Norwich Union LifeRealising the potential

Mark HodgesChief Executive, Norwich Union Life

Agenda

• UK market

• Position of strength

• Delivering strong financial results Q3 2006

• Driving forward with a clear strategy and plans

• Well placed to succeed

Note: Figures shown in yellow are estimated market for 2006

The under-provided£27 billion annual savings gap

The under-protected£2.5 billion annual protection gap

Corporate benefits£1 trillion pension scheme assets and corporate benefits

Ageing population and self funded retirement

Corporate£4.4 billion

The longer-term market opportunities are significant

Protection£0.8 billion

Savings & Investment£10.3 billion

Income£1.1 billion

Current Norwich Union Life

Market

Growth opportunities

The market is growing

Sources: Historic data, ABI for Life & Pensions and IMA for Collective Investments. Prospective data NUL estimates.

… and the potential is significant

Market growth of 5% pa• Increasing customer confidence in equity

markets and appetite for collective investments and bonds

• Greater flexibility for pensions post A-day2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Today

Current NUL market

Additional growth of up to 10% pa• Growing corporate market, including bulk

purchase annuities • Ageing population• Unlocking the potential of the £27bn

annual savings gap and the £2.5bn protection gap

New NUL marketsSavings gapProtectio

n gap

Agenda

• The UK market

• Position of strength

• Delivering strong financial results Q3 2006

• Driving forward with a clear strategy and plans

• Well placed to succeed

We are in a position of strength

= flexibility and scale to deliver

market leading performance and shareholder value

Product range

Distribution breadth

Financial strength

Brand

Uniquely placed to lead and succeed

Brand

• Growing brand awareness and consideration• Number 1 for awareness and consideration among traditional L&P providers• NU Life benefiting from GI brand spending

Source: Independent research. Awareness = ‘have heard of’, Consideration = ‘would consider using’

Our brand is compelling

Financial Services brand consideration and awareness Q1 2006

30

35

40

45

50

55

60

75 80 85 90 95 100Brand Awareness (%)

Bra

nd C

onsi

dera

tion

(%)

12.9% 13.1%

7.6%

14.2% 14.9%

10.3% 9.5%

IndividualPensions

GroupPersonalPensions

CorpPensions

Protection Annuities Bonds CollectiveInv

EquityRelease

A broad range of market leading products

• A broad portfolio of products with strong market presence in each market

• A diversified portfolio of products – close to the overall market mix

• Top 3 positions in key product markets

Strong positions across a balanced portfolioSources: Market Share based on, for NU MSE + 50% JV, for market ABI. Product mix based on Q306 YTD PVNBP.

NUL Market Share H106

12.1% (H105: 10.6%)30.4%

NUL Product Mix 2006 YTD

IndividualPensionsGroup Pensions

Protection

Annuities

Bonds

CollectiveInvestmentsEquity Release

An unrivalled multi distribution platform

• No.1 in the IFA market with 13.5% market share

• Leading provider to banks, building societies and the top 4 networks and service providers

• On 22 of 28 multi-tie panels

• Expanding our direct channel with the launch of new simplified life cover

With strong potential for further growth

IFA (Nationals & Regionals)

BancassuranceCorporate

Direct

IFA (Networks & Service Providers)

24%

33%29%

11%

3%

0

200

400

600

800

H104 H204 H105 H205 H106 Q306

£m

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

Life & Pensions Collective Investments Margin (Cumulative)

RBSG joint venture growing strongly• Share of YTD sales up 69% on

2005 at £879m

• Share of new business contribution up 140% on 2005 to £29m, a margin of 3.8%

• Advisers up 21% over the last 12 months to 700, targeting 850 by end-2007

• Strong product range integrated into core customer offerings

A successful and growing partnershipSource: Aviva share of sales (PVNBP) and margin.

Sales and Margin

0

500

1,000

1,500

In-Force profits New businessstrain

Net dividends toGroup

Financial strength

• Large in-force book annual profit provides funding for new business and dividend to Group

• Strong AA rated with-profit funds

• Appropriate regulatory capitalisation of non-profit funds and dynamically managed

• Regulatory basis of non-profit fund excessively prudent compared to economic basis

• Proposed CP06/16 change will remove some of the excessive capital requirement for unit linked and term assurance business

A self-financing model

Operating movements to net worth in 2½ year period

(2004 to mid-2006)

(370)

(930)1,330

£m

Agenda

• The UK market

• Position of strength

• Delivering strong financial results Q3 2006

• Driving forward with a clear strategy and plans

• Well placed to succeed

Progressive sales performance

• Excellent sales performance with PVNBP up 39% to £10,464 million• Market share at June 2006 of 12.1%, 1.5% higher than June 2005• New business contribution up 26% at £254m• Margins maintained at 2.9% (FY 2005: 2.9%)

Sales & Margin

Source: Quarterly PVNBP and Life & Pensions margin.

