Interim Results 2000 - Part 1

Legal & General Group PLC
26 July 2000


PART 1
                  Legal & General Group Plc
                  Interim Results - 2000
                            

  New life and pensions business EPI (see 1 below)
  ----------------------------------

     Worldwide                                    £258m         +  5%

     UK individual                                £175m         + 11%

     International                                 £54m         + 32%


  Modified Statutory Solvency basis -
  ---------------------------------

     Operating profit before tax                  £231m         + 19%


     Earnings per share (fully diluted) (see 2 below)
                                                  3.19p         + 15%

     Dividend per share                           1.48p         + 14%


  Achieved Profits basis -
  ----------------------  

     Operating profit before tax                  £336m         + 30%

     Contribution from new business (see 3 below)  £69m         + 13%

     Shareholders' funds                        £5,356m

  Fund Management - 
  ---------------

     New UK business                             £5.9bn

     Funds under management                      £111bn


     1 Equivalent Premium Income (EPI) is total new annual premiums 
       + 10% of new single premiums.

     2 Based on operating profit after tax.

     3 Contribution before tax from worldwide life and pensions 
       business.
                            
     Group Chief Executive David Prosser said: 'This is another set of 
     good results, building on a very successful period.  Over the last 
     five years our UK new business has almost trebled and we continue 
     to deliver profitable market share growth. Our UK investment
     management operation has once again produced an excellent
     performance winning £5.9bn of new business.

     The plans for e-enabling our business are moving ahead strongly.
     Low cost servicing and distribution via the worksite, complemented
     by our well-known brand and our leading index-tracking skills,
     will be key differentiators in the forthcoming Stakeholder world.

     We look forward to the challenges ahead and have the resources and
     determination to succeed.  We have a strong future as a leader in
     the UK's savings and protection business.'



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

  Operating profit before tax, on the Modified Statutory Solvency basis,
  grew by 19% driven by a 13% increase in the profit from the Group's
  life and pensions businesses, and a more than doubled contribution
  from investment management.
  
  The operating and financial strength of the Group provides a secure
  base for the Board to continue its progressive dividend policy.  A 14%
  increase in the interim dividend has been declared.
  
  Operating profit before tax on the Achieved Profits basis grew by 30%
  to £336m, driven by the strong increase in the profits of the
  worldwide life and pensions businesses, which grew by 38% to £274m.

  The new business contribution from the Group's life and pensions
  businesses, on the Achieved Profits basis, amounted to £69m pre tax,
  compared with £61m in the first half of 1999, with margins maintained.
  
  Our investment management business has once again delivered impressive
  new business results winning an exceptional £5.9bn of new
  institutional funds in the first six months of the year
  (1H99: £6.0bn).  Our success underlines Legal & General's position as
  one of the two dominant players in the UK index-tracking investment
  market.  At the end of June 2000, the Group had £111bn of funds under
  management, more than double the position three years ago.
  
  The 25% growth in group personal pensions business is both an
  encouraging indicator in advance of the launch of Stakeholder Pensions
  next year and an endorsement of our good value product proposition.
  New individual pension and annuity business (including group personal
  pensions) increased 10% to £79m EPI (1H99: £72m).
  
  New individual life annual premium business grew by 17% to £63m
  (1H99 : £54 m).  We have more than doubled both volumes and market
  share in this area in the last five years.  Single premium bond sales
  increased from £320m to £327m, whilst our group risk business
  reinforced its good performance in 1999 by growing new annual premiums
  by 40% to £14m.
  
  The profits from the Group's international businesses grew by 41%.
  New business in the United States grew 22% to $59.8m.  Our French and
  Dutch subsidiaries grew new business by 31% and 27% respectively.
  
  Over the year to 30 June 2000, shareholders funds, on the Achieved
  Profits basis, grew from £4.84bn to £5.36bn, an increase of 15% before
  the dividend.
  



  Key Figures
  ===========

                                             1H2000         1H1999
  New business(EPI)                           
   -  UK individual life and pensions         £175m          £157m
   -  UK corporate life and pensions           £30m           £47m
   -  UK unit trusts and ISAs                  £55m           £63m
   -  International (including unit trusts)    £56m           £43m
   -  Worldwide                               £315m          £310m
  New UK fund management                     £5.9bn          £6.0bn

  Modified statutory solvency (MSS) basis                    
  
  Operating profit before tax                 £231m          £194m
  Profit before tax                           £287m          £290m
  Profit after tax                            £185m          £244m
  Dividend                                    1.48p          1.30p


  UK life and pensions
  ====================

  The UK insurance market is currently experiencing a period of very 
  rapid change.

  Consumers are demanding simpler, more transparent products delivering 
  ever better value for money.  Fast moving technology is changing the 
  way people buy from us. Government and regulators are also promoting 
  change through Stakeholder Pensions, new product frameworks such as 
  the Individual Savings and Pension Accounts and a series of new 
  regulations.

  Legal & General is at the forefront in reacting to this fast changing 
  world.  We are redefining the market landscape, and transforming our 
  business to an e-enabled and low cost base. We have developed products 
  to provide value for money and to fulfil customers' aspirations for 
  clarity and flexibility.  Our efforts are being rewarded with both
  market share growth and industry recognition.

