Statement re Friends Provident Group plc STICS

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION (DIRECTLY OR INDIRECTLY) IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA OR JAPAN, OR ANY OTHER JURISDICTION WHERE TO DO THE SAME WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

THIS PRESS RELEASE IS NOT AN OFFER OF SECURITIES FOR SALE, NOR A SOLICITATION TO PURCHASE OR SUBSCRIBE FOR SECURITIES, IN OR INTO THE UNITED STATES, AUSTRALIA OR JAPAN.

THE COMPANY'S ORDINARY SHARES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES UNLESS THEY ARE REGISTERED UNDER APPLICABLE LAW OR EXEMPT FROM REGISTRATION. The Ordinary Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any US regulatory authority. THE COMPANY WILL NOT BE REGISTERED UNDER THE US INVESTMENT COMPANY ACT OF 1940, AS AMENDED, AND INVESTORS WILL NOT BE ENTITLED TO THE BENEFITS OF THE ACT. 

15 September 2010

For immediate release

Resolution Limited ("Resolution" or the "Company")

Amendment to the terms of Step-up Tier one Insurance Capital Securities of Friends Provident Group plc

The Company and its subsidiary undertaking, Friends Provident Group plc ("FPG") yesterday agreed to amend the terms of certain of the publicly-issued regulatory debt instruments issued by FPG, namely its £209,895,000 6.875 per cent guaranteed Step-up Tier one Insurance Capital Securities and its £267,837,000 6.292 per cent guaranteed Step-up Tier one Insurance Capital Securities (the "STICS").

The amendment to the STICS was required as, following the Company's acquisition of FPG and FPG's de-listing of its ordinary shares, the alternative coupon satisfaction mechanism ("ACSM") feature of the STICS no longer operated as intended.

The ACSM would only apply where coupon payments under the STICS were deferred, which would only happen in exceptional circumstances. Until FPG was de-listed, the ACSM would have operated so that deferred coupons were satisfied by the issue of FPG's shares to a calculation agent, who would sell the shares in the market and apply the proceeds of sale for the benefit of the STICS holders.

Following a review of the options to allow reinstatement of the ACSM in a manner which meets the original intention for the instruments, the terms and conditions of the ACSM in the STICS have been amended to provide that deferred coupons (if any) are satisfied by the issue of the Company's listed ordinary shares rather than FPG's shares to the calculation agent. As with the FPG shares prior to the amendment of the STICS, the calculation agent will sell the Company's shares in the market, with the proceeds of such sale applied for the benefit of the STICS holders.

The Company will benefit from the amendment to the STICS because FPG will not be required to issue shares under the ACSM, which would otherwise result in the Company's indirect ownership of FPG being subject to a minority interest.

Consistent with the existing group holding structure, any issue of its Ordinary Shares by the Company for the benefit of FPG under the amended ACSM in each of the STICS will be treated as deployed equity capital contributed to Resolution Holdco No. 1 LP (the "Limited Partnership"), the entity through which Resolution holds all its acquired life assurance companies. The Company will receive further partnership interests in the Limited Partnership in return for its capital contribution.

The Company, as general partner of the Limited Partnership, and the limited partners, RCAP Guernsey LP and RCAP Investments S.a.r.l., have agreed to amend the terms of the Limited Partnership Agreement to expressly provide for further partnership interests to be issued to the Company in this circumstance, and to include a mechanism to value such partnership interests. The UK Listing Authority considers that any such issue of further partnership interests to the Company would constitute a class 2 transaction under Chapter 10 of the Listing Rules, and this press release accordingly constitutes the announcement of the terms of such class 2 transaction.

All Enquiries:

Investors/analysts

Neil Wesley, Director of Investor Strategy Tel: +44 (0)20 3372 2928

Media

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