L&G Q3 New Business Results

Legal & General Group PLC 20 October 2005 20 October 2005 LEGAL & GENERAL GROUP PLC ========================= NEW BUSINESS RESULTS FOR THE NINE MONTHS TO 30 SEPTEMBER 2005 ============================================================= HIGHLIGHTS •36% growth in UK new business in the third quarter •UK individual business market share over 11% at the half year •Legal & General Investment Management funds up 15% to £187bn, with over £10bn of new business New business APE(1) (£m) Nine % Three % months to change on months to change on 30/09/05 2004 30/09/05 2004 -------- -------- -------- -------- UK individual business - life and pensions 529 19 180 8 - retail investments 248 71 78 160 -------- -------- -------- -------- UK individual business total 777 32 258 31 -------- -------- -------- -------- UK group life and pensions 118 39 42 75 -------- -------- -------- -------- UK total 895 33 300 36 -------- -------- -------- -------- International 84 (1) 27 (4) -------- -------- -------- -------- Worldwide total 979 29 327 31 -------- -------- -------- -------- Institutional fund management £10.2bn £3.3bn Group Chief Executive, Sir David Prosser, said: 'Legal & General has once again demonstrated its strength in the UK and continues to outperform. Total UK individual business has grown by 31% on the same quarter last year, with particularly strong pensions, unit-linked bonds and unit trust sales. We increased our market share to 11.3% in the first half, up almost two percentage points from 9.4% in the first half of 2004 and Legal & General Investment Management has continued its outstanding record of delivering an average of £1 billion of new business per month. The strength and flexibility of our distribution network, underpinned by market leading technologies, remains a key differentiator. We are particularly pleased both with the progress of our many long-standing bank and building society partnerships and our growing position in the IFA market. Chelsea Building Society's announcement today further illustrates the former, with the extension of its existing general insurance relationship with Legal & General to include the sale of our life assurance products - all through our on-line protection technology. Our focus on customers and value for money products, our powerful distribution network and well-recognised brand will enable Legal & General to benefit from further opportunities in the UK market.' Notes 1 Annual Premium Equivalent (APE) is total new annual premiums + 10% of single premiums, including ISAs and unit trusts. UK == Individual life protection business - Q3 down 14% to £36m APE ------------------------------------------------------------- Sales of annual premium mortgage related protection business have increased quarter by quarter in the year-to-date to £24m APE in the third quarter. Compared to the third quarter last year (Q3 2004: £29m APE), however, sales were 17% lower, reflecting a slower housing market and a higher level of competitive activity over the first half of 2005. Other protection business was broadly unchanged at £12m APE (Q3 2004: £13m APE). We continue to invest in e-technology and on-line protection processes and expect to maintain our market-leading position in the life protection segment. Individual life savings business - Q3 up 29% to £58m APE -------------------------------------------------------- The strong growth in our sales of unit-linked bond products, already highlighted in the first half results, continued in the third quarter. Volumes rose 51% on the corresponding quarter last year, driving year-to-date sales to £1,483m (2004: £956m), an increase of 55%. We are particularly pleased with initial sales of Legal & General's flexible multi-fund bond distributed to Bradford & Bingley customers using Cofunds technology. Volumes of with-profits bond sales continued to decline in the third quarter to £35m (Q3 2004: £86m). Individual pensions - Q3 up 38% to £72m APE ------------------------------------------- Individual pensions business continued to grow apace. Annual premiums increased by 34% to £43m APE (Q3 2004: £32m APE) and single premium new business grew by 43% to £285m (Q3 2004: £200m), as we continue to benefit from strong growth in the pensions transfer market ahead of Pensions A-day in April next year. Our new Self Invested Pension Plan product was launched in August, giving customers the flexibility to invest initially in unit-linked funds and subsequently in assets of their choice. Individual annuities - Q3 down 46% to £15m APE ---------------------------------------------- Increased competition in this area and a tough prior year comparator has led to a decrease in volumes in the third quarter of this year. Our requirement to maintain suitable levels of profitability by keeping to strict return on capital targets means that volume flow in this area is more volatile. Over the year-to-date, however, volumes remain broadly similar at £630m (2004: £647m). ISAs and Unit trusts - Q3 up 