Phoenix Group Holdings £428,113,000 6.625 per cent. Subordinated Notes due 2025 and £450,000,000 4.125 per cent. Tier 3 Notes due 2022

The following information is relevant to holders of Phoenix Group Holdings ("PGH") subordinated debt, currently comprising its £428,113,000 6.625 per cent. Subordinated Notes due 2025 and £450,000,000 4.125 per cent. Tier 3 Notes due 2022 (together, the "Outstanding Subordinated Notes").

Capitalised terms used in this announcement but not defined herein shall have the meanings ascribed to them in the relevant terms and conditions of the Outstanding Subordinated Notes.

Tier 2 roadshow

PGH has mandated Citigroup Global Markets Limited, HSBC Bank plc, J.P. Morgan Securities plc and Merrill Lynch International to arrange a series of credit investor meetings in Asia and Europe commencing 23 June 2017. A U.S. dollar denominated 10 year Tier 2 transaction will follow, subject to market conditions.

Expiry of the "other methods" waiver granted to PGH

The United Kingdom Prudential Regulation Authority (the "PRA") granted the Phoenix group an "other methods" waiver which allowed for an amendment to the standard methodology for Solvency II group supervision for the period from 1 January 2016 to 30 June 2017.

The "other methods" waiver will expire on 30 June 2017 and PGH has not made, and is not intending to make, an application to the PRA to extend the waiver. From 1 July 2017, regulatory supervision and the Solvency II capital assessment will be performed at the Phoenix Life Holdings Limited ("PLHL") and PGH levels.

In addition, the expiry of the waiver will result in the new group Solvency Capital Requirement of PGH on a consolidated basis being taken into account for the purposes of the relevant definitions of "Regulatory Deficiency Interest Deferral Event" and "Regulatory Deficiency Redemption Deferral Event" for the purposes of the terms and conditions of the Outstanding Subordinated Notes, in addition to that at PLHL level.

Consequences of potential change in head office of PGH

Following recent discussions with the PRA, PGH understands that upon a future change of PGH's head office from Jersey to the United Kingdom, it would expect the PRA to treat PGH, and not PLHL, as the ultimate EEA insurance holding company of the Insurance Group.

On that basis, if a decision were to be taken by the board of directors of PGH to change the head office of PGH in the future (which decision might be taken as early as the second half of 2017 and would also result in a change in the tax residency of PGH from Jersey to the United Kingdom), PGH would become the ultimate EEA insurance holding company and the Insurance Group Parent Entity and a member of the Insurance Group for the purposes of the terms and conditions of the Outstanding Subordinated Notes.

This would result in the Outstanding Subordinated Notes (and not the relevant on-loan of the proceeds of the Outstanding Subordinated Notes) being the relevant capital item for the purposes of the definition of "Capital Disqualification Event" under the Outstanding Subordinated Notes with effect from such date. PGH also understands that PLHL would no longer be required by the PRA to be taken into account for the purposes of the deferral of principal and interest on the Outstanding Subordinated Notes pursuant to the relevant definitions of "Regulatory Deficiency Interest Deferral Event" and "Regulatory Deficiency Redemption Deferral Event".

PLHL and PGH level Solvency II surplus

The PLHL Solvency II surplus as at 31 December 2016 takes no account of the issuance in January 2017 of the £450,000,000 4.125 per cent. Tier 3 Notes due 2022 (the on-loan of which qualifies as Solvency II capital at PLHL level), and the subsequent use of the proceeds to repay an equivalent amount of the Group's outstanding senior bank debt. It also does not reflect the impact of incorporating the acquired AXA Wealth Limited businesses within the scope of the Group's internal model following receipt of approval from the PRA to do so in March 2017. These developments are now expected to increase the PLHL Solvency II surplus by £0.3 billion, the regulatory coverage ratio by 7 percentage points and the Shareholder Capital Coverage Ratio by 12 percentage points.

The key difference between the PLHL Solvency II surplus and the PGH Solvency II surplus remains the inclusion of the Group's senior debt within the PGH-level own funds calculation. After taking account of the issuance of the £450,000,000 4.125 per cent. Tier 3 Notes due 2022 in January 2017 and subsequent repayment of amounts due under the Group's revolving credit facility, inclusion of the Group's remaining senior debt is expected to reduce the PGH Solvency II surplus by £0.9 billion, the regulatory coverage ratio by 18 percentage points and the Shareholder Capital Coverage Ratio by 32 percentage points when compared to the PLHL position. The positive impact that arises from the elimination of intragroup balances with entities outside of the PLHL sub-group and the recognition of additional assets held at the PGH level, is broadly offset by the recognition of the 2016 PGH final dividend (deducted from own funds as a foreseeable dividend). The PGH Solvency II surplus is expected to be improved by £0.2 billion, the regulatory coverage ratio by 3 percentage points and the Shareholder Capital Coverage Ratio by 5 percentage points due to the tap issue of £150,000,000 4.125 per cent. Tier 3 Notes due 2022 in May 2017 and subsequent partial repayment of the £300,000,000 5.75 per cent. Senior Unsecured Bonds due 2021.

Further, as part of the Group's internal risk management processes, regulatory capital requirements are tested against a number of financial scenarios. The results of that stress testing⁽¹⁾ as prepared for the purposes of PLHL's Solvency and Financial Condition Report published on 13 June 2017 are provided below and demonstrate the resilience of the PLHL Solvency II surplus.

For further information, please contact:

Phoenix Group Holdings

Office: 1st Floor, 32 Commercial Street, St. Helier, Jersey JE2 3RU, Channel Islands

Group Treasurer: Rashmin Shah

Telephone: +44 20 3735 0059

Email: rashmin.shah@thephoenixgroup.com

Website: http://www.thephoenixgroup.com/

This announcement is for information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any securities.

This announcement does not constitute and shall not, in any circumstances, constitute a public offering nor an invitation to the public in connection with any offer within the meaning of the Directive 2010/73/EU of the Parliament and Council of November 4, 2003 as implemented by the Member States of the European Economic Area (the "Prospectus Directive"). Any offer and sale of the notes will be made pursuant to an exemption under the Prospectus Directive, as implemented in Member States of the European Economic Area, from the requirement to produce a prospectus for offers of securities.

Stabilisation: FCA/ICMA