LIFE INSURANCE SENSITIVITY ANALYSIS (Tables)

12 Months Ended

Dec. 31, 2017

Disclosure of sensitivity analysis for actuarial assumptions [text block] [Abstract]

Schedule of Accounting Estimates and Judgements [Text Block]

		2017						2016
		Increase						Increase
		(reduction)			Increase			(reduction)			Increase
		in profit			(reduction)			in profit			(reduction)
	Change in	before tax			in equity			before tax			in equity
	variable	£m			£m			£m			£m
Non-annuitant mortality and morbidity1	5% reduction		23			19			25			21
Annuitant mortality2	5% reduction		(221	)		(184	)		(287	)		(238	)
Lapse rates3	10% reduction		75			62			48			40
Future maintenance and investment expenses4	10% reduction		289			240			318			264
Risk-free rate5	0.25% reduction		(40	)		(33	)		(74	)		(62	)
Guaranteed annuity option take up6	5% addition		(6	)		(5	)		(12	)		(10	)
Equity investment volatility7	1% addition		(7	)		(6	)		(10	)		(8	)
Widening of credit default spreads on corporate bonds8	0.25% addition		(235	)		(195	)		(200	)		(166	)
Increase in illiquidity premia9	0.10% addition		145			120			152			126

1	This sensitivity shows the impact of reducing mortality and morbidity rates on non-annuity business to 95 per cent of the expected rate.
2	This sensitivity shows the impact on the annuity and deferred annuity business of reducing mortality rates to 95 per cent of the expected rate.
3	This sensitivity shows the impact of reducing lapse and surrender rates to 90 per cent of the expected rate.
4	This sensitivity shows the impact of reducing maintenance expenses and investment expenses to 90 per cent of the expected rate.
5	This sensitivity shows the impact on the value of in-force business, financial options and guarantee costs, statutory reserves and asset values of reducing the risk-free rate by 25 basis points.
6	This sensitivity shows the impact of a flat 5 per cent addition to the expected rate.
7	This sensitivity shows the impact of a flat 1 per cent addition to the expected rate.
8	This sensitivity shows the impact of a 25 basis point increase in credit default spreads on corporate bonds and the corresponding reduction in market values. Swap curves, the risk-free rate and illiquidity premia are all assumed to be unchanged.
9	This sensitivity shows the impact of a 10 basis point increase in the allowance for illiquidity premia. It assumes the overall spreads on assets are unchanged and hence market values are unchanged. Swap curves and the non-annuity risk-free rate are both assumed to be unchanged. The increased illiquidity premium increases the annuity risk-free rate.