2005 FY New Business Result

Legal & General Group PLC 26 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 new business grew by almost a third in 2005 and our investment management business won a record £17.1 billion. Unit-linked bond sales have increased by nearly 50% and single payment unit trusts by 142%. Growth in individual pensions has been impressive and our corporate life and pensions businesses have performed very strongly - bulk purchase annuity sales in the final quarter have more than tripled. Through substantial and sustained organic growth, Legal & General has become one of the largest long-term savings, investment and protection groups in the UK. Our flexible and broad distribution model has produced outstanding results and forms a platform for success going forward. Strength in the IFA markets and good growth in our Banking and Building Society channel form the core of our winning proposition. 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 single premiums, 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 to benefit from improving equity markets and a further recovery in consumer confidence. This is particularly evidenced by the strong growth in unit trust and unit-linked bond volumes. Sales of protection business reflected the relatively weaker house purchase market. The approaching changes to the tax regime 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, our customer focused products and well-recognised brand enabled us to secure strong growth, particularly in savings-related business. Protection - Q4 down 13% to £35m Sales of annual premium mortgage related protection business in Q4 were unchanged from Q3 at £24m. Against a strong Q4 last year of £27m, sales were 11% lower, impacted by a slower housing market in 2005. Similarly, other protection business was below the same quarter last year at £11m (Q4 2004: £13m). Over the full year, mortgage related business of £91m (2004: £109m) and other 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-linked bonds 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-fund bond to Bradford & Bingley's customers using the Legal & General branded platform developed jointly with Cofunds. In a pilot project, the multi-fund bond 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 £263m APE in 2005. Our focus remains on the pensions transfer market in the run-up to pensions A-Day and on employer related business fuelled by scheme reconstructions. 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 keep under review the adequacy of private pension saving in the UK and advise on appropriate policy changes. It published its Second Report in November 2005. We welcomed the recommendations it contained regarding auto-enrolment and employer-matching and are currently working with the ABI to develop a response to the Report. Annuities - Q4 down 57% to £9m APE Sales of individual annuities fell to £92m in Q4 (Q4 2004: £212m). Competition in this market segment has intensified in the second half of the year. Our continued focus on return on capital rather than volumes has led to a fall in sales 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, up from £233m in Q4 2004. Over the full year, single payment unit trusts and ISA volumes increased by 92% to £2,999m (2004: £1,565m). Unit trust funds under management 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 and medium 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 in Q4 2005, as the business opportunity arising following the withdrawal of a competitor 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 market caused a 17% reduction in Q4 new business in local currency terms to $20m (Q4 2004: $24m APE). Over the year, volumes decreased by 23% from $98m APE in 2004 to $75m APE in 2005. We continue to achieve good growth in our European businesses. New business volumes in the Netherlands increased by 57% to €11m APE (Q4 2004: €7m APE) and in France by 25% to €10m APE (Q4 2004: €8m APE). Total volumes for the year were €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 outstanding performance, 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, combined with very favourable persistency rates and an increase in market values, led to a 26% growth in funds under management to £204bn at the year-end (31 December 2004: £162bn), of which 71% related to external funds. We continue to diversify our business mix and our client base. UK corporate pension clients continued to award us active fixed interest business and almost £1bn of new business was sourced from overseas this year. In addition, £2bn came from non-pension institutional clients such as charities and friendly societies. OUTLOOK We expect the investment, savings and protection market in the UK to continue to grow in 2006. We believe that investor confidence will show further improvement and that a cautious upturn in the housing market will lead to a gradual recovery in protection volumes. We anticipate that pensions A-Day will remain a significant positive influence on volumes of pensions transfer business, on restructuring of employer-related schemes and on sales of bulk purchase annuities. In the year ahead, Legal & General looks forward to extending further its already broad distribution reach. In Q1 2006, we will launch our multi-fund bond 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 pension customers 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 its leading position in the UK savings, investments and protection markets this year. 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 to certain of Legal & General's plans and its current goals and expectations relating to future financial condition, performance and results. By their nature forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond Legal & General's control, including, among others, UK domestic and global economic and business conditions, market related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities, the impact of competition and the policies and actions of governmental and regulatory authorities, the timing impact and other uncertainties of future acquisition or combinations within relevant industries. As a result, Legal & General's actual future 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 statements contained 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 Plc Unaudited New Business Premiums Year 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 premiums Life: - 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 premiums Life: - With-profits 169 390 (57) 32 80 (60) - Unit-linked 2,082 1,418 47 599 462 30 Pensions: - 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 6 APE ___________________________________________________________________________________________________ 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 Plc Unaudited New Business Premiums Year 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 premiums Life 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 premiums Life 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 14 business ___________________________________________________________________________________________________ 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 exchange rates. 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 20 UK 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 Plc Unaudited New Business Premiums Year 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 24 Single premiums 0 1 0 0 ___________________________________________________________________________________________________ APE 75 98 (23) 20 24 (17) Netherlands (€m): New annual premiums 19 18 5 4 Single premiums 231 166 60 33 ___________________________________________________________________________________________________ APE 42 35 20 11 7 57 France (€m): New annual premiums 25 19 2 1 Single premiums 278 214 74 59 Unit 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 65 Tied 103 224 327 32 Direct 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 64 Tied 119 134 253 32 Direct 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 67 Tied 28 48 76 31 Direct 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 67 Tied 28 33 61 30 Direct 4 2 6 3 ________________________________________________________________________________ Total 77 127 204 100 ________________________________________________________________________________ This information is provided by RNS The company news service from the London Stock Exchange

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