18th Oct 2006 07:01
Legal & General Group PLC18 October 2006 LEGAL & GENERAL GROUP PLC NEW BUSINESS RESULTS FOR THE 9 MONTHS TO 30 SEPT 2006Stock Exchange Release18 October 2006 A balanced business. An attractive market. Highlights for the nine months to 30 September 2006: • Worldwide new business up 32% to £1,294m APE(1)• UK new business up 36% to £1,213m APE• New institutional funds under management up 44% at £14.7bn Tim Breedon, Group Chief Executive, said: "Legal & General's worldwide new business grew by 32% in the first nine monthsof 2006 with the UK businesses generating a 36% increase over the correspondingperiod last year. "In the third quarter of 2006 we achieved £2bn of new bond, pension and retailinvestment sales(2), bringing the total flow of new savings(3) business to over£7bn in the year to date. Legal & General Investment Management saw new fundsrise 44% to £14.7bn in the first nine months of this year. In the thirdquarter, our individual protection businesses produced a 22% increase in newbusiness to £44m APE, thanks in part to a healthier housing market. At the sametime, our new individual annuity sales doubled to £26m APE as our competitiveposition improved. "Legal & General has a clear strategy combining focus on the UK protection,savings and investment markets with a balanced mix of products and distributionchannels. This positions us strongly in this favourable UK economic climate andresurgent savings market. We believe this environment is set to continue." (1) 'Annual Premium Equivalent' comprises new annual premiums together with 10% of single premiums (2) 'Sales' includes the sum of annual and single premiums (3) 'Savings' comprises bonds, pensions and retail investments New business APE (£m) Nine months to Nine months to 30 Sept 2006 30 Sept 2005 % change Q3 2006 Q3 2005 % change_______________________________________________________________________________________________________UK new businessProtection and annuities:- Individual protection 122 103 18 44 36 22- Group risk 50 59 (15) 17 18 (6)- Individual annuities 47 59 (20) 26 13 100- Bulk purchase annuities 74 55 35 24 22 9_______________________________________________________________________________________________________ 293 276 6 111 89 25Savings:- Unit linked bonds 181 148 22 60 54 11- Pensions - stakeholder and other non profit 139 113 23 48 41 17- Retail investments 433 248 75 91 78 17_______________________________________________________________________________________________________ 753 509 48 199 173 15 With-profits business 167 110 52 65 38 71_______________________________________________________________________________________________________Total UK new business 1,213 895 36 375 300 25_______________________________________________________________________________________________________ International new business 81 84 (4) 23 27 (15)_______________________________________________________________________________________________________Worldwide new business 1,294 979 32 398 327 22=======================================================================================================Investment management 14,689 10,206 44 3,931 3,331 18======================================================================================================= UK new business - up 36% to £1,213m APE Protection and annuities - up 6% to £293m APE Sales of protection and annuity products for the first nine months of this yearincreased by 6% against the same period last year. We saw strong growth inindividual protection and bulk purchase annuities. This was offset by ourreduced market share in individual annuities in the first half of this year,during which pricing conditions remained unattractive. In the last threemonths, however, sales of individual annuities have increased substantially.Group risk sales also reduced following unusually high industry sales in 2004and 2005 but remained at levels significantly above those seen in 2003. Individual protection Over the nine months to 30 September 2006, individual protection sales increasedby 18% to £122m APE (9M 2005: £103m APE). In the third quarter, volumes grew by22% to £44m APE (Q3 2005: £36m APE). This reflected a healthier housing marketand business received from our new partnership with the estate agency Connells.We also saw strong sales of our pensions term assurance product, evidence of thebeneficial effect of changes to pension rules brought about by A-Day in Aprilthis year. We continue to reinforce our competitive advantages in the individual protectionmarket, most recently with a further enhancement to our intelligent underwritingcapability with interactive functionality, which enables a greater proportion ofunderwriting decisions to be made at the point of sale. Group risk Sales of group risk products were £17m APE in the third quarter of this year,which represents a decrease of 6% on Q3 2005 (£18m APE) but is broadly in linewith previous quarters this year (Q1 2006: £17m APE, Q2 2006: £16m APE). In2004 and 2005, Legal & General's sales benefited, along with the industry, fromthe exit of a competitor towards the end of 2003. In the nine months to 30September 2006, our total sales of £50m APE were more than twice the level seenin the same period of 2003 (9M 2003: £24m APE). Individual annuities Third quarter sales of individual annuities doubled to £26m APE (Q3 2005: £13mAPE), bringing the total for the first nine months of the year to £47m APE (9M2005: £59m APE). Legal & General only competes in this