2004 New Business Results
Legal & General Group PLC
20 January 2005
20 January 2005
Legal & General Group Plc
=========================
2004 new business results
=========================
• Worldwide full year new business breaks £1bn barrier
• UK new business up 13% to a record £901m
• Another outstanding year for institutional fund management
12 months Increase/ 3 months Increase/
New business APE* to 31/12/04 decrease to 31/12/04 decrease
UK individual business
- life and pensions £614m +24% £170m +29%
- retail investments £179m -11% £34m 0%
- total £793m +14% £204m +23%
UK group business £108m +10% £23m +15%
UK total £901m +13% £227m +22%
International £107m +16% £22m +5%
Worldwide total £1,008m +14% £249m +20%
* Annual Premium Equivalent (APE) is total new annual premiums + 10% of single
premiums.
New institutional fund management £15.5bn +19% £4.4bn +47%
David Prosser, Group Chief Executive, said: 'We have ended 2004 with our
strongest quarter on quarter growth in UK individual business and have achieved
a record level of new business in the full year.
UK individual life and pensions increased by 29% in the final quarter - a clear
indication of the momentum of our business. Over the year, new worldwide life,
pensions and savings business exceeded £1bn APE for the first time, with our UK
business contributing over £900m of this total. We believe continued recovery in
equity markets will further increase consumer confidence in savings products.
Legal & General Investment Management has had yet another outstanding year,
winning no less than £15.5bn of new funds, bringing total funds under management
to £162bn.
The consistent application of our proven strategy has enabled us to build our UK
market share continuously over the last ten years. The excellent new business
performance in 2004 was a testimony to the strength of our business model which,
we believe, will continue to deliver profitable growth.'
UK BUSINESS
===========
In the final quarter, Legal & General delivered 22% growth in new business. This
brought sales for the year to £901m APE (2003: £794m), an increase of 13%, as
the market continued to concentrate on those companies with well recognised
brands coupled with operational and financial strength.
Individual
==========
Individual new business in the final quarter at £204m APE exceeded both the
third quarter and the corresponding period last year. This brought individual
new business for the full year to £793m APE (2003: £696m) an increase of 14%.
IFA sourced new business grew 38% in the final quarter with particularly strong
sales in unit-linked bonds and individual pensions.
Life
----
Despite the lower level of activity in the housing market, increased term
assurance sales have more than offset lower volumes of critical illness
business. As a consequence, annual premium sales increased by 7% over the year
to £160m (2003: £149m).
Full year sales of single premium bonds increased by 61% to £1,808m (2003:
£1,126m), as unit linked bond business more than doubled, benefiting from an
expanded product range and more than offsetting lower with-profit bond sales.
New single premiums in the final quarter also increased by 61% to £542m (2003:
£337m).
Pensions
--------
Increased individual pension and annuity sales led to a 25% increase in single
premium business over the year to £1,476m (2003: £1,180m). New single premiums
in the fourth quarter were even stronger, 43% ahead at £434m (2003: £304m).
Annual premium new business was unchanged at £33m bringing the full year total
to £126m (2003: £114m), an increase of 11%.
ISAs and unit trusts
--------------------
Equity market volatility in the early part of 2004 impacted sales of ISAs and
unit trusts, which finished the year at £179m APE (2003: £202m). Regular payment
business for the full year was lower at £22m (2003: £33m) and single payment
sales fell 7% to £1,565m (2003: £1,689m). However, single payment sales in the
fourth quarter grew by 6% to £295m (2003: £279m), helped by increased sales to
institutional clients.
Group
=====
Group new business for the year increased by 10% to £108m (2003: £98m) as higher
annual premium sales more than offset lower levels of single premium business.
In the fourth quarter, new business increased 15% to £23m (2003: £20m).
In 2004, we benefited from a competitor's withdrawal from the group risk market,
which resulted in an increase in annual premium business of 63% to £62m (2003:
£38m). Single premium business of £456m (2003: £603m) reflected lower levels of
bulk purchase annuity business. However, we maintained a steady flow of small
and medium sized bulk purchase annuity cases with new business rising in the
final quarter to £98m (2003: £83m).
Expanding distribution
======================
During the year we have continued to build our business sourced from IFAs and at
the same time we have been positioning ourselves for the introduction of
depolarisation. Quality products and increased focus on this segment have
enabled us to grow business from this channel by 32%. Prospects continue to be
strong, particularly following our announcement last year of an important link
with Cofunds, the IFA platform. In addition, we have been appointed to the
protection panels of Bankhall and Sesame and, earlier this month, THINC Destini
announced that we had been appointed to their multi-tie panel.
