L&G New Business Results 2001
Legal & General Group PLC
24 January 2002
Legal & General Group Plc
2001 new business results
- Record new business
- Record new institutional fund management business
- Record funds under management despite equity market falls
Full year Increase
New business APE*
UK life and pensions
- individual £457m +24%
- group £127m +74%
UK unit trusts and ISAs £126m +34%
Total UK £710m +32%
International (inc. unit trusts) £91m -3%
Total APE including unit trusts/ISAs £801m +27%
New institutional fund management £13.2bn +4%
* Annual Premium Equivalent (APE) is total new annual premiums + 10% of
single premiums.
Group Chief Executive, David Prosser, said: '2001 has been a year of real
progress for Legal & General with record new business volumes both for
the year and for the fourth quarter. Support from our strategic partners
helped UK individual new business grow by almost 50% in the fourth
quarter. Since 1995, UK individual new business has grown by 25% per
annum compound, six successive years of growth in market share.
New institutional fund management business reached a record level at
£13.2bn, a remarkable achievement. Our market leading index fund skills
were also the basis for unit trust and ISA growth, where our 34% increase
in sales contrasts with a fall in sales for the total market over the
year.
With our high quality brand and our extensive experience in multi-channel
distribution, we believe Legal & General is well positioned to succeed in
the new environment arising from the proposed changes to polarisation.'
UK new business
===============
New annual premium equivalent (APE) for the full year increased by 32% to
£710m (2000: £536m), with the fourth quarter representing another record
as new business grew to £194m APE (Q4 2000: £137m). Individual business
grew by 49% to £170m APE in the fourth quarter reflecting the benefit of
our strategic alliances.
Individual pensions
-------------------
New annual premium business grew by 60% to £123m (2000: £77m) of which
£115m was written on Stakeholder terms. Growth was particularly strong in
the fourth quarter (up 144% to £39m).
Over 43,000 employers, covering 1.5m potential scheme members, have
designated Legal & General as their Stakeholder pensions provider. We
believe this represents around 14% of total designations and places Legal
& General in a strong position to meet our target market share. We
continue to support worksite marketing initiatives to encourage scheme
membership.
In the final quarter, a growing proportion of our employer Stakeholder
business came from fee based employee benefit consultants, generally
covering larger employee groups and with higher average salaries.
Individual life
---------------
Legal & General has retained its leading position in the housing related
market. Annual premium sales of £138m were up 7% (2000: £129m) as the
strong position we have built up in the life protection market has largely
offset the impact of our decision to withdraw our ISA mortgage repayment
product in May. Despite this decision, annual premium life sales in the
fourth quarter were £37m, 16% up on the corresponding quarter in the prior
year.
Single premium bond sales were up sharply at £1,238m (2000: £751m), an
increase of 65%, resulting from continuing high levels of demand,
especially for with-profits bonds. Reflecting falling equity values, we,
in common with many competitors, have reduced with-profits bond product
benefits and terms. However, new business volumes have remained strong
despite these changes.
Group business
--------------
Group new business increased by 74% to reach £127m APE (2000: £73m),
largely as a result of our strength in the bulk purchase annuity market.
Following subdued demand in 2000, bulk purchase annuity premiums increased
by 187% to £741m. In the latter part of 2001, we took the opportunity to
increase the assumed return on capital in pricing this business. However,
at the smaller end of the market we continued to write increased volumes.
Unit trusts and ISAs
--------------------
Against a sharp downturn in sales in the market as a whole, we have
achieved exceptionally strong growth in new business in 2001. That growth
reflected customers' recognition of the benefits of regular saving and the
certainty of outcome relative to markets provided by our indexed products.
Over the year, new business APE reached £126m, an increase of 34% (2000:
£94m). In the fourth quarter new business increased 52% to £38m APE
boosted by the success of our Protected Portfolio product.
This month we have announced a further tranche of our Protected Portfolio
product and the launch of our web-enabled funds supermarket. Legal &
General's funds supermarket will initially offer over 80 funds from 21
different fund managers.
Institutional fund management
=============================
Our institutional fund management subsidiary had a record year for new
business in 2001 despite the fall in equity values which occurred during
the year. We continue to expand our range of funds, in part to meet the
growing appetite from defined benefit schemes for investment in corporate
bonds. Our broad range of indexed funds has also reinforced our position
as a leading provider of investment services to defined contribution
schemes.
Our success in winning both equity and bond mandates for our range of
active and indexed funds brought new business of £13.2bn (2000: £12.7bn).
Another 231 pension funds were added to our client list over the year with
some of the largest mandates coming from the local authority sector.
