Royal Skandia Collective Bond reasons why for the individual

							Royal Skandia Collective
Bond reasons why for the individual
investor

for financial advisers only

This document suggests some of the reasons that you may wish to incorporate within your
recommendation letters for your UK resident clients. You will, of course, need to relate these to your
clients’ own circumstances. You are responsible for ensuring your recommendation letters comply with
the rules and guidance issued by your regulatory body. Royal Skandia cannot accept any responsibility in
this respect.

All references to Royal Skandia, they and their in this document mean Royal Skandia Life Assurance
Limited.

Overleaf you will find a contents page showing the topics that are included in this document; it also
includes hyperlinks to each heading for ease of navigation.
Contents
Page
 3     what is the Royal Skandia Collective Bond?
       Life assurance basis
       Capital redemption basis

 3     reasons to recommend a Royal Skandia Collective Bond
       Simplicity
       Asset transfer facility (minimum amount £50,000)
       Share sale facility (UK residents only)
       Fund choice
       Investing in a Skandia Investment Solutions Collective Investment Account* via a Royal Skandia
       Collective Bond
       Future aspirations and objectives
       Using an authorised custodian
       Appointing a fund adviser
       Investment flexibility
       Risk profile
       Currency
       Access
       Investment charges
       Valuations
       Trusts

 6     tax planning reasons for recommending a Royal Skandia Collective Bond
       Gross roll-up
       Tax reporting
       Policy segmentation
       Capital gains tax
       Timing
       5% withdrawal allowance
       Chargeable events
       Taxation on chargeable event gains
       Top-slicing relief
       Cashing in the policies in your bond when you are not UK resident
       Time-apportionment relief
       Assignment

 8     taxation when holding funds on the Skandia Investment Solutions platform

 8     risk warnings
       Currency conversions
       Funds with stocks in specialist sectors
       Funds with investments in emerging markets
       Funds with holdings in a different currency
       Money market funds
       Property funds
       Past performance

 9     about Royal Skandia

 9     about Royal Skandia Trust Company

 10    regulatory stability

 10    policyholder protection

 11    what are Royal Skandia’s credentials?




                                              Page 2 of 11
what is the Royal Skandia Collective Bond?
The Royal Skandia Collective Bond is an offshore bond wrapper which allows you to hold a wide range of
investments in one place. Offshore bonds offer greater flexibility for tax planning by allowing you to choose
when to take the proceeds, which may or may not be liable to tax.

The Royal Skandia Collective Bond is automatically issued as a group of 12 policies, but to enhance the
future flexibility of the bond you can select a different number of policies when applying to set it up. (See
‘policy segmentation’ later on in this document for further information.)

The following two paragraphs are dependent on which basis the bond is going to be set up on:

LIFE ASSURANCE BASIS

As your Royal Skandia Collective Bond is a whole of life contract it will have one or more ‘lives assured’,
which means the policies will come to an end when the last person(s) whose life is covered by the policies
dies. If you, as the owner of the Royal Skandia Collective Bond, are the only life assured, then on your death
a chargeable event would occur. However, by having multiple lives assured you can delay the chargeable
event as it would occur when the last person who is a life assured dies. Royal Skandia has a flexible
approach to the number of lives assured that can be included at the start of the contract.

The Royal Skandia Collective Bond includes free life assurance cover of 101%. This means that on death of
the last life assured, the person(s) who is entitled to the policy proceeds at the time will receive 101% of the
encashment value provided the policies have not already been cashed in. For example, if the life assured is
not the same person as the policyholder, then the proceeds will be paid to the policyholder(s). However, if
the policyholder and life assured is the same person, and the Royal Skandia Collective Bond only has one
policyholder, then the proceeds will be paid to the beneficiaries of the policyholder's estate.

CAPITAL REDEMPTION BASIS

As your Royal Skandia Collective Bond is a capital redemption contract it will have a 99-year fixed term. This
means your investment will continue to the end of the term (the maturity date), unless you fully cash it in
before the maturity date. Each policy still in force at the maturity date has a guaranteed value of twice the
premium amount you have paid (less any money paid out of the Collective Bond as defined in the Policy
Terms and Conditions) or the encashment value on the maturity date, which will be paid to the policyholder
at that time.

