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
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