Since January 1998, we have averaged over £1bn of new UK pension fund
investment business a month - a track record we believe to be unequalled
by any other fund management house.
Although equity values fell over the year, Group funds under management
exceeded £116bn (2000: £114bn) at the year end.
International business
======================
Our European businesses continued to show strong growth over the year, up
21% to EUR. 63m APE (2000: EUR. 52m). Sales in the Netherlands continued
to outperform the wider market, growing by an impressive 40% to EUR. 28m
APE (2000: EUR. 20m). In France, against difficult market conditions,
new business has increased by 9% to EUR. 35m APE (2000: EUR. 32m),
supported by strong growth in annual premium business which increased 38%
to EUR. 11m.
In the USA, new annual premium business fell to $76m (2000: $93m)
following exceptional results in the first part of 2000 when sales were
distorted by the impact of the introduction of the 'Triple X' solvency
requirements. From a lower base, volumes have grown throughout 2001 with
fourth quarter new business 24% ahead of the corresponding period in 2000.
We continued to develop the business and believe we have increased our
share in the niche market of term assurance for upper income customers.
UK Distribution
===============
We have achieved volume growth in our IFA and Business Partners
distribution channels and distribution mix has become more balanced as the
fourth quarter results benefited from the strategic alliances with both
Alliance & Leicester and Barclays, together with the record number of
smaller business partners recruited.
In the IFA sector, we established a separate sales and servicing team in
December focussed on the needs of the major employee benefit consultants
and other fee based advisors to reflect the increasing volumes of business
we are receiving from this important segment of the market.
We have also used our direct distribution capabilities to support the
marketing efforts of our major Business Partners. Our e-commerce
capabilities have expanded further. We have benefited from our facility
for customers to purchase and manage ISAs on line with 12% of Direct ISA
sales over the year via the internet. Additional e-commerce functionality
provided for our Direct customers is also utilised by our Business
Partners or in the IFA channel. The volumes of term business submitted
and underwritten through the internet have continued to grow and now
represent over a quarter of such business submitted by IFAs.
Outlook
=======
2002 will see the full year benefit of the new partnerships, both large
and small, which were established in 2001. Accordingly, we anticipate
achieving further market share growth during the year ahead.
In the longer term, our marketplace will be influenced by the changes to
the polarisation rules recently proposed by the FSA. Legal & General has
successfully managed a multi-channel distribution strategy for many years.
This represents both a core competence and a key differentiator for us.
With our broad product range, recognised quality proposition, triple A
financial rating and well-known brand, we believe we have the combination
of capabilities and skills to succeed as distribution develops in the
marketplace for financial services.
For further information contact:
Investors: Peter Horsman Media: John Morgan
Head of Investor Relations Head of Public Relations
020 7528 6362 01737 375353
Anthony Carlisle
Citigate Dewe Rogerson
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 for 2001:
28 February Preliminary Results for 2001
30 April AGM and first quarter new business
25 July Interim results and second quarter new business
18 October Third quarter new business.
3. David Prosser, Group Chief Executive will be available for a
conference call for wire services at 7.45am today. Callers should dial
020 8400 6314 and ask for the Legal & General conference quoting John
Morgan as Chairperson.
LEGAL & GENERAL GROUP PLC
UNAUDITED NEW BUSINESS PREMIUMS
YEAR ENDED 31 DECEMBER 2001
NEW UK BUSINESS
===============
Year ended Three months to
31 December inc/ 31 December inc/
2001 2000 (dec) 2001 2000 (dec)
£m £m % £m £m %
INDIVIDUAL LIFE AND
PENSIONS BUSINESS
New annual premiums
Life:
- Mortgage related 101 112 26 26
- Savings 0 1 0 0
- Protection 37 16 11 6
