BANK OF ENGLAND PRUDENTIAL REGULATION AUTHORITY

WRITTEN NOTICE Major changes to an approved internal model

To: Clerical Medical Investment Group Limited (FRN 181655) pic (FRN 191517) Life Limited (FRN 171881) General Insurance Limited (FRN 202091) St Andrew's Insurance pic (FRN 202932) St Andrew's Life Assurance pic; (FRN 189101) Scottish Widows Annuities limited (FRN 191518) Scottish Widows Unit Funds Limited (FRN 202648) Clerical Medical Managed Funds Limited (FRN 110350) Pensions Management (SWF) Limited (FRN 110422) (the "firms")

Of: 25 Gresham Street London EC2V 7HN

Reference Number: 2254736, 2254738, 2254788, 2268112, 2268115, 2268116, 2268151, 2268157, 2268186 & 2268228

Date: 5 December 2015

DECISION: (1) In accordance with Regulation 48 and 49 of the Solvency 2 Regulations 2015, the Prudential Regulation Authority (the "PRA") has decided to approve a major change to the full internal model approved in the Written Notice - Internal model approval dated 5 December 2015 (the "Original Notice"). (2) This Written Notice replaces the Original Notice so that the full internal model approval covers the calculation of the firms' group and certain solo Solvency Capital Requirements (SCR) as set out in Annex 1. (3) This approval is granted on the basis of the information set out in the firm's major model change application received on 12 August 2015 and supplementary documentation received on 10 September 2015. (4) This approval is conditional on completion of a transfer under Part VII of the Financial Services and Markets Act 2000 in connection with Claim No 4616 of 2015 before the High Court of lustice in respect of the transfer of the insurance business of Scottish Widows pic, Halifax Life Limited, St Andrew's Life Assurance pic, Scottish Widows Annuities Limited, Scottish Widows Unit Funds Limited, Clerical Medical Managed Funds Limited and Pensions Management (SWF) Limited to Clerical Medical Investment Group Limited (the 'Part VH transfer').

Prudential Regulation Authority, 20 Moorgate, London EC2R 6DA T +44 (0)20 7601 4444 www.bankofenglandxo.uk

Prudential Regulation Authority, registered office: B Lothbury, London EC2R7HH. Registered in England and Wales No: 07854923 BANKOF ENGLAND PRUDENTIAL REGULATION AUTHORITY

Effective date (5) Subject to satisfaction of the condition referred to in paragraph (4), this approval takes effect on the later of (a) 1 January 2016 or (b) the date the Part VII transfer becomes effective.

Decision maker (6) The decision which gave rise to the obligation to give this Notice was made by the Supervision, Risk and Policy Committee of the PRA.

Publication (7) Details of this approval will be published on the Financial Services Register on 1 January 2016.

PRA contacts (8) For more information concerning this matter generally, the firm should contact their usual supervisory contact.

Supervision, Risk and Policy Committee For and on behalf of the PRA

Prudential Regulation Authority, 20 Moorgate, London EC2R 6DA T +44 (0)20 7601 4444 www.bankofengland.co.uk

Prudential Regulation Authority, registered office: 8 Lothbury, London EC2R 7HH. Registered in England and Wales No: 07B54923 BANK OF ENGLAND PRUDENTIAL REGULATION AUTHORITY

ANNEX 1

The approved Internal Model Definition 1. The approved internal model is as set out in the internal model application documents submitted to the PRA on 26 June 2015 and the addendum sent on 26 November 2015, as amended pursuant to the major model change documents submitted to the PRA on 12 August 2015 and supplementary documentation received on 10 September 2015. 2. The internal model is approved to calculate the Group SCR at the level of Scottish Widows Pic. 3. The internal model is approved to calculate the individual SCR for those entities with a "Yes" in the Solo SCR column in table 1.

Table 1

Legal Entity FRN Group SCR ('the Solo undertakings included SCR in the scope of the model for the calculation of the group SCR') Scottish Widows Group Limited (SWGL) Yes No Scottish Widows pic (SW PLC) 191517 Yes Yes Scottish Widows Limited (SWL) 181655 Yes Yes

Halifax Life Limited (HLL) 171881 Yes Yes St Andrew's Life Assurance pic (SALA) 189101 Yes Yes Lloyds Bank General Insurance Limited 202091 Yes Yes (LBGIL) St Andrew's Insurance pic (SAIL) 202932 Yes Yes Scottish Widows Annuities Limited 191518 Yes No (SWAL) Scottish Widows Unit Funds Limited 202648 Yes No (SWUFL) Clerical Medical Managed Funds Limited 110350 Yes No (CMMF) Pensions Management (SWF) Limited 110422 Yes No (PML) CMI Insurance (Luxembourg) Societe Yes No Anonyme (CMUL)

Prudential Regulation Authority, 20 Moorgate, London EC2R 6DA T +44 (0)20 7601 4444 www.bankofengland.co.uk

Prudential Regulation Authority, registered office 8 Lothbury, London EC2R7HH. Registered In England and Wales No: 07854923 BANK OF ENGLAND PRUDENTIAL REGULATION AUTHORITY

Reasons for the Decision

4. The PRA's assessment is that the internal model following the major model change met the tests and standards at the time the decision was made. Specifically, the PRA is satisfied that following the major model change:

a. the internal model complies with the rules contained in chapters 2, 3 and 10 to 15 of the Solvency Capital Requirement - Internal Models part of the PRA Rulebook; b. the internal model complies with the relevant requirements set out in Title 1 Chapter VI Solvency capital requirement - full and partial internal models of the Commission Delegated Regulation (EU) 2015/35; c. the systems of the undertaking for identifying, measuring, monitoring, managing and reporting risk are adequate; d. the model complies with the requirements of Title 2 Chapter II Section 2 of the Commission Delegated Regulation (EU) 2015/35; and e. the policy for changing the approved internal model complies with the rules contained in chapter 6 of the Solvency Capital Requirement - Internal Models part of the PRA Rulebook.

Prudential Regulation Authority, 20 Moorgate, London EC2R 6DA T +44 (0)20 7601 4444 www.bankofengland.co.uk

Prudential Regulation Authority, registered office: 8 Lothbury, London EC2R 7HH. Registered In England and Wales No: 078549Z3