PGH (LCA) Limited (finance company)2 UK Ordinary shares of £1 PGH (LCB) Limited (finance company)2 UK Ordinary shares of £1 PGH (LC1) Limited (finance company) UK Ordinary shares of £1 and
Preference shares of £1 PGH (MC2) Limited (finance company) UK Ordinary shares of £1 and
Preference shares of £1 PGH (TC1) Limited (holding company)2 UK ‘A’ ordinary shares of £1 and
Preference shares of £1 Pearl Group Holdings (No. 1) Limited (finance company) UK Ordinary shares of £0.05 Pearl Group Holdings (No. 2) Limited (holding company) UK Ordinary shares of £1 Pearl Life Holdings Limited (holding company) UK Ordinary shares of £1 Pearl Group Services Limited (management services company) UK Ordinary shares of £1 Pearl Group Management Services Limited (management services company) UK Ordinary shares of £1 Phoenix Life Holdings Limited (holding company) UK Ordinary shares of £1 UK Commercial Property Trust Limited (property fund) Guernsey 57.7% of ordinary shares of £0.25 1 The Group completed the sale of its entire interest in BAGI on 18 March 2014 and accordingly its assets and liabilities were classified as held for sale as at 31 December 2013.
2 These subsidiary undertakings are directly owned by Phoenix Group Holdings 195 PHOENIX GROUP HOLDINGS ANNUAL REPORT AND ACCOUNTS 2013
On 25 March 2014, the Group and Standard Life Investments signed a disposal agreement under which Standard Life Investments agreed to acquire the entire issued share capital of Ignis Asset Management, in return for headline consideration of £390 million. The consideration will be payable in cash on completion subject to certain adjustments in relation to the regulatory capital resources of Ignis Asset Management at completion.
The divested businesses represent the entire Ignis Asset Management reportable segment disclosed in note 5. The net assets included within the statement of consolidated financial position as at 31 December 2013, in respect of Ignis Asset Management, were £241 million. The contribution of Ignis Asset Management to Group IFRS operating earnings before tax and Group IFRS earnings after tax for the year ended 31 December 2013, was £49 million and £37 million respectively.
Completion of the divestment is subject to the Company obtaining regulatory approval and the divestment is anticipated to complete by the end of the second quarter of 2014.
On 25 March 2014, the Board recommended a final dividend of 26.7p per share (2012: 26.7p per share) for the year ended 31 December 2013. Payment of the final dividend is subject to compliance with the processes set out in the Group’s main credit facilities and shareholder approval at the AGM. The cost of this dividend has not been recognised as a liability in the financial statements for 2013 and will be charged to the statement of changes in equity in 2014.
In 2013, the Group agreed the sale of its entire interest in BAGI, which holds the Group’s residual, non-core general insurance business with liabilities totalling £38 million (net of reinsurance), to National Indemnity Company. The sale was completed on 18 March 2014 following regulatory approval, giving rise to a marginally positive impact on the Group’s MCEV and IFRS results which will be recognised in 2014.
As part of the Budget announced on 19 March 2014, the Government outlined proposals that would remove current restrictions on how people access their pension savings upon retirement. Whilst the guidance remains draft, such proposals have the potential to impact the levels of future new annuity business to be written by the Group.
The proposals are yet to be enacted in legislation, and therefore their impact remains uncertain. No adjustments have been made to the IFRS financial statements in this regard.
