Legal & General Group PLC · LSE:LGEN
Legal & General — FY2010 Earnings Presentation
18 slides from Legal & General's earnings presentation, Mar 17, 2011
Slide 1: Sustainable Growth. Preliminary Results 2010
1 SUSTAINABLE GROWTH. Preliminary Results 2010 17th March 2011 2
Slide 2: Forward looking statements
3 Forward looking statements. This document may contain certain forward-looking statements relating to Legal & General Group, its plans and its current goals and expectations relating to future financial condition, performance and results. By their nature forward- looking statements involve uncertai
Slide 3: Agenda: group financial performance
5 Agenda: group financial performance. • Market leading businesses delivering 5-12% growth per annum • Diversified operational cash flow growing at 12% per annum • Improved cost, risk and capital management yielding sustainable and substantial growth in net cash generation • Dividend per share incre
Slide 4: Sales: 28% growth in APE, £10bn net asset flows
7 Sales: 28% growth in APE, £10bn net asset flows. New business sales (£m) 2010 2009 Protection APE 175 180 Annuities APE 207 186 Savings APE 1,253 907 International APE 146 115 Worldwide new business APE 1,781 1,388 LGIM gross new business (£bn) 33.1 31.5 LGIM net asset flows (£bn) 6.6 8.8 Savings
Slide 5: Business growth: LGIM
9 Business growth: LGIM. LGIM Assets Under Management 2005-2010 2% CAGR: 1 £354bn £315bn £297bn £264bn £233bn £204bn 2005 2006 2007 2008 2009 2010 Non-Pension Funds Pension Funds FTSE 5,600 5,900 10 Business growth: Savings. Savings Assets Under Administration 2007-2010 0% CAGR: 1 £64bn £55bn £48bn
Slide 6: Business growth: Protection
11 Business growth: Protection. In-force Protection Premiums 2005-2010 : 8% CAGR £1,179m £1,095m £1,109m £1,018m £894m £792m 2005 2006 2007 2008 2009 2010 Individual Protection Group Protection 12 Business growth: Annuities. In-force Annuity Assets 2005-2010 : 9% C A GR £25.4bn £22.5bn £19.4bn £18.1
Slide 7: Risk: Another strong year
13 Business growth: L&G America. L&G America: Gross Written Premiums 2005-2010 CAGR: 5% $765m $778m $689m $734m $638m $597m 2005 2006 2007 2008 2009 2010 14 Risk: Another strong year. Healthy cash generation and profit contribution. Financial Highlights (£m) 2010 2009 Operational cash generation 439
Slide 8: Protection growth returning; Annuities strong growth
15 Protection growth returning, with c.5% pa opportunities to innovate. Individual Protection: 0-5%pa Group Protection: c.5%pa • Mortgage market to recover slowly • Recovery in UK employer confidence • Significant latent demand……..but new markets will • Transfer of risk from public to private sector
Slide 9: Savings: Profit contribution across the business
17 Savings: Profit contribution across the business. Financial highlights (£m) 2010 2009 Operational cash generation 138 106 New business strain (70) (77) Net cash generation 68 29 Assumption changes, experience and other variances 47 21 IFRS Operating profit 115 50 Savings new business APE 1,253 90
Slide 10: Investment Management: A record year for LGIM
19 Investment Management: A record year for LGIM Operating Profit of £206m. Financial highlights (£m) 2010 2009 Investment management IFRS Operating profit 206 172 Net cash generation 162 125 LGIM highlights Total revenue 378 316 Total costs (172) (144) IFRS Operating profit 206 172 Average ad valor
Slide 11: LGIM's model deployed into global asset pools
21 LGIM’s model is being deployed into the world’s global asset management pools. Global Asset Pools 2010 (£bn) USA 13,196 Japan 3,152 UK 1,791 Asia 1,441 Canada 1,213 MENA 1,049 996 Corporate Australia Pensions Netherlands 990 Sovereign Wealth Funds Switzerland 583 Germany 411 Source: Watson Wyatt,
Slide 12: Cash: consistent 12% per annum growth
23 Cash: consistent 12% per annum growth in operational cash generation. Operational Cash Generation 2007 – 2010 (£m) 808 726 654 580 2007 2008 2009 2010 Annuities Housing and protection Savings Investment management International Group capital and financing 24 Operational Cash Generation: Diversify
Slide 13: Operational cash generation: link between cash and profit
25 2009 Operational cash generation: close and transparent link between cash and profit. Operational New Net cash Tax and IFRS profit 2009 Full Year (£m) cash business International generation other before tax generation strain Annuities 235 129 364 - 231 735 Housing and protection 219 (79) 140 Savi
Slide 14: Modelling the business
27 Modelling the business. Operational Operational cash New Net cash cash New Net cash generation business generation generation business generation (£m) strain (£m) (£m) (£m) strain (£m) (£m) UK UVIF*: £7.9bn UK UVIF*: £8.0bn Annuities 235 129 364 229 60 289 Protection 203 (79) 124 216 (70) 146 Ins
Slide 15: Modelling IGD. Market and Asset Risk Management
29 Modelling IGD. IGD surplus £m 2010 2011 At 1 January 3,148 3,745 Operational cash generation 808 New business strain (80) Dividends (279) Experience variances and assumption changes 138 Investment variance 46 Increase in operational solvency capital requirement (155) Release of capital from US ca
Slide 16: Insurance Risk Management. Dividend per share up 24%
31 Insurance Risk Management. Mortality / longevity risk • Large annuitant portfolio with sophisticated postcode modelling of risks including segmentation of enhanced / lifestyle CPA • Large protection portfolio with volatility managed via event limits, reinsurance including cat risk • GI tail risk
Slide 17: Delivering on our strategy
33 Delivering on our strategy. Strategic Direction Evidence RISK: maintain leadership Scale and expertise across the risk business • £25.4bn annuity portfolio • £1.5bn protection premiums • Top 3 player across risk markets SAVINGS: transformation to a lower A customer centric asset based business co
Slide 18: Growth across the business. Delivering profits and cash.
35 Growth across the business. Delivering profits and cash. Increasing dividends.