1

Good afternoon everybody and welcome to our Guaranteed

Income for Life seminar. I am Simon Thomas, Group CFO. I am

joined today by our presenters Hugh McKee – MD of UK Retail,

Peter Ellis, Director of Propositions, and David Cooper, Group

Marketing and Distribution Director

Today’s session is being held to discuss the emerging growth

opportunities in the GIfL market and our position within that

market. It follows a similar session we hosted back in February on

Defined Benefit. For those who have dialled in, the presentation

materials are available in the reports and presentations section of

our website justgroupplc.co.uk … also, I am obliged to advise you

that this call is being recorded

In terms of running order, I will do a brief introduction, before

handing over to my colleagues to give further detail on the drivers

and moving parts of this market and what that means for Just.

2

We’ll then have a Q&A session – there will be plenty of time for

this, so can I please ask that you save your questions until the

end.

Finally, we will be available to follow up informally over a coffee

2

GIfL is at the heart of our Group, it was the basis on which it was

founded, and still accounts for around half of our premiums and

three quarters of our overall reserves. We hope to demonstrate

that it is a segment that is very much poised for further growth

within the wider retirement income market

In 2016, the GIfL market stabilised at around £4bn, and Q1 17 ABI

stats indicate an uptick. We look forward to seeing this trend

develop further. Since 2014, there have been exits from the market

for various reasons, leaving more room for retirement specialists

like us

Just commands an 18% market share of the overall GIfL market,

and 40% of the addressable Open Market. It is the addressable

OMO which is key to our prospects. Hugh, Peter and David will

take you through this shortly

3

Since IPO and Pension Freedoms, we have diversified our

sources of premium to include DB - however GIfL provides a

steady flow of business each month, which we closely and

speedily match to our LTM origination. The stable GIfL line of

business helps to iron out the seasonal lumpiness of DB.

As the team will show, it remains an attractive growth market in its

own right, where our medical IP gives us a sustainable competitive

advantage

And with that, I’ll hand over to Hugh

3

4

Thank you Simon, good afternoon anyone. As Simon has said I

am Hugh McKee and I am the MD responsible for all UK retail

business

Today we are here to discuss the individual pension annuity

market or as refer to it now the Guaranteed Income for Life market,

GIfL for shorthand.

We are very positive about the future of this market and of the

continued major contribution that we believe it will make to the

bottom line of JUST.

Why ?

Because of the favourable trends we see emerging.

The market is going to grow. It has stabilised post Pension

5

Freedoms and will now grow supported by demographics and

regulatory trends.

There are also new sources of business still to come along and

other sources which are up and running and developing and for

which there is a strong future.

And JUST is well positioned to benefit. We are leaders and prime

players in this market and we have already shown that we can

generate strong profits.

During the next half hour or so we will expand on all of these

aspects and explain our thinking.

As Simon has said, there will be plenty of time for questions and I

look forward to a vibrant discussion

5

Before we look specifically at the GIfL market we should look at

the overall market of which it is a part.

We should also consider the changes in behaviour that we have

seen from individuals in the UK over the last few years – and

contemplate what we expect in the future.

Looking at these two areas will put our subsequent comments on

GIfL in context.

Historically, individuals worked until a fixed retirement age and at

that point completely stopped working. They then lived off a

combination of employer sponsored pensions (many of them

defined benefit) and the State Pension. Pension benefits weren’t

flexible in any significant aspects, particularly timing, other than for

those who were better off financially.

6

Now many individuals ‘retire’ on a staged basis over a

period. They do fewer hours, reduce their days or switch to a

different role which is less stressful or carries less

responsibility. This shifts the work/life balance as they prepare for

retirement. It also supplements their income and delays the point

at which they need to start drawing down on their pension savings.

These changes started long before Pensions Freedoms but what

the Freedoms have done is help align the legal and tax framework

with how individuals wish to manage their finances in this phase of

their lives.

Our focus today is the situation we see in the market as the post

Freedoms world settles down and as we see patterns emerging.

Pre Freedoms most individuals with defined contribution pension

savings bought a GIfL when they retired. Drawdown existed but

was largely the preserve of the well off. The option to fully cash in

didn’t exist except for very small funds.

Now individuals make their decisions over the two decades from

ages 55 to 75 and inevitably their needs, financial status, capability

and attitude to risk can move significantly over such an extended

timescale.

