33 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 reportable segments comprising LGAS, LGR, LGIM, LGA, LGC and group expenses.

LGAS represents Insurance business (retail protection, group protection and general insurance) and Savings business (platforms, workplace, SIPPs, mature savings and with-profits). The LGAS segment also includes Legal & General France (LGF), Legal & General Netherlands (LGN) and emerging markets.

LGR represents Annuities (both individual and bulk purchase) and longevity insurance.

The LGIM segment represents institutional and retail investment management businesses.

The LGC segment includes shareholders’ equity supporting the non profit LGR and LGAS businesses held within Society and Legal & General Pensions Limited (LGPL) and capital held by the group’s treasury function. LGC and group expenses also incorporates inter-segmental eliminations, consolidation adjustments and consolidated unit trusts and property partnerships managed on behalf of clients which do not constitute a separately reportable segment.

The LGA segment represents protection business written in the USA.

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

(i) Profit/(loss) for the year

For the year ended 31 December 2014

LGAS
£m

LGR
£m

LGIM
£m

LGC
£m

LGA
£m

Group expenses and debt costs
£m

Total
£m

1.

Positive investment and other variances for LGR are primarily due to favourable default experience and an increase in exposure to Direct Investments which has enhanced the risk adjusted return. Negative investment and other variances for LGC reflect lower equity returns from shareholder funds.

2.

The low tax charge for LGC primarily reflects the impact of non-taxable income and recognition of losses.

Operating profit/(loss)

460

428

336

203

56

(208)

1,275

Investment and other variances1

(7)

67

(12)

(37)

(13)

(42)

(44)

Gains attributable to non-controlling interests

7

7

Profit/(loss) before tax attributable to equity holders

453

495

324

166

43

(243)

1,238

Tax (expense)/credit attributable to equity holders of the Company2

(102)

(97)

(70)

(9)

(19)

51

(246)

Profit/(loss) for the year

351

398

254

157

24

(192)

992

For the year ended 31 December 2013

LGAS
£m

LGR
£m

LGIM
£m

LGC
£m

LGA
£m

Group expenses and debt costs
£m

Total
£m

3.

The segmental analysis of profit/(loss) for the year has been restated to reflect the adoption by the group of IFRS 10 ‘Consolidated Financial Statements’. Further details are contained in Note 1. The impact is to increase profit for the year by £10m for 2013.

Operating profit/(loss)

444

310

304

179

92

(171)

1,158

Investment and other variances

(73)

63

(6)

60

(13)

(58)

(27)

Gains attributable to non-controlling interests3

13

13

Profit/(loss) before tax attributable to equity holders

371

373

298

239

79

(216)

1,144

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

(83)

(83)

(65)

(27)

(43)

63

(238)

Profit/(loss) for the year

288

290

233

212

36

(153)

906

(ii) Revenue

For the year ended 31 December 2014

LGAS
£m

LGR
£m

LGIM
£m

LGA
£m

LGC and other1
£m

Total
£m

1.

LGC and other includes LGC, inter-segmental eliminations and group consolidation adjustments.

Internal revenue

300

373

220

(218)

(675)

External revenue

4,971

13,767

27,972

377

4,430

51,517

Total revenue

5,271

14,140

28,192

159

3,755

51,517

For the year ended 31 December 20131

LGAS
£m

LGR
£m

LGIM
£m

LGA
£m

LGC and other2
£m

Total
£m

1.

The segmental analysis of revenue has been restated to reflect the adoption by the group of IFRS 10, ‘Consolidated Financial Statements’. Further details are contained in Note 1. The impact is to increase the total revenue by £13m for 2013.

2.

LGC and other includes LGC, inter-segmental eliminations and group consolidation adjustments.

Internal revenue

210

146

(71)

(285)

External revenue

6,600

4,468

27,173

460

563

39,264

Total revenue

6,810

4,468

27,319

389

278

39,264

Total revenue includes investment return of £40,639m (2013: £32,234m).

(iii) Consolidated balance sheet

As at 31 December 2014

LGAS
£m

LGR
£m

LGIM
£m

LGA
£m

LGC and other1
£m

Total
£m

1.

LGC and other includes LGC, inter-segmental eliminations, consolidation adjustments and net asset value attributable to unit holders.

2.

Includes non-recourse borrowings.

Assets

 

 

 

 

 

 

Investments

51,307

46,987

260,488

2,160

30,682

391,624

Other assets

11,569

884

1,510

2,835

(8,869)

7,929

Total assets

62,876

47,871

261,998

4,995

21,813

399,553

 

 

 

 

 

 

 

Shareholders’ equity

847

541

870

3,770

6,028

Non-controlling interests

275

275

Total equity

847

541

870

4,045

6,303

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Core borrowings

2,977

2,977

Operational borrowings2

261

2

6

285

161

715

Participating contract liabilities

15,021

15,021

Non-participating contract liabilities

44,065

43,862

249,612

1,923

(1,028)

338,434

Other liabilities

2,682

4,007

11,839

1,917

15,658

36,103

Total liabilities

62,029

47,871

261,457

4,125

17,768

393,250

 

 

 

 

 

 

 

Total equity and liabilities

62,876

47,871

261,998

4,995

21,813

399,553

As at 31 December 20131

LGAS
£m

LGR
£m

LGIM
£m

LGA
£m

LGC and other2
£m

Total
£m

1.

The segmental analysis of the consolidated balance sheet has been restated to reflect the adoption by the group of IFRS 10, ‘Consolidated Financial Statements’. Further details are contained in Note 1. The impact is to increase the total equity by £207m for 2013.

2.

LGC and other includes LGC, inter-segmental eliminations, consolidation adjustments and net asset value attributable to unit holders.

3.

Includes non-recourse borrowings.

Assets

 

 

 

 

 

 

Investments

52,619

33,974

249,396

1,998

20,485

358,472

Other assets

9,891

2,491

1,335

2,393

(8,310)

7,800

Total assets

62,510

36,465

250,731

4,391

12,175

366,272

 

 

 

 

 

 

 

Shareholders’ equity

783

421

816

3,622

5,642

Non-controlling interests

265

265

Total equity

783

421

816

3,887

5,907

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Core borrowings

2,453

2,453

Operational borrowings3

252

2

8

268

245

775

Participating contract liabilities

15,438

15,438

Non-participating contract liabilities

42,939

32,218

243,009

1,708

(847)

319,027

Other liabilities

3,098

4,245

7,293

1,599

6,437

22,672

Total liabilities

61,727

36,465

250,310

3,575

8,288

360,365

 

 

 

 

 

 

 

Total equity and liabilities

62,510

36,465

250,731

4,391

12,175

366,272

(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.

Outward reinsurance premiums of £1,122m (2013: £874m) are accounted for in the same accounting period as the related premiums for the direct or inwards reinsurance business being reinsured.

 

2014
£m

2013
£m

From continuing operations

 

 

LGAS

 

 

Non-participating UK Protection business

1,407

1,326

Non-participating UK Savings business

33

36

Participating UK Savings business

81

116

Netherlands (LGN)

200

200

France (LGF)

432

444

General insurance

 

 

– Household

354

352

– Other business

23

23

Total LGAS

2,530

2,497

LGR

 

 

Non-participating UK Annuity business

6,960

3,011

LGA

678

654

Total gross written premiums

10,168

6,162

(v) Fees from fund management and investment contracts

Fees charged for investment management services are recognised as revenue as the services are provided. Initial fees which exceed the level of recurring fees and relate to the future provision of services are deferred and amortised over the anticipated period in which the services will be provided. The total fees earned from fund management and investment contracts for the year is £1,085m (2013: £1,040m).