TIDMLGEN
RNS Number : 7891K
Legal & General Group Plc
24 April 2020
Legal & General builds on strong Q1; announces debt issuance
to capitalise on new business opportunities
Legal & General Group Plc ("Legal & General") today
updates on its performance during the first quarter of 2020, and
announces its intention to issue debt to capitalise on new business
opportunities, taking account of current favourable debt market
conditions.
COVID-19 is having an unprecedented impact on our customers,
employees and society at large. Legal & General continues to
support all of our stakeholders and we have done everything we can
in recent weeks to help our customers through this difficult
period. At this time, our commitment to Inclusive Capitalism and to
investing in the real economy is more important than ever.
New business update
Despite the evolving situation with COVID-19, Legal &
General remains well placed to deliver strong, attractive growth
and returns in our core markets, which are aligned to our six,
long-term, structural growth drivers: ageing demographics,
globalisation of asset markets, investing in the real economy,
welfare reforms, technological innovation and addressing climate
change.
Our business continues to perform strongly, broadly in line with
prior year .
Specifically, year to date as at 31 March 2020:
-- LGRI (our Institutional Retirement business) transacted
GBP1.2 billion of global Pension Risk Transfer (PRT) across 12
transactions and is in exclusive negotiations on a further GBP0.7
billion of PRT transactions which are expected to complete within
the next month. Additionally, LGRI is actively quoting on a further
global PRT pipeline of more than GBP26 billion.
-- LGRR (our Retail Retirement business) delivered individual
annuity sales of GBP223.1 million, up 4% (Q1 2019: GBP215.2
million) and lifetime mortgage advances of GBP206.8 million, down
8% (Q1 2019: GBP224.2 million).
-- LGIM (our Investment Management business) achieved external
net flows of GBP10.6 billion and total AUM is estimated at GBP1,140
billion. Revenue increased 10% to GBP226.4 million over the period
(Q1 2019: GBP205.4 million).
-- LGC (our early-stage investment business) paused traditional
construction operations and will restart as and when it is safe to
do so; for example, we have recently reopened our Modular Homes
business with procedures to ensure the safety of our employees.
Revenue from house building has stopped since March. Although this
can be partially offset by careful cost management, we expect LGC
operating profit to be down year on year. Despite the lockdown we
are still securing planning permissions across the UK, including
for a Later Living facility on the site of our former head office
in Kingswood. We expect to secure further planning permissions,
positioning us to continue investing in the UK and helping to meet
the country's need for affordable housing.
-- LGI (our Insurance business) achieved total gross written
premiums of GBP697.2 million, up 4% year on year (Q1 2019: GBP673.1
million). COVID-19 has led to a number of life insurance claims in
the UK and the US. Our thoughts are with the families of those
customers. To date our overall COVID-19 claims remain modest. We
continue to monitor mortality claims, however, our overall exposure
is limited as we reinsure the majority of our UK mortality
risk.
Institutional demand for new business remains robust.
Additionally, our business model is such that the majority of our
earnings are generated from existing business and we remain
confident in our H1 2020 outlook.
Balance sheet strength
Legal & General's balance sheet remains strong and the
solvency ratio robust. The position has moved broadly in line with
published sensitivities since the latest published figure of 174%
on 28 February 2020.
Our GBP75.9 billion annuity portfolio (1) continues to perform
in line with expectations, with minimal impact from downgrades and
no defaults year to date. The downgrade and default experience of
the portfolio has outperformed the market due to thoughtful asset
allocation and active management aimed at avoiding downgrades and
defaults, not simply beating a benchmark. For example, we have
limited exposure to airlines, hotel, leisure and traditional retail
which together represent less than 2% of our portfolio(1) .
Downgrades within investment grade have minimal impact on our
solvency ratio and our defensive positioning has meant that we have
realised approximately a third of the traded credit downgrades to
sub-investment grade experienced by the market (less than GBP250
million of our portfolio). Our balance sheet is further underpinned
by a GBP3.2 billion credit default reserve(1) .