Note to financial adviser: Remember to include ‘chargeable events’ wording in your recommendation letter.


reasons to recommend a Royal Skandia Collective Bond
 SIMPLICITY
  With the Collective Bond Royal Skandia takes care of the administration of your investment portfolio on
  your behalf, thereby relieving you of any administration worries which you may have when holding funds
  and assets directly.

 ASSET TRANSFER FACILITY (MINIMUM AMOUNT £50,000)
  You can transfer your existing funds or assets into your Royal Skandia Collective Bond in order to
  consolidate and hold them all within one wrapper. The paperwork is simple and kept to a minimum.
  Please note any asset transfer is subject to Royal Skandia’s approval.

 SHARE SALE FACILITY (UK RESIDENT APPLICANTS* ONLY)
  Through Royal Skandia you can take advantage of the share sale service offered by leading stockbroker
  Charles Stanley. This service offers you a convenient way to sell your quoted shares, fixed interest
  securities (such as gilts, corporate bonds and eurobonds), unit trusts or open-ended investment
  companies (OEICS) and reinvest the proceeds in the Royal Skandia Collective Bond. The service is
  available at a competitive rate. Additionally, if the amount you are investing into the Royal Skandia
  Collective Bond following the share sale is over £25,000, then Royal Skandia will pay the charges
  applicable to this service for you.

   * The applicant must also be the registered holder of the shares.



                                                                                                            continued


                                                            Page 3 of 11
reasons to recommend a Royal Skandia Collective Bond (continued)
 FUND CHOICE
  By investing in a Royal Skandia Collective Bond you will have almost unlimited access to authorised
  collective investments around the world, in most major asset classes and currencies. You can link your
  Royal Skandia Collective Bond to:

    o    Royal Skandia’s own range of unit-linked funds, managed by some of the world’s most prestigious
         fund management groups;
    o    more than 1,000 funds available on Skandia Investment Solutions’ platform*;
    o    any external collective investment funds, funds with UCITS status, SICAVs, FCPs, open-ended
         exchange-traded funds or unit trusts agreed with Royal Skandia**; and
    o    bank deposits.

   This not only provides greater opportunity to create a portfolio tailored to your individual risk profile and
   objectives, but also reduces the investment risk associated with this type of investment through the ability
   to diversify your portfolio of funds and assets.

   Please note that both the unit-linked funds and all the underlying funds/assets that you link your
   Collective Bond to are owned by Royal Skandia. All the rights relating to these funds and assets belong
   to Royal Skandia. However, the value of your Royal Skandia Collective Bond, which you own, and the
   amount you get back will be directly linked to the performance of the funds/assets you have chosen.

   * You can read more about this investment option in the investing in a Skandia Investment Solutions Collective Investment
   Account via a Royal Skandia Collective Bond and the Skandia Investment Solutions key features of the Collective
   Investment Account documents.
   ** You can find more details about the different types of investment in the key features of your Royal Skandia Collective Bond
   document.

 INVESTING IN A SKANDIA INVESTMENT SOLUTIONS COLLECTIVE INVESTMENT ACCOUNT* VIA
  A ROYAL SKANDIA COLLECTIVE BOND
  We discussed the administrative efficiency and added flexibility of easy switching when holding a Skandia
  Investment Solutions (SIS) Collective Investment Account inside your Royal Skandia Collective Bond.
  The online switching facility on the SIS platform (available through your financial adviser) provides you
  with a known cost when you want to change your fund choice on the platform as switching between funds
  are free of any Royal Skandia dealing charges when using this facility.

   Please note that Royal Skandia will apply to Skandia MultiFUNDS to set up a separate account, ie a SIS
   Collective Investment Account, for your chosen funds. Royal Skandia will own the SIS Collective
   Investment Account. However, the value of your Royal Skandia Collective Bond, which you own, and the
   amount you get back will be directly linked to the performance of the funds/assets you have chosen to
   hold inside the SIS Collective Investment Account.

   * Provided by Skandia MultiFUNDS.

   Note to financial adviser: When recommending the client to invest in a Skandia Investment Solutions Collective Investment
   Account via a Royal Skandia Collective Bond, please include wording about the taxation of funds held on the platform. See ‘taxation
   when holding funds on the Skandia Investment Solutions platform’ later in this document.

 FUTURE ASPIRATIONS AND OBJECTIVES
  The flexibility to switch between a wide range of funds and assets is particularly important should the
  performance of the funds or assets chosen not meet your expectations, or alternatively if your attitude to
  risk changes.

