Mike Wells - Group Chief Executive Nic Nicandrou - CFO Barry Stowe - Executive Director Tony Wilkey - Executive Director John Foley - Executive Director Chad Myers - EVP and CFO, Jackson.

Blair Stewart - Bank of America Merrill Lynch Jon Hocking - Morgan Stanley Greig Paterson - KBW Lance Burbidge - Autonomous Oliver Steel - Deutsche Bank Andy Hughes - Macquarie Farooq Hanif - Citigroup Gordon Aitken - RBC Abid Hussain - SocGen Alan Devlin - Barclays Ashik Musaddi - JP Morgan.

Thank you for joining us for 2015 Results. And we’ve got a little different format today.

I am going to give just a couple of quick comments, turn it over to Nic to do the financial overview, and then I am going to come back to give contexts and address some key points about various businesses and some of the challenges we have and some indication where we are, heading into 2016.

So with that, we think the performance was strong and broad based, obviously all the business units contributing effectively. I think if you look at the balance sheet, I think it’s in great shape, defensive, well capitalized. The operating performance again underpinning the shareholder dividend; this was something we talked about in January.

We’re earning it first, we’re stressing it, and we’re paying it. You see that as well, the extraordinary dividend. We got asked this morning on the investor call. So first one since 1970 for those of that are into Prudential history, so if you’d like a context for the last extraordinary dividend.

Execution, the key to what we’re doing; the strategy is holding obviously very well, opportunity is there and it’s our responsibility to turn that opportunity into tangible results for you. So, we’ll talk about that in detail today.

And then again, our relative position to peers and the marketplace to potential challenges et cetera we think is in very, very good shape. So, I am going to turn it over to Nic now to give you a granular look at the financials and then I am going to come back after and put some color and context around where we are as a business unit..

Thank you, Mike. Good morning, everyone. In my presentation, I will firstly run through our full-year results and highlight the drivers of our performance for 2015 and then as usual, I will go on to cover the Group’s capital position and the balance sheet.

So, starting with our financial headlines, at the time when companies in many sectors are having to choose between growth or cash, Prudential has been able to deliver both in tandem, yet again. All of the Group’s key profitability and cash generation measures have improved by 15% or more, making 2015 our most successful year ever.

We achieved this by making the most of our structural advantages in markets -- in the markets that we operate and by executing with discipline and with focus. The 22% increase in our IRFS profit to £4 billion was broad-based as Mike said, and is underpinned by larger portfolio of in-force business.

To this, we continue to add valuable new business flows of 20% in NBP terms to over £2.6 billion and this metric is led by Asia. Our capital disciplines ensure that sales translate to profits and then to cash relatively quickly across all our businesses. The success of this approach generated over £3 billion of free surplus, up 15% year-over-year.

Operating profitably is the first and most important source of capital. Our performance in 2015 has increased our Solvency II surplus to £9.7 billion and has added to our EEV shareholders’ capital, which was up 11% and is equivalent to £12.58 per share.

Our enhanced financial resources are a source of strength and resilience and provide additional headroom to weather the effects of the market volatility that we have seen in the early part of this year.

They have also provided -- allowed us rather to increase the full year ordinary dividend by 5% to 38.78 pence per share and declare a special dividend of 10 pence per share.

Turning to the detailed financials and starting with IFRS operating profit, the Group picture reflects our focus on diversified high quality growth that blends both resilience and stability to our financial performance. All four businesses contributed significantly to our profits with Asia, the U.S.

and the UK growing at double-digit rate while M&G maintained its profitability despite the adverse impact of the retail flows that we’ve seen in the year. Our IFRS profit growth is predominately led by insurance margin and fee income with low exposure to rates.

These two sources now account for 76% of our income, which represents a healthy evolution in the overall shape of our earnings. And I want to take each business in turn, starting with Asia. Our momentum in the region remains strong with all of our key financial metrics going between 16% and 28%.

Our life operations had a strong finish to the year, achieving record sales in the fourth quarter with December being our best ever month. Our focus on quality delivered a 30% increase in regular premium new business, which represented 93% of APE.

This result was underpinned by the strength and diversity of our distribution where agency sales grew by 29% and were complemented by 16% increase in sales through our regional partnership with SCB. Our long established and diverse new business franchise in Asia provides a high level of consistency when aggregated to the regional level.

This consistency affords us the flexibility to take value-based decisions which prioritize future performance or the near-term sales headlines. In line with this discipline, we took a deliberate decision in Indonesia to limit sales incentives to prioritize quality in the current soft environment.

In Singapore, we withdrew from universal life which provided poor returns in the current low interest environment and we directed our focus towards health and protection. And this will pay dividends as we move forward.

Notwithstanding these deliberate actions, our all overall sales increased by 26% with seven countries reporting APE growth of more than 15%. New business profitability increased at a faster rate of 28%, supported by a strong rise from health and protection, which now accounts for 62% of Asia’s NBP.

Our health and protection regular premium orientation also underpins the growth in both IFRS operating profit and free surplus generation. Eastspring’s contribution here is now meaningful after reporting a 26% increase in profit to 115 million on the back of record flows in the year.

I’d like to take a few minutes to explain why we’re confident about our earnings prospects in Asia. As you know, our life book in the region is predominantly regular premium business. The power of this can only be truly appreciated by looking at the impact that this has over a longer time period.

Mike first showed you this slide in January, which depicts the growth in the premium base of our Asian businesses over the last ten years. It confirms, both the consistency of our execution and the power of compounding with every year’s new regular premiums adding to a growing in-force base, which now exceeds £7 billion.

The £2.8 billion added by new business in 2015 will further augment this premium base as we move forward. Therefore, when we look at growth, what matters most is the movement in the total premium stock as this is what drives earnings. We said in January that earnings can sustain a double-digit growth, even if new business levels are flat.

The part of the chart that covers the 2007 to 2010 period is proof of this. What it shows is that despite the flat sales shown in blue, in 2007, ‘08 and ‘09, in-force premiums shown in red grew strongly from £2.1 billion in 2007 to £3.6 billion in 2010.

Now, the benefit of the increasing scale of our in-force premium base is evident in the rising levels of earnings. In 2015, our Asia business generated nearly £1.2 billion of profit from in-force, reflecting the compounding effect that I’ve just referenced of regular premium sales and strong customer retention.

Almost two thirds of these profits come from our health and protection book, as force that is uncorrelated to investment markets.

Growth here reflects the consistent addition of new business cohorts each year, underpinned by strong and enduring level of consumer demand, high levels of persistency, given the limited social welfare provision in the region and positive claims experienced, supported by our ability to re-price when necessary.

Therefore what we have in Asia is a high quality earnings base, one that is defensive in times of volatility and one that offers a secured platform for future growth. So, our confidence in the future earnings prospect of our Asian business reflects the powerful contribution from our in-force book which in 2015, as you can see, increased by 14%.

The growing contribution from our health and protection business which was up 17% to £783 million and the benefit of operating a diverse portfolio across the region where our most developed businesses are pushing forward the structural advantages and where newer businesses are making more sizable contributions than before and compounding nicely.

Moving to the U.S., Jackson’s results reflected disciplined value based approach to managing the business, which has driven growth in earnings and cash. New business APE rose by 3%, as we continued to manage the volumes and mix of variable annuities to match our annual risk appetite.

Sales of Vas with no living benefits were 33% of the total, reflecting the continued success of Elite Access. Here, sales level were slightly lower than last year but we have seen a positive migration towards non-qualified accounts which represents 69% of the Elite Access total, up from 66% a year ago.

The 9% increase in IFRS profit to £1,702 million reflected the growth in fee income on the separate account assets, which more than offset the decline in spread income. As I have previously flagged, yield compression has reduced spread margin on the fixed annuity book to 241 basis points.

