LGEN — Legal & General News Story

0.000.00%

Last trade - 00:00

FinancialsBalancedLarge CapNeutral

Market Cap
£14.54bn
Enterprise Value
£4.03bn
Revenue
£24.02bn

All News

REG - Legal & General Grp - L&G Full Year Results 2015 Part 2 <Origin Href="QuoteRef">LGEN.L</Origin> - Part 1

Legal & GeneralAnnouncement

15/03/2016 07:07

RNS Number : 0690S
Legal & General Group Plc
15 March 2016
Legal & General Group Plc
Full Year Results 2015 Part 2
IFRS and Cash Page 27
Operating profit
For the year ended 31 December 2015
2015 2014 
Notes m m 
From continuing operations 
Legal & General Retirement (LGR) 2.02 639 428 
Legal & General Investment Management (LGIM) 2.03 355 321 
Legal & General Capital (LGC) 2.05 233 203 
Insurance 2.02 293 370 
Savings 2.02 99 105 
Legal & General America (LGA) 83 56 
Operating profit from divisions 1,702 1,483 
Group debt costs¹ (153) (142) 
Group investment projects and expenses² 2.06 (94) (66) 
Operating profit 1,455 1,275 
Investment and other variances 2.07 (119) (44) 
Gains on non-controlling interests 19 7 
Profit before tax attributable to equity holders 1,355 1,238 
Tax expense attributable to equity holders of the company 2.16 (261) (246) 
Profit for the year 1,094 992 
Profit attributable to equity holders of the company 1,075 985 
p p 
Earnings per share³ 2.10 18.16 16.70 
Adjusted earnings per share^3,4 2.10 18.58 16.70 
Diluted earnings per share³ 2.10 18.04 16.54 
Adjusted diluted earnings per share^3,4 2.10 18.46 16.54 
1. Group debt costs exclude interest on non recourse financing.
2. Group investment projects and expenses include restructuring costs of 50m (2014: 31m).
3. All earnings per share calculations are based on profit attributable to equity holders of the company.
4. Adjusted earnings per share and adjusted diluted earnings per share have been calculated excluding the net loss, 25m, resulting from the disposal of subsidiary and joint venture investments during the year.
This supplementary operating profit information (one of the group's key performance indicators) provides further analysis of the results reported under IFRS and the group believes it provides shareholders with a better understanding of the underlying performance of the business in the year.
LGR represents worldwide annuities (both individual and bulk purchase), longevity insurance and lifetime mortgages.
The LGIM segment represents institutional and retail investment management and workplace savings businesses.
LGC represents the medium term investment return (less expenses) on group invested assets, using assumptions applied to the average balance of group invested assets (including interest bearing intra-group balances).
Insurance represents business in retail protection, group protection, general insurance, networks, Legal & General France (LGF) sold on 31 December 2015 and Legal & General Netherlands (LGN).
Savings represents business in platforms, SIPPs, mature savings, with-profits and emerging markets.
The LGA segment comprises protection business written in the USA.
Following changes to the organisational structure, Insurance and Savings are now reported as separate segments. Previously, Insurance and Savings had been reported together as the LGAS segment. In addition, the workplace savings business is now included in the LGIM segment. Workplace savings had previously been recognised in the Savings (LGAS) segment. Comparatives have been amended accordingly in line with this reclassification. The impact of the workplace savings reclassification has been to reduce LGIM 2014 operating profit by 15m, with an offsetting increase in the Savings segment's operating profit.
Operating profit measures the pre-tax result excluding the impact of investment volatility, economic assumption changes and exceptional items. Operating profit therefore reflects longer-term economic assumptions for the Group's insurance businesses and shareholder funds, except for LGA which excludes unrealised investment returns to align with the liability measurement under US GAAP. Variances between actual and smoothed investment return assumptions are reported below operating profit. Exceptional income and expenses which arise outside the normal course of business in the year, such as merger and acquisition, start-up and closure costs, are also excluded from operating profit.
IFRS and Cash Page 28
2.01 Reconciliation of operational cash to operating profit before tax
The table below provides an analysis of the operational cash generation by each of the Group's business segments, together with a reconciliation to operating profit before tax. 
Opera- Changes Operating
tional New Net in Operating profit/
cash business cash Exper- valuation Non-cash Inter- profit/ Tax (loss)
gene- surplus/ gene- ience assump- items and national (loss) expense/ before
For the year ended ration¹ (strain) ration variances tions other and other² after tax (credit) tax
31 December 2015 m m m m m m m m m m
LGR 372 45 417 13 114 (20) - 524 115 639
LGIM³ 303 (22) 281 (1) 1 (2) - 279 76 355
- LGIM excluding workplace 
 savings 282 - 282 - - - - 282 77 359
- Workplace savings 21 (22) (1) (1) 1 (2) - (3) (1) (4)
LGC 187 - 187 - - - - 187 46 233
Insurance 323 25 348 (14) (45) (46) (10) 233 60 293
Savings³ 119 (9) 110 (9) - (23) 1 79 20 99
LGA 54 - 54 - - - (17) 37 46 83
Total from divisions 1,358 39 1,397 (11) 70 (91) (26) 1,339 363 1,702
Group debt costs (122) - (122) - - - - (122) (31) (153)
Group investment projects 
and expenses (19) - (19) - - - (56) (75) (19) (94)
Total 1,217 39 1,256 (11) 70 (91) (82) 1,142 313 1,455
1. Operational cash generation includes dividends remitted from LGF of 1m (2014: 2m) and LGN of 28m (2014: 29m) within the Insurance line and LGA of 54m (2014: 46m).
2. International and other includes 40m (2014: 25m) of restructuring costs (50m before tax) (2014: 31m before tax) within the Group investment projects and expenses line.
3. LGIM includes the workplace savings business which was previously reported in Savings. Prior year comparatives have been amended.
Operational cash generation for LGR, LGIM, Insurance and Savings represents the expected surplus generated in the year from the in-force non profit annuities, workplace savings, protection and savings businesses using best estimate assumptions. The LGIM operational cash generation also includes operating profit after tax from the institutional and retail investment management businesses. The Insurance operational cash generation also includes dividends remitted from LGF and LGN and operating profit after tax from general insurance and the remaining Insurance businesses. The Savings operational cash generation also includes the shareholders' share of bonuses on with-profits business and operating profit after tax from the remaining Savings businesses. 
New business surplus/strain for LGR, LGIM, Insurance and Savings represents the cost of acquiring new business and setting up regulatory reserves in respect of the new business for UK non profit annuities, workplace savings, protection and savings, net of tax. The new business surplus and operational cash generation for LGR, LGIM, Insurance and Savings exclude the required solvency margin from the liability calculation.
Net cash generation for LGR, LGIM, Insurance and Savings is defined as operational cash generation less new business strain. 
Operational cash generation and net cash for LGC represents the operating profit (net of tax).
The operational cash generation for LGA represents the dividends received.
See Note 2.02 for more detail on experience variances, assumption changes and non-cash items.
IFRS and Cash Page 29
2.01 Reconciliation of operational cash to operating profit before tax (continued)
Opera- Changes Operating
tional New Net in Operating profit/
cash business cash Exper- valuation Non-cash Inter- profit/ Tax (loss)
gene- surplus/ gene- ience assump- items and national (loss) expense/ before
For the year ended ration¹ (strain) ration variances tions other and other² after tax (credit) tax
31 December 2014 m m m m m m m m m m
LGR 292 51 343 (13) 48 (32) - 346 82 428
LGIM³ 275 (29) 246 (3) 5 2 - 250 71 321
- LGIM excluding workplace 
 savings 262 - 262 - - - - 262 74 336
- Workplace savings 13 (29) (16) (3) 5 2 - (12) (3) (15)
LGC 162 - 162 - - - - 162 41 203
Insurance 332 (5) 327 (8) 24 (50) (6) 287 83 370
Savings³ 127 (14) 113 (7) 3 (22) (1) 86 19 105
LGA 46 - 46 - - - (14) 32 24 56
Total from divisions 1,234 3 1,237 (31) 80 (102) (21) 1,163 320 1,483
Group debt costs (112) - (112) - - - - (112) (30) (142)
Group investment projects 
and expenses (21) - (21) - - - (32) (53) (13) (66)
Total 1,101 3 1,104 (31) 80 (102) (53) 998 277 1,275
1. Operational cash generation includes dividends remitted from LGF of 2m and LGN of 29m within the Insurance line and LGA of 46m. 
2. International and other includes 25m of restructuring costs (31m before tax) within the Group investment projects and expenses line.
3. LGIM includes the workplace savings business which was previously reported in Savings.
IFRS and Cash Page 30
2.02 Analysis of LGR, Insurance and Savings operating profit
LGR Insurance Savings¹ LGR Insurance Savings¹
2015 2015 2015 2014 2014 2014 
m m m m m m 
Net cash generation 417 348 110 343 327 113 
Experience variances 
 Persistency 4 5 (2) (3) (3) 1 
 Mortality/Morbidity 18 (16) - 13 (7) 2 
 Expenses - 2 3 (3) 1 (2) 
 Project and development costs (20) (2) (2) (19) (6) (3) 
 Other² 11 (3) (8) (1) 7 (5) 
Total experience variances 13 (14) (9) (13) (8) (7) 
Changes to valuation assumptions 
 Persistency³ - 48 - - 43 (1) 
 Mortality/Morbidity⁴ 97 (20) - 61 37 - 
 Expenses⁵ 17 27 (2) (5) 11 3 
 Reinsurance modelling⁶ - (93) - - - - 
 Other - (7) 2 (8) (67) 1 
Total valuation assumption changes 114 (45) - 48 24 3 
Movement in non-cash items 
 Deferred tax - - 2 (11) (3) 6 
 Utilisation of brought forward trading losses (25) (6) - (62) (11) 2 
 Acquisition expense tax relief ⁷ - (30) (4) - (36) (6) 
 Deferred Acquisition Costs (DAC)⁸ - - (54) - - (76) 
 Deferred Income Liabilities (DIL)⁸ - - 39 - - 50 
 Other 5 (10) (6) 41 - 2 
Total non-cash movement items (20) (46) (23) (32) (50) (22) 
Other - (10) 1 - (6) (1) 
Operating profit after tax 524 233 79 346 287 86 
Tax gross up 115 60 20 82 83 19 
Operating profit before tax 639 293 99 428 370 105 
1. Savings excludes the workplace savings business which is now reported in LGIM. Prior period comparatives have been amended. The impact on the Savings comparatives is the increase of net cash generation by 16m and the increase of operating profit by 15m. Offsetting movements have been reflected in the LGIM segment.
2. The Other LGR experience variance reflects the benefit to profit of selective longevity and asset reinsurance related to bulk annuity transactions, offset by other smaller experience variances.
3. The Insurance persistency valuation assumption change reflects continued improvement in retail protection lapse rates.
4. The mortality/morbidity valuation assumption change in LGR primarily reflects late retirement factor assumption changes and a change in mortality reserving assumptions in relation to unreported deaths of deferred annuitants. The Insurance mortality/morbidity valuation assumption change has arisen on the strengthening of the reserving basis on the Whole Life Protection product to reflect the current expectation of future mortality improvement on this business.
5. The LGR and Insurance positive expense valuation assumption changes represents the continued operational efficiency reducing the existing business cost base.
6. The reinsurance modelling for our UK protection business has been enhanced. Recent reinsurance contracts have been written on a risk premium basis (as opposed to level premium) and the model change ensures that for these treaties, sufficient prudence is being held in later years. The one-off impact reduced operating profit by 93m in 2015. This also defers a higher proportion of cash generation into the later years of these reinsurance contracts.
7. Net cash for Insurance and Savings recognises tax relief from prior year acquisition expenses, which are spread evenly over seven years under relevant 'I-E' tax legislation in the period the cash flows actually occur. In contrast, operating profit typically recognises the value of these future cash flows in the same period as the underlying expense as deferred tax amounts. The reconciling amounts arising from these items are included in the table above. Following the removal of new retail protection business from the 'I-E' tax regime, and the removal of commission from new insured savings business under the Retail Distribution Review at the end of 2012, no material amount of deferred tax assets arise on new acquisition expenses and the value of these future cash flows for post-2013 acquisition expenses have been reflected within net cash. The residual prior year acquisition expenses will run off predictably to 2018.
8. The DAC in Savings represents the amortisation charges offset by new acquisition costs deferred in the year. The DIL reflects initial fees on insured savings business which relate to the future provision of services and are deferred and amortised over the anticipated period in which these services are provided.
IFRS and Cash Page 31
2.03 LGIM
2015 2014
m m
Investment management revenue 694 645
Investment management expenses (335) (309)
Workplace savings operating loss (4) (15)
Total LGIM operating profit 355 321
2.04 General insurance operating profit and combined operating ratio
2015 2014
m m
General insurance operating profit¹ 51 59
General insurance combined operating ratio (%)² 89 87
1. The general insurance operating profit includes the underwriting result and investment return.
2. The calculation of the general insurance combined operating ratio incorporates commission and expenses as a percentage of net earned premiums.
2.05 LGC
2015 2014
m m
Investment return 251 219
Expenses (18) (16)
Total LGC operating profit 233 203
2.06 Group investment projects and expenses
2015 2014
m m
Group investment projects and central expenses (44) (35)
Restructuring costs (50) (31)
Total Group investment projects and expenses (94) (66)
2.07 Investment and other variances
2015 2014
m m
Investment variance¹ (57) (8)
M&A related² (57) (21)
Other³ (5) (15)
Total Investment and other variances (119) (44)
1. 2015 investment variance is negative, primarily driven by below expected equity performance and a defined pension benefit scheme variance of (15)m (2014: 40m), that reflects the actuarial losses and gains and valuation differences arising on annuity assets held by defined benefit pension schemes that have been purchased from Legal & General Assurance Society Limited (Society). 
2. M&A related includes gains and losses, expenses and intangible amortisation relating to acquisitions and disposals. 2015 includes the 25m net loss resulting from the disposal of subsidiary and joint venture investments during the year.
3. Other includes new business start-up costs and other non-investment related variance items.
IFRS and Cash Page 32
Consolidated Income Statement
For the year ended 31 December 2015
2015 2014
Notes m m
Revenue 
Gross written premiums 6,321 10,168
Outward reinsurance premiums (1,603) (1,122)
Net change in provision for unearned premiums 21 1
Net premiums earned 4,739 9,047
Fees from fund management and investment contracts 1,139 1,085
Investment return 5,947 40,639
Operational income 876 746
Total revenue 12,701 51,517
Expenses 
Claims and change in insurance liabilities 5,080 15,071
Reinsurance recoveries (2,466) (975)
Net claims and change in insurance liabilities 2,614 14,096
Change in provisions for investment contract liabilities 5,615 33,385
Acquisition costs 838 873
Finance costs 186 183
Other expenses 1,893 1,748
Transfers to/(from) unallocated divisible surplus 141 (181)
Total expenses 11,287 50,104
Profit before tax 1,414 1,413
Tax expense attributable to policyholder returns (59) (175)
Profit before tax attributable to equity holders 1,355 1,238
Total tax expense (320) (421)
Tax expense attributable to policyholder returns 59 175
Tax expense attributable to equity holders 2.16 (261) (246)
Profit for the year 1,094 992
Attributable to: 
Non-controlling interests 19 7
Equity holders of the company 1,075 985
Dividend distributions to equity holders of the company during the year 2.18 701 580
Dividend distributions to equity holders of the company proposed after the year end 2.18 592 496
p p 
Earnings per share¹ 2.10 18.16 16.70
Adjusted earnings per share^1,2 2.10 18.58 16.70
Diluted earnings per share¹ 2.10 18.04 16.54
Adjusted diluted earnings per share^1,2 2.10 18.46 16.54
1. All earnings per share calculations are based on profit attributable to equity holders of the company.
2. Adjusted earnings per share and adjusted diluted earnings per share have been calculated excluding the net loss, 25m, resulting from the disposal of subsidiary and joint venture investments during the year. Adjusted EPS is a non IFRS reporting measure.
IFRS and Cash Page 33
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2015
2015 2014
Notes m m
Profit for the year 1,094 992
Items that will not be reclassified subsequently to profit or loss 
Actuarial gains/(losses) on defined benefit pension schemes 47 (117)
Tax on actuarial losses on defined benefit pension schemes (11) 23
Actuarial (losses)/gains on defined benefit pension schemes transferred to unallocated divisible surplus (17) 47
Tax on actuarial (losses)/gains on defined benefit pension schemes transferred to unallocated divisible surplus 4 (9)
Total items that will not be reclassified to profit or loss subsequently 23 (56)
Items that may be reclassified subsequently to profit or loss 
Exchange differences on translation of overseas operations 25 12
Net change in financial investments designated as available-for-sale (64) 40
Tax on net change in financial investments designated as available-for-sale 22 (14)
Total items that may be reclassified to profit or loss subsequently (17) 38
