The 2010 Savings results show improvement across all key metrics. There has been continued improvement in financial management across our Savings businesses; reducing commissions paid to intermediaries, increasing fees on some products and withdrawing products which had high reserving costs.

As anticipated, the steps taken to reduce reliance on products with high levels of commission and long payback periods has resulted in a reduction in sales of stakeholder pensions and with-profits products.

[Net cash generation] saw an increase of 134% to £68m and [IFRS operating profit] at £115m (2009: £50m) delivered a 130% improvement on the previous year. New business [APE] increased 38% on 2009 to £1,253m (2009: £907m). Overall, net new funds increased £3.1bn versus £1.7bn in 2009, with Assets under Administration growth of 16% to £64bn (2009: £55bn).

INDIVIDUAL SAVINGS

The scale of our structured products business continues to grow through our extended distribution agreement with Nationwide Building Society. This business has been further diversified with the addition of distribution partners including HSBC and RBS which has led to APE growing 85% to £183m.

Structured Products have benefited from the low interest rate environment experienced over the last two years and investors have taken the opportunity to seek higher returns with limited exposure to loss. We have a proven ability to manufacture structured products in a timely basis and we anticipate future opportunities in the market.

Changes to the tax regime continue to impact the savings landscape. The reduction in tax allowance on yearly pension contributions to £50,000 will encourage high earners to look for more flexible, tax efficient solutions for their long term savings needs. In response to this we launched a new Portfolio Regular Investment Plan (PRIP) in October to assist high net worth individuals with inheritance tax and retirement planning.

Offshore Bond sales delivered record APE growth of 463%, rising to £45m (2009: £8m) with particular success through the banks and building society distribution channels.

Re-engineering of the Self-Invested Personal Pension ([SIPP]) product, and the development of a combined high net worth (HNW) offering with LGII should help to build volume of this product.

INDIVIDUAL INVESTMENTS

In the Unit Trust market we continue to work on building our brand recognition, increase our range of funds and improve our fund capability.

We are the market leaders in retail index funds, a concept that is broadly expected to grow in usage after the Retail Distribution Review (RDR) implementation. In 2010, five of our funds had market share of gross industry sales exceeding 5% of their IMA sector.

Strong performance was shown by a range of other funds including the UK Alpha fund, the three multi-manager funds, the new Absolute Return fund and our three Corporate Bond funds.

There has been continued growth of 32% in the L&G Investments (UTM) business reflecting the success in the IFA sector to £263m (2009: £199m) and the strong investment performance in 2010 has delivered an investment platform on which to build sustained growth.

WORKPLACE SAVINGS

We have made a number of product and proposition enhancements to our Worksave platform in 2010 and continue to win mandates with large blue-chip organisations to provide their employees with worksave schemes. The target plan volumes for 2010 were comfortably exceeded with the successful completion of major scheme acquisitions including Alliance Boots, BAM and AstraZeneca. We now have pension scheme relationships with 15% of the FTSE 100 companies.

The introduction of pension scheme auto-enrolment from 2012 is likely to expand the marketplace for workplace pensions, with increased activity on tenders and employers looking to minimise costs. In addition, there will be opportunities to drive further growth from the inforce book as membership of existing schemes increases.

Two new initiatives have been launched which are designed to meet the auto-enrolment challenges facing employers: Worksave choice, which is designed to manage the process for enrolling or opting out of auto-enrolment into a trust-based qualifying pension scheme, and Worksave Pension Trust which provides a qualifying pension scheme that can offer refunds of contributions for short service leavers.

DISTRIBUTION

Plans are well under way to prepare our product range for the post-RDR world. The renewal of our distribution deal with Nationwide Building Society to provide RDR compliant investment products and services until 2016 is an important aspect of this preparation.

We also have retail savings relationships with the majority of Banks and Building Societies in the UK, including Barclays, Lloyds Banking Group, RBS, HSBC and Yorkshire Building Society.

Investment platforms are set to benefit from the changes that RDR will bring, with key IFAs expected to align with a platform of choice. We retain our 25% shareholding in Cofunds. However, we have removed the remaining exclusivity provisions so that we can work with advisers and distributors that have selected other platforms.

Our own platform, Investor Portfolio Service (IPS), is growing in scale amongst our tied distribution and banking partners, and is aligned to our strategy of continuing to increase customer numbers and build asset growth by deepening relationships with existing customers. Our WorkSave platform will continue to benefit from the emerging trend towards holistic workplace savings propositions.