Legal & General Group Plc · LSE:LGEN
Legal & General — Investor Day (2021)
98 slides from Legal & General's investor day presentation, 2021
Slide 1: Alternatives at L&G
Alternatives at L&G Nigel Wilson, Group CEO 1
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: Our objectives for today
Our objectives for today Highlight L&G’s business model and track record + Demonstrate: ● Why LGC exists and what it does ● The size of the Alternatives market opportunity ● LGC’s capabilities and the quality of its management team ● There is significant value in LGC ● Why LGC is a competitive advan
Slide 4: L&G is a leading global retirement solutions provider
L&G is a leading global retirement solutions provider with a longstanding commitment to Inclusive Capitalism and ESG Division Description LGRI A leading global manager of Pension Risk Transfer business LGC An increasingly international alternative asset originator generating attractive shareholder r
Slide 5: Unique, synergistic business model and collaborative culture
Our attractive returns are underpinned by a unique, synergistic business model and a collaborative culture Tech synergy Capital Workplace channel Retirement benefits Structuring (LGRI & LGRR) Building client Technology expertise relationships Insurance leadership Providing Manufacturing seed capital
Slide 6: Predictable and consistent strong performance over a decade
We have delivered predictable and consistent strong performance over a decade Operating profit from divisions1 (£m) Earnings per share2 (p) 9% CAGR 2,496 2,456 2,597 10% CAGR 33.12 2,231 28.66 2,034 24.74 1,902 23.10 1,702 21.22 1,483 19.84 1,329 18.16 1,277 16.70 1,109 13.84 15.20 12.42 2011 2012 2
Slide 7: Progress against five year cash, capital and dividend ambitions
We are making good progress against our five year cash, capital and dividend ambitions Cumulative (£bn) 2020-2024 To H1 21 • Over the period 2020-20244 our ambition is for: ‒ Cash & capital generation significantly to exceed Cash generation1 8.0-9.0 2.4 dividends Capital generation2 8.0-9.0 2.3 ‒ EP
Slide 8: Investor questions focus on three areas
Investor questions focus on three areas Focus areas Response / Outcome 1 Share price • Our share price was negatively impacted by the GFC, Solvency II, Brexit and the Pandemic gearing to • However, none of these events have impacted the way we manage, or the profitability of, our businesses macro ev
Slide 9: Best-in-class risk management: No defaults for 12.5 years
Best-in-class risk management: No defaults for 12.5 years, and just £24m since 2007, despite a number of significant exogenous events Actual default losses in LGR bond portfolio, £m Global financial Eurozone Oil price Brexit Covid crisis debt crisis crisis referendum pandemic 100 L&G - switch 90 to
Slide 10: LGC generates attractive risk-adjusted returns and creates assets
LGC generates attractive risk-adjusted returns on shareholder assets and creates assets for LGR and third party investors Why does LGC exist? LGC market opportunity LGC capabilities We successfully entered attractive, • Huge and growing Alternatives • LGC has developed significant growing markets fr
Slide 11: LGC driver in developing private markets capabilities
LGC has been the driver in developing the Group’s private markets capabilities in frontier sectors Launch date of new private markets capabilities Pre-2014 2014 2015 2016 2017 2018 2019 2020 2021 Core Real Alt. credit Renewable Retirement Affordable Secure Build to Rent Data centres Suburban BTR Est
Slide 12: Long-term trends that support LGC's business model
Long-term trends that support LGC’s business model 1i. UK Defined Benefit Pension Plans will increase their investments in Alternative Assets so LGC will attract further third party capital, e.g. £500m transaction with NatWest Group Pension Fund in respect of Inspired Villages 2ii. UK Defined Contri
Slide 13: LGC is a source of competitive advantage for L&G
LGC is a source of competitive advantage for L&G Generates strong returns 2025 ambition of 10-12% Alternative asset returns Provides early access to assets First mover advantage and development profits Creates attractive assets for LGR 50-200bps uplift over same-rated credit; resilient cash-flows Ge
Slide 14: LGC's unique approach
LGC’s unique approach Laura Mason, CEO of LGC 14
Slide 15: In LGC, we have three fundamental objectives
In LGC, we have three fundamental objectives 1 Profit generation within LGC for shareholders + 2 Asset creation for LGR and third party investors + 3 Securing lasting value for society 15
Slide 16: LGC has been shifting more towards Alternatives
1 – Profit generation Highly Confidential LGC has been shifting more towards Alternatives Alternatives NAV has more than tripled since 2016 and now constitutes c.40% of LGC’s NAV, up from less than 20% in 2016 LGC NAV (£bn) LGC NAV mix (%) 9.0 9.0 8.6 ~8.8 7.3 Key: 6.2 65% ~60% 73% 68% Traded 6.1 5.