And I repeat my guidance that this will trend down over the next couple of years to around 200 basis points. Capital formation remained strong in 2015, reflecting both Jackson’s operating performance and its disciplined approach maintaining -- to managing the market risk and the portfolio.

This in turn enabled Jackson to make a sizable remittance to Group for a second year running. Fee income on variable annuity business, which grew by 11% in 2015, remains the dominant component of Jackson’s earnings. The economics of this growth continue to be very favorable.

The business earns 192 basis points in fees and it’s serviced by highly cost effective platform. Growth in fee income is therefore directly correlated to the growth in the asset base. As you can see in the chart on the right, the increase in the separate account assets is primarily driven by the additions of new premiums each year.

These continue to exceed outflows, creating a positive effect jaws effect, a feature that we’ll enjoy for some time. While there is clearly a cyclical nature of this income source, market affects are dampened by the lower beta of our separate account assets and the positive expense leverage of our operations.

Our UK life business continues to build on the appeal of its expended retail offering. Retail APE and NBP, both increased by over 30%, driven by the popularity of PruFund, which is available through a wider range of drawdowns, pensions, bonds and other efforts.

[Ph] IFRS operating profit increased to £1,195 million, driven by an improvement in the life result, which is analyzed in the table on the right. The profit from new annuity business of a £123 million is lower than last year’s a £162 million, reflecting a continued decline in retail sales and lower contribution from bulks.

As I said in January, the onerous Solvency II capital requirements with effect of 1 January 2016 have reduced our appetite for annuities. And you should expect to see a very modest contribution to our profit from this line, going forward.

The step up in our UK life result has been driven by a £339 million profit from one-off management actions taking in the second half of 2015 to position our balance sheet more efficiently on the Solvency II.

These actions included the expansion of our longevity to insurance program which now covers £8.7 billion of the £31 billion annuity reserves, and the impact of various asset switches within the credit portfolio in order to optimize the matching adjustment benefit.

I do not anticipate that these actions will recur, although of course they remain available. The core profit from in-force annuities and new with-profits business were £644 million, and this will be the main driver of the UK life results, going forward.

These are seasoned portfolios which should sustain a healthy contribution to earnings from the UK for some time, supported by the size of all addition of new with-profits business.

On point of detail for your forecasts, the longevity reinsurance that we completed last year will create an annual earnings drag of around £25 million against these core in-force results. M&G experienced £10.9 billion of outflows from its retail funds, in part reflecting a market-wide change in investor sentiment away from fixed income.

Retail outflows totaled £3.5 billion in the fourth quarter, a run rate that has continued in the first two months of 2016. These retail outflows have more than offset the positive picture on the institutional side where we saw net inflows of £3.9 billion, reflecting M&G’s success in the specialist fixed income market.

The outlook here is positive underpinned by strong pipeline of committed capital. Despite these outflows, the revenues were broadly maintained as the average age AUM in 2015 were similar to 2014. By taking action on costs, M&G contained its cost to income ratio at 57% and delivered a broadly unchanged IFRS profit for the year of £422 million.

The 18% decline in retail AUM at the end of 2015 will have a direct impact on retail revenues which accounts for 60% of the M&G total. While related variable costs will cushion the impact on profit, everything else being equal, you should expect the overall cost to income ratio to drift higher in 2016 towards the 60% level.

Having covered growth, I now want to turn to cash, free surplus, which is the primary measure of cash generation in our business, increased by 15% to £3,050 million.

The improvement is underpinned by the expected returns from life in-force business and continues to be augmented by positive experience which in 2015 included £223 million from the non-recurring actions, I described earlier.

In the top right, you can see that all three businesses are making significant contributions to the life in-force results, reflecting business growth. We remain disciplined in the redeployment of our capital, increasing new business strain to £745 million. The components of this investment are analyzed in the bottom right.

In Asia and the UK strain climbed more slowly than sales, reflecting favorable product mix. The increased trend in the U.S. was also impacted by changes in the mix and was principally driven by a higher proportion of new VA premiums being directed to the fixed account option.

Jackson’s business remains highly capital efficient with IRRs well in excess of 20% and short payback periods. This next slide provides the usual chart, which shows you how the annual generation of free surplus has impacted stock on the left, and central cash on the right.

As you can see, our operating performance has driven our free surplus stock higher. This has in turn enabled our businesses to increase remittances to over £1.6 billion, while retaining sufficient buffers to fund growth and to absorb market shocks. The Asia remittance includes the 42 million proceeds from the sale of our Japanese life business.

We continued to moderate up-streaming from Asia, given the current FX rates and the strong levels of central liquidity, which at the end of the year stood at nearly £2.2 billion. Before leaving this topic, I want to update you on the evolution of our free cash generation profiles from our life in-force business.

As normal, we started to expect this profile at the end of 2014, in dark blue, which a year later is broadly unchanged as shown in the light blue, reflecting experience changes to market experience, changes to market assumptions and currency movements.

Adding the free surplus from the 2015 new business in red, produces as always on improved profile, evidence of the powerful capital dynamics of our book of business. Now, this analysis is prepaid on a Solvency I basis.

While it remains appropriate for our businesses in the Asia and U.S., the profile of our UK life business will change under Solvency II. As I indicated in January, we have reworked the UK life in-force profile to allow for Solvency II and updated it for the 2015 yearend position.

This slide summarizes the output of this work on the right and compares it to the profile under Solvency I on the left.

The updated analysis confirms the conclusion from our January presentation that the annual release of higher Solvency II SCR and risk margin more than offset the effect of the transitional amortization and other impacts to produce a broadly unchanged profile.

Incorporating this new UK profile into the overall Group picture, now shown in the white bars, confirms that Solvency II has not fundamentally altered the overall cash dynamics of our Group. So, having covered the operating results for the year, I want to reemphasize our commitment to the 2017 financial objectives.

On Asia, we are ahead of the 15% IFRS profit compound growth rate as measured on the original objective definition, using December 2013 exchange rates. The Asia free surpluses objectives on the same basis is a stretch, which was always the intension.

Finally, at Group, we remain on track having delivered £5.6 billion of cumulative free surplus across the Group at the half year point. On the back of another strong performance, the Board has approved a 5% increase in the 2015 full year ordinary dividend to 38.78 pence per share, in line with our progressive dividend policy.

The Board also decided to utilize the additional headroom created by management actions to award a special dividend of 10 pence per share.

We remain focused on growing the dividend given its importance to our shareholders and in doing so, we aim to strike the right balance between funding a long-term growth, which as you can see is intact; maintaining appropriate buffers for uncertainty; and increasing payouts.

Every dividend decision is subjected to severe market stresses to ensure that we can continue to grow it safely, even under challenging market conditions. Our conservative approach to dividends is a signal of good capital discipline. I’ll now turn to the balance sheet and the capital position.

On both reporting bases, we have seen the strong operating performance in the year, flow into the closing shareholder’s equity position. As a result, IFRS equity was up 10% while EEV equity increased by 11% to £32.4 billion. We continue to manage our balance sheet conservatively.

Our credit portfolio remains defensively positioned and performed well in 2015 with no defaults and minimal impairments. Specifically in Jackson, impairments for the full year were $58 million, $31 million of which was booked in the fourth quarter.

While our balance sheet is sensitive to markets, it is more resilient that you might think, reflecting our scale, our conservative approach to risk management, our currency mix, and the natural offset that exists within our business portfolios.

The best way to illustrate this is by reference to the position at end of February where we estimate that despite falls in a number of market indicators, indices, IFRS shareholders’ equity was up at £14 billion and our EEV equity was just over £34 billion equivalent to £13.25 per share.

