Share buy back programme

Friends Life Group Limited

("Friends Life" or the "Company")

Friends Life announces regulatory approval of increased share buy back programme

Friends Life is delighted to announce that regulatory approval has been received to increase the share buy back programme (the "Buy Back Programme") announced on 11 July 2014 from £261 million to £317 million. The Buy Back Programme will be funded from the £261 million upfront cash consideration from the sale of Lombard International Assurance S.A. and Insurance Development Holdings AG (together, the "Lombard Business") together with £56 million from existing surplus cash resources in the Company. The £56 million increase in the Buy Back Programme is equivalent to the amount of the vendor loan note issued as part of the Lombard Business sale. This demonstrates the strength of the Company's balance sheet and the Board's confidence in the Company's financial strength.

Friends Life has today entered into an irrevocable and non-discretionary arrangement with its corporate brokers, Barclays Bank PLC, acting through its investment bank, and RBC Europe Limited, (together, the "Joint Brokers"), to repurchase on its behalf £317 million (the "Programme Limit") worth of ordinary shares of nil par value in the capital of the Company, representing approximately 6.7% of the current issued share capital of the Company based on the 10 day rolling average share price of 332.1p on 4 August 2014.

The Buy Back Programme will commence on completion of the sale of the Lombard Business, which is expected to occur in the second half of 2014, subject to regulatory approval. The Buy Back Programme will end on the date the Programme Limit has been utilised. Ordinary shares repurchased pursuant to the Buy Back Programme will be cancelled by the Company.

Any purchase of ordinary shares in the Company carried out under the Buy Back Programme will be executed within certain pre-set parameters in accordance with the Listing Rules and the Company's general authority to make market purchases of ordinary shares. The Company will announce any market repurchase of ordinary shares no later than 7.30 am on the business day following the calendar day on which such repurchases occurred.

The Joint Brokers may undertake transactions in ordinary shares in the Company, (which may include sales and hedging activities, in addition to purchases) in order to manage their market exposure under the Buy Back Programme. The Joint Brokers will make any disclosures they are legally required to make in relation to such transactions.

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