L&G Interim Results - Part 2

Legal & General Group PLC
26 July 2007

New business                                                                                                    Page 15
============

2.01 New business summary
-------------------------
                                                    APE(1)    PVNBP(2)   Margin(3)         APE       PVNBP      Margin
                                                  30.06.07    30.06.07    30.06.07    30.06.06    30.06.06    30.06.06
                                         Notes          £m          £m           %          £m          £m           %
-----------------------------------------------------------------------------------------------------------------------
UK life and pensions                      2.02         598       4,472         3.7         496       3,613         4.9
International life and pensions           2.05          63         507         2.6          57         482         2.7
-----------------------------------------------------------------------------------------------------------------------
Total life and pensions                                661       4,979         3.6         553       4,095         4.7
--------------------------------------------------         ---------------------------         ------------------------
UK retail investments                     2.08         167                                 342
International retail investments          2.08           2                                   1
-----------------------------------------------------------------------------------------------------------------------
Total retail investments                               169                                 343
-----------------------------------------------------------------------------------------------------------------------
                                                       830                                 896
=======================================================================================================================

                                                  30.06.07                            30.06.06
                                         Notes          £m                                  £m
-----------------------------------------------------------------------------------------------------------------------
Institutional fund management             2.11      16,226                              10,758
=======================================================================================================================

                                                                                           APE       PVNBP      Margin
                                                                                     Full year   Full year   Full year
                                                                                      31.12.06    31.12.06    31.12.06
                                         Notes                                              £m          £m           %
-----------------------------------------------------------------------------------------------------------------------
UK life and pensions                      2.02                                           1,073       8,106         4.7
International life and pensions           2.05                                             103         824         4.6
-----------------------------------------------------------------------------------------------------------------------
Total life and pensions                                                                  1,176       8,930         4.7
--------------------------------------------------------------------------------------         ------------------------
UK retail investments                     2.08                                             664
International retail investments          2.08                                               2
-----------------------------------------------------------------------------------------------------------------------
Total retail investments                                                                   666
-----------------------------------------------------------------------------------------------------------------------
                                                                                         1,842
=======================================================================================================================

                                                                                      31.12.06
                                         Notes                                              £m
-----------------------------------------------------------------------------------------------------------------------
Institutional fund management             2.11                                          20,650
=======================================================================================================================

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.


=======================================================================================================================

New business                                                                                                    Page 16
============

2.02 Analysis of UK life and pensions new business by product
-------------------------------------------------------------
                                                                               APE     Contri-       PVNBP      Margin
                                                                                        bution
                                                                                      from new
                                                                                   business(1)
For the six months ended 30 June 2007                                           £m          £m          £m           %
-----------------------------------------------------------------------------------------------------------------------
Protection                                                                     111          51         563         9.1
Annuities                                                                       86          87         862        10.1
Savings
 - Unit linked bonds                                                           136          21       1,355         1.5
 - Pensions, stakeholder and other non profit                                  133          (5)        920        (0.5)
With-profits                                                                   132          11         772         1.4
-----------------------------------------------------------------------------------------------------------------------
Total                                                                          598         165       4,472         3.7
Cost of capital                                                                             20
-----------------------------------------------------------------------------------------------------------------------
Contribution from new business before cost of capital                                      185
=======================================================================================================================

For the six months ended 30 June 2006
-----------------------------------------------------------------------------------------------------------------------
Protection                                                                     111          45         555         8.0
Annuities                                                                       71         100         708        14.1
Savings
 - Unit linked bonds                                                           121          36       1,213         3.0
 - Pensions, stakeholder and other non profit                                   93          (8)        535        (1.5)
With-profits                                                                   100           6         602         1.0
-----------------------------------------------------------------------------------------------------------------------
Total                                                                          496         179       3,613         4.9
Cost of capital                                                                              3
-----------------------------------------------------------------------------------------------------------------------
Contribution from new business before cost of capital                                      182
=======================================================================================================================

For the year ended 31 December 2006
-----------------------------------------------------------------------------------------------------------------------
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                                  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
=======================================================================================================================

1. 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.


2.03 Internal rate of return on non profit business
---------------------------------------------------
                                                                                      30.06.07    30.06.06    31.12.06
                                                                                             %           %           %
-----------------------------------------------------------------------------------------------------------------------
Non profit internal rate of return (including solvency margin)                              14          16          16
=======================================================================================================================


=======================================================================================================================

New business                                                                                                    Page 17
============

