FY 2006 New Business Results
Legal & General Group PLC
25 January 2007
LEGAL & GENERAL GROUP PLC
Stock Exchange Release
25 January 2007
2006 Full year new business results
Highlights:
• £1.8bn APE(1) worldwide new business - up 42%
• £1.7bn APE UK new business - up 46%
• £11bn(2) new UK savings premiums
• £1bn new Bulk Purchase Annuities premiums
• £21bn new investment management business
Tim Breedon, Group Chief Executive, said:
'Legal & General achieved impressive worldwide new business growth of 42% to
£1.8bn APE in 2006. Our UK operations contributed £1.7bn APE - up 46% over the
previous year - and finished the year strongly, with a fourth quarter increase
of 79% on the corresponding period in 2005.
'Legal & General's UK Savings business attracted nearly £11bn in insurance bond,
pension and unit trust new premiums during 2006 - £4bn of which was received in
the final quarter alone. Individual protection sales grew by 22% during the
year and by over 30% in the fourth quarter against the same period in 2005,
supported by a healthy UK housing market and by the success of our Pensions Term
Assurance product. Individual annuity sales improved strongly in the second half
of 2006 and our Bulk Annuities business recorded its first ever £1bn year.
'Britain's financial services industry is in good shape and Legal & General is
well positioned in a number of markets which have attractive long-term growth
prospects. Demographics and increasing household wealth are driving growth in
savings products. Our continued investment in systems and expertise enables us
to gain further competitive advantage in our market- leading individual
protection business. Developments in the corporate market favour Legal &
General's positions in defined contribution pensions, bulk annuities and group
risk, while our institutional pension fund management business continues to reap
the rewards of a business model based on scalability, service quality and the
provision of simple, value-for-money products delivering reliable investment
performance.
'By working in partnership with other quality brands and leading independent
intermediaries, we are harnessing the power of scale in the financial services
arena. With scale comes the opportunity to continue to invest in infrastructure
and people in a way which stimulates further profitable growth. We aim to ensure
that our customers, our distribution partners and our shareholders all continue
to benefit from our focus on building the leading UK savings, investment and
life assurance group.'
(1) 'Annual Premium Equivalent' comprises new annual premiums
together with 10% of single premiums
(2) Includes the sum of annual and single premiums
New business (APE £m) 2006 Full year 2005 Full year % change Q4 2006 Q4 2005 % change
________________________________________________________________________________________________________________
UK new business
Protection and annuities:
- Individual protection 167 137 22 45 34 32
- Group risk 64 71 (10) 14 12 17
- Individual annuities 71 66 8 24 7 243
- Bulk purchase annuities 103 88 17 29 33 (12)
________________________________________________________________________________________________________________
405 362 12 112 86 30
Savings:
- Unit linked bonds 261 208 25 80 60 33
- Pensions - stakeholder and other
non profit 190 152 25 51 39 31
- Retail investments* 664 315 111 231 67 245
________________________________________________________________________________________________________________
1,115 675 65 362 166 118
With-profits business: 217 150 45 50 40 25
________________________________________________________________________________________________________________
Total UK new business 1,737 1,187 46 524 292 79
________________________________________________________________________________________________________________
International new business 105 109 (4) 24 25 (4)
________________________________________________________________________________________________________________
Worldwide new business 1,842 1,296 42 548 317 73
________________________________________________________________________________________________________________
Investment management (£m) 20,650 17,134 21 5,961 6,928 (14)
________________________________________________________________________________________________________________
* Includes wholesale transfers of £259m APE (FY 2006); £58m APE (FY 2005); £127m
(Q4 2006); £0m APE (Q4 2005)
UK new business - up 46% to £1,737m APE
Protection and annuities - up 12% to £405m APE
Protection
In the individual protection market, our leading position was strengthened
further in 2006 with a 22% increase in new business to £167m APE (2005: £137m
APE). Fourth quarter volumes grew by 32% to £45m APE (Q4 2005: £34m APE). In
2006, we opened a new underwriting office in Edinburgh, deployed our latest
generation of intelligent underwriting systems and extended our range of
distribution partners.
There was some slowdown in activity in the group risk market during the year as
advisers and customers focused on issues surrounding Pensions Simplification and
the new Age Discrimination legislation. Against this backdrop, 2006 volumes
were lower at £64m APE (2005: £71m APE), although sales were up 17% in the
fourth quarter at £14m APE (Q4 2005: £12m APE).
Annuities
Sales of individual annuities in the second half of the year of £50m APE
significantly exceeded those in the first half of the year (H1 2006: £21m APE).
As bond yields improved and competitor activity subsided, we were able to
improve our market position whilst maintaining pricing discipline. Fourth
quarter sales of individual annuities more than tripled to £24m APE (Q4 2005:
£7m APE), bringing the total for the year to £71m APE (2005: £66m APE).
