REG - Legal & General Grp - L&G Full Year Results 2024 Part 1
12/03/2025 07:00
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RNS Number : 2719A Legal & General Group Plc 12 March 2025
2024 Full Year Results
Core operating profit up 6%, executing our growth strategy with a sharper focus and enhanced returns, with a £500m buyback
António Simões, CEO:
"2024 has been a year of significant strategic progress and strong financial
performance. We delivered 6% growth in our core operating profit and core EPS,
alongside excellent new business volumes, while investing for the future.
We are seeing positive commercial momentum as we execute our strategy with
rigour and pace. By sharpening our focus and simplifying our portfolio -
through the sale of Cala and US Protection - alongside our strategic
partnership with Meiji Yasuda and our investment in Taurus, we are
strengthening our ability to generate sustainable growth in our core
businesses: Institutional Retirement, Asset Management and UK Retail. We
stated at our Capital Markets Event that we intended to return more to
shareholders and that is exactly what we are doing. Our clear capital
allocation framework supports our plan to return over £5 billion over the
next three years, through dividends and buybacks.
Looking ahead, our momentum demonstrates why we are confident in our ability
to deliver on our ambitious targets, directing our capital and expertise where
they can create lasting value, and making a meaningful impact for customers,
shareholders and communities."
Strong financial performance 1
• Core operating profit of £1,616m and Core operating EPS of
20.23p, both up 6%
• IFRS Profit before tax 2 of £542m
• Solvency II capital generation of £1.8bn and Solvency II
coverage ratio(3) of 232%
• A large store of future profit 3 of £14.8bn
Sustainable Growth
• Institutional Retirement: £10.7bn of Global PRT written;
£8.4bn UK PRT and record volumes in US and Canada
• Asset Management: £1.1trn global AUM; growth in revenue as we
pivot to higher fee margin products, and average fee rate increased from 7bps
to 8bps. Private Market AUM of £57bn, with £1.2bn of external committed
capital from several new fund launches, and a strategic investment in US real
estate equity specialist, Taurus
• Retail: Record volumes in Retail Annuities of £2.1bn and
continued strong growth in Workplace DC
Sharper focus
• Introduction of a disciplined capital allocation approach,
including the creation of Corporate Investments unit
• Major disposals to unlock value and reinvest for growth: Cala
(£1.35bn(4)) and US protection (£1.8bn 4 )
• Alongside the creation of a strategic partnership with Meiji
Yasuda, increasing growth potential in US PRT and co-investment capital of
¥150 bn 5 in Asset Management
Enhanced Returns
• Dividend per Share of 21.36p up 5% and £500m buyback announced
for 2025
• Intention to return more than £5bn (or c. 40% market cap(6))
within three years
Financial summary
£m FY 2024 FY 2023(2) Growth (%)
Institutional Retirement 1,105 1,028 7
Asset Management 401 448 (10)
Retail(1) 504 449 12
Group debt costs (216) (212) (2)
Group investment projects and expenses (178) (182) 2
Core Operating profit(3,4) 1,616 1,531 6
Corporate Investments unit 95 136 (30)
Operating Profit(3) 1,711 1,667 3
Investment variance from Core businesses (incl. minority interests) (991) (1,228) 19
Investment variance from Corporate Investments unit (388) (363) (7)
Profit before tax attributable to equity holders(3) 332 76 337
Profit after tax attributable to equity holders(4) 191 457 (58)
Core Operating Earnings per share(3) (p) 20.23 19.04 6
Operating ROE(3) (%) 34.8 26.6 8
Contractual Service Margin (CSM)(3) 13,292 12,994
CSM (net of tax) + Book Value 13,310 14,306
CSM (net of tax) + Book Value per share (p) 226 239
Solvency II
Operational surplus generation 1,751 1,821
Coverage ratio (%) 232 224
Dividend per share (p) 6 (#_ftn6) 21.36 20.34
1. This includes US protection business of £73m (FY 2023: £27m) that will be
sold to Meiji Yasuda on completion, which is expected towards the end of this
year. The growth in US protection profit reflects 2023 being impacted by
adverse mortality experience.
2. Comparatives restated to reflect the creation of the Corporate Investments
unit and movement of LGC assets to Institutional Retirement, Retail Annuities
and Asset Management.
3. Alternative Performance Measure as defined on pages 80-82.
4. The tax credit in 2023, of £367m, included a material one-off tax credit
arising from the recognition of a deferred tax asset relating to the
introduction of a new Bermuda corporate income tax regime.
Strong 2024 financial performance
Income statement
FY 2024 core operating profit grew by 6% to £1,616m, in line with the
guidance given at our half-year results. Total Operating Profit, which
includes our newly created Corporate Investment portfolio which focuses on the
disposal of non-strategic assets, grew by 3% to £1,711m after allowing for
the sale of Cala in the second half of the year.
Institutional Retirement operating profit increased by 7% to £1,105m,
underpinned by the growing scale of back-book earnings and consistent
investment performance of our annuity portfolio. In 2024, we have written
£10.7bn of global PRT (FY 2023: £13.7bn) or £10.1bn (FY 2023; £10.5bn) net
of funded reinsurance, reflecting a strong year in the UK, writing £8.4bn of
UK PRT at a lower strain, and a record year internationally.
Asset Management delivered operating profit of £401m (FY 2023: £448m).
Operating profit from fee-related earnings reduced to £256m (FY 2023: £268m)
as we have increased investment to drive future growth. Fee-related revenues
have increased by 4% to £967m on 2% lower average AUM, as we make a conscious
shift towards higher margin products. Underlying operating expenses were 1% up
reflecting efficiency initiatives and streamlining of our organisation. Lower
operating profit from our Balance Sheet investments of £145m primarily
reflects a more modest valuation uplift for Pemberton in 2024, as it continues
to grow.
Retail operating profit increased by 12% to £504m (FY 2023: £449m)
predominantly driven by growth in release of CSM and RA, helped by strong new
business sales in 2023 and 2024, and improved experience variances. Retail
Annuities had another year of record new business sales of £2.1bn (up 48%).
Our Workplace DC business continues to grow with net flows of £6.0bn and 5.5
million members. Investment in our Workplace proposition continues to improve
member engagement through our new Retail App and the launch of our
at-retirement guidance journey.
Profit before tax attributable to equity holders is £332m (FY 2023: £76m),
reflecting investment and other variances from core businesses of £(991)m (FY
2023: £(1,228)m). This was mostly driven by the impact on our annuity
portfolio from the increase in interest rates of c.100bps 7 , broadly in line
with our published sensitivities, as well as some non-recurring IFRS 17
modelling refinements in the first half of the year and an adverse accounting
impact from longevity releases of c£(79)m 8 . The investment variance from
Corporate Investments of £(388)m (FY 2023: £(363)m) predominantly reflects
the valuation write-down of Salary Finance recognised in the first half of the
year and the accounting impact from the disposal of Cala, around £70m of
which will come through as profit over time as the discounting on the deferred
consideration unwinds.
Balance sheet and asset portfolio
Solvency II coverage ratio remains strong at 232% (FY 2023: 224%).
Stable Solvency II operational surplus generation (OSG) of £1,751m (FY 2023:
£1,821m) reflects a combination of continued growth in capital generation
from our insurance businesses, Asset Management being adversely impacted by
higher interest rates and investment spend, and a slightly lower level of
management actions compared to 2023.
Net surplus generation (NSG) of £1,342m (FY 2023: £1,383m).
New business strain of £409m (FY 2023: £438m) reflects a c. £200m benefit
from writing capital efficient UK PRT compared to the strain in 2023. The
overall surplus benefit on writing more efficient UK PRT is partially offset
by record volumes of Retail annuities, international PRT and US protection
business, leading to broadly flat NSG.
Our operating return on equity 9 was 34.8% (FY 2023: 26.6%).
Our store of future profit increased to £14.8bn (FY 2023: £14.7bn), with the
CSM of £13.3bn (FY 2023: £13.0bn), reflecting our growing insurance
businesses. Risk Adjustment of £1.6bn is down slightly on FY 2023 (£1.7bn).
Group Strategy
At our Capital Markets event in June 2024, we set out a strategy for
delivering sustainable growth, a sharper focus and enhanced returns to
shareholders. We are targeting:
• 6-9% CAGR in core operating EPS (2024-27)
• at >20% operating Return on Equity in 2025-2027
• £5-6bn cumulative Solvency II capital generation over three
years (2025, 2026, 2027) 10
Following the announcement in February, of the sale of our US protection
business and the creation of the strategic partnership with Meiji Yasuda, we
have confirmed our increased confidence in meeting these targets.
We have well-positioned, capital generative businesses in Institutional
Retirement, Asset Management and Retail. Our divisions have strong
complementary synergies and a shared sense of purpose, which together create
significant competitive advantages for the Group. Making the most of these
synergistic benefits is a core tenet of our strategy.
