Barclays 2006 Annual Report Download - page 249
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Barclays PLC
Annual Report 2006 245
Financial statements
3
57 Insurance risk
The Group’s objectives and policies in managing the insurance risks that arise in connection with the use of financial instruments are set out in
Note 52 under the heading ‘Insurance Risk Management’.
Concentration of insurance risk
The Group considers that the concentration of insurance risk that is most relevant to the Group financial statements is according to the type of cover
offered and the location of insured risk. The following table shows the maximum amounts payable under all of the Group’s insurance products. It
ignores the probability of insured events occurring and the contribution from investments backing the insurance policies. The table shows the broad
product types and the location of the insured risk, before and after the impact of reinsurance that represents the risk that is passed to other insurers.
2006 2005
Before After Before After
Reinsurance Reinsurance Reinsurance Reinsurance Reinsurance Reinsurance
£m £m £m £m £m £m
Total benefits insured by product type
Long-term insurance contracts 24,934 (9,445) 15,489 28,877 (12,128) 16,749
Short-term insurance contracts 39,870 (901) 38,969 57,049 (753) 56,296
Total benefits insured 64,804 (10,346) 54,458 85,926 (12,881) 73,045
2006 2005
Before After Before After
Reinsurance Reinsurance Reinsurance Reinsurance Reinsurance Reinsurance
£m £m £m £m £m £m
Total benefits insured by geographic location
United Kingdom 25,403 (8,010) 17,393 28,687 (8,697) 19,990
Other European Union 3,317 (1,802) 1,515 5,418 (2,981) 2,437
Africa 36,084 (534) 35,550 51,821 (1,203) 50,618
Total benefits insured 64,804 (10,346) 54,458 85,926 (12,881) 73,045
Reinsurer credit risk
For the long-term business, reinsurance programmes are in place to restrict the amount of cover to any single life. The reinsurance cover is spread
across highly rated companies to diversify the risk of reinsurer solvency. Net insurance reserves include a margin to reflect reinsurer credit risk.