L&G HY 09 Results Part 2

New Business

Page 27

2.01

New business summary

APE1

PVNBP2

Margin3

APE

PVNBP

Margin

30.06.09

30.06.09

30.06.09

30.06.08

30.06.08

30.06.08

Notes

£m

£m

%

£m

£m

%

Risk

2.02

223 

1,755 

10.1 

288 

2,329 

7.4 

Savings4

2.02

297 

2,060 

0.3 

341 

2,507 

0.2 

International4

2.04

72 

551 

2.0 

59 

465 

3.5 

592 

4,366 

4.5 

688 

5,301 

3.7 

UK core retail investments

2.07

151 

115 

International retail investments

2.07

3 

3 

Total core retail investments

154 

118 

Total

746 

806 

30.06.09

30.06.08

Notes

£m

£m

Investment management

2.10

15,137 

17,645 

APE

PVNBP

Margin

Full year

Full year

Full year

31.12.08

31.12.08

31.12.08

Notes

£m

£m

%

Risk

2.02

488 

3,811 

7.1 

Savings4

2.02

650 

4,722 

(0.1)

International4

2.04

113 

896 

3.6 

1,251 

9,429 

3.1 

UK core retail investments

2.07

229 

International retail investments

2.07

6 

Total core retail investments

235 

Total

1,486 

31.12.08

Notes

£m

Investment management

2.10

33,091 

1. Annual Premium Equivalent (APE) is calculated for total new business, including core retail investments but excluding investment management new business, and comprises the new annual premiums together with 10% of single premiums.

2. The present value of new business premiums (PVNBP) on the EEV basis is defined as the present value of annual premiums plus single premiums for any given period. It is calculated using the same assumptions as for the contribution from new business but determined as at the point of sale.

3. The new business margin is defined as the contribution from new business (including the cost of solvency capital) divided by the PVNBP.

4. Excludes core retail investments.

New Business

Page 28

2.02

Analysis of Risk and Savings1 new business by product

APE

Contri-

PVNBP

Margin 

bution

from new

business2

For the six months ended 30 June 2009

£m

£m

£m

%

Protection

90 

30 

427 

7.0 

Annuities

133 

148 

1,328 

11.1 

Total Risk

223 

178 

1,755 

10.1 

Unit linked bonds

32 

(5)

319 

(1.6)

Pensions, stakeholder and other non profit

147 

(4)

1,007 

(0.4)

With-profits

118 

16 

734 

2.2 

Total Savings

297 

7 

2,060 

0.3 

Total Risk and Savings

520 

185 

3,815 

4.8 

Cost of capital3

32 

Contribution from new business before cost of capital

217 

For the six months ended 30 June 2008

Protection

110 

38 

553 

6.9 

Annuities

178 

135 

1,776 

7.6 

Total Risk

288 

173 

2,329 

7.4 

Unit linked bonds

75 

(4)

749 

(0.5)

Pensions, stakeholder and other non profit

162 

(2)

1,047 

(0.2)

With-profits

104 

11 

711 

1.5 

Total Savings

341 

5 

2,507 

0.2 

Total Risk and Savings

629 

178 

4,836 

3.7 

Cost of capital3

12 

Contribution from new business before cost of capital

190 

For the year ended 31 December 2008

Protection

207 

62 

1,005 

6.2 

Annuities

281 

209 

2,806 

7.4 

Total Risk

488 

271 

3,811 

7.1 

Unit linked bonds

131 

(13)

1,306 

(1.0)

Pensions, stakeholder and other non profit

328 

(8)

2,183 

(0.4)

With-profits

191 

15 

1,233 

1.2 

Total Savings

650 

(6)

4,722 

(0.1)

Total Risk and Savings

1,138 

265 

8,533 

3.1 

Cost of capital3

65 

Contribution from new business before cost of capital

330 

1. Excludes core retail investments.

2. The contribution from new business is defined as the present value at point of sale of assumed profits from new business written in the period and then rolled forward to the end of the financial period using the risk discount rate applicable at the end of the reporting period. 

3. For H1 09, the cost of capital relating to new business reflects a risk margin of 4.5% in the risk discount rate and an equity backing ratio for the assets backing the solvency capital of 41% (H1 08: risk margin of 3.0% and equity backing ratio of 77%; FY 08: risk margin of 4.5% and equity backing ratio of 55%). 

