally short-term treasury bills held by the Group’s treasury function for liquidity purposes and so there is limited sensitivity to interest rate movements. C6. 2 Sensitivity to equity and property price risk In the equity risk sensitivity analysis shown, the Group has considered the impact of an instantaneous 20 per cent fall in equity markets. If equity markets were to fall by more than 20 per cent, the Group believes that this would not be an instantaneous fall but rather would be expected to occur over a longer period of time, during which the hedge positions within Jackson, where the underlying equity risk is greatest, would be rebalanced. The equity risk sensitivity analysis provided assumes that all equity indices fall by the same percentage. The estimated sensitivity to a 10 per cent and 20 per cent change in equity and property prices at 30 June 2020 is as follows: 30 June 2020 Asia insurance $m US insurance $m Decrease of 20 % Increase of 10 % Decrease of 20 % Increase of 10 % Net effect on shareholders' equity* (559) 302 2,174 (484) * The effect from the instantaneous changes in equity and property prices above, if they arose, would impact profit after tax for Asia and the US insurance operations, which would mostly be recorded within short-term fluctuations in investment returns. The estimated sensitivity to a 10 per cent and 20 per cent change in equity and property prices at 31 December 2019 is as follows: 31 December 2019 Asia insurance $m US insurance $m Decrease of 20 % Increase of 10 % Decrease of 20 % Increase of 10 % Net effect on shareholders' equity* (816) 408 762 608 * The effect from the instantaneous changes in equity and property prices above, if they arose, would impact profit after tax for Asia and the US insurance operations, which would mostly be recorded within short-term fluctuations in investment returns. Asia insurance operations Generally, changes in equity and property investment values are not directly offset by movements in non-linked policyholder liabilities. Movements in equities backing with-profits and unit-linked business have been excluded as they are generally matched by an equal movement in insurance liabilities (including unallocated surplus of with-profits funds). The impact on changes to future profitability as a result of changes to the asset values within unit-linked or with-profits funds have not been included in the instantaneous sensitivity above. The estimated sensitivities shown above include equity and property investments held by the Group’s joint venture and associate businesses. US insurance operations The sensitivity movements shown above exclude the impact of the instantaneous equity movements on the separate account fees, and include the movements relating to the reinsurance of GMIB guarantees. They assume instantaneous market movements, while the actual impact on financial results would vary contingent upon the volume of new product sales and lapses, changes to the derivative portfolio, correlation of market returns and various other factors including volatility, interest rates and elapsed time. Jackson is exposed to equity risk through the options embedded in the fixed indexed annuity liabilities and guarantees included in certain variable annuity benefits. This risk is managed using an equity hedging programme to minimise the risk of a significant economic impact as a result of increases or decreases in equity market levels. Jackson purchases futures and options that hedge the risks inherent in these products. Due to the nature of the valuation of the free-standing derivatives and the variable annuity guarantee features under IFRS, this hedge, while effective on an economic basis, would not automatically offset within the financial statements as the impact of equity market movements resets the free-standing derivatives immediately while some of the hedged liabilities reset more slowly and fees are recognised prospectively in the period in which they are earned. Jackson’s hedging programme is primarily focused on managing the economic risks in the business and protecting statutory solvency in the circumstances of larger market movements. The hedging programme does not explicitly aim to hedge IFRS accounting results, which can lead to volatility in the IFRS results in a period of significant market movements, as was seen in the first half of 2020. In addition to the exposure explained above, Jackson is also exposed to equity risk from its holding of equity securities, partnerships in investment pools and other financial derivatives. The sensitivities reflect the actual hedging portfolio in place at 30 June 2020 and 31 December 2019. The nature of Jackson’s dynamic hedging programme means that the portfolio, and hence the results of these sensitivities, will change on an ongoing basis. The impacts shown under an increase or decrease in equity markets at 30 June 2020 reflect the factors discussed above. The changes from the values shown at 31 December 2019 largely arise from the additional equity protection in place at 30 June 2020 following the market volatility seen over the first half of the year. Asset management and other operations The profit for the period of asset management operations is sensitive to the level of assets under management, as this significantly affects the value of management fees earned by the business in the current and future periods. Assets under management will rise and fall as equities increase or decrease in value with a consequential impact on profitability. With the exception of the above, there is limited sensitivity to equity price risk. |
Deferred tax
Deferred tax | 6 Months Ended |
Jun. 30, 2020 | |
Deferred tax | |
Deferred tax | C7 Deferred tax The statement of financial position contains the following deferred tax assets and liabilities in relation to: Half year 2020 $m Movement Other through movements other including Movement in comprehensive foreign Balance income income and currency Balance at 1 Jan statement equity movements at 30 Jun Deferred tax assets Unrealised losses or gains on investments — — — 1 1 Balances relating to investment and insurance contracts 32 8 — (1) 39 Short-term temporary differences 3,889 238 — 1 4,128 Unused tax losses 154 (64) — 1 91 Total 4,075 182 — 2 4,259 Deferred tax liabilities Unrealised losses or gains on investments (877) 19 7 3 (848) Balances relating to investment and insurance contracts (1,507) (110) — 68 (1,549) Short-term temporary differences (2,853) (28) — — (2,881) Total (5,237) (119) 7 71 (5,278) |
Share capital, share premium an
Share capital, share premium and own shares | 6 Months Ended |
Jun. 30, 2020 | |
Share capital, share premium and own shares | |
Share capital, share premium and own shares | C8 Share capital, share premium and own shares 30 Jun 2020 31 Dec 2019 Share Share Share Share Number of capital premium Number of ordinary capital premium Issued shares of 5p each fully paid: ordinary shares $m $m shares $m $m Balance at beginning of period 2,601,159,949 172 2,625 2,593,044,409 166 2,502 Shares issued under share-based schemes 7,700,498 — 10 8,115,540 — 22 Impact of change in presentation currency — — — — 6 101 Balance at end of period 2,608,860,447 172 2,635 2,601,159,949 172 2,625 Options outstanding under save as you earn schemes to subscribe for shares at each period end shown below are as follows: Number of shares Share price range Exercisable to subscribe for from to by year 30 Jun 2020 2,197,782 1,104 p 1,455 p 31 Dec 2019 3,805,447 1,104 p 1,455 p Transactions by Prudential plc and its subsidiaries in Prudential plc shares The Group buys and sells Prudential plc shares (‘own shares’) either in relation to its employee share schemes or, up until the demerger of its UK and Europe operations (M&G plc) in October 2019, via transactions undertaken by authorised investment funds that the Group is deemed to control. The cost of own shares of $237 million at 30 June 2020 (31 December 2019: $183 million) is deducted from retained earnings. The Company has established trusts to facilitate the delivery of shares under employee incentive plans. At 30 June 2020, 11.5 million (31 December 2019: 8.4 million) Prudential plc shares with a market value of $173 million (31 December 2019: $161 million) were held in such trusts, all of which are for employee incentive plans. The maximum number of shares held during the period was 11.5 million which was in June 2020. Within the trusts, shares are notionally allocated by business unit reflecting the employees to which the awards were made. The Company purchased the following number of shares in respect of employee incentive plans: Number of shares purchased Cost* (in millions) $m Half year 2020 5.8 75.2 Full year 2019 3.7 73.8 * The cost in US dollars shown has been calculated from the share prices in pounds sterling using the monthly average exchange rate for the month in which those shares were purchased. The Group consolidated a number of authorised investment funds where it was deemed to control these funds under IFRS up until the demerger in October 2019. Some of these funds held shares in Prudential plc and the cost of acquiring these shares was included in the cost of own shares in 2019. All share transactions were made on an exchange other than the Stock Exchange of Hong Kong. Other than set out above, the Group did not purchase, sell or redeem any Prudential plc listed securities during half year 2020 or 2019. |
Gain (loss) attaching to corpor
Gain (loss) attaching to corporate transactions | 6 Months Ended |
Jun. 30, 2020 | |
Gain (loss) attaching to corporate transactions | |
Gain (loss) attaching to corporate transactions | D1 Gain (loss) attaching to corporate transactions 2020 $m 2019 $m Half year Half year Gain arising on reinsurance of Jackson's in-force fixed and fixed indexed annuity business note (i) 846 — Gain on disposals note (ii) — 270 Other transactions note (iii) — (253) Total gain (loss) attaching to corporate transactions 846 17 Notes (i) With effect from 1 June 2020, Jackson reinsured substantially all of its in-force portfolio of US fixed and fixed indexed annuities with Athene Life Re Ltd, which resulted in a pre-tax gain of $846 million, after allowing for the write-off of deferred acquisition costs associated with the business reinsured. The transaction excluded Jackson's legacy life and institutional business as well as the REALIC portfolio and group pay-out annuity business reinsured from John Hancock and was collateralised to reduce the exposure to counterparty risk. Under the reinsurance arrangement, Jackson reinsured $27.6 billion liabilities (valued at 1 June 2020) in return for a premium of $28.9 billion net of ceding commission, comprising principally of bonds. The pre-tax gain also includes the realised gains arising on the bonds net of the deferred acquisition costs written off as a result of the transaction. After allowing for tax and the reduction in unrealised gains recorded directly in other comprehensive income, the impact of the reinsurance transaction on IFRS shareholders' equity is a reduction of $(1.1) billion. (ii) In 2019, the gain on disposals principally related to profits arising from a 4 per cent reduction in the Group’s stake in its associate in India, ICICI Prudential Life Insurance Company, and the disposal of Prudential Vietnam Finance Company Limited, a wholly-owned subsidiary that provides consumer finance. (iii) In 2019, other transactions primarily reflected costs related to the demerger of the Group’s UK and Europe operations (M&G plc). |
Contingencies and related oblig
Contingencies and related obligations | 6 Months Ended |
Jun. 30, 2020 | |
Contingencies and related obligations | |
Contingencies and related obligations | D2 Contingencies and related obligations The Group is involved in various litigation and regulatory proceedings. These may from time to time include class actions involving Jackson. While the outcome of such litigation and regulatory issues cannot be predicted with certainty, the Company believes that their ultimate outcome will not have a material adverse effect on the Group’s financial condition, results of operations or cash flows. There have been no material changes to the Group’s contingencies and related obligations in the six month ended 30 June 2020. |
Post balance sheet events
Post balance sheet events | 6 Months Ended |
Jun. 30, 2020 | |
Post balance sheet events | |
Post balance sheet events | D3 Post balance sheet events First interim ordinary dividend The 2020 first interim ordinary dividend approved by the Board of Directors after 30 June 2020 is as described in note B6. Completion of the equity investment by Athene into US business On 17 July 2020, the Group completed the equity investment by Athene into the US business, which was announced in June 2020. Under the transaction, Athene Life Re Ltd invested $500 million in Prudential's US business in return for an 11.1 per cent economic interest for which the voting interest is 9.9 per cent. Athene's investment is in the form of a cash subscription for the issuance of new common equity in the holding company containing Prudential's US businesses, including Jackson National Life Insurance Company and PPM America. If the transaction had completed at 30 June 2020, the effect on the IFRS shareholders' equity would have been a reduction of $550 million. There would have been no impact on profit or loss for the period. |
Related party transactions
Related party transactions | 6 Months Ended |
Jun. 30, 2020 | |
Related party transactions | |
Related party transactions | D4 Related party transactions There were no transactions with related parties during the six months ended 30 June 2020 which have had a material effect on the results or financial position of the Group. The nature of the related party transactions of the Group has not changed from those described in the Group’s consolidated financial statements for the year ended 31 December 2019. |
Basis of preparation (Policies)
Basis of preparation (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Basis of preparation | |
Accounting policies followed in interim financial statements | The accounting policies applied by the Group in determining the IFRS basis results in this report are the same as those previously applied in the Group’s consolidated financial statements for the year ended 31 December 2019, as disclosed in the 2019 Form 20‑F, aside from those discussed in note A2 below. |
New accounting pronouncements in 2020 | A2 New accounting pronouncements in 2020 The IASB has issued the following new accounting pronouncements to be effective from 1 January 2020: - - - The adoption of these pronouncements have had no significant impact on the Group financial statements. |
Basis of preparation (Tables)
Basis of preparation (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Basis of preparation | |
Schedule of exchange rates applied | $: Local currency Closing rate as at period end Average rate for the period to date 30 Jun 2020 31 Dec 2019 Half year 2020 Half year 2019 China 7.07 6.97 7.03 6.78 Hong Kong 7.75 7.79 7.76 7.84 Indonesia 14,285.00 13,882.50 14,574.24 14,192.79 Malaysia 4.29 4.09 4.25 4.12 Singapore 1.40 1.34 1.40 1.36 Thailand 30.87 29.75 31.62 31.61 UK 0.81 0.75 0.79 0.77 Vietnam 23,206.00 23,172.50 23,303.21 23,253.04 |
Analysis of performance by se_2
Analysis of performance by segment (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Analysis of performance by segment | |
Schedule of segment results | 2020 $m 2019 $m Note Half year Half year Continuing operations: Asia Insurance operations 1,590 1,417 Asset management 143 133 Total Asia 1,733 1,550 US Insurance operations (Jackson) 1,256 1,556 Asset management 10 16 Total US 1,266 1,572 Other income and expenditure: Investment return and other income 18 32 Interest payable on core structural borrowings (163) (293) Corporate expenditure note(i) (205) (212) Total other income and expenditure (350) (473) Restructuring and IFRS 17 implementation costs (108) (30) Adjusted operating profit B1.3 2,541 2,619 Short-term fluctuations in investment returns on shareholder-backed business B1.2 (2,706) (1,455) Amortisation of acquisition accounting adjustments note (ii) (18) (22) Gain attaching to corporate transactions D1 846 17 Profit before tax attributable to shareholders 663 1,159 Tax charge attributable to shareholders' returns B4 (129) (1) Profit for the period from continuing operations 534 1,158 Profit for the period from discontinued operations — 835 Profit for the period 534 1,993 Attributable to: Equity holders of the Company From continuing operations 512 1,152 From discontinued operations — 835 Non-controlling interests from continuing operations 22 6 534 1,993 Basic earnings per share (in cents) Note Half year Half year B5 Based on adjusted operating profit, net of tax, from continuing operations note (iii) 79.0 ¢ 84.5 ¢ Based on profit for the period from continuing operations 19.7 ¢ 44.6 ¢ Based on profit for the period from discontinued operations — 32.3 ¢ Notes (i) Corporate expenditure as shown above is primarily for head office functions in London and Hong Kong. (ii) Amortisation of acquisition accounting adjustments principally relate to the REALIC business of Jackson which was acquired in 2012. (iii) Tax charges have been reflected as operating and non-operating in the same way as for the pre-tax items. Further details on tax charges are provided in note B4. |
Schedules of short-term fluctuations in investment returns on shareholder-backed business | 2020 $m 2019 $m Half year Half year Asia operations note (i) (448) 544 US operations note (ii) (2,288) (1,968) Other operations 30 (31) Total (2,706) (1,455) (i) Asia operations In Asia, the negative short-term fluctuations of $(448) million (half year 2019: positive $544 million) reflect the net value movements on shareholders’ assets and policyholder liabilities arising from market movements in the period. In half year 2020 falling interest rates in certain parts of Asia led to lower discount rates on policyholder liabilities under the local reserving basis applied, which were not fully offset by unrealised bond gains in the period. This together with the effect of falling equity markets led to the overall negative short-term investment fluctuations in Asia. (ii) US operations The short-term fluctuations in investment returns in the US are reported net of the related charge for amortisation of deferred acquisition costs (DAC) of $(50) million as shown in note C4.2 (half year 2019: credit of $616 million) and comprise amounts in respect of the following items: 2020 $m 2019 $m Half year Half year Net equity hedge result note (a) (4,378) (2,529) Other than equity-related derivatives note (b) 2,114 560 Debt securities note (c) 175 14 Equity-type investments: actual less longer-term return (128) (9) Other items (71) (4) Total net of related DAC amortisation (2,288) (1,968) Notes (a) The purpose of the inclusion of net equity hedge result in short-term fluctuations in investment returns is to segregate the amount included in pre-tax profit that relates to the accounting effect of market movements on both the value of guarantees in Jackson’s products including variable annuities and on the related derivatives used to manage the exposures inherent in these guarantees. The level of fees recognised in non-operating profit is determined by reference to that allowed for within the reserving basis. The variable annuity guarantees are valued in accordance with either Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures or ASC Topic 944, Financial Services – Insurance depending on the type of guarantee. Both approaches require an entity to determine the total fee (‘the fee assessment’) that is expected to fund future projected benefit payments arising using the assumptions applicable for that method. The method under ASC Topic 820 requires this fee assessment to be fixed at the time of issue. As the fees included within the initial fee assessment are earned, they are included in non-operating profit to match the corresponding movement in the guarantee liability. Other guarantee fees are included in operating profit, which in half year 2020 was $350 million (half year 2019: $341 million), pre-tax and net of related DAC amortisation. As the Group applies US GAAP for the measured value of the product guarantees, the net equity hedge result also includes asymmetric impacts where the measurement bases of the liabilities and associated derivatives used to manage the Jackson annuity business differ. The net equity hedge result therefore includes significant accounting mismatches and other factors that do not represent the economic result. These other factors include: – – – The net equity hedge result can be summarised as follows: 2020 $m 2019 $m Half year Half year Fair value movements on equity hedge instruments (301) (3,190) Accounting value movements on the variable and fixed indexed annuity guarantee liabilities* (4,503) 294 Fee assessments net of claim payments 426 367 Total net of related DAC amortisation (4,378) (2,529) * The value movement on the variable annuity guarantees and fixed indexed annuity options is discussed in 'Explanation of Performance and Other Financial Measures'. (b) The fluctuations for other than equity-related derivatives comprise the net effect of: – – – The free-standing, other than equity-related derivatives, are held to manage interest rate exposures and durations within the general account and the variable annuity guarantees and fixed indexed annuity embedded options described in note (a) above. Accounting mismatches arise because of differences between the measurement basis and presentation of the derivatives, which are fair valued with movements recorded in the income statement, and the exposures they are intended to manage. (c) Short-term fluctuations related to debt securities is analysed below: 2020 $m 2019 $m Half year Half year Credits (charges) in the period: Losses on sales of impaired and deteriorating bonds (148) (24) Bond write-downs (31) (1) Recoveries/reversals 1 1 Total credits (charges) in the period (178) (24) Risk margin allowance deducted from adjusted operating profit* 55 54 (123) 30 Interest-related realised gains (losses): Gains (losses) arising in the period † 369 42 Amortisation of gains and losses arising in current and prior periods to adjusted operating profit (67) (59) 302 (17) Related amortisation of deferred acquisition costs (4) 1 Total short-term fluctuations related to debt securities net of related DAC amortisation 175 14 * The debt securities of Jackson are held in the general account of the business. Realised gains and losses are recorded in the income statement with normalised returns included in adjusted operating profit with variations from period to period included in the short-term fluctuations category. The risk margin reserve charge for longer-term credit-related losses included in adjusted operating profit of Jackson for half year 2020 is based on an average annual risk margin reserve of 18 basis points (half year 2019: 18 basis points) on average book values of $62.3 billion (half year 2019: $60.0 billion) as shown below: |
Schedule of average annual risk margin reserve | Moody’s rating category (or equivalent under NAIC ratings of mortgage-backed securities) Half year 2020 Half year 2019 Average Annual Average Annual book expected book expected value RMR loss value RMR loss $m % $m $m % $m A3 or higher 39,118 0.10 (40) 34,318 0.10 (36) Baa1, 2 or 3 21,521 0.24 (51) 24,385 0.23 (55) Ba1, 2 or 3 1,383 0.74 (10) 1,008 0.93 (10) B1, 2 or 3 200 2.39 (5) 246 2.62 (6) Below B3 108 3.36 (4) 37 3.42 (1) Total 62,330 0.18 (110) 59,994 0.18 (108) Related amortisation of deferred acquisition costs 20 18 Risk margin reserve charge to adjusted operating profit for longer-term credit-related losses (90) (90) † Excluding the realised gains that are part of the gain arising in respect of the reinsured Jackson's in-force fixed and fixed indexed annuity liabilities to Athene Life Re Ltd, as discussed in note D1. |
Schedule of equity-type securities | Half year Half year Equity-type securities such as common and preferred stock and portfolio holdings in mutual funds 4.9% to 5.8 % 6.0 % to 6.7 % Other equity-type securities such as investments in limited partnerships and private equity funds 6.9% to 7.8 % 8.0 % to 8.7 % |
Acquisition costs and other e_2
Acquisition costs and other expenditure (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Acquisition costs and other expenditure | |
Schedule of acquisition costs and other expenditure | 2020 $m 2019 $m Half year Half year Acquisition costs incurred for insurance policies (1,433) (2,109) Acquisition costs deferred note C4.2 614 625 Amortisation of acquisition costs note (i) (470) 376 Recoveries for expenses associated with Jackson's business ceded to Athenenote (ii) 1,231 — Administration costs and other expenditure note (iii) (2,584) (2,291) Movements in amounts attributable to external unit holders of consolidated investment funds (390) (109) Total acquisition costs and other expenditure (3,032) (3,508) Notes (i) The charge of $(470) million in half year 2020 includes $(313) million arising in the US which includes $(764) million for the write-off of the deferred acquisition costs held for the in-force fixed and fixed indexed annuity liabilities reinsured to Athene. Offsetting this amount is a credit of $814 million (half year 2019: $616 million) recorded in non-operating profit largely as a result of the losses arising from market effects on variable annuity guarantee liabilities and associated hedging. (ii) As part of the reinsurance transaction with Athene Life Re Ltd discussed in note D1, Jackson received $1,231 million of ceding commission as a recovery for past acquisition expenses associated with the business ceded. (iii) Included in total administration costs and other expenditure is depreciation of property, plant and equipment of $(109) million (half year 2019: $(107) million), of which $(72) million (half year 2019: $(66) million) relates to the right-of-use assets recognised under IFRS 16. |
Additional segmental analysis_2
Additional segmental analysis of revenue (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Additional segmental analysis of revenue | |
Schedule of additional segmental analysis of revenue | Half year 2020 $m Unallocated Total to a Group Asia US segment segment total Gross premiums earned 10,890 8,892 19,782 60 19,842 Outward reinsurance premiums note (i) 50 (30,195) (30,145) (4) (30,149) Earned premiums, net of reinsurance 10,940 (21,303) (10,363) 56 (10,307) Other income note (ii) 285 28 313 20 333 Total external revenue 11,225 (21,275) (10,050) 76 (9,974) Intra-group revenue — 17 17 (17) — Interest income 883 1,283 2,166 22 2,188 Other investment return 3,235 (1,575) 1,660 62 1,722 Total revenue, net of reinsurance 15,343 (21,550) (6,207) 143 (6,064) Half year 2019 $m Unallocated Total to a Group Asia US segment segment total Gross premiums earned 11,458 9,588 21,046 35 21,081 Outward reinsurance premiums (499) (170) (669) (4) (673) Earned premiums, net of reinsurance 10,959 9,418 20,377 31 20,408 Other income note (ii) 228 14 242 16 258 Total external revenue 11,187 9,432 20,619 47 20,666 Intra-group revenue 21 31 52 (52) — Interest income 805 1,460 2,265 27 2,292 Other investment return 8,826 20,732 29,558 23 29,581 Total revenue, net of reinsurance 20,839 31,655 52,494 45 52,539 Notes (i) In half year 2020, outward reinsurance premiums include $(30,150) million paid during the period in respect of the reinsurance of substantially all of Jackson's in-force fixed and fixed indexed annuity liabilities to Athene Life Re Ltd. See note D1 for further details. Also included in outward reinsurance premiums for half year 2020 is a credit of $542 million for the recapture of previously reinsured business in Asia. (ii) Other income comprises income from external customers and consists primarily of revenue from the Group’s asset management business of $261 million (half year 2019: $198 million). The remaining other income consists primarily of policy fee revenue from external customers. |
