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Legal & General Group Plc  -  LGEN   

L&G Full Year Results 2017 Part 1

Released 07:00 07-Mar-2018

RNS Number : 9059G
Legal & General Group Plc
07 March 2018
 

LEGAL & GENERAL GROUP PLC

 

Stock Exchange Release                                                                                                        

 

07 March 2018                                                                                                                         

continuing strong performance in 2017: EPS1 31.9p, return on 

equity 25.6%



financial highlights2: 

·      OPERATING PROFIT up 32% to £2,055M (2016: £1,562m)

·      Profit Before tax3 UP 32% to £2,090m (2016: £1,582m)

·      Profit after tax UP 50% to £1,902m (2016: £1,265m)

·      Full year dividend up 7% to 15.35p per share (2016: 14.35p)

·      2017 results include mortality release4 of £332m

·      OPERATING PROFIT from continuing operations5 excluding mortality release up 12% 

      to £1,616M (2016: £1,447m) 

·      Net release from continuing operations5 up 9% to £1,352m (2016: £1,242m)

·      One-off US TAX benefit6 of £246m

·      SOLVENCY II COVERAGE RATIO7 OF 189% (2016: 171%)

·      Solvency II Net SURPLUS Generation of £1.2BN (2016: £1.1BN)

business highlights: 

·      PRT8 and individual Annuity new business of £4.6bn (2016: £4.1bn)

·      lifetime mortgage advances of £1.0bn (2016: £0.6BN)

·      lgim external net flows UP 49% AT £43.5BN (2016: £29.2bn)

·      LGIM AUM UP 10% AT £983.3BN (2016: £894.2BN)

·      GROUP-WIDE DIRECT INVESTMENT UP 44% AT £14.4BN (2016: £10.0bn)

·      lgi gross premiums UP 5% to £2.5bn (2016: £2.4bn)

Nigel Wilson, Group Chief Executive, said:

"Legal & General's strategic focus, alignment to global growth drivers and excellent execution, allowed us to deliver a record £2.1bn operating profit in 2017. Our shareholders are enjoying terrific EPS and RoE growth, while our 'inclusive capitalism' model ensures customers and society also benefit.   

Our scale businesses continued to successfully scale-up: LGIM's external net inflows were £44bn, taking us to almost £1 trillion in AUM. Customer focus and good value made us market leaders in our chosen UK business segments, while successfully expanding in the US where LGR broke new ground, completing fifteen Pension Risk Transfer deals. 

Our transformative, innovative businesses treat disruption as a privilege and a responsibility. Many of our initiatives are changing markets in the customer's favour, including SmartQuote, Smart Pensions, SalaryFinance, our housing businesses, Pemberton and NTR.

We remain confident that our unique business model, strong management team, collaborative culture, and strategic focus can deliver further growth in 2018 and beyond."

1.    Earnings per share is calculated by dividing profit after tax attributable to equity holders of the Company, by the weighted average number of ordinary shares in issue during the period. Excluding mortality releases and one-off US tax benefit, 2017 EPS is 23.10p (2016:21.22p).

2.    The metrics within the Group's financial highlights are defined in the glossary, which includes Alternative Performance Measures, on pages 93 to 99 to this report.

3.    Represents profit before tax attributable to equity holders.

4.    Mortality releases from LGR's £46.5bn of net longevity exposure comprises £206m relating to changes in longevity improvement assumptions to align to CMI 2015 tables, and a £126m base mortality release as reported in H1 2017.

5.    Excludes businesses disposed of comprising Mature Savings, Legal & General Netherlands, Suffolk Life, Cofunds and IPS.

6.    Reflects the revaluation of net deferred tax liabilities in the US, largely relating to the protection business following the US corporate income tax rate reduction from 35% to 21%.  

7.    Solvency II surplus and coverage ratio on a shareholder basis is adjusted for the Own Funds and SCR of the With-profits fund and the final salary pension schemes.

8.    Pension Risk Transfer (PRT).

 

FINANCIAL SUMMARY

 

£m

 

2017

2016

Growth %

 

 

 

 

 

Analysis of operating profit

 

 

 

 

Legal & General Retirement (LGR)

 

1,247

809

54

-  LGR Institutional (LGRI)

 

906

651

39

-  LGR Retail (LGRR)

 

341

158

116

Legal & General Investment Management (LGIM)

 

400

366

9

Legal & General Capital (LGC)

 

272

257

6

Legal & General Insurance (LGI)1

 

303

303

-

General Insurance

 

37

52

(29)

Continuing operating profit from divisions

 

2,259

1,787

26

Savings2

 

103

99

4

Legal & General Netherlands3

 

4

16

(75)

 

 

 

 

 

 

 

 

 

 

Operating profit from divisions

 

2,366

1,902

24

Group debt costs

 

(191)

(172)

(11)

Group investment projects and expenses4

 

(120)

(168)

29

 

 

 

 

 

Operating profit

 

2,055

1,562

32

Investment and other variances (incl. minority interests)5

 

35

20

75

 

 

 

 

 

 

 

 

 

 

Profit before tax attributable to equity holders

 

2,090

1,582

32

Profit after tax6

 

1,902

1,265

50

 

 

 

 

 

 

 

 

 

 

Operating profit from continuing operations7 excluding mortality release (£m)

 

1,616

1,447

12

Earnings per share (p)

 

31.87

21.22

50

Earnings per share excluding mortality release and one-off US tax (p)

 

23.10

21.22

9

Return on equity (%)

 

25.6

18.8

n/a

Full year dividend per share (p)

 

15.35

14.35

7

Final dividend per share (p)

 

11.05

10.35

n/a

Interim dividend per share (p)

 

4.30

4.00

n/a

 

 

 

 

 

 

 

 

 

 

Release from continuing operations7

 

1,191

1,082

10

New business surplus

 

161

160

1

 

 

 

 

 

 

 

 

 

 

Net release from continuing operations7

 

1,352

1,242

9

Net release from discontinued operations2,3

 

102

169

(40)

Dividend from subsidiary in respect of mortality releases8

 

250

-

n/a

Total release

 

1,704

1,411

21

 

 

 

 

 

 

 

 

 

 

1.Excludes Legal & General Netherlands which was sold on 6 April 2017.

2.Mature Savings sale to Swiss Re for £650m was announced on 6 December 2017. 2016 includes disposed businesses comprising Suffolk Life, Cofunds and IPS.

3.Legal & General Netherlands was sold on 6 April 2017.

4.In 2017, we invested £49m (2016: £40m) to increase efficiencies and develop strategic initiatives in the Group. 2016 includes the Kingswood office closure costs of £66m.

5.Includes net profit on disposals in 2017 of £17m in relation to the disposal of Legal & General Netherlands (2016: £(60)m loss comprising a £(64)m impairment loss on the disposal of Cofunds and IPS, and a £4m profit on disposal of Suffolk Life).

6.Includes one-off £246m tax benefit arising on revaluation of net deferred tax liabilities relating in the US, largely relating to the US protection business following the US corporate income tax rate reduction from 35% to 21%. 

7.Excludes Mature Savings, Legal & General Netherlands, Suffolk Life, Cofunds and IPS.

8.Represents dividend from Legal & General Assurance Society Ltd (LGAS) to Group, in addition to normal LGAS dividend, arising due to mortality reserve releases in 2017.

 

 

commentary on 2017 financial performance

Income statement

Operating profit increased 32% to £2,055m (2016: £1,562m), including £332m in mortality reserve releases. Operating profit from continuing operations1 excluding mortality releases increased 12%.

LGR delivered a 54% increase in operating profit to £1,247m (2016: £809m). This was driven by strong performances from our front and back books in LGR's Institutional and Retail divisions, and benefitted from our growing direct investment portfolio. In H2 2017 we adopted longevity improvement assumptions aligned to the next set of mortality tables (CMI 2015) for LGR's annuity book, resulting in a release of £206m of prudence within our reserves. This is in addition to the £126m reserve release in H1 2017 relating to the adjustment of our base mortality assumptions. Excluding these mortality reserve releases, growth in operating profit was 13%.

LGIM operating profit increased by 9% to £400m (2016: £366m). Management fee revenues were up 11% to £780m (2016: £700m) driven by record external net inflows of £43.5bn (2016: £29.2bn), and higher asset values throughout 2017. LGIM has continued to invest in the business to support its international growth strategy, and, despite increased regulatory costs, has maintained its market leading cost income ratio of 50%. 

LGC operating profit increased by 6% to £272m (2016: £257m) driven by returns from the division's £3.8bn (2016: £3.8bn) traded assets portfolio, and continued strong performance in the £1.5bn (2016: £1.1bn) direct investment portfolio which contributed £124m (2016: £121m). This included £43m from CALA Homes, representing our share of the business' profit in 2017.

LGI operating profit from continuing operations2 was flat year-on-year at £303m (2016: £303m). LGI America (LGIA) operating profit increased 11% to £94m (2016: £85m) driven by business growth, exchange rates and favourable mortality experience. LGI UK delivered robust profits of £209m (2016: £218m). Lapse experience impacted our retail protection business in H2 2017, in addition to previously reported adverse claims experience in group protection. Management actions taken to address the issues in group protection resulted in the business returning to profitability in H2 2017.

General Insurance operating profit decreased 29% to £37m (2016: £52m), primarily due to higher than expected non-weather related household claims in Q1 2017, in line with wider market experience. The division's financial performance has been improved through actions taken across pricing, underwriting and claims management. As a result we have seen claims experience returning to the required levels.

