ST ANDREW'S LIFE ASSURANCE PLC

Annual PRA Insurance Returns for the year ended 31 December 2014 IPRU(INS) Appendices 9.1, 9.3, 9.4, 9.6

Balance Sheet and Profit and Loss Account Contents Form 2 Statement of solvency - long-term insurance business 1 Form 3 Components of capital resources 3 Form 13 Analysis of admissible assets 6 Form 14 Long term insurance business liabilities and margins 12 Form 15 Liabilities (other than long term insurance business) 13 Form 16 Profit and loss account (non-technical account) 14 Form 17 Analysis of derivative contracts 15 Long Term Insurance Business: Revenue Account and Additional Information Form 40 Revenue account 16 Form 41 Analysis of premiums 17 Form 42 Analysis of claims 18 Form 43 Analysis of expenses 19 Form 44 Linked funds balance sheet 20 Form 45 Revenue account for internal linked funds 21 Form 46 Summary of new business 22 Form 47 Analysis of new business 23 Form 48 Assets not held to match linked liabilities 24 Form 50 Summary of mathematical reserves 25 Form 51 Valuation summary of non-linked contracts (other than 26 accumulating with-profits contracts) Form 53 Valuation summary of property linked contracts 29 Form 55 Unit prices for internal linked funds 31 Form 57 Analysis of valuation interest rate 32 Form 58 Distribution of surplus 33 Form 60 Long-term insurance capital requirement 34 Supplementary notes to the return 35 Additional information on derivative contracts 42 Additional information on controllers 43 Abstract of the Valuation Report 44 Directors' Certificate 55 Auditor's Report 56

24032015:17:48:35 Form 2 Statement of solvency - long-term insurance business Global business Solo solvency calculation Company GL/ registration UK/ day month year Units number CM R2 3104670 GL 31 12 2014 000 As at end of this financial year As at end of the previous year 1 2 Capital resources Capital resources arising within the long-term insurance fund 11 39444 69594 Capital resources allocated towards long-term insurance business arising outside the long-term insurance fund Capital resources available to cover long-term insurance business capital resources requirement (11+12) 12 656460 521188 13 695904 590782 Guarantee fund Guarantee fund requirement 21 24411 29764 Excess (deficiency) of available capital resources to cover guarantee fund requirement 22 671493 561018 Minimum capital requirement (MCR) Long-term insurance capital requirement 31 73233 89293 Resilience capital requirement 32 5000 7500 Base capital resources requirement 33 2902 3146 Individual minimum capital requirement 34 78233 96793 Capital requirements of regulated related undertakings 35 Minimum capital requirement (34+35) 36 78233 96793 Excess (deficiency) of available capital resources to cover 50% of MCR 37 656787 542385 Excess (deficiency) of available capital resources to cover 75% of MCR 38 637229 518187 Enhanced capital requirement With-profits insurance capital component 39 Enhanced capital requirement 40 78233 96793 Capital resources requirement (CRR) Capital resources requirement (greater of 36 and 40) 41 78233 96793 Excess (deficiency) of available capital resources to cover long-term insurance business CRR (13-41) 42 617671 493989 Contingent liabilities Quantifiable contingent liabilities in respect of long-term insurance business as shown in a supplementary note to Form 14 51 1

24032015:17:48:35 Form 2 Covering Sheet to Form 2 Global business Financial year ended 31-Dec-14 A M Parsons Director T E Strauss Director C J Thornton Director Date 26 March 2014 2

24032015:17:48:35 Components of capital resources Form 3 (Sheet 1) Global business Company GL/ registration UK/ day month year Units number CM R3 3104670 GL 31 12 2014 000 Core tier one capital General Long-term Total as at Total as at insurance insurance the end of the end of business business this financial the previous year year 1 2 3 4 Permanent share capital 11 360000 360000 360000 Profit and loss account and other reserves 12 444956 444956 380996 Share premium account 13 Positive valuation differences 14 23178 23178 26328 Fund for future appropriations Core tier one capital in related undertakings 15 16 Core tier one capital (sum of 11 to 16) 19 828134 828134 767324 Tier one waivers Unpaid share capital / unpaid initial funds and calls for supplementary contributions Implicit Items 22 Tier one waivers in related undertakings 23 21 Total tier one waivers as restricted (21+22+23) 24 Other tier one capital Perpetual non-cumulative preference shares as restricted Perpetual non-cumulative preference shares in related undertakings Innovative tier one capital as restricted Innovative tier one capital in related undertakings 25 26 27 28 Total tier one capital before deductions (19+24+25+26+27+28) Investments in own shares Intangible assets Amounts deducted from technical provisions for discounting Other negative valuation differences Deductions in related undertakings Deductions from tier one (32 to 36) Total tier one capital after deductions (31-37) 31 828134 828134 767324 32 33 34 35 36 37 39 828134 828134 767324 3

24032015:17:48:35 Components of capital resources Form 3 (Sheet 2) Global business Tier two capital Company GL/ registration UK/ day month year Units number CM R3 3104670 GL 31 12 2014 000 General Long-term Total as at Total as at insurance insurance the end of the end of business business this financial the previous year year 1 2 3 4 Implicit items, (tier two waivers and amounts excluded from line 22) Perpetual non-cumulative preference shares excluded from line 25 Innovative tier one capital excluded from line 27 Tier two waivers, innovative tier one capital and perpetual noncumulative preference shares treated as tier two capital (41 to 43) Perpetual cumulative preference shares Perpetual subordinated debt and securities 41 42 43 44 45 46 Upper tier two capital in related undertakings 47 Upper tier two capital (44 to 47) 49 Fixed term preference shares 51 Other tier two instruments 52 Lower tier two capital in related undertakings 53 Lower tier two capital (51+52+53) 59 Total tier two capital before restrictions (49+59) 61 Excess tier two capital 62 Further excess lower tier two capital Total tier two capital after restrictions, before deductions (61-62-63) 63 69 4

24032015:17:48:35 Components of capital resources Form 3 (Sheet 3) Global business Total capital resources Company GL/ registration UK/ day month year Units number CM R3 3104670 GL 31 12 2014 000 General Long-term Total as at Total as at insurance insurance the end of the end of business business this financial the previous year year 1 2 3 4 Positive adjustments for regulated non-insurance related undertakings Total capital resources before deductions (39+69+71) Inadmissible assets other than intangibles and own shares Assets in excess of market risk and counterparty limits Deductions for related ancillary services undertakings Deductions for regulated non-insurance related undertakings Deductions of ineligible surplus capital Total capital resources after deductions (72-73-74-75-76-77) 71 72 828134 828134 767324 73 132230 132230 176542 74 75 76 77 79 695904 695904 590782 Available capital resources for GENPRU/INSPRU tests Available capital resources for guarantee fund requirement Available capital resources for 50% MCR requirement Available capital resources for 75% MCR requirement 81 695904 695904 590782 82 695904 695904 590782 83 695904 695904 590782 Financial engineering adjustments Implicit items Financial reinsurance - ceded Financial reinsurance - accepted Outstanding contingent loans Any other charges on future profits Sum of financial engineering adjustments (91+92-93+94+95) 91 92 93 94 95 96 5

24032015:17:48:35 Analysis of admissible assets Form 13 (Sheet 1) Global business Category of assets Total other than long term insurance business assets Company GL/ Category registration UK/ day month year Units of number CM assets R13 3104670 GL 31 12 2014 000 1 As at end of this financial year As at end of the previous year 1 2 Land and buildings 11 Investments in group undertakings and participating interests UK insurance dependants Other insurance dependants Non-insurance dependants Other group undertakings Participating interests Shares Shares Shares Shares Shares 21 23 25 27 29 Debts and loans Debts and loans Debts and loans Debts and loans Debts and loans 22 24 26 28 30 Other financial investments Equity shares 41 Other shares and other variable yield participations 42 Holdings in collective investment schemes 43 450150 187566 Rights under derivative contracts 44 Fixed interest securities Variable interest securities Approved Approved 45 47 Other Other 46 48 105974 183948 Participation in investment pools 49 Loans secured by mortgages 50 Loans to public or local authorities and nationalised industries or undertakings 51 Loans secured by policies of insurance issued by the company Other loans 53 100210 149081 Bank and approved credit & financial institution deposits Other financial investments 56 Deposits with ceding undertakings 57 Assets held to match linked liabilities One month or less withdrawal More than one month withdrawal Index linked Property linked 52 54 55 58 59 6

24032015:17:48:35 Analysis of admissible assets Form 13 (Sheet 2) Global business Category of assets Total other than long term insurance business assets Company GL/ Category registration UK/ day month year Units of number CM assets R13 3104670 GL 31 12 2014 000 1 As at end of this financial year As at end of the previous year Reinsurers' share of technical provisions 1 2 Provision for unearned premiums Claims outstanding Provision for unexpired risks Other 60 61 62 63 Debtors and salvage Direct insurance business Salvage and subrogation recoveries Reinsurance Dependants Other Other assets Policyholders Intermediaries Accepted Ceded due in 12 months or less due in more than 12 months due in 12 months or less due in more than 12 months 71 72 73 74 75 76 77 78 250 79 Tangible assets Deposits not subject to time restriction on withdrawal with approved institutions Cash in hand Other assets (particulars to be specified by way of supplementary note) Accrued interest and rent Deferred acquisition costs (general business only) Other prepayments and accrued income 80 81 1 82 83 84 321 342 85 86 Deductions from the aggregate value of assets 87 Grand total of admissible assets after deduction of admissible assets in excess of market risk and counterparty limits (11 to 86 less 87) 89 656655 521188 7

