United Kingdom Payout Annuities Arshil Jamal SVP, Chief Actuary / Capital Management Angela Jonkhans Vice President, Capital Management

Capital Market Solutions UK Payout Annuities Market Overview Mortality Capital Market Solutions

Market has grown by 9% per year on average from 2003 to 2008 U.K. Payout Annuities – Total Market Premium 9% CAGR Market has grown by 9% per year on average from 2003 to 2008 Source: MARS, 2008

Canada Life sales have grown at 19% per annum on average since 2003 Canada Life U.K. Annuity Sales 19% CAGR Canada Life sales have grown at 19% per annum on average since 2003 Source: MARS, 2008

Canada Life is the fourth largest provider of new annuities in the UK UK New Sales – Annuities to all Distribution Channels - 2008 New Sales - 2008 Canada Life is the fourth largest provider of new annuities in the UK Source: MARS, 2008

UK Payout Annuity Market - 2008 Just under half of annuities are written by the company that managed / administered the pensions accumulation policy Source: MARS, 2008

UK New Sales External Annuities to all Channels - 2008 Excluding internal conventional rollover business, Canada Life is the second largest provider of new annuities in the UK Source: MARS, 2008

UK Payout Annuity Assets

UK Payout Annuity Asset Mix – Q1 2009 Total Assets £16.6 billion

Combined Payout Asset & Liability Cash Flows Projected Annuity Asset & Liability Cash flows Combined Payout Asset & Liability Cash Flows Asset portfolio is constructed to provide as close as possible cash flow match to the expected liabilities

Capital Market Solutions UK Payout Annuities Market Overview Mortality Capital Market Solutions

Reserving Assumption 90.6% Reserving Assumption 84% Canada Life Mortality Experience 2004-2008 Males Females Average Experience 100% Average Experience 99% Reserving Assumption 90.6% Reserving Assumption 84% For a seller of annuities, a higher ratio is better than a lower ratio The margin between actual experience and reserving assumption is approximately 10% for males and 15% for females. Footnotes: All numbers show ratio of actual deaths to expected deaths, with expected deaths calculated as 100% of the current valuation tables i.e. PNMA00 with medium cohort improvements (plus floor) for males and PNFA00 with 75% medium cohort improvements (plus floor) for females. 2004 and 2005 is Canada Life business only, 2006-2008 includes Resolution and Equitable business. Valuation assumption is weighted average across all 3 blocks.

CL UK Valuation/Pricing Life Expectancies CL UK Valuation/Pricing 26.0 - Female 23.3 - Male No Improvements With Improvements Canada Life assumption for life expectancies is approximately 6 years higher than the latest published population mortality Approximately half of this allowance is for future improvements in mortality Other half reflects the lighter mortality for annuitants compared to the general population

These now form a much lower proportion of the total deaths Mortality by Cause of Death Males Females Mortality by major cause for males – England & Wales, 1911-2005 (Source: ONS) Mortality by major cause for females – England & Wales, 1911-2005 (Source: ONS) Purple - Infectious diseases Green - Respiratory diseases Red - Cancers Blue - Circulatory diseases Purple - Infectious diseases Green - Respiratory diseases Red - Cancers Blue - Circulatory diseases Mortality rates have declined over the last 40 years driven by a decrease in deaths from circulatory diseases These now form a much lower proportion of the total deaths Deaths from other causes have been much more stable over that period.

Capital Market Solutions UK Payout Annuities Market Overview Mortality Capital Market Solutions

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