market where therequired return on capital can be achieved. In the more favourable bond yieldenvironment of Q2 and Q3, we have significantly improved our competitiveposition (Q1 2006: £5m APE; Q2 2006: £16m APE). Bulk purchase annuities Over the first nine months of the year, single premium bulk purchase annuitysales increased by 35% to £743m (9M 2005: £549m). Third quarter salesgrew to £244m, including the transfer of business from the Skandia back book,which we announced earlier this year. This was against a strong prior yearcomparator of £220m. Excluding the Skandia transaction, we won 57 policiesduring the quarter with an average case size of under £4m of single premiums.We are now beginning to see some evidence of increased quotation activity fromnew competitors for larger cases. Savings(4) - up 48% to £753m APE Growing awareness of the need to save among UK consumers, the availability of awide and flexible range of savings options and renewed impetus from PensionsA-Day changes have, we believe, combined to deliver strong growth in sales ofsavings products this year. Taking into account products written in both thenon profit and with-profits part of the long term fund (see below), we havewritten over £7bn of savings business premiums(5) in the nine months to 30September 2006. This represents an increase of over 50% against the same periodin 2005. Unit linked bonds Over the first nine months of the year, sales of unit linked bonds increased by22% over the same period in 2005. In the third quarter, new business volumesgrew by 11% to £60m APE (Q3 2005: £54m APE), driven predominantly by strongsales of the Legal & General Portfolio Bond through IFAs. Two thirds of thesesales were processed using fund platform technology. Non profit pensions New non profit pensions business grew by 23% in the nine months to 30 September2006 to £139m APE (9M 2005: £113m APE) and by 17% in the third quarter to £48m(Q3 2005: £41m APE). Taking into account pension products written in thewith-profits part of the fund (see below), new business volumes increased by 43%to £293m APE (9M 2005: £205m) over the same period in 2005. In the thirdquarter, we continued to focus on opportunities in the pensions transfer andcorporate schemes segments. We were pleased with the continued success of ourPortfolio Plus product, launched onto the Cofunds platform at the end of April,which provides customers with a wide range of investment options. Retail investments Sales of retail investment products grew by 75% over the first nine months ofthe year to £433m APE (9M 2005: £248m APE). This result benefited from a £1.3bnsingle premium institutional transfer in the second quarter. In the thirdquarter, sales increased by 17% to £91m APE (Q3 2005: £78m APE). With-profits new business - up 52% to £167m APE The strong growth in with-profits business to £167m APE (9M 2005: £110m APE)over the nine months to 30 September 2006 was mainly a result of higher volumesof pension sales, as referred to above. These include unitised pension productswhich contain a with-profits investment option. Sales of these productsincreased by 97% in the third quarter to £59m APE (Q3 2005: £30m APE), includingDWP rebates. (4) Savings business not written in the with-profits part of the fund(5) Includes the sum of annual and single premiums International new business - down 4% to £81m APE Over the nine months to 30 September 2006, new business from our internationaloperations decreased by 4% in sterling terms to £81m APE (9M 2005: £84m APE).In local currency terms, sales in our US business increased by 5% to $58m APE(9M 2005: $55m APE) and in our operation in the Netherlands by 3% to €33m APE(9M 2005: €32m APE). In France, volumes fell by 19% against strong prior yearcomparators to €38m APE (9M 2005: €47m APE) and in the third quarter declined to€6m APE (Q3 2005: €12m APE). Investment management - new funds up 44% to £14.7bn In the third quarter of 2006, Legal & General Investment Management continuedits impressive record of growth, once again delivering an average of over £1bnof new funds under management per month. This brings total new funds undermanagement over the nine months to 30 September 2006 to nearly £15bn, anincrease of 44% on the same period last year (9M 2005: £10.2bn). Total fundsunder management stood at £219bn at 30 September 2006 (30 September 2005:£187bn). Outlook The UK market continues to offer significant opportunities for growth. Weexpect that Pensions A-Day will continue to provide a catalyst for furtherexpansion in the market over the short term and believe longer term growthpotential is supported by demographic and economic trends. We believe that the annuities market continues to offer attractive opportunitiesin both individual and bulk segments and that we will maintain a strongcompetitive position in this market given our administrative capabilities,financial strength and reputation. Our individual protection businesscontinues to lead the UK market, where our significant scale allows us to remaincompetitive, to invest in our systems and people and to pursue further growthprofitably. Our diversified product base and distribution network provides the flexibilityneeded to compete effectively in those markets where we see opportunities andwhere we believe we can continue to create value for shareholders. Enquiries to: Investors:Jonathan Maddock, Head of Investor Relations 020 7528 6298Nicola Marshall, Investor Relations Manager 020 7528 6263 Media:John Morgan, Media Relations