26th Jan 2006 07:00
Legal & General Group PLC26 January 2006 26 January 2006 Stock Exchange Release LEGAL & GENERAL GROUP PLC 2005 NEW BUSINESS RESULTS HIGHLIGHTS • Record year for new business: o 29% increase in worldwide new business to £1.3 billion. o UK retail new business passes the £1 billion milestone, with strong demand for savings products. o LGIM wins nearly £7 billion of new investment management business in the last three months and a record £17.1 billion over the year. New business APE(1) (£m) Full year % change on Q4 2005 % change on 2005 2004 2004 UK individual life and pensions 710 16 181 6 UK retail investments 315 76 67 97 ___________________________________________UK retail business total 1,025 29 248 22 ___________________________________________ Corporate life and pensions 162 50 44 91 ___________________________________________UK business total 1,187 32 292 29 ___________________________________________ International business 109 2 25 9 ___________________________________________Worldwide total 1,296 29 317 27 ___________________________________________ Investment management £17.1bn 10 £6.9bn 57 "This has been a year of remarkable growth for Legal & General. Our UK newbusiness grew by almost a third in 2005 and our investment management businesswon a record £17.1 billion. Unit-linked bond sales have increased by nearly 50% and single payment unittrusts by 142%. Growth in individual pensions has been impressive and ourcorporate life and pensions businesses have performed very strongly - bulkpurchase annuity sales in the final quarter have more than tripled. Through substantial and sustained organic growth, Legal & General has become oneof the largest long-term savings, investment and protection groups in the UK.Our flexible and broad distribution model has produced outstanding results andforms a platform for success going forward. Strength in the IFA markets and goodgrowth in our Banking and Building Society channel form the core of our winningproposition. We are well positioned for further growth in the UK market." Tim Breedon, Group Chief Executive Notes 1 Annual Premium Equivalent (APE) is total new annual premiums + 10% of singlepremiums, including ISAs and unit trusts. UK RETAIL BUSINESS - Q4 up 22% to £248m APE, FY up 29% to £1,025m The sales environment for UK savings and investment products continued tobenefit from improving equity markets and a further recovery in consumerconfidence. This is particularly evidenced by the strong growth in unit trustand unit-linked bond volumes. Sales of protection business reflected therelatively weaker house purchase market. The approaching changes to the taxregime covering UK pensions, which will be implemented on 6 April 2006 ("A-Day"), have clearly stimulated an up-lift in pensions business. In this more positive UK environment, our clear strengths in distribution, ourcustomer focused products and well-recognised brand enabled us to secure stronggrowth, particularly in savings-related business. Protection - Q4 down 13% to £35m Sales of annual premium mortgage related protection business in Q4 wereunchanged from Q3 at £24m. Against a strong Q4 last year of £27m, sales were11% lower, impacted by a slower housing market in 2005. Similarly, otherprotection business was below the same quarter last year at £11m (Q4 2004:£13m). Over the full year, mortgage related business of £91m (2004: £109m) andother protection volumes of £47m (2004: £51m) were down 17% and 8% respectively. Savings - Q4 up 17% to £63m APE Continuing the trend of strong growth in sales of single premium unit-linkedbonds which we experienced in earlier quarters, volumes rose by 30% in Q4 to£599m (Q4 2004: £462m). We benefited further from the launch of our multi-fundbond to Bradford & Bingley's customers using the Legal & General brandedplatform developed jointly with Cofunds. In a pilot project, the multi-fundbond was also launched to selected IFAs in November using the Cofunds platform.Over the full year, sales increased by 47% to £2,082m (2004: £1,418m).With-profits bond sales continued to decline in Q4 to £32m (Q4 2004: £80m),bringing the full year total to £169m (2004: £390m). Pensions - Q4 up 33% to £73m APE New annual premium pension business increased by 33% in Q4 to £44m (Q4 2004:£33m) and single premium new business, excluding DWP rebates, grew by 46% to£219m (Q4 2004: £150m). Over the full year, annual and single premium business,again excluding DWP rebates, increased by 54% from £171m APE in 2004 to £263mAPE in 2005. Our focus remains on the pensions transfer market in the run-up topensions A-Day and on employer related business fuelled by schemereconstructions. DWP rebates for the quarter were in line with the prior year at£73m (Q4 2004: £72m). The Pensions Commission was appointed by the Government in December 2002 to keepunder review the adequacy of private pension saving in the UK and advise onappropriate policy changes. It published its Second Report in November 2005.We welcomed the recommendations it