26% growth in operating profit - Strong results pave the way for further growth

Strong performance
IFRS operating profit up 26% to £2.55 billion (FY 2009: £2.02 billion)
Profit before tax up 35% to £2.44 billion (FY 2009: £1.81 billion)
Increased net operational capital generation by 70% to £1.7 billion1 (FY 2009: £1.0 billion)
IFRS Net Asset Value per share up by 21% to 454p (FY 2009: 374p) EEV equivalent NAV per share 621p.
IFRS return on equity 14.8% (FY 2009: 10.9%)
Total dividend per share up 6% to 25.5 pence
Profitable growth in both life and general insurance
Improved life new business IRR to 12.5% and payback to 8 years (FY 2009: 10.0% and 14 years) and long term savings sales up 4% to £37.4 billion (FY 2009: £35.9 billion)
General insurance COR of 96.8% (FY 2009: 99%) and general insurance and health net written premiums up 6% to £9.7 billion
Positive outlook: good platform for continued growth
Focusing on markets where we have strength and scale: UK and Europe is the largest savings market in the world with greatest absolute growth in next five years
Improved profitability and focus on robust capital generation
Stronger balance sheet - pension deficit reduced to zero from £1.7 billion2 (31.12.09); IFRS shareholder equity now exceeds pre-financial crisis levels, increasing during the year by £2.5 billion to £13.0 billion
Financial strength recognised in recent positive rating action by S&P and Fitch
1. Gross of Delta Lloyd longevity assumption change.

2. IAS19 basis.

Andrew Moss, group chief executive, commented:

“We’ve gone from strength to strength in 2010. In a tough external environment we’ve outperformed. Operating profits are up 26% and we are able to reinvest in the business and pay a healthy and growing dividend.

“Over the last few years, we’ve grown the business, significantly reduced costs and strengthened the balance sheet. As a result, we’ve created a good platform for the next phase of growth.

“We have a clear strategy and we are meeting our customers’ needs. By focusing on what we do best in the markets where we have strength and scale, we will continue to prosper in 2011.”