  Our share of the UK life and pensions market grew by more than a fifth 
  between Q1 1999 and Q1 2000, whilst last month Legal & General was 
  named the British Insurance Awards Life Insurer of the Year.  This is 
  the second time in three years Legal & General has won this prestigious
  award.

  Individual pensions.
  --------------------
  In the run-up to the launch of Stakeholder Pensions in April 2001, 
  Legal & General has continued to achieve significant new business 
  growth in the closely related group personal pension market.  Aided by 
  our 'Stakeholder Guarantee', our new group personal pension business 
  grew by an impressive 25% to £26m.  Another important contributor
  to the 15% growth achieved in new individual pensions business
  (excluding DSS rebates) was the Compulsory Purchase Annuity 
  area. This area, which includes our recently launched With-Profits 
  Annuity product, saw business grow by 49% to £150m (1H99: £101m).

  Individual life.
  ----------------
  Increased demand for our ISA backed mortgage repayment product enabled 
  our mortgage-related new annual premium sales to grow by 27% to £57m 
  EPI. Also contributing to this impressive growth has been the further 
  development of our Mortgage Club panel of major lenders, which will 
  shortly be supported by a further range of efficient, internet-based 
  services.  Mortgage completions through the Club grew by over a third 
  to £1.9bn in the first half of 2000.

  Unit trusts and ISAs.
  ---------------------
  Regular saving ISA sales were up sharply to £11m (1H99: £4m).  The 
  single payment unit trust and ISA market was influenced earlier in the 
  year by the high level of interest among retail investors for 
  technology stocks.  Legal & General decided not to introduce 
  specialist high technology funds and, as a consequence, sales of 
  single payment unit trust and ISAs did not match the strong final PEP 
  season in 1999 (1H00:£440m against 1H99: £592m).  16% of ISA enquiries 
  to our Direct operation this year have come via the internet, a very 
  positive indicator of our customers' willingness to use this low cost 
  medium. 

  Corporate business. 
  -------------------
  Corporate new business was £30m EPI (1H99: £47m EPI). The bulk
  purchase annuity market was affected by a recent ruling from the
  Ombudsman about the equalisation of Guaranteed Minimum Pension rights
  between male and female pensioners.  The ruling, which is subject to
  appeal, has caused some pension trustees to defer plans to wind-up
  their schemes, thereby temporarily reducing market size.  Business in
  the first half of 1999 benefited from a single mandate comprising £19m
  EPI.

  In the group risk market, Legal & General delivered another strong
  performance with new annual premiums 40% up at £14m (1H99: £10m).

  Operating Profit. 
  -----------------
  The UK life and pensions operating profit before tax rose to £156m
  (1H99: £142m), reflecting a 10% growth in the net transfer from the UK
  long term fund.



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

  The profits from the Group's international businesses grew by 41% to
  £24m (1H99: £17m).

  USA
  ---
  This business continues to prosper, with both sales and profits
  growing strongly.  New business, which is predominantly annual 
  premium, grew by 22% in the first half of 2000 to reach $59.8m (1H99 
  $49.1m). It benefited from strong demand prior to the implementation 
  of the Triple X solvency requirements.

  Legal & General America has been successful in achieving a major and
  profitable position in the high net worth term assurance market.
  Using the internet to enhance business to business processing with its
  distributors, this highly regarded company grew profits in the first
  half by 52% to $29.3m (1H99: $19.3m).

  Netherlands
  -----------
  Sales grew by 27% to EUR. 8.4m EPI (1H99: EUR. 6.6m).  Operating 
  profit before tax was up 24% to EUR. 6.3m (1H99: EUR. 5.1m).

  France
  ------
  New business grew by 31% to EUR. 16.3m EPI (1H99: EUR. 12.4m) 
  following the introduction of a range of new products.  The profit of 
  EUR. 2.3m was 35% up from EUR. 1.7m in the first half of 1999.




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

  Legal & General is distinct in its market in having a large,
  successful and profitable investment management business.  Its scale,
  especially in index tracking, represents a key strategic asset in the
  new marketplace - especially for Stakeholder Pensions.  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
  £111bn at 30 June 2000, of which over 60% are held for external
  clients.

  Our investment management business has once again delivered impressive
  new business results winning £5.9bn of new institutional funds nearly
  matching the exceptional result of £6.0bn achieved in the first half
  of 1999.  Of the £5.9bn won this year, £5.3bn came from UK pension
  funds and the balance of £0.6bn came from other institutional clients.

  The profits from the management of external client funds more than
  doubled to £29m (1H99: £13m).  This result reflects the strong growth
  in external funds under management over a number of years and the
  absence of the one-off unit trust systems costs, which impacted 1999.




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

  The operating profit grew to £6m (1H99: £5m), after a transfer of £3m
  to equalisation provision.  The household account remains the major
  component of the Group's general insurance business and includes our
  joint venture with Woolwich plc.  The household account produced an
  improved operating result of £3m (1H99: breakeven), with little
  adverse weather in the first half of 2000.

