Final Results - Year Ended 31 Dec 1999, Part 1

Legal & General Group PLC
29 February 2000


Part 1                    
                         Legal & General Group Plc
                            
                Results for the year ended 31 December 1999


                                            1999      1998

Modified Statutory Solvency basis -

  Operating profit before tax              £413m      £368m    up 12%
    (from continuing operations)

    Earnings per share (see 1 below)       6.50p      5.26p    up 24%

Dividend per share                         4.13p      3.62p    up 14%


Achieved Profits basis -

    Operating profit before tax            £647m      £522m    up 24%
    (from continuing operations )

    Profit before tax                    £1,294m      £631m    up 105%

    Contribution from worldwide
    new business (see 2 below)             £178m      £135m    up 32%

    Shareholder's funds                   £5,250m   £4,465m    up 18%


1 based on operating profit from continuing operations after tax.
2 contribution before tax from long term business.

Group Chief Executive, David Prosser said: 'These excellent results show
that Legal & General continues to be a growth company in a growth market.
We have again shown that in our core UK businesses we have the scale and
ability to compete effectively and profitably.

During the past year we have e-enabled our business to support both our
partners and agents.  As well as making further investment in business to
business capabilities, we are also developing significant business to
consumer applications which will be rolled-out later this year.

We are well positioned for the Stakeholder Pensions revolution which, we 
believe, will establish the framework for the whole pensions market.  We
expect to be a leader in this important market, which will be structured
around worksite marketing and internet based customer self-servicing. It
will be a springboard for us to develop both significant new business 
and wider customer relationships'






Overview of results
===================

  The Group has continued to enjoy strong growth in new business. 
  Worldwide Equivalent Premium Income (EPI) (see 1 below)  grew by 27%
  to £628 million.  UK new business exceeded £500 million EPI for the
  first time and sales have almost trebled since 1995 - a compound growth
  rate of 29% per annum.  New business EPI in the USA grew by 77%, 
  reflecting our success as a major writer of term assurance in that 
  market.

  The Group's operating profit before tax from continuing operations grew
  by 12% and the related earnings per share by 24%. This was driven by a
  10% growth in profits from the Group's life and pensions businesses and
  a 34% increase in the contribution from investment management. A lower 
  tax charge as a result of favourable prior year adjustment and a US tax
  credit, resulted in a sharply higher earnings per share.

  The contribution from worldwide new business on the achieved profits 
  basis amounted to £178 million pre tax, an increase of 32% over 1998,
  with strong growth from UK life and pensions, UK pension fund 
  management business and the USA.

  Our investment management business has seen continued success, 
  performing exceptionally well in 1999 by winning £13.1 billion of new
  fund management business, which exceeded the outstanding result of 
  £11.3 billion achieved in 1998.  This reinforces our market leading
  position in the UK as a provider of pooled index funds. Funds under 
  management have grown by 30% during 1999 to reach £108 billion.  The
  scale of our investment business, together with the index tracking 
  skills and the reputation which we have built, is a critical 
  competitive advantage for Legal & General in the rapidly evolving
  financial services market.

  Legal & General enjoyed a strong final PEP season and, although 
  investors' initial reaction to ISAs was one of caution, they have 
  become increasingly accepted. Single payment unit trust, PEP and ISA 
  sales were a record £877 million (1998: £755 million).  Total unit
  trust, PEP and ISA assets under management now amount to £3.5 billion.

  During 1999, shareholders' funds on the Achieved Profit basis, grew 
  from £4.47 billion to £5.25 billion, an increase of 22% before the 
  dividend.

  The operating and financial strength of the Group provides a secure 
  base for the Board to continue its progressive dividend policy and to 
  declare a 14% increase in the dividend for the fourth successive year.

                                               1999     1998        
  Modified statutory solvency (MSS) basis                            
  
  Operating profit before tax (see 2 below)   £413m    £368m    +12%
  
  Profit before tax                           £676m    £406m        
  Profit after tax                            £587m    £407m        
                                                      
  New business                                  
  Worldwide EPI                               £628m    £494m    +27%
   -  UK  total EPI                           £541m    £437m    +24%
   -  UK  individual EPI                      £442m    £369m    +20%
   -  UK  corporate EPI                        £99m     £68m    +46%
   -  International EPI                        £87m     £58m    +50%
  New UK pension fund management             £13.1bn  £11.3bn   +16%
                                                      
  Funds under management                      £108bn    £83bn   +30%
        
  1 EPI - equivalent premium income for continuing operations.  EPI is 
    total annual premiums + 10% of single premiums and includes unit 
    trust, PEP and ISA sales.