Tax charge (Tables)
Tax charge (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tax charge | |
Schedule of total tax charge by nature | 2020 $m 2019 $m Current Deferred Half year Half year Tax charge tax tax Total Total Attributable to shareholders: Asia operations (103) (127) (230) (244) US operations (70) 183 113 143 Other operations (16) 4 (12) 100 Tax (charge) credit attributable to shareholders' returns (189) 60 (129) (1) Attributable to policyholders: Asia operations (69) 3 (66) (285) Total tax (charge) credit (258) 63 (195) (286) |
Schedule of shareholder profit and tax charge | 2020 2019 Half year Half year Total Percentage Total Percentage Asia US Other attributable to impact attributable to impact operations operations operations shareholders on ETR shareholders on ETR $m $m $m $m % $m % note (iv) Adjusted operating profit (loss) 1,733 1,266 (458) 2,541 2,619 Non-operating (loss) profit (450) (1,458) 30 (1,878) (1,460) Profit (loss) before tax 1,283 (192) (428) 663 1,159 Expected tax rate: 20 % 21 % 18 % 21 % Tax at the expected rate 257 (40) (77) 140 21.1 % 232 20.0 % Effects of recurring tax reconciliation items: Income not taxable or taxable at concessionary rates (31) (14) — (45) (6.8) % (70) (6.0) % Deductions not allowable for tax purposes 12 6 3 21 3.2 % 26 2.2 % Items related to taxation of life insurance businesses note (i) 7 (62) — (55) (8.3) % (179) (15.4) % Deferred tax adjustments 3 — — 3 0.5 % (12) (1.0) % Unrecognised tax losses note (ii) — — 72 72 10.9 % — — Effect of results of joint ventures and associates (31) — (6) (37) (5.6) % (35) (3.0) % Irrecoverable withholding taxes — — 26 26 3.9 % 27 2.3 % Other 3 13 (6) 10 1.5 % 5 0.4 % Total (37) (57) 89 (5) (0.7) % (238) (20.5) % Effects of non-recurring tax reconciliation items: Adjustments to tax charge in relation to prior years 21 — — 21 3.1 % 20 1.7 % Movements in provisions for open tax matters note (iii) (12) — — (12) (1.8) % 8 0.7 % Demerger related activities — — — — — 4 0.4 % Impact of carry back of US losses — (16) — (16) (2.4) % — — Impact of changes in local statutory tax rates 1 — — 1 0.2 % — — Adjustments in relation to business disposals — — — — — (25) (2.2) % Total 10 (16) — (6) (0.9) % 7 0.6 % Total actual tax charge (credit) 230 (113) 12 129 19.5 % 1 0.1 % Analysed into: Tax on adjusted operating profit (loss) 260 195 12 467 430 Tax on non-operating (loss) profit (30) (308) — (338) (429) Actual tax rate on: Adjusted operating profit (loss): Including non-recurring tax reconciling items 15 % 15 % (3) % 18 % 16 % Excluding non-recurring tax reconciling items 14 % 15 % (3) % 18 % 16 % Total profit (loss) 18 % 59 % (3) % 19 % 0 % Notes (i) The $62 million reconciling item in US operations reflects the impact of the dividend received deduction on the taxation of profits from variable annuity business. The $7 million adverse reconciling item in Asia operations reflects non tax deductible investment related marked-to-market losses. (ii) The $72 million adverse reconciling item in unrecognised tax losses reflects losses arising where it is unlikely that relief for the losses will be available in future periods. (iii) The statement of financial position contains the following provisions in relation to open tax matters. Half year 2020 $m At beginning of period 198 Movements in the current period included in tax charge attributable to shareholders (12) Provisions utilised in the period (34) Other movements* (3) At end of period 149 * Other movements include interest arising on open tax matters and amounts included in the Group’s share of profits from joint ventures and associates, net of related tax. (iv) Half year 2019 % Total Asia US Other attributable to operations operations operations shareholders Tax rate on adjusted operating profit (loss) % % % % Tax rate on profit (loss) before tax % % % % |
Schedule of movements in provisions for open tax matters | Half year 2020 $m At beginning of period 198 Movements in the current period included in tax charge attributable to shareholders (12) Provisions utilised in the period (34) Other movements* (3) At end of period 149 * Other movements include interest arising on open tax matters and amounts included in the Group’s share of profits from joint ventures and associates, net of related tax. |
Schedule of tax rate of relevant business operations | Half year 2019 % Total Asia US Other attributable to operations operations operations shareholders Tax rate on adjusted operating profit (loss) % % % % Tax rate on profit (loss) before tax % % % % |
Earnings per share (Tables)
Earnings per share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings per share | |
Schedule of earnings per share | Half year 2020 Net of tax and Basic Diluted Non- controlling non- controlling earnings earnings Before tax Tax interests interests per share per share $m $m $m $m cents cents Based on profit for the period 663 (129) (22) 512 19.7 ¢ 19.7 ¢ Short-term fluctuations in investment returns on shareholder-backed business 2,706 (513) — 2,193 84.4 ¢ 84.4 ¢ Amortisation of acquisition accounting adjustments 18 (3) — 15 0.6 ¢ 0.6 ¢ Gain attaching to corporate transactions (846) 178 — (668) (25.7) ¢ (25.7) ¢ Based on adjusted operating profit 2,541 (467) (22) 2,052 79.0 ¢ 79.0 ¢ Half year 2019 Net of tax and Basic Diluted Non-controlling non-controlling earnings earnings Before tax Tax interests interests per share per share $m $m $m $m cents cents Based on profit for the period 1,987 76.9 ¢ 76.9 ¢ Profit for the period from discontinued operations (835) (32.3) ¢ (32.3) ¢ Based on profit for the period from continuing operations 1,159 (1) (6) 1,152 44.6 ¢ 44.6 ¢ Short-term fluctuations in investment returns on shareholder-backed business 1,455 (407) — 1,048 40.6 ¢ 40.6 ¢ Amortisation of acquisition accounting adjustments 22 (4) — 18 0.7 ¢ 0.7 ¢ Gain attaching to corporate transactions (17) (18) — (35) (1.4) ¢ (1.4) ¢ Based on adjusted operating profit from continuing operations 2,619 (430) (6) 2,183 84.5 ¢ 84.5 ¢ |
Summary of weighted average number of shares for calculating earnings per share | Number of shares (in millions) Weighted average number of shares for calculation of: Half year Half year Basic earnings per share 2,596 2,583 Shares under option at end of period 2 4 Shares that would have been issued at fair value on assumed option price (2) (3) Diluted earnings per share 2,596 2,584 |
Dividends (Tables)
Dividends (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Dividends | |
Schedule of dividends | Half year 2020 Half year 2019 Cents per share $m Cents per share $m Dividends relating to reporting period: First interim ordinary dividend ¢ 20.29 ¢ 526 Dividends paid in reporting period: Second interim ordinary dividend for prior year 25.97 ¢ 674 42.89 ¢ 1,108 |
Group assets and liabilities _2
Group assets and liabilities by business type (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Analysis of operating segments | |
Schedule of segment statement of financial position by business type | 30 Jun 2020 $m Asia insurance Elimination Unit-linked Asia of intra-group With-profits assets and Other Asset Total Unallocated debtors and Group business liabilities business manage-ment Elimina-tions Asia US to a segment creditors total note (i) note (ii) Debt securities note (ix), note C1.1 Sovereign debt Indonesia 381 580 455 — — 1,416 — — — 1,416 Singapore 2,788 525 904 88 — 4,305 — — — 4,305 Thailand — — 1,567 16 — 1,583 — — — 1,583 United Kingdom — 7 — — — 7 — 154 — 161 United States 24,656 23 2,356 — — 27,035 5,371 — — 32,406 Vietnam — 14 2,789 — — 2,803 — — — 2,803 Other (predominantly Asia) 1,816 687 3,216 13 — 5,732 19 140 — 5,891 Subtotal 29,641 1,836 11,287 117 — 42,881 5,390 294 — 48,565 Other government bonds AAA 1,464 103 479 — — 2,046 447 — — 2,493 AA+ to AA- 353 34 101 — — 488 519 — — 1,007 A+ to A- 524 113 226 — — 863 191 — — 1,054 BBB+ to BBB- 466 88 248 8 — 810 2 — — 812 Below BBB- and unrated 104 17 331 — — 452 — 1 — 453 Subtotal 2,911 355 1,385 8 — 4,659 1,159 1 — 5,819 Corporate bonds AAA 1,122 270 504 — — 1,896 265 — — 2,161 AA+ to AA- 1,575 273 1,712 2 — 3,562 973 — — 4,535 A+ to A- 6,670 808 4,723 — — 12,201 11,792 — — 23,993 BBB+ to BBB- 7,806 1,043 3,389 — — 12,238 14,036 — — 26,274 Below BBB- and unrated 2,835 655 945 3 — 4,438 2,046 7 — 6,491 Subtotal 20,008 3,049 11,273 5 — 34,335 29,112 7 — 63,454 Asset-backed securities AAA 108 16 23 — — 147 2,227 — — 2,374 AA+ to AA- 36 6 8 — — 50 184 — — 234 A+ to A- 17 — 25 — — 42 575 — — 617 BBB+ to BBB- 15 — 10 — — 25 193 — — 218 Below BBB- and unrated 6 — — — — 6 175 — — 181 Subtotal 182 22 66 — — 270 3,354 — — 3,624 Total debt securities 52,742 5,262 24,011 130 — 82,145 39,015 302 — 121,462 Loans Mortgage loans note C1.2 — — 158 — — 158 8,119 — — 8,277 Policy loans 1,189 — 324 — — 1,513 4,705 8 — 6,226 Other loans 389 — 18 — — 407 — — — 407 Total loans 1,578 — 500 — — 2,078 12,824 8 — 14,910 Equity securities and holdings in collective investment schemes Direct equities 14,493 10,345 1,537 56 — 26,431 263 4 — 26,698 Collective investment schemes 13,455 6,097 4,175 10 — 23,737 36 7 — 23,780 US separate account assets note (iii) — — — — — - 184,220 — — 184,220 Total equity securities and holdings in collective investment schemes 27,948 16,442 5,712 66 — 50,168 184,519 11 — 234,698 Other financial investments note (iv) 991 572 1,817 97 — 3,477 3,827 75 — 7,379 Total financial Investments 83,259 22,276 32,040 293 — 137,868 240,185 396 — 378,449 Investment properties — — 7 — — 7 7 9 — 23 Investments in joint ventures and associates accounted for using the equity method — — 1,268 239 — 1,507 — — — 1,507 Cash and cash equivalents 913 599 1,242 132 — 2,886 2,493 3,005 — 8,384 Reinsurers' share of insurance contract liabilities note (v) 211 — 8,709 — — 8,920 35,993 5 — 44,918 Other assets note (vi) 1,954 482 8,051 799 (33) 11,253 17,942 3,828 (3,139) 29,884 Total assets 86,337 23,357 51,317 1,463 (33) 162,441 296,620 7,243 (3,139) 463,165 Shareholders' equity — — 10,535 994 — 11,529 8,955 (1,374) — 19,110 Non-controlling interests — — 2 159 — 161 - 36 — 197 Total equity — — 10,537 1,153 — 11,690 8,955 (1,338) — 19,307 Contract liabilities and unallocated surplus of with-profits funds note (iii) 76,647 21,376 33,541 — — 131,564 265,655 217 — 397,436 Core structural borrowings — — — — — — 250 6,249 — 6,499 Operational borrowings 243 15 111 25 — 394 1,212 639 — 2,245 Other liabilities note (vii) 9,447 1,966 7,128 285 (33) 18,793 20,548 1,476 (3,139) 37,678 Total liabilities 86,337 23,357 40,780 310 (33) 150,751 287,665 8,581 (3,139) 443,858 Total equity and liabilities 86,337 23,357 51,317 1,463 (33) 162,441 296,620 7,243 (3,139) 463,165 31 Dec 2019 $m Asia insurance Elimination Unit-linked Asia of intra-group With-profits assets and Other Asset Total Unallocated debtors and Group business liabilities business manage-ment Elimina-tions Asia US to a segment creditors total note (i) note (ii) Debt securities note (ix),note C1.1 Sovereign debt Indonesia 222 610 488 — — 1,320 — — — 1,320 Singapore 3,514 554 708 94 — 4,870 — — — 4,870 Thailand — — 1,398 19 — 1,417 — — — 1,417 United Kingdom — 7 — — — 7 — 615 — 622 United States 20,479 113 2,827 — — 23,419 6,160 597 — 30,176 Vietnam 1 15 2,900 — — 2,916 — — — 2,916 Other (predominantly Asia) 1,745 665 2,809 13 — 5,232 9 116 — 5,357 Subtotal 25,961 1,964 11,130 126 — 39,181 6,169 1,328 — 46,678 Other government bonds AAA 1,752 81 538 — — 2,371 977 — — 3,348 AA+ to AA- 135 8 78 — — 221 495 — — 716 A+ to A- 890 159 389 — — 1,438 245 — — 1,683 BBB+ to BBB- 356 88 201 — — 645 4 — — 649 Below BBB- and unrated 31 9 381 — — 421 — 2 — 423 Subtotal 3,164 345 1,587 — — 5,096 1,721 2 — 6,819 Corporate bonds AAA 732 384 516 — — 1,632 341 — — 1,973 AA+ to AA- 1,574 441 1,908 — — 3,923 1,566 — — 5,489 A+ to A- 5,428 542 5,063 — — 11,033 17,784 — — 28,817 BBB+ to BBB- 5,443 883 3,497 — — 9,823 22,775 — — 32,598 Below BBB- and unrated 2,111 569 781 3 — 3,464 2,157 2 — 5,623 Subtotal 15,288 2,819 11,765 3 — 29,875 44,623 2 — 74,500 Asset-backed securities AAA 236 19 104 — — 359 3,658 — — 4,017 AA+ to AA- 132 6 46 — — 184 780 — — 964 A+ to A- 1 — 14 — — 15 1,006 — — 1,021 BBB+ to BBB- — — — — — — 359 — — 359 Below BBB- and unrated — — — — — — 212 — — 212 Subtotal 369 25 164 — — 558 6,015 — — 6,573 Total debt securities 44,782 5,153 24,646 129 — 74,710 58,528 1,332 — 134,570 Loans Mortgage loans note C1.2 — — 165 — — 165 9,904 — — 10,069 Policy loans 1,089 — 316 — — 1,405 4,707 9 — 6,121 Other loans 374 — 19 — — 393 — — — 393 Total loans 1,463 — 500 — — 1,963 14,611 9 — 16,583 Equity securities and holdings in collective investment schemes Direct equities 14,143 12,440 1,793 59 — 28,435 150 4 — 28,589 Collective investment schemes 15,230 6,652 1,680 14 — 23,576 40 6 — 23,622 US separate account assets note (iii) — — — — — — 195,070 — — 195,070 Total equity securities and holdings in collective investment schemes 29,373 19,092 3,473 73 — 52,011 195,260 10 — 247,281 Other financial investments note (iv) 963 383 1,363 106 — 2,815 2,791 56 — 5,662 Total financial Investments 76,581 24,628 29,982 308 — 131,499 271,190 1,407 — 404,096 Investment properties — — 7 — — 7 7 11 — 25 Investments in joint ventures and associates accounted for using the equity method — — 1,263 237 — 1,500 — — — 1,500 Cash and cash equivalents 963 356 1,015 156 — 2,490 1,960 2,515 — 6,965 Reinsurers' share of insurance contract liabilities note (v) 152 — 5,306 — — 5,458 8,394 4 — 13,856 Other assets note (vi) 1,277 237 6,983 826 (35) 9,288 17,696 3,440 (2,652) 27,772 Total assets 78,973 25,221 44,556 1,527 (35) 150,242 299,247 7,377 (2,652) 454,214 Shareholders' equity — — 9,801 1,065 — 10,866 8,929 (318) — 19,477 Non-controlling interests — — 2 153 — 155 — 37 — 192 Total equity — — 9,803 1,218 — 11,021 8,929 (281) — 19,669 Contract liabilities and unallocated surplus of with-profits funds note (iii) 70,308 23,571 26,814 — — 120,693 269,549 186 — 390,428 Core structural borrowings — — — — — — 250 5,344 — 5,594 Operational borrowings 302 21 123 27 — 473 1,501 671 — 2,645 Other liabilities note (vii) 8,363 1,629 7,816 282 (35) 18,055 19,018 1,457 (2,652) 35,878 Total liabilities 78,973 25,221 34,753 309 (35) 139,221 290,318 7,658 (2,652) 434,545 Total equity and liabilities 78,973 25,221 44,556 1,527 (35) 150,242 299,247 7,377 (2,652) 454,214 Notes (i) The with-profits business of Asia comprises the with-profits assets and liabilities of the Hong Kong, Malaysia and Singapore operations. ‘Other business’ includes assets and liabilities of other participating businesses and other non-linked shareholder-backed business. (ii) Further analysis of the shareholders’ equity by business type of the US operations is provided below: 30 Jun 2020 $m 2019 $m Asset 31 Dec Insurance management Total Total Shareholders' equity 8,943 12 8,955 8,929 (iii) The US separate account assets comprise investments in mutual funds attaching to the variable annuity business that are held in the separate account. The related liabilities are reported in contract liabilities at an amount equal to the separate account assets. (iv) Other financial investments comprise derivative assets, other investments and deposits. (v) Reinsurers’ share of contract liabilities includes the reinsurance ceded in respect of the acquired REALIC business by the Group’s US insurance operations and at 30 June 2020 also includes amounts ceded in respect of the reinsurance of substantially all of Jackson’s in-force fixed and fixed indexed annuity liabilities to Athene Life Re Ltd, as discussed in note D1. (vi) Of total ‘Other assets’ at 30 June 2020, there are: – Property, plant and equipment (PPE) of $964 million (31 December 2019: $1,065 million). During the period, the Group made additions of $51 million of PPE (full year 2019: $160 million), of which $8 million relates to right-of-use assets (full year 2019: $96 million). – Premiums receivable of $778 million (31 December 2019: $794 million), of which $734 million (31 December 2019: $738 million) are due within one year. (vii) Within ’Other liabilities’ at 30 June 2020 is accruals, deferred income and other liabilities of $16,208 million (31 December 2019: $14,488 million), of which $11,213 million (31 December 2019: $9,172 million) are due within one year. (viii) The credit ratings, information or data contained in this report which are attributed and specifically provided by Standard & Poor's, Moody's and Fitch Solutions and their respective affiliates and suppliers ('Content Providers') is referred to here as the 'Content'. Reproduction of any Content in any form is prohibited except with the prior written permission of the relevant party. The Content Providers do not guarantee the accuracy, adequacy, completeness, timeliness or availability of any Content and are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such Content. The Content Providers expressly disclaim liability for any damages, costs, expenses, legal fees, or losses (including lost income or lost profit and opportunity costs) in connection with any use of the Content. A reference to a particular investment or security, a rating or any observation concerning an investment that is part of the Content is not a recommendation to buy, sell or hold any such investment or security, nor does it address the suitability of an investment or security and should not be relied on as investment advice. |
US | |
Analysis of operating segments | |
Schedule of shareholders equity by business type | 30 Jun 2020 $m 2019 $m Asset 31 Dec Insurance management Total Total Shareholders' equity 8,943 12 8,955 8,929 |
Additional analysis of debt s_2
Additional analysis of debt securities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt securities | US | |
Financial investments | |
Schedule of analysis of securities | 2020 $m 2019 $m 30 Jun 31 Dec Available-for-sale 37,597 57,091 Fair value through profit and loss 1,418 1,437 Total US debt securities 39,015 58,528 |
Debt securities | US insurance operations | |
Financial investments | |
Schedule of movements in unrealised gains and losses on available-for-sale securities | Changes in unrealised appreciation reflected in other comprehensive income Gains recycled to income statement on Unrealised gains transfer of debt (losses) arising in 30 Jun 2020 $m securities to Athene the period 31 Dec 2019 $m note D1 Assets fair valued at below book value Book value* 2,188 3,121 Unrealised gain (loss) (109) (82) (27) Fair value (as included in statement of financial position) 2,079 3,094 Assets fair valued at or above book value Book value* 32,190 50,474 Unrealised gain (loss) 3,328 (2,817) 2,622 3,523 Fair value (as included in statement of financial position) 35,518 53,997 Total Book value* 34,378 53,595 Net unrealised gain (loss) 3,219 (2,817) 2,540 3,496 Fair value (as included in the footnote above in the overview table and the statement of financial position) 37,597 57,091 * Book value represents cost or amortised cost of the debt securities. |
Schedule of securities classified as available-for-sale in an unrealised loss position | (i) Fair value of securities as a percentage of book value The following table shows the fair value of the debt securities in a gross unrealised loss position for various percentages of book value: 30 Jun 2020 $m 31 Dec 2019 $m Fair Unrealised Fair Unrealised value loss value loss Between 90% and 100 % 1,871 (62) 3,083 (25) Between 80% and 90% 111 (17) 11 (2) Below 80% 97 (30) - - Total 2,079 (109) 3,094 (27) (ii) Unrealised losses by maturity of security 2020 $m 2019 $m 30 Jun 31 Dec 1 year to 5 years (30) (1) 5 years to 10 years (39) (12) More than 10 years (20) (7) Mortgage-backed and other debt securities (20) (7) Total (109) (27) (iii) Age analysis of unrealised losses for the periods indicated The following table shows the age analysis of all the unrealised losses in the portfolio by reference to the length of time the securities have been in an unrealised loss position: 30 Jun 2020 $m 31 Dec 2019 $m Non- Non- investment Investment investment Investment Age analysis grade grade* Total grade grade* Total Less than 6 months (24) (80) (104) (1) (20) (21) 6 months to 1 year (3) (1) (4) (1) (1) (2) 1 year to 2 years — — — — (1) (1) 2 years to 3 years (1) — (1) — (1) (1) More than 3 years — — — — (2) (2) Total (28) (81) (109) (2) (25) (27) * For Standard and Poor's, Moody’s and Fitch rated debt securities, those with ratings range from AAA to BBB- are designated as investment grade. For NAIC rated debt securities, those with ratings 1 or 2 are designated as investment grade. Further, the following table shows the age analysis of the securities whose fair values were below 80 per cent of the book value: 30 Jun 2020 $m 31 Dec 2019 $m Fair Unrealised Fair Unrealised Age analysis value loss value loss Less than 3 months 60 (17) — — 3 months to 6 months 37 (13) — — Total below 80% 97 (30) — — |
Consolidated investment funds | |
Financial investments | |
Schedule of analysis of securities | 30 Jun 2020 $m 2019 $m Asia US Group total 31 Dec Debt securities held by consolidated investment funds 17,219 1,244 18,463 22,113 |
Corporate bonds | US insurance operations | |
Financial investments | |
Schedule of analysis of securities | 2020 $m 2019 $m 30 Jun 31 Dec Publicly traded and SEC Rule 144A securities* 21,215 34,781 Non-SEC Rule 144A securities 7,897 9,842 Total US corporate bonds 29,112 44,623 * A 1990 SEC rule that facilitates the resale of privately placed securities under Rule 144A that are without SEC registration to qualified institutional investors. The rule was designed to develop a more liquid and efficient institutional resale market for unregistered securities. |
Asset-backed securities | |
Financial investments | |
Schedule of analysis of securities | 2020 $m 2019 $m 30 Jun 31 Dec RMBS Sub-prime (30 Jun 2020: 2% AAA) 35 93 Alt-A (30 Jun 2020: 35% AAA, 39% A) 14 116 Prime including agency (30 Jun 2020: 85% AAA, 6% AA, 5% A) 263 862 CMBS (30 Jun 2020: 86% AAA, 5% AA, 3% A) 1,646 3,080 CDO funds (30 Jun 2020: 81% AAA, 9% AA, 5% A), $nil exposure to sub-prime 397 696 Other ABS (30 Jun 2020: 26% AAA, 5% AA, 48% A), $35 million exposure to sub-prime 999 1,168 Total US asset-backed securities 3,354 6,015 |
Bank debt securities | |
Financial investments | |
Schedule of analysis of securities | 30 Jun 2020 $m 2019 $m Senior debt Subordinated debt 31 Dec Group Shareholder-backed business Total Tier 1 Tier 2 Total total Group total Asia 549 572 329 901 1,450 993 Eurozone 223 — 26 26 249 337 United Kingdom 352 7 91 98 450 723 United States 1,565 5 52 57 1,622 3,134 Other 259 — 137 137 396 647 Total 2,948 584 635 1,219 4,167 5,834 With-profits funds Asia 534 87 572 659 1,193 1,130 Eurozone 77 — 101 101 178 131 United Kingdom 182 1 105 106 288 155 United States 670 2 15 17 687 34 Other 116 — 262 262 378 284 Total 1,579 90 1,055 1,145 2,724 1,734 |
Fair value measurement (Tables)
Fair value measurement (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Financial instruments | |
Schedule of reconciliation of movements in level 3 financial instruments measured at fair value | Half year 2020 $m Net asset Equity value securities attributable and Other to unit holdings in investments holders of collective (including consolidated Other Reconciliation of movements in level 3 assets investment Debt derivative investment financial and liabilities measured at fair value Loans schemes securities assets) funds liabilities Total Balance at beginning of period 3,587 276 6 1,301 (2) (3,760) 1,408 Total gains (losses) in income statement* 120 (44) (6) (170) 134 (91) (57) Total gains (losses) recorded in other comprehensive income — (4) — — — — (4) Purchases and other additions — 348 20 484 (583) — 269 Sales — (102) (2) (46) 13 — (137) Issues 52 — — — — (53) (1) Settlements (153) — — — — 161 8 Transfers into level 3 — — 53 — — — 53 Balance at end of period 3,606 474 71 1,569 (438) (3,743) 1,539 Full year 2019 $m Net asset Equity value securities attributable and Other Borrowings to unit holdings in investments attributable holders of collective (including to with- consolidated Other Reconciliation of movements in level 3 assets investment Debt derivative Derivative profits investment financial and liabilities measured at fair value Loans schemes securities assets) liabilities businesses funds liabilities Total Balance at beginning of year 6,054 656 1,505 6,714 (539) (2,045) (1,258) (4,335) 6,752 Demerger of UK and Europe operations (2,509) (440) (1,498) (5,513) — 2,045 1,258 451 (6,206) Total gains (losses) in income statement* 1 (11) 6 30 539 — — (28) 537 Total gains (losses) recorded in other comprehensive income — 3 — (6) — — — (11) (14) Purchases — 69 — 269 — — (2) — 336 Sales — (1) (7) (193) — — — — (201) Issues 275 — — — — — — (143) 132 Settlements (234) — — — — — — 306 72 Balance at end of year 3,587 276 6 1,301 — — (2) (3,760) 1,408 * Of the total net gains and (losses) in the income statement of $(57) million at half year 2020 (full year 2019: $537 million), $(103) million (full year 2019: $19 million) relates to net unrealised gains and losses of financial instruments still held at the end of the period, which can be analysed as follows: 2020 $m 2019 $m 30 Jun 31 Dec Equity securities and holdings in collective investment schemes (72) (11) Debt securities (5) — Other investments (157) 34 Net asset value attributable to unit holders of consolidated investment funds 132 — Other financial liabilities (1) (4) Total (103) 19 |
At fair value | |
Financial instruments | |
Schedule of fair value of assets and liabilities | 30 Jun 2020 $m Level 1 Level 2 Level 3 Valuation Valuation Quoted prices based on based on (unadjusted) significant significant in active observable unobservable markets market inputs market inputs Total Loans — — 3,606 3,606 Equity securities and holdings in collective investment schemes 230,670 3,554 474 234,698 Debt securities 64,300 57,091 71 121,462 Other investments (including derivative assets) 109 2,350 1,569 4,028 Derivative liabilities (65) (402) — (467) Total financial investments, net of derivative liabilities 295,014 62,593 5,720 363,327 Investment contract liabilities without discretionary participation features held at fair value — (936) — (936) Net asset value attributable to unit holders of consolidated investment funds (5,521) (8) (438) (5,967) Other financial liabilities held at fair value — — (3,743) (3,743) Total financial instruments at fair value 289,493 61,649 1,539 352,681 Percentage of total (%) 82 % 18 % 0 % 100 % Analysed by business type: Financial investments, net of derivative liabilities at fair value: With-profits 67,290 12,963 314 80,567 Unit-linked and variable annuity separate account 204,723 1,208 — 205,931 Non-linked shareholder-backed business 23,001 48,422 5,406 76,829 Total financial investments, net of derivative liabilities at fair value 295,014 62,593 5,720 363,327 Other financial liabilities at fair value (5,521) (944) (4,181) (10,646) Group total financial instruments at fair value 289,493 61,649 1,539 352,681 31 Dec 2019 $m Level 1 Level 2 Level 3 Valuation Valuation Quoted prices based on based on (unadjusted) significant significant in active observable unobservable markets market inputs market inputs Total Loans — — 3,587 3,587 Equity securities and holdings in collective investment schemes 243,285 3,720 276 247,281 Debt securities 67,927 66,637 6 134,570 Other investments (including derivative assets) 70 1,676 1,301 3,047 Derivative liabilities (185) (207) — (392) Total financial investments, net of derivative liabilities 311,097 71,826 5,170 388,093 Investment contract liabilities without discretionary participation features held at fair value — (1,011) — (1,011) Net asset value attributable to unit holders of consolidated investment funds (5,973) (23) (2) (5,998) Other financial liabilities held at fair value — — (3,760) (3,760) Total financial instruments at fair value 305,124 70,792 1,408 377,324 Percentage of total (%) 81 % 19 % 0 % 100 % Analysed by business type: Financial investments, net of derivative liabilities at fair value: With-profits 66,061 7,762 260 74,083 Unit-linked and variable annuity separate account 217,838 1,486 — 219,324 Non-linked shareholder-backed business 27,198 62,578 4,910 94,686 Total financial investments, net of derivative liabilities at fair value 311,097 71,826 5,170 388,093 Other financial liabilities at fair value (5,973) (1,034) (3,762) (10,769) Group total financial instruments at fair value 305,124 70,792 1,408 377,324 |