Other comprehensive income/(expense) after tax 6 (18)
Total comprehensive income for the year 1,100 974
Total comprehensive income attributable to: 
Non-controlling interests 19 7
Equity holders of the company 1,081 967
IFRS and Cash Page 34
Consolidated Balance Sheet
As at 31 December 2015
2015 2014
Notes m m
Assets 
Goodwill 83 79
Purchased interest in long term businesses and other intangible assets 292 342
Deferred acquisition costs 1,887 1,936
Investment in associates and joint ventures 220 149
Property, plant and equipment 92 146
Investment property 2.15 8,082 8,152
Financial investments 2.15 354,063 360,614
Reinsurers' share of contract liabilities 4,120 2,906
UK deferred tax asset 2.16 20 54
Current tax recoverable 236 217
Other assets 3,618 2,249
Assets of operations classified as held for sale 2.13 3,409 -
Cash and cash equivalents 20,677 22,709
Total assets 396,799 399,553
Equity 
Share capital 2.19 149 149
Share premium 2.19 976 969
Employee scheme treasury shares (30) (37)
Capital redemption and other reserves 89 117
Retained earnings 5,220 4,830
Shareholders' equity 6,404 6,028
Non-controlling interests 289 275
Total equity 6,693 6,303
Liabilities 
Participating insurance contracts 2.22 5,618 6,579
Participating investment contracts 2.23 4,912 7,667
Unallocated divisible surplus 893 983
Value of in-force non-participating contracts (184) (208)
Participating contract liabilities 11,239 15,021
Non-participating insurance contracts 2.22 49,754 49,876
Non-participating investment contracts 2.23 278,554 288,558
Non-participating contract liabilities 328,308 338,434
Core borrowings 2.20 3,092 2,977
Operational borrowings 2.21 536 715
Provisions 2.27 1,171 1,247
UK deferred tax liabilities 2.16 137 180
Overseas deferred tax liabilities 2.16 436 434
Current tax liabilities 95 9
Payables and other financial liabilities 2.17 22,709 16,131
Other liabilities 737 963
Net asset value attributable to unit holders 18,277 17,139
Liabilities of operations classified as held for sale 2.13 3,369 -
Total liabilities 390,106 393,250
Total equity and liabilities 396,799 399,553
IFRS and Cash Page 35
Consolidated Statement of Changes in Equity 
Employee Capital 
scheme redemption Non- 
Share Share treasury and other Retained controlling Total
capital premium shares reserves earnings Total interests equity
For the year ended 31 December 2015 m m m m m m m m
As at 1 January 2015 149 969 (37) 117 4,830 6,028 275 6,303
Profit for the year - - - - 1,075 1,075 19 1,094
Exchange differences on translation of 
overseas operations - - - 25 - 25 - 25
Actuarial gains on defined benefit 
pension schemes - - - - 36 36 - 36
Actuarial gains on defined benefit 
pension schemes transferred to 
unallocated divisible surplus - - - - (13) (13) - (13)
Net change in financial investments 
designated as available-for-sale - - - (42) - (42) - (42)
Total comprehensive income/(expense) 
for the year - - - (17) 1,098 1,081 19 1,100
Options exercised under 
share option schemes: 
- Savings related share option scheme - 7 - - - 7 - 7
Shares purchased - - (3) - - (3) - (3)
Shares vested - - 10 (23) - (13) - (13)
Employee scheme treasury shares: 
- Value of employee services - - - 26 - 26 - 26
Share scheme transfers to 
retained earnings - - - - (21) (21) - (21)
Dividends - - - - (701) (701) - (701)
Movement in third party interests - - - - - - (5) (5)
Currency translation differences - - - (14) 14 - - -
As at 31 December 2015 149 976 (30) 89 5,220 6,404 289 6,693
IFRS and Cash Page 36
Consolidated Statement of Changes in Equity (continued) 
Employee Capital 
scheme redemption Non- 
Share Share treasury and other Retained controlling Total
capital premium shares reserves earnings Total interests equity
For the year ended 31 December 2014 m m m m m m m m
As at 1 January 2014 148 959 (39) 57 4,517 5,642 265 5,907
Profit for the year - - - - 985 985 7 992
Exchange differences on translation of 
overseas operations - - - 12 - 12 - 12
Actuarial losses on defined benefit 
pension schemes - - - - (94) (94) - (94)
Actuarial losses on defined benefit 
pension schemes transferred to 
unallocated divisible surplus - - - - 38 38 - 38
Net change in financial investments 
designated as available-for-sale - - - 26 - 26 - 26
Total comprehensive income 
for the year - - - 38 929 967 7 974
Options exercised under 
share option schemes: 
- Savings related share option scheme 1 10 - - - 11 - 11
Shares purchased - - (7) - - (7) - (7)
Shares vested - - 9 (17) - (8) - (8)
Employee scheme treasury shares: 
- Value of employee services - - - 20 - 20 - 20
Share scheme transfers 
to retained earnings - - - - (17) (17) - (17)
Dividends - - - - (580) (580) - (580)
Movement in third party interests - - - - - - 3 3
Currency translation differences - - - 19 (19) - - -
As at 31 December 2014 149 969 (37) 117 4,830 6,028 275 6,303
IFRS and Cash Page 37
Consolidated Cash Flow Statement
For the year ended 31 December 2015
2015 2014 
Notes m m 
Cash flows from operating activities 
Profit for the year 1,094 992 
Adjustments for non cash movements in net profit for the year 
Realised and unrealised losses/(gains) on financial investments and investment properties 4,077 (30,851) 
Investment income (9,760) (9,205) 
Interest expense 186 183 
Tax expense 320 421 
Other adjustments (70) 87 
Net (increase)/decrease in operational assets 
Investments held for trading or designated as fair value through profit or loss 1,007 5,931 
Investments designated as available-for-sale 158 225 
Other assets (2,594) (151) 
Net increase/(decrease) in operational liabilities 
Insurance contracts (1,083) 9,228 
Transfer to/(from) unallocated divisible surplus (90) (222) 
Investment contracts (9,524) 10,156 
Value of in-force non-participating contracts 24 40 
Other liabilities 6,645 9,811 
Cash used in operations (9,610) (3,355) 
Interest paid (186) (203) 
Interest received 5,286 4,857 
Tax paid¹ (244) (76) 
Dividends received 3,931 4,264 
Net cash flows (used in)/generated from operating activities (823) 5,487 
Cash flows from investing activities 
Net acquisition of plant, equipment and intangibles (24) (80) 
Acquisitions² 2.11 (5) (38) 
Disposal of subsidiaries³ 2.12 (82) 56 
Investment in joint ventures (71) (77) 
Net cash flows from investing activities (182) (139) 
Cash flows from financing activities 
Dividend distributions to ordinary equity holders of the company during the year 2.18 (701) (580) 
Proceeds from issue of ordinary share capital 7 11 
Purchase of employee scheme shares (8) (2) 
Proceeds from borrowings 697 674 
Repayment of borrowings (527) (181) 
Net cash flows used in financing activities (532) (78) 
Net (decrease)/increase in cash and cash equivalents (1,537) 5,270 
Exchange losses on cash and cash equivalents (106) (15) 
Cash and cash equivalents at 1 January 22,709 17,454 
Cash and cash equivalents (before reallocation of held for sale cash) 21,066 22,709 
Cash and cash equivalents classified as held for sale 2.13 (389) - 
Cash and cash equivalents at 31 December 20,677 22,709 
1. Tax comprises UK corporation tax paid of 128m (2014: 29m), overseas corporate taxes of 36m (2014: 24m) and withholding tax of 80m (2014: 23m). 
2. Net cash flows from acquisitions includes cash paid of 5m (2014: 38m) less cash and cash equivalents acquired of nil (2014: nil). 
3. Net cash flows from disposals includes cash received of 242m (2014: 56m) less cash and cash equivalents disposed of 324m (2014: nil). 
The group's Consolidated Cash Flow Statement includes all cash and cash equivalent flows, including 856m (2014: 1,082m) relating to the with-profit fund policyholders and 16,116m (2014: 18,895m) relating to unit linked policyholders. 
IFRS and Cash Page 38
2.08 Basis of preparation
The group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by the European Union, and with those parts of the UK Companies Act 2006 applicable to companies reporting under IFRS. The group financial statements also comply with IFRS and interpretations by the IFRS Interpretations Committee as issued by the IASB and as adopted by the European Union. The group financial statements have been prepared under the historical cost convention, as modified by the revaluation of land and buildings, available-for-sale financial assets and financial assets and financial liabilities (including derivative instruments) at fair value through profit and loss.
The group has selected accounting policies which state fairly its financial position, financial performance and cash flows for a reporting period. The accounting policies have been consistently applied to all years presented.
Financial assets and financial liabilities are disclosed gross in the balance sheet unless a legally enforceable right of offset exists and there is an intention to settle recognised amounts on a net basis. Income and expenses are not offset in the income statement unless required or permitted by any accounting standard or interpretations by the IFRS Interpretations Committee.
Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the date of the transactions. The functional currency of the group's foreign operations is the currency of the primary economic environment in which the entity operates. The assets and liabilities of all of the group's foreign operations are translated into sterling, the group's presentation currency, at the closing rate at the date of the balance sheet. The income and expenses for each income statement are translated at average exchange rates. On consolidation, exchange differences arising from the translation of the net investment in foreign entities and of borrowings and other currency instruments designated as hedges of such investments, are taken to a separate component of shareholders' equity.
Use of estimates
The preparation of the financial statements includes the use of estimates and assumptions which affect items reported in the consolidated balance sheet and income statement and the disclosure of contingent assets and liabilities at the date of the financial statements. Although these estimates are based on management's best knowledge of current circumstances and future events and actions, actual results may differ from those estimates, possibly significantly. This is particularly relevant for the determination of fair values of investment property and unquoted and illiquid financial investments; the estimation of deferred acquisition costs; tax balances and the estimation of insurance and investment contract liabilities. The basis of accounting for these areas, and the significant judgements used in determining them, are outlined in the respective notes to the financial statements.
Key technical terms and definitions
The report refers to various key performance indicators, accounting standards and other technical terms. A comprehensive list of these definitions is contained within the glossary of the group's 2015 Annual Report and Accounts.
2.09 Segmental analysis
Reportable segments
The group has six reportable segments comprising LGR, LGIM, LGC, Insurance, Savings and LGA. Central group expenses and debt cost are reported separately.
LGR represents annuities (both individual and bulk purchase), longevity insurance and lifetime mortgages.
The LGIM segment represents institutional and retail investment management, and workplace savings businesses. 
The LGC segment includes shareholders' equity supporting the non profit LGR, Insurance and Savings businesses held within Society, and capital held by the group's treasury function. LGC and group expenses also incorporate inter-segmental eliminations, consolidated unit trusts and property partnerships managed on behalf of clients, which do not constitute a separately reportable segment. 
Following changes to the organisational structure, Insurance and Savings are now reported as separate segments. Previously, Insurance and Savings had been reported together as the LGAS segment. In addition, the workplace savings business is now included in the LGIM segment. Workplace savings had previously been recognised in the Savings segment. Comparatives have been amended in line with this reclassification. The impact of the workplace savings reclassification has been to reduce LGIM 2014 operating profit by 15m, with an offsetting increase in the Savings segment's operating profit.
Insurance represents business in retail protection, group protection, general insurance, networks, Legal & General France (LGF), sold on 31 December 2015, and Legal & General Netherlands (LGN).
Savings represents business in platforms, SIPPs, mature savings, with-profits and emerging markets.
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.
IFRS and Cash Page 39
2.09 Segmental analysis (continued) 
(a) Profit/(loss) for the year 
Group 
expenses 
and debt 
LGR LGIM LGC Insurance Savings LGA costs Total
For the year ended 31 December 2015 m m m m m m m m
Operating profit/(loss) 639 355 233 293 99 83 (247) 1,455
Investment and other variances¹ 79 (20) (116) (40) 3 (13) (12) (119)
Gains attributable to non-controlling 
interests - - - - - - 19 19
Profit/(loss) before tax attributable to 
equity holders 718 335 117 253 102 70 (240) 1,355
Tax (expense)/credit attributable to equity 
holders of the company (131) (74) (9) (61) (15) (41) 70 (261)
Profit/(loss) for the year 587 261 108 192 87 29 (170) 1,094
Group 
expenses 
and debt 
LGR LGIM² LGC Insurance Savings² LGA costs Total
For the year ended 31 December 2014 m m m m m m m m
Operating profit/(loss) 428 321 203 370 105 56 (208) 1,275
Investment and other variances 67 (7) (37) 12 (24) (13) (42) (44)
Gains attributable to non-controlling 
interests - - - - - - 7 7
Profit/(loss) before tax attributable to 
equity holders 495 314 166 382 81 43 (243) 1,238
Tax (expense)/credit attributable to equity 
holders of the company (97) (68) (9) (90) (14) (19) 51 (246)
Profit/(loss) for the year 398 246 157 292 67 24 (192) 992
1. 2015 Investment and other variances - Insurance and Savings include the gain/(loss) resulting from the disposal of subsidiary and joint venture investments during the year.
2. LGIM includes the workplace savings business which was previously reported in Savings. Prior period comparatives have been amended. At 2014, the impact includes the reduction of operating profit by 15m and profit before tax by 10m. Offsetting movements have been reflected in the Savings segment.
IFRS and Cash Page 40
2.10 Earnings per share
(a) Earnings per share
Adjusted Adjusted 
Profit Earnings profit earnings Profit Earnings 
after tax per share¹ after tax per share^1,2 after tax per share¹
2015 2015 2015 2015 2014 2014 
m p m p m p 
Operating profit after tax 1,142 19.29 1,142 19.29 998 16.92 
Investment and other variances (67) (1.13) (42) (0.71) (13) (0.22) 
Earnings per share based on profit 
attributable to equity holders 1,075 18.16 1,100 18.58 985 16.70 
1. Earnings per share is calculated by dividing profit after tax derived from continuing operations by the weighted average number of ordinary shares in issue during the year, excluding employee scheme treasury shares. 
2. Adjusted earnings per share has been calculated excluding the net loss, 25m, resulting from the disposal of subsidiary and joint venture investments.
(b) Diluted earnings per share
Adjusted Adjusted 
Number Profit Earnings profit earnings Number Profit Earnings
of shares¹ after tax per share after tax per share^{1, 2} of shares¹ after tax per share
2015 2015 2015 2015 2015 2014 2014 2014
m m p m p m m p
Profit attributable to equity holders of the Company 5,920 1,075 18.16 1,100 18.58 5,897 985 16.70
Net shares under options allocable for no further consideration 38 - (0.12) - (0.12) 59 - (0.16)
Diluted earnings per share 5,958 1,075 18.04 1,100 18.46 5,956 985 16.54
1. For diluted earnings per share, the weighted average number of ordinary shares in issue, excluding employee scheme treasury shares, is adjusted to assume conversion of all potential ordinary shares, such as share options granted to employees.
2. Adjusted earnings per share has been calculated excluding the net loss, 25m, resulting from the disposal of subsidiary and joint venture investments.
IFRS and Cash Page 41
2.11 Acquisition
On 1 April 2015, the group acquired 100% of New Life Home Finance Limited, a UK based lifetime mortgage provider for a consideration of 5m. The acquisition gave rise to an increase in the group's goodwill of 2m and an increase in purchased interest in long term businesses (PILTB) and other intangibles of 2m. This enables the group to offer lifetime mortgages as part of the retirement solutions suite of products.
2.12 Disposals
During 2015, the Group made the following disposals:
- Snow + Rock Group Holding Limited was sold to Cotswold Outdoor Limited for 34m. The carrying value of the investment was 6m, realising a profit on disposal of 28m reported in operational income in the Consolidated Income Statement. The majority of the profit on disposal is allocated to the with-profits fund.
- Legal & General International (Ireland) Limited (LGII), the group's Dublin based offshore bond provider was sold to Canada Life for 16m. The carrying value of the business was 14m, and disposal costs totalled 1m, realising a profit on disposal of 1m reported in operational income in the Consolidated Income Statement.
- Commercial International Life Insurance Company SAE (CIL), the group's Egypt based life insurance joint venture, was sold to AXA for 33m. The carrying value of the business was 14m, realising a profit on disposal of 19m reported in operational income in the Consolidated Income Statement.
- The group's interest in Legal & General Gulf BSC (LGG), the group's Bahrain based life insurance joint venture, was sold to a third party for 1. The carrying value of the business was 2m, realising a loss on disposal of 2m reported in operational income in the Consolidated Income Statement.
- Legal & General Holdings (France) S.A. (LGF), the group's French insurance business, was sold to APICIL Prvoyance. A loss on disposal of 43m is reported in operational income in the Consolidated Income Statement.