On 6 December 2017 we announced the sale of our Mature Savings business to Swiss Re for £650m. The sale is expected to generate a one-off IFRS gain, on completion of the Part VII transfer, planned for 2019, of over £400m. The business contributed £103m (2016: £105m) operating profit in the year.  

Profit before tax attributable to equity holders increased 32% to £2,090m (2016: £1,582m).

Profit before tax increased in line with operating profit. In addition, positive investment and other variances contributed £35m (2016: £20m), demonstrating diversification benefits across the Group. This included £91m (2016: £162m) primarily from the traded assets portfolio in LGC through outperformance of long term economic assumptions, as well as profit on disposals realised in the direct investments portfolio. Additionally, consistent with prior years, there was an accounting gain driven by the Group's defined benefit pension scheme reflecting accounting valuation differences arising on annuity assets held by the scheme. These gains were partially offset by the reduction in UK government bond yields in Q4 2017 which impacted the discount rate used to calculate the reserves for UK protection.

Profit after tax increased 50% to £1,902m (2016: £1,265m).

Following the reduction in the US corporate income tax rate from 35% to 21%, the Group benefitted from a one-time £246m reduction in tax charge in 2017. This was driven by the revaluation of net deferred tax liabilities in the US, largely relating to our US protection business. 

Net release from continuing operations1 increased 9% to £1,352m (2016: £1,242m), comprising £1,191m (2016: £1,082m) release from operations and £161m (2016: £160m) new business surplus. LGR new business surplus increased 13% to £180m (2016: £159m) benefitting from securing attractive spreads on direct investments, including lifetime mortgages, whilst maintaining discipline in meeting our return on capital hurdle rates. The mortality releases in 2017 resulted in an additional £250m subsidiary dividend being remitted to the Group, contributing to a total release of £1,704m (2016: £1,411m).

In 2017, total dividends remitted from subsidiaries to Group in respect of the year's results was £1.6bn (2016: £1.1bn).

1.  Excludes businesses disposed of comprising Mature Savings, Legal & General Netherlands, Suffolk Life, Cofunds and IPS.

2. Excludes Legal & General Netherlands, disposal completed on 6 April 2017.

balance sheet

The Group's Solvency II coverage ratio1 increased to 189% at the end of 2017 (2016: 171%), with net surplus generation contributing 15%. As at 5 March 2018, we estimate the ratio was 196%.

On a proforma calculation basis1, our Solvency II coverage ratio increased from 165% at the end of 2016 to 181% at year-end 2017. The surplus is the same on both bases at £6.9bn (2016: £5.7bn). The Group remains focused on delivering appropriate returns on capital. In 2017, our Solvency II new business strain was just £0.1bn.

The 2017 Solvency II coverage ratio incorporates a formal recalculation of the Group's Transitional Measure for Technical Provisions (TMTP), in line with UK regulatory guidance. At the end of 2017 the TMTP was £6.2bn which offsets the Group's Risk Margin of £5.9bn. We will continue to present management's estimate of the impact of recalculating the TMTP in future reporting periods as we believe this provides the most up to date and meaningful view of our Solvency II position. In line with guidance, the next formal recalculation will take place no later than 1st January 2020.

1.Solvency II coverage ratio on a shareholder basis excludes the SCR of the With-profits fund and the final salary pension schemes from both the Own Funds and SCR. The proforma calculation basis includes these items.

strategy and outlook

Group Strategy

The Group's strategy is aligned to our six established long term growth drivers: ageing demographics; globalisation of asset markets; creating new real productive assets; reform of the welfare state; technological innovation; and providing "today's capital". We focus on attractive high growth markets where we can leverage our expertise. Our focus, and the clear synergies between our core divisions, are expected to deliver further profit growth in the future. Our economic and commercial activities are closely aligned with our strategic purpose of building a better society.

Following the announcement of our sale of Mature Savings in December 2017, our business model is focused on three areas:

Investing & Annuities - Legal & General Retirement (LGR), and Legal & General Capital (LGC)

Investment Management - Legal & General Investment Management (LGIM)

Insurance - Legal & General Insurance (LGI), and General Insurance (GI)

Investing & Annuities

The first leg of our strategy in this area is the growth of long-dated liabilities via delivering for our customers in our pension risk transfer (PRT) business through LGR Institutional (LGRI), and our leading individual annuity business through LGR Retail (LGRR). As defined benefit (DB) pension funds reach maturity there is an increasing demand for risk transfer to insurers. Our network, skillset and reputation allows L&G to maintain a significant new business pipeline in this area, both direct and also via insurance back books. Additionally, in the UK we see annuities as a valuable tool for delivery of financial security to UK retirees, with individual annuity market volumes of £4.4bn in 2017, and LGRR volumes up 78%. LGRR continues to work closely with LGIM to seek to deliver a range of retirement solutions to our customers. These include lifetime and fixed-term annuities, and flexible lifetime mortgages, to add to LGIM's investment products.

The second leg of our business strategy is gathering the assets required to meet our annuity customer obligations, and deliver financial returns for our shareholders. L&G invests in sovereign and credit assets, and direct debt-like investments, benefitting from the long duration and illiquid nature of our liabilities. LGIM's Real Assets business is skilled at sourcing these opportunities, in real estate, infrastructure and private credit areas, and currently manages over £10bn of direct investments for LGR's funds. Additionally, LGRR's lifetime mortgages business delivers an attractive long-dated return for our annuity funds.

The final leg is LGC, which uses shareholder capital to achieve two clear goals. The first is to deliver attractive financial returns for our shareholders through leveraging L&G's existing businesses, our network of relationships, our brand, and our expertise. The second is to use these more equity-like investments to deliver or unlock attractive debt-like investments for our annuity business, and to grow third party opportunities for LGIM. LGC has developed clear skills in four main areas of investing:

·    Urban regeneration, where we work with local councils, partners and stakeholders to deliver significant real estate and infrastructure developments, e.g. Cardiff city centre;

·    Clean Energy, where in addition to working with our partner NTR, we are seeking to invest in energy technologies of the future;

·    Housing, where indirectly through our minority holding in CALA Homes, and directly, we are addressing the significant opportunity for housebuilders across all forms of tenure, including Build-to-Sell, Build-to-Rent and specialist housing for the elderly. We are also at the forefront of the development of UK residential property into an institutional asset class via the Build-to-Rent fund we launched in 2016;

·    SME Finance, where primarily, we invest through our minority owned partner Pemberton to provide corporate lending for European mid-market businesses.

Investment Management

LGIM has a strong history of providing customer focused investment solutions for UK pension funds, especially in Active Fixed Income, Liability Driven Investments (LDI) and Index. In recent years, LGIM has diversified substantially within this client segment via expansion into Global High Yield and Multi-Asset mandates, and broadening its Real Assets capability. Additionally, LGIM has established a leading environmental, social and governance (ESG) practice, and has evolved its Index range to include Factor Based Investing (FBI) products.

In recent years, LGIM has followed a strategy of expanding globally and into different UK client segments. The global expansion continues to be highly successful. LGIM America, based in Chicago, has grown its asset base to c.£140bn since its founding 11 years ago. Elsewhere, LGIM continues to secure mandates and now has client assets of over £88bn from Europe, the Middle East and Asia. In 2017, LGIM enhanced its European distribution strategy through the announcement of the acquisition of Canvas, the exchange-traded fund (ETF) platform. The acquisition provides LGIM's clients with access to an important segment, as the increasing use of passive vehicles and the drive to digitalisation will lead to growing demand for ETF products.

The UK savings gap remains a consumer challenge and LGIM has focused significant efforts on improving its offering in Defined Contribution (DC) and Workplace Savings, with 2.7million members and assets of £68.2bn, making it the largest manager of UK DC assets. In addition, the Retail business has grown strongly benefitting from its competitive range of index-based, multi-asset and property funds, and expects to make further progress on expanding its Personal Investing offering.

Insurance

Our insurance strategy is deeply rooted in providing customers with competitively priced and efficiently delivered protection products for life events. In both the UK and the US, LGI has adopted a strategy of using technology to optimise its operations. This includes increased automation in our customer administration and medical underwriting processes, and using robotics. Our GI business has implemented 'SmartClaims' which uses data and technology to automate customer processes and improve customer outcomes whilst reducing fraud. The next core element of the Insurance strategy is to diversify and digitise its distribution channels. Both businesses have had significant success with partners and affinities on the basis of their integrated digital journey for customers, and excellence in customer service and outcomes. GI's 'SmartQuote' tool, which seeks to underwrite household policies on the basis of only five questions, has improved direct take up by more than 50%, and is set to further expand in 2018 through our partnerships with companies who value the shorter underwriting process.

Insurance is where much of our Fintech innovation takes place with a dedicated team building on existing digital capability, for example The Idol, which powers a number of comparison websites. In 2017, the Fintech business acquired a stake in SalaryFinance which seeks to provide attractively priced lending via the workplace and payroll systems of partner clients. This has the potential to be integrated with other retail offerings in the future.

Outlook

We are confident Legal & General will see continuing momentum in 2018, driven by the excellent execution of our strategy across our three business areas. The Group's stated financial ambition is to achieve a similar performance out to 2020 as that achieved in 2011-2015; where EPS grew by 10% per annum. We made a good start in 2016 and this has continued in 2017. Excluding the impact of mortality reserve releases and a one-off US tax benefit, EPS increased 9% during the year, and operating profit from our continuing operations was up 12%. Legal & General is well placed to grow further in 2018, with over £3.4bn of cash. In addition to covering working capital and collateral for derivatives, this will be utilised for organic growth opportunities, bolt-on M&A, sourcing direct investments, and investing in our existing infrastructure.

