Scottish Widows - Replacement

Lloyds TSB Group PLC
31 January 2002



ISSUER ADVISES THAT THIS ANNOUNCEMENT REPLACES - LLOYDS TSB GROUP: SCOTTISH
WIDOWS ANNOUNCES NEW PRACTICE FOR GUARANTEED ANNUITY RATE POLICIES

RELEASED ON THE RNS SYSTEM ON RNS NUMBER 7700Q ON 31 JANUARY 2002 AT 08.06 AM.

CHANGES ARE IN NOTE 1: FIGURE 174140,000 SHOULD READ 174,000 AND IN NOTE 5
FIGURE 2318,000 SHOULD READ 23,000 AND FIGURE 118,0500 SHOULD READ 11,000.

ALL OTHER DETAILS REMAIN UNCHANGED.


09/02                                             31 January 2002

Lloyds TSB Group: Scottish Widows announces new practice for guaranteed annuity
                                 rate policies


At the time of the demutualisation of Scottish Widows in March 2000, and its
acquisition by Lloyds TSB Group, the guaranteed annuities case, Equitable Life v
Hyman was already in progress. As a contingency for a possible change to the way
in which the financial services industry pays guaranteed annuity rate policies,
an Additional Account, including interest rate hedges, was set up by Scottish
Widows to allow for such a contingency and to protect both policyholders and
shareholders.

The House of Lords' judgement on the Equitable Life case has clarified the
treatment of guaranteed annuity payments: after thorough consultation Scottish
Widows today announced that it is revising its practice from 1 February 2002.
The Financial Services Authority has been kept fully informed and is satisfied
that Scottish Widows' approach fulfils its requirements.

As a result of the change, final or 'terminal' bonuses for most guaranteed
annuity rate policies will be increased. The Additional Account will be used to
meet the cost of enhancing pensions for those guaranteed policies. We expect
that the Additional Account will be sufficient to meet this cost and any balance
would be paid out over time. With-profits benefits would not be reduced to meet
any excess.

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Peter Ellwood, Group Chief Executive, Lloyds TSB said:

'Scottish Widows continues to perform strongly and to meet the expectations set
out when we acquired the business. It is now a well established and successful
part of the Group.

'When we acquired Scottish Widows in March 2000 we took appropriate action to
protect the interests of both policyholders and shareholders by creating the
Additional Account. This announcement to policyholders is a demonstration of
both our prudence and the combined strength of Scottish Widows and Lloyds TSB.'



The full text of the announcement by Scottish Widows follows:

                SCOTTISH WIDOWS GUARANTEED ANNUITY RATE POLICIES

   Scottish Widows is revising the way it calculates benefits for guaranteed
annuity rate policies from 1 February 2002. As a result of the change, final or
'terminal' bonuses for most guaranteed annuity rate policies will be increased.
 The Financial Services Authority has been kept fully informed and is satisfied
            that Scottish Widows' approach fulfils its requirements.


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The change in practice follows the House of Lords judgement in the Equitable
Life v Hyman case. As a consequence of this ruling, when interest rates are low
- as they are now - most holders of policies with guaranteed annuity rate
options should be able to receive significantly higher pensions. The guaranteed
annuity rate will apply provided the selected pension benefits meet the terms
for the guarantee set out in the original policy contract.

The cost of enhancing pensions will be paid from the Additional Account
established when Scottish Widows demutualised in March 2000. As detailed in the
Policyholder Circular issued in November 1999, this Additional Account is there
to cover contingencies such as this, with any balance thereafter being paid out
over time to policyholders.

We expect that the Additional Account will be sufficient to meet the costs of
enhancing pensions for guaranteed annuity policies. With-profits policyholders
will be protected as benefits would not be reduced to meet any excess costs
arising from this change. With-profits policyholders without guaranteed annuity
rates will therefore receive similar values to those that would have applied had
Scottish Widows not demutualised.

Any balance in the Additional Account not needed to meet contingencies would be
available for distribution as enhancements to final bonuses on with-profits
policies which transferred from the old Scottish Widows to the new Scottish
Widows plc on demutualisation. Current projections suggest that any amount
available for this purpose would be limited, and no such distribution is
currently planned. As a result no enhancements have been included in benefit
illustrations for such policies since August 2001.

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The change in practice will be backdated to 1 January 1999. Eligible retirement
claims since then will be reviewed to identify whether higher benefits will be
paid. No benefits will be reduced as a result of this review.

Scottish Widows will be writing to all affected policyholders during the first
half of 2002, starting with those most immediately affected. Policyholders
should take no further action at present.

Mike Ross, Chief Executive of Scottish Widows, said:

'Today's announcement is a positive response to the wider consequences of the
House of Lords judgement, by increasing pensions for most policyholders who take
their guaranteed annuity rate options.

'We have always held strong reserves against changing circumstances and the
setting up of the Additional Account at the time of our demutualisation has
enabled us to take this action while maintaining the principle of fairness for
all policyholders.'


