Strategic report Introduction 1 2020 highlights timeline 2 Investment case 4 Business model 6 Chair’s statement 8 Section 172(1) statement 10 Chief Executive Officer’s review 11 Market overview 16 Our key performance indicators 18 Finance review 20 Operating review 36 Sustainability 44 Streamlined Energy and Carbon Reporting 68 Non-financial information statement 68 Risk management 69
We have a track record of delivering strong returns to shareholders, having distributed £1.2 billion in dividends over the past three years. This, together with our share price performance, has delivered an attractive total shareholder return.
We are transforming our technology and changing the way we work to increase the competitiveness of our business, with the aim of improving the quality of our earnings, with a greater proportion coming from current-year business.
Notes: 1. Includes Direct Line, Churchill, Privilege, Darwin and partner brands: RBS, NatWest. © Ipsos MORI 2021, Financial Research Survey (FRS), six months ended January 2021. c. 14,000 adults (aged 16+) surveyed across Great Britain. Interviews were conducted online and by telephone, and weighted to reflect the overall profile of the adult population.
A win for society and the planet because our long-term success is intrinsically linked to the success of the community and environment around us.
Dividend and capital management The Group’s solvency capital ratio as at 31 December 2020, prior to any proposed dividends or incremental capital returns, was 213%.The Board has recommended a final dividend of 14.7 pence per share, an increase of 2.1% on the special interim dividend of 14.4 pence announced with our interim results, which reflected a full catch up of the cancelled 2019 final dividend.
More information on the Group’s remuneration policy and share awards is disclosed in the Directors’ remuneration report on pages 113 to 139.
At a headline level we delivered operating profit of £522.1 million, a combined operating ratio of 91.0% and a return on tangible equity of 19.9%, well ahead of our target of at least 15% over the long term. Operating profit of £522.1 million was £24.8 million lower than 2019 (£546.9 million) due to higher major weather costs of £43.0 million (2019: £6.0 million) and reduced prior-year reserve releases, partially offset by improved current-year profitability.
As we transform the business both in terms of the technology we use and our agility, we are changing the way the organisation works. We have found through 2020 that we can create and protect the culture of the Group, even with almost everyone working from home, and our regular people surveys tell us that our people want the personal flexibility that homeworking offers. Our intention, therefore, is to take this opportunity to change the way we use our premises in future so they support collaboration, training and teamwork rather than being an everyday place of work for most people.
– Being well placed for customers and at a competitive advantage to other players in a post FCA pricing practices market.
– Car technology continues to evolve rapidly. Having the largest owned repair network of any UK insurer gives us the opportunity to develop further commercial insights.
Direct own brands gross written premium was stable with growth across Home and Commercial direct own brands and Green Flag Rescue offset by lower average premiums in Motor. Overall gross written premium reduced by 0.7% due to falling partnership and Travel premium.
4. Estimates based on the Group’s Solvency II partial internal model.
Direct own brands 163.3 149.4 NIG and other 404.5 379.5 Commercial 567.8 528.9 Total gross written premium 3,180.4 3,203.1
2. IT and other operating expenses include professional fees and property costs.
Note: 1. Other income includes mainly fee income from insurance intermediary services.
Effective corporation tax rate The effective tax rate for 2020 was 18.7% (2019: 17.6%), which was slightly lower than the standard UK corporation tax rate of 19.0% (2019: 19.0%) driven primarily by tax relief for the Tier 1 coupon payments partly offset by disallowable expenses. The effective rate is higher than 2019, which benefited from the release of an overprovision from a prior year.
Notes: 1. The PPO real discount rate used is an actuarial judgement which is reviewed annually based on the economic outlook for wage inflation relative to the PRA discount rate curve.
