Legal & General Group Plc · LSE:LGEN
Legal & General — Non-Deal Roadshow (March 2013)
26 slides from Legal & General's roadshow presentation, Mar 18, 2013
Slide 1: Protection & Annuities: Stepping Up
1 PROTECTION TITLE. & ANNUITIES. STEPPING UP. 00/00/0000 INVESTOR ROADSHOW 18 MARCH 2013 SUBTITLE. EVERY Dual DAY Branding MATTERS
Slide 2: Forward Looking Statements
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 nature, forward- looking statements involve uncerta
Slide 3: Protection and Annuities: Executing to Meet Opportunities
3 PROTECTION AND ANNUITIES: EXECUTING TO MEET OPPORTUNITIES. • UK Protection and Housing Premiums £1.6bn, Annuities £32bn AUM SUBSTANTIAL • Scale and industrial processes drive cost efficiency STOCK DRIVES STRONG CASH • Expertise in insurance and portfolio risk enables high predictability Retirement
Slide 4: Strong Results: Few Surprises
4 STRONG RESULTS: FEW SURPRISES. Investment IFRS IFRS Operational New Changes in gains and Tax profit/ Net cash Experience Non-cash profit/ All in £m cash business valuation losses, expense/ (loss) generation variances items (loss) generation strain assumptions international (credit) before after ta
Slide 5: Cash Focus Continues
5 CASH FOCUS CONTINUES. 2013 2012 2012 DIVIDEND DIVIDEND £m GUIDANCE GUIDANCE OP CASH STRAIN NET CASH TO GROUP % CASH Annuities 243 14 257 UK Protection c.620 c.590 240 (45) 195 525 88 Insured Savings 108 (62) 46 SUB TOTAL 591 498 With-profits c.55 c.50 52 52 US Protection 40 40 40 100 c.60 c.55 Eur
Slide 6: Capital Strength: Low Volatility
6 CAPITAL STRENGTH: LOW VOLATILITY. FINANCIAL HIGHLIGHTS £bn 2012 IGD SURPLUS: SENSITIVITY TO MARKET MOVEMENTS Group capital resources 7.2 Group capital requirement (3.1) IGD surplus 4.1 IGD coverage (%) 234 £3.8bn £4.0bn £4.0bn LGPL default provision 1.7 20% fall in equities 100 bp increase in 100
Slide 7: Profitable Growth
7 PROFITABLE GROWTH. CAGR 5.2% £1,617m CAGR 4.2% £1,460m £1,504m £571m £600m £553m
Slide 8: Diversified Distribution: Reaching Opportunities
8 DIVERSIFIED DISTRIBUTION: REACHING OPPORTUNITIES. INDIVIDUAL ANNUITIES APE OUTCOME • Able to adapt to changes in market Internal 24% • Post RDR - have captured 87% of Building Society customers. IFAs likely to be more interested in Direct £132m Protection and Annuities 4% IFA • Able to optimise pr
Slide 9: Innovation
9 INNOVATION. RDR – SUCCESSFULLY ACCESS TO 45 MILLION CUSTOMER DEPLOYED RELATIONSHIPS THROUGH BUSINESS MARKET LEADING PARTNERS SOLUTION ILL HEALTH LIABILITY INSURANCE (IHLI) PUBLIC SECTOR LARGEST UK PROPOSITION ACTIVE MEMBER 87% COVERAGE LONGEVITY OF THE OF BUILDING INSURANCE LONGEVITY SOCIETY MARKE
Slide 10: Five Macro Trends. Five Corporate Responses
10 FIVE MACRO TRENDS. FIVE CORPORATE RESPONSES. Homogenous asset markets LGIM International Ageing populations Retirement Solutions ‘On the Go’ lifestyles Digital Solutions Welfare Reforms Protection Retrenching banks Direct investments
Slide 11: Retirement Solutions
11 RETIREMENT TITLE. SOLUTIONS. 00/00/0000 SUBTITLE. Dual Branding
Slide 12: Growth in Annuities: Scale
12 GROWTH IN ANNUITIES: SCALE. FINANCIAL HIGHLIGHTS £m 2012 2011 UK ANNUITY ASSET GROWTH £bn Operational cash generation 243 227 £32bn New business strain 14 35 £19bn Net cash generation 257 262 Operating profit 281 287 Individual Annuities APE 132 105 Bulk Annuities APE 102 146 INDIVIDUAL ANNUITY G
Slide 13: Retirement Solutions: Drivers
13 RETIREMENT SOLUTIONS: DRIVERS. UK CONSUMERS REACHING RETIREMENT STRATEGIC SUMMARY 4.5 Consumers in 65-70 age group (millions) • Baby boomers creating strong potential 4.3 annuity demand. 4.0 • UK DB pension deficits have grown due 3.8 to low corporate bond yields, continued 3.5 inflation and long
