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ST. JAMES’S PLACEST. JAMES’S PLACE

WEALTH MANAGEMENTWEALTH MANAGEMENTDECEMBER 2008

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ContentsContents

Current trading updateStrategyThe PartnershipInvestment ManagementOur clientsOur marketAnalyst followingHistory & BoardFoundation

Page No:

2

20

26

35

44

50

58

60

63

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Current trading updateCurrent trading update31 December 200831 December 2008

4

Full Year Results 2008Full Year Results 2008

Highlights:• New Business (APE) of £419.0 million• Total single investments of £3.1 billion• Continued 95% retention of FUM• FUM at £16.3 billion with net inflows• Partnership numbers 1,340 up 7%• EEV new business profit £123.5 million• EEV operating profit at £204.3 million• EEV net asset value of 232.4 pence

5

New business by quarterNew business by quarter

69.4

97.8 98.791.5

115.7122.0

85.1

101.9101.9 103.1113.2

96.4

20

40

60

80

100

120

140

Q1 Q2 Q3 Q4

£’m APE (Annual premiums plus 10% of single premiums)

2007

2006

2006 over 2005 +57% +54% +63% +59%2007 over 2006 +41% +26% +20% +10%2008 over 2007 +1% +5% +0% -15%

2008

6

Investment new business by Investment new business by quarterquarterSingle premiums

2007

2006

2006 over 2005 +71% +47% +49% +36%2007 over 2006 +22% +39% +30% +16%2008 over 2007 -4% -4% -20% -24%

2008

512.2444.7

476.0432.3

593.5578.4

664.5

528.6

449.0461.3

633.6

507.7

0

100

200

300

400

500

600

700

Q1 Q2 Q3 Q4

£’m

7

Pensions new business by Pensions new business by quarterquarter

£’mSingle premiums

2007

2006

2006 over 2005 +83% +78% +106% +147%2007 over 2006 +105% +52% +27% -4%2008 over 2007 +9% +10% +19% -3%

2008

286.2

187.8

113.0

161.0

275.8

238.0244.8231.7

267.4282.4268.4

251.5

0

50

100

150

200

250

300

350

Q1 Q2 Q3 Q4

8

Pensions new business by Pensions new business by quarterquarter

£’m

Regular premiums

2007

2006

2006 over 2005 +31% +80% +132% +93%2007 over 2006 +83% -10% -7% +18%2008 over 2007 +7% +37% +48% -4%

2008

17.616.6

21.8

9.3

20.6

15.5

19.717.0

19.722.8

26.9

18.3

0

5

10

15

20

25

30

Q1 Q2 Q3 Q4

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Funds under managementFunds under management

0

5

10

15

20

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

+31%

-6%+10%+47%

Fu

nd

s £

’bn

+34%+20%

+25%

+29%

+18%

+24%

16%p.a. compound growth over the last5 years and 18%p.a. over 10 years

-10%

10

Fund flow informationFund flow information

FUM at start 18.2 15.4

New money invested 3.0 3.1Investment return (3.6) 0.9

17.6 19.4Regular income withdrawals/maturities (0.4) (0.3)

Surrenders / part surrenders (0.9) (0.9)

FUM at close 16.3

18.2 Implied surrender rate as %of average FUM 5.2% 5.1%

£’bn 2008 2007

11

Analysis of life, pension & unit Analysis of life, pension & unit trusttrust

pre-tax operating profitpre-tax operating profit

New business contribution

123.5

150.9

Profits from existing business

- expected 80.5 77.7

- experience variance 16.9 16.2

- operating assumption changes

(0.9)

(2.8)

Investment income 4.9

6.9

Operating profit 224.9

248.9

20082008£’m 20072007

12

Pre-tax EEV profit

Life & pension 174.1 189.9Unit trust 50.8

59.0Other operations (20.6) (4.2)

