Notes on the EEV basis results
6. Taiwan – effect of altered economic assumptions and sensitivity of results to future market conditions
For the half year 2007 results, as explained in note 2 (a), the expected long-term bond yield has been maintained at 5.5 per cent to be
achieved by 31 December 2013.
The sensitivity of the embedded value at 30 June 2007 of the Taiwan operation to altered economic assumptions and future market
conditions to:
(a) a one per cent increase or decrease in the projected long-term bond yield (including all consequential changes to investment returns for all classes, market values of fixed interest assets and risk discount rates) is £83 million and £(134) million respectively; and
(b) a one per cent increase or decrease in the starting bond rate for the progression to the assumed long-term rate is £92 million and
£(100) million respectively.
If it had been assumed in preparing the half year 2007 results that interest rates remained at the current level of around 2.5 per cent until
31 December 2008 and the progression period in bond yields was delayed by a year so as to end on 31 December 2014, there would
have been a reduction in the Taiwan embedded value of £90 million.