        NOTES

 1. Scottish Widows has over 1.8 million policyholders and manages customer
    assets of circa £78 billion. It has circa 174,000 in force with-profits
    guaranteed annuity policies.
 2. An Additional Account was set up at the time of Scottish Widows'
    demutualisation on 3 March 2000, and is available to meet contingencies. The
    Policyholder Circular issued in November 1999 stated that these
    contingencies include 'the costs of meeting guarantees on policies allocated
    to the With Profits Fund including the cost of guaranteed annuity options'.
    The current value of the Additional Account is circa £1.7 billion.

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    Lloyds TSB Group: Scottish Widows announces new practice for guaranteed
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 3. The current projected cost of increasing past and future annuity payments for
    guaranteed annuity policies and for the review is circa £1.4 billion, which
    will be paid out over many years as the guaranteed annuity options are
    exercised by policyholders some 30 years. The assets allocated to the
    Additional Account include certain hedge assets which assets, which provide
    substantial protection against the consequences of a future fall in interest
    rates including increases in the costs of meeting guaranteed benefits
    movements in the underlying values of the supporting assets. However, in the
    unlikely event of the Additional Account being insufficient to meet these
    costs Lloyds TSB Group stands behind Scottish Widows.
 4. To be eligible for an increased pension under our new practice, guaranteed
    annuity policyholders must take their pension benefits with Scottish Widows
    at a date and in a form specified in the policy for the guarantee. Following
    the House of Lords judgement, Scottish Widows cannot continue its previous
    practice of paying benefits with equivalent value to policyholders who opt
    not to take guaranteed annuity benefits.
 5. The change in practice will be backdated to 1 January 1999. It was from this
    date that sustained low interest rates first caused final bonuses to differ
    from those that our new practice might have provided. Scottish Widows will
    contact holders of circa 23,000 around guaranteed annuity rate policies who
    took retirement benefits between 1 January 1999 and 31 January 2002 to
    inform them of the change in practice. Circa 11,000 of those, where benefits
    were taken at a date when the guarantee applied will have their benefits
    automatically reviewed. The remaining policyholders, who took their benefits
    at a date when the guarantee did not apply, will be contacted to advise them
    of the change of practice. This letter will provide information about what
    steps these policyholders should take if they include details of the
    additional information required should policyholders wish to have their
    benefits reviewed - as the revised practice may have affected the choices
    people made had it been in force at the time.
 6. Where benefit illustrations were provided between March 2000 and August 2001
    for with-profits policies which transferred from the old Scottish Widows to
    the new Scottish Widows plc on demutualisation, they will normally have
    included an allowance from the Additional Account as an enhancement to final
    bonuses. This allowance was based on our estimate of extra bonuses that the
    Additional Account might have provided. However, in the light of the House
    of Lords judgement and subsequent change of practice, projections suggest
    that any amount available for this purpose would be limited, and at the
    moment no such distribution is planned. Consequently illustrations since
    August 2001 have not contained any allowance.

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 7. Scottish Widows expects the review of past claims to be substantially
    completed by the end of this year but this depends on the supply of
    essential information from policyholders and other annuity providers.
 8. Policyholders should take no action until they are contacted by Scottish
    Widows. If they subsequently require clarification they should consult their
    financial adviser or call Scottish Widows directly on its dedicated helpline
    on 0845 607 8909 - weekdays between 8am and 8pm and Saturdays between 9am
    and 12.30pm. Independent Financial Advisers can also contact the same
    helpline number.
 9. This change in practice applies only to policies taken out before Scottish
    Widows joined Lloyds TSB.



For further information:
SCOTTISH WIDOWS

Media

Robert Greenshields                                     0131 655 6818

Head of Corporate Communications

E-mail: [e-mail]

Paula Sutherland                                        0131 655 6818

Media Relations Manager

E-mail: [e-mail]
LLOYDS TSB GROUP

Investor Relations                                      020 7356 1436

Kent Atkinson

Group Finance Director

E-mail: [e-mail]                020 7356 2167

Michael Oliver

Director of Investor Relations

E-mail: [e-mail]

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Lloyds TSB Group: Scottish Widows announces new practice for guaranteed annuity
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LLOYDS TSB GROUP

Media

Terrence Collis                                         020 7626 1500

Director of Group Corporate Communications

E-mail: [e-mail]

Mary Walsh                                              020 7626 1500

Head of Media Relations

E-mail: [e-mail]



FORWARD LOOKING STATEMENTS

This announcement contains forward looking statements with respect to certain of
the plans of the Lloyds TSB Group, its current goals and expectations relating
to its future financial condition and performance. By their nature,
forward-looking statements involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the future. Lloyds TSB's
actual future results may differ materially from the results expressed or
implied in these forward-looking statements as a result of a variety of factors,
including UK domestic and global economic and business conditions, market
related risks such as interest rate risk and exchange rate risk in its banking
business and equity risk in its insurance businesses, unexpected changes to
regulation, changes in customer preferences, competition and other factors.
Please refer to the Registration Statement on Form 20F of Lloyds TSB Group filed
with the US Securities and Exchange Commission for a discussion of such factors.





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