Looking at market statistics they show that in 2016 a phenomenal

£18billion (net of tax free cash) transferred into drawdown or GIfL

products or was withdrawn as cash. Of that GIfL amounted to

£4.3billion, a substantial market and an increase over the figure for

2015. We believe that this shows that the market has stabilised

post freedoms and various reasons which we’ll go on to cover we

believe we will see growth in the market in the years ahead

6

I’d like to deal with one of the oft quoted but incorrect or misleading

statistics about the ‘at retirement’ market post freedoms – an

aspect which relates to full cash withdrawals.

It is correct to say that more than half of pension savings cases are

fully withdrawn. Also that the remaining cases are split 2/3 to 1/3

between drawdown and GIfL.

However, if you look at the more important money flows data the

position is quite different.

Just under one quarter of pensions savings is taken as cash

withdrawals, almost exactly the same amount as purchases GIfL.

Clearly this is because it is the smaller cases where full cash

withdrawal is most prevalent. Indeed 60% of cases fully withdrawn

were below £10k and 90% were below £30k.

7

Since freedoms we have seen the average case size for GIfL

purchases grow by more than 50% due to the loss of many of the

smaller cases and also due to attracting larger cases but more of

that later

7

A further misconception is that transfers to drawdown products

only happen at the point of retirement.

Clearly this is true in some cases but as you can see from the

graph more than 40% of people transferring to drawdown are

below age 60 and nearly ¾ are below age 65. The amounts

analysis indicates that these drawdown investments are not large

enough to support the drawing of any meaningful retirement

income from those ages.

So this is what leads to the zero income drawdown

phenomenon. Individuals transferring to drawdown to release their

tax free cash but not yet drawing an income from their pensions

savings. Indeed with no intention of drawing an income for many

years to come.

By contrast GIfL is a product which is only purchased at the point

8

of wishing to start an income and therefore the age profile of

purchasers reflects much more accurately when individuals wish to

start drawing their pension. The statistics show clearly that this is

a substantially older age profile than invests in drawdown. Less

than half of GIfL purchases are made by people under 65 with the

spike coming in the age range 65-69, indeed GIfL sales exceed

those of Drawdown for this key segment.

We believe that over time we will see movement of funds from

drawdown to GIfL when people wish to start drawing an

income. And the analysis of drawdown case size shows that 2/3

of the money lies in cases which are in prime GIfL buying

country. Drawdown is no longer a rich man’s product for

managing their pension funds throughout retirement and we

believe it will be a staging place for future GIfL purchase.

This will be supplemental to today’s market as the post freedoms

world hasn’t existed long enough yet for it to be part of our current

sales. So an opportunity for the future

8

A requirement for this opportunity to become a reality will be

customer preference. Our research has shown that more than half

of individuals with a pensions pot between £50k and £500k want to

use some or all of that fund to purchase a guaranteed income.

At JUST we are completely focussed on the retirement phase. We

research it heavily to ensure that we understand changing

preferences and thinking amongst those at that stage of their

lives. In our analysis we segment the population into various

categories dependent on their attitudes and the current slide

shows the key finding from a recent survey of more than 3,000

individuals.

The headline is that in each category more than half of

respondents said that they would use some or all of their pension

funds to secure a guaranteed income.

9

This supports our view that pension funds going into drawdown

pre retirement will at least partially be used to purchase GIfL at

retirement.

I’d now like to handover to Peter Ellis who is the Proposition

Director responsible for GIfL

9

Thanks Hugh. Good afternoon, I’m Peter Ellis, the Director of

Propositions for the Retail Business at Just.

10

The structural drivers of growth in the defined contribution pension

market are strong – and, as I’ll show you in my presentation, we

are confident this will help to drive growth in our core GIfL market.

As you can see from the chart, overall assets held in Defined

Contribution pension schemes are projected to rise consistently

over the next decade.

This growth is driven by both:

• the closure of defined benefit pension schemes and

replacement by DC schemes; and

• The increase in the volume of people joining workplace

pension schemes as a result of the continued rollout of the

government’s auto-enrolment programme, and the increase in

contribution levels that will be triggered by the government over

time.

