Legal & General Group Plc
Full Year Results 2020
Financial highlights[1]
· Operating profit[2] broadly flat at £2,218m (2019: £2,286m), with 3 of 5 businesses delivering growth
· Operating profit excluding mortality reserve release down £90m to £2,041m (2019: £2,131m) , with the reduction driven by specific COVID-19 estimated impacts of £(228)m[3]
· Profit after tax[4] down 12% to £1,607m (2019: £1,834m) , principally reflecting the formulaic impact of lower interest rates on LGI and the unrealised impact of market movements, partially offset by profit on disposal from our Mature Savings business
· Return on equity of 17.3% (2019: 20.4%), resilient in light of market volatility
· Despite COVID-19 we delivered financial metrics in line with our five year ambitions (2020-2024):
§ Full year dividend of 17.57p per share (2019: 17.57p)
§ Net release from operations of £1,539m (2019: £1,597m)
§ Solvency II operational surplus generation from continuing operations of £1.5bn (2019: £1.5bn)
Business highlights
We remain committed to Inclusive Capitalism as we support our customers, our people and communities in the face of COVID-19; for more details of our approach please see page 4.
Our businesses continue to perform resiliently:
· LGRI global Pension Risk Transfer (PRT) new business premiums of £8,843m , including record US PRT volumes of $1,614m (2019: £11,392m; $1,140m)
· LGRR annuity premiums of £910m (2019: £970m), initially impacted by COVID-19, but recovering to be up 3% during H2 compared to prior year
· LGC Direct Investment origination of £0.6bn, with AUM growth of 9% to £3.1bn (2019: £2.9bn)
· LGIM external net flows of £20.4bn, with AUM up 7% at £1,279bn (2019: £86.4bn; £1,196bn)
· LGI new business annual premiums up 10% to £372m , supporting £2,849m gross written premiums (2019: £339m; £2,729m)
Our balance sheet is robust:
· Solvency II coverage ratio[5] of 177% (2019: 184%) and as at 5 March 2021, we estimate the ratio was 192%[6]
· Our traded credit portfolio (excluding gilts), which is actively managed, has had no defaults and has seen net downgrades to sub-investment grade of 0.9 % during 2020; just half of that experienced by the index. Our £3.5bn IFRS Credit Default Reserve has remained unutilised
· 99.9% of scheduled cash-flows on our annuity portfolio's direct investments were paid during the year, reflecting the high quality of our counterparty exposure
“Legal & General delivered a robust and resilient performance for all stakeholders, providing stability to our people, customers and shareholders. Our balance sheet remains strong, with the Solvency II coverage ratio currently over 190%, and trading remains consistent with delivering our growth ambitions which are supported by six long term growth drivers. Our commitment to Inclusive Capitalism, ESG and investing in climate change means we intend to play an important role in the post pandemic recovery.”
Nigel Wilson, Group Chief Executive
Financial summary
|
£m |
2020 |
2019 |
Growth % |
|
|
|
|
|
|
Analysis of operating profit |
|
|
|
|
Legal & General Retirement (LGR) excl. mortality reserve release 7 |
1,554 |
1,414 |
10 |
|
– LGR – Institutional (LGRI) |
1,229 |
1,116 |
10 |
|
– LGR – Retail (LGRR) |
325 |
298 |
9 |
|
Legal & General Investment Management (LGIM) 8 |
404 |
394 |
3 |
|
Legal & General Capital (LGC) |
275 |
363 |
(24) |
|
Legal & General Insurance (LGI) |
189 |
314 |
(40) |
|
Operating profit from continuing divisions[7],[8],[9] |
2,422 |
2,485 |
(3) |
|
Mature Savings[10] |
34 |
46 |
(26) |
|
General Insurance[11] |
nil |
(35) |
n/a |
|
|
|
|
|
|
Operating profit from divisions 7 , 8 |
2,456 |
2,496 |
(2) |
|
Group debt costs |
(233) |
(208) |
12 |
|
Group investment projects and expenses |
(155) |
(157) |
(1) |
|
Exceptional COVID-19 related expenses[12] |
(27) |
nil |
n/a |
|
|
|
|
|
|
Operating profit excl. mortality reserve release 7 |
2,041 |
2,131 |
(4) |
|
LGR mortality reserve release |
177 |
155 |
n/a |
|
Operating profit |
2,218 |
2,286 |
(3) |
|
Investment and other variances (incl. minority interests), excluding LGI |
29 |
60 |
n/a |
|
LGI investment variance[13] |
(459) |
(234) |
n/a |
|
|
|
|
|
|
|
|
|
|
|
Profit before tax attributable to equity holders[14] |
1,788 |
2,112 |
(15) |
|
Profit after tax attributable to equity holders |
1,607 |
1,834 |
(12) |
|
Of which: |
|
|
|
|
Mortality reserve releases (post-tax) |
153 |
134 |
n/a |
|
Mature Savings profit on disposal |
271 |
|
|
|
Profit after tax excl. mortality reserve release and disposals |
1,183 |
1,700 |
(30) |
|
|
|
|
|
|
Reported earnings per share (p) |
27.00 |
30.92 |
(13) |
|
Of which: |
|
|
|
|
Mortality reserve releases (post-tax) |
2.58 |
2.26 |
n/a |
|
Mature Savings profit on disposal |
4.58 |
nil |
n/a |
|
Earnings per share (p) excl. mortality reserve release and Mature Savings disposal |
19.84 |
28.66 |
(31) |
|
|
|
|
|
|
Book value per share (p) |
158 |
150 |
5 |
|
Full year dividend per share (p) |
17.57 |
17.57 |
nil |
|
|
|
|
|
|
Net release from continuing operations 9 |
1,511 |
1,588 |
(5) |
|
Net release from discontinued operations |
28 |
9 |
211 |