Update on Governance Changes

Resolution Limited

10 December 2012

RESOLUTION LIMITED

FURTHER UPDATE ON GOVERNANCE CHANGES

Resolution Limited ("the Company") and Resolution Operations LLP ("ROL") are pleased to announce that they have now finalised arrangements regarding the final phase of simplification of the governance structure of the Company.

Simplification and retained value focus

The Company announced in August 2012 that, whilst the board and ROL believe the current structure was appropriate to launch the Company, the Company's strategy would now best be delivered by moving from an externally advised project based structure to a more conventional, simplified governance structure. Specifically the revised agreements and structure:

·; are more appropriate for a company no longer seeking acquisitions or a specific exit event;

·; will result in the smooth and efficient transfer of appropriate ROL staff and related resources to the Company eight months earlier than under current contractual terms;

·; will deliver a saving to the Company on the fee that would otherwise have been paid to ROL under the Operating Agreement; and

·; will ensure there is no risk to the Company's premium listing from the new FSA regulations regarding "externally managed companies" which, for existing externally advised companies, come into effect from 1 January 2014.

The Company expects to implement the following key changes in early 2013:

·; adopting unified membership of the boards of the Company and Friends Life Group plc ("FLG"), the main UK holding company for its regulated insurance group, further details of which were announced on 19 October 2012; and

·; ending the arrangements with ROL whereby it has provided mergers and acquisitions, strategic and oversight services to the Company under an Operating Agreement, with many of the skills from ROL being in-sourced to the Company including relevant ROL personnel transferring to the Company.

Following this announcement and subject to shareholder approval to amend the Company's constitution to permit the changes to the board composition announced on 19 October 2012, the implementation of all proposed governance changes is expected to be completed by the end of March 2013.

Operating Agreement services

The Company has entered into a Business Sale Agreement with ROL under which ROL will, on 27 March 2013, transfer to the Company business activities that relate to the services it currently provides to the Company and the 24 ROL employees who provide these services. ROL will cease to provide services to the Company, and the Company's payments to ROL under the Operating Agreement will terminate, at the same time.

The acquisition price agreed for the business sale is £7.5 million, representing a saving on the fee that would otherwise have been paid to ROL under the Operating Agreement. The Company estimates that the fee that would have been paid between 28 March and 10 December 2013 is £14.6 million* (including VAT), based on the closing share price on 7 December 2012 of 245.4 pence.

In addition, the Company will take over responsibility for the offices in which ROL staff and other members of ROL's corporate group are currently based. The Company will initially lease the offices to ROL's group for the current market rent of £1.0 million for the period from 28 March 2013 to 31 March 2014. After this initial period, the Company will seek to mitigate the remaining estimated liability for the offices of £2.5 million by sub letting the premises until the earliest break in the lease in September 2015.

Non-UK Life project funding

Although ROL continues to investigate and structure investments in financial services restructurings, it has been agreed that no further drawings on the Company's development budget for ROL's non-UK life projects, which was approved by shareholders in January 2012, will now be made. The Company will retain its existing rights to repayment and return on the £1.1 million of drawn funding. The remainder of the £20 million development budget has been cancelled.

Value share

Resolution Capital Limited ("Resolution Capital"), as sponsor of the Company, received a 'value share' in the Company at its launch. The value share arrangements are not affected by termination of the Operating Agreement. The Company and Resolution Capital have each decided that it would not be in their respective best interests or the interests of the Company's shareholders for the Company to buy-out the value share arrangements.

As part of the package of measures being announced today, a number of small changes to the Resolution Holdco No. 1 Limited Partnership Agreement which sets out the terms of the value share arrangements have been agreed for the benefit of the Company. Among other things, the proposed changes provide greater freedom for the Company to contribute capital to FLG without the consent of Resolution Capital.

Other commercial arrangements

The Company will continue to operate under the "Resolution" brand. The existing Trademark Licence with Resolution (Brands) Limited will remain in force substantially on its current terms, except that from 27 March 2013 there will be an annual termination right and no fee for use of the brand.

On 27 March 2013, consistent with the terms of the existing agreements between the Company and Resolution Capital, the shares in the Company held by Resolution Capital will cease to be subject to any lock-up restrictions. Resolution Capital and Clive Cowdery have both confirmed that Resolution Capital will not sell these shares until at least 31 December 2013.

