Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — Debt Investor Presentation (June 2024)
27 slides from Lloyds Banking's debt investor presentation, Jun 12, 2024
Slide 1: Insurance, Pensions & Investments Credit Investor Update
Classification: Limited Insurance Pensions & Investments Credit Investor Update Lloyds Banking Group 12th June 2024
Slide 2: Agenda
1. Strategy 2. Performance 3. Solvency 4. Q&A
Slide 3: IP&I Strategy overview
Classification: Limited IP&I Strategy overview
Slide 4: Lloyds Banking Group Overview
Lloyds Banking Group Overview Insurance, Pensions and Investments (IP&I) operates as one of the five LBG business units Customers Customers and Mass distribution Affluent Consumer Business & Corporate & Relationships Commercial Institutional Banking Banking Product, operations Consumer Insurance, Pe
Slide 5: Simplified Insurance Group Structure
Classification: Limited Insurance Sub-Group Simplified Scottish Widows Group Ltd Insurance Group Structure Lloyds Bank Scottish Widows Scottish General Embark Financial Widows Ltd Insurance Group Ltd Services Holdings Holdings Ltd Lloyds Bank Scottish Widows St Andrews General Europe S.A. Insurance
Slide 6: Insurance, Pensions & Investments Overview
Insurance, Pensions & Investments Overview A leading provider… Our purpose at IP&I: To democratise £213bn Assets under c.£1.5bn £4.7bn Dividends paid to Group Deferred profits savings, protection and retirement – Helping Britain Prosper Administration (AUA) since 2019 (at 31 Dec 2023)1 35%... …with
Slide 7: IP&I has a strong presence across its chosen markets
IP&I has a strong presence across its chosen markets Strong market presence Broad customer base Clear brand recognition IP&I market shares, FY 20231 IP&I policy count by business, FY 2023 Market brand recognition, FY 20233 Rank Rank Workplace Scottish #1 #2 Workplace 23% #2 Individual Widows #2 Annu
Slide 8: Executing on three fundamental pivots: Deliver a modern and efficient operating model
Executing on three fundamental pivots: 1 Deliver a modern and efficient operating model Transforming our estate and operating model… …to deliver enhanced experience and productivity New digital customer interfaces and integrated customer view Simplified legacy policy management – 2.7m legacy policie
Slide 9: Deepen relationships with Group and IP&I customers
2 Deepen relationships with Group and IP&I customers Deepening relationships with Group customers… …and increasing IP&I products within the business Cross-holdings of IP&I products as at FY 2023 c.10m c.22m IP&I Primary active customers Banking customers1 1 product 2 products 3+ products Number of I
Slide 10: Transform from a product factory to a proposition provider
3 Transform from a product factory to a proposition provider Embedding IP&I products into …and leveraging the same architecture for a Scottish Widows ‘customer spaces’ in the banking app… ‘Your Tomorrow’ app for Workplace and the open market Launched Save and Invest …with a Protection space in Singl
Slide 11: Strong growth potential across all propositions: Accumulation
Strong growth potential across all propositions Accumulation Leading with our Workplace platform… …and building a holistic investment solution Leveraging CIB relationships and auto-enrolment tailwinds Building momentum & growing market share Banking on strong CIB Mandatory and quasi-mandatory contri
Slide 12: Strong growth potential across all propositions: Decumulation and Protection
Strong growth potential across all propositions Decumulation Protection Leading with Individual Annuities to build a distinctive Leading with Home Insurance, with Life Insurance a retirement proposition significant upside Growing Market Share Recapturing Home Insurance share IP&I share of Individual
Slide 13: Performance
Performance
Slide 14: Overview of 2020 – 2023 Financials