Having provided you with a deeper run-through of Solvency II only a few weeks ago, I’ll focus my comments on the end 2015 position. Our Solvency II surplus at the end of last year was £9.7 billion, which was up on the half year number.

This is despite the more adverse market conditions in the second half, which turned what was a positive £0.5 billion market effect at the half year into the negative £0.6 billion market effect that you see in the chart on the right.

The strength of our operating experience was £2 billion, which is roughly equivalent to 20 points on the solvency, and the impact of management actions of £0.4 billion have mitigated the negative £1.6 billion modeled approval effect, bringing the overall surplus back to where we started the year.

The composition of our available resources is dominated by high quality Tier 1 capital which represents 82% of own funds and is equivalent to 159% of the SCR. Since our current utilization of the capital tiers are well within the prescribed limits, we retain significant headroom to increase the capital stack through the issue of qualifying debt.

The updated sensitivities to market shocks are included in the packs and are largely unchanged from those at the half year. Using these sensitivities, we estimate that our Solvency II position on the 1st of March was around £8.6 billion equivalent to a cover ratio of roughly 180%.

I would remind you that the Solvency II surplus underplays the true economic capital position of the Group. This is because it excludes around £2 billion of economic diversification benefits between the U.S.

and the rest of the Group; it does not recognize £1.4 billion of Asian surplus; it excludes shareholders share of the estate of £0.7 billion; it does not capture the surplus of the ring fenced with profit funds; it excludes the full value of the swaps program in the U.S.

of just over £0.2 billion consistent with the treatment under RBC; and it incorporates no benefit for a volatility adjustment, as we have yet to apply for this. In summary, we’re comfortable with our overall Solvency II surplus.

The local capital position of our main businesses, which remain the primary binding constraints, confirm the overall Group picture.

The contribution of our Asian operations under Solvency II has increased to £5.2 billion; however, it is the locally driven free surplus position of £1.5 billion that remains a relevant measure for cash and local capital. The U.S. RBC ratio has increased to 481%, reflecting the strong capital formation that I referenced earlier.

In the UK, the shareholders’ Solvency II surplus is broadly unchanged from the half year. The position of the UK with profits funds is lower despite the higher estate value as we decided to utilize the capital headroom to increase the equity backing ratio of the fund.

In my final slide on the topic of capital, I have summarized the capital generation ability of our business model, using three different lenses, IFRS; free surplus; and Solvency II. As you can see in the top part of the slide, our annual operating generation is sizable on all three basis, supported by a large in-force book.

We ensure that dividends are well-covered with the balance adding to our capital stock, as shown in the bottom part of the slide. We look to hold a stock of capital that is sufficiently large to cushion the effects of markets and to absorb the impact of any new capital regulation.

It is this discipline that underpins the resilience of our business model and enhances our ability to weather financial storms. And before I sum up, I wanted to update you on our credit position at the yearend, which I know is an area of focus. Shareholders’ exposure to credit is concentrated in the UK annuity portfolio and the U.S. general account.

These portfolios are actively managed and remain high quality with the defensive stance, as evidenced by the fact that 95% is held in investment grade bonus. Credit exposure is well-diversified across 1,800 names. And we operate strong risk management controls and concentration risk with strict limits by geography, by sector and individual security.

We have updated the disclosers on our exposure to oil and gas including the additional information on the energy and mining sector, provided by Chad at the January Investor Day, and all of these are included in the Appendix to your packs. In these two particular sectors, our debt holdings are centered on high quality names.

And our high yield exposures were small at end 2015 and in fact it remains small since then. To summarize, 2015 was a year when all of our growth and cash metrics improved by 15% or more, as we made the most of our structural advantages and executed with discipline.

Our strong operating performance and conservative stance on risk has also enhanced our Group capital on solvency levels, improved our resilience, and translated into a higher cash returns to our shareholders. Thank you. I’ll now hand it back to Mike.

IRR return, we’ve shown you this slide before. But I think given last year’s performance in markets, you equities down to 12%. You had recurring premium up 30. Nic walked through; this was disconnected by nature of the transaction with the client, by the client demand, and again it’s being counter-correlated to headline news.

We have a material disconnect between our opportunity and the equity markets and region.

That obviously should translate, if you have premium growth to the earnings and cash and again today you’ve seen that just proportionate amount that comes from taking care of, doing the right thing for existing clients, and then adding additional cohort after additional cohort, vintages as we call them in the states of clients on top of that.

And that part of our model is succeeding and we are very, very pleased with the performance there. And again, highly predictable. So fair question, so are the market leader, you’ve done well, good growth rates et cetera.

Is there any room left? Couple of things, our penetration level in our most established markets, so Singapore, Malaysia, Indonesia, Hong Kong is still low. We have great market share in each of these markets but there is still a very large un-serviced population there for us. And again, this is without even expanding our product portfolio.

But our other markets, our nascent markets are growing exceptionally well. We have shown you a couple of times on slides that where they were relative to some of our large markets 10 years ago. But the reality is they’re growing very high rates, very high quality.

And what you’re seeing the team do when you’re down on the ground, is you’re seeing them take the lessons from previous markets, previous experiences and Lilian and Tony and the team dropping those into these newer markets. And we don’t use all of them. We may skip a generation of tools, if we think the markets move past that.

But at the end of the day, we can deploy people who have done it before for us in the market, they have done a startup. I was in Cambodia with our team, Phnom Penh, we’re a new player, we are one of two major new players there. We have the bank distribution relationship. So, exceptionally well done by the team there.

But, what you are seeing is what we know in region applied in a new market. And there are new challenges and those come with the local, granular on the ground things. And you see that same thing in Africa, you see the same thing in rural part of the Philippines.

But, we take what we know, we take people that are part of our culture, know our tools and we drop them in and you get a similar result to what we had in other markets faster. There is less of a learning curve. And that’s a critical element. And again it comes back to our scale and our footprint.

So these are tremendous amount of upside in these markets for us. And I would argue with you that the bulk of our growth in Asia is ahead of us. There is no less demand in some of these other markets than we see in Hong Kong or Singapore. Our penetration in China, China team’s done a great job. We have a very good partner there, up 28% year-over-year.

But, we’re a fraction of that market. And it’s a market where the country has targets on insurance penetration. We are trusted brand. The concept of British rule of law is a very trusted cultural element of who we are. And we can do a lot more. So again, our growth is ahead of us in this marketplace. On to the U.S., I think we spent a lot of time at U.S.

in January, so I don’t want to spend too much time here. But, I think the key argument I would make is this is a unique business in its space.

It is a fraction of cost of the competitors; it has better technology; better operations; better distribution; has a track record of innovation; and has a track record of bringing products to market faster and more effectively than peers.

If you want a simple measurement of that, look at the Elite Access launch relative to the 12 or so clones of that. The sales of that product still exceed the cumulate sales of the rest of the industry, attempting to copy it.

Even at lower prices, even with more incentives, even with grantees on products, probably shouldn’t have the guarantee on to begin with. This is a group with ability to execute at a very, very high level. So, the other piece as we going to the changes in the U.S. and really the DoL being the key is the structural demand in the U.S. hasn’t changed.

The Department of Labor in some way with their regs changes access to advice, cost of advice, our access to the products, the configuration of products. The consumer still wants some level of protection on the retirement assets, the consumers still wants good balance portfolio. And again this is no different than we see in the UK.

So, the question becomes the attributes of the competitors. As I said in January , I think a major disruption -- I think first off, to be clear, I think a major disruption is not necessarily -- is arguably bad for the consumer but that doesn’t necessarily mean it’s bad for us. And those both can be true at once.

We can build whatever product, the rules and the regulations allow to get the most benefit to consumer at the highest returns for the shareholder. We can balance those stackholders; we can do it faster than peers; we are quite a ways into our contingency planning for this. We sort of plan for the worst, know what we will do if that’s the case.

