Legal & General Group Plc · LSE:LGEN
Legal & General — Goldman Sachs 23rd European Financials Conference 2019
25 slides from Legal & General's conference presentation, Jun 5, 2019
Slide 1: Improving lives through inclusive capitalism
Improving lives through inclusive capitalism Legal & General Group Plc Goldman Sachs, 23rd European Financials Conference, Paris
Slide 2: Our strategy is aligned to 6 structural growth drivers
Our strategy is aligned to 6 structural growth drivers Growth drivers Market opportunity • PRT market: • UK: >c£30bn p.a. of >£2tn DB pension liabilities L&G market share: 30% Ageing demographics • US: c$27bn p.a. of $3.5tn DB pension liabilities L&G market share: 3% • UK LTM: £6bn p.a. by 2020 • Gl
Slide 3: We have 5 growing and profitable businesses
We have 5 growing and profitable businesses 2016 2017 2018 CAGR (%) Growth Pension Risk • UK market: £25-30bn per annum, 30% market share 651 716 832 +13 Transfer (PRT)1 • US market: $25-30bn per annum, 3% market share Investment • £1tn AUM (1.6% global market share) 366 400 407 +5 Management • $80
Slide 4: An established track record of consistent growth
An established track record of consistent growth Operating profit from divisions1 (£m) Earnings per share (p) 11% CAGR 2011 - 2018 2,231 10% CAGR 2011 - 2018 2,034 24.74 1,902 23.10 1,702 21.22 1,483 18.16 1,329 16.70 1,277 15.20 1,109 13.84 12.42 2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 20
Slide 5: A business model with unique synergies in asset manufacturing and management
A business model with unique synergies in asset manufacturing and management Retirement Building client (PRT & Solutions) relationships Providing Structuring Providing seed capital expertise Capital Providing asset management services Contributing Manufacturing captive AUM SII-eligible assets Invest
Slide 6: Able to meet customer needs across the pension risk transfer journey
Able to meet customer needs across the pension risk transfer journey Active LDI & Real Longevity Index Buy-in Buyout fixed multi-asset Assets Longevityinsurance insurance Investment Management Capital PRT c30% of 2018 UK PRT transferred from existing LGIM clients UK Only Future 30% market share1 #1
Slide 7: PRT: A long-term, secular growth opportunity
PRT: A long-term, secular growth opportunity UK and US corporations have approximately £5tn of DB pension liabilities Total corporate DB pension liabilities1 UK - £2.2tn US - $3.5tn • Only 8% of UK corporate DB Share transferred to Insurers pension liabilities have 8% 5% transferred to date – a huge
Slide 8: UK PRT is growing rapidly with more demand than insurers can supply
UK PRT is growing rapidly with more demand than insurers can supply UK PRT bulk annuity premiums1 (£bn) 2018 UK PRT Market Share4 (%) L&G Market Share: 32% £50bn+ demand2 24.2 12.2 Insurer supply 10.2 L&G 35 (estimate)3 PIC 29 Aviva 11 Scottish Widows 7 8.4 Canada Life 6 3.3 3.4 JUST 5 Rothesay 4 20
Slide 9: US PRT market is a similar size to the UK and L&G has room to grow
US PRT market is a similar size to the UK and L&G has room to grow US PRT bulk annuity premiums1 ($bn) L&G Market Share: 3% Experts expect c25% growth in premiums p.a.3 16% win rate on small transactions2 27.3 23.0 13.7 2016 2017 2018 2019 2020 c$220m bulk L&G ($m) 448 713 844 annuity written 1. LIM
Slide 10: Our primary risk exposure is to longevity, which is going in our favour
Our primary risk exposure is to longevity, which is going in our favour L&G Solvency Capital Requirement1 Changes to UK mortality assumptions Rate of Other improvement Other Underwriting2 Operational 5% 6% CMI Mortality 2014 6% 8% 2015 2017: £206m release Market 2018: £433m release 22% 2016 £7.9bn L
Slide 11: The UK Real Asset opportunity
The UK Real Asset opportunity Climate Change – Unknown billions Long term capital Funding requirement Pension £1,300bn Housing £150bn Funds Insurance £900bn Regeneration £100bn Funds ‘Finance Sovereign £4,800bn “Finance Gap’ Clean Energy £40bn Wealth Funds Gap” Transport £90bn Reduced capacity Banks
Slide 12: £15 billion long term direct investment programme
Long term direct investment programme a Science Central, Newcastle Our Regeneration and Build to Rent investments b Thorpe Park, Leeds c Media City, Salford Quays £15 billion d New Bailey, Salford Canning Town, London direct investment programme with e Town Centre, Bracknell £14bn invested to date f