  2 based on operating profit from continuing operations before tax.


Achieved Profits results
========================

The Achieved Profits results show a profit before tax of £1,294 million 
(1998: £543 million) before exceptional items, benefiting from the 
increased contribution from new business and from strong investment 
markets. The 1998 results included the profit on the sale of the 
Australian business of £180 million, offset by the £92 million premium 
paid on the repurchase of the Euroconvertible bonds.

The operating profit before tax from continuing operations for 1999 grew
24% to £647 million (1998: £522 million).  The 1999 result reflected a 
record worldwide new business contribution of £178 million (1998:
£135million) with strong growth experienced in all our major businesses.  
The contribution from in-force business grew from £172 million to £289 
million as a result of the good growth in the business portfolio and
positive experience variances. The contribution from shareholders' net 
worth, declined to £128 million (1998: £176 million), reflecting a lower 
opening net worth because of the investment in the business portfolio
during 1998.

The profit before tax includes the effect of investment variances and 
economic assumption changes.  There was a favourable investment variance 
of £670 million in 1999 (1998: £103 million), reflecting strong equity 
and property returns.

Shareholders' funds increased by 18% from £4.47 billion to £5.25 billion, 
after the 1999 dividend of £212 million.  The Achieved Profits results 
are set out in Part 3 of this release.

Dividend
========

The Board has declared a final dividend of 2.83p, bringing the total for 
the year to 4.13p, an increase of 14%, reflecting the Group's financial 
and operating strengths and our confidence in the future success of the
business.  The dividend has now increased by 14% per annum each year 
since 1995.

Business review
===============

e-enablement
------------
1999 was a year in which we not only grew rapidly, but we also made 
important investment in the capabilities, which we believe will provide 
substantial competitive advantages in the years ahead.  Our achievements 
in building modern IT systems, in establishing efficient intermediary 
extranet capabilities, in running large call centres and in managing 
efficient index tracking funds, mean that Legal & General is in the front 
rank of companies ready to operate in the new financial services world.

Having first invested in business to business applications to maximise 
cost savings potential, we are now delivering increasing business to 
consumer functionality.  Customers can already apply for ISAs, mortgages 
and pensions over the internet.  They can manage their mortgages and 
track the value of their pensions, unit trusts, PEPs and ISAs held with 
us. Our current priority is to increase the range of products consumers 
can purchase and then self-service over the internet.  Life protection, 
savings and general insurance products head the list of products 
scheduled to be delivered over the internet this year.

UK life and pensions
--------------------
Our UK life and pensions business continues to grow strongly.  The IFA 
sector remains a significant source of new business, delivering 
substantial growth for the fourth consecutive year.  Our award winning 
internet capabilities, together with our firmly established telesales 
channel, enable us to meet the increasing and changing needs of our 
customers and their advisers.

At the same time we have been securing and developing important new 
business partnerships which provide the low cost distribution essential 
to our future growth.  They include a wide range of businesses and 
affiliations ranging from small entrepreneurs to large retail
businesses.  These relationships will be of growing importance in the 
future.

Legal & General's strategy has consistently delivered strong growth in 
new business.  We have benefited from our multi-channel distribution 
and wide product range, which has enabled us to take advantage of 
developing market trends. Multi-channel distribution is a key
component in Legal & General's growth strategy.  This maintains the 
greatest access to potential customers and embraces our business partners, 
IFAs and direct sales to customers through our call centre, the internet 
and 'off the page'.  Each of these channels is making increasing use of 
e-commerce opportunities to drive down costs and to enhance customer 
service.  All of our channels have achieved volume growth, with strongest 
growth in the IFA channel where individual new business grew by 31% over
the prior year.  The main features in 1999 were:

  Single premium bond sales remained strong throughout 1999, growing by 
  42% to £634 million (1998: £446 million), sales were supported by the 
  launch of our new With-Profits Bond in August 1999.

  Our continued success in the group personal pensions market has largely 
  offset the uncertainties created in the individual personal pensions 
  market, where sales have slowed ahead of the launch of Stakeholder 
  Pensions.  New individual pension and annuity business, including group
  personal pensions, increased to £142 million EPI (1998: £138 million).  
  We believe Legal & General is well positioned for the introduction of 
  Stakeholder Pensions in April 2001.