New Business

Page 29

2.03

Analysis of Risk and Savings1 PVNBP

Annual

Present

Capital-

Single

PVNBP

PVNBP

PVNBP

premiums

value

isation

premiums

of annual

factor2

premiums

Full year

30.06.09

30.06.09

30.06.09

30.06.09

30.06.09

30.06.08

31.12.08

£m

£m

£m

£m

£m

£m

Protection

90 

427 

4.7 

- 

427 

553 

1,005 

Annuities

- 

- 

-

1,328 

1,328 

1,776 

2,806 

Total Risk

90 

427 

4.7 

1,328 

1,755 

2,329 

3,811 

Unit linked bonds

- 

- 

-

319 

319 

749 

1,306 

Pensions, stakeholder and other non profit

77 

304 

3.9 

703 

1,007 

1,047 

2,183 

With-profits

68 

241 

3.5 

493 

734 

711 

1,233 

Total Savings

145 

545 

3.8 

1,515 

2,060 

2,507 

4,722 

Total Risk and Savings

235 

972 

4.1 

2,843 

3,815 

4,836 

8,533 

1. Excludes core retail investments.

2. The capitalisation factor is the present value of annual premiums divided by the amount of new annual premiums.

2.04

Analysis of International1 new business

APE

Contri-

Cost of

PVNBP

Margin 

bution

capital

from new

business2

For the six months ended 30 June 2009

£m

£m

£m

£m

%

USA

29 

8 

4 

204 

4.2 

Netherlands

13 

1 

2 

113 

0.6 

France

30 

2 

3 

234 

0.9 

Total

72 

11 

9 

551 

2.0 

For the six months ended 30 June 2008

USA

24 

12 

3 

166 

7.0 

Netherlands

16 

2 

2 

138 

1.7 

France

19 

2 

3 

161 

1.5 

Total

59 

16 

8 

465 

3.5 

For the year ended 31 December 2008

USA

51 

24 

6 

372 

6.3 

Netherlands

29 

7 

4 

241 

3.1 

France

33 

1 

4 

283 

0.5 

Total

113 

32 

14 

896 

3.6 

1. Excludes core retail investments.

2. Contribution from new business is reported after the cost of capital.

New Business

Page 30

2.05

Analysis of International1 new business in local currency

APE

Contri-

Cost of

PVNBP

Margin 

bution

capital

from new

business2

For the six months ended 30 June 2009

m

m

m

m

%

USA

$43 

$13 

$6 

$301 

4.2 

Netherlands

€15 

€1 

€2 

€128 

0.6 

France

€33 

€2 

€3 

€264 

0.9 

For the six months ended 30 June 2008

USA

$47 

$23 

$6 

$327 

7.0 

Netherlands

€21 

€3 

€3 

€181 

1.7 

France

€25 

€3 

€4 

€209 

1.5 

For the year ended 31 December 2008

USA

$94 

$44 

$11 

$691 

6.3 

Netherlands

€36 

€9 

€6 

€305 

3.1 

France

€42 

€2 

€5 

€354 

0.5 

1. Excludes core retail investments.

2. Contribution from new business is reported after the cost of capital.

2.06

Analysis of International1 PVNBP in local currency

Annual

Present

Capital-

Single

PVNBP

PVNBP

PVNBP

premiums

value of

isation

premiums

annual

factor

premiums

Full year

30.06.09

30.06.09

30.06.09

30.06.09

30.06.09

30.06.08

31.12.08

m

m

m

m

m

m

USA

$43 

$301 

7.0 

- 

$301 

$327 

$691 

Netherlands

€5 

€32 

6.5 

€96 

€128 

€181 

€305 

France

€21 

€142 

6.7 

€122 

€264 

€209 

€354 

1. Excludes core retail investments.

2.07

Analysis of core retail investments new business

Annual

Single

APE

Annual

Single

APE

premiums

premiums

premiums

premiums

30.06.09

30.06.09

30.06.09

30.06.08

30.06.08

30.06.08

£m

£m

£m

£m

£m

£m

UK

18 

1,331 

151 

19 

953 

115 

France

- 

32 

3 

- 

26 

3 

Total

18 

1,363 

154 

19 

979 

118 

Annual

Single

APE

premiums

premiums

Full year

Full year

Full year

31.12.08

31.12.08

