Glossary

A

ABI

Association of British Insurers – A trade association for the UK's insurance industry.

ABS

Asset Backed Securities – A collateralised security whose value and income payments are derived from a specified pool of underlying assets.

ACSM

Alternative Coupon Satisfaction Mechanism – The mechanism under the Tier 1 Notes, under which, if Pearl Group Holdings (No. 1) Limited opts to defer a coupon payment, the deferred coupon payment may only be satisfied through the proceeds of the issue of certain forms of securities, which may be made at any time.

AGM

Annual General Meeting - A meeting which companies with shareholders are required by law to hold.

ALM

Asset Liability Management – Management of mismatches between assets and liabilities within risk appetite.

Annuity policy

A policy that pays out regular benefit amounts, either immediately and for the remainder of a policyholder's lifetime (immediate annuity), or deferred to commence at some future date (deferred annuity).

Asset Management

The management of assets using a structured approach to guide the act of acquiring and disposing of assets, with the objective of meeting defined investment goals and maximising value for investors, including policyholders.

AST

Actuarial Systems Transformation - A project set up to rationalise and streamline the Group's actuarial systems, models and processes into a single actuarial modelling platform that is state of the art, scalable and able to meet our future demands.

AUM

Assets Under Management – The total value of assets that the Group manages and administers for itself and its customers, including assets managed for third parties outside the context of insurance.

B

Black-Scholes

A mathematical model used to calculate the value of an option.

BSP

Bonus Share Plan – The Group’s incentive programme under which a bonus is paid to employees in accordance with rules concerning eligibility, performance targets, time period, and size and form of payments.

C

CA06

UK Companies Act 2006.

CEIOPS

The Committee of European Insurance and Occupational Pensions Supervisors – the Committee is composed of high level representatives from the insurance and occupational pensions supervisory authorities of European Union member states and is currently consulting with the industry on the technical requirements of Solvency II.

CFO Forum

A high-level discussion group formed of the Chief Financial Officers of major European listed and non-listed insurance companies.Its aim is to influence the development of financial reporting and related regulatory developments for insurance companies on behalf of its members.

Closed Life Fund

A fund that no longer accepts new business.  The fund continues to be managed for the existing policyholders.

COC

Frictional Cost of Capital - The difference between the market value of shareholder-owned assets backing required capital and the present value of future releases of those assets allowing for future investment returns on that capital, investment expenses and taxes.

Combined Code / UK Code on Corporate Governance

Standards of good corporate governance practice in the UK relating to issues such as board composition and development, remuneration, accountability, audit and relations with shareholders. The current version of the UK Code is May 2010.

Corporate Governance

The framework of customs, policies, procedures, laws and institutions influencing the way a corporation or company is managed.

CNHR

Cost of residual non-hedgeable risk - The expected cost of non-hedgeable risks that can have an asymmetric impact on shareholder value to the extent these risks have not already been reflected in the present value of future profits or time value of financial options and guarantees within the MCEV.

D

DPF

Discretionary Participation Feature – A contractual right under an insurance contract to receive, as a supplement to guaranteed benefits, additional benefits whose amount or timing is at the discretion of the issuer.

E

EEA

European Economic Area - Established on 1 January 1994 and is an agreement between Norway, Iceland, Liechtenstein and the European Union. It allows these countries to participate in the EU’s single market without joining the EU. EU European Union.

Euronext

A pan-European Stock Exchange based in Amsterdam, Holland.

EV

The value to equity shareholders of the net assets and expected future profits of a life company.

F

FCA

Financial Conduct Authority

Financial Reporting Council

The UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment.

FSA

Financial Services Authority - From 1 April 2013 the responsibilities of the Financial Services Authority have been split into two bodies, the Financial Conduct Authority and the Prudential Regulation Authority.

G

GAO/GAR

Guaranteed Annuity Option/Rate - An option or rate available to certain pension policyholders to acquire an annuity at a contractually guaranteed conversion rate.

GCO

Guaranteed Cash Option – An option to convert an annuity benefit into cash on guaranteed terms.

GCR

Group Capital Resources – In accordance with the UK regulatory regime for insurers firms are required at all times to maintain overall financial resources to ensure liabilities can be met as they fall due.

