L&G 2000 Results - Part 1

Legal & General Group PLC
27 February 2001



Part 1


                    Legal & General Group Plc
                            
           Results for the year ended 31 December 2000


                                    2000      1999

Modified Statutory Solvency basis -

  Operating profit before tax      £479m     £418m        up 15%

  Earnings per share (note 1)      6.61p     6.56p        up  1%

Dividend per share                 4.71p     4.13p        up 14%


Achieved Profits basis -

  Operating profit before tax      £678m     £652m        up  4%

  Contribution from
  new business (note 2)            £196m     £178m        up 10%

  Shareholders' funds            £5,274m   £5,250m        up  5% (note 3)


Note 1: based on operating profit after a 2000 tax charge of £140m (1999:
        £83m).
Note 2: contribution before tax from worldwide life and pensions
        businesses.
Note 3: before the dividend to shareholders of £243m.



Group Chief Executive, David Prosser said: 'In our core UK individual
life and pensions business we have achieved volume growth, taken further
market share and, in a highly competitive market, maintained margins.

This momentum will be increased further by our strategic alliance with
Barclays.  The alliance will strengthen our position in the key
Stakeholder pensions market and in retail investment funds.

The recently announced partnership with Alliance & Leicester is a
further strong endorsement of our strategy and our good value products.
We expect the agreements with Barclays and Alliance & Leicester to
increase our UK individual equivalent premium income by a third in the
first full year of operation.  We are building on our existing business
with leading banks and mortgage lenders and there is more to come.

With its financial strength, value for money product range and strong
brand, Legal & General has the ingredients for continued success.'









Overview of results
===================

   The Group's operating profit before tax grew by 15%, driven by a 13%
   growth in profits from the Group's life and pensions businesses and a
   44% increase in the contribution from investment management.  Profit
   after tax and earnings per share reflect a tax charge of 36% (1999: 
   13%).

   The contribution from worldwide new business on the Achieved Profits
   basis amounted to £196m, an increase of 10% over 1999, reflecting
   increased new business volumes, maintained margins and a favourable
   mix of business.
  
   New UK individual life and pensions business continued the growth
   pattern of recent years, increasing by 11% to £369m EPI (see note 1
   below) (1999: £331m).  Group business fell as a result of lower volumes
   of bulk purchase annuity business in 2000.  Unit trust/ISA volumes were
   also lower.  International business, including unit trust sales, grew
   by 9%.  In aggregate, worldwide new business for the year was £630m
   EPI, a little above the 1999 level of £628m.

   Our investment management business again delivered impressive results
   in 2000, winning £12.7bn of new institutional funds and increasing
   profits to £62m.  This fast growing business is a key strategic asset
   of the Group.

   During 2000, Group shareholders' funds on the Achieved Profits basis
   grew from £5,250m to £5,274m, representing an increase of 5% before the
   dividend to shareholders of £243m.

   Reflecting the Group's strong performance, the Board has declared a
   final dividend per share of 3.23p.  The total dividend for the year has
   therefore grown by 14% to reach 4.71p.  Our progressive approach to
   dividend policy is supported by the transfer from the UK long term
   fund.  In the current low inflationary environment, we believe that
   future dividend growth should be more closely aligned to the transfer
   from the UK long term fund, which has been growing at 10% per annum
   since 1999.

Note 1: Equivalent premium income (EPI) comprises new annual premiums +
        10% of single premiums.



Results
=======

                                            2000     1999        
  Modified Statutory Solvency (MSS) basis
  Operating profit before tax              £479m    £418m    +15%
  Profit before tax                        £498m    £676m    -26%
  Profit after tax                         £317m    £587m    -46%
                                                      
  New life and pensions business EPI                              
   -  UK  individual                       £369m    £331m    +11%
   -  UK  group                             £73m     £99m    -26%
   -  International                         £90m     £84m     +7%
   -  Worldwide total                      £532m    £514m     +4%
  New ISA and unit trust EPI                £98m    £114m    -14%
                                                      
  New investment management business     £12.7bn  £13.1bn     -3%
  Funds under management                  £114bn   £108bn     +6%



Achieved Profits results
========================

The Group's operating profit before tax for 2000 was £678m (1999: £652m),
with the contribution from worldwide new business up 10% to £196m.  The
contribution from in-force business was £274m (1999: £289m).  The growth
in the in-force contribution from UK life and pensions, from £194m to
£209m, was more than offset by reduced contributions from UK Managed
Funds of £40m (1999: £46m) and International of £25m (1999: £49m).  The
contribution from shareholders' net worth increased to £145m (1999:
£128m).

Profit on ordinary activities before tax, which includes investment
return variance, was £392m (1999: £1,294m).  There was a negative
investment variance of £306m in 2000 (1999: a positive variance of £670m),
reflecting the downturn in equity markets.

Shareholders' funds grew to £5,274m (1999: £5,250m), an increase of 5%
before the dividend to shareholders of £243m.  The Achieved Profits
results are set out in Part 3 of this release.



