Summary
· UK Life Project is in value delivery phase with good progress on financial targets;
· The Group has delivered improved new business results in the three month period to 31 March 2012, with value of new business ("VNB") increased to £35 million (31 March 2011: £19 million) and new business cash strain ("NBS") reduced to £67 million (31 March 2011: £105 million):
- UK VNB increased to £22 million (31 March 2011: £6 million) reflecting the increasing proportion of new business on the target platforms and ongoing actions to generate operating cost synergies;
- UK NBS of £33 million (31 March 2011: £69 million) has improved from 2011 reflecting ongoing delivery of cost synergies in addition to the recognition of negative reserves on protection business from the second quarter of 2011;
- International new business results remain depressed in the current economic environment with VNB down slightly at £9 million (31 March 2011: £10 million). NBS is marginally down to £28 million (31 March 2011: £29 million) as the focus of the business moves towards new business with lower strain;
- Lombard delivered a good quarterly performance in what remain challenging conditions with VNB of £4 million (31 March 2011: £3 million), driven by a 29% increase in new business volumes. Sales of £44 million on an annual premium equivalent ("APE") basis reflect an increased proportion of large cases in the period;
· Run-rate synergies of £50 million achieved by 31 March 2012 progressing towards the £112 million run-rate target to be delivered by the end 2013, and £143 million run-rate synergies by the end of 2015;
· Strong balance sheet maintained with an estimated Insurance Groups Capital Adequacy ("IGCA") surplus at the Friends Life group ("FLG") level of £1.9 billion (31 December 2011: £2.1 billion) reflecting the payment of a £250 million dividend up to Resolution Holdings (Guernsey) Limited in March 2012;
· Group available shareholder cash ("ASC") totalled £841 million (31 December 2011: £853 million) before payment of dividend to Resolution Limited shareholders and scheduled DCN repayment of £60 million; and
· Total sales (on an annualised premium equivalent basis) in the first quarter of 2012 totalled £292 million up 8% on the £270 million reported in the same quarter in 2011.