Total Operating profit 204.3 244.7

Investment variance (320.6) (14.5)Economic changes 0.4

0.2

Pre-tax result (115.9) 230.4

£’m 2008

2007

13

Final dividend of 2.55 pence maintained

DividendDividend

14

Analysis of adjusted post tax Analysis of adjusted post tax profitprofit

Net annual management fee 122.2 123.2Unwind of surrender penalties (44.4) (44.6)New business strain (10.0) (7.7)Establishment expenses (72.2) (67.3)Investment income 10.1 10.5Other 18.4 11.8

Underlying cash flow 24.1 25.9One off - 7.2

24.1 33.1

£’m 2008

2007

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Analysis of underlying post tax Analysis of underlying post tax cashflowcashflow

£’ m 2008 2007

Arising on in force business 91.4 84.7Arising from new business (67.3)

(58.8)

24.1 25.9

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Year end capital positionYear end capital position

£’m LifeOtherRegulated

Other

Total

Solvency position

Solvency net assets 151.9 19.3 88.8 260.0

Solvency requirement 41.1 14.6

Solvency ratio 370% 132%

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Year end capital positionYear end capital position

£’m LifeOtherRegulated

Other

Total

Analysis of solvency net assets UK Govt. gilts 23.0 - - 23.0Other Govt. backed debt 26.3 - -

26.3AAA rated money market funds 137.0 15.6 20.5

173.1Bank balances 26.3 20.1 15.3 61.7Fixed assets - - 12.2 12.2Actuarial reserves (32.2) - - (32.2)Other assets / liabilities (28.5) (16.4) 40.8 (4.1)

Solvency net assets 151.9 19.3 88.8 260.0

Adjustments to IFRS basis 256.3 (8.3) - 248.0

IFRS net assets 408.2 11.0 88.8 508.0

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Group expensesGroup expenses

20082008£’m 20072007Paid from policy margins

Partner remuneration 176.9 191.8

Investment expenses 59.6 68.4

3rd party administration 27.8 24.7

Direct expenses

264.3

284.9

Other production related costs 42.2 44.4

Establishment expenses 97.6 91.9

Contribution from 3rd party product sales

(13.1) (14.4)

126.7 121.9

391.0 406.8

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Uniquely placed in growing Uniquely placed in growing marketmarket

• Proven growth record over longer term• Organic growth, not acquisitive• Niche market• Dedicated distributor with manufacturer

margins• Positive reputation (wealth manager awards)• Successful investment approach• Not exposed to industry issues• Clear focus on business model• Longer term demographics are positive (with

fewer advisers)

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OutlookOutlook• Respected and well positioned brand / business

• Loyal client base (Partners and investors)• 3rd consecutive year of strong recruitment• Opportunities for further growth in Partnership

(RDR, reputation, city redundancies)• Investment Management Approach more resilient• Strong solvency position• Strong market for advice• Economic uncertainty / stock market weakness• But strong / early growth on market recovery• Uniquely placed business

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StrategyStrategy

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St. James’s Place: overviewSt. James’s Place: overview• UK wealth management company• FTSE 250 market cap c £1bn• Target mass affluent / high net worth market• UK centric• Dedicated distribution through our own wealth managers• Strong retention of clients and Partners• Focus on areas where management adds value

– Outsource administration– Outsource investment management– Joint ventures for non-core activities

• Minimise shareholder financed overheads• £16.3bn funds under management and a further £1.5bn

under advice• Charitable Foundation• Simple Group structure

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Structure of St. James’s Structure of St. James’s PlacePlace

6060%%

LLOYDSLLOYDSLLOYDSLLOYDS

100100%%

ManufacturingManufacturing DistributionDistribution

St. James’s Place

SJP GROUP

Wealth Management

SJP Life andUnit Trust Companies

SJP Partnership

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The growth modelThe growth modelTarget

