L&G 2002 New Business Results
Legal & General Group PLC
24 January 2003
24 January 2003
Legal & General Group Plc
=========================
2002 new business results
=========================
• Core UK individual business grows by more than a quarter
• Record new business in fund management despite falling equity values
• Further market share gains expected in a difficult environment
Full year Increase/
decrease
New business APE (Note 1)
UK
- individual £737m +26%
- group £74m -42%
UK total £811m +14%
International £95m +4%
Worldwide total £906m +13%
New institutional fund management £14.0bn +6%
Note 1 - 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: '2002 was a year of significant
achievement and new business in the UK retail market grew by 26% benefiting from
our distribution strength. Our individual life and pensions business grew by 17%
and ISAs and unit trust sales by an exceptional 61%.
Our UK fund management business had another excellent year winning a record £14
billion of new funds. This performance is particularly impressive given the
sharp fall in equity values over the last three years. We have again had
excellent support from pension fund trustees who continue to switch assets to an
indexed core and active satellite structure.
The final quarter of the year has proved challenging for the retail savings
market as a result of continuing weakness in equity markets and the consequent
fall in consumer confidence. In these testing market conditions, the strength of
our brand and our strategy of offering good value products through a wide range
of distribution channels continues to produce above market sales performance.
Although not immune from adverse markets, Legal & General has the business model
and financial strength to continue its record of out-performance seen over the
last seven years.'
UK business - Individual
========================
Individual business (including ISAs and unit trusts) grew by 26% over the year
to £737m APE (2001: £583m), as the impact of new partnerships continued to
benefit our sales performance. In the final quarter, individual new business at
£157m APE was 8% below both the third quarter result and the corresponding
quarter in 2001 as a result of continuing weakness in equity markets and the
consequent fall in consumer confidence.
Life
----
Annual premium sales increased to £141m (2001: £138m), as the strong position we
have built in the life protection market has more than offset the impact of our
decision to withdraw our ISA mortgage repayment product in May 2001.
Demand for single premium bonds in the earlier part of the year benefited from
our new distribution partnerships. Full year sales increased by 16% to £1,431m
(2001: £1,238m). Although volumes fell in the second half of the year, there was
a recovery in with-profits bond sales in the final quarter, taking single
premiums to £362m, comfortably ahead of the third quarter (£293m) but below the
final quarter of 2001 (£395m).
Pensions
--------
New annual premium business grew strongly in 2002, up 32% to £162m (2001: £123m)
reflecting our success in winning business from fee-based employee benefit
consultants. Fourth quarter new annual premium business at £30m was 23% below
the corresponding quarter in 2001 (£39m).
Largely as a consequence of increased compulsory purchase annuity sales and a
higher level of DSS rebates, single premium business grew 21% to £876m (2001:
£721m). Legal & General has not actively pursued that element of the pensions
transfer market which has commanded higher commission levels. The fourth quarter
new business result of £253m was broadly in line with the third quarter and 51%
up on the corresponding quarter in 2001 (£167m).
ISAs and unit trusts
--------------------
We have achieved exceptional growth in new business against a significant
downturn in total market sales. Regular payment business for the full year grew
31% to £51m (2001: £39m). Single payment sales reached £1,522m, an increase of
75% (2001: £872m). Single payment sales fell to £223m in the fourth quarter from
£243m in the corresponding period in 2001, which benefited from a £60m
contribution from guaranteed products.
UK business - Group
===================
Group new business for the year was £74m APE (2001: £127m). In the fourth
quarter, group new business of £19m APE showed an improvement on the third
quarter but was 21% below the 2001 level.
Annual premium business was 20% lower at £37m (2001: £46m) resulting from lower
levels of incremental business on a declining final salary pension portfolio.
Lower volumes of single premium business at £373m (2001: £815m) reflected
reduced levels of demand in the bulk purchase annuity market arising from the
adverse impact of equity markets on pension scheme funding levels. We have
continued to win encouraging volumes of bulk purchase business in the small and
mid-sized segment. In the final quarter, single premium new business improved
from the third quarter level of £59m to £111m but was still below the fourth
quarter 2001 level of £148m.
Institutional fund management
=============================
Over the year, our institutional fund management business maintained its highly
successful track record, winning new funds of £14.0bn (2001: £13.2bn). This
result has been achieved despite a significant fall in equity values over the
year. Fourth quarter new business of £3.8bn has ensured that we maintained our
record of averaging over £1bn of new UK pension fund investment business per
month over the last five years.
Group funds under management at the year-end were £115bn, unchanged from the
2001 year end despite market falls.