Tier 1 capital before foreseeable distributions 1.84 1.80 Foreseeable dividend and share buyback (0.30) (0.35) Tier 1 capital – unrestricted 1.54 1.45 Tier 1 capital – restricted 0.38 0.37 Tier 1 capital 1.92 1.82 Tier 2 capital – subordinated debt 0.53 0.26 Tier 3 capital – deferred tax 0.11 0.09 Total own funds 2.56 2.17
The Covid-19 pandemic has led to the largest shock to the UK economy on record and the outlook remains unusually uncertain at year end 2020. Much depends on the evolution of the pandemic and measures taken to protect public health, as well as the transition to the new trading arrangements between the EU and the UK. In addition to concerns about general indicators of economic health, such as falls in gross domestic product, rising unemployment and rising public sector debt ratios, the Group’s reserves are exposed to the risk of changes in claims development patterns and claims inflation resulting from the pandemic. Changes in claims frequency present greater uncertainty for the unearned part of the business, whereas uncertainty over the level of claims severity has a greater impact on the earned claims reserves. Claims severity risk is particularly acute with respect to care costs for large bodily injury claims and car repair costs due to potential supply chain interruptions. The Group has therefore developed additional claims inflation scenarios, which look at 100 basis point changes in the claims inflation assumed in the actuarial best estimate over the next two years and these can be found in the table below.
Overview In 2020, the motor market experienced disruption driven by Covid-19 lockdowns, with reductions in claims frequency and lower new business shopping. These trends were reflected in lower average premiums.
Notes: 1. Average incepted written premium excluding IPT for Home own brands for year end 31 December 2020.
Total in-force policies and gross written premium reduced by 3.7% and 4.2% respectively, reflecting lower premium from Travel partly offset by higher premium in Green Flag.
Meeting our customers’ travel needs We have invested in and enhanced our digital platform, which has enabled us to deliver for our travel customers. This year we significantly accelerated our digital capabilities, and quickly mobilised an online claims process after the national lockdown. This new online forms and prioritisation process has helped us handle claims up to five times faster. The Travel team have been exceptionally busy with travel claims over the pandemic; during this period, we received 87,500 Covid-19 related travel claims and have brought home over 900 customers who were stranded overseas. To cope with the increased demand, we retrained over 500 of our colleagues to understand the changes in travel guidance as the pandemic progressed.
Other personal lines combined operating ratio increased by 14.4 percentage points to 118.5%. The increase is entirely due to Travel where the Group has incurred increased claims handling costs supporting customers throughout 2020, has taken a cautious stance in its reserving and has incurred additional commission payments, particularly on packaged bank account business.
Direct NIG & other 42 Direct Line Group Annual Report and Accounts 2020
NIG and other in-force policy numbers were 7.3% higher and gross written premium grew by 6.6% to £404.5 million. This reflected growth across all categories as the book continued to benefit from improvements arising from the re-platforming of the products on its awardwinning electronic trading platform and improvements in Van insurance pricing.
Gender Equality Achieve gender equality and empower all women and girls.
Social Mobility Action Plan SoMo group With the support of our active Social Mobility Employee Network, we have backed up our decision to sign the Social Mobility Pledge by working towards creating our own bespoke Social Mobility Action Plan. This plan provides a candid assessment of our current approach and how we can improve.
Teach First We’ve partnered with Teach First, who recruit, train and place teachers in schools in some of the most disadvantaged communities in England. Our funding will support the training and development of 17 teachers each year, who will go on to reach over 2,000 pupils. Colleagues will also be hosting work experience placements at our offices.
We have always published our Scope 1 and 2 emissions, but this year we wanted to go further by breaking down our emissions across our offices and our accident repair centres and by publishing our first TCFD report (see page 62).
Electricity 16,669,842 Gas 21,699,765 Total 38,369,607 58 Direct Line Group Annual Report and Accounts 2020
– The Second Line of Defence is the Risk Function which is responsible for the design and implementation of the Enterprise Risk Management Strategy and Framework, and provides proportionate oversight of, and challenge to, the business’s handling of risks, events and management actions.