24032015:17:48:35 Analysis of admissible assets Form 13 (Sheet 3) Global business Category of assets Total other than long term insurance business assets Company GL/ Category registration UK/ day month year Units of number CM assets R13 3104670 GL 31 12 2014 000 1 As at end of this financial year As at end of the previous year 1 2 Reconciliation to asset values determined in accordance with the insurance accounts rules or international accounting standards as applicable to the firm for the purpose of its external financial reporting Total admissible assets after deduction of admissible assets in excess of market risk and counterparty limits (as per line 89 above) Admissible assets in excess of market and counterparty limits Inadmissible assets directly held Capital resources requirement deduction of regulated related undertakings Ineligible surplus capital and restricted assets in regulated related insurance undertakings Inadmissible assets of regulated related undertakings Book value of related ancillary services undertakings Other differences in the valuation of assets (other than for assets not valued above) Deferred acquisition costs excluded from line 89 Reinsurers' share of technical provisions excluded from line 89 Other asset adjustments (may be negative) Total assets determined in accordance with the insurance accounts rules or international accounting standards as applicable to the firm for the purpose of its external financial reporting (91 to 101) 91 656655 521188 92 93 94 95 96 97 98 99 100 101 (3627) (3730) 102 653028 517458 Amounts included in line 89 attributable to debts due from related insurers, other than those under contracts of insurance or reinsurance 103 8

24032015:17:48:35 Analysis of admissible assets Form 13 (Sheet 1) Global business Category of assets Total long term insurance business assets Company GL/ Category registration UK/ day month year Units of number CM assets R13 3104670 GL 31 12 2014 000 10 As at end of this financial year As at end of the previous year 1 2 Land and buildings 11 Investments in group undertakings and participating interests UK insurance dependants Other insurance dependants Non-insurance dependants Other group undertakings Participating interests Shares Shares Shares Shares Shares 21 23 25 27 29 Debts and loans Debts and loans Debts and loans Debts and loans Debts and loans 22 24 26 28 30 Other financial investments Equity shares 41 Other shares and other variable yield participations 42 Holdings in collective investment schemes 43 72841 124244 Rights under derivative contracts 44 53612 50501 Fixed interest securities Variable interest securities Approved Approved 45 47 629 771 Other Other 46 48 23823 50832 Participation in investment pools 49 Loans secured by mortgages 50 Loans to public or local authorities and nationalised industries or undertakings 51 Loans secured by policies of insurance issued by the company Other loans 53 50105 949 Bank and approved credit & financial institution deposits Other financial investments 56 Deposits with ceding undertakings 57 Assets held to match linked liabilities One month or less withdrawal More than one month withdrawal Index linked Property linked 52 54 55 58 59 9132204 9889622 9

24032015:17:48:35 Analysis of admissible assets Form 13 (Sheet 2) Global business Category of assets Total long term insurance business assets Company GL/ Category registration UK/ day month year Units of number CM assets R13 3104670 GL 31 12 2014 000 10 As at end of this financial year As at end of the previous year Reinsurers' share of technical provisions 1 2 Provision for unearned premiums Claims outstanding Provision for unexpired risks Other 60 61 62 63 Debtors and salvage Direct insurance business Salvage and subrogation recoveries Reinsurance Dependants Other Other assets Policyholders Intermediaries Accepted Ceded due in 12 months or less due in more than 12 months due in 12 months or less due in more than 12 months 71 52380 30166 72 6 31422 73 74 75 557 5027 76 77 78 40778 74889 79 Tangible assets Deposits not subject to time restriction on withdrawal with approved institutions Cash in hand Other assets (particulars to be specified by way of supplementary note) Accrued interest and rent Deferred acquisition costs (general business only) Other prepayments and accrued income 80 81 12409 2586 82 83 84 61 85 86 95 Deductions from the aggregate value of assets 87 Grand total of admissible assets after deduction of admissible assets in excess of market risk and counterparty limits (11 to 86 less 87) 89 9439500 10261009 10

24032015:17:48:35 Analysis of admissible assets Form 13 (Sheet 3) Global business Category of assets Total long term insurance business assets Company GL/ Category registration UK/ day month year Units of number CM assets R13 3104670 GL 31 12 2014 000 10 As at end of this financial year As at end of the previous year 1 2 Reconciliation to asset values determined in accordance with the insurance accounts rules or international accounting standards as applicable to the firm for the purpose of its external financial reporting Total admissible assets after deduction of admissible assets in excess of market risk and counterparty limits (as per line 89 above) Admissible assets in excess of market and counterparty limits Inadmissible assets directly held Capital resources requirement deduction of regulated related undertakings Ineligible surplus capital and restricted assets in regulated related insurance undertakings Inadmissible assets of regulated related undertakings Book value of related ancillary services undertakings Other differences in the valuation of assets (other than for assets not valued above) Deferred acquisition costs excluded from line 89 Reinsurers' share of technical provisions excluded from line 89 Other asset adjustments (may be negative) Total assets determined in accordance with the insurance accounts rules or international accounting standards as applicable to the firm for the purpose of its external financial reporting (91 to 101) 91 9439500 10261009 92 93 16342 46168 94 95 96 97 98 99 115888 130374 100 118725 114587 101 46046 18463 102 9736501 10570601 Amounts included in line 89 attributable to debts due from related insurers, other than those under contracts of insurance or reinsurance 103 11

24032015:17:48:35 Long term insurance business liabilities and margins Form 14 Global business Total business/sub fund LTBF Non Profit Units 000 As at end of As at end of this financial the previous year year 1 2 Mathematical reserves, after distribution of surplus 11 9242932 9970569 Cash bonuses which had not been paid to policyholders prior to end of the financial year Balance of surplus/(valuation deficit) 13 39444 69594 Long term insurance business fund carried forward (11 to 13) 14 9282376 10040163 Claims outstanding Provisions 12 Gross 15 90105 85940 Reinsurers' share 16 Net (15-16) 17 90105 85940 Taxation 21 Other risks and charges 22 Deposits received from reinsurers 23 Creditors Debenture loans Direct insurance business 31 369 635 Reinsurance accepted 32 1129 4765 Reinsurance ceded 33 2870 Secured 34 Unsecured 35 Amounts owed to credit institutions 36 Creditors Taxation 37 11522 4627 Other 38 53999 122009 Accruals and deferred income 39 Provision for "reasonably foreseeable adverse variations" Total other insurance and non-insurance liabilities (17 to 41) 49 157124 220846 Excess of the value of net admissible assets 51 Total liabilities and margins 59 9439500 10261009 41 Amounts included in line 59 attributable to liabilities to related companies, other than those under contracts of insurance or reinsurance Amounts included in line 59 attributable to liabilities in respect of property linked benefits 61 27507 4217 62 9132204 9889622 Total liabilities (11+12+49) 71 9400056 10191415 Increase to liabilities - DAC related 72 23178 26328 Reinsurers' share of technical provisions 73 118725 114484 Other adjustments to liabilities (may be negative) 74 42419 14836 Capital and reserves and fund for future appropriations 75 152123 223538 Total liabilities under insurance accounts rules or international accounting standards as applicable to the firm for the purpose of its external financial reporting (71 to 75) 76 9736501 10570601 12

24032015:17:48:35 Form 15 Liabilities (other than long term insurance business) Global business Company GL/ registration UK/ day month year Units number CM R15 3104670 GL 31 12 2014 000 Technical provisions (gross amount) As at end of As at end of this financial the previous year year 1 2 Provisions for unearned premiums 11 Claims outstanding 12 Provision for unexpired risks 13 Equalisation provisions Credit business 14 Other than credit business 15 Other technical provisions 16 Total gross technical provisions (11 to 16) 19 Provisions and creditors Provisions Taxation 21 Other risks and charges 22 Deposits received from reinsurers 31 Creditors Debenture loans Direct insurance business 41 Reinsurance accepted 42 Reinsurance ceded 43 Secured 44 Unsecured 45 Amounts owed to credit institutions 46 Creditors Taxation 47 186 Foreseeable dividend 48 Other 49 9 Accruals and deferred income 51 Total (19 to 51) 59 195 Provision for "reasonably foreseeable adverse variations" 61 Cumulative preference share capital 62 Subordinated loan capital 63 Total (59 to 63) 69 195 Amounts included in line 69 attributable to liabilities to related insurers, other than those under contracts of insurance or reinsurance 71 Amounts deducted from technical provisions for discounting 82 Other adjustments (may be negative) 83 Capital and reserves 84 652833 517458 Total liabilities under insurance accounts rules or international accounting standards as applicable to the firm for the purpose of its external financial reporting (69-82+83+84) 85 653028 517458 13

24032015:17:48:35 Form 16 Profit and loss account (non-technical account) Global business Company GL/ registration UK/ day month year Units number CM R16 3104670 GL 31 12 2014 000 This financial year Previous year 1 2 Transfer (to)/from the general insurance business technical account From Form 20 11 Equalisation provisions 12 Transfer from the long term insurance business revenue account Income 13 130000 150000 14 3570 2855 Value re-adjustments on Investment income 15 investments Gains on the realisation of investments Investment management charges, including interest Value re-adjustments on Investment charges 18 investments Loss on the realisation of investments Allocated investment return transferred to the general insurance business technical account Other income and charges (particulars to be specified by way of supplementary note) Profit or loss on ordinary activities before tax (11+12+13+14+15+16-17-18-19-20+21) 16 909 1443 17 10 19 20 21 29 134469 154298 Tax on profit or loss on ordinary activities 31 (906) 914 Profit or loss on ordinary activities after tax (29-31) 39 135375 153384 Extraordinary profit or loss (particulars to be specified by way of supplementary note) 41 Tax on extraordinary profit or loss 42 Other taxes not shown under the preceding items 43 Profit or loss for the financial year (39+41-(42+43)) 49 135375 153384 Dividends (paid or foreseeable) 51 100000 Profit or loss retained for the financial year (49-51) 59 135375 53384 14