Schedule of net unrealised gains and losses in the income statement for financial instruments still held at the end of the year | 2020 $m 2019 $m 30 Jun 31 Dec Equity securities and holdings in collective investment schemes (72) (11) Debt securities (5) — Other investments (157) 34 Net asset value attributable to unit holders of consolidated investment funds 132 — Other financial liabilities (1) (4) Total (103) 19 |
Assets and liabilities at amortised cost for which fair value is disclosed | |
Financial instruments | |
Schedule of fair value of assets and liabilities | The table below shows the financial assets and liabilities carried at amortised cost on the statement of financial position and their fair value. Cash deposits, accrued income, other debtors, accruals, deferred income and other liabilities are excluded from the analysis below. These are carried at amortised cost, which approximates fair value. 2020 $m 2019 $m 30 Jun 31 Dec Carrying Fair Carrying Fair value value value value Assets Loans 11,304 11,435 12,996 13,511 Liabilities Investment contract liabilities without discretionary participation features (3,730) (3,793) (3,891) (3,957) Core structural borrowings of shareholder-financed businesses (6,499) (7,087) (5,594) (6,227) Operational borrowings (excluding lease liabilities) (1,703) (1,703) (2,015) (2,015) Obligations under funding, securities lending and sale and repurchase agreements (9,085) (9,442) (8,901) (9,135) Total (9,713) (10,590) (7,405) (7,823) |
Policyholder liabilities and _2
Policyholder liabilities and unallocated surplus (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Policyholder liabilities and unallocated surplus | |
Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds | Half year 2020 $m Asia US Total note C3.2 note C3.3 At 1 January 2020 132,570 269,549 402,119 Comprising: - Policyholder liabilities on the consolidated statement of financial position (excludes $186 million classified as unallocated to a segment) 115,943 269,549 385,492 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 4,750 — 4,750 - Group's share of policyholder liabilities of joint ventures and associate note(d) 11,877 — 11,877 Net flows: Premiums 9,746 8,865 18,611 Surrenders (2,083) (7,455) (9,538) Maturities/deaths (1,153) (1,793) (2,946) Net flows note(d) 6,510 (383) 6,127 Shareholders' transfers post-tax (54) — (54) Investment-related items and other movements 6,526 (3,511) 3,015 Foreign exchange translation differences (1,580) — (1,580) At 30 June 2020 143,972 265,655 409,627 Comprising: - Policyholder liabilities on the consolidated statement of financial position (excludes $217 million classified as unallocated to a segment) 126,052 265,655 391,707 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 5,512 — 5,512 - Group's share of policyholder liabilities of joint ventures and associate note (d) 12,408 — 12,408 Half year 2019 $m Discontinued Asia US UK and Total note C3.2 note C3.3 Europe At 1 January 2019 105,408 236,380 210,002 551,790 Comprising: - Policyholder liabilities on the consolidated statement of financial position (excludes $50 million classified as unallocated to a segment) note (c) 91,836 236,380 193,020 521,236 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,198 — 16,982 20,180 - Group's share of policyholder liabilities of joint ventures and associate note (d) 10,374 — — 10,374 Reclassification of UK and Europe liabilities as held for distribution — — (210,002) (210,002) Net flows: Premiums 9,800 9,136 — 18,936 Surrenders (1,982) (8,279) — (10,261) Maturities/deaths (1,278) (1,744) — (3,022) Net flows note(d) 6,540 (887) — 5,653 Shareholders' transfers post-tax (49) — — (49) Investment-related items and other movements 7,947 21,786 — 29,733 Foreign exchange translation differences 547 — — 547 At 30 June 2019 120,393 257,279 — 377,672 Comprising: - Policyholder liabilities on the consolidated statement of financial position (excludes $61 million classified as unallocated to a segment) note (c) 105,593 257,279 — 362,872 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,747 — — 3,747 - Group's share of policyholder liabilities of joint ventures and associate note (d) 11,053 — — 11,053 Average policyholder liability balances note (e) Half year 2020 133,141 267,602 — 400,743 Half year 2019 109,428 246,830 — 356,258 Notes (a) (b) (c) (d) (e) |
Schedule of movement in insurance contract liabilities and unallocated surplus of with-profit funds | Reinsurers' share of insurance Unallocated surplus Contract liabilities contract liabilities of with-profits funds $m $m $m At 1 January 2020 385,678 (13,856) 4,750 Income and expense included in the income statement note (a) 7,555 (31,066) 742 Other movements note (b) (110) — — Foreign exchange translation differences (1,199) 4 20 At 30 June 2020 391,924 (44,918) 5,512 At 1 January 2019 521,286 (14,193) 20,180 Removal of opening balances relating to the discontinued UK and Europe operations note (c) (193,020) 2,169 (16,982) Income and expense included in the income statement 33,996 (880) 655 Other movements note (b) 53 — (116) Foreign exchange translation differences 618 (15) 10 At 30 June 2019 362,933 (12,919) 3,747 Notes (a) The increase in reinsurers' share of insurance contract liabilities in half year 2020 includes $27.7 billion in respect of the reinsurance of substantially all of Jackson's in-force fixed and fixed indexed annuity liabilities to Athene Life Re Ltd, as discussed in note D1. (b) Other movements include premiums received and claims paid on investment contracts without discretionary participating features, which are taken directly to the statement of financial position in accordance with IAS 39. (c) The $2,169 million of reinsurer’s share of insurance contract liabilities excluded the intra-group reinsurance assets for the with-profits business ceded to the Asia insurance operations, which were eliminated on consolidation at 1 January 2019. |
Shareholder-backed | |
Policyholder liabilities and unallocated surplus | |
Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds | Half year 2020 $m Asia US Total At 1 January 2020 62,262 269,549 331,811 Net flows: Premiums 5,155 8,865 14,020 Surrenders (1,702) (7,455) (9,157) Maturities/deaths (477) (1,793) (2,270) Net flows note 2,976 (383) 2,593 Investment-related items and other movements 3,139 (3,511) (372) Foreign exchange translation differences (1,052) — (1,052) At 30 June 2020 67,325 265,655 332,980 Comprising: - Policyholder liabilities on the consolidated statement of financial position 54,917 265,655 320,572 (excludes $217 million classified as unallocated to a segment) - Group's share of policyholder liabilities relating to joint ventures and associate 12,408 — 12,408 Half year 2019 $m Discontinued UK and Asia US Europe Total At 1 January 2019 51,705 236,380 51,911 339,996 Reclassification of UK and Europe liabilities as held for distribution — — (51,911) (51,911) Net flows: Premiums 5,076 9,136 — 14,212 Surrenders (1,714) (8,279) — (9,993) Maturities/deaths (567) (1,744) — (2,311) Net flows note 2,795 (887) — 1,908 Investment-related items and other movements 2,100 21,786 — 23,886 Foreign exchange translation differences 315 — — 315 At 30 June 2019 56,915 257,279 — 314,194 Comprising: - Policyholder liabilities on the consolidated statement of financial position (excludes $61 million classified as unallocated to a segment) 45,862 257,279 — 303,141 - Group's share of policyholder liabilities relating to joint ventures and associate 11,053 — — 11,053 Note Including net flows of the Group’s insurance joint ventures and associate. |
Asia insurance operations | |
Policyholder liabilities and unallocated surplus | |
Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds | Half year 2020 $m Shareholder-backed business With-profits Unit-linked Other business liabilities business Total At 1 January 2020 70,308 28,850 33,412 132,570 Comprising: - Policyholder liabilities on the consolidated statement of financial position 65,558 23,571 26,814 115,943 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 4,750 — — 4,750 - Group's share of policyholder liabilities relating to joint ventures and associate note (a) — 5,279 6,598 11,877 Premiums: New business 375 909 1,009 2,293 In-force 4,216 1,148 2,089 7,453 4,591 2,057 3,098 9,746 Surrenders note (b) (381) (1,209) (493) (2,083) Maturities/deaths (676) (87) (390) (1,153) Net flows 3,534 761 2,215 6,510 Shareholders' transfers post tax (54) — — (54) Investment-related items and other movements note (c) 3,387 (2,243) 5,382 6,526 Foreign exchange translation differences note (d) (528) (794) (258) (1,580) At 30 June 2020 76,647 26,574 40,751 143,972 Comprising: - Policyholder liabilities on the consolidated statement of financial position 71,135 21,376 33,541 126,052 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 5,512 — — 5,512 - Group's share of policyholder liabilities relating to joint ventures and associate note (a) — 5,198 7,210 12,408 Half year 2019 $m Shareholder-backed business With-profits Unit-linked Other business liabilities business Total At 1 January 2019 53,703 25,704 26,001 105,408 Comprising: - Policyholder liabilities on the consolidated statement of financial position 50,505 20,846 20,485 91,836 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,198 — — 3,198 - Group's share of policyholder liabilities relating to joint ventures and associate note (a) — 4,858 5,516 10,374 Premiums: New business 769 1,003 1,180 2,952 In-force 3,955 1,206 1,687 6,848 4,724 2,209 2,867 9,800 Surrenders note (b) (268) (1,385) (329) (1,982) Maturities/deaths (711) (89) (478) (1,278) Net flows 3,745 735 2,060 6,540 Shareholders' transfers post-tax (49) — — (49) Investment-related items and other movements note (c) 5,847 753 1,347 7,947 Foreign exchange translation differences note (d) 232 176 139 547 At 30 June 2019 63,478 27,368 29,547 120,393 Comprising: - Policyholder liabilities on the consolidated statement of financial position 59,731 22,392 23,470 105,593 - Unallocated surplus of with-profits funds on the consolidated statement of financial position 3,747 — — 3,747 - Group's share of policyholder liabilities relating to joint ventures and associate note (a) — 4,976 6,077 11,053 Average policyholder liability balances note (e) Half year 2020 68,347 27,712 37,082 133,141 Half year 2019 55,118 26,536 27,774 109,428 Notes (a) (b) (c) (d) (e) |
US insurance operations | |
Policyholder liabilities and unallocated surplus | |
Analysis of movements in policyholder liabilities and unallocated surplus of with-profits funds | Half year 2020 $m Variable annuity General account separate account and other liabilities business Total note (d) At 1 January 2020 195,070 74,479 269,549 Premiums 6,544 2,321 8,865 Surrenders (5,353) (2,102) (7,455) Maturities/deaths (848) (945) (1,793) Net flows note (a) 343 (726) (383) Transfers from separate to general account (1,042) 1,042 — Investment-related items and other movements note (b) (10,151) 6,640 (3,511) At 30 June 2020 184,220 81,435 265,655 Half year 2019 $m Variable annuity General account separate account and other liabilities business Total At 1 January 2019 163,301 73,079 236,380 Premiums 6,032 3,104 9,136 Surrenders (6,008) (2,271) (8,279) Maturities/deaths (782) (962) (1,744) Net flows note (a) (758) (129) (887) Transfers from general to separate account 637 (637) — Investment-related items and other movements 21,737 49 21,786 At 30 June 2019 184,917 72,362 257,279 Average policyholder liability balances note (c) Half year 2020 189,645 77,957 267,602 Half year 2019 174,109 72,721 246,830 Notes (a) (b) (c) (d) |
Intangible assets (Tables)
Intangible assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Intangible assets | |
Reconciliation of goodwill | 2020 $m 2019 $m 30 Jun 31 Dec Carrying value at beginning of period 969 2,365 Reclassification/Demerger of UK and Europe operations — (1,731) Additions in the period — 299 Exchange differences (27) 36 Carrying value at end of period 942 969 |
Schedule of deferred acquisition costs and other intangible assets | 2020 $m 2019 $m 30 Jun 31 Dec Deferred acquisition costs and other intangible assets attributable to shareholders 18,538 17,409 Other intangible assets, including computer software, attributable to with-profits funds 66 67 Total of deferred acquisition costs and other intangible assets 18,604 17,476 |
Shareholder-backed | |
Intangible assets | |
Schedule of deferred acquisition costs and other intangible assets | 2020 $m 2019 $m 30 Jun 31 Dec Deferred acquisition costs related to insurance contracts as classified under IFRS 4 14,567 14,206 Deferred acquisition costs related to investment management contracts, including life assurance contracts classified as financial instruments and investment management contracts under IFRS 4 34 33 Deferred acquisition costs related to insurance and investment contracts 14,601 14,239 Present value of acquired in-force policies for insurance contracts as classified under IFRS 4 (PVIF) 34 38 Distribution rights and other intangibles 3,903 3,132 Present value of acquired in-force (PVIF) and other intangibles attributable to shareholders 3,937 3,170 Total of deferred acquisition costs and other intangible assets note (a) 18,538 17,409 Notes (a) Total deferred acquisition costs and other intangible assets attributable to shareholders can be further analysed by business operations as follows: 2020 $m 2019 $m Deferred acquisition costs PVIF and other 30 Jun 31 Dec Asia US* intangibles † Total Total Balance at beginning of period: 1,999 12,240 3,170 17,409 15,008 Removal of UK and Europe operations from opening balance — — — — (143) Additions ‡ 261 353 904 1,518 2,601 Amortisation to the income statement: note (c) Adjusted operating profit (157) (363) (111) (631) (792) Non-operating profit (loss) — 50 (2) 48 1,243 (157) (313) (113) (583) 451 Disposals and transfers — — (13) (13) (11) Exchange differences and other movements (30) — (11) (41) 134 Amortisation of DAC related to net unrealised valuation movements on the US insurance operation's available-for-sale securities recognised within other comprehensive income — 248 — 248 (631) Balance at end of period 2,073 12,528 3,937 18,538 17,409 * Under the Group’s application of IFRS 4, US GAAP is used for measuring the insurance assets and liabilities of its US and certain Asia operations. Under US GAAP, most of the US insurance operation’s products are accounted for under Accounting Standard no. 97 of the Financial Accounting Standards Board (FAS 97) whereby deferred acquisition costs are amortised in line with the emergence of actual and expected gross profits which are determined using an assumption for long-term investment returns for the separate account of 7.4 per cent (full year 2019: 7.4 per cent) gross of asset management fees and other charges to policyholders, but net of external fund management fees. The other assumptions impacting expected gross profits include mortality assumptions, lapses, assumed unit costs and future hedge costs. The amounts included in the income statement and other comprehensive income affect the pattern of profit emergence and thus the DAC amortisation attaching. DAC amortisation is allocated to the operating and non-operating components of the Group’s supplementary analysis of profit and other comprehensive income by reference to the underlying items. The charge of $(313) million in half year 2020 in the US operations includes $(764) million for the write-off of the deferred acquisition costs in respect of the reinsured Jackson's in-force fixed and fixed indexed annuity liabilities to Athene Life Re Ltd. † PVIF and other intangibles comprise present value of acquired in-force (PVIF), distribution rights and other intangibles such as software rights. Distribution rights relate to amounts that have been paid or have become unconditionally due for payment as a result of past events in respect of bancassurance partnership arrangements in Asia. These agreements allow for bank distribution of Prudential’s insurance products for a fixed period of time. Software rights include additions of $21 million, amortisation of $(17) million, disposals of $(8) million, foreign exchange of $2 million and closing balance at 30 June 2020 of $83 million (31 December 2019: $85 million). ‡ On 19 March 2020, the Group signed a new bancassurance agreement with TMB Bank for a period of 15 years. This extended exclusive partnership agreement required the novation of TMB Bank's current bancassurance distribution agreement with another insurance group. The agreement cost Thai Baht 24.5 billion, which will be paid in two instalments with Thai Baht 12.0 billion paid in April 2020 and the remainder on 1 January 2021. The amount included in additions in the table above is $788 million. |
US insurance operations | Shareholder-backed | |
Intangible assets | |
Schedule of DAC components | 2020 $m 2019 $m 30 Jun 31 Dec Variable annuity and other business 12,975 12,935 Cumulative shadow DAC (for unrealised gains/losses booked in other comprehensive income)* (447) (695) Total DAC for US operations 12,528 12,240 * A net gain of $248 million (full year 2019: a loss of $(631) million) for shadow DAC amortisation is booked within other comprehensive income to reflect a reduction in shadow DAC of $535 million as a result of the reinsurance of substantially all of Jackson's fixed and fixed annuity business to Athene Life offset by the impact from the positive unrealised valuation movement for half year 2020 of $2,540 million (full year 2019: positive unrealised valuation movement of $4,023 million). These adjustments reflect the movement from period to period, in the changes to the pattern of reported gross profits that would have happened if the assets reflected in the statement of financial position had been sold, crystallising the unrealised gains and losses, and the proceeds reinvested at the yields currently available in the market. |
Borrowings (Tables)
Borrowings (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Core structural borrowings of shareholder-financed businesses | |
Borrowings | |
Schedule of borrowings | 2020 $m 2019 $m 30 Jun 31 Dec Central operations: Subordinated debt: US$250m 6.75% Notes note (i) 250 250 US$300m 6.5% Notes note (i) 300 300 US$700m 5.25% Notes 700 700 US$1,000m 5.25% Notes 997 996 US$725m 4.375% Notes 723 721 US$750m 4.875% Notes 746 744 €20m Medium Term Notes 2023 22 22 £435m 6.125% Notes 2031 533 571 Senior debt: note (ii) £300m 6.875% Notes 2023 366 392 £250m 5.875% Notes 2029 280 298 $1,000m 3.125% Notes 2030 note (iii) 982 — Bank loans note (iv) $350m Loan 2024 350 350 Total central operations 6,249 5,344 Jackson US$250m 8.15% Surplus Notes 2027 note (v) 250 250 Total core structural borrowings of shareholder-financed businesses 6,499 5,594 Notes (i) These borrowings can be converted, in whole or in part, at the Company’s option and subject to certain conditions, on any interest payment date, into one or more series of Prudential preference shares. (ii) The senior debt ranks above subordinated debt in the event of liquidation. (iii) In April 2020, the Company issued $1,000 million 3.125 per cent senior debt maturing on 14 April 2030 with proceeds, net of costs of $982 million. (iv) The bank loan of $350 million was drawn in November 2019 at a cost of LIBOR plus 0.2 per cent. The loan matures on 7 November 2024. The £275 million bank loan was repaid by the Group in October 2019. (v) Jackson’s borrowings are unsecured and subordinated to all present and future indebtedness, policy claims and other creditor claims of Jackson. |
Operational borrowings | |
Borrowings | |
Schedule of borrowings | 2020 $m 2019 $m 30 Jun 31 Dec Borrowings in respect of short-term fixed income securities programmes – commercial paper 506 520 Lease liabilities under IFRS 16 318 371 Non-recourse borrowings of consolidated investment funds note (a) 1,081 1,045 Other borrowings note (b) 97 406 Operational borrowings attributable to shareholder-financed businesses 2,002 2,342 Lease liabilities under IFRS 16 224 259 Other borrowings 19 44 Operational borrowings attributable to with-profits businesses 243 303 Total operational borrowings 2,245 2,645 Notes (a) (b) |
Sensitivity analysis to key m_2
Sensitivity analysis to key market risks (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Interest rate risk | |
Sensitivity analysis | |
Schedule of estimated sensitivity to risk | The sensitivities shown below are for movements in risk-free rates (based on local government bond yields at the valuation date) in isolation and are subject to a floor of zero. They do not include movements in credit risk that may affect credit spreads and hence the valuation of debt securities and policyholder liabilities. A one-letter credit downgrade in isolation (i.e. ignoring any consequential change in valuation) would not have a material impact on IFRS profit or shareholders' equity. Following the fall in interest rates during the first half of 2020, the estimated sensitivity to a decrease in interest rates at 30 June 2020 has been updated to a decrease of 0.5 per cent. This compares to a 1 per cent change at 31 December 2019. The estimated sensitivity to a decrease and increase in interest rates at 30 June 2020 is as follows: 30 June 2020 Asia insurance $m US insurance $m Decrease of 0.5 % Increase of 1 % Decrease of 0.5 % Increase of 1 % Net effect on shareholders' equity* (1,203) 64 (90) (123) * The effect from the instantaneous changes in interest rates above, if they arose, would impact profit after tax for Asia insurance operations and would mostly be recorded within short-term fluctuations in investment returns. The impact on profit after tax would be the same as the net effect on shareholders' equity. For US insurance operations , the instantaneous changes in interest rates above, if they arose, would cause the net effect on equity shown above through two constituent movements. Firstly, profit after tax, net of related changes in the amortisation of DAC, would be impacted (decrease of 0.5 per cent: $(1,036) million; increase of 1 per cent: $1,577 million), and would mostly be recorded within short-term fluctuations in investment returns. Secondly, the effect would also impact other comprehensive income (decrease of 0.5 per cent: $946 million; increase of 1 per cent: $(1,700) million) in respect of the direct effect on the carrying value of the available-for-sale debt securities, net of related changes in the amortisation of DAC and related tax effects. The estimated sensitivity to a decrease and increase in interest rates at 31 December 2019 is as follows: 31 December 2019 Asia insurance $m US insurance $m Decrease of 1 % Increase of 1 % Decrease of 1 % Increase of 1 % Net effect on shareholders' equity* (702) (718) 20 (553) * The effect from the instantaneous changes in interest rates above, if they arose, would impact profit after tax for Asia insurance operations and would mostly be recorded within short-term fluctuations in investment returns. The impact on profit after tax would be the same as the net effect on shareholders' equity. For US insurance operations , the instantaneous changes in interest rates above, if they arose, would cause the net effect on equity shown above through two constituent movements. Firstly, profit after tax, net of related changes in the amortisation of DAC, would be impacted (decrease of 1 per cent: $(2,224) million; increase of 1 per cent: $1,691 million), and would mostly be recorded within short-term fluctuations in investment returns. Secondly, the effect would also impact other comprehensive income (decrease of 1 per cent: $2,244 million; increase of 1 per cent: $(2,244) million) in respect of the direct effect on the carrying value of the available-for-sale debt securities, net of related changes in the amortisation of DAC and related tax effects |
Equity and property price risk | |
Sensitivity analysis | |
Schedule of estimated sensitivity to risk | The estimated sensitivity to a 10 per cent and 20 per cent change in equity and property prices at 30 June 2020 is as follows: 30 June 2020 Asia insurance $m US insurance $m Decrease of 20 % Increase of 10 % Decrease of 20 % Increase of 10 % Net effect on shareholders' equity* (559) 302 2,174 (484) * The effect from the instantaneous changes in equity and property prices above, if they arose, would impact profit after tax for Asia and the US insurance operations, which would mostly be recorded within short-term fluctuations in investment returns. The estimated sensitivity to a 10 per cent and 20 per cent change in equity and property prices at 31 December 2019 is as follows: 31 December 2019 Asia insurance $m US insurance $m Decrease of 20 % Increase of 10 % Decrease of 20 % Increase of 10 % Net effect on shareholders' equity* (816) 408 762 608 * The effect from the instantaneous changes in equity and property prices above, if they arose, would impact profit after tax for Asia and the US insurance operations, which would mostly be recorded within short-term fluctuations in investment returns. |
Deferred tax (Tables)
Deferred tax (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Deferred tax | |
Schedule of deferred tax assets and liabilities | Half year 2020 $m Movement Other through movements other including Movement in comprehensive foreign Balance income income and currency Balance at 1 Jan statement equity movements at 30 Jun Deferred tax assets Unrealised losses or gains on investments — — — 1 1 Balances relating to investment and insurance contracts 32 8 — (1) 39 Short-term temporary differences 3,889 238 — 1 4,128 Unused tax losses 154 (64) — 1 91 Total 4,075 182 — 2 4,259 Deferred tax liabilities Unrealised losses or gains on investments (877) 19 7 3 (848) Balances relating to investment and insurance contracts (1,507) (110) — 68 (1,549) Short-term temporary differences (2,853) (28) — — (2,881) Total (5,237) (119) 7 71 (5,278) |
Share capital, share premium _2
Share capital, share premium and own shares (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Share capital, share premium and own shares | |
Schedule of reconciliation of issued shares | 30 Jun 2020 31 Dec 2019 Share Share Share Share Number of capital premium Number of ordinary capital premium Issued shares of 5p each fully paid: ordinary shares $m $m shares $m $m Balance at beginning of period 2,601,159,949 172 2,625 2,593,044,409 166 2,502 Shares issued under share-based schemes 7,700,498 — 10 8,115,540 — 22 Impact of change in presentation currency — — — — 6 101 Balance at end of period 2,608,860,447 172 2,635 2,601,159,949 172 2,625 |
Summary of options outstanding under save as you earn schemes to subscribe for shares | Number of shares Share price range Exercisable to subscribe for from to by year 30 Jun 2020 2,197,782 1,104 p 1,455 p 31 Dec 2019 3,805,447 1,104 p 1,455 p |
Summary of purchases of own shares in respect of employee incentive plans | Number of shares purchased Cost* (in millions) $m Half year 2020 5.8 75.2 Full year 2019 3.7 73.8 * The cost in US dollars shown has been calculated from the share prices in pounds sterling using the monthly average exchange rate for the month in which those shares were purchased. |