None of the disposals completed during 2015 are discontinued operations as they do not represent major lines of business or geographical segments of the group.
IFRS and Cash Page 42
2.13 Held for sale
On 15 January 2016, the group sold Suffolk Life Group Limited (SLG) to Curtis Banks Group plc for 45m (excluding transaction costs), subject to regulatory approval. The assets and liabilities of SLG have accordingly been assessed as a disposal group and have been classified as held for sale as at 31 December 2015. SLG formed part of the Savings segment in Note 2.09.
SLG is not a discontinued operation as it does not represent a major line of business or geographical segment of the group.
Total
2015
m 
Assets classified as held for sale 
Purchased interest in long term business and other intangible assets 28
Property, plant and equipment 1
Investment property 1,140
Financial investments 1,801
Reinsurers' share of contract liabilities 39
Cash and cash equivalents 389
Other assets 11
Total assets of the disposal group 3,409
Liabilities classified as held for sale 
Investment contract liabilities (3,235)
Operational borrowings (102)
Tax liabilities (5)
Payables and other financial liabilities (10)
Other liabilities (17)
Total liabilities of the disposal group (3,369)
Total net assets of the disposal group 40
2.14 Post balance sheet events
On 15 January 2016, the group sold Suffolk Life Group Limited (SLG) to Curtis Banks Group Plc for 45m, subject to regulatory approval. The assets and liabilities of SLG have accordingly been assessed as a disposal group and have been classified as held for sale as at 31 December 2015. For held for sale details refer to Note 2.13.
On 21 January 2016, the group made a formal decision to close an office located in Kingswood, Surrey, UK. The group plans to close the office in 2018. The net cost associated with this closure (including write-off of previously capitalised property, plant and equipment and expenditure relating to redundancy and rent and rates), is estimated to be 50m, which is expected to be recognised in the 2016 Consolidated Income Statement. These costs will be treated as restructuring costs and as such will not be included in operational and net cash generation. 
IFRS and Cash Page 43
2.15 Financial investments and investment property
2015 2014
m m
Equities 166,892 162,177
Unit trusts 6,021 7,529
Debt securities¹ 169,720 178,766
Accrued interest 1,456 1,604
Derivative assets² 9,509 10,035
Loans and receivables 465 503
Financial investments 354,063 360,614
Investment property 8,082 8,152
Total financial investments and investment property 362,145 368,766
1. Detailed analysis of debt securities which shareholders are directly exposed to is disclosed in Note 4.06. 
2. Derivatives are used to ensure efficient portfolio management, especially the use of interest rate swaps, inflation swaps, credit default swaps and foreign exchange forward contracts for asset and liability management. Derivative assets are shown gross of derivative liabilities and include 5,795m (2014: 6,011m) held on behalf of unit linked policyholders.
2.16 Tax 
(a) Tax charge in the Consolidated Income Statement 
The tax attributable to equity holders differs from the tax calculated at the standard UK corporation tax rate as follows:
2015 2014
m m
Profit before tax attributable to equity holders 1,355 1,238
Tax calculated at 20.25% (2014: 21.5%) 274 266
Effects of: 
Adjustments in respect of prior years (5) 8
Income not subject to tax, such as dividends (11) (9)
Change in valuation of tax losses - (6)
Higher rate of tax on profits taxed overseas 16 8
Additional allowances/non-deductible expenses (4) (7)
Impact of reduction in UK corporate tax rate to 18% from 2020 on deferred tax balances¹ 1 -
Differences between taxable and accounting investment gains (10) (15)
Other - 1
Tax attributable to equity holders 261 246
Equity holders' effective tax rate² 19.3% 19.9%
1. Following the 2015 Finance Act, the rate of corporation tax will reduce to 19% from 1 April 2017. There will be a further 1% reduction to 18% from 1 April 2020. The enacted rates of 20 - 18% have been used in the calculation of UK's deferred tax assets and liabilities. 
2. Equity holders' effective tax rate is calculated by dividing the tax attributable to equity holders over profit before tax attributable to equity holders.
IFRS and Cash Page 44
2.16 Tax (continued) 
(b) Deferred Tax 
2015 2014
(i) UK deferred tax assets/(liabilities) m m
Realised and unrealised gains on investments (146) (168)
Excess of depreciation over capital allowances 18 19
Excess expenses¹ 74 105
Deferred acquisition expenses (51) (61)
Difference between the tax and accounting value of insurance contracts (83) (143)
Accounting provisions 8 3
Trading losses² 6 45
Pension fund deficit 72 98
Purchased interest in long term business (15) (24)
Net UK deferred tax liabilities (117) (126)
Presented on the Consolidated Balance Sheet as: 
UK deferred tax asset 20 54
UK deferred tax liability (137) (180)
Net UK deferred liabilities³ (117) (126)
(ii) Overseas deferred tax assets/(liabilities) 
Realised and unrealised gains on investments (8) (53)
Deferred acquisition expenses (308) (295)
Difference between the tax and accounting value of insurance contracts (241) (242)
Accounting provisions (27) (20)
Trading losses 159 186
Purchased interest in long term business (11) (10)
Net Overseas deferred tax liabilities (436) (434)
1. The reduction in the deferred tax asset on excess expenses reflects the unwind of the spread acquisition expenses.
2. LGR and Insurance utilised their remaining losses against profits that arose during the first half of the year. The remaining losses mainly relate to Cofunds.
3. On the Consolidated Balance Sheet the net UK deferred tax liability has been split between an asset of 20m and a liability of 137m where the relevant items cannot be offset.
IFRS and Cash Page 45
2.17 Payables and other financial liabilities
2015 2014 
m m 
Derivative liabilities 8,047 6,877 
Repurchase agreements¹ 13,343 7,016 
Other² 1,319 2,238 
Payables and other financial liabilities 22,709 16,131 
Due within 12 months 20,027 11,887
Due after 12 months 2,682 4,244
1. The repurchase agreements are presented gross, however they and their related assets are subject to master netting arrangements. 
2. Other financial liabilities include net variation margins on derivative contracts, which are maintained daily. Included within the variation margins are collateral held and pledged of 94m and 50m respectively (2014: 107m and 235m respectively). Other also includes the present value of future commission costs which have contingent settlement provisions of 175m (2014: 186m). 
Fair value hierarchy 
Amortised 
Total Level 1 Level 2 Level 3 cost 
As at 31 December 2015 m m m m m 
Derivative liabilities 8,047 1,451 6,596 - - 
Repurchase agreements 13,343 - - - 13,343 
Other 1,319 5 12 175 1,127 
Payables and other financial liabilities 22,709 1,456 6,608 175 14,470 
Amortised 
Total Level 1 Level 2 Level 3 cost 
As at 31 December 2014 m m m m m 
Derivative liabilities 6,877 593 6,284 - - 
Repurchase agreements 7,016 - - - 7,016 
Other 2,238 869 29 186 1,154 
Payables and other financial liabilities 16,131 1,462 6,313 186 8,170 
Future commission costs are modelled using expected cash flows, incorporating expected future persistency. They have therefore been classified as level 3 liabilities. The entire movement in the balance has been reflected in the Consolidated Income Statement during the period. A reasonably possible alternative persistency assumption would have the effect of increasing the liability by 6m (2014: 6m).
Significant transfers between levels
There have been no significant transfers between levels 1, 2 and 3 for the period ended 31 December 2015 (2014: No significant transfers between levels 1, 2 and 3).
IFRS and Cash Page 46
2.18 Dividends
Per Per 
Dividend share¹ Dividend share¹
2015 2015 2014 2014 
m p m p 
Ordinary share dividends paid in the period: 
- Prior year final dividend 496 8.35 408 6.90 
- Current year interim dividend 205 3.45 172 2.90 
701 11.80 580 9.80 
Ordinary share dividend proposed² 592 9.95 496 8.35 
1. The dividend per share calculation is based on the number of equity shares registered on the ex-dividend date. 
2. The dividend proposed is not included as a liability on the Consolidated Balance Sheet. 
2.19 Share capital and share premium
2015 2014 
Number of 2015 Number of 2014
Authorised share capital shares m shares m
At 31 December: ordinary shares of 2.5p each 9,200,000,000 230 9,200,000,000 230
Share Share
Number of capital premium
Issued share capital, fully paid shares m m
As at 1 January 2015 5,942,070,229 149 969
Options exercised under share option schemes: 
- Savings related share option scheme 6,718,251 - 7
As at 31 December 2015 5,948,788,480 149 976
Share Share
Number of capital premium
Issued share capital, fully paid shares m m
As at 1 January 2014 5,917,066,636 148 959
Options exercised under share option schemes: 
- Savings related share option scheme 25,003,593 1 10
As at 31 December 2014 5,942,070,229 149 969
There is one class of ordinary shares of 2.5p each. All shares issued carry equal voting rights.
The holders of the company's ordinary shares are entitled to receive dividends as declared and are entitled to one vote per share at shareholder meetings of the company. 
IFRS and Cash Page 47
2.20 Core Borrowings 
Carrying Fair Carrying Fair 
amount value amount value
2015 2015 2014 2014
m m m m
Subordinated borrowings 
6.385% Sterling perpetual capital securities (Tier 1) 637 631 658 642
5.875% Sterling undated subordinated notes (Tier 2) 413 426 416 431
4.0% Euro subordinated notes 2025 (Tier 2) - - 472 482
10% Sterling subordinated notes 2041 (Tier 2) 310 398 310 424
5.5% Sterling subordinated notes 2064 (Tier 2) 589 570 588 666
5.375% Sterling subordinated notes 2045 (Tier 2) 602 611 - -
Client fund holdings of group debt¹ (26) (27) (28) (31)
Total subordinated borrowings 2,525 2,609 2,416 2,614
Senior borrowings 
Sterling medium term notes 2031-2041 609 779 609 800
Client fund holdings of group debt¹ (42) (54) (48) (62)
Total senior borrowings 567 725 561 738
Total core borrowings 3,092 3,334 2,977 3,352
1. 68m (2014: 76m) of the group's subordinated and senior borrowings are currently held by Legal & General customers through unit linked products. These borrowings are shown as a deduction from total core borrowings in the table above.
All of the group's core borrowings are measured using amortised cost. The presented fair values of the group's core borrowings reflect quoted prices in active markets and they are classified as level 1 in the fair value hierarchy.
Subordinated borrowings
6.385% Sterling perpetual capital securities
In 2007, Legal & General Group Plc issued 600m of 6.385% Sterling perpetual capital securities. These securities are callable at par on 2 May 2017 and every three months thereafter. If not called, the coupon from 2 May 2017 will be reset to three month LIBOR plus 1.93% pa. For Solvency I purposes these securities are treated as tier 1 capital and for Solvency II purposes these securities are treated as tier 1 own funds. 
5.875% Sterling undated subordinated notes
In 2004, Legal & General Group Plc issued 400m of 5.875% Sterling undated subordinated notes. These notes are callable at par on 1 April 2019 and every five years thereafter. If not called, the coupon from 1 April 2019 will be reset to the prevailing five year benchmark gilt yield plus 2.33% pa. These notes are treated as lower tier 2 capital for Solvency I purposes and tier 2 own funds for Solvency II purposes. 
4.0% Euro subordinated notes 2025
In 2005, Legal & General Group Plc issued 600m of 4.0% Euro dated subordinated notes. The proceeds were swapped into Sterling. On 8 June 2015, the group redeemed these notes at par. Prior to redemption, these notes were treated as lower tier 2 capital for Solvency I purposes and tier 2 own funds for Solvency II purposes. 
10% Sterling subordinated notes 2041
In 2009, Legal & General Group Plc issued 300m of 10% dated subordinated notes. The notes are callable at par on 23 July 2021 and every five years thereafter. If not called, the coupon from 23 July 2021 will be reset to the prevailing five year benchmark gilt yield plus 9.325% pa. These notes mature on 23 July 2041. They are treated as lower tier 2 capital for Solvency I purposes and tier 2 own funds for Solvency II purposes.
5.5% Sterling subordinated notes 2064
In 2014, Legal & General Group Plc issued 600m of 5.5% dated subordinated notes. The notes are callable at par on 27 June 2044 and every five years thereafter. If not called, the coupon from 27 June 2044 will be reset to the prevailing five year benchmark gilt yield plus 3.17% pa. These notes mature on 27 June 2064. They are treated as lower tier 2 capital for Solvency I purposes and tier 2 own funds for Solvency II purposes.
5.375% Sterling subordinated notes 2045
On 27 October 2015, Legal & General Group Plc issued 600m of 5.375% dated subordinated notes. The notes are callable at par on 27 October 2025 and every five years thereafter. If not called, the coupon from 27 October 2025 will be reset to the prevailing five year benchmark gilt yield plus 4.58% pa. These notes mature on 27 October 2045. They are treated as lower tier 2 capital for Solvency I purposes and tier 2 own funds for Solvency II purposes.
IFRS and Cash Page 48
2.21 Operational Borrowings 
Carrying Fair Carrying Fair
amount value amount value
2015 2015 2014 2014
m m m m
Short term operational borrowings 
Euro Commercial paper 15 15 73 73
Bank loans/other 2 2 13 13
Total short term operational borrowings 17 17 86 86
Non recourse borrowings 
US Dollar Triple X securitisation 2037 302 258 286 240
Suffolk Life unit linked borrowings¹ - - 120 120
LGV 6/LGV 7 Private Equity Fund Limited Partnership 98 98 136 136
Consolidated Property Limited Partnerships 184 184 148 148
Total non recourse borrowings 584 540 690 644
Group holding of operational borrowings² (65) (56) (61) (52)
Total operational borrowings 536 501 715 678
1. In January 2016, the group announced that Suffolk Life Group Limited had been sold to Curtis Banks Group. As at 31 December 2015, the Suffolk Life unit linked borrowings have been transferred to held for sale, refer to Note 2.13.
2. Group investments in operational borrowings have been eliminated from the Consolidated Balance Sheet. 
The presented fair values of the group's operational borrowings reflect observable market information and have been classified as level 2 in the fair value hierarchy.
Short term operational borrowings
Short term assets available at the holding company level exceeded the amount of short term operational borrowings of 17m (2014: 86m). Short term operational borrowings comprise Euro Commercial paper, bank loans and overdrafts.
Non recourse borrowings
US Dollar Triple X securitisation 2037
In 2006, a subsidiary of LGA issued US$450m of non recourse debt in the US capital markets to meet the Triple X reserve requirements of part of the US term insurance written in 2005 and 2006. It is secured on the cash flows related to that tranche of business.
Suffolk Life unit linked borrowings
All of these non recourse borrowings are in relation to commercial properties held within SIPP plans and the borrowings solely relate to client investments.
LGV 6/LGV 7 Private Equity Fund Limited Partnerships
These borrowings are non recourse bank borrowings.
Consolidated Property Limited Partnerships
These borrowings are non recourse bank borrowings.
Syndicated credit facility
As at 31 December 2015, the group had in place a 1.00bn syndicated committed revolving credit facility provided by a number of its key relationship banks, maturing in December 2020. This facility replaced the syndicated facility totalling 1.00bn, of which 0.04bn was due to mature in October 2017 and 0.96bn was due to mature in October 2018. No drawings were made under either facility during 2015. 
IFRS and Cash Page 49
2.22 Insurance contract liabilities
(a) Analysis of insurance contract liabilities
Re- Re-
Gross insurance Gross insurance
2015 2015 2014 2014
Notes m m m m
Participating insurance contracts 2.22(b) 5,618 (1) 6,579 (1)
Non-participating insurance contracts 2.22(c) 49,470 (3,861) 49,589 (2,587)
General insurance contracts 284 (8) 287 (8)
Insurance contract liabilities 55,372 (3,870) 56,455 (2,596)
During the year, the group continued utilising prospective reinsurance arrangements which resulted in a profit of 503m (2014: 298m). This profit has been reflected in the Consolidated Income Statement for the year and arises from new reinsurance arrangements or the reinsurance of new business under existing arrangements.
(b) Movement in participating insurance contract liabilities
Re- Re-
Gross insurance Gross insurance
2015 2015 2014 2014
m m m m
As at 1 January 6,579 (1) 6,972 (1)
New liabilities in the year 52 - 61 -
Liabilities discharged in the year (977) - (1,159) -
Unwinding of discount rates 40 - 54 -
Effect of change in non-economic assumptions 5 - (5) -
Effect of change in economic assumptions 81 - 561 -
Disposals¹ (171) - - -
Other 9 - 95 -
As at 31 December 5,618 (1) 6,579 (1)
1. Reflects the disposal of LGF and LGII during the year.
(c) Movement in non-participating insurance contract liabilities
Re- Re-
Gross insurance Gross insurance
2015 2015 2014 2014
m m m m
As at 1 January 49,589 (2,587) 39,975 (2,596)
New liabilities in the year 2,866 (768) 7,325 (446)
Liabilities discharged in the year (2,744) (39) (2,469) 259
Unwinding of discount rates 1,451 (93) 1,493 (145)
Effect of change in non-economic assumptions (384) 157 (569) 362
Effect of change in economic assumptions (1,335) (513) 3,844 (3)
Foreign exchange adjustments 27 (18) (10) (18)
As at 31 December 49,470 (3,861) 49,589 (2,587)
IFRS and Cash Page 50
2.23 Investment contract liabilities
(a) Analysis of investment contract liabilities
 