24032015:17:48:35 Form 17 Analysis of derivative contracts Global business Category of assets Total long term insurance business assets Company GL/ Category registration UK/ day month year Units of number CM assets R17 3104670 GL 31 12 2014 000 10 Derivative contracts Value as at the end of this financial year Notional amount as at the end of this financial year Futures and contracts for differences In the money options Out of the money options 11 Interest rates 12 Inflation 13 Credit index / basket 14 Credit single name 15 Equity stock 17 Land 18 Currencies 19 Mortality 20 Other 21 Assets Liabilities Bought / Long Sold / Short 1 2 3 4 16 58 46 978 1331 31 Equity index calls 32 Equity stock calls 33 Equity index puts 34 20388 401227 Equity stock puts 35 Other 36 Swaptions 41 Equity index calls 42 Equity stock calls 43 Equity index puts 44 53554 956036 Equity stock puts 45 Other 46 Total (11 to 46) 51 53612 20435 402206 957367 Adjustment for variation margin Total (51 + 52) Fixed-interest securities Equity index Swaptions 52 (58) (46) 53 53554 20388 THE NOTIONAL AMOUNTS IN COLUMNS 3 AND 4 ARE NOT A MEASURE OF EXPOSURE. Please see instructions 11 and 12 to this Form for the meaning of these figures. 15

24032015:17:48:35 Long-term insurance business : Revenue account Form 40 Total business / subfund LTBF Non Profit Units 000 Financial year Previous year 1 2 Income Earned premiums 11 97771 112810 Investment income receivable before deduction of tax Increase (decrease) in the value of non-linked assets brought into account Increase (decrease) in the value of linked assets 12 297228 322880 13 3112 (37382) 14 179807 772918 Other income 15 1025 1836 Total income 19 578943 1173062 Expenditure Claims incurred 21 1133932 1078822 Expenses payable Interest payable before the deduction of tax Taxation 22 57556 66963 23 33 82 24 15209 (575) Other expenditure 25 Transfer to (from) non technical account 26 130000 150000 Total expenditure 29 1336730 1295292 Business transfers - in 31 Business transfers - out 32 Increase (decrease) in fund in financial year (19-29+31-32) 39 (757787) (122230) Fund brought forward 49 10040163 10162393 Fund carried forward (39+49) 59 9282376 10040163 16

24032015:17:48:35 Long-term insurance business : Analysis of premiums Form 41 Total business / subfund LTBF Non Profit Units 000 UK Life UK Pension Overseas Total Financial year Total Previous year 1 2 3 4 5 Gross Regular premiums 11 108231 108231 124557 Single premiums 12 29969 (264) 29705 21479 Reinsurance - external Regular premiums 13 34496 34496 31969 Single premiums 14 Reinsurance - intra-group Regular premiums 15 4420 4420 4512 Single premiums 16 1249 1249 (3256) Net of reinsurance Regular premiums 17 69315 69315 88076 Single premiums 18 28720 (264) 28456 24735 Total Gross 19 138200 (264) 137936 146036 Reinsurance 20 40165 40165 33226 Net 21 98035 (264) 97771 112810 17

24032015:17:48:35 Long-term insurance business : Analysis of claims Form 42 Total business / subfund LTBF Non Profit Units 000 UK Life UK Pension Overseas Total Financial year Total Previous year 1 2 3 4 5 Gross Death or disability lump sums 11 254428 254428 255269 Disability periodic payments 12 Surrender or partial surrender 13 903109 903109 866024 Annuity payments 14 73 73 80 Lump sums on maturity 15 11982 11982 13699 Total 16 1169592 1169592 1135072 Reinsurance - external Death or disability lump sums 21 31429 31429 31206 Disability periodic payments 22 Surrender or partial surrender 23 79 Annuity payments 24 Lump sums on maturity 25 Total 26 31429 31429 31285 Reinsurance - intra-group Death or disability lump sums 31 436 436 882 Disability periodic payments 32 Surrender or partial surrender 33 3778 3778 24064 Annuity payments 34 Lump sums on maturity 35 17 17 19 Total 36 4231 4231 24965 Net of reinsurance Death or disability lump sums 41 222563 222563 223181 Disability periodic payments 42 Surrender or partial surrender 43 899331 899331 841881 Annuity payments 44 73 73 80 Lump sums on maturity 45 11965 11965 13680 Total 46 1133932 1133932 1078822 18

24032015:17:48:35 Long-term insurance business : Analysis of expenses Form 43 Total business / subfund LTBF Non Profit Units 000 UK Life UK Pension Overseas Total Financial year Total Previous year 1 2 3 4 5 Gross Commission - acquisition 11 0 3 3 1169 Commission - other 12 8692 8692 10545 Management - acquisition 13 853 853 138 Management - maintenance 14 48008 48008 55025 Management - other 15 Total 16 57553 3 57556 66877 Reinsurance - external Commission - acquisition 21 Commission - other 22 Management - acquisition 23 Management - maintenance 24 Management - other 25 Total 26 Reinsurance - intra-group Commission - acquisition 31 Commission - other 32 Management - acquisition 33 Management - maintenance 34 (86) Management - other 35 Total 36 (86) Net of reinsurance Commission - acquisition 41 0 3 3 1169 Commission - other 42 8692 8692 10545 Management - acquisition 43 853 853 138 Management - maintenance 44 48008 48008 55111 Management - other 45 Total 46 57553 3 57556 66963 19

24032015:17:48:35 Long-term insurance business : Linked funds balance sheet Form 44 Total business Units 000 Financial year Previous year 1 2 Internal linked funds (excluding cross investment) Directly held assets (excluding collective investment schemes) Directly held assets in collective investment schemes of connected companies Directly held assets in other collective investment schemes 11 456115 1801943 12 7843730 7529781 13 955225 631037 Total assets (excluding cross investment) (11+12+ 13) 14 9255070 9962761 Provision for tax on unrealised capital gains 15 57808 Secured and unsecured loans 16 Other liabilities 17 59707 68009 Total net assets (14-15-16-17) 18 9137555 9894751 Directly held linked assets Value of directly held linked assets 21 Total Value of directly held linked assets and units held (18+21) 31 9137555 9894751 Surplus units 32 5537 6245 Deficit units 33 186 1116 Net unit liability (31-32+33) 34 9132204 9889622 20

24032015:17:48:35 Long-term insurance business : Revenue account for internal linked funds Form 45 Total business Units 000 Financial year Previous year 1 2 Income Value of total creation of units Investment income attributable to the funds before deduction of tax Increase (decrease) in the value of investments in the financial year Other income 11 87963 108442 12 293857 321350 13 180523 772918 14 998 Total income 19 562343 1203707 Expenditure Value of total cancellation of units Charges for management Charges in respect of tax on investment income Taxation on realised capital gains Increase (decrease) in amount set aside for tax on capital gains not yet realised Other expenditure 21 1099565 1050504 22 125954 129803 23 51997 5340 24 5083 (10325) 25 4090 81798 26 32850 35703 Total expenditure 29 1319539 1292823 Increase (decrease) in funds in financial year (19-29) Internal linked fund brought forward Internal linked funds carried forward (39+49) 39 (757196) (89116) 49 9894751 9983867 59 9137555 9894751 21

24032015:17:48:35 Long-term insurance business : Summary of new business Form 46 Total business Units 000 UK Life UK Pension Overseas Total Financial year Total Previous year 1 2 3 4 5 Number of new policyholders/ scheme members for direct insurance business Regular premium business 11 92 Single premium business 12 Total 13 92 Amount of new regular premiums Direct insurance business 21 19 External reinsurance 22 Intra-group reinsurance 23 Total 24 19 Amount of new single premiums Direct insurance business 25 17581 17581 17665 External reinsurance 26 Intra-group reinsurance 27 Total 28 17581 17581 17665 22

23 24032015:17:48:35 Form 47 Long-term insurance business : Analysis of new business Total business Units 000 UK Life / Direct Insurance Business Product code number Number of policyholders / scheme members Amount of premiums Number of policyholders / scheme members Amount of premiums 1 2 3 4 5 6 300 Regular premium non-profit WL/EA OB Product description Regular premium business Single premium business 700 Life property linked single premium 17581

24032015:17:48:35 Long-term insurance business : Assets not held to match linked liabilities Form 48 Category of assets 10 Total long term insurance business assets Units 000 Unadjusted assets Economic exposure Expected income from assets in column 2 Yield before adjustment Return on assets in financial year 1 2 3 4 5 Assets backing non-profit liabilities and non-profit capital requirements Land and buildings 11 Approved fixed interest securities 12 633 1953 27 0.74 Other fixed interest securities 13 1018 3 0.29 Variable interest securities 14 23844 28767 496 1.71 UK listed equity shares 15 57 Non-UK listed equity shares 16 2 Unlisted equity shares 17 Other assets 18 282819 275499 616 0.22 Total 19 307296 307296 1142 0.37 Assets backing with-profits liabilities and with-profits capital requirements Land and buildings 21 Approved fixed interest securities 22 Other fixed interest securities 23 Variable interest securities 24 UK listed equity shares 25 Non-UK listed equity shares 26 Unlisted equity shares 27 Other assets 28 Total 29 Overall return on with-profits assets Post investment costs but pre-tax 31 Return allocated to non taxable 'asset shares' 32 Return allocated to taxable 'asset shares' 33 24