Gain (loss) attaching to corp_2
Gain (loss) attaching to corporate transactions (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Gain (loss) attaching to corporate transactions | |
Schedule of gain (loss) attaching to corporate transactions | 2020 $m 2019 $m Half year Half year Gain arising on reinsurance of Jackson's in-force fixed and fixed indexed annuity business note (i) 846 — Gain on disposals note (ii) — 270 Other transactions note (iii) — (253) Total gain (loss) attaching to corporate transactions 846 17 Notes (i) With effect from 1 June 2020, Jackson reinsured substantially all of its in-force portfolio of US fixed and fixed indexed annuities with Athene Life Re Ltd, which resulted in a pre-tax gain of $846 million, after allowing for the write-off of deferred acquisition costs associated with the business reinsured. The transaction excluded Jackson's legacy life and institutional business as well as the REALIC portfolio and group pay-out annuity business reinsured from John Hancock and was collateralised to reduce the exposure to counterparty risk. Under the reinsurance arrangement, Jackson reinsured $27.6 billion liabilities (valued at 1 June 2020) in return for a premium of $28.9 billion net of ceding commission, comprising principally of bonds. The pre-tax gain also includes the realised gains arising on the bonds net of the deferred acquisition costs written off as a result of the transaction. After allowing for tax and the reduction in unrealised gains recorded directly in other comprehensive income, the impact of the reinsurance transaction on IFRS shareholders' equity is a reduction of $(1.1) billion. (ii) In 2019, the gain on disposals principally related to profits arising from a 4 per cent reduction in the Group’s stake in its associate in India, ICICI Prudential Life Insurance Company, and the disposal of Prudential Vietnam Finance Company Limited, a wholly-owned subsidiary that provides consumer finance. (iii) In 2019, other transactions primarily reflected costs related to the demerger of the Group’s UK and Europe operations (M&G plc). |
Basis of preparation (Details)
Basis of preparation (Details) $ in Billions | 6 Months Ended | |||||||||||||||||||||||||||||||
Jun. 30, 2020$ / ₫ | Jun. 30, 2020$ / ₫$ / ฿ | Jun. 30, 2020$ / ₫$ / $ | Jun. 30, 2020$ / ₫$ / RM | Jun. 30, 2020$ / ₫$ / Rp | Jun. 30, 2020$ / ₫$ / $ | Jun. 30, 2020$ / ₫$ / £ | Jun. 30, 2020$ / ₫$ / ¥ | Jun. 30, 2019$ / ₫ | Jun. 30, 2019$ / ฿ | Jun. 30, 2019$ / $ | Jun. 30, 2019$ / RM | Jun. 30, 2019$ / Rp | Jun. 30, 2019$ / $ | Jun. 30, 2019$ / £ | Jun. 30, 2019$ / ¥ | Jun. 30, 2020$ / ฿ | Jun. 30, 2020$ / $ | Jun. 30, 2020$ / RM | Jun. 30, 2020$ / Rp | Jun. 30, 2020$ / $ | Jun. 30, 2020$ / £ | Jun. 30, 2020$ / ¥ | Jun. 30, 2020USD ($) | Dec. 31, 2019$ / ₫ | Dec. 31, 2019$ / ฿ | Dec. 31, 2019$ / $ | Dec. 31, 2019$ / RM | Dec. 31, 2019$ / Rp | Dec. 31, 2019$ / $ | Dec. 31, 2019$ / £ | Dec. 31, 2019$ / ¥ | |
Basis of preparation | ||||||||||||||||||||||||||||||||
Central cash and short-term investment balances | $ 1.9 | |||||||||||||||||||||||||||||||
Undrawn liquidity facilities | $ 2.6 | |||||||||||||||||||||||||||||||
Closing rate | 23,206 | 23,206 | 23,206 | 23,206 | 23,206 | 23,206 | 23,206 | 23,206 | 30.87 | 1.40 | 4.29 | 14,285 | 7.75 | 0.81 | 7.07 | 23,172.50 | 29.75 | 1.34 | 4.09 | 13,882.50 | 7.79 | 0.75 | 6.97 | |||||||||
Average rate | 23,303.21 | 31.62 | 1.40 | 4.25 | 14,574.24 | 7.76 | 0.79 | 7.03 | 23,253.04 | 31.61 | 1.36 | 4.12 | 14,192.79 | 7.84 | 0.77 | 6.78 |
Analysis of performance by se_3
Analysis of performance by segment - Segment results (Details) - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | ||
Other income and expenditure: | |||
Interest payable on core structural borrowings | $ (163) | $ (293) | |
Adjusted operating profit | 2,541 | 2,619 | |
Short-term fluctuations in investment returns on shareholder-backed business | (2,706) | (1,455) | |
Amortisation of acquisition accounting adjustments | (18) | (22) | |
Gain attaching to corporate transactions | 846 | 17 | |
Profit before tax attributable to shareholders' returns | 663 | 1,159 | |
Tax charge attributable to shareholders' returns | (129) | (1) | |
Profit from continuing operations | 534 | 1,158 | |
Profit for the period from discontinued operations | [1] | 835 | |
Profit for the period | 534 | 1,993 | |
Attributable to: | |||
Equity holders of the Company From continuing operations | 512 | 1,152 | |
Equity holders of the Company From discontinued operations | 835 | ||
Non-controlling interests from continuing operations | 22 | 6 | |
Profit for the period | $ 534 | $ 1,993 | |
Basic earnings per share | |||
Based on adjusted operating profit, net of tax, from continuing operations | $ 0.790 | $ 0.845 | |
Based on profit for the period from continuing operations (in USD per share) | $ 0.197 | 0.446 | |
Based on profit for the period from discontinued operations | $ 0.323 | ||
Operating segments | Asia | |||
Other income and expenditure: | |||
Adjusted operating profit | $ 1,733 | $ 1,550 | |
Short-term fluctuations in investment returns on shareholder-backed business | (448) | 544 | |
Profit before tax attributable to shareholders' returns | 1,283 | ||
Tax charge attributable to shareholders' returns | (230) | (244) | |
Operating segments | Asia insurance operations | |||
Other income and expenditure: | |||
Adjusted operating profit | 1,590 | 1,417 | |
Operating segments | Asia asset management | |||
Other income and expenditure: | |||
Adjusted operating profit | 143 | 133 | |
Operating segments | US | |||
Other income and expenditure: | |||
Adjusted operating profit | 1,266 | 1,572 | |
Short-term fluctuations in investment returns on shareholder-backed business | (2,288) | (1,968) | |
Profit before tax attributable to shareholders' returns | (192) | ||
Tax charge attributable to shareholders' returns | 113 | 143 | |
Operating segments | US insurance operations | |||
Other income and expenditure: | |||
Adjusted operating profit | 1,256 | 1,556 | |
Operating segments | US asset management | |||
Other income and expenditure: | |||
Adjusted operating profit | 10 | 16 | |
Operating profit reconciling items | |||
Other income and expenditure: | |||
Investment return and other income | 18 | 32 | |
Interest payable on core structural borrowings | (163) | (293) | |
Corporate expenditure | (205) | (212) | |
Total other income and expenditure | (350) | (473) | |
Restructuring and IFRS 17 implementation costs | $ (108) | $ (30) | |
[1] | Discontinued operations for half year 2019 related to the UK and Europe operations (M&G plc) that were demerged from the Group in October 2019. |
Analysis of performance by se_4
Analysis of performance by segment - Short-term fluctuations in investment returns on shareholder-backed business (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Analysis of operating segments | ||
Short-term fluctuations in investment returns on shareholder-backed business | $ (2,706) | $ (1,455) |
Operating segments | Asia | ||
Analysis of operating segments | ||
Short-term fluctuations in investment returns on shareholder-backed business | (448) | 544 |
Operating segments | US | ||
Analysis of operating segments | ||
Related credit (charge) for amortisation of deferred acquisition costs | (50) | 616 |
Short-term fluctuations in investment returns on shareholder-backed business | (2,288) | (1,968) |
Operating segments | US | Net equity hedge result | ||
Analysis of operating segments | ||
Fair value movements on equity hedge instruments | (301) | (3,190) |
Accounting value movements on the variable and fixed indexed annuity guarantee liabilities | (4,503) | 294 |
Fee assessments net of claim payments | 426 | 367 |
Short-term fluctuations in investment returns on shareholder-backed business | (4,378) | (2,529) |
Other guarantee fees | 350 | 341 |
Operating segments | US | Other than equity-related derivatives | ||
Analysis of operating segments | ||
Short-term fluctuations in investment returns on shareholder-backed business | 2,114 | 560 |
Operating segments | US | Debt securities | ||
Analysis of operating segments | ||
Short-term fluctuations in investment returns on shareholder-backed business | 175 | 14 |
Operating segments | US | Equity-type securities such as common and preferred stock and portfolio holdings in mutual funds | ||
Analysis of operating segments | ||
Short-term fluctuations in investment returns on shareholder-backed business | (128) | (9) |
Operating segments | US | Other items | ||
Analysis of operating segments | ||
Short-term fluctuations in investment returns on shareholder-backed business | (71) | (4) |
Unallocated to a segment (Other operations) | ||
Analysis of operating segments | ||
Short-term fluctuations in investment returns on shareholder-backed business | $ 30 | $ (31) |
Analysis of performance by se_5
Analysis of performance by segment - Short-term fluctuations related to debt securities (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Interest-related realised gains (losses): | ||
Total short-term fluctuations related to debt securities net of related DAC amortisation | $ (2,706) | $ (1,455) |
Operating segments | US | ||
Interest-related realised gains (losses): | ||
Total short-term fluctuations related to debt securities net of related DAC amortisation | (2,288) | (1,968) |
Operating segments | US | Debt securities | ||
Credits (charges) in the period | ||
Losses on sales of impaired and deteriorating bonds | (148) | (24) |
Bond write-downs | (31) | (1) |
Recoveries/reversals | 1 | 1 |
Total credits (charges) in the period | (178) | (24) |
Risk margin allowance deducted from adjusted operating profit | 55 | 54 |
Total credits (charge) in the year, net of risk margin allowance | (123) | 30 |
Interest-related realised gains (losses): | ||
Gains (losses) arising in the period | 369 | 42 |
Amortisation of gains and losses arising in current and prior periods to adjusted operating profit | (67) | (59) |
Total interest-related realised (losses) gains | 302 | (17) |
Related amortisation of deferred acquisition costs | (4) | 1 |
Total short-term fluctuations related to debt securities net of related DAC amortisation | $ 175 | $ 14 |
Analysis of performance by se_6
Analysis of performance by segment - Risk margin reserve (Details) - USD ($) $ in Millions | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | ||
Risk margin reserve | ||||
Debt securities | [1] | $ 121,462 | $ 134,570 | |
US insurance operations | Debt securities | ||||
Risk margin reserve | ||||
RMR (as a percent) | 0.18% | 0.18% | ||
Annual expected loss | $ (110) | $ (108) | ||
Related amortisation of deferred acquisition costs | 20 | 18 | ||
Risk margin reserve charge to adjusted operating profit for longer-term credit-related losses | (90) | (90) | ||
Pre-tax net unrealised gains/(losses) on debt securities classified as available-for-sale | 2,253 | 2,826 | ||
US insurance operations | Debt securities | Athene Life Re Ltd | ||||
Risk margin reserve | ||||
Pre-tax loss for the recycling of the gains on transfer of debt securities to Athene | (2,282) | |||
US insurance operations | Debt securities | Cost/Gross amount | Average | ||||
Risk margin reserve | ||||
Debt securities | $ 62,330 | $ 59,994 | ||
US insurance operations | Debt securities | A3 or higher | ||||
Risk margin reserve | ||||
RMR (as a percent) | 0.10% | 0.10% | ||
Annual expected loss | $ (40) | $ (36) | ||
US insurance operations | Debt securities | A3 or higher | Cost/Gross amount | Average | ||||
Risk margin reserve | ||||
Debt securities | $ 39,118 | $ 34,318 | ||
US insurance operations | Debt securities | Baa1, 2 or 3 | ||||
Risk margin reserve | ||||
RMR (as a percent) | 0.24% | 0.23% | ||
Annual expected loss | $ (51) | $ (55) | ||
US insurance operations | Debt securities | Baa1, 2 or 3 | Cost/Gross amount | Average | ||||
Risk margin reserve | ||||
Debt securities | $ 21,521 | $ 24,385 | ||
US insurance operations | Debt securities | Ba1, 2 or 3 | ||||
Risk margin reserve | ||||
RMR (as a percent) | 0.74% | 0.93% | ||
Annual expected loss | $ (10) | $ (10) | ||
US insurance operations | Debt securities | Ba1, 2 or 3 | Cost/Gross amount | Average | ||||
Risk margin reserve | ||||
Debt securities | $ 1,383 | $ 1,008 | ||
US insurance operations | Debt securities | B1, 2 or 3 | ||||
Risk margin reserve | ||||
RMR (as a percent) | 2.39% | 2.62% | ||
Annual expected loss | $ (5) | $ (6) | ||
US insurance operations | Debt securities | B1, 2 or 3 | Cost/Gross amount | Average | ||||
Risk margin reserve | ||||
Debt securities | $ 200 | $ 246 | ||
US insurance operations | Debt securities | Below B3 | ||||
Risk margin reserve | ||||
RMR (as a percent) | 3.36% | 3.42% | ||
Annual expected loss | $ (4) | $ (1) | ||
US insurance operations | Debt securities | Below B3 | Cost/Gross amount | Average | ||||
Risk margin reserve | ||||
Debt securities | $ 108 | $ 37 | ||
[1] | Included within equity securities and holdings in collective investment schemes, debt securities and other investments are $265 million of lent securities as at 30 June 2020 (31 December 2019: $90 million). |
Analysis of performance by se_7
Analysis of performance by segment - Performance measure (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 |
Analysis of operating segments | |||
Unamortised interest-related realised gains and losses related to previously sold bonds | $ 1,301 | $ 738 | |
Equity-type securities | |||
Financial investments | 378,449 | $ 404,096 | |
Asia insurance operations | Non-linked shareholder-backed | Equity-type securities | |||
Equity-type securities | |||
Financial investments | $ 5,712 | $ 2,904 | |
Asia insurance operations | Non-linked shareholder-backed | Equity-type securities | Minimum | |||
Equity-type securities | |||
Longer-term rates of return (as a percent) | 4.60% | 5.20% | |
Asia insurance operations | Non-linked shareholder-backed | Equity-type securities | Maximum | |||
Equity-type securities | |||
Longer-term rates of return (as a percent) | 17.60% | 17.60% | |
US insurance operations | Non-separate account operations | Equity-type securities | |||
Equity-type securities | |||
Financial investments | $ 1,854 | $ 1,499 | |
US insurance operations | Non-separate account operations | Equity-type securities such as common and preferred stock and portfolio holdings in mutual funds | Minimum | |||
Equity-type securities | |||
Longer-term rates of return (as a percent) | 4.90% | 6.00% | |
US insurance operations | Non-separate account operations | Equity-type securities such as common and preferred stock and portfolio holdings in mutual funds | Maximum | |||
Equity-type securities | |||
Longer-term rates of return (as a percent) | 5.80% | 6.70% | |
US insurance operations | Non-separate account operations | Other equity-type securities such as investments in limited partnerships and private equity funds | Minimum | |||
Equity-type securities | |||
Longer-term rates of return (as a percent) | 6.90% | 8.00% | |
US insurance operations | Non-separate account operations | Other equity-type securities such as investments in limited partnerships and private equity funds | Maximum | |||
Equity-type securities | |||
Longer-term rates of return (as a percent) | 7.80% | 8.70% |
Acquisition costs and other e_3
Acquisition costs and other expenditure (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Acquisition costs and other expenditure | ||
Acquisition costs incurred for insurance policies | $ (1,433) | $ (2,109) |
Acquisition costs deferred | 614 | 625 |
Amortisation of acquisition costs | (470) | 376 |
Recoveries for expenses associated with Jackson's business ceded to Athene | 1,231 | |
Administration costs and other expenditure | (2,584) | (2,291) |
Movements in amounts attributable to external unit holders of consolidated investment funds | (390) | (109) |
Total acquisition costs and other expenditure | (3,032) | (3,508) |
Gains attributable to losses arising from market effects on variable annuity guarantee liabilities and associated hedging | 814 | 616 |
Depreciation of property, plant and equipment | (109) | (107) |
Depreciation charge from the right-of-use assets | (72) | $ (66) |
US | ||
Acquisition costs and other expenditure | ||
Amortisation of acquisition costs | (313) | |
In-force fixed and fixed indexed annuity | US insurance operations | ||
Acquisition costs and other expenditure | ||
Amortisation of acquisition costs | $ (764) |
Additional segmental analysis_3
Additional segmental analysis of revenue (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Analysis of operating segments | ||
Gross premiums earned | $ 19,842 | $ 21,081 |
Outward reinsurance premiums | (30,149) | (673) |
Earned premiums, net of reinsurance | (10,307) | 20,408 |
Other income | 333 | 258 |
Total revenue | (9,974) | 20,666 |
Interest income | 2,188 | 2,292 |
Other investment return | 1,722 | 29,581 |
Total revenue, net of reinsurance | (6,064) | 52,539 |
Asia | ||
Analysis of operating segments | ||
Recapture of previously reinsured business | 542 | |
US insurance operations | In-force fixed and fixed indexed annuity | Athene Life Re Ltd | ||
Analysis of operating segments | ||
Outward reinsurance premiums | (30,150) | |
Asset management business | ||
Analysis of operating segments | ||
Other income | 261 | 198 |
Operating segments after elimination of intra-group amounts, before unallocated | ||
Analysis of operating segments | ||
Gross premiums earned | 19,782 | 21,046 |
Outward reinsurance premiums | (30,145) | (669) |
Earned premiums, net of reinsurance | (10,363) | 20,377 |
Other income | 313 | 242 |
Total revenue | (10,050) | 20,619 |
Operating segments after elimination of intra-group amounts, before unallocated | Asia | ||
Analysis of operating segments | ||
Gross premiums earned | 10,890 | 11,458 |
Outward reinsurance premiums | 50 | (499) |
Earned premiums, net of reinsurance | 10,940 | 10,959 |
Other income | 285 | 228 |
Total revenue | 11,225 | 11,187 |
Operating segments after elimination of intra-group amounts, before unallocated | US | ||
Analysis of operating segments | ||
Gross premiums earned | 8,892 | 9,588 |
Outward reinsurance premiums | (30,195) | (170) |
Earned premiums, net of reinsurance | (21,303) | 9,418 |
Other income | 28 | 14 |
Total revenue | (21,275) | 9,432 |
Operating segments | ||
Analysis of operating segments | ||
Interest income | 2,166 | 2,265 |
Other investment return | 1,660 | 29,558 |
Total revenue, net of reinsurance | (6,207) | 52,494 |
Operating segments | Asia | ||
Analysis of operating segments | ||
Interest income | 883 | 805 |
Other investment return | 3,235 | 8,826 |
Total revenue, net of reinsurance | 15,343 | 20,839 |
Operating segments | US | ||
Analysis of operating segments | ||
Interest income | 1,283 | 1,460 |
Other investment return | (1,575) | 20,732 |
Total revenue, net of reinsurance | (21,550) | 31,655 |
Unallocated to a segment (other operations) - including intra-group eliminations | ||
Analysis of operating segments | ||
Total revenue, net of reinsurance | 143 | 45 |
Elimination of intra-group amounts | ||
Analysis of operating segments | ||
Total revenue | (17) | (52) |
Elimination of intra-group amounts | Asia | ||
Analysis of operating segments | ||
Total revenue | (21) | |
Elimination of intra-group amounts | US | ||
Analysis of operating segments | ||
Total revenue | (17) | (31) |
Unallocated to a segment (Other operations) | ||
Analysis of operating segments | ||
Gross premiums earned | 60 | 35 |
Outward reinsurance premiums | (4) | (4) |
Earned premiums, net of reinsurance | 56 | 31 |
Other income | 20 | 16 |
Total revenue | 76 | 47 |
Interest income | 22 | 27 |
Other investment return | $ 62 | $ 23 |
Tax charge - Total tax charge b
Tax charge - Total tax charge by nature (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Tax charge attributable to shareholders: | ||
Current tax (charge) credit attributable to shareholders' returns | $ (189) | |
Deferred tax (charge) credit attributable to shareholders' returns | 60 | |
Tax (charge) credit attributable to shareholders' returns | (129) | $ (1) |
Tax charge attributable to policyholders: | ||
Total tax (charge) credit | (66) | (285) |
Total current tax (charge) credit | (258) | |
Total deferred tax (charge) credit | 63 | |
Total tax (charge) credit | (195) | (286) |
Operating segments | Asia | ||
Tax charge attributable to shareholders: | ||
Current tax (charge) credit attributable to shareholders' returns | (103) | |
Deferred tax (charge) credit attributable to shareholders' returns | (127) | |
Tax (charge) credit attributable to shareholders' returns | (230) | (244) |
Tax charge attributable to policyholders: | ||
Current tax to attributable policyholders | (69) | |
Deferred tax attributable to policyholders | 3 | |
Total tax (charge) credit | (66) | (285) |
Operating segments | US | ||
Tax charge attributable to shareholders: | ||
Current tax (charge) credit attributable to shareholders' returns | (70) | |
Deferred tax (charge) credit attributable to shareholders' returns | 183 | |
Tax (charge) credit attributable to shareholders' returns | 113 | 143 |
Unallocated to a segment (Other operations) | ||
Tax charge attributable to shareholders: | ||
Current tax (charge) credit attributable to shareholders' returns | (16) | |
Deferred tax (charge) credit attributable to shareholders' returns | 4 | |
Tax (charge) credit attributable to shareholders' returns | $ (12) | $ 100 |
Tax charge - Reconciliation of
Tax charge - Reconciliation of shareholder effective tax rate (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Reconciliation of effective tax rate | ||
Adjusted operating profit (loss) | $ 2,541 | $ 2,619 |
Non-operating (loss) profit | (1,878) | (1,460) |
Profit (loss) before tax | $ 663 | 1,159 |
Expected tax rate, attributable to shareholders (as a percent) | 21.00% | |
Tax at the expected rate, attributable to shareholders | $ 140 | $ 232 |
Tax at the expected rate, attributable to shareholders, percentage impact on ETR | 21.10% | 20.00% |
Effects of recurring tax reconciliation items: | ||
Income not taxable or taxable at concessionary rates | $ (45) | $ (70) |
Income not taxable or taxable at concessionary rates, percentage impact on ETR | (6.80%) | (6.00%) |
Deductions not allowable for tax purposes | $ 21 | $ 26 |
Deductions not allowable for tax purposes, percentage impact on ETR | 3.20% | 2.20% |
Items related to taxation of life insurance businesses | $ (55) | $ (179) |
Items related to taxation of life insurance businesses, percentage impact on ETR | (8.30%) | (15.40%) |
Deferred tax adjustments | $ 3 | $ (12) |
Deferred tax adjustments, percentage impact on ETR | 0.50% | (1.00%) |
Unrecognised tax losses | $ 72 | |
Unrecognised tax losses, percentage impact on ETR | 10.90% | |
Effect of results of joint ventures and associates | $ (37) | $ (35) |
Effect of results of joint ventures and associates, percentage impact on ETR | (5.60%) | (3.00%) |
Irrecoverable withholding taxes | $ 26 | $ 27 |
Irrecoverable withholding taxes, percentage impact on ETR | 3.90% | 2.30% |
Other | $ 10 | $ 5 |
Other, percentage impact on ETR | 1.50% | 0.40% |
Total effects of recurring tax reconciliation items | $ (5) | $ (238) |
Total tax rate, Effects of recurring tax reconciliation items | (0.70%) | (20.50%) |
Effects of non-recurring tax reconciliation items: | ||
Adjustments to tax charge in relation to prior years | $ 21 | $ 20 |
Adjustments to tax charge in relation to prior years, percentage impact on ETR | 3.10% | 1.70% |
Movements in provisions for open tax matters | $ (12) | $ 8 |
Movements in provisions for open tax matters, percentage impact on ETR | (1.80%) | 0.70% |
Demerger related activities | $ 4 | |
Demerger related activities, percentage impact on ETR | 0.40% | |
Impact of carry back of US losses | $ (16) | |
Impact of carry back of US losses, percentage impact on ETR | (2.40%) | |
Impact of changes in local statutory tax rates | $ 1 | |
Impact of changes in local statutory tax rates, percentage impact on ETR | 0.20% | |
Adjustments in relation to business disposals | $ (25) | |
Adjustments in relation to business disposals, percentage impact on ETR | (2.20%) | |
Total effects of non-recurring tax reconciliation items | $ (6) | $ 7 |
Total tax rate, Effects of non-recurring tax reconciliation items | (0.90%) | 0.60% |
Total actual tax charge (credit), attributable to shareholders | $ 129 | $ 1 |
Total actual tax charge (credit), attributable to shareholders, percentage impact on ETR | 19.50% | 0.10% |
Tax charge (credit) on: | ||
Tax on adjusted operating profit (loss) | $ 467 | $ 430 |
Tax on non-operating (loss) profit | $ (338) | $ (429) |
Analysed into: | ||
Adjusted operating profit (loss) (as a percent) | 18.00% | 16.00% |
Adjusted operating profit, excluding non-recurring tax reconciling items (as a percent) | 18.00% | 16.00% |
Total actual tax charge (credit) (as a percent) | 19.00% | 0.00% |
Unallocated to a segment (Other operations) | ||
Reconciliation of effective tax rate | ||
Adjusted operating profit (loss) | $ (458) | |
Non-operating (loss) profit | 30 | |
Profit (loss) before tax | $ (428) | |
Expected tax rate, attributable to shareholders (as a percent) | 18.00% | |
Tax at the expected rate, attributable to shareholders | $ (77) | |
Effects of recurring tax reconciliation items: | ||
Deductions not allowable for tax purposes | 3 | |
Unrecognised tax losses | 72 | |
Effect of results of joint ventures and associates | (6) | |
Irrecoverable withholding taxes | 26 | |
Other | (6) | |
Total effects of recurring tax reconciliation items | 89 | |
Effects of non-recurring tax reconciliation items: | ||
Total actual tax charge (credit), attributable to shareholders | 12 | $ (100) |
Tax charge (credit) on: | ||
Tax on adjusted operating profit (loss) | $ 12 | |
Analysed into: | ||
Adjusted operating profit (loss) (as a percent) | (3.00%) | 10.00% |
Adjusted operating profit, excluding non-recurring tax reconciling items (as a percent) | (3.00%) | |
Total actual tax charge (credit) (as a percent) | (3.00%) | 13.00% |
Asia | Operating segments | ||
Reconciliation of effective tax rate | ||
Adjusted operating profit (loss) | $ 1,733 | $ 1,550 |
Non-operating (loss) profit | (450) | |
Profit (loss) before tax | $ 1,283 | |
Expected tax rate, attributable to shareholders (as a percent) | 20.00% | |
Tax at the expected rate, attributable to shareholders | $ 257 | |
Effects of recurring tax reconciliation items: | ||
Income not taxable or taxable at concessionary rates | (31) | |
Deductions not allowable for tax purposes | 12 | |
Items related to taxation of life insurance businesses | 7 | |
Deferred tax adjustments | 3 | |
Effect of results of joint ventures and associates | (31) | |
Other | 3 | |
Total effects of recurring tax reconciliation items | (37) | |
Effects of non-recurring tax reconciliation items: | ||
Adjustments to tax charge in relation to prior years | 21 | |
Movements in provisions for open tax matters | (12) | |
Impact of changes in local statutory tax rates | 1 | |
Total effects of non-recurring tax reconciliation items | 10 | |
Total actual tax charge (credit), attributable to shareholders | 230 | $ 244 |
Tax charge (credit) on: | ||
Tax on adjusted operating profit (loss) | 260 | |
Tax on non-operating (loss) profit | $ (30) | |
Analysed into: | ||
Adjusted operating profit (loss) (as a percent) | 15.00% | 14.00% |
Adjusted operating profit, excluding non-recurring tax reconciling items (as a percent) | 14.00% | |
Total actual tax charge (credit) (as a percent) | 18.00% | 10.00% |
US | Operating segments | ||
Reconciliation of effective tax rate | ||
Adjusted operating profit (loss) | $ 1,266 | $ 1,572 |
Non-operating (loss) profit | (1,458) | |
Profit (loss) before tax | $ (192) | |
Expected tax rate, attributable to shareholders (as a percent) | 21.00% | |
Tax at the expected rate, attributable to shareholders | $ (40) | |
Effects of recurring tax reconciliation items: | ||