Bradford & Bingley announced in November 2004 that it would tie to Legal &
General for protection and investment products, an agreement which comes into
effect this month. The introduction of the regulation of mortgage advice
provided an opportunity, through Legal & General Partnership Services Ltd, to
further develop our market leading mortgage related distribution by establishing
a network of tied mortgage advisers.
Outlook
=======
In our judgement, levels of consumer confidence in savings markets grew steadily
through 2004, a view supported by both the growth in equity values and the
momentum in our UK individual new business performance, with each quarter
exceeding the prior year.
Our expectation for 2005 is that we will maintain momentum despite the impact of
rising interest rates on products relating to the housing market. The prospects
for growth in other product areas, in particular in individual pensions and
medium term savings products, remain encouraging driven by increasing consumer
demand, further product development and enhanced distribution capabilities.
INSTITUTIONAL FUND MANAGEMENT
=============================
Over the year, Legal & General Investment Management maintained its highly
successful track record, delivering new funds of £15.5bn (2003: £13.1bn).
Results for 2004 include an impressive increase in the volume of actively
managed fixed interest business at £2.5bn (2003: £1.5bn).
In the last seven years, the company has averaged in excess of £1bn of new UK
pension fund investment business per month, totalling £94bn over the period. At
the year end, funds managed by Legal & General Investment Management were up 20%
at £162bn (2003: £135bn), reflecting both new business success and equity market
recovery.
INTERNATIONAL BUSINESS
======================
In sterling terms, international new business was £107m (2003: £92m). The
contribution from the USA was adversely affected by the weakness of the dollar,
as reflected in the year end exchange rate of $1.92 (2003: $1.79).
In local currency terms, new business in the USA was 14% higher over the year at
$98m (2003: $86m). Fourth quarter new business grew 20% to $24m (2003: $20m).
The XXX capital markets solution to finance new business written in 2004 and
some older business is now in place.
Our European businesses produced new business of €79m, a 30% increase over the
year (2003: €61m). In the Netherlands, where we were again named Best Life
Assurer, strong performance in term assurance contributed to a 17% increase in
new business to €35m (2003: €30m). In France, new business (including unit
trusts) grew 42% to €44m (2003: €31m). Growth in life assurance, with group
business especially strong, more than offset slightly lower unit trust sales.
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:
2004 preliminary results 24 February 2005
2005 first quarter new business results and AGM 27 April 2005
2005 interim results and second quarter new business 28 July 2005
2005 third quarter new business results 20 October 2005
LEGAL & GENERAL GROUP PLC
UNAUDITED NEW BUSINESS PREMIUMS
YEAR ENDED 31 DECEMBER 2004
NEW UK BUSINESS
===============
Year ended Three months to
31 December increase/ 31 December increase/
2004 2003 (decrease) 2004 2003 (decrease)
£m £m % £m £m %
INDIVIDUAL LIFE AND PENSIONS
BUSINESS
New annual premiums
Life:
- Mortgage related 109 103 27 25
- Protection 51 46 13 10
Pensions:
- Individual pensions 126 114 33 33
------- ------- ------ ------- ------- ------
Total new annual premiums 286 263 9 73 68 7
Single premiums
Life:
- With-profits 390 593 80 143
- Other 1,418 533 462 194
Pensions:
- Individual pensions 452 274 150 57
- Annuities - individual 859 727 212 202
- DWP rebates 165 179 72 45
------- ------- ------ ------- ------- ------
Total single premiums 3,284 2,306 42 976 641 52
Individual life and ------- ------- ------ ------- ------- ------
pensions APE 614 494 24 170 132 29
======= ======= ====== ======= ======= ======
ISAS, PEPS AND UNIT TRUSTS
New annual premiums
- ISAs/PEPs
(excluding cash ISAs) 20 27 4 5
- Unit trusts 2 6 0 1
------- ------- ------ ------- ------- ------
Total new annual premiums 22 33 (33) 4 6 (33)
Single premiums
- ISAs/PEPs
(excluding cash ISAs) 499 572 62 76
- Unit trusts 1,066 1,117 233 203
------- ------- ------ ------- ------- ------
Total single premiums 1,565 1,689 (7) 295 279 6