H Davies C Bannister J McConville A Barbour R P Azria D Barnes I Cormack T Cross Brown M Dale I Hudson D Woods
St Helier, Jersey 25 March 2014 196 PHOENIX GROUP HOLDINGS ANNUAL REPORT AND ACCOUNTS 2013
Total comprehensive income for the year attributable to owners 92 55
STATEMENT OF FINANCIAL POSITION As at 31 December 2013 £m £m
EQUITY AND LIABILITIES Equity attributable to owners Share capital E – – Share premium 1,095 982 Other reserves – 5 Foreign currency translation reserve 89 89 Retained earnings 257 154
Other amounts due to Group entities R 118 38 Accruals and deferred income H 5 –
Collective investment schemes J 6 – Loans and receivables K 244 232
Cash flows from operating activities Cash generated by operations M 75 3
STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2012
Dividends paid on ordinary shares – (73) – – – (73) Shares issued in lieu of dividends – 1 – – – 1 Credit to equity for equity-settled share-based payments (note P) – – – – 5 5
(B) ACCOUNTING POLICIES The accounting policies in the separate financial statements are the same as those presented in notes 1(a) to 1(ee) to the consolidated financial statements on pages 109 to 119, except for the following: (i) Investments in group entities Investments are carried in the statement of financial position at cost less impairment.
Predominantly, all revenues from external customers is sourced in the UK.
Employee costs1 2 2 Professional fees 7 1 Office costs 1 –
The holders of ordinary shares are entitled to one vote per share on matters to be voted on by owners and to receive such dividends, if any, as may be declared by the Board of Directors in its discretion out of legally available profits. Movements in issued share capital during the year: Shares in issue at 1 January 174,587,148 14,174 Placement and open offer ordinary shares 50,000,000 4,224 Other ordinary shares issued in the period 231,153 20 Shares in issue at 31 December 224,818,301 18,418
Shares in issue at 1 January 174,472,815 14,165 Ordinary shares issued for scrip dividend 114,333 9 Shares in issue at 31 December 174,587,148 14,174 202 PHOENIX GROUP HOLDINGS ANNUAL REPORT AND ACCOUNTS 2013
Details of shares held by the Phoenix Group Holdings Employee Benefit Trust and Phoenix Life Assurance Limited (subsidiaries of the Company) are included in note 18 to the consolidated financial statements.
Warrants over shares in Phoenix Group Holdings 5 3 5 3
The Company has in issue a number of warrants over its ordinary shares. Details of these warrants are included in note 24.2 to the consolidated financial statements.
On 25 April 2013, the Company received an £8 million dividend from Opal Reassurance Limited in the form of preference shares in the company.
All investments are categorised as Level 1 financial instruments. Details of the factors considered in determination of the fair value are included in note 34.2.1 to the consolidated financial statements.
Loans due from PGH (LCA) Limited and PGH (LCB) Limited 148 161 246 223 Loans due from PGH (MC1) Limited and PGH (MC2) Limited 84 70 186 149 Loans due from other Group Entities 12 1 1 1
On 22 March 2010, the Company subscribed for £325 million of Eurobonds which were issued equally by PGH (LCA) Limited and PGH (LCB) Limited. On 23 March 2010, the Eurobonds were listed on the Channel Islands Stock Exchange. Interest accrues on these Eurobonds at a rate of LIBOR plus a margin of 2.5% and the final maturity date to 30 June 2025. The Eurobonds were initially recognised at fair value and are accreted to par over the period to 2025. At 31 December, £143.7 million was due (2012: £128 million).
On 22 April 2010, Pearl Group Holdings (No.1) Limited issued a balancing instrument under which notes with a principal of £75 million were issued to PGH. The notes have no fixed maturity date and are included in the Company’s financial statements at a nil value. PGH paid no consideration for the notes and has waived its right to receive a coupon on the notes.
All loans and receivables are categorised as Level 3 financial instruments. The fair value of loans and receivables with no external market is determined by internally developed discounted cash flow models using a risk adjusted discount rate corroborated with external market data where possible.