Income not taxable or taxable at concessionary rates | (14) | |
Deductions not allowable for tax purposes | 6 | |
Items related to taxation of life insurance businesses | (62) | |
Other | 13 | |
Total effects of recurring tax reconciliation items | (57) | |
Effects of non-recurring tax reconciliation items: | ||
Impact of carry back of US losses | (16) | |
Total effects of non-recurring tax reconciliation items | (16) | |
Total actual tax charge (credit), attributable to shareholders | (113) | $ (143) |
Tax charge (credit) on: | ||
Tax on adjusted operating profit (loss) | 195 | |
Tax on non-operating (loss) profit | $ (308) | |
Analysed into: | ||
Adjusted operating profit (loss) (as a percent) | 15.00% | 17.00% |
Adjusted operating profit, excluding non-recurring tax reconciling items (as a percent) | 15.00% | |
Total actual tax charge (credit) (as a percent) | 59.00% | 35.00% |
Tax charge - Provision for open
Tax charge - Provision for open tax matters (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Movements in provisions for open tax matters | |
Provision for open tax matters at beginning of period | $ 198 |
Movements in the current period included in tax charge attributable to shareholders | (12) |
Provisions utilised in the period | (34) |
Other movements | (3) |
Provision for open tax matters at end of period | $ 149 |
Tax charge - 2019 actual tax ra
Tax charge - 2019 actual tax rate of relevant business operations (Details) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Disclosure of income taxes [Line Items] | ||
Tax rate on adjusted operating profit (loss) | 18.00% | 16.00% |
Tax rate on profit (loss) before tax | 19.00% | 0.00% |
Unallocated to a segment (Other operations) | ||
Disclosure of income taxes [Line Items] | ||
Tax rate on adjusted operating profit (loss) | (3.00%) | 10.00% |
Tax rate on profit (loss) before tax | (3.00%) | 13.00% |
Asia | Operating segments | ||
Disclosure of income taxes [Line Items] | ||
Tax rate on adjusted operating profit (loss) | 15.00% | 14.00% |
Tax rate on profit (loss) before tax | 18.00% | 10.00% |
US | Operating segments | ||
Disclosure of income taxes [Line Items] | ||
Tax rate on adjusted operating profit (loss) | 15.00% | 17.00% |
Tax rate on profit (loss) before tax | 59.00% | 35.00% |
Earnings per share - Calculatio
Earnings per share - Calculation (Details) - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Before tax | ||
Based on profit for the period | $ 663 | $ 1,159 |
Short-term fluctuations in investment returns on shareholder-backed business | 2,706 | 1,455 |
Amortisation of acquisition accounting adjustments | 18 | 22 |
Gain attaching to corporate transactions | (846) | (17) |
Based on adjusted operating profit | 2,541 | 2,619 |
Tax | ||
Based on profit for the period | (129) | (1) |
Short-term fluctuations in investment returns on shareholder-backed business | (513) | (407) |
Amortisation of acquisition accounting adjustments | (3) | (4) |
Gain attaching to corporate transactions | 178 | (18) |
Based on adjusted operating profit | (467) | (430) |
Non-controlling interests | ||
Based on profit for the period | (22) | (6) |
Based on adjusted operating profit | (22) | (6) |
Net of tax and non-controlling interests | ||
Based on profit for the period | 512 | 1,987 |
Profit for the period from discontinued operations | (835) | |
Based on profit for the period from continuing operations | 512 | 1,152 |
Short-term fluctuations in investment returns on shareholder-backed business | 2,193 | 1,048 |
Amortisation of acquisition accounting adjustments | 15 | 18 |
Gain attaching to corporate transactions | (668) | (35) |
Based on adjusted operating profit | $ 2,052 | $ 2,183 |
Basic | ||
Based on profit for the period (in USD per share) | $ 0.197 | $ 0.769 |
Profit for the period from discontinued operations (in USD per share) | (0.323) | |
Based on profit for the period from continuing operations (in USD per share) | 0.197 | 0.446 |
Short-term fluctuations in investment returns on shareholder-backed business (in USD per share) | 0.844 | 0.406 |
Amortisation of acquisition accounting adjustments (in USD per share) | 0.006 | 0.007 |
Gain attaching to corporate transactions (in USD per share) | (0.257) | (0.014) |
Based on adjusted operating profit (in USD per share) | 0.790 | 0.845 |
Diluted | ||
Based on profit for the period (in USD per share) | 0.197 | 0.769 |
Profit for the period from discontinued operations (in USD per share) | (0.323) | |
Based on profit for the period from continuing operations (in USD per share) | 0.197 | 0.446 |
Short-term fluctuations in investment returns on shareholder-backed business (in USD per share) | 0.844 | 0.406 |
Amortisation of acquisition accounting adjustments (in USD per share) | 0.006 | 0.007 |
Gain attaching to corporate transactions (in USD per share) | (0.257) | (0.014) |
Based on adjusted operating profit (in USD per share) | $ 0.790 | $ 0.845 |
Earnings per share - Weighted a
Earnings per share - Weighted average shares (Details) shares in Millions, Options in Millions | 6 Months Ended | |
Jun. 30, 2020Optionsshares | Jun. 30, 2019Optionsshares | |
Weighted average number of shares for calculating earnings per share | ||
Basic earnings per share | 2,596 | 2,583 |
Shares under option at end of period | Options | 2 | 4 |
Shares that would have been issued at fair value on assumed option price | (2) | (3) |
Diluted earnings per share | 2,596 | 2,584 |
Dividends (Details)
Dividends (Details) - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Oct. 21, 2019 | |
Dividends relating to reporting period: | |||
First interim ordinary dividend (in USD per share) | $ 0.0537 | $ 0.2029 | |
First interim ordinary dividend | $ 140 | $ 526 | |
Dividends paid in reporting period: | |||
Second interim ordinary dividend for prior year (in USD per share) | $ 0.2597 | $ 0.4289 | |
Second interim ordinary dividend for prior year | $ 674 | $ 1,108 | |
Dividend in specie | $ 7,379 |
Group assets and liabilities _3
Group assets and liabilities by business type (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | |
Analysis of operating segments | |||||
Sovereign debt | $ 48,565 | $ 46,678 | |||
Other government bonds | 5,819 | 6,819 | |||
Corporate bonds | 63,454 | 74,500 | |||
Asset-backed securities | 3,624 | 6,573 | |||
Total debt securities | [1] | 121,462 | 134,570 | ||
Loans | 14,910 | 16,583 | |||
Equity securities and holdings in collective investment schemes | [1] | 234,698 | 247,281 | ||
Other financial investments | 7,379 | 5,662 | |||
Total financial investments | 378,449 | 404,096 | |||
Assets | |||||
Investment properties | 23 | 25 | |||
Investment in joint ventures and associates accounted for using the equity method | 1,507 | 1,500 | |||
Cash and cash equivalents | 8,384 | 6,965 | $ 6,628 | ||
Reinsurers' share of insurance contract liabilities | [2] | 44,918 | 13,856 | ||
Other assets | 29,884 | 27,772 | |||
Total assets | 463,165 | 454,214 | |||
Shareholders' equity | 19,110 | 19,477 | |||
Non-controlling interests | 197 | 192 | |||
Total equity | 19,307 | 19,669 | $ 25,066 | $ 21,991 | |
Liabilities | |||||
Contract liabilities and unallocated surplus of with-profits funds | 397,436 | 390,428 | |||
Core structural borrowings | 6,499 | 5,594 | |||
Operational borrowings | 2,245 | 2,645 | |||
Other liabilities | 37,678 | 35,878 | |||
Total liabilities | 443,858 | 434,545 | |||
Total equity and liabilities | 463,165 | 454,214 | |||
Indonesia | |||||
Analysis of operating segments | |||||
Sovereign debt | 1,416 | 1,320 | |||
Singapore | |||||
Analysis of operating segments | |||||
Sovereign debt | 4,305 | 4,870 | |||
Thailand | |||||
Analysis of operating segments | |||||
Sovereign debt | 1,583 | 1,417 | |||
UK | |||||
Analysis of operating segments | |||||
Sovereign debt | 161 | 622 | |||
US | |||||
Analysis of operating segments | |||||
Sovereign debt | 32,406 | 30,176 | |||
Vietnam | |||||
Analysis of operating segments | |||||
Sovereign debt | 2,803 | 2,916 | |||
Other (predominantly Asia) | |||||
Analysis of operating segments | |||||
Sovereign debt | 5,891 | 5,357 | |||
AAA | |||||
Analysis of operating segments | |||||
Other government bonds | 2,493 | 3,348 | |||
Corporate bonds | 2,161 | 1,973 | |||
Asset-backed securities | 2,374 | 4,017 | |||
AA+ to AA- | |||||
Analysis of operating segments | |||||
Other government bonds | 1,007 | 716 | |||
Corporate bonds | 4,535 | 5,489 | |||
Asset-backed securities | 234 | 964 | |||
A+ to A- | |||||
Analysis of operating segments | |||||
Other government bonds | 1,054 | 1,683 | |||
Corporate bonds | 23,993 | 28,817 | |||
Asset-backed securities | 617 | 1,021 | |||
BBB+ to BBB- | |||||
Analysis of operating segments | |||||
Other government bonds | 812 | 649 | |||
Corporate bonds | 26,274 | 32,598 | |||
Asset-backed securities | 218 | 359 | |||
Below BBB- and unrated | |||||
Analysis of operating segments | |||||
Other government bonds | 453 | 423 | |||
Corporate bonds | 6,491 | 5,623 | |||
Asset-backed securities | 181 | 212 | |||
Unrated | |||||
Analysis of operating segments | |||||
Securities excluding sovereign debt | 788 | 648 | |||
Mortgage loans | |||||
Analysis of operating segments | |||||
Loans | 8,277 | 10,069 | |||
Policy loans | |||||
Analysis of operating segments | |||||
Loans | 6,226 | 6,121 | |||
Other loans | |||||
Analysis of operating segments | |||||
Loans | 407 | 393 | |||
Direct equities | |||||
Analysis of operating segments | |||||
Equity securities and holdings in collective investment schemes | 26,698 | 28,589 | |||
Collective investment schemes | |||||
Analysis of operating segments | |||||
Equity securities and holdings in collective investment schemes | 23,780 | 23,622 | |||
US separate account assets | |||||
Analysis of operating segments | |||||
Equity securities and holdings in collective investment schemes | 184,220 | 195,070 | |||
US | |||||
Assets | |||||
Shareholders' equity | 8,955 | 8,929 | |||
US insurance operations | |||||
Assets | |||||
Shareholders' equity | 8,943 | ||||
US asset management | |||||
Assets | |||||
Shareholders' equity | 12 | ||||
Operating segments | Asia | |||||
Analysis of operating segments | |||||
Sovereign debt | 42,881 | 39,181 | |||
Other government bonds | 4,659 | 5,096 | |||
Corporate bonds | 34,335 | 29,875 | |||
Asset-backed securities | 270 | 558 | |||
Total debt securities | 82,145 | 74,710 | |||
Loans | 2,078 | 1,963 | |||
Equity securities and holdings in collective investment schemes | 50,168 | 52,011 | |||
Other financial investments | 3,477 | 2,815 | |||
Total financial investments | 137,868 | 131,499 | |||
Assets | |||||
Investment properties | 7 | 7 | |||
Investment in joint ventures and associates accounted for using the equity method | 1,507 | 1,500 | |||
Cash and cash equivalents | 2,886 | 2,490 | |||
Reinsurers' share of insurance contract liabilities | 8,920 | 5,458 | |||
Other assets | 11,253 | 9,288 | |||
Total assets | 162,441 | 150,242 | |||
Shareholders' equity | 11,529 | 10,866 | |||
Non-controlling interests | 161 | 155 | |||
Total equity | 11,690 | 11,021 | |||
Liabilities | |||||
Contract liabilities and unallocated surplus of with-profits funds | 131,564 | 120,693 | |||
Operational borrowings | 394 | 473 | |||
Other liabilities | 18,793 | 18,055 | |||
Total liabilities | 150,751 | 139,221 | |||
Total equity and liabilities | 162,441 | 150,242 | |||
Operating segments | Asia | Indonesia | |||||
Analysis of operating segments | |||||
Sovereign debt | 1,416 | 1,320 | |||
Operating segments | Asia | Singapore | |||||
Analysis of operating segments | |||||
Sovereign debt | 4,305 | 4,870 | |||
Operating segments | Asia | Thailand | |||||
Analysis of operating segments | |||||
Sovereign debt | 1,583 | 1,417 | |||
Operating segments | Asia | UK | |||||
Analysis of operating segments | |||||
Sovereign debt | 7 | 7 | |||
Operating segments | Asia | US | |||||
Analysis of operating segments | |||||
Sovereign debt | 27,035 | 23,419 | |||
Operating segments | Asia | Vietnam | |||||
Analysis of operating segments | |||||
Sovereign debt | 2,803 | 2,916 | |||
Operating segments | Asia | Other (predominantly Asia) | |||||
Analysis of operating segments | |||||
Sovereign debt | 5,732 | 5,232 | |||
Operating segments | Asia | AAA | |||||
Analysis of operating segments | |||||
Other government bonds | 2,046 | 2,371 | |||
Corporate bonds | 1,896 | 1,632 | |||
Asset-backed securities | 147 | 359 | |||
Operating segments | Asia | AA+ to AA- | |||||
Analysis of operating segments | |||||
Other government bonds | 488 | 221 | |||
Corporate bonds | 3,562 | 3,923 | |||
Asset-backed securities | 50 | 184 | |||
Operating segments | Asia | A+ to A- | |||||
Analysis of operating segments | |||||
Other government bonds | 863 | 1,438 | |||
Corporate bonds | 12,201 | 11,033 | |||
Asset-backed securities | 42 | 15 | |||
Operating segments | Asia | BBB+ to BBB- | |||||
Analysis of operating segments | |||||
Other government bonds | 810 | 645 | |||
Corporate bonds | 12,238 | 9,823 | |||
Asset-backed securities | 25 | ||||
Operating segments | Asia | Below BBB- and unrated | |||||
Analysis of operating segments | |||||
Other government bonds | 452 | 421 | |||
Corporate bonds | 4,438 | 3,464 | |||
Asset-backed securities | 6 | ||||
Operating segments | Asia | Mortgage loans | |||||
Analysis of operating segments | |||||
Loans | 158 | 165 | |||
Operating segments | Asia | Policy loans | |||||
Analysis of operating segments | |||||
Loans | 1,513 | 1,405 | |||
Operating segments | Asia | Other loans | |||||
Analysis of operating segments | |||||
Loans | 407 | 393 | |||
Operating segments | Asia | Direct equities | |||||
Analysis of operating segments | |||||
Equity securities and holdings in collective investment schemes | 26,431 | 28,435 | |||
Operating segments | Asia | Collective investment schemes | |||||
Analysis of operating segments | |||||
Equity securities and holdings in collective investment schemes | 23,737 | 23,576 | |||
Operating segments | US | |||||
Analysis of operating segments | |||||
Sovereign debt | 5,390 | 6,169 | |||
Other government bonds | 1,159 | 1,721 | |||
Corporate bonds | 29,112 | 44,623 | |||
Asset-backed securities | 3,354 | 6,015 | |||
Total debt securities | 39,015 | 58,528 | |||
Loans | 12,824 | 14,611 | |||
Equity securities and holdings in collective investment schemes | 184,519 | 195,260 | |||
Other financial investments | 3,827 | 2,791 | |||
Total financial investments | 240,185 | 271,190 | |||
Assets | |||||
Investment properties | 7 | 7 | |||
Cash and cash equivalents | 2,493 | 1,960 | |||
Reinsurers' share of insurance contract liabilities | 35,993 | 8,394 | |||
Other assets | 17,942 | 17,696 | |||
Total assets | 296,620 | 299,247 | |||
Shareholders' equity | 8,955 | 8,929 | |||
Total equity | 8,955 | 8,929 | |||
Liabilities | |||||
Contract liabilities and unallocated surplus of with-profits funds | 265,655 | 269,549 | |||
Core structural borrowings | 250 | 250 | |||
Operational borrowings | 1,212 | 1,501 | |||
Other liabilities | 20,548 | 19,018 | |||
Total liabilities | 287,665 | 290,318 | |||
Total equity and liabilities | 296,620 | 299,247 | |||
Operating segments | US | US | |||||
Analysis of operating segments | |||||
Sovereign debt | 5,371 | 6,160 | |||
Operating segments | US | Other (predominantly Asia) | |||||
Analysis of operating segments | |||||
Sovereign debt | 19 | 9 | |||
Operating segments | US | AAA | |||||
Analysis of operating segments | |||||
Other government bonds | 447 | 977 | |||
Corporate bonds | 265 | 341 | |||
Asset-backed securities | 2,227 | 3,658 | |||
Operating segments | US | AA+ to AA- | |||||
Analysis of operating segments | |||||
Other government bonds | 519 | 495 | |||
Corporate bonds | 973 | 1,566 | |||
Asset-backed securities | 184 | 780 | |||
Operating segments | US | A+ to A- | |||||
Analysis of operating segments | |||||
Other government bonds | 191 | 245 | |||
Corporate bonds | 11,792 | 17,784 | |||
Asset-backed securities | 575 | 1,006 | |||
Operating segments | US | BBB+ to BBB- | |||||
Analysis of operating segments | |||||
Other government bonds | 2 | 4 | |||
Corporate bonds | 14,036 | 22,775 | |||
Asset-backed securities | 193 | 359 | |||
Operating segments | US | Below BBB- and unrated | |||||
Analysis of operating segments | |||||
Corporate bonds | 2,046 | 2,157 | |||
Asset-backed securities | 175 | 212 | |||
Operating segments | US | Mortgage loans | |||||
Analysis of operating segments | |||||
Loans | 8,119 | 9,904 | |||
Operating segments | US | Policy loans | |||||
Analysis of operating segments | |||||
Loans | 4,705 | 4,707 | |||
Operating segments | US | Direct equities | |||||
Analysis of operating segments | |||||
Equity securities and holdings in collective investment schemes | 263 | 150 | |||
Operating segments | US | Collective investment schemes | |||||
Analysis of operating segments | |||||
Equity securities and holdings in collective investment schemes | 36 | 40 | |||
Operating segments | US | US separate account assets | |||||
Analysis of operating segments | |||||
Equity securities and holdings in collective investment schemes | 184,220 | 195,070 | |||
Operations within segments | Asia insurance operations | With-profits business | |||||
Analysis of operating segments | |||||
Sovereign debt | 29,641 | 25,961 | |||
Other government bonds | 2,911 | 3,164 | |||
Corporate bonds | 20,008 | 15,288 | |||
Asset-backed securities | 182 | 369 | |||
Total debt securities | 52,742 | 44,782 | |||
Loans | 1,578 | 1,463 | |||
Equity securities and holdings in collective investment schemes | 27,948 | 29,373 | |||
Other financial investments | 991 | 963 | |||
Total financial investments | 83,259 | 76,581 | |||
Assets | |||||
Cash and cash equivalents | 913 | 963 | |||
Reinsurers' share of insurance contract liabilities | 211 | 152 | |||
Other assets | 1,954 | 1,277 | |||
Total assets | 86,337 | 78,973 | |||
Liabilities | |||||
Contract liabilities and unallocated surplus of with-profits funds | 76,647 | 70,308 | |||
Operational borrowings | 243 | 302 | |||
Other liabilities | 9,447 | 8,363 | |||
Total liabilities | 86,337 | 78,973 | |||
Total equity and liabilities | 86,337 | 78,973 | |||
Operations within segments | Asia insurance operations | With-profits business | Indonesia | |||||
Analysis of operating segments | |||||
Sovereign debt | 381 | 222 | |||
Operations within segments | Asia insurance operations | With-profits business | Singapore | |||||
Analysis of operating segments | |||||
Sovereign debt | 2,788 | 3,514 | |||
Operations within segments | Asia insurance operations | With-profits business | US | |||||
Analysis of operating segments | |||||
Sovereign debt | 24,656 | 20,479 | |||
Operations within segments | Asia insurance operations | With-profits business | Vietnam | |||||
Analysis of operating segments | |||||
Sovereign debt | 1 | ||||
Operations within segments | Asia insurance operations | With-profits business | Other (predominantly Asia) | |||||
Analysis of operating segments | |||||
Sovereign debt | 1,816 | 1,745 | |||
Operations within segments | Asia insurance operations | With-profits business | AAA | |||||
Analysis of operating segments | |||||
Other government bonds | 1,464 | 1,752 | |||
Corporate bonds | 1,122 | 732 | |||
Asset-backed securities | 108 | 236 | |||
Operations within segments | Asia insurance operations | With-profits business | AA+ to AA- | |||||
Analysis of operating segments | |||||
Other government bonds | 353 | 135 | |||
Corporate bonds | 1,575 | 1,574 | |||
Asset-backed securities | 36 | 132 | |||
Operations within segments | Asia insurance operations | With-profits business | A+ to A- | |||||
Analysis of operating segments | |||||
Other government bonds | 524 | 890 | |||
Corporate bonds | 6,670 | 5,428 | |||
Asset-backed securities | 17 | 1 | |||
Operations within segments | Asia insurance operations | With-profits business | BBB+ to BBB- | |||||
Analysis of operating segments | |||||
Other government bonds | 466 | 356 | |||
Corporate bonds | 7,806 | 5,443 | |||
Asset-backed securities | 15 | ||||
Operations within segments | Asia insurance operations | With-profits business | Below BBB- and unrated | |||||
Analysis of operating segments | |||||
Other government bonds | 104 | 31 | |||
Corporate bonds | 2,835 | 2,111 | |||
Asset-backed securities | 6 | ||||
Operations within segments | Asia insurance operations | With-profits business | Policy loans | |||||
Analysis of operating segments | |||||
Loans | 1,189 | 1,089 | |||
Operations within segments | Asia insurance operations | With-profits business | Other loans | |||||
Analysis of operating segments | |||||
Loans | 389 | 374 | |||
Operations within segments | Asia insurance operations | With-profits business | Direct equities | |||||
Analysis of operating segments | |||||
Equity securities and holdings in collective investment schemes | 14,493 | 14,143 | |||
Operations within segments | Asia insurance operations | With-profits business | Collective investment schemes | |||||
Analysis of operating segments | |||||
Equity securities and holdings in collective investment schemes | 13,455 | 15,230 | |||
Operations within segments | Asia insurance operations | Unit-linked assets and liabilities | |||||
Analysis of operating segments | |||||
Sovereign debt | 1,836 | 1,964 | |||
Other government bonds | 355 | 345 | |||
Corporate bonds | 3,049 | 2,819 | |||
Asset-backed securities | 22 | 25 | |||
Total debt securities | 5,262 | 5,153 | |||
Equity securities and holdings in collective investment schemes | 16,442 | 19,092 | |||
Other financial investments | 572 | 383 | |||
Total financial investments | 22,276 | 24,628 | |||
Assets | |||||
Cash and cash equivalents | 599 | 356 | |||
Other assets | 482 | 237 | |||
Total assets | 23,357 | 25,221 | |||
Liabilities | |||||
Contract liabilities and unallocated surplus of with-profits funds | 21,376 | 23,571 | |||
Operational borrowings | 15 | 21 | |||
Other liabilities | 1,966 | 1,629 | |||
Total liabilities | 23,357 | 25,221 | |||
Total equity and liabilities | 23,357 | 25,221 | |||
Operations within segments | Asia insurance operations | Unit-linked assets and liabilities | Indonesia | |||||
Analysis of operating segments | |||||
Sovereign debt | 580 | 610 | |||
Operations within segments | Asia insurance operations | Unit-linked assets and liabilities | Singapore | |||||
Analysis of operating segments | |||||
Sovereign debt | 525 | 554 | |||
Operations within segments | Asia insurance operations | Unit-linked assets and liabilities | UK | |||||
Analysis of operating segments | |||||
Sovereign debt | 7 | 7 | |||
Operations within segments | Asia insurance operations | Unit-linked assets and liabilities | US | |||||
Analysis of operating segments | |||||
Sovereign debt | 23 | 113 | |||
Operations within segments | Asia insurance operations | Unit-linked assets and liabilities | Vietnam | |||||
Analysis of operating segments | |||||
Sovereign debt | 14 | 15 | |||
Operations within segments | Asia insurance operations | Unit-linked assets and liabilities | Other (predominantly Asia) | |||||
Analysis of operating segments | |||||
Sovereign debt | 687 | 665 | |||
Operations within segments | Asia insurance operations | Unit-linked assets and liabilities | AAA | |||||
Analysis of operating segments | |||||
Other government bonds | 103 | 81 | |||
Corporate bonds | 270 | 384 | |||
Asset-backed securities | 16 | 19 | |||
Operations within segments | Asia insurance operations | Unit-linked assets and liabilities | AA+ to AA- | |||||
Analysis of operating segments | |||||
Other government bonds | 34 | 8 | |||
Corporate bonds | 273 | 441 | |||
Asset-backed securities | 6 | 6 | |||
Operations within segments | Asia insurance operations | Unit-linked assets and liabilities | A+ to A- | |||||
Analysis of operating segments | |||||
Other government bonds | 113 | 159 | |||
Corporate bonds | 808 | 542 | |||
Operations within segments | Asia insurance operations | Unit-linked assets and liabilities | BBB+ to BBB- | |||||
Analysis of operating segments | |||||
Other government bonds | 88 | 88 | |||
Corporate bonds | 1,043 | 883 | |||
Operations within segments | Asia insurance operations | Unit-linked assets and liabilities | Below BBB- and unrated | |||||
Analysis of operating segments | |||||
Other government bonds | 17 | 9 | |||
Corporate bonds | 655 | 569 | |||
Operations within segments | Asia insurance operations | Unit-linked assets and liabilities | Direct equities | |||||
Analysis of operating segments | |||||
Equity securities and holdings in collective investment schemes | 10,345 | 12,440 | |||
Operations within segments | Asia insurance operations | Unit-linked assets and liabilities | Collective investment schemes | |||||
Analysis of operating segments | |||||
Equity securities and holdings in collective investment schemes | 6,097 | 6,652 | |||
Operations within segments | Asia insurance operations | Other business | |||||
Analysis of operating segments | |||||
Sovereign debt | 11,287 | 11,130 | |||
Other government bonds | 1,385 | 1,587 | |||
Corporate bonds | 11,273 | 11,765 | |||
Asset-backed securities | 66 | 164 | |||
Total debt securities | 24,011 | 24,646 | |||
Loans | 500 | 500 | |||
Equity securities and holdings in collective investment schemes | 5,712 | 3,473 | |||
Other financial investments | 1,817 | 1,363 | |||
Total financial investments | 32,040 | 29,982 | |||
Assets | |||||
Investment properties | 7 | 7 | |||
Investment in joint ventures and associates accounted for using the equity method | 1,268 | 1,263 | |||
Cash and cash equivalents | 1,242 | 1,015 | |||
Reinsurers' share of insurance contract liabilities | 8,709 | 5,306 | |||
Other assets | 8,051 | 6,983 | |||
Total assets | 51,317 | 44,556 | |||
Shareholders' equity | 10,535 | 9,801 | |||
Non-controlling interests | 2 | 2 | |||
Total equity | 10,537 | 9,803 | |||
Liabilities | |||||
Contract liabilities and unallocated surplus of with-profits funds | 33,541 | 26,814 | |||
Operational borrowings | 111 | 123 | |||
Other liabilities | 7,128 | 7,816 | |||
Total liabilities | 40,780 | 34,753 | |||
Total equity and liabilities | 51,317 | 44,556 | |||
Operations within segments | Asia insurance operations | Other business | Indonesia | |||||
Analysis of operating segments | |||||
Sovereign debt | 455 | 488 | |||
Operations within segments | Asia insurance operations | Other business | Singapore | |||||
Analysis of operating segments | |||||
Sovereign debt | 904 | 708 | |||
Operations within segments | Asia insurance operations | Other business | Thailand | |||||
Analysis of operating segments | |||||
Sovereign debt | 1,567 | 1,398 | |||
Operations within segments | Asia insurance operations | Other business | US | |||||
Analysis of operating segments | |||||
Sovereign debt | 2,356 | 2,827 | |||
Operations within segments | Asia insurance operations | Other business | Vietnam | |||||
Analysis of operating segments | |||||
Sovereign debt | 2,789 | 2,900 | |||
Operations within segments | Asia insurance operations | Other business | Other (predominantly Asia) | |||||
Analysis of operating segments | |||||
Sovereign debt | 3,216 | 2,809 | |||
Operations within segments | Asia insurance operations | Other business | AAA | |||||
Analysis of operating segments | |||||
Other government bonds | 479 | 538 | |||
Corporate bonds | 504 | 516 | |||
Asset-backed securities | 23 | 104 | |||
Operations within segments | Asia insurance operations | Other business | AA+ to AA- | |||||
Analysis of operating segments | |||||
Other government bonds | 101 | 78 | |||
Corporate bonds | 1,712 | 1,908 | |||
Asset-backed securities | 8 | 46 | |||
Operations within segments | Asia insurance operations | Other business | A+ to A- | |||||
Analysis of operating segments | |||||
Other government bonds | 226 | 389 | |||
Corporate bonds | 4,723 | 5,063 | |||
Asset-backed securities | 25 | 14 | |||
Operations within segments | Asia insurance operations | Other business | BBB+ to BBB- | |||||
Analysis of operating segments | |||||
Other government bonds | 248 | 201 | |||
