Compared with June 2004, the firms' aggregate surplus assets over liabilities, measured on a realistic basis, had improved by 16% at the 2004 year end.
David Strachan, the FSA's sector leader for insurance, said: "This represents a further step forward for with-profits firms. The second half of 2004 saw major progress by the largest firms under our new realistic reporting requirements.
"Clearly the stronger market conditions have played their part, but this is also an indication of firms getting to grips with the new requirements. This is good news for both the firms themselves and for consumers who will benefit from stronger, better capitalised insurers."
Key figures
- Between June 2004 and the year-end 2004, the realistic working capital of with-profits firms increased by 8% to £24.9bn. A number of firms were allowed to include support arrangements in their assets which took the total aggregate realistic working capital to £26.7bn, some 16% higher than in June 2004.
- The overall capital held by firms (£81.1bn) exceeded the capital resource requirement (£46.3bn) by 75%.
- The aggregate holding of equities by with-profits firms has been broadly stable — increasing from 36% to 37% of total with-profits assets over that period. The level varies between different with-profits funds.
The FSA introduced new capital requirements for insurers on 31 December 2004. These require insurers with with-profits liabilities in excess of £500m to take a more risk-based approach to the calculation of their assets and liabilities. This will ensure that assets are more closely aligned to the business written by the firms.