31.12.08

£m

£m

£m

UK

41 

1,879 

229 

France

- 

63 

6 

Total

41 

1,942 

235 

New Business

Page 31

2.08

Analysis of UK Risk and Savings new business premiums

Annual

Single

APE

Annual

Single

APE

APE

premiums

premiums

premiums

premiums

Full year

30.06.09

30.06.09

30.06.09

30.06.08

30.06.08

30.06.08

31.12.08

£m

£m

£m

£m

£m

£m

£m

Protection

- Individual 

60 

- 

60 

73 

- 

73 

140 

- Group

30 

- 

30 

37 

- 

37 

67 

Annuities

- Individual (non profit)

- 

583 

58 

- 

384 

38 

84 

- Individual (with-profits)

- 

7 

1 

- 

15 

2 

3 

- Bulk purchase

- 

738 

74 

- 

1,377 

138 

194 

Total Risk

90 

1,328 

223 

110 

1,776 

288 

488 

Non profit savings

- Unit linked bonds

- 

319 

32 

- 

749 

75 

131 

- Individual pensions

77 

699 

147 

94 

675 

162 

327 

- DWP rebates

- 

4 

- 

- 

4 

- 

1 

With-profits savings

- Bonds

- 

305 

31 

- 

112 

11 

28 

- Individual pensions

67 

123 

79 

56 

290 

85 

149 

- DWP rebates

- 

65 

7 

- 

71 

7 

12 

- Group pensions

1 

- 

1 

1 

2 

1 

2 

145 

1,515 

297 

151 

1,903 

341 

650 

Core retail investments

- Unit trusts

5 

1,061 

111 

5 

698 

75 

159 

- ISAs

13 

270 

40 

14 

255 

40 

70 

Total Savings

163 

2,846 

448 

170 

2,856 

456 

879 

Total Risk and Savings new business

253 

4,174 

671 

280 

4,632 

744 

1,367 

2.09

Analysis of total UK Risk and Savings APE

APE

APE

APE

Full year

30.06.09

30.06.08

31.12.08

£m

£m

£m

Independent financial advisers

377 

421 

827 

Tied

137 

129 

243 

Direct

52 

18 

34 

Total Individual Risk and Savings

566 

568 

1,104 

Individual Risk and Savings1

415 

453 

875 

Core retail investments

151 

115 

229 

Total Individual Risk and Savings

566 

568 

1,104 

Group Risk and Savings

105 

176 

263 

Total Risk and Savings new business premiums

671 

744 

1,367 

1. Excludes core retail investments.

New Business

Page 32

2.10

Analysis of Investment management new business

Full year

30.06.09

30.06.08

31.12.08

£m

£m

£m

Managed pension funds1

Pooled funds

11,788 

13,562 

26,733 

Segregated funds

1,247 

364 

841 

Total managed funds

13,035 

13,926 

27,574 

Other funds2

2,102 

3,719 

5,517 

Total

15,137 

17,645 

33,091 

Attributable to:

Legal & General Investment Management

14,182 

16,224 

30,873 

Legal & General Retail Investments

955 

1,421 

2,218 

1. New monies from pension fund clients of Legal & General Assurance (Pensions Management) exclude £2.4bn (H1 08: £4.6bn; FY 08: £7.4bn) held through the period on a temporary basis, generally as part of portfolio reconstructions.

2. Includes segregated property, property partnerships, private equity partnerships and institutional clients funds managed by Legal & General Investment Management and institutional investments in unit trust funds managed by Legal & General Retail Investments.

2.11

Legal & General Investment Management new business by investment approach

Full year

30.06.09

30.06.08

31.12.08

%

%

%

Index equities

51.9 

46.6 

45.2 

Index bonds (including index linked funds and cash)

27.4 

39.2 

41.2 

Active bonds (including index linked funds and cash) 

15.5 

6.7 

7.2 

Structured solutions

5.0 

7.4 

6.2 

Property

0.2 

0.1 

0.2 

Total

100.0 

100.0 

100.0