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Treasury

Group investment activity and attendant risk management are closely monitored by the Company's investment committee.

Investment strategy is developed to capitalise on market opportunities within defined risk parameters. As such, it will remain focused on a longer-term investment horizon whilst it is appropriate to do so, recognising the cyclical nature of the Group's core business.

Investment management is outsourced to leading investment companies. Diversification remains a key aspect within overall strategy, this is aimed at reducing vulnerability to underperformance from underlying asset classes or investment managers.

Strict investment parameters are applied to all Group bond funds which govern eligible securities and credit quality, with exposure limits to mitigate concentration risks. It is also worthy of note that the Group does not have any direct exposure to sub-prime mortgage assets or mono-line insurers.

An investment risk budget is set annually by reference to key corporate financial strength indicators. The budget is regularly assessed using a Value at Risk model, which calculates the potential impact of a downturn in investment markets to a magnitude of a one in twenty year event. The framework for asset allocation is set within the parameters of the agreed risk budget.