2.04 Analysis of UK life and pensions PVNBP
-------------------------------------------
                                        Annual     Present    Capital-      Single       PVNBP       PVNBP       PVNBP
                                      premiums       value     isation    premiums
                                                 of annual   factor(1)
                                                  premiums                                                   Full year
                                      30.06.07    30.06.07    30.06.07    30.06.07    30.06.07    30.06.06    31.12.06
                                            £m          £m                      £m          £m          £m          £m
-----------------------------------------------------------------------------------------------------------------------
Protection                                 111         563         5.1           -         563         555       1,201
Annuities                                    -           -           -         862         862         708       1,735
Savings
 - Unit linked bonds                         -           -           -       1,355       1,355       1,213       2,612
 - Pensions, stakeholder and other non
    profit                                  70         285         4.1         635         920         535       1,326
With-profits                                80         250         3.1         522         772         602       1,232
-----------------------------------------------------------------------------------------------------------------------
Total                                      261       1,098         4.2       3,374       4,472       3,613       8,106
=======================================================================================================================

1. The capitalisation factor is the present value of annual premiums divided by the amount of new annual premiums.


2.05 Analysis of international life and pensions new business
-------------------------------------------------------------
                                                                   APE     Contri-     Cost of       PVNBP      Margin
                                                                            bution     capital
                                                                          from new
                                                                       business(1)
For the six months ended 30 June 2007                               £m          £m          £m          £m           %
-----------------------------------------------------------------------------------------------------------------------
USA                                                                 22           2           3         149         1.5
Netherlands                                                         14           6           2         124         4.7
France                                                              27           5           5         234         2.2
-----------------------------------------------------------------------------------------------------------------------
Total                                                               63          13          10         507         2.6
=======================================================================================================================

For the six months ended 30 June 2006
-----------------------------------------------------------------------------------------------------------------------
USA                                                                 21          (3)          4         145        (1.9)
Netherlands                                                         16          11           2         142         7.4
France                                                              20           5           4         195         2.7
-----------------------------------------------------------------------------------------------------------------------
Total                                                               57          13          10         482         2.7
=======================================================================================================================

For the year ended 31 December 2006
-----------------------------------------------------------------------------------------------------------------------
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
=======================================================================================================================

1. Contribution from new business is reported after the cost of capital.


2.06 Analysis of international life and pensions new business in local currency
-------------------------------------------------------------------------------
                                                                   APE     Contri-     Cost of       PVNBP      Margin
                                                                            bution     capital
                                                                          from new
                                                                       business(1)
For the six months ended 30 June 2007                                m           m           m           m           %
-----------------------------------------------------------------------------------------------------------------------
USA                                                                $44          $4          $7        $293         1.5
Netherlands                                                        €21          €9          €2        €183         4.7
France                                                             €39          €8          €7        €346         2.2
=======================================================================================================================

For the six months ended 30 June 2006
-----------------------------------------------------------------------------------------------------------------------
USA                                                                $38         ($5)         $7        $260        (1.9)
Netherlands                                                        €23         €15          €3        €207         7.4
France                                                             €30          €8          €6        €285         2.7
=======================================================================================================================

For the year ended 31 December 2006
-----------------------------------------------------------------------------------------------------------------------
USA                                                                $77         $19         $11        $528         3.5
Netherlands                                                        €43         €32          €5        €379         8.3
France                                                             €46         €10          €9        €411         2.4
=======================================================================================================================

1. Contribution from new business is reported after the cost of capital.


=======================================================================================================================

New business                                                                                                    Page 18
============

2.07 Analysis of international life and pensions PVNBP
------------------------------------------------------
                                        Annual     Present    Capital-      Single       PVNBP       PVNBP       PVNBP
                                      premiums    value of     isation    premiums
                                                    annual      factor
                                                  premiums                                                   Full year
                                      30.06.07    30.06.07    30.06.07    30.06.07    30.06.07    30.06.06    31.12.06
                                             m           m                       m           m           m           m
-----------------------------------------------------------------------------------------------------------------------
USA                                        $44        $293         6.7           -        $293        $260        $528
Netherlands                                 €7         €48         6.9        €135        €183        €207        €379
France                                     €16        €116         7.3        €230        €346        €285        €411
=======================================================================================================================


2.08 Analysis of retail investments new business
------------------------------------------------
                                                    Annual      Single         APE      Annual      Single         APE
                                                  premiums    premiums                premiums    premiums
                                                  30.06.07    30.06.07    30.06.07    30.06.06    30.06.06    30.06.06
                                                        £m          £m          £m          £m          £m          £m
-----------------------------------------------------------------------------------------------------------------------
UK                                                      12       1,551         167          10       3,315         342
France                                                   -          15           2           -          10           1
-----------------------------------------------------------------------------------------------------------------------
Total                                                   12       1,566         169          10       3,325         343
=======================================================================================================================

                                                                                        Annual      Single         APE
                                                                                      premiums    premiums
                                                                                     Full year   Full year   Full year
                                                                                      31.12.06    31.12.06    31.12.06
                                                                                            £m          £m          £m
-----------------------------------------------------------------------------------------------------------------------
UK                                                                                          20       6,443         664
France                                                                                       -          25           2
-----------------------------------------------------------------------------------------------------------------------
Total                                                                                       20       6,468         666
=======================================================================================================================


