Supplementary Disclosures FRS 27 "Life Assurance"

for the year ended 31 December 2004

In December 2004, the UK Accounting Standards Board (ASB) released Financial Reporting Standard 27 "Life Assurance" (FRS 27) with implementation for years ending on or after 23 December 2005. In keeping with industry practice, and in recognition of the Memorandum of Understanding signed by UK listed insurance companies, the Association of British Insurers and the ASB, key components of FRS 27 disclosures are provided as supplementary information for the year ended 31 December 2004. This information is not subject to audit and does not form part of the financial statements. The disclosures will be incorporated into the financial statements prepared under International Financial Reporting Standards for the year ending 31 December 2005 and subsequent years.

CAPITAL POSITION STATEMENT
The capital position of the Group's significant life businesses, based on latest estimates, can be summarised as follows:

Technical provisions for linked liabilities exclude £414 million (R4,491 million) in respect of other life businesses not included in the above analysis.

South Africa
The amounts disclosed above represent the capital position of Old Mutual Life Assurance Company (South Africa) Limited (OMLAC(SA)). The calculations have been determined in accordance with the requirements of the South African Financial Services Board, with estimates of the regulatory adjustments, as regulatory returns have yet to be completed. At 31 December 2004, OMLAC(SA)'s statutory capital cover was 2.6 times the statutory capital adequacy requirement (SCAR), after allowing for statutory limitations on the value of certain assets.

The equity shareholders' funds include OMLAC(SA)'s investments in Nedcor Limited (£928 million (R10,066 million)) and Mutual & Federal Insurance Company Limited (£486 million (R5,274 million)). In addition, £261 million (R2,831 million) is invested in the Group's loan notes and £198 million (R2,153 million) is held in intercompany loans. There are no formal intra-Group arrangements that exist to provide capital to other subsidiaries. All intercompany loans are immediately repayable and subject to commercial terms and conditions, with the exception that interest may be waived in certain circumstances.

The amount of the surplus available to be distributed as dividends to the ultimate parent, Old Mutual plc, is subject to available distributable reserves within the shareholders' fund, maintaining the minimum statutory capital adequacy requirement and foreign exchange controls, as determined by the South African Reserve Bank.

United States
The amounts disclosed above represent the consolidated capital position of the US Life group of companies, including Fidelity & Guaranty Life Assurance Company, Fidelity & Guaranty Life Insurance Company of New York, Life Insurance Company of New York, OMNIA (Bermuda) Limited and Old Mutual Reassurance (Ireland) Limited. The calculations have been determined on the basis of local regulatory requirements for the United States, Bermuda and Ireland accordingly.

There are no formal intra-Group arrangements that exist to provide capital to other subsidiaries.

The amount of the surplus available to be distributed as dividends to the ultimate parent, Old Mutual plc, is subject to available distributable reserves within the entities and the requirement to maintain the minimum statutory capital requirements, being 100% of the risk-based capital (referred to as the Company Action Level).

Rest of World
The amounts disclosed above represent the capital position of the life business in Namibia and Old Mutual International, based in Guernsey. The statutory solvency requirement for Namibia is N$4 million (£0.4 million (R4 million)). The calculations have been determined on the South African statutory basis, which is more prudent. Old Mutual International has been included on the basis of the Guernsey regulatory requirements.

There are no formal intra-Group arrangements that exist to provide capital to other subsidiaries.

The amount of the surplus available to be distributed as dividends to the ultimate parent, Old Mutual plc, is subject to available distributable reserves within the shareholders' fund, maintaining the minimum statutory capital adequacy requirement and foreign exchange controls.

Capital management policies
Capital is actively managed to ensure that the Group is properly capitalised and funded at all times, having regard to its regulatory needs, prudent management and the needs of all stakeholders.

The Group has a business planning process that runs on an annual cycle with regular updates to projections. It is through this process, which includes risk and sensitivity analyses of forecasts, and the operations of the Group Capital Management Committee (GCMC) that the operating businesses gain approval from the Old Mutual plc Board for their requests for capital.

The GCMC is a sub-committee of the Executive Committee of the Board, established to set an appropriate framework and guidelines to ensure the appropriate management of capital, allocation of capital to the various businesses, and monitoring of the return on allocated capital for each business relative to the agreed hurdle. The GCMC comprises the Executive Directors of Old Mutual plc together with certain executives drawn from Old Mutual plc and/or one or more subsidiaries. Meetings are held as regularly as circumstances require and in any event not less than half-yearly and approve requests for capital that are outside the business plans.

Specifically, the Group has adopted the following capital management policies:

Each regulated business is required to hold, as a minimum, capital sufficient to meet the requirements of any applicable regulator in respect of its business in the jurisdictions in which it operates and such additional capital as management believes is necessary to ensure that obligations to policyholders and/or clients can be met on a timely basis.

Each business ensures that it maintains an appropriate level of liquidity at all times. Old Mutual plc further ensures that it can meet its expected capital and financing needs at all times, having regard to the Group's business plans, forecasts and any strategic initiatives.

The Group will always ensure it maintains adequate capital resources to ensure it satisfies its regulatory requirements.

From 1 January 2005, the Group is subject to the UK Financial Services Authority's Group capital adequacy requirements established following introduction of the EU Financial Groups Directive. Management regularly monitors the capital requirements of the Group, taking account of future balance sheet growth, profitability, projected dividend payments and any anticipated regulatory changes, in order to ensure that the Group is at all times able to meet the forecast future minimum capital requirements.

Sensitivities
The Group has both qualitative and quantitative risk management procedures to monitor, at the individual company and Group levels, the key risks and sensitivities of the business. This is achieved through stress tests, scenario analyses and individual risk assessments by the operating businesses. From an understanding of the principal risks, the Group defines appropriate risk limits and controls.

The key risks affecting the surplus capital of the Group are:

Market Risk - the risk of loss due to fluctuations in the financial markets (equity investment returns, interest rates or exchange rates).

Credit Risk - the risk of a major counterparty no longer being able to pay its debt, including amounts due as a result of investment activities.

Underwriting Risks - arise from higher claims being experienced than anticipated when premium, bonus rates and surrender value levels were set.

Business Risks - arise from changes in structural, regulatory and/or competitive environments.

For further details of the management of specific risks, refer to the Corporate Governance and Directors' Report on pages 26 to 41.