Our long-term vision requires near-term investment in our operating model to
position us for structural growth trends in our businesses. This in turn will
move the business towards a more capital-light model.
Successful execution will require sharper focus. We have a disciplined
approach to capital allocation, and we have simplified the Group by creating a
single asset manager and a Corporate Investments unit. We are committed to
gaining efficiencies in operations and we are challenging the way we work. We
are continually looking to optimise our capital and cash usage, and where
appropriate, will look to redeploy these resources to drive future growth.
Our three businesses
Institutional Retirement is a market leader in UK PRT with a growing presence
internationally, in the US and via our global reinsurance hub in Bermuda. We
are well placed to address the significant growth in the global PRT market
over the next decade and our newly announced partnership with Meiji Yasuda
increases our growth potential in the US. The economics are attractive, with
our growing portfolio set to release reliable earnings over decades from our
store of future profit (FY 2024: £9.3bn). Our total annuity portfolio,
including Retail annuities, stands at £92bn as at FY 2024 and acts as a
valuable source of capital to cornerstone new investment strategies.
Key metrics: UK PRT volume guidance of £50-65bn at <4% strain (2024-28),
5-7% operating profit CAGR (FY23-28)
Asset Management was formed in 2024 from the combination of LGIM (L&G
Investment Management) and LGC (L&G Capital). It is a leading global asset
manager with private and public market capabilities and total AUM of £1.1trn,
of which 44% 11 is managed internationally. It has significant market share
of the assets invested by the UK pensions industry, and plays a critical role
in the growth across the Group by providing a pipeline of "PRT ready" Defined
Benefit (DB) clients for Institutional Retirement (over the last three years,
81% of L&G UK PRT new business premiums have come from Asset Management
clients), acting as investment manager for our annuity portfolio and being a
provider of investment funds for our Workplace DC business in Retail. Private
Markets will be a major driver of Asset Management growth both directly in
L&G and through our origination partners (e.g. Pemberton). We can access
and originate differentiated investment opportunities in private credit, real
estate and infrastructure both by using our own balance sheet, and attracting
third party capital investment.
Key metrics: £500-600m operating profit (2028), £100-150m cumulative ANNR
(2025-28), £85bn+ Private Markets AUM (2028) 12
Retail is a leading provider of retail retirement and protection solutions. We
support customers throughout their lifetime and leverage our Asset Management
capabilities, as responsibility for retirement savings shifts from employers
to individuals. We continue to leverage technology to engage customers
effectively and efficiently at scale.
Key metrics: £40-50bn of cumulative Workplace Savings net flows (2024-2028).
The additional Retail ambition is impacted by the sale of our US protection
business. A new divisional ambition will be shared at our Retail investor deep
dive planned for the second half of this year.
Our capital allocation framework
We have a disciplined capital allocation framework which prioritises:
• A strong and sustainable balance sheet, supported by robust
capital generation from our divisions
• Investment for growth, with clearly set out hurdle rates on
investment in organic growth and potential bolt-on acquisitions in Asset
Management
• Shareholder returns, with surplus capital to be returned to
shareholders in the form of dividend or buybacks
Capital from disposals will be deployed in line with this capital allocation
policy and where opportunities are not available at our required 14% hurdle
rate or we are more capital efficient, we will consider returning more to
shareholders.
Returning capital to shareholders
As noted, the Board intends to return more to shareholders over 2024-2027 than
the equivalent of maintaining a 5% per annum growth in dividend per share
(DPS). This is intended to be achieved through a combination of dividends,
ongoing and incremental buybacks. In line with that, full year DPS growth is
confirmed at 5%, with a final dividend of 15.36p and a full year dividend of
21.36p. As stated previously, from 2025 we intend to grow DPS at 2% per annum
out to 2027.
In 2024, we completed the announced buyback of £200m and today we announce a
buyback of £500m. The increase compared to 2024 reflects more capital
efficient UK PRT written in 2024 and a return of the capital release from the
sale of Cala.
In February this year, we announced the intention to carry out an additional
£1bn buyback commencing after the completion of the sale of our US protection
business and creation of our strategic partnership with Meiji Yasuda.
Overall, we intend to return the equivalent of c. 40% of market cap 13 to
shareholders over 2025-2027 through a combination of dividends and buybacks.
All future capital returns will be subject to the market environment, our
views on solvency buffers, and regulatory approval.
Outlook
As we look at 2025, we have strong commercial momentum in each of our three
businesses.
In Institutional Retirement, we have a busy PRT pipeline and have already
completed £1.2bn of transaction in the UK and we are actively pricing on
£17bn of new deals, with visibility on a further £27bn. We expect strong
volumes this year, with good profitability and low new business strain. We
will continue to adapt to changes in market conditions and deliver attractive
returns, as we have successfully demonstrated in 2024.
Asset Management has also had a positive start to the year as we continue to
see flows into higher margin products. This is expected to increase as we see
more of our Workplace clients transition into our Lifetime Advantage Fund
which has a c. 15% investment in our Private Markets Asset Fund providing
enhanced returns to DC savers and aligning strongly with the government agenda
to deploy more pensions money into productive finance in the UK. We also
expect to see part of the ¥150bn of co-investment from Meiji Yasuda flow into
our private markets business.
In Retail, several Workplace schemes that we won in 2024 will fund this year,
and we will continue to strengthen our proposition. We expect the thriving
retail annuities market to continue, with increased competition, as higher
interest rates and increased awareness around the benefits of guaranteed
income, continue to make these products more attractive to customers. We are
well positioned in this market. Our UK protection businesses will continue to
focus on writing strong volumes at disciplined margins.
We now have a plan in place for the disposal of each of the remining assets in
our Corporate Investments portfolio as we continue to simplify our business
and unlock value to redeploy into our strategic businesses.
Institutional Retirement
FINANCIAL HIGHLIGHTS(1) £m FY 2024 FY 2023
Contractual service margin release 650 591
Risk adjustment release 141 119
Expected investment margin 485 486
Experience variances (10) (13)
Non-attributable expenses (168) (160)
Other 7 5
Operating profit 1,105 1,028
Investment and other variances (557) (555)
Profit before tax attributable to equity holders 548 473
Contractual service margin (CSM) 8,625 8,350
Risk adjustment (RA)(2) 710 807
Total store of future profit 9,335 9,157
CSM release as a % of closing CSM pre release 7.0% 6.6%
New business CSM 489 865
New business RA 94 161
Total new business future profit 583 1,026
UK PRT 8,412 12,048
International PRT 2,250 1,671
Total new business (Gross Premiums) 10,662 13,719
Funded reinsurance premiums (557) (3,189)
Total new business (net of Funded Reinsurance) 10,105 10,530
Institutional annuity assets(3) (£bn) 73.8 68.9
Shareholder assets(4) (£bn) 3.5 3.1
1. Comparatives restated to reflect the movement of assets from LGC to
Institutional Retirement. For further information please see Note 1.01.
2. The FY 2024 RA is reduced by £78m following the impact of the funded
reinsurance transacted in 2024 on PRT deals signed pre-2024, including £(56)m
from the 2023 Boots Pension Scheme.
3. In the UK, annuity assets across Institutional Retirement and Retail
are managed together. We show here estimated Institutional Retirement annuity
assets. Excludes derivative assets.
4. Assets formerly reported in LGC.
Strong operating profit, up 7% to £1.1bn
Contractual Service Margin (CSM) release has increased to £650m (FY 2023:
£591m), driven by growth in the CSM, as we continue to write strong new
business volumes, and an increased amortisation rate of the CSM as the back
book matures. Amortisation was 7.0% of the pre-release CSM, compared to 6.6%
in 2023. Overall, the CSM grew 3% to £8.6bn (FY 2023: £8.4bn) which is
supported by profitable new business written and the routine 2024 longevity
review.
Risk Adjustment (RA) release has increased to £141m (FY 2023: £119m), driven
by a growing annuity portfolio following strong new business volumes in 2024
and 2023.
The expected investment margin is stable at £485m (FY 2023: £486m)
reflecting returns on surplus assets, and our continuing back-book
optimisation.
Profit before tax of £548m (FY 2023: £473m) was impacted by investment and
other variances of £(557)m. This was mostly driven by increases in interest
rates, broadly in line with our year-end sensitivities, and non-recurring IFRS
17 modelling refinements as set out at the half year. It also reflects an
adverse accounting mismatch as a result of the longevity releases.
£10.7bn global PRT volumes written and a strong pipeline for 2025
In 2024, we wrote £10.7bn of global PRT new business across 56 deals, with 4
deals over £1billion. (FY 2023: £13.7bn across 43 deals). UK volumes were
£8.4bn (FY 2023: £12.0bn) and we delivered record international volumes of
£2.3bn (FY 2023: £1.7bn). In the UK, we are actively pricing on £17bn of
new deals and have visibility on a further £27bn which are expected to
transact in 2025.
