Royal Liver Group

Interim Results for the 6 months ended 30 June 2009

28 August 2009

Commendable results in face of tough market conditions

Society to simplify Group structure and focus on core manufacturing activities

· Continued robust performance of core manufacturing brands, Progress and Caledonian Life

· Active and prudent management of capital position and management expenses; Society operating deficit of just £90,000

· Distributions investments in the UK and Republic of Ireland, including Park Row under strategic review

· Second half outlook dominated by continuing difficult market conditions in UK and Republic of Ireland

· Steve Burnett to step down after seven years as chief executive. Appointment of David Woods as Chairman and Chief Executive on an interim basis pending a new Chief Executive appointment.

David Woods, Chairman and Chief Executive, Royal Liver Group, said:

“The after-shocks of the unprecedented events in the financial markets in 2008 continue to impact on all our markets and I am proud of the way the Society has faced these challenges. We have taken bold and often difficult decisions to mitigate these circumstances.

“However, the continuing strength and quality of our operations can be seen in the commendable performance of our manufacturing brands, Progress and Caledonian Life. We have therefore decided to focus our efforts around these businesses, to simplify our Group structure, actively manage our capital position and find further ways to reduce expenditure.

“This process has already begun and we have completed a major IT outsourcing project and brought to an end, expensive door-to-door collections in the UK and, soon, Ireland. We are considering carefully the future for our investments in Park Row and Citadel Financial Services.

“Given these developments, the Board, in discussion with the chief executive, has decided that this is an appropriate time for a change of leadership to meet the new challenges facing the Society. Accordingly, Steve Burnett has elected to leave the business after a seven year period as chief executive.

“On behalf of the Society, I would like to thank Steve for the enormous contribution he has made to Royal Liver. It was Steve who was the architect of the refocusing and modernization of the Society that has given it a new lease of life. Thanks to Steve, we have had a strong focus on reducing expenditure and two fine financial services brands in Progress and Caledonian Life. Seven years is a good innings and Steve leaves with our best wishes for him and his family.”

For further information:

Chris Salt / Tom Gough HeadLand Consultancy 0207 367 5222

Results Overview

Responsible Capital Management
The first half of 2009 has seen the key markets for our products and services buffeted by the continuing fall out from the financial crisis and ensuing economic turmoil. These significant outside factors have the ability to reduce asset values and investment returns while increasing liabilities and reducing available capital.

More than ever, the Board focuses on prudent capital management, strengthening the balance sheet and constantly assessing the Society’s solvency requirements. When necessary, pre-emptive action has been taken to protect and enhance value for members and maintain the Group’s capital position in a way that fulfills our business objectives.

Progress and Caledonian Life

Given this context the manufacturing brands of Progress (servicing the UK) and Caledonian Life (serving the Republic of Ireland) performed well and made a profitable contribution to the Society. Both Progress and Caledonian Life have leveraged their quality customer service credentials and strong market position in protection products. These products are designed to protect against the financial trauma of bereavement, serious illness and loss of income through incapacity. The range is primarily aimed at families that need the protection and peace of mind that insurance provides.

For so long as the current economic climate continues to pervade the landscape, these brands will form the core business at Royal Liver.

Across the first six months of the year, both businesses performed in line with expectations. Progress’s annual premium equivalent (APE) being £5.8m and Caledonian Life’s being £3.8m are broadly on target. However APE is significantly down for both brands compared to last year reflecting the Group’s desire to focus on writing smaller volumes of more profitable business.

Allowances have fallen in line with business volumes and we have worked hard to implement a myriad of measures to limit expenses. However in the Republic of Ireland, economic conditions have seen less demand for the With Profits Bond, which is 50% down on last year.

Park Row and Citadel

The tough economic conditions had a further negative impact on our distribution investments in both UK and the Republic of Ireland. Park Row had valiantly endured a significant restructuring process aimed at repositioning the business to take advantage of the UK’s long awaited Retail Distribution Review. However with new business significantly down, the Board had to reconsider its options and initiated an in-depth strategic review of Park Row. Turnover for the first six months was £4.3m; 69% of budget. At the end of the half year, Park Row had posted a deficit of £2.17m which was greater than budget.