  The housing market, in which Legal & General's distribution is strongly 
  represented, has seen good growth in 1999.  Our capabilities in this 
  area have helped to push individual annual premium life sales up by
  37% to £126 million (1998: £92 million).

  Legal & General enjoyed a strong final PEP season and, although 
  investors' initial reaction to ISAs was one of caution, they have 
  become increasingly accepted. Single payment ISA and PEP transfer sales 
  in the second half of 1999 exceeded PEP sales over the equivalent
  period of 1998 by 18%.  This - together with increased institutional 
  unit trust sales - produced a 16% increase in single payment sales over 
  the full year to £877 million (1998: £755 million).  Total unit trust, 
  PEP and ISA assets under management now amount to £3.5 billion.

  UK corporate life and pensions new business in 1999 grew by 46% to £99 
  million EPI (1998: £68 million).  Good growth in bulk purchase annuity 
  business in the first and final quarters of the year pushed single 
  premiums up by 85% to £643 million (1998: £348 million).  The group 
  risk business achieved record sales levels, with new annual premiums 
  increasing by 20% to £24 million (1998: £20 million).

The UK life and pensions operating profit before tax rose by 9% to £285 
million (1998: £261 million), reflecting a 10% growth in the net transfer 
from the UK long term fund and a lower grossing up rate.

International life and pensions
===============================

The profits from the Group's international businesses grew by 16% to £36 
million (1998: £31 million).

USA
---
Sales grew strongly throughout the year to give record new business and 
profits.  New business, which is predominantly annual premium, grew 77% 
to $101 million EPI (1998: $57 million).

Legal & General America is a major writer of term assurance for high net 
worth individuals and markets its products through a national brokerage 
distribution. Its success has been built upon significant medical
underwriting capabilities, good value products and good service developed 
within the framework of a low cost, business to business, internet 
operating environment. Profit before tax of $48 million (1998: $40 
million) was up 20%.

Netherlands
-----------
In the Netherlands, sales grew by 17% to EUR. 14 million EPI (1998:
EUR. 12 million).  Annual premiums grew particularly strongly - up 33% to 
EUR. 8 million, of which EUR. 3 million (38%) represented sales of the 
new flexible universal life product launched in April.  Operating profit 
before tax grew by 50% to EUR. 9 million (1998: EUR. 6 million)
reflecting the strong growth in the business in recent years.

France
------
In France, there was a 14% increase in new business over the year to EUR. 
25 million EPI (1998: EUR. 22 million).  New annual premiums - including 
group protection business - increased 14% to EUR.8 million.  Life single 
premiums grew 22% to EUR. 115 million, with a particularly strong
performance in the final quarter, which benefited from the launch of a 
new unit linked fund.  The profit of EUR. 2 million was down on the 1998 
result of EUR. 4 million profit because of increased local reserving 
requirements and lower realised gains.

Investment management
=====================

Our investment management business provides fund management expertise to 
trustees of pension schemes, other institutional clients and to the 
Group's corporate and retail businesses.  Total funds under management 
were £108 billion at the year-end, of which over 60% are held for 
external clients.  The success and scale of our investment management 
business is a key competitive advantage for Legal & General.

The profits from the management of external client funds increased by 34% 
to £43 million (1998: £32 million), reflecting the very strong growth in 
external funds under management in recent years.

New pension funds management business rose 16% to £13.1 billion, 
exceeding the previous record  £11.3 billion of new business achieved in 
1998. Pension fund assets exceeded £60 billion at end 1999, underlining 
Legal & General's position as a major UK investment house and a leading 
provider of index tracking services.

General insurance
=================

The operating profit from the general insurance business increased to £20 
million (1998: £14 million), after a transfer of £5 million to 
equalisation provision (1998: £5 million).  The household account remains 
the major component of the Group's general insurance business and
includes the joint venture with Woolwich plc.  The household underwriting 
result improved but lower investment returns led to a reduced operating 
profit of £2 million (1998:  £4 million).  Further investment in the 
development of the healthcare business resulted in an operating loss of 
£3 million (1998: £4 million loss).

Domestic mortgage indemnity business produced an insurance profit of £20 
million (1998: £18 million). This comprises £14 million profit from 
post-1992 business and a £6 million profit from pre-1993 business (1998: 
£14 million and £4 million respectively).

