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Looking ahead

Our goal for the future is simple - we want to continue generating sustainable returns for our shareholders by continually improving our efficiency and financial performance. Already this year, on 14 February, we reinsured more than half of our pre demutualisation UK immediate annuity portfolio to Canada Life International Re, a subsidiary of Great-West Lifeco. This reduces the risk to our shareholders associated with greater than expected improvement in the life expectancy of annuitants by reinsuring that risk in respect of £6.7bn of annuitant liabilities. The transaction will also have the effect of releasing capital and cash from reserves and reducing capital requirements.

Having beaten our RoEV target in 2007, and despite an uncertain economic background, we are working to increase our core return on embedded value, aided by continued improvement in volumes, mix and product profitability.

We aim to continue building lasting relationships with our customers, helping them to grow their assets with well designed products, consistent investment performance and leading service. At the same time, we will continue to develop capital efficient solutions to customer needs, seek to make these available in more markets, and open up new routes to customers in those markets.

Our strong set of results for 2007, achieved against a background of volatile global markets and challenging trading conditions in our key markets, confirm the validity of this strategy and the confidence we have in our future as a major plc. We expect market conditions to remain demanding over the coming months, but we are in a strong position to manage these challenges and to take advantage of the opportunities they present. I look forward to keeping you up-to-date with our future achievements.

Sandy Crombie
Group Chief Executive