Legal & General Group PLC · LSE:LGEN
Legal & General — H1 2011 Earnings Presentation
13 slides from Legal & General's earnings presentation, Aug 3, 2011
Slide 1: Half-Year Results 2011
1 MORE. Half-Year Results 2011 3rd August 2011 2 FORWARD LOOKING STATEMENTS. This document may contain certain forward-looking statements relating to Legal & General Group, its plans and its current goals and expectations relating to future financial condition, performance and results. By their natu
Slide 2: H1 2011: Delivering on our strategy
3 H1 2011: Delivering on our strategy A strong track record of performance. Financial highlights (£m) H1 2011 H1 2010 H1 2009 Operational cash generation 498 417 333 Net cash generation 427 373 302 Worldwide new business 920 881 746 IFRS operating profit 523 542 404 IFRS profit before tax 473 537 (1
Slide 3: Diversification of net cash generation; strong profitability and returns
5 Material progress in diversification of net cash generation. Source of net cash generation 2009-2011 2009 2010 H1 2011 £699m £760m £427m 22% 30% 35% 52% 38% 26% Annuities Housing and Protection Savings LGIM International Group capital and financing 6 Continued strong profitability and returns. Sum
Slide 4: Sales: Solid H1 performance; Investment management: another record six months
7 Sales: Solid H1 performance, confident about H2. New business sales (£m) H1 2011 H1 2010 Protection APE 94 85 Annuities APE 76 106 Savings APE 662 609 International APE 88 81 Worldwide new business APE 920 881 LGIM gross new business (£bn) 17.9 21.2 LGIM net asset flows (£bn) 3.0 8.3 Savings net a
Slide 5: Investment management: LDI and international growth; Savings: record six months
9 Investment management: LDI and international from £39bn to £62bn in 18 months. Assets under management (£bn) H1 2011 FY 2010 Opening assets under management 353.5 315.1 of which international 14.6 8.9 of which LDI 40.8 29.9 UK gross new business 14.7 26.5 of which LDI new business 2.7 4.9 Internat
Slide 6: Savings: All business units generating cash and profits; Risk: another good six months
11 Savings: All business units generating cash and profits. Savings Insured With-profits Investments Savings H1 H1 H1 H1 H1 H1 Financial highlights (£m) 2011 2010 2011 2010 2011 2010 Operational cash generation 12 13 26 23 51 36 New business strain (31) (34) Net cash generation 12 13 26 23 20 2 Assu
Slide 7: Risk: Good growth in operational cash generation, masked by one off movements
13 Risk: Good growth in operational cash generation, masked by one off movements. Movement in operating profit (£m) H1 2011 Risk H1 2010 operating profit 310 Increase in operational cash generation 21 Lower expense assumptions 18 Reduction in positive annuity new business strain (34) Group protectio
Slide 8: International: Strong US performance; Group capital and financing
15 International: Strong performance from the US, continuing to invest in emerging markets. Financial highlights (£m) H1 2011 H1 2010 IFRS operating profit USA 50 44 Europe (France and Netherlands) 18 21 Middle East and Asia (Egypt, the Gulf and India)1 (2) (4) IFRS operating profit 66 61 New busine
Slide 9: Operational cash generation: Close and transparent link between cash and profit
17 H1 2010 Operational cash generation: Close and transparent link between cash and profit. Operational New Net cash Tax and IFRS profit 2010 Half-Year (£m) cash business International generation other before tax generation strain Annuities 106 35 141 108 310 Housing and protection 106 (45) 61 Savin
Slide 10: Assets: High quality with limited PIIGS exposure; confidence over 2011 cash
19 Assets: High quality with PIIGS sovereign debt and bank debt exposure only 1.4% of shareholder assets. Shareholder assets at 30/06/11 (£bn) Worldwide assets under By business unit By asset class management at 30/06/11(£bn) Other group shareholder assets, 1.5 Equities, 1.0 Group capital & Derivati
Slide 11: Modelling IGD; Modelling VIF
21 Modelling IGD. IGD Surplus (£m) H1 2011 FY 2010 At start of period 3,745 3,148 Operational cash generation 498 840 New business strain (71) (80) Dividends (97) (279) Experience variances and assumption changes 27 138 Investment variance (27) 46 (Increase) / decrease in operational regulatory capi
Slide 12: EEV per share increased to 139p; Interim dividend up 25%
23 EEV per share increased to 139p. Estimated additional value of LGIM 160 on discounted cashflow basis1 21 139 119 95 H1 09 H1 10 H1 11 1. Management estimates, assuming stable margins and 10% outflows per annum 24 Interim dividend up 25%. Full up 24% 4.75p 3.84p 3.42 2.73 Interim Interim up 25% up
Slide 13: Positive outlook for L&G
25 Positive outlook for L&G. Difficult macro-economic environment • Low growth • Economic and market risks remain high Attractive trends in the UK • Demographic shifts favour our model • Pension fund de-risking driving demand in LGIM and BPA • Government agenda plays to L&G’s strengths Significant a
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