Legal & General Full Year 2023 Results: Set to achieve its 5 year ambitions, with record new business volumes and resilient in-year profit generation
António Simões, Group Chief Executive: “Everything I have seen since joining the business in January has confirmed what attracted me to Legal & General. We have an authentic sense of purpose and stand out for our market-leading businesses, performance track record and strong balance sheet, delivered by talented colleagues.
“Our 2023 performance reflects these strengths. We are on course to achieve our five-year targets, and demonstrated resilience in challenging markets to achieve record new business volumes in pension risk transfer, UK annuities and US protection, increasing our store of future profit. Our international assets under management and alternative assets portfolio continue to grow, as does our position in the UK defined contribution pensions market.
“We must be as ambitious for Legal & General’s future as we are proud of our history. This is the right moment to take a fresh perspective, build on our track record and set out a vision for profitable and sustainable growth. I look forward to outlining our strategy and plans at our Capital Markets Event on 12 June.”
Resilient financial performance1
Operating profit of £1,667m (2022: £1,663m)
Profit after tax2 of £457m (2022: £783m)
Solvency II capital generation of £1.8bn (2022: £1.8bn)
Solvency II coverage ratio3of 224%, with surplus of £9.2bn (2022: 236%, £9.9bn)
Dividend per share of 20.34p, up 5% (2022: 19.37p)
Growth in our store of future profit: up 9% to £14.7bn4
Record volumes across our insurance businesses:
£13.7bn of institutional annuities (£10.5bn retained premium5)
£1.4bn of individual annuities
$175m of US protection new business premium
New business CSM contributed £1.2bn (2022: £0.9bn)
CSM has grown 9% to £13.0bn (2022: £11.9bn)
Set to achieve our five-year (2020-2024) ambitions
Cumulative Solvency II capital generation of £6.8bn (£8-9bn by 2024)
Cumulative dividends declared of £4.5bn (£5.6-5.9bn by 2024)
Cumulative net surplus generation over dividends of £0.8bn
The Board’s intention is to grow the dividend at 5% for the year FY246, as previously communicated
1. The Group uses a number of Alternative Performance Measures (including adjusted operating profit) to enhance understanding of the Group’s performance. These are defined in the glossary, on pages 83 to 83 of this report. IFRS 17 was introduced on 1st January 2023, comparatives have been restated accordingly.2. Profit after tax attributable to equity holders.3. Solvency II coverage ratio before the payment of 2023 final dividend.4. Store of future profit refers to the gross of tax combination of established Contractual Service Margin 5. “CSM” and Risk Adjustment “RA” (net of reinsurance) under IFRS 17.5. Net premium after deducting for funded reinsurance relating to 2023 PRT transactions.6. Absent market shocks / events outside of our control.
Legal & General Group Plc Board announces the planned retirement of Sir Nigel Wilson
Legal & General Group Plc (“Legal & General” or “the Group”) announces that Sir Nigel Wilson has informed the Board that he has decided that he would like to retire from executive life after over a decade as Chief Executive.
Sir Nigel Wilson joined Legal & General Group in 2009 as Chief Financial Officer and was appointed Chief Executive in 2012.
Since Sir Nigel joined Legal & General, the Group has delivered a consistently strong financial performance with a total shareholder return of over 600% driven by significant growth in dividends, earnings per share and ROE. During his time as Chief Executive, Sir Nigel has executed numerous strategic initiatives to grow and re-focus the business, consistently exceeding financial and operational targets while also ensuring Legal & General has delivered Inclusive Capitalism with positive outcomes for shareholders, customers and the broader economy.
The Board will now commence a rigorous process to appoint a successor, considering both internal and external candidates. Sir Nigel has agreed to continue as Chief Executive until the new Chief Executive starts and he will support a smooth transition following their appointment. It is envisaged that this process will take around a year. In the meantime, Sir Nigel will continue to focus on delivering the current strategy of the Group, supported by the executive team.
Sir John Kingman, Group Chair: “The Board would like to take this opportunity to pay tribute to the outstanding contribution Nigel has made to Legal & General Group for almost fourteen years. He is a world-class leader who has worked with great passion and energy, and we have been very fortunate to have had his vision, drive and commitment.
Nigel has successfully navigated significant geopolitical changes as well as challenges in the regulatory and market environments of each of our core businesses and has steered the Group into a position of strength from which it can continue developing on behalf of its shareholders, customers and people.
Under his stewardship, the Group has consistently delivered profitable, sustainable and inclusive growth. Nigel has been a tireless champion for investment-led growth and responsible investment.