 Re- Re-
 Gross insurance Gross insurance
 2015 2015 2014 2014
Note m m m m
 
 
Participating investment contracts  4,912 - 7,667 14
Non-participating investment contracts  278,554 (250) 288,558 (324)
 
 
Investment contract liabilities 2.23(b) 283,466 (250) 296,225 (310)
 
 
(b) Movement in investment contract liabilities
Re- Re-
Gross insurance Gross insurance
2015 2015 2014 2014
m m m m
As at 1 January 296,225 (310) 286,247 (295)
Reserves in respect of new business 37,639 (598) 30,645 (334)
Amounts paid on surrenders and maturities during the year (46,557) 164 (53,311) 60
Investment return and related benefits 5,160 455 33,126 259
Management charges (303) - (309) -
Foreign exchange adjustments (162) - (177) -
Disposals¹ (5,321) - - -
Transfer to held for sale (3,235) 39 - -
Other 20 - 4 -
As at 31 December 283,466 (250) 296,225 (310)
1. Reflects the disposal of LGF and LGII during the year.
IFRS and Cash Page 51
2.24 IFRS sensitivity analysis
Impact on 
pre-tax Impact on
group profit group equity
net of re- net of re-
insurance insurance
2015 2015
m m
Economic sensitivity 
Long-term insurance 
1% increase in interest rates 48 (36)
1% decrease in interest rates (168) (49)
1% increase in long term inflation expectations (38) (31)
Credit spread widens by 100bps with no change in expected defaults (102) (138)
10% decrease in listed equities (124) (103)
10% fall in property values (81) (65)
10bps increase in credit default assumption (324) (258)
10bps decrease in credit default assumption 366 292
Non-economic sensitivity 
Long-term insurance 
1% decrease in annuitant mortality (132) (105)
5% increase in assurance mortality (64) (49)
Default of largest external reinsurer (835) (666)
General insurance 
Single storm event with 1 in 200 year probability (67) (54)
Subsidence event - worst claims ratio in last 30 years (72) (57)
The table shows the impacts on group pre-tax profit and equity, net of reinsurance, under each sensitivity scenario for the group. The participating funds have been excluded in the above sensitivity analysis as the impact of the sensitivities on IFRS profit and equity is offset by the movement in the unallocated divisible surplus (UDS). The shareholders' share of with-profit bonus declared in the year is relatively insensitive to market movements due to the smoothing policies applied.
The interest rate sensitivity assumes a 100bps change in the gross redemption yield on fixed interest securities together with a 100bps change in the real yields on variable securities. For the UK with-profit funds, valuation interest rates are assumed to move in line with market yields adjusted to allow for the impact of PRA regulations. The interest rate sensitivities reflect the impact of the regulatory restrictions on the reinvestment rate used to value the liabilities of the long term business. Modelling improvements have been made in the year which more accurately isolate the impacts of discrete assumptions changes. No yield floors have been applied in the estimation of the stresses, despite the current low interest rate environment.
Interest rate and inflation expectation have historically shown positive correlation and have therefore been presented next to each other.
The inflation stress adopted is a 1% pa increase in inflation resulting in a 1% pa reduction in real yield and no change to the nominal yield. In addition the expense inflation rate is increased by 1% pa.
In the sensitivity for credit spreads, corporate bond yields have increased by 100bps, gilt and approved security yields are unchanged, and there has been no adjustment to the default assumptions.
The equity stress is a 10% fall in listed equity market values. The property stress adopted is a 10% fall in property market value. Rental income is assumed to be unchanged; however the vacant possession value is stressed down by 10% in line with the market value stress. Where property is being used to back liabilities, the valuation interest rate used to place a value on the liabilities moves with the implied change in property yields. 
The annuitant mortality stress is a 1% reduction in the mortality rates for immediate and deferred annuitants with no change to the mortality improvement rates. The assurance mortality stress represents an increase in mortality/morbidity rates for assurance contracts by 5%.
The credit default stress assumes a +/-10bps stress to the current credit default assumption for unapproved corporate bonds which will have an impact on the valuation interest rates used to discount liabilities. The credit default assumption is set based on the credit rating of the individual bonds in the asset portfolio and their outstanding term using Moody's global credit default rates.
For the sensitivity to the default of the group's largest external reinsurer, the reinsurer stress shown is equal to the technical provisions ceded to the external reinsurer and represents the impact of the default of largest external reinsurer at an entity level.
The above sensitivity analyses do not reflect management actions which could be taken to reduce the impacts. The group seeks to actively manage its asset and liability position. A change in market conditions may lead to changes in the asset allocation or charging structure which may have a more, or less, significant impact on the value of the liabilities. The analyses also ignore any second order effects of the assumption change, including the potential impact on the group asset and liability position and any second order tax effects. In calculating the alternative values, all other assumptions are left unchanged, though in practice, items of the group's experience may be correlated. The sensitivity of the profit and equity to changes in assumptions may not be linear. These results should not be extrapolated to changes of a much larger order, which could be significantly more or less than the amounts shown above.
IFRS and Cash Page 52
2.25 Foreign exchange rates
Principal rates of exchange used for translation are: 
Period end exchange rates At 31.12.15 At 31.12.14
United States Dollar 1.47 1.56
Euro 1.36 1.29
01.01.15 - 01.01.14 - 
Average exchange rates 31.12.15 31.12.14
United States Dollar 1.53 1.65
Euro 1.38 1.24
2.26 Related party transactions 
There were no material transactions between key management and the Legal & General group of companies during the period. All transactions between the group and its key management are on commercial terms which are no more favourable than those available to employees in general. Contributions to the post-employment defined benefit plans were 93m (2014: 69m) for all employees.
At 31 December 2015 and 31 December 2014 there were no loans outstanding to officers of the company.
Key management personnel compensation 
The aggregate compensation for key management personnel, including executive and non-executive directors, is as follows:
2015 2014
m m
Salaries 10 8
Social security costs 2 2
Post-employment benefits 1 2
Share-based incentive awards 5 4
Key management personnel compensation 18 16
Number of key management personnel 16 16
IFRS and Cash Page 53
2.27 Provisions
(a) Analysis of provisions
2015 2014
m m
Retirement benefit obligations 1,131 1,217
Other provisions 40 30
1,171 1,247
(b) Retirement benefit obligations 
Fund and Fund and 
Scheme Overseas Scheme Overseas
2015 2015 2014 2014
m m m m
Gross pension obligations included in provisions (1,126) (5) (1,215) (2)
Annuity obligations insured by Society 746 - 723 -
Gross defined benefit pension deficit (380) (5) (492) (2)
Deferred tax on defined benefit pension deficit 72 - 98 -
Net defined benefit pension deficit (308) (5) (394) (2)
The Legal & General Group UK Pension and Assurance Fund and the Legal & General Group UK Senior Pension Scheme are defined benefit pension arrangements and account for all UK and the majority of worldwide assets of, and contributions to, such arrangements. The schemes were closed to future accrual on 1 January 2016. At 31 December 2015, the combined after tax deficit arising from these arrangements (net of annuity obligations insured by Society) has been estimated at 308m (2014: 394m). These amounts have been recognised in the financial statements with 194m charged against shareholder equity (2014: 248m) and 114m against the unallocated divisible surplus (2014: 146m).
IFRS and Cash Page 54
2.28 Contingent liabilities, guarantees and indemnities
Provision for the liabilities arising under contracts with policyholders is based on certain assumptions. The variance between actual experience from that assumed may result in those liabilities differing from the provisions made for them. Liabilities may also arise in respect of claims relating to the interpretation of policyholder contracts, or the circumstances in which policyholders have entered into them. The extent of these liabilities is influenced by a number of factors including the actions and requirements of the PRA, FCA, ombudsman rulings, industry compensation schemes and court judgments. 
Various group companies receive claims and become involved in actual or threatened litigation and regulatory issues from time to time. The relevant members of the group ensure that they make prudent provision as and when circumstances calling for such provision become clear, and that each has adequate capital and reserves to meet reasonably foreseeable eventualities. The provisions made are regularly reviewed. It is not possible to predict, with certainty, the extent and the timing of the financial impact of these claims, litigations or issues. Legal & General (Portfolio Management Services) Limited (PMS) is currently cooperating with an investigation by FCA into Structured Deposits products issued by PMS between 2006 and 2014. PMS has responded to FCA's requests for information and awaits FCA's feedback. This matter is at an early stage, management and legal advisers will evaluate on an ongoing basis whether any provision should be recognised.
In 1975, Society was required by the Institute of London Underwriters (ILU) to execute the ILU form of guarantee in respect of policies issued through the ILU's Policy Signing Office on behalf of NRG Victory Reinsurance Company Ltd (Victory), a company which was then a subsidiary of the Society. In 1990, Nederlandse Reassurantie Groep Holding NV (the assets and liabilities of which have since been assumed by Nederlandse Reassurantie Groep NV under a statutory merger in the Netherlands) acquired Victory and provided an indemnity to the Society against any liability the Society may have as a result of the ILU's requirement, and the ILU agreed that its requirement of the Society would not apply to policies written or renewed after the acquisition. Nederlandse Reassurantie Groep NV is now owned by Columbia Insurance Company, a subsidiary of Berkshire Hathaway Inc. Whether the Society has any liability as a result of the ILU's requirement and, if so, the amount of its potential liability is uncertain. The Society has made no payment or provision in respect of this matter. 
Group companies have given warranties, indemnities and guarantees as a normal part of their business and operating activities or in relation to capital market transactions or corporate disposals. Legal & General Group Plc has provided indemnities and guarantees in respect of the liabilities of group companies in support of their business activities including Pension Protection Fund compliant guarantees in respect of certain group companies' liabilities under the group pension fund and scheme. LGAS has provided indemnities, a liquidity and expense risk agreement, a deed of support and a cash and securities liquidity facility in respect of the liabilities of group companies to facilitate the group's matching adjustment reorganisation pursuant to Solvency II.
Asset and premium flows Page 55
3.01 Legal & General investment management total assets 
Active 
fixed Solu- Active Total Advisory Total
For the year Index income¹ tions² Real assets¹ equities AUM assets assets
ended 31 December 2015 bn bn bn bn bn bn bn bn
At 1 January 2015 274.8 102.9 293.3 14.5 8.2 693.7 14.8 708.5
External inflows³ 33.4 11.1 16.3 1.4 - 62.2 62.2
External outflows (30.9) (4.3) (6.6) (0.9) - (42.7) (42.7)
Overlay/ advisory net flows - - 18.2 - - 18.2 (4.6) 13.6
External net flows⁴ 2.5 6.8 27.9 0.5 - 37.7 (4.6) 33.1
Internal net flows (0.7) (1.9) - 0.9 (0.4) (2.1) - (2.1)
Disposal of LGF⁵ - (2.3) - - - (2.3) - (2.3)
Total net flows 1.8 2.6 27.9 1.4 (0.4) 33.3 (4.6) 28.7
Cash management movements⁶ - 0.8 - - - 0.8 - 0.8
Market and other movements⁴ (2.3) 0.5 17.0 2.4 0.7 18.3 0.3 18.6
At 31 December 2015 274.3 106.8 338.2 18.3 8.5 746.1 10.5 756.6
Assets attributable to: 
External 661.0 10.5 671.5
Internal 85.1 - 85.1
Assets attributable to: 
UK 623.7 - 623.7
International 122.4 10.5 132.9
Active 
fixed Solu- Active Total Advisory Total 
For the year ended Index income¹ tions² Real assets¹ equities AUM assets assets 
31 December 2014 bn bn bn bn bn bn bn bn 
As at 1 January 2014 269.8 88.7 232.5 12.0 8.6 611.6 - 611.6 
External inflows 23.7 5.5 8.5 1.4 0.1 39.2 39.2 
External outflows (39.5) (3.8) (6.6) (0.5) (0.1) (50.5) (50.5) 
Overlay/ advisory net flows - - 18.8 - - 18.8 (0.2) 18.6 
External net flows⁴ (15.8) 1.7 20.7 0.9 - 7.5 (0.2) 7.3 
Internal net flows (0.2) (0.7) 0.4 1.5 (0.1) 0.9 - 0.9 
Total net flows (16.0) 1.0 21.1 2.4 (0.1) 8.4 (0.2) 8.2 
Acquisition of GIA assets - - - - - - 13.4 13.4 
Cash management movements⁶ - (1.6) - - - (1.6) - (1.6) 
Market and other movements⁴ 21.0 14.8 39.7 0.1 (0.3) 75.3 1.6 76.9 
As at 31 December 2014 274.8 102.9 293.3 14.5 8.2 693.7 14.8 708.5 
Assets attributable to: 
External 603.7 14.8 618.5 
Internal 90.0 - 90.0 
Assets attributable to: 
UK 579.7 - 579.7 
International 114.0 14.8 128.8 
1. Infrastructure debt investment has been reclassified from Active Fixed Income to Real Assets in 2015. 2014 has therefore been restated (1 January 2014 AUM: 0.7bn; internal net flows: 0.2bn; 31 December 2014 AUM: 0.9bn). The commercial loans business has also been reclassified and is now included in Real Assets (2014: 0.6bn). 
2. Solutions include liability driven investments, multi-asset funds and included 226.2bn at 31 December 2015 (31 December 2014: 194.6bn) of derivative notionals associated with the Solutions business. 
3. Solutions external inflows include 11.7bn of assets associated with the transfer of National Grid UK Pension Scheme after the purchase of their asset manager Aerion Fund Management. 
4. External net flows exclude movements in short term solutions assets, with maturity as determined by client agreements and are subject to a higher degree of variability. The total value of these assets at 31 December 2015 was 59.9bn (31 December 2014: 46.5bn) and the movement in these assets is included in market and other movements for Solutions assets. 
5. On 31 December 2015, the group sold Legal & General Holdings (France) S.A. to APICIL Prvoyance. 
6. Cash management movements include external holdings in money market funds and other cash mandates held for clients' liquidity management purposes. 
Asset and premium flows Page 56
3.02 Legal & General investment management total assets quarterly progression
Active 
fixed Solu- Active Total Advisory Total
For the year ended Index income¹ tions² Real assets¹ equities AUM assets assets
31 December 2015 bn bn bn bn bn bn bn bn
At 1 January 2015 274.8 102.9 293.3 14.5 8.2 693.7 14.8 708.5
External inflows 6.8 2.3 1.4 0.3 - 10.8 10.8
External outflows (8.3) (1.6) (1.6) (0.1) - (11.6) (11.6)
Overlay/ advisory net flows - - 5.1 - - 5.1 (1.2) 3.9
External net flows⁴ (1.5) 0.7 4.9 0.2 - 4.3 (1.2) 3.1
Internal net flows - (0.6) - 0.3 (0.1) (0.4) - (0.4)
Total net flows (1.5) 0.1 4.9 0.5 (0.1) 3.9 (1.2) 2.7
Cash management movements⁵ - 1.7 - - - 1.7 - 1.7
Market and other movements 11.3 4.8 5.8 1.2 0.1 23.2 0.7 23.9
At 31 March 2015 284.6 109.5 304.0 16.2 8.2 722.5 14.3 736.8
External inflows 9.1 2.5 2.5 0.4 - 14.5 14.5
External outflows (8.8) (0.9) (1.8) (0.2) - (11.7) (11.7)
Overlay/ advisory net flows - - 6.7 - - 6.7 (2.3) 4.4
External net flows⁴ 0.3 1.6 7.4 0.2 - 9.5 (2.3) 7.2
Internal net flows (0.3) (0.2) - 0.1 (0.2) (0.6) - (0.6)
Total net flows - 1.4 7.4 0.3 (0.2) 8.9 (2.3) 6.6
Cash management movements⁵ - - - - - - - -
Market and other movements (9.9) (4.5) (3.2) 0.2 0.6 (16.8) (0.7) (17.5)
At 30 June 2015 274.7 106.4 308.2 16.7 8.6 714.6 11.3 725.9
External inflows 9.3 1.0 1.6 0.4 - 12.3 12.3
External outflows (6.6) (0.8) (1.1) (0.2) - (8.7) (8.7)
Overlay / advisory net flows - - 4.3 - - 4.3 (0.2) 4.1
External net flows⁴ 2.7 0.2 4.8 0.2 - 7.9 (0.2) 7.7
Internal net flows - (1.5) - 0.3 - (1.2) - (1.2)
Total net flows 2.7 (1.3) 4.8 0.5 - 6.7 (0.2) 6.5
Cash management movements⁵ - (0.8) - - - (0.8) - (0.8)
Market and other movements (13.5) 1.2 9.3 0.3 (0.8) (3.5) (0.4) (3.9)
At 30 September 2015 263.9 105.5 322.3 17.5 7.8 717.0 10.7 727.7
External inflows³ 8.2 5.3 10.8 0.3 - 24.6 24.6
External outflows (7.2) (1.0) (2.1) (0.4) - (10.7) (10.7)
Overlay / advisory net flows - - 2.1 - - 2.1 (0.9) 1.2
