Rights Issue

Legal & General Group PLC
10 September 2002

 NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION IN WHOLE OR IN PART, DIRECTLY OR
   INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, SWITZERLAND,
              FRANCE, NEW ZEALAND OR THE REPUBLIC OF SOUTH AFRICA



10 September 2002

         Legal & General Group Plc announces £786 million Rights Issue

                    An opportunity to seize market advantage

Summary

Issue

- net proceeds of £786 million

- 13 new shares per 50 existing shares at 60 pence per share

- represents 13.5 per cent. of current market capitalisation

- fully underwritten by UBS Warburg and Dresdner Kleinwort Wasserstein

Rationale

- proven Legal & General business model and strong, profitable market share
growth

- significant increase in Legal & General market share

- UK life and pensions and retail investment market expected to continue to grow

- demographics, shift to defined contribution pensions and Government-led drive
to self-reliance and simple, good value products favour Legal & General's proven
strategy and competitive position

- competitive pressures are reinforced by current market conditions. Likely
further concentration of capacity to write new business

- opportunity for Legal & General to continue increasing market share and gain
further operating efficiencies

- new capital enables increased scale, financial flexibility and the capacity to
generate further economies of scale and create additional value

Timing

- EGM 26 September

- provisional allotment letters expected to be posted 26 September

- nil paid trading period expected to commence 27 September and end 22 October

- completion expected 22 October

Financial Effects

- 2.4 per cent. added to Free Asset Ratio

- progressive dividend policy maintained

- dividend adjustment to reflect bonus element of Rights Issue

Commenting, David Prosser, Group Chief Executive of Legal & General Group Plc,
said:

'Legal & General's strategy has anticipated to a considerable extent the changed
and changing marketplace in which we operate. This is shown by our record of
significant growth, increased market share, the profitability of our growth and
our dividend record.

'Over the past five years to 31 August this year, we have delivered a total
shareholder return of 25 per cent. compared with a sector performance of -6 per
cent. and a FTSE All-Share performance of 2 per cent. This has been accompanied
by prudent capital management as shown by the capital strength of our long term
fund which has been triple A rated for 13 years.

'We believe the trends in our marketplace will continue to favour the strong and
efficient, and that current stock market conditions reinforce this. We believe
that Legal & General's strategy and performance to date have placed us in a
position where we can benefit. We therefore wish to increase our capital base
and financial flexibility to ensure our potential for profitable market growth
is not constrained.'

Additional information follows and forms part of this announcement.

A presentation for analysts will be held at Legal & General's offices at Temple
Court, 11 Queen Victoria Street, EC4N 4TP, at 9.30am.

Enquiries

Media

John Morgan, Head of Public Relations, Legal & General Group Plc       020 7528 6213

                                                                       Mob: [phone]

Anthony Carlisle, Citigate Dewe Rogerson                               020 7638 9571
                                                                       Mob: [phone]

Michael Berkeley, Citigate Dewe Rogerson                               020 7638 9571
                                                                       Mob: [phone]

Investors

David Prosser, Group Chief Executive,                                  020 7528 6316

Legal & General Group Plc

Andrew Palmer, Group Director (Finance), Legal & General Group         020 7528 6286
Plc

Peter Horsman, Head of Investor Relations, Legal & General Group       020 7528 6362
Plc

Advisers

UBS Warburg

Hew Glyn Davies, UK Investment Banking                                 020 7568 1000

Philip Ellick, Equity Capital Markets                                  020 7568 1000

Martyn Dodgson, UK Investment Banking                                  020 7568 1000

Dresdner Kleinwort Wasserstein

Edward Cumming-Bruce, Investment Banking                               020 7623 8000

Mark Smith, Investment Banking                                         020 7623 8000




Further Details of the Rights Issue

Legal & General Group Plc announces today that it proposes to raise
approximately £786 million, net of expenses, by the issue of up to 1,341,575,618
new Legal & General Group Plc Shares at a price of 60 pence per share.

The Board of Legal & General Group Plc sees a real opportunity to increase
competitive advantage and build upon the momentum of Legal & General's business.

The proposed capital raising is to be made by way of a Rights Issue to
Qualifying Shareholders on the basis of 13 new Legal & General Group Plc shares
for every 50 Legal & General Group Plc shares held at the close of business on
19 September 2002. The Rights Issue has been fully underwritten by UBS Warburg
and Dresdner Kleinwort Wasserstein.

The issue price of 60 pence represents a discount of 46.8 per cent. to the
middle market closing price of 112.75 pence per Share on 9 September 2002, the
last business day prior to the announcement of the Rights Issue.

To implement the Rights Issue, there will be an Extraordinary General Meeting to
seek authority from shareholders to issue and allot the New Shares.