Slide 14: Execution Powers Growth
14 EXECUTION POWERS GROWTH. RETIREMENT SOLUTIONS FLEXIBILITY IN BULK ANNUITIES: 2012: GROWTH IN DIRECT INVESTMENT TATE AND LYLE PARTIAL BUY-IN December 2012, £347m pensioner buy-in £1.2bn Ability to deal with a complicated benefit structure , employing a price tracking mechanism £0.6bn Funded in-par
Slide 15: Annuities and LGIM De-risking Capability
15 ANNUITIES AND LGIM DE-RISKING CAPABILITY. LIABILITY DEFINED STRATEGIC BULK ASSET DE- MATCHING BENEFIT ASSET PURCHASE RISKING AND ASSETS ALLOCATION ANNUITIES DE-RISKING Legal & General Annuities LGIM expertise Index funds Solutions Active fixed Liability Buy-in team driven Commodities investments
Slide 16: Risk Science: Our Approach
16 RISK SCIENCE: OUR APPROACH. Wide range of Actuaries, statisticians, epidemiologists, research IN HOUSE skill sets scientist, programmers CAPABILITY Core University College London, Liverpool University, collaborative Commercial Consultants groups COLLABORATION Longevity Leading scientists and acad
Slide 17: Rich-Poor Longevity Difference
17 RICH-POOR LONGEVITY DIFFERENCE. (Cited by The Economist’s 2012 Christmas issue) 17
Slide 18: Investment Discipline
18 INVESTMENT DISCIPLINE. Extensive LGIM LGIM: 6 economists, 20 person strategic risk team, plus a resources large pool of investment analysts FORWARD External Inputs Industry standard Algorithmics software covering in LOOKING excess of £350bn assets Prospective risk 500,000 simulations and theme ba
Slide 19: Direct Investments
19 5. DIRECT INVESTMENTS. Sale and Leasebacks Income Partnerships • Joint venture with Imperial • National Football Centre, St College George’s Park at Burton-on- • £116m student Trent accommodation project in Clapham, London • University of Greenwich • Tesco distribution hub at student accommodatio
Slide 20: Protection
20 PROTECTION.
Slide 21: Growth in Protection: Efficiency
21 GROWTH IN PROTECTION: EFFICIENCY. FINANCIAL HIGHLIGHTS £m 2012 2011 WORLDWIDE PROTECTION GROSS PREMIUMS Operating profit 359 314 £2,058m £1,860m Operational cash generation 279 270 £1,675m New business strain (45) (66) Net cash generation 234 204 Retail Protection APE 151 131 2008 2010 2012 Group
Slide 22: Execution Powers Growth
22 EXECUTION POWERS GROWTH. PROTECTION 2012: RETAIL PROTECTION, BENEFITS OF 2012: LGA MARGIN AND MARKET SHARE TECHNOLOGY PROGRESSION 2000 2006 2009 2010 2011/12 14.0% 12.0% 10.0% ONLINE NEW UW DIRECT REGULAR 8.0% PAPER CONNECT TERM ENGINE ONLINE RELEASES 6.0% 4.0% Underwriting 2.0% decision at 78% 0
Slide 23: Complete Housing Solution
23 COMPLETE HOUSING SOLUTION. L&G Owned Distributors Mortgage distribution Independent Local Brands Survey Reciprocation Own Advisers (Not L&G L&G’s) AR (Advice Risk) & DA Banks Banks & Building & Building L&G Network L&G Network Societies Societies Protection/ Household & Investment. Investment/Pro
Slide 24: The 'Triangle of Austerity' Creates Opportunities
24 THE ‘TRIANGLE OF AUSTERITY’ CREATES OPPORTUNITIES. The ‘Triangle of Austerity’ is caused by: FISCAL AUSTERITY • Fiscal austerity: government finances under pressure • Banking austerity: deleveraging reduces lending • Regulatory austerity: policy forces ‘risk off’ We are well positioned because: P
Slide 25: The Protection Gap
25 THE PROTECTION GAP. • Over-estimated level of State benefits and ability to pay CAUSES • State move to actively encourage work (from passive welfare provision) • Increasing life expectancy and long term care needs Retirement solutions • Burden of protection shifts to individuals • Increasing expo
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