Acquisition Balance Sheet Update (Unaudited)

9 March 2010

RESOLUTION LIMITED

Registered Office: Trafalgar Court, Les Banques, St Peter Port, Guernsey, Channel Islands

Company Number: 49558

Acquisition Balance Sheet Update (Unaudited)

Resolution Limited has prepared its completion acquisition balance sheet of Friends Provident group as at 4 November 2009. The balance sheet, which is unaudited, reflects the alignment with the European Insurance CFO Forum Market Consistent Embedded Value Principles ("MCEV Principles") issued on 9 October 2009.

The principal points arising from the completion balance sheet comprise:

·; The Friends Provident Embedded Value acquired by Resolution Limited was £3,070 million at 4 November 2009 on a MCEV basis ("Acquired Embedded Value").

·; The offer announced for Friends Provident plc was £1,858 million which represented 60.5 % of the Acquired Embedded Value, compared to the 69% announced at the time of offer.

·; There is no material impact from the review of operating assumptions. Increased provisions in respect of adverse persistency were offset by releases as a result of reduced expenses.

·; The post acquisition review of assets and liabilities at the date of acquisition increased the Acquired Embedded Value by £86 million.

·; The inclusion of an illiquidity premium and alignment with other MCEV Principles increased the Acquired Embedded Value by circa £150 million.

·; At the date of completion, the aggregate of the Acquired Embedded Value and the Resolution Limited net assets was equivalent to £1.40 per ordinary share.

·; Resolution Limited's IFRS gain on acquisition was £1.2 billion.

Bases of preparation

In preparing the acquisition balance sheet, Resolution Limited has conducted a review of the operating assumptions of the business and of the assets and liabilities of the business at the acquisition date. The company has also applied the MCEV Principles established by the CFO Forum, including allowing for an increased illiquidity premium in the valuation of the cash flows from the annuity business.

Review of Operating Assumptions

The review of operating assumptions highlighted two main areas for which the long term assumptions have been revised which, in aggregate, have resulted in no material overall effect.

Persistency experience in the second half of the year was consistent with the experience seen in the first six months of 2009. In light of this experience, the assumptions have been revised to take account of the long term trend in persistency levels and also the expected shorter term impact of the current economic downturn. Aggregate gross of tax assumption changes of approximately £140 million in respect of persistency will be charged to Embedded Value Operating Profit in 2009.

The expense assumptions have also been revised to reflect the achieved cost savings already announced and the allocation of all recurring expenses (including corporate costs) to individual product lines in accordance with the MCEV Principles. The gross of tax improvement arising from the change in expense assumptions of approximately £150 million offsets the 2009 persistency charge and there is therefore no material overall impact from the change in operating assumptions.

Review of Asset and Liabilities

The review of the value of MCEV assets and liabilities, at the acquisition date, confirmed that there were no unexpected changes from the items identified as part of the company's pre-acquisition due diligence. Two material adjustments were identified during due diligence: the value of tax liabilities was reduced by £107 million to reflect the applicable rate of tax for the Friends Provident International business, offset by a reduction in the gross value of deferred tax assets totalling £26 million. The former is taken below the Embedded Value Operating Profit line and the latter will be charged to Operating Profit in 2009.

Overall the review of these balance sheet assets and liabilities resulted in an increase of £81 million in Friends Provident's Embedded Value profit, gross of tax and a net of tax of £86 million in the Embedded Value.

Alignment with updated MCEV Principles

The alignment with the updated MCEV Principles established by the CFO Forum resulted in an increase of circa £200 million gross of tax, £150 million net of tax, in the Friends Provident's Embedded Value. Aligning with MCEV Principles entailed including an illiquidity premium in the Acquisition Balance Sheet of 75bps, increasing the allowance for Non Hedgeable Risk and changing the reference rate from gilts to swaps.

In addition, the calculation of the existing business contribution will reflect a lower earned rate as the reference rate is based on a one year yield instead of a long term average yield. Overall, the impact of aligning with the MCEV Principles is a reduction of circa £65 million (gross of tax) in full year Operating Embedded Value Profit. The lower earned rate will result in a corresponding increase in the economic variance component of total Embedded Value Profit.

Acquisition Balance Sheet Valuation

The transaction was announced on 11 August 2009 at an estimated consideration of £1,858 million based on an offer of 0.9 Resolution shares per Friends Provident share. This valued each Friends Provident share at 79.4 pence, based on the Resolution Ltd share price of 88.25 pence at close of trading on 7 August. The offer represented 69% of Friends Provident's published Embedded Value as at 30 June 2009, as adjusted for the sale of F&C and the payment of the interim dividend paid in July 2009.

Based on the completed acquisition balance sheet, the consideration offered of £1,858 million represented 60.5% of the Acquired Embedded Value of £3,070 million prepared on a MCEV basis.

On 4 November 2009, being the completion date for the acquisition of Friends Provident plc, Resolution Limited had net assets of £310 million, which, when aggregated with the Acquired Embedded Value, resulted in a total Embedded Value for Resolution Limited of £3,380 million, equivalent to £1.40 per share as at that date.

The closing Resolution Ltd share price on the 4 November 2009 was 97.0 pence, which gave a rise to consideration on completion of £2,012 million based on 1,752,451,145 of Resolution Limited shares issued and the cash component of the consideration of £312 million. The consideration paid at completion equated to 65.5% of the Acquired Embedded Value.

On an IFRS basis, the Acquisition Balance Sheet, as revised to take into account the fair value of assets acquired and liabilities assumed, shows net assets attributable to equity shareholders of £3,214 million. This gives rise to a gain on acquisition of £1,202 million before transaction costs of £16 million, primarily as a result of the inclusion of the Additional Value of In-Force business, and the inclusion of the fair value of intangible assets.

Resolution Limited will include its balance sheet as at 31 December 2009 on an IFRS and MCEV basis as part of its financial results for the year ended 31 December 2009, which will be released on 24 March 2010.

Enquiries:

Media Alex Child-Villiers, Temple Bar Advisory +44 (0)7795 425580

Investors and Analysts Steve Riley, Resolution Operations +44 (0) 203 372 2908