We hold an investment property portfolio, and all assets in this portfolio must have an Energy Performance Certificate of ‘D’ or better, or a plan and funds in place for achieving that level. This is one level above the Government-mandated efficiency level of ‘E’. The property portfolio also has a tailored set of 2022 ESG targets covering, amongst other things, carbon, energy, water and waste.
Our 2020 emissions data can be found on page 61, which reflects reduced energy usage in 2020 due to the impact of Covid-19. This data includes our intensity metric of emissions per £ million annually of net earned premium. This is a measure of how efficiently we provide our insurance products and allows us to compare our performance year-on-year and against other insurance companies.
Future Group activity The Group has now set itself new priorities against the TCFD recommendations.
The Group plans to maintain strong Board oversight, ensuring the Planet pillar, as part of its sustainability strategy, continues to take a strategic lead. Setting the Board’s strategic debates in a climate change context will be supported by periodic debates on climate-related risks and opportunities, as well as inviting thought leaders to engage with Board meetings.
With significant strategic investment we continue actively to strengthen our change implementation controls to further mitigate potential impacts from risk events.
Strategic risk is influenced by internal and external developments such as the Covid-19 pandemic, Brexit and the FCA’s Pricing Practices Review. In addition, the adoption of agile ways of working is designed to allow the business to more quickly identify and react to risks to the implementation of the Group’s strategic goals.
Potential effects of Brexit The Brexit transition period following the UK leaving the EU ended at 11pm on 31 December 2020. A trade and co-operation agreement had been agreed, tariffs on goods entering the UK from the EU were avoided and the more severe risks identified in connection with a so-called ‘no-deal’ Brexit have not materialised.
Some of these risks could still occur to some degree and we continue to monitor developments.
– mitigate the impact of emerging risks which could impact the delivery of the Group’s Strategic Plan.
The most notable emerging risks are outlined on the following page.
Annual General Meeting Direct Line Insurance Group plc’s 2021 AGM will be held on Thursday 13 May 2021 at 11.00 am. Full details including the resolutions to be proposed to our shareholders can be found in the Notice of AGM which will be made available on our corporate website.
Biography The Board benefits from Tim’s many years of experience as a finance director in the insurance industry, his detailed knowledge of capital markets and his track record of successfully leading finance transformation programmes.
Current external appointments – Non-Executive Director of William Hill plc – Non-Executive Director of Rothesay Life plc – Non-Executive Director of Welsh Water – Honorary Treasurer of the Disasters
Corporate Governance Statement This Corporate Governance Statement explains key features of Direct Line Insurance Group plc’s (the “Company”) governance structure and how it measures itself against the standards set out in the UK Corporate Governance Code 2018 (the “Code”). The Code set by the Financial Reporting Council (the “FRC”) applied to the financial year ended 31 December 2020. For more information about the Code, visit the FRC’s website at www.frc.org.uk. This Corporate Governance Statement fulfils the requirements of the FCA’s Disclosure Guidance and Transparency Rule 7.2 (“DTR 7.2”). For full details refer to the Directors’ report on pages 140 to 144.
– Setting financial plans, annual budgets and key performance indicators and monitoring the Group’s results against them; – Considering the Group’s reserving position, approving the Solvency II narrative reports and approving financial results for publication; – Approving reinsurance programmes and renewals; – Approving the issuance of £260 million of Tier 2 debt in June 2020; – Reviewing broker reports on the Group, alongside feedback from investor meetings; and – In March 2020, the Board considered it prudent to cancel the share buyback programme and, in April 2020, to cancel the 2019 final dividend as a result of the volatile conditions arising from Covid-19. The Board subsequently declared a 2020 interim dividend of 7.4 pence alongside a further special dividend of 14.4 pence to replace the cancelled 2019 final dividend.
Corporate governance report continued 88 Direct Line Group Annual Report and Accounts 2020
Matters Reserved for the Board and Board Committees’ terms of reference
Beyond the Board and into Executive Committee and the wider workforce, we are pleased with the progress that has been made in embedding principles and practices to promote diversity and to champion the benefits of a diverse and inclusive workforce.
