L&G Bonus Announcement 2001

Legal & General Group PLC
28 February 2002





         LEGAL & GENERAL ANNOUNCES 2001 BONUS RATES
         ==========================================


Following a year in which equity markets fell significantly, Legal & 
General's bonus declaration reflects the benefits of both a balanced 
portfolio of investments and the smoothing process - an integral feature 
of with-profits policies.


Balanced Investments
--------------------
The total return on the FTSE All Share was a negative 13 per cent during 
2001.  By contrast, the return on the assets backing with-profits business
was a negative seven per cent for pensions business and a negative five 
per cent net of tax for life assurance business.  This return indicates 
the benefits of investment in fixed interest and commercial property 
assets in 2001, which provided positive returns outperforming those of 
equities.  The allocation of assets backing with-profits business is 
detailed below.


Smoothing
---------
A 25 year policy* taken out on 1/03/77 will receive a payout of £73,566. 
A similar but 24 year policy* taken out on the same day would last year 
have received a payout of £74,895.  This fall in payout when adjusted for
the receipt of the final year's premiums is less than the 5% negative 
return on the fund during the year, referred to above.  The bonus 
declared for 2001 therefore demonstrates the benefits of smoothing for 
with-profits policyholders in times of poor investment return.

The bonus declaration process has been subject to independent peer review.


Outperformance of Return
------------------------
A 25 year endowment policy* maturing on 1/03/02 will have delivered a 
nominal rate of return of 11.1% per annum and a real rate of return of 
6.7%.  A similar investment placed with a building society would have 
yielded an annual rate of return of only 5.1% and a real rate of return of
0.9%.

*Maturity values and yields for a Legal & General with-profits endowment 
policy taken out on 1/03/77 by a 29 year old male paying £50 per month.


Prudent Approach
----------------
Legal & General's approach to bonus declarations takes account of current 
investment conditions and expected future inflation and investment 
returns.  The stock market performance of 2000 and 2001 has been below 
Legal & General's longer term expectations and this has not been fully 
reflected in the bonus declaration for these years.  Legal & General 
expects future investment returns to be better but it will require a 
significant stock market recovery during 2002 followed by a period of 
good and sustained investment returns to avoid further bonus rate cuts for
those whose investments experienced the falls of 2001.  Nevertheless Legal
& General expects that its with-profits policies will offer attractive 
returns over the long term when compared with cash deposits and inflation.

Legal & General believes its prudent action in setting bonus rates 
maintains fairness between all generations and classes of with-profits 
policyholders and meets the concerns raised by the Financial Services 
Authority in its 18 December 2001 announcement.  Together with the 
continuation of the AAA financial strength rating from Standard & Poors 
for the financial strength of our UK Long Term Fund it demonstrates our 
commitment to maintain a strong with-profits fund for the benefit of all 
our on-going customers.



Notes to editors:
-----------------

 1.  *Maturity values and yields for Legal & General 25 year with-profits
     endowment policies taken out by a 29 year old male investing £50 per 
     month and maturing on 1 March 2002 are:

Endowment Assurance Policy: £73,566 (2001: £86,895).  This is an actual 
return of 11.1% and a real return over inflation of 6.7% (2000: 7.2%).  
This rate of return is 6.0% higher than the 5.1% the same investment would
have obtained from an average higher rate building society account.  The 
returns from the average higher rate building society deposit account are 
the net rates to 1 March 2002 assuming that interest rates for January to 
1 March 2002 remain at the January 2002 level (Source Micropal).  A 
building society guarantees the capital and added interest of its 
investments.

The 'real rate of return' represents the yield obtained in excess of the 
return earned if the premiums had grown in line with the RPI (increase in 
RPI for the period December to March 2002 remains at the same level as 
December 2001).

Low Cost Endowment Policy:  £72,279 (2001: £84,869).  This is £44,623 
greater than the mortgage of £27,656 it was designed to repay.  The 
policy carries a higher level of life assurance cover than the endowment 
assurance policies.


2.   Further details
Examples of payouts to customers with policies maturing in 2002 are in the
appendices below.


3.   Bonus Policy
The 2001 bonus declaration is in line with Legal & General's principles 
which aim to provide competitive and equitable returns for policyholders 
while maintaining the strength of the Long Term Fund for future 
generations of policyholders.  This requires Legal & General to:
 -   Treat all generations of policyholders and types of policies fairly.
 -   Take account of the amount of assets generated by each type and 
     generation of policy allowing for investment returns achieved and 
     expenses incurred.
 -   Smooth maturity returns to policyholders so that they are shielded 
     from some of the fluctuations that can be experienced in investment 
     returns and other factors.


4.   Total Cost of Bonuses in 2001:  £809m  (2000: £848m).


5.   Investment Mix:
The investment mix backing participating with-profits business in 
aggregate showed little change during 2001.

                            End 2000           End 2001
                                %                  %
     Fixed Interest            20                 23
     Property                  14                 15
     Equity Shares
          UK Shares            48                 44
          Non UK Shares        16                 15
          Unlisted Shares       1                  1
          Other Investments     1                  2
                              ---                ---
                              100                100

The asset mix is the mix for all the participating with-profits business.
The asset mix and therefore the investment return attributed to different 
types and generations of policyholders may be different from the above as 
it reflects the different product designs, guarantees and representations 
made to policyholders.  The change in asset mix in 2001 principally 
reflects changes in asset prices.  The asset mix may change in the future.