Bank and cash balances 1 16 Short-term deposits (including demand and time deposits) 8 –
Profit for the year before tax 92 55 Adjustments to reconcile profit for the year to cash flows from operating activities
Net (increase)/decrease in investment assets (6) 1 Net increase in working capital 90 3 Cash generated by operations 75 3 205 PHOENIX GROUP HOLDINGS ANNUAL REPORT AND ACCOUNTS 2013
PARENT COMPANY ACCOUNTS CONTINUED N. RECONCILIATIONS BETWEEN CONSOLIDATED EQUITY AND INCOME AND PARENT COMPANY EQUITY AND INCOME
Consolidated equity attributable to owners of the parent 1,909 1,658 Retained earnings relating to Group entities and consolidation adjustments (468) (428) Parent company equity attributable to owners 1,441 1,230
Consolidated comprehensive income for the year attributable to owners of the parent 141 72 Earnings of Group entities and consolidation adjustments (49) (17) Parent company comprehensive income for the year attributable to owners 92 55
O. CAPITAL AND RISK MANAGEMENT The Company’s capital comprises share capital and all reserves. At 31 December 2013, total capital was £1,441 million (2012: £1,230 million). The movement in capital in the year comprises the retained profit for the year of £92 million (2012: £55 million profit), proceeds of the equity raising net of associated fees and commission of £233 million (2012 £nil), payment of dividend of £120 million (2012: £72 million, net of £1 million of shares issued in lieu of dividend), and a credit to equity for equity-settled share-based payments of £6 million (2012: £5 million).
The primary operation of the Company is to manage its investment in subsidiaries. The Company’s other assets and liabilities mainly consist of receivables and borrowings from and to other Group entities.
−credit risk, arising from the default of the counterparty to a particular financial asset and is significantly reduced as assets are primarily inter-company receivables from other group entities.
The Company’s exposure to all these risks is monitored by the Directors, who agree policies for managing each of these risks on an ongoing basis.
P. SHARE-BASED PAYMENTS For detailed information on the long-term incentive plans, Save As You Earn schemes and deferred bonus share schemes refer to note 19 in the consolidated financial statements.
R. RELATED PARTY TRANSACTIONS The Company has related party transactions with Group entities and its key management personnel. Details of the total compensation of key management personnel, being those having authority and responsibility for planning, directing and controlling the activities of the Group, including the Executive and Non-Executive Directors, are included in note 42.
During the year ended 31 December 2013, the Company entered into the following transactions with Group entities: £m £m
Amounts due from related parties at the end of the year: £m £m
Loans due from Group entities 244 232 Other amounts due from Group entities 5 8
Loans due to Group entities 3 3 Other amounts due to Group entities 118 38
S. AUDITOR’S REMUNERATION Details of auditor’s remuneration, for Phoenix Group Holdings and its subsidiary undertakings, is included in note 11 to the consolidated financial statements.
OTHER INFORMATION PROPOSAL FOR PROFIT APPROPRIATION Profits for the period have been transferred to retained earnings. Dividends on ordinary shares of £120 million have been charged against share premium, as permitted by Cayman Companies law.
4 Includes repurchase loans of £1,789 million (2012: £1,683 million), policy loans of £13 million (2012: £16 million), other loans of £67 million (2012: £22 million), net derivatives of £211 million (2012: £647 million) and other investments of £807 million (2012: £839 million).
Participating non-supported £m Unit-linked £m Total £m 210 PHOENIX GROUP HOLDINGS ANNUAL REPORT AND ACCOUNTS 2013
Sovereign and supranational debt represented 45% of the debt portfolio in respect of shareholder exposure, or £5.1 billion, at 31 December 2013. The vast majority of the life companies’ exposure to sovereign and supranational debt holdings is to UK gilts.
The following table sets out a breakdown of the life companies’ sovereign and supranational debt security holdings by country: Analysis of sovereign and supranational debt security holdings by country
At 31 December 2013, the life companies had £4 million shareholder exposure to sovereign debt of the Peripheral Eurozone, defined as Portugal, Italy, Ireland, Greece and Spain. This exposure has remained at the same level since 31 December 2012.
ADDITIONAL LIFE COMPANY ASSET DISCLOSURES CONTINUED INDIRECT EXPOSURE The £2,564 million shareholder exposure to financial institution corporate debt comprised £1,653 million (2012: £1,445 million) bank debt and £911 million (2012: £1,110 million) non-bank debt.