Although no business model can be fully immunised to market volatility, our operating model is resilient and underpinned by thoughtful and effective risk management practices. The structural drivers, on which the Group's strategy is based, are largely unaffected by ongoing political and economic uncertainty. The Group's balance sheet remains strong with £6.9bn in surplus regulatory capital and has significant buffers to absorb a market downturn.

Investing and Annuities

In LGR, demand for pension de-risking strategies in our institutional business, LGRI, remains strong. We are currently quoting on c.£17bn of buy-in and buy-out deals in the UK. Additionally, the US, which achieved a 59% increase in PRT sales in 2017, is expected to continue its positive momentum in 2018. We will remain disciplined in the deployment of our capital, and will only select PRT and longevity opportunities that meet our return on capital hurdle rates. In LGR's Retail business, demographic changes will see our target market continue to grow, both in terms of the numbers of retirees and the levels of wealth they hold. We expect individual annuities to build on 2017 driven by our growing strengths in pricing, underwriting, marketing and distribution. Our leading lifetime mortgage business, which made over £1bn advances in 2017, currently has a 33% market share. Our focus is to continue growing the market by widening the range of products offered and routes to market utilised. We anticipate total lifetime mortgage market volumes of over £6bn by 2020, up from £3bn in 2017.

LGC is planning to continue the transition of the traded portfolio into longer-term real assets through growth in the direct investment portfolio, seeking to create long-term value with strong risk-adjusted returns and reduced short-term volatility. In our Housing portfolio, we will continue the expansion of our build-to-sell and build-to-rent offerings. We have ambitious plans to develop businesses in the Later Living and Affordable Housing sectors, and we intend to grow the Urban Regeneration portfolio through further investment into existing projects, and the regeneration of cities where we do not yet have a presence. We also plan to continue to expand our SME Finance portfolio through new equity and debt investment. In addition, as the portfolio continues to mature, we forecast further capital recycling in the period through disposals. LGC's £3.8bn traded asset portfolio significantly outperformed our long term assumptions in 2017, however, we do not anticipate a similar outperformance in 2018.

Investment Management

In LGIM, we have positioned the business to build on our market-leading position in UK defined benefit (DB) pension solutions, and are focused on achieving strong growth in the international, DC, and retail markets. Our international business achieved record net inflows in 2017, accounting for over 80% of total net flows with AUM now at £228bn, and we expect this momentum to continue in 2018. We are now the largest manager of DC assets in the UK and our retail business was third in net retail sales for the second consecutive year (Source: Pridham report). The direct-to-consumer market is of strategic importance to LGIM and we will be expanding our Personal Investing business later this year. We will continue to invest in areas of the business that are experiencing strong growth, with operational leverage in our core business areas allowing us to maintain a relatively stable cost-income ratio of around 50%.

Insurance

In our life business, LGI, we expect continued premium growth and to maintain good earnings in the US. During 2017, in collaboration with colleagues from the UK, the US launched a direct to consumer sales channel, and work is ongoing to digitally transform the business. In the UK, the turnaround of our group protection business is on track, having returned to profitability in H2 2017 following management actions. Our market leading retail protection business has a 24% market share and is expected to continue growing premiums and generating good profits in 2018, supported by distribution and product enhancements.

In General Insurance, we continue to attract significant interest from potential distribution partners, and are actively discussing a number of new opportunities including the very latest in Insuretech. Several of our new distribution agreements are due to commence in H1 2018. Our pet insurance sales are increasing, supported by our recent acquisition of pet insurance provider 'Buddies'. Additionally, we anticipate the actions we have taken to address adverse non-weather related household claims experience in 2017 will drive an improved 2018 performance, more in line with previous years.

FULL year DIVIDEND UP 7%

Legal & General has a progressive dividend policy reflecting the Group's expected medium term underlying business growth, including net release from operations and operating earnings. There is no change to our dividend policy.

In line with our policy, the Board has maintained its view of the medium-term trajectory of dividend growth, taking into account sustainability across a wide range of economic scenarios and the Group's anticipated financial performance. Accordingly, the Board has recommended a final dividend of 11.05p (2016: 10.35p) giving a full year dividend of 15.35p (2016: 14.35p), 7% higher than 2016.

LEGAL & GENERAL RETIREMENT

FINANCIAL HIGHLIGHTS £m

 

 

2017

2016

 

 

 

 

 

 

 

 

 

 

Release from operations

 

 

508

432

New business surplus

 

 

180

159

 

 

 

 

 

 

 

 

 

 

Net release from operations

 

 

688

591

Experience variances, other assumption changes, tax and non-cash movements

 

 

285

178

Longevity assumption changes (net of tax)

 

 

274

40

 

 

 

 

 

 

 

 

 

 

Operating profit

 

 

1,247

809

- LGR Institutional

 

 

906

651

- LGR Retail

 

 

341

158

Investment and other variances

 

 

4

37

Profit before tax

 

 

1,251

846

 

 

 

 

 

Back book acquisitions

 

 

-

2,945

UK PRT

 

 

3,405

3,338

International PRT

 

 

543

347

Individual annuity single premiums

 

 

671

378

Lifetime mortgage advances

 

 

1,004

620

Longevity insurance1

 

 

800

900

 

 

 

 

 

 

 

 

 

 

Total LGR new business

 

 

6,423

8,528

Total annuity assets (£bn)

 

 

58.2

54.4

 

 

 

 

 

1.  Represents the notional size of reinsured longevity insurance transactions and is based on the present value of the fixed leg cashflows discounted at the LIBOR curve.

Operating profit up 54% to £1,247m AND UP 13% EXCLUDING mortality RELEASE OF £332m

Operating profit increased to £1,247m (2016: £809m) driven by strong performance in the front and back books of LGR's Institutional and Retail divisions. Additionally, in H2 2017 we completed our review of longevity trend assumptions and have now adopted adjusted CMI 2015 mortality tables for LGR's annuity book. This resulted in a release of £206m of prudence within our reserves and is in addition to the £126m reserve release in H1 2017 relating to the adjustment of our base mortality assumptions. Excluding these prudent reserve releases of £332m, LGR's operating profit continued to show good growth at 13%.

As normal, we will continue to review the appropriateness of our longevity improvement assumptions. There is increasing evidence that the higher than expected level of recent mortality is in part due to medium or long-term influences. We will apply caution in our assessment of any reduction in longevity improvements, with any release being recognised over several years as greater certainty emerges.

Release from operations increased 18% to £508m (2016: £432m), reflecting the expected release of prudential margins from our growing £58.2bn annuity fund.

Net release from operations increased 16% to £688m (2016: £591m) with new business surplus of £180m (2016: £159m). New business surplus benefitted from strong volumes and securing attractive spreads on direct investments including lifetime mortgages.

LGR achieved Solvency II new business strain of less than 4% on £4,619m of new annuity business in 2017, within our target low to mid single digit range. UK annuity sales delivered an 8.5% new business margin.

LGR's gross longevity exposure is £64.3bn across annuity and longevity insurance business. We have reinsured £17.8bn of longevity risk with 12 reinsurance counterparties, leaving a net exposure of £46.5bn. 

We view LGR as having two objectives: 'Institutional' which enables global pension risk transfer (PRT) for corporates, and 'Retail' which provides individual retirement solutions. The need for products and services to manage the consequences of ageing populations is increasing, and our strategy is to be at the forefront of this for our institutional and retail customers. 

LGR Institutional

Global Pension Risk Transfer

In 2017, LGR Institutional completed £3,948m (2016: £3,685m) of pension scheme buy-ins and buy-outs and a longevity insurance transaction of £800m (2016: £900m).

2017 was a good year for UK pension de-risking with market volumes exceeding £10bn for the fourth year in a row. LGR closed 31 buy-ins and buy-outs in the UK in 2017, totalling £3.4bn (2016: £3.3bn), representing a market share of 28% (2016: 33%). The largest overall market deal in 2017 was the £1.2bn buy-in of the Pearson Pension Plan which is one of our long standing clients. LGR's share of the transaction was £585m and further demonstrates the strength of our de-risking proposition. We operate a capital efficient model, reinsuring approximately 85% of longevity risk on new UK PRT business to our panel of reinsurers.

The UK private sector DB market is estimated to have £2.3 trillion of liabilities, with only c.7% transacted to date. As interest rates increase, DB pension deficits will reduce, making it more affordable for corporates to achieve a buy-in or buy-out. We expect further growth in this market and are currently quoting on c.£17bn of UK buy-in and buy-out transactions. 

We are unique in offering and participating in all possible DB pension de-risking solutions. For example, our investment management division, LGIM, is the UK market leader in LDI which provides UK corporates with interest rate and inflation risk hedging strategies for their pension assets. Of LGRI's £3.4bn UK PRT annuity sales in 2017, £1.4bn of the assets transferred were from existing LGIM clients.

In the US, our PRT team based in Stamford, Connecticut, completed 15 bulk deals in 2017 totalling $713m in premiums (2016: $448m). LGR America has now written more than $1.6bn in cumulative premium since completing its first deal in 2015. The US represents a significant market opportunity, with $3.7 trillion of DB liabilities, and only c.4% transacted to date.

LGR Retail

Individual Retirement Solutions

LGR's Retail business is playing an important role in our customers' retirement lives. Helping those approaching or already in retirement make the right choices to manage their financial needs through annuities and lifetime mortgages is vital. 