Slide 17: Profits from Alternatives have grown significantly
1 – Profit generation Highly Confidential Profits from Alternatives have grown significantly The contribution from Alternatives to LGC operating profits has been steadily growing with blended portfolio returns of 8-10% LGC Operating Profit (£m) LGC Operating Profit mix (%) ~4502 ~25% 42% 40% 43% 363
Slide 18: We plan to extend our Alternatives allocation further
1 – Profit generation Highly Confidential We plan to extend our Alternatives allocation further We will continue to invest in Alternative assets as the in-force book continues to mature, and returns increase to 10-12%. Indicatively, we expect Alternatives to generate £500-600m of profits by 2025 LGC
Slide 19: We invest in sectors aligned to the Group's strategic drivers
1 – Profit generation Highly Confidential We invest in sectors aligned to the Group’s strategic drivers L&G strategic growth driver LGC contribution 1 Ageing demographics • Creation of Later Living retirement communities 2 Globalisation of asset markets • Alternative asset platforms via Pemberton, A
Slide 20: Differentiated investment approach delivering attractive returns
1 – Profit generation Highly Confidential Our differentiated investment approach is delivering attractive asset returns and creating assets for LGR and third party investors High conviction investing Our • Delivering double- investment Outstanding execution capability digit Alternative teams asset r
Slide 21: Broad range of investment strategies
1 – Profit generation Highly Confidential We can deliver holistic impact through our broad range of investment strategies 1 Housing 2 SME Finance CALA: 29% Pemberton: 12% Other Housing: 27% • • BTR Affordable £3.5bn Venture Capital: 6% Alternatives NAV • Later Living • Modular (2021e) Specialist Com
Slide 22: Flexibility to choose the best asset creation platforms
1 – Profit generation Highly Confidential We have flexibility to choose the best asset creation platforms for each of our asset classes 1 2 3 4 Specialist Commercial Asset Creation Platform Housing SME Finance Clean Energy Real Estate CALA 100% owned Affordable ADV Urban regeneration operating busin
Slide 23: In LGC, we have three fundamental objectives
In LGC, we have three fundamental objectives 1 Profit generation within LGC for shareholders + 2 Asset creation for LGR and third party investors + 3 Securing lasting value for society 23
Slide 24: Platform businesses invest LGC growth capital to generate assets
2 – Asset creation Highly Confidential LGC’s platform businesses invest LGC growth capital to generate assets for long-term ‘buy and hold’ investors 1 2 3 Alternative asset … developed by LGC and its scalable … creating investment assets that can opportunities … asset creation platforms … be further
Slide 25: LGR asset creation: Affordable Homes
2 – Asset creation Highly Confidential LGR asset creation: Affordable Homes LGAH is forecast to create £1.7bn of assets by 2025 for LGR and third party equity Case Study: Initial £270m allocation for LGR finalised in 2021: 1 2 3 New build affordable … built out and tenanted by LGAH into … following
Slide 26: Asset creation platforms create opportunities for LGR and third parties
2 – Asset creation Highly Confidential LGC’s asset creation platforms create investment opportunities for LGR and for third party investors Sources of capital Example projects, partnerships and platforms, generated by LGC LGC targets … Asset creation to support Sheffield Oxford Affordable housing L&
Slide 27: Generates incremental value for the Group
2 – Asset creation Highly Confidential … and this generates incremental value for the Group over and above LGC profit generation 1 Profits within LGC + 2 50-200bps yield uplift in LGR + Incremental future fee generation 3 on third party funds 27
Slide 28: Developing third party fee opportunities
2 – Asset creation Highly Confidential We are developing a number of third party fee opportunities, building on Pemberton’s success 2021e 2025 AUM1 L&G asset creation platforms AUM1 (£bn) ambition (£bn) • Pemberton Existing platforms • NTR c.£12bn2 £24–27bn2 • LGIM BTR Fund • Affordable Housing • La
