Directors' Report, Corporate Governance & Remuneration Report

Notes

1. Directors who were appointed during the year were paid their base salary pro rata.

2. 2005 bonuses were calculated as described in the Remuneration Report. In 2005 a maximum cash bonus of 100% of salary was achievable.

3. George Culmer received an annual performance bonus of £361,200 in respect of performance year 2005. His allowances include 15% of basic salary as a retirement allowance, paid monthly with effect from 1 April 2005. During 2005 the amount paid was £47,000. He also received car benefits worth £28,000 and medical and life assurance benefits worth £3,000.

4. Andy Haste received an annual performance bonus of £739,200 in respect of performance year 2005. His allowances include an age related percentage of basic salary as a retirement allowance, paid monthly. During 2005 the allowance was 26% and the amount paid was £200,000. He also received car benefits worth £39,000 and medical and life assurance benefits worth £6,000.

5. Bridget McIntyre’s salary was for two months of the year, following her appointment in November 2005. She did not receive an annual performance bonus in respect of performance year 2005. Her allowances include 15% of basic salary as a retirement allowance, paid monthly. During 2005, the amount paid was £9,000. Her allowances also include £107,000 as compensation for a bonus lost on leaving her prior employment and £359,000 as compensation for long term incentives lost on leaving her prior employment. She also received car, medical and life assurance benefits worth £3,000.

6. David Paige’s salary was for 11 months of the year, following his appointment in February 2005. He received an annual performance bonus of £190,400 in respect of performance year 2005. His allowances include 17.5% of basic salary as a retirement allowance, paid monthly. During 2005, the amount paid was £54,000. His allowances also include £165,000 as compensation for a bonus lost on leaving his prior employment and £185,000 as compensation for long term incentives lost on leaving his prior employment. He also received car benefits worth £13,000 and medical and life assurance benefits worth £3,000.

Notes:

1. The difference in transfer values reflects the difference between the two transfer values calculated using relevant information on the respective dates and is not necessarily the actuarial increase of the underlying pension.

2. The figures set out in the table above provide information as required by the Directors' Remuneration Report Regulations 2002. The Listing Rules require the change in accrued pension to be shown excluding the effects of inflation and the transfer value of this increase. These figures are shown in the notes below.

3. The accrued pension figures shown are the annual amounts of member's pension payable from normal retirement age. Increases to pensions when in payment are applied in accordance with the relevant scheme rules. On the death of the member leaving a surviving spouse and/or children, spouse's and/or childrens' pensions are payable in accordance with scheme rules.

4. The benefits shown above in respect of Andy Haste relate to his membership of a defined benefit pension scheme up to the earnings cap.

5. For Andy Haste the increase in his accrued pension during the year, excluding the effects of inflation, was £1,783pa and the transfer value in respect of this less his contributions was £12,531 at 31 December 2005.

6. Andy Haste is required to contribute to the scheme and also has the option of paying Additional Voluntary Contributions (AVCs). Neither voluntary contributions nor the resulting benefits are included in the table.

7. Transfer values have been calculated in accordance with the guidance note GN11 published by the UK Institute of Actuaries and Faculty of Actuaries.

8. The transfer value of the accrued benefits represent the value of assets that the pension scheme would need to transfer to another pension provider on transferring the scheme's liability in respect of Andy Haste's pension benefits. The transfer values do not represent sums payable or due to Andy Haste.

George Culmer joined the Group in May 2004; he therefore received contributions in respect of eight months' service in 2004.

Bridget McIntyre joined the Group in November 2005. Because of changes being made to the Group's pension arrangements, no contributions have been paid into the Royal & SunAlliance UK Pension Scheme 2002 in respect of November and December 2005. These contributions will be paid into the Royal & SunAlliance Stakeholder Pension Plan which was set up on 1 January 2006. The contributions paid into the new scheme in 2006 will be reported next year but are expected to include £8,750 in respect of Company contributions payable in respect of November and December 2005.

David Paige is not a member of any Royal & SunAlliance pension scheme.