Legal & General Group Plc · LSE:LGEN
Legal & General — FY2023 Earnings Presentation
29 slides from Legal & General's earnings presentation, March 2024
Slide 1: 2023 full year results
Legal & General 2023 full year results António Simões, Group CEO
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 beca
Slide 3: Record new business volumes, resilient in-year profit generation
Record new business volumes, resilient in-year profit generation Record new business A resilient performance Supported by a volumes, including in a challenging market strong balance sheet £13.7bn £1,667m 224% Institutional annuities Operating profit Solvency ratio 2022: £9.5bn 2022: £1,663m 2022: 23
Slide 4: Financial highlights
Financial highlights Jeff Davies, Group CFO 4 L&G full year results
Slide 5: Resilient performance in 2023
Resilient performance in 2023 Metric 2023 2022 Operating profit from divisions (£m) 2,078 2,071 Group debt costs (£m) (212) (214) Group investment projects & expenses (£m) (199) (194) Operating profit (£m) 1,667 1,663 Investment & other variances (incl. minority interests) (£m)1 (1,106) (628) Profit
Slide 6: Growing our store of future profit
Growing our store of future profit CSM + RA are expected to unwind as future profits Growing store of Movements in our store of future profit over 2023 (£bn) future profit… £14.7bn 18% 8% CSM + RA 1.4 (1.2) (0.1) 2022: £13.5bn, +9% 0.6 0.6 With strong new business contribution… 15.9 £1,378m 13.5 Dri
Slide 7: We are set to achieve our ambition
We are set to achieve our ambition Growing capital faster than our dividend commitment Capital Generation 10 10 Cumulative Capital Generation £8-9bn 8.6 9 9 Cumulative Dividends Declared 8 8 6.8 7 Dividends 7 Declared 5.8 £5.6-5.9bn 6 6 4.9 4.5 5 5 4 4 3.1 3.3 3 3 2.1 1.5 2 2 1.0 1 1 0 0 2020 2021 2
Slide 8: LGRI
LGRI Higher profit reflects business growth and effective asset sourcing Financial Highlights 2023 2022 • Operating profit grew +10% to £886m driven by: CSM release 591 497 − CSM release reflecting the provision of insurance services Risk Adjustment (RA) release 119 136 6.6% of the closing CSM pre-r
Slide 9: LGRI
LGRI Higher demand has driven increased profit and value New Business Sales 2023 2022 • Record 2023 volumes growing +44% to £13.7bn (£10.5bn net of funded reinsurance) across 43 transactions, including our largest ever US transaction United Kingdom 12,048 7,319 for $789m. United States 1,463 1,763 •
Slide 10: Retail
Retail Strong profit releases from large books of business Financial Highlights 2023 2022 • Insurance operating profit grew +22% to £436m driven by: CSM release 446 424 − The CSM release reflecting the provision of insurance service Risk Adjustment (RA) release 74 85 8.8% of the closing CSM pre-rele
Slide 11: Retail
Retail Strong proposition and higher demand has driven increased new business volume and value Total Retail Sales 2023 2022 • Record new business volumes: Protection NB Annual premium (£m) 412 382 − US protection continues to benefit from our technological advantage (US Annual premium up 36% to $175
Slide 12: LGC
LGC Delivering financial performance, positive impact and increasing our third-party capital Financial Highlights 2023 2022 • Operating profit of £510m is flat in a challenging environment for alternative assets. Cala’s profit is down against prior year, offset by continued strong Operating profit (
Slide 13: LGIM
LGIM Adverse markets have impacted profitability • Operating profit down to £274m reflecting the ongoing impact of higher interest Financial Highlights 2023 2022 rates on AUM, average AUM down 12%. Asset management revenue1 (£m) 902 970 • Revenue of £902m, down 7%, has been impacted to a lesser exte
Slide 14: Solvency II
Solvency II Strong balance sheet providing significant optionality Solvency II Balance Sheet (£bn) Solvency II surplus analysis of change (£bn) 16.6 9.2 (1.2) 1.8 Own Funds (0.5) Capital Requirement (0.3) 7.4 Surplus (0.1) (0.4) 10.564 YE 2023 9.9 9.606 9.2 • Coverage ratio of 224% • Solvency II sur
Slide 15: In summary