Step 2: The Chair interviewed members of the Board and Senior Management team.
The Board, with the assistance of the Board Risk Committee and the Audit Committee as appropriate, monitored the Company’s risk management and internal control systems that have been in place throughout the year under review, and reviewed their effectiveness. The monitoring and review covered all material controls, including financial, operational and compliance controls. The Board and its Committees are overseeing the programme of activity to upgrade and better integrate the major IT systems within the Group’s technology infrastructure, including focusing on developing future capability for both customers and our people and monitoring risks relating to IT systems’ stability, cyber security and the internal control environment.
Actuarial and Finance Transformation During the year, the Committee continued to receive reports on progress against key milestones in the Actuarial and Finance Transformation programme. Updates included in respect of the migration of the general ledger, which was completed successfully in May 2020, an overview of the technology solution design for IFRS 17 and progress on accounting policy choices. The Committee also reviewed the findings of a third party assurance review and approved the budget for the programme.
Covid-19 At the heart of the Group’s strategy is the vision to become a force for good and so it has been a key focus for the Group to support its customers, people and wider society through the Covid-19 pandemic. The Committee was supportive of the Group’s move to homeworking to protect the lives of its people and their families, to maintain the Group’s ability to service its customers, to safeguard its business for the longer term and to support the Government in protecting the country. The Committee took a proactive approach in monitoring the impacts and risk of the Covid-19 pandemic.
During the period, the Group continued to work on its proactive operational resilience programme aligned to the expectations set by the Bank of England, PRA and FCA, aiming to address business process, organisational, third-party and technological resilience as well as prioritising the prevention of, and recovery from, financial and other shocks to the business. Through receipt of regular updates, the Committee challenged and supported management on the key indicators and management information which would be used to provide the Board with oversight of the Group’s operational resilience, the impact tolerances to be set and the suitable strategies, processes and systems for identifying important business services.
Financial risk As an insurance company, Direct Line Group understands the importance of managing climate-related risk and recognises that climate change could pose material long-term financial impacts to the business. During the year, the Committee received regular climate-related updates as part of the CRO’s report and examined and monitored management’s 2020 and 2021 plans to protect the Group from climate-related financial risks and address the PRA’s climate change expectations. The Committee recognised the progress that had been made, including the development of a governance framework and workstreams to manage climate-related risks and the publication of the TCFD Report in December 2020. As part of a strategy session in October 2020, the Committee also considered the potential financial risks and impacts from climate change, including an external view on regulatory expectations in the context of the sustainability agenda. Further details on the risks due to climate change faced by the Group can be found on pages 58 and 74.
Diversity and inclusion The Board believes that an effective Board with a broad strategic perspective embraces a diversity of gender, race, skills and experience, as well as of regional, socio-economic, educational and professional backgrounds, amongst other differences. The individual experience of each Director is recognised and forms a valuable part of the decisionmaking process at Board level. The annual evaluation of the Board considers its composition and diversity.
included access, affordability and data availability. The Committee acknowledged that action to reduce social exclusion would be explored alongside the Group’s response to the FCA’s Market Study on General Insurance Pricing Practices.
Committee evaluation During the year, an internal evaluation of the effectiveness of the Committee was conducted as part of the wider review of the Board and the Board Committees by the Chair of the Board. The review found that the Committee functions effectively and that issues are dealt with in a thoughtful and rigorous manner. The Committee’s terms of reference can be found on the corporate website: www.directlinegroup.co.uk/en/who-we-are/governance/ board-committees.
The Committee would be mindful of the PRA’s request that insurers consider the need to protect policyholders and “maintain safety and soundness” when making decisions on variable remuneration.
Performance and incentive outcomes for 2020 During 2020, the management team has worked extremely hard to launch the refocused strategy and is proud of the Group’s performance in the past year.
Notes: 1. Mark Gregory joined the Committee on 9 May 2019 and was appointed as Chair of the Committee with effect from 26 October 2020. 2. Mike Biggs stepped down as Chair of the Board with effect from 4 August 2020. 3. Danuta Gray succeeded Mike Biggs as Chair of the Board with effect from 4 August 2020. 4. Richard Ward joined the Committee with effect from 1 January 2021.