Corporate bonds | 3,389 | 3,497 | |||
Asset-backed securities | 10 | ||||
Operations within segments | Asia insurance operations | Other business | Below BBB- and unrated | |||||
Analysis of operating segments | |||||
Other government bonds | 331 | 381 | |||
Corporate bonds | 945 | 781 | |||
Operations within segments | Asia insurance operations | Other business | Mortgage loans | |||||
Analysis of operating segments | |||||
Loans | 158 | 165 | |||
Operations within segments | Asia insurance operations | Other business | Policy loans | |||||
Analysis of operating segments | |||||
Loans | 324 | 316 | |||
Operations within segments | Asia insurance operations | Other business | Other loans | |||||
Analysis of operating segments | |||||
Loans | 18 | 19 | |||
Operations within segments | Asia insurance operations | Other business | Direct equities | |||||
Analysis of operating segments | |||||
Equity securities and holdings in collective investment schemes | 1,537 | 1,793 | |||
Operations within segments | Asia insurance operations | Other business | Collective investment schemes | |||||
Analysis of operating segments | |||||
Equity securities and holdings in collective investment schemes | 4,175 | 1,680 | |||
Operations within segments | Asia asset management | |||||
Analysis of operating segments | |||||
Sovereign debt | 117 | 126 | |||
Other government bonds | 8 | ||||
Corporate bonds | 5 | 3 | |||
Total debt securities | 130 | 129 | |||
Equity securities and holdings in collective investment schemes | 66 | 73 | |||
Other financial investments | 97 | 106 | |||
Total financial investments | 293 | 308 | |||
Assets | |||||
Investment in joint ventures and associates accounted for using the equity method | 239 | 237 | |||
Cash and cash equivalents | 132 | 156 | |||
Other assets | 799 | 826 | |||
Total assets | 1,463 | 1,527 | |||
Shareholders' equity | 994 | 1,065 | |||
Non-controlling interests | 159 | 153 | |||
Total equity | 1,153 | 1,218 | |||
Liabilities | |||||
Operational borrowings | 25 | 27 | |||
Other liabilities | 285 | 282 | |||
Total liabilities | 310 | 309 | |||
Total equity and liabilities | 1,463 | 1,527 | |||
Operations within segments | Asia asset management | Singapore | |||||
Analysis of operating segments | |||||
Sovereign debt | 88 | 94 | |||
Operations within segments | Asia asset management | Thailand | |||||
Analysis of operating segments | |||||
Sovereign debt | 16 | 19 | |||
Operations within segments | Asia asset management | Other (predominantly Asia) | |||||
Analysis of operating segments | |||||
Sovereign debt | 13 | 13 | |||
Operations within segments | Asia asset management | AA+ to AA- | |||||
Analysis of operating segments | |||||
Corporate bonds | 2 | ||||
Operations within segments | Asia asset management | BBB+ to BBB- | |||||
Analysis of operating segments | |||||
Other government bonds | 8 | ||||
Operations within segments | Asia asset management | Below BBB- and unrated | |||||
Analysis of operating segments | |||||
Corporate bonds | 3 | 3 | |||
Operations within segments | Asia asset management | Direct equities | |||||
Analysis of operating segments | |||||
Equity securities and holdings in collective investment schemes | 56 | 59 | |||
Operations within segments | Asia asset management | Collective investment schemes | |||||
Analysis of operating segments | |||||
Equity securities and holdings in collective investment schemes | 10 | 14 | |||
Elimination | Asia | |||||
Assets | |||||
Other assets | (33) | (35) | |||
Total assets | (33) | (35) | |||
Liabilities | |||||
Other liabilities | (33) | (35) | |||
Total liabilities | (33) | (35) | |||
Total equity and liabilities | (33) | (35) | |||
Unallocated to a segment (Other operations) | |||||
Analysis of operating segments | |||||
Sovereign debt | 294 | 1,328 | |||
Other government bonds | 1 | 2 | |||
Corporate bonds | 7 | 2 | |||
Total debt securities | 302 | 1,332 | |||
Loans | 8 | 9 | |||
Equity securities and holdings in collective investment schemes | 11 | 10 | |||
Other financial investments | 75 | 56 | |||
Total financial investments | 396 | 1,407 | |||
Assets | |||||
Investment properties | 9 | 11 | |||
Cash and cash equivalents | 3,005 | 2,515 | |||
Reinsurers' share of insurance contract liabilities | 5 | 4 | |||
Other assets | 3,828 | 3,440 | |||
Total assets | 7,243 | 7,377 | |||
Shareholders' equity | (1,374) | (318) | |||
Non-controlling interests | 36 | 37 | |||
Total equity | (1,338) | (281) | |||
Liabilities | |||||
Contract liabilities and unallocated surplus of with-profits funds | 217 | 186 | |||
Core structural borrowings | 6,249 | 5,344 | |||
Operational borrowings | 639 | 671 | |||
Other liabilities | 1,476 | 1,457 | |||
Total liabilities | 8,581 | 7,658 | |||
Total equity and liabilities | 7,243 | 7,377 | |||
Unallocated to a segment (Other operations) | UK | |||||
Analysis of operating segments | |||||
Sovereign debt | 154 | 615 | |||
Unallocated to a segment (Other operations) | US | |||||
Analysis of operating segments | |||||
Sovereign debt | 597 | ||||
Unallocated to a segment (Other operations) | Other (predominantly Asia) | |||||
Analysis of operating segments | |||||
Sovereign debt | 140 | 116 | |||
Unallocated to a segment (Other operations) | Below BBB- and unrated | |||||
Analysis of operating segments | |||||
Other government bonds | 1 | 2 | |||
Corporate bonds | 7 | 2 | |||
Unallocated to a segment (Other operations) | Policy loans | |||||
Analysis of operating segments | |||||
Loans | 8 | 9 | |||
Unallocated to a segment (Other operations) | Direct equities | |||||
Analysis of operating segments | |||||
Equity securities and holdings in collective investment schemes | 4 | 4 | |||
Unallocated to a segment (Other operations) | Collective investment schemes | |||||
Analysis of operating segments | |||||
Equity securities and holdings in collective investment schemes | 7 | 6 | |||
Elimination of intra-group amounts | |||||
Assets | |||||
Other assets | (3,139) | (2,652) | |||
Total assets | (3,139) | (2,652) | |||
Liabilities | |||||
Other liabilities | (3,139) | (2,652) | |||
Total liabilities | (3,139) | (2,652) | |||
Total equity and liabilities | $ (3,139) | $ (2,652) | |||
[1] | Included within equity securities and holdings in collective investment schemes, debt securities and other investments are $265 million of lent securities as at 30 June 2020 (31 December 2019: $90 million). | ||||
[2] | At 30 June 2020, reinsurers’ share of insurance contract liabilities include $27.7 billion in respect of the reinsurance of substantially all of Jackson’s in-force fixed and fixed indexed annuity liabilities to Athene Life Re Ltd, as discussed in note D1. |
Group assets and liabilities _4
Group assets and liabilities by business type - Notes (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Analysis of operating segments | ||
Property, plant and equipment | $ 964 | $ 1,065 |
Additions to property, plant and equipment | 51 | 160 |
Additions to right-of-use assets | 8 | 96 |
Premiums receivable | 778 | 794 |
Accruals, deferred income and other liabilities | 16,208 | 14,488 |
Within one year | ||
Analysis of operating segments | ||
Premiums receivable | 734 | 738 |
Accruals, deferred income and other liabilities | $ 11,213 | $ 9,172 |
Additional analysis of debt s_3
Additional analysis of debt securities (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 | |
Financial investments | |||
Debt securities | [1] | $ 121,462 | $ 134,570 |
Corporate bonds | 63,454 | 74,500 | |
Asia | Operating segments | |||
Financial investments | |||
Debt securities | 82,145 | 74,710 | |
Corporate bonds | 34,335 | 29,875 | |
US | Operating segments | |||
Financial investments | |||
Debt securities | 39,015 | 58,528 | |
Corporate bonds | 29,112 | 44,623 | |
US | Operating segments | Publicly traded and SEC rule 144A securities | |||
Financial investments | |||
Corporate bonds | 21,215 | 34,781 | |
US | Operating segments | Non-SEC Rule 144A securities | |||
Financial investments | |||
Corporate bonds | 7,897 | 9,842 | |
US | Operating segments | Available-for-sale | |||
Financial investments | |||
Debt securities | 37,597 | 57,091 | |
US | Operating segments | Fair value through profit or loss | |||
Financial investments | |||
Debt securities | 1,418 | 1,437 | |
Consolidated investment funds | Operating segments | |||
Financial investments | |||
Debt securities | 18,463 | $ 22,113 | |
Consolidated investment funds | Asia | Operating segments | |||
Financial investments | |||
Debt securities | 17,219 | ||
Consolidated investment funds | US | Operating segments | |||
Financial investments | |||
Debt securities | $ 1,244 | ||
[1] | Included within equity securities and holdings in collective investment schemes, debt securities and other investments are $265 million of lent securities as at 30 June 2020 (31 December 2019: $90 million). |
Additional analysis of debt s_4
Additional analysis of debt securities - Movements in unrealised gains and losses (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Available-for-sale securities | |||
Gains recycled to income statement on transfer of debt securities to Athene | $ (2,817) | ||
Unrealised gains (losses) arising in the period | 2,540 | $ 3,386 | |
US insurance operations | Debt securities | |||
Available-for-sale securities | |||
Financial assets classified as available-for-sale | 37,597 | $ 57,091 | |
US insurance operations | Debt securities | Cost/Gross amount | |||
Available-for-sale securities | |||
Financial assets classified as available-for-sale | 34,378 | 53,595 | |
US insurance operations | Debt securities | Unrealised gain (loss) | |||
Available-for-sale securities | |||
Financial assets classified as available-for-sale | 3,219 | 3,496 | |
Gains recycled to income statement on transfer of debt securities to Athene | (2,817) | ||
Unrealised gains (losses) arising in the period | 2,540 | ||
US insurance operations | Debt securities | Assets fair valued at below book value | |||
Available-for-sale securities | |||
Financial assets classified as available-for-sale | 2,079 | 3,094 | |
US insurance operations | Debt securities | Assets fair valued at below book value | Cost/Gross amount | |||
Available-for-sale securities | |||
Financial assets classified as available-for-sale | 2,188 | 3,121 | |
US insurance operations | Debt securities | Assets fair valued at below book value | Unrealised gain (loss) | |||
Available-for-sale securities | |||
Financial assets classified as available-for-sale | (109) | (27) | |
Unrealised gains (losses) arising in the period | (82) | ||
US insurance operations | Debt securities | Assets fair valued at or above book value | |||
Available-for-sale securities | |||
Financial assets classified as available-for-sale | 35,518 | 53,997 | |
US insurance operations | Debt securities | Assets fair valued at or above book value | Cost/Gross amount | |||
Available-for-sale securities | |||
Financial assets classified as available-for-sale | 32,190 | 50,474 | |
US insurance operations | Debt securities | Assets fair valued at or above book value | Unrealised gain (loss) | |||
Available-for-sale securities | |||
Financial assets classified as available-for-sale | 3,328 | $ 3,523 | |
Gains recycled to income statement on transfer of debt securities to Athene | (2,817) | ||
Unrealised gains (losses) arising in the period | $ 2,622 |
Additional analysis of debt s_5
Additional analysis of debt securities - Unrealised loss positions (Details) - US insurance operations - Debt securities - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Available-for-sale securities | ||
Financial assets classified as available-for-sale | $ 37,597 | $ 57,091 |
Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | 3,219 | 3,496 |
Assets fair valued at below book value | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | 2,079 | 3,094 |
Assets fair valued at below book value | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (109) | (27) |
Assets fair valued at below book value | Non-investment grade | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (28) | (2) |
Assets fair valued at below book value | Investment grade | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (81) | (25) |
Assets fair valued at below book value | 1 to 5 years | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (30) | (1) |
Assets fair valued at below book value | 5 years to 10 years | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (39) | (12) |
Assets fair valued at below book value | More than 10 years | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (20) | (7) |
Assets fair valued at below book value | Mortgage-backed and other debt securities | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (20) | (7) |
Assets fair valued at below book value | Between 90% and 100% | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | 1,871 | 3,083 |
Assets fair valued at below book value | Between 90% and 100% | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (62) | (25) |
Assets fair valued at below book value | Between 80% and 90% | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | 111 | 11 |
Assets fair valued at below book value | Between 80% and 90% | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (17) | (2) |
Assets fair valued at below book value | Below 80% | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | 97 | |
Assets fair valued at below book value | Below 80% | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (30) | |
Less than 6 months | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (104) | (21) |
Less than 6 months | Non-investment grade | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (24) | (1) |
Less than 6 months | Investment grade | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (80) | (20) |
6 months to 1 year | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (4) | (2) |
6 months to 1 year | Non-investment grade | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (3) | (1) |
6 months to 1 year | Investment grade | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (1) | (1) |
1 year to 2 years | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (1) | |
1 year to 2 years | Investment grade | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (1) | |
2 years to 3 years | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (1) | (1) |
2 years to 3 years | Non-investment grade | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (1) | |
2 years to 3 years | Investment grade | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (1) | |
More than 3 years | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (2) | |
More than 3 years | Investment grade | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | $ (2) | |
Less than 3 months | Below 80% | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | 60 | |
Less than 3 months | Below 80% | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | (17) | |
3 months to 6 months | Below 80% | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | 37 | |
3 months to 6 months | Below 80% | Unrealised gain (loss) | ||
Available-for-sale securities | ||
Financial assets classified as available-for-sale | $ (13) |
Additional analysis of debt s_6
Additional analysis of debt securities - Asset-backed securities (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Financial investments | ||
Asset-backed securities | $ 3,624 | $ 6,573 |
AAA | ||
Financial investments | ||
Asset-backed securities | 2,374 | 4,017 |
Operating segments | US | ||
Financial investments | ||
Asset-backed securities | 3,354 | 6,015 |
Operating segments | AAA | US | ||
Financial investments | ||
Asset-backed securities | 2,227 | 3,658 |
Operating segments | RMBS Sub-prime | US | ||
Financial investments | ||
Asset-backed securities | $ 35 | 93 |
Operating segments | RMBS Sub-prime | AAA | US | ||
Financial investments | ||
Percentage for credit rating category | 2.00% | |
Operating segments | Alt-A | US | ||
Financial investments | ||
Asset-backed securities | $ 14 | 116 |
Operating segments | Alt-A | AAA | US | ||
Financial investments | ||
Percentage for credit rating category | 35.00% | |
Operating segments | Alt-A | A | US | ||
Financial investments | ||
Percentage for credit rating category | 39.00% | |
Operating segments | Prime including agency | US | ||
Financial investments | ||
Asset-backed securities | $ 263 | 862 |
Operating segments | Prime including agency | AAA | US | ||
Financial investments | ||
Percentage for credit rating category | 85.00% | |
Operating segments | Prime including agency | AA | US | ||
Financial investments | ||
Percentage for credit rating category | 6.00% | |
Operating segments | Prime including agency | A | US | ||
Financial investments | ||
Percentage for credit rating category | 5.00% | |
Operating segments | CMBS | US | ||
Financial investments | ||
Asset-backed securities | $ 1,646 | 3,080 |
Operating segments | CMBS | AAA | US | ||
Financial investments | ||
Percentage for credit rating category | 86.00% | |
Operating segments | CMBS | AA | US | ||
Financial investments | ||
Percentage for credit rating category | 5.00% | |
Operating segments | CMBS | A | US | ||
Financial investments | ||
Percentage for credit rating category | 3.00% | |
Operating segments | CDO funds | US | ||
Financial investments | ||
Asset-backed securities | $ 397 | 696 |
Operating segments | CDO funds | AAA | US | ||
Financial investments | ||
Percentage for credit rating category | 81.00% | |
Operating segments | CDO funds | AA | US | ||
Financial investments | ||
Percentage for credit rating category | 9.00% | |
Operating segments | CDO funds | A | US | ||
Financial investments | ||
Percentage for credit rating category | 5.00% | |
Operating segments | Other asset-backed securities | US | ||
Financial investments | ||
Asset-backed securities | $ 999 | $ 1,168 |
Operating segments | Other asset-backed securities | US | Sub-prime | ||
Financial investments | ||
Asset-backed securities | $ 35 | |
Operating segments | Other asset-backed securities | AAA | US | ||
Financial investments | ||
Percentage for credit rating category | 26.00% | |
Operating segments | Other asset-backed securities | AA | US | ||
Financial investments | ||
Percentage for credit rating category | 5.00% | |
Operating segments | Other asset-backed securities | A | US | ||
Financial investments | ||
Percentage for credit rating category | 48.00% |
Additional analysis of debt s_7
Additional analysis of debt securities - Group sovereign debt and bank debt exposure (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Shareholder-backed | ||
Financial investments | ||
Bank debt securities | $ 4,167 | $ 5,834 |
Shareholder-backed | Senior debt | ||
Financial investments | ||
Bank debt securities | 2,948 | |
Shareholder-backed | Subordinated debt | ||
Financial investments | ||
Bank debt securities | 1,219 | |
Shareholder-backed | Tier 1 subordinated debt | ||
Financial investments | ||
Bank debt securities | 584 | |
Shareholder-backed | Tier 2 subordinated debt | ||
Financial investments | ||
Bank debt securities | 635 | |
Shareholder-backed | Asia | ||
Financial investments | ||
Bank debt securities | 1,450 | 993 |
Shareholder-backed | Asia | Senior debt | ||
Financial investments | ||
Bank debt securities | 549 | |
Shareholder-backed | Asia | Subordinated debt | ||
Financial investments | ||
Bank debt securities | 901 | |
Shareholder-backed | Asia | Tier 1 subordinated debt | ||
Financial investments | ||
Bank debt securities | 572 | |
Shareholder-backed | Asia | Tier 2 subordinated debt | ||
Financial investments | ||
Bank debt securities | 329 | |
Shareholder-backed | Eurozone | ||
Financial investments | ||
Bank debt securities | 249 | 337 |
Shareholder-backed | Eurozone | Senior debt | ||
Financial investments | ||
Bank debt securities | 223 | |
Shareholder-backed | Eurozone | Subordinated debt | ||
Financial investments | ||
Bank debt securities | 26 | |
Shareholder-backed | Eurozone | Tier 2 subordinated debt | ||
Financial investments | ||
Bank debt securities | 26 | |
Shareholder-backed | UK | ||
Financial investments | ||
Bank debt securities | 450 | 723 |
Shareholder-backed | UK | Senior debt | ||
Financial investments | ||
Bank debt securities | 352 | |
Shareholder-backed | UK | Subordinated debt | ||
Financial investments | ||
Bank debt securities | 98 | |
Shareholder-backed | UK | Tier 1 subordinated debt | ||
Financial investments | ||
Bank debt securities | 7 | |
Shareholder-backed | UK | Tier 2 subordinated debt | ||
Financial investments | ||
Bank debt securities | 91 | |
Shareholder-backed | US | ||
Financial investments | ||
Bank debt securities | 1,622 | 3,134 |
Shareholder-backed | US | Senior debt | ||
Financial investments | ||
Bank debt securities | 1,565 | |
Shareholder-backed | US | Subordinated debt | ||
Financial investments | ||
Bank debt securities | 57 | |
Shareholder-backed | US | Tier 1 subordinated debt | ||
Financial investments | ||
Bank debt securities | 5 | |
Shareholder-backed | US | Tier 2 subordinated debt | ||
Financial investments | ||
Bank debt securities | 52 | |
Shareholder-backed | Other | ||
Financial investments | ||
Bank debt securities | 396 | 647 |
Shareholder-backed | Other | Senior debt | ||
Financial investments | ||
Bank debt securities | 259 | |
Shareholder-backed | Other | Subordinated debt | ||
Financial investments | ||
Bank debt securities | 137 | |
Shareholder-backed | Other | Tier 2 subordinated debt | ||
Financial investments | ||
Bank debt securities | 137 | |
With-profits business | ||
Financial investments | ||
Bank debt securities | 2,724 | 1,734 |
With-profits business | Senior debt | ||
Financial investments | ||
Bank debt securities | 1,579 | |
With-profits business | Subordinated debt | ||
Financial investments | ||
Bank debt securities | 1,145 | |
With-profits business | Tier 1 subordinated debt | ||
Financial investments | ||
Bank debt securities | 90 | |
With-profits business | Tier 2 subordinated debt | ||
Financial investments | ||
Bank debt securities | 1,055 | |
With-profits business | Asia | ||
Financial investments | ||
Bank debt securities | 1,193 | 1,130 |
With-profits business | Asia | Senior debt | ||
Financial investments | ||
Bank debt securities | 534 | |
With-profits business | Asia | Subordinated debt | ||
Financial investments | ||
Bank debt securities | 659 | |
With-profits business | Asia | Tier 1 subordinated debt | ||
Financial investments | ||
Bank debt securities | 87 | |
With-profits business | Asia | Tier 2 subordinated debt | ||
Financial investments | ||
Bank debt securities | 572 | |
With-profits business | Eurozone | ||
Financial investments | ||
Bank debt securities | 178 | 131 |
With-profits business | Eurozone | Senior debt | ||
Financial investments | ||
Bank debt securities | 77 | |
With-profits business | Eurozone | Subordinated debt | ||
Financial investments | ||
Bank debt securities | 101 | |
With-profits business | Eurozone | Tier 2 subordinated debt | ||
Financial investments | ||
Bank debt securities | 101 | |
With-profits business | UK | ||
Financial investments | ||
Bank debt securities | 288 | 155 |
With-profits business | UK | Senior debt | ||
Financial investments | ||
Bank debt securities | 182 | |
With-profits business | UK | Subordinated debt | ||
Financial investments | ||
Bank debt securities | 106 | |
With-profits business | UK | Tier 1 subordinated debt | ||
Financial investments | ||
Bank debt securities | 1 | |
With-profits business | UK | Tier 2 subordinated debt | ||
Financial investments | ||
Bank debt securities | 105 | |
With-profits business | US | ||
Financial investments | ||
Bank debt securities | 687 | 34 |
With-profits business | US | Senior debt | ||
Financial investments | ||
Bank debt securities | 670 | |
With-profits business | US | Subordinated debt | ||
Financial investments | ||
Bank debt securities | 17 | |
With-profits business | US | Tier 1 subordinated debt | ||
Financial investments | ||
Bank debt securities | 2 | |
With-profits business | US | Tier 2 subordinated debt | ||
Financial investments | ||
Bank debt securities | 15 | |
With-profits business | Other | ||
Financial investments | ||
Bank debt securities | 378 | $ 284 |
With-profits business | Other | Senior debt | ||
Financial investments | ||
Bank debt securities | 116 | |
With-profits business | Other | Subordinated debt | ||
Financial investments | ||
Bank debt securities | 262 | |
With-profits business | Other | Tier 2 subordinated debt | ||
Financial investments | ||
Bank debt securities | $ 262 |
Additional analysis of loans -
Additional analysis of loans - Components (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | |
Financial investments | |||
Loans | $ 14,910 | $ 16,583 | |
Policy loans | |||
Financial investments | |||
Loans | 6,226 | 6,121 | |
Mortgage loans | |||
Financial investments | |||
Loans | 8,277 | 10,069 | |
Operating segments | US | |||
Financial investments | |||
Loans | 12,824 | 14,611 | |
Operating segments | US | Policy loans | |||
Financial investments | |||
Loans | 4,705 | 4,707 | |
Operating segments | US | Mortgage loans | |||
Financial investments | |||
Loans | 8,119 | 9,904 | |
Operating segments | US | Mortgage loans | Average | |||
Financial investments | |||
Loans | $ 18.6 | $ 19.3 | |
Estimated loan to value (as a percent) | 55.00% | 54.00% | |
Operating segments | US insurance operations | Mortgage loans | |||
Financial investments | |||
Loans with restructured contractual terms | $ 947 | $ 0 | $ 0 |
Impairment | $ 0 |
Fair value measurement - Carrie
Fair value measurement - Carried at fair value (Details) - At fair value - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Financial instruments | |||
Total financial investments, net of derivative liabilities | $ 363,327 | $ 388,093 | |
Total financial instruments at fair value | $ 352,681 | $ 377,324 | |
Percentage of total (%) | 100.00% | 100.00% | |
Loans | |||
Financial instruments | |||
Financial assets | $ 3,606 | $ 3,587 | |
Equity securities and holdings in collective investment schemes | |||
Financial instruments | |||
Financial assets | 234,698 | 247,281 | |
Debt securities | |||
Financial instruments | |||
Financial assets classified as available-for-sale | 37,752 | 58,302 | |
Financial assets | 121,462 | 134,570 | |
Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 4,028 | 3,047 | |
Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (467) | (392) | |
Other financial liabilities at fair value | |||
Financial instruments | |||
Financial liabilities | (10,646) | (10,769) | |
Investment contract liabilities without discretionary participation features held at fair value | |||
Financial instruments | |||
Financial liabilities | (936) | (1,011) | |
Net asset value attributable to unit holders of consolidated investment funds | |||
Financial instruments | |||
Financial liabilities | (5,967) | (5,998) | |
Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | (3,743) | (3,760) | |
With-profits business | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 80,567 | 74,083 | |
Unit-linked and variable annuity separate account | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 205,931 | 219,324 | |
Non-linked shareholder-backed | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 76,829 | 94,686 | |
Level 1 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 295,014 | 311,097 | |
Total financial instruments at fair value | $ 289,493 | $ 305,124 | |
Percentage of total (%) | 82.00% | 81.00% | |
Level 1 | Equity securities and holdings in collective investment schemes | |||
Financial instruments | |||
Financial assets | $ 230,670 | $ 243,285 | |
Level 1 | Debt securities | |||
Financial instruments | |||
Financial assets | 64,300 | 67,927 | |
Level 1 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 109 | 70 | |
Level 1 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (65) | (185) | |
Level 1 | Other financial liabilities at fair value | |||
Financial instruments | |||