In summary Record new business A resilient performance Supported by a volumes, including in a challenging market strong balance sheet £13.7bn £1,667m 224% Institutional annuities Operating profit Solvency ratio 2022: £9.5bn 2022: £1,663m 2022: 236% 9% growth in our store On track to meet five-year 5
Slide 16: Looking ahead
Looking ahead António Simões, Group CEO 16
Slide 17: Legal & General's strengths are clear
Legal & General’s strengths are clear Purpose People Performance Passionate Market-leading, Proud heritage and trusted brand and talented highly-synergistic businesses Deep customer relationships Strong leadership Strong capital generation track record and partnerships and culture and balance sheet
Slide 18: The opportunities ahead are compelling
The opportunities ahead are compelling Macro trends Market dynamics Complementary capabilities 1 Improved DB funding positions Differentiated asset sourcing 2 Demand for high quality and origination Changing Transition to asset management macro-economic Net Zero environment 3 Purposeful private inve
Slide 19: We are taking a fresh perspective on strategy
We are taking a fresh perspective on strategy 1 • Clear strategy and simpler investment case Our future • Leveraging our strong, authentic purpose Group strategy • Making the most of our synergistic strengths 2 • Continued leadership in institutional retirement Join us at our Capital Our priority •
Slide 20: Record new business volumes, resilient in-year profit generation
Record new business volumes, resilient in-year profit generation Record new business A resilient performance Supported by a volumes, including in a challenging market strong balance sheet £13.7bn £1,667m 224% Institutional annuities Operating profit Solvency ratio 2022: £9.5bn 2022: £1,663m 2022: 23
Slide 21: Q&A
António Simões Jeff Davies Group CEO Group CFO Q&A Laura Mason Andrew Kail LGC LGRI Bernie Hickman Michelle Scrimgeour Retail LGIM 21 L&G full year results
Slide 22: Thank you
Thank you We look forward to welcoming you to our Capital Markets Event on 12 June 2024 22 L&G full year results
Slide 23: Appendix
Appendix 23 L&G full year results
Slide 24: Annuity assets: A well-diversified bond portfolio
Annuity assets: A well-diversified bond portfolio Complemented by high quality direct investments Annuity Bond Portfolio: £76.8bn Annuity DI portfolio: £24.8bn1, 29% of total assets FY 2023 AAA, 3% (£2.6bn) • Defensively positioned, high quality portfolio 7% Property Vacant Possession Value 12% Long
Slide 25: We have a high quality, diversified investment grade book
We have a high quality, diversified investment grade book Bond portfolio by rating Bond portfolio by geography Bond portfolio by asset type Bond portfolio by sector £76.8bn £76.8bn £76.8bn £76.8bn AAA 3% UK 47% Traded credit 66% Infrastructure 16% AA 28% USA 34% Direct investments 26% Utilities 14%
Slide 26: Our UK exposure is diversified
Our UK exposure is diversified Annuity Bond portfolio UK Annuity Bond portfolio UK Traded Credit portfolio by geography by asset type by sector £31.1bn1 £9.7bn £76.8bn UK Annuity UK Traded Credit assets (excl. FTSE 100) UK 47% FTSE 100 exposure 13% Utilities 41% USA 34% Government DI / Sovereigns 31
Slide 27: Direct property exposure in annuity portfolio is limited
Direct property exposure in annuity portfolio is limited Annuity Property Annuity property exposure comprises: • C.£2bn of RVNs. This is the present value estimate of the future vacant possession value of the property (i.e. the value at the end of the lease term) and represents our actual direct pro
Slide 28: Our BBB exposure is to high quality names
Our BBB exposure is to high quality names Annuity Portfolio: Top 10 BBB exposure Counterparty Sector Country of Risk Investment value 1 FGP TopCo Ltd Economic Infrastructure UK 306 2 CK Hutchison Holdings Ltd Utilities, Economic Infrastructure UK 293 3 Deutsche Telekom AG Communications & Technology
Slide 29: Our Direct Investments are with high quality counterparties
Our Direct Investments are with high quality counterparties Annuity Portfolio: Top 15 Direct Investments by exposure* Counterparty Sector Year of Investment Investment value 1 HMRC Government 2016-2019 1,169 2 UK Govt Government 2011-2019 699 3 UK Corporate Media Media 2017 408 4 Student Accommodati