Sales and assets.

WORLDWIDE SALES (APE)

£2.1bn

(2011: £1.8bn)

LGIM ASSETS UNDER MANAGEMENT (AUM)

£406bn

(2011: £371bn)

SAVINGS ASSETS UNDER ADMINISTRATION (AUA)

£70bn

(2011: £65bn)

WORLDWIDE ANNUAL PREMIUM EQUIVALENT (APE)

Annual Premium Equivalent is an industry measure of new business that is common in the UK. It is the total value of regular premiums, plus 10% of any new single premiums written for the year.

(XLS:) Worldwide Annual Premium Equivalent (APE)

 

Annual premiums 2012
£m

Single premiums 2012
£m

APE
2012
£m

Annual premiums 2011
£m

Single premiums 2011
£m

APE
2011
£m

Retail protection

151

151

131

131

Group protection

70

70

46

46

Annuities

2,339

234

2,515

251

Netherlands (LGN)

13

82

21

5

95

15

France (LGF)

38

233

61

24

232

47

France (LGF) retail investment business

105

11

46

5

Total Protection and Annuities

272

2,759

548

206

2,888

495

Investments

69

5,285

598

68

6,200

688

Insured

519

2,383

757

244

2,015

445

With-profits

58

342

92

69

525

122

India (26% share)

7

24

9

5

22

7

Total Savings

653

8,034

1,456

386

8,762

1,262

US Protection

90

90

69

69

Other (Egypt and the Gulf)

18

6

19

11

5

11

Worldwide APE

1,033

10,799

2,113

672

11,655

1,837

LGIM ASSETS UNDER MANAGEMENT (AUM)

Assets under management is the total amount of money investors have trusted to our fund managers to invest across all of our investment products.

(XLS:) LGIM Assets under management (AUM)

 

2012
£m

2011
£m

Index tracking funds

243,185

224,168

Actively managed funds

98,830

88,684

Liability-driven investments

63,957

58,359

LGIM funds under management

405,972

371,211

SAVINGS ASSETS UNDER ADMINISTRATION (AUA)

Assets under administration is the total amount of money held within all of our Savings products. These funds are managed by a number of investment managers, including LGIM.

(XLS:) Savings Assets under administration (AUA)

 

2012
£m

2011
£m

Investments

28.4

25.3

Insured

21.6

19.1

With-profits

20.1

20.5

Savings assets under administration

70.1

64.9

BUSINESS SEGMENT

PROTECTION AND ANNUITIES

RETAIL PROTECTION – continues to deliver outstanding performance with sales up 15%

Retail Protection sales were up 15% to £151m (2011: £131m), the highest level since 2007, with gross premiums now 4% higher at £947m (2011: £914m). Our market-leading business benefits from diversified distribution through IFAs and tied distribution agreements with Nationwide, Yorkshire and Leeds Building Societies (among others). We continue to diversify our product offering with our non-mortgage related protection products, which now account for over 50% of sales.

GROUP PROTECTION – high quality proposition has achieved sales growth of 52%

Group Protection’s high quality proposition has achieved sales growth of 52% to £70m (2011: £46m) and gross premiums are up by 12% to £321m (2011: £286m) as a result. Auto enrolment has encouraged companies to review employee benefits and a number have taken Legal & General’s Group Protection products alongside our Workplace pensions proposition and we continue to see strong demand for our public sector products.

ANNUITIES – record Individual Annuity sales up 26%

Individual Annuity sales were up 26% to a record £132m (2011: £105m) benefiting from growth in average pension pots. The final quarter of 2012 saw record sales of £45m, more than double those for the same period in 2011. This was delivered through maintenance of gender specific rates until 20 December 2012. Capability in bulk purchase annuities is demonstrated through sales of £102m (2011: £146m) and the completion of a £347m partial buy-in with respect to Tate & Lyle’s defined benefit pension scheme in December 2012. Note that the 2011 comparative included £110m from the Turner & Newell deal.

