2010 Smoothed Return Announcement

We're delighted to be able to share some of the profits from the With-Profits Fund with people who bought our new Income Choice Annuity in its first year. All clients will see an increase in their income at their policy anniversary after 6 April 2010. For clients whose Income Choice Annuity started between 9 March 2009 and 5 April 2009* we have announced an actual Smoothed Return of 8.5% and for clients whose Income Choice Annuity started between 6 April 2009 and 5 April 2010, we have announced an actual Smoothed Return of 7.1%*.

* Past performance is not a reliable indicator of future performance. The level of future Smoothed Return cannot be guaranteed.

The Smoothed Returns we announce depend on several things including the start date of the annuity, the return from our With-Profits Fund and how we expect investments to perform in the following months, adjustments for smoothing and the charges we take. In the early years of a contract the announced Smoothed Return will be heavily influenced by our expected future returns and this is reflected in our 2010 Smoothed Return announcement.

Please remember that Smoothed Return can be changed and is not guaranteed until it becomes payable at the next policy anniversary. Once payable the Smoothed Return is payable for one year.

Changes in the income payable from an Income Choice Annuity will depend on the relationship between the Smoothed Return we announce and the Required Smoothed Return needed to maintain your client's chosen level of income. The income from an Income Choice Annuity can fall as well as rise at an annual review.