Release date: 10 August 2005

We are pleased to announce that the proportion of Pearl with-profits policyholder fund invested in equities and property has been increased from a target of 25% to 45%.

The change in investment strategy follows a detailed analysis of the assets and liabilities of the Pearl with-profits fund carried out by our new owners in conjunction with the Pearl management and the Pearl actuarial team. The change, which was effected on 1 July, has been notified to the Financial Services Authority.

Historically, assets such as equities and property have tended to generate higher returns than fixed income investments (bonds) over the long-term, in return for the higher level of investment risk.

The change in investment strategy is intended to improve long-term investment performance and, therefore, is unlikely to affect bonus policy in the short term.

Guarantees to policyholders are unaffected by the changes.

Hugh Osmond, Director of Pearl Group Limited and Chairman of Sun Capital Partners, said: "This is good news for with profits policyholders as it breathes new life into the investment performance of their fund. We believe this is an unprecedented move for a closed fund."