15 – 20% pa

New BusinessNew BusinessNew BusinessNew Business

CAPACITYCAPACITYNo of PartnersNo of Partners

CAPACITYCAPACITYNo of PartnersNo of Partners

PRODUCTIVITYPRODUCTIVITYNew BusinessNew Business

Per PartnerPer Partner

PRODUCTIVITYPRODUCTIVITYNew BusinessNew Business

Per PartnerPer Partner

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Our wealth management Our wealth management servicesservices

• Pensions• Investment• Estate protection• Estate creation• Inheritance tax

solutions• ISAs• Offshore bonds

• Mortgages• Employee benefits• Trust & Estate

planning• Protection• General insurance• Annuities• Portfolio

management• Banking• Stakeholder• Private medical

insurance

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What we don’t haveWhat we don’t have• No with profits• No guaranteed annuity options• No solvency assets invested in

equities• No final salary pension scheme• No longevity risk• No split level trusts• No derivative-based “precipice” funds• No mortgages / sub prime• No monoline reassurance• No hybrid debt

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The PartnershipThe Partnership

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The PartnershipThe Partnership

• High quality self-employed team of 1,340 advisers• Only experienced advisers: average 17 years• Bring existing client bases• High productivity – 2.5 x industry average• Average age of Partner – 48 years old• Male : Female – 90 : 10• Focus on higher value clients• Growth in specialisms• Stability (including retirees) - 97% p.a. retention by value (APE) - no single Partner represents over 1% of APE• Academy starting to bear fruit

(Own dedicated distribution)

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Number of PartnersNumber of Partners

0

200

400

600

800

1000

1200

1400

1600

19981999200020012002200320042005200620072008

Associate Partner Partner Double Partner +

Nu

mb

er

of

Part

ners

+10%+9%

+8%+7% -2% +2% +1% +2% +5%

+8%+7%

30

PartnersPartners ClientsClients

7%

23%

13%

3%

22%

15%

9%

3%

2%

6%

24%

14%

4%

25%11%

11%

3%

2%

Overseas Clients: 3%

Geographic Geographic DistributionDistribution

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Changing face of the Changing face of the PartnershipPartnership

£250-750k14%

£750k+2%

<£50k33%

£50-250k51%

2004

2008

(APE)

£250-750k33%

£750k+8%

<£50k15%

£50-250k44%

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Partners by Age BandPartners by Age Band

Existing Partners

<356%

35-4530%

45-5540%

55-6522%

65+2%

New Partners

<3520%

35-4539%

45-5534%

55-657%

65+0%

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The AcademyThe Academy

•First 8 academy members join the Partnership

•45 people currently training in the academy

•Average age 39

•Two additional intakes of 15 to 20 planned for 2009

•Refining process as we progress

•Successful event targeting city fall out/ other events planned

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Benefits of our own Benefits of our own distributiondistribution

• New business more predictable• Spread of production• Less exposed to market pressures• Greater control over quality of new business• Better retention of business• Our clients – cross selling opportunities• Control over brand• Can incentivise distribution• Strong client advocacy

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Why join SJP?Why join SJP?•Brand recognition for preferential, trusted advice•Guarantee•Unique exit /retirement options•Meritocracy•Client service focus (SJP culture)•Financial and regulatory stability of principle•Investment management approach

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Investment ManagementInvestment Management

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Investment management Investment management approachapproach

Investment CommitteeInvestment Committee

Select, monitor and changeSelect, monitor and changeinvestment housesinvestment houses

19 investment management 19 investment management houseshouses

(select individual managers)(select individual managers)

Stamford Associates (Consultants)

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External investment External investment managersmanagers• Core managers – managed funds

– AXA Framlington – GAM – Invesco Perpetual– Jupiter– Newton– Polaris– Schroder Investment Management– Taube Hodson Stonex Partners

• Specialist managers– Aberdeen (Far East, Ethical)– BGI (Alternative Assets)– Insight (Tracker)– Invesco Perpetual (Corporate Bond)– Invista (Commercial Property)– Oldfield / Thornburg (High Octane)– Reed Connor Birdwell (North American)– RWC Partners (UK Growth)– State Street (Cash)– S W Mitchell (Continental European)– Wellington (Gilts & International Bond)

