2005 FY New Business Result
Legal & General Group PLC
26 January 2006
26 January 2006
Stock Exchange Release
LEGAL & GENERAL GROUP PLC
2005 NEW BUSINESS RESULTS
HIGHLIGHTS
• Record year for new business:
o 29% increase in worldwide new business to £1.3 billion.
o UK retail new business passes the £1 billion milestone, with strong
demand for savings products.
o LGIM wins nearly £7 billion of new investment management business in the
last three months and a record £17.1 billion over the year.
New business APE(1) (£m) Full year % change on Q4 2005 % change on
2005 2004 2004
UK individual life and pensions 710 16 181 6
UK retail investments 315 76 67 97
___________________________________________
UK retail business total 1,025 29 248 22
___________________________________________
Corporate life and pensions 162 50 44 91
___________________________________________
UK business total 1,187 32 292 29
___________________________________________
International business 109 2 25 9
___________________________________________
Worldwide total 1,296 29 317 27
___________________________________________
Investment management £17.1bn 10 £6.9bn 57
'This has been a year of remarkable growth for Legal & General. Our UK new
business grew by almost a third in 2005 and our investment management business
won a record £17.1 billion.
Unit-linked bond sales have increased by nearly 50% and single payment unit
trusts by 142%. Growth in individual pensions has been impressive and our
corporate life and pensions businesses have performed very strongly - bulk
purchase annuity sales in the final quarter have more than tripled.
Through substantial and sustained organic growth, Legal & General has become one
of the largest long-term savings, investment and protection groups in the UK.
Our flexible and broad distribution model has produced outstanding results and
forms a platform for success going forward. Strength in the IFA markets and good
growth in our Banking and Building Society channel form the core of our winning
proposition. We are well positioned for further growth in the UK market.'
Tim Breedon, Group Chief Executive
Notes
1 Annual Premium Equivalent (APE) is total new annual premiums + 10% of single
premiums, including ISAs and unit trusts.
UK RETAIL BUSINESS - Q4 up 22% to £248m APE, FY up 29% to £1,025m
The sales environment for UK savings and investment products continued to
benefit from improving equity markets and a further recovery in consumer
confidence. This is particularly evidenced by the strong growth in unit trust
and unit-linked bond volumes. Sales of protection business reflected the
relatively weaker house purchase market. The approaching changes to the tax
regime covering UK pensions, which will be implemented on 6 April 2006
('A-Day'), have clearly stimulated an up-lift in pensions business.
In this more positive UK environment, our clear strengths in distribution, our
customer focused products and well-recognised brand enabled us to secure strong
growth, particularly in savings-related business.
Protection - Q4 down 13% to £35m
Sales of annual premium mortgage related protection business in Q4 were
unchanged from Q3 at £24m. Against a strong Q4 last year of £27m, sales were
11% lower, impacted by a slower housing market in 2005. Similarly, other
protection business was below the same quarter last year at £11m (Q4 2004:
£13m). Over the full year, mortgage related business of £91m (2004: £109m) and
other protection volumes of £47m (2004: £51m) were down 17% and 8% respectively.
Savings - Q4 up 17% to £63m APE
Continuing the trend of strong growth in sales of single premium unit-linked
bonds which we experienced in earlier quarters, volumes rose by 30% in Q4 to
£599m (Q4 2004: £462m). We benefited further from the launch of our multi-fund
bond to Bradford & Bingley's customers using the Legal & General branded
platform developed jointly with Cofunds. In a pilot project, the multi-fund
bond was also launched to selected IFAs in November using the Cofunds platform.
Over the full year, sales increased by 47% to £2,082m (2004: £1,418m).
With-profits bond sales continued to decline in Q4 to £32m (Q4 2004: £80m),
bringing the full year total to £169m (2004: £390m).
Pensions - Q4 up 33% to £73m APE
New annual premium pension business increased by 33% in Q4 to £44m (Q4 2004:
£33m) and single premium new business, excluding DWP rebates, grew by 46% to
£219m (Q4 2004: £150m). Over the full year, annual and single premium business,
again excluding DWP rebates, increased by 54% from £171m APE in 2004 to £263m
APE in 2005. Our focus remains on the pensions transfer market in the run-up to
pensions A-Day and on employer related business fuelled by scheme
reconstructions. DWP rebates for the quarter were in line with the prior year at
£73m (Q4 2004: £72m).
