L&G FY Results 2006 - Part 2

Legal & General Group PLC 14 March 2007 Page 15 New Business ============ 2.01 New business summary ------------------------- APE(1) PVNBP(2) Margin(3) APE PVNBP Margin 2006 2006 2006 2005 2005 2005 Notes £m £m % £m £m % ------------------------------------------------------------------------------------------------------------------------ UK life and pensions 2.02 1,073 8,106 4.7 872 6,621 4.6 International life and pensions 2.05 103 824 4.6 107 873 2.9 ------------------------------------------------------------------------------------------------------------------------ Total life and pensions 1,176 8,930 4.7 979 7,494 4.4 --------------------------------------------------- ---------------------------- ------------------------ UK retail investments 2.08 664 315 International retail investments 2.08 2 2 ------------------------------------------------------------------------------------------------------------------------ Total retail investments 666 317 ------------------------------------------------------------------------------------------------------------------------ 1,842 1,296 ======================================================================================================================== ------------------------------------------------------------------------------------------------------------------------ Institutional fund management 2.11 20,650 17,134 ======================================================================================================================== 2.02 Analysis of UK life and pensions new business by product ------------------------------------------------------------- APE Contri- PVNBP Margin bution from new business(4) For the year ended 31 December 2006 £m £m £m % ------------------------------------------------------------------------------------------------------------------------ Protection 231 131 1,201 10.9 Annuities 174 191 1,735 11.0 Savings - Unit linked bonds 261 51 2,612 2.0 - Pensions, stakeholder and other non profit(5) 208 (10) 1,326 (0.7) With-profits 199 17 1,232 1.4 ------------------------------------------------------------------------------------------------------------------------ Total 1,073 380 8,106 4.7 Cost of capital 27 ------------------------------------------------------------------------------------------------------------------------ Contribution from new business before cost of capital 407 ======================================================================================================================== For the year ended 31 December 2005 ------------------------------------------------------------------------------------------------------------------------ Protection 208 82 1,051 7.8 Annuities 154 177 1,539 11.5 Savings - Unit linked bonds 208 49 2,082 2.3 - Pensions, stakeholder and other non profit 152 (18) 935 (1.9) With-profits 150 16 1,014 1.6 ------------------------------------------------------------------------------------------------------------------------ Total 872 306 6,621 4.6 Cost of capital 8 ------------------------------------------------------------------------------------------------------------------------ Contribution from new business before cost of capital 314 ======================================================================================================================== 2.03 Internal rate of return on non profit business 2006 2005 % % ------------------------------------------------------------------------------------------------------------------------ Non profit internal rate of return (including solvency margin) 16 15 ------------------------------------------------------------------------------------------------------------------------ 1. Annual Premium Equivalent (APE) is calculated for total new business, including unit trusts and ISAs but excluding institutional fund management, and comprises the new annual premiums together with 10% of single premiums. 2. The present value of new business premiums (PVNBP) on the EEV basis is defined as the present value of annual premiums plus single premiums for any given period. It is calculated using the same assumptions as for the contribution from new business but determined as at the point of sale. 3. The new business margin is defined as the contribution from new business (including the cost of solvency capital) divided by the PVNBP. 4. The contribution from new business is defined as the present value at point of sale of assumed profits from new business written in the period and then rolled forward to the end of the financial period using the risk discount rate applicable at the end of the reporting period. 5. Includes the re-categorisation of £18m APE (£3m annual premiums and £149m single premiums) previously reported in with-profits individual pensions in the '2006 full year new business results' Stock Exchange Release announcement on 25 January 2007. ======================================================================================================================== Page 16 2.04 Analysis of UK life and pensions PVNBP ------------------------------------------- Annual Present Capital- Single PVNBP PVNBP premiums value isation premiums of annual factor(1) premiums 2006 2006 2006 2006 2006 2005 £m £m £m £m £m ------------------------------------------------------------------------------------------------------------------------ Protection 231 1,201 5.2 - 1,201 1,051 Annuities - - - 1,735 1,735 1,539 Savings - Unit linked bonds - - - 2,612 2,612 2,082 - Pensions, stakeholder and other non profit(2) 126 509 4.0 817 1,326 935 With-profits 117 405 3.5 827 1,232 1,014 ------------------------------------------------------------------------------------------------------------------------ Total 474 2,115 4.5 5,991 8,106 6,621 ======================================================================================================================== 2.05 Analysis of international life and pensions new business ------------------------------------------------------------- APE Contri- Cost of PVNBP Margin bution capital from new business(3) For the year ended 31 December 2006 £m £m £m £m % ------------------------------------------------------------------------------------------------------------------------ USA 42 10 6 286 3.5 Netherlands 29 21 3 258 8.3 France 32 7 6 280 2.4 ------------------------------------------------------------------------------------------------------------------------ Total 103 38 15 824 4.6 ======================================================================================================================== For the year ended 31 December 2005 ------------------------------------------------------------------------------------------------------------------------ USA 42 2 6 295 0.8 Netherlands 29 16 5 258 6.1 France 36 7 6 320 2.1 ------------------------------------------------------------------------------------------------------------------------ Total 107 25 17 873 2.9 ======================================================================================================================== 2.06 Analysis of international life and pensions new business in local currency ------------------------------------------------------------------------------- APE Contri- Cost of PVNBP Margin bution capital from new business For the year ended 31 December 2006 m m m m % ------------------------------------------------------------------------------------------------------------------------ USA $77 $19 $11 $528 3.5 Netherlands €43 €32 €5 €379 8.3 France €46 €10 €9 €411 2.4 ======================================================================================================================== For the year ended 31 December 2005 ------------------------------------------------------------------------------------------------------------------------ USA $75 $4 $10 $507 0.8 Netherlands €42 €23 €7 €377 6.1 France €57 €10 €8 €467 2.1 ======================================================================================================================== 2.07 Analysis of international life and pensions PVNBP ------------------------------------------------------ Annual Present Capital- Single PVNBP PVNBP premiums value of isation premiums annual factor premiums 2006 2006 2006 2006 2006 2005 m m m m m ------------------------------------------------------------------------------------------------------------------------ USA $77 $528 6.8 - $528 $507 Netherlands €18 €130 7.2 €249 €379 €377 France €17 €123 7.4 €288 €411 €467 ======================================================================================================================== 1. The capitalisation factor is the present value of annual premiums divided by the amount of new annual premiums. 2. Includes the re-categorisation of £18m APE (£3m annual premiums and £149m single premiums) previously reported in with-profits individual pensions in the '2006 full year new business results' Stock Exchange Release announcement on 25 January 2007. 3. Contribution from new business is reported after the cost of capital. ======================================================================================================================== Page 17 2.08 Analysis of retail investments new business ------------------------------------------------ Annual Single APE Annual Single APE premiums premiums premiums premiums 2006 2006 2006 2005 2005 2005 £m £m £m £m £m £m ------------------------------------------------------------------------------------------------------------------------ UK 20 6,443 664 15 2,999 315 France - 25 2 - 25 2 ----------------------------------------------------------------------------------------------------------------------- Total 20 6,468 666 15 3,024 317 ======================================================================================================================== 2.09 Analysis of UK APE new business premiums --------------------------------------------- Annual Single APE Annual Single APE premiums premiums premiums premiums 2006 2006 2006 2005 2005 2005 £m £m £m £m £m £m ------------------------------------------------------------------------------------------------------------------------ Protection - Individual protection 167 - 167 137 - 137 - Group risk 64 - 64 71 - 71 ------------------------------------------------------------------------------------------------------------------------ Annuities - Individual - 702 71 - 662 66 - Bulk purchase - 1,033 103 - 877 88 ------------------------------------------------------------------------------------------------------------------------ Savings - Unit linked bonds - 2,612 261 - 2,082 208 - Individual pensions(1) 126 812 207 97 547 152 - DWP rebates - 5 1 - 2 - ------------------------------------------------------------------------------------------------------------------------ With-profits - Annuities - 83 8 - 60 6 - Individual pensions 115 502 165 73 379 110 - DWP rebates - 155 16 - 116 12 - Group pensions 2 4 2 4 5 5 - Bonds - 83 8 - 169 17 ------------------------------------------------------------------------------------------------------------------------ Total UK life and pensions business 474 5,991 1,073 382 4,899 872 - Unit trusts 2 5,945 596 1 2,577 259 - ISAs 18 498 68 14 422 56 ======================================================================================================================== Total UK retail investment business 20 6,443 664 15 2,999 315 ======================================================================================================================== Total UK new business 494 12,434 1,737 397 7,898 1,187 ======================================================================================================================== 1. Includes the re-categorisation of £18m APE (£3m annual premiums and £149m single premiums) previously reported in with-profits individual pensions in the '2006 full year new business results' Stock Exchange Release announcement on 25 January 2007. ======================================================================================================================== Page 18 2.10 Analysis of total UK APE ----------------------------- APE APE 2006 2005 £m £m ------------------------------------------------------------------------------------------------------------------------ Independent financial advisers 926 667 Tied 603 327 Direct 39 31 ------------------------------------------------------------------------------------------------------------------------ Total UK individual 1,568 1,025 ======================================================================================================================== Individual life and pensions 904 710 Retail investments 664 315 ------------------------------------------------------------------------------------------------------------------------ Total UK individual 1,568 1,025 Group life and pensions 169 162 ------------------------------------------------------------------------------------------------------------------------ Total UK 1,737 1,187 ======================================================================================================================== 2.11 Analysis of institutional fund management new business ----------------------------------------------------------- 2006 2005 £m £m ------------------------------------------------------------------------------------------------------------------------ Managed pension funds(1) Pooled funds 17,878 14,778 Segregated funds 608 240 ------------------------------------------------------------------------------------------------------------------------ Total managed funds 18,486 15,018 Other funds(2) 2,164 2,116 ------------------------------------------------------------------------------------------------------------------------ Total 20,650 17,134 ======================================================================================================================== 2.12 Institutional fund management new business by investment approach ---------------------------------------------------------------------- 2006 2005 % % ------------------------------------------------------------------------------------------------------------------------ Indexed equities 46.3 50.6 Indexed bonds (including indexed linked funds and cash) 39.1 37.6 Active bonds (including indexed linked funds and cash) 9.6 10.3 Property 0.7 0.7 Private equity 0.1 0.3 Active equities 0.3 0.2 Structured solutions 3.9 0.3 ------------------------------------------------------------------------------------------------------------------------ Total 100.0 100.0 ======================================================================================================================== 1. New monies from pension fund clients of Legal & General Assurance (Pensions Management) Limited exclude £4.4bn (2005: £4.1bn) held through the year on a temporary basis, generally as part of portfolio reconstructions. 2. Includes segregated property, property partnerships, ventures and institutional clients excluding institutional trusts. This information is provided by RNS The company news service from the London Stock Exchange

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