Financial results

Preliminary Results 2008

Operating profit resilient in difficult markets

  • EEV operating profit before tax up 6% to £933m (2007: £881m), generating a return on embedded value of 10.9% (2007: 11.5%) after making provision for customer payments to the Pension Sterling Fund

Cash flow robust with strong coverage of new business strain

  • Core capital and cash generation after tax £303m (2007: £334m)
  • Full year dividend of 11.77p, representing 2.3% growth

Balance sheet strength maintained

  • Group Embedded Value per share of 286p (2007: 285p) stable in the face of challenging markets
  • IFRS equity per share excluding intangible assets and minority interests of 151p (2007: 148p), with IFRS profit after tax attributable to equity holders of £100m (2007: £465m)
  • Financial Groups Directive surplus of £3.3bn (2007: £3.4bn) after allowing for the payment of the final dividend

Efficiency target achieved

  • Annual efficiency target of £100m cost savings achieved one year early, and a further target of £75m set

Quarter 4 New Business Results 2008

Net flows resilient in the face of difficult market conditions

  • Worldwide life and pensions net inflows of £2.4bn (2007: £2.8bn)
  • Worldwide third party net investment inflows, excluding money market funds, of £3.8bn (2007: £5.3bn)

New business sales supported by international performance

  • Worldwide life and pensions sales 6% lower at £15.6bn (2007: £16.5bn)
  • UK life and pensions sales 9% lower at £12.2bn (2007: £13.4bn)
  • Canadian life and pensions sales 9% higher at £2.0bn (2007: £1.7bn)
  • 17% increase in Asian sales volumes to £495m (2007: £266m)

Preliminary results expected to show strong RoEV and solid cash generation

  • Return on Embedded Value (RoEV) expected to be ahead of current market expectations and broadly similar to the 11.5% reported in 2007
  • IFRS profitability expected to be lower due to significant volatility in investment markets
  • Core capital and cash generation expected to remain robust

Capital strength maintained

  • Estimated FGD surplus of £3.5bn at 31 December 2008 has remained largely insensitive to volatile markets
    (30 September 2008: £3.4bn)

Quarter 3 New Business Results 2008

strong net flows in testing market conditions

  • Worldwide life and pensions net inflows of £2.3bn (2007: £2.4bn)
  • Worldwide third party net investment inflows, excluding money market funds, of £3.2bn (2007: £4.8bn)

New business sales demonstrate robust business model

  • Worldwide life and pensions sales marginally higher at £12.4bn (2007: £12.3bn)

Balance sheet resilient

  • Financial Groups Directive (FGD) surplus of £3.4bn at 30 September 2008 (30 June 2008: £3.5bn)
  • A further 40% fall in equity markets from 30 September 2008 would result in an FGD surplus of £1.9bn

2008 Interim Results

Improved net flows and sales

  • life and pensions net flows up 15% to £2.0bn
  • life and pensions PVNBP1 sales up 5% to £9.1bn
  • New business contribution up 4% to £157m

strong growth in operating profits

  • EEV operating profit before tax up 51% to £534m
  • Return on embedded value up 1.9% points to 11.0%
  • IFRS underlying profit before tax up 58% to £345m
  • IFRS profit before tax attributable to equity holders up 219% to £201m

Higher cash flow supporting a growing dividend

  • EEV core capital and cash generation after tax up 25% to £143m
  • Interim dividend of 4.07p, representing 7% growth

A balance sheet resilient to market falls

  • Group Embedded Value per share 3% lower at 277p
  • Financial Groups Directive surplus 3% lower at £3.5bn

Quarter 1 New Business Results 2008

Net flows

  • Worldwide life and pensions net inflows up 31% to £986m
  • UK life and pensions net inflows up 42% to £826m
  • Worldwide investment net inflows up 1% to £2,295m

New business sales

  • Worldwide life and pensions sales up 8% to £4,477m
  • UK life and pensions sales up 6% to £3,516m

Other developments

  • £6.7bn of UK immediate annuity liabilities reinsured
  • Global liquidity Funds restructured, with an expected net cash cost of £17m after tax