The Pensions Commission was appointed by the Government in December 2002 to keep
under review the adequacy of private pension saving in the UK and advise on
appropriate policy changes. It published its Second Report in November 2005.
We welcomed the recommendations it contained regarding auto-enrolment and
employer-matching and are currently working with the ABI to develop a response
to the Report.
Annuities - Q4 down 57% to £9m APE
Sales of individual annuities fell to £92m in Q4 (Q4 2004: £212m). Competition
in this market segment has intensified in the second half of the year. Our
continued focus on return on capital rather than volumes has led to a fall in
sales of 16% over the full year to £722m (2004: £859m).
Retail investments - Q4 up 97% to £67m APE
Sales of single payment ISAs increased marginally to £66m in Q4 (Q4 2004: £62m).
Single payment unit trusts sales grew significantly to £576m in Q4 2005, up
from £233m in Q4 2004. Over the full year, single payment unit trusts and ISA
volumes increased by 92% to £2,999m (2004: £1,565m). Unit trust funds under
management reached £16.6bn at the year-end (31 December 2004: £12.8bn).
UK CORPORATE BUSINESS - Q4 up 91% to £44m APE, FY up 50% to £162m
In Q4, sales of single premium bulk purchase annuities were very strong at £328m
(Q4 2004: £98m), reflecting our success in winning good volumes of small and
medium sized cases. For the full year, sales were at their highest ever level of
£877m (2004: £449m).
Group Risk new annual premiums fell marginally from £12m in Q4 2004 to £11m in
Q4 2005, as the business opportunity arising following the withdrawal of a
competitor from the market at the end of 2003 tailed off. Over the full year,
Group Risk new business increased by 19% to £70m (2004: £59m).
INTERNATIONAL BUSINESS - Q4 up 9% to £25m APE, FY up 2% to £109m
In the USA, continued difficult trading conditions in the brokerage market
caused a 17% reduction in Q4 new business in local currency terms to $20m (Q4
2004: $24m APE). Over the year, volumes decreased by 23% from $98m APE in 2004
to $75m APE in 2005.
We continue to achieve good growth in our European businesses. New business
volumes in the Netherlands increased by 57% to €11m APE (Q4 2004: €7m APE) and
in France by 25% to €10m APE (Q4 2004: €8m APE). Total volumes for the year
were €42m APE in the Netherlands (2004: €35m APE) and €57m APE in France (2004:
€44m APE).
INVESTMENT MANAGEMENT - Q4 new business up 57% to £6.9bn, FY up 10% to £17.1bn
Legal & General Investment Management has once again delivered an outstanding
performance, with a 57% increase in new business in Q4 to £6.9bn (Q4 2004:
£4.4bn). Total new business for 2005 was up 10% to £17.1bn (2004: £15.5bn),
£8.8bn of which was received from existing clients. This strong growth, combined
with very favourable persistency rates and an increase in market values, led to
a 26% growth in funds under management to £204bn at the year-end (31 December
2004: £162bn), of which 71% related to external funds.
We continue to diversify our business mix and our client base. UK corporate
pension clients continued to award us active fixed interest business and almost
£1bn of new business was sourced from overseas this year. In addition, £2bn
came from non-pension institutional clients such as charities and friendly
societies.
OUTLOOK
We expect the investment, savings and protection market in the UK to continue to
grow in 2006. We believe that investor confidence will show further improvement
and that a cautious upturn in the housing market will lead to a gradual recovery
in protection volumes. We anticipate that pensions A-Day will remain a
significant positive influence on volumes of pensions transfer business, on
restructuring of employer-related schemes and on sales of bulk purchase
annuities.
In the year ahead, Legal & General looks forward to extending further its
already broad distribution reach. In Q1 2006, we will launch our multi-fund
bond product to the wider market of IFAs using the Cofunds platform and, in Q2,
will add our pensions products.
In addition, we are pleased to announce that, subject to FSA approval, Legal &
General is to become the annuity provider for Skandia's maturing pension
customers who do not take the open market option. It is intended that Legal &
General will take over Skandia Life's existing annuity book later this year.
With our expanding distribution network, our attractive product proposition,
strong brand and customer focus, Legal & General expects to extend further its
leading position in the UK savings, investments and protection markets this
year.