 USING AN AUTHORISED CUSTODIAN
  You already have a custodian arrangement in place and by investing in the Royal Skandia Collective
  Bond you can continue your existing arrangement within the Collective Bond subject to Royal Skandia’s
  approval. Alternatively you can choose to set up a new custodial arrangement, again subject to Royal
  Skandia’s approval.

 APPOINTING A FUND ADVISER
  You already have a fund adviser who looks after your investment portfolio and by investing in the Royal
  Skandia Collective Bond you can continue your existing arrangement subject to Royal Skandia’s
  approval. Alternatively you can choose to appoint a new fund adviser, again subject to Royal Skandia’s
  approval.
                                                                                                  continued


                                                           Page 4 of 11
reasons to recommend a Royal Skandia Collective Bond (continued)
 INVESTMENT FLEXIBILITY
  You can request to make an additional investment whenever you want, subject to Royal Skandia’s
  approval. The minimum additional premium is £2,500 (US$3,750, €3,750 or other currency equivalent).

 RISK PROFILE
  When deciding which provider to invest with it is important to consider the investment choice. The
  flexibility to change your investment strategy or fund manager in the future is important should your
  investment objectives or risk profile change.

 CURRENCY
  The Royal Skandia Collective Bond offers a choice of currencies in which to pay your premiums and
  denominate your policy currency. You can hold funds and assets in many different currencies, with the
  added benefit that all your valuations will be summarised in your chosen policy currency.

    Note to financial adviser: Remember to include appropriate risk warnings regarding exchange rate fluctuations. For examples,
   see the section on risk warnings later on in this document.

 ACCESS
  With the Royal Skandia Collective Bond you have easy access to your investment. One of the most
  attractive features of a bond is the withdrawal facility.

   You can set up regular withdrawals and ask for payments to be made on either a monthly, quarterly, half-
   yearly or yearly basis.

   Alternatively you can take one-off withdrawals or cash in your policies at any time by writing to Royal
   Skandia at their head office.

   Note to financial adviser: Please also see information on 5% withdrawal allowance on the next page.

 INVESTMENT CHARGES
  With more traditional structures, if a particular investment is underperforming, changing investment
  strategy or fund manager may result in exit penalties, a possible tax liability as well as new initial charges
  on a new investment. In most instances, by choosing a Royal Skandia Collective Bond, you avoid
  potential tax liabilities because Royal Skandia owns the funds/assets. Thanks to Royal Skandia’s buying
  power and excellent relationships with fund managers you can also benefit from the best possible terms
  on initial fund charges and exit penalties.

   The Royal Skandia Collective Bond offers flexibility in switching between fund managers and funds, even
   those of different currencies. A dealing charge of £15 may apply each time you buy or sell a fund or
   asset. However, the cost of switching funds and assets within the Royal Skandia Collective Bond when
   compared to holding funds or assets directly is, generally, significantly cheaper.

   Note to financial adviser: The Royal Skandia dealing charge does not apply for funds held on the Skandia Investment Solutions
   platform as described earlier in investing in a Skandia Investment Solutions Collective Investment Account.

 VALUATIONS
  You will receive detailed quarterly valuation reports outlining your complete portfolio of investments. The
  valuation report will show any transactions that have taken place since the last quarterly statement,
  including any cash withdrawals and charges.

 TRUSTS
  A Royal Skandia Collective Bond is an ideal investment to place into a trust.

   We have discussed how you can reduce your inheritance tax liability and the fact that Royal Skandia
   provides you with access to a number of trusts which may be suitable for you.

   In addition to the comprehensive trust offering, you should also carefully consider your choice of
   trustee(s). By investing with Royal Skandia you will be able to appoint a professional trustee, Royal
   Skandia Trust Company. Having a professional trustee will give you peace of mind that your assets will
   be dealt with in a professional and unbiased manner, taking into account your wishes.

   Note to financial adviser: Further reasons why paragraphs for specific trusts are available on the Skandia literature library by
   logging on to the UK adviser extranet via http://www2.skandia.co.uk/Adviser/.



                                                            Page 5 of 11
tax planning reasons for recommending a Royal Skandia Collective
Bond
 GROSS ROLL-UP
  The Collective Bond is provided by Royal Skandia based on the Isle of Man. The beneficial tax
  environment of the Isle of Man means that any growth in the funds or assets that you have chosen to link
  your Royal Skandia Collective Bond to will roll-up free of any income or capital gains tax. As a result, you
  will have the potential to benefit from enhanced capital growth over the medium to long term through
  gross roll-up. An exception to this is the element of withholding tax on dividends which may have been
  applied at source that Royal Skandia cannot recover on your behalf.

