Association of Financial Mutuals

26 May 2010

Keith Boughton – Director, Insurance and Payroll

Brian Please – Business Development Manager, Insurance and Payroll

The Xafinity Group

• Corporate Pensions Consultancy, Administration & Actuarial services

• SSAS and SIPPS

• Transaction Services

• Mortality Analysis and Benefit Pricing

• Liability Modelling & Deficit Management

• Scheme Terminations

• Independent Trusteeship

• Flexible Benefits

• Healthcare Services

• Communications

• Investment Consultancy

• Learning & Development Training

• Annuity Administration & Payment

• Pensions Administration Services

• Bulk Annuity Administration & Payment

• Pensioner Payroll Services

• Banking Services

• Collection Services

• Professional Services

• Training Services

• Pensions and Actuarial Software Solutions

• Data validation

A company focussed on delivering service excellence

Scale of Xafinity Paymaster’s Operations… for smaller scale & start-up businesses to exploit

45 million BACS payments per annum

2.5 million benefit calculations per annum

Payments valued at £11 billion per annum

600,000 calls per annum

100,000 address changes per annum

Pay 2.2 million Pensioners & Annuitants

Payments made to approx 180 countries

Handle 1 in 10 UK deaths

Administer over 500,000 active and deferred pensions

Manage 865 pension arrangements

Why have we become an Associate Member of AFM?

• Actively engaged with the insurance market

• Relationships and solutions for AFM members large and small

• Alignment of culture given our public sector heritage

• AFM members are under increased scrutiny and pressure from the FSA, Solvency II and the economics of staying in business

• AFM’s own loyal members / policyholders are facing dramatic social changes arising from longevity and resulting financial challenges of sustaining a lifestyle over a 20-30 year retirement period

• Xafinity Paymaster offers solutions that leverage our strengths in pensions and annuity administration

• By sharing our knowledge and experience we can all better understand and adapt to meeting these challenges

• Give all parties a greater opportunity to determine sound courses of action that will lead to greater growth and prosperity

The Value to your Members in looking at the Retirement and Annuity Market• Having invested in enhancing, developing and achieving brand

loyalty in your members … why not retain them for a lifetime?

• “Providing financial security…enhance people’s welfare …fair, simple, accessible value-for-money products”

• The Annuity / Retirement Opportunity• Further 20-30 years of products, services and value• Retention of Funds under Management• With Profit Annuities – on-going membership, W/P New Business (FSA)• Simple Lifetime Annuities – fair value, brand loyalty• Against a backdrop of issues of including Solvency II, compulsory

annuitisation(?), NEST, …

• Opportunity for Mutuals and Friendly Societies• Profile and shifting demographics of your target customer base• Close alignment of skills and potential of your existing businesses• Ability to develop viable forward strategies in the retirement space• Existence of small scale, low entry, cost-effective, proven, fit-for-purpose,

outsourced annuity solutions

New Product Opportunities Exist for Staged Retirement

Working longer

Emerging Model

Pre-Retirement Full Retirement

Annuity Product Opportunities

Staged Retirement

DC PensionsPersonal PensionsSIPPsStakeholder PensionsNEST (PADA)ISAProperty……

State PensionDB/DC PensionsTax Free CashVariable AnnuitiesIncome DrawdownTemporary AnnuitiesWith Profit AnnuitiesEnhanced AnnuitiesValue Protection

State PensionDB/DC PensionsLifetime AnnuitiesEquity Release Long Term Care……

60-65 75-80

Straight-through Processing (STP) Works for Annuities

Customer

IFA

Portals

Ceding Co

Annuity Gateway•Filters, Secure access, Data Validation•xml, pdf, GUI interface options•Portal integration

Hosted / Outsourced Provider Services•Client data•Application data•Medical data (if required, including dynamic CQRF)•Automated pre-population of data throughout•Quotations & Illustrations•Underwriting (if required)•Pension Transfer / Discharge (incl. ABI Options)•New Business administration•Annuity Policy administration•Payroll administration (incl. HMRC reporting)•Death Claims administration (incl. dependent benefits)

HMRC

What are the real Benefits of an STP Annuity Solution?

• Costs less, of a magnitude less than historical implementations

• Lower entry costs make the entire annuity product launch commercially feasible

• Reduced time to market (3 months from specification)

• Reduced risk (operationally stable, proven, replicable)

• Backed by leaders in annuity distribution & administration

• Self-contained, virtual solution

• Immediate connectivity into the intermediary market

• Full service for internal vesting pensions

• Reduced ongoing costs to support regulatory compliance as a result of shared service development and maintenance costs

Meeting the Requirements for an Annuity Product Launch

• Capital No

• Product design and development Yes

• Reassurance and pricing Help

• Route to market Yes

• Quotation, illustration and application systems and processes Yes

• Application, administration and accounting Yes

• Annuity payment and management Yes

• Project management Yes

• The Annuity Corporation has been set up to bring together the expertise to advise and deliver effective annuity strategies and solutions to corporations and insurance companies

• TAC is a sister company of the Annuity Exchange, provider of the first comparative annuity portal, delivering quotation services including Annuity Marketing Services (AMS) and tied distribution channels

The Annuity Corporation (TAC)

TAC

XafinityPaymaster