And then we will see when this gets dropped on us, what the period is when it’s effective or the grandfather period is if there is, what the transition is, all those dynamics will navigate as well as anybody, and I think arguably better than most in that space.

And it does -- if it’s at the extreme end of the DOL proposal, it does reshuffle the position of providers of financial services and providers of advice. And when that happens, there’ll be winners and losers. And I would argue with you, Jackson has the attributes to be one of the winners. And market where we could prove that to be true would be the UK.

So, our UK business had a record year. This includes pre RDR, this includes the changes to annuities. Team’s doing a great job. Why? Again, trusted brand, good product, product innovation, all those things -- getting the right things for the consumer and pricing at a level that gets the shareholders a good return.

M&G then gives us the capability and the asset management side combined with our UK business to compete with anybody in the space domestically. You will see more changes, that’s the nature of our market; it’s the nature of all of our markets. Regulatory changes are part of the business. Let me look at changes in the little broader context.

We’ve used this slide with you. We’ve always had something going on. In 21 years here as you guys know, I don’t ever remember a year when we sat around in December and that was an easy one. There was nothing -- there was nothing to work on. There is always something and this firm’s resilience is measurable.

And I think there is an element of our history as a part of our DNA and the culture of the firm and again, we’re ready for more. But I think the UK business is a good example of a disruption in a marketplace on advice and product, creates opportunity. And I think that’s similar to what you’ll see in the U.S.

Let’s get to shareholder centric metrics for a second. So, the earnings are high quality, measured how? Well, by source, by currency and mix of the customer base, they come from. So again, not a single dimensional look. Whatever stress you want to throw at this, different ways to look at it. So, what if U.S.

dollar policy is -- rate policy changes the value of the dollar where we have a lot of earnings in dollars. Rates go up, we can benefit from that. I mean again, most financial metrics moving, we have benefit on both sides and risk management on both sides.

So, I think we’re very well-positioned with the shape of earnings, the source and the relationships at the consumer level for them to be predictable and strong. So, this all sums up on my favorite slides. Two things I’d ask you take away from this. These should grow in tandem. If you’re squeezing a business, there’ll be a misalignment of these metrics.

So, if you’re looking at us versus competitors, in this slide side by side, there should be a similar nature, doesn’t have to be a perfect correlation, but these should grow in a similar fashion with businesses. It tells you that you’re consistently adding profitable business, managing capital correctly et cetera.

And there is one other takeaway I’d like you to look at is, look at where we were pre-crisis in terms of operating income, new business profits, free surplus generation. Look at the change in order of magnitude where we are now. We had a good crisis; we were fine last time.

We are materially -- we’re 3x times stronger and more capable and have more recurring earnings and more client relationships than we had last crisis. Again, that’s not a forecast of a bad market crisis but I heard this morning, we’re at seven-year anniversary of this market going up.

We’re well-positioned for market changes and we’re well-positioned for resilience across a variety of climates. And again, that translates into cash for our shareholders. Said this earlier, it’s a discipline dividend policy, earn it first, stress at second, pay it. If we had extraordinary capital or pull forward earnings, it’s yours.

You see the special dividend today reflecting our view on that. So there’s no other message in that, it’s not a lack of confidence in our growth. We have plenty of capital to grow in 2016 and beyond.

It’s not a reflection in the market climate but we’re a bigger company, we have grown in size and scale and with that we should have the reserves and the opportunity to be countercyclical that goes with that. And finally we’re a growth stock as well. So, you’ve seen increase in value.

I think the metric that have to jump off this page is a 30% growth in revenue in Q4. Think of the noise around Q4. I just don’t believe that’s what people thought was going on.

It was very frustrating to see this on our business units and by law we can’t share that with you in a quarter we’re talking, but the strength of this business and again the attributes are how it relates to clients does very well in rough markets.

But, the value creation and the investment at returns that are competitive I think with any industry are key to our growth story and we think the opportunity is there.

And lastly on ‘16, so it feels roughly like ‘15, we see double-digit increases year-to-date in the life business, same net outflow challenges on the retail side at M&G, same success on the institutional side, and Asia again having a very, very good start to the year. So that’s where I think we are. I think it was strong performance.

I think the franchises we have are best-in-class; I think they’re measurable in how they can and did execute and what their capabilities are. I think we’re innovating at levels again that will keep us competitive with natural competitors and disruptors.

And I think our superior long-term position gives a recurring value to this predictably to this that’s unique, given our size and scope. And we hope to keep demonstrating the benefit of that to you. So with that what I’d like to do is, ask the team to come on up and join me and we’ll go to Q&A..

Thank you very much. Good morning. It’s Blair Stewart BofA Merrill. Two questions please. On the dividend, Nic, you talked earlier this year about performing a 1 in 25-year stress on profits and looking at how the cover looks. I wonder if you could provide a little bit more detail around that.

Everything about the Company is growing at double-digit, yet there is a 5% base growth in the dividend, and you talk about two times cover. So, there is maybe some mixed messages around the dividend. So, just any color you can give on the stress aspect of that would be really helpful. And secondly, I guess also for you, Nic.

Can you give us an indication of what you think the organic Solvency II available capital generation is for the business, so that’s everything including, in-force, creation, et cetera; what’s the organic Solvency II available capital generation of the business?.

Okay. What the dividend cover is, once you take the special dividend into consideration is around 2.5 times that’s where we’ve ended the year.

And as you say, and I’ve said this before, that there are number of things that we take into consideration as what happens in the stress and also what other prospects going forward in terms of how much capital we’re gaining to need. We think 5% is a very good rate to continue to compound.

I’ve said before that that is -- we’re looking to grow at 5%, no matter what. And that’s really important because even in a downturn or even if something doesn’t go with plan, then we look to our shareholders to feel confident that we can sustain that level.

On the organic generation, the £2 billion that I have referenced, unless I’ve misunderstood your question, is what the Company was able to flow out in this year, that’s roughly 2.4 on own funds and the negative 0.4 on the SCR. I’m not sure if that is addressing your question.

Clearly about 2.4 on own funds, it comprises a big block that it relates to the in-force, why, because we bring everything effectively on an MCV basis and then margins unwind and of course we deliver the equity and the risk premium that is available there. And a good chunk of t also comes from new business which we also generate organically.

So, the entire 2 or 2.4 and the numerator is organic, unless I misunderstood your question..

Good morning. It’s Jon Hocking from Morgan Stanley. I’ve got three questions please. Just going back to the dividend, I know it seems little bit churlish because it’s special.

But what should we be looking for in terms of the triggers, when that cover starts coming in because the stress element I guess is related more to the what you’ve earned in the year relative to prospective use.

Is it actually just the outlook in terms of visibility and we need to see clear before cover starts coming in, because you’ve been talking about this I guess for two to three years now in terms of the cover? Second point on DoL.

Can you talk a little about where we are on the policies; is there anything that could happen to actually derail the whole rule change? And if you could give us some color on where you base case is for the change? That will be helpful.

And then just finally, there is couple of sort of minor regulatory issues, I think, one with PRA on the back books and second with CRIC in China. I was wondering, if you could comment on those please. Thank you..

So, I’ll start with the cover. When I covered this in January, I said that whilst dividend policy is anchored on IFRS cover, we use a number of other metrics to assess that. Candidly, if you are growing company and the assets and liabilities that you ride, grow as well, you need to put risk capital aside.

And IFRS is imperfect in terms of capturing that which is why we use free surplus as well, which is something else that we assess cover against. And it’s something else that we stress and of course now we do have the Solvency II and a number of other metrics, capital -- ratings capital for example. So we take the full suite of capital metrics.

