26th Oct 2007 07:01
Legal & General Group PLC26 October 2007 LEGAL & GENERAL GROUP PLC 9 MONTH 2007 NEW BUSINESS RESULTS Highlights:----------- • UK new life and pensions growth of 11% to £869m APE(1) o Protection performed well despite slowing housing market o Annuity sales 1% higher o Savings product sales up 19%• Exceptional new Investment Management Business of £32.4bn• International sales up 14% Tim Breedon, Group Chief Executive, said: "Legal & General has delivered robust new life and pensions business growth inthe first nine months of 2007, building on last year's record levels."Volatility in equities and bonds, a slowdown in the housing market andtightening credit conditions have not made investment decisions any easier forour customers. However, it is in these more difficult markets that thefundamental strengths of our business matter most: a wide range of good valuefor money products, broad distribution capability, a commitment to deliver apositive experience to our customers, all backed by our brand and financialstrength. "Our investment business, Legal & General Investment Management, deliveredoutstanding growth during the quarter. Our life and pensions savings businessesalso continued to deliver good growth. Our risk businesses have performed wellin the face of short term challenges in housing and annuity markets."It is an important strength of our business that we can pursue opportunitieswherever they emerge across a broad range of products and distribution channels.Looking ahead, we will continue to refine our product mix, add distribution, andmake increasing use of the extensive opportunities for synergy that existbetween our businesses." (1) Annual Premium Equivalent comprises new annual premiums together with 10% of single premiums. UK life and pensions new business: up 11% to £869m APE====================================================== Protection: down 2% at £168m APE-------------------------------- Protection business remained robust. Individual protection - including mortgagerelated business - grew by 1% in the first nine months. Individual protectionvolumes in Q3 - at £41m of APE - were moderately higher than in Q2 despite signsof a softening housing market. We estimate that, in the second quarter of thisyear, we further extended our market share to over 21%. Group risk sales weredown 10% to £45m, but £16m in the third quarter shows some encouragingprogression over the earlier quarters of the year. Outlook: The pace of housing market activity over the next 12 months remainsuncertain - mortgage transactions underpin a large proportion of the individualprotection contracts we sell at present. Industry sales of individual protectionwill likely struggle to grow over the next year if current housing marketconditions persist. However we expect once again to outperform the industry nextyear, in particular as sales from our relationship with Nationwide BuildingSociety begin to contribute from early 2008. Group risk sales remain subdued after a period of heightened activity in recentyears. Against this backdrop we intend to invest further in our product andservice in 2008 in order to build on our position as one of the major players inthis market. Annuities(2): up 1% to £122m APE-------------------------------- Sales performance in the annuity business differs between individual andcorporate (bulk purchase) annuity sales. Our individual business grew stronglyin the year to date up 53%. Bulk purchase annuity (BPA) volumes were down 32% year to date and 50% in thethird quarter. This reflected a fall in the number of schemes coming to marketin the period. Recent changes to the operation of the Financial AssistanceScheme (FAS) have, temporarily, significantly limited the number of small schemeswith insolvent employers able to buy out their liabilities. In addition capitalmarket volatility - which drives pension scheme funding levels - has led todelays in some buyout decisions. Outlook: With the effect of the temporary - for a period of nine months from September - suspension in sales from part of the smaller schemes market asdescribed above, underlying sales in terms of scheme numbers are likely toremain at lower levels. Reported headline quarterly sales will therefore beincreasingly determined by the closure of larger schemes for a period of time.While the timing of closure of such larger schemes remains uncertain, quotationactivity remains very high. Individual annuity business has strong long-term growth opportunities as moreindividuals reach retirement and do so with greater levels of accumulatedpension savings. Short term volumes will continue to be determined by themarket's capacity to meet our required level of return on shareholders' capital.Recent experience has been buoyant. We are pleased with the early progress inour pilot scheme that prices individual annuities based on postcode information.We intend to begin rolling this project out to a wider distribution audience incoming periods. Unit linked bonds: up 9% to £198m APE------------------------------------- After rapid development