Executing capital-light UK PRT in 2024
In 2024, we have once again successfully demonstrated our ability to adapt quickly to new market environments. Faced with tighter corporate credit spreads and wider gilt spreads we, like others, pivoted to use gilts-based investment strategies. This allowed us to write capital efficient new business resulting in a c.1% strain on the £8.4bn of business we wrote in the UK.
This gilts-based approach results in a highly attractive return on capital,
with scope for further back book asset optimisation; whilst day one
profitability metrics are moderately lower, reflecting the slightly lower
initial yield, the capital deployed is significantly reduced. As a result, the
£8.4bn of UK PRT written in 2024 delivered a Solvency II margin of 5.3% (FY
2023: 7.4%). Institutional Retirement delivered an IFRS new business
margin 14 of 7.1% (FY 2023: 9.0%).
A record year for international PRT volumes
Institutional Retirement delivered record US PRT new business premiums of
$2.2bn or £1.7bn (FY 2023: $1.9bn; £1.5bn) as well as increased Canadian PRT
volumes of CAD $1.0bn (FY 2023: CAD $0.3bn).
L&G entered the US PRT market 10 years ago, completing its first
transaction with Royal Philips in 2015. It has since completed more than $12
billion of new business, securing the pension benefits of over 200,000
annuitants. L&G and RGA recently won Insurance ERM's Innovation of the
Year award for their split transaction solution, which continues to meet the
evolving needs of the pension plan sponsors in the US PRT market.
L&G completed its first Canadian PRT transaction in 2019. In 2024, three
significant Canadian transactions were secured with a total volume of CAD
$1bn. These include L&G's largest Canadian transaction to date, valued at
CAD $0.5 billion, bringing the total written premium to over CAD $2.5 billion.
Going forward, alongside Meiji Yasuda in the US, L&G remains strongly
positioned to offer holistic, multinational pension de-risking solutions,
leveraging skills and capabilities across geographies to make us a global
leader in PRT.
Asset Management
FINANCIAL HIGHLIGHTS(1) £m FY 2024 FY 2023
Management fee revenue 947 900
Transactional revenue 20 26
Total revenue 967 926
Total costs (711) (658)
Operating profit from fee-related earnings 256 268
Operating profit from Balance Sheet investments 145 180
Total Operating Profit 401 448
Investment and other variances (190) (123)
Profit before tax 211 325
Asset Management cost: income ratio (%) 74% 71%
NET FLOWS AND ASSETS £bn
External net flows (47.8) (38.4)
PRT Transfers (2.8) (15.2)
Internal net flows 2.1 1.6
Total net flows (48.5) (52.0)
Average assets under management 1,128 1,155
Assets under management ex JV, Associates and other 1,118 1,159
JV, Associates and other AUM(2) 17 13
Total AUM 1,135 1,172
Of which:
- International assets under management(3) 488 465
- Private Markets(4) 57 50
- UK DC assets under management 183 163
1. Comparatives restated to reflect the movement of assets from LGC to
Asset Management. For further information please see Note 1.01
2. Includes 100% of assets managed by associates (Pemberton and NTR) and
L&G balance sheet assets managed by Asset Management.
3. International AUM includes assets from internationally domiciled
clients plus assets managed internationally on behalf of UK clients.
4. Private Markets assets includes assets from associates and is based on
managed AUM including £1.5bn from multi-asset strategies.
Higher average revenue fee rate and underlying operating expenses broadly flat
Operating profit from fee-related earnings £256m (FY 2023: £268m)
Operating profit from fee-related earnings has decreased as we invest to
enable growth. Revenues increased by 4% to £967m (FY 2023: £926m) on 2%
lower average AUM, as we pivot towards higher margin products. The increase in
our average fee rate from 7bps to 8bps is a result of changes in both client
mix and investment capabilities.
Total operating costs of £711m increased by 8% due to increased investment of
c. £48m in growth and scalability, consistent with the £50-100m per annum
guidance. Underlying operating expenses were up just 1% as a result of actions
taken to drive efficiency to streamline our organisation. We will continue to
be disciplined in our management of operating expenses.
Operating profit from Balance Sheet investments £145m (FY 2023: £180m)
Balance Sheet investments comprises of our asset origination platforms in
Private Credit, Real Estate and Infrastructure, where these investment
strategies have been successfully developed in-house over the last decade, and
we are now looking to distribute them to third parties.
Lower operating profit primarily reflects a more modest valuation uplift for
Pemberton in 2024. Pemberton was awarded 2024 Private Debt Investor
Fundraising of the Year: Europe 15 and has continued to make significant
progress in raising and deploying capital with total commitments increasing by
€6bn in 2024. During this year Pemberton achieved its first close on the new
NAV Strategic Financing strategy, which provides financing solutions to
private equity firms and secured c. €1bn of commitment, including from
anchor investor Abu Dhabi Investment Authority. We expect future growth in
valuations as new funds are launched and capital is deployed.
Profit Before Tax and Investment Variances
Profit before tax was £211m, with investment and other variances of £(190)m,
driven primarily by the unrealised mark-to-market impact on the carrying value
of some of our balance sheet investments.
Supporting clients across key channels and markets
Higher interest rates and outflows mean total AUM 16 reduced by 4% year on
year to £1,118bn (FY 2023: £1,159bn). External net flows of £(47.8)bn
reflect lower margin outflows as UK DB clients continue to adjust their
portfolios in response to improved funding ratios and execute some one-off
tactical asset allocation rebalances.
Growth in other channels meant Annualised Net New Revenue (ANNR) excluding
flows from our UK Defined Benefit channel is £17.4m.
Defined Contribution (DC) business continues to attract new assets with AUM
growth of 12% to £183bn (FY 2023: £163bn). Within this, external net flows
of £6.0bn 17 in Workplace Savings generated £10m of ANNR. Our ability to
offer investors an integrated blend of high-quality investment solutions,
pensions administration and Master Trust governance is a significant source of
competitive advantage. In 2024, we launched our L&G Private Markets Access
Fund, giving UK DC investors and our 5.5 million DC members the opportunity to
access diversified Private Markets exposure across clean energy, affordable
homes, university spin-outs and critical infrastructure.
UK Wholesale AUM has seen continued growth and now stands at £64.7bn, 19%
higher than prior year (FY 2023: £54.2bn). Flows contributed £4.0bn of
growth and generated £3m of ANNR. We achieved record gross sales of £24.7bn.
We continue to build on our successes in international markets, growing AUM by
89% since 2018 to £488bn. This represents c.44% of overall AUM.
In the US we are expanding our fixed income offering to meet the increasing
demand from institutional investors for broader fixed income capabilities in
the higher rate environment.
In Europe, we have seen positive momentum with AUM growth of 6% over the past
year to £91bn partly driven by growth in our Active Fixed Income offering.
In Asia, our AUM has grown by 8% to £150bn over the past year. We have
offices in Tokyo, Hong Kong and now Singapore, where we continued to make
strategic hires in 2024. In Japan, our AUM has more than doubled since 2019,
and we remain Japan's 7th largest asset manager 18 .
Growing our Private Markets Platform
In 2024, we accelerated the growth of our Private Markets platform to £57bn
AUM, laying the foundation for achieving our target of £85bn 19 AUM by 2028.
We focus on our core strengths - Real Estate, Private Credit, and
Infrastructure. Utilising balance sheet capital to catalyse opportunities, we
are unlocking substantial growth and driving significant value for our
clients. We have launched several new Private Markets funds over 2024, with
£1.2bn of external committed capital.
In Real Estate our AUM increased to £21bn as we launched our Affordable
Housing Fund, with £510m of commitments, and created a new £1bn Build to
Rent BTR partnership with Nest and PGGM.
In October 2024. we made a strategic investment in Taurus, a US-based real
estate private equity firm, committing up to $200m in seed capital to
accelerate our presence in the high-growth US multi-family sector.
Our Private Credit business continues to grow at pace with AUM rising to
£34bn 20 . This growth is driven both from our L&G platform in Europe and
North America and through Pemberton.
We are growing our Infrastructure offering across various sectors and achieved
planning approval for a £750 million hyperscale data centre in London, which
we intend to form part of an offering to third party investors in 2025. Our
Clean Power Europe Fund has reached €358m AUM and continues to expand its
portfolio, meeting society's need for sustainable and reliable energy.
Through strategic investments, innovative product development, and a focus on
delivering both financial returns and social impact, we are well-positioned to
achieve our ambitious growth targets.
Investing for the long term
We measure success by achieving positive returns for our clients today whilst
helping to build a better future. In June, we published our eighth Climate
Impact Pledge, assessing over 5,000 companies and engaging with more than
2,800. As of 31 December 2024, we managed £425bn (FY 2023: £378bn) in
responsible investment strategies linked to sustainability criteria for
various clients.
