3 SEGMENTAL ANALYSIS.


The Group provides a segmental analysis to enhance the understanding of the financial statements.

Under the requirements of [IFRS] 8, ‘Operating segments’, operating and reportable segments are presented in a manner consistent with the internal reporting provided to the chief operating decision maker, which has been identified as the Board of Legal & General Group Plc.

Reportable segments

The Group has five reporting segments comprising Risk, Savings, Investment management, International, and Group capital and financing.

The Risk segment comprises individual and group protection, individual and [bulk purchase annuities], longevity and general insurance, together with estate agencies and the housing related business conducted through our regulated mortgage network.

The Savings segment comprises non profit investment bonds, non profit pensions (including [SIPPs]), ISAs, retail unit trusts, retail platform businesses, and all with-profits products.

The Investment management segment comprises institutional fund management and LGIM America (LGIMA).

The International segment comprises Legal & General America (LGA), Legal & General France (LGF), Legal & General Netherlands (LGN) as well as our joint ventures in emerging markets.

Shareholders’ equity supporting the non profit Risk and Savings businesses is held within Legal & General Assurance Society Limited and Legal & General Pensions Limited and is managed on a groupwide basis within Group capital and financing. This also includes capital within the Group’s treasury function and unit trust funds and property partnerships, which are managed on behalf of clients but are required to be consolidated under IFRS, which do not constitute a separately reportable segment.

Transactions between reportable segments are on normal commercial terms, and are included within the reported segments.

The Group assesses performance and allocates resources on the basis of IFRS supplementary operating profit before tax. Segmental IFRS supplementary operating profit before tax is reconciled to the consolidated profit from continuing operations before tax attributable to equity holders and consolidated profit from ordinary activities after income tax.

(i) Operating profit/(loss)

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For the year ended 31 December 2011

Risk
£m

Savings
£m

Investment management
£m

International
£m

Group capital and financing1
£m

Total
£m

Operating profit/(loss)

561

128

234

137

(4)

1,056

Variation from longer term investment return2

172

(34)

(7)

(21)

(207)

(97)

Property losses attributable to non-controlling interests

(3)

(3)

Profit/(loss) from continuing operations before tax

733

94

227

116

(214)

956

Tax (expense)/credit attributable to equity holders of the Company

(193)

(22)

(44)

(41)

67

(233)

Profit/(loss) for the year after tax

540

72

183

75

(147)

723

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For the year ended 31 December 2010

Risk
£m

Savings
£m

Investment management
£m

International
£m

Group capital and financing1
£m

Total
£m

1.

For segmental purposes, Investment projects of £56m (2010: £39m) have been included in Group capital and financing.

2.

Additional information concerning the Variation from longer term investment return is provided in Note 2(vii).

Operating profit

560

115

206

102

19

1,002

Variation from longer term investment return2

102

(54)

(8)

35

15

90

Property losses attributable to non-controlling interests

Profit from continuing operations before tax

662

61

198

137

34

1,092

Tax (expense)/credit attributable to equity holders of the Company

(184)

(18)

(41)

(37)

8

(272)

Profit for the year after tax

478

43

157

100

42

820

(ii) Revenue

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For the year ended 31 December 2011

Risk
£m

Savings
£m

Investment management
£m

International
£m

Group capital and financing
£m

Total
£m

Internal revenue

49

145

18

(212)

External revenue

5,967

1,569

9,447

1,079

255

18,317

Total revenue

5,967

1,618

9,592

1,097

43

18,317

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For the year ended 31 December 2010

Risk
£m

Savings
£m

Investment management
£m

International
£m

Group capital and financing
£m

Total
£m

Internal revenue

46

128

(174)

External revenue

5,547

6,403

24,922

1,236

332

38,440

Total revenue

5,547

6,449

25,050

1,236

158

38,440

Total revenue includes investment return of £12,143m (2010: £32,671m).

(iii) Consolidated balance sheet

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As at 31 December 2011

Risk
£m

Savings
£m

Investment management
£m

International
£m

Group capital and financing2
£m

Total
£m

1.