11

So the speed at which the accumulation bucket is being filled will

increase. And that means that over time, as the tap is turned on,

the value that will flow out into retirement income products will

increase too.

This outflow, or decumulation as we like to call it, is forecast to

reach around £30bn in 2020, and is in part supported by a

continued growth in this period, in the number of people who are

aged between 50-64.

So in summary DB pension scheme economics, government

policy and demographics are positive forces supporting growth in

the retirement income market.

11

So the top left chart shows the total GIfL market was around

£4.3bn in 2016, a small increase over 2015.

As you can see in the right hand chart, our addressable market,

the size of the external market, was £1.9bn, an increase of 11%

compared to the 2015.

The remaining £2.3bn is sold internally by pension companies to

their existing customers.

Over the course of our presentations today we’ll show why we

believe more of this internal business will be transacted in the

external market going forwards.

In the bottom left chart you will see the rollercoaster ride of OMO.

Before the pension freedoms announcement in the 2014 Budget,

12

significant progress was being made to increase the proportion of

business written via the Open Market.

An unintended consequence of freedoms was that the OMO

proportion dropped sharply. This was clearly a setback in terms of

our ambition to see a GIfL market that is fully open.

However since then, the ratio has started to rebuild and we are

confident this trend will continue – and as I mentioned we’ll set out

our reasons for this today.

12

As some of you will have heard us describe before, over a number

of years the industry conduct regulator, the FCA, has undertaken a

number of market investigations and made changes to conduct

rules in relation to the retirement income market.

The motivation behind these changes have been to achieve two

outcomes

– improve competition, and

- to achieve better consumer protection.

This work is still ongoing, and the range of active interventions

made by the regulator has been increasing.

A good example of a recent intervention - announced only a few

weeks ago - is a requirement for companies to provide customers

with what’s called ¬- an “information prompt” – it’s a comparison

that shows the customer the best rate in the market and how that

13

compares with the offer made by the incumbent provider.

This comparison is designed to encourage people to access the

better deals available in the external market by showing in pounds

and pence what they are losing by accepting the offer from their

current firm.

Our Hub Financial Solutions business is delivering technology

solutions to help life companies meet the new requirements from

the FCA. David Cooper will talk more about Hub later.

We obviously support the FCA’s work in this area – the outcome

should result in increasing numbers of people accessing better

deals available from the open market from companies such as

Just.

13

This chart is one of the most important we will present today, so I’d

like to spend some time walking you through it. It shows our view

on the sources of growth driving the increase in the external GIfL

market up to 2020.

Our base case is the market will grow to around £2.9bn – but we

also think there is potential upside beyond this figure.

So let me step through each source:

<click>

Firstly demographics – I think I’ve covered this earlier in sufficient

detail – DC replacing DB, auto-enrolment and positive

demographics. The variation around the base case arises from the

uncertain timeline of government policy implementation around

auto-enrolment and any potential reforms to DB pensions.

<click>

14

Secondly - We have ascribed a value to something Hugh

mentioned earlier, those people using drawdown in their mid-50’s

to early-60’s , taking their tax free cash but leaving their money

invested without taking an income as they continue working. We

believe significant proportions of these people, when they decide

later in life how to generate a retirement income, will choose to

secure some guaranteed income via a GIfL product.

It’s also worth noting that beyond 2020, we expect this value to

increase markedly year-on-year, as more people reach ages

where they require a secure income. The variability around the

base case arises because this is a relatively new phenomenon –

and we will adjust our thinking as we observe how consumers

behave and how the FCA intervenes.

<click>

Number 3, GAR – or Guaranteed Annuity Rate commitments – I’m

going to cover this in detail on the next slide;

<click>

And number 4 – DB transfers – these are individuals who are

choosing to transfer their DB pensions into individual DC

arrangements. I have a slide to cover this in some detail too.

<click>

And finally number 5 – Life companies. As you know some Life

Companies have or are changing their business models. For

some, that means no longer making their GIfL products available

in the open market, for others it results in a broking solution being

introduced to provide a wider choice – and better value deals – to

their existing customers. The latter change will increase flows of

business into the external GIfL market. The variability around the

base case results from the pace at which those remaining life

companies accept – what we judge to be an inevitability – that all

business will be individually underwritten – and therefore those

businesses that don’t have the capability to compete – will

introduce broking solutions for their customers.