Business review 2000
====================

UK business
-----------
New individual life and pensions business continued the growth pattern of
recent years, increasing by 11% to £369m EPI (1999: £331m).  This
represents a further increase in our market share since market new
business volumes declined marginally in 2000.  New group business
fell as a result of lower volumes of bulk purchase annuity business.  New
unit trust and ISA sales in 2000 were also lower than in the previous
year, although we are encouraged by the 14% growth in new business EPI in
the final quarter over the corresponding period in 1999, following the
launch of four new funds.  In aggregate, new business for the year was
£536m EPI, little changed from the 1999 level of £541m.  The main features
of 2000 were:

   In the pensions intermediary market, Legal & General has operated
   largely in the fee-based and low commission sectors.  Support from
   these intermediaries for our pre-Stakeholder products contributed to
   the growth of 16% in our new individual pensions business to £165m EPI
   (1999: £142m).

   Legal & General's strengths in the housing market led to a 5% increase
   in new annual premiums from term and ISA business related to mortgages
   to £112m (1999: £107m).  Our new business reflected an increasing trend
   towards repayment mortgages.  Term assurance from this segment rose by
   47% to £25m (1999: £17m).  This significant growth in new business
   reflected the success of our Mortgage Club panel of lenders which saw
   completed loans increase by 53% to £5.1bn.

   Demand for our with-profits bonds from both IFAs and our major business
   partners was buoyant, increasing sales by 45% over the year to £648m
   (1999: £448m).  Sales accelerated in the second half of the year,
   averaging over £63m each month.

   Early in 2000, Legal & General took the view that technology stocks
   were overpriced.  As a consequence, we did not offer a technology fund
   at that time despite the then high levels of market demand.  Although
   our first quarter market share was therefore depressed, new business
   has subsequently recovered.  At the year-end, external unit trust and
   ISA assets under management in the UK were £3.9bn (1999: £3.5bn).

   Group business EPI fell as a result of lower volumes of bulk purchase
   annuity business.  Overall, group life and pensions new business
   totalled £73m EPI in 2000 - a decrease of 26% (1999: £99m).  Group risk
   continued its strong performance with new business totalling £31m EPI
   over the year (1999: £24m), reflecting further growth in the market's
   support for our value for money products.
 
The UK life and pensions operating profit before tax rose to £312m (1999:
£285m), reflecting a 10% growth in the net transfer from the UK long term
fund and a slightly lower tax grossing up rate.


Expanding distribution
----------------------
Legal & General and Barclays Bank Plc have recently announced a strategic
alliance.  Initially, this important new alliance will focus on
Stakeholder pensions but, subject to regulatory approval, it will be
extended later this year to include Legal & General's full range of UK
life, pensions and savings products.  Last week we also announced a
partnership with Alliance and Leicester.  Together, these agreements are
expected to increase Legal & General's UK new individual EPI by a third in
the first full year of operation.


Investment management
---------------------
Our fast growing investment management business is a key strategic asset
of the Group.  It provides fund management expertise to trustees of
pension schemes, other institutional clients and to other Group
operations.  Group funds under management were £114bn at the year end
(1999: £108bn).

In 2000, our investment management team again delivered impressive new
business results, winning £12.7bn (1999: £13.1bn) of new institutional
funds of which £11.4bn (1999: £12.8bn) came from managed fund business.

The profits from investment management increased by 44% to £62m (1999:
£43m). The profit from the UK Managed Funds business was £53m (1999: £41m)
reflecting the very strong growth in funds under management in recent
years.  The profit for 2000 includes the benefit of UK double taxation
relief amounting to £16m (1999: £12m).  This benefit will cease to be
available from 2001 following changes in the 2000 Budget.  The investment
management profit also includes £3m (1999: £3m) from the Ventures
operation and a profit of £2m (1999: £4m loss) from the unit trust and
ISA/PEP business.


International life and pensions
-------------------------------
The profits from the Group's international businesses grew strongly by 44%
to £52m (1999: £36m).  Each of our international businesses reported
robust profit growth in local currency terms.

USA
Legal & General America has been successful in achieving a major position
in the high net worth term assurance market.  Business written is almost
entirely annual premium in nature with the positive impact that will have
on future premium revenue.  Legal & General America is a highly focused
manufacturer of term insurance with a proven ability to implement
technological solutions, a strong reputation for expense control and
for the quality of its underwriting.

New business EPI in 2000 was $93m down from $101m in 1999 when
substantial volumes of business were written prior to pricing changes
arising from new statutory solvency provisions, which came into effect on
1 January 2000.  Legal & General America is well positioned to continue to
increase its market share.

Profit before tax of $62m was up 29% (1999: $48m) reflecting the benefit
of the rapid growth in business achieved in recent years.


