Legal & General Group Plc · LSE:LGEN
Legal & General — H1 2020 Earnings Presentation
19 slides from Legal & General's earnings presentation, 2020
Slide 1: 2020 Half year results
2020 Half year results Delivering value through Inclusive Capitalism Robust, resilient and relevant
Slide 2: Forward looking statements
Forward looking statements This document may contain certain forward-looking statements relating to Legal & General, its plans and its current goals and expectations relating to future financial condition, performance and results. By their nature, forward-looking statements involve uncertainty becau
Slide 3: Robust, resilient and relevant
Robust, resilient and relevant Nigel Wilson Chief Executive Officer
Slide 4: Financial highlights
Financial highlights We remain a robust, resilient and relevant business • Our balance sheet is £1,128m 4.93p robust: H1 2020 solvency ratio of 173%. Unutilised Operating profit from Interim dividend credit default reserve of £3.5bn divisions1 H1 2019: £1,154m H1 2019: 4.93p • Our operating earnings
Slide 5: Financial summary
Financial summary COVID-19 impact of £129m on H1 Operating profit, H2 outlook Resilient and Robust H1 estimated £m H1 2019 H1 2020 H2 Outlook Covid-19 impact LGRI 524 585 Pipeline (£18bn) 32 LGRR 131 136 Resilient volumes LGIM 192 196 Consistent performance LGC 173 123 (60) UK housing uncertainty LG
Slide 6: Dividend coverage is strong under IFRS and Solvency II
Dividend coverage is strong under IFRS and Solvency II IFRS surplus over dividend SII surplus over dividend £2.0bn 1.7x1 1.8x • Dividends have been – and continue to 1.9x 1.7x 1.5x1 be – well covered under both IFRS and 1.6x Solvency II £1.5bn 1.7x 1.5x 1.4x • We carefully manage Solvency II new 1.4
Slide 7: Financial highlights: Resilient through uncertainty
Financial highlights Resilient through uncertainty Jeff Davies Chief Financial Officer
Slide 8: Financial highlights: Limited real economic impact
Financial highlights: Limited real economic impact Metric H1 2019 H1 2020 % Operating profit from continuing divisions (£m) 1,154 1,128 (2) Discontinued operations (£m) 19 26 Operating profit from divisions (£m) 1,173 1,154 (2) Group debt costs (£m) (108) (115) Group investment projects & expenses (
Slide 9: LGR: Consistently delivering despite challenging environment
LGR: Consistently delivering despite challenging environment • Operating profit of £721m up 10%, reflecting: Financial Highlights H1 2019 H1 2020 ‒ Strong performance from back book prudential Operating profit (£m) 655 721 margin unwind - LGR Institutional 524 585 ‒ PRT new business volumes of £3.4b
Slide 10: LGRI: PRT market remains open and attractive
LGRI: PRT market remains open and attractive. Five year ambition of £40-50bn UK PRT remains Total Sales (£m) H1 2019 H1 2020 • £3.4bn premium for global PRT across 29 transactions, vs. 18 transactions in H1 2019, demonstrating the resilience UK PRT 6,316 3,176 of the market and our agile and efficie
Slide 11: LGR: Defensive Bond portfolio – limited downgrades and no defaults
LGR: Defensive Bond portfolio – limited downgrades to sub-investment grade and no defaults LGR Bond Portfolio: £76.4bn • Defensively positioned, high quality portfolio 2019 YE £70.0bn H1 2020 £76.4bn not materially impacted by COVID-19 • The traded credit portfolio (excluding gilts), AAA, 9% AAA, 9%
Slide 12: LGR: Direct Investment portfolio – high quality and diversified
LGR: Direct Investment portfolio – high quality and diversified counterparty exposure, with 99.5% of scheduled cash-flows paid LGR Direct Investment portfolio: £23.6bn, 29% of total LGR assets • The portfolio has continued to Direct investments by type Direct investments by sector perform strongly i
Slide 13: LGIM: Strong performance with AUM and profit growth
LGIM: Strong performance with AUM and profit growth Financial Highlights H1 2019 H1 2020 • Operating profit up 2% to £196m Asset management revenue1 (£m) 434 467 • AUM up to £1.2tn against a challenging external market backdrop Asset management expenses1 (£m) (240) (270) ‒ International AUM of £385b
Slide 14: LGIM: Resilient AUM and positive flows
LGIM: Resilient AUM and positive flows underpinned by diverse asset exposure AUM progression from FY19 AUM by underlying asset exposure1 38 31% 28% 22% 13% 3% 3% 6 Equities Derivatives Government Bonds 1,241 Corporate Bonds Property Cash 1,196 • AUM up 4% from FY19, driven by positive net flows and
Slide 15: LGC: Housing sales impacted by lockdown measures
LGC: Housing sales impacted by lockdown measures Financial Highlights H1 2019 H1 2020 • Operating profit of £123m, impacted primarily by a pause in house building activities as a result of COVID-19 Operating profit (£m) 173 123 • As with other house builders, under conditions similar to today, we -
Slide 16: LGI: Supporting customers through unprecedented times
LGI: Supporting customers through unprecedented times Financial Highlights H1 2019 H1 2020 • Operating Profit of £88m, largely impacted by adverse mortality experience arising as a result of COVID-19 Operating profit (£m) 134 88 ‒ UK Operating Profit of £57m. Adverse mortality - UK 93 57 experience
Slide 17: Robust Solvency II Balance sheet
Robust Solvency II Balance sheet Solvency II Balance Sheet (£bn) Solvency II surplus analysis of change (£bn) 184% 173% 17.3 7.3 Rates: -£0.6bn 16.1 7.3 0.8 (0.8) Equities: -£0.2bn Spreads: -£0.4bn Own Funds Other: +£0.3bn Capital 10.0 Requirement 8.8 Surplus (0.9) 1.0 0.1 (0.1) (0.1) 7.3 7.3 7.3 YE
Slide 18: Financial highlights
Financial highlights We remain a robust, resilient and relevant business • We firmly believe that our business is well placed to execute on £1,128m 4.93p opportunities in H2, supported by strong competitive positioning in growing and profitable markets Operating profit from Interim dividend • We rem
Slide 19: 2020 Half year results
2020 Half year results Delivering value through Inclusive Capitalism Robust, resilient and relevant