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January 2006

Demutualization Update

This document is for the information of intermediaries. It is the first in a series that will keep you informed as we progress towards the proposed demutualization and flotation of Standard Life. If your clients need more information, feel free to send them to the special demutualization section of our Web site at However, they can also call our Customer Service Centre at 1 888 841-6633. Lines are open from 8:30 a.m. to 5:00 p.m., Monday to Friday. Here's a quick demutualization overview:

How demutualization will affect you and your clients

On October 17, the Board of The Standard Life Assurance Company confirmed that it intends to recommend to members that the Company should demutualize and float on the London Stock Exchange, subject to satisfactory completion of all legal, regulatory and other processes. However, demutualization is not a done deal. Standard Life will not demutualize and float unless at least 75% of members who vote at a Special General Meeting (planned for May or June 2006) vote in favour of the proposals. We have around 2.4 million eligible members worldwide, including approximately 62,000 in Canada.

Keeping your clients informed

Our recent Members' Updates have explained in detail what demutualization would mean to Canadian participating policyholders and the Company and future issues will keep them up to date with developments. It is expected that the proposal for members and an additional notice to Canadian policyholders will be sent out next April or May and will contain more detailed information about our demutualization and flotation plans. We aim to ensure that your clients with participating policies have as much information as possible before deciding how to vote. During October, eligible members were sent a confirmation of details mailing, asking them to confirm that the details we have on them are correct. In addition, an informative brochure, Straightforward Answers to Your Questions, was also included to answer any questions and help them fill out the confirmation of details form. Eligible members won't be able to receive shares or other demutualization entitlement unless we have their up to date details. If speaking to members, we would ask you to encourage them to return the confirmation of details form to us as soon as possible.

What would demutualization mean?

Ownership of Standard Life's business would be transferred to a new Standard Life company. This company, Standard Life plc (public limited company), would own the Standard Life group on flotation and its shares would be listed on the London Stock Exchange. Standard Life plc would be owned and controlled by its shareholders. Demutualization is a complicated legal process, which, amongst other things, needs to be voted on and agreed to by our members, scrutinized by the Financial Services Authority and an independent expert and approved by the Court. In addition, our demutualization proposals, with respect to our Canadian business, are subject to the approval of Canadian regulatory authorities after consideration of a report on the fairness of the transaction by an independent actuary.


Why does Standard Life want to demutualize?

The three main reasons why Standard Life now believes it is right to demutualize and give eligible members their share in the value of Standard Life's business in place of their membership are:

Unlocking value for members

Demutualization and flotation would give eligible members access to their share in the value of Standard Life's business in place of their membership rights. In the past, Standard Life was able to offer members the prospects of extra benefits from being with a mutual company. The Company no longer has the same flexibility to provide these additional benefits. Eligible members have a choice between Standard Life continuing as a mutual or voting for demutualization and unlocking their share of the value of the Company whilst keeping their policies.

The risks of membership are expected to increase

In a mutual business, with profits (participating) investors bear the business risks and rewards of the group. While in some markets with profits remains a popular choice, across the business as a whole with profits investors are expected to decline as a proportion of the total customer base. As a result, the overall risks of the business to which with profit investors are exposed are expected to be borne by progressively fewer people. In a plc these risks generally lie with shareholders so demutualization should reduce these risks for policyholders.

Who is eligible to vote on demutualization and flotation and receive shares?

Generally speaking, members will be eligible to vote and get shares or corresponding demutualization entitlement if: · They are a member for a policy which started on or before March 30, 2004, and which has been continuously invested in with profits (participating) from, at the latest, March 30, 2004, · The conditions of their policy have been complied with, and · Their policy is still in force on the day of the Special General Meeting held to vote on demutualization and flotation ­ this is planned for next May or June. New with profits (participating) investors who made their with profits (participating) investment on or after March 31, 2004, are mostly subject to declarations waiving their right to vote on demutualization proposals and receive compensation for loss of membership rights.

Access to external equity capital

At the time of the proposed listing on the London Stock Exchange, Standard Life intends to raise capital to support and develop its business. Demutualization and flotation would give Standard Life access to external equity capital which would not be available to it as a mutual.


How will policyholders be affected by demutualization and flotation?

If we demutualize and float, ownership of Standard Life's business would be transferred to a new holding company, Standard Life plc. Policyholders would keep their policies, which will continue to be insured by a company in the Standard Life group. Demutualization and flotation would unlock value for eligible members, giving them their fair share of the value of the business ­ in the form of an allocation of shares or corresponding demutualization entitlement. At the same time, we will put enough value into the Canadian participating account to protect the interests and security of Canadian with profit (participating) policyholders. We have a legal obligation to make sure policyholders' interests and security are protected. If demutualization and flotation goes ahead, most eligible members will get shares in place of their membership. For legal and practical reasons, some eligible members will receive cash instead of shares. If members receive shares, they will be able to choose what to do with them. They can sell them for cash or hold on to them as an investment. In Canada, subject to regulatory approvals and clearances, most eligible members will have a choice. They will get corresponding cash demutualization entitlement unless they choose to receive shares.

Stay up to date

The demutualization section of our website is an invaluable resource. Visit it regularly at for updated content. If you have any questions, please contact us at 1 888 841-6633 and we will be happy to help. There is no guarantee Standard Life will demutualize and members should not base their financial decisions on our demutualization plans at this stage.




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