Interim Management Statement

6 May 2010

RESOLUTION LIMITED

First quarter 2010 - business update

·; Resolution is focused on improving the efficiency of capital and cash resources. To this end, £180 million of internal dividends have been paid from the operating companies to Friends Provident Group plc (FPG) in the first quarter of 2010.

·; Friends Provident maintained an estimated IGD surplus of £1.0 billion as at 30 April 2010 after the payment of a £65 million dividend to Resolution Holdings (Guernsey) Limited (RHG).

·; Resolution believes 2010 will be a decisive year for the re-shaping of many financial services groups. The group is confident that it can deliver on its strategy and will update the market when appropriate.

·; Resolution sets out in the attached Appendix the new business sales for the first quarter of 2010 for Friends Provident. Sales (measured on an annual premium equivalent basis) in the first quarter of 2010 were up 19% to £178 million compared to £149 million for the same quarter of 2009.

Enquiries:

Investors / analysts Neil Wesley, Resolution Operations LLP +44 (0)20 3372 2928

Media

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

Forward-looking statements

This announcement contains certain forward-looking statements with respect to Resolution Limited and its outlook. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this announcement should be construed as a profit forecast.

Notes to editors

Headline new business figures are presented on the Annual Premium Equivalent (APE) basis, representing annualised new regular premiums plus 10% of single premiums.

Media

There will be a conference call today for real-time media at 07:30 GMT, hosted by John Tiner, CEO of Resolution Operations and Trevor Matthews, CEO of Friends Provident (+44 (0) 1452 555566 quoting 72980949).

Analysts / Investors

There will be a conference call today for analysts and investors at 09:00 GMT hosted by John Tiner, CEO of Resolution Operations and Trevor Matthews, CEO of Friends Provident (+44 (0) 1452 555566 quoting 72987354). A recording of this call will be available for 7 days by dialling: +44 (0) 1452 550000 replay access number 72987354#.

Financial calendar

Annual General Meeting 18 May 2010

Interim results 2010 18 August 2010

Interim management statement 11 November 2010

Website

www.resolution.gg

AppendiX

Friends Provident - first quarter 2010 new business

·; Total sales of £178 million for first quarter of 2010 measured on an annual premium equivalent basis (APE) are up 19% on the same period of 2009.

·; International sales, excluding Lombard, of £57 million are up 49% on the first quarter of 2009 with improved sales across regions, notably Asia, where sales were up by 61% to £27 million.

·; Lombard sales have improved markedly on the same period in 2009, up 62% to £33 million.

·; UK sales of £88 million show group pensions down 5%, individual protection down 4% and annuities up 37% year-on-year.

·; The first phase of the Friends Provident Corporate Investment Platform was successfully launched at the end of the quarter.

·; Estimated IGD surplus maintained at £1.0 billion at 30 April 2010 after the payment of a £65 million dividend to Resolution Holdings (Guernsey) Limited (RHG).

Life and Pensions New Business

Sales of new life and pensions business measured in APE for the first quarter of 2010 were £178 million, up 19% on the first quarter of 2009. Within this overall result the International business (Friends Provident International Limited, overseas business written in the UK operating companies and the Friends Provident 30% stake in AmLife, the Malaysian joint venture) was up 49%, Lombard was up 62% and the UK down 3%.

International

International sales have maintained the momentum seen in 2009 with most regions performing well. March was a particularly strong month in Asia, up 61% year-on-year and accounting for half of International sales, with Middle East sales also beginning to gain ground. The International business has been actively developing bank distribution relationships in both of these markets.

Friends Provident's commitment and growing prominence in the Middle East market has already been recognised in 2010 by a number of prestigious awards, including 'Life Insurer of the Year' at the Gulf Insurance awards.

Friends Provident's proposition in Germany has also shown strong first quarter growth, in a market that is beginning to stabilise. Following the acquisition of our distribution partner Financial Partners Business AG (fpb) at the end of December 2009, Friends Provident is continuing to develop and expand its network of supporting brokers which is expected to contribute to future profitable growth.

AmLife, the Malaysian life insurance joint venture in which Friends Provident has a 30% stake, has continued to perform strongly this quarter. Friends Provident's share of new business APE was £2.7 million, up from £1.1 million reported last year.

Lombard

New business in the first quarter of the year is traditionally limited, which is in contrast to the strong final quarter of 2009. Nevertheless first quarter sales of £33.0 million APE are significantly up on 2009 comparatives (£20.4 million) with stronger performances in Italy, UK Private Banks, Finland and Asia, which have all benefited from the completion of large cases.

UK

Market conditions within the UK life insurance industry remain difficult with little prospect of significant economic growth in the short term. Friends Provident has maintained pricing discipline and is focused on cash generation. Friends Provident is investing to maintain the competitive position of its key individual protection and group pensions businesses, while providing annuity policies for retiring pensions customers.

