Dividends and capital management
The Board has resolved to pay an interim dividend of 4.9 pence per share, an increase on 1H 2015 (4.6 pence), in line with the Group's aim to grow the regular dividend annually in real terms, where appropriate.
As has been its practice in the past, where the Board believes the Group has capital which is expected to be surplus to the Group's requirements for a prolonged period, it would intend to return the excess to shareholders.
In future, the Board has decided that in the normal course of events it will consider whether or not it is appropriate to pay a special dividend only once a year, alongside the full-year results. In doing this, the Group will harmonise its major capital management decisions with its planning process and its full-year earnings.
The Board has considered the risk appetite range of the Group under its Solvency II partial internal model and considers that the appropriate range, which should enable it to meet its operational, regulatory and rating agency requirements, is 140% to 180% of its solvency capital requirement.
The Board has also resolved to pay a special interim dividend of 10.0 pence per share, following the approval of, and transition to, the Group's Solvency II partial internal model. After deducting the interim and special interim dividends, the Group's estimated Solvency II capital coverage ratio was 184% (pre-dividends: 199%).
Consistent with this new approach, the Board will now consider whether or not there is capital surplus to the Group's requirements for a prolonged period and hence whether or not there is any scope for a special dividend in conjunction with the Preliminary Results Announcement for 2016.