contained regarding auto-enrolment andemployer-matching and are currently working with the ABI to develop a responseto the Report. Annuities - Q4 down 57% to £9m APE Sales of individual annuities fell to £92m in Q4 (Q4 2004: £212m). Competitionin this market segment has intensified in the second half of the year. Ourcontinued focus on return on capital rather than volumes has led to a fall insales of 16% over the full year to £722m (2004: £859m). Retail investments - Q4 up 97% to £67m APE Sales of single payment ISAs increased marginally to £66m in Q4 (Q4 2004: £62m).Single payment unit trusts sales grew significantly to £576m in Q4 2005, upfrom £233m in Q4 2004. Over the full year, single payment unit trusts and ISAvolumes increased by 92% to £2,999m (2004: £1,565m). Unit trust funds undermanagement reached £16.6bn at the year-end (31 December 2004: £12.8bn). UK CORPORATE BUSINESS - Q4 up 91% to £44m APE, FY up 50% to £162m In Q4, sales of single premium bulk purchase annuities were very strong at £328m(Q4 2004: £98m), reflecting our success in winning good volumes of small andmedium sized cases. For the full year, sales were at their highest ever level of£877m (2004: £449m). Group Risk new annual premiums fell marginally from £12m in Q4 2004 to £11m inQ4 2005, as the business opportunity arising following the withdrawal of acompetitor from the market at the end of 2003 tailed off. Over the full year,Group Risk new business increased by 19% to £70m (2004: £59m). INTERNATIONAL BUSINESS - Q4 up 9% to £25m APE, FY up 2% to £109m In the USA, continued difficult trading conditions in the brokerage marketcaused a 17% reduction in Q4 new business in local currency terms to $20m (Q42004: $24m APE). Over the year, volumes decreased by 23% from $98m APE in 2004to $75m APE in 2005. We continue to achieve good growth in our European businesses. New businessvolumes in the Netherlands increased by 57% to €11m APE (Q4 2004: €7m APE) andin France by 25% to €10m APE (Q4 2004: €8m APE). Total volumes for the yearwere €42m APE in the Netherlands (2004: €35m APE) and €57m APE in France (2004:€44m APE). INVESTMENT MANAGEMENT - Q4 new business up 57% to £6.9bn, FY up 10% to £17.1bn Legal & General Investment Management has once again delivered an outstandingperformance, with a 57% increase in new business in Q4 to £6.9bn (Q4 2004:£4.4bn). Total new business for 2005 was up 10% to £17.1bn (2004: £15.5bn),£8.8bn of which was received from existing clients. This strong growth, combinedwith very favourable persistency rates and an increase in market values, led toa 26% growth in funds under management to £204bn at the year-end (31 December2004: £162bn), of which 71% related to external funds. We continue to diversify our business mix and our client base. UK corporatepension clients continued to award us active fixed interest business and almost£1bn of new business was sourced from overseas this year. In addition, £2bncame from non-pension institutional clients such as charities and friendlysocieties. OUTLOOK We expect the investment, savings and protection market in the UK to continue togrow in 2006. We believe that investor confidence will show further improvementand that a cautious upturn in the housing market will lead to a gradual recoveryin protection volumes. We anticipate that pensions A-Day will remain asignificant positive influence on volumes of pensions transfer business, onrestructuring of employer-related schemes and on sales of bulk purchaseannuities. In the year ahead, Legal & General looks forward to extending further itsalready broad distribution reach. In Q1 2006, we will launch our multi-fundbond product to the wider market of IFAs using the Cofunds platform and, in Q2,will add our pensions products. In addition, we are pleased to announce that, subject to FSA approval, Legal &General is to become the annuity provider for Skandia's maturing pensioncustomers who do not take the open market option. It is intended that Legal &General will take over Skandia Life's existing annuity book later this year. With our expanding distribution network, our attractive product proposition,strong brand and customer focus, Legal & General expects to extend further itsleading position in the UK savings, investments and protection markets thisyear. Enquiries to: Investors: Peter Horsman, Head of Investor Relations 020 7528 6362 Nicola Marshall, Investor Relations Manager 020 7528 6263 Media: John Morgan, Media Relations Director 020 7528 6213 Anthony Carlisle, Citigate Dewe Rogerson 07973 611888 Forward-looking statements: This document may contain certain forward-looking statements with respect tocertain of Legal & General's plans and its current goals and expectationsrelating to future financial condition, performance and results. By theirnature forward-looking statements involve risk and uncertainty because theyrelate to future events and circumstances which are beyond Legal & General'scontrol, including, among others, UK domestic and global economic and businessconditions, market