The following table sets out a breakdown of the life companies’ corporate – other debt security holdings by country: Analysis of corporate – other debt security holdings by country
Participating non-supported £m Unit-linked £m Total £m 214 PHOENIX GROUP HOLDINGS ANNUAL REPORT AND ACCOUNTS 2013
CLIVE BANNISTER JAMES MCCONVILLE Group Chief Executive Officer Group Finance Director St Helier, Jersey 25 March 2014 218 PHOENIX GROUP HOLDINGS ANNUAL REPORT AND ACCOUNTS 2013
BASIS OF ACCOUNTING AND RESTRICTION ON USE Without modifying our opinion, we draw attention to pages 224 to 227 of the Phoenix Group MCEV supplementary information, which describe the basis of preparation. The Phoenix Group MCEV supplementary information is prepared to comply with the basis of preparation set out on pages 224 to 227. As a result, the Phoenix Group MCEV supplementary information may not be suitable for another purpose. This report, including the opinion, has been prepared for and only for the Group’s Directors as a body in accordance with our letter of engagement dated 15 June 2011 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
OTHER MATTERS Ernst & Young Accountants LLP have reported separately on the IFRS consolidated financial statements of Phoenix Group Holdings for the year ended 31 December 2013. The information contained in the Phoenix Group MCEV supplementary information should be read in conjunction with the IFRS consolidated financial statements.
Life MCEV operating earnings 401 360 Management services operating profit 32 28 Ignis Asset Management operating profit 49 43 Group costs (27) (25) Group MCEV operating earnings before tax 455 406 Economic variances on life business 138 24 Economic variances on non-life business (48) (6) Other non-operating variances on life business (35) 39 Non-recurring items on non-life business (61) (39) Finance costs attributable to owners (140) (123) Group MCEV earnings before tax 309 301 Tax on operating earnings (105) (99) Tax on non-operating earnings (42) – Total tax (147) (99) Group MCEV earnings after tax 162 202
Group MCEV earnings for the year after tax 162 202 Other comprehensive income Remeasurements and pension scheme contributions on defined benefit pension schemes (net of tax)
RECONCILIATION OF MOVEMENT IN EQUITY – GROUP MCEV BASIS For the year ended 31 December 2013 £m £m
Group net assets attributable to owners of the parent as reported under IFRS 1,909 1,658 Goodwill and other intangibles in accordance with IFRS removed (net of tax) (391) (431) Value of in-force business in accordance with IFRS removed (net of tax) (1,083) (1,234) Adjustments to IFRS reserving (144) (203) Tax adjustments 33 6 Revalue listed debt to market value 5 123 Fair value adjustments1 (4) 4 Eliminate after tax pension scheme surpluses (including IFRIC 14 adjustments)2 (210) (186) Other adjustments 6 8 MCEV net worth attributable to owners of the parent 121 (255) MCEV value of in-force business included (net of tax) as set out in note 2 2,257 2,377 Closing Group MCEV 2,378 2,122 1 Investments carried at amortised cost under IFRS are revalued at market value.
The Finance Act 2012 introduced new rules for the taxation of insurance companies, with effect from 1 January 2013. The new rules did not have a significant impact on the Group’s MCEV.
a) Net worth For the Group’s life companies, net worth is defined as the market value of shareholder funds plus the shareholders’ interest in surplus assets held in long-term business funds less the market value of any outstanding debt of the life companies.
Loans from the life companies to holding companies have been consolidated out such that they do not appear as an asset in the life company or as a liability in the holding company. This presentation has no impact on the overall MCEV but does affect the allocation of net assets between covered and non-covered business.
Present value of future profits (‘PVFP’) The PVFP represents the present value of profits attributable to shareholders arising from the in-force business. The PVFP is calculated by projecting and discounting using risk-free rates, with an allowance for liquidity premiums where appropriate.
