Release date: 20 July 2005

We are pleased to provide an update on the position with the NPI Property fund.

With effect from 15 July 2005 we have compensated current customers, because of our failure to inform customers of the change in investment policy, by increasing the value of the units they hold in the Property Fund.

The unit prices have been increased to reflect the same rate of growth (excluding the effect of the move in pricing basis) achieved by the top performing NPI Funds between 1 January 2004 and the date customers were notified of the change to the Property Fund. For pensions business the top-performing fund was the UK Equity Fund and for life business it was the European Fund.

We have chosen 1 January 2004 as the date from which compensation is to be paid because that is the date that we accept we should have given our customers the information to allow them to make an informed choice.

Affected customers will receive a letter confirming the detail of the steps we have taken, and the actions they now need to take.

An example of how compensation has been applied is detailed below. This example is for illustrative purposes and the actual increase due to compensation is dependent on the type of policy customers have. Compensation could be higher or lower than the amount shown here:

On the day before compensation was applied a policyholder had an investment of 1500 units in the pension Property Fund. Assuming the bid price was £5.00, the total value would have been £7,500.

On the day after compensation was applied the assumed bid price would have increased to £5.48 - giving a total value of £8,220.

The value of the compensation at the assumed bid price in this example totals £720.00.

Normal policy surrender and transfer charges apply.

Please note we are unable to provide individual calculations of compensation.

A separate exercise will be undertaken in respect of those customers who have already left the Property Fund.