Information on Legal & General Group Plc

Legal & General Group Plc is a major financial services group providing life
assurance, pensions and general insurance and institutional and retail
investment management. The Group, whose UK long term fund is triple A rated, is
based in the United Kingdom and also has operating subsidiaries in the United
States, France and The Netherlands.

Legal & General's total worldwide premium income gross of reinsurance for the
year ended 31 December 2001 was £5,084 million. Of this, total worldwide life
and pensions premium income gross of reinsurance was £4,799 million (of which
£4,250 million arose in the United Kingdom). At 30 June 2002, worldwide funds
under management amounted to £120 billion, of which £116 billion was managed in
the United Kingdom.

Legal & General Group Plc has a record of consistently strong profitable market
share growth. Legal & General's worldwide new business Annual Premium Equivalent
for the six months ended 30 June 2002 increased by 34 per cent. to £498 million
from £373 million for the six months ended 30 June 2001. Legal & General's UK
new business Annual Premium Equivalent grew by 38 per cent. over the same period
from £325 million to £449 million. New individual UK life and pensions and
retail investment sales have grown at a compound rate of 29 per cent. per annum
comparing the sales in the first half of 1995 with the sales in the first half
of 2002. Legal & General has also grown its external funds under management from
£7 billion on 31 December 1992 to over £70 billion at 30 June 2002. Operating
profit before tax on an Achieved Profits Basis was £751 million in 2001, of
which the UK life and pensions business contributed £532 million. In the first
half of 2002, operating profit before tax on the same basis amounted to £365
million, with the UK life and pensions business contributing £277 million.

Background to and reasons for the Rights Issue

Operating in a growth market

The UK individual life and pensions and retail investment market has shown
steady growth, and Legal & General believes that this will continue over both
the medium and long term. Since 1995, this market has grown by 110 per cent,
with aggregate sales of £9.1 billion in 2001. Among the factors driving this
market are the demographics of an ageing population, the shift in the pensions
market from defined benefit to defined contribution schemes and the Government's
clear commitment to promoting individual self-reliance through simple, good
value and transparent products.

Fragmented market which is concentrating

Not everyone, however, can prosper in this marketplace. The marketplace
pressures have already demanded that successful offices become increasingly
efficient, and Legal & General believes these pressures will continue. Whilst
the marketplace remains fragmented, it is concentrating. The market share of the
top five companies in each relevant year has increased from 31 per cent. in 1997
to 48 per cent. for the first half of 2002. In this period, the market has
continued growing and Legal & General has increased its share of the market.

Legal & General's strategy has anticipated the market changes

Some years ago, Legal & General put in place a strategy which anticipated, to a
considerable extent, the changes in our industry which have taken place and
those likely to come. This strategy was, and continues to be, based on simple,
good value products marketed under one strong brand; distributed by multiple
channels to suit customers' preference; backed by investment in the
administrative and customer service platform; and complemented by Legal &
General's investment management resource.

This strategy recognised that increasing business volumes could fuel cost
efficiency and generate value for customer and shareholder alike, thereby
creating a virtuous circle. Legal & General Group Plc's strategy is focussed on
organic growth, undistracted by the management and legacy issues of acquisition
driven growth.

A strategy which has worked

This strategy has attracted large and small business partners and IFAs,
especially in the fee-based segment of that market. In addition, direct
marketing, advertising and greater use of the Internet have increased sales
direct to members of the investing public. In recent years, the Group has also
formed and greatly expanded strategic distribution partnerships. In 2001
partnerships were formed with Barclays, Alliance & Leicester and the Woolwich,
which added substantially to existing partnerships including those with Northern
Rock and other important businesses. The proportion of Legal & General's total
UK individual life and pensions and retail investment sales through partnerships
has increased from 24 per cent. in 2000 to 40 per cent. in the first half of
2002, giving the Group the benefit and security of distribution which is well
balanced between the tied and independent channels. The Board of Legal & General
Group Plc believes that the many important business partnerships continue to
offer considerable potential. In addition, the Board of Legal & General Group
Plc believes that there will be opportunity for further new partnerships.

Based upon the success of this strategy, Legal & General Group Plc has increased
its market share of the individual life and pensions and retail investment
market from 3.3 per cent. for the full year 1995 to 8.7 per cent. in the second
quarter of this year. This ranks Legal & General now the third largest company
in that market.

Delivering superior returns

In generating this organic growth, Legal & General is conscious of the need to
ensure that business is written on profitable terms. Using the Group's Achieved
Profits assumptions, Legal & General generated a Return on Capital of 15 per
cent. per annum net of tax on its UK long term insurance business in the full
year to 31 December 2001 and 16 per cent. in the first half of 2002, or 12 per
cent. per annum net of tax excluding the with-profits contribution. Legal &
General's growth has been accompanied by superior share price performance
compared with the sector. Legal & General Group Plc has outperformed its sector
in terms of Total Shareholder Return by 17 per cent. over the past year ended 31
August 2002, and by 30 per cent. over the five years ended on the same date.
During this time the growth in Legal & General dividends has also greatly
exceeded that of the FTSE All-Share Index.

