SJPC

1
ST. JAMESS PLACE CAPITAL plc
2
Contents

• History
• SJP Group
• The Future

3
History

• 1992 Management team left Allied Dunbar
  Assurance, UKs largest unit-linked assurer
  (now part of Zurich Financial Services)
• J. Rothschild Assurance Group launched
• 1997 J. Rothschild Assurance Group reversed into
  St. Jamess Place Capital plc (listed on
  London Stock Exchange)
• 2000 HBOS (Halifax) acquired 60 interest in
  St. Jamess Place Capital.
• J. Rothschild Assurance Group rebranded St.
  Jamess Place.

4
Structure of St. Jamess Place Capital
HBOS
St. Jamess Place Capital
60
100
SJP GROUP Wealth Management
Manufacturing

Distribution
SJP Life and Unit Trust Companies
SJP Partnership
5
St. Jamess Place Group Adviser-based Wealth
Management
6
St. Jamess Place Group

• No with profits
• No guaranteed annuity options
• No solvency assets invested in equities
• No final salary pension scheme
• No high tech funds
• No split level trusts
• No derivative-based precipice funds

7
Guiding Principles

• Focus on areas where Management adds value
• Own adviser-based distribution product design
• Outsource administration
• Outsource investment management (open
  architecture plus)
• Joint ventures for non-core activities (best of
  breed)
• Minimise shareholder-financed overheads
• Partners commission based pay own costs of
  client acquisition
• Outsourced administrators paid per transaction
• Investment managers fees charged to funds

8
Key Strength

• St. Jamess Place Partnership Own dedicated
  distribution
• High quality self-employed, commission-paid
  salesforce of 1148 financial advisers
• Only experienced advisers average 16 years
• Bring existing client bases (350 to 400)
• High productivity 2.5 x industry average
• Focus on higher value clients
• Stability (excluding retirees)- 97 p.a.
  retention by value (APE)

9
Benefits of our Own Distribution

• New business more predictable
• Spread of production
• Less exposed to market pressures
• Greater control over quality of new business
• Better retention of business
• Our clients cross selling opportunities
• Control over brand
• Can incentivise distribution

10
What is our competitive advantage?
Financial advice you can trust

• Service
• Expertise and
• experience
• Personal
• (face-to-face)
• The Partnership

• Performance
• Investment policy
• Track record

Values Openness integrity
11
New Business Model
Target 5 to 10 p.a.
5 to 10 p.a.
15 to 20 p.a.
12
Number of Partners
Target 5 to 10 pa
2
1
7
2
-2
8
9
10
7
Number of Partners
13
New Business per Partner
Target 5 to 10 pa
k
23
3
31
18
7
-26
- 4
8
16
APE (Regular contributions plus 10 of single
contributions)
14
New Business
Target 15 to 20 pa
m
25
11
42
19
-22
- 4
17
17
25
APE (Regular contributions plus 10 of single
contributions)
15
St. Jamess Place GroupNew Business by Quarter
m
39
29
29
2
24
1
39
19
46.7
52.2
65.0
40.6
46.3
44.2
59.6
43.7
2004
2005
APE (Regular contributions plus 10 of single
contributions)
16
St. Jamess Place Group
Year to 31 December 2005

• Long term savings
• New business annual premium equivalent
• Wealth Management Services
• Gross fees generated 28.3 m 33
• Funds under management at 12.3 billion
• Up 29 since the start of the year

17
Managing the New Business Model

• 1. Increasing no. of Partners by 5-10 p.a.
• Recruitment
• Dedicated recruitment team
• Sales Manager focused on recruiting in each
  office
• Manager bonuses targeted on recruiting
• Star grading of recruits
• Retention
• Passive income lock-in
• Buy-out of practice on retirement
• 2. Increasing new business per Partner by 5-10
  p.a.
• Productivity increases with practice development
• Partners recognition and qualification for
• granting and validation of share options
• overseas Partners meeting, Partner titles
• productivity bonus
• all based on new business commission produced
• Levels for recognition and qualifications
  increased annually