24032015:17:48:35 Long-term insurance business : Summary of mathematical reserves Form 50 Total business / subfund LTBF Non Profit Units 000 UK Life UK Pension Overseas Total Financial year Total Previous year 1 2 3 4 5 Gross Form 51 - with-profits 11 Form 51 - non-profit 12 166590 0 166590 126714 Form 52 13 Form 53 - linked 14 9169014 9169014 9925484 Form 53 - non-linked 15 26053 26053 32958 Form 54 - linked 16 Form 54 - non-linked 17 Total 18 9361657 0 9361657 10085156 Reinsurance - external Form 51 - with-profits 21 Form 51 - non-profit 22 81914 81914 78724 Form 52 23 Form 53 - linked 24 Form 53 - non-linked 25 Form 54 - linked 26 Form 54 - non-linked 27 Total 28 81914 81914 78724 Reinsurance - intra-group Form 51 - with-profits 31 Form 51 - non-profit 32 Form 52 33 Form 53 - linked 34 36811 36811 35863 Form 53 - non-linked 35 Form 54 - linked 36 Form 54 - non-linked 37 Total 38 36811 36811 35863 Net of reinsurance Form 51 - with-profits 41 Form 51 - non-profit 42 84676 0 84676 47990 Form 52 43 Form 53 - linked 44 9132204 9132204 9889622 Form 53 - non-linked 45 26053 26053 32958 Form 54 - linked 46 Form 54 - non-linked 47 Total 48 9242932 0 9242932 9970569 25

26 24032015:17:48:35 Long-term insurance business : Valuation summary of non-linked contracts (other than accumulating with-profits contracts) Form 51 Total business / subfund LTBF Non Profit Units 000 UK Life / Gross Product code number Product description Number of policyholders / scheme members Amount of benefit Amount of annual office premiums Nominal value of units Discounted value of units Other liabilities 1 2 3 4 5 6 7 8 9 Amount of mathematical reserves 300 Regular premium non-profit WL/EA OB 48303 168600 9641 70872 325 Level term assurance 322776 9842608 44148 94033 330 Decreasing term assurance 129416 6537056 35582 (2286) 360 Income protection non-profit (guaranteed premiums) 14048 251969 838 888 395 Annuity non-profit (PLA) 34 7 697 440 Additional reserves non-profit OB 2386

27 24032015:17:48:35 Long-term insurance business : Valuation summary of non-linked contracts (other than accumulating with-profits contracts) Form 51 Total business / subfund LTBF Non Profit Units 000 UK Life / Reinsurance ceded external Product code number Product description Number of policyholders / scheme members Amount of benefit Amount of annual office premiums Nominal value of units Discounted value of units Other liabilities 1 2 3 4 5 6 7 8 9 Amount of mathematical reserves 300 Regular premium non-profit WL/EA OB 63236 3321 25877 325 Level term assurance 5914772 20551 36945 330 Decreasing term assurance 4037455 3780 19090 360 Income protection non-profit (guaranteed premiums) (3392) 1217 1 440 Additional reserves non-profit OB

28 24032015:17:48:35 Long-term insurance business : Valuation summary of non-linked contracts (other than accumulating with-profits contracts) Form 51 Total business / subfund LTBF Non Profit Units 000 Overseas / Gross Product code number Product description Number of policyholders / scheme members Amount of benefit Amount of annual office premiums Nominal value of units Discounted value of units Other liabilities 1 2 3 4 5 6 7 8 9 325 Level term assurance Amount of mathematical reserves 330 Decreasing term assurance 2 0 0 360 Income protection non-profit (guaranteed premiums)

29 24032015:17:48:35 Long-term insurance business : Valuation summary of property linked contracts Form 53 Total business / subfund LTBF Non Profit Units 000 UK Life / Gross Product code number Product description Number of policyholders / scheme members Amount of benefit Amount of annual office premiums Nominal value of units Discounted value of units Other liabilities 1 2 3 4 5 6 7 8 9 Amount of mathematical reserves 700 Life property linked single premium 227518 5773969 9041933 9041132 24195 9065327 710 Life property linked whole life regular premium 3031 132425 1218 6004 6004 456 6460 715 Life property linked endowment regular premium - savings 7 167 5 168 168 168 720 Life property linked endowment regular premium - target cash 8060 279365 3934 115452 115452 60 115512 795 Miscellaneous property linked 2518 90896 835 6258 6258 1341 7600

30 24032015:17:48:35 Long-term insurance business : Valuation summary of property linked contracts Form 53 Total business / subfund LTBF Non Profit Units 000 UK Life / Reinsurance ceded intra-group Product code number Product description Number of policyholders / scheme members Amount of benefit Amount of annual office premiums Nominal value of units Discounted value of units Other liabilities 1 2 3 4 5 6 7 8 9 Amount of mathematical reserves 700 Life property linked single premium 36137 36137 36137 720 Life property linked endowment regular premium - target cash 674 674 674

31 24032015:17:48:35 Long-term insurance business : Unit prices for internal linked funds (Sheet 1) Form 55 Total business Units 000 Fund name Type of fund Net assets Main series Unit management charge Price at previous valuation date Price at current valuation date 1 2 3 4 5 6 7 8 Change in price during year CAUTIOUS GROWTH LIFE 03 - life - defensive managed fund 601440 Series 2 1.35 117.9000 124.9000 5.94 BALANCED GROWTH LIFE 02 - life - balanced managed fund 280604 Series 2 1.35 123.9000 129.5000 4.52 SL PELICAN LIFE SP NET 05 - life - UK equity 865090 Series 2 1.40 176.1000 175.7000 (0.23) SL HIGH INCOME LIFE SP NET 05 - life - UK equity 629715 Series 2 1.40 190.0000 188.0000 (1.05) SL UK ALL SHARE LIFE SP NET 01 - life - stock market managed fund 732832 Series 2 1.40 178.6000 177.5000 (0.62) SL INTL GROWTH LIFE SP NET 06 - life - overseas equity 455165 Series 2 1.40 167.9000 180.2000 7.33 SLL CAUTIOUS MANAGED FUND LIFE 03 - life - defensive managed fund 1862208 Series 2 1.40 147.2000 152.0000 3.26 SL STERLING MONEY LIFE SP NET 04 - life - other managed fund 142531 Series 2 1.40 112.4000 111.3000 (0.98) SL MIF MANAGED LINKED LIFE COMPOSITE FUND 04 - life - other managed fund 777605 Series 10 1.25 469.0000 474.3000 1.13 ST ANDREWS LIFE BALANCED FUND 02 - life - balanced managed fund 191215 Series 1 0.75 65.3200 67.6600 3.58 ST ANDREWS BALANCED INVESTMENT 02 - life - balanced managed fund 108877 Series 10 1.40 161.1000 165.8000 2.92 SL GIP DECEMBER 08 LIFE 04 - life - other managed fund 152635 Series 2 1.75 594.2000 582.8000 (1.92) ST ANDREW LIFE FOUNDATION FUND 02 - life - balanced managed fund 182117 Series 1 0.75 69.9500 72.2800 3.33 SA GILT &FIXED ASSURANCE 04 - life - other managed fund 904195 Series 2 1.40 135.8000 147.5000 8.62 SL GIP JUNE 09 LIFE SINGLE 04 - life - other managed fund 179547 Series 2 1.75 572.0000 562.2000 (1.71) SL GIP MARCH 09 LIFE 04 - life - other managed fund 132627 Series 2 1.75 582.1000 573.9000 (1.41) SL GIP SEPTEMBER 09 LIFE 04 - life - other managed fund 182727 Series 2 1.72 561.4000 551.8000 (1.71) ST ANDREWS OPPORTUNITY LIFE 01 - life - stock market managed fund 183114 Series 1 0.75 72.9400 75.8700 4.02

24032015:17:48:35 Long-term insurance business: Analysis of valuation interest rate Form 57 Total business LTBF Non Profit Units 000 Product group 1 Net mathematical reserves Net valuation interest rate Gross valuation interest rate Risk adjusted yield on matching assets 2 3 4 5 UK Life NP Form 51 82290 0.81 1.01 1.04 UK Life NP Form 53 26053 0.81 1.01 1.04 Misc 2386 Total 110729 32

24032015:17:48:35 Long-term insurance business : Distribution of surplus Form 58 Total business / subfund LTBF Non Profit Units 000 Financial year Previous year 1 2 Valuation result Fund carried forward 11 9282376 10040163 Bonus payments in anticipation of a surplus 12 Transfer to non-technical account 13 130000 150000 Transfer to other funds / parts of funds 14 Subtotal (11 to 14) 15 9412376 10190163 Mathematical reserves 21 9242932 9970569 Surplus including contingency and other reserves held towards the capital requirements (deficiency) (15-21) 29 169444 219594 Composition of surplus Balance brought forward 31 69594 90051 Transfer from non-technical account 32 Transfer from other funds / parts of fund 33 Surplus arising since the last valuation 34 99850 129543 Total 39 169444 219594 Distribution of surplus Bonus paid in anticipation of a surplus 41 Cash bonuses 42 Reversionary bonuses 43 Other bonuses 44 Premium reductions 45 Total allocated to policyholders (41 to 45) 46 Net transfer out of fund / part of fund 47 130000 150000 Total distributed surplus (46+47) 48 130000 150000 Surplus carried forward 49 39444 69594 Total (48+49) 59 169444 219594 Percentage of distributed surplus allocated to policyholders Current year 61 Current year - 1 62 Current year - 2 63 Current year - 3 64 33