Slide 29: In LGC, we have three fundamental objectives
In LGC, we have three fundamental objectives 1 Profit generation within LGC for shareholders + 2 Asset creation for LGR and third party investors + 3 Securing lasting value for society 29
Slide 30: ESG central to our investment philosophy since inception
3 – Value forHighly Confidential society ‘ESG’ has been central to our investment philosophy since inception … Web searches for ESG (2013-2021)1 vs LGC investment market entry NTR – a renewable E energy GP Solar tech Energy demand tech EV charging Heat pumps Urban Rental Retirement Life Affordable S
Slide 31: Investments at scale in local communities
3 – Value forHighly Confidential society … and our investments at scale in local communities help drive growth in the UK economy Oxford Manchester Begbroke Affordable Salford CALA Homes MediaCity Build to Rent Science Park Housing Central Oxford Sciences Life and Mind Affordable OxPV Life Sciences I
Slide 32: Market opportunity is global
3 – Value forHighly Confidential society We have invested in the UK and Europe but we recognise that the market opportunity is global $9.5tn1 $2tn2 + investments through Alternative asset Proposed US Pemberton and NTR in management AUM infrastructure spending per 10 European countries The American J
Slide 33: Explore these ideas through real case studies
1 – Profit generation Highly Confidential We want to explore these ideas with you further through real case studies, led by our sector experts 1 Housing 2 SME Finance CALA: 29% Pemberton: 12% Other Housing: 27% • • BTR Affordable £3.5bn Venture Capital: 6% Alternatives NAV • Later Living • Modular (
Slide 34: Deep dive into asset class strategies
Deep dive into asset class strategies 34
Slide 35: Housing
reefs General Housing
Slide 36: LGC's Housing platform
Housing Highly Confidential LGC’s Housing platform Macro strategic drivers Our investment approach Chronic undersupply of UK housing • Building a market-leading, multi-tenure residential • 345,000 homes needed p.a.1 housing platform that: ✓ Achieves above-market, diverse, risk-adjusted Affordability
Slide 37: Housing NAV and profits expected to grow strongly
Housing Highly Confidential Housing NAV and profits are expected to continue to grow strongly, driven by Affordable Homes and CALA LGC NAV (£bn) Operating Profit (£m) • Housing constitutes over half of LGC’s Alternatives NAV (56%). 37% FY16-FY21 CAGR 25% FY16-FY21 CAGR 375-400 • Housing NAV has grow
Slide 38: Housing businesses to grow profits to £375-400m by 2025
Housing Highly Confidential We expect our Housing businesses to grow profits to £375-400m by 2025 Op. Profit1 (£m) Asset Description 2025 2021e2 Ambition CALA • 100% owned housebuilder, producing 3,000 homes p.a. 120-130 c.240 • Affordable Homes: Affordable housing portfolio for rental and shared ow
Slide 39: CALA Homes
CALA Homes Kevin Whitaker, CEO 39
Slide 40: CALA Homes: growing revenues and profits at pace
Housing Highly Confidential CALA Homes: We are growing revenues and profits at pace By all major metrics, CALA Homes has grown significantly since L&G’s first investment in March 2013 Metrics of our business development Performance highlights in the last 8 years Homes Revenue Op. Profit • CALA has g
Slide 41: CALA Homes: Future growth at higher margins & ROCE
Housing Highly Confidential CALA Homes: Future growth at higher margins & ROCE We have ambitious plans for the business that will drive greater scale and at higher operating margins and improved ROCE Focus on scale Operating • CALA has the capacity to deliver growth with additional sites within ROCE
Slide 42: CALA Homes: journey to net zero carbon
Housing Highly Confidential CALA Homes: We are on a journey to net zero carbon Current status • CALA’s carbon value as at 2019: 208,787 (tCO2e): CALA Net Zero Timeline ‒ Operational Carbon: 25,998 (12%) ‒ Embodied Carbon: 182,789 (88%) 2019 UK sets Net Zero Carbon Target • Only CALA, Taylor Wimpey a
Slide 43: CALA Homes: Organic growth opportunities in every region