Alignment to Provision 40 of the Corporate Governance Code The following table summarises how the Remuneration Committee has addressed the factors set out in Provision 40 of the 2018 UK Corporate Governance Code.
– Guides are accessible explaining how each incentive plan operates via the employee portal to ensure full understanding.
3. Annual bonus – includes amounts earned for performance during the year but deferred for three years under the DAIP. For more information, see page 133. These deferred awards are normally subject to continuous employment. However, awards remain subject to malus and clawback.
Annual Incentive Plan outcomes for 2020 (Audited) The chart illustrates the final assessment of the level of achievement under the AIP and total outcome approved by the Committee.
Financial element (55% weighting) The financial performance measure is profit before tax. The Committee established threshold and maximum performance levels at the start of the year and did not adjust the targets during the year. In the table below, we have disclosed the target set for profit before tax performance.
Leadership effectiveness & succession Enable the transformation of the Group by bringing about a shift in leadership style. Ensure there is good succession cover and that we are building high-quality talent pipelines of future leaders
The 2020 single remuneration figure includes the value of the 2017 TSR elements (for which the performance period ended in November 2020 for Penny James) and the awards vested shortly after. Details of the targets and performance achieved are set out in the table below (with the March and August 2017 outcomes only relating to former Directors).
As there was a change of CEO in 2019, the 2019 pay ratios were calculated based on a “hybrid” single figure of remuneration for the two CEOs during the year, as required by the Regulations. This means that the 2019 and 2020 ratios are not directly comparable. Nevertheless, the small increase in the pay ratios from 2019 to 2020 is partly attributable to the increase in the CEO’s AIP and LTIP outcomes for 2020. This increase is partially offset by an increase in the total pay and benefits of employees, primarily as a result of the increase in the Group’s minimum salary level in April 2020 and broader annual salary increases, as well as an increase in bonus outcomes (consistent with the CEO’s AIP outcome).
LTIP awards granted during 2020 (Audited) The table below shows awards granted under the LTIP to Executive Directors in 2020 in the form of nil-cost options.
– Executive Directors receive a benefits package generally set by reference to market practice in companies of a similar size and complexity. Benefits currently provided include a Company car, use of a car or car allowance, private medical insurance, life insurance, health screening, and income protection
– Awards under the LTIP may be made at various times during the financial year – Executive Directors will be subject to an additional two-year holding period following the three-year vesting period, during which time awards may not normally be exercised or released – During the additional holding period the awards will continue to accrue dividends. Following the holding period awards will cease to accrue dividends if not exercised
The Board of Directors present their report for the financial year ended 31 December 2020 as required by the Companies Act 2006.
Disclosure of information required by Disclosure Guidance and Transparency Rule 7.2 The FCA’s Disclosure Guidance and Transparency Rule 7.2 require a corporate governance statement in the Directors’ report to include certain information. You can find information that fulfils the corporate governance statement’s requirements in this Directors’ report, the Corporate Governance report, the Committee reports and the Directors’ Remuneration Report, all of which is incorporated in the Directors’ report by reference.
The final dividend resolution provides that the Board may cancel the dividend and, therefore, payment of the dividend at any time before payment, if it considers it necessary to do so for regulatory capital purposes. You can find detailed explanations about this in the Notice of AGM 2021.
How the scope of our audit responded to the key audit matter We have obtained an understanding and tested the relevant control related to the annual meeting with management’s external valuation expert where a review and challenge of the assumptions and methodologies used in determining the fair value is performed. This relevant control mitigates the risk over the valuation of investment properties.
14. Matters on which we are required to report by exception 14.1 Adequacy of explanations received and accounting records Under the Companies Act 2006 we are required to report to you if, in our opinion: – we have not received all the information and explanations we require for our audit; or – adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or – the Parent Company financial statements are not in agreement with the accounting records and returns.
