Resolution Limited 2011 Interim Results 16 August 2011
Important Notice Neither the issue of this presentation nor any part of its contents constitutes an offer to sell or invitation to purchase any securities of Resolution Limited or any other entity or of any persons holding securities of Resolution Limited and no information set out in this presentation or referred to in other written or oral information is intended to form the basis of any contract of sale, investment decision or any decision to purchase any securities in it. This presentation and its content is not for release, publication or distribution (directly or indirectly) in or into the United States, Canada, Australia or Japan. Neither the presentation or publication or distribution of it or its content constitutes an offer of securities for sale any where in the world, including in or into the United States, Canada, Australia or Japan. Recipients of this presentation should inform themselves about and observe any applicable legal requirements in their jurisdictions. In particular, the distribution of this presentation may in certain jurisdictions be restricted by law. Accordingly, recipients represent that they are able to receive this presentation without contravention of any applicable legal or regulatory restrictions in the jurisdiction in which they reside or conduct business. This presentation has been prepared by Resolution Limited and is the sole responsibility of Resolution Limited. The merits or suitability of any securities of Resolution Limited must be independently determined by any recipient of this presentation on the basis of its own investigation and evaluation of Resolution. Any such determination should involve, among other things, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of the securities. Recipients are recommended to seek their own financial and other advice and should rely solely on their own judgment, review and analysis in evaluating Resolution Limited, its business and its affairs. Past performance of Resolution Limited cannot be relied upon as a guide to its future performance. This document includes statements that are, or may be deemed to be, "forward-looking statements" with respect to Resolution Limited and its subsidiary undertakings (together, the Group‖) In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms ―targets‖, and their outlook, plans and current goals. ―believes‖, ―estimates‖, ―anticipates‖, ―expects‖, ―intends‖, ―may‖, ―will‖ or ―should‖ or, in each case, their negative or other variations or comparable terminology. By their nature, forward- looking statements involve risks and uncertainties because they relate to events and depend upon circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. Resolution Limited’s actual performance, results of operations, internal rate of return, financial condition, liquidity, distributions to shareholders and the development of its acquisition, financing and restructuring and consolidation strategies may differ materially from the impression created by the forward-looking statements contained in this document. Forward-looking statements in this document are current only as of the date of this announcement. Resolution Limited undertakes no obligation to update the forward-looking statement it may make. Nothing in this announcement should be construed as a profit forecast. Resolution Operations LLP (―ROL‖) is a privately owned advisory and operating firm which provides services to Resolution Limited. ROL is part of ―The Resolution Group‖ that also includes Resolution Capital Limited and Resolution Financial Markets LLP. Resolution Capital Limited facilitated the creation and initial public offering of Resolution Limited. Resolution Financial Markets LLP undertakes for ROL a range of activities that include working with investors to facilitate the direct placing of equity and debt with institutions. Resolution Limited is not part of The Resolution Group and the members of The Resolution Group do not form part of the Group. Resolution Operations LLP is acting for Resolution Limited and no one else in connection with this presentation and will not regard any other person (whether or not a recipient of this presentation) as a client in relation to such matters and will not be responsible to anyone other than Resolution Limited for providing the protections afforded to its clients or for providing advice in relation to any matters referred to in this presentation. 2