   Any gains, dividends, rent or interest are taxed at 0% within the fund.

   Note to financial adviser: When recommending that the client should invest in a Skandia Investment Solutions Collective
   Investment Account via a Royal Skandia Collective Bond, please include wording about the taxation of funds held on the platform.
   See ‘taxation when holding funds on the Skandia Investment Solutions platform’ later in this document.


 TAX REPORTING
  The Collective Bond is classed as a ‘non-income’ producing investment, which means there are no
  regular tax returns for individuals to complete regarding the underlying investments.

   You can switch funds within the Royal Skandia Collective Bond without being subject to a capital gains
   tax or income tax liability and you will not have any tax reporting requirements.

   Any chargeable event gain* made will be reported by Royal Skandia to you and to HM Revenue &
   Customs where the gain exceeds 50% of the basic rate threshold. The policyholder will be responsible for
   submitting tax returns in relation to any chargeable event gains.


   * Please see details for ‘chargeable events’ below.

 POLICY SEGMENTATION
  The Royal Skandia Collective Bond consists of multiple policies within the bond to maximise the UK tax
  efficiency of your investment when you want to access your money.

   It may also be beneficial should you wish to assign individual policies in the future, or on distribution to
   your beneficiaries should you place your Royal Skandia Collective Bond into trust. The benefit of having
   12 policies is that it can be divided by 2, 3 and 4 on assignment of individual policies.

 CAPITAL GAINS TAX
  An offshore bond is not subject to capital gains tax, unless the policy has previously been assigned for
  money or money’s worth.

   Switches in and out of funds and assets within an offshore bond are not subject to the capital gains tax
   30-day rule*, so will not trigger a taxable event. This is because Royal Skandia own the underlying assets
   and are non-UK resident for UK capital gains tax purposes. However, all switches should comply with
   individual fund manager’s market timing and short-term trading policies or rules, which may prevent
   frequent or short-term switching.

   * This rule prevents a shareholder from making a gain or loss on shares they have sold and bought back almost immediately. This
   applies where you sell shares and then buy back shares of the same class in the same company within 30 days of the sale.

 TIMING
  Offshore bonds offer greater flexibility for tax planning. You can choose when the proceeds are taken and
  therefore when to incur a tax assessment, for example by waiting until you are in a lower tax bracket.

 5% WITHDRAWAL ALLOWANCE
  You are able to withdraw up to (and including) 5% each policy year of the amount you have invested
  without incurring an immediate UK tax liability for 20 years. If you do not use your 5% allowance in any
  policy year, you can carry forward any unused allowance to the following year. For example, if you don’t
  use your 5% allowance for six years, this means you could withdraw 30% without an immediate liability to
  UK tax.

                                                                                                                         continued


                                                          Page 6 of 11
tax planning reasons for recommending a Royal Skandia Collective
Bond (continued)
 CHARGEABLE EVENTS
  During the period your Royal Skandia Collective Bond is in force, there is no personal taxation to pay.
  However, there are certain ‘chargeable events’ that may trigger a ‘taxable gain’. A chargeable event
  happens when:

               you take withdrawals from your bond by partially cashing in the policies above your
                allowance of 5% of the premium;
               you fully cash in one or more policies in your bond;
               you fully cash in all the policies in your bond;
               the last life assured dies (life assurance basis only);
               the bond reaches its maturity date (capital redemption basis only);
               you assign one or more policies in your bond for consideration or ‘money or money’s worth’.
    When a chargeable event happens you will normally be subject to income tax on the gain at the rate
    applicable to you at that time. However, there may be several ways of reducing this liability:

               top-slicing relief;
               cashing in the policies in your bond when you are not UK resident;
               time-apportionment relief.

 TAXATION ON CHARGEABLE EVENT GAINS
  The Royal Skandia Collective Bond is taxed under the chargeable event legislation, which means any
  gain on a chargeable event is assessed to income tax, rather than capital gains tax.

   You are able to use your personal allowance and the 20%, 40% and 50% tax bands when calculating
   overall tax liability.

   Note to financial adviser: We suggest you link in to the paragraphs explaining chargeable events overleaf.

