REG - Legal & General Grp - L&G Half-year results 2015 Part 3 <Origin Href="QuoteRef">LGEN.L</Origin> - Part 3
05/08/2015 07:02
- Part 3: For the preceding part double click ID:nRSE1058Vb
40,737 45,811
Additional analysis of sovereign debt exposures:
Sovereigns, Supras and Sub-Sovereigns
LGR Total LGR Total LGR Total
At At At At At At
30.06.15 30.06.15 30.06.14 30.06.14 31.12.14 31.12.14
£m £m £m £m £m £m
Market value by region:
United Kingdom 4,963 5,309 4,768 5,102 5,946 6,267
USA 519 745 407 830 536 772
Netherlands 1 139 13 167 5 153
France 5 78 118 246 1 138
Germany 151 346 195 437 204 417
Greece - - - 5 - -
Ireland - 7 - 12 - 8
Italy 1 85 109 192 2 96
Portugal - 4 - 6 - 9
Spain 1 23 - 6 - 10
Russia 9 18 - - 19 28
Ukraine - - - 4 - -
Rest of Europe 629 750 793 985 765 922
Brazil 50 60 38 38 55 64
Rest of World 393 479 137 227 227 365
Total 6,722 8,043 6,578 8,257 7,760 9,249
Capital and Investments
83
4.05 Bond portfolio summary (continued)
(c) Analysed by credit rating
LGR LGR Total Total
At At At At
30.06.15 30.06.15 30.06.15 30.06.15
£m % £m %
AAA 1,870 5 3,149 7
AA 9,763 25 10,632 24
A 11,996 31 12,943 30
BBB 10,268 26 11,305 26
BB or below 1,008 3 1,262 3
Unrated: Bespoke CDOs1 979 2 979 2
Other 3,433 8 3,647 8
39,317 100 43,917 100
LGR LGR Total Total
At At At At
30.06.14 30.06.14 30.06.14 30.06.14
£m % £m %
AAA 1,711 5 3,376 9
AA 8,471 25 9,217 23
A 11,082 32 12,333 31
BBB 8,716 26 9,891 25
BB or below 566 2 761 2
Unrated: Bespoke CDOs1 983 3 983 3
Other 2,533 7 2,681 7
34,062 100 39,242 100
LGR LGR Total Total
At At At At
31.12.14 31.12.14 31.12.14 31.12.14
£m % £m %
AAA 1,936 5 3,451 8
AA 10,357 25 11,190 24
A 13,231 33 14,420 31
BBB 10,360 25 11,441 25
BB or below 630 2 853 2
Unrated: Bespoke CDOs1 994 2 994 2
Other 3,229 8 3,462 8
40,737 100 45,811 100
1. The CDOs are termed as super senior since default losses have to exceed 27.5%, on average across the reference portfolio, before the CDOs incur any default losses. The underlying reference portfolio had no reference entity defaults in 2014 or 2015. Losses are limited under the terms of the CDOs to assets and collateral invested.
Capital and Investments
84
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European Embedded Value
85
Group embedded value - summary
Covered business
Insurance Non-
UK overseas covered
business business LGA business Total
For the six months ended 30 June 2015 £m £m £m £m £m
At 1 January 2015
Value of in-force business (VIF) 6,118 147 518 - 6,783
Shareholder net worth (SNW) 3,519 325 209 139 4,192
Embedded value at 1 January 2015 9,637 472 727 139 10,975
Exchange rate movements - (38) (6) 13 (31)
Operating profit after tax for the period 416 3 55 62 536
Non-operating profit/(loss) after tax for the period 48 (50) (5) (9) (16)
Profit/(loss) for the period 464 (47) 50 53 520
Intra-group distributions1 (282) (19) (52) 353 -
Dividends to equity holders of the Company - - - (496) (496)
Transfer to non-covered business2 (17) - - 17 -
Other reserve movements including pension deficit3 13 - - (36) (23)
Embedded value at 30 June 2015 9,815 368 719 43 10,945
Value of in-force business4,5 6,024 79 565 - 6,668
Shareholder net worth6,7 3,791 289 154 43 4,277
Embedded value per share (p)8 184
Additional value of LGIM
30.06.15 30.06.15
Indicative valuation including LGIM p per share £bn
EEV as reported 184 10.9
LGIM VIF 27 1.6
Total including LGIM 211 12.5
30.06.15 30.06.15
Estimated LGIM discounted cash flow valuation p per share £bn
Look through value of profits on covered business 6 0.4
Net asset value 11 0.7
Current value of LGIM in Group embedded value 17 1.1
LGIM VIF 27 1.6
Alternative discounted value of LGIM future cash flows 44 2.7
1. UK intra-group distributions primarily reflect a £300m (H1 14: £nil; FY 14: £675m) declared dividend from Society to Group, and dividends of E23m (H1 14: E18m; FY 14: E35m) from LGN paid to Society. Dividends of $80m (H1 14:$73m; FY 14: $76m) from LGA and E1m (H1 14: E2m; FY 14: E2m) from LGF were paid to Group.
2. The transfer to non-covered business represents the IFRS profits arising in the year from the provision 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 primarily reflect movement in the pension deficit and movements in the share options scheme and employee scheme treasury shares.
4. Value of inforce business is shown net of cost of capital, which consists of £567m (H1 14: £449m; FY 14: £545m) from UK covered business; £57m (H1 14: £66m; FY 14: £60m) from Insurance overseas covered business and £12m (H1 14: £12m; FY 14: £11m) from LGA.
5. The time value of options and guarantees deduction included in value of inforce business is £28m (H1 14: £14m; FY 14: £43m).
6. Shareholder net worth of Insurance overseas covered business is made up of £62m (H1 14: £74m ; FY 14: £90m) of free surplus and £227m (H1 14: £251m ; FY 14: £235m) of required capital.
7. Shareholder net worth of LGA is made up of £104m (H1 14: £139m ; FY 14: £161m) of free surplus and £50m (H1 14: £49m ; FY 14: £48m) of required capital.
8. The number of shares in issue at 30 June 2015 was 5,945,774,722 (H1 14: 5,935,497,507; FY 14: 5,942,070,229).
Further analysis of the UK covered business can be found in Note 5.01.
European Embedded Value
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