Investment performance has been strong across our range of matching, tracking
and active strategies. For our UK-managed Active Fixed Income strategies, 76 %
of strategies out-performed over 1 year, and 79% over 3 years. US-managed
Active Fixed Income strategies also performed well with 93% of strategies
out-performing over 1 year and 84% over 3 years. Multi-Asset strategies
outperformed by 50% over 1 year and 3 years.
Retail
FINANCIAL HIGHLIGHTS(1) £m FY 2024 FY 2023
Contractual service margin release 469 446
Risk adjustment release 84 74
Expected investment margin 106 122
Experience variances 16 (44)
Non-attributable expenses (136) (121)
Other (35) (28)
Operating profit 504 449
- US/UK Insurance(2) 188 139
- Retail Retirement(3) 316 310
Investment and other variances (207) (171)
Profit before tax attributable to equity holders 297 278
Contractual service margin (CSM) 4,667 4,644
Risk adjustment (RA) 841 891
Total store of future profit 5,508 5,535
New business CSM 351 320
New business RA 45 32
Total new business future profit 396 352
Protection new business annual premiums 422 412
Individual annuities single premium 2,118 1,431
Workplace DC net flows (£bn)(4) 6.0 6.4
Lifetime & Retirement Interest Only mortgage advances 270 299
Retail retirement annuity assets(5) (£bn) 18.4 17.2
Retail retirement shareholder assets(5) (£bn) 1.0 0.9
UK Retail protection gross premiums 1,525 1,512
UK Group protection gross premiums 528 479
US protection gross premiums 1,318 1,273
Total protection gross premiums 3,371 3,264
Protection New Business Value 192 165
Annuities New Business Value 132 100
Solvency II New Business Value 324 265
1. Comparatives restated to reflect the movement of assets from LGC and the
creation of the Corporate Investments unit in line with HY24. For further
information please see Note 1.01.
2. UK Insurance includes Retail protection, Group protection and Mortgage
Services.
3. Retail Retirement includes Individual Annuities, Lifetime Mortgages,
Workplace DC administration and returns from shareholder assets.
4. Figures include Workplace DC and Retail Savings net flows
5. In the UK, annuity assets across Institutional Retirement and Retail are
managed together. Estimated proportion of annuity assets belonging to Retail.
Excludes derivative assets.
Operating profit up 12%
In FY 2024, Retail operating profit has increased 12% to £504m (FY 2023:
£449m). This is predominantly driven by growth in CSM and RA release and
favourable experience variances.
The Contractual Service Margin (CSM) release was £469m (FY 2023: £446m),
reflecting increasing volumes of profitable new business. 9.1% of the closing
CSM pre-release (£5.1bn) was released into profit (FY 2023: 8.8%, £5.1bn).
Overall, the CSM was broadly flat at £4.7bn.
Experience variances of £16m (2023: £(44)m) were driven by improvements in
both the US and UK protection businesses compared to the adverse experience
seen in the previous year.
Profit before tax was £297m (FY 2023: £278m), impacted by investment
variances in our annuity portfolio in line with Institutional Retirement.
Solvency II New Business Value increased 22% to £324m (FY 2023: £265m) with
continued sales growth in Retail annuities and US protection, and improved
margins in our UK protection business as we continue to operate with a focus
on disciplined pricing.
Succeeding in a competitive landscape in FY 2024
Workplace DC net flows were £6.0bn (FY 2023: £6.4bn), with continued client
wins and strong client retention as well as increased member contributions and
consolidation. Workplace pension platform members increased to 5.5 million and
we continue to invest in our proposition with the launch of the Workplace DC
app and our new personalised guidance journey.
Retail annuity sales up 48% to a new record of £2,118m (FY 2023: £1,431m),
generating a Solvency II new business value add of £132m (FY 2023: £100m) in
a buoyant market, in which we increased market share to 23.6% 21 . Both
Lifetime Annuity and Fixed Term Annuity sales performed well throughout the
year as higher interest rates, and increased awareness around the benefits of
guaranteed income, have made these products more attractive to customers.
Lifetime mortgage advances, including Retirement Interest Only mortgages, were
£270m (FY 2023: £299m) reflecting lower market demand in the current higher
interest rate environment.
UK Retail protection gross premium income increased to £1,525m (FY 2023:
£1,512m), with new business annual premiums of £153m (FY 2023: £150m) at
improved margins in what remained a highly competitive market. Our market
share increased year-on-year to 19.0% 22 and we delivered a point-of-sale
underwriting decision for 77% of our customers.
UK Group protection gross premium income increased 10% to £528m (FY 2023:
£479m) owing to good retention and new business annual premiums of £110m (FY
2023: £121m). Our online "quote and apply" platform for smaller schemes
continues to perform well, processing c. 1,900 new applications over the year
(FY 2023: c. 1,000), and we continue to see growth in this part of the market.
Group Protection saw 2,466 income protection scheme members return to work
during 2024.
US protection new business annual premiums increased 16% to $203m (FY 2023:
$175m), with broadly stable Solvency II new business margins of 10.8% (FY
2023: 11.4%). Gross premiums increased 6% to $1,685m (FY 2023: $1,584m). The
digital new business platform continues to make it easier for customers and
their advisors to apply and complete the purchase, resulting in increased
sales volumes.
Corporate Investments
FINANCIAL HIGHLIGHTS £m FY 2024 FY 2023
Operating profit 95 136
Investment and other variances (388) (363)
Loss before tax attributable to equity holders (293) (227)
Portfolio Net Asset Value (£bn)
Cala - 1.1
Legacy Real Estate 0.5 0.4
Legacy Land 0.1 0.1
Fintech and Other 0.2 0.3
Total Corporate Investments 0.8 1.9
Operating profit down reflecting disposals
Operating profit is down 30% at £95m versus prior year earnings (FY 2023:
£136m). This largely reflects the sale of Cala in the second half of the
year, with lower trading profits being recognised compared to 2023.
Investment and other variances of £(388)m predominantly reflects the
valuation write-down of Salary Finance which was reported at half year and the
accounting impact from the disposal of Cala, around £70m of which will come
through as profit over time as the discounting on the deferred consideration
unwinds. The remaining investment variances are driven by the usual unrealised
mark-to-market impacts versus the expected return in operating profit.
Subsidiary remittances to Group
Subsidiary remittances(1) (£m) 2024 2023
LGAS 1,193 752
LGIM 80 140
LGA(2) - 185
Other(3) 447 472
Total 1,720 1,549
1. Represents cash remittances from subsidiaries to Group in respect of the
year's financial performance.
2. There is no cash remittance from LGA in 2024, reflecting the sale of the
US protection business and the strategic partnership with Meiji Yasuda
announced in February.
3. Other predominantly includes L&G Capital Investments Limited and
L&G Reinsurance, as well as any smaller remittances from other Group
entities
The level of subsidiary remittances ensures coverage of external dividends
(2024: £1,258m; 2023: £1,215m) and Group related costs, with excess
liquidity being held within our regulated subsidiaries.
Borrowings
The Group's outstanding core borrowings totalled £4.3bn at 31 December 2024
(FY 2023: £4.3bn). There is also a further £1.7bn (FY 2023: £1.5bn) of
operational borrowings including £1.7bn (FY 2023: £1.4bn) of non-recourse
borrowings. The total excludes unit linked related borrowings.
Group debt costs of £216m (FY 2023: £212m) reflect an average cost of debt
of 4.9% per annum (FY 2023: 4.8% per annum) on an average nominal value of
debt balances of £4.5bn (FY 2023: £4.5bn).
Cash
As at 31 December 2024, the Group held £2,629m of Treasury Assets and Other
Shareholder Cash (FY 2023: £2,584m).
In 2024, L&G owned Private Markets assets (£3.3bn at FY 2024 23 )
generated c. £850m of cash, reflecting the receipt of the c. £500m first
tranche of the consideration following the sale of Cala, disposals of assets
to funds and dividends from our development and operating companies.
Taxation
Equity holders' Effective Tax Rate (%) FY 2024 FY 2023
Equity holders' total Effective Tax Rate(1) 41.3 11.9
Annualised rate of UK corporation tax 25.0 23.5
1. The FY23 figure excludes the impact of the Bermudan corporate income tax
enacted in 2023, the investment variance from longevity assumption
changes and the buyout of the L&G pension scheme (see note 3.06i).
Including this impact, the effective tax rate in 2023 was (483)%
The effective tax rate reflects the varying rates of tax that we pay on our
businesses in different territories and the mixture of profits and losses
across those territories.
The higher effective tax rate of 41% reflects the adverse impact from disposal
accounting variances on the sale of Cala and valuation write downs on certain
investments that are not tax deductible. In 2024 we are also seeing the
impact for the first time of the implementation of the UK top-tax rules in
line with the global minimum tax framework resulting in Bermuda profits being
taxed at 15%.
