Chairman's statement.

Legal & General again performed strongly in 2012. My colleagues delivered higher sales, providing vital financial products and services for millions of customers. Strong earnings growth meanwhile enables us to further increase dividends to shareholders.

John Stewart, Chairman (photo)

A RECORD YEAR IN 2012

All our UK operating business divisions performed strongly and international contributions grew, particularly from the US. 2012 also highlighted our ability to adapt to changing distribution through the Retail Distribution Review (RDR) and pension auto enrolment, where we are one of the market leaders among large employers.

Our efficient operating model drove a 12% growth in earnings per share, which underpins the further recommended 20% increase in the final dividend.

TOTAL SHAREHOLDER RETURN AND DIVIDEND

KEY INFORMATION FOR SHAREHOLDERS

FULL YEAR DIVIDEND

7.65p

(2011: 6.40p)

FINAL DIVIDEND

5.69p

To be paid on 29 May 2013 (2011: 4.74p)

ANNUAL GENERAL MEETING

2013

11.00am on Wednesday 22 May 2013 at the Honourable Artillery Company, Armoury House, City Road, London EC1Y 2BQ

TSR for 2012 was 50.4% – among the top four European life insurers and the top dozen performers in the FTSE 100. Over the last three years our TSR is 112%, the highest in our sector in the world of major life insurance companies.

The Board is recommending a final dividend of 5.69p per share, payable on 29 May 2013. This is an increase of 20% on the prior year reflecting our strong performance in 2012 and positive outlook for the Company in 2013.

APPOINTMENT OF NEW CHIEF EXECUTIVE

Following a thorough internal and external process, the Board was delighted to appoint Dr Nigel Wilson, formerly Group Chief Financial Officer (CFO), as Group Chief Executive, effective from 30 June 2012. Nigel’s experience as CFO and his extensive external experience means he is very well qualified to lead the Company through the next stage of its growth.

In September 2012 we welcomed Mark Zinkula, CEO LGIM, to the Board to bring greater knowledge and experience of investment management, and the US market.

The Board is currently engaged in a process to identify and appoint a new Chief Financial Officer.

OUR STAFF

Our employees again contributed hugely in 2012. Our employee survey during the year showed record levels of engagement and reflected the very strong commitment shown at all levels of the Company to delivering the best possible outcomes for customers and shareholders. I was once again proud to recognise the outstanding charitable endeavours of our employees at the Chairman’s Community Awards and the Board remains very grateful to all our employees for their contribution during the year.

OUTLOOK

Our focus on financial and operational discipline underpins value for customers and returns to shareholders. The resulting financial strength positions us well for expansion.

JOHN STEWART
CHAIRMAN