24032015:17:48:35 Long-term insurance capital requirement Global business Units 000 LTICR factor Insurance death risk capital component Life protection reinsurance 11 0.0% Gross reserves / capital at risk Net reserves / capital at risk Reinsurance factor LTICR Financial year Form 60 LTICR Previous year 1 2 3 4 5 6 Classes I (other), II and IX 12 0.1% 232305 232305 116 203 Classes I (other), II and IX 13 0.15% 1368 1368 0.50 1 7 Classes I (other), II and IX 14 0.3% 15202883 6488452 22804 25648 Classes III, VII and VIII 15 0.3% 377883 414693 1.10 1244 1375 Total 16 15814439 7136819 24166 27233 Insurance health risk and life protection reinsurance capital component Class IV supplementary classes 1 and 2 and life protection reinsurance Insurance expense risk capital component Life protection and permanent 31 0% health reinsurance 21 83 83 Classes I (other), II and IX 32 1% 166102 84190 0.85 1412 1065 Classes III, VII and VIII (investment risk) Classes III, VII and VIII (expenses fixed 5 yrs +) Classes III, VII and VIII (other) 33 1% 997617 997617 1.00 9976 13380 34 1% 35 25% 3413 4141 Class IV (other) 36 1% 488 487 1.00 5 14 Class V 37 1% Class VI 38 1% Total 39 14806 18600 Insurance market risk capital component Life protection and permanent 41 0% health reinsurance Classes I (other), II and IX 42 3% 166102 84190 0.85 4236 3195 Classes III, VII and VIII (investment risk) Classes III, VII and VIII (expenses fixed 5 yrs +) Classes III, VII and VIII (other) 43 3% 997617 997617 1.00 29929 40140 44 0% 45 0% 8197450 8160639 Class IV (other) 46 3% 488 487 1.00 15 42 Class V 47 0% Class VI 48 3% Total 49 9361657 9242932 34179 43377 Long term insurance capital requirement 51 73233 89293 34

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 DECEMBER 2014 NOTES TO THE FORMS *0201* Waiver and modification rules The FSA, on the application of the firm, made a direction under section 148 of the Financial Services and Markets Act 2000 in December 2010. The effect of the direction is to modify the provisions of INSPRU 3.1.35R and IPRU(INS) Appendix 9.3 so that a more appropriate rate of interest is used for assets taken in combination." *0301* Form 3 reconciliation of net admissible assets to total capital resources after deductions Total of admissible assets - other than long term business assets Form 13 Line 89 Total of admissible assets - long term business assets Form 13 Line 89 Less: Mathematical reserves, after distribution of surplus Form 14 Line 11 Total other insurance and non-insurance liabilities Form 14 Line 49 Total liabilities - other than long term insurance business Form 15 Line 69 Net admissible assets / total capital resources after deductions Form 3 Line 79 000 656,655 9,439,500 (9,242,932) (157,124) (195) 695,904 *0310* Details of positive and negative valuation differences '000 Adjustments for Deferred Tax 23,178 23,178 Positive valuation difference in respect of adjustment for Deferred Tax relates to the Deferred Tax Liability on the Deferred Acquisition Costs. *0313* Reconciliation of profit and loss and other reserves to Form 16 Profit and Loss Account and other reserves as at 31 December 2013 Form 3 Line 12 Column 4 Profit and Loss Account and other reserves as at 31 December 2014 Form 3 Line 12 Column 3 000 380,996 444,956 Movement in Profit and Loss Account and Other Reserves 63,960 Reporting basis difference 41,265 Less Long Term Business Fund loss/ (profit) retained for the financial year 30,150 Profit retained for the financial year - Form 16 Line 59 135,375 *1100* Form has been omitted on account of de minimis limits as per IPRU(INS)Rule 9.11. 35

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 DECEMBER 2014 NOTES TO THE FORMS (continued) *1200* Form has been omitted on account of de minimis limits as per IPRU(INS)Rule 9.11. *1301* & *1308* Aggregate value of certain securities The company held no investments meeting the specified criteria. *1304* & *1310* Set off of amounts Amounts have been set off to the extent permitted by generally accepted accounting principles. *1305* & *1319* Maximum Counterparty Limit The Company s investment guidelines set maximum counterparty limits in order to maintain the admissibility of assets in accordance with INSPRU 2.1.22. This is with the exception of approved securities and any holdings under the UCITS Directive, and includes exposures with both approved counterparties and other than approved counterparties. The exposure applies to long term business assets and other than long term business assets combined. There were no occasions during the financial period when limits were exceeded. *1306* & *1312* Amount and nature of exposure at the year end to large counterparties There were no exposures to any counterparty subject to limits in INSPRU 2.1.22R(3) at 31 December 2014 which exceeded 5% of the base capital resource requirement and its long term insurance business liabilities, excluding property linked. *1307 & 1313* Aggregate value of fully secured rights Value of Rights: 33,382,013 This represents the value of derivative assets secured by derivative collateral received from counterparties as disclosed in the financial statements. *1318 SH* Details of other adjustments to assets 000 Balances held as liabilities in the Company accounts (3,627) Other adjustments to assets Form 13 Line 101 (3,627) *1318 * Details of other adjustments to assets Reclassification of unit linked liabilities included in Net Asset Value of unit linked funds on Form 13 Line 59 000 42,419 Balances held as liabilities in the Company accounts 3,627 Other adjustments to assets Form 13 Line 101 46,046 36

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 DECEMBER 2014 NOTES TO THE FORMS (continued) *1401* Provision for adverse changes No provision for adverse changes under either GENPRU 1.3.30R to GENPRU 1.3.33R or INSPRU 3.2.17R and INSPRU 3.2.18R has been made. The Company considers asset valuations in the context of the requirements of GENPRU 1.3.30R to GENPRU 1.3.33R. The need for a provision for adverse variation is also considered by the Actuarial Function Holder. The Company's mark to model valuations are formally reviewed and signed off to provide additional comfort over robustness. The Company reviews any potential liquidity issues on assets on a regular basis and incorporates valuation adjustments if required. The Company reviews its investments to identify whether any provisions are required pursuant to INSPRU 3.2.17R and INSPRU 3.2.18R. Sufficient cover is held for all positions to match reasonably foreseeable adverse variations and no non-approved derivatives or quasi-derivatives are held. *1402* Details of contingencies and commitments: a) Charges over assets There are no charges over assets. b) Potential capital gains tax liability There is no potential capital gains tax liability should the Company dispose of its assets, based on asset values as at 31 st December 2014. c) Contingent liabilities There are no contingent liabilities. d) Guarantees, indemnities or other contractual commitments affected other than in the ordinary course of insurance business and in respect of related companies. There are no such items. e) Other fundamental uncertainties There are no other uncertainties which it is necessary to disclose. *1405* Details of other adjustments to liabilities 000 Reclassification of unit linked liabilities included in Net Asset Value of unit 42,419 linked funds on Form 13 Line 59 Other adjustments to liabilities Form 14 Line 74 42,419 *1501* Provision for adverse changes No provision for adverse changes under either GENPRU 1.3.30R to GENPRU 1.3.33R or INSPRU 3.2.17R and INSPRU 3.2.18R has been made. The Company considers asset valuations in the context of the requirements of GENPRU 1.3.30R to GENPRU 1.3.33R. The need for a provision for adverse variation is also considered by the Actuarial Function Holder. The Company reviews any potential liquidity issues on assets on a regular basis and incorporates valuation adjustments if required. No derivatives are held outside of the long-term business fund. 37

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 DECEMBER 2014 NOTES TO THE FORMS (continued) *1502* Details of contingencies and commitments: a) Charges over assets There are no charges over assets. b) Potential capital gains tax liability There is no potential capital gains tax liability should the Company dispose of its assets, based on asset values as at 31 st December 2014. c) Contingent liabilities There are no contingent liabilities. d) Guarantees, indemnities or other contractual commitments effected other than in the ordinary course of insurance business and in respect of related companies. There are no such items. e) Other fundamental uncertainties There are no other uncertainties which it is necessary to disclose. *1601* Basis of conversion of foreign currency Rates of exchange prevailing at the time of the transaction have been used to convert amounts of income and expenditure in foreign currencies. Assets and liabilities denominated in foreign currencies are expressed in sterling at exchange rates ruling at 31 December 2014. *1701* Variation margins in the Long Term Business Fund a) The aggregate amount of excess variation margin which has been received is nil. b) Variation margin received is included in Form 13 Line 44. c) Amounts recorded in Form 13 include any liability to repay such assets or equivalent assets. *4002* Details of other income '000 Stock lending income 300 Management fees receivable 527 Renewal commission Unit linked rebates 2 196 Other income Form 40 Line 15 1,025 38

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 DECEMBER 2014 NOTES TO THE FORMS (continued) *4005* Basis of conversion of foreign currency Rates of exchange prevailing at the time of the transaction have been used to convert amounts of income and expenditure in foreign currencies. Assets and liabilities denominated in foreign currencies are expressed in sterling at exchange rates ruling at 31 December 2014. *4008* Provision of management services and name of the party providing such services: Aberdeen Asset Management and Insight Investment Funds Management Limited provided investment management services to the Company during the year. Invista Real Estate Investment Management Limited, a subsidiary of HBOS Insurance & Investment Group Limited provides investment management services in respect of property investments. There are four providers of administration services to the Company in the period: Aviva plc provided certain administration services to the Company. St Andrews Group plc, a wholly owned subsidiary of HBOS plc, provided management services under a management agreement in respect of the creditor insurance business. Vertex provide administration services in respect of the Third Party Agreement on the life business in respect of whole of life policies, term assurance policies, capital investment bond and secure life plan, which are currently in run off. Opal provide administration services in respect of the Third Party Agreement on the life business in respect of whole of life policies. *4009* Material Connected Party Transactions The intercompany transactions which exceeded 5% of the insurer's liabilities arising from the long term business amount, excluding property linked and reinsurance are as follows: Name of connected person Scottish Widows plc Halifax Life ltd Relationship with connected person Fellow group undertaking Fellow group undertaking Amount Description of transaction m 150 Loan 37 Reinsurance arrangement No amounts were written off in the period in respect of debts due to or from connected parties. 39