Now a new market opportunity

Legal & General believes that competitive pressures will continue to drive
concentration of the capacity to write new business in the UK life and pensions
market and that today's challenging stock market conditions are reinforcing
these pressures. The Board of Legal & General Group Plc also believes that these
conditions will increase further the demand of distributors and customers for
the products and services of the strongest and most efficient providers. The
Board of Legal & General Group Plc believes these trends favour Legal & General.
The success of Legal & General's strategy to date demonstrates the ability to
succeed in today's markets and offers the opportunity to increase market share
further. The funds raised by the Rights Issue will give financial flexibility
and will provide scope for increased scale which will enable Legal & General to
achieve yet further operating efficiencies. Legal & General believes that this
will once again benefit both its customers and its shareholders. This is the
opportunity that leads Legal & General to propose a Rights Issue now.

Financial Background

Legal & General announced its interim results for the six-month period ended 30
June 2002 on 25 July 2002. As at 30 June 2002 the Free Asset Ratio for the
Group's UK long term fund was estimated to be 13.4 per cent. This allowed for
the Financial Services Authority's announced modification to the Resilience Test
and included an Implicit Item. If this Implicit Item is excluded, the ratio as
at 30 June 2002 stood at 10.2 per cent, compared with 12.1 per cent. at 31
December 2001.

Since 30 June 2002, there has been a further marked decline in worldwide equity
markets which has had an impact on the Free Asset Ratio of the Group's UK long
term business. If the 30 June 2002 Free Asset Ratio including the Implicit Item
had been calculated using a FTSE 100 Index of 4000 it is estimated that the Free
Asset Ratio would have been 10.0 per cent. It is estimated that receipt of the
proceeds of the Rights Issue would have had the effect of adding approximately
2.4 per cent. to the Free Asset Ratio as at 30 June 2002.

Use of proceeds

The net proceeds of the Rights Issue will be used to provide the capital to
finance the Group's new business growth. The proceeds will initially form part
of shareholders' funds and are intended to be invested in line with the Group's
policy for investing shareholder capital, which is predominantly in equities.
There is no current intention to inject any new capital into the Group's
with-profits business.

Dividends

Following completion of the Rights Issue, Legal & General intends to maintain
its progressive dividend policy, with future dividend payments per share taking
account of the bonus element of the Rights Issue.

Current Trading and Prospects

During the six months to 30 June 2002, Legal & General's sales of individual
life and pensions and retail investment products in the UK grew by 58 per cent.
compared with the corresponding period in 2001. The growth in overall UK sales
of these products in the market as a whole in the six months to 30 June 2002,
compared with the corresponding period in 2001, was 4.8 per cent.

Legal & General's new business sales of UK individual life, pensions and
investment products grew by 11 per cent. during July and August 2002 (on an
Annual Premium Equivalent basis) compared with the same period in 2001 and the
pipeline of new business currently being processed is broadly in line with the
monthly average level seen during the past two months. The condition of equity
markets over the last two months has had a constraining impact on the level of
new business.

Sales of new group life and pensions business were £11 million (on an Annual
Premium Equivalent basis) in July and August 2002 compared with £20 million (on
an Annual Premium Equivalent basis) in the same period of the previous year.

Legal & General's institutional investment management business has won new funds
under management of over £2 billion during July and August 2002. Since the start
of the year, new funds under management totalling over £9 billion have been won.
This business has now averaged new business gains of more than £1 billion per
month since the start of 1998.

The Group expects to announce details of new business sales for the third
quarter of 2002 on or around 11 October 2002.

The Board remains confident that the fundamentals underpinning our core UK
market continue to be robust and positive, notwithstanding the recent
significant fall in worldwide equity markets, and the Board believes that Legal
& General is strongly placed to deliver further profitable market share growth
in the remaining part of the current financial year and beyond.

Principal Terms of the Rights Issue

The Board proposes to issue the New Shares in connection with the Rights Issue
in order to raise approximately £786 million net of expenses. The Issue Price of
60 pence per New Share represents a 46.8 per cent. discount to the closing
middle market price of 112.75 pence per Share on 9 September 2002, the last
business day before the announcement of the Rights Issue. The New Shares are
expected to be offered by way of rights to Qualifying Shareholders on the
following basis:

13 New Shares at 60 pence per New Share for every 50 Shares

held and registered in their name at the Record Date. Entitlements to fractions
of New Shares will be rounded down to the nearest whole number of New Shares and
will not be allotted to Qualifying Shareholders. Accordingly, Shareholders with
fewer than 4 Shares will not be entitled to subscribe for any New Shares. The
latest time and date for acceptance and payment in full under the Rights Issue
is 9.30 a.m. on 22 October 2002.