ISAs, PEPs and ------- ------- ------ ------- ------- ------
unit trusts APE 179 202 (11) 34 34 0
======= ======= ====== ======= ======= ======
Total individual ------- ------- ------ ------- ------- ------
business APE 793 696 14 204 166 23
======= ======= ====== ======= ======= ======
GROUP LIFE AND PENSIONS
BUSINESS
New annual premiums
- Group risk 59 34 12 10
- Group pensions 3 4 1 2
------- ------- ------ ------- ------- ------
Total new annual premiums 62 38 63 13 12 8
Single premiums
- Annuities
- bulk purchase 449 598 98 83
- Other group business 7 5 3 (4)
------- ------- ------ ------- ------- ------
Total single premiums 456 603 (24) 101 79 28
Group life and ------- ------- ------ ------- ------- ------
pensions APE 108 98 10 23 20 15
------- ------- ------ ------- ------- ------
Total UK APE 901 794 13 227 186 22
======= ======= ====== ======= ======= ======
INSTITUTIONAL FUND MANAGEMENT
UK Managed Funds
- Pooled funds 13,951 11,066 4,252 2,739
- Segregated funds 1,228 1,504 85 248
------- ------- ------ ------- ------- ------
15,179 12,570 21 4,337 2,987 45
UK Other 368 482 68 12
------- ------- ------ ------- ------- ------
15,547 13,052 19 4,405 2,999 47
======= ======= ====== ======= ======= ======
LEGAL & GENERAL GROUP PLC
UNAUDITED NEW BUSINESS PREMIUMS
YEAR ENDED 31 DECEMBER 2004
WORLDWIDE NEW BUSINESS
======================
Year ended Three months to
31 December increase/ 31 December increase/
2004 2003 (decrease) 2004 2003 (decrease)
£m £m % £m £m %
Annual premiums
Life and pensions:
- Life 219 183 52 45
- Pensions 129 118 34 35
------- ------- ------ ------- ------- ------
UK 348 301 16 86 80 8
- USA 51 47 10 8
- Netherlands 13 12 3 4
- France 14 7 1 1
------- ------ ------ ------- ------- ------
Total life and pensions 426 367 16 100 93 8
Retail investment business:
- UK 22 33 4 6
------- ------- ------ ------- ------- ------
Total new annual premiums 448 400 12 104 99 5
Single premiums
Life and pensions:
- Life 1,808 1,126 542 337
- Pensions 1,932 1,783 535 383
------- ------- ------ ------- ------- ------
UK 3,740 2,909 29 1,077 720 50
- USA 1 10 0 (1)
- Netherlands 117 96 27 29
- France 152 124 46 39
------- ------- ------ ------- ------- ------
Total life and pensions 4,010 3,139 28 1,150 787 46
Retail investment business:
- UK 1,565 1,689 295 279
- France 23 25 9 7
------- ------- ------ ------- ------- ------
Total single premiums 5,598 4,853 15 1,454 1,073 36
Annual premium equivalent
(APE)
- UK life and pensions
business 722 592 193 152
- Overseas life and
pensions business 105 89 21 20
Total life and pensions ------- ------- ------ ------- ------- ------
business 827 681 21 214 172 24
- UK retail investment
business 179 202 34 34
- Overseas retail
investment business 2 3 1 1
------- ------- ------ ------- ------- ------
Total retail nvestment
business 181 205 (12) 35 35 0
------- ------- ------ ------- ------- ------
Worldwide APE 1,008 886 14 249 207 20
======= ======= ====== ======= ======= ======
LEGAL & GENERAL GROUP PLC
UNAUDITED NEW BUSINESS PREMIUMS
YEAR ENDED 31 DECEMBER 2004
OVERSEAS OPERATIONS IN LOCAL CURRENCY
=====================================
Year ended Three months to
31 December increase/ 31 December increase/
2004 2003 (decrease) 2004 2003 (decrease)
% %
USA ($m):
New annual premiums 98 84 24 20
Single premiums 1 18 0 0
APE 98 86 14 24 20 20
Netherlands (€m):
New annual premiums 18 16 4 4
Single premiums 166 136 33 40
APE 35 30 17 7 8 (13)
France (€m):
New annual premiums 19 10 1 1
Single premiums 214 176 59 55
Unit trusts 32 36 12 10
APE 44 31 42 8 8 0
UK INDIVIDUAL APE BY CHANNEL
============================
Year ended 31 December 2004
Annual Single Total APE
£m £m £m %
Independent financial
advisers 171 334 505 64
Business partnerships 115 120 235 30
Business partnerships
direct 4 14 18 2
Direct 18 17 35 4
------ ------ ------ ------
308 485 793 100
====== ====== ====== ======
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
====== ====== ====== ======
Three months to 31 December 2004
Annual Single Total APE
£m £m £m %
Independent financial
advisers 45 92 137 67
Business partnerships 27 32 59 29
Business partnerships
direct 1 1 2 1
Direct 4 2 6 3
------ ------ ------ ------
77 127 204 100
====== ====== ====== ======
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
====== ====== ====== ======
This information is provided by RNS
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