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 DECEMBER 2014 NOTES TO THE FORMS (continued) *4401* Basis of linked asset valuation Linked assets are valued using the FCA Handbook Rules in GENPRU 1.3. Financial assets and instruments used to cover linked liabilities are stated at market value. Stock exchange securities and investments in collective investment schemes have been valued at bid prices. Investment property is shown at open market value as determined by independent valuation. Investment property valuations are carried out by persons who are members of the Royal Institute of Chartered Surveyors and were conducted in accordance with the "RICS Statement of Asset Valuation and Guidance Notes". Other assets have been valued using appropriate international financial reporting standards applicable to the firm for the purpose of its external financial reporting. The Rules in GENPRU 1.3.30 to GENPRU 1.3.33 may require management to make adjustments to these valuations. *4402* Aggregate value of rights under derivative contracts The value of rights and liabilities under derivatives contracts in the linked funds are: '000 '000 '000 Gross Variation Net margin Derivative rights 526 (387) 139 Derivative liabilities (1,348) 1,179 (169) Net (822) 792 (30) *4502* Details of items reported as "other income" or "other expenditure" Other expenditure 000 Sundry operating costs 57 Transaction fees 69 Property expenditure 460 Distribution paid 32,264 Other expenditure Form 45 Line 26 32,850 *4802* Treatment of expected income for assets in default. No payment of income is assumed for assets in default. *4803* Where fixed and variable interest securities can be redeemed over a period at the option of the guarantor or issuer, the workout date has been assumed. Workout date is the date that the bond is being priced to (Bid). For bullet bonds, the workout date never changes. For bonds with early redemption features, workout date will be the 'worst' date. Worst date is the corresponding date of minimum yield for callable bonds, maximum yield for putable bonds, and maturity date for sinking funds. The total value included in respect of securities that may be redeemed at different dates at the option of the issuer is nil. 40

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 DECEMBER 2014 NOTES TO THE FORMS (continued) *4804* The weighted yield shown at column 4 for 'other assets' is age yield Asset Type Value Weighted Yield Collective Investment Schemes 65,617 0.30 Cash 128 0.25 Derivatives 53,554 - Other 156,200 0.27 *4807* Included within the 'Other Assets' in economic exposure shown in column 2 of Form 48 are certificates of deposit and commercial paper investments where these are held within liquidity funds and are short dated. This is because they are not held as part of the long term investment strategy but instead are held as a means of improving the overnight cash deposit rates. They have therefore been treated as cash for the purposes of preparing column 2 of Form 48. *4900* Form has been omitted on account of de minimis limits as per IPRU(INS) Rule 9.11. *5103* Product code 440 covers an endowment provision, waiver of premium reserve, additional claims reserve, profit commission reserve and a reserve for future renewal commission payments. *5303* Products in Miscellaneous product category Product Code 795 Life Critical Illness Plan is a Unit Linked regular premium product that pays a lump sum on critical illness or death. Reserve 6.3m. *6001* The gross annual premiums for this class of business are less than 1% of the gross annual premiums of the company so Forms 11 and 12 are not needed. The Insurance Health Risk Capital Component is calculated as the greater of 18% of annual premiums and 26% of gross claims. The capital required for PHI business is the same as if Forms 11 and 12 had been completed. 41

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 DECEMBER 2014 ADDITIONAL INFORMATION REQUIRED BY RULE 9.29 OF THE ACCOUNTS AND STATEMENTS RULES (a) Investment managers work to written authorities in respect of derivative transactions, approved, initially, by the Scottish Widows Group Board. Controls are applied to ensure that the authorities delegated to the investment managers are not exceeded. The use of derivatives is approved for hedging the investment portfolio against adverse movements in underlying markets or effecting policy switches between markets without trading the underlying securities. The use of derivatives is also allowed for the purpose of efficient portfolio management provided their substance would otherwise be permitted as a series of direct transactions. The use of derivatives is permitted, under separate specific Group Board approvals, for the purpose of matching contractual liabilities provided the relevant constraints, including constraints to limit counterparty risk, are determined and monitored in line with these Board approvals. (b) Written authorities do not prohibit entry into derivative contracts which were not, at the time of entry, reasonably likely to be exercised in order to ensure that investment managers are not prevented from entering into contracts that could enhance efficient portfolio management. There were, however, no such contracts entered into during the year ended 31st December 2014. (c) See (b) above. (d) At no time during the year did the company enter into a derivative or quasi-derivative contract which required a significant provision to be made for it under INSPRU 3.2.17R or did not fall within the definition of a permitted derivatives contract. (e) No consideration was received by the company during the year in return for granting rights under derivative contracts. 42

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 DECEMBER 2014 STATEMENT OF INFORMATION ON SHAREHOLDER CONTROLLER AS REQUIRED BY RULE 9.30 OF THE INTERIM PRUDENTIAL SOURCEBOOK FOR INSURERS. The immediate shareholder controller of the Company during the financial year was Halifax Life Limited. Halifax Life Limited is a wholly owned and controlled subsidiary of Clerical Medical Investment Group Limited. Clerical Medical Investment Group Limited is a wholly owned and controlled subsidiary of Scottish Widows plc. Scottish Widows plc is a wholly owned and controlled subsidiary of Scottish Widows Financial Services Holdings. Scottish Widows Financial Services Holdings is a wholly owned and controlled subsidiary of Scottish Widows Group Limited. Scottish Widows Group Limited is a wholly owned and controlled subsidiary of Lloyds TSB Bank plc. Lloyds TSB Bank plc is a wholly owned and controlled subsidiary of Lloyds Banking Group plc. Halifax Life Limited holds all the issued shares of the Company and is thereby entitled to exercise all the associated voting powers at any general meeting of the Company. 43

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 st DECEMBER 2014 ABSTRACT OF VALUATION REPORT (Continued) APPENDIX 9.4 FOR THE PERIOD ENDING 31 DECEMBER 2014 ABSTRACT OF VALUATION REPORT 1. Introduction (1) The valuation date is 31 December 2014. (2) The previous valuation date was 31 December 2013. (3) Not applicable. 2. Product range New products No new products were introduced during 2014. Changes to existing products There were no changes to existing products during 2014. 3. Discretionary charges and benefits (1) Not applicable. (2) There were no changes to premiums on reviewable protection policies. (3) Not applicable. (4) Monthly service charges on linked policies are increased annually in line with the Average Weekly Earnings (AWE) or the Retail Prices Index. In 2014 these increases were as follows: Products Old Charge New Index used Charge Investment Plan 2.69 2.71 AWE Savings and Protection Mortgage Plan 6.38 6.44 AWE Savings Plan 6.38 6.44 AWE Mortgage Repayment Plan 2.69 2.71 AWE Flexible for Life Plan 2.69 2.71 AWE Critical Illness Plan 2.69 2.71 AWE Regular Investment Plan 2.69 2.71 AWE Tax Free Home Plan (Home Protection Benefits) 4.99 5.11 RPI The charge increases are based on July to July increases in the relevant indices as follows: July 2013 July 2014 Increase RPI 249.7 256 2.5% AWE 475 478 0.6% (5) There were no changes to benefit charges on linked contracts. 44

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 st DECEMBER 2014 ABSTRACT OF VALUATION REPORT (Continued) (6) Not applicable. (7) Unit Pricing for Internal Linked Funds (a) (i) Creation and cancellation of units of internal linked funds: The Company s policy is to match the units allocated for policies (the liability units ) closely to the units available within each corresponding unit fund (the asset units ). The excess of asset units over the liability units is called the box of units. The Company s policy is to avoid negative unit boxes, however, for practical reasons these can arise from time to time. The Company's policy also places a limit on the maximum size of the box of units for each fund, after allowing for any units reserved for new policies which have already been accepted but have yet to be issued. Whenever units in a fund are created or cancelled, cash or assets of equivalent value at the bare price are added or deducted respectively. Within the above policy, the Company s practice is to create or cancel units such that each fund s box size is the smallest practical commensurate with efficient dealing in the investments permitted under the guidelines for the fund. (a) (ii) Unit Prices: The unit prices make allowance for the actual or expected outgoings from the fund, actual tax charges and prospective tax liabilities attributable to the fund and are computed for each fund normally each working day as follows:- i) The assets of the fund are valued, together with any accrued income and uninvested cash as follows:- a) The maximum value of any asset may not exceed the market value at which it may be purchased, increased by any charges which may be expected; and b) The minimum value of any asset may not be less than the market value at which it may be sold, reduced by any charges which may be expected. c) The mid-market value of any asset is the average of the maximum and minimum values. ii) iii) iv) (v) For listed securities, prices quoted on a recognised Stock Exchange are used. Otherwise, the value of assets is determined by the Company in conjunction with its investment managers. Any other charges incurred or expected are deducted or added. For single priced funds, the price of the units is the sum of the mid-market values of the assets divided by the number of units in issue. For dual priced funds, the price will be on a bid or offer basis as appropriate. a) The bid price of the units is the sum of the bid-market values divided by the number of units in issue. b) The offer price of the units is the bid price increased for a bid/offer spread. (iii) Valuation of Assets: For all funds the assets are valued on a mid-market basis, where the mid-market value of the assets is the average of the valuations on an offer and a bid basis as described above. A dilution levy may be applied to large transactions, at the discretion of the company, to avoid dilution of existing investments. 45

