At Centuria, investors come first. We understand the importance of keeping you informed about your investments. In addition to our annual Investment Bond Review, Perspectives will cover topical and current issues affecting financial markets and the impact on your Centuria investment bond.

What is becoming increasingly important in current market conditions is how much risk, or volatility, investors are comfortable with to achieve the returns they want.

Here we examine the volatility in financial markets and demonstrate how the investment strategy of your bond has worked to protect your investment and produce a steady return in these volatile times.

Your feedback is important – so let us know if you have any suggestions for future editions of Perspectives.

Regards,

Anne Hamieh Head of Distribution – Financial Services

“The major concern of investors has become security of capital and returns.”

Perspectives

February 2012

Welcome to the first edition of Perspectives.

Financial Markets: The Tortoise and the Hare Global financial markets are in the midst of their most severe turbulence since the Great Depression. The primary issue is debt in the major western economies and the struggle by Governments and central banks to reduce it without reducing those economies into recession. While this struggle continues investment markets will continue to be volatile. The major concern of investors has become security of capital and returns.

Security of capital and accrued returns is the focus of your Centuria Capital Guaranteed Bond.

How has your investment performed during this volatile period?Generally in investing there is a tradeoff between risk and reward with higher risk growth assets expected to produce higher returns. However, the greater potential for capital growth, the greater the potential for capital losses.

Our capital guaranteed bonds are conservative, low risk investments aimed to provide you with steady returns over time and protect you from loss and volatility.

This difference is clear in the graph below where we compare the return of the Capital Guaranteed Bond against that of higher risk growth style assets such as shares and property. These asset classes have continued to decline in value and experienced significant volatility since their peak in November 2007 and the onset of the Global Financial Crisis (GFC).

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Australian Equity Listed PropertyInternational Equity Capital Guaranteed BondUnlisted Property

Returns of Growth Assets and the Capital Guaranteed Bond since 31 October 2007

Source: Morningstar and Centuria Life. Past performance is not an indicator of future performance. Longer time scales will produce different results. Actual returns to 30 June 2011 are included for the Capital Guaranteed Bond. Indices used are Australian Equities: S&P/ASX 200 Accumulation Index, International Equities: MSCI World Ex Australia Index in $A (Un-hedged),Listed Property: S&P/ASX 200 Property Accumulation Index, Unlisted Property: S&P/ASX Property Trusts Accumulation Index. No representation is made in respect of future performance of Centuria’s products against any other asset or asset class.

If you invested $100 in the Australian All Ordinaries Share Index on 1 November 2007, as at 30 June 2011 this would have been worth just over $80. The same amount invested in overseas shares would have been worth even less. Not only have growth assets generally failed to deliver significant performance since their initial rally from the March 2009 lows, returns have been volatile. Whilst this may not always be the case, it is the situation at present.

Through this period of extreme volatility your Centuria Capital Guaranteed Bond has delivered steady growth. This stability of returns and guarantee of both your capital and accumulated returns is not an accident or a recent phenomenon; it is a result of a careful process of investment selection, backed by capital reserves to ensure the guarantee. The Federal regulator, the Australian Prudential Regulatory Authority (APRA), and independent actuaries also oversee your Bond.

What is reserving and what does it do?Reserving is a mechanism that we apply to our capital guaranteed bonds to enable us to guarantee your capital and bonuses each year.

In order to provide this capital guarantee, the Australian Prudential Regulatory Authority (APRA) requires that we put aside, or reserve, a certain level of retained profits each year. An independent actuary determines this amount by examining the bond’s assets and assessing the risk of a sharp drop in their value if investment markets are subject to a shock (as defined in the APRA Prudential Standards). If a bond holder were to withdraw during a period of loss, the reserved funds aim to ensure that all funds invested by the bond holder, and their declared bonuses, are guaranteed.

Though reserved amounts are restricted from being paid out as an annual or interim bonus, they are paid to bond holders at maturity or when proceeds are paid upon the death of the life insured.