Frictional cost of capital (‘COC’) COC is defined as the difference between the market value of shareholder-owned assets backing required capital and the present value of future releases of those assets allowing for future investment returns on that capital, investment expenses and taxes.
d) Taxation Full allowance has been made for the value of tax that would become payable on the transfer of surplus assets out of non-profit funds. This allowance reflects the projected pace of releases of surplus from non-profit funds that is not required to support with-profit funds.
The time value of options and guarantees used in the calculation of MCEV also allows for expected management and policyholder responses to the varying external economic conditions simulated by the economic scenario generators. Policyholder response has been modelled based on historical experience. Management actions have been set in accordance with each life company’s Principles and Practices of Financial Management.
Under IFRIC 14, an interpretation of IAS 19, pension funding contributions are considered to be a minimum funding requirement and, to the extent that the contributions payable would result in a surplus that would not be recoverable, a liability is recognised when the obligation arises. The IFRS IFRIC 14 adjustments are not reflected in the Group MCEV as the Group does not anticipate that its ultimate contributions into the pension schemes would result in an unrecoverable surplus.
h) Events after the reporting period As part of the Budget announced on 19 March 2014, the Government outlined proposals that would remove current restrictions on how people access their pension savings upon retirement. Whilst the guidance remains draft, such proposals have the potential to impact the levels of future new annuity business to be written by the Group.
On 25 March 2014, the Group and Standard Life Investments signed a disposal agreement under which Standard Life Investments agreed to acquire the entire issued share capital of Ignis Asset Management, in return for headline consideration of £390 million. The consideration will be payable in cash on completion, subject to certain adjustments in relation to the regulatory capital resources of Ignis Asset Management at completion.
The net worth of covered business of £802 million at 31 December 2013 (2012: £886 million) consists of £529 million of free surplus in excess of required capital (2012: £514 million).
1 Expected existing business contribution (reference rate) represents the expected return on the opening MCEV at the long-term risk-free rate at 2.42% (2012: 2.58%).
The risk-free rates assumed for a sample of terms were as follows: Term Gilt yield + 10 bps
(b) Liquidity premiums In October 2009, the CFO Forum published an amendment to the MCEV principles to reflect the inclusion of a liquidity premium. The changes affirm that the reference rate may include a liquidity premium over and above the risk-free yield curve for liabilities which are not liquid, given that the matching assets are able to be held to maturity.
The liabilities to which a liquidity premium is applied include immediate annuities, pensions policies with benefits defined as an annuity or inthe -money guaranteed annuity options. The liquidity premium is determined by reference to the yield on the bond portfolios held after allowing for credit risk by deducting margins for best estimate defaults and unexpected default risk premiums. The additional yield above risk-free rates implied by the calculated liquidity premium is as follows: Additional yield over risk-free rates 0.36% 0.60%
NOTES TO THE MCEV FINANCIAL STATEMENTS CONTINUED 6. ASSUMPTIONS CONTINUED INFLATION For purposes of the MCEV calculation, the rate of increase in the UK Retail Price Index (‘RPI’) as at 31 December 2013, was taken from the implied inflation curve at a term appropriate to the liabilities. The rate of increase in UK National Average Earnings inflation is assumed to be RPI plus 100 basis points as at 31 December 2013 (2012: RPI plus 100 basis points).
STOCHASTIC ECONOMIC ASSUMPTIONS The time value of options and guarantees is calculated using an economic scenario generator. The model is calibrated to market conditions as at 31 December 2013. The scenario generator and calibration are consistent with that used for realistic balance sheet reporting.
Best estimate levels of volatility are assumed for directly held property. The model implied volatility for 2013 is 15% (2012: 15%).
EXPENSES Each life company’s projected per policy expenses are based on existing management services agreements with the Group’s management service companies, adjusted to allow for additional costs incurred directly by the life companies, including, for example, regulatory fees and one-time expenses.