in the competitive environment over 2006, affecting bothvolumes and margins in this marketplace, volumes remained robust in the firstnine months of the year, up 9%. Outlook: There appears to be little sign yet of significant deterioration ingeneral confidence in long term savings as a result of equity market volatility.As we enter the fourth quarter we have reintroduced an improved customerallocation offer promoting uptake of our open architecture portfolio bond.Recent proposed changes to capital gains tax for individuals outlined in thePre-Budget Report have the potential to reduce the attraction of some bondproducts for a proportion of customers relative to other forms of investment.The industry is in discussion with HM Treasury in this respect. It remains astrength of our business that we can offer customers a wide choice of wrappersfor their long-term savings, be it pensions, bonds or unit trusts, and combinethis with leading product design and administration. Pensions(2): up 30% to £193m APE-------------------------------- Buoyant conditions for pension sales post A-day continued in the third quarter,up 9% year on year in Q3, and 30% year to date. We have seen growth in bothindividual and grouped individual (corporate client) business. Our PortfolioPlus SIPP, written on the Cofunds platform is performing strongly. Investorscontinue to pursue opportunities to improve and consolidate their pensionprovision, taking advantage of the greater flexibility which now exists in thismarket and the investment choice offered by open architecture investmentsolutions. Outlook: We continue to see greater opportunity now, than we have for manyyears, to build our position in the pensions market profitably and sustainably.Individuals continue to capitalise on the flexibility afforded by the change inregulations post A-day. Tender activity in the group schemes market remainshigh. We launched our Group SIPP product earlier this year - it is early daysfor this product, but it has been received well. We will continue to invest inour product and distribution capability to reinforce our ability to capitalizeon these opportunities. With-profits: up 19% to £188m APE--------------------------------- 94% of all sales written in the with-profits part of the fund are pensionsbusiness, including new unit linked pensions which have the option to invest ina with-profits fund. As a result, the performance and outlook for these sales isdriven in large part by the same themes as the non-profit pensions discussedabove. Combining with-profits and non profit pensions business, sales grew 26%year to date, to £369m. In addition we saw a 17% increase in sales of with-profit bonds to £7m of APE. UK Retail investments: underlying retail sales stable===================================================== Sales of underlying retail unit trust and ISA business were stable at £167m(2006 YTD: £168m). In 2006 we saw exceptional levels of institutional andwholesale inflows into our unit trust products of £265m for the nine monthperiod - this has dropped to £64m in the same period of 2007 leading to theheadline reduction in overall sales of unit trusts of 47%. Activity in theinstitutional and wholesale area is volatile, with total sales in any periodskewed by the incidence of very few exceptionally large transactions. We expectto continue to attract substantial new business flows from institutional andwholesale clients in future, although the timing of new business flows from thissource is inevitably unpredictable. International new business: up 14% to £92m APE============================================== Stronger sales trends in the US business continued in the third quarter, driving9 month sales growth of 16% in local currency terms. In France, sales of savingsproducts were strong, stimulated by regulatory changes. Overall sales growth was47%. In the Netherlands, sales remain at lower levels, down 12% in localcurrency terms, reflecting ongoing challenging industry conditions. Investment management: new business of £32.4bn - up 120%======================================================== 2007 is proving an exceptional year for new business at Legal & GeneralInvestment Management. £32.4bn of new mandates were won in the first nine monthsof the year, already 57% higher than our record full year in 2006 of £20.7bn.These results included the first tranche of funds transferring from clients ofHermes, some £7bn in the third quarter. We expect the bulk of the remainingfunds from the Hermes relationship to be transferred in the fourth quarter. Outlook: Our core product offering to pension scheme clients remains verystrong, as does our reputation for superior client service. We aim to continueto win significant business in coming years, with an increasing proportioncoming from new products. Due to the exceptional performance so far this year,however, 2008 sales can be expected to return to more normal levels in 2008. (2) Business not written in the with-profits part of the fund Enquiries to:-------------Investors: Jonathan Maddock, Head of Investor Relations 020 