Enquiries to:
Investors:
Peter Horsman, Head of Investor Relations 020 7528 6362
Nicola Marshall, Investor Relations Manager 020 7528 6263
Media:
John Morgan, Media Relations Director 020 7528 6213
Anthony Carlisle, Citigate Dewe Rogerson 07973 611888
Forward-looking statements:
This document may contain certain forward-looking statements with respect to
certain of Legal & General's plans and its current goals and expectations
relating to future financial condition, performance and results. By their
nature forward-looking statements involve risk and uncertainty because they
relate to future events and circumstances which are beyond Legal & General's
control, including, among others, UK domestic and global economic and business
conditions, market related risks such as fluctuations in interest rates and
exchange rates, the policies and actions of regulatory authorities, the impact
of competition and the policies and actions of governmental and regulatory
authorities, the timing impact and other uncertainties of future acquisition or
combinations within relevant industries. As a result, Legal & General's actual
future condition, performance and results may differ materially from the plans,
goals and expectations set out in Legal & General's forward-looking statements.
Legal & General does not undertake to update forward-looking statements
contained in this document or any other forward-looking statement it may make.
Notes:
- A copy of this announcement can be found in the News and Results section of
our Shareholder site at http://investor.legalandgeneral.com/releases.cfm
- Issued share capital at 31 December 2005 was 6,507,421,932 shares of 2.5p
each.
Financial Calendar:
17 March 2006 2005 Preliminary results
26 April 2006 First quarter new business results
18 May 2006 Annual General Meeting
27 July 2006 Interim results
18 October 2006 Third quarter new business results
Legal & General Group Plc
Unaudited New Business Premiums
Year ended 31 December 2005
UK NEW BUSINESS
Year ended Three months to
31 December increase/ 31 December increase/
2005 2004 (decrease) 2005 2004 (decrease)
£m £m % £m £m %
UK INDIVIDUAL LIFE AND PENSIONS BUSINESS
New annual premiums
Life:
- Mortgage related 91 109 (17) 24 27 (11)
- Protection 47 51 (8) 11 13 (15)
Pensions:
- Individual pensions 170 126 35 44 33 33
___________________________________________________________________________________________________
Total new annual premiums 308 286 8 79 73 8
Single premiums
Life:
- With-profits 169 390 (57) 32 80 (60)
- Unit-linked 2,082 1,418 47 599 462 30
Pensions:
- Individual pensions 926 452 105 219 150 46
- Annuities - individual 722 859 (16) 92 212 (57)
- DWP rebates 118 165 (28) 73 72 1
___________________________________________________________________________________________________
Total single premiums 4,017 3,284 22 1,015 976 4
___________________________________________________________________________________________________
Individual life and pensions total 710 614 16 181 170 6
APE
___________________________________________________________________________________________________
UK RETAIL INVESTMENTS
New annual premiums
- ISAs/PEPs (excluding cash ISAs) 14 20 (30) 3 4 (25)
- Unit trusts 1 2 (50) 0 0 N/A
___________________________________________________________________________________________________
Total new annual premiums 15 22 (32) 3 4 (25)
Single premiums
- ISAs/PEPs (excluding cash ISAs) 422 499 (15) 66 62 6
- Unit trusts 2,577 1,066 142 576 233 147
___________________________________________________________________________________________________
Total single premiums 2,999 1,565 92 642 295 118
___________________________________________________________________________________________________
UK retail investments total APE 315 179 76 67 34 97
___________________________________________________________________________________________________
UK retail business total APE 1,025 793 29 248 204 22
___________________________________________________________________________________________________
UK CORPORATE LIFE AND PENSIONS BUSINESS
New annual premiums
- Group risk 70 59 19 11 12 (8)
- Group pensions 4 3 33 0 1 (100)
___________________________________________________________________________________________________
Total new annual premiums 74 62 19 11 13 (15)
Single premiums
- Annuities - bulk purchase 877 449 95 328 98 235
- Other group business 5 7 (29) 0 3 (100)
___________________________________________________________________________________________________
Total single premiums 882 456 93 328 101 225
___________________________________________________________________________________________________
UK corporate life and pensions APE 162 108 50 44 23 91
___________________________________________________________________________________________________
___________________________________________________________________________________________________
UK business total APE 1,187 901 32 292 227 29
___________________________________________________________________________________________________
Legal & General Group Plc
Unaudited New Business Premiums
Year ended 31 December 2005
WORLDWIDE NEW BUSINESS
Year ended Three months to
31 December increase/ 31 December increase/
2005 2004* (decrease) 2005 2004* (decrease)
£m £m % £m £m %
___________________________________________________________________________________________________
Annual premiums
Life and pensions:
- Life 208 219 (5) 46 52 (12)
