Account Executives (AEs)
Individuals employed by the Group to develop markets and support IFAs.
Annualised Premium Equivalent (APE)
An industry measure of insurance new business sales. It is calculated as the sum of regular premiums and 10% of single premiums.
Assets Under Administration (AUA)
A measure of the total assets that the Group administers on behalf of policyholders, who have selected an external third party investment manager.
Assumptions
Variables applied to data used to project expected outcomes.
Board
The board of Directors of the Company.
Cash Payback on New Business
Cash payback on new business is the time at which the value of the expected cash flows, after tax, is sufficient to have recouped the capital invested to support the writing of the business. The cash flows are calculated on the same assumptions and expense basis as those used for the contribution from new business.
CFO Forum
A high-level discussion group formed and attended by the Chief Financial Officers of major European listed, and some non-listed, insurance companies.
Company
Hansard Global plc.
Compensation Credit (CC)
The Group’s prime indicator of calculating new business production. This indicates the relative value of each piece of new business and is used, therefore, in the calculation of commission payable.
Corporate Governance Code
The UK Corporate Governance Code sets out guidance in the form of principles and provisions on how companies should be directed and controlled to follow good governance practice. The Financial Services Authority (FSA) requires companies listed in the UK to disclose how they have applied the principles of the Code and whether they have complied with its provisions throughout the accounting year. Where the provisions have not been complied with, companies must provide an explanation for this.
Covered Business
The business covered by the EEV methodology. This includes all contracts issued by the Group’s insurance company subsidiaries. Additional information may be found in the EEV methodology within the EEV supplementary information.
Deferred Income Reserve (DIR)
The method of accounting whereby front end fees that relate to services to be provided in future periods are deferred in the balance sheet as a liability and amortised over the life of those contracts. This leads to a smoothed recognition of up front income instead of the full income in the year of sale.
Deferred Origination Costs (DOC)
The method of accounting whereby origination costs of long-term business are deferred in the balance sheet as an asset and amortised over the life of those contracts. This leads to a smoothed recognition of up front expenses instead of the full cost in the year of sale.
Development Costs
Costs that are considered to be non-recurring and are reported separately from other expenses in the EEV movement analysis.
Director
A director of the Company.
Discounting
The reduction to present value at a given date of a future cash transaction at an assumed rate, using a discount factor reflecting the time value of money. The choice of a discount rate will usually greatly influence the value of insurance provisions, and may give indications on the conservatism of provisioning methods.
Earnings Per Share (EPS)
EPS is a commonly used financial metric which can be used to measure the profitability and strength of a company over time. EPS is calculated by dividing profit by the number of ordinary shares. Basic EPS uses the weighted average number of ordinary shares outstanding during the year. Diluted EPS adjusts the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares, for example share awards and share options awarded to employees.
Economic Assumptions
Assumptions in relation to future interest rates, investment returns, inflation and tax. These assumptions, and variances in relation to these assumptions, are treated as non-operating profits/(losses) under EEV.
Enterprise-wide Risk Management (ERM) programme.
The programme implemented by the Group to allow identification, monitoring and management of risks.
European Embedded Value (EEV)
The value to equity shareholders of the net assets plus the expected future profits on in-force business from a life assurance business. Prepared in accordance with the EEV Principles and Guidance issued in May 2004 by the CFO Forum and the Additional Guidance issued in October 2005. EEV reports the value of business in-force based on a set of best estimate assumptions, allowing for the impact of uncertainty inherent in future assumptions, the costs of holding required capital, the value of free surplus and TVOG.
EEV Operating Profit
Covered business EEV operating profit represents profit generated from new business sales and the in-force book of business, based on closing non-economic and opening economic assumptions. Covered business is defined above.
Expected Return on EEV
Anticipated results based on applying opening assumptions to the opening EEV.
Experience Variances
Current period differences between the actual experience incurred over the period and the assumptions used in the calculation of the embedded value, excluding new business non-economic experience variances which are captured in new business contribution.
Foreign Account Tax Compliance Act (FATCA)
The Foreign Account Tax Compliance Act is a new US law aimed at Foreign Financial Institutions (FFIs) and other financial intermediaries to prevent tax evasion by US citizens and residents through use of offshore accounts. The FATCA provisions were included in the HIRE Act, which was signed into US law on 18 March 2010.
Free Surplus
The amount of capital and any surplus allocated to, but not required to support, the in-force business covered by the EEV.