Individual annuity sales were up 78% at £671m (2016: £378m), our highest volume since 2014, and LGR Retail is a top three UK annuity provider with a 14% market share. LGR Retail now manages c.£20bn in assets for its 500,000 individual annuity customers. Our high quality customer service and strength in the key areas of pricing, underwriting, marketing and distribution are important drivers for continued growth in 2018 and beyond.

Legal & General Home Finance had a strong year, making £1,004m of lifetime mortgage advances in 2017 (2016: £620m). This represents a 33% market share. Our portfolio has an average customer age of 70 and the weighted average loan-to-value is c.28%. In 2017, we secured a five year partnership agreement with The Co-operative Bank to offer lifetime mortgages to its interest-only customers approaching retirement. With an estimated £1.5 trillion of housing equity currently owned by the over 55s in the UK, the long-term growth characteristics of this market are strong, and we anticipate the market volume to reach £6bn by 2020, up from £3bn in 2017.  

We have recently re-opened to new annuity business in Ireland through a partnership with New Ireland Assurance and the Bank of Ireland.

ONGOING credit and ASSET management

Credit portfolio management

LGR's £58.2bn 'A minus' rated asset portfolio backing the IFRS annuity liabilities is well diversified. Within the £52.5bn bond portfolio, just over 2/3rds of the portfolio is A-rated or better, 31% BBB-rated and 1% sub-investment grade. 

Our fixed income fund managers in LGIM manage the portfolio to avoid credit downgrades and defaults. At the end of 2017 our IFRS credit default reserve was £2.7bn.

Direct Investment

In 2017, LGR invested over £4bn in direct investments, including infrastructure, housing and lifetime mortgages. This portfolio is now £12.2bn (2016: £8.1bn) including £2.0bn in lifetime mortgages, and makes up c.21% of the assets within the annuity portfolio. We have a robust internal rating process and over half of the direct investment portfolio is rated A and above. 

The Group's large balance sheet size and long term illiquid liabilities enable LGR to invest in assets of size and term that differentiate it from many other institutional investors. The ability to self-manufacture attractive assets to back annuities, working with LGIM, LGC, or through lifetime mortgages, is an important feature of LGR's business. Including externally sourced investments, the yield enhancement over fixed-rate traded assets typically ranges from 50 to 150+ bps depending on the asset type. Notable activity in 2017 included the funding of our first investments in UK offshore wind and US renewables.

LEGAL & GENERAL investment management

 

FINANCIAL HIGHLIGHTS £m

 

 

2017

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management fee revenue1

 

 

780

700

 

Transactional revenue

 

 

25

30

 

Total revenue

 

 

805

730

 

Total costs1

 

 

(405)

(358)

 

 

 

 

 

 

 

Asset management operating profit

 

 

400

372

 

Workplace Savings operating result2

 

 

-

(6)

 

 

 

 

 

 

 

Operating profit

 

 

400

366

 

Investment and other variances

 

 

(9)

(32)

 

Profit before tax

 

 

391

334

 

Net release from operations

 

 

321

286

 

Cost:income ratio3 (%)

 

 

50

49

 

 

 

 

 

 

 

£bn

 

 

 

 

 

External net flows

 

 

43.5

29.2

 

Internal net flows

 

 

(2.7)

2.0

 

Disposal of LGN4

 

 

(0.8)

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Total net flows

 

 

40.0

31.2

 

- Of which international

 

 

33.0

14.5

 

Cash management flows

 

 

3.0

(0.7)

 

Persistency (%)

 

 

90

91

 

 

 

 

 

 

 

 

 

 

 

Average assets under management

 

 

949

830

 

Assets under management

 

 

983.3

894.2

 

Of which:

 

 

 

 

 

- International assets under management

 

 

228.0

177.4

 

Assets under administration - Workplace Savings

 

 

27.7

20.8

 

 

 

 

 

 

 

                     

1.             Management fee revenue and total costs exclude income and costs of £17m in relation to the provision of 3rd party market data (2016: £14m).

2.             Represents Workplace Savings admin only and excludes fund management profits.

3.             Excluding Workplace Savings.

4.             Legal & General Netherlands disposal completed on 6 April 2017.

operating profit up 9% to £400m

LGIM has continued to expand and diversify its business across channels, regions and product lines. This contributed to a 10% growth in assets under management (AUM) to £983.3bn (2016: £894.2bn). External net flows were strong at £43.5bn (2016: £29.2bn), with a further £3.0bn of cash management flows (2016: £(0.7)bn). Revenues were up 10% to £805m (2016: £730m), while transactional revenues were lower at £25m (2016: £30m).

Operating profit increased by 9% to £400m (2016: £366m), reflecting fees from higher asset values and net flows, partially offset by LGIM's continued investment in its growth strategy and increased regulatory costs. We maintained a market leading cost income ratio of 50%. 

Workplace Savings assets increased by 33% to £27.7bn (2016: £20.8bn), and we are focused on improving efficiency as the business grows. The business achieved a breakeven operating result in 2017 (2016: £(6)m), reflecting the administration business only. The profits on the fund management services provided are included in LGIM's operating profit.

INTERNATIONAL assets up 29% to £228bn 

LGIM's international businesses experienced record net inflows of £33.0bn (2016: £14.5bn), underpinned by net inflows of £12.6bn in the US (2016: £9.4bn), £12.6bn in Europe (2016: £2.6bn), £3.6bn in the Gulf (2016: £1.7bn), and £4.2bn in the Pacific Rim (2016: £0.8bn). We established a regional office in Tokyo together with trading and fund management capabilities in Hong Kong. We have also enhanced our European distribution strategy through the announcement of the acquisition of Canvas, the exchange-traded fund (ETF) platform. Total international AUM increased by 29% to £228.0bn (2016: £177.4bn).

Half a Million new workplace customers

The defined contribution (DC) business continued to grow rapidly with total net inflows of £3.0bn (2016: £2.0bn), driven by the bundled business which provides administration and investment services to DC schemes. Total UK DC AUM increased by 19% to £68.2bn (2016: £57.1bn). LGIM has experienced a 20% increase in customers on its Workplace pension platform, with the number of members now at 2.7m (2016: 2.2m).

Accelerating growth in our retail business

The retail business experienced record net inflows of £3.0bn (2016: £1.4bn). Retail AUM increased to £29.7bn (2016: £24.1bn) as we benefit from an expanded product range and broader distribution strategy. We experienced strong net flows from our partnerships with intermediaries and wealth managers, particularly into multi-asset, index and property products.

breadth of investment management solutions

  

 

Global

  

  

  

  

Asset movements  

Index

fixed

Solu-

Real

Active

Total

£bn

funds

income

tions

assets

equities

AUM

  

 

 

  

  

  

  

  

 

 

  

  

  

  

At 1 January 2017

319.8

134.8

411.9

19.6

8.1

894.2

  

 

 

 

 

 

 

  

 

 

 

 

 

 

External inflows

51.1

15.1

33.2

1.5

0.1

101.0

External outflows

(61.4)

(6.4)

(15.7)

(1.2)

(0.1)

(84.8)

Overlay net flows

27.3 

 -

27.3

  

 

 

 

 

 

 

  

 

 

 

 

 

 

External net flows

(10.3)

8.7

44.8

0.3

-

43.5

Internal net flows

(0.4)

(2.0)

(1.1)

1.5

(0.7)

(2.7)

Disposal of LGN1

(0.3)

(0.5)

-

-

-

(0.8)

  

 

 

 

 

 

 

  

 

 

 

 

 

 

Total net flows

(11.0)

6.2

43.7

1.8

(0.7)

40.0

Cash management movements

-

3.0

-

-

-

3.0

Market and other movements

32.1

4.8

7.1

2.4

(0.3)

46.1

At 31 December 2017

340.9

148.8

462.7

23.8

7.1

983.3

  

 

 

 

 

 

 

  

 

 

 

 

 

 

               

1.             Legal & General Netherlands disposal completed on 6 April 2017.

Total AUM increased 10% to £983.3bn (2016: £894.2bn), with external net inflows of £43.5bn (2016: £29.2bn) representing c.5% of opening AUM. Flows were once again positive across all channels and regions, and most product lines. We delivered consistent strong performance on our active funds, with 85%, 82% and 71% of AUM above benchmark or their peer group median on a one, three and five year basis.

Solutions external net inflows were £44.8bn (2016: £34.7bn), driven by DB pension schemes implementing a broad range of liability driven investment (LDI) strategies and high demand for multi-asset strategies from DC schemes and retail customers. Multi-asset external net inflows were £7.2bn (2016: £5.7bn), and multi-asset AUM has grown to £24.7bn (2016: £15.8bn). Our LDI solutions and private credit areas have also experienced strong growth.

Index external net outflows were £10.3bn (2016: £9.8bn outflow), driven by UK DB clients implementing de-risking strategies. We expect to see continued index outflows as many of these clients transition into our LDI strategies. We also expect to see continued consolidation of local government pension scheme funds, with known outflows in Q1. Outflows from the UK index business were partially offset by net inflows from international and retail clients.

Net external inflows into Global Fixed Income of £8.7bn (2016: £4.3bn) were driven by continued strong performance across our range of funds. There has been robust demand for credit strategies from US and European institutional clients, while UK clients increased their fixed income allocations as they de-risked their portfolios.   

The Real Assets business has continued to expand, with good growth in private credit. LGIM originated over £2.8bn of investments across corporate and infrastructure debt and real estate lending in 2017 and saw continued success with its Build to Rent business. Real Assets AUM has grown to £23.8bn (2016: £19.6bn). 

