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14.02.2008
Standard Life reinsures £6.7bn of annuity liabilities

Standard Life has reinsured £6.7bn of UK immediate annuity liabilities, more than half of its
total £12bn¹, to Canada Life International Re, a wholly-owned subsidiary of Great-West Lifeco.

• Longevity risk exposure for shareholders significantly reduced.
  
  
• An expected one-off positive impact on embedded value operating profit of at least £100m²
  and release of cash from reserves in 2008 along with a reduction in capital requirements.
  
  
• Benefits the Heritage With Profits Fund (HWPF) through an enhancement of the residual estate.
  
  
• Standard Life retains the relationship and servicing for all our annuitant customers.

Group Chief Executive Sandy Crombie said:

“I am delighted to announce this transaction with Great-West which delivers benefits to our shareholders and
the policyholders in our Heritage With Profits Fund. It is consistent with our strategy of improving risk
adjusted returns for the group, while crystallising value in the Heritage With Profits Fund estate for the benefit
of with-profits policyholders. Importantly, Standard Life retains the relationship and servicing for all our
annuitant customers.

“This transaction is believed to be the largest of its kind in the UK, and follows a full analysis of the strategic
options for our annuity book and a competitive tender process.

“It substantially reduces pure longevity risk while providing a significant increase to embedded value, a
release of cash and a reduction in capital requirements. It creates capacity to broaden our innovative
product range and take advantage of the profitable opportunities available to us.”

Standard Life has a large back book of annuity business in the UK predating demutualisation in July 2006.
The book primarily consists of existing Standard Life pensions customers who, on retirement, took out an
annuity product with us. Following demutualisation, shareholders bear the longevity risk on predemutualisation
business while investment risk is borne by the Heritage With Profits Fund.

Standard Life conducted a comprehensive review of the options to manage longevity exposure within our
annuity book in the context of our overall risk profile. This review concluded that the best return to
shareholders and with-profits policyholders would be achieved by reinsuring a major block of the business
that predated our demutualisation.

The transaction has taken the form of a ‘single premium’ reinsurance structure and has resulted in the
transfer of £6.7 billion of Standard Life’s total £12bn¹ UK immediate annuity liability. The effective date of the
transaction is 14th February 2008. The tranche of business that has been reinsured relates to individual life
immediate annuities written prior to demutualisation, which reside within the Heritage With Profits Fund. The
remaining blocks of Standard Life’s UK immediate annuity portfolio that have not been affected by this
transaction comprise group annuity policies, with profits annuities, Irish annuities, and the reversionary
element of joint life annuities.

The transaction is expected to deliver a number of financial benefits, including:

• An expected one-off increase in pre-tax embedded value operating profit of at least £100m2 in 2008.
  This reflects the reduction in the risk discount rate used to discount future shareholder cashflows.
  This amount is after sharing the underlying benefit from the transaction with with-profits policyholders
  and is after allowing for the loss of lookthrough margin to Standard Life Investments.
  
  
• A release of cash from reserves in 2008.
  
  
• A significant reduction in the sensitivity of our EEV and IFRS profits to longevity risk.
  In the case of EEV, the sensitivity of the UK’s year-end 2006 embedded value to a 5%
  strengthening of mortality assumptions has been reduced by approximately £40m, from £94m pretransaction
  to £55m post-transaction.
  
  
• A reduction in Pillar 2 capital requirements³.
  
  
• An enhancement to the Heritage With Profits Fund estate and a reduction in its exposure to risk.

Reducing our longevity exposure provides greater capacity to broaden our innovative product range and take
advantage of the profitable opportunities available to us.

For new annuity business written by Standard Life since demutualisation, shareholders bear longevity risk
but also benefit from investment margins. Conversions from Standard Life pension policyholders currently
account for over 90% of our annuity sales.

Standard Life will continue to administer all the business being reinsured and as a result the transaction will
have no impact on the service provided to annuity customers.

Impact on With Profits Policyholders in the Heritage With Profits Fund

Under the scheme of Demutualisation that came into effect at IPO, with-profits policyholders are protected
from exposure to longevity risk via a reinsurance arrangement, through which this exposure has been
transferred to shareholders of Standard Life plc.

The terms of the reinsurance transaction were arrived at with due consideration for our ongoing obligations
to our with-profits policyholders under the Treating Customers Fairly initiative and our Principles and Policies
of Financial Management. The longevity risk protections currently afforded to our with-profits policyholders
will not be affected by this transaction. Furthermore, this transaction benefits the Heritage With Profits Fund
by enhancing its estate.

Great–West Lifeco Inc.

Canada Life International Re Limited was established in Ireland in 2001. It is a wholly owned subsidiary of
The Great-West Life Assurance Company and is fully regulated by the Irish Financial Regulator. The Great-
West Life Assurance Company is the largest operating company of Great-West Lifeco Inc., which has a
current market capitalisation of around £14bn (C$28bn) and had assets under administration of over £200bn
(C$400bn) at 30 September 2007. The Great-West Life Assurance Company is rated ‘AA’ by Standard and
Poor’s Corporation and ‘A+’ by A.M Best Company.

For further information please contact:

Institutional Equity Investors:
Gordon Aitken 0131 245 6799
Duncan Heath 0131 245 4742

Retail Equity Investors:
Computershare 0845 113 0045

Media:
Barry Cameron 0131 245 6165 / 07712 486 463
Neil Bennett (Maitland) 020 7379 5151 / 07900 000 777

Debt Investors:
Andy Townsend 0131 245 7260

PDF version of press release

Notes to Editors:

1. The total UK immediate annuity liability of £12bn includes £0.3bn in respect of Irish immediate
   annuities and excludes total deferred annuity liabilities of approximately £1.5bn.
   
   
2. The expected one-off benefit to pre-tax embedded value operating profit has been calculated on the
   basis of the European Embedded Value (EEV) methodology used by Standard Life as at the end of
   2007.
   
   
3. Pillar 2 refers to the level of capital that a company calculates it should hold under regulatory Internal
   Capital Assessments (ICA).
   
   
4. There will be a conference call today for investors and analysts at 9.00am (UK time) hosted by David
   Nish, Group Finance Director, and Evelyn Bourke, Managing Director of Finance for UK Financial
   Services. Dial in telephone number +44 (0)20 7162 0125. Callers should quote Standard Life call.
   A recording of this call will be available for replay for one week by dialing +44 (0)20 7031 4064
   (access code 785016).

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