Legal & General Group Plc · LSE:LGEN
Legal & General — Morgan Stanley Conference 2012
17 slides from Legal & General's conference presentation, Mar 27, 2012
Slide 1: Every Day Matters
1 EVERY DAY MATTERS. Morgan Stanley Conference 27 March 2012
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 uncertai
Slide 3: FY 2011 Financial Highlights
3 FY 2011 Financial Highlights All business divisions increased sales, cash and profit. 1. Operational cash ahead 12% to £940m 2. Net cash ahead 11% to £846m, net cash per share 14.52p 3. Sales up 7% to £1.9bn 4. Operating profit up 5% to £1,056m 5. ROE 14.5% 6. EEV operating profit up 20% to £1.47b
Slide 4: Dividends from subsidiaries increased 47% to £701m
4 Dividends from subsidiaries increased 47% to £701m. Dividends supporting 2011 2010 cash generation Net cash Dividend Dividend Net cash Dividend Dividend £m £m % of cash £m £m % of cash Risk 451 429 500 89 300 60 Savings 111 68 Investment management 189 150 79 162 132 81 International 51 51 100 44
Slide 5: Continued progress in diversification of cash generation
5 Continued progress in diversification of cash generation. Source of net cash generation 2009-2011 2009 2010 2011 £699m £760m £846m LGIM and 22% Savings £154m 30% 35% £230m £300m Annuities 52% 38% 31% Annuities Housing and Protection Savings Investment management International Group capital and fin
Slide 6: Group results: All operating divisions increased profit
6 Group results: All operating divisions increased profit. £m 2011 2010 Operational cash generation 940 840 New Business strain (94) (80) Net cash generation 846 760 IFRS Profit Risk 561 560 Savings 128 115 Investment management 234 206 International 137 102 Group capital and financing 52 58 Investm
Slide 7: Risk strategy
7 Risk strategy. To build strong customer propositions across our markets whilst delivering improving risk adjusted returns. Scale: Reduced unit operating costs STRONG Distribution: Expanded our footprint PROTECTION Technology: Increased straight through processing and improved customer FRANCHISE ex
Slide 8: Annuities: High potential
8 Annuities: High potential. New Annuity Business (£bn) – Potential UK market enormous UK Market (£1,000bn plus) Maturing DC pension pots increasing 3 DB pension schemes derisking 2 – DB de-risking strong reputation and 1 full offering: 0 Investment de-risking (e.g. LDI) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q
Slide 9: Housing and Protection: Attractive market
9 Housing and Protection: Attractive market. Protection Gross Premiums (£m) Strong franchise - No. 1 in IP, No.2 in GP 1,400 • Scale and quality of in-force book delivers strong cash flows, operating 1,200 cash up 21% to £255m, net cash up 1,000 35% to £189m • High quality products and efficient IT
Slide 10: Savings strategy
10 Savings strategy. To build a sustainable and growing asset accumulation business, which generates an increasing cash contribution to the Group. GROWTH IN Scale in assets under administration is critical to success. ASSETS UNDER Sustained a healthy cash generation from the in-force book. ADMINISTR
Slide 11: A transformed business: 2008-2011
11 A transformed business: 2008-2011. Assets under administration (£bn) Net cash generation (£m) 111 64 65 55 46 68 29 2008 2008 2009 2010 2011 -23 2008 2009 2010 2011 IFRS operating profit (£m) New business strain (£m)¹ 128 115 5.5% 4.2% 161 2.7% 2.8% 50 77 70 63 7 2008 2009 2010 2011 2008 2009 201
Slide 12: Auto enrolment, workplace savings and RDR opportunities
12 Auto enrolment, workplace savings and RDR opportunities. 1. 133 new workplace schemes secured in 2011 with over 94,000 people up from 102 schemes and around 24,000 people in 2010 – customers include Marks & Spencer and General Electric– more completed, but not yet announced 2. Unit costs in workp
Slide 13: LGIM strategy
13 LGIM strategy. To continue to focus on diversifying by growing our core active management capability and our defined benefit pensions de-risking solutions alongside our market leading index tracking business. Lead the market in providing derisking solutions to UK pension plans UK PRIORITIES Conti
Slide 14: Business review – Investment Management: Delivery on all key metrics
14 Business review – Investment Management: Delivery on all key metrics. Financial highlights £m 2011 2010 IFRS Operating profit 234 206 Total revenue 417 378 Total costs (183) (172) Net cash generation 189 162 Average ad valorem fee margin (bps) 10.9 10.7 Average expense margin (bps) 5.3 5.5 Gross
Slide 15: International strategy
15 International strategy. To focus on return on equity and measured growth by leveraging our bancassurance and UK expertise. Maintained growth and momentum on core term products by active USA PRIORITIES distribution management (LGA) Continue to focus on capital management EUROPE Increased NBVA in N
Slide 16: LGA has accelerated growth
16 LGA has accelerated growth. L&G America: gross written premiums ($m) 2005 - 2011 6% CAGR: 597 638 689 734 765 778 836 2005 2006 2007 2008 2009 2010 2011 • 900,000 active policies • Sustainable and growing ordinary dividend • APE up 39% to $111m (2010 $50m; 2011 $55m; 2012 $60m) • No. 6 provider o
Slide 17: Growth and Opportunity
17 Growth and Opportunity • Growth in Cash Generation over 5 years • High quality & transparency in cash • Leading franchise in core UK business divisions • Well placed for change in the UK • International opportunities • Strong Balance Sheet gives optionality and mitigates regulatory uncertainties
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