LEGAL & GENERAL CAPITAL

 

FINANCIAL HIGHLIGHTS £m

 

 

2017

2016

 

 

 

 

 

 

 

Net release from operations

 

 

224

214

 

Operating profit from:

 

 

 

 

 

Direct investment

 

 

124

121

 

Traded investment portfolio

 

 

140

122

 

Treasury assets

 

 

8

14

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating profit

 

 

272

257

 

Investment and other variances

 

 

91

162

 

Profit before tax attributable to equity holders

 

 

363

419

 

 

 

 

 

 

 

 

 

 

 

 

 

DIRECT INVESTMENT PORTFOLIO1 £m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Urban Regeneration

 

 

469

501

 

Clean Energy

 

 

97

90

 

Housing

 

 

588

392

 

SME Finance

 

 

296

154

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,450

1,137

 

TRADED PORTFOLIO £m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equities

 

 

2,069

1,714

 

Fixed income

 

 

216

492

 

Multi-asset

 

 

131

150

 

Cash2

 

 

1,395

1,418

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,811

3,774

 

 

 

 

 

 

 

 

 

 

 

 

 

LGC investment portfolio

 

 

5,261

4,911

 

Treasury assets at holding company

 

 

2,040

1,282

 

Total

 

 

7,301

6,193

 

 

 

 

 

 

               

1. Direct Investment portfolio includes an LGC asset valued at £128m which is classified as held for sale in line with IFRS 5 Non-current Assets Held for Sale and Discontinued operations.

2. Includes short term liquid holdings.

DIRECT INVESTMENT portfolio up 28% to £1.5bn

The Direct Investments portfolio increased by 28% to £1,450m (2016: £1,137m). The portfolio delivered a solid performance with operating profit of £124m (2016: £121m) and profit before tax of £102m (2016: £94m), representing a net portfolio return3 of 8.1% (2016: 9.0%). This includes a number of assets which are in early stage development. The increase in profit before tax was driven by the maturing profile of the portfolio which has delivered valuation increases and positive variances from asset disposals.

recycling capital and delivering new investment

In 2017, LGC generated £369m as its share of gross proceeds from sale transactions with a gross value of £1.2bn. This was achieved through a combination of portfolio assets disposals and sales of funds, and was ahead of our full year target of £250m. All full asset disposals have been achieved at or above our target IRR's, demonstrating our ability to generate liquidity and profits for our shareholders. We have recycled the proceeds into new opportunities and invested or committed £668m during the year in investments across all the target sectors.

Urban Regeneration assets of £469m (2016: £501m)

The Urban Regeneration business is maturing, with profits being realised on disposals and valuations increasing as projects are developed and letting of units is achieved. A number of significant milestones were reached in 2017, including the completion of the transformational £240m redevelopment of Bracknell Town Centre, the successful sale of 1 Central Square, Cardiff in July 2017, and a forward sale of 2 Central Square which completed in October 2017. Our Cardiff regeneration scheme has been successful in attracting high quality tenants including BBC Wales and HMRC.

3.             Net portfolio return calculated as direct investment profit before tax divided by average portfolio assets in the year.

In our Newcastle Science Central development, planning permission has been secured for two office buildings, with work due to start in March 2018.

Clean Energy assets of £97m (2016: £90m)

In Clean Energy, LGC's sector partner, NTR1, has now completed the construction of 8 of 11 sites in its €246m UK onshore wind fund, which is in the final stages of its investment period. NTR is in advanced stages of the development of its second fund.

Housing assets increased to £588m (2016: £392m)

LGC has continued to build out its housing sector investment, developing operating businesses to deliver a multi-tenure housing offering.

In August, LGC completed its first investment in the later living sector with the establishment of Inspired Villages Group (IVG) and the simultaneous acquisition of two part-constructed schemes. LGC also completed the acquisition of Renaissance Villages, a business with four later living schemes, which has accelerated LGC's later living business plan by several years. IVG is now the fourth largest later living operator in the UK and has plans to acquire and develop out at further sites.

Our Build-to-Rent joint venture has invested in new sites in Leeds, Bristol, Birmingham and Brighton, and now has a pipeline of nearly 2,000 homes.

Legal & General Homes is building over 2,500 new homes on three UK sites. All the sites will provide a full range of housing options, including affordable housing.

CALA Homes2 delivered a record financial performance. In the twelve months to the end of December, CALA delivered revenue of £776m and is ahead of the same period last year.

SME Finance assets increased to £296m (2016: £154m)

Pemberton3 continues to build out its European asset management platform, successfully closing two new funds during 2017: a second Euro Fund to which LGC committed c.£80m in 2017 and a Strategic Opportunities Fund. In 2018, Pemberton will hold further closes on these two funds, and will look to take advantage of attractive investment opportunities within the UK and European direct lending market.

During 2017 LGC committed c.£36m to vehicles investing in early stage start-ups in the UK and Europe taking total commitments to c.£80m.

TRADED PORTFOLIO

LGC's traded investment portfolio, including treasury assets, delivered operating profit of £148m (2016: £136m) and profit before tax £261m (2016: £325m).

The £3.8bn (2016: £3.8bn) traded book holds a diversified set of exposures across equities, fixed income, multi-asset funds and cash. Overall, the book performed above assumed returns over the year, benefiting from positive equity market performance.

LGC holds cash for a variety of reasons including working capital, collateral to cover derivatives trades and cash awaiting longer term investment. In addition, Group Treasury holds cash and near cash investments to cover a range of uses including working capital, imminent known cash flows and collateral to cover derivatives.

 

1.             LGC owned a 25.0% share in NTR fund management business and 47.0% in the NTR fund as at 31 December 2017.

2.             LGC owned a 47.9% share in CALA Homes as at 31 December 2017.

3.             LGC owned a 40.0% share in Pemberton as at 31 December 2017.

 

LEGAL & GENERaL INSURANCE

 

FINANCIAL HIGHLIGHTS £m

 

 

2017

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Release from operations

 

 

273

248

New business surplus

 

 

2

23

 

 

 

 

 

 

 

 

 

 

Net release from continuing operations1

 

 

275

271

 

 

 

 

 

 

 

 

 

 

Operating profit from continuing operations1

 

 

303

303

UK

 

 

209

218

US

 

 

94

85

Investment and other variances2

 

 

(60)

(130)

Profit before tax attributable to equity holders

 

 

243

173

 

 

 

 

 

LGI new business annual premiums3

 

 

300

290

 

 

 

 

 

Retail Protection gross premiums

 

 

1,232

1,179

Group Protection gross premiums

 

 

326

333

US Protection gross premiums

 

 

973

897

 

 

 

 

 

 

 

 

 

 

Total gross premiums3

 

 

2,531

2,409

 

 

 

 

 

1.Excludes Legal & General Netherlands (LGN) which was sold on 6 April 2017. In 2017, LGN contributed £nil (2016: £70m) to net release from operations, and £4m (2016: £16m) to operating profit.

2.Prior year investment variance of £(130)m) driven by a reduction in UK government bond yields of c.85bps which impacted the discount rate used to calculate the reserves for our UK protection liabilities.

3.Excludes £1m (2016: £4m) new business annual premiums and £14m (2016: £52m) gross premiums in LGN.

 

5% increase in Gross premiums to £2.5bn

In 2017, LGI achieved further growth in gross premium income, up 5% to £2,531m (2016: £2,409m) as a result of strong new business performance in LGI's US business as well as exchange rates, and record UK retail sales that continued to benefit from highly efficient automated underwriting and a broad distribution reach.

Retail Protection gross premium income increased 4% to £1,232m (2016: £1,179m) with new business annual premiums of £172m (2016: £170m). We remain a leading provider of Retail Protection in the UK, and in 2017 delivered straight through processing for more than 80% of our customers. Our direct distribution channel continues to perform strongly and delivered Retail Protection new business APE of £32m (2016: £31m) accounting for c.19% of new business APE. Group Protection gross premium income was £326m (2016: £333m) with new business of £49m (2016: £58m), reflecting the non-renewal of specific schemes which have experienced significantly higher claims than expected.

LGI America (LGIA) gross premium income increased 3% (8% on a sterling basis) to $1,254m (2016: $1,220m) driven by new annual premiums increasing 21% to $102m (2016: $84m). LGIA is the second largest provider of US term life assurance through the brokerage channel and has 1.3m policies in force (2016: 1.2m). 

Legal & General Mortgage Club facilitated £65bn of mortgages in 2017 (2016: £53bn) through strong partnerships with top lenders and over 9,000 mortgage brokers. As the largest participant in the intermediated mortgage market in the UK, we are involved in one in five of all UK mortgage transactions. Legal & General Surveying Services delivered a strong performance, completing over 522,000 surveys.

SUSTAINED divisional operating profit and strong us growth

Net release from continuing operations in LGI increased by £4m to £275m (2016: £271m), with lower new business surplus of £2m (2016: £23m) reflecting an increasingly competitive UK protection marketplace. LGIA net release from operations increased by 10% (27% on a sterling basis) to $100m (2016: $91m). This represents the annual dividend paid by LGIA to the Group in 2017. LGIA paid its 2018 dividend in March of this year, up 5% to $105m.

In 2017, LGI UK delivered robust profits of £209m (2016: £218m), down 4% on the prior year reflecting the impact of lower than expected lapses on older business, which resulted in a negative experience variance in retail protection. This was in addition to the previously reported adverse claims experience seen primarily in a small number of schemes in group protection. In 2017, we undertook a range of actions to address this issue, including pricing action at scheme renewals. The impact of these management actions resulted in improved experience, and the business returned to profitability in H2 2017. As part of the ongoing review of our actuarial assumptions we reflected recent experience and also made some modelling refinements in our retail protection mortality reserving.

