REG - Legal & General Grp - L&G H1 2014 Results Part 3 <Origin Href="QuoteRef">LGEN.L</Origin> - Part 4
29/10/2014 10:33
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3,249 315 234 199 3,997
Embedded value at 1 January 2014 7,942 512 933 199 9,586
Exchange rate movements - (19) (30) 12 (37)
Operating profit after tax for the period 539 11 47 68 665
Non-operating profit/(loss) for the period 59 3 (1) (7) 54
Profit for the period 598 14 46 61 719
Intra-group distributions1 18 (15) (44) 41 -
Dividends to equity holders of the Company - - - (408) (408)
Transfer to non-covered business2 (15) - - 15 -
Other reserve movements including pension deficit3 12 - - (29) (17)
Embedded value at 30 June 2014 8,555 492 905 (109) 9,843
Value of in-force business 4,928 167 717 - 5,812
Shareholder net worth 3,627 325 188 (109) 4,031
Embedded value per share (p)4 166
1. UK intra-group distributions primarily reflect E18m (H1 13: Enil; FY 13: E16m) dividend from LGN and £4m dividend from Nationwide Life (H1 13: £10m; FY 13: £10m) paid to Society. Dividends of $73m (H1 13: $66m; FY 13: $69m) from LGA and E2m (H1 13: E1m; FY 13: E2m) from LGF were paid to the group.
2. The transfer to non-covered business represents the IFRS profits arising in the period from the provisions of investment management services by LGIM to the UK covered business, which have been included in the operating profit of the covered business on the look through basis.
3. The other reserve movements of UK covered business primarily reflects the effect of reinsurance arrangement transactions between UK and US covered business. Non-covered business mainly reflects the movement in the savings related share options scheme and the actuarial loss on the pension deficit movement.
4. The number of shares in issue at 30 June 2014 was 5,935,497,507 (30 June 2013: 5,915,445,369; 31 December 2013: 5,917,066,636).
Further analysis of the LGAS and LGR covered business can be found in Note 5.01.
European Embedded Value
90
Group embedded value - summary (continued)
Covered business
LGAS Non-
UK overseas covered
business business LGA business Total
For the six months ended 30 June 2013 £m £m £m £m £m
At 1 January 2013
Value of in-force business (VIF) 4,402 146 735 - 5,283
Shareholder net worth (SNW) 3,178 296 239 (96) 3,617
Embedded value at 1 January 2013 7,580 442 974 (96) 8,900
Exchange rate movements - 23 72 (74) 21
Operating profit after tax for the period 392 4 35 73 504
Non-operating profit/(loss) for the period 282 34 (31) (4) 281
Profit for the period 674 38 4 69 785
Intra-group distributions1 10 (1) (43) 34 -
Dividends to equity holders of the Company - - - (337) (337)
Transfer to non-covered business2 (12) - - 12 -
Other reserve movements including pension deficit3 (44) - - 4 (40)
Embedded value at 30 June 2013 8,208 502 1,007 (388) 9,329
Value of in-force business 4,570 178 890 - 5,638
Shareholder net worth 3,638 324 117 (388) 3,691
Embedded value per share (p)4 158
1. UK intragroup distributions reflect dividends of £10m paid to Society from subsidiaries (primarily Nationwide Life). Dividends of $66m from LGA, Enil from LGN and E1m from LGF were also paid to the group.
2. The transfer to non-covered business represents the IFRS profits arising in the period from the provisions of investment management services by Legal & General Investment Management to the UK covered business, which have been included in the operating profit of the covered business on the look through basis.
3. The other reserve movements reflect the pension deficit movement, the movement of investment project costs from covered to non-covered business and the effect of reinsurance arrangement transactions between UK and US covered business.
4. The number of shares in issue at 30 June 2013 was 5,915,445,369.
Further analysis of the LGAS and LGR covered business can be found in Note 5.01.
European Embedded Value
91
Group embedded value - summary (continued)
Covered business
LGAS Non-
UK overseas covered
business business LGA business Total
For the year ended 31 December 2013 £m £m £m £m £m
At 1 January 2013
Value of in-force business (VIF) 4,402 146 735 - 5,283
Shareholder net worth (SNW) 3,178 296 239 (96) 3,617
Embedded value at 1 January 2013 7,580 442 974 (96) 8,900
Exchange rate movements - 9 (14) (10) (15)
Operating profit after tax for the year 804 16 70 168 1,058
Non-operating profit/(loss) for the year 222 60 (24) (17) 241
Profit for the year 1,026 76 46 151 1,299
Intra-group distributions1 (602) (15) (44) 661 -
Dividends to equity holders of the Company - - - (479) (479)
Transfer to non-covered business2 (27) - - 27 -
Other reserve movements including pension deficit3 (35) - (29) (55) (119)
Embedded value at 31 December 2013 7,942 512 933 199 9,586
Value of in-force business 4,693 197 699 - 5,589
Shareholder net worth 3,249 315 234 199 3,997
Embedded value per share (p)4 162
1. UK intra-group distributions reflect a £625m dividend paid from Society to Group, and dividends of £10m paid to Society from subsidiaries (primarily Nationwide Life). Dividends of E16m from LGN are also paid to Society. Dividends of $69m from LGA and E2m from LGF were paid to the group.
2. The transfer to non-covered business represents the IFRS profits arising in the period from the provisions of investment management services by LGIM to the UK covered business, which have been included in the operating profit of the covered business on the look through basis.
3. The other reserve movements reflect the pension deficit movement, the movement of investment project costs from covered to non-covered business and the effect of reinsurance arrangement transactions between UK and US covered business.
4. The number of shares in issue at 31 December 2013 was 5,917,066,636.
Further analysis of the LGAS and LGR covered business can be found in Note 5.01.
European Embedded Value
92
5.01 LGAS and LGR embedded value reconciliation
Shareholder net worth Total
Free Required Value of embedded
surplus capital Total in-force value
For the six months ended 30 June 2014 £m £m £m £m £m
At 1 January 20141 1,174 2,390 3,564 4,890 8,454
Exchange movement (15) 4 (11) (8) (19)
Operating profit/(loss) after tax - UK business:
- New business contribution2 (195) 184 (11) 305 294
- Expected return on VIF - - - 157 157
- Expected transfer from VIF to SNW3 457 (113) 344 (344) -
- Expected return on SNW 26 62 88 - 88
Generation of embedded value 288 133 421 118 539
- Experience variances (6) 3 (3) 34 31
- Operating assumption changes 11 - 11 (31) (20)
- Development costs (11) - (11) - (11)
Variances (6) 3 (3) 3 -
Operating profit/(loss) after tax - LGAS overseas 12 4 16 (5) 11
Operating profit after tax - LGAS & LGR 294 140 434 116 550
Non-operating profit/(loss) after tax - UK business:
- Economic variances (30) 42 12 26 38
- Other taxation impacts4 (12) - (12) 33 21
Non-operating profit/(loss) after tax - LGAS overseas 13 8 21 (18) 3
Non-operating profit/(loss) after tax - LGAS & LGR (29) 50 21 41 62
Profit for the period - LGAS & LGR 265
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