Other income
============

Shareholders' other income
--------------------------
Shareholders' other income from investments held outside the UK long-term 
fund declined from £43 million to £41 million, reflecting a lower level 
of investment gains than in 1998, in a portfolio largely invested in 
bonds.

Banking
-------
New mortgage advances grew by 83% to £271 million, driven by our Flexible 
Reserve product. Mortgage loans now total £868m.  The launch of Legal & 
General's 'Easy Access' LIBOR tracker deposit account in November has 
generated a strong response from savers.  By the year-end, Legal &
General Bank (LGB) deposits were £1.03 billion (1998: £0.94 billion) on 
behalf of some 66,000 customers - an increase of 20,000 customers over 
the year.  LGB's loss of £3 million (1998: £2 million loss) reflected its
continuing investment in growth.

Estate Agency
-------------
The strength of the housing market and the restructuring of the estate 
agency operation produced a break-even result (1998: £8 million loss).  
This result excludes the contribution from products distributed through 
this channel.  The 1998 result included a charge of £4 million primarily 
arising from the reassessment of provisions for vacant properties.


Change in shareholders' retained capital (SRC)
==============================================

The value of the SRC is but one component of the embedded value of the UK 
long term fund, which grew to £3.82 billion net of tax (1998: £3.24 
billion) after the annual distribution to shareholders.  Accounting 
standards require that the change in the amount of the SRC is included in 
the profit and loss account.

For 1999, the change in the SRC, grossed-up to a pre tax amount, was an 
increase of £260 million (1998: a decrease of £195 million) and 
comprised:
 -    the investment return on the SRC, which amounted to £288 million 
      (1998: £224 million)
 -    plus the release of capital and profits from business written in 
      previous years, which has been partly offset by the investment of 
      SRC in new business not written in the with-profits fund. In 
      aggregate these items amounted to an increase of £126 million. The
      equivalent figure in 1998 was a decrease of £284 million, as a 
      result of an increase in actuarial provisions following a rapid 
      fall in interest rates; and allowances for trends in annuitant 
      mortality.
 -    less the accrued transfer from SRC of £154 million (1998: £135 
      million), already included in the life and pensions operating 
      profit.

FSA Reviews
===========

We continue to make good progress with the Phase 2 of the PIA Pensions 
Review.  51,000 requests for review have been received and our target is 
to complete the review by June 2002.  The estimated cost of compensation, 
has been borne by the working capital provided by shareholders over many 
years and retained in the with-profits part of the UK long-term fund.
The end 1998 provisions have proved resilient.

The FSA has called for a review of endowment policies. Legal & General 
fully supports the FSA's statement that, on average, consumers have done 
well from having endowment policies.  As part of the action plan agreed 
by the ABI, we have written to all endowment mortgage policyholders 
outlining the review process.

Outlook
=======

The financial services marketplace is rapidly changing. As well as 
traditional methods of product delivery and customer servicing, the 
market is adopting internet technologies as a step towards full 
interactivity.  Legal & General is committed to being a major force in 
that marketplace.  Our many capabilities and the investments we have made 
and are making, position us well for that world.

   We have a growing business to business internet capability and are 
   now rolling out our business to customer functionality.

   The scale of our investment management business and our expertise in 
   index tracking are major competitive advantages for the Group.

   We are ready for the new Stakeholder Pensions market.  The model of 
   low cost Stakeholder Pensions, delivered through worksite marketing 
   and self-serviced over the internet, will provide significant 
   opportunities for us to develop both extensive new business and
   valuable customer relationships.

   The qualities of good value and trustworthiness associated with our 
   brand will be of growing importance in this changing world.

Legal & General is looking forward to these opportunities and to
continuing as a growth company in a growth market.




Notes:

 -    The Annual General Meeting will be held on Wednesday 12 April 2000.

 -    The Annual Report for 1999 will be sent to shareholders on Monday 
      13 March 2000.

 -    The final dividend will be paid on Tuesday 2 May 2000 to 
      shareholders registered at the close of business on Friday 14 
      April 2000.  The shares go ex-dividend on Monday 10 April.




Enquiries to:

Investors:
Anthony Hobson, Group Director (Finance)     020 7528 6290
e-mail: [e-mail]

Peter Horsman, Investor Relations Manager    020 7528 6362
e-mail: [e-mail]

Media:
John Morgan, Head of Public Relations        020 7528 6213
Graham Rimmer, Chief Press Officer           020 7528 6252
Anthony Carlisle, Citigate Dewe Rogerson     020 7638 9571

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