 TOP-SLICING RELIEF
  Top slicing relief is available to take into account the number of years for which the policies have been in
  force when assessing the tax on any chargeable gain where you are a basic rate taxpayer or higher rate
  taxpayer before the chargeable gain is added to your other income for that tax year, and adding the
  chargeable gain brings you into a higher tax bracket.

 CASHING IN THE POLICIES IN YOUR BOND WHEN YOU ARE NOT UK RESIDENT
  If you cash in the policies in your bond when you are not a UK resident for income tax purposes, there
  will be no liability to UK income tax. Investors in bonds subject to income tax may be non-resident for a
  settled purpose* for as little as one tax-year to remove the need to pay tax on offshore bonds.

   Whilst there will be no liability to UK income tax, you may be liable to tax in the country where you are
   resident.

   * this will depend on the individual’s circumstances and requires specialist advice.

 TIME-APPORTIONMENT RELIEF
  If you are UK resident at the time of the chargeable event, but have been UK resident for only part of the
  period the policies in your bond are in force, the gross amount of any gains will be reduced to a net
  amount, ie the chargeable gain. This will reflect the number of days you have been resident outside the
  UK.

   The chargeable gain is calculated as follows, looking at the period from the Royal Skandia Collective
   Bond’s commencement date to the date the gain arises under the policy or policies concerned within the
   bond.

                              Number of days you have been resident in the UK
   Gross gain          x      Number of days the policies have been in force                      = Chargeable gain

   (Time-apportionment relief does not apply if the policy or policies within your bond are or have been
   subject to a trust.)

                                                                                                                  continued
                                                             Page 7 of 11
tax planning reasons for recommending a Royal Skandia Collective
Bond (continued)
 ASSIGNMENT
  It is possible to assign one or more policies in your bond. This can be to another individual, trustees or
  company. Provided this is not for consideration or ‘money or money’s worth’ a chargeable event will not
  occur, so there is no tax liability. The new legal owner of the policy/policies will be the person you
  assigned the policies to. If they cashed in the policies they would be liable to tax at their highest marginal
  rate on any chargeable gain.

   Although there is no liability to income tax you should consider any inheritance tax implications.


taxation when holding funds on the Skandia Investment Solutions
platform
If you have recommended your client to invest in a Skandia Investment Solutions Collective Investment
Account via a Royal Skandia Collective Bond, the following should be included in your recommendation
letter:

As I have explained to you prior to my recommendation, there is a key difference in terms of taxation of the
funds when holding funds via the Skandia Investment Solutions platform through the Royal Skandia
Collective Bond. The key difference is the taxation of the underlying funds that you can select on the
platform. Through the Skandia Investment Solutions Collective Investment Account you can access UK
domiciled and some non-UK domiciled funds to help meet your investment objectives. However, it’s
important to note that Royal Skandia is not able to (where applicable) reclaim any tax paid from funds held
on the Skandia Investment Solutions platform. Therefore, in such instances, the returns could be less if you
hold these funds on the platform instead of investing in external funds directly through a Royal Skandia
Collective Bond.

risk warnings
Risk warnings are an essential part of any financial promotion. The risk warnings below should be seen as
example text that can be adapted to meet particular circumstances.

 CURRENCY CONVERSIONS
  If you choose a policy currency* other than that in which you make your investment, ie the premium you
  pay to Royal Skandia, then we will credit the premium to a transaction account in the currency in which
  you have paid your premium. You should be aware that Royal Skandia will notionally convert the
  premium amount into your chosen policy currency. This means Royal Skandia will not physically convert
  the premium amount; just apply the converted amount to your Collective Bond. This currency conversion
  could expose you to exchange rate fluctuations. Any conversion made will be based on the closing
  ‘market mid-rate’** provided to Royal Skandia by a third-party currency rate provider on the working day
  before Royal Skandia applies your premium amount to your Collective Bond. The converted premium
  amount will be the amount which is shown in your policy schedules.

   If additional currency conversions are required as a result of transactions within your Collective Bond (for
   example, when you buy assets in a currency other than your chosen policy currency or when we deduct
   Collective Bond charges shown as a fixed amount in pound sterling***), you should be aware that delays
   may occur. Please refer to the Policy Terms and Conditions for further details on this and for any charges
   which may apply.