The investment return earned on the participating with-profits business 
in 2001 was a negative 7% gross, a negative 5% net.  



Regulatory Notes:
*    Past performance is not necessarily a guide to future performance.
*    Legal & General Assurance Society Limited is regulated by the 
     Financial Services Authority.
*    Returns from with-profits contracts are dependent on bonuses. Future
     bonus rates are not guaranteed.
*    Unlike a with-profits policy, capital and income in a deposit account
     is guaranteed on encashment.
*    The surplus arose during a period when investment returns were high, 
     similar returns and therefore such large surpluses may not be 
     available in future years.


Issued By:
John Morgan
Head of Public Relations
Tel: [phone]




Appendix A
                                
               2001 ENDOWMENT ASSURANCE BONUS DECLARATION
               ------------------------------------------                 
                                
             ANNUAL (REVERSIONARY) BONUSES ON LIFE POLICIES
        
                2001                                2000

                1.50    % of sum assured            2.00
                2.75    % of existing bonus         3.50
                                
                                
                                
                                
                 PAYOUTS ON MATURING ENDOWMENT POLICIES
                 
                            £50 per month

                  Maturing  Yield     %      Maturing  Yield     %
                   1/3/02   (Real Return)     1/3/01   (Real Return)
                     £                          £

25 Year Payout     73,566       11.1          86,895       12.1
                                (6.7)                      (7.2)
                         
20 Year Payout     33,696        9.4          39,233       10.7
                                (5.9)                      (6.7)

15 Year Payout     17,217        8.2          19,127        9.4
                                (5.2)                      (5.9)
                         
10 Year Payout      8,470        6.7           9,330        8.5
                                (4.4)                      (5.7)



Notes:
------
1.   The examples assume a male aged 29 paying a premium of £50 per month

2.   *The 'real rate of return' represents the yield obtained in excess 
     of the return earned if the premiums had grown in line with the RPI 
     (increase in RPI for the period December to March 2002 remains at the
     same level as December 2001).





Appendix B

               2001 UNITISED WITH-PROFITS BONUS DECLARATION
               --------------------------------------------

The figures in the table are the running yields for premiums paid in 2001
and the interim running yields for premiums paid in 2001 and 2002.  The 
equivalent interim running yields declared last year on premiums paid in 
2001 are shown in brackets.



              SINGLE PREMIUM LIFE POLICIES (CURRENT SERIES)

With-profits Income Bond
      2001 Running Yield              6.50%*    (6.50)%*
      2002 Interim Running Yield      5.00%*

With-profits Growth Bond
      2001 Running Yield              4.50%**   (5.00)%**
      2002 Interim Running Yield      4.00%**

      
                          
    REGULAR PREMIUM (ANNUAL) LIFE POLICIES (LATEST CONTRACT VERSIONS)

Flexible Mortgage Plan (Higher rates apply to some earlier versions of 
the Plan)
      2001 Running Yield              5.25%     (5.50)%
      2002 Interim Running Yield      4.25%

Savings Plan (Higher rates apply to some earlier versions of the Plan)
      2001 Running Yield              4.35%     (4.85)%
      2002 Interim Running Yield      3.60%
          


               REGULAR PREMIUM (ANNUAL) PENSIONS POLICIES
          
Personal Pension Plan (accumulation units)
      2001 Running Yield              5.50%    (6.00)%
      2002 Interim Running Yield      4.50%


Notes:
------
* For Income Bonds sold from 1 January to 30 June 2001.  The three rates 
for income bonds sold from 1 July to 30 September 2001 were 6.25% and 
from 1 October 2001 to 31 December 2001 were 5.75%.  

** For with-profits bonds sold from 1 January to 30 June 2001.  The rates
for income bonds sold from 1 July to 30 September were 5.0% with an 
interim running yield of 4.5% for 2002.  The three rates for income bonds 
sold from 1 October 2001 to 31 December 2001 were 4.0%.

For most of Legal & General's Unitised With-profits policies growth 
attributed comes from the addition of a 'contractual addition' and the 
addition of bonuses.  Both depend upon when the premiums were paid and 
can vary from year to year.  Where Unitised With-profits policies do not 
attract a contractual addition the annual bonuses have been 
correspondingly higher.

Each year a normal, annual bonus, is declared for the previous year and 
the sum of the normal annual bonus and any contractual addition is called 
the 'Running Yield'.  An interim bonus rate, which is not guaranteed and 
which can be changed without notice is also declared and applies in 
respect of the current year for any claims.  'Interim Running Yield' is 
the sum of interim bonus and any contractual addition.  NB: the annual 
bonus rates declared for 2002 may be different from the interim rates.

Terminal bonus may also be paid in the event of claim. Terminal bonus 
rates are not guaranteed and can be changed without notice.  For 
with-profit Income Bonds the total return comes through the addition of 
annual bonus.  There is zero terminal bonus.

The Unitised With-profits terminal bonus rates which range from 0% to 
6.40% per annum also depend on the policy type and when the premiums were 
paid.

Legal & General reserves the right in certain investment conditions to 
reduce the amount payable on surrender or switch by the application of a 
Market Value Reduction Factor.  

Further example of bonus rates applicable to premiums paid in other 
years can be obtained from Legal & General.





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