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 st DECEMBER 2014 ABSTRACT OF VALUATION REPORT (Continued) (iv) (a) (b) (c) For the purpose of calculating the unit price of each fund the assets are valued at 12pm. Allocations and deallocations of units from policies use the price at the next valuation following receipt of instructions, except for switch transactions where a cutoff point of 5pm applies, with instructions received after this time receiving the price at the next but one valuation point. There is no change in the pricing basis for any funds. Unit-linked contracts can be invested in any of the unit-linked funds within the range of funds available to them. The total value of units held within the contract is determined based on the prices of the units in each of the fund in which the contract is invested. Units held in collective investment schemes have been valued consistently with the underlying investments, using the price applicable at the 12pm valuation point. (8) Taxation deductions for internal linked funds Tax at 20% of realised chargeable gains and taxable income is settled quarterly in arrears for Life business. There is no settlement of tax on unrealised gains and losses which remain as a provision within the funds. (9) Taxation provisions for internal linked funds For all unit-linked Life funds, provision held in the internal linked fund is made on a daily basis for tax on both realised and unrealised chargeable gains. A provision is then made on the basis that there is adequate provision to meet the future incidence of tax payments as they fall due. Realised and unrealised chargeable gains include the respective element of deemed disposals of OEICs. Provision was made during 2014 on the internal linked Life funds for realised chargeable gains at a rate of 20% and unrealised chargeable gains where the rate of 20% is discounted using a discount rate which is reviewed at regular intervals. During 2014 this discount rate ranged between 0.9% and 1.4%. No credit is normally given for unrelieved capital losses (and losses will be carried forward). (10) When a unit-linked fund invests through an external fund link and the external fund provider charges the Company, then these charges are passed on to investors in the fund as an addition to the existing charges. The end result is therefore profit neutral for the company. 4. Valuation basis (1) Valuation methods Non-linked policies Term Assurances Creditor business In the case of single premium creditor term assurances and disability cover a reserve equivalent to the greater of the (net of agent s commission) unearned premium (without any cancellation charge), and the discounted value of the future benefits increased by 10% to provide for expenses, is held. This reserve covers any return of 46

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 st DECEMBER 2014 ABSTRACT OF VALUATION REPORT (Continued) premium that is due upon the early repayment of the loan and consequent cancellation of the insurance contract including outstanding instalments (where applicable) for which the company takes credit. For revolving credit term assurances a reserve equivalent to the monthly instalment premium (net of agent s commission) at the valuation date is held which covers the cost of outstanding risk. Additional reserves were held for creditor business to cover IBNR, pending claims, continuing claims, accrued profit commission, and for premiums receivable prior to the investigation date for which no valuation data had then been established. Term Assurances - Total Mortgage Protection Plan & PFA Products A gross premium method of valuation was adopted with explicit reserves for expenses after the valuation date. There was no minimum reserve. An additional reserve was held to cover Incurred But Not Reported (IBNR) claims. Term Assurances - Other For conventional term assurances a gross premium valuation basis was used with specific reserves for expenses after the valuation date. Linked policies For property linked business, a gross premium valuation method was used. Comments applying to products in general For business reinsured from St. Andrew's Life to Halifax Life Limited the reserve is the same as the reinsurer's valuation liability. Derivative contracts are used within the internal linked funds and the main fund for efficient portfolio management. All such contracts are fully covered. Consequently, no additional reserve has been made for derivative contracts. (2) Interest Rates Valuation interest rates used in the valuation were as follows: 31/12/2013 31/12/2014 Term Assurances 1.26% p.a. (net) 0.81% p.a. (net) Linked Products 1.26% p.a. (net) 0.81% p.a. (net) (3) Risk Adjusted Yields The Company s policy is to invest non-linked assets in fixed interest securities, variable interest asset backed securities, cash and near cash instruments. The yields on the underlying assets are adjusted to allow for the maximum of 97.5% of the underlying yield. 47

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 st DECEMBER 2014 ABSTRACT OF VALUATION REPORT (Continued) (4)&(5) Mortality and Morbidity Rates Mortality and morbidity rates are based on UK experience. A small part of the creditor business is written outside the UK, in other EU countries. Non-linked Policies Term Assurances Creditor business The following mortality tables have been used in the valuation: Product 31/12/2013 31/12/2014 Creditor 100% AM92U 100% AM92U Term Assurances - Total Mortgage Protection Plan & PFA Products For Total Mortgage Protection Plans and PFA Products the following mortality has been used:- 31/12/2013 31/12/2014 Male NS 109%TMN00 Select 104%TMN00 Select Male S 92% TMS00 Select 86% TMS00 Select Female NS 109% TFN00 Select 104% TFN00 Select Female S 109% TFS00 Select 109% TFS00 Select Specimen morbidity rates are shown below. The annual rates for critical illness cover only (per 1,000 sum assured) are: Age Male NS Male S Female NS Female S 25 0.360 0.624 0.656 0.896 35 0.745 1.393 1.816 2.557 45 2.579 5.516 4.604 7.315 55 8.211 18.841 10.127 17.444 65 22.868 50.815 24.022 41.052 At 31/12/2013, the specimen morbidity rates were: Age Male NS Male S Female NS Female S 25 0.339 0.653 0.592 0.834 35 0.701 1.459 1.640 2.381 45 2.427 5.779 4.159 6.810 55 7.728 19.738 9.147 16.241 65 21.523 53.235 21.697 38.221 48

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 st DECEMBER 2014 ABSTRACT OF VALUATION REPORT (Continued) Term Assurances - Other For term assurance policies the following mortality has been used:- 31/12/2013 31/12/2014 Male NS 88% TMN00U + 88% LTA_CI_EXP_MN U 88% TMN00U + 88% LTA_CI_EXP_MN U Male S 88% TMS00U + 88% LTA_CI_EXP_MS U 88% TMS00U + 88% LTA_CI_EXP_MS U Female NS 55% TFN00U + 55% LTA_CI_EXP_FN U 55% TFN00U + 55% LTA_CI_EXP_FN U Female S 55% TFS00U + 55% LTA_CI_EXP_FS U 55% TFS00U + 55% LTA_CI_EXP_FS U No explicit allowance has been made for possible future increases to mortality. For the Over 50's Plan the following mortality has been used:- 31/12/2013 31/12/2014 Male NS 165% AMC00U 165% AMC00U Male S 165% AMC00U 165% AMC00U Female NS 165% AFC00U 165% AFC00U Female S 165% AFC00U 165% AFC00U Linked Policies For linked policies, the following mortality has been used:- Product 31/12/2013 31/12/2014 Endowment Assurances Male NS 50% AMN00 Select + 50% LTA_CI_EXP_MN U 50% AMN00 Select + 50% LTA_CI_EXP_MN U Male S 50% AMS00 Select + 50% LTA_CI_EXP_MS U 50% AMS00 Select + 50% LTA_CI_EXP_MS U Female NS 50% AFN00 Select + 50% LTA_CI_EXP_FN U 50% AFN00 Select + 50% LTA_CI_EXP_FN U Female S 50% AFS00 Select + 50% LTA_CI_EXP_FS U 50% AFS00 Select + 50% LTA_CI_EXP_FS U Investment Male 72% AMC00U 72% AMC00U Bonds Female 94% AFC00U 94% AFC00U For linked policies, no explicit allowance has been made for possible future increases to mortality. 49

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 st DECEMBER 2014 ABSTRACT OF VALUATION REPORT (Continued) (6) Expenses Non-linked policies The explicit expense allowance per policy is:- 31/12/2013 31/12/2014 Term assurances (325 / 330) 28.88 30.12 Annuities (395) 57.12 29.73 Expenses are before tax relief of 20%. Investment expenses are assumed to be 0.051% of the reserve for term assurances, and 0.115% of the reserve for annuities Linked policies The explicit expense allowance per policy is:- 31/12/2013 31/12/2014 Investment Bonds (700) 51.04 42.93 Assurances (720) 61.66 42.30 Expenses are before tax relief of 20%. Investment expenses are assumed to be 0.205% of the unit fund for PIP and unit linked products managed through Aberdeen Asset Management and for products with funds invested through HBOS Investment Fund Managers Limited. Investment expenses are assumed to be 0.15% of the reserve for the FWL products. The investment expense for Guaranteed Investment Plan also includes an assumption to reflect the fee for managing the investment guarantee. For policies incepting before September 2008 this fee is 0.55% (paid to HBOS Treasury) and for policies incepting between September 2008 and December 2009 this fee is 0.6% (paid to BNP Paribas) (7) Unit Growth Rates and Expense Inflation For policies linked to internal linked funds, the following gross growth rates were used:- Type of business Life / Pension 31/12/2013 31/12/2014 All products Life 3.45% p.a. 2.19% p.a. The assumption for expense inflation and policy fee inflation is 4.20% p.a. (8) Future bonus rates in the valuation basis Not applicable. 50

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 st DECEMBER 2014 ABSTRACT OF VALUATION REPORT (Continued) (9) Lapse rates The average lapse rates used in the valuation were as follows: Product Average lapse rate for the policy years (%p.a.) 1-5 6-10 11-15 16-20 Level Term (325) Lapse 23.0 15.1 12.5 12.5 Decreasing Term (330) Lapse 22.8 15.2 12.6 12.6 Income Protection (360) Lapse 27.4 15.7 15.0 15.0 UL Bond (700) Surrender 3.5 5.0 3.7 3.7 For all other products no allowance is made for lapses in the valuation. (10) Other material basis assumptions All covered in the above sections. (11) Derivatives No derivative assets were hypothecated to liabilities in setting the valuation interest rate. (12) Impact of methodology changes There has been no further change in valuation method in respect of changes in INSPRU valuation rules since the previous year-end. 5. Options and Guarantees (1) There is no requirement to hold any additional explicit reserves in respect of guaranteed annuity rate options. (2) An additional explicit reserve is held in respect of the return of premium on death guarantee for the PIP product. The size of this reserve is less than 10m. (3) There is no requirement to hold any additional explicit reserves in respect of guaranteed insurability options. (4) There are no other Guarantees or Options. 6. Expense reserves (1) The total renewal (including terminal) expense loadings in the valuation are 19.2m. This figure is made up of explicit expense allowances only. An allowance for investment expenses, expressed as a percentage of the total mathematical reserve has been calculated as 23.8m. (2) Not applicable. 51