Slide 13: We are in the early stages of self-manufacturing assets
We are in the early stages of self-manufacturing assets Birmingham Manchester Cambridge Newcastle Edinburgh Glasgow Sheffield Brighton London Belfast Oxford Cardiff Bristol Leeds Bath Urban regeneration Future Cities Clean energy Build to rent Housing Affordable housing Later living Lifetime mortgag
Slide 14: Inclusive investments: Future Cities
Inclusive investments: Future Cities 14
Slide 15: Manufacturing assets benefits the whole Group
Manufacturing assets benefits the whole Group Example: Central Cardiff mixed-use redevelopment scheme Sep JV with Cardiff County Council and local developer, RightAcres – initial equity 1 Capital LGIM 2015 investment (£37m), further equity investment on Two Central Square (£33m) £83m BBC Wales HQ, p
Slide 16: Manufacturing assets benefits from strategic partnerships
Manufacturing assets benefits from strategic partnerships Example: Manchester regeneration project L&G is involved in £3bn of regeneration projects in Manchester, developing commercial, residential, leisure and infrastructure projects and creating homes and jobs. Capital Investment Investment Manage
Slide 17: PRT and Retirement Solutions: A diversified portfolio, high quality assets
PRT and Retirement Solutions: A diversified portfolio, high quality assets PRT & Retirement Solutions Asset portfolio Asset portfolio maintaining overall credit 2017 2018 quality and high sectorial diversification1 £58.2bn £63.0bn • 17% in Sovereign-like assets • c.2/3rd A rated or better 17% 79% •
Slide 18: Capital Investment: Long-term investment driving balance sheet efficiency
Capital Investment: Long-term investment driving balance sheet efficiency LGC Assets (£m) LGC Direct Investments SME 2014 2015 2016 2017 2018 Finance Direct Investments 700 867 1,137 1,450 2,359 18% Diversified Housing Traded Portfolio 2,073 2,165 2,356 2,416 1,845 49% Cash & Treasury 2,349 2,633 2,
Slide 19: Largest direct investments by exposure
Largest direct investments by exposure1 Year of Investment value Counterparty Sector Investment (£m) 1 HMRC Buildings Government 2016 – 2019 1,0742 2 Places for People Property backed lease 2014 305 3 The Rolls Building (Secretary of State) Property backed lease 2011 284 4 Foreign & Colonial (UK pri
Slide 20: Creating a diverse retirement ecosystem by leveraging on L&G's synergies
Creating a diverse retirement ecosystem by leveraging on L&G’s synergies UK PRT Drawdown / Decumulation products LGRI DB Retirement Payments US PRT income Personal Investing Retirement Enhanced savings L&G LGRR Individual Workplace & DC Retirement Individual Care Needs Ecosystem annuities Fixed Term
Slide 21: Globally, DB remains a huge opportunity, but DC is growing faster
Globally, DB remains a huge opportunity, but DC is growing faster Global Pension Assets1 ($tn) 40.2 • L&G is the leading asset manager of CAGR UK DB and DC pension schemes DC 7.6% • UK DC assets are expected to grow to DB 3.2% 20.1 £871bn by 20262 (CAGR: 13%) 21.4 UK Market L&G 15.3 8.6 AUM3 (£bn) A
Slide 22: Actively managing our portfolio to sustain profitable growth
Actively managing our portfolio to sustain profitable growth 100% PRT Retirement Solns “GROWN UPS” Capital Investment Investment Management Insurance General Insurance Sale agreed Mature Savings Sale agreed 20% - 49% 100% “SCALE UPS” - CALA Homes - Clean Energy - Build to Rent - Pemberton - Salary F
Slide 23: Moving from low growth/low return businesses
Moving from low growth/low return businesses Business L&G shareholder Cash Geography L&G entity line proceeds £m received Mature Savings 650 2018 Cofunds 148 2017 UK Savings Suffolk Life Group Limited 45 2016 Ireland 15 2015 Middle East Egypt 55% interest 32 2015 UK General Insurance 242 2019 India
Slide 24: Our financial goal to 2020
Our Strategic Goals to 2020 • Globally trusted brand • Achieve global leadership in pensions de-risking • Provide a suite of products to maximise retirement income • Help people achieve financial wellbeing through insurance, pensions, Our financial lifetime mortgages and annuities goal to 2020 • Bui
Slide 25: 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
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