3124 2150Nicola Marshall, Investor Relations Manager 020 3124 2151 Media:John Morgan, Media Relations Director 020 3124 2095Anthony 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 Issued share capital at 30 September 2007 was 6,435,943,438 shares of 2.5p each. Financial Calendar:------------------- --------------------------------------------------------------------------------Q4 2007 New business results 24 January 2008--------------------------------------------------------------------------------2007 Preliminary results 13 March 2008--------------------------------------------------------------------------------Q1 2008 New business results 24 April 2008--------------------------------------------------------------------------------2008 AGM 14 May 2008--------------------------------------------------------------------------------2008 Interim and new business results 1 August 2008--------------------------------------------------------------------------------Q3 2008 New business results 23 October 2008--------------------------------------------------------------------------------Q4 2008 New business results 29 January 2009-------------------------------------------------------------------------------- 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 2007 WORLDWIDE NEW BUSINESS Nine months to 30 September 2007 Nine months to 30 September 2006 Annual Single APE Annual Single APE Increase/ premiums premiums premiums premiums (decrease) £m £m £m £m £m £m %-----------------------------------------------------------------------------------------------------------------------Protection- Individual protection 123 - 123 122 - 122 1%- Group protection 45 - 45 50 - 50 (10%)----------------------------------------------------------------------------------------------------------------------- 168 - 168 172 - 172 (2%)Annuities- Individual - 724 72 - 472 47 53%- Bulk purchase - 497 50 - 743 74 (32%)----------------------------------------------------------------------------------------------------------------------- - 1,221 122 - 1,215 121 1%Savings- Unit linked bonds - 1,975 198 - 1,813 181 9%- Individual pensions -stakeholder and othernon profit 104 889 193 95 535 148 30%- DWP rebates - 4 - - 4 - N/A----------------------------------------------------------------------------------------------------------------------- 104 2,868 391 95 2,352 329 19%With-profits- Annuities - 45 5 - 66 7 (29%)- Individual pensions 101 581 159 90 385 129 23%- DWP rebates - 112 11 - 136 14 (21%)- Group pensions 6 3 6 2 1 2 200%- Bonds - 70 7 - 60 6 17%----------------------------------------------------------------------------------------------------------------------- 107 811 188 92 648 158 19%----------------------------------------------------------------------------------------------------------------------- 379 4,900 869 359 4,215 780 11%UK retail investment business- Unit trusts 5 1,747 180 1 3,778 379 (53%)- ISAs 12 385 50 15 390 54 (7%)----------------------------------------------------------------------------------------------------------------------- 17 2,132 230 16 4,168 433 (47%)-----------------------------------------------------------------------------------------------------------------------Total UK new business 396 7,032 1,099 375 8,383 1,213 (9%)------------------------------------------------------------------------------------------------------------------------ USA 34 - 34 32 - 32 6%- Netherlands 8 121 20 9 130 22 (9%)- France 16 201 36 11 145 25 44%----------------------------------------------------------------------------------------------------------------------- 58 322 90 52 275 79 14%France retail investmentbusiness - 20 2 - 17 2 0%-----------------------------------------------------------------------------------------------------------------------Total internationalnew business 58 342 92 52 292 81 14%-----------------------------------------------------------------------------------------------------------------------Total worldwidenew business 454 7,374 1,191 427 8,675 1,294 (8%)----------------------------------------------------------------------------------------------------------------------- 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 30.09.07 30.06.07 31.03.07 31.12.06 30.09.06 30.06.06 31.03.06 £m £m £m £m £m £m £m-----------------------------------------------------------------------------------------------------------------------Protection- Individual protection 41 40 42 45 44 39 39- Group protection 16 15 14 14 17 16 17----------------------------------------------------------------------------------------------------------------------- 57 55 56 59 61 55 56Annuities- Individual 24 23 25 24 26 16 5- Bulk purchase 12 21 17 29 24 22 28----------------------------------------------------------------------------------------------------------------------- 36 44 42 53 50 38 33Savings- Unit linked bonds 62 62 74 80 60 60 61- Individual pensions -stakeholder and othernon profit (1) 60 64 69 59 55 52 41- DWP rebates - - - 1 - - ------------------------------------------------------------------------------------------------------------------------ 