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Standard Life plc - Annual Report and Accounts 2007
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New business profitability

Our overall sales growth has driven higher profitability with new business contribution (NBC) up 68% to £345m and PVNBP margin increasing by 0.7% points to 2.1%. The NBC growth was driven by significantly higher sales volumes in the UK and Europe. There were improvements in margins across all territories.

Group NBC £345m (2006: £205m): UK: £282m (2007), £167m (2006); Canada: £37m (2007), £28m (2006); Europe: £26m (2007), £10m (2006)

Group PVNBP margin 2.1% (2006: 1.4%): UK: 2.1% (2007), 1.5% (2006); Canada: 2.3% (2007), 1.6% (2006); Europe: 2.2% (2007), 1.2% (2006)

In the UK, NBC increased by 69% to £282m (2006: £167m). This was partly due to the large increase in sales volumes and also improved profit margins. The UK PVNBP margin increased from 1.5% to 2.1% exceeding our target of 2.0% in 2008 and reflecting greater profitability in individual product lines as well as a more favourable product mix. The UK internal rate of return (IRR) increased from 13% in 2006 to 20% for the full product range and reflects increasing capital efficiency.

In Canada, NBC increased by 38% in constant currency to £37m (2006: £28m). This was mainly due to the repricing of certain life products and our shift in focus to higher margin products.

In Europe, NBC increased by 155% in constant currency to £26m (2006: £10m). The increase is a result of higher sales volumes and margins that have been enhanced by efficiency savings and new product launches.

Further analysis of the individual segment results can be found in the business segment performance section.