GCRR

Group Capital Resource Requirement – In accordance with the UK regulatory regime for insurers it is the sum of the individual capital resource requirements for the insurer and each of its regulated undertakings.

H

HMRC

Her Majesty’s Revenue and Customs.

I

ICA

Individual Capital Assessment - A firm’s assessment of the amount of capital required to ensure that assets exceed liabilities 99.5% of the time over a one-year period

IFRS

International Financial Reporting Standards - Accounting standards, Interpretations and the Framework adopted by the International Accounting Standards Board.

IGD

Insurance Groups Directive – Requires an EEA insurance Group holding company to prepare and submit to its regulatory supervisor a group capital adequacy calculation, assessing the level of insurance and financial risk and the resources available to cover the risk.

IMC

Investment Management Contract - A contract between an investor and an investment manager.

IMMFA

Institutional Money Market Funds Association – The trade association which represents the European triple-A rated money market funds industry.

Insider Warrant

Warrants held by the original founders and sponsors of the Company.

IPO

Initial Public Offering.

L

LIBOR

London Inter-Bank Offer Rate - Interest rate that banks charge each other for loans of varying short-term maturities.

LSE

London Stock Exchange.

LTICR

Long-Term Insurance Capital Component - Capital required to be held for regulatory purposes in respect of investment, expense and insurance risks.

LTIP

Long-Term Incentive Plan - A reward system designed to improve employees’ long-term performance.

M

MCEV

Market Consistent Embedded Value - A measure of the consolidated value of shareholders’ interests calculated using the Group’s MCEV methodology as described in the note 1 of the MCEV supplementary information.

MSA

Management Services Agreement – A contract that exists between Phoenix Life and management services or between management services and their outsourced services providers.

O

Open Ended Investment Companies

A type of company or a fund in the UK that is structured to invest in other companies with the ability to adjust constantly its investment criteria and fund size.

P

PGL EBT

Pearl Group Limited Employee Benefit Trust.

PIK

Payment-in-kind.

PPFM

Principles and Practices of Financial Management - An FSA requirement to produce a publicly available account of how a company’s with profits business is run to ensure customers are treated fairly.

PRA

PRA - Prudential Regulation Authority

Premium Listing

From 6 April 2010 a Premium Listing replaces the pre-existing Primary Listing on the London Stock Exchange. Under a Premium Listing companies are required to comply with “premium” or “super-equivalent” standards.

Public Warrant

Warrants of the Company currently listed on Euronext.

PVFP

Present Value of Future Profits – The present value of profits attributable to shareholders arising from the in-force business.

R

RCR

Resilience Capital Requirement - additional amounts of capital required to be held for regulatory purposes as a result of two stress tests.

RPIX

Retail Price Index excluding mortgage interest payments – Official measure of the general level of inflation as reflected in the retail price of goods and services.

S

Solvency II

A fundamental review of the capital adequacy regime for the European insurance industry. Solvency II aims to establish a set of EU-wide capital requirements and risk management standards that will replace the current Solvency I requirements.

SPAC

A Special Purpose Acquisition Company is a company set up with the express purpose of acquiring other businesses.

T

TCF

Treating Customers Fairly - A central FSA principal that aims to ensure an efficient and effective market and thereby help policyholders achieve a fair deal.

TSR

Total Shareholder Return – The total return of a stock to an investor (capital gain plus dividends).

TVFOG

Time value of financial options and guarantees embedded within insurance contracts.

U

UEL

Useful Economic Life - The period over which fixed assets are depreciated.

UKCPT

UK Commercial Property Trust Limited - A property subsidiary of the Group which is domiciled in Guernsey and listed on the London Stock Exchange.

UKLA

UK Listing Authority - The FSA acting as the competent authority for listing, is referred to as the UKLA, and maintains the official list.

UK GAAP

Generally Accepted Accounting Principles adopted within the UK.

V

VIF

The Value of in-force business - The Present Value of Future Profits (PVFP) plus the Time Value of Financial Options and Guarantees (TVFOG) less the Frictional Costs of Required Capital (COC).

W

WPICC

With profit insurance capital component. The WPICC is the amount by which the regulatory surplus exceeds the realistic surplus.

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