L&G 2003 New Business Results

Legal & General Group PLC 26 January 2004 26 January 2004 Legal & General Group Plc ========================= 2003 new business results ========================= • UK individual business continues to outperform market • Further expansion of distribution • Momentum maintained in institutional fund management new business • A record £138bn of funds managed by Legal & General Group 12 months Increase/ 3 months Increase/ to 31/12/03 decrease to 31/12/03 decrease New business APE* - UK individual business £696m -6% £166m +6% - UK group business £98m +32% £20m +5% UK total £794m -2% £186m +6% Worldwide total £886m -2% £207m +5% New institutional fund management £13.1bn £3.0bn * Annual Premium Equivalent (APE) is total new annual premiums + 10% of single premiums and includes ISA and unit trust sales. David Prosser, Group Chief Executive, said: 'Consumer savings in the UK were held back in the early part of 2003 by the volatility and decline in equity markets. Against this backdrop, Legal & General performed well, continuing profitably to build market share. In the second half of 2003, our core UK individual business returned to growth with new business increasing by 4% in the third quarter and by 6% in the fourth quarter. Our institutional fund management business has maintained its impressive momentum, again averaging over £1bn of new funds each month during the year. We believe 2004 will see further recovery in equity markets and it is this steady progress which will restore consumer confidence in savings products. In these conditions, we expect to benefit from our balanced distribution and product strengths by achieving further gains in market share.' UK business =========== Market conditions have been testing for the industry in 2003 but the success of our balanced distribution model and product range has allowed us to gain further market share in a year of continuing consolidation for the sector. Individual ========== In the final quarter, individual new business at £166m APE was up 6% (2002: £157m), reflecting sales growth in most product areas. Over the year, resilient term assurance sales and further progress in individual annuity business partly offset the declines in annual premium pensions business and single premium bond sales. Overall, individual new business (including ISAs and unit trusts) was 6% lower at £696m APE (2002: £737m). Life ---- Competitive products, coupled with efficient on-line processing and steadily extending distribution reach, have enabled us to build a leading position in the life protection market. As a consequence, annual premium sales increased to £149m (2002: £141m). 70% of term assurance applications are now submitted on-line. Demand for single premium bonds grew with consumer confidence in the second half of the year but has yet to regain 2002 levels. Full year sales fell by 21% to £1,126m (2002: £1,431m) as growth in sales of unit linked bonds partly offset the decline in with-profits bond sales. In the final quarter, new single premiums were 7% lower at £337m (2002: £362m). Pensions -------- Fourth quarter annual premium new business was 10% higher at £33m (2002: £30m) following the introduction of a new money purchase contract. However, over the year new annual premium business was lower at £114m (2002: £162m) following the initial population of Stakeholder schemes in 2002. Increased individual annuity sales and a higher level of DSS rebates led to a 35% increase in single premium business over the year to £1,180m (2002: £876m). New single premiums in the fourth quarter were 20% ahead at £304m (2002: £253m). ISAs and unit trusts -------------------- Our broad product range and distribution strengths sustained full year sales at £202m APE (2002: £203m) although the overall market was adversely impacted by equity market volatility in the early part of the year. Regular payment business for the full year was lower at £33m (2002: £51m) but single payment sales increased by 11% to £1,689m (2002: £1,522m). Single payment sales in the fourth quarter grew by 25% to £279m (2002: £223m). Group ===== Group new business for the year increased by 32% to £98m APE (2002: £74m) as bulk purchase annuity business grew strongly. In the fourth quarter, new business was broadly similar at £20m APE (2002: £19m). Annual premium business remained largely unchanged over the year at £38m (2002: £37m) as growth in group risk business was offset by a lower contribution from the maturing group pensions portfolio. Single premium business at £603m (2002: £373m) reflected particularly strong growth in bulk purchase annuity business. However, this business was impacted by the pattern of closures, so in the final quarter single premium new business was lower at £79m (2002: £111m). We