Amendments to IAS 1 and IAS 8: ‘Definition of Material’, clarify and align the definition of "material" and provide guidance to help improve consistency in the application of that concept whenever it is used in IFRS Standards.
HTM or loans and receivables If there is objective evidence that an impairment loss on a financial asset or group of financial assets classified as HTM or loans and receivables has been incurred, the Group measures the amount of the loss as the difference between the carrying amount of the asset or group of assets and the present value of estimated future cash flows from the asset or group of assets, discounted at the effective interest rate of the instrument at initial recognition.
Insurance receivables Insurance receivables comprise outstanding insurance premiums where the policyholders have elected to pay in instalments or amounts due from third parties where they have collected or are due to collect the money from the policyholder.
IFRS 17 was issued by the IASB in May 2017 to replace IFRS 4 ‘Insurance Contracts’ and is effective for reporting periods beginning on or after 1 January 2023, with comparative figures required. IFRS 17 is a comprehensive new accounting standard for all insurance contracts covering recognition and measurement, presentation and disclosure. The overall objective of IFRS 17 is to provide an accounting model for insurance contracts that is more useful and consistent for insurers and to replace the requirements of IFRS 4 that allowed insurers to apply grandfathering of previous local accounting policies.
Other risks include: – reinsurance concentration risk – the concentration of credit exposure to any given counterparty; – reinsurance capacity being reduced and/or withdrawn; – underwriting risk appetite and reinsurance contract terms not being aligned; – reinsurance contract terms being inappropriate or ineffective resulting in classes or types of business not being appropriately reinsured; – non-adherence to the reinsurance policy terms and conditions, in terms of both policy management and claims not being handled within the reinsurance contract terms and conditions, or paid on an ex-gratia basis, resulting in reinsurance recoveries not being made in full; – inappropriate or inaccurate management information and/or modelling being used to determine the value for money and purchasing of reinsurance (including aggregate modelling); and
Reinsurance risk This is the risk of inappropriate selection and/or placement of reinsurance arrangements, with either individual or multiple reinsurers, which renders the transfer of insurance risk to the reinsurer(s) inappropriate and/or ineffective.
The Group also has subordinated Tier 2 notes with fixed coupon rates with a nominal value of £260 million that were issued on 5 June 2020 and perpetual Tier 1 notes with fixed coupon rates with a nominal value of £350 million that were issued on 7 December 2017.
The market value of the Group's financial investments with fixed coupons is affected by the movement of interest rates. For the majority of investments in US dollar and Euro corporate bonds, the Group hedges its exposure to US dollar and Euro interest rate risk using swaps, excluding £361.8 million of US dollar short duration high yield bonds (2019: £398.9 million), £99.9 million of US dollar subordinated financial debt and £71.4 million of Euro subordinated financial debt (2019: £111.4 million US dollar and £64.7 million Euro) and £58.7 million short duration Euro credit (2019: £194.3 million).
The Group is exposed to the following interest rate benchmarks within its hedging relationships: GBP LIBOR, USD LIBOR and EURIBOR. The first two are subject to interest rate benchmark reform. The hedged items include issued sterling fixed rate subordinated debt (which is no longer treated as designated under IAS 39) and holdings of US dollar and Euro denominated fixed rate debt securities.
Technology and infrastructure risk This is the risk that information or services are unavailable because of compromised, unstable or inadequately performing systems, all of which impact customers.
Derivative gains / (losses): Net gains / (losses) on foreign exchange forward contracts 85.5 (96.5) (3.4) (20.4)
On 3 March 2021, the Chancellor of the Exchequer announced that the rate of UK corporation tax will increase to 25% from 1 April 2023. This is not reflected in the figures above as it was not substantively enacted at the balance sheet date, however the effect is not expected to be material.
Notes: 1. Disposals and write-off include fully amortised intangible assets no longer utilised by the Group in its operating activities. 2. Impairment losses relate to capitalised software development costs for ongoing IT projects primarily relating to development of new systems.