External net flows⁴ 1.0 4.3 10.8 (0.1) - 16.0 (0.9) 15.1
Internal net flows (0.4) 0.4 - 0.2 (0.1) 0.1 - 0.1
Disposal of LGF⁶ - (2.3) - - - (2.3) - (2.3)
Total net flows 0.6 2.4 10.8 0.1 (0.1) 13.8 (0.9) 12.9
Cash management movements⁵ - (0.1) - - - (0.1) - (0.1)
Market and other movements 9.8 (1.0) 5.1 0.7 0.8 15.4 0.7 16.1
At 31 December 2015 274.3 106.8 338.2 18.3 8.5 746.1 10.5 756.6
1. Infrastructure debt investment has been reclassified from Active Fixed Income to Real Assets in 2015 (1 January 2015 AUM: 0.9bn). The commercial loans business has also been reclassified and is now included in Real Assets (Q1 15: 0.1bn, Q2 15: 0.1bn, Q3 15: 0.3bn). 
2. Solutions include liability driven investments, multi-asset funds, and include 226.2bn at 31 December 2015 (Q1 15: 197.1bn; Q2 15: 208.1bn; Q3 15: 216.6bn) of derivative notionals associated with the Solutions business. 
3. External inflows include 11.7bn of assets associated with the transfer of National Grid UK Pension Scheme after the purchase of their asset manager Aerion Fund Management.
4. External net flows exclude movements in short term solutions assets, with maturity as determined by client agreements and are subject to a higher degree of variability. The total value of these assets at 31 December 2015 was 59.9bn (Q1 15: 44.0bn; Q2 15: 48.2bn; Q3 15: 52.5bn) and the movement in these assets is included in market and other movements for Solutions assets.
5. Cash management movements include external holdings in money market funds and other cash mandates held for clients' liquidity management purposes.
6. On 31 December 2015, the group sold Legal & General Holdings (France) S.A. to APICIL Prvoyance.
Asset and premium flows Page 57
3.02 Legal & General investment management total assets quarterly progression (continued)
Active 
fixed Solu- Active Total Advisory Total 
For the year ended Index income¹ tions² Real assets¹ equities AUM assets assets
31 December 2014 bn bn bn bn bn bn bn bn
At 1 January 2014 269.8 88.7 232.5 12.0 8.6 611.6 - 611.6
External inflows 4.9 1.4 2.4 0.3 - 9.0 9.0
External outflows (5.8) (0.5) (1.2) (0.1) - (7.6) (7.6)
Overlay/ advisory net flows - - 5.2 - - 5.2 - 5.2
External net flows³ (0.9) 0.9 6.4 0.2 - 6.6 - 6.6
Internal net flows - 2.0 - 0.5 (0.1) 2.4 - 2.4
Total net flows (0.9) 2.9 6.4 0.7 (0.1) 9.0 - 9.0
Cash management movements⁴ - - - - - - - -
Market and other movements³ 1.5 2.9 5.9 (0.1) 0.1 10.3 - 10.3
At 31 March 2014 270.4 94.5 244.8 12.6 8.6 630.9 - 630.9
External inflows 6.1 1.5 2.8 0.3 0.1 10.8 10.8
External outflows (13.5) (1.4) (0.9) (0.1) (0.1) (16.0) (16.0)
Overlay/ advisory net flows - - 7.1 - - 7.1 0.1 7.2
External net flows³ (7.4) 0.1 9.0 0.2 - 1.9 0.1 2.0
Internal net flows (0.1) (1.3) 0.5 0.4 (0.1) (0.6) - (0.6)
Total net flows (7.5) (1.2) 9.5 0.6 (0.1) 1.3 0.1 1.4
Acquisition of GIA assets - - - - - - 13.4 13.4
Cash management movements⁴ - 0.2 - - - 0.2 - 0.2
Market and other movements³ 5.8 3.0 (1.2) 0.3 (0.3) 7.6 0.2 7.8
At 30 June 2014 268.7 96.5 253.1 13.5 8.2 640.0 13.7 653.7
External inflows 5.6 1.0 1.5 0.3 - 8.4 8.4
External outflows (8.7) (0.8) (1.4) (0.2) - (11.1) (11.1)
Overlay/ advisory net flows - - 2.5 - - 2.5 - 2.5
External net flows³ (3.1) 0.2 2.6 0.1 - (0.2) - (0.2)
Internal net flows (0.3) (0.9) (0.1) - (0.1) (1.4) - (1.4)
Total net flows (3.4) (0.7) 2.5 0.1 (0.1) (1.6) - (1.6)
Cash management movements⁴ - (0.7) - - - (0.7) - (0.7)
Market and other movements³ 5.2 1.7 17.4 0.3 (0.2) 24.4 0.5 24.9
At 30 September 2014 270.5 96.8 273.0 13.9 7.9 662.1 14.2 676.3
External inflows 7.1 1.6 1.8 0.5 - 11.0 11.0
External outflows (11.5) (1.1) (3.1) (0.1) - (15.8) (15.8)
Overlay/ advisory net flows - - 4.0 - - 4.0 (0.3) 3.7
External net flows³ (4.4) 0.5 2.7 0.4 - (0.8) (0.3) (1.1)
Internal net flows 0.2 (0.5) - 0.6 0.2 0.5 - 0.5
Total net flows (4.2) - 2.7 1.0 0.2 (0.3) (0.3) (0.6)
Cash management movements⁴ - (1.1) - - - (1.1) - (1.1)
Market and other movements³ 8.5 7.2 17.6 (0.4) 0.1 33.0 0.9 33.9
At 31 December 2014 274.8 102.9 293.3 14.5 8.2 693.7 14.8 708.5
1. Infrastructure debt investment has been reclassified from Active Fixed Income to Real Assets in 2015. 2014 has therefore been restated (1 January 2014 AUM: 0.7bn; internal net flows: 0.2bn; 31 December 2014 AUM: 0.9bn). The commercial loans business has also been reclassified and is now included in Real Assets (Q1 14: 0.0bn, Q2 14: 0.2bn, Q3 14: 0.1bn, Q4 14: 0.3bn).
2. Solutions include liability driven investments, multi-asset funds, and include 194.6bn at 31 December 2014 (Q1 14: 168.3bn; Q2 14: 174.9bn; Q3 14: 185.3bn) of derivative notionals associated with the Solutions business. 
3. External net flows exclude movements in Solutions assets, with maturity as determined by client agreements and are subject to a higher degree of variability. The total value of these assets at 31 December 2014 was 46.5bn (Q1 14: 33.8bn; Q2 14: 33.3bn; Q3 14: 41.2bn), and the movement in these assets is included in market and other movements for Solutions assets. 
4. Cash management movements include external holdings in money market funds and other cash mandates held for clients' liquidity management purposes.
Asset and premium flows Page 58
3.02 Legal & General investment management total assets quarterly progression (continued)
As at As at As at As at As at As at As at As at
31.12.15 30.09.15 30.06.15 31.03.15 31.12.14 30.09.14 30.06.14 31.03.14
bn bn bn bn bn bn bn bn
Total assets attributable to:¹ 
External 671.5 641.7 636.1 644.5 618.5 591.5 570.3 547.8
Internal 85.1 86.0 89.8 92.3 90.0 84.8 83.4 83.1
Total assets attributable to:¹ 
UK 623.7 599.2 598.8 610.4 579.7 589.8 570.8 564.9
International² 132.9 128.5 127.1 126.4 128.8 86.5 82.9 66.0
1. Total assets at 31 December 2015 include 10.5bn of advisory assets (Q3 15: 10.7bn; Q2 15: 11.3bn; Q1 15: 14.3bn; Q4 14: 14.8bn; Q3 14: 14.2bn; Q2 14: 13.7bn; Q1 14: nil).
2. In Q4 14, International assets included 37.5bn of assets transferred from our London office to our Chicago office.
3.03 Legal & General investment management total external assets under management net flows 
3 3 3 3 3 3 3 3
months months months months months months months months
to to to to to to to to 
31.12.15 30.09.15 30.06.15 30.03.15 31.12.14 30.09.14 30.06.14 31.03.14
bn bn bn bn bn bn bn bn
LGIM total external AUM net flows¹ 16.0 7.9 9.5 4.3 (0.8) (0.2) 1.9 6.6
Attributable to: 
International 1.5 2.6 4.6 0.8 1.6 1.3 2.4 3.4
UK Institutional 
- Defined contribution 1.1 0.8 0.6 0.4 0.9 0.7 0.5 0.6
- Defined benefit ² 13.1 3.9 4.0 3.1 (3.6) (2.2) (1.2) 2.3
UK Retail 0.3 0.6 0.3 - 0.3 - 0.2 0.3
1. External net flows exclude movements in short term overlay assets, with maturity as determined by client agreements and cash management movements. 
2. External inflows include 11.7bn of assets associated with the transfer of National Grid UK Pension Scheme after the purchase of their asset manager Aerion Fund Management.
Asset and premium flows Page 59
3.04 Assets under administration 
LGIM 
Consol- France 
Mature idation and Retail 
Suffolk Retail adjust- Total Nethe- Work- Invest- 
For the year ended Platforms² Life Savings³ ment⁴ Savings rlands place ments⁷ Annuities
ended 31 December 2015 bn bn bn bn bn bn bn bn bn
At 1 January 2015 71.9 7.7 36.0 (6.9) 108.7 4.4 11.1 21.3 44.2
Gross inflows¹ 8.7 1.2 1.1 (0.5) 10.5 0.4 3.3 5.9 3.0
Gross outflows (5.2) (0.5) (4.1) 0.8 (9.0) (0.3) (0.7) (5.7) -
Payments to pensioners - - - - - - - (2.6)
Disposals^5,6 - - (2.8) - (2.8) (2.7) - - -
Net flows 3.5 0.7 (5.8) 0.3 (1.3) (2.6) 2.6 0.2 0.4
Market and other 
movements 1.5 0.2 (0.6) (0.2) 0.9 (0.2) 1.0 1.1 (1.2)
At 31 December 2015 76.9 8.6 29.6 (6.8) 108.3 1.6 14.7 22.6 43.4
LGIM 
Consol- France 
Mature idation and Retail 
Suffolk Retail adjust- Total Nethe- Work- Invest- 
For the year ended Platforms² Life Savings³ ment⁴ Savings rlands place ments⁷ Annuities
ended 31 December 2014 bn bn bn bn bn bn bn bn bn
At 1 January 2014 64.1 6.6 36.3 (6.8) 100.2 4.5 8.7 20.5 34.4
Gross inflows¹ 10.1 1.3 1.4 (0.5) 12.3 0.4 2.8 4.4 6.5
Gross outflows (4.7) (0.5) (4.4) 0.7 (8.9) (0.4) (0.6) (4.8) -
Payments to pensioners - - - - - - - - (2.1)
Net flows 5.4 0.8 (3.0) 0.2 3.4 - 2.2 (0.4) 4.4
Market and other 
movements 2.4 0.3 2.7 (0.3) 5.1 (0.1) 0.2 1.2 5.4
At 31 December 2014 71.9 7.7 36.0 (6.9) 108.7 4.4 11.1 21.3 44.2
1. Platforms gross inflows include Cofunds institutional net flows. Total 2015 Platforms comprise 37.5bn (2014: 38.3bn) of retail assets and 39.4bn (2014: 33.6bn) of assets held on behalf of institutional clients. 
2. Platforms AUA comprise ISAs 19.9bn (2014: 19.1bn); onshore bonds 3.0bn (2014: 3.3bn); offshore bonds 0.1bn (2014: 0.1bn); platform SIPPs 3.5bn (2014: 3.3bn) and non-wrapped funds 50.4bn (2014: 46.1bn).
3. Mature Retail Savings products include with-profits products, bonds and retail pensions. 
4. Consolidation adjustment represents Suffolk Life and Mature Retail Savings assets included in the Platforms column. 
5. 2.8bn of assets relating to Legal & General International (Ireland) Limited, were sold to Canada Life Group on 1 July 2015.
6. 2.7bn of assets relating to Legal & General Holdings (France) S.A. were sold on 31 December 2015 to APICIL Prvoyance.
7. 2015 Retail Investments include 2.0bn (2014: 1.7bn) of LGIM unit trust assets held on our Cofunds platform and 3.2bn (2014: 3.2bn) of LGIM unit trust assets held on our IPS platform. 
Asset and premium flows Page 60
3.05 Assets under administration quarterly progression 
LGIM 
Consol- France 
Mature idation and Retail 
Suffolk Retail adjust- Total Nethe- Work- Invest- 
For the year ended Platforms Life Savings² ment³ Savings rlands place ments⁵ Annuities 
31 December 2015 bn bn bn bn bn bn bn bn bn 
At 1 January 2015 71.9 7.7 36.0 (6.9) 108.7 4.4 11.1 21.3 44.2 
Gross inflows¹ 1.9 0.3 0.3 - 2.5 0.1 0.6 1.5 0.7 
Gross outflows (1.2) (0.1) (0.9) 0.2 (2.0) (0.1) (0.1) (1.6) - 
Payments to pensioners - - - - - - - - (0.5) 
Net flows 0.7 0.2 (0.6) 0.2 0.5 - 0.5 (0.1) 0.2 
Market and other 
movements 3.4 0.3 0.7 (0.4) 4.0 (0.1) 1.4 1.2 1.2 
At 31 March 2015 76.0 8.2 36.1 (7.1) 113.2 4.3 13.0 22.4 45.6 
Gross inflows¹ 1.9 0.3 0.4 (0.2) 2.4 0.1 0.6 1.5 0.7 
Gross outflows (1.5) (0.2) (1.3) 0.2 (2.8) (0.1) (0.2) (1.4) - 
Payments to pensioners - - - - - - - - (0.7) 
Net flows 0.4 0.1 (0.9) - (0.4) - 0.4 0.1 - 
Market and other 
movements (1.8) - (0.4) 0.2 (2.0) (0.1) (0.3) - (2.2) 
At 30 June 2015 74.6 8.3 34.8 (6.9) 110.8 4.2 13.1 22.5 43.4 
Gross inflows¹ 2.7 0.3 0.1 (0.2) 2.9 0.1 1.0 1.7 0.2 
Gross outflows (1.2) (0.1) (1.0) 0.2 (2.1) - (0.2) (1.2) - 
Payments to pensioners - - - - - - - - (0.7) 
Disposal of LGI⁴ - - (2.8) - (2.8) - - - - 
Net flows 1.5 0.2 (3.7) - (2.0) 0.1 0.8 0.5 (0.5) 
Market and other 
movements (3.0) (0.3) (0.9) 0.3 (3.9) (0.1) (0.8) (0.8) 0.2 
At 30 September 2015 73.1 8.2 30.2 (6.6) 104.9 4.2 13.1 22.2 43.1 
Gross inflows¹ 2.2 0.3 0.3 (0.1) 2.7 0.1 1.1 1.2 1.4 
Gross outflows (1.3) (0.1) (0.9) 0.2 (2.1) (0.1) (0.2) (1.5) - 
Payments to pensioners - - - - - - - - (0.7) 
Disposal of LGF⁶ - - - - - (2.7) - - - 
Net flows 0.9 0.2 (0.6) 0.1 0.6 (2.7) 0.9 (0.3) 0.7 
Market and other 
movements 2.9 0.2 - (0.3) 2.8 0.1 0.7 0.7 (0.4) 
At 31 December 2015⁷ 76.9 8.6 29.6 (6.8) 108.3 1.6 14.7 22.6 43.4 
1. Platforms gross inflows include Cofunds institutional net flows. Total 2015 Platforms comprise 37.5bn (Q3 15: 36.5bn; Q2 15: 37.9bn; Q1 15: 38.8bn) of retail assets and 39.4bn (Q3 15: 36.6bn; Q2 15: 36.7bn; Q1 15: 37.2bn) of assets held on behalf of institutional clients. 
2. Mature Retail Savings products include with-profits products, bonds and retail pensions. 
3. Consolidation adjustment represents Suffolk Life and Mature Retail Savings assets included in the Platforms column. 
4. 2.8bn of assets relating to Legal & General International (Ireland) Limited, were sold to Canada Life Group on 1 July 2015. 
5. At 31 December 2015 Retail Investments include 3.2bn (Q3 15: 1.9bn; Q2 15: 1.8bn; Q1 15: 1.8bn) of LGIM unit trust assets held on our Cofunds platform and 2.0bn (Q3 15: 3.1bn; Q2 15: 3.3bn; Q1 15: 3.4bn) of LGIM unit trust assets held on our IPS platform. 
6. 2.7bn of assets relating to Legal & General Holdings (France) S.A. were sold on 31 December 2015 to APICIL Prvoyance. 
7. On 21 January 2016 Suffolk Life was sold. The assets of 8.6bn and consol adjustment of 0.1m are included in the total savings assets as at 31 December 2015. 
Asset and premium flows Page 61
3.05 Assets under administration quarterly progression (continued) 
LGIM 
Consol- France 
Mature idation and Retail 
Suffolk Retail adjust- Total Nether- Work- Invest- 
For the year ended Platforms Life Savings² ment³ Savings lands place ments⁴ Annuities
31 December 2014 bn bn bn bn bn bn bn bn bn
At 1 January 2014 64.1 6.6 36.3 (6.8) 100.2 4.5 8.7 20.5 34.4
Gross inflows¹ 2.6 0.3 0.4 (0.1) 3.2 0.1 0.7 1.0 3.3
Gross outflows (1.1) (0.1) (1.1) 0.2 (2.1) (0.1) (0.2) (0.9) -
Payments to pensioners - - - - - - - - (0.5)
Net flows 1.5 0.2 (0.7) 0.1 1.1 - 0.5 0.1 2.8
Market and other 
movements - 0.1 0.5 (0.1) 0.5 (0.1) (0.1) 0.2 1.1
At 31 March 2014 65.6 6.9 36.1 (6.8) 101.8 4.4 9.1 20.8 38.3
Gross inflows¹ 2.2 0.3 0.3 (0.1) 2.7 0.1 0.6 0.9 0.2
Gross outflows (1.2) (0.1) (1.1) 0.2 (2.2) (0.1) (0.1) (1.5) -
Payments to pensioners - - - - - - - - (0.5)
Net flows 1.0 0.2 (0.8) 0.1 0.5 - 0.5 (0.6) (0.3)
Market and other 
movements 0.8 0.1 0.6 - 1.5 0.1 (0.1) 0.4 0.5
At 30 June 2014 67.4 7.2 35.9 (6.7) 103.8 4.5 9.5 20.6 38.5
Gross inflows¹ 2.8 0.4 0.4 (0.2) 3.4 0.1 0.7 1.2 0.4
Gross outflows (1.3) (0.2) (1.2) 0.2 (2.5) (0.1) (0.2) (1.3) -
Payments to pensioners - - - - - - - - (0.6)
Net flows 1.5 0.2 (0.8) - 0.9 - 0.5 (0.1) (0.2)
Market and other 
movements 0.1 0.1 0.4 (0.1) 0.5 (0.1) 0.1 0.2 1.6
At 30 September 2014 69.0 7.5 35.5 (6.8) 105.2 4.4 10.1 20.7 39.9
Gross inflows¹ 2.5 0.3 0.3 (0.1) 3.0 0.1 0.8 1.3 2.6
Gross outflows (1.1) (0.1) (1.0) 0.1 (2.1) (0.1) (0.1) (1.1) -
Payments to pensioners - - - - - - - - (0.5)
Net flows 1.4 0.2 (0.7) - 0.9 - 0.7 0.2 2.1
Market and other 
movements 1.5 - 1.2 (0.1) 2.6 - 0.3 0.4 2.2
At 31 December 2014 71.9 7.7 36.0 (6.9) 108.7 4.4 11.1 21.3 44.2
1. Platforms gross inflows include Cofunds institutional net flows. At 31 December 2014 Platforms comprise 38.3bn (Q1 14 36.6bn; Q2 14: 37.3bn; Q3 14: 37.4bn) of retail assets and 33.6bn (Q1 14: 29.0bn; Q2 14: 30.1bn; Q3 14: 31.6bn) of assets held on behalf of institutional clients.
2. Mature Retail Savings products include with-profits products, bonds and retail pensions. 
3. Consolidation adjustment represents Suffolk Life and Retail Savings assets included in the Platforms column.
4. At 31 December 2014 Retail Investments include 1.7bn (Q1 14: 1.6bn; Q2 14: 1.5bn; Q3 14: 1.6bn) of LGIM unit trust assets held on our Cofunds platform and 3.2bn (Q1 14: 3.2bn; Q2 14: 3.2bn; Q3 14: 3.2bn) of LGIM unit trust assets held on our IPS platform.
Asset and premium flows Page 62
3.06 LGR new business 
3 3 3 3 3 3 3 3
months months months months months months months months
to to to to to to to to
31.12.15 30.09.15 30.06.15 31.03.15 31.12.14 30.09.14 30.06.14 31.03.14
m m m m m m m m
Individual Annuities 65 82 81 99 83 125 139 244
Bulk Purchase Annuities 
 - UK 739 92 491 655 2,619 233 90 3,045
 - USA 295 - - - - - - -
 - Netherlands 145 - - - - - - -
Lifetime Mortgage Advances¹ 99 65 37 - - - - -
Total LGR new business 1,343 239 609 754 2,702 358 229 3,289
1. In Q2 15, 12m of these advances were funded by L&G prior to our acquisition of New Life Home Finance Ltd. 
3.07 Insurance new business annual premiums 
3 3 3 3 3 3 3 3
months months months months months months months months
to to to to to to to to
31.12.15 30.09.15 30.06.15 31.03.15 31.12.14 30.09.14 30.06.14 31.03.14
m m m m m m m m
UK Retail Protection 41 42 41 38 41 41 41 42
UK Group Protection 16 13 22 18 11 14 20 20
France Protection - - - 30 - - - 33
Netherlands Protection 1 1 2 1 - 1 - 2
US Protection 14 15 21 20 21 23 24 23
Total Insurance new business 72 71 86 107 73 79 85 120
3.08 Gross written premiums on Insurance business 
3 3 3 3 3 3 3 3
months months months months months months months months
to to to to to to to to
31.12.15 30.09.15 30.06.15 31.03.15 31.12.14 30.09.14 30.06.14 31.03.14
 m m m m m m m m
UK Retail Protection 282 285 275 270 273 269 260 254
UK Group Protection 51 50 127 102 57 65 130 99
General Insurance 86 87 83 81 95 104 94 84
France Protection 44 39 42 43 41 41 45 46
Netherlands Protection 11 11 11 13 9 16 12 14
US Protection 201 186 202 184 184 162 170 162
Longevity Insurance 81 81 85 79 82 84 83 84
Total gross written premiums on insurance business 756 739 825 772 741 741 794 743
Asset and premium flows Page 63
3.09 Overseas new business in local currency 
Annual Single Annual Single
premiums premiums premiums premiums
2015 2015 2014 2014
US (US$m) 106 - 150 -
Netherlands (m) 14 111 10 138
France (m) 41 418 41 351
India (Rs m) - Group's 26% interest 478 3,266 408 4,003
Egypt (Pounds m) - Group's 55% interest 144 - 149 -
Gulf (US$m) - Group's 50% interest 2 2 3 5
Asset and premium flows Page 64
This page has been left intentionally blank.