Housing Highly Confidential CALA Homes: Organic growth opportunities in every region Organic growth demonstrated through a case study of our Northern Home Counties (NHC) region Northern Home Counties case study • Within the North Home Counties region, CALA competes with a range of housebuilders from
Slide 44: CALA Homes: Well positioned to deliver further growth
Housing Highly Confidential CALA Homes: Well positioned to deliver further growth 1 Experienced management team 2 Strong land bank 3 Strong customer service 4 Diverse geographical exposure 5 Focus on improving margins and ROCE 6 All new homes to be operational net zero by 2030 44
Slide 45: CALA's strong land bank
Housing Highly Confidential CALA’s strong land bank is well positioned to achieve target 2025 volumes and support the wider Housing platform Historic growth of CALA’s near term1 land bank (number 25,000 of plots) 22,000 Plots in the current near term land bank1 20,000 Of future sales pipeline2 15,00
Slide 46: Multi-tenure case study: North Horsham
Housing Highly Confidential Multi-tenure case study: LGC Housing collaboration in North Horsham Master Plan Proposals for a new village north of Horsham • 2,750 Homes (including through CALA, Affordable and Suburban Build to Rent) • A portion of homes to be built by L&G Modular Homes • 500,000 sq. f
Slide 47: Five other high growth Housing businesses
Housing Highly Confidential We have five other high growth Housing businesses creating long-term investment assets and tangible positive societal impact Affordable Homes Later Living Urban & Suburban BTR Modular Homes Addressing housing Tackling the increasing Providing high quality, well Modernisin
Slide 48: Affordable Homes: Scaling up our platform
Housing Highly Confidential Affordable Homes: Scaling up our platform Bringing much-needed capital into deeply capital constrained sector Homes Operating Revenue completed Profit Increasing the supply of affordable housing: • L&G established Legal & General Affordable Homes (‘LGAH’) in April 2018 in
Slide 49: Inspired Villages using third party capital
Housing Highly Confidential Inspired Villages is using third party capital to support growth Our new JV with NatWest Group Pension Fund will enable us to rapidly scale our Later Living proposition Homes with GDV of secured Supporting the UK’s ageing population Residents planning pipeline • Inspired
Slide 50: Build to Rent: co-investment generating third party capital
Housing Highly Confidential Build to Rent: co-investment generating third party capital L&G’s Urban BTR proposition uses co-investment with PGGM to develop assets for the LGIM BTR Fund and LGR Strategic co-investment in development stage Units completed, LGIM BTR LGC Operating 1 or under constructio
Slide 51: Summary takeaways
Housing Highly Confidential Summary takeaways 1 Highly diversified housing platform in structurally underfunded sectors + Asset generation at scale – our Housing platforms are creating 2 long-dated cash generating assets for LGR and third parties 3 + Huge ESG impact – meeting the needs of society, a
Slide 52: Q&A
Q&A 52
Slide 53: SME Finance
SME Finance 53
Slide 54: SME Finance: Venture Capital and GP strategies
SME Finance Highly Confidential SME Finance: Venture Capital and GP strategies to support LGC’s third party capital growth story Macro strategic drivers Our investment approach Shift from bank financing to asset • Invest growth capital in young and ambitious management financing post-GFC managers to
Slide 55: Two SME Finance businesses: Pemberton and Venture Capital
SME Finance Highly Confidential We currently have two SME Finance businesses: Pemberton (an alternative credit manager) and Venture Capital 2021e1 (£m) Asset Description Operating LGC NAV profit2 • 40% equity stake in £12bn3 alternative credit manager Pemberton 400-410 30-35 • Growth capital investe
Slide 56: Pemberton
Pemberton Symon Drake-Brockman, Managing Partner 56
Slide 57: Pemberton: leading asset manager specialising in private debt
SME Finance Highly Confidential Pemberton: A leading asset manager specialising in private debt Pemberton’s evolution £12bn+ Committed AUM (£bn)3 AUM1 30 Across 4 strategies 25 102 147 20 Companies 15 Investors Invested Worldwide 10 120+ 8 5 Professionals2 Locations 0 2015 2016 2017 2018 2019 2020 2