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Advantages of investment Advantages of investment approachapproach

• No in-house investment managers – no conflict of interest

• Selection of managers (“best of breed”) – wholesale purchasing power

• Spread - 8 core balanced funds with different styles

• Use only genuinely “active” managers• Monitoring - continuous analysis plus

quarterly presentations• Changing managers

– ease of change– improved persistency

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The role of StamfordsThe role of Stamfords

• Stamfords work with the Investment Committee to help achieve superior investment results over time.

• They provide:– Dedicated research and advice– Manager research & assessment– Regular monitoring of managers– Regular portfolio analysis– Advice on changing managers

41

Funds under managementFunds under management

0

5

10

15

20

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

+31%

-6%+10%+47%

Fu

nd

s £

’bn

+34%+20%

+25%

+29%

+18%

+24%

16%p.a. compound growth over the last5 years and 18%p.a. over 10 years

-10%

42

Funds Under Management: Shown by Asset Class and Funds Under Management: Shown by Asset Class and RegionRegion

Cash and Other Assets14%

European18%

US9%

Far East10%

International4%

UK38%

Property4%

PABs/FABs3%

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Relative investment performance Relative investment performance of funds under management – 1 of funds under management – 1

yearyear

16% 14%

4%

20%12%

8%3%

15%

6% 8%

12% 15%

15%

7%

5%

23%

9%

1%

10%

24%

22%

34%

28%

10%

11%

39%23%

38%13%

49% 47% 45%

73%

57%

49%

61%

46%

55%

20082008 2006 2005 2004 2003 2002 2001 2000 1999

1st

2nd

3rd

4th

14%

58%

2007 2006 2005 2004 2003 2002 2001 2000 1999

44

Relative investment performance Relative investment performance of funds under management – of funds under management –

rolling 5 yearrolling 5 year

12% 8%4% 4% 2%

10% 8%13%

17%

9%12%

8%2%

3%

8% 8%

16%15%

13% 13%

8%14% 20%

15% 19%

10% 5%

67% 67%

80% 79% 76%68% 65% 61% 63%

2008 2007 2006 2005 2004 2003 2002 2001 2000

1st

2nd

3rd

4th

2008 2007 2006 2005 2004 2003 2002 2001 2000

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Our clientsOur clients

46

Our clientsOur clients

• 82,000 wealth management clients• Average age: 60• Average funds under management:

£180k• Average duration as SJP client: 7.4 years• Strong clients advocacy• Clients vote us Wealth Manager of the

Year

47

Geographic Distribution of Client FUMGeographic Distribution of Client FUM

5%

19%

12%

4%

24%18%

10%

3%

1%

Overseas Clients 4%

48

FUM by Value of ClientsFUM by Value of ClientsFum by Client Band

>£1m14%

£50k to £1/4m40%

<£50k18%

£1/4m to £1/2m17%

£1/2 to £1m11%

49

New and Retained Clients by Age BandNew and Retained Clients by Age Band

New Clients by Age Band

<308%

30-4017%

40-5025%

50-5511%

55-6012%

60-6511%

65-706%

70+10%

Existing Clients by Age Band

<303%

30-4020%

40-5026%

50-5510%

55-6010%

60-6510%

65-707%

70+14%

50

Clients vote us Wealth Manager Clients vote us Wealth Manager of Yearof Year

51

Our market

52

Our marketOur market

• The market is big• Favourable demographics• The tax burden is increasing• UK high net worth individuals want

face to face advice

53

The SJP Market PlaceThe SJP Market PlaceUK Individuals with between €50k and €3m of liquid assets

6,772,000

7,876,102

8,533,210

9,109,6028,734,968

8,396,304 8,276,3098,732,890

9,256,186

9,927,622

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Year

Nu

mb

er

of

Ind

ivid

ua

ls

Source: Datamonitor Global Wealth Model

54

The SJP MarketplaceThe SJP MarketplaceAmount of liquid assets held by UK individuals with between €50k and €3m

