Our five strategic imperatives* are applied across all business units. The following illustrates them in action in the Savings division.
 |
|
Imperative |
Activity |
|---|---|
|
Financial Management |
‘Capital-light’ products which reduce upfront strain from writing new business. |
|
Diversified Business |
Broader mix in the product range, increased focus on corporate market. |
|
High Quality Product, Broad Distribution |
Added SIPP capability, new fund launches, Cofunds platform. |
|
A Positive Customer Experience |
Less reliance on upfront commission and increased focus on customer retention. |
|
High Expectation Culture |
Technology usage reducing in-force unit costs. Increased training investment to upskill employees. |
* As outlined at Strategy of the Group.
During 2008 we grew and diversified our savings product portfolio. We acquired Suffolk Life, a leading provider of Self Invested Personal Pensions (SIPPs). This gives us a significant presence in this growing, profitable market. Our SIPP products have a relatively low capital requirement, so can be rapidly cash-generative for Legal & General. We continued to expand our pension product range by introducing a mid-market ‘SIPP-Light’ product.
Our core retail investments business grew substantially, partly due to the acquisition of Nationwide Unit Trust Managers (NUTM). We broadened our product range for savers and added a multi-manager proposition in March 2008 which further extended our fund range. The multi-manager format permits wide choice between asset classes, investment styles and asset managers.
During 2008 we made good progress in providing group pension and group SIPP products to corporate clients. The Share SIPP element of our Group SIPP benefited from a growing trend for larger employers to offer these products to their staff.
In 2007 we said that Capital Gains Tax changes would damage the Investment Bond market. New business sales for bonds fell by 48% with negative effects on unit costs and net margins. Product diversity can mitigate regulatory or fiscal change, and we continue to extend our bond product range. Our Dublin based international bond product enjoyed a successful first year.
With-profits bond sales grew significantly despite the economic environment. New products with guarantees were well received by more cautious investors and retention of existing policies improved. More endowment policies were sold to Traded Endowment Policy (TEP) providers instead of being surrendered, and the number of endowment policyholders retaining policies to maturity also increased.
We significantly broadened distribution during 2008. The Nationwide Building Society partnership boosted sales of savings products, and we continued to extend our online presence, strengthening our relationship with Cofunds. Cofunds is now established as part of our distribution engine, enabling us to compete successfully and cost-effectively in the platform-based, open-architecture market.
Many of our 2008 initiatives moved us towards a less capital intensive product mix. This means better value for customers and a faster payback for Legal & General. We are moving towards distribution which relies less on upfront commission payments, and more on trail commission or remuneration set directly by distributors with their customers. This provides customers with greater clarity and reduces our risk exposure to distributors.
During 2008, we made significant progress in reducing unit costs and improving efficiency for our in-force business by using technology more effectively. This helped reduce headcount while increasing the average investment in training and professional development per employee.