Solvency II
As at 31 December 2024, the Group had an estimated Solvency II surplus of
£9.0bn over its Solvency Capital Requirement, corresponding to a Solvency II
coverage ratio of 232%.
Capital(1) (£m) FY 2024 FY 2023
Own Funds 15,860 16,556
Solvency Capital Requirement (SCR) (6,848) (7,389)
Solvency II surplus 9,012 9,167
SCR coverage ratio (%) 232% 224%
1. Please see disclosure note 5.01 for further detail.
Solvency II Solvency II Solvency II Surplus
Own Funds
SCR
Analysis of movement from 1 January to 31 December 2024(1) (£m)
Opening Position 16,556 (7,389) 9,167
Operational surplus generation 1,786 (35) 1,751
New business strain 185 (594) (409)
Net surplus generation 1,971 (629) 1,342
Operating variances( ) 156
Mergers, acquisitions and disposals 9
Market movements (231)
Share buyback (201)
Dividends paid (1,230)
Total surplus movement (after dividends paid in the period) (696) 541 (155)
Closing Position 15,860 (6,848) 9,012
1.Please see disclosure note 5.01 for further detail.
Operational surplus generation is at £1,751m (FY 2023: £1,821m), after
allowing for amortisation of the opening Transitional Measures on Technical
Provisions (TMTP) and release of Risk Margin.
New business strain of £409m (FY 2023: £438m) reflects a c. £200m benefit
from writing capital efficient UK PRT compared to the strain in 2023. The
overall surplus benefit on writing more efficient UK PRT is partially offset
by record volumes of retail annuities, international PRT and US protection
business, leading to broadly flat NSG.
This resulted in net surplus generation of £1,342m (FY 2023: £1,383m).
Market movements of £(231)m reflect the impact of movements in interest
rates, credit spreads and property and equity markets.
The movements shown above incorporate the impact of recalculating the TMTP as
at 31 December 2024.
Sensitivity analysis(1)
Impact on net of tax Solvency II capital surplus Impact on net of tax Solvency II coverage ratio
FY 2024 FY 2024
£bn %
100bps increase in risk-free rates (0.0) 11
100bps decrease in risk-free rates (0.2) (14)
Credit spreads widen by 100bps assuming an escalating addition to ratings 0.2 9
Credit spreads widen by 100bps assuming a flat addition to ratings 0.2 13
Credit spreads narrow by 100bps assuming a flat deduction from ratings (0.6) (18)
Credit spreads of sub-investment grade assets widen by 100bps assuming a level (0.1) (3)
addition to ratings
Credit migration (0.5) (8)
25% fall in equity markets (0.5) (5)
15% fall in property markets (0.8) (10)
50bps increase in future inflation expectations 0.1 (1)
10% increase in maintenance expenses (0.3) (5)
1. Please see disclosure 5.01 (vii) for further details.
The above sensitivity analysis does not reflect all management actions which
could be taken to reduce the impacts. In practice, the group actively manages
its asset and liability positions to respond to market movements. Allowance is
made for the recalculation of the Loss Absorbing Capacity of Deferred Tax for
all stresses, assuming full capacity remains available post stress.
The impacts of these stresses are not linear therefore these results should
not be used to interpolate or extrapolate the impact of a smaller or larger
stress. The results of these tests are indicative of the market conditions
prevailing at the balance sheet date. The results would be different if
performed at an alternative reporting date.
Solvency II new business contribution
Management estimates of the present value of new business (PVNBP) and the
margin as at 31 December 2024 are shown below(1):
£m PVNBP Contribution from Margin %
new business
Institutional Retirement - UK annuity business 7,855 420 5.3
Retail Retirement - UK annuity business 2,118 132 6.2
UK Protection 1,461 57 3.9
US Protection 1,249 135 10.8
The key economic assumptions as at 31 December 2024 are as follows:
%
Margin for risk 3.7
Risk-free rate
- UK 4.1
- US 4.6
Risk discount rate (net of tax) 7.8
- UK 8.3
- US
Long-term rate of return on non-profit annuities 5.5
1. Please see disclosure 5.02 for further details.
The future earnings are discounted using duration-based discount rates, which
is the sum of a duration-based risk-free rate and a flat margin for risk. The
risk-free rate shown above is a weighted average based on the projected cash
flows.
Economic and non-economic assumptions are set to best estimates of their
real-world outcomes, including a risk premium for asset returns where
appropriate. In particular:
• The assumed future pre-tax returns on fixed interest and RPI linked
securities are set by reference to yield on the relevant backing assets, net
of an allowance for default risk which takes into account the credit rating
and the outstanding term of the assets. The weighted average deduction for
business written in 2024 equates to a level rate deduction from the expected
returns of 15 basis points. The calculated return takes account of derivatives
and other credit instruments in the investment portfolio.
• Non-economic assumptions have been set at levels commensurate with
recent operating experience, including those for mortality, morbidity,
persistency and maintenance expenses (excluding development costs). An
allowance is made for future mortality improvement. For new business,
mortality assumptions may be modified to take certain scheme specific features
into account.
The profits on the new business are presented gross of tax.
Principal risks and uncertainties
The directors confirm that they have carried out a robust assessment of the
emerging and principal risks facing the Group, including those that would
threaten its business model, future performance, solvency or liquidity.
The principal risks are set out below including details of how they have been
managed or mitigated. Further details of the Group's inherent risk exposures
are set out at Notes 6 and 16 to 18 of the financial statements.
Risks and Uncertainties Risk management Outlook
Investment market performance and conditions in the broader economy may We cannot completely eliminate the downside impacts on our earnings, The global economic outlook remains uncertain with the potential for external
adversely impact earnings, profitability, liquidity, or surplus capital. profitability, liquidity, or surplus capital from investment market volatility shocks to knock economies and markets off course.
and adverse economic conditions, although we seek to position our investment
The performance and liquidity of financial and property markets, interest rate portfolios and wider business plans for a range of plausible economic
movements and inflation impact the value of investments we hold in both scenarios and investment market conditions to ensure their resilience across a
shareholders' funds and to meet the obligations from insurance business; the range of outcomes. This includes setting risk limits on exposures to different Our businesses are primarily exposed to economic conditions in the UK and US.
movement in certain investments directly impacts profitability. Interest rate asset classes and where hedging instruments exist, we seek to use them to Central bank interest rates were cut during 2024 in UK and US, however, there
movements and inflation can also change the value of our obligations and limit our exposures to risks which are not adequately rewarded. We maintain a remains uncertainty around the pace and timing of any further cuts and there
although we seek to match assets and liabilities, losses can still arise. range of actions to retain liquidity flexibility. is no guarantee of a "soft landing" for either economy.
Falls in the risk-free yield curve can also create a greater degree of
inherent volatility to be managed in the solvency balance sheet, potentially
impacting capital requirements and surplus capital. Rises in risk free rates Our Own Risk Solvency Assessment ("ORSA") process is integral to our risk Geo-political risk factors remain elevated - this includes on-going conflicts
can lead to reduced liquidity buffers. Falls in investment values can reduce management approach, and includes an assessment of the financial impacts of in Ukraine and the Middle East, and the impact of a resurgence of populist and
our investment management fee income. risks associated with investment market volatility and adverse economic nationalist politics on domestic and international policy.
scenarios for our solvency balance sheet, capital sufficiency, and liquidity
requirements.
Asset values, including commercial and residential property prices, remain
susceptible to reappraisal should the current economic outlook deteriorate,
as well as from a range of geo-political factors. During 2024 we have seen
signs of commercial property markets stabilising, albeit transaction volumes
remain low and the office sector continues to show pressure. Within our
construction businesses supply chain pressure and cost inflation appear to be
moderating, albeit we remain vigilant over cost inflation being absorbed by
the supply chain. Labour shortages also continue to present risk.
In dealing with issuers of debt and other types of counterparty, the group is We manage our exposure to downgrade and default risks within our bond The risk of credit default increases in periods of low economic growth, and we
exposed to the risk of financial loss. portfolios, through setting selection criteria and exposure limits, and using continue to closely monitor the factors that may lead to a widening of credit
L&G Asset Management's global credit team's capabilities to ensure risks spreads including the outlook for the real economy and fiscal and monetary
Systemic corporate sector failures, or a major sovereign debt event, could, in are effectively controlled, where appropriate trading out to improve credit policy.
extreme scenarios, trigger defaults impacting the value of our bond quality. In our property lending businesses, our loan criteria take account of
portfolios. Under Solvency II, a widespread widening of credit spreads and borrower creditworthiness and the potential for movements in the value of
downgrades can also result in a reduction in our balance sheet surplus, security.
despite already having set aside significant capital for credit risk.