LGIA operating profit increased 5% (up 11% on a sterling basis) to $121m (2016: $115m), due to business growth and favourable mortality experience. LGIA delivered a strong Solvency II new business margin of 11.7%.

UK protection sales delivered an 8.6% Solvency II new business margin (2016: 10.4%), reflecting the impact of competitive pressures in the retail protection market. The protection business continues to generate Solvency II surplus immediately when written and so represents excellent economic value for our shareholders.

DiGitaL & Diversified growth strategy

LGI's purpose is to enable people to protect their lives and lifestyles. By leveraging strengths across the division's market leading protection businesses in the UK and US, Mortgage Club and Fintech operations, LGI is well placed to continue growing its capabilities and delivery to its customers.

Our UK retail protection business benefits from high levels of automation and self-service capabilities which we have continued to enhance during 2017. We are also increasingly using predictive analytics and improved underwriting approaches to reduce the time it takes for advisers and their customers to apply for policies.

The digital transformation of our US Protection business is on track, using the wealth of experience and capabilities in our UK business. In 2018, we will be introducing an application which will allow us to provide instant underwriting decisions to more of our customers. This will improve the experience of our intermediated customers and also support the direct-to-customer business we established in 2017. By collecting customer information digitally, we will be able to make underwriting decisions more quickly and with less need for manual underwriting and medical examinations.

We see increasing opportunities for technological innovation to help customers engage with financial services. To pursue these growth opportunities we have recently established a Fintech business area within LGI that will include our existing business, Investment Discounts Online (IDOL), and other start-ups, that we fund and collaborate with. Our investment in SalaryFinance, which seeks to provide attractively priced lending via the workplace and payroll systems of partner clients, is a recent example of our commitment to Fintech.

General Insurance

FINANCIAL HIGHLIGHTS £m

 

 

2017

2016

 

 

 

 

 

 

 

 

 

 

Net release from operations

 

 

30

42

Experience variances, assumption changes, tax and non-cash movements

 

 

7

10

 

 

 

 

 

 

 

 

 

 

Operating profit

 

 

37

52

Investment and other variances

 

 

6

16

Profit before tax

 

 

43

68

General Insurance gross premiums

 

 

369

326

13% growth in gross premiums to £369m

Gross premiums increased 13% to £369m (2016: £326m) despite the pressures of a competitive market and maintaining our pricing discipline. Our direct business delivered gross premiums of £139m in 2017, representing 15% growth on 2016 and now accounts for 38% of gross premiums (2016: £121m, 37% of gross premiums). Legal & General is ranked second for household new business via price comparison websites, which in total accounts for over half of UK direct household gross premiums.

The General Insurance business has won seven distribution agreements in the last two years with major UK financial institutions, several of which will commence in H1 2018. A key factor in securing distribution agreements has been the launch of our market leading, digital SmartQuote proposition.

In October 2017 we agreed to acquire Buddies Enterprises Limited, a pet insurance provider, which provides significant opportunities for growth in the pet market, thereby helping to diversify and expand our product range.

We continue to attract significant interest from potential distribution partners, and are actively discussing a number of new opportunities including the very latest in Insuretech.

Improved claims experience in H2 2017

Operating profit decreased to £37m (2016: £52m) with a combined operating ratio of 93% (2016: 89%). This was primarily due to increased costs from non-weather related household claims in Q1 2017, predominantly escape of water, in line with wider market experience. Actions taken across pricing, underwriting and claims management have resulted in a 3% improvement in the operating ratio in H2 compared to H1, which we expect to return to previous levels in the coming years. In addition, ongoing work on streamlining internal processes and customer journeys will reduce time and cost associated with managing our business.

DIGITAL INNOVATION

In August 2017 we launched our market leading SmartQuote product which enables customers to receive a quote in about 90 seconds by answering five questions. This has generated significant interest amongst potential partners leading to securing one deal with several others at advanced stages of discussion. Since the launch of SmartQuote our direct take up has increased by more than 50%.

Our SmartClaims innovation uses advanced data and technology capability to streamline the claims journey enabling claims to be settled more quickly and at lower cost, thereby improving customer outcomes and internal processes, whilst also reducing fraudulent claims.

savings

FINANCIAL HIGHLIGHTS £m

 

 

2017

2016

 

 

 

 

 

 

 

 

 

 

Release from operations

 

 

107

104

New business strain

 

 

(5)

(5)

 

 

 

 

 

 

 

 

 

 

Net release from operations

 

 

102

99

Experience variances, assumption changes, tax and non-cash movements

 

 

1

-

 

 

 

 

 

 

 

 

 

 

Operating profit

 

 

103

99

- Mature Savings

 

 

103

105

- Digital Savings

 

 

n/a

(6)

Investment and other variances

 

 

(4)

9

Net loss on disposals

 

 

-

(60)

Profit before tax

 

 

99

48

Mature Savings sold to Swiss Re for £650m

The Group announced the sale of the Mature Savings business to Swiss Re on 6 December 2017 for £650m. The proceeds were received by the Group at the start of January 2018 and the sale is expected to generate a one-off IFRS gain on completion of the Part VII transfer, anticipated in 2019, of over £400m. Swiss Re assumed the economic exposure of the business from 1 January 2018 via a risk transfer agreement. The transaction is expected to increase the Group's Solvency II coverage ratio by c.2%.

In 2017, net release from operations was £3m higher at £102m (2016: £99m). The Mature Savings business contributed £103m (2016: £105m) operating profit in the year, driven by increased automation allowing us to reduce unit costs.

Disposals

In addition to the sale of the Mature Savings business, the Group completed the following disposals in 2017.

On 6 April 2017, the Group completed the sale of Legal & General Nederland Levensverzekering Maatschappij N.V. to Chesnara plc for total consideration of €161m (£137m) resulting in a £17m profit on disposal.

On 1 January 2017, the Group completed the sale of Cofunds and IPS to Aegon for total consideration of £147.5m. The Cofunds business was acquired in stages between 2005 and 2013, for a total cash consideration of £153m. 

subsidiary dividends TO GROUP

 

£m 

 

 

2017

2016

  

 

 

  

 

  

 

 

 

 

Subsidiary dividends remitted1:

 

 

 

 

LGAS

 

 

1,133

740

LGIM

 

 

251

200

LGA

 

 

80

63

Other2

 

 

119

82

Total

 

 

1,583

1,085

Total excluding mortality release and LGN disposal proceeds3,4

 

 

1,203

1,085

1.             Represents cash remitted from subsidiaries to Group in respect of the year's financial performance.

2.             Other includes L&G Finance Plc, Retail Investment Holdings, L&G Home Financing, LGCIL and LGRe.

3.             £250m dividend paid from Legal & General Assurance Society (LGAS) to Group, due to mortality reserve releases in 2017.

4.             Legal & General Netherlands (LGN) was sold on 6 April 2017 for 161m.

The level of dividends remitted to the Group ensures coverage of external dividends (2017: £914m, 2016: £854m), Group related costs, and investment in our businesses, with excess liquidity being held within our regulated subsidiaries.

borrowings

The Group's outstanding core borrowings total £3.5bn (2016: £3.1bn). There is also a further £0.5bn (2016: £0.4bn) of operational borrowings including £0.1bn (2016: £0.2bn) of non-recourse borrowings.

The Group accessed the US dollar market in March 2017 for the first time and issued $850m of Tier 2 subordinated debt with a coupon of 5.25%. The proceeds were utilised to refinance the Group's £600m Tier 1 notes with a coupon of 6.385% which were called in May 2017. This inaugural issue has given the Group access to an alternative source of debt financing away from the Group's traditional European institutional investor base. In April 2017 the Group accessed the US dollar market again when it issued $500m of Tier 2 subordinated debt in private placement format with a coupon of 5.55%, reflecting the longer duration compared to the March 2017 issue.

Group debt costs of £191m (2016: £172m) reflect an average cost of debt of 5.1% per annum (2016: 5.4% per annum) on average nominal value of debt balances of £3.8bn (2016: £3.2bn).

taxation

Equity holders' Effective Tax Rate (%)

 

 

2017

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity holders' total Effective Tax Rate

 

 

9.0

20.0

 

Annualised rate of UK corporation tax

 

 

19.25

20.00

 

 

 

 

 

 

 

 

 

 

 

               

In 2017, the Group's effective tax rate was significantly lower than the UK corporation tax rate. This is primarily due to the reduction in the US federal corporate income tax rate from 35% to 21% from 1 January 2018 included in the US Tax Reform measures enacted in December. Accordingly, this lower tax rate applies to the net US deferred tax liability balance arising at 31 December 2017 resulting in a one-off benefit to the annual tax charge of £246m. The Group's effective tax rate for the year excluding the impact of the US rate change was 20.8%.

SOLVENCY II

As at 31 December 2017, the Group had an estimated Solvency II surplus of £6.9bn over its Solvency Capital Requirement, corresponding to a Solvency II coverage ratio of 189% on a shareholder basis. As at 5 March 2018, we estimate the ratio was 196%.