18
Managing the Partnership

• Managing the Heads of Location
• Bonuses and recognition based on KPIs
• Recruitment, retention and productivity per
  Partner
• Quality of production/persistency of business
• of Partners who are profitable
• Compliance rating
• Culture
• 1,148 Partners are our clients
• No Hiding Place all Directors telephone
  numbers
• 24 hour phone back
• Consultation groups products/services
• Strong Compliance culture

19
Contracting out Investment Management
Investment Committee
Stamford Associates (Consultants)
Select, monitor and change investment houses
11 investment management houses (select
individual managers)
20
Advantages of Contracting Out Investment
Management

• No in-house investment managers no conflict of
  interest
• Selection of managers (best of breed)
  wholesale purchasing power.
• Spread - 5 core balanced funds with different
  styles
• Use only genuinely active managers
• Monitoring - continuous analysis plus quarterly
  presentations
• Changing managers
• ease of change
• improved persistency

21
SJP Approach compared with IFA
Independent Financial Adviser
22
External Investment Managers

• Core managers balanced funds (onshore,
  offshore, pension)
• Invesco Perpetual
• GAM
• Schroder Investment Management
• Taube Hodson Stonex Partners
• Select (different manager for each asset class)
  
• Specialist managers
• Aberdeen (Far East, Ethical)
• Bank of Ireland (European)
• Insight (Tracker)
• Wellington (Fixed Interest)
• Reed Connor Birdwell (North American)
• Insight (commercial property)

23
Investment Performance to 31/12/2005 SJP Pension
Managed Funds
Period in years
Growth SJP
Growth sector average
Ranking in sector/no. of funds

Investment spread equally between SJP
Pension Managed Funds. ABI UK Pension Funds
Balance Managed Sector.
24
Key Awards

• CAPS survey of Pooled Pension Funds 31 December
  2005 The GAM and THSP Managed Funds are the
  top performing funds in the survey over 5 and 10
  years respectively. The average of our Managed
  Funds produces top or second quartile ranking
  over 3 months, 1, 3, 5 10 year periods.
• Lipper Fund Awards 2005 The International and
  UK General Progressive Unit Trusts were awarded
  1st place over 10 years in their respective
  sectors. The Recovery Unit Trust was awarded 1st
  place over 5 years in the Global Mixed Asset
  sector.
• Standard Poors Micropal Awards 2005 The
  THSP Managed Pension Fund achieved 1st place over
  10 years in the Balanced Managed Sector.

25
Funds under Management
29
20
34
Funds bn
10
-6
24
47
31
26
Wealth Management Group
2006
Banking Services SJP Bank
Mortgage Panel
Employee Benefits
Trust Estate Planning
StakeholderPanel
St. Jamess Place Partnership
SJP International
SJP Unit Trusts
Protection Panel
Portfolio Management
General Insurance
Annuity Panel
SJP UK
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Products and Selected Providers

• - St. Jamess Place Group
• - Panel of leading providers
• - Panel of leading providers
• - BOS annuity service
• - Panel of leading providers
• - St. Jamess Place Bank
• (Halifax Intelligent Finance)
• - Corporate Banking
• (Bank of Scotland)
• - Canada Life / BUPA
• - Laing Cruickshank, Quilters
• - Simmonds Simmonds Halliwell Landau
  Turcan Connell
• - Stackhouse Poland
• - Panel of leading providers

• Protection, pensions and investment (onshore and
  offshore) includingunit trusts and ISAs
• Protection Panel
• Mortgage Panel
• Annuity Service
• Stakeholder Pensions
• Banking Services
• Employee benefits (Group life, critical illness,
  permanent health)
• Portfolio management
• Trust Estate planning
• General Insurance
• Private Medical Insurance

28
Wealth Management Services Year ended 31
December 2005
Total Fees Received 28.3 million (2004
21.2 million) up 33
29
Benefits from Additional Services
Positions Partners as providers of
comprehensive wealth management services

• Helps existing Partners
• acquire new clients
• get more business from existing clients
• Helps recruit additional Partners

More high-margin core business
30
The Future
31
Future Impact of Regulatory Changes

• 2001 2003 behind us
• recovery in sentiment
• product broadening (property funds)
• Return to growth
• 2004 19 APE growth
• 2005 25 APE growth
• Favourable impact on SJP of regulatory changes
• depolarisation
• pension changes

32
1. Depolarisation

• Under polarisation rules (since 1988), advisers
  have to be either wholly independent or tied to
  the products of a single group.
• St. Jamess Place Partners are tied to SJP for
  regulated products.
• To provide a complete range of regulated products
  for Partners, SJP has had to manufacture all
  products (including rate-sensitive and
  capital-intensive products).
• Polarisation has been abolished.
• Two major benefits for SJP Group
• Will be able to buy-in other companies
  products to sell through our distribution.
• Significantly improves opportunity to recruit new
  Partners from IFA market.

