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PART III PRO FORMA FINANCIAL INFORMATION The following is an unaudited pro forma statement of consolidated net assets of the Group, prepared in accordance with the notes set out below. The unaudited pro forma statement of consolidated net assets has been prepared for illustrative purposes only and, because of its nature, addresses a hypothetical situation and, therefore, does not represent the actual financial position or results of the Group following the Disposal. Its purpose is to illustrate the effect on the consolidated net assets of the Group as if the Disposal had been effected on 30 June 2006. The consolidated net assets of the Group at 30 June 2006 have been extracted, without material adjustment, from the unaudited consolidated interim results of the Group for the six months ended 30 June 2006. The consolidated net assets of the US Operation at 30 June 2006 have been extracted, without material adjustment, from the unaudited consolidation schedules used to prepare the unaudited consolidated results of the Group for the six months ended 30 June 2006. The proceeds of the Disposal receivable by the Company are described in paragraphs 5 and 6 of Part I of this document. 12
Summary Consolidated Balance Sheet Total Group as at 30 June 2006 Adjustments US Operation as at 30 June 2006 Other Adjustments Pro forma Remaining Group £m £m £m £m Assets Goodwill and other intangible assets 479 (13) – 466 Property and equipment 383 (4) – 379 Investment property 451 – – 451 Investment in associated undertakings 27 – – 27 Financial assets Equity securities 1,568 (47) – 1,521 Debt and fixed income securities 10,995 (1,860) 70 (3) 9,205 Other 239 (14) – 225 Total financial assets 12,802 (1,921) 70 10,951 Reinsurers’ share of insurance contract liabilities 3,617 (2,040) 485 (4) 2,062 Insurance and reinsurance debtors 2,513 (315) 404 (4) 2,602 Deferred acquisition costs 465 (7) – 458 Other debtors and other assets 980 (83) 12 (6) 909 Cash and cash equivalents 1,564 (146) (180) (5) 1,238 23,281 (4,528) 791 19,544 Non current assets held for sale – – – – Total assets 23,281 (4,528) 791 19,544 Equity, reserves and liabilities Equity and reserves Shareholders’ funds 2,920 (322) (130) (8) 2,468 Minority interests 379 – – 379 Total equity and reserves 3,299 (322) (130) 2,847 Liabilities Loan capital 1,127 – – 1,127 Insurance contract liabilities 16,259 (3,286) 485 (4) 13,457 Insurance and reinsurance liabilities 439 (256) – 183 Borrowings 6 – – 6 Provisions and other liabilities 2,151 (664) 436 (4)(6) 1,923 Total liabilities 19,982 (4,206) 921 16,696 Total equity, reserves and liabilities 23,281 (4,528) 791 19,544 Footnotes: (1) The consolidated net assets of the Group have been extracted from the unaudited interim results of the Group for the period ended 30 June 2006. (2) The consolidated net assets of the US Operation at 30 June 2006 have been extracted from consolidation schedules used to prepare the interim financial information for the Group for the period ended 30 June 2006. (3) The pro forma financial information has been adjusted to take into account the consideration in the form of US$300 million subordinated notes which form the proceeds of the Disposal receivable by the Remaining Group. As a financial instrument the subordinated notes are required to be fair valued; a fair value of £70 million has been placed upon the financial instrument. (4) The pro forma financial information has been adjusted to take into account the impact of the ADC contract which currently eliminates on group consolidation but which will form part of the assets and liabilities of the Remaining Group. (5) The pro forma financial information has been adjusted to take into account: (a) the capital contribution of £151 million (US$287.5 million) in cash; and (b) transaction and other costs of £29 million (including the legal fees of Arrowpoint Capital). (6) The pro forma financial information has been adjusted to take into account: (a) reinstatement of an intercompany balance of £12 million between the Remaining Group and the US Operation which is currently eliminated; and (b) a taxation liability arising for the Remaining Group of £20 million relating to foreign exchange movements previously taken into reserves and certain centrally held provisions for reinsurance recoverables. (7) No adjustment has been made to take account of trading or changes in the financial position of the Group since 30 June 2006. (8) The adjustment to Shareholders’ funds reflects the estimated loss on Disposal including a £20 million taxation liability partially offset by foreign exchange previously taken to reserves. 13
Page 1 and 2: THIS DOCUMENT IS IMPORTANT AND REQU
Page 3 and 4: CONTENTS Page Definitions..........
Page 5 and 6: ‘‘IFRS’’ ‘‘Listing Rule
Page 7 and 8: 3. INFORMATION ON THE US OPERATION
Page 9 and 10: shareholder and regulatory approval
Page 11: PART II FINANCIAL INFORMATION ON TH
Page 15 and 16: (a) (b) (c) (d) (e) (f) the right o
Page 17 and 18: educe over time as liabilities for
Page 19 and 20: 3. US Directors’ service contract
Page 21 and 22: 6. Material Contracts With the exce
Page 23 and 24: s uncertainty over the timing of a
Page 25 and 26: 7.8 Reinsurance The Group is expose
Page 27 and 28: The original loan portfolio had a f
Page 29 and 30: ROYAL & SUN ALLIANCE INSURANCE GROU
Page 32: The paper used for this circular is

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