GOVERNANCE MATTERS.

During 2010, corporate governance has continued to evolve apace. The Board of Legal & General has again this year dedicated time to considering emerging corporate governance practice in line with our belief that good corporate governance underpins the long term success of the Company.

In November, the Board carried out a review of the Company’s corporate governance framework. This included the annual review of a number of corporate governance policies such as the Matters Reserved for the Board and Terms of Reference for each of the Board’s committees. As well as assisting the Board in being able to confirm compliance with the principles and provisions of the Combined Code for 2010, the Board determined as a result of the review to develop a Corporate Governance handbook bringing all Company corporate governance policies into one reference document. I believe this reflects the commitment of the Board to good corporate governance and to ensuring that good corporate governance practice underpins the day to day activities of the Board. The Board closely followed the debate on the annual re-election of directors and believes that annual re-election promotes our accountability to you, our shareholders. All Board members will therefore offer themselves for re-election at this year’s AGM.

The success of the Board as an effective steward of the Company depends on the right balance of skills and experience being in place. During 2010, two of our non-executive directors, Frances Heaton and Dr Ronaldo Schmitz, retired from the Board and Nick Prettejohn joined the Board in November as a non-executive director bringing recent executive experience to the Board, in particular experience in the life insurance sector. Sir David Walker will retire from the Board this year and we thank him for his outstanding contribution to the Board.

Each year the Board participates in a formal evaluation of its performance. This year our evaluation was undertaken by an external facilitator, Tracy Long of Boardroom Review. Tracy is an experienced consultant whose only interest with Legal & General is her work with the Board. The evaluation process included the facilitator interviewing each of the directors and obtaining their views on how the Board and its committees work. Feedback on Board performance was then presented to a meeting of the Board which discussed what it believed were the relevant issues and agreed the recommendations arising and the actions to be taken in 2011 as a result. With regards to information on personal performance, I meet with each director individually and provide feedback on a one to one basis and agree any particular business education requirements for the year ahead. Feedback on my performance in chairing the Board is provided by the Senior Independent Director following discussions between him and the other Board members. Overall, I am satisfied that the Board operates well.

This year we have continued our work in promoting greater and more effective engagement with our shareholders. On behalf of the Board, the Group Chief Executive, Group Chief Financial Officer and I, supported by the Investor Relations department, regularly met with institutional investors and analysts throughout the year. The Board also received regular reports from the Investor Relations department on its activities, and in particular the feedback being received from investors and analysts. The Board is committed to ensuring that the direction of the Company is aligned with our shareholders’ interests. Ongoing engagement, supported by clear communication, is key and will remain a focus for the Board in 2011.

The AGM is an important opportunity for us as a Board to engage with the Company’s private investors. All Board members will attend the AGM and be available to meet and speak with shareholders. We would like our investors to find attending our AGM an interesting and rewarding experience; to hear about the performance of the Company over the last year and have the opportunity to meet members of the Board. I encourage as many shareholders as possible to attend on 25 May 2011 and I look forward to sharing with you in person the successes of the Company during 2010.