Barclays 2008 Annual Report Download - page 229

3
Financial statements
Barclays PLC Annual Report 2008 227
26Insurance assets and liabilities (continued)
Sensitivity analysis
The following table presents the sensitivity of the level of insurance contract liabilities disclosed in this note to movements in the actuarial assumptions
used to calculate them. The percentage change in variable is applied to a range of existing actuarial modelling assumptions to derive the possible impact
on net profit after tax. The disclosure is not intended to explain the impact of a percentage change in the insurance assets and liabilities disclosed above.
2008 2007
Net profit Net profit
Change in after tax Change in after tax
variable impact variable impact
% £m % £m
Long-term insurance contracts:
Improving mortality (annuitants only) 10 1 10 21
Worsening of mortality (assured lives only) 10 20 10 29
Worsening of base renewal expense level 20 19 20 43
Worsening of expense inflation rate 10 1 10 10
Short-term insurance contracts:
Worsening of claim expense assumptions 10 3 10 3
Any change in net profit after tax would result in a corresponding increase or decrease in shareholders’ equity.
The above analyses are based on a change in a single assumption while holding all other assumptions constant. In practice this is unlikely to occur.
Options and guarantees
The Group’s contracts do not contain options or guarantees that could confer material risk.
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.
2008 2007
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 19,193 (3,591) 15,602 31,205 (10,497) 20,708
Short-term insurance contracts 36,228 (2,735) 33,493 31,464 (1,139) 30,325
Total benefits insured 55,421 (6,326) 49,095 62,669 (11,636) 51,033
2008 2007
Before After Before After
Reinsurance Reinsurance Reinsurance Reinsurance Reinsurance Reinsurance
£m £m £m £m £m £m
Total benefits insured by geographic location
United Kingdom 8,120 (525) 7,595 22,538 (7,473) 15,065
Other European Union 6,519 (2,305) 4,214 4,304 (2,479) 1,825
Africa 40,782 (3,496) 37,286 35,827 (1,684) 34,143
Total benefits insured 55,421 (6,326) 49,095 62,669 (11,636) 51,033
Reinsurer credit risk
For the long-term business, reinsurance programmes are in place to restrict the amount of cover on 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.