Chairman’s statement

Delivering growth through social responsibility.

We have a special culture at Legal & General which inspires our people to help our customers and our communities, as well as striving to deliver financial success. In 2014, I took pride in the financial success we achieved in tough trading conditions, as well as knowing that we continued to fulfil our commitments to build a better society.

Our performance

Profit before tax increased by 8% to £1,238 million (2013: £1,144 million) with earnings per share at 16.70p (2013: 15.20p). Our total shareholder return is 300% over five years and 184% over three years, making us the best five-year performer among our global peers in the life sector. We’re proposing a full year dividend for 2014 of 11.25p. That’s 21% higher than in 2013. We have a progressive dividend policy which recognises that Solvency II has not yet been finalised. Should our Solvency II surplus be no lower than Solvency I, we intend to return up to two thirds of our cash flow to shareholders, whilst retaining at least one third in 2015 to reinvest in the business. Our dividend policy is described in the Group chief financial officer Q&A section.

A clear strategy for success

Our strategy is built with our customers and our contribution to society at its heart. It’s aligned to the long-term global macro trends which affect us all and the clarity and relevance of this strategy helps our employees deliver success.

World class leadership

We’re developing ambitious, inspiring leaders who have high expectations in terms of performance and results. Our Leadership Academy uses leading providers and offers us exciting and innovative opportunities. This year we’ve launched a new initiative, 50/50 by 2020, aligned to our goal to progress and develop talented women and become a more diverse and inclusive organisation for all our employees.

Key information for shareholders

Full year dividend

11.25p

(2013: 9.30p)

Final dividend

8.35p

To be paid on 4 June 2015 (2013: 6.90p). Our dividend policy is described in the Group chief financial officer Q&A section

Annual general meeting

2015

11am on Thursday 21 May 2015, at the Honourable Artillery Company, Armoury House, City Road, London EC1Y 2BQ

Recent Board changes

The Board leads Legal & General’s governance function. We describe in the Governance section of this report how its performance remained effective throughout 2014. I’d like to record my appreciation to John Pollock, our CEO for LGAS, who’s retiring after serving for 11 years on the Board and for 35 years at Legal & General. I would also like to thank Mike Fairey who left the Board in 2014 and welcome Olaf Swantee, Richard Meddings and Carolyn Bradley, who bring us significant new skills and experience.

Commitment to society

We play an important role in society, with responsibility for £709 billion of total assets, across the globe. In the UK, we look after the savings or provide protection for around one in six adults. Our commitment extends beyond our own customers to our communities and to society as a whole and I would especially like to commend our work on helping people suffering from stroke and mental health issues and our actions to improve housing for the elderly.

Positioned for growth

The Board are confident that our financial strength, our strategic ambition and our talented people position us well to succeed and grow in future years, even though economic uncertainty and market volatility are likely to remain issues for the foreseeable future. I would encourage shareholders to find out more about what makes us successful in this report. I hope to see as many of you as possible at our annual general meeting in May.

Signature John Stewart, Chairman (handwriting)

John Stewart
Chairman