Pensions:
- Individual pensions 123 77 39 16
------ ------ --- ------ ------ ---
Total new annual premiums 261 206 27 76 48 58
Single premiums
Life:
- With-profits 1,134 648 360 180
- Other 104 103 35 21
Pensions:
- Individual pensions 266 342 55 55
- Annuities - individual 335 426 80 116
- DSS rebates 120 111 32 35
------ ------ --- ------ ------ ---
Total single premiums 1,959 1,630 20 562 407 38
Individual life ------ ------ --- ------ ------ ---
and pensions APE 457 369 24 132 89 48
GROUP LIFE AND
PENSIONS BUSINESS
New annual premiums
- Group risk 32 31 7 6
- Group pensions 14 9 2 2
------ ------ --- ------ ------ ---
Total new annual premiums 46 40 15 9 8 13
Single premiums
- Annuities - bulk
purchase 741 258 143 136
- Other group business 74 68 5 10
------ ------ --- ------ ------ ---
Total single premiums 815 326 150 148 146 1
Group life ------ ------ --- ------ ------ ---
and pensions APE 127 73 74 24 23 4
ISAS, PEPS AND UNIT TRUSTS
New annual premiums
- ISAs/PEPs
(excluding cash ISAs) 38 27 13 13
- Unit trusts 1 0 1 0
------ ------ --- ------ ------ ---
Total new annual premiums 39 27 44 14 13 8
Single premiums
- ISAs/PEPs
(excluding cash ISAs) 467 403 98 58
- Unit trusts 405 269 145 62
------ ------ --- ------ ------ ---
Total single premiums 872 672 30 243 120 103
ISAs, PEPs and ------ ------ --- ------ ------ ---
unit trusts APE 126 94 34 38 25 52
------ ------ --- ------ ------ ---
Total UK APE 710 536 32 194 137 42
====== ====== === ====== ====== ===
INSTITUTIONAL
FUND MANAGEMENT
UK Managed Funds
- Pooled funds 10,608 11,040 2,842 3,007
- Segregated funds 2,571 327 1,373 32
------ ------ ------ ------
13,179 11,367 4,215 3,039
UK Other 40 1,310 12 39
------ ------ --- ------ ------ ---
13,219 12,677 4 4,227 3,078 37
====== ====== === ====== ====== ===
LEGAL & GENERAL GROUP PLC
UNAUDITED NEW BUSINESS PREMIUMS
YEAR ENDED 31 DECEMBER 2001
WORLDWIDE NEW BUSINESS
======================
Year ended Three months to
31 December inc/ 31 December inc/
2001 2000 (dec) 2001 2000 (dec)
£m £m % £m £m %
New annual premiums
Life and pensions:
- Life 170 160 44 38
- Pensions 137 86 41 18
------ ------ --- ------ ------ ---
UK 307 246 25 85 56 52
- USA 52 62 14 10
- Netherlands 8 7 2 3
- France 7 5 1 1
------ ------ --- ------ ------ ---
Total life and pensions 374 320 17 102 70 46
Retail investment business:
- UK 39 27 14 13
------ ------ --- ------ ------ ---
Total new annual premiums 413 347 19 116 83 40
Single premiums
Life and pensions:
- Life 1,238 751 395 201
- Pensions 1,536 1,205 315 352
------ ------ --- ------ ------ ---
UK 2,774 1,956 42 710 553 28
- USA 1 1 1 1
- Netherlands 91 54 14 24
- France 109 107 25 29
------ ------ --- ------ ------ ---
Total life and pensions 2,975 2,118 40 750 607 24
Retail investment business:
- UK 872 672 243 120
- France 35 41 6 14
------ ------ --- ------ ------ ---
Total single premiums 3,882 2,831 37 999 741 35
Annual premium equivalent (APE)
- Life and pensions
business 671 532 26 177 131 35
- Retail investment
business 130 98 33 39 26 50
------ ------ --- ------ ------ ---
Worldwide APE 801 630 27 216 157 37
====== ====== === ====== ====== ===
LEGAL & GENERAL GROUP PLC
UNAUDITED NEW BUSINESS PREMIUMS
YEAR ENDED 31 DECEMBER 2001
OVERSEAS OPERATIONS IN LOCAL CURRENCY
=====================================
Year ended inc/ Three months to inc/
31 December (dec) 31 December (dec)
2001 2000 % 2001 2000 %
USA ($m):
New annual premiums 76 93 21 17
Single premiums 1 1 0 0
APE 76 93 (18) 21 17 24
Netherlands (EUR. m):
New annual premiums 13 11 3 3
Single premiums 149 86 24 36
APE 28 20 40 6 7 (14)
France (EUR. m):
New annual premiums 11 8 1 2
Single premiums 178 170 43 40
Unit trusts 58 65 12 19
APE 35 32 9 7 8 (13)
UK INDIVIDUAL APE BY CHANNEL
============================
Year ended 31 December 2001
Annual Single Total APE
£m £m £m %
Independent financial adviser 154 159 313 54
Business partnerships 115 95 210 36
Direct 31 29 60 10
------ ------ ------ ----
300 283 583 100
====== ====== ====== ====
Year ended 31 December 2000
Annual Single Total APE
£m £m £m %
Independent financial adviser 123 156 279 60
Business partnerships 78 31 109 24
Direct 32 43 75 16
------ ------ ------ ----
233 230 463 100
====== ====== ====== ====
This information is provided by RNS
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