The recoverable amounts of all CGUs were based on the value-in-use test, using the Group’s strategic plan. The long-term growth rates have been based on gross domestic product rates adjusted for inflation. The risk discount rates incorporate observable market long-term government bond yields and average industry betas adjusted for an appropriate risk premium based on independent analysis.
Note: 1. Impairment provision relates to reinsurance debtors, allowing for the risk that reinsurance assets may not be collected, or where the reinsurer’s credit rating has been significantly downgraded and it may have difficulty in meeting its obligations.
Notes: 1. The liquidity fund is an investment in an open-ended fund incorporated in the Republic of Ireland which targets capital stability and income in the UK. It is invested in short-term fixed income and variable rate securities (such as treasury bills) listed or traded on one or more recognised exchanges.
Notes: 1. The shares have full voting dividend and capital distribution rights (including wind-up) attached to them; these do not confer any rights of redemption. 2. On 3 March 2020, the Group announced a share buyback of Ordinary Shares for an aggregate purchase price of £150 million. On 19 March 2020 the buyback programme was cancelled, given the uncertainty in the capital markets at the time driven by the rapidly emerging Covid-19 pandemic. At the time of cancellation, the Group had repurchased 10,448,395 Ordinary Shares for an aggregate consideration of £30,014,567 as reflected in retained earnings. The shares were subsequently cancelled giving rise to a capital redemption reserve of an equivalent amount as required by the Companies Act 2006.
31. Other reserves Movements in the AFS investments revaluation reserve £m £m
The weighted average share price for awards exercised during the year ended 31 December 2020 was £2.86 (2019: £3.29).
Restructuring provisions include balances held in respect of various property dilapidations and a number of restructuring programmes within the Group, including office site closures and staff restructuring.
42. Fair value Fair value hierarchy Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique.
Share-based payments 7.6 7.9 44. Post balance sheet event On 10 February 2021, U K Insurance Limited signed a contract in relation to its Bromley site to surrender the current lease and DL Insurance Services Limited signed a contract to purchase the head lease. The cost of surrendering the lease was £91 million and the value of the fixed asset capitalised will be in the region of £17 million. This will reduce the Group’s Solvency II own funds by around £85 million.
The Company has taken advantage of the following FRS 101 disclosure exemptions: – FRS 101.8 (d): the requirements of IFRS 7 ‘Financial Instruments: Disclosures’ to make disclosures about financial instruments; – FRS 101.8 (e): the disclosure requirements of IFRS 13 ‘Fair Value Measurement’; – FRS 101.8 (g): the requirements of paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 111 and 134 – 136 of IAS 1 ‘Presentation of
Amortised cost Assets which are held to collect contractual cash flows, and with contractual terms which give rise to cash flows which are solely payments of principal and interest on the principal amount outstanding, are classified as financial assets held at amortised cost. The Company initially measures financial assets held at amortised cost at fair value plus transaction costs. They are subsequently measured using the effective interest method where applicable and are subject to impairment. Gains and losses are recognised in the income statement when the asset is derecognised, modified or impaired.
Impairment losses, including the expected credit allowance, are recognised in the income statement and the carrying amount of the financial asset or group of financial assets is reduced by establishing an allowance for the impairment
The income earned from the investment portfolio, recognised through the income statement during the period (excluding unrealised and realised gains and losses, impairments and fair value adjustments) divided by the average assets under management (“AUM”). The average AUM derives from the period’s opening and closing balances for the total Group. (See page 227 alternative performance measures.)
This is an index that measures the willingness of customers to recommend products or services to others. It is used to gauge customers' overall experience with a product or service, and customers' loyalty to a brand.
This is adjusted profit after tax divided by the Group’s average shareholders’ equity less goodwill and other intangible assets. Profit after tax is adjusted to exclude restructuring and one-off costs and to include the Tier 1 coupon payments. It is stated after charging tax using the UK standard rate of 19%. (See page 228 alternative performance measures.)