Mandatory Deferral of Interest

Subject as set out below, payment of interest on the Notes by the Issuer will be mandatorily deferred on each Regulatory Deficiency Interest Deferral Date. The Issuer shall notify the Noteholders, the Agents and the Trustee of any Regulatory Deficiency Interest Deferral Date in accordance with Condition 5(d) (provided that failure to make such notification shall not oblige the Issuer to make payment of such interest, or cause the same to become due and payable, on such date) and the Issuer shall not have any obligation to make such payment on that date.

Notwithstanding that an Interest Payment Date may be a Regulatory Deficiency Interest Deferral Date, interest payments may still be paid on that relevant Interest Payment Date to the extent that:

(i) the PRA has exceptionally waived the deferral of the payment of Interest Amounts;
(ii) the payment of such Interest Amounts do not further weaken the solvency position of the Issuer; and
(iii) the Minimum Capital Requirement is complied with immediately after such payments of Interest Amounts are made.

Deferral of redemption date
(i) No Notes shall be redeemed on the Maturity Date pursuant to Condition 6(a) or redeemed prior to the Maturity Date pursuant to Condition 6(c), 6(d), 6(e) or 6(j) or purchased pursuant to Condition 6(f) if a Regulatory Deficiency Redemption Deferral Event has occurred and is continuing or would occur if redemption or purchase were made on, if Condition 6(a) applies, the Maturity Date or, if Condition 6(c), 6(d), 6(e) or 6(j) applies, any date specified for redemption in accordance with such Conditions or, if Condition 6(f) applies, the date of such purchase.

(ii) If the Notes are not to be redeemed on the Maturity Date pursuant to Condition 6(a) or on any redemption date pursuant to Condition 6(c), 6(d), 6(e) or 6(j) (as applicable) as a result of circumstances where:

(A) a Regulatory Deficiency Redemption Deferral Event has occurred and is continuing or would occur if the Notes were redeemed on such date;
(B) the Solvency Condition would not be satisfied on such date or immediately after the redemption; or
(C) the Regulatory Clearance Condition is not satisfied (to the extent then required under the Relevant Rules) in relation to such redemption; and/or
(D) such redemption otherwise cannot be effected in compliance with the Relevant Rules on such date,

"Regulatory Deficiency Redemption Deferral Event" means:

(a) any event (including, without limitation, where an Insolvent Insurer Winding-up has occurred and is continuing or any event which causes any Solvency Capital Requirement or Minimum Capital Requirement applicable to the Issuer, the Issuer Group Parent Entity or the Issuer Group to be breached and such Insolvent Insurer Winding-up or, as the case may be, such breach is an event) which under the Relevant Rules means that the Issuer must defer or suspend redemption of the Notes; or
(b) the PRA having notified the Issuer in writing that, in circumstances in which it is permitted to do so pursuant to and in accordance with the Relevant Rules, it has determined that the Issuer must defer making a payment of principal under the Notes and the PRA not having revoked such notification.