related risks such as fluctuations in interest rates andexchange rates, the policies and actions of regulatory authorities, the impactof competition and the policies and actions of governmental and regulatoryauthorities, the timing impact and other uncertainties of future acquisition orcombinations within relevant industries. As a result, Legal & General's actualfuture condition, performance and results may differ materially from the plans,goals and expectations set out in Legal & General's forward-looking statements.Legal & General does not undertake to update forward-looking statementscontained in this document or any other forward-looking statement it may make. Notes: - A copy of this announcement can be found in the News and Results section of our Shareholder site at http://investor.legalandgeneral.com/releases.cfm - Issued share capital at 31 December 2005 was 6,507,421,932 shares of 2.5p each. Financial Calendar: 17 March 2006 2005 Preliminary results 26 April 2006 First quarter new business results 18 May 2006 Annual General Meeting 27 July 2006 Interim results 18 October 2006 Third quarter new business results Legal & General Group PlcUnaudited New Business PremiumsYear ended 31 December 2005 UK NEW BUSINESS Year ended Three months to 31 December increase/ 31 December increase/ 2005 2004 (decrease) 2005 2004 (decrease) £m £m % £m £m %UK INDIVIDUAL LIFE AND PENSIONS BUSINESS New annual premiumsLife:- Mortgage related 91 109 (17) 24 27 (11)- Protection 47 51 (8) 11 13 (15)Pensions:- Individual pensions 170 126 35 44 33 33___________________________________________________________________________________________________ Total new annual premiums 308 286 8 79 73 8 Single premiumsLife:- With-profits 169 390 (57) 32 80 (60)- Unit-linked 2,082 1,418 47 599 462 30Pensions:- Individual pensions 926 452 105 219 150 46- Annuities - individual 722 859 (16) 92 212 (57)- DWP rebates 118 165 (28) 73 72 1___________________________________________________________________________________________________ Total single premiums 4,017 3,284 22 1,015 976 4___________________________________________________________________________________________________ Individual life and pensions total 710 614 16 181 170 6APE___________________________________________________________________________________________________ UK RETAIL INVESTMENTS New annual premiums- ISAs/PEPs (excluding cash ISAs) 14 20 (30) 3 4 (25)- Unit trusts 1 2 (50) 0 0 N/A___________________________________________________________________________________________________Total new annual premiums 15 22 (32) 3 4 (25) Single premiums- ISAs/PEPs (excluding cash ISAs) 422 499 (15) 66 62 6- Unit trusts 2,577 1,066 142 576 233 147___________________________________________________________________________________________________Total single premiums 2,999 1,565 92 642 295 118___________________________________________________________________________________________________UK retail investments total APE 315 179 76 67 34 97___________________________________________________________________________________________________UK retail business total APE 1,025 793 29 248 204 22___________________________________________________________________________________________________ UK CORPORATE LIFE AND PENSIONS BUSINESS New annual premiums- Group risk 70 59 19 11 12 (8)- Group pensions 4 3 33 0 1 (100)___________________________________________________________________________________________________Total new annual premiums 74 62 19 11 13 (15) Single premiums- Annuities - bulk purchase 877 449 95 328 98 235- Other group business 5 7 (29) 0 3 (100)___________________________________________________________________________________________________Total single premiums 882 456 93 328 101 225___________________________________________________________________________________________________UK corporate life and pensions APE 162 108 50 44 23 91______________________________________________________________________________________________________________________________________________________________________________________________________UK business total APE 1,187 901 32 292 227 29___________________________________________________________________________________________________ Legal & General Group PlcUnaudited New Business PremiumsYear ended 31 December 2005 WORLDWIDE NEW BUSINESS Year ended Three months to 31 December increase/ 31 December increase/ 2005 2004* (decrease) 2005 2004* (decrease) £m £m % £m £m %___________________________________________________________________________________________________Annual premiumsLife and pensions:- Life 208 219 (5) 46 52 (12)- Pensions 174 129 35 44 34 29___________________________________________________________________________________________________ UK 382 348 10 90 86 5- USA 42 54 (22) 12 13 (8)- Netherlands 13 12 8 3 3 0- France 17 13 31 1 0 N/A___________________________________________________________________________________________________Total life and pensions 454 427 6 