160% to £78m APE --------------------------------------------- Single premium unit trusts sales more than trebled to £697m (Q3 2004: £212m) and sales of single premium ISAs increased by 40% to £67m (Q3 2004: £48m). Strong institutional sales were the main driver behind the increase in volumes, accounting for £36m APE of the £78m APE of new business. Group business - Q3 up 75% to £42m APE -------------------------------------- Single premiums for bulk purchase annuity business nearly doubled to £220m (Q3 2004: £120m). Group risk new annual premiums showed an increase of over 60% to £18m APE (Q3 2004: £11m APE), as we continue to benefit from the withdrawal in 2004 of a major competitor. International ============= Total international new business remained broadly unchanged at £27m APE (Q3 2004: £28m APE). In local terms, new business volumes in the Netherlands of €11m APE (Q3 2004: €9m APE) and in France of €12m APE (Q3 2004: €10m APE) are up 22% and 20% respectively, driven by improved single premium sales. In the USA, difficult trading conditions in the brokerage market have resulted in a 27% reduction in new business to $19m APE (Q3 2004: $26m APE), however management is working to broaden distribution within the existing business model. Legal & General Investment Management ===================================== Legal & General Investment Management has maintained its remarkable record of averaging £1bn of new business per month. Total funds under management now stand at £187bn (31 Dec 2004: £162bn). We have continued to expand our business sourced overseas, where funds under management now exceed £2bn (31 Dec 2004: £1bn). New draft tax legislation ========================= We continue to seek clarification of the impact of the draft tax legislation announced by the Economic Secretary to the Treasury on 29 September but, as of 19 October, we are unable to provide any update on our earlier announcement, issued on 4 October. HM Treasury has commented that 'Any suggestion that the industry will be hit with a bill of £500m is wide of the mark by a factor of 10'. OUTLOOK ======= We expect our brand, product and distribution strengths will continue to enable us to expand our position in the UK market. We are pleased with the progress of our bancassurance partnerships and, at the same time, we are continuing to grow our share of the IFA market. The distribution of our products using the Cofunds platform continues. Using this platform, we will be conducting a pilot programme among selected IFAs of Legal & General's single premium bond. We expect to roll the programme out to the whole of the IFA channel in the New Year. Recent trends, as evidenced through our Mortgage Club, indicate that the period of declining activity in housing transactions may be coming to an end and therefore we expect mortgage protection volumes to begin to show signs of improvement. In pensions, we expect market activity to continue to be stimulated by the approach of A-Day. We also believe the forthcoming second report of the Pensions Commission will heavily influence the pensions landscape for the next decade and beyond. In this and our other product areas, we expect the natural beneficiaries of efforts to stimulate savings to be those institutions, such as Legal & General, with strong brands, efficient investment and transaction capabilities, and good value products. -------------------------------------------------------------------------------- Enquiries to: Investors: Andrew Palmer, Group Director (Finance) 020 7528 6286 Peter Horsman, Head of Investor Relations 020 7528 6362 Nicola Marshall, Investor Relations Manager 020 7528 6263 Media: John Morgan, Media Relations Director 020 7528 6213 Anthony Carlisle, Citigate Dewe Rogerson 07973 611888 Notes: A copy of this announcement can be found in the News and Results section of our Shareholder site at http://investor.legalandgeneral.com/releases.cfm Financial Calendar: 26 January 2006 2005 Full year new business results 17 March 2006 2005 Preliminary results 26 April 2006 First quarter new business results 18 May 2006 Annual General Meeting 27 July 2006 Interim results 18 October 2006 Third quarter new business results LEGAL & GENERAL GROUP PLC UNAUDITED NEW BUSINESS PREMIUMS NINE MONTHS TO 30 SEPTEMBER 2005 NEW UK BUSINESS Nine months to Three months to 30 September inc/ 30 September inc/ 2005 2004 (dec) 2005 2004 (dec) £m £m % £m £m % INDIVIDUAL LIFE AND PENSIONS BUSINESS New annual premiums Life: - Mortgage related 67 82 24 29 - Protection 36 38 12 13 Pensions: - Individual pensions 126 93 43 32 ------- ------- ------ ------- ------- ------ Total new annual premiums 229 213 8 79 74 7 Single premiums Life: - With-profits 137 310 35 86 - Unit-linked 1,483 956 543 359 Pensions: - Individual pensions 707 302 247 124 - Annuities - individual 630 647 149 280 - DWP rebates 45 93 38 76 ------- ------- ------ ------- ------- ------ Total single premiums 3,002 2,308 30 1,012 925 9 Individual life ------- ------- ------ ------- ------- ------ and pensions APE 529 444 19 180 167 8 ======= ======= ====== ======= ======= ====== ISAS, PEPS AND UNIT TRUSTS New annual premiums - ISAs/PEPs (excluding cash ISAs) 11 17 2 4 - Unit trusts 1 1 0 0 ------- ------- ------ ------- ------- ------ Total new annual premiums 12 18 (33) 2 4 (50) Single premiums - ISAs/PEPs (excluding cash ISAs) 356 437 67 48 - Unit trusts 2,001 833 697 212 ------- ------- ------ ------- ------- ------ Total single premiums 2,357 1,270 86 764 260 194 ISAs, PEPs and ------- ------- ------ ------- ------- ------ unit trusts APE 248 145 71 78 30 160 ======= ======= ====== ======= ======= ====== Total individual ------- ------- ------ ------- ------- ------ business APE 777 589 32 258 197 31 ======= ======= ====== ======= ======= ====== GROUP LIFE AND PENSIONS BUSINESS New annual premiums - Group risk 59 47 18 11 - Group pensions 4 3 2 1 ------- ------- ------ ------- ------- ------ Total new annual premiums 63 50 26 20 12 67 Single premiums - Annuities - bulk purchase 549 350 220 120 - Other group business 5 4 1 2 ------- ------- ------ ------- ------- ------ Total single premiums 554 354 56 221 122 81 Group life ------- ------- ------ ------- ------- ------ and pensions APE 118 85 39 42 24 75 ------- ------- ------ ------- ------- ------ Total UK APE 895 674 33 300 221 36 ======= ======= ====== ======= ======= ====== INSTITUTIONAL FUND MANAGEMENT UK Managed Funds - Pooled funds 9,649 9,699 2,939 2,089 - Segregated funds 146 1,143 41 80 ------- ------- ------ ------- ------- ------ 9,795 10,842 (10) 2,980 2,169 37 UK Other 411 301 351 231 ------- ------- ------ ------- ------- ------ 10,206 11,143 (8) 3,331 2,400 39 ======= ======= ====== ======= ======= ====== LEGAL & GENERAL GROUP PLC UNAUDITED NEW BUSINESS PREMIUMS NINE MONTHS TO 30 SEPTEMBER 2005 WORLDWIDE NEW BUSINESS Nine months to Three months to 30 September inc/ 30 September inc/ 2005 2004 (dec) 2005 2004 (dec) £m £m % £m £m % Annual premiums Life and pensions: - Life 162 167 54 53 - Pensions 130 96 45 33 ------- ------- ------ ------- ------- ------ UK 292 263 11 99 86 15 - USA 30 41 11 14 - Netherlands 10 10 4 4 - France 16 13 2 3 ------- ------- ------ ------- ------- ------ Total life and pensions 348 327 6 116 107 8 Retail investment business: - UK 12 18 2 4 ------- ------- ------ ------- ------- ------ Total new annual premiums 360 345 4 118 111 6 Single premiums Life and pensions: - Life 1,620 1,266 578 445 - Pensions 1,936 1,396 655 602 ------- ------- ------ ------- ------- ------ UK 3,556 2,662 34 1,233 1,047 18 - USA 0 1 0 1 - Netherlands 117 90 39 26 - France 140 105 49 37 ------- ------- ------ ------- ------- ------ Total life and pensions 3,813 2,858 33 1,321 1,111 19 Retail investment business: - UK 2,357 1,270 764 260 - France 19 14 9 6 ------- ------- ------ ------- ------- ------ Total single premiums 6,189 4,142 49 2,094 1,377 52 Annual premium equivalent (APE) - UK life and pensions business 647 529 222 191 - Overseas life and pensions business 82 84 26 27 Total life and ------- ------- ------ ------- ------- ------ pensions business 729 613 19 248 218 14 - UK retail investment business 248 145 78 30 - Overseas retail investment business 2 1 1 1 Total retail ------- ------- ------ ------- ------- ------ investment business 250 146 71 79 31 155 ------- ------- ------ ------- ------- ------ Worldwide APE 979 759 29 327 249 31 ======= ======= ====== ======= ======= ====== LEGAL & GENERAL GROUP PLC UNAUDITED NEW BUSINESS PREMIUMS NINE MONTHS TO 30 SEPTEMBER 2005 OVERSEAS OPERATIONS IN LOCAL CURRENCY Nine months to Three months to 30 September inc/ 30 September inc/ 2005 2004 (dec) 2005 2004 (dec) USA ($m): New annual premiums 55 74 19 26 Single premiums 0 1 0 0 APE 55 74 (26) 19 26 (27) Netherlands (€m): New annual premiums 15 14 5 5 Single premiums 171 132 57 37 APE 32 27 19 11 9 22 France (€m): New annual premiums 23 18 4 4 Single premiums 205 155 71 54 Unit trusts 28 21 13 8 APE 46 36 28 12 10 20 UK INDIVIDUAL APE BY CHANNEL Nine months to 30 September 2005 Annual Single Total APE £m £m £m % Independent financial advisers 155 347 502 65 Single tie 74 176 250 32 Direct 12 13 25 3 ------ ------ ------ ------ 241 536 777 100 ====== ====== ====== ====== Nine months to 30 September 2004 Annual Single Total APE £m £m £m % Independent financial advisers 126 242 368 62 Single tie 91 101 192 33 Direct 14 15 29 5 ------ ------ ------ ------ 231 358 589 100 ====== ====== ====== ====== Three months to 30 September 2005 Annual Single Total APE £m £m £m % Independent financial advisers 52 133 185 72 Single tie 27 42 69 27 Direct 2 2 4 1 ------ ------ ------ ------ 81 177 258 100 ====== ====== ====== ====== Three months to 30 September 2004 Annual Single Total APE £m £m £m % Independent financial advisers 46 88 134 73 Single tie 29 15 44 24 Direct 4 2 6 3 ------ ------ ------ ------ 79 105 184 100 ====== ====== ====== ====== This information is provided by RNS The company news service from the London Stock Exchange

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