VALUATION OF DEBT AND NON-CONTROLLING INTERESTS The Group’s consolidated balance sheet as at 31 December 2013, includes Perpetual Reset Capital Securities with principal outstanding of £425 million (2012: £425 million) and subordinated debt with a face value of £200 million (2012: £200 million). These listed securities have been included within the MCEV at their market value quoted at the reporting date.
The table below summarises the value of these debt obligations without adjustment for internal holdings in the Perpetual Reset Capital Securities and the Pearl facility: Face value (including accrued interest)
Unlisted debt Pearl and Impala facilities 1,612 2,307 Royal London PIK notes and facility 121 116 231 PHOENIX GROUP HOLDINGS ANNUAL REPORT AND ACCOUNTS 2013
(2) 1% decrease in risk-free rates 11 91 (3) 1% increase in risk-free rates 7 (95) (4) 10% decrease in equity market values (41) (70) (5) 10% increase in equity market values 47 69 (6) 10% decrease in property market values (46) (48) (7) 10% increase in property market values 45 47 (8) 100 bps increase in credit spreads1 (143) (150) (9) 100 bps decrease in credit spreads1 148 175 (10) 25% increase in equity/property implied volatilities (7) (9) (11) 25% increase in swaption implied volatilities 6 (1) (12) 25% decrease in lapse rates and paid-up rates (25) (38) (13) 5% decrease in annuitant mortality (122) (148) (14) 5% decrease in non-annuitant mortality 28 29 (15) Required capital equal to the minimum regulatory capital2 1 15 1 25 bps is assumed to relate to default risk.
SHAREHOLDER SERVICES MANAGING YOUR SHAREHOLDING Our registrar, Computershare, maintains the Company’s Register of Members. Shareholders may request a hard copy of this Annual Report from our registrar and if you have any further queries in respect of your shareholding, please contact them directly using the contact details set out below.
If you receive any unsolicited investment advice: − Make sure you get the correct name of the person and organisation
More detailed information on this or similar activity can be found on the FCA website available at www.fca.org.uk/consumers.
ORDINARY SHARES – 2013 FINAL DIVIDEND Ex-dividend date 2 April 2014 Record date 4 April 2014 Payment date for the recommended final dividend 2 May 2014
GROUP FINANCIAL CALENDAR FOR 2014 Annual General Meeting 30 April 2014 Announcement of first quarter Interim Management Statement 1 May 2014 Announcement of unaudited six months’ Interim Results 21 August 2014 Announcement of third quarter Interim Management Statement 23 October 2014
FORWARD-LOOKING STATEMENTS The 2013 Annual Report and Accounts contains, and we may make other statements (verbal or otherwise) containing, forward-looking statements and other financial and/or statistical data about the Group’s current plans, goals and expectations relating to future financial conditions, performance, results, strategy and/or objectives.
Statements containing the words: ‘believes’, ‘intends’, ‘expects’, ‘plans’, ‘seeks’, ‘targets’, ‘continues’ and ‘anticipates’ or other words of similar meaning are forward-looking (although their absence does not mean that a statement is not forward-looking). Such forward-looking statements and other financial and/or statistical data involve risk and uncertainty because they relate to future events and circumstances that are beyond the Group’s control. For example, certain insurance risk disclosures are dependent on the Group’s choices about assumptions and models, which by their nature are estimates. As such, actual future gains and losses could differ materially from those that we have estimated.
− Changes in assumptions in pricing and reserving for insurance business (particularly with regard to mortality and morbidity trends, gender pricing and lapse rates)
− The impact of changes in capital, solvency or accounting standards, and tax and other legislation and regulations in the jurisdictions in which members of the Group operate.
As a result, the Group’s actual future financial condition, performance and results may differ materially from the plans, goals and expectations set out in the forward-looking statements within the 2013 Annual Report and Accounts. The Group undertakes no obligation to update any of the forward-looking statements contained within the 2013 Annual Report and Accounts or any other forward-looking statements it may make or publish.