This information is provided by RNS
The company news service from the London Stock Exchange
  END
FR AKQDPCBKDPND

LGEN — Legal & General News Story

REG - Legal & General Grp - L&G Full Year Results 2015 Part 2 <Origin Href="QuoteRef">LGEN.L</Origin> - Part 1

Legal & General Group Plc

Full Year Results 2015 Part 2

Recent news on Legal & General

REG - Legal & General Grp - Transaction in Own Shares

REG - Legal & General Grp Morgan Stanley - Holding(s) in Company

REG - Orbit Capital plc - Directorate Change

REG - Legal & General Grp Morgan Stanley - Holding(s) in Company

REG - Legal & General Grp - Transaction in Own Shares


		2015	2014
	Notes	m	m


From continuing operations
Legal & General Retirement (LGR)	2.02	639	428
Legal & General Investment Management (LGIM)	2.03	355	321
Legal & General Capital (LGC)	2.05	233	203
Insurance	2.02	293	370
Savings	2.02	99	105
Legal & General America (LGA)		83	56


Operating profit from divisions		1,702	1,483
Group debt costs¹		(153)	(142)
Group investment projects and expenses²	2.06	(94)	(66)


Operating profit		1,455	1,275
Investment and other variances	2.07	(119)	(44)
Gains on non-controlling interests		19	7


Profit before tax attributable to equity holders		1,355	1,238
Tax expense attributable to equity holders of the company	2.16	(261)	(246)


Profit for the year		1,094	992



Profit attributable to equity holders of the company		1,075	985



		p	p


Earnings per share³	2.10	18.16	16.70

Adjusted earnings per share^3,4	2.10	18.58	16.70

Diluted earnings per share³	2.10	18.04	16.54

Adjusted diluted earnings per share^3,4	2.10	18.46	16.54


1. Group debt costs exclude interest on non recourse financing.
2. Group investment projects and expenses include restructuring costs of 50m (2014: 31m).
3. All earnings per share calculations are based on profit attributable to equity holders of the company.
4. Adjusted earnings per share and adjusted diluted earnings per share have been calculated excluding the net loss, 25m, resulting from the disposal of subsidiary and joint venture investments during the year.

The table below provides an analysis of the operational cash generation by each of the Group's business segments, together with a reconciliation to operating profit before tax.

	Opera-				Changes					Operating
	tional	New	Net		in			Operating		profit/
	cash	business	cash	Exper-	valuation	Non-cash	Inter-	profit/	Tax	(loss)
	gene-	surplus/	gene-	ience	assump-	items and	national	(loss)	expense/	before
For the year ended	ration¹	(strain)	ration	variances	tions	other	and other²	after tax	(credit)	tax
31 December 2015	m	m	m	m	m	m	m	m	m	m


LGR	372	45	417	13	114	(20)	-	524	115	639
LGIM³	303	(22)	281	(1)	1	(2)	-	279	76	355
- LGIM excluding workplace
savings	282	-	282	-	-	-	-	282	77	359
- Workplace savings	21	(22)	(1)	(1)	1	(2)	-	(3)	(1)	(4)
LGC	187	-	187	-	-	-	-	187	46	233
Insurance	323	25	348	(14)	(45)	(46)	(10)	233	60	293
Savings³	119	(9)	110	(9)	-	(23)	1	79	20	99
LGA	54	-	54	-	-	-	(17)	37	46	83


Total from divisions	1,358	39	1,397	(11)	70	(91)	(26)	1,339	363	1,702


Group debt costs	(122)	-	(122)	-	-	-	-	(122)	(31)	(153)
Group investment projects
and expenses	(19)	-	(19)	-	-	-	(56)	(75)	(19)	(94)


Total	1,217	39	1,256	(11)	70	(91)	(82)	1,142	313	1,455


1. Operational cash generation includes dividends remitted from LGF of 1m (2014: 2m) and LGN of 28m (2014: 29m) within the Insurance line and LGA of 54m (2014: 46m).
2. International and other includes 40m (2014: 25m) of restructuring costs (50m before tax) (2014: 31m before tax) within the Group investment projects and expenses line.
3. LGIM includes the workplace savings business which was previously reported in Savings. Prior year comparatives have been amended.

Operational cash generation for LGR, LGIM, Insurance and Savings represents the expected surplus generated in the year from the in-force non profit annuities, workplace savings, protection and savings businesses using best estimate assumptions. The LGIM operational cash generation also includes operating profit after tax from the institutional and retail investment management businesses. The Insurance operational cash generation also includes dividends remitted from LGF and LGN and operating profit after tax from general insurance and the remaining Insurance businesses. The Savings operational cash generation also includes the shareholders' share of bonuses on with-profits business and operating profit after tax from the remaining Savings businesses.

New business surplus/strain for LGR, LGIM, Insurance and Savings represents the cost of acquiring new business and setting up regulatory reserves in respect of the new business for UK non profit annuities, workplace savings, protection and savings, net of tax. The new business surplus and operational cash generation for LGR, LGIM, Insurance and Savings exclude the required solvency margin from the liability calculation.

Net cash generation for LGR, LGIM, Insurance and Savings is defined as operational cash generation less new business strain.

Operational cash generation and net cash for LGC represents the operating profit (net of tax).

The operational cash generation for LGA represents the dividends received.

See Note 2.02 for more detail on experience variances, assumption changes and non-cash items.


	LGR	Insurance	Savings¹	LGR	Insurance	Savings¹
	2015	2015	2015	2014	2014	2014
	m	m	m	m	m	m


Net cash generation	417	348	110	343	327	113


Experience variances
Persistency	4	5	(2)	(3)	(3)	1
Mortality/Morbidity	18	(16)	-	13	(7)	2
Expenses	-	2	3	(3)	1	(2)
Project and development costs	(20)	(2)	(2)	(19)	(6)	(3)
Other²	11	(3)	(8)	(1)	7	(5)


Total experience variances	13	(14)	(9)	(13)	(8)	(7)


Changes to valuation assumptions
Persistency³	-	48	-	-	43	(1)
Mortality/Morbidity⁴	97	(20)	-	61	37	-
Expenses⁵	17	27	(2)	(5)	11	3
Reinsurance modelling⁶	-	(93)	-	-	-	-
Other	-	(7)	2	(8)	(67)	1


Total valuation assumption changes	114	(45)	-	48	24	3


Movement in non-cash items
Deferred tax	-	-	2	(11)	(3)	6
Utilisation of brought forward trading losses	(25)	(6)	-	(62)	(11)	2
Acquisition expense tax relief ⁷	-	(30)	(4)	-	(36)	(6)
Deferred Acquisition Costs (DAC)⁸	-	-	(54)	-	-	(76)
Deferred Income Liabilities (DIL)⁸	-	-	39	-	-	50
Other	5	(10)	(6)	41	-	2


Total non-cash movement items	(20)	(46)	(23)	(32)	(50)	(22)


Other	-	(10)	1	-	(6)	(1)


Operating profit after tax	524	233	79	346	287	86


Tax gross up	115	60	20	82	83	19


Operating profit before tax	639	293	99	428	370	105


1. Savings excludes the workplace savings business which is now reported in LGIM. Prior period comparatives have been amended. The impact on the Savings comparatives is the increase of net cash generation by 16m and the increase of operating profit by 15m. Offsetting movements have been reflected in the LGIM segment.
2. The Other LGR experience variance reflects the benefit to profit of selective longevity and asset reinsurance related to bulk annuity transactions, offset by other smaller experience variances.
3. The Insurance persistency valuation assumption change reflects continued improvement in retail protection lapse rates.
4. The mortality/morbidity valuation assumption change in LGR primarily reflects late retirement factor assumption changes and a change in mortality reserving assumptions in relation to unreported deaths of deferred annuitants. The Insurance mortality/morbidity valuation assumption change has arisen on the strengthening of the reserving basis on the Whole Life Protection product to reflect the current expectation of future mortality improvement on this business.
5. The LGR and Insurance positive expense valuation assumption changes represents the continued operational efficiency reducing the existing business cost base.
6. The reinsurance modelling for our UK protection business has been enhanced. Recent reinsurance contracts have been written on a risk premium basis (as opposed to level premium) and the model change ensures that for these treaties, sufficient prudence is being held in later years. The one-off impact reduced operating profit by 93m in 2015. This also defers a higher proportion of cash generation into the later years of these reinsurance contracts.
7. Net cash for Insurance and Savings recognises tax relief from prior year acquisition expenses, which are spread evenly over seven years under relevant 'I-E' tax legislation in the period the cash flows actually occur. In contrast, operating profit typically recognises the value of these future cash flows in the same period as the underlying expense as deferred tax amounts. The reconciling amounts arising from these items are included in the table above. Following the removal of new retail protection business from the 'I-E' tax regime, and the removal of commission from new insured savings business under the Retail Distribution Review at the end of 2012, no material amount of deferred tax assets arise on new acquisition expenses and the value of these future cash flows for post-2013 acquisition expenses have been reflected within net cash. The residual prior year acquisition expenses will run off predictably to 2018.
8. The DAC in Savings represents the amortisation charges offset by new acquisition costs deferred in the year. The DIL reflects initial fees on insured savings business which relate to the future provision of services and are deferred and amortised over the anticipated period in which these services are provided.

