Pearl Group Update

Pearl Group update

Pearl Group is scheduled to announce its preliminary results for the year to 31 December 2009 on 31 March 2010. Ahead of that announcement, Pearl Group wishes to provide an update on its progress on a number of important points.

·; 2009 operational cash generation to exceed target of £500 million

·; Continued preparations for a Premium Listing on the London Stock Exchange in H1

·; No intention to raise capital at time of Premium Listing

·; Appointment of three independent non-executive Directors

·; Intention to change name to Phoenix Group Holdings

·; Appointment of corporate brokers

Ron Sandler, Chairman of Pearl Group, said:

"I am pleased to report that we have made significant progress on a number of fronts to continue to strengthen our financial position and governance and to support our stated goal of achieving a Premium Listing on the London Stock Exchange. I am delighted to welcome Charles Clarke, Isabel Hudson and David Woods to the Pearl Group Board. They each bring a wealth of skills and experience. We look forward to working with them and benefiting from their contribution.

"In addition, we are announcing today our intention to change the name of the Group. The reconstruction last year provided the Group with fresh momentum, and the decision to change the name is a reflection of this. The Phoenix brand has been associated with life assurance for over two hundred years, and carries a proud legacy. It will serve us well as we continue on our chosen path of consolidating closed life funds in the UK."

Trading update

In the Q3 Interim Management Statement, Pearl Group stated that cash generation from its subsidiaries was on track to achieve the full year target of approximately £500 million. While the audit of our 2009 results will not be complete until the announcement of our preliminary results on 31 March 2010, we can confirm that Pearl Group's strong performance in the second half of the year has resulted in cash generation from its subsidiaries in excess of £500 million for 2009.

Pearl Group remains on track to pay the full year 2009 dividend of €0.50 per share, pro rated from 2 September 2009.

Pearl Group is in constructive discussions with its Tier 1 Bondholders with a view to finding an agreement that would be acceptable to all its stakeholders. However, there can be no assurance at this point that a solution will be found that would resolve all outstanding issues and provide certainty in respect of the conditions under which coupons would be paid in the future.

Jonathan Moss, Pearl Group CEO said:

"The underlying operating companies have delivered strong cashflows in 2009 and met the plans set out for the business, which demonstrates the cash generative nature and longer-term predictability of the business model. We recognise the importance to investors of providing greater visibility of cashflows and the extent to which this facilitates understanding of our complex structure and makes the underlying value of the group more transparent.

"Work continues in pursuit of a Premium Listing on the London Stock Exchange. The Group does not intend to raise additional capital at the time of the Premium Listing that is being targeted for the first half of 2010."

Appointment of independent non-executive Directors

The Board is pleased to announce that Charles Clarke, Isabel Hudson and David Woods have been appointed to the Board as independent non-executive Directors. The Group is also well advanced with plans to appoint a fourth new independent non-executive Director, who will become Chairman of the Audit Committee.

Charles Clarke

Charles Clarke is a Jersey resident Chartered Accountant who spent some 30 years with KPMG, latterly as Senior Partner of the Channel Island firm. Since retiring from KPMG in 2005 he has established an offshore governance consultancy and accepted a number of non-executive Director appointments, including SG Hambros Bank where he chairs the Audit Committee. Charles will serve on the Audit Committee.

Isabel Hudson

Isabel Hudson is an insurance professional and has been an Executive Director of both Eureko BV and Prudential Assurance. She is a non-executive Director of the Pensions Regulator and QBE. Isabel will serve on the Risk Committee and the Remuneration Committee.

David Woods

David Woods is an actuary by training and has been Managing Director of Scottish Provident, Deputy Chairman of Aberdeen Asset Management, and is Chairman of Royal Liver Assurance. David will Chair the Risk Committee.

Premium Listing and appointment of corporate brokers

Pearl Group continues with its preparations for a Premium Listing in the first half of 2010. The Group is pleased to announce that it has appointed Deutsche Bank and JP Morgan Cazenove to be joint corporate brokers to the Group.

Intention to change name

The Board of Pearl Group is to ask shareholders to approve a change in its name to Phoenix Group Holdings. An EGM will be scheduled to be held on 15 March 2010 and it is intended that the Group will trade under the name Phoenix Group Holdings from 17 March 2010.

Following the Group's reconstruction in September last year, which resulted in the injection of new capital, changes to ownership, a transition to publicly listed from privately owned status and the appointment of a new Chairman in Ron Sandler, the Phoenix name was chosen as the core brand for the Life Company businesses. The Board has considered the Group's brand positioning and believes that there is value to be obtained by extending the Phoenix name and brand to the parent company level.

Corporate calendar

A presentation of Pearl Group's preliminary results is scheduled to take place on 31 March 2010 at the offices of JP Morgan Cazenove, 20 Moorgate, London EC2R 6DA at 8.30 am.

Enquiries:

Media:

Andrew Grant, James Bradley, Mal Patel

Tulchan Communications

+44 (0) 20 7353 4200

Daniel Godfrey

Director of Corporate Communications, Pearl Group

+44 (0) 20 7489 4517

+44 (0) 7894 937 890

Investors:

Samuel Perowne, Pearl Group

+44 (0) 20 7489 4489

Corporate brokers:

Martyn Dodgson, Andrew Smith, Deutsche Bank

+44 (0) 20 7545 8000

Tim Wise, JP Morgan Cazenove

+44 (0) 20 7155 4576

Conor Hillery, JP Morgan Cazenove

+ 44(0) 20 7155 4622

Notes for Editors

Pearl Group is listed in London and Amsterdam, and owns a range of household name life assurers, serving over 6.5 million policyholders. The companies are all closed to new business and the Group is fully focused on the provision of service and investment performance to its policyholders rather than the development of costly new business. The group has over £66 billion of assets under management by its wholly owned subsidiary, Ignis Asset Management, which manages the Group's funds as well as assets on behalf of external clients.

The Group has a simple business model, the safe and responsible de-commissioning of closed life funds in the interests of millions of policyholders. A great deal of skill and expertise is applied to the management of the closed books of business that the Group acquires. The business model is highly cash generative as the regulatory reserves of capital which are required to be held to back the liabilities of policies in force can be released as the business runs off over time.

The cash generation from operating subsidiaries in excess of £500 million is in addition to the £170m due from Royal London to Phoenix Life Limited which was released in Q3 2009. This amount was used to offset amounts due to Royal London from other group companies.

Pearl Group's cash generation from subsidiaries comprises cash distributed to the UK holding companies from its life, service and asset management companies, and amounts received from these subsidiaries in respect of group relief payments. The amounts distributed from Pearl Group's life companies are generated from the interest earned on capital, the release of excess capital, policyholder charges and management fees earned on assets.