Financial liabilities | (5,521) | (5,973) | |
Level 1 | Net asset value attributable to unit holders of consolidated investment funds | |||
Financial instruments | |||
Financial liabilities | (5,521) | (5,973) | |
Level 1 | With-profits business | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 67,290 | 66,061 | |
Level 1 | Unit-linked and variable annuity separate account | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 204,723 | 217,838 | |
Level 1 | Non-linked shareholder-backed | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 23,001 | 27,198 | |
Level 2 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 62,593 | 71,826 | |
Total financial instruments at fair value | $ 61,649 | $ 70,792 | |
Percentage of total (%) | 18.00% | 19.00% | |
Level 2 | Equity securities and holdings in collective investment schemes | |||
Financial instruments | |||
Financial assets | $ 3,554 | $ 3,720 | |
Level 2 | Debt securities | |||
Financial instruments | |||
Financial assets | 57,091 | 66,637 | |
Level 2 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 2,350 | 1,676 | |
Level 2 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (402) | (207) | |
Level 2 | Other financial liabilities at fair value | |||
Financial instruments | |||
Financial liabilities | (944) | (1,034) | |
Level 2 | Investment contract liabilities without discretionary participation features held at fair value | |||
Financial instruments | |||
Financial liabilities | (936) | (1,011) | |
Level 2 | Net asset value attributable to unit holders of consolidated investment funds | |||
Financial instruments | |||
Financial liabilities | (8) | (23) | |
Level 2 | With-profits business | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 12,963 | 7,762 | |
Level 2 | Unit-linked and variable annuity separate account | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 1,208 | 1,486 | |
Level 2 | Non-linked shareholder-backed | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 48,422 | 62,578 | |
Level 3 | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 5,720 | 5,170 | |
Total financial instruments at fair value | $ 1,539 | $ 1,408 | $ 6,752 |
Percentage of total (%) | 0.00% | 0.00% | |
Level 3 | Loans | |||
Financial instruments | |||
Financial assets | $ 3,606 | $ 3,587 | 6,054 |
Level 3 | Equity securities and holdings in collective investment schemes | |||
Financial instruments | |||
Financial assets | 474 | 276 | 656 |
Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 71 | 6 | 1,505 |
Level 3 | Other investments (including derivative assets) | |||
Financial instruments | |||
Financial assets | 1,569 | 1,301 | 6,714 |
Level 3 | Derivative liabilities | |||
Financial instruments | |||
Financial liabilities | (539) | ||
Level 3 | Other financial liabilities at fair value | |||
Financial instruments | |||
Financial liabilities | (4,181) | (3,762) | |
Level 3 | Net asset value attributable to unit holders of consolidated investment funds | |||
Financial instruments | |||
Financial liabilities | (438) | (2) | (1,258) |
Level 3 | Other financial liabilities | |||
Financial instruments | |||
Financial liabilities | (3,743) | (3,760) | $ (4,335) |
Level 3 | With-profits business | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | 314 | 260 | |
Level 3 | Non-linked shareholder-backed | |||
Financial instruments | |||
Total financial investments, net of derivative liabilities | $ 5,406 | $ 4,910 |
Fair value measurement - Fair v
Fair value measurement - Fair value disclosed (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Financial instruments | ||
Total | $ (9,713) | $ (7,405) |
Loans | ||
Financial instruments | ||
Financial assets at amortised cost | 11,304 | 12,996 |
Investment contract liabilities without discretionary participation features held at fair value | ||
Financial instruments | ||
Financial liabilities at amortised cost | (3,730) | (3,891) |
Core structural borrowings of shareholder-financed businesses | ||
Financial instruments | ||
Financial liabilities at amortised cost | (6,499) | (5,594) |
Operational borrowings (excluding lease liabilities) | ||
Financial instruments | ||
Financial liabilities at amortised cost | (1,703) | (2,015) |
Obligations under funding, securities lending and sale and repurchase agreements | ||
Financial instruments | ||
Financial liabilities at amortised cost | (9,085) | (8,901) |
Assets and liabilities at amortised cost for which fair value is disclosed | ||
Financial instruments | ||
Total | (10,590) | (7,823) |
Assets and liabilities at amortised cost for which fair value is disclosed | Loans | ||
Financial instruments | ||
Financial assets at amortised cost | 11,435 | 13,511 |
Assets and liabilities at amortised cost for which fair value is disclosed | Investment contract liabilities without discretionary participation features held at fair value | ||
Financial instruments | ||
Financial liabilities at amortised cost | (3,793) | (3,957) |
Assets and liabilities at amortised cost for which fair value is disclosed | Core structural borrowings of shareholder-financed businesses | ||
Financial instruments | ||
Financial liabilities at amortised cost | (7,087) | (6,227) |
Assets and liabilities at amortised cost for which fair value is disclosed | Operational borrowings (excluding lease liabilities) | ||
Financial instruments | ||
Financial liabilities at amortised cost | (1,703) | (2,015) |
Assets and liabilities at amortised cost for which fair value is disclosed | Obligations under funding, securities lending and sale and repurchase agreements | ||
Financial instruments | ||
Financial liabilities at amortised cost | $ (9,442) | $ (9,135) |
Fair value measurement - Level
Fair value measurement - Level 3 financial instruments (Details) - At fair value - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Reconciliation of movements in level 3 net financial instruments measured at fair value | ||
Financial instruments at beginning of period | $ 377,324 | |
Financial instruments at end of period | 352,681 | $ 377,324 |
Loans | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 3,587 | |
Assets at end of period | 3,606 | 3,587 |
Equity securities and holdings in collective investment schemes | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 247,281 | |
Assets at end of period | 234,698 | 247,281 |
Debt securities | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 134,570 | |
Assets at end of period | 121,462 | 134,570 |
Other investments (including derivative assets) | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 3,047 | |
Assets at end of period | 4,028 | 3,047 |
Derivative liabilities | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (392) | |
Liabilities at end of period | (467) | (392) |
Net asset value attributable to unit holders of consolidated investment funds | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (5,998) | |
Liabilities at end of period | (5,967) | (5,998) |
Other financial liabilities | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (3,760) | |
Liabilities at end of period | (3,743) | (3,760) |
Level 3 | ||
Reconciliation of movements in level 3 net financial instruments measured at fair value | ||
Financial instruments at beginning of period | 1,408 | 6,752 |
Demerger of UK and Europe operations | (6,206) | |
Total gains (losses) in income statement | (57) | 537 |
Total gains/(losses) recorded in other comprehensive income | (4) | (14) |
Purchases and other additions | 269 | 336 |
Sales | (137) | (201) |
Issues | (1) | 132 |
Settlements | 8 | 72 |
Transfers into level 3 | 53 | |
Financial instruments at end of period | 1,539 | 1,408 |
Net unrealised gains (losses) on financial instruments held at the end of the year | (103) | 19 |
Level 3 | Loans | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 3,587 | 6,054 |
Demerger of UK and Europe operations | (2,509) | |
Total gains (losses) in income statement | 120 | 1 |
Issues | 52 | 275 |
Settlements | (153) | (234) |
Assets at end of period | 3,606 | 3,587 |
Level 3 | Equity securities and holdings in collective investment schemes | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 276 | 656 |
Demerger of UK and Europe operations | (440) | |
Total gains (losses) in income statement | (44) | (11) |
Total gains/(losses) recorded in other comprehensive income | (4) | 3 |
Purchases and other additions | 348 | 69 |
Sales | (102) | (1) |
Assets at end of period | 474 | 276 |
Net unrealised gains (losses) on financial instruments held at the end of the year | (72) | (11) |
Level 3 | Debt securities | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 6 | 1,505 |
Demerger of UK and Europe operations | (1,498) | |
Total gains (losses) in income statement | (6) | 6 |
Purchases and other additions | 20 | |
Sales | (2) | (7) |
Transfers into level 3 | 53 | |
Assets at end of period | 71 | 6 |
Net unrealised gains (losses) on financial instruments held at the end of the year | (5) | |
Level 3 | Other investments (including derivative assets) | ||
Reconciliation of movements in level 3 assets measured at fair value | ||
Assets at beginning of period | 1,301 | 6,714 |
Demerger of UK and Europe operations | (5,513) | |
Total gains (losses) in income statement | (170) | 30 |
Total gains/(losses) recorded in other comprehensive income | (6) | |
Purchases and other additions | 484 | 269 |
Sales | (46) | (193) |
Assets at end of period | 1,569 | 1,301 |
Net unrealised gains (losses) on financial instruments held at the end of the year | (157) | 34 |
Level 3 | Derivative liabilities | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (539) | |
Total gains (losses) recorded in income statement | 539 | |
Level 3 | Borrowings attributable to with-profits businesses | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (2,045) | |
Demerger of UK and Europe operations | 2,045 | |
Level 3 | Net asset value attributable to unit holders of consolidated investment funds | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (2) | (1,258) |
Demerger of UK and Europe operations | 1,258 | |
Total gains (losses) recorded in income statement | 134 | |
Purchases and other additions | (583) | (2) |
Sales | 13 | |
Liabilities at end of period | (438) | (2) |
Net unrealised gains (losses) on financial instruments held at the end of the year | 132 | |
Level 3 | Other financial liabilities | ||
Reconciliation of movements in level 3 liabilities measured at fair value | ||
Liabilities at beginning of period | (3,760) | (4,335) |
Demerger of UK and Europe operations | 451 | |
Total gains (losses) recorded in income statement | (91) | (28) |
Total gains/(losses) recorded in other comprehensive income | (11) | |
Issues | (53) | (143) |
Settlements | 161 | 306 |
Liabilities at end of period | (3,743) | (3,760) |
Net unrealised gains (losses) on financial instruments held at the end of the year | $ (1) | $ (4) |
Fair value measurement - Valuat
Fair value measurement - Valuation approach for level 3 (Details) - At fair value - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Financial instruments | |||
Net financial instruments at fair value | $ 352,681 | $ 377,324 | |
Equity securities and holdings in collective investment schemes | |||
Financial instruments | |||
Financial assets | 234,698 | 247,281 | |
Net asset value attributable to unit holders of consolidated investment funds | |||
Financial instruments | |||
Financial liabilities | 5,967 | 5,998 | |
Debt securities | |||
Financial instruments | |||
Financial assets | 121,462 | 134,570 | |
Level 3 | |||
Financial instruments | |||
Net financial instruments at fair value | $ 1,539 | $ 1,408 | $ 6,752 |
Percentage using valuation method | 0.50% | 1.00% | |
Level 3 | Equity securities and holdings in collective investment schemes | |||
Financial instruments | |||
Financial assets | $ 474 | $ 276 | 656 |
Level 3 | Net asset value attributable to unit holders of consolidated investment funds | |||
Financial instruments | |||
Financial liabilities | 438 | 2 | 1,258 |
Level 3 | Debt securities | |||
Financial instruments | |||
Financial assets | 71 | 6 | $ 1,505 |
Level 3 | REALIC of Jacksonville Plans, Inc | |||
Financial instruments | |||
Net financial instruments at fair value | (137) | (173) | |
Financial assets | 3,606 | 3,587 | |
Financial liabilities | 3,743 | 3,760 | |
Level 3 | Entity excluding REALIC | |||
Financial instruments | |||
Net financial instruments at fair value | 1,676 | 1,581 | |
Level 3 | Entity excluding REALIC | Non-linked shareholder-backed | |||
Financial instruments | |||
Net financial instruments at fair value | $ 1,362 | 1,323 | |
Reasonably possible decrease in valuation (as a percent) | 10.00% | ||
Amount of reasonably possible decrease in valuation | $ (136) | (132) | |
Level 3 | Entity excluding REALIC | Non-linked shareholder-backed | External valuation | |||
Financial instruments | |||
Net financial instruments at fair value | 1,360 | ||
Level 3 | Entity excluding REALIC | Other financial investments | |||
Financial instruments | |||
Net financial instruments at fair value | 1,687 | 1,301 | |
Level 3 | Entity excluding REALIC | Equity securities and holdings in collective investment schemes | |||
Financial instruments | |||
Net financial instruments at fair value | 356 | 276 | |
Level 3 | Entity excluding REALIC | Net asset value attributable to unit holders of consolidated investment funds | |||
Financial instruments | |||
Net financial instruments at fair value | (438) | (2) | |
Level 3 | Entity excluding REALIC | Other sundry individual financial investments | |||
Financial instruments | |||
Net financial instruments at fair value | $ 71 | 6 | |
Level 3 | Entity excluding REALIC | Equity-type securities | Internal valuation | |||
Financial instruments | |||
Percentage using valuation method | 0.10% | ||
Financial assets | $ 2 | 0 | |
Level 3 | Asia insurance operations | Entity excluding REALIC | |||
Financial instruments | |||
Net financial instruments at fair value | $ 314 | $ 258 |
Fair value measurement - Transf
Fair value measurement - Transfers between levels (Details) - At fair value - Equity and debt securities $ in Millions | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Financial instruments | |
Transfers from level 1 to level 2 | $ 4,232 |
Transfers from level 2 to level 1 | 1,843 |
Transfers into level 3 | $ 53 |
Policyholder liabilities and _3
Policyholder liabilities and unallocated surplus - Analysis of movements (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | $ 385,678 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 4,750 | |
Policyholder liabilities on the consolidated statement of financial position | 391,924 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 5,512 | |
Operating segments after elimination of intra-group amounts, before unallocated | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 402,119 | $ 551,790 |
Policyholder liabilities on the consolidated statement of financial position | 385,492 | 521,236 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 4,750 | 20,180 |
Group's share of policyholder liabilities of joint ventures and associates | 11,877 | 10,374 |
Reclassification of UK and Europe's liabilities as held for distribution | (210,002) | |
Premiums | 18,611 | 18,936 |
Surrenders | (9,538) | (10,261) |
Maturities/deaths | (2,946) | (3,022) |
Net flows | 6,127 | 5,653 |
Shareholders' transfers post-tax | (54) | (49) |
Investment-related items and other movements | 3,015 | 29,733 |
Foreign exchange translation differences | (1,580) | 547 |
Ending Balance | 409,627 | 377,672 |
Policyholder liabilities on the consolidated statement of financial position | 391,707 | 362,872 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 5,512 | 3,747 |
Group's share of policyholder liabilities of joint ventures and associates | 12,408 | 11,053 |
Average policyholder liability balances | 400,743 | 356,258 |
Operating segments after elimination of intra-group amounts, before unallocated | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities | 331,811 | 339,996 |
Reclassification of UK and Europe's liabilities as held for distribution | (51,911) | |
Premiums | 14,020 | 14,212 |
Surrenders | (9,157) | (9,993) |
Maturities/deaths | (2,270) | (2,311) |
Net flows | 2,593 | 1,908 |
Investment-related items and other movements | (372) | 23,886 |
Foreign exchange translation differences | (1,052) | 315 |
Policyholder liabilities | 332,980 | 314,194 |
Policyholder liabilities on the consolidated statement of financial position | 320,572 | 303,141 |
Group's share of policyholder liabilities of joint ventures and associates | 12,408 | 11,053 |
Unallocated to a segment (Other operations) | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 186 | 50 |
Policyholder liabilities on the consolidated statement of financial position | 217 | 61 |
Unallocated to a segment (Other operations) | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 217 | 61 |
Asia insurance operations | Operating segments after elimination of intra-group amounts, before unallocated | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 132,570 | 105,408 |
Policyholder liabilities on the consolidated statement of financial position | 115,943 | 91,836 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 4,750 | 3,198 |
Group's share of policyholder liabilities of joint ventures and associates | 11,877 | 10,374 |
Premiums | 9,746 | 9,800 |
Surrenders | (2,083) | (1,982) |
Maturities/deaths | (1,153) | (1,278) |
Net flows | 6,510 | 6,540 |
Shareholders' transfers post-tax | (54) | (49) |
Investment-related items and other movements | 6,526 | 7,947 |
Foreign exchange translation differences | (1,580) | 547 |
Ending Balance | 143,972 | 120,393 |
Policyholder liabilities on the consolidated statement of financial position | 126,052 | 105,593 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 5,512 | 3,747 |
Group's share of policyholder liabilities of joint ventures and associates | 12,408 | 11,053 |
Average policyholder liability balances | 133,141 | 109,428 |
Asia insurance operations | Operating segments after elimination of intra-group amounts, before unallocated | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities | 62,262 | 51,705 |
Premiums | 5,155 | 5,076 |
Surrenders | (1,702) | (1,714) |
Maturities/deaths | (477) | (567) |
Net flows | 2,976 | 2,795 |
Investment-related items and other movements | 3,139 | 2,100 |
Foreign exchange translation differences | (1,052) | 315 |
Policyholder liabilities | 67,325 | 56,915 |
Policyholder liabilities on the consolidated statement of financial position | 54,917 | 45,862 |
Group's share of policyholder liabilities of joint ventures and associates | 12,408 | 11,053 |
US insurance operations | Operating segments after elimination of intra-group amounts, before unallocated | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 269,549 | 236,380 |
Policyholder liabilities on the consolidated statement of financial position | 269,549 | 236,380 |
Premiums | 8,865 | 9,136 |
Surrenders | (7,455) | (8,279) |
Maturities/deaths | (1,793) | (1,744) |
Net flows | (383) | (887) |
Investment-related items and other movements | (3,511) | 21,786 |
Ending Balance | 265,655 | 257,279 |
Policyholder liabilities on the consolidated statement of financial position | 265,655 | 257,279 |
Average policyholder liability balances | 267,602 | 246,830 |
US insurance operations | Operating segments after elimination of intra-group amounts, before unallocated | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities | 269,549 | 236,380 |
Premiums | 8,865 | 9,136 |
Surrenders | (7,455) | (8,279) |
Maturities/deaths | (1,793) | (1,744) |
Net flows | (383) | (887) |
Investment-related items and other movements | (3,511) | 21,786 |
Policyholder liabilities | 265,655 | 257,279 |
Policyholder liabilities on the consolidated statement of financial position | $ 265,655 | 257,279 |
Discontinued UK and Europe | Operating segments after elimination of intra-group amounts, before unallocated | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 210,002 | |
Policyholder liabilities on the consolidated statement of financial position | 193,020 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 16,982 | |
Reclassification of UK and Europe's liabilities as held for distribution | (210,002) | |
Discontinued UK and Europe | Operating segments after elimination of intra-group amounts, before unallocated | Shareholder-backed | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities | 51,911 | |
Reclassification of UK and Europe's liabilities as held for distribution | $ (51,911) |
Policyholder liabilities and _4
Policyholder liabilities and unallocated surplus - Movement in insurance contract liabilities and unallocated surplus (Details) - USD ($) $ in Millions | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | ||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | ||||
Policyholder liabilities on the consolidated statement of financial position | $ 385,678 | |||
Policyholder liabilities on the consolidated statement of financial position | 391,924 | |||
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 4,750 | |||
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 5,512 | |||
Reinsurers' share of insurance contract liabilities | [1] | 44,918 | $ 13,856 | |
Claims paid | 13,504 | |||
Hong Kong | ||||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | ||||
Effect of change in valuation interest rate on policyholder liabilities net of reinsurance | (1,039) | |||
Athene Life Re Ltd | In-force fixed and fixed indexed annuity | US insurance operations | ||||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | ||||
Reinsurers' share of insurance contract liabilities | 27,700 | |||
With-profits business | ||||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | ||||
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 4,750 | $ 20,180 | ||
Removal of opening balances relating to the discontinued UK and Europe operations | (16,982) | |||
Income and expense included in the income statement and other comprehensive income | 742 | 655 | ||
Other movements | (116) | |||
Foreign exchange translation differences | 20 | 10 | ||
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 5,512 | 3,747 | ||
Contract liabilities (before reinsurers' share) | ||||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | ||||
Policyholder liabilities on the consolidated statement of financial position | 385,678 | 521,286 | ||
Removal of opening balances relating to the discontinued UK and Europe operations | (193,020) | |||
Income and expense included in the income statement | 7,555 | 33,996 | ||
Other movements | (110) | 53 | ||
Foreign exchange translation differences | (1,199) | 618 | ||
Policyholder liabilities on the consolidated statement of financial position | 391,924 | 362,933 | ||
Reinsurers' share | ||||
Insurance contract liabilities, gross and reinsurance share, and unallocated surplus of with-profits funds | ||||
Policyholder liabilities on the consolidated statement of financial position | (13,856) | (14,193) | ||
Removal of opening balances relating to the discontinued UK and Europe operations | 2,169 | |||
Income and expense included in the income statement | (31,066) | (880) | ||
Foreign exchange translation differences | 4 | (15) | ||
Policyholder liabilities on the consolidated statement of financial position | (44,918) | $ (12,919) | ||
Claims paid | $ (590) | |||
[1] | At 30 June 2020, reinsurers’ share of insurance contract liabilities include $27.7 billion in respect of the reinsurance of substantially all of Jackson’s in-force fixed and fixed indexed annuity liabilities to Athene Life Re Ltd, as discussed in note D1. |
Policyholder liabilities and _5
Policyholder liabilities and unallocated surplus - Analysis of movements, Asia (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | $ 385,678 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 4,750 | |
Policyholder liabilities on the consolidated statement of financial position | 391,924 | |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 5,512 | |
Operating segments after elimination of intra-group amounts, before unallocated | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 402,119 | $ 551,790 |
Policyholder liabilities on the consolidated statement of financial position | 385,492 | 521,236 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 4,750 | 20,180 |
Group's share of policyholder liabilities of joint ventures and associates | 11,877 | 10,374 |
Premiums | 18,611 | 18,936 |
Surrenders | (9,538) | (10,261) |
Maturities/deaths | (2,946) | (3,022) |
Net flows | 6,127 | 5,653 |
Shareholders' transfers post-tax | (54) | (49) |
Investment-related items and other movements | 3,015 | 29,733 |
Foreign exchange translation differences | (1,580) | 547 |
Ending Balance | 409,627 | 377,672 |
Policyholder liabilities on the consolidated statement of financial position | 391,707 | 362,872 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 5,512 | 3,747 |
Group's share of policyholder liabilities of joint ventures and associates | 12,408 | 11,053 |
Average policyholder liability balances | 400,743 | 356,258 |
With-profits business | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 4,750 | 20,180 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 5,512 | 3,747 |
Shareholder-backed | Operating segments after elimination of intra-group amounts, before unallocated | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Premiums | 14,020 | 14,212 |
Surrenders | (9,157) | (9,993) |
Maturities/deaths | (2,270) | (2,311) |
Net flows | 2,593 | 1,908 |
Investment-related items and other movements | (372) | 23,886 |
Foreign exchange translation differences | (1,052) | 315 |
Policyholder liabilities on the consolidated statement of financial position | 320,572 | 303,141 |
Group's share of policyholder liabilities of joint ventures and associates | 12,408 | 11,053 |
Asia insurance operations | Operating segments after elimination of intra-group amounts, before unallocated | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 132,570 | 105,408 |
Policyholder liabilities on the consolidated statement of financial position | 115,943 | 91,836 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 4,750 | 3,198 |
Group's share of policyholder liabilities of joint ventures and associates | 11,877 | 10,374 |
New business | 2,293 | 2,952 |
In-force | 7,453 | 6,848 |
Premiums | 9,746 | 9,800 |
Surrenders | (2,083) | (1,982) |
Maturities/deaths | (1,153) | (1,278) |
Net flows | 6,510 | 6,540 |
Shareholders' transfers post-tax | (54) | (49) |
Investment-related items and other movements | 6,526 | 7,947 |
Foreign exchange translation differences | (1,580) | 547 |
Ending Balance | 143,972 | 120,393 |
Policyholder liabilities on the consolidated statement of financial position | 126,052 | 105,593 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 5,512 | 3,747 |
Group's share of policyholder liabilities of joint ventures and associates | 12,408 | 11,053 |
Average policyholder liability balances | 133,141 | 109,428 |
Asia insurance operations | With-profits business | Operating segments after elimination of intra-group amounts, before unallocated | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 70,308 | 53,703 |
Policyholder liabilities on the consolidated statement of financial position | 65,558 | 50,505 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 4,750 | 3,198 |
New business | 375 | 769 |
In-force | 4,216 | 3,955 |
Premiums | 4,591 | 4,724 |
Surrenders | (381) | (268) |
Maturities/deaths | (676) | (711) |
Net flows | 3,534 | 3,745 |
Shareholders' transfers post-tax | (54) | (49) |
Investment-related items and other movements | 3,387 | 5,847 |
Foreign exchange translation differences | (528) | 232 |
Ending Balance | 76,647 | 63,478 |
Policyholder liabilities on the consolidated statement of financial position | 71,135 | 59,731 |
Unallocated surplus of with-profits funds on the consolidated statement of financial position | 5,512 | 3,747 |