Netherlands
In the Netherlands, new business EPI increased by 43% to EUR. 20m (1999:
EUR. 14m) contrasting favourably with the decline in business seen in the
market overall.  Annual premium business increased 38% to EUR. 11m (1999:
EUR. 8m) reflecting the strong support we have received following a number
of product and service initiatives.  Single premium sales were
particularly strong, increasing 51% to EUR. 86m (1999: EUR. 57m) boosted
by an annuity product launch in October 2000.

Operating profit before tax grew by 22% to EUR. 11m (1999: EUR. 9m) once
again reflecting the strong growth in the business.


France
In France, new business EPI increased by 28% to EUR. 32m (1999: EUR. 25m).
Within this result, single premium life and pension business increased by
48% to EUR. 170m (1999: EUR. 115m).  Unit trust sales increased by 30%
over the year to EUR. 65m (1999: EUR. 50m).  The profit from this business
was EUR. 5m compared with the 1999 result of EUR. 2m, which was adversely
impacted by increased local reserving requirements and lower realised
gains.



General insurance
-----------------
The operating profit fell to £20m (1999: £25m).  The household account
remains the major component of the Group's general insurance premium
income and includes our joint venture with Woolwich Plc.  The household
account produced an operating profit of £5m (1999: £7m), despite adverse
weather claims of £17m in the fourth quarter of 2000.

The healthcare and ASU business, for which premiums have grown strongly, 
produced an operating profit of £1m (1999: £1m loss).  The motor business
also produced an operating profit of £1m (1999: £1m loss).

The operating profit for mortgage indemnity business was £21m (1999:
£20m).  This included £9m (1999: £6m) arising from the pre-1993 mortgage
indemnity reserves, reflecting settlements made.  The remaining provision
for pre-1993 business is £14m.

As indicated at the half year, the overseas result for 2000 comprises a
final settlement in respect of marine business written before 1980
through Andrew Weir Insurance Company Limited, a company now in
administration.



Other income
------------
Other income arising from investments held outside the UK long term fund,
together with profits arising from other operations, was £33m (1999:
£29m).  The Group's other operations (banking, estate agency and
Fairmount) produced a £1m profit (1999: £2m loss).  Unallocated
corporate expenses reduced to a more normal level of £5m (1999: £10m).



Change in shareholders' retained capital (SRC)
----------------------------------------------
Accounting standards require that the change in SRC be included in the
profit before tax.  

For 2000, the change in SRC, grossed up to a pre-tax amount, was an
increase of £30m (1999: £260m) and comprised:

 - a reduction in SRC of £24m (1999: increase of £288m) resulting from a 
   1% negative rate of investment return on equities and property (1999:
   a positive rate of investment return of 23%); and

 - the release of capital and profits from business written in previous
   years, which has been partially offset by the investment of SRC in the
   funding of new business not written in the with-profits fund.  In
   aggregate, these items amounted to an increase of £231m compared with
   an increase of £126m in 1999 - a period in which we strengthened our
   mortality assumptions for annuitants; less

 - the accrued transfer from SRC of £177m (1999: £154m), already included
   in the life and pensions operating profit.



Outlook
=======

Significant changes to the design and distribution of long term savings
and protection products are taking place.  Consumer choice and
increasingly flexible products, market regulation and Government
initiatives will drive the pace of these changes.

The FSA is currently consulting on proposed changes to the existing
polarisation regime.  The proposals permit 'multi-ties' for some products.
Given Legal & General's experience in successfully managing multiple
distribution channels, we believe the proposals, if adopted, will play to
the Group's strengths. 

April 2001 will see the launch of Stakeholder pensions.  We believe our
strength in distribution, e-commerce capabilities and investment
management skills will prove especially advantageous in developing a
powerful position in this highly important market over the next few years.



Dividend
========

The Board has declared a final dividend of 3.23p per share.  The total
dividend for the year has therefore grown by 14% to reach 4.71p,
reflecting the Group's strong performance.  The final dividend will be
paid on 1 May 2001 to shareholders registered at the close of business on
6 April 2001.  The shares go ex-dividend on 4 April 2001.



Notes:
------

 -  The Annual Report for 2000 will be sent to shareholders on 23 March
    2001.

 -  The Annual General Meeting will be held on 25 April 2001.

 -  This release can also be found on the investor relations section of
    our web site, www.landg.com.  The slides from the results
    presentation to analysts and a recording of that presentation will be
    added to the site later today.

 -  Institutional fund managers and analysts who cannot attend our results
    presentation may join a conference call at 15.00 GMT today.  To join
    the conference please call [phone] from 14.50 GMT.  Investors
    in the USA and Canada may call toll free on 1 888 881 4892.  The call
    will be archived for 48 hours on [phone] pin 117227 and toll
    free in the USA and Canada on 1 416 640 1917 pin 94684.




Enquiries to:

Investors:
Andrew Palmer, Group Director (Finance)      020 7528 6290
Peter Horsman, Investor Relations Manager    020 7528 6362


Media:
John Morgan, Head of Public Relations        020 7528 6213
Anthony Carlisle, Citigate Dewe Rogerson     0973 611888



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