have continued to win encouraging volumes of bulk purchase business in the small and mid-sized segment. Distribution ============ Our value for money products, financial strength and broad distribution capability continued to attract new distribution partners in 2003, most notably Spicer Haart, Norwich & Peterborough Building Society, Chelsea Building Society and National Australia Bank. Since the end of 2003, Sainsbury's Bank have announced that they will offer Legal & General term assurance to the 11m customers who shop regularly in the group's supermarkets. In addition to expanding our tied distribution, we have also focussed additional effort on the IFA market, which we believe offers further growth opportunities for Legal & General. Looking ahead, we believe our strong brand and our operational and financial flexibility position us well to respond to further recovery in consumer demand. We also believe that the changes in products and distribution to be brought about by Government and regulatory initiatives will favour our business model. Institutional fund management ============================= Over the year, our institutional fund management business maintained its highly successful track record, winning new funds of £13.1bn (2002: £14.0bn). This result, which includes increased volumes of active bond business, has ensured our record of averaging over £1bn of new UK pension fund investment business per month has now extended over six years. Group funds under management at the year end at £138bn were up 19% (2002: £116bn), reflecting both new business success and equity market recovery. International business ====================== In sterling terms, international new business was £92m APE (2002: £95m) with the contribution from the USA impacted by the weakness of the dollar reflected in the year end exchange rate of $1.79 (2002: $1.61). In local currency terms, new business in the USA was 7% lower over the year at $86m APE (2002: $92m). Fourth quarter new business fell 17% to $20m APE (2002: $24m) as some competitors, moving away from savings related products, priced term assurance aggressively for a limited period. Legal & General America remains a top 10 provider in the term assurance market for upper income customers. Our European businesses produced €61m APE, a 3% increase over the year (2002: €59m). In the Netherlands, where we have again been named Best Life Assurer, new business of €30m APE (2002: €29m) benefited from a strong contribution from term assurance. In France, new business (including unit trusts) was €31m APE (2002: €30m). Growth in life assurance, with group business growing strongly, more than offset lower unit trust sales where consumer confidence in equity based products has been slow to recover. For further information contact: Investors: Peter Horsman Media: John Morgan Head of Investor Relations Head of Public Relations 020 7528 6362 020 7528 6213 Anthony Carlisle Citigate Dewe Rogerson 020 7638 9571 07973 611888 Notes: 1. A copy of this announcement can be found in the shareholder section of our website at http://investor.legalandgeneral.com/releases.cfm 2. Financial Calendar: 2003 preliminary results 26 February 2004 2004 first quarter new business results and AGM 28 April 2004 2004 interim results and second quarter new business 29 July 2004 2004 third quarter new business results 20 October 2004 LEGAL & GENERAL GROUP PLC UNAUDITED NEW BUSINESS PREMIUMS YEAR ENDED 31 DECEMBER 2003 NEW UK BUSINESS Year ended Three months to 31 December increase/ 31 December increase/ 2003 2002 (decrease) 2003 2002 (decrease) £m £m % £m £m % INDIVIDUAL LIFE AND PENSIONS BUSINESS New annual premiums Life: - Mortgage related 103 96 25 23 - Protection 46 45 10 11 Pensions: - Individual pensions 114 162 33 30 ------ ------ ------ ------ ------ ------ Total new annual premiums 263 303 (13) 68 64 6 Single premiums Life: - With-profits 593 1,172 143 286 - Other 533 259 194 76 Pensions: - Individual pensions 274 283 57 69 - Annuities - individual 727 434 202 134 - DSS rebates 179 159 45 50 ------ ------ ------ ------ ------ ------ Total single premiums 2,306 2,307 0 641 615 4 Individual life ------ ------ ------ ------ ------ ------ and pensions APE 494 534 (7) 132 126 5 ====== ====== ====== ====== ====== ====== Year ended Three months to 31 December increase/ 31 December Increase/ 2003 2002 (decrease) 2003 2002 (decrease) £m £m % £m £m % ISAS, PEPS AND UNIT TRUSTS New annual premiums - ISAs/PEPs (excluding cash ISAs) 27 44 5 7 - Unit trusts 6 7 1 2 ------ ------ ------ ------ ------ ------ Total new annual premiums 33 51 (35) 6 9 (33) Single premiums - ISAs/PEPs (excluding cash ISAs) 572 720 76 74 - Unit trusts 1,117 802 203 149 ------ ------ ------ ------ ------ ------ Total single premiums 1,689 