Highlights

In the first half of 2009, we delivered a continuing strong performance across all our businesses and reinforced our already robust capital position, despite economic conditions that remained challenging.

As a result of the decision we took last year to focus on capital conservation and cash generation by concentrating on expanding sales in our most profitable product lines, we have been able to manage our investment in new business and improve our margins across the Group in the first six months of the year.

Compared with the same period in 2008, our Group European Embedded Value (EEV) New Business Profit increased 25 per cent to £691 million, and our Group International Financial Reporting Standards (IFRS) statutory operating profit increased six per cent to £688 million. Our Group EEV Operating Profit decreased eight per cent to £1,246 million.

Our prudent but proactive approach enabled us to strengthen further our Group capital position. At 30 June 2009, we had an estimated Insurance Groups Directive (IGD) capital surplus of £2.5 billion, before any allowance for the interim dividend. In July 2009 we completed a bond issue which will increase our IGD capital surplus by a further £0.5 billion to an estimated £3.0 billion.

While we expect the business environment to remain difficult through the rest of 2009, our combination of prudent capital management, selective geographic spread, trusted brands and consistent focus on profitable retirement-related opportunities will ensure we are very well placed to continue to outperform over the economic and financial cycle.