FRANCE AND NETHERLANDS – progress on Protection business

France and Netherlands sales have grown significantly during the year. France APE is up by 38% and Netherlands by 40%. This reflects a successful re-launch of the Netherlands term products and a 72% increase in France Group Protection new business sales.

GENERAL INSURANCE – distribution reach increased and sales up 15%

General Insurance gross premiums increased by 15% to £349m (2011: £304m) benefiting from 27% growth from our broker accounts and 36% from direct sales. General Insurance still delivered a healthy operating profit of £30m (2011: £42m) despite less favourable weather conditions in 2012, through effective management of costs and selection of risk.

LEGAL & GENERAL NETWORK – market share of 25% of intermediated mortgages

The Network facilitated lending of £19bn in 2012 (2011: £16bn) and was responsible for 1 in 8 UK mortgages.

SAVINGS

INVESTMENTS – net inflows of £1.2bn on our bancassurance IPS platform

Savings Investments operating profit of £16m (2011: £23m) reflects the investment in our RDR proposition to our IFA and Building Society partners. The retail savings market has nevertheless been challenging. The current low interest rate environment made structured products less attractive to customers, and as a result sales of the product reduced to £25m (2011: £102m). This, coupled with adviser focus on preparing for RDR and constraints on customers’ disposable income, resulted in Savings Investments sales reducing to £598m (2011: £688m).

INSURED – Workplace platform gained £1.6bn net inflows

Insured Savings operating profit grew by 41% to £48m (2011: £34m). Net cash generation increased to £46m (2011: £38m) and operational cash generation increased to £108m (2011: £101m). New business strain was broadly flat at £62m (2011: £63m) despite the 69% growth in Insured Savings sales. This reflects the benefits of our automated and scalable Workplace Pensions platform. The growth in our Workplace business offset outflows from insured bonds business, resulting in total Insured Savings net inflows of £0.6bn (2011: £0.4bn) and record APE sales of £766m (2011: £452m).

WITH PROFITS – maturing endowments in line with expectation

With-profit Savings operating profit was £69m (2011: £69m) with net cash generation of £52m (2011: £51m). Assets under administration reduced marginally to £20.1bn (2011: £20.5bn) where net outflows of £2.2bn reflect the ageing profile of the book as endowments sold in the 1980s mature.

ASSETS UNDER ADMINISTRATION – up 8% to a record £70bn

Assets under administration (AUA) increased to £70bn, up 8% on 2011. In 2012, our Workplace platform grew 58% to £6.0bn (2011: £3.8bn) and will continue to grow as more schemes are transferred to the platform and employees auto enrol. Investor Portfolio Services (IPS), our bancassurance platform, now has £8.6bn of assets (2011: £6.8bn) and is positioned to take advantage of the changes the Retail Distribution Review (RDR) will bring.

INVESTMENT MANAGEMENT

International expansion driving net flows of £7.1bn, up 139%

LGIM’s net inflows of £7.1bn were over double the £3.0bn of 2011, benefiting from record gross inflows of £34.2bn. This has led to an increase in assets under management (AUM) of 9% to £406bn (2011: £371bn). LGIM’s total revenue increased 7% to £446m (2011: £417m) reflecting the growth in AUM, whilst operating profit increased to £243m (2011: £234m). The cost:income ratio was an excellent 46%, although it increased marginally on 2011 as LGIM invested in resources to deliver its strategies for growth. We continue to deliver on our international growth strategy with net inflows from international clients of £7.8bn (2011: £4.5bn). International assets have increased 34% to £43bn (2011: £32bn) and now account for over 10% of LGIM’s AUM.

US PROTECTION 

Sales up 28% to $142m; core term product grown over 12 consecutive quarters

Legal & General America (LGA) delivered record sales with 28% growth to $142m (2011: $111m) where a focus on promoting LGA’s products to key brokerage agents in the US market has allowed sales to increase significantly. LGA is now a top five provider of term assurance in the US, from outside the top ten just three years ago. Growth in sales resulted in gross premiums increasing 10% to $922m (2011: $836m).

More details of new business can be found in Note 5.