Capital (£bn)

 

 

20171

20161

 

 

 

 

 

 

 

Own Funds

 

 

14.6

13.6

 

Solvency Capital Requirement (SCR)

 

 

(7.7)

(7.9)

 

 

 

 

 

 

 

 

 

 

 

 

 

Solvency II surplus

 

 

6.9

5.7

 

SCR coverage ratio (%)

 

 

189

171

 

 

 

 

 

 

 

 

 

 

 

               

1.             Solvency II position on a shareholder basis and before the accrual of the relevant dividend.

 

 

 

Analysis of movement from 1 January to 31 December 2017 (£bn)

 

 

 

Solvency II surplus

 

 

 

 

 

 

 

 

 

 

 

 

 

Surplus arising from back-book (including release of SCR)

 

 

 

1.3

 

Release of Risk Margin2

 

 

 

0.4

 

Amortisation of TMTP3

 

 

 

(0.4)

 

Operational surplus generation 

 

 

 

1.3

 

New business strain

 

 

 

(0.1)

 

Net surplus generation

 

 

 

1.2

 

Dividends paid4

 

 

 

(0.9)

 

Operating variances 

 

 

 

0.4

 

Market movements 

 

 

 

-

 

Subordinated debt

 

 

 

0.5

 

 

 

 

 

 

 

Total surplus movement (after dividends paid in the year)

 

 

 

1.2

 

 

 

 

 

 

 

 

 

 

 

 

2.Based on the risk margin in force at 31 December 2017 and does not include the release of any risk margin added by new business written in 2017.

 

3.TMTP amortisation based on a linear run down of the end-2016 TMTP of £5.9bn (net of tax, £7bn before tax) which was management's estimate of the TMTP on end-2017 market conditions.

4.Dividends paid are the amounts from the 2016 final and 2017 interim dividend declarations paid in 2017.

 

               

The increase in surplus reflects the surplus generated in 2017 net of £0.9bn of dividends paid and £0.2bn of interest payments on the Group's debt. The net surplus generation was £1.2bn, after allowing for amortisation of the opening Transitional Measures on Technical Provisions (TMTP). New business strain was £0.1bn.

Operating variances include the impact of experience variances, changes to valuation and capital calibration assumptions, and other management actions. These actions include changes in asset mix, matching adjustment optimisation, hedging strategies, M&A activities (sale of Mature Savings, Legal & General Netherlands and Cofunds), and updates to the longevity assumptions which contributed £0.3bn surplus in 2017.

The above incorporates changes to the Internal Model and Matching Adjustment during 2017, and the impacts of a recalculation of the TMTP as at end December 2017. In line with UK regulatory requirements, the PRA granted approval to recalculate the TMTP in December 2017, but will not review our detailed methodology until later in 2018. The recalculated TMTP of £6.2bn (2016: £7.0bn) is net of amortisation to 31 December 2017.

The liabilities include a Risk Margin of £5.9bn (2016: £6.4bn) which represents an allowance for the cost of capital for a purchasing insurer taking on the portfolio of liabilities and residual risks that are deemed to be not hedgeable under Solvency II.

When stated on a proforma basis, including the SCR attributable to our With-profits fund of £0.6bn and the final salary pension schemes of £0.2bn in both the Group's Own Funds and the SCR, the Group's coverage ratio was 181% (FY 2016: 165%).

reconcilation of ifrs net release from operations to solvency ii net surplus generation

The table below gives a reconciliation of the Group's IFRS Release from operations and Solvency II Operational surplus generation in 2017:

 

 

£bn

 

 

IFRS Release from operations

1.3

Expected release of IFRS prudential margins

(0.5)

Release of IFRS specific reserves

(0.1)

Solvency II investment margin

0.2

Release of Solvency II Capital Requirement and Risk Margin less TMTP amortisation

0.4

Other Solvency II items and presentational differences

-

 

 

Solvency II Operational surplus generation

1.3

 

 

 

 

 

The table below gives a reconciliation of the Group's IFRS New business surplus to Solvency II New business strain in 2017:

 

 

 

 

 

£bn

 

 

 

 

 

IFRS New business surplus

 

 

 

0.2

Removal of requirement to set up prudential margins above best estimate on new business

 

 

 

0.2

Set up of Solvency II Capital Requirement on new business

 

 

 

(0.3)

Set up of Risk Margin on new business

 

 

 

(0.2)

 

 

 

 

 

Solvency II New business strain

 

 

 

(0.1)

 

 

 

 

 

 

 

 

 

 

 

Sensitivity analysis

 

Impact on net of tax Solvency II capital surplus 2017

£bn

Impact on net of tax Solvency II coverage ratio 2017

%

 

 

 

 

 

 

 

 

 

Credit spreads widen by 100bps assuming an escalating addition to ratings1

0.2

8

Credit spreads narrow by 100bps assuming an escalating addition to ratings1

(0.3)

(9)

Credit migration2

(0.5)

(6)

25% rise in equity markets

0.5

5

25% fall in equity markets

(0.5)

(5)

15% fall in property markets

(0.4)

(4)

15% rise in property markets

0.3

4

100bps increase in risk free rates

0.8

20

50bps decrease in risk free rates

(0.5)

(10)

Substantially reduced Risk Margin3

0.1

1

 

 

 

 

 

 

1.Applies to all assets within Legal & General's holdings where the capital treatment depends on a credit rating (e.g. corporate bonds and Sale & Leaseback rental strips), with no change in the firm's long term default expectations.

2.Credit migration stress covers the cost of an immediate big letter downgrade on 20% of all assets where the capital treatment depends on a credit rating (including corporate bonds and Sale & Leaseback rental strips).

3.This represents a reduction of two-thirds in Risk Margin and subsequent recalculation of TMTP.

The above sensitivity analysis does not reflect all management actions which could be taken to reduce the impacts. In practice, the Group actively manages its asset and liability positions to respond to market movements. These results all allow (on an approximate basis) for the recalculation of TMTP as at 31 December 2017, where the impact of the stress would cause it to change materially.

The impacts of these stresses are not linear therefore these results should not be used to interpolate or extrapolate the impact of a smaller or larger stress. The results of these tests are indicative of the market conditions prevailing at the balance sheet date. The results would be different if performed at an alternative reporting date.

 

Solvency II new business contribution

Management estimates of the value of new business and the margin as at 31 December 2017 are shown below:

 

 

 

 

 

Contribution from

 

 

PVNBP

new business

Margin %

  

 

  

  

  

 

  

  

LGR1 (£m)

4,083

346

8.5

UK Protection Total (£m)

1,496

129

8.6

 - Retail protection

1,293

111

8.6

 - Group protection

203

18

8.7

US Protection (£m)

764

89

11.7

  

 

 

 

 

 

 

 

1.             UK annuity business.

The key economic assumptions as at 31 December 2017 are as follows:

  

 

 

 

  

 

 

 

Margin for risk

 

 

3.0%

Risk free rate

 

 

 

 - UK

 

 

1.6%

 - US

 

 

2.4%

 

 

 

 

Risk discount rate (net of tax)

 

 

 

 - UK

 

 

4.6%

 - US

 

 

5.4%

 

 

 

 

Long term rate of return on non-profit annuities in LGR

 

 

3.0%

  

 

 

 

All other economic and non-economic assumptions and methodologies that would have a material impact on the margin for these contracts are unchanged from those used for the European Embedded Value reporting at end 2015, other than the cost of currency hedging which has been updated to reflect current market conditions, and hedging activity in light of Solvency II.

principal risks and UNCERTAINTIES

The directors confirm that they have carried out a robust assessment of the principal risks facing the group, including those that would threaten its business model, future performance, solvency or liquidity. The principal risks are set out below including details of how they have been managed or mitigated.

 

 

 

Risks and uncertainties

Trend and outlook

Mitigation

Reserves and our assessment of capital requirements may require revision as a result of changes in experience, regulation or legislation.

The writing of long-term insurance business requires the setting of assumptions for long-term trends in factors such as mortality, lapse rates, valuation interest rates, expenses and credit defaults. Actual experience may require recalibration of these assumptions impacting profitability. Management estimates are also required in the derivation of Solvency II capital metrics. These include modelling simplifications to reflect that it is not possible to perfectly model the external environment, with adjustment necessitated where new data emerges. Forced changes in reserves can also arise from regulatory or legislative intervention impacting capital requirements and profitability.

 

We regularly appraise the assumptions underpinning the business we write. We remain, however, inherently exposed to certain extreme events, that could require us to adjust our reserves. For example, in our pension risk transfer and annuities business, while trend data suggests the rate of longevity improvement may be slowing, a dramatic advance in medical science beyond that anticipated may lead to an unexpected change in life expectancy, requiring adjustment to reserves. In our protection businesses, a widespread increase in mortality/ morbidity may also require us to re-evaluate reserves. We are also exposed to lapse risks if our US term policies are not continued in line with our renewal assumptions.

We undertake significant analysis of the variables associated with writing long-term insurance business to ensure that a suitable premium is charged for the risks we take on, and that reserves continue to remain appropriate for factors including mortality, lapse rates, valuation interest rates, expenses and credit defaults. In seeking a comprehensive understanding of longevity science we aim to anticipate long term trends in mortality. We also continue to evolve and develop our underwriting capabilities for our protection business. Our selective use of reinsurance also acts to reduce the impacts of significant variations in life expectancy and mortality.

Investment market performance and conditions in the broader economy may adversely impact earnings, profitability or surplus capital.

The performance and liquidity of investment markets, interest rate movements and inflation impact the value of investments we hold in shareholders' funds and those to meet the obligations from insurance business, with the movement in certain investments directly impacting profitability. Interest rate movements and inflation can also change the value of our obligations. We use a range of techniques to manage mismatches between assets and liabilities. However, loss can still arise from adverse markets. Interest rate expectations leading to falls in the risk free yield curve can also create a greater degree of inherent volatility to be managed in the Solvency II balance sheet, than the underlying economic position would dictate, potentially impacting capital requirements and surplus capital. In addition, significant falls in investment values can reduce fee income to our investment management business.

