Supplemental IE Report RSAI Sun & Marine - Royal and Sun Alliance

Milliman Client Report
Table 4.3
Simplified Balance Sheets for Marine as at 30 June 2011
£m Pre-transfers
Post-transfers
(before RI)
Post-transfers
(after RI)
Assets
Investments 72 157 152
Reinsurers' share of technical provisions 125 188 281
Debtors 35 43 43
Other Assets 3 3 2
Liabilities
235 391 478
Capital & Reserves 90 95 90
Technical provisions 142 283 283
Creditors 3 13 13
Other liabilities 0 0 0
Funds withheld premium to RSAI 92
Table 4.4
Simplified Balance Sheets for Sun as at 30 June 2011
235 391 478
£m Pre-transfers
Post-transfers
(before RI)
Post-transfers
(after RI)
Assets
Investments 372 400 400
Reinsurers' share of technical provisions 43 47 493
Debtors 121 127 127
Other Assets 119 131 83
Liabilities
655 704 1,102
Capital & Reserves 91 116 95
Technical provisions 473 494 494
Creditors 70 72 72
Other liabilities 22 23 23
Funds withheld premium to RSAI 0 0 419
655 704 1,102
4.14 Under the MIC Scheme and the PAGI (marine business) Scheme, RSAI will transfer assets to Marine equal to the net
liabilities transferring plus an uplift to reflect the risk premium for the business being accepted. Based on the balance
sheet position as at 30 June 2011 RSAI will transfer assets to the value of £84.2m to Marine. This will be made up of
cash and a portfolio of US corporate bonds with durations of less than 2 years and credit rating of typically A or
higher. The assets that will transfer to the funds withheld account will consist of cash and the bond portfolio
transferred from RSAI, together with assets currently held by Marine to back its existing insurance liabilities.
4.15 Under the Sun Scheme, all assets will be transferred out of National Vulcan and Sea to Sun. Sun will issue shares to
National Vulcan and Sea equal in value to the net value of assets transferring to Sun under the Sun Scheme. The
assets that will form the funds withheld account will include a portfolio of euro-denominated fixed income securities
currently held in Sun, with a market value (as at 30 June 2011) of £299m. The securities making up this portfolio are a
mixture of corporate and government bonds, with an average duration of around 2 years and credit rating of mainly A-
or higher. The funds withheld account will also be made up of around £52m of debtors, and £68m of cash.
Supplemental Report of the Independent Expert 10
November 30, 2011