During 2010, Legal & General America (LGA) completed the first phase of its capital management programme. This saw the repurchase at a discount to par of a further $440m of externally financed debt. This had been issued as part of the funding of Triple X reserves on portions of business written prior to 2005.

In December 2010, this business was reinsured from LGA to Legal & General Assurance Society (LGAS) and assets were posted from LGAS to US trusts.

This transaction benefits both our US and UK businesses. Overall, [IGD surplus] is enhanced by $129m (£82m), embedded value is increased by $155m (£100m) and the annual external funding costs are reduced by an estimated $12m (£8m).

The new internal reinsurance solution also demonstrates the potential for further capital and profit enhancing transactions from our US capital management programme.