Based on the closing middle-market price of a Share on 9 September 2002 (the
last business day before the announcement of the Rights Issue) of 112.75 pence
and the proposed Issue Price of 60 pence for each New Share, the theoretical
ex-rights price of each Share is 100.5 pence, after taking into account the
interim dividend 1.67 pence per share.

The Company has arranged for the Rights Issue to be underwritten in full in
order to provide certainty as to the amount of capital to be raised. In view of
the size of the discount to the current share price, the underwriting
commissions expected to be payable by the Company are significantly less taken
as a whole than would otherwise be paid on a conventionally discounted rights
issue.

The Rights Issue is conditional upon (i) the Resolution being passed at the
Extraordinary General Meeting, (ii) Admission becoming effective by not later
than 8.00 a.m. on 27 September 2002 (or such later time and/or date as the
Underwriters may agree (being not later than 14 October 2002)), and (iii) the
Underwriting Agreement otherwise having become unconditional in all respects and
not having been terminated in accordance with its terms prior to Admission.

We expect Admission to become effective and dealings in the New Shares, nil
paid, to commence on 27 September 2002.

The Rights Issue is expected to result in the issue of up to 1,341,575,618 New
Shares (representing approximately 20.6 per cent. of the issued share capital of
Legal & General, as enlarged by the Rights Issue). The New Shares will, when
issued and fully paid, rank equally in all respects with the existing issued
Shares, except that they will not carry the right to receive the interim
dividend for the year 2002 of 1.67 pence per share which will be paid on 1
October 2002 to Shareholders on the register of members of the Company on 13
September 2002.




Expected Timetable of Principal Events

Record date for the Rights Issue                               Close of business            19 September 2002

Extraordinary General Meeting                                  2.00pm                       26 September 2002

Despatch of Provisional Allotment Letters ('PALs')                                          26 September 2002

Dealings in New Shares commence, nil paid                                                   27 September 2002

Latest time and date for splitting PALs                        3:00pm on                    18 October 2002

Latest time and date for acceptance and payment in full        9:30am on                    22 October 2002

Latest time and date for registration of renunciation          9:30am on                    22 October 2002

Date for crediting of CREST Member Accounts                                                 23 October 2002

Date of despatch of definitive share certificates in respect   
of New Shares by                                                                            31 October 2002


Definitions used in the Legal & General Group Plc prospectus dated 10 September
2002 (the 'Prospectus') shall have the same meanings when used in this
announcement, unless the context requires otherwise.

This announcement shall not constitute or form any part of any offer or
invitation to subscribe for, underwrite or otherwise acquire, or any
solicitation of any offer to purchase or subscribe for, the Nil Paid Rights, the
Fully Paid Rights or the New Shares (the 'Securities'). Any purchase of, or
application for, Securities in the Rights Issue should only be made on the basis
of information contained in the Prospectus and any supplement thereto.

These materials are not an offer for sale of the Securities in the United States
of America. The Securities have not been and will not be registered under the
U.S. Securities Act of 1933, as amended, or under any relevant securities laws
of any state of the United States of America and may not be offered, sold, taken
up, renounced or delivered, subject to certain limited exemptions, within the
United States of America. The Securities will not qualify for distribution under
any of the relevant securities laws of the Excluded Territories. Accordingly,
subject to certain exceptions, the Securities may not be offered, sold,
delivered, renounced or transferred, directly or indirectly, in or into the
Excluded Territories. There is no public offer of the Securities in the United
States of America.

Prices and values of, and income from, shares may go down as well as up and an
investor may not get back the amount invested. It should be noted that past
performance is no guide to future performance. Persons needing advice should
consult an independent adviser.

Certain statements made on or contained in this announcement constitute
'forward-looking statements'. These statements, which reflect Legal & General's
beliefs and expectations, are subject to risks and uncertainties that may cause
actual results or events to differ materially from those reflected or
contemplated in such forward-looking statements.

Each of UBS Warburg and Dresdner Kleinwort Wasserstein is acting exclusively for
Legal & General Group Plc and no-one else in connection with the Rights Issue
and will not be responsible to anyone other than Legal & General Group Plc for
providing the protections afforded to clients of UBS Warburg and Dresdner
Kleinwort Wasserstein or for providing advice in relation to the Rights Issue or
any matters referred to herein.

The address of UBS AG, acting through its business group UBS Warburg and UBS
Warburg Ltd. (together 'UBS Warburg') is 1 Finsbury Avenue, London EC2M 2PP. The
address of Dresdner Kleinwort Wasserstein Limited ('Dresdner Kleinwort
Wasserstein') is 20 Fenchurch Street, London EC3P 3DB.



END


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