Legal & General Group Plc · LSE:LGEN
Legal & General — RBC 2019 Bulk Annuities Seminar
17 slides from Legal & General's conference presentation, 2019
Slide 1: Global Pension Risk Transfer: An attractive growing market
Global Pension Risk Transfer: An attractive growing market Improving lives through inclusive capitalism Legal & General Group Plc RBC 2019 Bulk Annuities Seminar
Slide 2: L&G's strategy is aligned to 6 structural growth drivers
L&G’s 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 $3.5tn DB pension liabilities, L&G market share: 3% • UK LTM: £6bn p.a. by 2020
Slide 3: Pension Risk Transfer: Consistently delivering
Pension Risk Transfer: Consistently delivering Financial Highlights 2016 2017 2018 CAGR (%) Release from operations (£m) 297 347 379 13 New business surplus (£m) 147 152 188 13 Net release from operations (£m) 444 499 567 13 Operating profit excl. mortality release (£m) 651 716 832 13 Mortality Rele
Slide 4: A unique business model
A unique business model • Structuring & Balance Pension Risk Sheet expertise Transfer • Portfolio construction Ability to self- manufacture • Real assets attractive • Affordable housing • Private credit real assets to • Later living • Active fixed credit LGIM LGC • BTR back pension • LDI Solutions •
Slide 5: Meeting customer needs across the pension risk transfer journey
Meeting customer needs across the pension risk transfer journey Active LDI & Real Longevity Index Buy-in Buyout fixed multi-asset Assets Longevityinsurance insurance LGIM LGC LGRI c30% of 2018 UK PRT transferred from existing LGIM clients UK Only Future 30% market share1 #1 in DB #1 in LDI Cities Co
Slide 6: UK PRT is growing rapidly
UK PRT is growing rapidly UK PRT bulk annuity premiums1 (£bn) 2018 UK PRT Experts expect £25-£30bn UK Market Share3 (%) 35 PRT p.a. in 2019 and beyond2 L&G Market Share: 32% 30 24.2 25 20 15 12.2 10.2 10 L&G 35 5 PIC 29 Aviva 11 0 Scottish Widows 7 Canada Life 6 2016 2017 2018 2019 2020 JUST 5 L&G P
Slide 7: And US PRT is also growing
And US PRT is also growing US PRT bulk annuity premiums1 ($bn) 50 Experts expect c25% growth in 45 premiums p.a.3 L&G Market Share: 3% 40 16% win rate on small transactions2 35 30 27.3 25 23.0 20 15 13.7 10 5 0 2016 2017 2018 2019 2020 L&G Premium c$220m bulk 448 713 844 ($m) annuity written 1. LIMR
Slide 8: Our primary risk exposure is to longevity
Our primary risk exposure is to longevity Other Other Underwriting 2 Operational Mortality six Market Male life expectancy at age 65 L&G SCR1: 22.8 22.5 £7.7bn 22.3 22.2 Longevity 21.7 Credit CMI-14 CMI-15 CMI-16 CMI-17 CMI-18 L&G mortality review Year of adoption 2016 2017 2018 2019 2020 Reserve re
Slide 9: A diversified portfolio, high quality assets
A diversified portfolio, high quality assets LGR 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% • Bank exposure reduced from c. 20% pre-crisis to 5% 4%
Slide 10: Largest direct investments by exposure
Largest direct investments by exposure1 Year of Investment value Counterparty Sector Investment (£m) 1 HMRC Buildings Government 2016 – 2019 9422 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 prime
Slide 11: We have a competitive advantage in self-manufacturing direct investments
We have a competitive advantage in self-manufacturing direct investments LGR Direct Investments (£bn) 15.7 • Direct Investments give economic diversification from listed credit and 3.2 12.2 typically provide a yield uplift over 2.0 same-rated credit 8.1 • We have a competitive advantage in LTM 0.9 1
Slide 12: 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 13: Inclusive investments: Future Cities
Inclusive investments: Future Cities 13 2019 RBC Bulk Annuities Seminar
Slide 14: 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) CAGR 40.2 • L&G is the leading asset manager of UK DB and DC pension schemes DC 7.6% • UK DC assets are expected to grow DB 3.2% 20.1 to £871bn by 20262 (CAGR: 13%) 21.4 UK Market L&G 15.3 AUM3 (£bn) AUM (
Slide 15: Creating a diverse retirement ecosystem
Creating a diverse retirement ecosystem 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 Workplace & DC Retirement Refina
Slide 16: A consistent strategy: Consistently delivering
A consistent strategy: Consistently delivering Operating profit from divisions (£m) Earnings per share (p) 3,000 11% CAGR 2011 - 2018 35 10% CAGR 2011 - 2018 2,500 30 2,231 24.74 2,034 25 23.10 2,000 1,902 21.22 1,702 20 18.16 1,500 1,483 15.20 16.70 1,277 1,329 1,109 15 12.42 13.84 1,000 10 500 5 0
Slide 17: 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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