   * This is the currency that your valuations will be summarised in. It is also the currency in which the deduction of most Royal
   Skandia Collective Bond charges will be made.
   ** All currencies have a market rate. Any provider dealing with currencies will independently set different ‘buy’ and ‘sell’ rates, these
   include overheads and profit margins. The market mid-rate is derived from the mid-point between the ‘buy’ and ‘sell’ rates used in
   the global markets.
   *** Any charges shown as a fixed amount in pound sterling in your charges schedule (issued together with your policy schedule(s)
   and Policy Terms and Conditions) will, if your policy currency is not the pound sterling, be converted and deducted in your selected
   policy currency as stated above.

 FUNDS WITH STOCKS IN SPECIALIST SECTORS
  Investments held by some specialist funds, including emerging markets, technology and smaller
  companies funds, tend to be volatile and the fund prices could move sharply up or down at times. They
  can also be difficult to sell at times, which can make it difficult to sell or switch from these funds.
                                                                                                          continued
                                                             Page 8 of 11
risk warnings (continued)
 FUNDS WITH INVESTMENTS IN EMERGING MARKETS
  Investments held in emerging markets are usually considered to carry a greater degree of risk relating to
  dealing, settlement and custody practices than investment in established markets.

 FUNDS WITH HOLDINGS IN A DIFFERENT CURRENCY
  The fund holds investments in a different currency to the fund, so fund prices will rise and fall purely
  because of exchange rate fluctuations.

 MONEY MARKET FUNDS
  The fund invests in money-market assets, including deposits with banks and other financial institutions.
  The yield on the fund will fluctuate as interest rates change. There is a possibility of default, reducing
  capital values.

 PROPERTY FUNDS
  The value of property is generally a matter of a valuer’s opinion rather than fact. In addition, property
  investments may not be readily saleable, which could lead to constraints on your ability to sell or switch
  from the fund.

 PAST PERFORMANCE
  Past performance is not a guide to the future.

about Royal Skandia
Royal Skandia is part of Skandia International which is the international group of companies which provides
the offshore and cross-border investment solutions for the Old Mutual Group.

As a leading provider of offshore savings products, Skandia International offers a comprehensive range of
innovative and market-leading investment solutions to investors around the globe. When investing with
Skandia International, you are choosing a large, reputable company that is passionate about innovation,
choice and enabling their clients to take control of their finances. Above all, it is dedicated to help their
clients achieve their wealth management goals whatever they may be.

Royal Skandia has operated from the Isle of Man since 1984. It is owned by Old Mutual plc, established in
South Africa in 1845 and with headquarters in London. As a FTSE® 100 company, Old Mutual is one of the
100 largest companies listed on the London Stock Exchange. It manages more than £309 billion* of clients'
funds worldwide.
* As at 31 December 2010. Source: Old Mutual


about Royal Skandia Trust Company
Royal Skandia Trust Company is a company within Skandia International which is the international group of
companies which providers the offshore and cross-border investment solutions for the Old Mutual Group..

Royal Skandia Trust Company is based on the Isle of Man and has been offering its services exclusively
through financial advisers since 1999. It is owned by Old Mutual plc, established in South Africa in 1845 and
with headquarters in London. As a FTSE® 100 company, Old Mutual is one of the 100 largest companies
listed on the London Stock Exchange. It manages more than £309 billion* of clients' funds worldwide.
* As at 31 December 2011. Source: Old Mutual




                                                 Page 9 of 11
regulatory stability
The Isle of Man is an established international finance centre with a stable and independent legal, political
and regulatory framework. Life Assurance is an important business sector for the Isle of Man.

All life assurance companies based on the Isle of Man are regulated by the Isle of Man Insurance &
Pensions Authority, which controls this type of business and imposes detailed reporting requirements.

The Isle of Man is also recognised as a leading offshore base. It has been voted the ‘Best International
Financial Services Centre’ at the International Investment International Fund & Product Awards from 2001 to
2009, with the exception of 2010 and 2007 when it was highly commended.

policyholder protection
Policyholder protection schemes are regarded as a safety net for policyholders of a life assurance company
and allow policyholders to claim for compensation in the unlikely event the life assurance company becomes
insolvent. The rules governing schemes and specific rights for each policyholder vary from one jurisdiction to
another and in some jurisdictions there is no scheme at all.

On the Isle of Man there is a statutory protection scheme which covers Royal Skandia policyholders. This
compensation scheme is a result of the Isle of Man Life Assurance (Compensation of Policyholders)
Regulations 1991 which protects all policyholders whose policies were effected on or after 4 April 1988.