Director 020 7528 6213Anthony Carlisle, Citigate Dewe Rogerson 07973 611888 Notes: A copy of this announcement can be found in the News and Results section of ourshareholder web site at http://investor.legalandgeneral.com/releases.cfm Financial Calendar 2006/2007: Capital and cash flow presentation 15 November 2006Q4 2006 New business results 25 January 20072006 Preliminary results 14 March 2007Q1 2007 New business results 25 April 20072007 Interim results 26 July 2007 Forward-looking statements: This document may contain certain forward-looking statements with respect tocertain of Legal & General Group Plc's plans and its current goals andexpectations relating to future financial condition, performance and results. Bytheir nature forward-looking statements involve risk and uncertainty becausethey relate to future events and circumstances which are beyond Legal & GeneralGroup Plc's control, including, among others, UK domestic and global economicand business conditions, market related risks such as fluctuations in interestrates and exchange rates, the policies and actions of governmental andregulatory authorities, the impact of competition, the timing impact and otheruncertainties of future mergers or combinations within relevant industries. As aresult, Legal & General Group Plc's actual future condition, performance andresults may differ materially from the plans, goals and expectations set out inLegal & General Group Plc's forward-looking statements. Legal & General GroupPlc does not undertake to update forward-looking statements contained in thisdocument or any other forward-looking statement it may make. Legal & General Group PlcUnaudited New Business PremiumsNine months to 30 September 2006 WORLDWIDE NEW BUSINESS Nine months to 30 September 2006 Nine months to 30 September 2005 Annual Single APE Annual Single APE Increase/ premiums premiums premiums premiums (decrease) £m £m £m £m £m £m %______________________________________________________________________________________________________________________Protection- Mortgage related 78 - 78 67 - 67 16%- Other 44 - 44 36 - 36 22%- Group risk 50 - 50 59 - 59 (15%)______________________________________________________________________________________________________________________ 172 - 172 162 - 162 6%Annuities- Individual - 472 47 - 589 59 (20%)- Bulk purchase - 743 74 - 549 55 35%______________________________________________________________________________________________________________________ - 1,215 121 - 1,138 114 6%Savings- Unit linked bonds - 1,813 181 - 1,483 148 22%- Individual pensions - stakeholder and other non profit 93 458 139 71 420 113 23%- DWP rebates - 4 - - 1 - N/A______________________________________________________________________________________________________________________ 93 2,275 320 71 1,904 261 23%With-profits- Annuities - 66 7 - 41 4 75%- Individual pensions 92 462 138 55 287 84 64%- DWP rebates - 136 14 - 44 4 250%- Group pensions 2 1 2 4 5 4 (50%)- Bonds - 60 6 - 137 14 (57%)______________________________________________________________________________________________________________________ 94 725 167 59 514 110 52%______________________________________________________________________________________________________________________ 359 4,215 780 292 3,556 647 21% UK retail investment business- Unit trusts 1 3,778 379 1 2,001 201 89%- ISAs 15 390 54 11 356 47 15%______________________________________________________________________________________________________________________ 16 4,168 433 12 2,357 248 75%______________________________________________________________________________________________________________________ Total UK new business 375 8,383 1,213 304 5,913 895 36%______________________________________________________________________________________________________________________ - USA 32 - 32 30 - 30 7%- Netherlands 9 130 22 10 117 22 0%- France 11 145 25 16 140 30 (17%)______________________________________________________________________________________________________________________ 52 275 79 56 257 82 (4%) France retail investment business - 17 2 - 19 2 0%______________________________________________________________________________________________________________________ Total international new business 52 292 81 56 276 84 (4%)______________________________________________________________________________________________________________________ Total worldwide new business 427 8,675 1,294 360 6,189 979 32%______________________________________________________________________________________________________________________ Legal & General Group PlcUnaudited New Business PremiumsNine months to 30 September 2006 WORLDWIDE NEW BUSINESS APE QUARTERLY PROGRESSION 3 months to 3 months to 3 months to 3 months to 3 months to 3 months to 3 months to 30.09.06 30.06.06 31.03.06 31.12.05 30.09.05 30.06.05 31.03.05 £m £m £m £m £m £m £m______________________________________________________________________________________________________________________Protection- Mortgage related 26 26 26 23 24 23 20- Other 18 13 13 11 12 12 12- Group risk 17 16 17 12 18 19 22______________________________________________________________________________________________________________________ 61 55 56 46 54 54 54Annuities- Individual 26 16 5 7 13 29 17- Bulk purchase 24 22 28 33 22 6 27______________________________________________________________________________________________________________________ 50 38 33 40 35 35 44Savings- Unit linked bonds 60 