REG - Legal & General Grp - L&G Half-year results 2015 Part 2 <Origin Href="QuoteRef">LGEN.L</Origin> - Part 2
05/08/2015 07:01
- Part 2: For the preceding part double click ID:nRSE1056Va
192 50 280 179 54 188
1. Savings excludes the Workplace Savings business which is now reported in LGIM. Prior period comparatives have been amended. The impact includes the increase of net cash generation by £8m and the increase of operating profit by £10m. Offsetting movements have been reflected in the LGIM segment.
2. The other LGR experience variance reflects the benefit to profit of selective longevity and asset reinsurance related to bulk annuity transactions.
3. The mortality/morbidity valuation assumption change in LGR primarily reflects a change in mortality reserving assumptions in relation to unreported deaths of deferred annuitants.
4. The DAC in Savings represents the amortisation charges offset by new acquisition costs deferred in the year. The DIL reflects initial fees on insured savings business which relate to the future provision of services and are deferred and amortised over the anticipated period in which these services are provided.
IFRS and Cash
31
2.02 Analysis of Insurance, Savings and LGR operating profit (continued)
Insurance Savings1 LGR
Full year Full year Full year
31.12.14 31.12.14 31.12.14
£m £m £m
Net cash generation 327 113 343
Experience variances
Persistency (3) 1 (3)
Mortality/Morbidity2 (7) 2 13
Expenses 1 (2) (3)
BPA Loading - - 6
Project and development costs (6) (3) (19)
Other 7 (5) (7)
Total experience variances (8) (7) (13)
Changes to valuation assumptions
Persistency3 43 (1) -
Mortality/Morbidity4 37 - 61
Expenses 11 3 (5)
Other5 (67) 1 (8)
Total valuation assumption changes 24 3 48
Movement in non-cash items
Deferred tax (3) 6 (11)
Utilisation of brought forward trading losses (11) 2 (62)
Acquisition expense tax relief (36) (6) -
Deferred Acquisition Costs (DAC)6 - (76) -
Deferred Income Liabilities (DIL)6 - 50 -
Other7 - 2 41
Total non-cash movement items (50) (22) (32)
Other (6) (1) -
Operating profit after tax 287 86 346
Tax gross up 83 19 82
Operating profit before tax 370 105 428
1. Savings excludes the Workplace Savings business which is now reported in LGIM. The impact includes the increase of net cash generation by £16m and the increase of operating profit by £15m. Offsetting movements have been reflected in the LGIM segment.
2. The mortality/morbidity experience variances in Insurance in 2014 primarily relates to adverse morbidity on one of our group protection products.
3. The persistency valuation assumption change in Insurance primarily relates to an improvement in the experience and modelling for persistency on some of our long term products.
4. The mortality/morbidity valuation assumption change in Insurance primarily relates to an improvement in the modelling for certain morbidity features on our retail protection products. The LGR mortality valuation assumption change primarily relates to the adoption of the recent CMI projection table (CMI2013) with an allowance for anticipated modelling changes that have been incorporated into the CMI2014 model.
5. The other valuation assumption change in Insurance primarily relates to a refinement in the modelling for reinsurance on certain long term policies.
6. The DAC in Savings represents the amortisation charges offset by new acquisition costs deferred in the year. The DIL reflects initial fees on insured savings business which relate to the future provision of services and are deferred and amortised over the anticipated period in which these services are provided.
7. The other non-cash items in LGR primarily relates to the elimination of intra-group future profits arising from the provision of investment management services at market referenced rates.
IFRS and Cash
32
2.03 General insurance operating profit and combined operating ratio
Full year
30.06.15 30.06.14 31.12.14
£m £m £m
General insurance operating profit1 38 28 59
General insurance combined operating ratio (%)2 82 88 87
1. The general insurance operating profit includes the underwriting result and investment return.
2. The calculation of the general insurance combined operating ratio incorporates commission and expenses as a percentage of net earned premiums.
2.04 LGIM1
Full year
30.06.15 30.06.14 31.12.14
£m £m £m
Investment management revenue 347 309 645
Investment management expenses (168) (150) (309)
Workplace Savings operating loss (3) (10) (15)
Total LGIM operating profit 176 149 321
1. LGIM includes the Workplace Savings business which was previously reported in Savings. Prior period comparatives have been amended. Offsetting movements have been reflected in the Savings segment.
2.05 LGC
Full year
30.06.15 30.06.14 31.12.14
£m £m £m
Investment return 125 109 219
Expenses (10) (7) (16)
Total LGC operating profit 115 102 203
2.06 Group investment projects and expenses
Full year
30.06.15 30.06.14 31.12.14
£m £m £m
Group investment projects and central expenses (19) (16) (35)
Restructuring costs (9) - (31)
Total Group investment projects and expenses (28) (16) (66)
2.07 Investment and other variances
Full year
30.06.15 30.06.14 31.12.14
£m £m £m
Investment variance1 (29) 26 (8)
M&A related2 (55) (15) (21)
Other3 (2) (17) (15)
Total Investment and other variances (86) (6) (44)
1. H1 15 investment variance is negative, primarily arising from the defined pension benefit scheme variance of £(26)m (H1 14: £8m; FY 14: £40m), that reflects the actuarial losses and gains and valuation differences arising on annuity assets held by defined benefit pension schemes that have been purchased from Legal & General Assurance Society Limited (Society).
2. M&A related includes gains, expenses and intangible amortisation relating to acquisitions and disposals (including the recognition of £40m impairment losses arising on classification of disposal groups as held for sale).
3. Other includes new business start-up costs and other non-investment related variance items.
IFRS and Cash
33
Consolidated Income Statement
For the six months ended 30 June 2015
Full year
30.06.15 30.06.14 31.12.14
Notes £m £m £m
Revenue
Gross written premiums 3,170 5,291 10,168
Outward reinsurance premiums (865) (514) (1,122)
Net change in provision for unearned premiums 14 6 1
Net premiums earned 2,319 4,783 9,047
Fees from fund management and investment contracts 564 548 1,085
Investment return 5,062 13,481 40,639
Operational income 444 372 746
Total revenue 2.09 8,389 19,184 51,517
Expenses
Claims and change in insurance liabilities 2,090 6,717 15,071
Reinsurance recoveries (999) (582) (975)
Net claims and change in insurance liabilities 1,091 6,135 14,096
Change in provisions for investment contract liabilities 4,958 10,864 33,385
Acquisition costs 429 436 873
Finance costs 91 90 183
Other expenses 930 869 1,748
Transfers to/(from) unallocated divisible surplus 61 50 (181)
Total expenses 7,560 18,444 50,104
Profit before tax 829 740 1,413
Tax expense attributable to policyholder returns (157) (104) (175)
Profit before tax attributable to equity holders 672 636 1,238
Total tax expense (282) (233) (421)
Tax expense attributable to policyholder returns 157 104 175
Tax expense attributable to equity holders 2.16 (125) (129) (246)
Profit for the period 547 507 992
Attributable to:
Non-controlling interests 8 6 7
Equity holders of the Company 539 501 985
Dividend distributions to equity holders of the Company during the period 2.18 496 408 580
Dividend distributions to equity holders of the Company proposed after the period end 2.18 205 172 496
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