Average policyholder liability balances | 68,347 | 55,118 |
Asia insurance operations | Shareholder-backed | Operating segments after elimination of intra-group amounts, before unallocated | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Premiums | 5,155 | 5,076 |
Surrenders | (1,702) | (1,714) |
Maturities/deaths | (477) | (567) |
Net flows | 2,976 | 2,795 |
Investment-related items and other movements | 3,139 | 2,100 |
Foreign exchange translation differences | (1,052) | 315 |
Policyholder liabilities on the consolidated statement of financial position | 54,917 | 45,862 |
Group's share of policyholder liabilities of joint ventures and associates | $ 12,408 | $ 11,053 |
Percentage rate of surrender | 2.70% | 3.30% |
Asia insurance operations | Unit-linked assets and liabilities | Operating segments after elimination of intra-group amounts, before unallocated | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | $ 28,850 | $ 25,704 |
Policyholder liabilities on the consolidated statement of financial position | 23,571 | 20,846 |
Group's share of policyholder liabilities of joint ventures and associates | 5,279 | 4,858 |
New business | 909 | 1,003 |
In-force | 1,148 | 1,206 |
Premiums | 2,057 | 2,209 |
Surrenders | (1,209) | (1,385) |
Maturities/deaths | (87) | (89) |
Net flows | 761 | 735 |
Investment-related items and other movements | (2,243) | 753 |
Foreign exchange translation differences | (794) | 176 |
Ending Balance | 26,574 | 27,368 |
Policyholder liabilities on the consolidated statement of financial position | 21,376 | 22,392 |
Group's share of policyholder liabilities of joint ventures and associates | 5,198 | 4,976 |
Average policyholder liability balances | 27,712 | 26,536 |
Asia insurance operations | Other business | Operating segments after elimination of intra-group amounts, before unallocated | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Beginning Balance | 33,412 | 26,001 |
Policyholder liabilities on the consolidated statement of financial position | 26,814 | 20,485 |
Group's share of policyholder liabilities of joint ventures and associates | 6,598 | 5,516 |
New business | 1,009 | 1,180 |
In-force | 2,089 | 1,687 |
Premiums | 3,098 | 2,867 |
Surrenders | (493) | (329) |
Maturities/deaths | (390) | (478) |
Net flows | 2,215 | 2,060 |
Investment-related items and other movements | 5,382 | 1,347 |
Foreign exchange translation differences | (258) | 139 |
Ending Balance | 40,751 | 29,547 |
Policyholder liabilities on the consolidated statement of financial position | 33,541 | 23,470 |
Group's share of policyholder liabilities of joint ventures and associates | 7,210 | 6,077 |
Average policyholder liability balances | $ 37,082 | $ 27,774 |
Policyholder liabilities and _6
Policyholder liabilities and unallocated surplus - Analysis of movements, US (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | $ 385,678 | |
Policyholder liabilities on the consolidated statement of financial position | 391,924 | |
Operating segments after elimination of intra-group amounts, before unallocated | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 385,492 | $ 521,236 |
Premiums | 18,611 | 18,936 |
Surrenders | (9,538) | (10,261) |
Maturities/deaths | (2,946) | (3,022) |
Net flows | 6,127 | 5,653 |
Investment-related items and other movements | 3,015 | 29,733 |
Policyholder liabilities on the consolidated statement of financial position | 391,707 | 362,872 |
Average policyholder liability balances | 400,743 | 356,258 |
US insurance operations | Operating segments after elimination of intra-group amounts, before unallocated | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 269,549 | 236,380 |
Premiums | 8,865 | 9,136 |
Surrenders | (7,455) | (8,279) |
Maturities/deaths | (1,793) | (1,744) |
Net flows | (383) | (887) |
Investment-related items and other movements | (3,511) | 21,786 |
Policyholder liabilities on the consolidated statement of financial position | 265,655 | 257,279 |
Average policyholder liability balances | 267,602 | 246,830 |
US insurance operations | Operating segments after elimination of intra-group amounts, before unallocated | Variable annuity separate account | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 195,070 | 163,301 |
Premiums | 6,544 | 6,032 |
Surrenders | (5,353) | (6,008) |
Maturities/deaths | (848) | (782) |
Net flows | 343 | (758) |
Transfers between general and separate account | (1,042) | 637 |
Investment-related items and other movements | (10,151) | 21,737 |
Policyholder liabilities on the consolidated statement of financial position | 184,220 | 184,917 |
Average policyholder liability balances | 189,645 | 174,109 |
US insurance operations | Operating segments after elimination of intra-group amounts, before unallocated | General account and other business | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | 74,479 | 73,079 |
Premiums | 2,321 | 3,104 |
Surrenders | (2,102) | (2,271) |
Maturities/deaths | (945) | (962) |
Net flows | (726) | (129) |
Transfers between general and separate account | 1,042 | (637) |
Investment-related items and other movements | 6,640 | 49 |
Policyholder liabilities on the consolidated statement of financial position | 81,435 | 72,362 |
Average policyholder liability balances | 77,957 | $ 72,721 |
US insurance operations | Operating segments after elimination of intra-group amounts, before unallocated | General account and other business | Athene Life Re Ltd | In-force fixed and fixed indexed annuity | ||
Analysis of movements in policyholder liabilities and unallocated surplus | ||
Policyholder liabilities on the consolidated statement of financial position | $ 27,700 |
Intangible assets - Goodwill re
Intangible assets - Goodwill reconciliation (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Changes in goodwill: | ||
Carrying value at beginning of period | $ 969 | $ 2,365 |
Reclassification/Demerger of UK and Europe operations | (1,731) | |
Additions in the period | 299 | |
Exchange differences | (27) | 36 |
Carrying value at end of period | $ 942 | $ 969 |
Intangible assets - Deferred ac
Intangible assets - Deferred acquisition costs and other intangible assets (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred acquisition costs and other intangible assets | |||
Total of deferred acquisition costs and other intangible assets | $ 18,604 | $ 17,476 | |
Shareholder-backed | |||
Deferred acquisition costs and other intangible assets | |||
Deferred acquisition costs | 14,601 | 14,239 | |
Intangible assets other than goodwill | 3,937 | 3,170 | |
Total of deferred acquisition costs and other intangible assets | 18,538 | 17,409 | $ 15,008 |
Shareholder-backed | PVIF | |||
Deferred acquisition costs and other intangible assets | |||
Intangible assets other than goodwill | 34 | 38 | |
Shareholder-backed | Distribution rights and other intangible assets | |||
Deferred acquisition costs and other intangible assets | |||
Intangible assets other than goodwill | 3,903 | 3,132 | |
Shareholder-backed | Insurance contracts | |||
Deferred acquisition costs and other intangible assets | |||
Deferred acquisition costs | 14,567 | 14,206 | |
Shareholder-backed | Investment contracts | |||
Deferred acquisition costs and other intangible assets | |||
Deferred acquisition costs | 34 | 33 | |
With-profits business | |||
Deferred acquisition costs and other intangible assets | |||
Total of deferred acquisition costs and other intangible assets | $ 66 | $ 67 |
Intangible assets - Changes in
Intangible assets - Changes in DAC and other intangibles (Details) $ in Millions, ฿ in Billions | Mar. 19, 2020THB (฿)installment | Mar. 19, 2020USD ($)installment | Apr. 30, 2020THB (฿) | Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) |
Movements in deferred acquisition costs and intangible assets | |||||
At beginning of period | $ 17,476 | ||||
At end of period | 18,604 | $ 17,476 | |||
Shareholder-backed | |||||
Movements in deferred acquisition costs and intangible assets | |||||
At beginning of period | 17,409 | 15,008 | |||
Removal of UK and Europe operations from opening balance | (143) | ||||
Additions | 1,518 | 2,601 | |||
Amortisation to the income statement | (583) | 451 | |||
Adjusted operating profit | (631) | (792) | |||
Non-operating profit (loss) | 48 | 1,243 | |||
Disposals and transfers | (13) | (11) | |||
Exchange differences and other movements | (41) | 134 | |||
Amortisation of DAC related to net unrealised valuation movements on the US insurance operation's available-for-sale securities recognised within other comprehensive income | 248 | (631) | |||
At end of period | 18,538 | 17,409 | |||
PVIF and other intangibles | |||||
Intangible assets | 3,937 | 3,170 | |||
Shareholder-backed | TMB Bank | |||||
Movements in deferred acquisition costs and intangible assets | |||||
Additions | $ 788 | ||||
PVIF and other intangibles | |||||
Period of bancassurance agreement | 15 years | 15 years | |||
Cost of change in arrangements due to bancassurance agreement | ฿ | ฿ 24.5 | ||||
Number of instalments in bancassurance agreement | installment | 2 | 2 | |||
Payment for change in arrangements paid to bancassurance agreement | ฿ | ฿ 12 | ||||
Shareholder-backed | PVIF and other intangibles | |||||
Movements in deferred acquisition costs and intangible assets | |||||
At beginning of period | 3,170 | ||||
Additions | 904 | ||||
Amortisation to the income statement | (113) | ||||
Adjusted operating profit | (111) | ||||
Non-operating profit (loss) | (2) | ||||
Disposals and transfers | (13) | ||||
Exchange differences and other movements | (11) | ||||
At end of period | 3,937 | 3,170 | |||
Shareholder-backed | Software | |||||
PVIF and other intangibles | |||||
Additions | 21 | ||||
Amortisation | (17) | ||||
Foreign exchange losses | 2 | ||||
Disposals | (8) | ||||
Intangible assets | 83 | 85 | |||
Shareholder-backed | Asia insurance operations | Deferred acquisition costs | |||||
Movements in deferred acquisition costs and intangible assets | |||||
At beginning of period | 1,999 | ||||
Additions | 261 | ||||
Amortisation to the income statement | (157) | ||||
Adjusted operating profit | (157) | ||||
Exchange differences and other movements | (30) | ||||
At end of period | $ 2,073 | $ 1,999 | |||
Shareholder-backed | US insurance operations | |||||
Movements in deferred acquisition costs and intangible assets | |||||
Assumption for long-term investment returns (as a percent) | 7.40% | 7.40% | |||
Shareholder-backed | US insurance operations | Deferred acquisition costs | |||||
Movements in deferred acquisition costs and intangible assets | |||||
At beginning of period | $ 12,240 | ||||
Additions | 353 | ||||
Amortisation to the income statement | (313) | ||||
Adjusted operating profit | (363) | ||||
Non-operating profit (loss) | 50 | ||||
Amortisation of DAC related to net unrealised valuation movements on the US insurance operation's available-for-sale securities recognised within other comprehensive income | 248 | ||||
At end of period | $ 12,528 | $ 12,240 | |||
Assumption for long-term investment returns (as a percent) | 7.40% | ||||
Shareholder-backed | US insurance operations | Deferred acquisition costs | In-force fixed and fixed indexed annuity | |||||
Movements in deferred acquisition costs and intangible assets | |||||
Amortisation to the income statement | $ (764) |
Intangible Assets - DAC for US
Intangible Assets - DAC for US operations and sensitivity of amortisation (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
DAC amounts | ||||
Deferred acquisition costs and other intangible assets | $ 18,604 | $ 17,476 | ||
Gain (loss) for shadow DAC amortisation | (287) | $ (560) | ||
Reduction in shadow DAC | 535 | |||
Shareholder-backed | ||||
DAC amounts | ||||
Deferred acquisition costs and other intangible assets | $ 18,538 | $ 17,409 | $ 15,008 | |
Shareholder-backed | US insurance operations | ||||
DAC amounts | ||||
Assumption for long-term investment returns (as a percent) | 7.40% | 7.40% | ||
Deferred acquisition costs | Shareholder-backed | US insurance operations | ||||
DAC amounts | ||||
Deferred acquisition costs and other intangible assets | $ 12,528 | $ 12,240 | ||
Gain (loss) for shadow DAC amortisation | 248 | (631) | ||
Reduction in shadow DAC | 535 | |||
Positive (negative) unrealised valuation movement | 2,540 | 4,023 | ||
Amount of acceleration or deceleration for every 1 percent growth | $ 17 | |||
Percentage taken for expected acceleration or deceleration | 1.00% | |||
Assumptions for amortisation of deferred acquisition costs - investment return realisation period | 8 years | |||
Assumption for long-term investment returns (as a percent) | 7.40% | |||
Credit (charge) for decelerated (accelerated) amortisation | $ (32) | $ 191 | ||
Assumptions for amortisation of deferred acquisition costs - period for projected level of investment return | 5 years | |||
Assumptions for amortisation of deferred acquisition costs - preceding period of actual investment return | 3 years | |||
Maximum decrease in separate account values for mean reversion assumption to remain within the corridor (as a percent) | 30.00% | |||
Maximum increase in separate account values for mean reversion assumption to remain within the corridor (as a percent) | 42.00% | |||
Deferred acquisition costs | Shareholder-backed | US insurance operations | Cumulative shadow DAC | ||||
DAC amounts | ||||
Deferred acquisition costs and other intangible assets | $ (447) | (695) | ||
Deferred acquisition costs | Shareholder-backed | US insurance operations | Variable annuity and other business | Amount before cumulative shadow DAC | ||||
DAC amounts | ||||
Deferred acquisition costs and other intangible assets | $ 12,975 | $ 12,935 |
Borrowings - Core Structural Bo
Borrowings - Core Structural Borrowings (Details) € in Millions, £ in Millions, $ in Millions | 1 Months Ended | ||||||||||
Apr. 30, 2020USD ($) | Nov. 30, 2019USD ($) | Oct. 31, 2019GBP (£) | Jun. 30, 2020GBP (£) | Jun. 30, 2020EUR (€) | Jun. 30, 2020USD ($) | Dec. 31, 2019GBP (£) | Dec. 31, 2019EUR (€) | Dec. 31, 2019USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) | |
Core structural borrowings of shareholder-financed businesses | |||||||||||
Borrowings | |||||||||||
Borrowings | $ 6,499 | $ 5,594 | $ 9,470 | $ 9,761 | |||||||
Central operations total | |||||||||||
Borrowings | |||||||||||
Borrowings | 6,249 | 5,344 | |||||||||
US$250m 6.75% Notes | |||||||||||
Borrowings | |||||||||||
Borrowings | 250 | 250 | |||||||||
Notional amount | $ 250 | $ 250 | |||||||||
Borrowings, interest rate | 6.75% | 6.75% | 6.75% | 6.75% | 6.75% | 6.75% | |||||
US$300m 6.5% Notes | |||||||||||
Borrowings | |||||||||||
Borrowings | $ 300 | $ 300 | |||||||||
Notional amount | $ 300 | $ 300 | |||||||||
Borrowings, interest rate | 6.50% | 6.50% | 6.50% | 6.50% | 6.50% | 6.50% | |||||
US$700m 5.25% Notes | |||||||||||
Borrowings | |||||||||||
Borrowings | $ 700 | $ 700 | |||||||||
Notional amount | $ 700 | $ 700 | |||||||||
Borrowings, interest rate | 5.25% | 5.25% | 5.25% | 5.25% | 5.25% | 5.25% | |||||
US$1,000m 5.25% Notes | |||||||||||
Borrowings | |||||||||||
Borrowings | $ 997 | $ 996 | |||||||||
Notional amount | $ 1,000 | $ 1,000 | |||||||||
Borrowings, interest rate | 5.25% | 5.25% | 5.25% | 5.25% | 5.25% | 5.25% | |||||
US$725m 4.375% Notes | |||||||||||
Borrowings | |||||||||||
Borrowings | $ 723 | $ 721 | |||||||||
Notional amount | $ 725 | $ 725 | |||||||||
Borrowings, interest rate | 4.375% | 4.375% | 4.375% | 4.375% | 4.375% | 4.375% | |||||
US$750m 4.875% Notes | |||||||||||
Borrowings | |||||||||||
Borrowings | $ 746 | $ 744 | |||||||||
Notional amount | $ 750 | $ 750 | |||||||||
Borrowings, interest rate | 4.875% | 4.875% | 4.875% | 4.875% | 4.875% | 4.875% | |||||
20m Medium Term Notes 2023 | |||||||||||
Borrowings | |||||||||||
Borrowings | $ 22 | $ 22 | |||||||||
Notional amount | € | € 20 | € 20 | |||||||||
435m 6.125% Notes 2031 | |||||||||||
Borrowings | |||||||||||
Borrowings | $ 533 | $ 571 | |||||||||
Notional amount | £ | £ 435 | £ 435 | |||||||||
Borrowings, interest rate | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | |||||
Senior debt: 300m 6.875% Bonds 2023 | |||||||||||
Borrowings | |||||||||||
Borrowings | $ 366 | $ 392 | |||||||||
Notional amount | £ | £ 300 | £ 300 | |||||||||
Borrowings, interest rate | 6.875% | 6.875% | 6.875% | 6.875% | 6.875% | 6.875% | |||||
Senior debt: 250m 5.875% Bonds 2029 | |||||||||||
Borrowings | |||||||||||
Borrowings | $ 280 | $ 298 | |||||||||
Notional amount | £ | £ 250 | £ 250 | |||||||||
Borrowings, interest rate | 5.875% | 5.875% | 5.875% | 5.875% | 5.875% | 5.875% | |||||
Senior debt: 1,000m 3.125% Notes 2030 | |||||||||||
Borrowings | |||||||||||
Borrowings | $ 982 | ||||||||||
Notional amount | $ 1,000 | ||||||||||
Borrowings, interest rate | 3.125% | 3.125% | 3.125% | ||||||||
Proceeds from issue of bonds, notes and debentures | $ 982 | ||||||||||
$350m Loan 2024 | |||||||||||
Borrowings | |||||||||||
Borrowings | $ 350 | $ 350 | |||||||||
Notional amount | 350 | 350 | |||||||||
Interest rate basis | LIBOR | ||||||||||
Adjustment to interest rate basis (as a percent) | 0.20% | ||||||||||
Proceeds from borrowings | $ 350 | ||||||||||
275m Loan 2022 | |||||||||||
Borrowings | |||||||||||
Repayment of bank loan | £ | £ 275 | ||||||||||
Jackson US$250m 8.15% Surplus Notes 2027 | |||||||||||
Borrowings | |||||||||||
Borrowings | 250 | 250 | |||||||||
Notional amount | $ 250 | $ 250 | |||||||||
Borrowings, interest rate | 8.15% | 8.15% | 8.15% | 8.15% | 8.15% | 8.15% |
Borrowings - Operational borrow
Borrowings - Operational borrowings (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Operational borrowings | ||
Borrowings | ||
Borrowings | $ 2,245 | $ 2,645 |
Operational borrowings attributable to shareholder-financed businesses | ||
Borrowings | ||
Borrowings | 2,002 | 2,342 |
Borrowings attributable to with-profits businesses | ||
Borrowings | ||
Borrowings | 243 | 303 |
Borrowings in respect of short-term fixed income securities programmes - commercial paper | Operational borrowings attributable to shareholder-financed businesses | ||
Borrowings | ||
Borrowings | 506 | 520 |
Lease liabilities under IFRS 16 | Operational borrowings attributable to shareholder-financed businesses | ||
Borrowings | ||
Borrowings | 318 | 371 |
Lease liabilities under IFRS 16 | Borrowings attributable to with-profits businesses | ||
Borrowings | ||
Borrowings | 224 | 259 |
Non-recourse borrowings of consolidated investment funds | Operational borrowings attributable to shareholder-financed businesses | ||
Borrowings | ||
Borrowings | 1,081 | 1,045 |
Other borrowings | Operational borrowings attributable to shareholder-financed businesses | ||
Borrowings | ||
Borrowings | 97 | 406 |
Other borrowings | Borrowings attributable to with-profits businesses | ||
Borrowings | ||
Borrowings | $ 19 | $ 44 |
Sensitivity analysis to key m_3
Sensitivity analysis to key market risks (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Interest rate risk | ||
Sensitivity analysis | ||
Floor for movements in interest rates in sensitivity analysis | 0.00% | |
Interest rate risk | Asia insurance operations | ||
Sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 0.50% | 1.00% |
Net effect on shareholders' equity, decrease in assumption | $ (1,203) | $ (702) |
Net effect on profit after tax, decrease in assumption | $ (1,203) | $ (702) |
Reasonably possible increase in assumption (as a percent) | 1.00% | 1.00% |
Net effect on shareholders' equity, increase in assumption | $ 64 | $ (718) |
Net effect on profit after tax, increase in assumption | $ 64 | $ (718) |
Interest rate risk | US insurance operations | ||
Sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 0.50% | 1.00% |
Net effect on shareholders' equity, decrease in assumption | $ (90) | $ 20 |
Net effect on profit after tax, decrease in assumption | (1,036) | (2,224) |
Net effect on other comprehensive income, decrease in assumption | $ 946 | $ 2,244 |
Reasonably possible increase in assumption (as a percent) | 1.00% | 1.00% |
Net effect on shareholders' equity, increase in assumption | $ (123) | $ (553) |
Net effect on profit after tax, increase in assumption | 1,577 | 1,691 |
Net effect on other comprehensive income, increase in assumption | $ (1,700) | $ (2,244) |
Equity and property price risk | Asia insurance operations | ||
Sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 20.00% | 20.00% |
Net effect on shareholders' equity, decrease in assumption | $ (559) | $ (816) |
Reasonably possible increase in assumption (as a percent) | 10.00% | 10.00% |
Net effect on shareholders' equity, increase in assumption | $ 302 | $ 408 |
Equity and property price risk | US insurance operations | ||
Sensitivity analysis | ||
Reasonably possible decrease in assumption (as a percent) | 20.00% | 20.00% |
Net effect on shareholders' equity, decrease in assumption | $ 2,174 | $ 762 |
Reasonably possible increase in assumption (as a percent) | 10.00% | 10.00% |
Net effect on shareholders' equity, increase in assumption | $ (484) | $ 608 |
Deferred tax (Details)
Deferred tax (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the beginning of the year | $ 4,075 |
Movement in income statement | 182 |
Other movements including foreign currency movements | 2 |
Deferred tax assets at the end of the year | 4,259 |
Deferred tax liabilities in statement of financial position | |
Deferred tax liabilities at the beginning of the year | (5,237) |
Movement in income statement | (119) |
Movement through other comprehensive income and equity | 7 |
Other movements including foreign currency movements | 71 |
Deferred tax liabilities at the end of the year | (5,278) |
Unrealised gains and losses on investments | |
Deferred tax assets in statement of financial position | |
Other movements including foreign currency movements | 1 |
Deferred tax assets at the end of the year | 1 |
Deferred tax liabilities in statement of financial position | |
Deferred tax liabilities at the beginning of the year | (877) |
Movement in income statement | 19 |
Movement through other comprehensive income and equity | 7 |
Other movements including foreign currency movements | 3 |
Deferred tax liabilities at the end of the year | (848) |
Balances relating to investment and insurance contracts | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the beginning of the year | 32 |
Movement in income statement | 8 |
Other movements including foreign currency movements | (1) |
Deferred tax assets at the end of the year | 39 |
Deferred tax liabilities in statement of financial position | |
Deferred tax liabilities at the beginning of the year | (1,507) |
Movement in income statement | (110) |
Other movements including foreign currency movements | 68 |
Deferred tax liabilities at the end of the year | (1,549) |
Short-term temporary differences | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the beginning of the year | 3,889 |
Movement in income statement | 238 |
Other movements including foreign currency movements | 1 |
Deferred tax assets at the end of the year | 4,128 |
Deferred tax liabilities in statement of financial position | |
Deferred tax liabilities at the beginning of the year | (2,853) |
Movement in income statement | (28) |
Deferred tax liabilities at the end of the year | (2,881) |
Unused tax losses | |
Deferred tax assets in statement of financial position | |
Deferred tax assets at the beginning of the year | 154 |
Movement in income statement | (64) |
Other movements including foreign currency movements | 1 |
Deferred tax assets at the end of the year | $ 91 |
Share capital, share premium _3
Share capital, share premium and own shares - Share capital and premium (Details) $ in Millions | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2020USD ($)shares | Jun. 30, 2019USD ($)Optionsshares | Dec. 31, 2019USD ($)shares | Jun. 30, 2020Options£ / shares | Dec. 31, 2019Options£ / shares | |
Disclosure of classes of share capital | |||||
Par value per share (in GBP per share) | £ / shares | £ 0.05 | £ 0.05 | |||
Number of issued shares at beginning of period | shares | 2,601,159,949 | 2,593,044,409 | 2,593,044,409 | ||
Number of shares issued under share-based schemes | shares | 7,700,498 | 8,115,540 | |||
Number of issued shares at end of period | shares | 2,608,860,447 | 2,601,159,949 | |||
Balance at beginning of period | $ 19,669 | $ 21,991 | $ 21,991 | ||
Shares issued under share-based schemes | 10 | 13 | |||
Impact of change in presentation currency | (4) | ||||
Balance at end of period | 19,307 | $ 25,066 | 19,669 | ||
Options outstanding under save as you earn schemes | |||||
Number of shares to subscribe for | Options | 4,000,000 | 2,000,000 | |||
Share capital | |||||
Disclosure of classes of share capital | |||||
Balance at beginning of period | 172 | $ 166 | 166 | ||
Impact of change in presentation currency | (1) | 6 | |||
Balance at end of period | 172 | 165 | 172 | ||
Share premium | |||||
Disclosure of classes of share capital | |||||
Balance at beginning of period | 2,625 | 2,502 | 2,502 | ||
Shares issued under share-based schemes | 10 | 13 | 22 | ||
Impact of change in presentation currency | (3) | 101 | |||
Balance at end of period | $ 2,635 | $ 2,512 | $ 2,625 | ||
SAYE options | |||||
Options outstanding under save as you earn schemes | |||||
Number of shares to subscribe for | Options | 2,197,782 | 3,805,447 | |||
SAYE options | Minimum | |||||
Options outstanding under save as you earn schemes | |||||
Share price range | £ / shares | £ 11.04 | £ 11.04 | |||
SAYE options | Maximum | |||||
Options outstanding under save as you earn schemes | |||||
Share price range | £ / shares | £ 14.55 | £ 14.55 |
Share capital, share premium _4
Share capital, share premium and own shares - Transactions in Prudential plc shares (Details) - USD ($) shares in Millions, $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Transactions in Prudential plc shares | ||
Cost of own shares deducted from retained earnings | $ 237 | $ 183 |
Shares held in trust for employee incentive plans | ||
Transactions in Prudential plc shares | ||
Number of shares held | 11.5 | 8.4 |
Market value of shares held | $ 173 | $ 161 |
Number of shares purchased | 5.8 | 3.7 |
Cost of shares purchased | $ 75.2 | $ 73.8 |
Maximum | Shares held in trust for employee incentive plans | ||
Transactions in Prudential plc shares | ||
Number of shares held | 11.5 |
Gain (loss) attaching to corp_3
Gain (loss) attaching to corporate transactions (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Gain (loss) attaching to corporate transactions | ||
Gain arising on reinsurance of Jackson's in-force fixed and fixed indexed annuity business | $ 846 | |
Gain on disposals | $ 270 | |
Other transactions | (253) | |
Total gain (loss) attaching to corporate transactions | 846 | $ 17 |
ICICI Prudential Life Insurance Company Limited | ||
Gain (loss) attaching to corporate transactions | ||
Percentage of stake sold | 4.00% | |
US insurance operations | Athene Life Re Ltd | In-force fixed and fixed indexed annuity | ||
Gain (loss) attaching to corporate transactions | ||
Value of reinsured portfolio | 27,600 | |
Premium paid, net of ceding commission | 28,900 | |
Reduction in shareholder's equity for reinsurance transaction | $ 1,100 |
Post balance sheet events (Deta
Post balance sheet events (Details) - Completion of equity investment - Athene Life Re Ltd - US insurance operations - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jul. 17, 2020 | |
Post balance sheet events | ||
Investment amount | $ 500 | |
Economic interest to be transferred (as a percent) | 11.10% | |
Voting interest to be transferred (as a percent) | 9.90% | |
Pro Forma | ||
Post balance sheet events | ||
Reduction in shareholder's equity for investment transaction, if the transaction had completed at balance sheet date | $ (550) | |
Impact on profit or loss for investment transaction, if the transaction had completed at balance sheet date | $ 0 |