 Eligible policyholders in policies issued by Isle of Man authorised life assurance companies are protected
  no matter where in the world they reside.
 In the unlikely event that a life assurance company is unable to meet its liabilities, the policyholder will be
  protected by this compensation scheme.
 The compensation scheme offers policyholders up to 90% of the policy benefit. For the purposes of the
  scheme this is calculated as the policy value less any contractual charges associated with the policy. No
  monetary limit applies to the calculation of the policy benefit.

Please note that this protection only applies if Royal Skandia is unable to meet its liabilities.

Royal Skandia only writes unit-linked business and therefore there is always a close link between the value
of the company’s assets and the liabilities to its policyholders. Assets linked to Royal Skandia policies are
segregated from Royal Skandia’s business assets in order to comply with the Isle of Man Insurance Act
2008. The fact that policyholder assets are segregated from the company’s own means that, in the event of
liquidation, the liquidator or administrator cannot access policyholder funds.

The value of your Royal Skandia Collective Bond is linked to the value of bank deposits and investments
generally managed by third parties such as banks and fund managers. In the event that the provider of an
asset, including bank deposits, fails, compensation will depend on the scheme in place where that provider
is registered. You should be aware that any compensation arrangements are likely to relate only to Royal
Skandia’s aggregate holdings across all affected policies rather than to individual investors. As a result you
may not benefit from any scheme.

Full details are available from Royal Skandia on request.

As you are invested into funds/assets through a Collective Bond you will not be eligible for any
compensation schemes which may apply to individuals investing directly. If this is a concern, please discuss
this with your financial adviser so you are aware of the possible risks.

Note to financial adviser: Where the client has asked for their assets to be transferred to a UK FSA authorised custodian account, the
FSA requires custodians to keep their clients’ assets segregated from their own assets. Therefore, in the unlikely event of the custodian
becoming insolvent, the clients’ assets are protected. However, please note that in such circumstances it can take some time to re-
register the assets due to administration issues.




                                                            Page 10 of 11
what are Royal Skandia’s credentials?
Skandia International is the collective name for the offshore and cross-border providers of investment
solutions within the Skandia Group. Royal Skandia is the Isle of Man based arm of Skandia International.
Therefore, you can be confident that you are investing with a company that understands the needs of
international investors.

These qualities have been recognised by the many industry awards that Skandia International has won.

Below are Skandia International’s latest awards:

International Investment – International Fund & Product Awards

2011
Best International Life Group – Winner
Best International Life Product – Winner
Best International Sales Team – Winner
Best International Service Initiative – Highly Commended

2009
Best International Life Group – Winner
Best International Provider Far East – Winner
Best Commitment to Service – Winner

2008
Best International Life Product Range – Winner*
Best International Life Group – Highly Commended
Best International Life Product – Highly Commended

International Adviser – International Adviser Life Awards

2010
Best Single Premium Product (Far East) – Winner

2009
Best Regular Premium Investment Product (UK Offshore) – Winner
Best New Product (Far East) – Winner
Best Online Proposition (Far East) - Winner

For more information please see http://www.skandiainternational.com/about_us/awards/

* winner for five consecutive years until this award category was withdrawn

Skandia International, part of the wealth management business of Old Mutual plc, is the international
group of companies which provides the offshore and cross-border investment solutions for the Old Mutual
Group.

www.skandiainternational.com

Calls may be monitored and recorded for training purposes and to avoid misunderstandings.

Royal Skandia Life Assurance Limited is registered in the Isle of Man under number 24916C.
Registered and Head Office: Skandia House, King Edward Road, Onchan, Isle of Man, IM99 1NU, British Isles.
Phone: +44 (0)1624 655 555 Fax: +44 (0)1624 611 715.

Authorised and regulated by the Isle of Man Insurance & Pensions Authority. Authorised and regulated by the Financial Services
Authority for business conducted in the UK. Some of the FSA’s rules do not apply to non-UK based insurers.

FSA register number 142309. www.fsa.gov.uk/pages/register.

Royal Skandia Trust Company is registered in the Isle of Man under number 095926C.
Registered and Head Office: PO Box 142, Skandia House, King Edward Road, Onchan, Isle of Man, IM99 3DJ, British Isles.
Phone: +44 (0)1624 655 456 Fax: +44 (0)1624 655 930.
Licensed by the Financial Supervision Commission of the Isle of Man to provide trust services.

PDF7656/INT11-301/July 2011