Legal & General Group Plc · LSE:LGEN
Legal & General — H1 2024 Earnings Presentation
37 slides from Legal & General's earnings presentation, Aug 7, 2024
Slide 1: 2024 half year results
Highly Confidential Legal & General 2024 half year results
Slide 2: Forward-looking statements
Highly Confidential 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 invol
Slide 3: Agenda for today
Agenda for today 1. H1 2024 Summary and Execution Update António Simões, Group CEO 2. H1 2024 Financial Highlights António Simões Jeff Davies, Group CFO Group CEO 3. Closing Statements António Simões, Group CEO 4. Q&A Jeff Davies Group CFO 3 L&G half year results
Slide 4: H1 2024 Summary and Execution Update
H1 2024 Summary and Execution Update António Simões, Group CEO 4 L&G half year results
Slide 5: Continued confidence in Full Year growth
Highly Confidential Continued confidence in Full Year growth Core operating profit in 7% year on year growth in Supported by a line with guidance our store of future profit strong balance sheet £849m £14.5bn 223% Core operating profit CSM & RA balance1 Solvency ratio H1 2023: £844m H1 2023: £13.5bn
Slide 6: We have a compelling vision for growth and shareholder value
Highly Confidential We have a compelling vision for growth and shareholder value A simpler, more synergistic model, Well-positioned businesses with becoming more capital-light over time Where is growth going to competitive advantages aligned to come from? structural trends Asset Management How will
Slide 7: Delivering sustainable growth, sharper focus, enhanced returns
Highly Confidential Delivering sustainable growth, sharper focus, enhanced returns • Institutional Retirement: £5bn PRT volumes YTD1 with a strong H2 2024 pipeline Sustainable • Asset Management: investment in the business with early client wins in Private Markets Growth • Retail: strong activity in
Slide 8: £5bn PRT volumes YTD and a strong pipeline for H2 2024
Highly Confidential £5bn PRT volumes YTD and a strong pipeline for H2 2024 Forecast UK PRT volumes £5bn PRT deals YTD Our strongest ever pipeline 90 £bn 80 2.3 c.£5bn 5.0 70 15 Annual PRT volumes (£bn) 60 £1bn+ UK deals 50 New baseline c.£45bn p.a. in pipeline 1.1 40 30 1.5 £24bn+ 20 US Active deals
Slide 9: Establishing our combined Asset Manager
Highly Confidential Establishing our combined Asset Manager Asset Management client AUM (£1.14trn)1 Continued investment out-performance Index Solutions across our active strategies £507bn £328bn £492m Integration work well underway in H1 2024 Multi-asset Active Strategies Total revenues creating a
Slide 10: Investing in Asset Management transformation
Highly Confidential Investing in Asset Management transformation Asset Management Cost Bridge (£m) + 3% 359 + 7% 326 • Deepen institutional and unlock Growth and operational +£23m wholesale in Asia and Europe scalability (of £50-100m p.a. • Enhancing private markets capabilities investment guidance)
Slide 11: Client wins in Private Markets show the value of our model
Highly Confidential Client wins in Private Markets show the value of our model Private Markets Access Fund Affordable Housing Fund Build to Rent development Access for DC investors to long-term Addressing under-investment in UK Expansion of our existing partnership growth potential of private market
Slide 12: Strong new business growth in Retail across all businesses
Highly Confidential Strong new business growth in Retail across all businesses Increasing UK personal wealth in Defined Contribution H1 2024 new business successes Asset growth: 4.0 2023-33 CAGR 3.5 3.7 Workplace DC net flows + £3.2bn Decumulation 3.0 assets1: 6% Individual annuities sales 2x Total
Slide 13: Sharper focus in executing at pace and with rigour
Highly Confidential Sharper focus in executing at pace and with rigour CME H1 2024 2025 – 2028 Early progress Plans in place to deliver transformation • Corporate Investment Unit portfolio management in progress 80+ IT services migrated to Cloud (moved to final testing) Capital re-allocation • Inves
Slide 14: Delivering enhanced returns to shareholders
Highly Confidential Delivering enhanced returns to shareholders Capital return to shareholders £200m + Further similar buybacks • Board intends to return more to shareholders over 2024- 2027 than the equivalent of maintaining 5% per annum growth in dividends per share • This is intended to be achiev
Slide 15: Financial highlights
Financial highlights Jeff Davies, Group CFO 15 L&G half year results
Slide 16: Core operating profit in line with guidance for H1 2024
Highly Confidential Core operating profit in line with guidance for H1 2024 Metric H1 2024 H1 2023 Core Operating profit1 (£m) 849 844 Investment variance from Core businesses (417) (296) (incl. minority interests) (£m) Core Operating Earnings per share1 (p) 10.58 10.52 Operating Return on equity1 (
Slide 17: Growing our store of future profit
Highly Confidential Growing our store of future profit Store of future profit balance… Half year store of future profit growth1 (£bn) £14.5bn 14.5 CSM + RA £1.1bn New business contribution… £303m 13.5 13.4 New Business CSM + RA in H1 2024 30 June 2022 30 June 2023 30 June 2024 17 L&G half year resul
Slide 18: Institutional Retirement: Higher profits from CSM
Highly Confidential Institutional Retirement: Higher profits from CSM Financial Highlights (£m) H1 2024 H1 2023 • Operating profit grew +6% to £560m driven by: CSM release 316 267 − CSM release reflecting the provision of insurance services Risk Adjustment (RA) release 64 54 3.7% of the closing CSM