I hope -- I wish it was as simple as managing this business by reference to one metric, it would make my job a lot easier. Unfortunately it’s not; we have to balance all these things.

And interestingly, the slide I’ve put up, as said, the operating formation of capital is different numbers on the different bases; these is different mechanics under each. We have to take all of the into consideration. Most of these KPIs, we are covered strongly but of course in a stress will come off a little that.

The way we make the decisions is that in a stress, we can sustain the growth of the dividend at 5%. And that’s what we judge alongside the growth prospects. And as you heard today, those are intact. And particularly in Asia, we are seeing growth, we’re seeing great opportunities for growth that ultimately needs financing as well..

DoL, Barry, do you want to give us some color on -- you are closes to politcs?.

Yes. With respect to the politics, I mean in some respect, the politics is kind of scaling back and it’s more focused on implementation, which doesn’t mean to say that there is not still some politics at play. So, right now the rule is sitting with the Office of Management and Budget.

They are tasked with trying to measure the cost, the economic impact of the implementation of the rule change. Now there is the prospect that OMB would come back to Department of Labor and say you’ve massively underestimated the cost of doing this and economic disruption will be created by this, the odds of that happening are approximately zero.

I mean that is run by political appointees, and so they are going to come back and say the rule is fine. So, they are going to publish I would guess, within the next 30 days at the outside, probably less than that whatever they are going publish. And we reach probably from every source to get a sneak preview of where it’s landed.

It’s very difficult to do. The ranking minority member, the ranking democrat on house labor committee demanded basically from Secretary Perez that he be allowed to see the bill or the rule change before it was issued. They refused to share that with him.

Their alternative was to go to Capitol Hill and brief the opposing Democrats principally because about 100 Democrats on Capitol Hill that are opposed to the change or at least have some level of concern about the change.

The briefing as far as we can tell consisted of don’t worry, this is going to be very consumer centric; it’s going to ensure that people get better advice than they’ve been getting in the past, so you should be for this.

And some Democrats have come back concerned that they didn’t really get any meat, if you will, in that briefing and others have said well, they satisfied me. So, because they said it’s going to be good, so it must be good. We will see what it looks like when we get it.

If they land in a sensible place, the prospect is that companies will try to adapt to it, as Mike has said, and I would reiterate, we are prepared for this from both the product perspective and a process perspective. So, don’t be concerned about that.

We do have a track record in the Group and within Jackson’s specifically of using disruption of this sort to our commercial advantage. So, without disclosing things we can’t talk about around product changes and so forth, I’d say everything I could possibly say to allay your concerns that we will be able to deal with this.

If he goes too far, if they do things like not grandfathering, then the politics becomes very real. And I’m not suggesting to you it would be that if they win, as far as that and say you’ve got to repay for the whole industry, you would probably get a stay of implementation in the courts. You will have lawsuits anyway.

There is a number of trade oriented groups as well as some -- the potential for other regulators to come in and go to the federal courts immediately as for a stay of implementation while they work out the legal matters and so forth.

So, it’s still a of very messy process and it really just all depends on what the ruler says and we are not going to know for a few weeks. I wish I could tell you more about that. But I would again close by emphasizing that we are prepared for any contingency..

So, there was two other questions and they’re both regulatory.

Tony do you want to comment on the -- I assume, Tony, CIRC, do you want to take the UnionPay?.

So, I think maybe this is what you are referring to, CIRC conducts a review or inspection of the life companies operating in China every five years, recently went through that, not only for us, for the entire sector. And the results of that get published; that’s a good thing I think.

Broadly the results, the finding is nothing, no material issues, just some tightening up of certain controls within the company, ties in nicely though with all the work being done. And the implementation effective January 1st of China Solvency II [indiscernible] so, it’s kind like it ties into the operational side of that.

Worth noting, we were in Beijing last month I think with the Chairman of CIRC and having dealt with these folks for many, many years now, they consistently hold us out as the gold standard of operating environment and controls within the China insurance sector, so no major concerns about..

And John, do you want to just -- I mean there is very little to be said, but the PRA -- I’m sorry not the PRA, FCA..

I assume you are talking about the FCA recent press release on the reviewing to longstanding customers. There is not much we can say. We are obviously working very closely with them. We’re taking it very seriously. But it’s on to enforcement, so they are using their enforcement powers to conduct further review.

This has been going on for maybe two years now. So, going for a while longer. I think in their press release they have stated that they will make no further comments, and I they expect us to make no further comment either. Because it’s going through the enforcement route. So, there is nothing we can say..

Good morning. It’s Greig Paterson, KBW; two questions. One is just in terms of Indonesia, in January you spoke about consumer confidence and other leading indicators. I mean this is an oil and energy poor country. You must be benefiting from lower oil price et cetera, just wondered to get some kind of feel for the outlook for Indonesia.

And in terms of U.S., you mentioned impairments but I’m saying to -- what was the cost of downgrades in terms of 2015, so we can get a feel for the total cost of the wider spreads of the downgrade theme? And then, Nic, just in terms of the 180 coverage you mentioned, I think you said on the 6th of March.

I wonder if you can give us a bit of waterfall.

Is that ex the dividend? Have you just marked to market, is including operating elements et cetera, and just want to know there’s been reduction?.

So Tony, why don’t you start with Indonesia, and maybe absolute level of sales and earnings?.

Sure. While the business did de-grow slightly in 2015, it was still a very good year for new business, generating essentially a third of £1 billion of new APE sales at about 17% margin, IFRS around a third £1 billion as well. So highlights some good. There have been a lot of economic headwinds there.

But notwithstanding that we have been pushing forward with expansion of the business. We opened 25 new branches, we call them Gas. We recruited right around 10,000 new agents every month. We onboarded 410,000 new customers in the year, that’s 1,100 customers per day, so pretty vibrant growth in the business.

Where we are today? I mean does look like there might be some signs of economic turnaround there. The JCI is up, I think about 4%, 5% year to date. The rupiah seems to be stabilizing. We are pushing forward with all our activities. One example is last month, we were in 30 cities in 30 days in front of 50,000 of our top agents.

And let me just say, morale is quite good. And yes, feel pretty good..

Okay, just to give you some stats for 2015, in the UK, the annuity book we had £2.4 billion of various securities being downgraded and we have £0.9 billion being upgraded. In the U.S., we had across our portfolio $4.7 billion downgraded and $3 billion upgraded. So, those were -- those are the numbers that are flowing through our accounts today.

And clearly the impact that that has on capital and earnings has been captured in the ratios that we put out today. So, the 481 for RBC obviously clearly fully factors the impact on that. And £3.3 billion on the shareholder account in UK on the Solvency II also captures the effects of those.

I was asked in January, what is the sensitivity to the downgrades on the UK ratios. We have added some additional sensitivity in the appendices, you now have that. So, hopefully that answers that question. On the 180, what’s driven that predominantly is the drop in yields and to a certain extent a drop in the equity markets.

That does impact, if you like, the transfers that come out from the profit, because bonuses are ultimately linked to that. So that’s had an impact on that. And of course it’s had an impact in one or two other places, where we have interest rate risk. Offsetting that was a positive FX effect. So, the 180 or the 8.6 billion reflects that.

It is before the dividend, because the dividend will come through the numbers at the point of which it’s effectively declared. And the impact of that is 7 points on the -- it’s £900 odd million, so 7 points on the final and another couple of points on the special..

[Question Inaudible].

Not one quarter; it includes two months..

Thanks it’s Lance Burbidge from Autonomous. I have couple questions, firstly on Asia. Hong Kong is obviously crucial part of the business.

I just wanted to understand are you seeing any impact in terms of capital flights in China coming through in terms of explaining why the sales are so strong? And then on China, your new business margin is actually pretty low compared to some of your peers, I wonder if you might talk about that? And then I am afraid I am going to get back to the dividend again.