Legal & General also announces that we expect to launch
shortly a GBP-denominated benchmark Tier 2 subordinated debt
issuance. Given the robust new business activity year to date and
the strong pipeline, we wish to capitalise on favourable debt
market conditions to provide optionality for further new business
activity over the remainder of the year and into 2021. Legal &
General will confirm the amount of debt raised after the issuance
has settled.
Footnote 1: As at 31 December 2019
Protecting our customers, employees and society
At this difficult time our priority is looking after our
customers, safeguarding the wellbeing of our employees and
supporting the needs of the broader society through Inclusive
Capitalism.
Customers : We continue to service our customers, paying
annuities and claims as they arise and providing reliable customer
service. We paid 96% of life insurance and critical illness claims
in Q1 2020, the same rate as we paid in Q1 2019. With more than
three million people in the UK relying on Legal & General for
financial security in retirement, we are committed to providing
consistent, reliable service to each of our customers.
Employees : Supported by our established agile working
technology, Legal & General's employees have been operational
throughout the lockdown with approximately 90% of employees now
working effectively from home. We have maintained all employees'
jobs at full pay while supporting their physical and mental
wellbeing through online resources and outreach.
Society : We have launched a range of initiatives to help meet
the growing social needs arising from the COVID-19 disruption. With
COVID-19 disproportionately impacting the health and wellbeing of
older populations, we believe our GBP20 million sponsorship of
Edinburgh University's research into elderly care is more important
than ever. As such, we are accelerating components of this
arrangement. Recognising the stress on the NHS and its workers, we
are supporting the NHS in a variety of ways, including by offering
free accommodation for NHS key workers at our Build to Rent sites.
For more details of our efforts to help society through the
COVID-19 pandemic, please refer to our website:
www.legalandgeneralgroup.com/media-centre/in-the-news/our-response-to-covid-19-the-coronavirus/
"Legal & General's outstanding front-line staff have
continued to help provide more certainty for our millions of
insurance and pension customers who we recognise are often under
pressure as a result of COVID-19. Our business remains robust and
is performing broadly in line with the prior year despite
tremendous volatility and disruption. Our current strength
underpins our future focus and determination to use Inclusive
Capitalism to help address the economic dislocation caused by the
pandemic and to help drive economic growth over the
longer-term."
Nigel Wilson, Group Chief Executive
Notes to editors
Legal & General Group Plc
Established in 1836, Legal & General is one of the UK's
leading financial services groups and a major global investor, with
international businesses in the US, Europe, Middle East and Asia.
With over GBP1.1 trillion in total assets under management, we are
the UK's largest investment manager for corporate pension schemes
and a UK market leader in pension risk transfer, life insurance,
workplace pensions and retirement income.
As at 23 April 2020, Legal & General has a market
capitalisation of GBP11.4 billion.
Forward-looking statements
This announcement 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 because they relate to future events
and circumstances which are beyond Legal & General's control,
including, among others, UK domestic and global economic and
business conditions, market-related risks such as fluctuations in
interest rates and exchange rates, the policies and actions of
regulatory and Governmental authorities, the impact of competition,
the timing impact of these events and other uncertainties of future
acquisitions or combinations within relevant industries. As a
result, Legal & General's actual future condition, performance
and results may differ materially from the plans, goals and
expectations set out in these forward-looking statements and
persons reading this announcement should not place reliance on
forward-looking statements. These forward-looking statements are
made only as at the date on which such statements are made and
Legal & General does not undertake to update forward-looking
statements contained in this announcement or any other
forward-looking statement it may make.
Further information
Investors
Edward Houghton Head of Investor Relations +44 (0)7585
905799
Alyssa Manning Investor Relations Director +44 (0)20 3124
2047
Sujee Rajah Investor Relations Director +1 312 964 3034
Media
John Godfrey Corporate Affairs Director +44 (0)1989 750131
Graeme Wilson Tulchan Communications +44 (0)7720 414235
Sheebani Chothani Tulchan Communications +44 (0)7805 011046
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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