Change in embedded value of covered business

for the year ended 31 December 2010
 
     
2010
2009
R million Note  
Total
Value of
in-force
Cost of
capital
Adjusted
net
worth
Total Value of
in-force
Cost of
capital
Adjusted
net
worth
Embedded value of covered business at the beginning of the year – reported
   
28 988
17 626
(2 885)
14 247
28 591 15 939 (2 361) 15 013
Change in accounting policies 9  
(49)
201
36
(286)
Embedded value of covered business at the beginning of the year – restated
   
28 939
17 827
(2 849)
13 961
28 591 15 939 (2 361) 15 013
Value of new business 2  
666
1 873
(93)
(1 114)
607 1 811 (97) (1 107)
Net earnings from existing covered business    
2 639
(200)
62
2 777
2 430 (231) 146 2 515
Expected return on value of in-force business    
2 218
2 111
107
1 714 1 588 126
Expected transfer of profit to adjusted net worth    
(2 388)
2 388
(2 064) 2 064
Operating experience variances 3  
468
(10)
(18)
496
636 186 (4) 454
Operating assumption changes 4  
(47)
87
(27)
(107)
80 59 24 (3)
Expected investment return on adjusted net worth    
1 151
1 151
1 091 1 091
Embedded value earnings from operations
   
4 456
1 673
(31)
2 814
4 128 1 580 49 2 499
Economic assumption changes 5  
430
334
99
(3)
(1 206) (687) (484) (35)
Tax changes – change in corporate tax rates    
2
(2)
Investment variances – value of in-force    
332
127
(55)
260
1 149 874 (69) 344
Investment variances – investment return on adjusted net worth    
4
4
515 515
Exchange rate movements    
(119)
(128)
9
(137) (149) 12
Net project expenses 6  
(46)
(46)
(28) (28)
Embedded value earnings from covered business
   
5 057
2 008
22
3 027
4 421 1 618 (492) 3 295
Acquired value of in-force    
6
5
(1)
2
210 69 (32) 173
Transfers from other Group operations    
17 17
Change in utilisation of capital diversification    
(700)
(700)
(729) (729)
Transfers from covered business    
(2 257)
(2 257)
(3 522) (3 522)
Embedded value of covered business at the end of the year
   
31 045
19 840
(2 828)
14 033
28 988 17 626 (2 885) 14 247
Analysis of earnings from covered business
                   
Sanlam Personal Finance    
3 782
1 556
2
2 224
2 815 802 (315) 2 328
Sanlam Developing Markets    
676
491
185
467 341 (26) 152
Sanlam UK    
(7)
(25)
3
15
(14) (1) 3 (16)
Sanlam Employee Benefits    
606
(14)
17
603
1 153 476 (154) 831
Embedded value earnings from covered business
   
5 057
2 008
22
3 027
4 421 1 618 (492) 3 295