REG - Legal & General Grp - L&G Full Year Results 2016 Part 3 <Origin Href="QuoteRef">LGEN.L</Origin> - Part 3
08/03/2017 07:08
- Part 3: For the preceding part double click ID:nRSH8036Yb
2.5 2.6
IFRS gross written premiums from Savings business 0.2 0.5
Deposit accounting for lifetime mortgage advances (0.6) (0.2)
General Insurance gross written premiums 3.09 0.3 0.3
Future premiums on longevity swap new business (0.9) -
Total gross written premiums 10.3 6.3
1. Other principally includes annuity sales in the US, lifetime mortgage advances and discounted future cash flows on longevity swap new business.
Capital and Investments
Page 75
4.04 Investment portfolio
Market Market
value value
2016 2015
£m £m
Worldwide total assets 903,886 747,944
Client and policyholder assets1 (821,978) (679,831)
Non-unit linked with-profits assets (11,924) (11,644)
Investments to which shareholders are directly exposed 69,984 56,469
1. Prior year figures for client and policyholder assets have been restated to include £82m of reverse repurchase agreements. The total investments to which shareholders are directly exposed to has increased to reflect the change.
Analysed by investment class:
Other
non profit Other
LGR insurance LGC shareholder
investments investments investments1 investments Total Total
2016 2016 2016 2016 2016 2015
Note £m £m £m £m £m £m
Equities1 393 - 2,034 131 2,558 2,252
Bonds 4.06 49,470 1,769 1,689 435 53,363 43,916
Derivative assets2 4,611 - 82 - 4,693 3,663
Property 4.07 2,442 - 162 - 2,604 2,347
Cash, cash equivalents, loans & receivables 1,589 544 2,194 524 4,851 4,168
Financial investments 58,505 2,313 6,161 1,090 68,069 56,346
Other assets3 1,883 - 32 1,915 123
Total investments 60,388 2,313 6,193 1,090 69,984 56,469
1. Equity investments include a total of £237m (2015: £180m) in respect of CALA Group Limited, Peel Media Holdings Limited (MediaCityUK), NTR Wind Management Ltd and Access Development Partnership, the latter being acquired in 2016.
2. Derivative assets are shown gross of derivative liabilities of £2.9bn (2015: £2.7bn). Exposures arise from the use of derivatives for 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.
3. Other assets include reverse repurchase agreements of £1,883m (2015: £82m).
Capital and Investments
Page 76
4.05 Direct Investments
(a) Analysed by asset class
Direct1, 2 Traded3 Direct1, 2 Traded3
Investments securities Total Investments securities Total
2016 2016 2016 2015 2015 2015
£m £m £m £m £m £m
Equities 595 1,963 2,558 432 1,820 2,252
Bonds4 6,256 47,107 53,363 3,929 39,987 43,916
Derivative assets - 4,693 4,693 - 3,663 3,663
Property 2,604 - 2,604 2,347 - 2,347
Cash, cash equivalents, loans & receivables 518 4,333 4,851 425 3,743 4,168
Other assets 32 1,883 1,915 41 825 123
10,005 59,979 69,984 7,174 49,295 56,469
1. Direct investments, which generally constitute an agreement with another party, represent an exposure to untraded and often less volatile asset classes. Direct investments also include physical assets, bilateral loans and private equity, but exclude hedge funds.
2. A further breakdown of property is provided in note 4.07.
3. Traded securities are defined by exclusion. If an instrument is not a Direct Investment, then it is classed as a traded security.
4. Direct Investment bonds now include lifetime mortgages of £852m. Prior year figures have been adjusted, showing an increase of £207m in Direct Investments bonds.
5. 2015 traded securities now include £82m of reverse repurchase agreements.
(b) Analysed by segment
LGI
LGI (UK and
LGR LGC (US) Other) Total
2016 2016 2016 2016 2016
£m £m £m £m £m
Equities - 595 - - 595
Bonds1 5,655 228 373 - 6,256
Property2 2,442 162 - - 2,604
Cash, cash equivalents, loans & receivables 33 120 365 - 518
Other assets - 32 - - 32
8,130 1,137 738 - 10,005
1. Direct Investments bonds now include lifetime mortgages of £852m. Prior year figures have been adjusted, showing an increase of £207m in Direct Investments bonds.
2. A further breakdown of property is provided in note 4.07.
Capital and Investments
Page 77
4.05 Direct Investments
(a) Analysed by segment (continued)
LGI
LGI (UK and
LGR LGC (US) Other) Total
2015 2015 2015 2015 2015
£m £m £m £m £m
Equities - 432 - - 432
Bonds1 3,543 93 293 - 3,929
Property2 2,157 186 - 4 2,347
Cash, cash equivalents, loans & receivables - 115 310 - 425
Other assets - 41 - - 41
5,700 867 603 4 7,174
1. Direct Investments bonds now include lifetime mortgages of £852m. Prior year figures have been adjusted, showing an increase of £207m in Direct Investments bonds.