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 st DECEMBER 2014 ABSTRACT OF VALUATION REPORT (Continued) (3) The amount of modelled maintenance expenses is different to the maintenance expenses shown at line 14 of Form 43 because the latter includes additional expenses that are covered elsewhere in the Valuation. (4) An estimate has been made for the valuation surplus for SAL for the 12 months after the valuation date, combined with the expected new business strain based on planned new business volumes. This gives a surplus of 36.4m so no additional reserve is required. (5) Maintenance expense overrun reserve Explicit expense allowances are included in the calculation of the mathematical reserves. No maintenance expense overrun reserve is required. Explicit allowances are set in line with an analysis of actual and expected spend, with an additional prudential margin. (6) Not applicable. 7. Mismatching reserves (1) Not applicable. (2) Not applicable. (3) Currency Matching All non-unit reserves are matched by assets in the same currency. (4) Resilience Capital Requirement A resilience capital requirement (RCR) has been calculated in accordance with INSPRU 3.1.10. The RCR was determined by identifying assets which, after applying the scenario set out below, had a value equal to the firm's long term insurance liabilities under that scenario. The amount of the RCR was then calculated by deducting the long term insurance liabilities from the value of the assets identified above, prior to applying the scenario below. For the purposes of calculating the RCR, the most onerous scenario under INSPRU 3.1.16 was a fall in the market value of equities by 10%, a fall in real estate value of 20%, and a fall in the yields of fixed interest investments of 45 basis points. (5) There are no assets invested outside the UK and so no testing was necessary. (6) After carrying out this test, an RCR of 5.0m is required. Under the scenario described above, the aggregate amount of the liabilities increases by 5.0m. There is no change in the aggregate amount of assets allocated to match these liabilities from the amount shown in Form 13. (7) No further reserve was made in respect of the resilience capital requirement test. 8. Other special reserves No other reserves are significant enough to include. 52

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 st DECEMBER 2014 ABSTRACT OF VALUATION REPORT (Continued) 9. Reinsurance (1) The company did not cede any reinsurance on a facultative basis to a reinsurer who is not authorised to carry on insurance business in the UK. (2) (d) Reinsurer 1. Gen Re 2. Halifax Life Limited (e) Nature & Extent of cover under treaty (f) Treaty Premiums ( 000) (g) Amounts Deposited (h) Closed to New Business (i) Undischarged Obligation (j) Mathematical Reserves Ceded ( 000) (k) Retention Original Terms Reinsurance covering TMPP LTA and DTA policies sold after 1/3/2004 Original Terms Reinsurance covering Personal Investment Plan and Flexible Protection Plan 3. Gen Re 4. Munich Re Original Risk Terms Premium Reinsurance Reinsurance covering covering Level Term TMPP LTA Assurance and DTA Plan and policies sold Loan before Assurance 1/3/2004 Plan 5. Swiss Re 6. Gen Re Original Terms Reinsurance covering Over 50s Life Plan 21,504 Nil 4,398 5,972 2,905 2,801 Nil Nil Nil Nil Nil Nil Yes No Yes Yes Yes Yes No No No No No No Original Terms Reinsurance covering LTA, DTA and FIB sold through PFAs. 56,796 36,811-257 1,066 18,565-1,109 10% of all claims notified after 31/12/2010. Nil 100% reinsured Life and Accidental Death Benefits: 20% Waiver of premium and Standalone and Accelerated Critical Illness: 25% 50% of all claims. 65% quota share up to max of 8,450. 70% quota share up to max of 175,000. (l) (m) (n) Gen Re, HLL, Munich Re and Swiss Re are authorised to carry on business in the UK. HLL is a connected company of the insurer. Gen Re, Munich Re and Swiss Re are not. The company is exposed to the credit default risk of the reinsurer. 53

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 st DECEMBER 2014 ABSTRACT OF VALUATION REPORT (Continued) (o) (p) No provision has been made for the refunding of any reinsurance commission in the event of lapse or surrender of a contract. There are no financing arrangements. (3) Not Applicable 10. Reversionary (or annual) bonus Not applicable. 54

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31 DECEMBER 2014 DIRECTORS CERTIFICATE REQUIRED BY RULE 9.34 OF THE ACCOUNTS AND STATEMENTS RULES We certify: 1. (a) that the return has been properly prepared in accordance with the requirements in IPRU(INS), GENPRU and INSPRU, as modified by waivers dated 5 March 2009 and 30 December 2010 issued under section 148 of the Financial Services and Markets Act 2000, and; (b) we are satisfied that: (i) (ii) throughout the financial year in question, the insurer has complied in all material respects with the requirements in SYSC and PRIN as well as the provisions of IPRU(INS), GENPRU, and INSPRU; and it is reasonable to believe that the insurer has continued so to comply subsequently, and will continue so to comply in future. 2. (a) that in our opinion, premiums for contracts entered into during the financial year and the resulting income earned are sufficient, under reasonable actuarial methods and assumptions, and taking into account the other financial resources of the insurer that are available for the purpose, to enable the insurer to meet its obligations in respect of those contracts and, in particular, to establish adequate mathematical reserves; (b) (c) that the sum of the mathematical reserves and the deposits received from reinsurers as shown in Form 14, constitute proper provision at the end of the financial year in question for the longterm insurance liabilities (including all liabilities arising from deposit back arrangements, but excluding other liabilities which had fallen due before the end of the financial year) including any increase in those liabilities arising from a distribution of surplus as a result of an actuarial investigation as at that date into the financial condition of the long-term insurance business; and that we have in preparing the return, taken and paid due regard to advice from every actuary appointed by the insurer to perform the actuarial function in accordance with SUP 4.3.13R. A M Parsons Director T E Strauss Director C J Thornton Director Date : 26 March 2015 55

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31st DECEMBER 2014 Auditors report: Regulatory Return for a life insurance company ST ANDREW S LIFE ASSURANCE PLC Global business Independent auditors report to the directors pursuant to rule 9.35 of the Interim Prudential Sourcebook for Insurers We have audited the following documents prepared by the insurer pursuant to the Accounts and Statements Rules set out in Part I and Part IV of Chapter 9 to IPRU(INS) the Interim Prudential Sourcebook for Insurers, GENPRU the General Prudential Sourcebook and INSPRU the Prudential Sourcebook for Insurers ( the Rules ) made by the Prudential Regulation Authority under section 137G of the Financial Services and Markets Act 2000: Forms 2, 3, 13 to 17, 40 to 45, 48, 58 and 60 on pages 1 to 21, 24 and 33 to 34 ( the Forms ) and the supplementary notes to those forms; the statement required by IPRU(INS) rule 9.29 on page 42 ( the statement ); and the valuation report required by IPRU(INS) rule 9.31(a) on pages 44 to 54 ( the valuation report ); We are not required to audit and do not express an opinion on: Forms 46, 47 50, 51, 53, 55 and 57 on pages 22, 23 and 25 to 32 and the supplementary notes to those forms; the statements required by IPRU(INS) rule 9.30 on page 43; and the certificate required by IPRU(INS) rule 9.34(1) on page 55. Respective responsibilities of the insurer and its auditors The insurer is responsible for the preparation of an annual return (including the Forms, the statement and the valuation report) under the provisions of the Rules. Under IPRU(INS) rule 9.11 the Forms, the statement and the valuation report are required to be prepared in the manner specified by the Rules and to state fairly the information provided on the basis required by the Rules. The methods and assumptions determined by the insurer and used to perform the actuarial investigation as set out in the valuation report are required to reflect appropriately the requirements of INSPRU 1.2. It is our responsibility to form an independent opinion as to whether the Forms, the statement and the valuation report meet these requirements, and to report our opinion to you. We also report to you if, in our opinion: adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or the Forms, the statement and the valuation report are not in agreement with the accounting records and returns; or we have not received all the information we require for our audit. This report has been prepared for the directors of the insurer to comply with their obligations under IPRU(INS) rule 9.35 and for no other purpose. We do not, in providing this report, accept or assume responsibility for any other purpose save where expressly agreed by our prior consent in writing. 56

RETURNS UNDER THE ACCOUNTS AND STATEMENTS RULES FINANCIAL YEAR ENDED 31st DECEMBER 2014 Basis of opinion We conducted our work in accordance with Practice Note 20 'The audit of insurers in the United Kingdom (Revised)' issued by the Auditing Practices Board. Our work included examination, on a test basis, of evidence relevant to the amounts and disclosures in the Forms, the statement and the valuation report. The evidence included that previously obtained by us relating to the audit of the financial statements of the insurer for the financial year. It also included an assessment of the significant estimates and judgements made by the insurer in the preparation of the Forms, the statement and the valuation report. We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Forms, the statement and the valuation report are free from material misstatement, whether caused by fraud or other irregularity or error and comply with IPRU(INS) rule 9.11. In accordance with IPRU(INS) rule 9.35(1A), to the extent that any document, Form, statement, analysis or report to be examined under IPRU(INS) rule 9.35(1) contains amounts or information abstracted from the actuarial investigation performed pursuant to IPRU(INS) rule 9.4, we have obtained and paid due regard to advice from a suitably qualified actuary who is independent of the insurer. Opinion In our opinion: (i) the Forms, the statement and the valuation report fairly state the information provided on the basis required by the Rules and have been properly prepared in accordance with the provisions of those Rules; and (ii) the methods and assumptions determined by the insurer and used to perform the actuarial investigation as set out in the valuation report appropriately reflect the requirements of INSPRU 1.2. PricewaterhouseCoopers LLP Chartered Accountants 26 March 2015 The maintenance and integrity of the Clerical Medical website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the insurance annual return since they were initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of insurance annual returns may differ from legislation in other jurisdictions. 57