	2015	2014
	m	m


Investment management revenue	694	645
Investment management expenses	(335)	(309)
Workplace savings operating loss	(4)	(15)


Total LGIM operating profit	355	321

	2015	2014
	m	m


General insurance operating profit¹	51	59


General insurance combined operating ratio (%)²	89	87


1. The general insurance operating profit includes the underwriting result and investment return.
2. The calculation of the general insurance combined operating ratio incorporates commission and expenses as a percentage of net earned premiums.

	2015	2014
	m	m


Investment return	251	219
Expenses	(18)	(16)


Total LGC operating profit	233	203

	2015	2014
	m	m


Group investment projects and central expenses	(44)	(35)
Restructuring costs	(50)	(31)


Total Group investment projects and expenses	(94)	(66)

	2015	2014
	m	m


Investment variance¹	(57)	(8)
M&A related²	(57)	(21)
Other³	(5)	(15)


Total Investment and other variances	(119)	(44)


1. 2015 investment variance is negative, primarily driven by below expected equity performance and a defined pension benefit scheme variance of (15)m (2014: 40m), that reflects the actuarial losses and gains and valuation differences arising on annuity assets held by defined benefit pension schemes that have been purchased from Legal & General Assurance Society Limited (Society).
2. M&A related includes gains and losses, expenses and intangible amortisation relating to acquisitions and disposals. 2015 includes the 25m net loss resulting from the disposal of subsidiary and joint venture investments during the year.
3. Other includes new business start-up costs and other non-investment related variance items.

Consolidated Statement of Changes in Equity

			Employee	Capital
			scheme	redemption			Non-
	Share	Share	treasury	and other	Retained		controlling	Total
	capital	premium	shares	reserves	earnings	Total	interests	equity
For the year ended 31 December 2015	m	m	m	m	m	m	m	m


As at 1 January 2015	149	969	(37)	117	4,830	6,028	275	6,303
Profit for the year	-	-	-	-	1,075	1,075	19	1,094
Exchange differences on translation of
overseas operations	-	-	-	25	-	25	-	25
Actuarial gains on defined benefit
pension schemes	-	-	-	-	36	36	-	36
Actuarial gains on defined benefit
pension schemes transferred to
unallocated divisible surplus	-	-	-	-	(13)	(13)	-	(13)
Net change in financial investments
designated as available-for-sale	-	-	-	(42)	-	(42)	-	(42)


Total comprehensive income/(expense)
for the year	-	-	-	(17)	1,098	1,081	19	1,100
Options exercised under
share option schemes:
- Savings related share option scheme	-	7	-	-	-	7	-	7
Shares purchased	-	-	(3)	-	-	(3)	-	(3)
Shares vested	-	-	10	(23)	-	(13)	-	(13)
Employee scheme treasury shares:
- Value of employee services	-	-	-	26	-	26	-	26
Share scheme transfers to
retained earnings	-	-	-	-	(21)	(21)	-	(21)
Dividends	-	-	-	-	(701)	(701)	-	(701)
Movement in third party interests	-	-	-	-	-	-	(5)	(5)
Currency translation differences	-	-	-	(14)	14	-	-	-


As at 31 December 2015	149	976	(30)	89	5,220	6,404	289	6,693

2.09 Segmental analysis (continued)
(a) Profit/(loss) for the year

							Group
							expenses
							and debt
	LGR	LGIM	LGC	Insurance	Savings	LGA	costs	Total
For the year ended 31 December 2015	m	m	m	m	m	m	m	m


Operating profit/(loss)	639	355	233	293	99	83	(247)	1,455
Investment and other variances¹	79	(20)	(116)	(40)	3	(13)	(12)	(119)
Gains attributable to non-controlling
interests	-	-	-	-	-	-	19	19


Profit/(loss) before tax attributable to
equity holders	718	335	117	253	102	70	(240)	1,355
Tax (expense)/credit attributable to equity
holders of the company	(131)	(74)	(9)	(61)	(15)	(41)	70	(261)


Profit/(loss) for the year	587	261	108	192	87	29	(170)	1,094




							Group
							expenses
							and debt
	LGR	LGIM²	LGC	Insurance	Savings²	LGA	costs	Total
For the year ended 31 December 2014	m	m	m	m	m	m	m	m


Operating profit/(loss)	428	321	203	370	105	56	(208)	1,275
Investment and other variances	67	(7)	(37)	12	(24)	(13)	(42)	(44)
Gains attributable to non-controlling
interests	-	-	-	-	-	-	7	7


Profit/(loss) before tax attributable to
equity holders	495	314	166	382	81	43	(243)	1,238
Tax (expense)/credit attributable to equity
holders of the company	(97)	(68)	(9)	(90)	(14)	(19)	51	(246)


Profit/(loss) for the year	398	246	157	292	67	24	(192)	992


1. 2015 Investment and other variances - Insurance and Savings include the gain/(loss) resulting from the disposal of subsidiary and joint venture investments during the year.
2. LGIM includes the workplace savings business which was previously reported in Savings. Prior period comparatives have been amended. At 2014, the impact includes the reduction of operating profit by 15m and profit before tax by 10m. Offsetting movements have been reflected in the Savings segment.


			Adjusted	Adjusted
	Profit	Earnings	profit	earnings	Profit	Earnings
	after tax	per share¹	after tax	per share^1,2	after tax	per share¹
	2015	2015	2015	2015	2014	2014
	m	p	m	p	m	p


Operating profit after tax	1,142	19.29	1,142	19.29	998	16.92
Investment and other variances	(67)	(1.13)	(42)	(0.71)	(13)	(0.22)


Earnings per share based on profit
attributable to equity holders	1,075	18.16	1,100	18.58	985	16.70


1. Earnings per share is calculated by dividing profit after tax derived from continuing operations by the weighted average number of ordinary shares in issue during the year, excluding employee scheme treasury shares.
2. Adjusted earnings per share has been calculated excluding the net loss, 25m, resulting from the disposal of subsidiary and joint venture investments.

				Adjusted	Adjusted
	Number	Profit	Earnings	profit	earnings	Number	Profit	Earnings
	of shares¹	after tax	per share	after tax	per share^{1, 2}	of shares¹	after tax	per share
	2015	2015	2015	2015	2015	2014	2014	2014
	m	m	p	m	p	m	m	p


Profit attributable to equity holders of the Company	5,920	1,075	18.16	1,100	18.58	5,897	985	16.70
Net shares under options allocable for no further consideration	38	-	(0.12)	-	(0.12)	59	-	(0.16)


Diluted earnings per share	5,958	1,075	18.04	1,100	18.46	5,956	985	16.54

1. For diluted earnings per share, the weighted average number of ordinary shares in issue, excluding employee scheme treasury shares, is adjusted to assume conversion of all potential ordinary shares, such as share options granted to employees.
2. Adjusted earnings per share has been calculated excluding the net loss, 25m, resulting from the disposal of subsidiary and joint venture investments.


On 15 January 2016, the group sold Suffolk Life Group Limited (SLG) to Curtis Banks Group plc for 45m (excluding transaction costs), subject to regulatory approval. The assets and liabilities of SLG have accordingly been assessed as a disposal group and have been classified as held for sale as at 31 December 2015. SLG formed part of the Savings segment in Note 2.09. SLG is not a discontinued operation as it does not represent a major line of business or geographical segment of the group.

								Total
								2015
								m


Assets classified as held for sale
Purchased interest in long term business and other intangible assets								28
Property, plant and equipment								1
Investment property								1,140
Financial investments								1,801
Reinsurers' share of contract liabilities								39
Cash and cash equivalents								389
Other assets								11


Total assets of the disposal group								3,409


Liabilities classified as held for sale
Investment contract liabilities								(3,235)
Operational borrowings								(102)
Tax liabilities								(5)
Payables and other financial liabilities								(10)
Other liabilities								(17)


Total liabilities of the disposal group								(3,369)


Total net assets of the disposal group								40

	2015	2014
	m	m


Equities	166,892	162,177
Unit trusts	6,021	7,529
Debt securities¹	169,720	178,766
Accrued interest	1,456	1,604
Derivative assets²	9,509	10,035
Loans and receivables	465	503


Financial investments	354,063	360,614


Investment property	8,082	8,152


Total financial investments and investment property	362,145	368,766


1. Detailed analysis of debt securities which shareholders are directly exposed to is disclosed in Note 4.06.
2. Derivatives are used to ensure efficient portfolio management, especially the use of interest rate swaps, inflation swaps, credit default swaps and foreign exchange forward contracts for asset and liability management. Derivative assets are shown gross of derivative liabilities and include 5,795m (2014: 6,011m) held on behalf of unit linked policyholders.

2.16 Tax
(a) Tax charge in the Consolidated Income Statement

The tax attributable to equity holders differs from the tax calculated at the standard UK corporation tax rate as follows:

	2015	2014
	m	m


Profit before tax attributable to equity holders	1,355	1,238
Tax calculated at 20.25% (2014: 21.5%)	274	266
Effects of:
Adjustments in respect of prior years	(5)	8
Income not subject to tax, such as dividends	(11)	(9)
Change in valuation of tax losses	-	(6)
Higher rate of tax on profits taxed overseas	16	8
Additional allowances/non-deductible expenses	(4)	(7)
Impact of reduction in UK corporate tax rate to 18% from 2020 on deferred tax balances¹	1	-
Differences between taxable and accounting investment gains	(10)	(15)
Other	-	1


Tax attributable to equity holders	261	246


Equity holders' effective tax rate²	19.3%	19.9%


1. Following the 2015 Finance Act, the rate of corporation tax will reduce to 19% from 1 April 2017. There will be a further 1% reduction to 18% from 1 April 2020. The enacted rates of 20 - 18% have been used in the calculation of UK's deferred tax assets and liabilities.
2. Equity holders' effective tax rate is calculated by dividing the tax attributable to equity holders over profit before tax attributable to equity holders.

2.16 Tax (continued)
(b) Deferred Tax

	2015	2014
(i) UK deferred tax assets/(liabilities)	m	m


Realised and unrealised gains on investments	(146)	(168)
Excess of depreciation over capital allowances	18	19
Excess expenses¹	74	105
Deferred acquisition expenses	(51)	(61)
Difference between the tax and accounting value of insurance contracts	(83)	(143)
Accounting provisions	8	3
Trading losses²	6	45
Pension fund deficit	72	98
Purchased interest in long term business	(15)	(24)


Net UK deferred tax liabilities	(117)	(126)



Presented on the Consolidated Balance Sheet as:


UK deferred tax asset	20	54
UK deferred tax liability	(137)	(180)


Net UK deferred liabilities³	(117)	(126)



(ii) Overseas deferred tax assets/(liabilities)


Realised and unrealised gains on investments	(8)	(53)
Deferred acquisition expenses	(308)	(295)
Difference between the tax and accounting value of insurance contracts	(241)	(242)
Accounting provisions	(27)	(20)
Trading losses	159	186
Purchased interest in long term business	(11)	(10)


Net Overseas deferred tax liabilities	(436)	(434)


1. The reduction in the deferred tax asset on excess expenses reflects the unwind of the spread acquisition expenses.
2. LGR and Insurance utilised their remaining losses against profits that arose during the first half of the year. The remaining losses mainly relate to Cofunds.
3. On the Consolidated Balance Sheet the net UK deferred tax liability has been split between an asset of 20m and a liability of 137m where the relevant items cannot be offset.


				2015	2014
				m	m


Derivative liabilities				8,047	6,877
Repurchase agreements¹				13,343	7,016
Other²				1,319	2,238


Payables and other financial liabilities				22,709	16,131


Due within 12 months				20,027	11,887
Due after 12 months				2,682	4,244


1. The repurchase agreements are presented gross, however they and their related assets are subject to master netting arrangements.
2. Other financial liabilities include net variation margins on derivative contracts, which are maintained daily. Included within the variation margins are collateral held and pledged of 94m and 50m respectively (2014: 107m and 235m respectively). Other also includes the present value of future commission costs which have contingent settlement provisions of 175m (2014: 186m).


Fair value hierarchy
					Amortised
	Total	Level 1	Level 2	Level 3	cost
As at 31 December 2015	m	m	m	m	m


Derivative liabilities	8,047	1,451	6,596	-	-
Repurchase agreements	13,343	-	-	-	13,343
Other	1,319	5	12	175	1,127


Payables and other financial liabilities	22,709	1,456	6,608	175	14,470




					Amortised
	Total	Level 1	Level 2	Level 3	cost
As at 31 December 2014	m	m	m	m	m


Derivative liabilities	6,877	593	6,284	-	-
Repurchase agreements	7,016	-	-	-	7,016
Other	2,238	869	29	186	1,154


Payables and other financial liabilities	16,131	1,462	6,313	186	8,170



Future commission costs are modelled using expected cash flows, incorporating expected future persistency. They have therefore been classified as level 3 liabilities. The entire movement in the balance has been reflected in the Consolidated Income Statement during the period. A reasonably possible alternative persistency assumption would have the effect of increasing the liability by 6m (2014: 6m).


Significant transfers between levels There have been no significant transfers between levels 1, 2 and 3 for the period ended 31 December 2015 (2014: No significant transfers between levels 1, 2 and 3).


		Per		Per
	Dividend	share¹	Dividend	share¹
	2015	2015	2014	2014
	m	p	m	p


Ordinary share dividends paid in the period:
- Prior year final dividend	496	8.35	408	6.90
- Current year interim dividend	205	3.45	172	2.90


	701	11.80	580	9.80


Ordinary share dividend proposed²	592	9.95	496	8.35


1. The dividend per share calculation is based on the number of equity shares registered on the ex-dividend date.
2. The dividend proposed is not included as a liability on the Consolidated Balance Sheet.

		2015			2014
		Number of	2015		Number of	2014
Authorised share capital		shares	m		shares	m


At 31 December: ordinary shares of 2.5p each	9,200,000,000		230	9,200,000,000		230



					Share	Share
				Number of	capital	premium
Issued share capital, fully paid				shares	m	m


As at 1 January 2015			5,942,070,229		149	969
Options exercised under share option schemes:
- Savings related share option scheme			6,718,251		-	7


As at 31 December 2015			5,948,788,480		149	976


					Share	Share
				Number of	capital	premium
Issued share capital, fully paid				shares	m	m


As at 1 January 2014			5,917,066,636		148	959
Options exercised under share option schemes:
- Savings related share option scheme			25,003,593		1	10


As at 31 December 2014			5,942,070,229		149	969


There is one class of ordinary shares of 2.5p each. All shares issued carry equal voting rights.

The holders of the company's ordinary shares are entitled to receive dividends as declared and are entitled to one vote per share at shareholder meetings of the company.

2.20 Core Borrowings

	Carrying	Fair	Carrying	Fair
	amount	value	amount	value
	2015	2015	2014	2014
	m	m	m	m


Subordinated borrowings
6.385% Sterling perpetual capital securities (Tier 1)	637	631	658	642
5.875% Sterling undated subordinated notes (Tier 2)	413	426	416	431
4.0% Euro subordinated notes 2025 (Tier 2)	-	-	472	482
10% Sterling subordinated notes 2041 (Tier 2)	310	398	310	424
5.5% Sterling subordinated notes 2064 (Tier 2)	589	570	588	666
5.375% Sterling subordinated notes 2045 (Tier 2)	602	611	-	-
Client fund holdings of group debt¹	(26)	(27)	(28)	(31)


Total subordinated borrowings	2,525	2,609	2,416	2,614


Senior borrowings
Sterling medium term notes 2031-2041	609	779	609	800
Client fund holdings of group debt¹	(42)	(54)	(48)	(62)


Total senior borrowings	567	725	561	738


Total core borrowings	3,092	3,334	2,977	3,352


1. 68m (2014: 76m) of the group's subordinated and senior borrowings are currently held by Legal & General customers through unit linked products. These borrowings are shown as a deduction from total core borrowings in the table above.

