L&G 2007 FY Results Part 2

Legal & General Group Plc 18 March 2008 Page 16 2.01 New business summary ------------------------- APE(1) PVNBP(2) Margin(3) APE PVNBP Margin 2007 2007 2007 2006 2006 2006 Restated(4) Notes £m £m % £m £m % ------------------------------------------------------------------------------------------------------------------------ UK life and pensions 2.02 1,160 8,892 3.6 1,073 8,106 4.7 International life and pensions 2.05 114 915 4.1 103 824 4.6 ------------------------------------------------------------------------------------------------------------------------ Total life and pensions 1,274 9,807 3.7 1,176 8,930 4.7 ----------------------------------------------------- ------------------------------ ------------------------- UK core retail investments(4) 2.08 161 123 International retail investments 2.08 2 2 ------------------------------------------------------------------------------------------------------------------------ Total core retail investments 163 125 ------------------------------------------------------------------------------------------------------------------------ Total 1,437 1,301 ======================================================================================================================== 2007 2006 Notes £m £m ------------------------------------------------------------------------------------------------------------------------ Institutional fund management 2.11 54,431 26,033 ======================================================================================================================== 1. Annual Premium Equivalent (APE) is calculated for total new business, including core retail investments, but excluding institutional fund management new business, 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. For 2007 reporting, UK core retail investments excludes institutional investments in unit trust funds which are disclosed as part of institutional fund management new business in Note 2.11. 2006 has been restated to reflect this change. 2.02 Analysis of UK life and pensions new business by product ------------------------------------------------------------- APE Contri- PVNBP Margin bution from new business(1) For the year ended 31 December 2007 £m £m £m % ------------------------------------------------------------------------------------------------------------------------ Protection 223 108 1,161 9.3 Annuities(2) 205 187 2,045 9.1 ------------------------------------------------------------------------------------------------------------------------ Total risk 428 295 3,206 9.2 ------------------------------------------------------------------------------------------------------------------------ Unit linked bonds 251 21 2,512 0.8 Pensions, stakeholder and other non profit 253 (14) 1,674 (0.8) With-profits savings 228 19 1,500 1.3 ------------------------------------------------------------------------------------------------------------------------ Total savings 732 26 5,686 0.5 ------------------------------------------------------------------------------------------------------------------------ Total risk and savings 1,160 321 8,892 3.6 Cost of capital 19 ------------------------------------------------------------------------------------------------------------------------ Contribution from new business before cost of capital 340 ======================================================================================================================== For the year ended 31 December 2006 Restated(2) Restated(2) Restated(2) Restated(2) ------------------------------------------------------------------------------------------------------------------------ Protection 231 131 1,201 10.9 Annuities(2) 182 195 1,818 10.7 ------------------------------------------------------------------------------------------------------------------------ Total risk 413 326 3,019 10.8 ------------------------------------------------------------------------------------------------------------------------ Unit linked bonds 261 51 2,612 2.0 Pensions, stakeholder and other non profit 208 (10) 1,326 (0.7) With-profits savings 191 13 1,149 1.1 ------------------------------------------------------------------------------------------------------------------------ Total savings 660 54 5,087 1.1 ------------------------------------------------------------------------------------------------------------------------ Total risk and savings 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. For 2007 reporting, with-profits annuity business has been recategorised from 'with-profits' to 'annuities' and 2006 comparatives restated. This business amounted to £47m (2006: £83m) of PVNBP and £2m (2006: £4m) of new business contribution. 