Nine months sales 2006 exceeding full year 2005

1,750

2,250

2,750

3,250

3,750

Q105 Q205 Q305 Q405 Q106 Q206 Q306

£m

2.0%

2.5%

3.0%

3.5%

Life & Pensions Investments Margin (Cumulative)

Writing new business above the cost of capital

Focusing on improving the IRR

Bonds & savings

Corporate PensionsProtection

WACC

6.6%

Annuity

Individual Pensions

Group Personal Pensions

Internal rate of return

Source: September YTD product IRRs. Bubble size indicates amount of new business contribution before the cost of capital.

• IRR of 10.4% (unleveraged) – in excess of Group WACC of 6.6%

• Equity shareholders IRR of 12.5% (leveraged)

0

500

1,000

1,500

2,000

2,500

3,000

6% 8% 10% 12% 14% 16%

PVN

BP

£m

Agenda

• The UK market

• Position of strength

• Delivering strong financial results Q3 2006

• Driving forward with a clear strategy and plans

• Well placed to succeed

Driving forward with strategic intents

Low cost provider

Easy customer experience

Broad product offering

Clear accountability

and prideFi

nanc

ial l

itera

cy

Self-serviceGuidance and

advice

Balanced distribution

Clear business direction

Strategic intents with clear plans

Low cost provider

Easy customer experience

Broad product offering

Clear accountability

and prideFi

nanc

ial l

itera

cy

Self-serviceGuidance and

advice

Balanced distribution

Rationalise cost

Value out of service

Manage retention

Simplify the legacy

Develop the

business

Value from focus

Rationalising the cost base

• Simpler, faster and more customer focused processes

• Strong supplier management• Sharing of support services across

the UK• Robust prioritisation of change spend• Rationalisation of property portfolio

Cost Savings Split

£250m

GI

£125m

Sales&

Operations£50m

Life

£125m

Sales&

Operations£57m

Support Functions£143m

Delivering £125m annual cost savings by end 2007

c.80%c.80% Existing businessc.20%c.20% New business

Proportion benefiting:£125m£100mCost saving benefits

20082007

• Benefits to substantially accrue to shareholders

• Lower sales costs to benefit new business

• Existing business expense overruns substantially reduced

Simplifying the legacy

A pragmatic approach to become a scale, low cost operator

c900 products

8.5 million policies

550 systems

Current productsand systems

40% Value

60% Value

Migration

Ring-fence and rationalise

Decommission

Heritage

20% value

Scale

80% valueDevelop target systems and processes

Aug Oct Dec Feb March May July Sept

Creating value out of service

-20%

0%

20%

40%

60% NUL

20062005

Good service increases value• Retention of existing customers• New business sales

Objectives• “One and done”• Easy to do business with

Already seeing results• Record levels of distributor satisfaction

and advocacy• Significant reduction in service

complaints– Distributor down 48%– Customer down 43%

Service is no longer a constraint

Service Rating

55%34%8%19%-5%-10%-1%-21%NUL Scores

Source: Independent research. Net score represents distributor net score (excellent/good less quite poor/poor service). Lines represent NUL and competitor scores.

0

500

1,000

1,500

2,000

2,500

3,000

Premiums Claims

£m

0

500

1,000

1,500

2,000

2,500

3,000

Premiums Claims

£m

Managing retention

Greater focus on retention - key value driver for NU

• Winning from A-day

• Developing products- Bond service promise- Improving confidence in With Profits- Move customers to more modern

contracts- Move customers to better products for

them

• Increased operational focus- All Directors assigned retention

targets- Enlarged customer retention teams- Customer service improvements

• Reviewing our assumptions

NUL Pension Cashflows 9 Months 2006

NUL Pension Cashflows FY05

£3.0 bn

£(2.3) bn£2.9 bn

£(2.8) bn

*

*

* Claims shown net of money converted to immediate annuities

Developing the business

Developing the business to exploit the market opportunities

IFA fund centre

Simplified life cover

“Making sense of it” website

Well placed to succeed

To be a winner in a growing market with:

• Position of strength with track record of delivery

• Clear plans to deliver strategy- Low cost and flexible operating model- Simplified legacy- Value out of service- Customer retention- Developing the business

• Already made significant progress

• Strong leadership and a passionate and committed team

Clear direction, focus and delivery