Slide 58: Pemberton: Key Business Pillars
SME Finance Highly Confidential Pemberton: Key Business Pillars Highly experienced and dedicated institutional lender Legal & General PLC Institutional Financing Partner 40% shareholder Copenhagen London Highly Experienced Local Amsterdam Enhanced Sourcing Strategy Origination Teams Frankfurt Luxemb
Slide 59: Pemberton: Dual-track Investment Process
SME Finance Highly Confidential Pemberton: Dual-track Investment Process Two independent credit assessment approaches Origination/Portfolio Management PM & Origination Paper Investment Committee Credit Analyst Team Credit Analysts Approval Paper Investment sourcing Detailed Analysis and Due Diligenc
Slide 60: Pemberton: A range of private debt opportunities
SME Finance Highly Confidential Pemberton: A range of private debt opportunities Working Capital Senior Loan Mid-Market Debt Strategic Credit Strategy • Confirmed trade • Senior loans to • Senior debt to • Senior and subordinated payables & receivables European mid-market, European mid- loans to Eur
Slide 61: Pemberton has grown into one of Europe's largest non-bank lenders
SME Finance Highly Confidential Pemberton has grown into one of Europe’s largest non-bank lenders 2nd largest lender in Europe and UK 350 300 2 250 2 Top 10 Deal count 200 Pemberton’s market 3 position by deals 150 Other (exc. top 10) 100 50 0 2018 2019 2020 61
Slide 62: Pemberton has deployed £5.9bn in the past 24 months
SME Finance Highly Confidential Pemberton has deployed £5.9bn in the past 24 months, against a high quality, diverse portfolio Projected Direct Lending 2019 2020 LTM2 Deployment • Significant increase in investment 20213 opportunities to record levels through H1 2021 Opportunities Reviewed 508 610 7
Slide 63: Pemberton continues to raise funds and scale
SME Finance Highly Confidential Pemberton continues to successfully raise funds and scale Committed Deployed Revenue Proven track record of growth AUM AUM • Increased number of LPs from 11 in 2015 to 147 in 2021 • Developed core competencies to establish four strategies 2016 £1.1bn1 £0.3bn1 £9.5m1 K
Slide 64: Broad asset class expertise on a global scale
SME Finance Highly Confidential Broad asset class expertise on a global scale Working Capital Credit Real Asset Financing Finance Senior Mid-Market Strategic Finance Fund NAV Inventory Loan Debt Credit CLO Leasing Strategy Financing Finance Strategy Strategy Strategy Europe Asia USA Legend Current A
Slide 65: Pemberton's approach to ESG
SME Finance Highly Confidential Pemberton has a well established and fully embedded approach to ESG >€2bn Pemberton’s approach of ESG-linked lending 17 investments since Dec 2020 incorporating financial incentives for borrowers to produce Net Zero CO2 emissions or reduce CO2 emissions by 20% YOY Joi
Slide 66: Venture Capital
Venture Capital Peter Maher, Director of VC 66
Slide 67: Venture Capital: scale of opportunity and our approach
SME Finance Highly Confidential Venture Capital: scale of opportunity and our approach European VC growing quickly from a low base L&G has two VC businesses European VC deal value (€bn)1 Fund of Funds ADV 94 • £130m of fund commitments • L&G’s VC manager with £68m to the UK and Europe’s best of comm
Slide 68: Combined VC businesses continue to outperform
SME Finance Highly Confidential Our combined VC businesses continue to outperform, in a market with huge growth potential A Fast-Growing portfolio # of Committed Cumulative profit Active Funds Capital since inception • £198m committed to well-diversified VC LP programme spanning 29 funds across 19 m
Slide 69: Investments support growth of Europe's early-stage companies
SME Finance Highly Confidential Our investments support the growth of some of Europe's most valuable early-stage companies Venture capital: accessing the top growth businesses through our VC partners Leading European Early-stage tech Leading UK Seed Stage VC LGC-owned Series A tech led by Skype Seed
Slide 70: Summary takeaways