Overview of 2020 – 2023 Financials IFRS17 implemented on 1/1/23; 2022 figures on a comparative basis New business value contribution Underlying profit (£m) Deferred profit (£m) to deferred profit (£m) GI Profit (£m) Reduced under IFRS 17 by £453m, with a decrease in other income of £616m given defer
Slide 15: Shareholder Assets
Shareholder Assets High quality, diversified UK focused portfolio Shareholder portfolio £22.2bn Credit Ratings Asset Type Other, 0.2 • High quality portfolio; 80% A or better Cash, 0.9 AAA, 15.8% Liquidity • UK focused – 67% of portfolio invested in Funds, 3.3 UK AA, 25.2% Gilts, 3.1 • Portfolio wel
Slide 16: Solvency
Solvency
Slide 17: Solvency Position Breakdown YE 2023 - SWL
Solvency Position Breakdown YE 2023 - SWL 160% ▪ Figures shown are for Scottish Widows Limited (SWL) on a regulatory basis – consistent with annual SFCR disclosures ▪ Scottish Widows manages capital on a shareholder basis (i.e. excluding With Profits impact). Equivalent SWL shareholder solvency rati
Slide 18: Solvency Position Breakdown YE 2023 - SWL SCR
Solvency Position Breakdown YE 2023 - SWL SCR Market Risk (pre Diversification) (£bn's) Interest Rate Totals £5.5bn £13.4bn £6.4bn £0.7bn £6.3bn £2.9bn £3.4bn Risk 0.8 1.8 0.4 Equity Risk Other, 1.5 Credit & Swap Spread Risk Within Risk 0.3 Operational Diversification, Other Risk, 2.0 6.4 Risk Marke
Slide 19: Solvency Position Breakdown YE 2023 – SWL to SWG
Solvency Position Breakdown YE 2023 – SWL to SWG 160% Transitional Matching Adjustment *includes foreseeable dividends paid in Q1 2024 SWL Capital Generation – Capital generation over 2023 is primarily due to: • The positive impact of Solvency II reforms • Positive earnings from in-force business •
Slide 20: YE 2022 to YE 2023 SWG Solvency Walk
YE 2022 –> YE 2023 SWG Solvency Walk As the predominant entity within Insurance Group, SWL’s capital movements are materially consistent with SWG £m Eligible Own Funds SCR Opening balance : 31 December 2022 5,492 3,624 M&A (see note 1) 36 24 Regulatory & other model changes 573 45 Operating impact:
Slide 21: Sensitivity to Market Risk YE 2023
Sensitivity to Market Risk YE 2023 Change in working Change in working Sensitivities (£m) capital1 excluding TMTP2 capital1 including TMTP2 • Equity risk is materially removed through the recalculation recalculation equity hedging program. The equity hedge was rebalanced after year end reducing the
Slide 22: 2023 Risk & Capital Management Update
2023 Risk & Capital Management Update • The PRA implemented the first stages of the Solvency UK reforms at YE23 Solvency UK • Material benefit of reduced Risk Margin Review net of transitional recalculation reforms • Additional benefit from removal of FRR test in the Solvency II Transitional • Reduc
Slide 23: Liquidity Monitoring
Liquidity Monitoring • Liquidity is monitored on a Primary (3 month) and Total (12 month) basis • Primary classes cash and gilts as liquid assets. Total liquidity also classes bonds as liquid assets Liquidity • Two metrics are monitored for both Primary and Total liquidity Monitoring • Liquidity cov
Slide 24: Appendix
Classification: Limited Appendix
Slide 25: IFRS 17 – Income Spread over Contract Life; no change to Economic Value
IFRS 17 – Income Spread over Contract Life; no change to Economic Value IP&I has successfully transitioned to IFRS17 IFRS 17 is an accounting change which impacts phasing of profit recognition for insurance contracts ▪ Expected future profit on insurance contracts was recognised as new business inco
Slide 26: Q&A
Classification: Limited Q&A
Slide 27: Disclaimer
Disclaimer Important notice The information, statements, views and opinions contained in this document and accompanying discussion (“this Presentation”) are for informational and reference purposes only. This Presentation has been provided by the Group (defined below). This Presentation does not pur
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