Group pensions sales were £66 million, down 5% on the first quarter of 2009. Increments to existing schemes are the largest component of new APE but remain subdued due to the economic conditions. As previously noted, new scheme business in the first quarter was held back by the effect of being removed from a number of consultants' panels at the time of the Resolution acquisition. These panel positions have since been reinstated. 

Funds under management for unit-linked group and individual pensions on the New Generation Pensions platform at the end of March were £10.4 billion up from £9.7 billion at 31 December 2009.

At the end of March, Friends Provident announced the launch of the new Corporate Investment Platform (CIP). The CIP provides a platform for pension scheme trustees to manage their funds, giving them greater flexibility and simplifying the administration process. This platform showcases innovative technology and demonstrates Friends Provident's commitment to the corporate pensions market. Further phases of the platform are expected to be launched throughout 2010.

UK Individual sales mostly comprise annuities and individual protection. Annuity sales, up 37% year-on-year, are the principal driver of the 12% overall sales growth. A factor driving this growth is the one-off impact of customers aged between 50 and 55 wishing to retire before April 4th, when the regulations changed to increase the minimum early retirement age to 55.

The protection market reflects, in a large part, housing market turnover. It is our expectation that the UK market will remain challenging overall for the remainder of 2010.

Sesame Bankhall

As expected, Sesame Bankhall has traded profitably in the first quarter. The integration of the Sesame and Bankhall operations is now largely complete, with new operating structures in place.

Capital

As at 30 April 2010 after taking into consideration the payment of the £65 million dividend to RHG, Friends Provident maintained a strong IGD surplus estimated at £1.0 billion (31 December 2009: £1.0 billion). Shareholder funds have limited exposure to equities and as a result the surplus was not affected by the performance of equity markets through the latter part of 2009 and the first quarter of 2010,

Insurer financial strength ratings from each of the three rating agencies, Moody's, Standard & Poor's and Fitch remain in the A range.

Shareholder cash resources

As announced with the 2009 results, Resolution Limited is focused on improving the efficiency of capital and cash resources. To this end a number of internal dividends have been paid in the first quarter of 2010. In total, dividends of £180 million were paid from the operating companies to Friends Provident Group plc (FPG) in March. These enabled the payment of a £65 million dividend to RHG, also in March, which will fund the 2009 final dividend to be paid by Resolution in May 2010.

The bulk of the remaining cash is being retained in FPG and Friends Provident (UK) Holdings Limited (FPH) for general corporate purposes.

Following the completion of the annual statutory valuation the remainder of the £380 million floating rate notes, raised under the securitisation in December 2004, have been repaid on 15 April 2010.

The notes repaid include:

·; £23 million nominal Box Hill Life Finance plc securitisation notes - class A-1 due 2016

·; £100 million nominal Box Hill Life Finance plc securitisation notes - class A-2 due 2019

The original projections made in 2004, based on embedded value assumptions, indicated repayment of the A-2 notes in 2011. Therefore these notes have been repaid one year ahead of schedule.

Analysis of Life and Pensions New Business

In classifying new business premiums the following basis of recognition is adopted:

·; single new business premiums consist of those contracts under which there is no expectation of continuing premiums being paid at regular intervals;

·; regular new business premiums consist of those contracts under which there is an expectation of continuing premiums being paid at regular intervals, including repeated or recurrent single premiums where the level of premiums is defined, or where a regular pattern in the receipt of premiums has been established;

·; non-contractual increments under existing group pensions schemes are classified as new business premiums;

·; transfers between products where open market options are available are included as new business; and

·; regular new business premiums are included on an annualised basis.

Life & Pensions New Business - Regular and Single Premiums

New Business - Annual Premium Equivalent

Annual Premium Equivalent represents annualised new regular premiums plus 10% of single premiums.

International

Lombard

New business APE at constant exchange rates

All amounts in currency in the tables above other than Sterling are translated into Sterling at a monthly average exchange rate. The estimated new business assuming constant currency rates would be as follows:

New Business - Present Value of New Business Premiums (PVNBP)

PVNBP equals new single premiums plus the expected present value of new regular premiums. Premium values are calculated on a consistent basis with the EV contribution to profits from new business. Start of period assumptions are used for the economic basis and end of period assumptions are used for the operating basis. A risk free rate is used to discount expected premiums in future years. The impact of operating assumption changes across a whole reporting period will normally be reflected in the PVNBP figures for the final quarter of the period that the basis changes relate to. No change in operating assumptions will be reflected in the PVNBP for the first and third quarters, when the contribution to profits from new business is not published. All amounts in currency other than Sterling are translated into Sterling at a monthly average exchange rate.