A presentation for:

Aviva

26th February 2015

MERRION INVESTMENT MANAGERS

ABOUT US

Ireland’s leading independent pension and investment fund manager

Operating since 1986 – formerly Oppenheim Investment Managers

Culturally oriented towards client interests

Independently owned, not a subsidiary of a Bank or Life company

Our portfolios have consistently outperformed both the underlying markets and the

returns of our competitors over the long-term

Investment team has 15+ years average industry experience

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SECURITY OF ASSETS

Full separation from client assets (No Balance Sheet exposure)

Assets held in safekeeping by top A-1/P-1 rated custodian (Northern Trust

$4.2T AUM)

Portfolio Oversight

• Independent Custodian appointed with responsibility for the safekeeping

of assets

• Independent Trustee reviews portfolios to ensure management in

accordance with constitutional documentation

Independent Administrator calculates NAV of portfolios

MERRION INVESTMENT MANAGERS

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Active management is essential to maximising investment return

Over the long term equity market performance reflects valuation but over the short

term reflects sentiment

Our three-pillar investment process captures these drivers

A flexible approach to asset allocation is more appropriate than rigid allocations

In an increasingly global economy sector exposure is as important as regional

weighting

We are not tied to a single investment strategy such as value or growth

INVESTMENT PHILOSOPHY MERRION INVESTMENT PHILOSOPHY

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Valuation Analysis

• Capital efficiency & valuation

Technical Analysis

• Price movements & momentum

Macro-EconomicAnalysis

• Economic growth dynamics

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PERFORMANCE BASED ON A ROBUST INVESTMENT PROCESS

TWO EXAMPLES OF THE PROCESS AT WORK

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Reduced emerging market exposure in Q4 2010

Emerging Equity Market Relative

Increased Healthcare exposure in Q1 13

Healthcare relative to Global Equity Market

EXAMPLE 1:REDUCED EMERGING MARKET EXPOSURE IN Q4 2010

Macro - Emerging market economies were the main engine of global growth

Valuation - Emerging market equities looked expensive on valuation grounds

Technical analysis suggested Emerging market equities were tiring

Switch to Japan - 50% of Japan’s exports to emerging markets

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Emerging Market Valuation Relative to World Mkt.

Japanese Market Valuation Relative to World Mkt.

MSCI Emerging Markets relative price performance

Approaching resistance on weak momentum

Emerging Market Technical Analysis Relative to World Mkt.

EXAMPLE 2:INCREASED HEALTHCARE EXPOSURE IN Q1 2013

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Macro – aging populations globally mean structural increase in healthcare spending

Valuation - analysis highlighted positive structural position not recognised

Technical analysis - suggested the beginning of a sustained period of outperformance

MACRO ANALYSIS VALUATION ANALYSIS

TECHNICAL ANALYSIS

No. of countries with >30% of the population aged 60+)

FDSAGG World Healthcare (Price/Book)

Healthcare relative to Global Equity

WHAT’S CURRENTLY PRICED INTO MARKETS ?

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REAL EXCESS RETURN USA EURO JAPAN

Equity Yield 3.14% 3.69% 3.37%

Inflation Protected Bond Yield 0.17% -0.68% -0.56%

Real Excess Return 2.97% 4.37% 3.93%

VALUATIONS – EQUITIES ATTRACTIVE VERSUS BONDS

GERMAN BUND YIELDS

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WORLD EQUITY MARKET VALUATION

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CARRY, ROLL-DOWN AND SPREAD COMPRESSION

Yield Curves are very steep (due to global

zero interest rate policy)

Curves should continue to flatten ECB QE

pushes down future rate expectations

Steepest part of the curve is 7 to 15 year –

this is where roll-down is most attractive

Spreads have tightened from extremes, but

carry remains attractive, and spreads should

tighten further

Bond portfolios currently positioned to benefit from: Carry; Roll-down; Spread Compression; Flatter Yield Curve

Italian Yield CurveSpanish Yield CurveIrish Yield CurveGerman Yield Curve

Italy: Spread to BundsSpain: Spread to BundsIreland: Spread to Bunds

US RELATIVE TO GLOBAL EQUITIES

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US Market valuation vs. World Equities Central Bank Balance Sheets

S&P RelativeUS market valuation is stretched relative to global market

US Federal Reserve is near the end of its balance sheet expansion, Bank of Japan and European Central Bank only beginning

Negative divergence indicates waning appetite for US equities relative to rest of world

BoJ balance sheet target

ECB balance sheet target

Price relative: new high not confirmed by momentum

VALUATIONS RELATIVE TO THE WORLD MARKET

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Europe Equity Market vs. World Equities Japan Equity Market vs. World Equities

European and Japanese equities trade at a significant discount to global equities

ACTION FROM THE ECB TO IMPROVE FUNDING FOR SME’s

Eurozone inflation far below ECB target – and falling

But Money Supply growth should lead to improving business confidence

And loan demand is finally beginning to expand

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Money Supply and Business ConfidenceEU Inflation

Eurozone Headline Inflation

Eurozone Core Inflation

ECB Bank Lending Survey – Demand for loans

Loan Demand:

EnterprisesHousingConsumer Credit

IS ECB ACTION STARTING TO HAVE AN IMPACT?