You do talk obviously about moving towards that two times cover, and on 2015 taking out the special, taking out your one-offs. You are three times covered on the ordinary dividend and you are certainly three times covered, I think on the underlying free surplus generation.

And you talk about obviously through your presentation how defensive your earnings are. And I guess even the fee income on Jackson, a lot of it’s based on guarantee account value, not on the account value.

So, I suppose where do you see actual stress that kind of come through in terms of getting you to the point where you feel uncomfortable with that 5% growth?.

So first one Asia, Hong Kong and China.

Tony, do you want to grab those two?.

Sure. I think as you’ll know from the results, Honk Kong had a fairly respectable year in terms of new business, about 50% of the new business is coming from mainland Chinese who buy in Hong Kong. As I think we mentioned before, this is in no way a new phenomenon.

We started selling to mainland Chinese in Hong Kong over a decade ago and have built infrastructure, Mandarin speaking capabilities, simplified Chinese et cetera to deal with these customers. And I think we have a bit of a first mover advantage there.

A lot of the growth in that business can actually be fairly well correlated with the growth in the agency force. The agency force, I think in the last -- I am looking at Lilian, I think in the last 3 or 4 years has almost doubled.

We’re now at about 14 -- close to 14,000 agents in Hong Kong and continue to -- that we continue to recruit and license new agents and we continue to onboard new customers, both domestically and from the mainland.

It’s worth nothing that the business in 2015 from let’s call it domestic with honky -- Hong Kong people buying in Hong Kong also grew by about -- I called them honky, sorry. Grew by -- it’s local term, grew by about 35% to 40% domestic growth and also then coming through with the mainland piece. And again business continues to do well in that regard.

In China, I think we had a fairly respectable year. The business grew by about 28% in terms of top line APE. The NBP grew slightly higher, not as significantly as maybe some of our competitors. And the growth in that margin came from two things, a shift in distribution, and within the shift in distribution a shift in product.

We have deliberately grown our agency force. I think we have pretty good intellectual property when it comes to building agency force. And our CEO in China Mr. [indiscernible] has spent a lot of time in other countries studying the Prudential agency model, has taken that back to China, and we’ve been building out the agency force very strongly.

We are now at record levels. I think we’re at over 20,000 in terms of China agency. It’s more by China terms sort of a lot of headroom, and the agency force has been selling more health and protection and that has increased the margin. We’re very happy with the quality, direction growth of that business..

And Dividend, I am not sure if there is more to say....

Maybe just two, you’re right that we are -- the potential for earnings growth in Asia is robust. I would agree that. Your point on the U.S., just to correct maybe one statement that you made. You are right the fees -- some of the fees are linked with the guaranteed asset base but that’s a component of the fees that pays for the guarantee.

So, the 192 basis-point doesn’t include any of that. That utilized, if you like, to hedge and is reported with the hedge results. And in the UK, in M&G, sort of I guided you down. I don’t know how else to answer the question; it’s a reflection of discipline; it’s a reflection of the opportunities that we have elsewhere to direct the money.

In the end, the payment that made is a 40% payout. Yes, we haven’t used the special dividend mechanic before but it’s a talk that we decided to use this time and we may use going forward..

Oliver Steel with Deutsche Bank. Two questions, the first is, I was bit surprised to see that health and protection new business profits in Asia were up only, I say only 20% against the 28% increase across the whole of Asia.

So, what was grown by more than that? And I suppose linked to that question is, if it’s the par with-profit, if it’s the with-profit new business profits, how does that link through then to IRFS because historically the with-profit firms in Asia have not actually driven much in the way of IFRS earnings? So that’s sort of question one and half.

And second question is, if you do see a slowdown in new business or even a fall in new business sales in the states over the next year or so, what are you going to do? I mean the free capital generation of that business is going to look pretty impressive in the next year or two; what are you going to do with that free cash that’s developed?.

20% is a pretty good number for the health and protection. And I look at how the team has to look to deliver that. There is -- I mean we’ve cautioned you a little about the susceptibility of NBP with health and protection to interest rates.

I know it’s discussion that Adrian and I have constantly, if only we were on stable assumptions like some of our competitors, you’d be able to see the underlying growth without if you like the noise that comes through from that we’re on active, if you want us to change capacity, we are happy to do that.

Bu what’s held it, we’re working against the H&P total was 100 basis points increase in interest rates in Indonesia and a lot of H&P comes from there. It’s 60% of the sales.

There was also an increase in interest rates between start and end of the year in Singapore of 32 basis points again with the reorientation of the focus of our Singapore sales force into H&P.

Kind of the economics worked against that underlying growth and of course in Malaysia is the third place, we sell a lot of H&P and interest rates were up, there as well little by 10 basis points. So, that’s what held it back and it’s only 20, somewhat it is optical because of that particular mechanics.

Now, free surplus generation, yes, that’s a nice problem to have. If and when we -- if it turns out as you predict. And then, we’ll decide how we use it at that point..

Alright, thanks very much. Andy Hughes from Macquarie. Three questions if I could, and the first one is on the UK. And obviously you’ve got a 170 million benefit from longevity reinsurance and 8 billion of liabilities, but you still have 22 billion of liabilities which is still on CMI ‘14.

Now if you move to CMI ‘15 at the end of the year, which is quite lower in terms of the improvements, presumably you’ll get a big IFRS benefit then as well. So, how should we think about that? Second is follow-up question is on the FCA and investigation and work you’re doing there.

If there was any compensation to be paid, would a large proportion of that come out these states? Could you just confirm that? And a general question on Asia. I guess, the commentary you’re giving us on Asia now is very strong start to the year, December was the strongest period of time for a long time. It all seems very positive.

Any numbers you can put around this or is that just as far as you can go in terms of how Asia is performing in the current market? And final question on M&G. And obviously you talked about institutional pipeline of inflows.

Is that not enough to offset the continued outflows from the overall income? And on the cost income ratio guided up, are the cost savings embedded in that or is that something you’ll consider? Thank you..

So Andy, on Asia, that was my decision. No, that’s about as much detail as we can get and it’s a similar answer on the FCA. There’s zero upside and us commenting about a regulatory process, we have an ex-regulator in the front row nodding his head going, yes, Mike, stop talking now. We take it very seriously.

We interact with the regulators in all our markets frequently. This was an industry wide look, underlying product has done extremely well for the client one, three, five or ten years. So there’s -- so we’ll do everything we need to do to work with the regulator to get this true.

But publically commenting on the process is something they asked us not to do so, as far as we go. You asked about -- one other I missed there, CMI and change of assumptions too..

Okay. CMI ‘14, CMI ‘15, there are many in the industry that believe that CMI ‘14 and ‘15 are aberrations and do not reflect true underlying trend..

Due to changes in longevity….

Improvements in the -- or rather reductions in the rate of improvement, which longevity is increasing. So, there are many in the industry that believe ‘14 and ‘15 are aberrations as opposed to a signaling, if you like, a true change in the life expectancy or improvement in the life expectancy of people.

Our reserving last year was on CMI ‘12, we looked at CMI ‘14.

We’ll move -- we have moved to CMI ‘14 but we did it in -- if I could describe a CMI ‘14 minus, minus basis because in line with that conservatism and the caution that you would have heard from us throughout the whole presentation, we want more data before we can declare victory on that particular point.

So, there is a small benefit coming through around this but it’s not significant. We’ll see, if there are more studies and they confirm the trend, then we will move our assumptions but we haven’t moved them; we’ve moved them modestly at the moment.