2.03 Internal rate of return on non profit business --------------------------------------------------- 2007 2006 % % ------------------------------------------------------------------------------------------------------------------------ Non profit internal rate of return (including solvency margin) 14 16 ------------------------------------------------------------------------------------------------------------------------ ======================================================================================================================== Page 17 2.04 Analysis of UK life and pensions PVNBP ------------------------------------------- Annual Present Capital- Single PVNBP PVNBP premiums value isation premiums of annual factor(1) premiums 2007 2007 2007 2007 2007 2006 Restated(2) £m £m £m £m £m ------------------------------------------------------------------------------------------------------------------------ Protection 223 1,161 5.2 - 1,161 1,201 Annuities(2) - - - 2,045 2,045 1,818 ------------------------------------------------------------------------------------------------------------------------ Total risk 223 1,161 5.2 2,045 3,206 3,019 ------------------------------------------------------------------------------------------------------------------------ Unit linked bonds - - - 2,512 2,512 2,612 Pensions, stakeholder and other non profit 141 552 3.9 1,122 1,674 1,326 With-profits savings 130 517 4.0 983 1,500 1,149 ------------------------------------------------------------------------------------------------------------------------ Total savings 271 1,069 4.0 4,617 5,686 5,087 ------------------------------------------------------------------------------------------------------------------------ Total risk and savings 494 2,230 4.5 6,662 8,892 8,106 ======================================================================================================================== 1. The capitalisation factor is the present value of annual premiums divided by the amount of new annual premiums. 2. For 2007 reporting, with-profits annuity business has been recategorised from 'with-profits' to 'annuities' and 2006 comparatives restated. This business amounted to £47m (2006: £83m) of PVNBP and £2m (2006: £4m) of new business contribution. 2.05 Analysis of international life and pensions new business ------------------------------------------------------------- APE Contri- Cost of PVNBP Margin bution capital from new business(1) For the year ended 31 December 2007 £m £m £m £m % ------------------------------------------------------------------------------------------------------------------------ USA 45 23 5 319 7.3 Netherlands 27 6 3 227 2.5 France 42 9 8 369 2.4 ------------------------------------------------------------------------------------------------------------------------ Total 114 38 16 915 4.1 ======================================================================================================================== 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 year ended 31 December 2007 m m m m % ------------------------------------------------------------------------------------------------------------------------ USA $90 $46 $11 $637 7.3 Netherlands €38 €8 €5 €331 2.5 France €60 €13 €11 €539 2.4 ======================================================================================================================== 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. 2.07 Analysis of international life and pensions PVNBP in local currency ------------------------------------------------------------------------ Annual Present Capital- Single PVNBP PVNBP premiums value of isation premiums annual factor premiums 2007 2007 2007 2007 2007 2006 m m m m m ------------------------------------------------------------------------------------------------------------------------ USA $90 $637 7.1 - $637 $528 Netherlands €15 €103 6.7 €228 €331 €379 France €24 €175 7.3 €364 €539 €411 ======================================================================================================================== ======================================================================================================================== Page 18 2.08 Analysis of core retail investments new business ----------------------------------------------------- Annual Single APE Annual Single APE premiums premiums premiums premiums 2007 2007 2007 2006 2006 2006 Restated(1) Restated(1) Restated(1) £m £m £m £m £m £m ------------------------------------------------------------------------------------------------------------------------ UK(1) 21 1,399 161 17 1,063 123 France - 24 2 - 25 2 ------------------------------------------------------------------------------------------------------------------------ Total 21 1,423 163 17 1,088 125 ======================================================================================================================== 1. For 2007 reporting, UK core retail investments excludes institutional investments in unit trust funds which are disclosed as part of institutional fund management new business in Note 2.11. 2006 has been restated to reflect this change. 2.09 Analysis of UK risk and savings new business premiums ---------------------------------------------------------- Annual Single APE Annual Single APE premiums premiums premiums premiums 2007 2007 2007 2006 2006 2006 Restated(1) Restated(1) Restated(1) £m £m £m £m £m £m ------------------------------------------------------------------------------------------------------------------------ Protection - Individual 160 - 160 167 - 167 - Group 63 - 63 64 - 64 ------------------------------------------------------------------------------------------------------------------------ Annuities - Individual (non profit) - 875 88 - 702 71 - Individual (with-profits) - 47 5 - 83 8 - Bulk purchase - 1,123 112 - 1,033 103 ------------------------------------------------------------------------------------------------------------------------ Total risk 223 2,045 428 231 1,818 413 Non profit savings - Unit linked bonds - 2,512 251 - 2,612 261 - Individual pensions 141 1,118 253 126 812 207 - DWP rebates - 4 - - 5 1 With-profits savings - Bonds - 102 10 - 83 8 - Individual pensions 124 752 199 115 502 165 - DWP rebates - 124 12 - 155 16 - Group pensions 6 5 7 2 4 2 ------------------------------------------------------------------------------------------------------------------------ Total life and pensions savings 271 4,617 732 243 4,173 660 Core retail investments(1) - Unit trusts 7 962 103 2 683 70 - ISAs 14 437 58 15 380 53 ------------------------------------------------------------------------------------------------------------------------ Total savings 292 6,016 893 260 5,236 783 ======================================================================================================================== Total risk and savings new business 515 8,061 1,321 491 7,054 1,196 ======================================================================================================================== 1. For 2007 reporting, core retail investments excludes institutional investments in unit trust funds which are disclosed as part of institutional fund management new business in Note 2.11. 2006 has been restated to reflect this change. ======================================================================================================================== Page 19 2.10 Analysis of total UK APE ----------------------------- 2007 2006 Restated(1) £m £m ------------------------------------------------------------------------------------------------------------------------ Independent financial advisers 842 719 Tied 261 270 Direct 36 38 ------------------------------------------------------------------------------------------------------------------------ Total UK individual(1) 1,139 1,027 ======================================================================================================================== Individual life and pensions 978 904 Core retail investments(1) 161 123 ------------------------------------------------------------------------------------------------------------------------ Total UK individual 1,139 1,027 Group life and pensions 182 169 ------------------------------------------------------------------------------------------------------------------------ Total UK risk and savings new business premiums 1,321 1,196 ======================================================================================================================== 1. For 2007 reporting, core retail investments excludes institutional investments in unit trust funds which are disclosed as part of institutional fund management new business in Note 2.11. 2006 has been restated to reflect this change. 2.11 Analysis of institutional fund management new business ----------------------------------------------------------- 2007 2006 Restated(1) £m £m ------------------------------------------------------------------------------------------------------------------------ Managed pension funds(2) Pooled funds 49,460 17,878 Segregated funds 2,603 608 ------------------------------------------------------------------------------------------------------------------------ Total managed funds 52,063 18,486 Other funds(3) 2,368 7,547 ------------------------------------------------------------------------------------------------------------------------ Total 54,431 26,033 ======================================================================================================================== Attributable to: Legal & General Investment Management 52,622 20,650 Legal & General Retail Investments(1) 1,809 5,383 ======================================================================================================================== 1. For 2007 reporting, Other funds includes institutional investments in unit trust funds managed by Legal & General Retail Investments which were previously disclosed as UK core retail investments APE in Note 2.01. 2006 has been restated to reflect this change. 2. New monies from pension fund clients of Legal & General Assurance (Pensions Management) exclude £19.4bn (2006: £4.4bn) held through the year on a temporary basis, generally as part of portfolio reconstructions. 3. Includes segregated property, property partnerships, ventures partnerships and institutional clients funds managed by Legal & General Investment Management and institutional investments in unit trust funds managed by Legal & General Retail Investments. 2.12 Legal & General Investment Management new business by investment approach ------------------------------------------------------------------------------ 2007 2006 % % ------------------------------------------------------------------------------------------------------------------------ Indexed equities 70.9 46.3 Indexed bonds (including index linked funds and cash) 21.1 39.1 Active bonds (including index linked funds and cash) 4.0 9.6 Structured solutions 3.6 3.9 Property 0.4 0.7 Private equity - 0.1 Active equities - 0.3 ------------------------------------------------------------------------------------------------------------------------ Total 100.0 100.0 ======================================================================================================================== ======================================================================================================================== This information is provided by RNS The company news service from the London Stock Exchange

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