Although real incomes in the UK have risen in 2024, any reversal of this would
particularly impact economic activity in sectors reliant on discretionary
spending. The recent UK budget announced tax and spending measures that have
We manage our reinsurer exposures tightly, with the vast majority of our dampened consumer and business sentiment.
We are also exposed to default risks in dealing with banking, money market and reinsurers having a minimum A- rating, setting rating-based exposure limits,
reinsurance counterparties, as well as settlement, custody, and other bespoke and where appropriate taking collateral. Similarly, we seek to limit aggregate
business services. Default risk also arises where we undertake property exposure to banking, money market and service providers. Whilst we manage
lending, with exposure to loss if an accrued debt exceeds the value of risks to our balance sheet, we can never eliminate downgrade or default risks, Growth forecasts are modest and employers are cautious on the impact of
security taken. although we seek to hold a strong balance sheet that we believe to be prudent increased labour costs.
for a range of adverse scenarios.
Economic growth in the United States continues to be strong and there is broad
optimism that the new administration will support domestic manufacturing.
However, we believe uncertainty over new policies, in particular around
tariffs and immigration, pose downside risks.
We remain vigilant, closely monitoring all the names/assets in our portfolio
in the short term, as well as forming views on the medium to long-term
outlook. Our credit portfolio remains overwhelmingly (98%+) investment grade.
We fail to respond to the emerging threats from climate change for our We recognise that our scale brings a responsibility to act decisively in Over the next decade, the change necessary to meet global carbon reduction
investment portfolios and wider businesses. positioning our balance sheet in the context of the threats from climate targets will require societal adjustments on an unprecedented scale.
change. We continue to embed the assessment of climate risks in our investment
process, including in the management of real assets. We measure the carbon
intensity of our investment portfolios. Along with specific investment
As a significant investor in financial markets, commercial real estate and exclusions for carbon intensive sectors, we have set overall reduction targets Recent events, particularly the increasing frequency of record-breaking heat
housing, we are exposed to climate related transition risks. Abrupt shifts in aligned with the 1.5°C Paris objective. This includes science-based targets and extreme weather, have demonstrated the impacts of increased climate
the political and technological landscape could impact the value of those to support our emission reduction goals in line with our transition plan. volatility can be significant and may emerge rapidly.
investment assets associated with higher levels of greenhouse gas emissions.
We are evolving our approach to the inclusion of nature and biodiversity A failure by governments to ensure an orderly transition to low carbon
Physical risks, stemming from extreme outcomes, could impact the valuation alongside our climate risk work. economies increases the risk for sudden late policy action and large,
of at-risk assets, for example floods could impact the value of our property
unanticipated shifts in the asset values of impacted industries. Whilst our
assets; and could also potentially have longer-term effects on mortality transition plans seek to minimise our overall exposure to this risk, their
rates.
execution is dependent on the delivery of the policy actions and the climate
Alongside managing physical and transition exposures, we closely monitor the reduction targets of the firms we invest in. The actions governments take will
political and regulatory landscape, and as part of our climate strategy we also, to a significant extent, impact on our ability to deliver upon the
engage with regulators and investee companies in support of climate action. As climate-related targets we have set ourselves, and as the science of climate
We are also exposed to reputation and climate related litigation risks should we change how we invest, the products and services we offer, and how we change evolves, we may need to adapt our approach. Anti ESG sentiment,
our responses to the threats from climate change be judged not to align with operate, we are also mindful of the need to ensure that we have the right particularly within countries with a high dependency on fossil fuel related
the expectations of advocacy groups. Our risk management approach is also skills for the future. industries, may also constrain global ambition in addressing climate change as
reliant upon the availability of verifiable consistent and comparable well as limiting investment opportunities.
emissions data.
Although a broad set of actions to limit global warming are underway, we are
moving to a situation where the path to achieving a near-1.5 temperature
increase is becoming narrower. Whilst we retain our current ambition, this
could also have an impact on our ability to meet the climate-related targets
we have set ourselves.
We expect a continuing and increased focus on nature and biodiversity risks
going forward.
Changes in demographic experience, regulatory changes, increased expenses and We undertake significant analysis of the variables associated with writing At times, we have seen elevated levels of mortality in both the UK and the US
taxation levels may require revisions to our pricing and reserving bases. long-term insurance business to ensure that a suitable premium is charged for since the Covid 19 pandemic, and there is continued uncertainty in the
the risks we take on, and that provisions continue to remain appropriate for outlook, albeit this has somewhat reduced with the passage of time. The causes
factors including mortality, lapse rates, expenses, and credit defaults in the are unclear but may reflect indirect impacts of Covid 19 related illness, and
assets backing our insurance liabilities. the deferral of diagnostics and medical treatments for other conditions.
Changes in capital requirements, including UK and Insurance Capital Standards,
could impact our reported solvency position and our dividend and capital Cost of living pressures and government spending decisions, particularly
return policy.
relating to health and care, also have the potential to affect mortality
We seek to have a comprehensive understanding of longevity, mortality, and outcomes.
morbidity risks, and we continue to evaluate wider trends in life expectancy.
However, we cannot remove the risk that adjustment to reserves may be
The pricing of long-term business requires the setting of assumptions for required, although the selective use of reinsurance acts to reduce the impact
long-term trends in factors such as mortality, lapse rates, expenses, interest to us of significant variations in life expectancy and mortality. Along with the emergence of new diseases and changes in immunology impacting
rates and credit defaults. Actual experience may require recalibration of
mortality and morbidity assumptions, other risk factors that may impact future
these assumptions, changing the level of liability provisions and impacting reserving requirements include significant advances in medical science leading
reported profitability.
to more effective treatments, beyond that anticipated, requiring adjustment to
We actively engage with government and regulatory bodies to assist in the our longevity assumptions.
evaluation of regulatory and tax change to promote outcomes that meet the
needs of all stakeholders. To influence policy, our interactions with the
Regulation defines the overall framework for the design, marketing, taxation government and policy teams at regulators include face-to-face and virtual
and distribution of our products, and the prudential provisions and capital meetings, written responses to discussion papers and consultations, ad-hoc Whilst at present we do not believe climate change to be material driver for
that we hold. Significant changes in legislation or regulation may increase communications and attendance at roundtables with industry peers. With our mortality and longevity risk in the medium term, we continue to keep this
our cost base, reduce our future revenues, impact profitability or require us experience in various sectors, we can explain how proposed policy translates under review.
to hold more capital. into practice and identify potential issues or unintended consequences that
might arise.
The UK has experienced elevated levels of inflation in recent years, but this
The prominence of this risk increases where change is implemented without
has returned closer to the Bank of England's inflation target. Inflationary
prior engagement with the sector. The nature of long-term business can also When such regulatory changes move to the implementation stage, we undertake pressure impacts the level of our expense base and there is an additional risk
result in some changes or re- interpretation of regulation over time, having a detailed gap analysis work and depending on the scale of the remediation that complying with new regulatory requirements increases costs. We have
retrospective effect on in-force books of business, impacting future cash required, establish project management arrangements with first- and carefully evaluated the impact of expected price and salary inflation in our
generation. second-line teams working together. This is to ensure we deliver regulatory pricing and reserving assumptions and will continue to pro-actively monitor on
change effectively and efficiently, minimising disruption to our operations an ongoing basis.
and to our customers and clients.
Changes in these areas can affect our reported solvency position and our
dividend and capital return policy. Changes in capital standards, both in the UK and elsewhere, could impact our
reported solvency position and our dividend and capital return policy.
Post-Brexit, the UK is reforming its capital regime to move from Solvency II
to Solvency UK. The key changes are designed to enable annuity product
providers to invest more broadly to diversify risk and support investment in
the UK economy. We have developed our risk framework to meet or exceed
regulatory expectations on subjects such as funded reinsurance, Matching
Adjustment and liquidity risk management and reporting.
The Bermuda Monetary Authority ("BMA") revised its capital regime for life
insurers during 2023, with changes effective from March 2024 and reflected in
our results.
The Insurance Capital Standards (ICS), a global minimum standard capital for
Internationally Active Insurance Groups ("IAIGs"), was adopted by the
International Association of Insurance Supervisor (IAIS) in December 2024.
L&G Group, designated an IAIG by the PRA, has actively participated in
consultations on the standard. If Solvency UK is considered as strong as the
ICS, it may be used for ICS compliance and therefore would result in little
impact on L&G Group. We will continue to engage with both the PRA and the
IAIS during this period.
New UK rules implementing both a global minimum tax regime and a UK domestic
minimum tax regime at 15% applied from 1 January 2024 to all of the Group's
businesses globally with work underway to ensure compliance and to engage with
regulators as implementation and guidance on the new regimes develops.
Bermuda has introduced a corporate income tax regime from 1 January 2025 and
there is ongoing consultation on the implementation of the new regime.