International business
======================
In sterling terms, international new business increased by 4% to £95m APE (2001:
£91m).
In the USA, new business grew strongly, up 21% to $92m APE (2001: $76m) as we
continued to develop our chosen niche market of term assurance for upper income
customers. Legal & General America is now a top 10 provider in the term
assurance market. In the fourth quarter new business grew by 14% to $24m APE
(2001: $21m).
Our European businesses continued to experience difficult market conditions
producing EUR. 59m APE over the year (2001: EUR. 63m). In France, new business
for the year (including unit trusts) was EUR. 30m APE (2001: EUR. 35m). Our
business in the Netherlands outperformed its market as annual premium business
at EUR. 16m (2001: EUR. 13m) showed further growth with a strong contribution
from term assurance. Single premium business grew in the second half but the
result for the year was lower at EUR. 133m for the year (2001: EUR. 149m),
following an exceptional result in the first quarter of 2001.
UK distribution and outlook
===========================
Our view is that equity markets offer good value at current levels but that
recovery could be slow as confidence is taking time to build. Legal & General is
well placed to benefit both from any improvement in the market and from the
continuing concentration on larger companies with recognised financial strength
by customers and their advisers.
The success of 2002 has been built on the strength of our partnerships, greater
focus in IFA distribution and on our ability to handle increasing volumes of
business electronically. In the term assurance market, over 50% of IFA
applications are now handled on-line with differential pricing for electronic
submission. In 2003 we will actively seek further opportunities to develop both
our partnerships and IFA business.
Looking further ahead, we believe proposed regulatory changes favour companies
with multi-channel distribution capabilities. Changes such as mortgage
regulation, the introduction of 'Sandler products', lighter touch regulation and
depolarisation play to our established distribution strategy.
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. There will be a conference call today for analysts and fund managers at
9.00am (UK time) on +44 (0)20 8400 6337 hosted by Andrew Palmer, Group Director
(Finance). Replay will be available until 31 January 2003 on +44 (0)20 8797 2499
and the pass code is 863195#.
3. Financial Calendar:
2002 preliminary results 27 February 2003
2003 first quarter new business results and AGM 30 April 2003
2003 interim results and second quarter new business 24 July 2003
2003 third quarter new business results 15 October 2003
LEGAL & GENERAL GROUP PLC
UNAUDITED NEW BUSINESS PREMIUMS
YEAR ENDED 31 DECEMBER 2002
-------------------------------
NEW UK BUSINESS
===============
Year ended Three months to
31 December inc/ 31 December inc/
2002 2001 (dec) 2002 2001 (dec)
£m £m % £m £m %
INDIVIDUAL LIFE AND PENSIONS BUSINESS
New annual premiums
Life:
- Mortgage related 96 101 23 26
- Protection 45 37 11 11
Pensions:
- Individual pensions 162 123 30 39
------ ------ ------ ------ ------ ------
Total new annual premiums 303 261 16 64 76 (16)
Single premiums
Life:
- With-profits 1,172 1,134 286 360
- Other 259 104 76 35
Pensions:
- Individual pensions 283 266 69 55
- Annuities - individual 434 335 134 80
- DSS rebates 159 120 50 32
------ ------ ------ ------ ------ ------
Total single premiums 2,307 1,959 18 615 562 9
------ ------ ------ ------ ------ ------
Individual life and pensions APE 534 457 17 126 132 (5)
====== ====== ====== ====== ====== ======
Year ended Three months to
31 December inc/ 31 December inc/
2002 2001 (dec) 2002 2001 (dec)
£m £m % £m £m %
ISAS, PEPS AND UNIT TRUSTS
New annual premiums
- ISAs/PEPs (excluding Cash ISAs) 44 38 7 13
- Unit trusts 7 1 2 1
------ ------ ------ ------
Total new annual premiums 51 39 31 9 14 (36)
Single premiums
- ISAs/PEPs (excluding Cash ISAs) 720 467 74 98
- Unit trusts 802 405 149 145
------ ------ ------ ------ ------ ------
Total single premiums 1,522 872 75 223 243 (8)