<Click>

14

Taking all 5 of these sources – we believe there could be potential

upside of up-to £2bn – beyond our base case.

Making the range £2.9-£4.9bn. Now just to be clear – we aren’t

forecasting a £4.9bn market. We are confident that the flows in

the dark bars to create the £2.9b base case are robust, and the

lighter bars are potential upsides – dependent upon the pace of

change adopted by life companies, government and individual

consumer behaviours. This pace of change is particularly relevant

to sources 3 & 5 where cut-through is reliant on changes in

approach by more incumbent providers and for some of these

companies, a deeper level of customer engagement than has

likely gone before.

I’ll now look at source 3 and 4 in some detail.

<click>

14

Part of the GIfL market, GARs, had not been considered

accessible by companies such as Just. These contracts were

written in a period of much higher interest rates - so in today’s

environment many are extremely generous.

However some of these provider firms no longer want to write

longevity business. Instead these firms are actively securing a

GIfL from the external market to match the GAR terms offered to

their customers.

We have made strong progress growing this relatively new

opportunity. Indeed 15% of our sales to-date in 2017 are from

these GAR deals, this is up from 8% in 2016.

GAR solutions are driving growth in the external market and are

valuable sources of business for the Just Group, many of which

have been enabled through our HUB Financial Solutions business.

15

Next individual transfers from DB schemes. As you may have

read – this is an activity that has been growing exponentially since

pension freedoms was introduced in 2015. Mercer, the employee

benefit consultancy, published analysis last week, stating that

£50bn has been paid to some 210,000 members of company-

backed, defined benefit pension schemes, since April 2015.

We think there are legitimate reasons why some people benefit

from making these transfers and expect this activity will continue.

For example – a DB scheme member may have no spouse, may

have medical conditions or lifestyle factors shortening their life

expectancy or have a need to provide death benefits better than

those available in the DB scheme. Reconfiguring those benefit

structures by using the DC environment may – in many

circumstances – deliver better value for the individual. Of

relevance to the GIfl market is that when some people transfer

their benefits they are using a proportion of their funds to purchase

16

an open market GIfL product to replace the guaranteed income

they would have received from their DB scheme. Other customers

transferring out of their DB scheme prior to retirement, are

expected to purchase GIfL when their employment ceases.

Again we estimate that 15% of our sales to-date in 2017 have

arisen from this source. This is a relatively new and valuable

source of business for the Group and we forecast continued

growth which could be very significant if the consideration

(inclusion) of GIfL is adopted as best practice.

16

So, we’ve looked at the forces driving growth in the DC pension

market, the regulatory interventions improving competition and

consumer protection – and the sources of growth for our

addressable GIfL market.

I’m now going to focus on showing you why we are confident of the

Group’s capabilities to succeed in continuing to drive disciplined,

profit growth.

So – how do we win – how have we created competitive

advantage?

17

We have unrivalled, proprietary, intellectual property that enables

the Group to prioritise the most profitable risks that we want to

write.

We have four building blocks that together deliver our IP driven

competitive advantage:

• Firstly, Our data. We have more of it and its better quality than

our competitors. We have 2.3 million person years of data and

that’s growing at over 30,000 person years per month. And as

importantly we have captured over 250 rating factors for each life.

Collected it – stored it – processed it - and used it to make better

decisions.

• Secondly, Our people – we have a group of highly talented

people led by our medical director, Dr Tim Crayford. These people

are drawn from a wide range of disciplines from across the globe

• Thirdly, PrognoSysTM – this is the system we have developed

18

to take all of our data, research and insights and codify it into

software that enables us to price GIfL and other longevity

products.

• And finally the technology, that enables our eco-system of

actuarial systems and customer pricing engines to operate

seamlessly, delivering rapid automated pricing to our business

partners and customers.

When you boil it all down – our IP enables us to win in the market

by forecasting longevity better – which gives investors confidence

in the quality of our earnings – because we are able to set our

reserves more accurately; and

We can be more agile and sophisticated in establishing our new

business pricing – choosing how best to compete and generate

profitable sales within our capital budget

18

However, the proof of the pudding is in the eating. Many of you

will have seen us use this slide before to demonstrate how our IP

is performing.

Obviously our pricing and reserving reflects the characteristics of

our own customer base, not just the general population trends.