 

Whilst the global economic outlook remains positive, we continue to monitor a range of risk factors that could trigger a reappraisal of asset values or influence a change in broader central bank monetary policies.  In particular, after a period of strong growth in equity markets, 2018 has seen a return to volatility as financial markets   have responded to potential changes in interest rate policies. In the UK, a lengthy period of negotiation and an uncertain "Brexit" outcome has potential to create asset price volatility for specific sectors, as well as a slowing in the broader UK economy in which we operate. There also remain a range of geo-political events that could cause shocks to global financial markets, and in stressed conditions a market correction may be significantly exaggerated from continued illiquidity in bond markets.

Although we cannot fully eliminate the downside impacts from these and other risk factors on our earnings, profitability or surplus capital, as part of our strategic planning activity we seek to model our business plans across a range of economic scenarios to ensure they will be resilient. Our ORSA process plays an integral part in this process ensuring a clear link between capital sufficiency and the nature of risks to which we may be exposed, and confirming that exposures are within our risk appetite. As set out within the Strategic Report, we have sought to ensure focus upon those market segments that we expect to be resilient in projected conditions. We cannot, however, completely eliminate risk.

In dealing with issuers of debt and other types of counterparty the group is exposed to the risk of financial loss.

Systemic corporate sector failures, or a major sovereign debt event, could in extreme scenarios trigger defaults impacting the value of our bond portfolios. Under Solvency II, a widespread widening of credit spreads and downgrades can also result in a reduction in our Solvency II balance sheet surplus, despite already setting aside significant capital for credit risk. We are also exposed to default risks in dealing with banking, money market and reinsurance counterparties, as well as settlement, custody and other bespoke business services. A default by a counterparty could expose us to both financial loss and operational disruption of business processes. Default risk also arises where we undertake property lending, with exposure to loss if an accrued debt exceeds the value of security taken.

Factors that could lead to a widespread default of the issuers of investment grade debt are currently considered to be more remote risks, however, we are closely monitoring a number of factors that may lead to a widening of credit spreads including the outlook for interest rates; and the potential economic impacts of an unfavourable "Brexit" outcome for specific industrial and service sectors. The outlook for aspects of the UK property market are also less certain, with recent housing data whilst mixed being indicative of slowing confidence, although prime commercial property remains in high demand. Whilst more extreme risk scenarios in the current environment, factors that could increase in the level of default risk if they were to occur include a material deterioration in global economic conditions; a renewed banking crisis; and default on debt linked to emerging markets.

 

We actively manage our exposure to default risks within our bond portfolios, setting selection criteria and exposure limits, and using the capabilities of LGIM's global credit team to ensure the risks are effectively controlled, and if appropriate trade out to improve credit quality. Within our property lending businesses, our loan criteria take account of both the default risk of the borrower and the potential for adverse movements in the value of secured property. We seek to closely manage risks to our Solvency II balance sheet through monitoring factors that could give rise to a heightened level of default risk. However, we can never completely eliminate default risks or their impacts to our Solvency II balance sheet, although we seek to hold a strong balance sheet that we believe to be prudent for a range of adverse scenarios.

 

Changes in regulation or legislation may have a detrimental effect on our strategy.

Legislation and government fiscal policy influence our product design, the period of retention of products and required reserves for future liabilities. Regulation defines the overall framework for the design, marketing, taxation and distribution of our products; and the prudential capital that we hold. Significant changes in legislation or regulation may increase our cost base, reduce our future revenues and impact profitability or require us to hold more capital. The prominence of the risk increases where change is implemented without prior engagement with the sector. The nature of long-term business can also result in some changes in regulation, and the re-interpretation of regulation over time, having a retrospective effect on in-force books of business, impacting future cash generation.

The financial services sector continues to see significant regulatory driven change, both from the EU and from within the UK. We are progressing our responses to EU driven financial services regulation including UCITS V, the IDD and PRIIPS, as well as actions to meet the requirements of the EU GDPR which comes into force in May 2018. As a predominantly UK and US focused business, the loss of EU passporting rights has limited direct impact, however, we are establishing businesses in Dublin to support our European investment clients. We are also monitoring potential implications on market infrastructure and contract continuity risks. Within the UK the FCA published its final report on the Asset Management Market Study in June 2017 and continues with its thematic review activities across the sector to ensure the fair treatment of customers. The tax landscape continues to be subject to change, most recently on US tax reform in 2017 and the potential impact on the tax regime from the changing UK political environment.

 

We are supportive of regulation in the markets in which we operate where it ensures trust and confidence and can be a positive force on business. We seek to actively participate with government and regulatory bodies in the UK and Europe to assist in the evaluation of change so as to develop outcomes that meet the needs of all stakeholders. Internally, we evaluate change as part of our formal risk assessment processes, with material matters being considered at the Group Risk Committee and the Group Board. Our internal control framework seeks to ensure ongoing compliance with relevant legislation and regulation. We cannot, however, completely eliminate the risks that controls may fail or that historic accepted practices may be reappraised by regulators, resulting in sanction against the group.

New entrants may disrupt the landscape of the markets in which we operate.

As has been seen in other business sectors, it is possible that alternative digitally enabled providers of financial service products emerge with lower cost business models or innovative service propositions and capital structures disrupting the current competitive landscape.

 

There is already strong competition in all our markets, and although we have had considerable past success at building scale to offer low cost products, we recognise that markets remain attractive to new entrants. We are also cognisant of the potential for entry by scale overseas competitors who may have lower return on capital requirements and be unconstrained by Solvency II.

We're building our digital businesses. Alongside 1.5m customers now using MyAccount to manage their investments  on line;  our SmartQuote app for household insurance; and the use of technology to transform our insurance product distribution reach in the US plans , we are investing in FinTech businesses to remain at the forefront of innovation in the markets we operate in.

A material failure in our business processes or IT security may result in unanticipated financial loss or reputation damage.

We have constructed our framework of internal controls to minimise the risk of unanticipated financial loss or damage to our reputation. However, no system of internal control can completely eliminate the risk of error, financial loss, fraudulent actions or reputational damage. We are also inherently exposed to the risk that third parties may seek to disrupt our online business operations, steal customer data or perpetrate acts of fraud using digital media.

 

Our plans for growth and the digitalisation of our businesses, together with the regulatory change agenda, inherently increase the profile of operational risks across our businesses. As we develop our housing businesses we are also exposed to property construction and safety risks. We continue to invest in our system capabilities and business processes to ensure that we meet the expectations of our customers; comply with regulatory, legal and financial reporting requirements; and mitigate the risks of loss or reputational damage from operational risk events.

Our risk governance model seeks to ensure that business management are actively engaged in maintaining an appropriate control environment, supported by risk functions led by the Group Chief Risk Officer, with independent assurance from Group Internal Audit. We recognise however, that residual risk will always remain and have designed our risk governance framework to ensure that when adverse events occur we can deploy appropriate responses.

       

 

ENQUIRIES

Investors:

Laura Doyle                   Head of Investor Relations                                                                       020 3124 2088

Sujee Rajah                   Investor Relations Manager                                                                     020 3124 2047

Media:

John Godfrey                 Group Corporate Affairs Director                                                              020 3124 2090

Graeme Wilson              Tulchan Communications                                                                        020 7353 4200
Sheebani Chothani        Tulchan Communications                                                                         020 7353 4200

Notes

A copy of this announcement can be found in "Results, Reports and Presentations", under the "Investors" section of our shareholder website at https://www.legalandgeneralgroup.com/investors/results-reports-and-presentations/

A presentation to analysts and fund managers will take place at 9.30am UK time today at One Coleman Street, London, EC2R 5AA. There will be a live webcast of the presentation which can be accessed at https://www.legalandgeneralgroup.com/investors/full-year-results-2017/ A replay will be available on this website later today.

There will be a live, listen only, teleconference link to the presentation. Details below:

 

PARTICIPANT DIAL-IN NUMBERS

 

 

 

 

 

 

 

LOCATION YOU ARE DIALLING IN FROM

NUMBER YOU SHOULD DIAL

 

 

 

 

UNITED KINGDOM

020 3936 2999

 

 

UNITED STATES (TOLL FREE)

1 855 979 6654

 

 

 

 

ALL OTHER LOCATIONS

+44 20 3936 2999

 

 

 

 

 

Please enter access code 942922 to gain access to the conference.   

 

2018 Financial Calendar

 

 

 

Date

 

 

 

 

 

 

 

 

 

 

 

 

Ex-dividend date (final dividend)

 

 

26 April 2018

Record date

 

 

27 April 2018

Annual general meeting

 

 

17 May 2018

Payment date of 2017 final dividend

 

 

7 June 2018

Half-year results 2018

 

 

9 August 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

           

 

 

DEFINITIONS

Definitions are included in the Glossary on pages 93 to 99 of this release.

FORWARD LOOKING STATEMENTS

This announcement may contain certain forward-looking statements relating to Legal & General, its plans and its current goals and expectations relating to future financial condition, performance and results. By their nature, forward-looking statements involve 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 and Governmental authorities, the impact of competition, the timing impact of these events and other uncertainties of future acquisitions 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 these forward-looking statements and persons reading this announcement should not place reliance on forward-looking statements. These forward-looking statements are made only as at the date on which such statements are made and Legal & General Group Plc does not undertake to update forward-looking statements contained in this announcement or any other forward-looking statement it may make.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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L&G Full Year Results 2017 Part 1 - RNS