Glossary

Association of British Insurers – A trade association for the UK's insurance industry.

Asset Backed Securities – A collateralised security whose value and income payments are derived from a specified pool of underlying assets.

Alternative Coupon Satisfaction Mechanism – The process through which the deferred coupon on certain securities is settled.

Annual General Meeting - A meeting which companies with shareholders are required by law to hold.

Asset Liability Management – Management of mismatches between assets and liabilities within risk appetite.

A policy that pays out regular benefit amounts, either immediately and for the remainder of a policyholder's lifetime (immediate annuity), or deferred to commence at some future date (deferred annuity).

The management of assets using a structured approach to guide the act of acquiring and disposing of assets, with the objective of meeting defined investment goals and maximising value for investors, including policyholders.

Actuarial Systems Transformation - A project set up to rationalise and streamline the Group's actuarial systems, models and processes into a single actuarial modelling platform that is state of the art, scalable and able to meet our future demands.

Assets Under Management – The total value of assets that the Group manages and administers for itself and its customers, including assets managed for third parties outside the context of insurance.

A mathematical model used to calculate the value of an option.

Bonus Share Plan – The Group’s incentive programme under which a bonus is paid to employees in accordance with rules concerning eligibility, performance targets, time period, and size and form of payments.

UK Companies Act 2006.

The Committee of European Insurance and Occupational Pensions Supervisors – the Committee is composed of high level representatives from the insurance and occupational pensions supervisory authorities of European Union member states and is currently consulting with the industry on the technical requirements of Solvency II.

A high-level discussion group formed of the Chief Financial Officers of major European listed and non-listed insurance companies.

A fund that is closed to new business and no longer accepts funds from new customers. The fund continues to be managed for the existing policyholders.

Frictional cost of capital - The expected cost of investment expenses and tax arising from the investment of shareholderowned assets backing the capital requirements of an insurance company.

Standards of good corporate governance practice in the UK relating to issues such as board composition and development, remuneration, accountability, audit and relations with shareholders. The current version of the UK Code is May 2010.

The framework of customs, policies, procedures, laws and institutions influencing the way a corporation or company is managed.

Cost of residual non-hedgeable risk - The expected cost of non-hedgeable risks that can have an asymmetric impact on shareholder value to the extent these risks have not already been reflected in the PVFP or TVFOG. This can include both financial risks and non-financial risks such as mortality, persistency and expense risk.

Discretionary Participation Feature – A contractual right under an insurance contract to receive, as a supplement to guaranteed benefits, additional benefits whose amount or timing is at the discretion of the issuer.

European Economic Area - Established on 1 January 1994 and is an agreement between Norway, Iceland, Liechtenstein and the European Union. It allows these countries to participate in the EU’s single market without joining the EU. EU European Union.

A pan-European Stock Exchange based in Amsterdam, Holland.

See MCEV.

The UK’s independent regulator responsible for promoting confidence in corporate reporting and governance.

Financial Services Authority – The UK regulator for the financial services industry.

Guaranteed Annuity Option/Rate - An option or rate available to certain pension policyholders to acquire an annuity at a contractually guaranteed conversion rate.

Guaranteed Cash Option – An option to convert an annuity benefit into cash on guaranteed terms.

Group Capital Resources – In accordance with the UK regulatory regime for insurers firms are required at all times to maintain overall financial resources to ensure liabilities can be met as they fall due.

Group Capital Resource Requirement – In accordance with the UK regulatory regime for insurers it is the sum of the individual capital resource requirements for the insurer and each of its regulated undertakings.

Her Majesty’s Revenue and Customs.

Individual Capital Assessment - A firm’s assessment of the amount of capital required to ensure that assets exceed liabilities 99.5% of the time over a one-year period

International Financial Reporting Standards - Accounting standards, Interpretations and the Framework adopted by the International Accounting Standards Board.

Insurance Groups Directive – Requires an EEA insurance Group holding company to prepare and submit to its regulatory supervisor a group capital adequacy calculation, assessing the level of insurance and financial risk and the resources available to cover the risk.

Investment Management Contract - A contract between an investor and an investment manager.

Institutional Money Market Funds Association – The trade association which represents the European triple-A rated money market funds industry.

Warrants held by the original founders and sponsors of the Company.

Initial Public Offering.

London Inter-Bank Offer Rate - Interest rate that banks charge each other for loans of varying short-term maturities.

London Stock Exchange.

Long-Term Insurance Capital Component - Capital required to be held for regulatory purposes in respect of investment, expense and insurance risks.

Long-Term Incentive Plan - A reward system designed to improve employees’ long-term performance.

Market Consistent Embedded Value - A measure of the consolidated value of shareholders’ interests calculated using the Group’s MCEV methodology as described in the note 1 of the MCEV supplementary information.

Management Services Agreement – A contract that exists between Phoenix Life and management services or between management services and their outsourced services providers.

A type of company or a fund in the UK that is structured to invest in other companies with the ability to adjust constantly its investment criteria and fund size.

Pearl Group Limited Employee Benefit Trust.

Payment-in-kind.

Principles and Practices of Financial Management - An FSA requirement to produce a publicly available account of how a company’s with profits business is run to ensure customers are treated fairly.

From 6 April 2010 a Premium Listing replaces the pre-existing Primary Listing on the London Stock Exchange. Under a Premium Listing companies are required to comply with “premium” or “super-equivalent” standards.

Warrants of the Company currently listed on Euronext.

Present Value of Future Profits – The present value of profits attributable to shareholders arising from the in-force business.

Resilience Capital Requirement - additional amounts of capital required to be held for regulatory purposes as a result of two stress tests.

Retail Price Index excluding mortgage interest payments – Official measure of the general level of inflation as reflected in the retail price of goods and services.

A fundamental review of the capital adequacy regime for the European insurance industry. Solvency II aims to establish a set of EU-wide capital requirements and risk management standards that will replace the current Solvency I requirements.

A Special Purpose Acquisition Company is a company set up with the express purpose of acquiring other businesses.

Treating Customers Fairly - A central FSA principal that aims to ensure an efficient and effective market and thereby help policyholders achieve a fair deal.

Total Shareholder Return – The total return of a stock to an investor (capital gain plus dividends).

Time value of financial options and guarantees embedded within insurance contracts.

Useful Economic Life - The period over which fixed assets are depreciated.

UK Commercial Property Trust Limited - A property subsidiary of the Group which is domiciled in Guernsey and listed on the London Stock Exchange.

UK Listing Authority - The FSA acting as the competent authority for listing, is referred to as the UKLA, and maintains the official list.

Generally Accepted Accounting Principles adopted within the UK.

The Value of in-force business - The Present Value of Future Profits (PVFP) plus the Time Value of Financial Options and Guarantees (TVFOG) less the Frictional Costs of Required Capital (COC).

With profit insurance capital component. The WPICC is the amount by which the regulatory surplus exceeds the realistic surplus.