  The healthcare and ASU business, which continues to grow strongly,
  again produced a breakeven operating result.  The motor business also
  produced a breakeven result following rate increases (1H99: £2m loss).

  The operating profit for mortgage indemnity business was £10m
  (1H99: £7m).  This includes a profit of £4m (1H99: breakeven) arising
  from the pre-1993 mortgage indemnity reserves, reflecting settlements 
  made.

  The overseas result reflects a final settlement in respect of marine
  business written before 1980 through Andrew Weir Insurance Company
  Limited, a company now in administration.




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

  Banking
  -------
  New mortgage advances grew by 32% to £139m, driven primarily by the
  success of our range of flexible mortgage products for residential
  and buy to let properties; mortgage loans now total £883m.  The value
  of bank deposits has increased significantly since the launch of Legal
  & General's 'Easy Access' LIBOR tracker account late last year. 
  Deposits now stand at £1.2bn (1H99: £1.0bn), with a customer base of
  81,000.  Despite this increase in new business, banking achieved a
  breakeven result (1H99: £1m loss).

  Other income
  ------------
  Other income was stable at £16m (1H99: £17m).




  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 £3.80bn net of tax (30 June
  1999: £3.50bn), after the accrued transfer to shareholders. 
  Accounting standards require that the change in the amount of the SRC
  is included in the profit and loss account.

  For the first half of 2000, the change in the SRC, grossed up to a
  pre-tax amount, was an increase of £60m (1H99: an increase of £94m)
  and comprised:

  -    the investment return on the SRC, which amounted to a negative
       £12m (1H99: a positive £141m), reflecting weak UK equity markets 
       in the first half of 2000.
  -    the release of capital and profits from business written in 
       previous years, which has been partially offset by the investment 
       of the SRC in the funding of new business not written in the 
       with-profits fund.  In aggregate, these items amounted to an 
       increase of £160m compared to an increase of £31m in the first 
       half of 1999 - a period in which we strengthened our mortality
       assumptions for annuitants.
  -    less the accrued transfer from the SRC of £88m (1H99: £78m), 
       already included in the life and pensions operating profit.


  Achieved Profits results
  ========================
  The Achieved Profits results show a strong increase of 30% in the 
  operating profit before tax to £336m (1H99:£259m).  This result 
  benefited from strong growth in the profits from our life and pensions 
  businesses, which in total increased by 38% to £274m (1H99: £199m).

  The result included an increased worldwide new business contribution 
  of £87m (1H99: £86m).  Of this total, £49m (1H99: £45m) arose from UK 
  life and pensions where new business EPI increased from £204m to £205m. 
  The lower contribution from UK managed funds reflected a reduction
  in new pension fund business from the exceptional levels of 1999.

  The contribution from in-force business grew strongly to £148m 
  compared with £87m in 1999, as the in-force business continued to grow 
  strongly and the significant systems expenditure in 1999 was not 
  repeated.  The contribution from shareholders' net worth grew to £75m
  (1H99: £67m).

  Shareholders' funds grew from £4.84bn at 30 June 1999 to £5.36bn at 
  30 June 2000 after the payment of dividends of £223m during the period.  
  The Achieved Profits results are set out in Part 3 of this release.

  Financial strength
  ==================
  The growth of Legal & General is supported by its financial strength.  
  A core asset of the Group is the triple A rated UK long term fund, 
  which is a source of considerable competitive advantage.  Its strength 
  gives us the resources to grow our business, the freedom as to how and 
  when we invest assets and the capital to ensure that we have an 
  efficient and flexible infrastructure.

  At the end of 1999, assets of £26.9bn within the UK long term fund 
  supported its with-profits business.  This amount substantially 
  exceeded that required to meet guaranteed benefits, expected future 
  bonuses and all other liabilities.  The excess comprises working 
  capital provided by shareholders over many years and retained in the 
  with-profits fund.  We can now report that at the end of 1999, this 
  excess amounted to at least £2.3bn after all reserves and provisions, 
  compared with £1.9bn reported as at the end of 1997.

  Outlook
  =======
  Legal & General is well positioned for the market place of tomorrow.  
  Our brand is widely recognised and respected, a strength that will 
  prove especially advantageous as the range of products distributed 
  over the internet increases.  We are already closely identified with 
  the emerging Stakeholder Pension market, which will be so important in 
  the future.  Our skill in index tracking is a key asset in both the 
  retail and corporate markets.

  A low cost base, worksite capabilities, index tracking investment 
  expertise and financial strength will all be central to the new 
  financial services marketplace.  We believe that our business is
  prepared for this new world.  The Group's firm foundations will 
  ensure a strong and successful future and will continue to create
  significant shareholder value.

  Dividend Payment Date
  =====================
  The 2000 interim dividend has been increased by 14% to 1.48p and will 
  be paid on 2 October 2000 to shareholders registered at the close of 
  business on 15 September 2000.  The shares go ex-dividend on 11 
  September 2000. The interim report will be sent to shareholders on 11
  August 2000.




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

Anthony Carlisle, Citigate Dewe Rogerson          0973 611888

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