Individual annuities accounted for 49% of total non profit annuity sales in the
second half of the year (H1 2006: 30%; FY 2006: 41%; FY 2005: 43%).
In 2006, for the first time, Legal & General wrote over £1bn of single premium
bulk purchase annuity business (2005: £877m). The average policy size written
during the year was under £4m of single premium, highlighting Legal & General's
capabilities in administering large volumes of policies. Fourth quarter sales
were £290m of single premium, representing a decrease of 12% against a very
strong comparator (Q4 2005: £328m) but an increase of 19% over the third quarter
(Q3 2006: £244m). Whilst we saw some evidence of increased competition in the
latter stages of 2006, we continued to write good volumes of business at
attractive levels of return.
Savings(3) - up 65% to £1,115m APE
Sales of unit linked bonds increased by 25% to £261m APE during 2006 (2005:
£208m APE). Volumes in the fourth quarter of £80m APE (Q4 2005: £60m APE) were
driven predominantly by strong sales of our Portfolio Bond. These were
stimulated by the success of an additional unit allocation promotion for
customers, aimed at encouraging bond applications processed on-platform.
During 2006, activity in the pensions arena was stimulated by A-Day as
individuals sought advice in the new tax environment. New non profit pensions
business grew by 25% during 2006 to £190m APE (2005: £152m APE) and by 31% in
the fourth quarter to £51m (Q4 2005: £39m APE). We continued to focus on
opportunities in the pensions transfer and corporate schemes segments, and
enhanced our wrap proposition with the launch of our SIPP in April. Taking into
account pensions business written in the with-profits part of the fund (see
below), total pensions sales for the full year 2006 were £391m APE, representing
an increase of 40% against 2005 (£279m APE).
Total sales of retail investment products more than doubled, from £315m APE in
2005 to £664m APE in 2006, including £259m APE of wholesale unit trust transfers
(2005: £58m APE). In the fourth quarter, sales of £231m APE (Q4 2005: £67m APE)
benefited from a £127m APE wholesale transfer.
With-profits new business - up 45% to £217m APE
Strong growth in sales of our pension products (see above) was the main driver
behind the 45% increase in with-profits business during the year to £217m APE
(2005: £150m APE). This includes those unit linked contracts which offer a
with-profits option. With-profits bond sales continued to decline to £8m APE
(2005: £17m APE).
International new business - down 4% to £105m APE
Total international new business sales in 2006 decreased by 4% in sterling terms
to £105m APE (2005: £109m APE). In local currency terms, sales in our US
business remained broadly stable at $77m APE (2005: $75m APE), as did sales in
the Netherlands at €43m APE (2005: €42m APE). In France, total APE fell by 12%
in 2006 to €50m (2005: €57m APE), mainly as a result of lower group protection
sales, although fourth quarter volumes were 20% ahead of the prior year at €12m
APE (Q4 2005: €10m APE).
Investment management - new business up 21% to £21bn
Legal & General Investment Management (LGIM) achieved a record £21bn of new
business in 2006 (2005: £17bn) and £6bn in the fourth quarter (Q4 2005: £7bn).
Over £10bn of new business was received from existing clients, underscoring the
strength of LGIM's core franchise and its focus on excellence in customer
service. £2bn was received from non pension fund institutions.
During the year, we established a US presence in investment management, LGIM
America, which will provide US fixed income expertise to complement LGIM's UK
based fixed income skills. Significant progress was also made in developing our
Structured Solutions capabilities. LGIM had over £4bn of Structured Solutions
assets managed on behalf of third parties as at 31 December 2006.
Total funds under management increased by 14% to £233bn (31 December 2005:
£204bn), reflecting strong new business flows, rising market values and
favourable persistency.
(3) Savings business not written in the with-profits part of the fund
Outlook
We remain confident in the prospects for the UK market, with above trend
economic growth and favourable demographics. Individuals are continuing to
increase savings and we believe the pensions A-Day reforms will continue to
support the market into 2007. The significant impact of investment platforms
and the move to open architecture give us confidence in Legal & General's
prospects in the UK savings market. Our strong product set, supported by our
high quality infrastructure and broad distribution, positions us well for
further success.
The recent increase in interest rates may lead to some caution in the housing
market. Coupled with the removal of Pensions Term Assurance at the end of 2006,
this has the potential to dampen growth prospects in individual protection
markets. However, we expect to build further on our already strong position in
this segment.
We believe that the underlying drivers of growth in the individual annuities
markets are compelling. We continue to see opportunities for a significant
expansion in the bulk annuities segment, driven by the regulatory, financial and
accounting considerations of pension fund trustees and sponsoring companies.
Our confidence in our core markets is reflected in our ongoing development plans
in 2007, as we continue to drive the efficient, scalable, customer orientated
business model which has proved so successful over many years.