€1,201bn

€1,351bn

€1,545bn

€1,670bn €1,637bn €1,603bn €1,597bn

€1,700bn

€1,818bn

€1,967bn

-

500

1,000

1,500

2,000

2,500

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Year

€b

n

Source: Datamonitor Global Wealth Model

55

The SJP OpportunityThe SJP Opportunity

•£78bn held in Stocks & Shares ISAs (HMRC as at 5/4/2008)

•Around £10bn new money into Stocks & Shares ISAs in 2008(IMA Dec 2008 Data and ABI End Q3 data extrapolated)

•SJP £0.5bn – around 5% share

56

The SJP OpportunityThe SJP Opportunity

• £163bn in cash ISAs (Building Society Association December 2008)

– Low interest rates– Can be transferred

• Average interest rate on instant access accounts 0.81% (Bank of England, 4 Feb 2009)

“savers have lost an estimated £27 billion in income since December 2007, when Bank rate stood at

5.5%”(The Times, 3 Feb 2009)

57

The SJP OpportunityThe SJP Opportunity

• Pensions– 52% of open defined benefit schemes

expect to close to new members within 5 years National Association of Pension Funds, 23 January 2009

– More than 59% of UK workers are not confident that they will have enough money during retirement Club VITA survey

– Almost 1.7m are relying on property to fund their retirement USwitch

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The SJP opportunityThe SJP opportunity

The average UK high net worth … is particularly focused on tax optimisation and his financing needs, and has a

markedly lower knowledge of financial products than his European counterparts. Face to face relationship management is very important to him, and he is

reliant on recommendations from someone he knows in choosing his wealth manager.

Datamonitor – Wealth Management in the UK, 2008

59

Analyst followingAnalyst following

60

• Craig Bourke• Roman Cizdyn• Rakshit Ranjan• Raghu Hariharan• Colin Simpson• James Pearce• Blair Stewart• Barrie Cornes• Eamonn Flanagan

• Blue Oak Capital Ltd• Blue Oar Securities• Clear Capital• Fox-Pitt Kelton• Goldman Sachs• JPMorgan Cazenove• Merrill Lynch• Panmure Gordon• Shore Capital

Analyst Analyst followingfollowing

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History & BoardHistory & Board

62

HistoryHistory1992 Management team left Allied Dunbar Assurance, UK’s largest unit-linked assurer (now part of Zurich Financial Services)

J. Rothschild Assurance Group launched (backed by Scottish Amicable and Lord Rothschild)

1997 J. Rothschild Assurance Group reversed into St. James’s Place Capital plc (listed on London Stock Exchange)

2000 HBOS acquired 60% interest in St. James’s Place J. Rothschild Assurance Group rebranded St. James’s Place

2009 Lloyds Banking Group assume holding as part of HBOS transaction

63

Board of directorsBoard of directors

ChairmanMike Wilson

Executive directorsDavid Bellamy (CEO)Andrew CroftIan GascoigneDavid Lamb

Non executivedirectorsSarah BatesSteve Colsell (Lloyds)Jo Dawson (Lloyds)Derek NethertonMike PowerMichael SorkinRoger Walsom

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Foundation

65

St. James’s Place FoundationSt. James’s Place Foundation• Foundation established in 1992 based on simple belief

that those of us who have should give to those who have less or who suffer in some way

• Supporting the Foundation is a key cornerstone for the SJP culture

• Every employee and Partner is encouraged to take part in, and contribute towards fund raising events

• Over 80% of the community make monthly payments by deed of covenant

• Company matches funds raised• In 2008 raised £2.5 million in a record year• Major grants made to Children’s Trust, Help the Hospice,

Teenager Cancer Trust and Hope & Homes• Hundreds of small grants are made each year

6624 February 2009