Our investment in a distribution business in the Republic of Ireland, Citadel has also continued to suffer the tribulations associated with the state of the domestic economy. In spite of the good headway that this fledgling business has made since its inception in October 2006, the Board has decided to review its options for the business in the light of what looks like a continuing

poor outlook in the Irish market. From its network of advisors, Citadel, showed a turnover of €1.74m; 37% of target. This increased turnover, when compared to half year 2008, is as a direct result of the increased network of advisors. However, Citadel continues to operate in poor economic conditions and recruitment of advisors has proven difficult. Citadel’s group loss was €1.77m which is higher than budgeted for by €0.24m.

Society Operating Costs

It is a tough task to manage the legacy cost base of Royal Liver whilst still enabling the newer business to grow. Several projects were initiated or progressed in the half year to limit the expenditure of the Society.

The project to cease door to door premium collections in the UK has been completed and it is in its final stages in the Republic of Ireland. This process to phase out what has become an expensive and outdated form of collections will be completed by the end of 2009.

Also completed is an agreement to transfer our IT function to another organization called ATOS, a specialist provider of computer services. Neither the scale of our operation nor the allowances within the premiums from our Members could any longer support the required IT team. This decision was one that will yield cost savings of the order of £20m over the next 10 years.

Overall, for the half year, the Society’s operating expenditure was £25.6m, 8% below budget and 0.4% below the first half of 2008. In terms of the Society’s surplus position, for the first time in two years, there is a small deficit of £0.09m, which is £2.6m better than budget. To put this in context, in 2002 the expense overrun for the Society was £28m, only falling to £8m in 2006.

In terms of investments, turnover in Royal Liver Asset Management (RLAM) has naturally fallen from 2008 levels to £1.76m at the half year. This is as a result of the reducing value of funds under management in RLAM, again driven by the falls in markets during the first half of the year. However, RLAM continued to make a small, but very welcome, profit of £45,000.

ends

Notes to Editors

Background on the Group

The Royal Liver Group encompasses a number of specialist financial services companies in the UK and Republic of Ireland. Within the Group sits Royal Liver Assurance Limited - an Incorporated Friendly Society, founded in Liverpool in 1850 for the mutual benefit and financial security of local families.

Royal Liver is owned by policyholders – or Members – rather than shareholders, and it has more than 3 million policies in force and 1 million Members. It has £3.2 billion assets under management. Royal Liver is a Member of the Association of Mutual Insurers (AMI).

Core business areas

- Royal Liver Assurance exists to service and maintain Royal Liver policies with a focus on delivering value back to policyholders.

www.royalliverassurance.com

- Progress is Royal Liver’s online-only Protection service for the UK. A multi-award winning company, Progress is a manufacturer and provider of products for independent financial advisers, including Life, Income and Critical Illness Cover.

www.ifa.royal-liver.com

- Caledonian Life was formed in 2001, building on the 200-year old Caledonian brand in the Republic of Ireland. It manufactures and provides Protection and Protected Investment Products for independent brokers in the Republic of Ireland. www.caledonianlife.ie

- Park Row is one of the largest financial advice companies in the UK. It is Royal Liver’s customer-facing distribution arm and provides tailor-made advice to individuals and businesses in every area of financial planning.

www.parkrow.co.uk

- Citadel is Royal Liver’s broker business in the Republic of Ireland and was formed in 2006 to provide a complete service to the market. It has already established a reputation within the marketplace based on its innovative business approach.

www.citadel-fa.ie

The Delegation

Royal Liver has had a Delegation system since 1886; the Members of Royal Liver elect fellow Members to act as the sole representative body. There are around 200 Delegates and they are authorised to take decisions on behalf of the Membership at General Meetings of the Society.

About David Woods

David became Chairman of Royal Liver in March 2003. He has spent more than 36 years in the financial services industry, including 13 years as Group Managing Director of The Scottish Provident Institution.

He is a Non-Executive Director of Kiln plc., Edinburgh Small Companies Trust plc. and The Moller Centre for Continuing Education. He is also Chairman of the Trustees of the Xansa Pension Funds, a Trustee of both the Scottish Provident and Kiln Pension Funds and a member of the Court of Heriot-Watt University.

In respect of his Royal Liver appointments, he is Chairman of the Nominations Committee and, in an ex-officio capacity, attends the Audit, Risk & Compliance, With-Profits and Remuneration Committees and the Investment Strategy Group.