Slide 19: Institutional Retirement: £5bn YTD; strong H2 pipeline
Highly Confidential Institutional Retirement: £5bn YTD; strong H2 pipeline New Business Sales (£m) H1 2024 H1 2023 • £5bn of PRT written or exclusive year to date despite lower H1 UK volumes due to quieter quoting activity. Strong H1 US volumes, which have more than United Kingdom 1,126 4,866 double
Slide 20: Asset Management: Investing for growth
Highly Confidential Asset Management: Investing for growth Financial Highlights (£m) H1 2024 H1 2023 • Operating profit from fee-earning AUM down 4% reflecting the increased investment signalled at the Capital Markets Event in June. Asset management revenue1 492 464 • Fee revenue of £492m, up 6%, re
Slide 21: Retail: Reliable profit releases from large books of business
Highly Confidential Retail: Reliable profit releases from large books of business Financial Highlights (£m) H1 2024 H1 2023 • Retail operating profit is up 6% year on year to £268m driven by: CSM release 226 210 − The CSM release reflecting the provision of insurance service with 4.6% of the closing
Slide 22: Retail: Strong new business volume and value
Highly Confidential Retail: Strong new business volume and value Total Retail Sales (£m) H1 2024 H1 2023 • Record new business volumes: Workplace Savings net flows (£bn) 3.2 3.0 − Workplace net flows of £3.2bn driven by continued client wins and increased contributions. Workplace pension members inc
Slide 23: Corporate Investments Unit: managing non-strategic assets
Highly Confidential Corporate Investments Unit: managing non-strategic assets Financial Highlights H1 2024 H1 2023 • Operating profit of £71m is down reflecting lower trading profit from CALA, the largest asset in the portfolio. CALA generated operating Operating profit (£m) 71 80 profit of £42m (H1
Slide 24: Solvency II: Our Balance Sheet remains strong
Highly Confidential Solvency II: Our Balance Sheet remains strong Solvency II Balance Sheet (£bn) 224% 223% 16.6 9.2 16.0 8.8 223% Coverage ratio £8.8bn Solvency II surplus 7.4 7.2 £12.6bn Tier 1 Own funds (i.e. 79%) 1 FY 2023 H1 2024 Own Funds Capital Requirement Surplus 24 L&G half year results 1.
Slide 25: Closing Statements
Closing Statements António Simões, Group CEO 25 L&G half year results
Slide 26: Our strategy and key metrics
Highly Confidential Our strategy and key metrics A simpler, more synergistic model, becoming more capital-light over time Core Operating EPS CAGR (2024 -27) 6-9% Group Operating Return on Equity >20% Asset Cumulative SII capital generation (2025-27) £5-6bn Management UK PRT (2024-28)1 £50-65bn Insti
Slide 27: Societal challenges addressed by our strategy
Highly Confidential Societal challenges addressed by our strategy The challenges Aligned policy direction • Proposed reforms to planning system Growth and • Mobilisation of institutional capital towards productive finance investment • Increase in housebuilding targets, especially social and affordab
Slide 28: In summary…
Highly Confidential In summary… Core operating profit in 7% year on year growth in Supported by a line with guidance our store of future profit strong balance sheet £849m £14.5bn 223% Core operating profit CSM & RA balance1 Solvency ratio H1 2023: £844m H1 2023: £13.5bn FY 2023: 224% 5% growth in Bu
Slide 29: Q&A
Highly Confidential António Simões Jeff Davies Group CEO Group CFO Q&A Laura Mason CEO Private Markets Andrew Kail CEO Institutional Retirement Bernie Hickman Michelle Scrimgeour CEO Retail CEO LGIM 29 L&G half year results
Slide 30: Thank you
Thank you 30 L&G half year results
Slide 31: Appendix
Appendix 31 L&G half year results
Slide 32: Annuity assets: A well-diversified bond and DI portfolio
Highly Confidential Annuity assets: A well-diversified bond and DI portfolio 1 Annuity Bond Portfolio: £74.5bn Annuity DI portfolio: £26.1bn2, 31% of total assets HY 2024 AAA, 4% (£2.6bn) • Defensively positioned, high quality portfolio 7% Property Vacant Possession Value • Approximately two-thirds
Slide 33: We have a high quality, diversified investment grade book
Highly Confidential 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 £74.5bn £74.5bn £74.5bn £74.5bn AAA 4% UK 47% Traded credit 64% Infrastructure 17% AA 28% USA 35% Direct investment
Slide 34: Our UK exposure is diversified
Highly Confidential Our UK exposure is diversified Annuity Bond portfolio UK Annuity Bond portfolio UK Traded Credit portfolio by geography by asset type by sector £29.0bn1 £8.6bn £74.5bn UK Annuity UK Traded Credit assets (excl. FTSE 100) UK 47% FTSE 100 exposure 13% Utilities 36% USA 35% Governmen
Slide 35: Direct property exposure in annuity portfolio is limited
Highly Confidential Direct property exposure in annuity portfolio is limited Annuity Property Annuity property exposure comprises1: • 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
Slide 36: Our BBB exposure is to high quality names
Highly Confidential Our BBB exposure is to high quality names Annuity Portfolio: Top 10 BBB exposure Counterparty Sector Country of Risk Investment value 1 CK Hutchison Holdings Ltd Utilities, Economic Infrastructure UK 231 2 Deutsche Telekom AG Communications & Technology USA, Germany 216 3 FGP Top
Slide 37: Our Direct Investments are with high quality counterparties
Highly Confidential 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 1,186 2 UK Govt Government 2011-2019 671 3 UK Corporate Media Media 2017 396 4
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