Various discounts are applied to both the value of open
underwriting results and assets in Funds at Lloyd’s (FAL) and
special reserve funds (SRFs). These discounts are in recognition of
the delay between death and the date pipeline profits are paid and
the dates when FAL and SRF assets are released to the estate. The
rates currently used for discounting purposes depend on whether the
statutory audit basis is used or the actual basis. Discounting
factors are adopted using “Parry’s Tables”.
| Statutory Audit Basis |
|
| Deposits/Reserves | 3.5% per annum* |
| Profits (discount tables) | 6.0% per annum |
| Losses (discount tables) | 4.0% per annum |
| Concessionary Actual Basis* |
|
| Deposits/Reserves | 3.5% per annum |
| Profits | 12.0% per annum |
| Losses | 12.0% per annum |
*less the mean of yields on 2.5% consols and the FT All Share
Index net of tax.