AST Actuarial Systems Transformation – A project set up to rationalise and streamline the Group’s actuarial systems, models and processes into a single actuarial modelling platform that is state of the art, scalable and able to meet our future demands
CNHR Cost of residual non-hedgeable risk – The expected cost of non-hedgeable risks that can have an asymmetric impact on shareholder value to the extent these risks have not already been reflected in the present value of future profits or time value of financial options and guarantees within the MCEV
DPF Discretionary Participation Feature – A contractual right under an insurance contract to receive, as a supplement to guaranteed benefits, additional benefits whose amount or timing is contractually at the discretion of the issuer
EBT Employee Benefit Trust – A trust set up to enable its Trustee to purchase and hold shares to satisfy employee share-based incentive plan awards. The Company’s EBT is the Phoenix Group Holdings Employee Benefit Trust
FREE SURPLUS The amount of capital held in life companies in excess of that needed to support their minimum regulatory capital requirement, which is the greater of Pillar 1 and Pillar 2 capital requirements, plus the capital required under the Group’s capital management policy 237 PHOENIX GROUP HOLDINGS ANNUAL REPORT AND ACCOUNTS 2013
GEARING Gross shareholder debt as a percentage of the gross MCEV
Gross shareholder debt is defined as the sum of the IFRS carrying value of shareholder debt (as disclosed in the Borrowings note in the IFRS financial statements) and 50% of the IFRS carrying value of the Tier 1 Notes given the hybrid nature of that instrument
GROUP AUM Group assets under management – This represents life company assets (excluding collateral on stock lending arrangements), holding company cash and third party assets managed by Ignis Asset Management
HOLDING COMPANIES Refers to Phoenix Group Holdings, Phoenix Life Holdings Limited, Pearl Group Holdings (No. 2) Limited, Impala Holdings Limited, Pearl Group Holdings (No. 1) Limited, PGH (TC1) Limited, PGH (TC2) Limited, PGH (MC1) Limited, PGH (MC2) Limited, PGH (LCA) Limited, PGH (LCB) Limited, PGH (LC1) Limited, PGH (LC2) Limited and Pearl Life Holdings Limited
ICA+ The PRA has indicated that due to continuing uncertainties over the timetable for the introduction of Solvency II, it will work with the industry to enhance the existing Pillar 2 ICA regime to an ‘ICA+’ regime leveraging the investments firms have made preparing for Solvency II
LIBOR London Interbank Offer Rate – The average interbank interest rate at which a selection of banks on the London money market are prepared to lend to one another
LTIP Long-Term Incentive Plan – The part of an executive’s remuneration designed to incentivise long-term value for shareholders through an award of shares with vesting contingent on employment and the satisfaction of stretching performance conditions linked to Group strategy 238 PHOENIX GROUP HOLDINGS ANNUAL REPORT AND ACCOUNTS 2013
PROTECTION POLICY A policy which provides benefits payable on certain events. The benefits may be a single lump sum or a series of payments and may be payable on death, serious illness or sickness
SOLVENCY II A fundamental review of the capital adequacy regime for the European insurance industry. Solvency II aims to establish a set of EU-wide capital requirements and risk management standards that will replace the current Solvency I requirements 239 PHOENIX GROUP HOLDINGS ANNUAL REPORT AND ACCOUNTS 2013
TIER 1 NOTES £500 million Perpetual Reset Capital Securities issued by Pearl Group Holdings (No. 1) Limited. Following amendments to the Notes in 2010, the principal amount outstanding now is £425 million
WPICC With-Profit Insurance Capital Component – The WPICC is the amount by which the regulatory surplus exceeds the realistic surplus for with-profit funds 240 PHOENIX GROUP HOLDINGS ANNUAL REPORT AND ACCOUNTS 2013
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Phoenix Group Holdings Registered address: Phoenix Group Holdings PO Box 309 Ugland House Grand Cayman KY1-1104 Cayman Islands