Previously announced changes to the board and executive management and timing of required shareholder approval

On 19 October 2012, the Company announced the proposed unification of membership of the boards of the Company and FLG and consequential changes to the Company's board composition. The new board will be chaired for an interim period by Mike Biggs (current Chairman of the Company). Andy Briggs (FLG CEO) and Tim Tookey (FLG CFO) will join the board as Group CEO and Group CFO respectively and Clive Cowdery and John Tiner will become non-executive directors of the Company.

In addition, Jim Newman (ROL CFO) will cease to be a Partner of ROL and will join the Company's executive committee as Transformation Director, working part time, as he does currently for ROL.

No shareholder approval is required in relation to the changes to the arrangements with ROL and Resolution Capital announced today. Shareholder approval is however required to amend the Company's constitution to enable the proposed board changes to be implemented.

A shareholder circular will be published in early 2013. It is now expected that the general meeting to approve the constitutional amendments will be convened for March 2013. Subject to receipt of this shareholder approval, the proposed board membership changes will occur on 28 March 2013, immediately after the cessation of services by ROL. This step will complete the simplification of the Company's governance structure announced in August 2012.

As a result of and shortly after the changes to the board's composition, the Company expects to become UK tax resident. The Company has no plans to change its Guernsey incorporation.

Comments

Mike Biggs, Chairman of Resolution Limited said:

"These are a comprehensive and positive set of developments for Resolution Limited, implementing the changes we announced in August and delivering a saving for shareholders against the current contractual position. We are pleased that Andy Briggs will join the board as Group Chief Executive and that Clive Cowdery will join the board and continue to play an active role in the strategic development of the company."

Enquiries:

Investors/analysts

Neil Wesley, Resolution Operations LLP +44 (0)203 372 2928

Media

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

* This excludes the staff costs which would have been separately payable to ROL for accounting consolidation and company secretarial services.

Notes to editors:

For the purpose of this announcement, "the Company" and "Resolution Capital" include references to other members of their respective corporate groups where necessary.

ROL and Resolution Capital are members of a privately-owned financial services advisory group. The Company is not part of their corporate group and they do not form part of the Company's corporate group. Resolution (Brands) Limited is owned by Clive Cowdery.

On 15 August 2012 the Company announced that the Operating Agreement under which ROL has provided mergers and acquisitions, strategic and oversight services to the Company would end on 10 December 2013 at the latest and that the Company intended, subject to regulatory approvals, to streamline the boards of the Company and FLG and adopt a more conventional corporate governance structure.

The Company's ordinary shares were admitted to the Official List and to trading on the main market of the London Stock Exchange in December 2008. The Company transferred to a premium listing as it completed its first acquisition, Friends Provident Group plc, on 4 November 2009 and is subject to those provisions of the Listing Rules that apply to overseas companies with a premium listing. The Company completed its second acquisition, the majority of the AXA UK life business, on 15 September 2010. On 31 January 2011, the Company completed its third acquisition, the shares and business of Bupa Health Assurance Limited.

Resolution Capital, as sponsor of the Company, received a 'value share' in the Company at its launch. The value share arrangements are not affected by the termination of the Operating Agreement. The Company and Resolution Capital have each decided that it would not be in their respective best interests or the interests of the Company's shareholders for the Company to buy-out the value share arrangement. The value share structure is not time limited. In broad terms, it entitles the holder to 10 per cent. of all distributions made from the Company's subsidiary undertaking, Resolution Holdco No. 1 LP ("Holdco"), once the accumulated value of the deployed equity capital contributed into Holdco plus an agreed return has been returned to the Company or its shareholders. As at 30 September 2012, the accumulated value of the deployed equity capital (including the agreed return) was £3,795 million net of amounts previously returned to the Company by Holdco. The value share may also become payable on a change of control of the Company. For the avoidance of doubt, the Company's share price does not itself influence whether payments are made under the terms of the value share. This depends on the aggregate amount of distributions made to the Company by Holdco, including to fund payments to shareholders (dividends or returns of capital), or there being a relevant change of control event.

In January 2012, shareholders gave approval to the Company, under certain conditions, to provide ROL with up to £20 million development funding for non-UK life projects. Expenditure of up to £5 million in respect of two projects had been approved by the Company prior to August 2012, of which £1.1 million has been drawn to date. This funding is for two on-going financial services projects outside the scope of the Company's UK life business which relate to the acquisition and consolidation of closed life insurance businesses in Western Europe, ex-UK and the acquisition of captive asset managers.

A copy of this announcement is available, subject to certain restrictions relating to persons resident in restricted jurisdictions, for inspection on the Company's website at www.resolution.gg

For the avoidance of doubt any other information contained on the Company's website does not form part of this announcement.