Failure to effectively implement regulatory or legislative change applying to We identify, track and review the impact of regulatory and legislative change The volume and burden of regulatory change remains high across the sectors we
the financial services sector in a timely manner could lead to regulatory through our internal control processes, with material updates being considered operate in. We analyse, interpret and implement all relevant financial
censure, reputational damage, and deteriorating customer and client outcomes. at the Executive and Group Risk Committees and the Group Board. Our processes services legislation and regulation impacting our business units ensuring
are designed to ensure compliance with all new and developing regulation. appropriate levels of governance and assurance.
We are exposed to several risks where effective identification and
implementation of regulatory changes are particularly important. These include
changes relating to our management of operational risk, conduct risk, climate
risk and health & safety risk. The magnitude or scope of some regulatory We actively engage with regulatory bodies to ensure we maintain high standards Key forthcoming developments in our risk areas include:
changes can have a bearing on our ability to deliver our overall strategy. of business and deliver for our customers and clients.
Operational risk: Work is underway to comply with the UK's new operational
Regulatory or legislative changes can have a significant impact on our In 2023 we successfully implemented the Consumer Duty for open products, and resilience rules by 31 March 2025 and similar rules in other jurisdictions.
business. Such changes could limit our ability to operate in certain markets our work on legacy products is also now complete. We have also made strong
or sectors, potentially leading to a reduction in our customer and client base progress on our implementation of the UK's Operational Resilience rules which
and revenue. are due to come into force in March 2025.
Conduct risk: The FCA has committed to consulting on rules to better support
consumers in retail investments and pensions in H1 2025. The FCA and
Government have also committed to developing a new UK retail disclosure
There is a risk that regulatory policies could develop in a manner that is We seek to influence the direction of travel on various regulatory policy regime, the Consumer Composite Investment regime. In early 2025, the FCA will
detrimental to our business and/ or customers and clients. Alternatively, it themes at the government and regulator level for the benefit of our customers launch a Market Study into the distribution of pure protection products. New
could develop in a way that presents opportunities, but we fail to revise our and other stakeholders. rules on diversity and inclusion in financial services are expected, likely
strategy and adapt quickly enough to benefit.
leading to increased data collection, disclosure and reporting requirements.
We maintain a focus on minimising the risks of financial crime for our
customers and clients and on our financial results.
Non-compliance with new regulations or legislation could potentially damage
our reputation. This could lead to a loss of customer and client trust and
result in regulatory sanctions including potentially significant monetary Climate risk: there continue to be a variety of moving pieces in the
penalties. development of climate regulation at the UK, the US and EU level. We
anticipate more focus on scenario testing and scrutiny on sustainability
claims following the FCA's new anti-greenwashing rule and Sustainability
Disclosure Regulations effective from 31 May 2024. We continue to await the
outcome of developments on the UK Green Taxonomy and are preparing for the
implementation of International Sustainability Standards Board (ISSB)
disclosure standards from 2026. Requirements relating to Nature continue to
evolve rapidly.
Health and Safety: we have enhanced our governance processes and developed a
3-year strategy focusing on culture, quality, consistency, technology, and
keeping pace with change. Initial registration requirements for UK's new
Buildings Safety Act were met and we are working to ensure we meet all the
Act's requirements. Our overall Health & Safety risk exposure is expected
to decrease materially following the sale of CALA Group (Cala).
Strategic risk: we continue to follow and engage closely with the new UK
Government on the reforms being proposed as part of the Pensions Investment
Review and related initiatives. We were the first major pension provider to
successfully pass integration testing with the Pension Dashboard Programme
ahead of connections starting in April 2025.
New entrants and/or new technology may disrupt the markets in which we We continuously monitor the factors that may impact the markets in which we We observe a continued acceleration of a number of trends, including greater
operate. operate. consumer engagement in digital business models and on-line servicing tools. In
the current operating environment, businesses like ours have transformed
There is already strong competition in our markets, and although we have had working practices, and we anticipate further investment in automation, using
considerable past success at building scale to offer low-cost products, we
robotics and machine learning to enhance business efficiency. We are deepening
recognise that markets remain attractive to new entrants. We have responded to the rapid advancement and accessibility of generative AI our understanding of the impacts of generative and traditional AI on our
capabilities from third parties by launching a central AI Accelerator businesses and in the wider sector.
programme. This initiative brings together colleagues across the Group to
shape and incubate our generative AI approaches, raise awareness and educate
We are also cognisant of competitors who may have lower return on capital our business, and deliver a secure environment for internal test and learn use
requirements or be unconstrained by Solvency II and/or Solvency UK. cases. Our businesses are also well positioned for changes in the competitive
landscape that may arise from pensions-related changes. We welcome innovation
in the market, such as the proposed roll out of defined benefit 'superfund'
consolidation schemes, as long as the security of members' benefits is
The continued evolution of AI has the potential to be a significant disrupting Our regulatory developments team keeps a close watch on the AI landscape prioritised. We may see alternative de-risking offerings coming to the market
force across our businesses, for example by enabling new entrants to compete across all our jurisdictions. We have been actively engaged in numerous targeting a similar segment to superfunds, for instance for DB schemes with
with potentially lower costs, and more efficient processes. The technology consultations in relation to AI and generative AI. funding levels of around 90%.
itself could have an impact on asset valuations, and on our liabilities
including through its impact on life sciences and health care systems
effectiveness.
The pension dashboards initiative will also be a positive development. We
are well positioned for connecting having passed integration testing.
On the 'collective' defined contribution reform, while we have seen limited
demand for this to date, it may hold the potential to disrupt both the
workplace and retirement income market.
A material failure in our business processes or IT security may result in Our risk governance model seeks to ensure that business management are We continue to remain alert to evolving operational risks and invest in our
unanticipated financial loss or reputational damage. actively engaged in maintaining an appropriate control environment, supported system capabilities, including those for the management of cyber risks, to
by risk functions led by the Chief Risk Officer, with independent assurance ensure that our important business processes are resilient. We also remain
We have constructed our framework of internal control to minimise the risk of from Group Internal Audit. cognisant of the risks as we implement a new global operating model and IT
unanticipated financial loss or damage to our reputation. However, no system
platform for Asset Management and have structured the migration in phases to
of internal control can completely eliminate the risk of error, financial minimise change risks.
loss, fraudulent actions, or reputational damage. We are also inherently
exposed to cyber threats including the risks of data theft and fraud and more We continue to evolve our risk management approach for change, IT, security,
generally it is imperative that we maintain the privacy of our customers and operational resilience and data access and privacy.
clients' personal data. There is also strong stakeholder expectation that our
core business services are resilient to operational disruption.
Whilst we seek to maintain a control environment commensurate with our risk
profile, we recognise that residual risk will always remain across the
spectrum of our business operations and we aim to develop response plans so
that when adverse events occur, appropriate actions are deployed.
The successful delivery of our strategy is dependent on the ability to attract We seek to ensure that key personnel dependencies do not arise, through Competition for talent remains strong with skills in areas such as investment
and retain talent with the right skills and capabilities. employee training and development programmes, remuneration strategies and management and data particularly sought after across many business sectors,
succession planning. including those in which we operate. We also recognise the risks posed by the
The Group aims to recruit, develop and retain high quality individuals. We are
outlook for inflation in salary expectations across the wider employment
inherently exposed to the risk that key personnel or teams and their market, and internally we have taken steps to help our employees through
associated expertise may leave the Group, with an adverse effect on the
direct financial support and by providing advice and resources to help them
Group's businesses. As we increasingly focus on the digitalisation of our Our processes include the active identification and development of talent manage their financial well-being. The recent increase in employer National
businesses, we are also competing for technology and digital skill sets with within our workforce, and by highlighting our values and social purpose, Insurance contributions and the reduction in contribution threshold may impact
other business sectors as well as our peers. promoting L&G as a great place to work. As well as investing in our operational costs. We remain committed to attracting and retaining top talent
people, we are also transforming how we engage and develop capabilities, with by continuously adapting our strategies to the evolving market conditions
new technologies and tools to support globalisation, increase productivity and
provide an exceptional employee experience.
Notes
A copy of this announcement can be found in "Results, Reports and
Presentations", under the "Investors" section of our shareholder website at
https://group.legalandgeneral.com/en/investors/results-reports-and-presentations
(https://group.legalandgeneral.com/en/investors/results-reports-and-presentations)
.
A presentation to analysts and investors will take place at 10:00am UK time
today at One Coleman Street, London, EC2R 5AA. There will also be a live
webcast of the presentation that can be accessed at
https://group.legalandgeneral.com/en/investors
(https://group.legalandgeneral.com/en/investors) .
A replay of the presentation will be made available on this website by 13
March 2025.