------ ------ ------ ------ ------ ------
ISAs, PEPs and unit trusts APE 203 126 61 31 38 (18)
====== ====== ====== ====== ====== ======
------ ------ ------ ------ ------ ------
Total individual business APE 737 583 26 157 170 (8)
====== ====== ====== ====== ====== ======
Year ended Three months to
31 December inc/ 31 December inc/
2002 2001 (dec) 2002 2001 (dec)
£m £m % £m £m %
GROUP LIFE AND PENSIONS BUSINESS
New annual premiums
- Group risk 30 32 6 7
- Group pensions 7 14 2 2
------ ------ ------ ------ ------ ------
Total new annual premiums 37 46 (20) 8 9 (11)
Single premiums
- Annuities - bulk purchase 307 741 97 143
- Other group business 66 74 14 5
------ ------ ------ ------ ------ ------
Total single premiums 373 815 (54) 111 148 (25)
------ ------ ------ ------ ------ ------
Group life and pensions APE 74 127 (42) 19 24 (21)
------ ------ ------ ------ ------ ------
Total UK APE 811 710 14 176 194 (9)
====== ====== ====== ====== ====== ======
INSTITUTIONAL FUND MANAGEMENT
UK Managed Funds
- Pooled funds 12,359 10,608 3,187 2,842
- Segregated funds 1,039 2,571 550 1,373
------ ------ ------ ------
13,398 13,179 3,737 4,215
UK Other 569 40 27 12
------ ------ ------ ------ ------ ------
13,967 13,219 6 3,764 4,227 (11)
====== ====== ====== ====== ====== ======
LEGAL & GENERAL GROUP PLC
UNAUDITED NEW BUSINESS PREMIUMS
YEAR ENDED 31 DECEMBER 2002
-------------------------------
WORLDWIDE NEW BUSINESS
======================
Year ended Three months to
31 December inc/ 31 December inc/
2002 2001 (dec) 2002 2001 (dec)
£m £m % £m £m %
Annual premiums
Life and pensions:
- Life 171 170 40 44
- Pensions 169 137 32 41
------ ------ ------ ------ ------ ------
UK 340 307 11 72 85 (15)
- USA 57 52 14 14
- Netherlands 10 8 2 2
- France 5 7 1 1
------ ------ ------ ------ ------ ------
Total life and pensions 412 374 10 89 102 (13)
Retail investment business:
- UK 51 39 9 14
------ ------ ------ ------ ------ ------
Total new annual premiums 463 413 12 98 116 (16)
Single premiums
Life and pensions:
- Life 1,431 1,238 362 395
- Pensions 1,249 1,536 364 315
------ ------ ------ ------ ------ ------
UK 2,680 2,774 (3) 726 710 2
- USA 3 1 1 1
- Netherlands 87 91 20 14
- France 111 109 28 25
------ ------ ------ ------ ------ ------
Total life and pensions 2,881 2,975 (3) 775 750 3
Retail investment business:
- UK 1,522 872 223 243
- France 32 35 9 6
------ ------ ------ ------ ------ ------
Total single premiums 4,435 3,882 14 1,007 999 1
Equivalent premium income (APE)
- Life and pensions business 700 671 4 166 177 (6)
- Retail investment business 206 130 58 32 39 (18)
------ ------ ------ ------ ------ ------
Worldwide APE 906 801 13 198 216 (8)
====== ====== ====== ====== ====== ======
LEGAL & GENERAL GROUP PLC
UNAUDITED NEW BUSINESS PREMIUMS
YEAR ENDED 31 DECEMBER 2002
-------------------------------
OVERSEAS OPERATIONS IN LOCAL CURRENCY
=====================================
Year ended inc/ Three months to inc/
31 December (dec) 31 December (dec)
2002 2001 % 2002 2001 %
USA ($m):
New annual premiums 91 76 24 21
Single premiums 5 1 2 0
APE 92 76 21 24 21 14
Netherlands (EUR. m):
New annual premiums 16 13 3 3
Single premiums 133 149 27 24
APE 29 28 4 6 6 0
France (EUR. m):
New annual premiums 8 11 1 1
Single premiums 170 178 37 43
Unit trusts 49 58 13 12
APE 30 35 (14) 6 7 (14)
UK INDIVIDUAL APE BY CHANNEL
============================
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
====== ====== ====== ======
Year ended 31 December 2001 Annual Single Total APE
£m £m £m %
Independent financial advisers 154 159 313 54
Business partnerships 108 92 200 34
Business partnerships direct 8 3 11 2
Direct 30 29 59 10
------ ------ ------ ------
300 283 583 100
====== ====== ====== ======
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
====== ====== ====== ======
Three months to 31 December 2001 Annual Single Total APE
£m £m £m %
Independent financial advisers 39 36 75 44
Business partnerships 38 38 76 45
Business partnerships direct 6 2 8 5
Direct 7 4 11 6
------ ------ ------ ------
90 80 170 100
====== ====== ====== ======
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