Volatility – here to stay?We certainly are not out of the woods yet. The economic outlook is marked by a high degree of growth uncertainty. Here in Australia we have avoided the worst of the problems experienced in the US and Europe, mostly due to a sound banking system, low levels of government debt and of course the ongoing strength of the Chinese economy. However, in this environment the continued growth of China cannot be taken for granted and as we are seeing, even four years after the GFC started, the after effects continue to impact the global economy and financial markets.

As governments and individuals endeavour to reduce their debt levels, and economic growth slows, we believe financial asset returns will be subdued at least for the medium term. This will likely be accompanied by continued volatility in financial markets as the European sovereign debt issue and other political crisis, such as the current tensions in the Gulf, continue to impact investor sentiment.

The current difficult economic environment has seen central banks in most countries drop interest rates to very low levels. Australia has been, until recently, an exception with our interest rates amongst the highest in the world. However the recent two rate cuts, totalling 0.5%, with the likelihood of more to come, will see our interest rates move lower over the next 12 months.

Managing your bond

An investor’s appetite for volatility depends on their investment time frame and how much risk they are willing to bear to achieve a certain return.

Our Capital Guaranteed Bond invests in government securities and investment grade corporate debt securities.

In response to market conditions, the Centuria Capital Guaranteed Bond focuses on the highest quality debt instruments, with particular emphasis on income, and will take advantage of opportunities that occur when markets are volatile. These strategies should allow the Bond to deliver the best returns possible in the current environment of lower interest rates and volatility.

The Centuria Capital Guaranteed Bond continues to aim to achieve consistent guaranteed returns of both capital and accumulated bonuses providing you with peace of mind through these uncertain and challenging times.

“The economic outlook is marked by a high degree of growth uncertainty.”

“We believe financial asset returns will be subdued at least for the medium term.”

Introducing Centuria Property Funds.

In addition to our bond business, Centuria has a property investment division.Centuria Property Funds was formed in 1999 with a specific focus on the purchase of high-quality, growth-orientated commercial property assets. Centuria has a focus on commercial, industrial and bulky goods properties.

Centuria has a “Total Return” philosophy which means there is a commitment to achieving superior returns from a combination of income and capital growth. Our experienced hands-on approach means that we’re able, with every purchase, to identify investments with a strong mix

of income revenue, capital growth potential and tax benefits. Centuria currently consists of:

• 29 unlisted funds

• 48 individual properties

• $1 billion of commercial property

• 3,700 investors

In addition Centuria has completed 19 property funds with a combined value of $341m.

Centuria Property Funds is a wholly-owned subsidiary of Centuria Capital Limited. To learn more about Centuria Property Funds, please see: www.centuria.com.au/property

Did you know?You can switch between our bonds at no cost and with no tax penalty. You can also make regular contributions to your Bond each year without impacting the 10 year tax free status of your investment. For more information about switching, and the other benefits your bond offers, please contact Investor Services on 1300 50 50 50.

“Rewarding investment through superior asset selection and active asset management.”

Important: Issued by Centuria Life Limited (Centuria) AFSL230867, ABN 79 087 649 054. Information in this document is general information only and does not take into consideration any persons’ objectives, financial situation or needs. These should be considered before any investment decision is made. A Product Disclosure Statement (PDS) for the Centuria Flexible Investment Bonds is available on request, please free call 1300 50 50 50. The PDS should be considered before making an investment decision. Centuria believes that the information contained in this communication is accurate, but makes no representation as to its accuracy or completeness. To the maximum extent permitted by law, Centuria excludes liability for any loss or damage arisingfrom use of the information contained in the communication.

Do we have your correct contact details?If your contact details have changed, please send us the new details in writing to:

Centuria Life LimitedReply Paid 695Melbourne VIC 8060(no stamp required)

For more information about your bonds, please contact Investor Services on 1300 50 50 50.