Financial Calendar Date
Ex-dividend date (2024 final dividend) 24 April 2025
Record date 25 April 2025
Annual General meeting 22 May 2025
Dividend payment date 5 June 2025
2025 interim results announcement 6 August 2025
Ex-dividend date (2025 interim 21 August 2025
dividend)
Record date 22 August 2025
Dividend payment date 26 September 2025
Definitions
Definitions are included in the Glossary in L&G Full Year Results 2024
Part 2.
Forward-looking statements
This release may contain 'forward-looking statements' with respect to the
financial condition, performance and position, strategy, results of operations
and businesses of the company and the Group that are based on management's
current expectations or beliefs, as well as assumptions and projections about
future events. These forward- looking statements can be identified by the fact
that they do not relate only to historical or current facts. Forward-looking
statements often use words such as 'aim', 'ambition', 'may', 'could', 'will',
'expect', 'intend', 'estimate', 'anticipate', 'believe', 'plan', 'seek',
'continue', 'milestones', 'outlook', 'target', 'objectives' or other words of
similar meaning. By their very nature, forward-looking statements are subject
to known and unknown risks and uncertainties and can be affected by other
factors that could cause actual results, and the Group's plans and objectives,
to differ materially from those expressed or implied in the forward-looking
statements. Recipients should not place undue reliance on, and are cautioned
about relying on, any forward-looking statements.
There are several factors which could cause actual results to differ
materially from those expressed or implied in forward-looking statements. The
factors that could cause actual results to differ materially from those
described in the forward-looking statements include (but are not limited to):
changes in global, political, economic, business, competitive and market
forces or conditions; future exchange and interest rates; changes in
environmental, social or physical risks; legislative, regulatory and policy
developments; risks arising out of health crises and pandemics; changes in tax
rates, future business combinations or dispositions; and other factors
specific to the Group. Any forward-looking statement contained in this
document is based on past or current trends and/or activities of the Group and
should not be taken as a guarantee, warranty or representation that such
trends or activities will continue in the future. No statement in this
document is intended to be a profit forecast or to imply that the earnings of
the Group for the current year or future years will necessarily match or
exceed the historical or published earnings of the Group. Each forward-looking
statement speaks only as of the date of the particular statement. Except as
required by any applicable laws or regulations, the Group expressly disclaims
any obligation to revise or update any forward- looking statement contained
within this document, regardless of whether those statements are affected as a
result of new information, future events or otherwise.
The information, statements and opinions contained in this release do not
constitute an offer to sell or buy or the solicitation of an offer to sell or
buy any securities or financial instruments nor do they constitute any advice
or recommendation with respect to such securities or other financial
instruments or any other matter.
Caution about climate information
Annual Report and Accounts contains climate and ESG disclosures which use a
large number of judgments, assumptions and estimates in connection with
involved complex issues. The ESG disclosures should be treated with special
caution, as ESG and climate data, models and methodologies are often
relatively new, are rapidly evolving and are not of the same standard as those
available in the context of other financial information, nor are they subject
to the same or equivalent disclosure standards, historical reference points,
benchmarks, market consensus or globally accepted accounting principals. These
judgments, assumptions and estimates are likely to change over time, in
particular given the uncertainty around the evolution and impact of climate
change.
In addition, the Group's climate risk analysis and net zero strategy remain
under development and the data underlying the analysis and strategy remain
subject to evolution. As a result, certain climate and ESG disclosures made in
this report are likely to be amended, updated, recalculated or restated in
future reports. This statement should be read together with the Cautionary
statement contained in the Group's latest Climate and nature report. The
information, statements and opinions contained in the Annual Report and
Accounts do not constitute an offer to sell or buy or the solicitation of an
offer to sell or buy any securities or financial instruments nor do they
constitute any advice or recommendation with respect to such securities or
other financial instruments or any other matter.
Going concern statement
The Group's business activities, together with the factors likely to affect
its future development, performance and position in the current economic
environment are set out in the Annual Report & Accounts. The financial
position of the Group, its cash flows, liquidity position and borrowing
facilities are described in the Group Results. Principal risks and
uncertainties are detailed on pages 18 to 26.
The directors have made an assessment of the Group's going concern,
considering both the current performance and the outlook for a period of at
least, but not limited to, 12 months from the date of approval of the
consolidated financial statements, using the information available up to the
date of issue of the Annual Report & Accounts.
The Group manages and monitors its capital and liquidity, and applies various
stresses, including adverse inflation and interest rate scenarios, to those
positions to understand potential impacts from market downturns. Our key
sensitivities and the impacts on our capital position from a range of stresses
are disclosed in section 5.01 of the Capital section of the Full year results
in this 2024 Preliminary Management Report. These stresses do not give rise to
any material uncertainties over the ability of the Group to continue as a
going concern. Based upon the available information, the directors consider
that the Group has the plans and resources to manage its business risks
successfully and that it remains financially strong and well diversified.
Having reassessed the principal risks and uncertainties (both financial and
operational) in light of the current economic environment, as detailed on
pages 18 to 26, the directors are confident that the Group and company will
have sufficient funds to continue to meet its liabilities as they fall due for
a period of, but not limited to, 12 months from the date of approval of the
financial statements and therefore have considered it appropriate to adopt the
going concern basis of accounting when preparing the financial statements.
Directors' responsibility statement
We confirm to the best of our knowledge that:
· The Group financial statements within the full Annual Report &
Accounts, from which the financial information within this preliminary
announcement has been extracted, and which have been prepared in accordance
with UK-adopted IFRSs, give a true and fair view of the assets, liabilities,
financial position and profit of the Group;
· The preliminary announcement includes a fair review of the
development, performance and position of the Group, as well as the principal
risks and uncertainties faced by the Group; and
· A list of current directors of L&G Group Plc is maintained on
the L&G Group Plc website:
https://group.legalandgeneral.com/en/about-us/our-management/group-board
(https://group.legalandgeneral.com/en/about-us/our-management/group-board)
By order of the Board
António Pedro dos Santos Simões
Stuart Jeffrey Davies
Group Chief Executive Officer
Group Chief Financial Officer
11 March 2025
11 March 2025
Enquiries
Investors
Michelle Moore, Group Strategy & Investor Relations Director
investor.relations@group.landg.com (mailto:investor.relations@group.landg.com)
+44 20 3124 3773
Gregory Franck, Investor Relations Director
investor.relations@group.landg.com (mailto:investor.relations@group.landg.com)
+44 203 124 4415
Media
Natalie Whitty, Group Corporate Affairs Director
Natalie.whitty@group.landg.com (mailto:Natalie.whitty@group.landg.com)
+44 738 443 5692
Lauren Kemp, Group Head of Corporate Media & Issues
Lauren.Kemp@lgim.com (mailto:Lauren.Kemp@lgim.com)
+44 794 651 4627
Lucy Legh / Nigel Prideaux, Headland Consultancy
LandG@headlandconsultancy.com (mailto:LandG@headlandconsultancy.com)
+44 20 3805 4822
1 . The Group uses a number of Alternative Performance Measures to enhance
understanding of the Group's performance, defined on pages 80-82.
2 . IFRS Profit before tax see Note 2.01
3 . Store of future profit refers to the gross of tax Contractual Service
Margin "CSM" and Risk Adjustment "RA" (net of reinsurance) under IFRS 17
4 . £1.35bn reflects Cala enterprise value and £1.8bn reflects sale of US
protection and US PRT partnership with Meiji Yasuda expected to complete at
the end of 2025.
5 . This equates to c. $1bn on FX rate as at 5 March 2025
6 . Market Cap. at 1 Jan 2025 = £13.542bn
7 . 10 year gilts
8 . As we experienced in 2023, the positive movement in the CSM from
longevity releases, which will be released into the P&L over time, is
offset by an adverse day-one impact on P&L through investment
variances. This is purely an accounting mismatch.
9 . See glossary for more information.
10 . As previously disclosed, we will include the anticipated accelerated
capital generation of the Magnet transaction in the performance against this
target
11 . Total AUM ex JV, Associates and Other
12 . Including 100% Pemberton fee-earning AUM
13 . Market Cap. at 1 Jan 2025 = £13.542bn
14 . Calculated as a percentage of premium net of funded reinsurance.
Includes transacted annuity book optimisation from Direct Investment capacity
enabled by gilts-based investment strategies and removes timing
constraints on reinsurance imposed by IFRS17.
15 . PDI Awards 2024: Europe winners
16 . Excludes JV, associates and other AUM
17 . Includes Workplace DC and Retail Savings net flows
18 . Ranked seventh by AUM, Japanese industry publication (Pension News)
January 2025
19 . Including 100% Pemberton fee-earning AUM
20 . Private Credit AUM includes 100% of assets managed by Pemberton
21 . ABI Q3 2024 Report - YTD Q3 Lifetime Annuities only.
22 . ABI Q3 2024 Report.
23 . This excludes Annuity portfolio assets.
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