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Benefits from Depolarisation

• Freedom to buy in products
• SJP can exit from manufacture of lower margin and
  high-capital products.
• Ability to offer best of breed products
  improves image of Partners.

• 2. Many IFAs expected to change status to some
  form of multi-tie
• SJP has nothing to lose from this as do not
  accept business from IFAs.
• Experienced ex-IFAs like to join SJP
  Partnership because
• depolarisation regime removes perceived benefit
  of independence
• will now offer best of breed protection
  products, in addition to existing Open
  Architecture investment products
• recognised as highest quality team of advisers
• Favourable reaction to recent introduction of
  Protection Panel for non-regulated term
  assurance.

34
What SJPC provide for Partners

• Regulatory cover and PI, training and compliance
• Selection of providers and products
• Selection, monitoring and changing investment
  managers
• Guarantee advice of Partners to clients
• Practice Buy-out on retirement
• Renewal commissions and trail fees vest only on
  retirement
• Part of team, including cross-selling areas of
  expertise
• Well-managed, strong principal. Adviser free to
  concentrate on what he does best

35
2. Pension Changes

• New pensions regime announced from April 2006
• Impacts all existing pensions as well as new
  pensions.
• Overall fund per member capped at 1.5m indexed.
• Annual contribution limit raised to 215,000.
• From age 55 can take 25 in cash tax-free,
  without having to retire or cease contributions.
• No compulsion to convert remaining 75 into an
  annuity at any particular age.

36
Pension Changes Opportunities Created

• Impact on higher income market
• In run up to new rules biting, urgent need for
  advice to take advantage of transitional
  provisions and to avoid traps.
• Self-employed and owners of small businesses can
  transfer 215,000 p.a into personal pensions in
  years leading up to retirement (c.f.
  401k)including property.
• need for advice on transferring assets from
  business to this tax shelter.
• Executives in corporate Defined Benefit schemes
  can transfer fund into personal pensions with
  freedom over the investment of their funds
• well suited to SJPs investment approach.
• The 1,500,000 cap will increase need for
  retirement planning for senior executives.
• SJP well advanced in planning to take advantage
  of new rules.

37
Summary

• Competitive advantage
• Own strong dedicated distribution.
• No exposure to industry issues.
• Successful investment approach.
• Outlook
• Back to longer term target of 15 to 20 growth
  in new business.
• Good recovery in new business since September
  2003
• Future benefits from depolarisation and pension
  changes.

38
Why invest in SJPC?

• Niche market
• Distributor and manufacturer
• Own dedicated distribution
• Not exposed to industry issues
• Pension A day plays to our market
• Demographic, social and economic backdrop
• Focus on areas where management adds value

39
Financials
40
St. Jamess Place CapitalProfit Presentation

• 1. International Financial Reporting Standards
  (IFRS) for primary statement
• 2. European Embedded Value as Supplementary
  Information in accordance with industry guidance
• 3. European Embedded Value a more meaningful
  measure of progress

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St. Jamess Place CapitalPre-Tax EEV Profit

• m 2005 2004
• Life 92.3 57.3
• Unit trust 30.6 30.9
• Combined life and unit trusts 122.9 88.2
• Other operations (4.1) (6.8)
• IT systems development (4.3) (5.6)
• Operating profit 114.5 75.8 51
• Investment variance 86.1 26.5
• Economic changes 3.3 0.6
• Pre-tax achieved profit 203.9
  102.9

42
St. Jamess Place Capital
Analysis of Life Unit Trust Pre-Tax Operating
Profit
m
2005
2004
43
St. Jamess Place Capital

• Net Asset Value 31/12/2005

185.2 pence
44
St. Jamess Place Capital
Group Expenses
2005
2004
m
5
45
28 February 2006