2.09 Analysis of UK new business premiums
-----------------------------------------
                                        Annual      Single         APE      Annual      Single         APE         APE
                                      premiums    premiums                premiums    premiums               Full year
                                      30.06.07    30.06.07    30.06.07    30.06.06    30.06.06    30.06.06    31.12.06
                                            £m          £m          £m          £m          £m          £m          £m
-----------------------------------------------------------------------------------------------------------------------
Protection 
 - Individual                               82           -          82          78           -          78         167
 - Group                                    29           -          29          33           -          33          64
-----------------------------------------------------------------------------------------------------------------------
Annuities
 - Individual                                -         480          48           -         209          21          71
 - Bulk purchase                             -         382          38           -         499          50         103
-----------------------------------------------------------------------------------------------------------------------
Savings
 - Unit linked bonds                         -       1,355         136           -       1,213         121         261
 - Individual pensions                      70         562         126          63         294          93         207
 - DWP rebates                               -          73           7           -           -           -           1
-----------------------------------------------------------------------------------------------------------------------
With-profits
 - Annuities                                 -          33           3           -          39           4           8
 - Individual pensions                      74         438         118          62         252          87         165
 - DWP rebates                               -           2           -           -          41           4          16
 - Group pensions                            6           1           6           1           1           1           2
 - Bonds                                     -          48           5           -          42           4           8
-----------------------------------------------------------------------------------------------------------------------
Total UK life and pensions business        261       3,374         598         237       2,590         496       1,073

 - Unit trusts                               4       1,246         129           1       3,000         301         596
 - ISAs                                      8         305          38           9         315          41          68
=======================================================================================================================
Total UK retail investment business         12       1,551         167          10       3,315         342         664
=======================================================================================================================
Total UK new business                      273       4,925         765         247       5,905         838       1,737
=======================================================================================================================


=======================================================================================================================

New business                                                                                                    Page 19
============

2.10 Analysis of total UK APE
-----------------------------
                                                                                           APE         APE         APE
                                                                                                             Full year
                                                                                      30.06.07    30.06.06    31.12.06
                                                                                            £m          £m          £m
-----------------------------------------------------------------------------------------------------------------------
Independent financial advisers                                                             479         418         926
Tied                                                                                       191         311         603
Direct                                                                                      22          25          39
-----------------------------------------------------------------------------------------------------------------------
Total UK individual                                                                        692         754       1,568
=======================================================================================================================

Individual life and pensions                                                               525         412         904
Retail investments                                                                         167         342         664
-----------------------------------------------------------------------------------------------------------------------
Total UK individual                                                                        692         754       1,568
Group life and pensions                                                                     73          84         169
-----------------------------------------------------------------------------------------------------------------------
Total UK                                                                                   765         838       1,737
=======================================================================================================================


2.11 Analysis of institutional fund management new business
-----------------------------------------------------------
                                                                                                             Full year
                                                                                      30.06.07    30.06.06    31.12.06
                                                                                            £m          £m          £m
-----------------------------------------------------------------------------------------------------------------------
Managed pension funds(1)
Pooled funds                                                                            15,568       8,263      17,878
Segregated funds                                                                           448         599         608
-----------------------------------------------------------------------------------------------------------------------
Total managed funds                                                                     16,016       8,862      18,486
Other funds(2)                                                                             210       1,896       2,164
-----------------------------------------------------------------------------------------------------------------------
Total                                                                                   16,226      10,758      20,650
=======================================================================================================================

1. New monies from pension fund clients of Legal & General Assurance (Pensions Management) Limited exclude £7.8bn 
   (H1 06: £1.7bn, FY 06: £4.4bn) held through the year on a temporary basis, generally as part of portfolio 
   reconstructions.
2. Includes segregated property, property partnerships, ventures partnerships and institutional clients excluding 
   institutional investments in unit trust funds.


2.12 Institutional fund management new business by investment approach
----------------------------------------------------------------------
                                                                                                             Full year
                                                                                      30.06.07    30.06.06    31.12.06
                                                                                             %           %           %
-----------------------------------------------------------------------------------------------------------------------
Index equities                                                                            67.2        34.0        46.3
Index bonds (including index linked funds and cash)                                       24.9        46.7        39.1
Active bonds (including index linked funds and cash)                                       5.0         9.9         9.6
Structured solutions                                                                       2.4         7.9         3.9
Property                                                                                   0.5         0.7         0.7
Private equity                                                                               -         0.3         0.1
Active equities                                                                              -         0.5         0.3
-----------------------------------------------------------------------------------------------------------------------
Total                                                                                    100.0       100.0       100.0
=======================================================================================================================





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