SME Finance Highly Confidential Summary takeaways Addressing global financing gap by 1 backing growth companies and innovation + Diversified venture capital portfolio delivering 2 exceptional performance and generating LGC profits + Our SME Finance platforms are 3 attracting significant third party
Slide 71: Specialist Commercial Real Estate
Specialist Commercial Real Estate 71
Slide 72: LGC's Specialist Commercial Real Estate businesses
Specialist Commercial Real HighlyEstate Confidential LGC’s Specialist Commercial Real Estate businesses Creating cities of the future using the power of partnerships Macro strategic drivers Our investment approach Inequality driving need to ‘level up’ • Developing real assets to catalyse growth in l
Slide 73: A capital light business creating assets for LGR
Specialist Commercial Real HighlyEstate Confidential A capital light business focused on creating assets for LGR and other long term investors • Specialist Commercial Real Estate LGC NAV & GDV (£bn) Operating Profit (£m) constitutes 19% of LGC’s NAV 6% CAGR on LGC NAV 4% CAGR • This is a capital lig
Slide 74: SCRE three investment themes
Specialist Commercial Real HighlyEstate Confidential SCRE focuses on three investment themes: SciTech, Data Centres and Urban Regeneration 2021e1 (£m) Asset Description LGC Op. NAV Profit2 • Joint Venture with Bruntwood to create Life sciences & Technology focussed Bruntwood SciTech real estate 170-
Slide 75: Kao Data Centres: Structural growth & strategic co-investments
Specialist Commercial Real HighlyEstate Confidential Kao Data Centres: Structural growth & strategic co-investments Diversifying asset class offering capital appreciation alongside contracted downside protection Enterprise Funding Leading UK developer & operator of advanced data Footprint Value oppo
Slide 76: Urban Regeneration
Urban Regeneration Wes Erlam – Director of Urban Regeneration
Slide 77: Bruntwood SciTech: Leading network of innovation districts
Specialist Commercial Real HighlyEstate Confidential Bruntwood SciTech: Leading network of thriving innovation districts Specialist environments and ecosystems that science and technology businesses need to form, scale and grow Property Value Portfolio Size Job Creation1 First and leading UK propert
Slide 78: Urban regeneration: transformation of towns and cities
Specialist Commercial Real HighlyEstate Confidential Urban regeneration: continuing to lead the transformation of Circle Square, Manchester our towns and cities with a growing pipeline Delivering inclusive capitalism and continuing to create assets for LGR and Third Parties • Our UK Regeneration Por
Slide 79: Summary takeaways
Specialist Commercial Real HighlyEstate Confidential Summary takeaways 1 Investing in high growth sectors to secure enhanced returns on development 2 + Strategic partnership models to access differentiated capabilities and off-market opportunities + 3 Capital-light, ESG-focused asset creation at sca
Slide 80: Clean Energy
eae General Clean Energy
Slide 81: Transition to a zero carbon economy creates global opportunity
Clean Highly Energy Confidential The transition to a zero carbon economy creates a global investment opportunity Macro strategic drivers Our investment approach Climate Change as the biggest • Investments in long-term opportunities that can challenge of the 21st century catalyse decarbonisation of t
Slide 82: Two types of investments: Low carbon infrastructure and Growth equity
Clean Highly Energy Confidential We currently focus on two types of investments: Low carbon infrastructure and Growth equity investments 2021e1 (£m) Asset Description LGC NAV Target IRR2 Low carbon • NTR GP: 25% stake in PRI renewable energy infrastructure manager with €500m+ AUM 150-155 6-8%3 infra
Slide 83: Portfolio addresses three major sources of carbon emissions
Clean Highly Energy Confidential Our portfolio addresses the three major sources of carbon emissions in the UK; we are planning further investment to deliver greater impact Current polluting technologies will be obsolete in the next 25 years; this creates significant opportunity for LGC % of UK CO2