Enquiries to:
Investors:
Jonathan Maddock, Head of Investor Relations 020 7528 6298
Nicola Marshall, Investor Relations Manager 020 7528 6263
Media:
John Morgan, Media Relations Director 020 7528 6213
Anthony Carlisle, Citigate Dewe Rogerson 07973 611888
Notes:
A copy of this announcement can be found in the News and Results section of our
shareholder web site at http://investor.legalandgeneral.com/releases.cfm
Issued share capital at 31 December 2006 was 6,532,319,378 shares of 2.5p each.
Financial Calendar:
________________________________________________________________________________
2006 Preliminary results 14 March 2007
________________________________________________________________________________
Q1 2007 New business results 25 April 2007
________________________________________________________________________________
Annual General Meeting 16 May 2007
________________________________________________________________________________
2007 Interim results and Q2 2007 New business results 26 July 2007
________________________________________________________________________________
Q3 2007 New business results 17 October 2007
________________________________________________________________________________
Q4 2007 New business results 24 January 2008
________________________________________________________________________________
Forward-looking statements:
This document may contain certain forward-looking statements with respect to
certain of Legal & General Group Plc'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
Group Plc'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 governmental and
regulatory authorities, the impact of competition, the timing impact and other
uncertainties of future mergers or combinations within relevant industries. As a
result, Legal & General Group Plc's actual future condition, performance and
results may differ materially from the plans, goals and expectations set out in
Legal & General Group Plc's forward-looking statements. Legal & General Group
Plc does not undertake to update forward-looking statements contained in this
document or any other forward-looking statement it may make.
Legal & General Group Plc
Unaudited New Business Premiums
Twelve months to 31 December 2006
WORLDWIDE NEW BUSINESS
Twelve months to 31 December Twelve months to 31 December 2005
2006
Annual Single APE Annual Single APE Increase/
premiums premiums premiums premiums (decrease)
£m £m £m £m £m £m %
__________________________________________________________________________________________________________________
Protection
- Individual protection 167 - 167 137 - 137 22%
- Group risk 64 - 64 71 - 71 (10%)
__________________________________________________________________________________________________________________
231 - 231 208 - 208 11%
Annuities
- Individual - 702 71 - 662 66 8%
- Bulk purchase - 1,033 103 - 877 88 17%
__________________________________________________________________________________________________________________
- 1,735 174 - 1,539 154 13%
Savings
- Unit linked bonds - 2,612 261 - 2,082 208 25%
- Individual pensions - stakeholder and
other non profit 123 663 189 97 547 152 24%
- DWP rebates - 5 1 - 2 - N/A
__________________________________________________________________________________________________________________
123 3,280 451 97 2,631 360 25%
With-profits
- Annuities - 83 8 - 60 6 33%
- Individual pensions 118 651 183 73 379 110 66%
- DWP rebates - 155 16 - 116 12 33%
- Group pensions 2 4 2 4 5 5 (60%)
- Bonds - 83 8 - 169 17 (53%)
__________________________________________________________________________________________________________________
120 976 217 77 729 150 45%
__________________________________________________________________________________________________________________
474 5,991 1,073 382 4,899 872 23%
__________________________________________________________________________________________________________________
UK retail investment
business
- Unit trusts 2 5,945 596 1 2,577 259 130%
- ISAs 18 498 68 14 422 56 21%
__________________________________________________________________________________________________________________
20 6,443 664 15 2,999 315 111%
__________________________________________________________________________________________________________________
Total UK new business 494 12,434 1,737 397 7,898 1,187 46%
__________________________________________________________________________________________________________________
- USA 42 - 42 42 - 42 0%
- Netherlands 12 170 29 13 158 29 0%
- France 12 195 32 17 191 36 (11%)
__________________________________________________________________________________________________________________
66 365 103 72 349 107 (4%)
France retail investment business - 25 2 - 25 2 0%
__________________________________________________________________________________________________________________
Total international new business 66 390 105 72 374 109 (4%)
__________________________________________________________________________________________________________________
Total worldwide new business 560 12,824 1,842 469 8,272 1,296 42%
__________________________________________________________________________________________________________________
Legal & General Group Plc
Unaudited New Business Premiums
Twelve months to 31 December 2006
WORLDWIDE NEW BUSINESS APE QUARTERLY PROGRESSION
3 months 3 months 3 months 3 months 3 months 3 months 3 months 3 months
to to to to to to to to
31.12.06 30.09.06 30.06.06 31.03.06 31.12.05 30.09.05 30.06.05 31.03.05
£m £m £m £m £m £m £m £m
__________________________________________________________________________________________________________________
Protection
- Individual protection 45 44 39 39 34 36 35 32
- Group risk 14 17 16 17 12 18 19 22
__________________________________________________________________________________________________________________
59 61 55 56 46 54 54 54
Annuities
- Individual 24 26 16 5 7 13 29 17
