L&G Q1 New Business Results

Legal & General Group PLC 25 April 2001 Legal & General Group Plc New business results - first quarter 2001 * Record new business EPI in the UK - up 15% * Strong growth in UK life and pensions - up 18% * Excellent new fund management business - £3.3 bn * Continued progress in Continental Europe - up 120% * Barclays alliance starts strongly with Stakeholder New life and pensions 2001 2000 business EPI* UK individual £93m £84m +11% UK group £26m £17m +53% Total UK £119m £101m +18% Total Worldwide £143m £126m +13% UK EPI including unit trusts/ISAs* £149m £130m +15% Total EPI including unit trusts/ISAs* £174m £156m +12% New fund management business £3.3bn £2.3bn +43% * Equivalent Premium Income (EPI) comprises new annual premiums + 10% of single premiums. Group Chief Executive, David Prosser, said: 'These results, which include our best ever quarter for new business in the UK, are a further demonstration of our ability to build market share profitably. They have been achieved even before the benefits of our links with Barclays and Alliance & Leicester have started to come through. The 18% growth achieved in our core UK Life and Pensions business is a very good start to the year. Strongest growth came from IFAs, reflecting their continuing support for our good value product strategy. Our fund management business has also started the year very strongly. The volume of new business won reflects the continuing trend amongst pension trustees to seek the benefits of a focused investment strategy using a combination of indexed core and active satellite portfolios. 2001 has opened well for Legal & General with strong growth in our chosen markets. Our brand strength based upon our good value products is being recognised by many more business partners and agents and through them, Legal & General is gaining access to ever larger numbers of consumers. Our prospects have never looked better.' UK operations ============= Our UK business now operates under a unified management structure, enabling more rapid decision-making and efficient use of resources. We continue to focus on our core competencies with our value for money product range and multi-channel distribution capability driving forward both business and market share. We have continued to e-enable the business and additional internet functionality has been rolled-out in the past few months for use by agents and customers. Sales of our successful e-term policies have continued to grow rapidly and over 50% of these policies are wholly underwritten on-line. Stakeholder pensions for individual customers have also been available on-line from their launch date on 6 April. Legal & General was, we believe, the only company able to transact individual Stakeholder policies on-line on the launch date. Individual life --------------- New annual premium business was stable at £30m (2000: £30m). Our protection business is achieving rapid growth, with annual premiums of £7m up from £3m in 2000. The proportion of our mortgage related new business arising from our Flexible Mortgage ISA product has continued to fall. Legal & General's Mortgage Club is a very important force in the UK market. In March alone, the Club placed £1.06bn of mortgages. This was the first time in the Club's six-year history that mortgages placed in a month have exceeded £1bn. Over the quarter, mortgage completions through the Club grew by 97% to £1.6bn. New life single premium business reached £196m, an increase of 40% on the 2000 level, reflecting continuing consumer demand for with-profits bonds. Individual pensions ------------------- Our pensions business achieved further growth in Q1 2001 with an increase of 8% in EPI. Our successes in the Group Personal Pensions area, particularly in the fee paying and low commission segment of that market, have more than offset the decline in new individual personal pension sales, a part of the market where high commission still prevails. Individual annuity sales have grown once again, increasing to £103m (2000: £99m). The market for Stakeholder pension sales has now opened. Some 18,000 employers have already designated Legal & General as their Stakeholder provider, and this number is growing steadily. We remain convinced that Stakeholder pensions offer Legal & General an important opportunity for profitable new business growth with a product that is very consumer friendly. Group life and pensions ----------------------- Good growth was maintained in annual premium business, which increased by 22% to £11m. Our group risk contract remains competitive, and a voluntary membership product will be offered alongside Stakeholder pensions both through Barclays Bank and our own salesforces. Single premium sales benefited considerably in Q1 2001 from a recovery in the bulk purchase annuity market. Our well-respected strengths in this market enabled us to achieve a 126% increase in sales (2001: £129m; 2000: £57m). Unit trusts and ISAs -------------------- Sales of our Unit Trust and ISA products performed well in a difficult market, with EPI broadly stable at £30m (2000: £29m). Although equity market turbulence in the final weeks of the tax year undoubtedly limited consumer demand, we nonetheless expect to have gained market share over the quarter in this segment of the savings market. Distribution ------------ Legal & General remains committed to multi-channel distribution. Growth in the quarter was fastest in the IFA channel, which represented 61% of sales, endorsing