2. A further breakdown of property is provided in note 4.07.
(c) Movement in the period
Carrying Change in Carrying
value market value
01.01.16 Additions Disposals1 value 31.12.16
£m £m £m £m £m
Equities 432 202 (74) 35 595
Bonds 3,929 2,121 (286) 492 6,256
Property 2,347 596 (328) (11) 2,604
Cash, cash equivalents, loans & receivables 425 60 (33) 66 518
Other assets 41 6 - (15) 32
7,174 2,985 (721) 567 10,005
1. Disposals include £91m of assets transferred to held for sale.
Capital and Investments
Page 78
4.06 Bond portfolio summary
(a) LGR analysed by sector
Sectors analysed by credit rating
BB or
AAA AA A BBB below LGR LGR
2016 2016 2016 2016 2016 2016 2016
£m £m £m £m £m £m %
Sovereigns, Supras and Sub-Sovereigns 888 9,874 285 230 34 11,311 23
Banks:
- Tier 1 - - - - 12 12 -
- Tier 2 and other subordinated 211 49 61 41 - 362 1
- Senior 6 330 1,019 58 - 1,413 3
- Covered 259 - 16 - - 275 1
Financial Services:
- Tier 1 - - - - - - -
- Tier 2 and other subordinated - - 13 11 - 24 -
- Senior - 458 171 155 - 784 2
Insurance:
- Tier 1 - - - 1 - 1 -
- Tier 2 and other subordinated - 45 3 68 - 116 -
- Senior 8 88 485 76 - 657 1
Consumer Services and Goods:
- Cyclical - 387 1,088 1,755 164 3,394 7
- Non-cyclical 260 647 1,380 1,290 116 3,693 7
- Health care 3 12 16 10 - 41 -
Infrastructure:
- Social - 346 3,161 675 148 4,330 9
- Economic - - 873 1,313 45 2,231 5
Technology and Telecoms 57 202 610 2,104 84 3,057 6
Industrials - 142 741 362 37 1,282 3
Utilities - 101 4,903 3,142 12 8,158 16
Energy - 171 617 1,134 211 2,133 4
Commodities - - 304 475 77 856 2
Oil and Gas - 111 32 53 - 196 -
Property - 278 99 339 - 716 1
Property backed securities - 305 628 1,063 48 2,044 4
Structured finance ABS / RMBS / CMBS / Other 121 671 572 46 49 1,459 3
Lifetime mortgage loans 388 322 91 51 - 852 2
CDOs1 - - 59 14 - 73 -
Total £m 2,201 14,539 17,227 14,466 1,037 49,470 100
Total % 4 30 35 29 2 100
1. In October 2016 the Lagoon CDOs were restructured effectively unwinding the levered super senior swaps. As the notes are now unlevered they have been reclassified to reflect the nature of the exposure.
Capital and Investments
Page 79
4.06 Bond portfolio summary (continued)
(a) LGR analysed by sector (continued)
Sectors analysed by credit rating (continued)
BB or
AAA AA A BBB below LGR LGR
2015 2015 2015 2015 2015 2015 2015
£m £m £m £m £m £m %
Sovereigns, Supras and Sub-Sovereigns 1,041 6,396 275 206 31 7,949 21
Banks:
- Tier 1 - - - 5 30 35 -
- Tier 2 and other subordinated - - 91 137 - 228 1
- Senior 25 296 869 111 - 1,301 3
- Covered 258 - - 15 - 273 1
Financial Services:
- Tier 1 - - - - - - -
- Tier 2 and other subordinated - 3 45 7 - 55 -
- Senior - 360 200 246 4 810 2
Insurance:
- Tier 1 - - - 6 - 6 -
- Tier 2 and other subordinated - - 93 103 - 196 -
- Senior - 70 422 76 - 568 1
Consumer Services and Goods:
- Cyclical - 292 582 1,475 141 2,490 6
- Non-cyclical 198 489 1,205 939 100 2,931 7
- Health care 2 1 24 3 - 30 -
Infrastructure:
- Social - 518 2,086 412 131 3,147 8
- Economic - - 729 735 19 1,483 4
Technology and Telecoms 47 137 404 1,991 110 2,689 7
Industrials - 82 504 345 28 959 2
Utilities - 76 3,886 2,681 28 6,671 17
Energy 22 315 471 897 268 1,973 5
Commodities - - 262 361 23 646 2
Oil and Gas 1 6 15 4 - 26 -
Property - 257 93 343 - 693 2
Property backed securities - 414 291 989 12 1,706 4
Structured finance ABS / RMBS / CMBS / Other 123 713 237 72 70 1,215 3
Lifetime mortgage loans - - - 207 - 207 1
CDOs1 - 552 468 14 47 1,081 3
Total £m 1,717 10,977 13,252 12,380 1,042 39,368 100
Total % 4 28 34 31 3 100
1. The underlying reference portfolio has had no
reference entity defaults during the period . The CDOs
are termed as super senior since default losses on the
reference portfolio have to exceed 27.5%, on average
across the reference portfolio, before the CDOs incur
any default losses. Assuming an average recovery rate of
30%, then over 39% of the reference names would have to
default before the CDOs incur any default losses. The
CDOs are valued using an external valuation which is
based on observable market inputs. This is then
validated against the counterparty valuation.
Capital and Investments
Page 80
4.06 Bond portfolio summary (continued)
(a) LGR analysed by sector (continued)
Sectors analysed by domicile
EU Rest of
UK US excluding UK the World LGR
2016 2016 2016 2016 2016
£m £m £m £m £m
Sovereigns, Supras and Sub-Sovereigns 9,071 782 950 508 11,311
Banks 816 682 388 176 2,062
Financial Services 389 76 342 1 808
Insurance 176 528 15 55 774
Consumer Services and Goods:
- More to follow, for following part double click ID:nRSH8036YdRecent news on Legal & General
See all newsREG - Legal & General Grp - Transaction in Own Shares
AnnouncementREG - Legal & General Grp Morgan Stanley - Holding(s) in Company
AnnouncementREG - Legal & General Grp Morgan Stanley - Holding(s) in Company
AnnouncementREG - Legal & General Grp - Transaction in Own Shares
AnnouncementREG - Legal & General Grp Morgan Stanley - Holding(s) in Company
Announcement