Notes to the consolidated financial statements

For the year ended 31 December 2008

1 Accounting policies

Basis of preparation

The consolidated financial information contained herein has been prepared in accordance with International Financial Reporting Standards adopted by the EU. The Group's results for the year ended 31 December 2008 and the position at that date have been prepared using accounting policies consistent with those applied in the preparation of the Group's 2007 Annual Report and Accounts, except as set out below.

The financial information set out herein does not constitute the Company's statutory accounts for the years ended 31 December 2008 or 2007. Statutory accounts for 2007 have been delivered to the Registrar of Companies, and those for 2008 will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports, and (iii) did not contain statements under section 237(2) or (3) of the Companies Act 1985.

Segment presentation

There has been a presentational change in the way segmental information is reflected in the notes to more closely align the disclosure with the way that management and the Board of Directors considers information when making operating decisions and is the basis on which resources are allocated and performance assessed by management and the Board of Directors. The Group's results are now analysed across nine reportable segments. For purposes of presentation these are grouped in geographical areas. The reported segments are Skandia UK, Nordic and ELAM, Old Mutual South Africa, Nedbank, Mutual & Federal, Rest of Africa, US Life and US Asset Management. Information about other business activities and operating segments is disclosed in the 'other operating segments' category. Other operating segments comprise the Asia Pacific asset management business and Group head office.

There are four principal business activities from which the Group generates revenues. These are long-term business (premium income), asset management business (fee and commission income), banking (banking interest receivable) and general insurance (premium income). The revenues generated in each reported segment can be seen in the analysis of profits and losses in note 3(ii).

The information reflected in note 3 reflects the measures of profit and loss, assets and liabilities for each segment as regularly provided to management and the Board of Directors. There are no differences between the measurement of the assets and liabilities reflected in the primary statements and that reported for the segments. A reconciliation between the reported segment revenues and expenses and the Group's revenues and expenses is shown in note 3(ii).

Assets, liabilities, revenues or expenses that are not directly attributable to a particular segment are allocated between segments where there is a reasonable basis for doing so. The Group accounts for inter-segment revenues and transfers as if the transactions were with third parties at current market prices. Given the nature of the operations, there are no major customers within any of the segments.

Reallocations of certain comparative segment information have been made following changes in the Group's management reporting structure, effective 1 January 2008. There was no impact on net profit or net assets.

Amendments to IAS 39 'Financial instruments: Recognition and Measurement' - reclassification of financial assets

The amendments to IAS 39 'Financial instruments: Recognition and Measurement', issued in October 2008, in respect of the reclassification of financial assets, have been adopted in these financial statements. Under the extended reclassification rules introduced by the amendments an entity has the ability to reclassify financial instruments from the held-for-trading and available-for-sale categories in certain specified rare circumstances. The Group's accounting policies have been updated to reflect the amendments to the standard. The Group's US Life business has applied the amendments to certain financial assets previously categorised as available-for-sale, which it has reclassified to the loans and receivables category. This reclassification was implemented as at 1 July 2008 in accordance with the transitional provisions in the IAS 39 amendment. As a result, assets with a carrying value of £926 million at 1 July 2008 have been reclassified from available-for-sale to loans and receivables. Net decreases in the fair value of the reclassified assets in the period from 1 July 2008 to 31 December 2008, amounting to £284 million, have consequently not been reflected in the available-for-sale reserve in equity. There was no impact on the Group's IFRS profit or adjusted operating profit, before or after tax, as a result of the introduction of the amendments.