60 61 60 54 51 43- Individual pensions - stakeholder and other non profit 48 50 41 39 41 41 31- DWP rebates - - - - - - -______________________________________________________________________________________________________________________ 108 110 102 99 95 92 74With-profits- Annuities 3 2 2 2 2 1 1- Individual pensions 49 48 41 26 27 30 27- DWP rebates 10 2 2 8 3 - 1- Group pensions 1 - 1 1 2 1 1- Bonds 2 2 2 3 4 4 6______________________________________________________________________________________________________________________ 65 54 48 40 38 36 36______________________________________________________________________________________________________________________ 284 257 239 225 222 217 208 UK retail investment business- Unit trusts 78 191 110 58 69 68 64- ISAs 13 27 14 9 9 27 11______________________________________________________________________________________________________________________ 91 218 124 67 78 95 75______________________________________________________________________________________________________________________ Total UK new business 375 475 363 292 300 312 283______________________________________________________________________________________________________________________ - USA 11 10 11 12 11 9 10- Netherlands 6 7 9 7 8 6 8- France 5 13 7 6 7 17 6______________________________________________________________________________________________________________________ 22 30 27 25 26 32 24 France retail investment business 1 1 - - 1 1 -______________________________________________________________________________________________________________________ Total international new business 23 31 27 25 27 33 24______________________________________________________________________________________________________________________ Total worldwide new business 398 506 390 317 327 345 307______________________________________________________________________________________________________________________ Legal & General Group PlcUnaudited New Business PremiumsNine months to 30 September 2006 INVESTMENT MANAGEMENT Nine months to 30 September Increase/ 2006 2005 (decrease) £m £m %______________________________________________________________________________________________________________________UK Managed Funds- Pooled funds 12,077 9,649 25%- Segregated funds 607 146 316%______________________________________________________________________________________________________________________ 12,684 9,795 29% UK Other 2,005 411 388%______________________________________________________________________________________________________________________ Total new funds 14,689 10,206 44%______________________________________________________________________________________________________________________ INVESTMENT MANAGEMENT QUARTERLY PROGRESSION 3 months to 3 months to 3 months to 3 months to 3 months to 3 months to 3 months to 30.09.06 30.06.06 31.03.06 31.12.05 30.09.05 30.06.05 31.03.05 £m £m £m £m £m £m £m______________________________________________________________________________________________________________________ UK Managed Funds- Pooled funds 3,814 4,500 3,763 5,129 2,939 3,396 3,314- Segregated funds 8 538 61 94 41 63 42______________________________________________________________________________________________________________________ 3,822 5,038 3,824 5,223 2,980 3,459 3,356 UK Other 109 157 1,739 1,705 351 3 57______________________________________________________________________________________________________________________ Total new funds 3,931 5,195 5,563 6,928 3,331 3,462 3,413______________________________________________________________________________________________________________________ INTERNATIONAL OPERATIONS IN LOCAL CURRENCY Nine months to 30 September 2006 Nine months to 30 September 2005 Increase/ Annual Single APE Annual Single APE (decrease) premiums premiums premiums premiums %______________________________________________________________________________________________________________________ USA ($m): 58 - 58 55 - 55 5% Netherlands (•m): 14 189 33 15 171 32 3% France (•m): - Life and pensions 15 212 36 23 205 44 (18%) - Unit trusts - 24 2 - 28 3 (33%)______________________________________________________________________________________________________________________ UK INDIVIDUAL APE BY CHANNEL Nine months to 30 September 2006 Annual Single Total APE % of £m £m £m total________________________________________________________________________________________________________________________Independent financial advisers 218 4,427 661 61%Tied 89 3,047 394 36%Direct 16 165 32 3%________________________________________________________________________________________________________________________Total 323 7,639 1,087 100%________________________________________________________________________________________________________________________ Nine months to 30 September 2005 Annual Single Total APE % of £m £m £m total________________________________________________________________________________________________________________________Independent financial advisers 155 3,474 502 65%Tied 74 1,759 250 32%Direct 12 126 25 3%________________________________________________________________________________________________________________________Total 241 5,359 777 100%________________________________________________________________________________________________________________________ This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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