Frictional Costs
The additional taxation and investment costs incurred by shareholders through investing the Required Capital in the Company rather than directly.
Group
Hansard Global plc and its subsidiaries.
Growth Investment Spend
Costs we incur investing in the future of our business, including technology to support our growth.
Independent Financial Advisors (IFAs)
A person or organisation authorised to give advice on financial matters and to sell the products of financial service providers. Outside the UK IFAs may be referred to by other names.
In-force
Long-term business which has been written before the period end and which has not terminated before the period end.
Internal Rate of Return (IRR)
A measure of rate of return on an investment and so an indicator of capital efficiency. The IRR is equivalent to the discount rate at which the present value of the after-tax cash flows expected to be earned over the lifetime of new business written is equal to the capital invested to support the writing of the business.
International Financial Reporting Standards (IFRS)
International Financial Reporting Standards are accounting standards issued by the International Accounting Standards Board (IASB). The Group’s consolidated financial statements are required to be prepared in accordance with IFRS as adopted by the European Union.
IFRS Equity Per Share
Total IFRS equity divided by the diluted number of issued shares at the end of the period.
Key Performance Indicators (KPI)
This is a measure by reference to which the development, performance or position of the business can be measured effectively.
Maintenance Expenses
Expenses related to the servicing of the in-force book of business (including investment and termination expenses and a share of overheads).
Net worth
The market value of shareholders' funds, determined on a statutory solvency basis and adjusted to add back any non-admissible assets per regulatory returns.
New Business Contribution (NBC)
The expected present value of all future cash flows attributable to the equity holder from new business, as included within EEV operating profit. NBC is calculated using economic assumptions set at the start of each quarter and the same operating assumptions as those used to determine the embedded values at the end of the reporting period and is stated after the effect of any frictional costs. Unless otherwise stated, it is also quoted net of tax.
New Business Strain (NBS)
Costs involved in acquiring new business (such as commission payments to intermediaries, expenses, reserves) affecting the insurance company’s financial position at that point and where all of the income from that new business (including premiums and investment income) has not yet been received and will not be received until a point in the future. To begin with, therefore, a strain may be created where cash outflows exceed inflows.
Non-economic Assumptions
Assumptions in relation to future levels of mortality, morbidity, persistency and expenses. These assumptions, and variances in relation to these assumptions, are included as operating profits/(losses) under EEV.
Origination Costs
Expenses related to the procurement and processing of new business written including a share of overheads. Sometimes known as acquisition costs.
Present Value of In-force business (PVIF)
The present value of the projected future distributable profits after tax attributable to equity holders from the covered business in-force at the valuation date, adjusted where appropriate to take account of TVOG.
Present Value of New Business Premiums (PVNBP)
The industry measure of insurance new business sales under the EEV methodology. It is calculated as 100% of single premiums plus the expected present value of new regular premiums.
PVNBP Margin
PVNBP margin is NBC expressed as a percentage of PVNBP. This measures whether new business written is adding value or eroding value.
Regular Premium
A regular premium contract (as opposed to a single premium contract), is one where the policyholder agrees at inception to make regular payments throughout the term of the contract.
Required Capital
The amount of assets, over and above the value placed on liabilities in respect of covered business, whose distribution to equity holders is restricted.
Return on EEV (RoEV)
The annualised post-tax operating profit on an EEV basis expressed as a percentage of the opening embedded value, adjusted for dividends paid to equity holders.
Single Premium
A single premium contract (as opposed to a regular premium contract (see above), involves the payment of one premium at inception with no obligation for the policyholder to make subsequent additional payments.
Time Value of Options and Guarantees (TVOG)
Represents the potential additional cost to equity holders where a financial option or guarantee exists which affects policyholder benefits and is exercisable at the option of the policyholder.
The Group’s business does not include any policies with material options and/or guarantees regarding investment performance and, hence, unlike the situation faced by many other life assurers, the Group’s cost of financial options and guarantees is zero.
Total Shareholder Return
This is a measure of the overall return to shareholders and includes the movement in the share price and any dividends paid and reinvested.
Unit-Linked Policy
A policy where the benefits are determined by reference to the investment performance of a specified pool of assets referred to as the unit-linked fund.
Value of New Business
Is calculated using economic assumptions set at the start of each quarter and the same operating assumptions as those used to determine the embedded values at the end of the reporting period and is stated after the effect of any frictional costs. Unless otherwise stated, it is also quoted net of tax and minority interests.