All of the group's core borrowings are measured using amortised cost. The presented fair values of the group's core borrowings reflect quoted prices in active markets and they are classified as level 1 in the fair value hierarchy.

2.21 Operational Borrowings

	Carrying	Fair	Carrying	Fair
	amount	value	amount	value
	2015	2015	2014	2014
	m	m	m	m


Short term operational borrowings
Euro Commercial paper	15	15	73	73
Bank loans/other	2	2	13	13


Total short term operational borrowings	17	17	86	86


Non recourse borrowings
US Dollar Triple X securitisation 2037	302	258	286	240
Suffolk Life unit linked borrowings¹	-	-	120	120
LGV 6/LGV 7 Private Equity Fund Limited Partnership	98	98	136	136
Consolidated Property Limited Partnerships	184	184	148	148


Total non recourse borrowings	584	540	690	644


Group holding of operational borrowings²	(65)	(56)	(61)	(52)


Total operational borrowings	536	501	715	678


1. In January 2016, the group announced that Suffolk Life Group Limited had been sold to Curtis Banks Group. As at 31 December 2015, the Suffolk Life unit linked borrowings have been transferred to held for sale, refer to Note 2.13.
2. Group investments in operational borrowings have been eliminated from the Consolidated Balance Sheet.


			Re-		Re-
		Gross	insurance	Gross	insurance
		2015	2015	2014	2014
	Notes	m	m	m	m


Participating insurance contracts	2.22(b)	5,618	(1)	6,579	(1)
Non-participating insurance contracts	2.22(c)	49,470	(3,861)	49,589	(2,587)
General insurance contracts		284	(8)	287	(8)


Insurance contract liabilities		55,372	(3,870)	56,455	(2,596)




During the year, the group continued utilising prospective reinsurance arrangements which resulted in a profit of 503m (2014: 298m). This profit has been reflected in the Consolidated Income Statement for the year and arises from new reinsurance arrangements or the reinsurance of new business under existing arrangements.

	Impact on
	pre-tax	Impact on
	group profit	group equity
	net of re-	net of re-
	insurance	insurance
	2015	2015
	m	m


Economic sensitivity
Long-term insurance
1% increase in interest rates	48	(36)
1% decrease in interest rates	(168)	(49)

1% increase in long term inflation expectations	(38)	(31)

Credit spread widens by 100bps with no change in expected defaults	(102)	(138)
10% decrease in listed equities	(124)	(103)
10% fall in property values	(81)	(65)

10bps increase in credit default assumption	(324)	(258)
10bps decrease in credit default assumption	366	292

Non-economic sensitivity
Long-term insurance
1% decrease in annuitant mortality	(132)	(105)
5% increase in assurance mortality	(64)	(49)
Default of largest external reinsurer	(835)	(666)

General insurance
Single storm event with 1 in 200 year probability	(67)	(54)
Subsidence event - worst claims ratio in last 30 years	(72)	(57)

Principal rates of exchange used for translation are:

Period end exchange rates	At 31.12.15	At 31.12.14


United States Dollar	1.47	1.56
Euro	1.36	1.29



	01.01.15 -	01.01.14 -
Average exchange rates	31.12.15	31.12.14


United States Dollar	1.53	1.65
Euro	1.38	1.24

2.26 Related party transactions

There were no material transactions between key management and the Legal & General group of companies during the period. All transactions between the group and its key management are on commercial terms which are no more favourable than those available to employees in general. Contributions to the post-employment defined benefit plans were 93m (2014: 69m) for all employees.

At 31 December 2015 and 31 December 2014 there were no loans outstanding to officers of the company.

Key management personnel compensation
The aggregate compensation for key management personnel, including executive and non-executive directors, is as follows:

	2015	2014
	m	m


Salaries	10	8
Social security costs	2	2
Post-employment benefits	1	2
Share-based incentive awards	5	4


Key management personnel compensation	18	16


Number of key management personnel	16	16

			2015	2014
			m	m


Retirement benefit obligations			1,131	1,217
Other provisions			40	30


			1,171	1,247




(b) Retirement benefit obligations
	Fund and		Fund and
	Scheme	Overseas	Scheme	Overseas
	2015	2015	2014	2014
	m	m	m	m


Gross pension obligations included in provisions	(1,126)	(5)	(1,215)	(2)
Annuity obligations insured by Society	746	-	723	-


Gross defined benefit pension deficit	(380)	(5)	(492)	(2)
Deferred tax on defined benefit pension deficit	72	-	98	-


Net defined benefit pension deficit	(308)	(5)	(394)	(2)

3.01 Legal & General investment management total assets

		Active
		fixed	Solu-			Active		Total		Advisory		Total
For the year	Index	income¹	tions²	Real assets¹		equities		AUM		assets		assets
ended 31 December 2015	bn	bn	bn	bn		bn		bn		bn		bn


At 1 January 2015	274.8	102.9	293.3	14.5		8.2		693.7		14.8		708.5
External inflows³	33.4	11.1	16.3	1.4		-		62.2				62.2
External outflows	(30.9)	(4.3)	(6.6)	(0.9)		-		(42.7)				(42.7)
Overlay/ advisory net flows	-	-	18.2	-		-		18.2		(4.6)		13.6


External net flows⁴	2.5	6.8	27.9	0.5		-		37.7		(4.6)		33.1
Internal net flows	(0.7)	(1.9)	-	0.9		(0.4)		(2.1)		-		(2.1)
Disposal of LGF⁵	-	(2.3)	-	-		-		(2.3)		-		(2.3)


Total net flows	1.8	2.6	27.9	1.4		(0.4)		33.3		(4.6)		28.7
Cash management movements⁶	-	0.8	-	-		-		0.8		-		0.8
Market and other movements⁴	(2.3)	0.5	17.0	2.4		0.7		18.3		0.3		18.6


At 31 December 2015	274.3	106.8	338.2	18.3		8.5		746.1		10.5		756.6

Assets attributable to:
External								661.0		10.5		671.5
Internal								85.1		-		85.1


Assets attributable to:
UK								623.7		-		623.7
International								122.4		10.5		132.9



		Active
		fixed	Solu-		Active		Total		Advisory		Total
For the year ended	Index	income¹	tions²	Real assets¹	equities		AUM		assets		assets
31 December 2014	bn	bn	bn	bn	bn		bn		bn		bn


As at 1 January 2014	269.8	88.7	232.5	12.0	8.6		611.6		-		611.6
External inflows	23.7	5.5	8.5	1.4	0.1		39.2				39.2
External outflows	(39.5)	(3.8)	(6.6)	(0.5)	(0.1)		(50.5)				(50.5)
Overlay/ advisory net flows	-	-	18.8	-	-		18.8		(0.2)		18.6


External net flows⁴	(15.8)	1.7	20.7	0.9	-		7.5		(0.2)		7.3
Internal net flows	(0.2)	(0.7)	0.4	1.5	(0.1)		0.9		-		0.9


Total net flows	(16.0)	1.0	21.1	2.4	(0.1)		8.4		(0.2)		8.2
Acquisition of GIA assets	-	-	-	-	-		-		13.4		13.4


Cash management movements⁶	-	(1.6)	-	-	-		(1.6)		-		(1.6)
Market and other movements⁴	21.0	14.8	39.7	0.1	(0.3)		75.3		1.6		76.9


As at 31 December 2014	274.8	102.9	293.3	14.5	8.2		693.7		14.8		708.5


Assets attributable to:
External							603.7		14.8		618.5
Internal							90.0		-		90.0


Assets attributable to:
UK							579.7		-		579.7
International							114.0		14.8		128.8


1. Infrastructure debt investment has been reclassified from Active Fixed Income to Real Assets in 2015. 2014 has therefore been restated (1 January 2014 AUM: 0.7bn; internal net flows: 0.2bn; 31 December 2014 AUM: 0.9bn). The commercial loans business has also been reclassified and is now included in Real Assets (2014: 0.6bn).
2. Solutions include liability driven investments, multi-asset funds and included 226.2bn at 31 December 2015 (31 December 2014: 194.6bn) of derivative notionals associated with the Solutions business.
3. Solutions external inflows include 11.7bn of assets associated with the transfer of National Grid UK Pension Scheme after the purchase of their asset manager Aerion Fund Management.
4. External net flows exclude movements in short term solutions assets, with maturity as determined by client agreements and are subject to a higher degree of variability. The total value of these assets at 31 December 2015 was 59.9bn (31 December 2014: 46.5bn) and the movement in these assets is included in market and other movements for Solutions assets.
5. On 31 December 2015, the group sold Legal & General Holdings (France) S.A. to APICIL Prvoyance.
6. Cash management movements include external holdings in money market funds and other cash mandates held for clients' liquidity management purposes.

3.02 Legal & General investment management total assets quarterly progression

		Active
		fixed	Solu-		Active	Total	Advisory	Total
For the year ended	Index	income¹	tions²	Real assets¹	equities	AUM	assets	assets
31 December 2015	bn	bn	bn	bn	bn	bn	bn	bn


At 1 January 2015	274.8	102.9	293.3	14.5	8.2	693.7	14.8	708.5
External inflows	6.8	2.3	1.4	0.3	-	10.8		10.8
External outflows	(8.3)	(1.6)	(1.6)	(0.1)	-	(11.6)		(11.6)
Overlay/ advisory net flows	-	-	5.1	-	-	5.1	(1.2)	3.9


External net flows⁴	(1.5)	0.7	4.9	0.2	-	4.3	(1.2)	3.1
Internal net flows	-	(0.6)	-	0.3	(0.1)	(0.4)	-	(0.4)


Total net flows	(1.5)	0.1	4.9	0.5	(0.1)	3.9	(1.2)	2.7
Cash management movements⁵	-	1.7	-	-	-	1.7	-	1.7
Market and other movements	11.3	4.8	5.8	1.2	0.1	23.2	0.7	23.9


At 31 March 2015	284.6	109.5	304.0	16.2	8.2	722.5	14.3	736.8


External inflows	9.1	2.5	2.5	0.4	-	14.5		14.5
External outflows	(8.8)	(0.9)	(1.8)	(0.2)	-	(11.7)		(11.7)
Overlay/ advisory net flows	-	-	6.7	-	-	6.7	(2.3)	4.4


External net flows⁴	0.3	1.6	7.4	0.2	-	9.5	(2.3)	7.2
Internal net flows	(0.3)	(0.2)	-	0.1	(0.2)	(0.6)	-	(0.6)


Total net flows	-	1.4	7.4	0.3	(0.2)	8.9	(2.3)	6.6
Cash management movements⁵	-	-	-	-	-	-	-	-
Market and other movements	(9.9)	(4.5)	(3.2)	0.2	0.6	(16.8)	(0.7)	(17.5)


At 30 June 2015	274.7	106.4	308.2	16.7	8.6	714.6	11.3	725.9


External inflows	9.3	1.0	1.6	0.4	-	12.3		12.3
External outflows	(6.6)	(0.8)	(1.1)	(0.2)	-	(8.7)		(8.7)
Overlay / advisory net flows	-	-	4.3	-	-	4.3	(0.2)	4.1


External net flows⁴	2.7	0.2	4.8	0.2	-	7.9	(0.2)	7.7
Internal net flows	-	(1.5)	-	0.3	-	(1.2)	-	(1.2)


Total net flows	2.7	(1.3)	4.8	0.5	-	6.7	(0.2)	6.5
Cash management movements⁵	-	(0.8)	-	-	-	(0.8)	-	(0.8)
Market and other movements	(13.5)	1.2	9.3	0.3	(0.8)	(3.5)	(0.4)	(3.9)


At 30 September 2015	263.9	105.5	322.3	17.5	7.8	717.0	10.7	727.7


External inflows³	8.2	5.3	10.8	0.3	-	24.6		24.6
External outflows	(7.2)	(1.0)	(2.1)	(0.4)	-	(10.7)		(10.7)
Overlay / advisory net flows	-	-	2.1	-	-	2.1	(0.9)	1.2


External net flows⁴	1.0	4.3	10.8	(0.1)	-	16.0	(0.9)	15.1
Internal net flows	(0.4)	0.4	-	0.2	(0.1)	0.1	-	0.1
Disposal of LGF⁶	-	(2.3)	-	-	-	(2.3)	-	(2.3)


Total net flows	0.6	2.4	10.8	0.1	(0.1)	13.8	(0.9)	12.9
Cash management movements⁵	-	(0.1)	-	-	-	(0.1)	-	(0.1)
Market and other movements	9.8	(1.0)	5.1	0.7	0.8	15.4	0.7	16.1


At 31 December 2015	274.3	106.8	338.2	18.3	8.5	746.1	10.5	756.6


1. Infrastructure debt investment has been reclassified from Active Fixed Income to Real Assets in 2015 (1 January 2015 AUM: 0.9bn). The commercial loans business has also been reclassified and is now included in Real Assets (Q1 15: 0.1bn, Q2 15: 0.1bn, Q3 15: 0.3bn).
2. Solutions include liability driven investments, multi-asset funds, and include 226.2bn at 31 December 2015 (Q1 15: 197.1bn; Q2 15: 208.1bn; Q3 15: 216.6bn) of derivative notionals associated with the Solutions business.
3. External inflows include 11.7bn of assets associated with the transfer of National Grid UK Pension Scheme after the purchase of their asset manager Aerion Fund Management.
4. External net flows exclude movements in short term solutions assets, with maturity as determined by client agreements and are subject to a higher degree of variability. The total value of these assets at 31 December 2015 was 59.9bn (Q1 15: 44.0bn; Q2 15: 48.2bn; Q3 15: 52.5bn) and the movement in these assets is included in market and other movements for Solutions assets.
5. Cash management movements include external holdings in money market funds and other cash mandates held for clients' liquidity management purposes.
6. On 31 December 2015, the group sold Legal & General Holdings (France) S.A. to APICIL Prvoyance.

3.02 Legal & General investment management total assets quarterly progression (continued)

	As at	As at	As at	As at	As at	As at	As at	As at
	31.12.15	30.09.15	30.06.15	31.03.15	31.12.14	30.09.14	30.06.14	31.03.14
	bn	bn	bn	bn	bn	bn	bn	bn


Total assets attributable to:¹
External	671.5	641.7	636.1	644.5	618.5	591.5	570.3	547.8
Internal	85.1	86.0	89.8	92.3	90.0	84.8	83.4	83.1


Total assets attributable to:¹
UK	623.7	599.2	598.8	610.4	579.7	589.8	570.8	564.9
International²	132.9	128.5	127.1	126.4	128.8	86.5	82.9	66.0


1. Total assets at 31 December 2015 include 10.5bn of advisory assets (Q3 15: 10.7bn; Q2 15: 11.3bn; Q1 15: 14.3bn; Q4 14: 14.8bn; Q3 14: 14.2bn; Q2 14: 13.7bn; Q1 14: nil).
2. In Q4 14, International assets included 37.5bn of assets transferred from our London office to our Chicago office.

3.03 Legal & General investment management total external assets under management net flows

	3	3	3	3	3	3	3	3
	months	months	months	months	months	months	months	months
	to	to	to	to	to	to	to	to
	31.12.15	30.09.15	30.06.15	30.03.15	31.12.14	30.09.14	30.06.14	31.03.14
	bn	bn	bn	bn	bn	bn	bn	bn


LGIM total external AUM net flows¹	16.0	7.9	9.5	4.3	(0.8)	(0.2)	1.9	6.6
Attributable to:
International	1.5	2.6	4.6	0.8	1.6	1.3	2.4	3.4

UK Institutional
- Defined contribution	1.1	0.8	0.6	0.4	0.9	0.7	0.5	0.6
- Defined benefit ²	13.1	3.9	4.0	3.1	(3.6)	(2.2)	(1.2)	2.3

UK Retail	0.3	0.6	0.3	-	0.3	-	0.2	0.3


1. External net flows exclude movements in short term overlay assets, with maturity as determined by client agreements and cash management movements.
2. External inflows include 11.7bn of assets associated with the transfer of National Grid UK Pension Scheme after the purchase of their asset manager Aerion Fund Management.