- Pensions 174 129 35 44 34 29
___________________________________________________________________________________________________
UK 382 348 10 90 86 5
- USA 42 54 (22) 12 13 (8)
- Netherlands 13 12 8 3 3 0
- France 17 13 31 1 0 N/A
___________________________________________________________________________________________________
Total life and pensions 454 427 6 106 102 4
Retail investment business:
- UK 15 22 (32) 3 4 (25)
___________________________________________________________________________________________________
Total new annual premiums 469 449 4 109 106 3
Single premiums
Life and pensions:
- Life 2,251 1,808 25 631 542 16
- Pensions 2,648 1,932 37 712 535 33
___________________________________________________________________________________________________
UK 4,899 3,740 31 1,343 1,077 25
- USA 0 1 (100) 0 0 N/A
- Netherlands 158 112 41 41 23 78
- France 191 145 32 50 41 22
___________________________________________________________________________________________________
Total life and pensions 5,248 3,998 31 1,434 1,141 26
Retail investment business:
- UK 2,999 1,565 92 642 295 118
- France 25 22 14 6 8 (25)
___________________________________________________________________________________________________
Total single premiums 8,272 5,585 48 2,082 1,444 44
Annual premium equivalent (APE)
- UK life and pensions business 872 722 21 225 193 17
- International life and pensions 107 105 2 25 22 14
business
___________________________________________________________________________________________________
Total life and pensions business 979 827 18 250 215 16
- UK retail investment business 315 179 76 67 34 97
- International retail investment 2 2 0 0 1 (100)
business
___________________________________________________________________________________________________
Total retail investment business 317 181 75 67 35 91
___________________________________________________________________________________________________
Worldwide APE 1,296 1,008 29 317 250 27
___________________________________________________________________________________________________
* In accordance with IFRS, International New Business has been restated at quarterly average exchange
rates.
INVESTMENT MANAGEMENT
UK Managed Funds
- Pooled funds 14,778 13,951 6 5,129 4,252 21
- Segregated funds 240 1,228 (80) 94 85 11
___________________________________________________________________________________________________
15,018 15,179 (1) 5,223 4,337 20
UK Other 2,116 368 475 1,705 68 2,407
___________________________________________________________________________________________________
Total new funds 17,134 15,547 10 6,928 4,405 57
___________________________________________________________________________________________________
Legal & General Group Plc
Unaudited New Business Premiums
Year ended 31 December 2005
INTERNATIONAL OPERATIONS IN LOCAL CURRENCY
Year ended Three months to
31 December increase/ 31 December increase/
2005 2004 (decrease) 2005 2004 (decrease)
___________________________________________________________________________________________________
USA ($m):
New annual premiums 75 98 20 24
Single premiums 0 1 0 0
___________________________________________________________________________________________________
APE 75 98 (23) 20 24 (17)
Netherlands (€m):
New annual premiums 19 18 5 4
Single premiums 231 166 60 33
___________________________________________________________________________________________________
APE 42 35 20 11 7 57
France (€m):
New annual premiums 25 19 2 1
Single premiums 278 214 74 59
Unit trusts 37 32 9 12
___________________________________________________________________________________________________
APE 57 44 30 10 8 25
UK RETAIL BUSINESS APE BY CHANNEL
Year ended 31 December 2005
Annual Single Total APE
£m £m £m %
________________________________________________________________________________
Independent financial advisers 205 462 667 65
Tied 103 224 327 32
Direct 15 16 31 3
________________________________________________________________________________
Total 323 702 1,025 100
________________________________________________________________________________
Year ended 31 December 2004
Annual Single Total APE
£m £m £m %
________________________________________________________________________________
Independent financial advisers 171 334 505 64
Tied 119 134 253 32
Direct 18 17 35 4
________________________________________________________________________________
Total 308 485 793 100
________________________________________________________________________________
Three months to 31 December 2005
Annual Single Total APE
£m £m £m %
________________________________________________________________________________
Independent financial advisers 51 115 166 67
Tied 28 48 76 31
Direct 3 3 6 2
________________________________________________________________________________
Total 82 166 248 100
________________________________________________________________________________
Three months to 31 December 2004
Annual Single Total APE
£m £m £m %
________________________________________________________________________________
Independent financial advisers 45 92 137 67
Tied 28 33 61 30
Direct 4 2 6 3
________________________________________________________________________________
Total 77 127 204 100
________________________________________________________________________________
This information is provided by RNS
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