Clearly we have a bias to unhealthy lives, which our medical

underwriting allows us to price competitively. Shorter lives results

in quicker confirmation of actual mortality and a richer dataset. Our

proprietary IP enables accurate longevity estimates at the outset

and is invaluable in risk selection

This slide compares the actual deaths we experienced compared

to our current IFRS reserving basis.

We consistently reserve for 10% fewer deaths than we actually

expect

19

The pink bars represent actual deaths and the grey bars represent

expected deaths. As you can see, actual deaths have been higher

than the current reserving basis in every year. The thick black line

on the chart shows the ratio between the two. It is comfortably in

excess of 100% each year which translates into IFRS mortality

profits. This margin for prudence will gradually emerge through the

in-force profit line

Furthermore, our understanding of the life expectancy of our

customers is constantly improving. Our mortality experience has

become more stable, and our estimates more certain as the

volume of in force business has grown year by year. This is shown

by the dotted blue lines which shows the 95% confidence intervals

around our observed experience, and a similar picture applies to

narrowing confidence intervals around our best estimate

assumptions.

In other words our commanding lead on data and IP gives us a

competitive advantage. As well as allowing us to price risks more

accurately, it improves our reserving accuracy leading to robust

profits.

The IP also allows us to negotiate better reinsurance terms –

reinsurers can take comfort from the size and accuracy of the IP

19

We use our IP, together with our reinsurance and capital models to

establish our technical prices. We then examine over 500

benchmark, pricing points covering key ages, conditions and

benefit structures.

We then consider the market & competitive environment ie the

volume and value of quotes being requested at any point in time.

We then set prices to achieve the margins to deliver our profit and

capital usage targets.

And as we have explained previously – we also give consideration

to the relative opportunity to acquire business through our DB

channel.

So the process is dynamic – but always disciplined.

As you’ve heard us say before and will say again no doubt later –

20

growing the Open Market - and growing our access to this market -

gives us the ability to be increasingly selective in the business we

choose to compete for.

20

This chart shows you a typical distribution of margins for a portfolio

of new business in the current market environment

What this shows is that we will write a small proportion of business

at lower margins, a proportion of business at very attractive

margins, with the rump of business being written on good, solid

margins.

Now, let me try and demonstrate what we mean by pricing

discipline in a dynamic market.

Based on the earlier prediction of a c.50% increase in the size of

the Open Market over the next 4 years, let’s consider 2 scenarios:

Firstly, we could, as indicated by the Green line, grow our own

volumes in line with this market growth, and all other things being

equal, would achieve a similar shape of margin distribution for this

larger portfolio of written business, or alternatively……

21

…… be even more selective in the business we seek to win, as

indicated by the Black line, taking the risks we really we prefer to

write from this increased pool.

This would serve to combine profit growth - with improved IRR.

Just to be clear we will focus on winning this business ^^ rather

than this business^^

I hope this demonstrates the combined value of two of our key

objectives, i.e. growing the accessible (OMO) market, and the

careful deployment of our IP led, risk selection capability, and how

we use them to deliver against our key financial targets.

I’m now going to hand you over to David Cooper to continue to

theme of How We Win.

21

Thanks Pete, Good afternoon everyone, I’m David Cooper.

22

Continuing with the theme of How We Win, I am going to cover the

wider aspects of our business that together, ensure that we lead

the market and secure the best outcomes for consumers and

shareholders alike.

By focusing on both the customer and the partner through which

we access them, we have built an operating model that uniquely

delivers to the needs of later life.

I’d like to start firstly with our brand. It is a new brand as you will

have observed, but very much draws on the positive heritage that

both previous businesses had toward the consumer. Rather than

talk about the brand I think that this internally produced video,

which features a range of target customers, will help you get a

sense of where our brand will be positioned. The people in this

video are stating their real concerns about and ambitions for

retirement. They are not actors and are not using scripts

23

VIDEO

Our brand embodies the trust that both customers and business

partners have put in us for more than two decades. We have

accumulated over ½ million customers and have had many loyal

partners work with us for all of the time.

You will see that the people in the video are younger than you

might have expected. This reflects the changing landscape and

the fact that post freedoms people are thinking about their

retirement plans much earlier than before. They know they have

options and that they should plan. They struggle to find brands that

will help them and that is where Just fits in with information,

guidance and signposting.