As regards, extrapolating from the 8.7 billion of reinsurance that we’ve done to the 31 billion of liabilities, look it’s not -- there were very specific circumstances kind of why we did this in the course of 2015. Clearly you only do transactions where they have value and that’s the prerequisite. We wouldn’t do something that is bad for value.

But the circumstances were that we have the uncertainty surrounding Solvency II. We were only going to know for sure in December, candidly, if at that point we had a downward -- a negative surprise, then there would have been no time to react.

So, you do the responsible thing on behalf of your shareholders, which talks to discipline to try and pull those levers us, to try and optimize their position in the event that you have to rely on that. As it happened, the outcome was fine. So, I wish I could turn back the clock and unwind those but it’s not possible.

So, we did it, they were a good value. We have no plans to repeat that. Of course, other than to say, if we ever needed to, we would, the market is there. And of course we do -- there is a trade of ultimately by how much you can bring upfront versus ultimately what you lose in profits going forward. Those were the circumstances, they were unique i.e.

as I said, there is no plans necessarily to repeat that, which is I guided you to look at that core line in the UK results and project from there. Cost income ratio, I was very specific in my words, I said everything else being equal.

So to the degree that there are further cost actions we can take or management actions we can take on the cost savings, those are not in 2016..

Hi there, thank you. Farooq from Citigroup. Can you just give a little bit more guidance on what you mean by the contingency plans with Department of Labor? I mean you talked a bit about product, so I know you don’t want to share your full economics and plans obviously, but just to give us a bit more comfort. And secondly, if in the U.S.

we move to kind of lower churn type of model in the VA market, so we have kind of more stable AUM. And in the UK, it looks like we are going to have potentially net out flows unless you really ramp up in the bulk market.

So, are we ever going to move to situation where you see better remittance ratios in both of those two markets? So, it’s a way of sort of growing remittance above surplus capital generation.

And lastly, very quickly, I mean do you have an update to review on the fourth coming RBC changes of credit risk in U.S.?.

On the U.S. regulation, it’s a bit of a same answer on some of the other questions. So, we can’t discuss product fillings for both approval reasons and competitive reasons. We are not looking to coach competitors on direction they should go at this point.

But I think it’s -- from the worse case DoL proposal, we’ve backed into what would be effective strategies and how do you get those to market. I think the piece that’s key in this when you think of our U.S.

platform is one of the absolute critical elements will be who is going to help the most heavily -- and in a worst case as written DoL implementation, no softening whatsoever. Broker dealers really get hit hardest.

Their business models take the biggest hit, and their disproportionate amount of the IT and the biggest change in their role and position with the consumer. So, there will be a need for someone to get those advisors and those firms technically up to speed and have systems and products that are compliant et cetera that’s something we’re very good at.

So, the planning is operational as well as product as well as training; it’s multidimensional but again not desire to get competitors of UK to where that’s going. And regulators don’t allow us to comment on fillings in the U.S. as they wouldn’t here either. So, the comment on churn, I’m not sure where you’re going at.

So, the VA products in the United States, Jackson is the net sales, to be very clear. If you look at net sales tables, it’s us. So, we don’t have a retention and consumer issue with Jackson.

I think that goes to quality of products, it goes who do you business with, and it goes to the returns the policyholders have been able to receive by not capping the structure over the product with unnecessary volatility adjustments to our fee structure that the portfolios can’t support.

So, the quality of the underlying product, this is true in the UK, this is true in Asia, gets you better retention. There is no way we win in this room of shareholders if the client doesn’t win. So, the U.S. product is very good, it is by far and measurably the best in the industry.

So, we don’t have a high -- we are not trying to chase our own outflows in the book. And I used to hear, well that’s because you’re new entrant. We’ve led that the net sales tables, since we started. It’s not just that.

We have a book at scale, we now have distribution at scale, we have all the elements that any of our peers do and we still have positive net inflows. And that’s how you’re getting earnings growth without managing the total risk exposure to absolute sales.

Now we’re looking at that again, taking a lot more sophisticated look at our risk appetite in the U.S. and we’ll keep you informed on that. But not all sales have the same risk. One has a 3% guarantee and one has a 5%, that’s two different risks as shareholders. So again, we’ll look at that.

But we don’t -- I’m not sure I understand the nuance of the churn..

I think the point that Farooq was making, if there are less moving parts, would there be more stability in free surplus or profit and therefore, can there be higher remittance ratios? That was the question. Well, I kind of admire your optimism. I hope you’re right.

Yes, there may be less moving parts but there is still a lot moving parts, which is why in the past we’ve resisted from giving you targets, financial objectives for any parts of our UK business because there we are selective or any parts of our U.S. business because it’s cyclical.

So, all we promise is that to do the best in the circumstances as we find them. And as I said a minute ago, there are still many moving parts that could influence those KPIs. Now, as it relates to the remittance ratios, they are not the top numbers that they can be. We never said that that’s the case.

We have them in a place where it’s comfortable in order to leave enough capital behind to buffer any market events. And they are also informed by what we actually need at the center. So, if you like, they are not indicative of the best percentage that at any given point in time we can deliver. They have gone up and down.

They have been higher actually at a time of crisis which is exactly what you want. You want that flexibility at that point.

On RBC, Chad, I don’t know if you have that?.

The changes in RBC?.

Yes. The changes on RBC, they are still not defined at this point. So, it’s a slow moving entity. So, I think we don’t know yet exactly what they are going to do. It’s going to take typically a few years to implement.

Generally speaking, the direction they are heading would tend to across the industry move RBC a little bit lower, really depends on how they shake out. There is some differences between what’s in the investment grade, non-investment grade world too. So, they are just making it more granular.

I think wherever it shakes out, it’s going to be similar to what we’ve seen in the past which is if RBC becomes -- the charges become more onerous and RBC drops, the industry will adjust, and I think the rating agencies will adjust to the new normal there. It shouldn’t really change anything in the long run..

Thanks. Gordon Aitken from RBC. Just on the reinsuring of annuities. You’ve reinsured some in-force annuities there, just wonder what the difference is with reinsuring new business because obviously you’ve said you’ve stepped away from that.

And the second question is on, just if I can understand the thought process behind the special because it’s quite unusual for you to do this.

If it’s a one-off gain then, and pay a special but this is a little bit different, in that, I sense you’re giving some profit away to the reinsurers and it’s a change in shape of the cash flows, so it’s more upfront. And you mention a £25 million drag.

So, is it to do with this, or is it just a signal that our balance sheet is strong enough?.

Let me address the one-off and then cover the reinsurance in-force. I think the discussion around the boardroom is as Nic said, we -- the reinsurance was precautionary going into Solvency II. This was a work in progress until approval. And so that being the motivation for this piece.

It effectively, to your point pulled forward earnings, earnings belong to the shareholder, if you look you, you adjust for tax, and they’ve been paid out. It also goes to the general view though if we have excess capital, if we’ve earned it, we’re open to paying it out.

But again, it’s earning it first, it’s having it in house first and then paying it. I have not seen a piece on risk adjusted dividends. I think it will be an interesting; somebody’s bored on a Sunday, it’d an interesting work stream on.

But, I think, as long as we make our earnings from -- our earnings driving dividend and cash is driving dividend, we have a highly sustainable dividend relative to peers and we are doing that while we are growing the Company at the numbers we’re seeing. That balance is critical.

But the first piece, I’ve been here when we had an unsustainable dividend. So, part of that’s personal experience. We want you to be able to count on that. So there is an element of -- you keep hearing this conservative conservatism up, it’s real, but we also understand at a point it’s unnecessary.

So there is a balance in here and we’ll keep working to that. But if we have excess earnings, we’ll pay them out. And I don’t think -- there’s multiple mechanisms we could have used. The U.S. there would have been a share buyback. That drives other metrics that may or may not be things you want to move. Cash is a simple, clear message.