1,522 11 279 223 25 ISAs, PEPs and ------ ------ ------ ------ ------ ------ unit trusts APE 202 203 0 34 31 10 ====== ====== ====== ====== ====== ====== ------ ------ ------ ------ ------ ------ Total individual business APE 696 737 (6) 166 157 6 ====== ====== ====== ====== ====== ====== Year ended Three months to 31 December increase/ 31 December Increase/ 2003 2002 (decrease) 2003 2002 (decrease) £m £m % £m £m % GROUP LIFE AND PENSIONS BUSINESS New annual premiums - Group risk 34 30 10 6 - Group pensions 4 7 2 2 ------ ------ ------ ------ ------ ------ Total new annual premiums 38 37 3 12 8 50 Single premiums - Annuities - bulk purchase 598 307 83 97 - Other group business 5 66 (4) 14 ------ ------ ------ ------ ------ ------ Total single premiums 603 373 62 79 111 (29) Group life ------ ------ ------ ------ ------ ------ and pensions APE 98 74 32 20 19 5 ------ ------ ------ ------ ------ ------ Total UK APE 794 811 (2) 186 176 6 ====== ====== ====== ====== ====== ====== INSTITUTIONAL FUND MANAGEMENT UK Managed Funds - Pooled funds 11,066 12,359 2,739 3,187 - Segregated funds 1,504 1,039 248 550 ------ ------ ------ ------ 12,570 13,398 2,987 3,737 UK Other 482 569 12 27 ------ ------ ------ ------ ------ ------ 13,052 13,967 (7) 2,999 3,764 (20) ====== ====== ====== ====== ====== ====== LEGAL & GENERAL GROUP PLC UNAUDITED NEW BUSINESS PREMIUMS YEAR ENDED 31 DECEMBER 2003 WORLDWIDE NEW BUSINESS Year ended Three months to 31 December Increase/ 31 December increase/ 2003 2002 (decrease) 2003 2002 (decrease) £m £m % £m £m % Annual premiums Life and pensions: - Life 183 171 45 40 - Pensions 118 169 35 32 ------ ------ ------ ------ ------ ------ UK 301 340 (11) 80 72 11 - USA 47 57 8 14 - Netherlands 12 10 4 2 - France 7 5 1 1 ------ ------ ------ ------ ------ ------ Total life and pensions 367 412 (11) 93 89 4 367 Retail investment business: - UK 33 51 6 9 ------ ------ ------ ------ ------ ------ Total new annual premiums 400 463 (14) 99 98 1 Single premiums Life and pensions: - Life 1,126 1,431 337 362 - Pensions 1,783 1,249 383 364 ------ ------ ------ ------ ------ ------ UK 2,909 2,680 9 720 726 (1) - USA 10 3 (1) 1 - Netherlands 96 87 29 20 - France 124 111 39 28 ------ ------ ------ ------ ------ ------ Total life and pensions 3,139 2,881 9 787 775 2 Retail investment business: - UK 1,689 1,522 279 223 - France 25 32 7 9 ------ ------ ------ ------ ------ ------ Total single premiums 4,853 4,435 9 1,073 1,007 7 Annual Premium Equivalent (APE) - UK life and pensions business 592 608 152 144 - Overseas life and pensions business 89 92 20 22 ------ ------ ------ ------ ------ ------ Total life and pensions business 681 700 (3) 172 166 4 - UK retail investment business 202 203 34 31 - Overseas retail investment business 3 3 1 1 ------ ------ ------ ------ ------ ------ Total retail investment business 205 206 0 35 32 9 ------ ------ ------ ------ ------ ------ Worldwide APE 886 906 (2) 207 198 5 ====== ====== ====== ====== ====== ====== LEGAL & GENERAL GROUP PLC UNAUDITED NEW BUSINESS PREMIUMS YEAR ENDED 31 DECEMBER 2003 OVERSEAS OPERATIONS IN LOCAL CURRENCY Year ended Increase/ Three months to increase/ 31 December (decrease) 31 December (decrease) 2003 2002 % 2003 2002 % USA ($m): New annual premiums 84 91 20 24 Single premiums 18 5 0 2 APE 86 92 (7) 20 24 (17) Netherlands (€ m): New annual premiums 16 16 4 3 Single premiums 136 133 40 27 APE 30 29 3 9 6 50 France (€ m): New annual premiums 10 8 1 1 Single premiums 176 170 55 37 Unit trusts 36 49 10 13 APE 31 30 3 7 6 17 UK INDIVIDUAL APE BY CHANNEL Year ended 31 December 2003 Annual Single Total APE £m £m £m % Independent financial advisers 147 235 382 55 Business partnerships 121 131 252 36 Business partnerships direct 10 17 27 4 Direct 18 17 35 5 ------ ------ ------ ------ 296 400 696 100 ====== ====== ====== ====== Year ended 31 December 2002 Annual Single Total APE £m £m £m % Independent financial advisers 155 185 340 46 Business partnerships 155 147 302 41 Business partnerships direct 22 22 44 6 Direct 22 29 51 7 ------ ------ ------ ------ 354 383 737 100 ====== ====== ====== ====== Three months to 31 December 2003 Annual Single Total APE £m £m £m % Independent financial advisers 41 58 99 60 Business partnerships 29 31 60 36 Business partnerships direct 1 1 2 1 Direct 3 2 5 3 ------ ------ ------ ------ 74 92 166 100 ====== ====== ====== ====== Three months to 31 December 2002 Annual Single Total APE £m £m £m % Independent financial advisers 30 48 78 50 Business partnerships 39 30 69 44 Business partnerships direct 2 2 4 2 Direct 2 4 6 4 ------ ------ ------ ------ 73 84 157 100 ====== ====== ====== ====== This information is provided by RNS The company news service from the London Stock Exchange

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