Slide 84: Growth Equity investments are scaling at pace
Clean Highly Energy Confidential Our Growth Equity investments are scaling at pace Pod Point Kensa Total miles of Energy Network of Heat pumps Energy CO2 saved electric driving provided public charge installed provided (annual tonnes) provided (GWh) sockets (UK) (annual run-rate) (annual GWh) At LGC
Slide 85: Environmental improvements and innovation across L&G Group
Clean Highly Energy Confidential We facilitate environmental improvements and innovation across L&G Group Our expertise and access helps drive standards and create investment opportunities Engaging with LGIM on low Decarbonising the Group Decarbonising LGC’s portfolio by carbon propositions and bala
Slide 86: Summary takeaways
Clean Highly Energy Confidential Summary takeaways An experienced energy transition investor, targeting opportunities 1 that catalyse decarbonisation of the energy system + 2 Focus on high growth, low carbon technologies and infrastructure + 3 Creating ESG opportunities for LGR and third party inves
Slide 87: Conclusion
Conclusion Nigel Wilson, Group CEO 87
Slide 88: LGC will continue to scale and drive higher returns
LGC will continue to scale and drive higher returns Financial strategy • Increasing financial returns from existing businesses, e.g. Cala, ROCE rising to 20%, with minimal increase in capital • Increasing allocation to attractive growing businesses that deliver high returns, e.g. Pemberton, Venture
Slide 89: Summary of 2025 financial ambitions
To summarise our 2025 financial ambitions 1. Grow the alternative asset 2. Alternatives portfolio return to portfolio to circa £5 billion by increase from 8-10% per annum 2025 to 10-12% by 2025 3. LGC total operating profits 4. Third party AUM to grow from of £600-700 million plus by £12 billion at
Slide 90: Q&A
Q&A 90
Slide 91: Capital Markets Event 2021 Legal & General Capital
Capital Markets Event 2021 Legal & General Capital
Slide 92: Appendix
Appendix 92
Slide 93: We have an experienced alternatives investment team
We have an experienced alternatives investment team Simon Century Kevin Whitaker Rosie Toogood Wes Erlam Matteo Colombo Director of Housing CEO, CALA Homes CEO, Modular Homes Director of Urban Head of Digital Regeneration Infrastructure • 15+ years’ experience • 30 years’ experience • 30+ years’ exp
Slide 94: Long-term client and customer relationships
L&G has long-term client and customer relationships resulting in high lifetime value of customers Accumulation Phase Decumulation Phase • We are leaders in LDI1 and PRT Duration Duration across the UK and US (years) (years) • We are the only business in the UK • Index • Pension Risk and US that has
Slide 95: L&G comparable to Blackstone but trades on fraction of valuation
L&G has comparable financial characteristics to Blackstone, but trades on a fraction of its valuation multiples EPS1 BVPS1 P/E 250 250 $12.79 45.0 33.70p 40.0 200 200 35.0 £1.82 30.4x $3.90 30.0 150 150 $2.00 25.0 94p 20.0 14.7x 100 100 15.20p $5.56 15.0 50 50 10.0 12.4x 8.8x 5.0 0 0 0.0 2013 2014 2
Slide 96: L&G performance relative to Blackrock not reflected in valuation
Whilst L&G has performed well relative to Blackrock (another respected competitor) our performance has not been reflected in valuation EPS1 BVPS1 P/E 350 250 25.0 $36.46 £1.82 300 200 20.0 22.3x 250 15.3x 33.70p 200 150 15.0 86p 150 $12.56 $244 100 10.0 100 $181 8.3x 8.8x 12.42p 50 5.0 50 0 0 0.0 20
Slide 97: High quality investment grade book backed by credit default provision
We have a high quality, investment grade book, further backed by a £3.4bn credit default provision LGR bond portfolio and credit default reserve H1 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 LGR bond portfolio (£bn) 16.2 17.1 21.4 23.4 26.3 29.3 30.0 40.7 39.4 49.5 52
Slide 98: Solvency II SCR has been stable
Our Solvency II SCR has been stable, despite writing £47bn of annuity business since 2016 Group SCR (£bn) 9.7 8.8 9.1 7.9 7.7 7.9 YE 2016 YE 2017 YE 2018 YE 2019 YE 2020 HY 2021 Solvency II Surplus (£bn) 5.7 6.9 6.9 7.3 7.4 7.5 Growing surplus Solvency II Coverage (%) 171 189 188 184 177 183 Stable