122 126 143 140 115 112 102With-profits- Annuities 2 1 2 1 3 2 2- Individual pensions 48 56 55 36 42 46 41- DWP rebates(2) 4 6 1 2 10 2 2- Group pensions - 5 1 - 1 - 1- Bonds 2 2 3 2 2 2 2----------------------------------------------------------------------------------------------------------------------- 56 70 62 41 58 52 48----------------------------------------------------------------------------------------------------------------------- 271 295 303 293 284 257 239UK retail investment business- Unit trusts 51 63 66 217 78 191 110- ISAs 12 24 14 14 13 27 14----------------------------------------------------------------------------------------------------------------------- 63 87 80 231 91 218 124-----------------------------------------------------------------------------------------------------------------------Total UK new business 334 382 383 524 375 475 363------------------------------------------------------------------------------------------------------------------------ USA 12 11 11 10 11 10 11- Netherlands 6 6 8 7 6 7 9- France 9 17 10 7 5 13 7----------------------------------------------------------------------------------------------------------------------- 27 34 29 24 22 30 27France retail investmentbusiness - 1 1 - 1 1 ------------------------------------------------------------------------------------------------------------------------Total internationalnew business 27 35 30 24 23 31 27-----------------------------------------------------------------------------------------------------------------------Total worldwide newbusiness 361 417 413 548 398 506 390-----------------------------------------------------------------------------------------------------------------------(1) Includes the re-categorisation of £1m APE in Q1 2007 and £6m Q2 2007 previously reported as non profit DWP rebates.Total non profit pensions APE is unchanged.(2) Includes the re-categorisation of £1m APE in Q1 2007 and £6m Q2 2007 previously reported as with-profit individualpensions. Total with-profit APE is unchanged. INVESTMENT MANAGEMENT Nine months to 30 September Increase/ 2007 2006 (decrease) £m £m %-----------------------------------------------------------------------------------------------------------------------UK Managed Funds- Pooled funds 29,557 12,077 145%- Segregated funds 2,373 607 291%----------------------------------------------------------------------------------------------------------------------- 31,930 12,684 152%UK Other 445 2,005 (78%)-----------------------------------------------------------------------------------------------------------------------Total new funds 32,375 14,689 120%----------------------------------------------------------------------------------------------------------------------- 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 30.09.07 30.06.07 31.03.07 31.12.06 30.09.06 30.06.06 31.03.06 £m £m £m £m £m £m £m-----------------------------------------------------------------------------------------------------------------------UK Managed Funds- Pooled funds 13,989 10,646 4,922 5,801 3,814 4,500 3,763- Segregated funds 1,925 380 68 1 8 538 61----------------------------------------------------------------------------------------------------------------------- 15,914 11,026 4,990 5,802 3,822 5,038 3,824UK Other 235 141 69 159 109 157 1,739-----------------------------------------------------------------------------------------------------------------------Total new funds 16,149 11,167 5,059 5,961 3,931 5,195 5,563----------------------------------------------------------------------------------------------------------------------- INTERNATIONAL OPERATIONS IN LOCAL CURRENCY Nine months to 30 September 2007 Nine months to 30 September 2006 Increase/ Annual Single APE Annual Single APE (decrease) premiums premiums premiums premiums %-----------------------------------------------------------------------------------------------------------------------USA ($m): 67 - 67 58 - 58 16%Netherlands (•m): 11 178 29 14 189 33 (12%)France (•m): - Life and pensions 23 297 53 15 212 36 47% - Unit trusts - 29 3 - 24 2 50%----------------------------------------------------------------------------------------------------------------------- UK INDIVIDUAL APE BY CHANNEL Nine months to 30 September 2007 Annual Single Total APE % of £m £m £m total-----------------------------------------------------------------------------------------------------------------------Independent financial advisers 251 4,503 701 70%Tied 79 1,878 267 27%Direct 15 151 30 3%-----------------------------------------------------------------------------------------------------------------------Total 345 6,532 998 100%----------------------------------------------------------------------------------------------------------------------- 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%----------------------------------------------------------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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