the quality of our products and our value for money strategy. Barclays started to sell Legal & General's Stakeholder pension and associated group life products on 6 April. Our full life and pensions product range is planned to be available through Barclays from August and a funds supermarket will be offered in September. Alliance & Leicester will begin selling Legal & General's ISAs and with-profit bonds in May. Through our new relationships with Barclays and Alliance & Leicester we have greatly increased our access to potential customers, but also balanced our distribution channels between IFAs, Business Partners and Direct. Fund management =============== In the first quarter of 2001 we achieved new fund management business of £3.3bn, an increase of 43% on the corresponding period last year. The consistent success of this business is underlined by the fact that we have won over £2bn of new funds under management in each of the last ten quarters, a remarkable record. The scale of our fund management business, and the quality and skill of our managers, in particular our index fund capability, continue to be the key differentiators for Legal & General. Funds under management at 31 March 2001 exceeded £110bn, up from £107bn a year earlier. International operations ======================== In the USA, new EPI was $17m, broadly in line with the levels achieved in the third and fourth quarters of last year. Sales in Q1 2000 of $32m were boosted by the exceptional volumes of business as a consequence of applications received prior to the introduction of the 'Triple X' solvency requirements. Our US business is now one of that country's top 10 largest companies by sums assured and a leader in its chosen market of upscale term assurance. Our European businesses continue to show very strong growth, up 120% in Euros. In France, new business, which increased by 83% to EUR. 11m EPI (2000: EUR. 6m), benefited from the removal of initial charges on investment products. Sales in the Netherlands grew by a very impressive 175% to EUR. 11m EPI (2000: EUR. 4m). Single premium sales were particularly strong, following the launch of a new annuity product in October 2000. For further information contact: Investors: Peter Horsman Media: John Morgan Investor Relations Manager Head of Public Relations 020 7528 6362 01737 375353 Anthony Carlisle Citigate Dewe Rogerson 0973 611888 LEGAL & GENERAL GROUP PLC UNAUDITED NEW BUSINESS PREMIUMS THREE MONTHS TO 31 MARCH 2001 NEW UK BUSINESS --------------- Three months to 31 March increase/ 2001 2000 (decrease) £m £m % INDIVIDUAL LIFE AND PENSIONS BUSINESS New annual premiums Life: - Mortgage related 23 27 - Savings 0 0 - Protection 7 3 Pensions: - Individual pensions 22 20 ---- ---- ---- Total new annual premiums 52 50 4 Single premiums Life: - With-profits 179 108 - Other 17 32 Pensions: - Individual pensions 87 81 - Annuities - individual 103 99 - DSS rebates 24 21 ---- ---- ---- Total single premiums 410 341 20 Individual life ---- ---- ---- and pensions EPI 93 84 11 GROUP LIFE AND PENSIONS BUSINESS New annual premiums - Group risk 9 7 - Group pensions 2 2 ---- ---- ---- Total new annual premiums 11 9 22 Single premiums - Annuities - bulk purchase 129 57 - Other group business 22 19 ---- ---- ---- Total single premiums 151 76 99 Group life ---- ---- ---- and pensions EPI 26 17 53 ISAS, PEPS AND UNIT TRUSTS New annual premiums - ISAs/PEPs (excluding cash ISAs) 5 3 67 Single premiums - ISAs/PEPs (excluding cash ISAs) 170 183 - Unit trusts 75 78 ---- ---- ---- Total single premiums 245 261 (6) ISAs, PEPs and ---- ---- ---- unit trusts EPI 30 29 3 ---- ---- ---- Total UK EPI 149 130 15 ==== ==== ==== INSTITUTIONAL FUND MANAGEMENT UK Managed Funds 3,254 1,894 UK Other 6 434 ----- ----- ---- Total fund management 3,260 2,328 40 ===== ===== ==== LEGAL & GENERAL GROUP PLC UNAUDITED NEW BUSINESS PREMIUMS THREE MONTHS TO 31 MARCH 2001 WORLDWIDE NEW BUSINESS ---------------------- Three months to Three months to increase/ 31 March 2001 31 March 2000 (decrease) Annual Single Annual Single Annual Single £m £m £m £m % % LIFE AND PENSIONS Life 39 196 37 140 5 40 Pensions 24 365 22 277 9 32 ---- ---- ---- ---- ---- ---- UK 63 561 59 417 7 35 USA 12 0 20 0 (40) n/a Netherlands 2 47 1 11 100 327 France 2 29 1 21 100 38 ---- ---- ---- ---- ---- ---- INSURANCE TOTAL 79 637 81 449 (2) 42 RETAIL INVESTMENT BUSINESS UK 5 245 3 261 67 (6) France 14 9 n/a 56 ---- ---- ---- ---- ---- ---- TOTAL NEW BUSINESS 84 896 84 719 0 25 ==== ==== ==== ==== ==== ==== OVERSEAS OPERATIONS IN LOCAL CURRENCY ----------------- Three months to increase/ 31 March (decrease) 2001 2000 % USA ($m): New annual premiums 17 32 Single premiums 0 0 EPI 17 32 (47) Netherlands (EUR. m): New annual premiums 3 2 Single premiums 76 18 EPI 11 4 175 France (EUR. m): New annual premiums 4 1 Single premiums 46 35 Unit trusts 22 16 EPI 11 6 83 LEGAL & GENERAL GROUP PLC UNAUDITED NEW BUSINESS PREMIUMS THREE MONTHS TO 31 MARCH 2001 UK INDIVIDUAL EPI BY CHANNEL ---------------------------- Three months to 31 March 2001 Annual Single Total EPI £m £m £m % Independent financial advisers 31 43 74 61 Business partnerships 19 10 29 24 Direct 7 12 19 15 ---- ---- ---- ---- 57 65 122 100 ==== ==== ==== ==== Three months to 31 March 2000 Annual Single Total EPI £m £m £m % Independent financial advisers 28 38 66 58 Business partnerships 20 7 27 24 Direct 5 15 20 18 ---- ---- ---- ---- 53 60 113 100 ==== ==== ==== ====

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