106 102 4 Retail investment business:- UK 15 22 (32) 3 4 (25)___________________________________________________________________________________________________Total new annual premiums 469 449 4 109 106 3 Single premiumsLife and pensions:- Life 2,251 1,808 25 631 542 16- Pensions 2,648 1,932 37 712 535 33___________________________________________________________________________________________________UK 4,899 3,740 31 1,343 1,077 25- USA 0 1 (100) 0 0 N/A- Netherlands 158 112 41 41 23 78- France 191 145 32 50 41 22___________________________________________________________________________________________________Total life and pensions 5,248 3,998 31 1,434 1,141 26 Retail investment business:- UK 2,999 1,565 92 642 295 118- France 25 22 14 6 8 (25)___________________________________________________________________________________________________Total single premiums 8,272 5,585 48 2,082 1,444 44 Annual premium equivalent (APE)- UK life and pensions business 872 722 21 225 193 17- International life and pensions 107 105 2 25 22 14business___________________________________________________________________________________________________Total life and pensions business 979 827 18 250 215 16 - UK retail investment business 315 179 76 67 34 97- International retail investment 2 2 0 0 1 (100)business___________________________________________________________________________________________________Total retail investment business 317 181 75 67 35 91___________________________________________________________________________________________________Worldwide APE 1,296 1,008 29 317 250 27___________________________________________________________________________________________________ * In accordance with IFRS, International New Business has been restated at quarterly average exchangerates. INVESTMENT MANAGEMENT UK Managed Funds- Pooled funds 14,778 13,951 6 5,129 4,252 21- Segregated funds 240 1,228 (80) 94 85 11___________________________________________________________________________________________________ 15,018 15,179 (1) 5,223 4,337 20UK Other 2,116 368 475 1,705 68 2,407___________________________________________________________________________________________________Total new funds 17,134 15,547 10 6,928 4,405 57___________________________________________________________________________________________________ Legal & General Group PlcUnaudited New Business PremiumsYear ended 31 December 2005 INTERNATIONAL OPERATIONS IN LOCAL CURRENCY Year ended Three months to 31 December increase/ 31 December increase/ 2005 2004 (decrease) 2005 2004 (decrease)___________________________________________________________________________________________________USA ($m):New annual premiums 75 98 20 24Single premiums 0 1 0 0___________________________________________________________________________________________________APE 75 98 (23) 20 24 (17) Netherlands (•m):New annual premiums 19 18 5 4Single premiums 231 166 60 33___________________________________________________________________________________________________APE 42 35 20 11 7 57 France (•m):New annual premiums 25 19 2 1Single premiums 278 214 74 59Unit trusts 37 32 9 12___________________________________________________________________________________________________APE 57 44 30 10 8 25 UK RETAIL BUSINESS APE BY CHANNEL Year ended 31 December 2005 Annual Single Total APE £m £m £m %________________________________________________________________________________Independent financial advisers 205 462 667 65Tied 103 224 327 32Direct 15 16 31 3________________________________________________________________________________Total 323 702 1,025 100________________________________________________________________________________ Year ended 31 December 2004 Annual Single Total APE £m £m £m %________________________________________________________________________________Independent financial advisers 171 334 505 64Tied 119 134 253 32Direct 18 17 35 4________________________________________________________________________________Total 308 485 793 100________________________________________________________________________________ Three months to 31 December 2005 Annual Single Total APE £m £m £m %________________________________________________________________________________Independent financial advisers 51 115 166 67Tied 28 48 76 31Direct 3 3 6 2________________________________________________________________________________Total 82 166 248 100________________________________________________________________________________ Three months to 31 December 2004 Annual Single Total APE £m £m £m %________________________________________________________________________________Independent financial advisers 45 92 137 67Tied 28 33 61 30Direct 4 2 6 3________________________________________________________________________________Total 77 127 204 100________________________________________________________________________________ This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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