Periphery bond yields have fallen, and bank lending rates are now following

Consumer confidence is consistent with more retail and durable goods spending

Easing bank lending conditions has a notable impact on investment

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Italian Credit Conditions and Investment

Italian and Spanish Lending Rates Eurozone Economy Stabilising

EUROPEAN RECOVERY POTENTIAL

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US vs. European Earnings Europe – Technical Analysis

MSCI Europe ex UK vs MSCI World:Price lows in 2012 were not confirmed by momentum, a pattern that has been repeated in recent months

WHY JAPAN? ATTRACTIVE VALUATION, MACRO & TECHNICAL

“Abenomics” is all about ending deflation

The labour market is tight, and getting tighter

This should lead to wage hikes, boosting domestic demand

Currency weakness is having an impact on exports

Jobs-Applicants ratioAverage Earnings yoy

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Value of Exports:Total; China; EU; US

TECHNICAL ANALYSIS - JAPAN

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Japanese equities – technical support

JPY/USD FX Rate:Long-term downtrend broken

And currency should add momentum

CENTRAL BANKS AND EQUITY MARKETS

JAPAN

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US

Fed Balance Sheet SizeS&P Index

BoJ Balance Sheet SizeTopix Index

Fed’s Balance Sheet will flat-line from here, the BoJ’s will continue to expand rapidly, and the ECB’s will also expand

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MERRION EQUITY PORTFOLIO 31.07.2011MERRION MANAGED FUND 31.01.2015

SECTORAL DISTRIBUTION OF EQUITIES ASSET ALLOCATION

Source: Pooled Pension Funds Surveys 31.01.2015

MERRION MANAGED FUND

Ireland’s number one performing multi-asset pension fund

over the long-term, outperforming peers consistently over

the short and long-term.

Multi-asset structure (Equities, Bonds, Alternatives, Property

and Cash)

Over the last 20 years, €100,000 invested in the MET

Managed fund would have grown to €625,477 compared to

€457,540 in the average managed/consensus fund.

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Merion Managed Fund MoneyMate Pooled Fund Average

PERFORMANCE UPDATE AT 31.01.2015

Managed Average

1 Month 5.4% 3.9%

1 Year 23.2% 17.6%

3 Years p.a. 16.9% 12.8%

5 Years p.a. 11.7% 10.2%

10 Years p.a. 6.8% 5.3%

15 Years p.a. 5.0% 3.7%

20 Years p.a. 9.6% 7.9%

Performance since inception to 31.01.2015

Merrion Managed Fund Returns are significantly ahead of other asset classes:

Total Return since Managed inception ( 20/10/93) Annualised Return

Merrion Managed Fund 819% 11.0%

S&P 500 Index 548% 9.2%

Euro Stoxx Index 405% 7.9%

Euro Govt Bond Index 349% 7.3%

Gold 242% 5.9%

MERRION MANAGED FUND SUMMARY STATISTICS

Summary Stats compared to typical Structured Product Investment Horizon of 6 years

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RETURNS (31st Jan 2015)

Annualised 6 Year Return: Maximum 25.19% p.a

Annualised 6 Year Return: Minimum -0.65% p.a

Annualised 6 Year Return: Average 7.41% p.a

Percentage of Time 6 Year Return > 0% 96.74%

APPENDIX

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MERRION HIGH ALPHA FUND

The Merrion High Alpha investment strategy aims to deliver absolute returns to investors

The fund leverages the most attractive ideas and themes across Merrion’sinvestment process

Absolute returns in the High Alpha fund are generated using:

1. Transparent stock selection

2. Dynamic asset allocation decisions (0-100%) between asset classes

Dynamic asset allocation allows investors to benefit from rising markets but also to preserve capital in down markets

Our philosophy and process aims to add value in four key areas, namely active asset allocation, stock selection, fundamental analysis and technical analysis

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MERRION HIGH ALPHA FUND

The fund aims to deliver returns of at least 7% per annum

Capital preservation – We actively manage asset allocation

between asset classes to help protect against capital loss.

In 2008 the fund delivered a positive 5.3% return in the

midst of the global financial crisis.