Secondly, for our scale, we are uniquely focused on the retiree.

Virtually every activity of the Group relates to a consumer who is

either facing their retirement years or currently experiencing them.

We are not distracted by other phases of life and the issues that

are specific to them. We know the importance at an individual

consumer level of getting retirement right – and the dire

consequences of not.

Our partners and distribution channels are also unique in the world

of retirement provision. I will come onto this in more detail shortly.

We put open markets ahead of tied solutions and were one of the

first groups to offer the products of our competitors through our

distribution activities.

We have always put technology at the heart of our processes even

though in many instances the customer isn’t exposed to it – rather

we enable our highly trained customer service teams to deliver our

operations in a customer friendly form.

Technology and innovation will continue to feature and we expect

to reveal more in this space in the near future, with newer younger

customers now willing to utilise more remote solutions to aid their

journeys into retirement.

23

Finally, as Pete outlined, individual underwriting is central to many

of our commercial activities and customer solutions, but as you

have heard it is not all that we do to differentiate and attract

partners and customers.

23

I mentioned that Just is unique. Here we see the competitive

landscape for GIfL following the relatively recent withdrawal of

Prudential, Standard Life and LV.

We are one of the largest providers of GIfL and the largest writer in

the open and accessible markets.

Our underwriting depth and breadth – by this I mean, the extent of

our active underwriting risk factors and the amount of data that we

have supporting them, is the most extensive in the market.

We are able to deploy this via a variety of technological enabled

solutions including powering intermediary portals, our own partner

solutions for the likes of Phoenix and Royal London and through

bespoke capabilities such as that utilised by Hargreaves

Lansdown.

24

We do not have vesting customers from accumulation products

and therefore focus completely on attracting new customers using

price, service and ease-of-access to win.

As this slide shows we have the most comprehensive and focused

business in GIfL and indeed the wider retirement market place.

24

Turning now to distribution. This has changed beyond almost all

recognition over the past 3-4 years - courtesy of a combination of

RDR and Pension Freedoms.

We have seen a dramatic drop in the amount of GIfL sales that

emanate from full financial planning undertaken by traditional

intermediaries. Four years ago this segment generated 63% of all

sales, now it has dropped to 31%.

We continue to work with networks, marketing group and other

directly authorised advisory firms to help them formulate new ways

of working with consumers for whom GIfL is the right answer – the

right answer for either all of retirement funds or for part of them.

We have a number of new ideas in this space, one of which I will

cover shortly.

To offset this, specialist intermediaries, those that advise

25

specifically on decumulation or retirement income needs have

grown in their importance. The likes of Age Partnership and My

Pension Expert together with the specialist planning desks of

Hargreaves Lansdown and SJP have grown in their importance in

the provision of GIfL.

Finally, we have our own distribution channels, either where we

wholly own the channel including the help, guidance or advice or

where we power the staff of a partner organisation via our

technology. You will see shortly how this has grown dramatically in

importance. These closely managed capabilities, now generate

27% of GIfL sales, up 200% from 3 years ago and growing.

25

I have mentioned our service proposition on a number of

occasions. Here I will briefly cover what we deliver and how we

measure it. Our service delivery is focused both on the

partner/intermediary and the end consumer.

We have deployed technology to ensure that we can quote

accurately, in real time, for virtually any combination of medical

conditions or lifestyle factors.

We use the Origo Options transfer services to complete business

as fast as practically possible. We know that this focus means that

the customer gets their income set up and paid quickly, that the

intermediary gets their agreed remuneration settled and

conversely, that extensive delays will not be good for the

reputation of the open market.

We continue to invest in technology to improve both customer

26

journeys and distributor experience. We are doing this to help

rebuild interest in GIfL again, particularly with traditional

intermediaries

26

Here we see evidence of our continuous pursuit of service

excellence – in this example with intermediaries. As intermediaries

become more and more focused toward their ‘on platform’

solutions, it is critical that any capabilities or products that they

need to rely on which are off platform, are as slick and easy to use

as possible.

These awards are voted for by intermediaries and I think you’ll

agree that they speak for themselves. We believe that a

succession of awards of this nature and of this standing is

unprecedented amongst retirement providers.

27

I said that I would return to our own distribution.

