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Insurance business
 6 Months Ended
Jun. 30, 2025
Insurance business [Abstract]  
Insurance business Note 5: Insurance business
Half-year
to 30 Jun
2025
£m
Half-year
to 30 Jun
2024
£m
Half-year
to 31 Dec
2024
£m
Insurance revenue
Amounts relating to the changes in liabilities for remaining coverage:
Contractual service margin recognised for services provided
392
216
233
Change in risk adjustments for non-financial risk for risk expired
24
27
31
Expected incurred claims and other insurance services expenses
959
977
939
Charges to funds in respect of policyholder tax and other
66
68
40
1,441
1,288
1,243
Recovery of insurance acquisition cash flows
56
56
49
Total life
1,497
1,344
1,292
Total non-life
370
306
349
Insurance revenue
1,867
1,650
1,641
Insurance service expense
Incurred claims and other directly attributable expenses
(977)
(961)
(1,017)
Changes that relate to past service: adjustment to liabilities for incurred claims
1
3
(7)
Changes that relate to future service: losses and reversal of losses on onerous
contracts
(86)
(46)
(26)
Amortisation of insurance acquisition cash flows
(56)
(56)
(49)
Net impairment loss on insurance acquisition assets
–
(8)
(1)
Total life
(1,118)
(1,068)
(1,100)
Total non-life
(291)
(271)
(294)
Insurance service expense
(1,409)
(1,339)
(1,394)
Net expense from reinsurance contracts held
(28)
(23)
(49)
Insurance service result
430
288
198
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 5: Insurance business (continued)
Half-year to 30 June 2025
Life
£m
Non-life
£m
Total
£m
Net gains on financial assets and liabilities at fair value through profit or loss
3,520
17
3,537
Foreign exchange
140
–
140
Investment property gains
1
–
1
Net investment return on assets held to back insurance and participating
investment contracts1
3,661
17
3,678
Net investment return on assets held to back third party interests in consolidated
funds
703
Net investment return on assets held to back non-participating investment
contracts
935
Net investment return on assets held to back insurance and investment contracts
5,316
Net finance expense from insurance and participating investment contracts
(3,532)
(3)
(3,535)
Net finance income from reinsurance contracts held
23
–
23
Net finance expense from insurance, participating investment and reinsurance
contracts
(3,509)
(3)
(3,512)
Movement in third party interests in consolidated funds
(634)
Change in non-participating investment contracts
(1,171)
Net finance expense in respect of insurance and investment contracts
(5,317)
Half-year to 30 June 2024
Life
£m
Non-life
£m
Total
£m
Net gains on financial assets and liabilities at fair value through profit or loss
6,263
20
6,283
Foreign exchange
221
–
221
Investment property losses
(2)
–
(2)
Net investment return on assets held to back insurance and participating investment
contracts1
6,482
20
6,502
Net investment return on assets held to back third party interests in consolidated
funds
830
Net investment return on assets held to back non-participating investment
contracts
2,492
Net investment return on assets held to back insurance and investment contract
9,824
Net finance expense from insurance and participating investment contracts
(6,555)
(3)
(6,558)
Net finance income from reinsurance contracts held
81
–
81
Net finance expense from insurance, participating investment and reinsurance
contracts
(6,474)
(3)
(6,477)
Movement in third party interests in consolidated funds
(802)
Change in non-participating investment contracts
(2,734)
Net finance expense in respect of insurance and investment contracts
(10,013)
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 5: Insurance business (continued)
Half-year to 31 December 2024
Life
£m
Non-life
£m
Total
£m
Net gains on financial assets and liabilities at fair value through profit or loss
3,984
18
4,002
Foreign exchange
(25)
–
(25)
Investment property losses
(2)
–
(2)
Net investment return on assets held to back insurance and participating investment
contracts1
3,957
18
3,975
Net investment return on assets held to back third party interests in consolidated
funds
275
Net investment return on assets held to back non-participating investment
contracts
1,939
Net investment return on assets held to back insurance and investment contracts
6,189
Net finance expense from insurance and participating investment contracts
(3,826)
(4)
(3,830)
Net finance expense from reinsurance contracts held
(34)
–
(34)
Net finance expense from insurance, participating investment and reinsurance
contracts
(3,860)
(4)
(3,864)
Movement in third party interests in consolidated funds
(257)
Change in non-participating investment contracts
(2,144)
Net finance expense in respect of insurance and investment contracts
(6,265)
1Includes income of £3,426 million (half-year to 30 June 2024: £6,951 million; half-year to 31 December 2024: £3,737 million) in
respect of unit-linked and with-profit contracts measured applying the variable fee approach. The assets generating the
investment return held to back insurance contracts and participating investment contracts are carried at fair value on the
Group’s balance sheet.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 5: Insurance business (continued)
At 30 June 2025
Present
value
of future
cash flows
£m
Risk
adjustment
£m
Contractual
service
margin
£m
Other
£m
Total
£m
Insurance contract assets
136
(53)
(81)
–
2
Liabilities arising from insurance contracts and
participating investment contracts1
(120,037)
(834)
(4,110)
–
(124,981)
Other liabilities2
–
–
–
–
–
Net liability
(119,901)
(887)
(4,191)
–
(124,979)
Insurance acquisition assets
–
–
–
29
29
Insurance and participating investment contracts net
liability
(119,901)
(887)
(4,191)
29
(124,950)
At 31 December 2024
Insurance contract assets
–
–
–
–
–
Liabilities arising from insurance contracts and
participating investment contracts1
(117,111)
(874)
(4,102)
–
(122,087)
Other liabilities2
(5,268)
–
–
–
(5,268)
Net liability
(122,379)
(874)
(4,102)
–
(127,355)
Insurance acquisition assets
–
–
–
23
23
Insurance and participating investment contracts net
liability
(122,379)
(874)
(4,102)
23
(127,332)
1Excluding insurance acquisition assets.
2Liabilities arising from insurance contracts relating to the disposal of the Group's bulk annuity business have been classified as
disposal group liabilities.
On 13 March 2024, the Group entered into a business transfer agreement with Rothesay Life plc for the sale of the
Group’s bulk annuity business and to pursue the transfer of associated business assets and assumed liabilities
under Part VII of the Financial Services and Markets Act 2000. A reinsurance agreement between the Group and
Rothesay Life plc was signed on 30 April 2024 to materially de-risk the Group’s bulk annuity portfolio. The Part VII
transfer was completed on 11 June 2025.
At 31 December 2024, the Group presented the assets and liabilities relating to the bulk annuity business, including
the reinsurance contract assets arising from the agreement between the Group and Rothesay Life plc, as a disposal
group.
At the Part VII transfer date, the Group derecognised the assets and liabilities of the disposal group, comprising
£4.9 billion of reinsurance contract assets, £5.1 billion of insurance contract liabilities, £50 million of goodwill and a
£9 million deferred tax asset. Following the derecognition requirements in IFRS 17 for transfers of contracts to a
third party, the Group recognised £179 million in insurance revenue, representing the release of CSM for future
service at the transfer date. The derecognition of the goodwill and deferred tax asset was charged to other
operating income. The overall pre-tax gain on derecognition of the disposal group was £120 million.