2011 Half Year Results Agenda Introduction Mike Biggs Business review John Tiner Financial review Jim Newman Building a business for the future Andy Briggs Questions Mike Biggs 3
2011 Half Year Results Introduction Mike Biggs Business review John Tiner Financial review Jim Newman Building a business for the future Andy Briggs Questions Mike Biggs 4
Summary UK Life Project on track H1 2011 results first step on path to deliver returns — Operating free surplus generation (excluding capital synergies) of £122m — Results support platform choices for new business — Results impacted by further cleaning up of International — Interim dividend per share of 6.47p up 18.5% Robust cash and capital position maintained — Available Shareholder Cash of £793m after cash dividend of £141m — £500m cash return targeted - £250m share buy-back commenced, reaffirmed intention of further £250m cash return, 2011 final dividend guidance of 13.33p per share Strategy on-track — On-track to deliver 2013 financial targets — £24m run-rate synergies delivered New management team in Friends Life bringing focus and leadership to business with clear priority on financial performance Defensively positioned balance sheet 5
Friends Life financial targets Cash flow, product and returns focused Metric FY2010 (baseline) H1 2011 Target from end 2013 onwards £392m 1 annualised £161m NBS in H1 £200m reduction to £192m New business strain £476m 2010 cost £24m run-rate £112m of synergies UK cost base including BHA synergies achieved Individual 3.3% 1 5.0% 20% protection Corporate 5.3% 4.2% 1 10%+ New benefits business IRR Retirement 16.5% 23.8% 15%+ income 9.6% 8.6% 2 15%+ Group total Cash dividends from £2m - £50m non UK business Distributable cash £746m £283m £400m from 2011 generation 4.5% FLG operating ROEV 5.5% 1 10%+ ( 1) 2010 full year baseline now includes an estimate of 12 months BHA and AXA UK Life Business results. (2) The 2011 Lombard IRR (and therefore the blended group IRR) now takes account of the Luxembourg regulatory regime in which DAC is an allowable asset. 6
UK Life Project – synergies, separation & integration Delivery on track Synergies and cost to achieve, £m Cost synergies, annualised (at baseline prices), £m 117 112 112 100 Operations & Support 27 72 69 Sales & Marketing 41 39 30 24 Customer service & IT 44 H1 11 By end 2011 By end 2012 By end 2013 Target by end 2013 One-off cost to deliver Run-rate synergies 7
UK Life Project – Individual Protection Integrated proposition to deliver higher margins Metrics Market VNB, £m 80 9 Held up well in difficult economic climate 4 Excluded from RDR (5) Implementation of strategy (20) Leverage efficient BHA platform NBS, £m Build market leading propositions (2) Focus on profitability (30) (39) (41) Improve product and distribution mix — (193) Reduce operating costs — IRR 26.4% 20.0% 5.0% 3.3% 3.1% 2010 FY H1 11 "old" H1 11 target H1 11 actual 2013 target baseline platforms platform 8
UK Life Project – Corporate benefits Integrated propositions to deliver higher margins Metrics 25 VNB, £m Market 11 Move from DB to DC, positive demographics (1) Pension reform – auto-enrolment (12) (23) RDR to increase customer engagement NBS, £m Implementation of strategy Retain and grow customer base (16) (23) (39) Selective participation (75) (80) Extract synergies IRR >10% 8.8% 5.3% 4.2% 0.9% 2010 FY H1 11 "old" H1 11 target H1 11 actual 2013 target baseline platforms platform 9
UK Life Project – Retirement income Profitable, managed growth Metrics VNB, £m 50 Market 33 Move from DB to DC, positive demographics 16 OMO segment to grow Solvency II NBS, £m Implementation of strategy 26 Increase vesting pensions 7 Selective OMO entry Develop new customer management systems IRR 23.8% Deploy enhanced credit risk management 16.5% >15.0% Develop and grow team 2010 FY baseline H1 11 actual 2013 target 10
Lombard Strong business with long term value Metrics Market VNB, £m -42% Lower activity compared to prior half 31 18 Consumer sentiment affected by volatile markets Half year 2010 Half year 2011 Strong long term demand for product IFRS based OPBT, £m +62% 21 Implementation of strategy 13 Strengthened sales force Investment in marketing and partnerships Half year 2010 Half year 2011 -22% MCEV OPBT, £m Improvements in operating model 51 40 Financial performance Second best first half Half year 2010 Half year 2011 Average FUM, £bn +22% VNB impacted by lower volume 17.7 14.5 IFRS OPBT up due to lower NBS and increased surplus Half year 2010 Half year 2011 11
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