Includes non recourse financing.

2.

Group capital and financing includes inter-segmental eliminations.

Assets

 

 

 

 

 

 

Deferred acquisition costs

52

908

1,093

2,053

Investment in associates

4

22

34

60

Investment property

486

2,146

1,077

5

1,180

4,894

Financial investments

29,591

41,059

223,135

6,463

356

300,604

Reinsurers’ share of contract liabilities

1,726

1,717

312

(1,466)

2,289

Other assets

1,333

638

1,115

1,682

(2,062)

2,706

Cash and cash equivalents

432

2,378

2,024

377

8,902

14,113

Total assets

33,624

48,868

227,351

9,966

6,910

326,719

 

 

 

 

 

 

 

Shareholders’ equity

154

155

351

1,407

3,133

5,200

Non-controlling interests

66

66

Total equity

154

155

351

1,407

3,199

5,266

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Subordinated borrowings

1,921

1,921

Participating contract liabilities

14,402

2,421

16,823

Non-participating contract liabilities

27,892

32,311

222,342

3,548

(742)

285,351

Senior borrowings1

240

286

803

1,329

Other liabilities

5,578

1,760

4,658

2,304

1,729

16,029

Total liabilities

33,470

48,713

227,000

8,559

3,711

321,453

Total equity and liabilities

33,624

48,868

227,351

9,966

6,910

326,719

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As at 31 December 2010

Risk
£m

Savings
£m

Investment management
£m

International
£m

Group capital and financing2
£m

Total
£m

1.

Includes non recourse financing.

2.

Group capital and financing includes inter-segmental eliminations.

Assets

 

 

 

 

 

 

Deferred acquisition costs

44

920

1,036

2,000

Investment in associates

4

21

32

57

Investment property

130

2,246

832

6

1,357

4,571

Financial investments

25,194

43,216

223,657

6,733

770

299,570

Reinsurers’ share of contract liabilities

1,733

1,178

299

(874)

2,336

Other assets

903

750

821

1,822

(1,993)

2,303

Cash and cash equivalents

259

2,450

2,599

477

7,251

13,036

Total assets

28,267

50,781

227,909

10,405

6,511

323,873

 

 

 

 

 

 

 

Shareholders’ equity

123

142

324

1,664

2,574

4,827

Non-controlling interests

47

47

Total equity

123

142

324

1,664

2,621

4,874

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Subordinated borrowings

1,897

1,897

Participating contract liabilities

15,351

2,447

17,798

Non-participating contract liabilities

24,868

32,963

223,940

3,625

(645)

284,751

Senior borrowings1

248

1

344

842

1,435

Other liabilities

3,276

2,077

3,644

2,325

1,796

13,118

Total liabilities

28,144

50,639

227,585

8,741

3,890

318,999

Total equity and liabilities

28,267

50,781

227,909

10,405

6,511

323,873

(iv) Gross written premiums on insurance contracts

Gross written premium is the total written by the Group before deductions for reinsurance.

Long term insurance premiums are recognised as revenue when due for payment. General insurance premiums are accounted for in the period in which the risk commences. Estimates are included for premiums not notified by the year end and provision is made for the anticipated lapse of renewals not yet confirmed. Those proportions of premiums written in a year which relate to periods of risk extending beyond the end of the year are carried forward as unearned premiums.

Premiums received relating to investment contracts are not recognised as revenue, but are included in the balance sheet investment contract liability.

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2011
£m

2010
£m

From continuing operations

 

 

Risk

 

 

Non-participating Risk business

3,778

3,309

General insurance

 

 

– Household

283

259

– Other business

21

22

Total Risk

4,082

3,590

 

 

 

Savings

 

 

Non-participating Savings business

40

41

Participating business

488

609

Total Savings

528

650

 

 

 

International

 

 

USA (LGA)

522

502

Netherlands (LGN)

194

227

France (LGF)

393

379

Total International

1,109

1,108

Total gross written premiums

5,719

5,348

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