A high conviction fund – The fund invests in the most

attractive themes and ideas from Merrion’s successful

investment process.

Leverage – There is no leverage employed within the fund.

Low Correlation with Equity Markets – An investment in the

High Alpha Fund can significantly reduce the overall

volatility of an investor’s portfolio.Source: Merrion Investment Managers 31.12.2014

Launched in 2007 to provide an absolute

return platform for Merrion Investment

Managers’ investment process which has a

20 year proven track record in multi asset

funds.

PERFORMANCE UPDATE 31.12.2014

High Alpha Fund Target

1 Year 9.0% 7.0%

3 Years p.a. 9.8% 7.0%

5 Years p.a. 7.1% 7.0%

7 Years p.a. 12.8% 7.0%

Inception 160.6% 64.8%

HIGH ALPHA FUND – DYNAMIC ASSET ALLOCATION

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HIGH ALPHA FUND – DIVERSIFICATION BENEFIT

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The High Alpha Fund compound annualised return of 13.8% since inception compares

favourably versus the compound annualised return of 6.0% for World Equities over the same

period.

High Alpha Fund returns have been significantly better than equity market returns with

extremely low correlation to the main global equity markets.

An investment in the High Alpha Fund can significantly reduce the volatility of an investor’s

portfolio.

Correlation R‐squared

Euro Stoxx 0.22 0.05 S&P 500 0.25 0.06 Nikkei 225 0.10 0.01 MSCI World Index 0.29 0.08

PERFORMANCE STATISTICS - MERRION HIGH ALPHA

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STATISTICAL ANALYSIS SINCE INCEPTION

Merrion HighAlpha

Composite Hedge Fund

Index

Compound Annual Return 13.8% 5.6%

Average Quarterly Return 3.5% 1.5%

Largest Quarterly Gain 30.0% 9.2%

Largest Quarterly Loss (8.7%) (9.6%)

% Positive Quarters 63.3% 66.7%

Average Positive Return 7.8% 3.9%

Average Negative Return (3.8%) (3.9%)

% Negative Quarter 36.7% 30.0%

Annualized Standard dev. 16.0% 9.2%

Max Drawdown (9.0%) (15.5%)

Annualized Standard dev. (5Yr) 9.22% 8.13%

Sharpe Ratio (EONIA) 0.78 0.47

Sortino Ratio (EONIA) 2.55 0.84

QUARTERLY RETURNS

Q1 Q2 Q3 Q4

2014 (6.9%) 2.9% 3.3% 10.1%

2013 (1.0%) (0.8%) 9.2% 5.2%

2012 5.8% (3.8%) (0.5%) 6.3%

2011 (1.5%) (3.5%) 4.2% 0.2%

2010 4.5% 6.9% (4.5%) 0.3%

2009 30.0% 15.1% 13.0% (7.2%)

2008 3.4% (8.7%) 15.8% (3.7%)

2007 2.6% 9.3%

POSITIVE EXAMPLE: TOYO TIRE (JAPANESE AUTO PARTS)26.2% PROFIT

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Macro – BoJ QE means weak currency, strong equity market

Valuation – earnings under-estimated due to yen sensitivity, oil weakness – gives P/E relative to Topix of 0.5 for double digit growth, or 1.5x book value for 20% ROE

Technical analysis – breakout after consolidation

MACRO ANALYSIS VALUATION ANALYSIS

TECHNICAL ANALYSIS

Bank of Japan Balance SheetTopix Index

Toyo Tire Price

NEGATIVE EXAMPLE: MICHAEL KORS (LUXURY BRANDS)7.7% LOSS

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Macro – US employment market improvement suggests retail spending to pick up

Valuation – decline in P/E multiples (both absolute and relative) at odds with gathering strength of US consumer

Technical analysis – trading above key support provided good entry point with clear stop loss level

MACRO ANALYSIS VALUATION ANALYSIS

TECHNICAL ANALYSIS

Unemployment RateWeekly jobless claims

Duration of unemployment

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INVESTMENT PROCESS

Valuation Analysis Macro Analysis Technical

Analysis

Merrion Group

Fixed Income Analyst Macro Analyst Portfolio Managers Research Analysts

Investment Consultants

Quantitative Analysis

MERRION – INVESTMENT TEAM STRUCTURE

Past performance may not be a reliable guide to future performance. Investments may fall as well as rise. Funds may be affected by changes in currency exchange rates. Merrion Capital Investment Managers (Trading as Merrion investment Managers) is regulated by the Central Bank of Ireland.

Merrion Investment ManagersGuild House (2nd Floor)Guild StreetIFSCDublin 1

Phone: 353-1-670 2500 Fax: 353-1-670 2356

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