Your earnings, you pull forward, here you go..

Post January 1, given that we cannot use -- we don’t have the benefit of a transition, the capital that has to be priced into -- actually utilized and then priced into an annuity contract going forward is very, very onerous. Where the interest rates were at the end of last year, it would have been somewhere between 20% and 25% of premium.

Where interest rates are today, it’s greater than that. Now, in order to get the thing to work, even if you wanted to deploy the capital, you are reliant on huge increases in price and you’re reliant on quite a lot of engineering, both in terms of removing parts of the risk margin through longevity and reinsurance or asset side engineering as well.

Candidly, I think there are easier ways for us to deploy our capital than to enter into that particular race. And that’s why we haven’t done it. On the back book, candidly it was to increase, clearly, if you pass all the -- there are many factors, the fees will attract it.

The tradeoff between the fee that we ended up paying to the reinsurer, and if you like, the pads that were released under the various capital bases were sufficiently attractive, at the same time, it increased our resilience.

Part of the reason that the sensitivity when interest rates are a lot lower in the UK, the sensitivity is unchanged in the UK, is because having pulled the levers, we’ve muted that sensitivity to the impacts of the market effects. And that’s part of the reason why at the end of February we were only down less than -- about 1 billion.

So, you take all that into consideration, we think it was the right thing to do for the back book. But for the front book there are easier ways of using our capital than generating return. And that’s what underpins our stance in that particular space..

It’s Abid Hussain, SocGen. Two questions, if I can, firstly, on China and Hong Kong. Is there a risk the Hong Kong business is cannibalizing the JV in China, especially if I can just jump on a plane and go across the border and the rule of law -- the trust in the rule of law is higher across the border? That’s the first question.

And then secondly, on the U.S., what is the minimum crediting rate on the fixed annuity back book or put it another way, where would U.S.

long-term rates need to be before you start making a loss on that book?.

It’s a risk that Hong Kong’s cannibalizing China, with 1.3 billion people there, I’m not sure there is at this stage. I think it’s probably worth noting that the mainland Chinese consumers who were purchasing products in Hong Kong are slightly different.

The lion share of them come from Guangdong province, which is the neighboring province, formerly Canton, where the JV, most of the business is actually coming from the eastern seaboard, Shanghai, Beijing, we just opened a new branch in Hunan. And so actually it’s a different geography and it’s also slightly different socioeconomic.

So, don’t see any cannibalization at this stage..

Okay.

On crediting rates?.

Two or three things to say on that. Firstly, in relation to the proportion of the VA premium that goes into the fixed account option that goes in at 1% guarantee. So the guarantee level is modest there. And we’re able to effectively back it with assets that yield comfortably in excess of that.

In relation to the in-force book, again it’s difficult to generalize, but on average, the guarantees are around the 3% level. The assets backing -- there is around -- the crediting rates on average have about 20 to 25 basis points headroom against that guarantee level.

And they are backed by assets that deliver 240 odd basis points on top of that, which is ultimately what drives after an RMR deduction. It would only be an issue, and of course, they are backed by securities that are where you do -- that produce that and there is a good level of cash flow matching their duration.

The only issue would be is if for whatever reason, all these holders decided to extend well beyond the point at which we hold the assets. There are trades that we do to lengthen, if you like, the duration of that and we’ve done that in the past where we needed to. So no, we’re a long way away from that being a problem.

I don’t know Chad, if there is anything you want to add to that? And actually people save for a reason. They don’t save -- they can’t extend ultimately forever..

Thanks. Alan Devlin from Barclays. Just one question on the Department of Labor. I know nobody knows what’s going to happen to sales,[ph] but have you got any concerns on the in-force? You mentioned grandfathering because that would materially impact earnings..

There is no clarity on it. But if you think about, earlier in a previous life actually around retirement services for one of the brokers [indiscernible] you had art, antique cars, people’s mortgages, oil and gas, some of the partnerships REITS, all these products have been allowed over the years and retirement accounts.

It is unimaginable, it’s possible -- but when Barry talked about a political reaction, if you said that all of these clients by year-end, whatever the timeframe is, this all has to be put into a fee based asset management relationship, the political reaction to that would be severe.

And I don’t think the White House is looking for -- even the most extreme advocates are anti-advice, anti-active management would see that as a good thing, but that would be the implication. So that’s the question on grandfathering. And it’s clearly an issue in the market. People are very concerned about it.

The single best thing with DoL now is get it out. We can deal with whatever changes they make. I hope they are more consumer centric than the first draft. But, it would be nice to know the rules and we’ll go from there. It’s not helpful for the industry to be in limbo.

And it’s certainly not helpful politically for [indiscernible] and means than in finance, particularly committees to be in limbo. That’s not an efficient process. So it’s clearly coming to an end. But the grandfathering element would be, I think you’d see the other bill probably passed..

What you’d end up with -- and this piece of legislation was introduced in December with a broad Democratic support, called Roskam-Neal. If that legislation were passed, then survived the presidential veto, which would be almost certain, it would completely undo the rule change.

But again, the key there is that it’s difficult, even with Republican majority, it’s difficult to override a presidential veto. If you had grandfathering, you would probably, the speculation is you would see Roskam-Neal attaches as an amendment to the Puerto Rican financial bailout, which the President cannot veto. So basically, it would be okay.

If we’re going to play nuclear options here, here is the nuclear option from the other side. I don’t think it’ll go there. That’s a very inelegant last thing to happen in the last 12 months of any presidency, and I’d be surprised if they went there..

If you think about Alan some of the securities that can be legally owned, it’s forcing a client to sell at this point in the cycle and some will effectively would be forcing into realized losses for no reason other than an arbitrary policy change. So, it’s possible but again, I think it’s fairly remote. We’ll see.

But the best thing for us, we’re ready; let’s get it out there; let’s react; let’s get back to business, see what opportunities it creates, go from there..

Hi, good morning. Ashik Musaddi from JP Morgan. Just a couple of questions, one on UK.

Can you give us some thoughts about where your UK capital ratios are at the moment? You gave the Group number 180%, but where would the UK number be; would it still be above your comfortable level which I think is around 130%? I think that’s what you said at the Investor Day. That’s number one.

Secondly, what is the fundamental spread on the UK annuities book that is currently baked in, in the Solvency II and how does that compare to Solvency I? Just wanted to get a better sense about what the numbers are.

And thirdly is can you give us some thoughts on where the variable annuity hedging costs are at the moment? It looks like there has been a recent spike because of lower rates and high vols.

So, how does that compare with the guarantee fees that you are collecting?.

On the UK, it’s in our range; it’s in the range that I highlighted in January. On the percentage of spread, it’s 45%. That’s what’s coming through in the surplus -- I mean it’s 58 basis points in the base; it’s 172 basis points in the SCR in the stress. So, when you translate that into percentages, it’s around 45% in the SCR.

What was the other question on -- the hedging costs..

Chad, do you want to give us or anyone?.

As you would expect, hedging cost has gone up a little bit for certain transactions, nothing so significant that it’s impaired our ability to put the hedges in place that we think need to be in place and the program still performs well. In terms of the scale of the increase, I don’t know if it’s that easy to quantify actually that..

I guess two things there, on rates because we’re tending to be and have been for years on the shorter end, call it two years and then on most of the hedges we’re buying, the fact that long rates have come down has really not affected anything. Actually, two-year rate is actually higher than it’s been for a while.

So the rate side of it’s been somewhat helpful. Volatility has actually been a fair bit lower than we saw last year. So, it’s manageable in the short-term spike and we adapt and I’d say a very minimal impact..

Okay. So, with that, I want to thank everybody for your time today, your questions and appreciate your support. And we’ll see you in six months. Thank you..