Hub Financial Solutions is made up of what we previously knew as

Just Retirement Solutions and TOMAS, or The Open Market

Annuity Service.

We have been building this capability for over a decade with the

dual objectives of growing the markets in which we operate, and

also defending our reach in the event that traditional third party

distribution ceased to support our objectives.

I think it’s fair to say that Hub, has come of age – I’ll show you why

I’m saying this in a moment.

Through its technology we are powering the majority of UK life

assurers who either want to outsource their at-retirement and in-

retirement processes, or those that have chosen to insource our

28

technology to achieve this themselves.

Through the Prudential, Royal London - which includes GAR

business that Pete covered, Phoenix, Standard Life and Zurich, we

are enabling maturing pension customers to get the very best GIfL

for their individual circumstances.

We also offer a fund solution alongside GIfL to aid those that wish

to split their income sources between guaranteed and flexible.

These same services are also offered to Employee Benefit

Consultants and Trustees of DC occupational schemes. We are

currently providing these services to 1-in-5 of the FTSE 100’s DC

pension schemes.

Hub currently employs around 150 staff and we believe is the

largest distributor of GIfL solutions in the UK.

We will continue to invest in HUB particularly in partner

capabilities, customer engagement and experience, and customer

handing technology to both grow its scale and effectiveness.

28

I mentioned that HUB Financial Solutions has come of age. The

left hand chart shows that not only are GIfL sales through this

channel running at twice the base level shown – that base is 2013,

the period before Freedoms were ever mentioned and when GIfL

was the default option for the vast majority of retirees.

This chart also shows that HUB now handles around 1-in-6 open

market GIfL purchases in the UK as measured by premium

income.

The right hand chart shows that we are scaling the business

effectively. Despite volumes more than doubling the headcount

supporting the channel has grown, but by only 20 heads or so, or

by around 15% from the baseline shown.

This is a result of the increasing use of technology at all points in

the customer journeys.

29

Finally you can see from the timeline at the bottom of the chart,

that the number of important partners, the lifeblood of HUB,

continues to grow substantially. I am delighted to say that I fully

expect this growth to continue as more and more organisations

and Trustee bodies see the benefits of using a B2B2C business

built specifically to serve their retirees.

29

Earlier I mentioned a new development. This is a development

that is aimed at encouraging the large number of wealth managers

that look after pension assets, but who do not access GIfL

solutions either at all or very infrequently, to reconsider their

approaches

I mentioned platform use earlier and the understandable trend for

an intermediary to wish to manage all of their affairs - and those of

their clients - through such utilities. Put simply for many advisors if

it doesn’t work through their platform and all that is connected to it,

then it probably will not get used.

So in conjunction with specialist technology business we have

devised a way of including GIfL - as an asset within a SIPP - on a

platform. We are hoping to bring this to market next year, ideally in

conjunction with some of the previously mentioned competitors in

order to create a reputable efficient market place.

30

The GIfL will be accessible on platform, have a value attributed to

it for tracking purposes, and will enable income to paid gross into

the platform’s cash account. This has obvious income tax planning

applications, especially for mid to high-net-worth customers.

We hope to be able to tell you more about this exciting

development as the project progresses, but presently we are

working with our technology partner, a handful of platforms and

advisors in order to shape this in a way that it will be readily

adoptable.

That brings me to an end and our session to an end. I will now

hand you back to Simon to summarise and to open up Q&A.

30

Thank you David,

A few concluding remarks, and then we will open up to Q&A – we

believe the structural drivers of GIfL are in place and that after a

period of stabilisation, there are opportunities for selective growth.

As ever - our focus is not on absolute sales levels, but on

maintaining discipline and focusing on new business margins, IRR

and profitability.

As you have seen from our Q1 2017 trading statement on 18 May,

NB margins are now expected to exceed the mid 6% level, and

with broadly comparable margins on both DB and GIfL, our

observation is that the GIfL price increases implemented after the

introduction of Solvency II have largely stuck. With attractive

growth opportunities in both of our main markets, we are able to be

to be more selective, picking the more profitable opportunities, and

31

indeed - not picking certain risks

And with that, we’ll open up to Q&A

Question from the floor

Operator – any questions on the line?

And with that, we will bring today’s session to a close, and we

would be delighted to join us for a coffee

31

32

33

34

35