- Bulk purchase 29 24 22 28 33 22 6 27
__________________________________________________________________________________________________________________
53 50 38 33 40 35 35 44
Savings
- Unit linked bonds 80 60 60 61 60 54 51 43
- Individual pensions - stakeholder
and other non profit 50 48 50 41 39 41 41 31
- DWP rebates 1 - - - - - - -
__________________________________________________________________________________________________________________
131 108 110 102 99 95 92 74
__________________________________________________________________________________________________________________
With-profits
- Annuities 1 3 2 2 2 2 1 1
- Individual pensions 45 49 48 41 26 27 30 27
- DWP rebates 2 10 2 2 8 3 - 1
- Group pensions - 1 - 1 1 2 1 1
- Bonds 2 2 2 2 3 4 4 6
__________________________________________________________________________________________________________________
50 65 54 48 40 38 36 36
__________________________________________________________________________________________________________________
293 284 257 239 225 222 217 208
UK retail investment
business
- Unit trusts 217 78 191 110 58 69 68 64
- ISAs 14 13 27 14 9 9 27 11
__________________________________________________________________________________________________________________
231 91 218 124 67 78 95 75
__________________________________________________________________________________________________________________
Total UK new business 524 375 475 363 292 300 312 283
__________________________________________________________________________________________________________________
- USA 10 11 10 11 12 11 9 10
- Netherlands 7 6 7 9 7 8 6 8
- France 7 5 13 7 6 7 17 6
__________________________________________________________________________________________________________________
24 22 30 27 25 26 32 24
France retail investment
business - 1 1 - - 1 1 -
__________________________________________________________________________________________________________________
Total international new
business 24 23 31 27 25 27 33 24
__________________________________________________________________________________________________________________
Total worldwide new
business 548 398 506 390 317 327 345 307
__________________________________________________________________________________________________________________
Legal & General Group Plc
Unaudited New Business Premiums
Twelve months to 31 December 2006
INVESTMENT MANAGEMENT
Twelve months to 31 December Increase/
2006 2005 (decrease)
£m £m %
__________________________________________________________________________________________________________________
UK Managed Funds
- Pooled funds 17,878 14,778 21%
- Segregated funds 608 240 153%
__________________________________________________________________________________________________________________
18,486 15,018 23%
UK Other 2,164 2,116 2%
__________________________________________________________________________________________________________________
Total new funds 20,650 17,134 21%
__________________________________________________________________________________________________________________
INVESTMENT MANAGEMENT QUARTERLY PROGRESSION
3 months 3 months 3 months 3 months 3 months 3 months 3 months 3 months
to to to to to to to to
31.12.06 30.09.06 30.06.06 31.03.06 31.12.05 30.09.05 30.06.05 31.03.05
£m £m £m £m £m £m £m £m
__________________________________________________________________________________________________________________
UK Managed Funds
- Pooled funds 5,801 3,814 4,500 3,763 5,129 2,939 3,396 3,314
- Segregated funds 1 8 538 61 94 41 63 42
__________________________________________________________________________________________________________________
5,802 3,822 5,038 3,824 5,223 2,980 3,459 3,356
UK Other 159 109 157 1,739 1,705 351 3 57
__________________________________________________________________________________________________________________
Total new funds 5,961 3,931 5,195 5,563 6,928 3,331 3,462 3,413
__________________________________________________________________________________________________________________
INTERNATIONAL OPERATIONS IN LOCAL CURRENCY
Twelve months to 31 December Twelve months to 31 December 2005 Increase/
2006
Annual Single APE Annual Single APE (decrease)
premiums premiums premiums premiums %
__________________________________________________________________________________________________________________
USA ($m): 77 - 77 75 - 75 3%
Netherlands (€m): 18 249 43 19 231 42 2%
France (€m):
- Life and pensions 17 288 46 25 278 53 (13%)
- Unit trusts - 36 4 - 37 4 0%
__________________________________________________________________________________________________________________
UK INDIVIDUAL APE BY CHANNEL
Twelve months to 31 December 2006
Annual Single Total APE % of
£m £m £m total
__________________________________________________________________________________________________________________
Independent financial advisers 289 6,368 926 59%
Tied 119 4,843 603 39%
Direct 20 186 39 2%
__________________________________________________________________________________________________________________
Total 428 11,397 1,568 100%
__________________________________________________________________________________________________________________
Twelve months to 31 December 2005
Annual Single Total APE % of
£m £m £m total
__________________________________________________________________________________________________________________
Independent financial advisers 205 4,624 667 65%
Tied 103 2,237 327 32%
Direct 15 155 31 3%
__________________________________________________________________________________________________________________
Total 323 7,016 1,025 100%
__________________________________________________________________________________________________________________
This information is provided by RNS
The company news service from the London Stock Exchange
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