Nigel’s decision to announce his planned retirement from Legal & General now allows for an orderly process to appoint a new Chief Executive who can continue delivering on the Group’s immense potential.”
Sir Nigel Wilson, Group Chief Executive: “Legal & General has been a big part of my life and my decision to retire from the Group has been taken with mixed emotions. It has been an honour and privilege to serve as Chief Executive of Legal & General over the past decade and I am deeply proud of everything we have achieved. It has been a remarkable team effort by all my colleagues across the world. Without their unstinting efforts we would not have achieved the tremendous success we have. I have also benefitted hugely from the support of an outstanding Board.
I firmly believe we have laid strong foundations to support the next phase of growth for the Group, with one of the most talented, collaborative and collegiate management teams in any industry to deliver this.
I remain fully committed to delivering the current strategy of the Group, in partnership with the executive team, and supporting the transition to a new Chief Executive.”
Legal & General partners with Cancer Research UK
During the Covid-19 pandemic, cancer services have suffered. There were over 380,000 fewer urgent suspected cancer referrals in the UK1.between March 2020 and March 2021, compared to pre-pandemic, and nearly 45,000 fewer patients starting their cancer treatment in the UK in April 2020-March 2021 compared with pre-pandemic2.
Legal & General has a responsibility to help people throughout society, and partnering with charities like Cancer Research UK is one way we are supporting our customers and communities.
With the right education and support, we can catch cancer early and save lives. During the pandemic, we backed the NHS’ call for people experiencing symptoms of critical illness such as cancer to seek medical advice.
The partnership
Cancer Research UK is the leading UK charitable provider of digital cancer information. They have a comprehensive About Cancer website, supported by a Cancer Chat forum and Nurse Helpline. Legal & General has helped to fund the Nurse Helpline, where people affected by cancer, or those who are supporting someone close to them with cancer, can access information directly from a team of specialist nurses.
Feedback
These three services have helped millions of people already, with more than 18,000 new Cancer Chat members and over 29m users for About Cancer in 2020/21. Every year the Nurse Helpline responds to between 14,000 and 16,000 queries.
Feedback from a recent survey of the Nurse Helpline has shown:
97% of respondents are satisfied with their experience of the Nurse Helpline
98% of respondents found their call with the Helpline nurse useful
86% of respondents said their understanding of their situation had improved as a result of the call
1 CRUK estimate based on England and Wales trends from Cancer Waiting Times data. 2 Pre-pandemic refers to the same months in 2019, and figures have been adjusted for working days where appropriate.3 Legal & General’s statistics show that 41% fewer policyholders claimed on their critical illness insurance in April 2020 than the typical figure of around 300 claims a month.
Jack Roper, Group Head of Sustainability, Legal & General: “At Legal & General, we want to improve people’s lives, and helping Cancer Research UK to carry out their vital work is a great way to do that. It’s a privilege to work with them to help people affected by cancer and by the impact that Covid-19 has had on cancer services. We saw a dramatic fall in policyholders claiming on critical illness insurance at the beginning of the pandemic3, and we want to ensure anyone who needs medical help, and our support, is getting what they need.”
Martin Ledwick, Head Information Nurse at Cancer Research UK: “The nurses on Cancer Research UK’s helpline listen to thousands of people every year and give much needed information and support. Cancer Research UK couldn’t provide this much needed service without donations from individuals and companies like Legal & General and we are incredibly grateful for the continued support that we receive.”
Legal & General agrees c£370m buy-in with Heathrow’s BAA Pension Scheme
Legal & General Assurance Society Limited (“Legal & General”) announced that it has agreed a c£370 million buy-in with London Heathrow’s BAA Pension Scheme (“the Scheme”), securing the benefits of more than 1,400 retirees.
The Sponsoring company, Heathrow Airport Limited, runs London Heathrow Airport, one of the world’s busiest airports and a vital global transport hub.
Today’s buy-in represents the Scheme’s second Pension Risk Transfer (“PRT) transaction with Legal & General, following a £325 million buy-in in 2018 covering 1,300 retirees. Legal & General has now secured the benefits of nearly 3,000 members of the Scheme, demonstrating its commitment to a long-term relationship with the Trustee.
An umbrella contract has been established as part of the transaction, enabling the Trustee to potentially insure further liabilities quickly and easily as it continues its de-risking plans.
The Scheme is an existing client of Legal & General, having established a partnership with Legal & General’s Investment Management business (“LGIM”) to manage the Scheme’s assets in 2020.
The Trustee was advised on the transaction by LCP and legal advice was provided to the Trustee by CMS. MacFarlanes provided legal advice to Legal & General.
Adrian Somerfield, Director, Legal & General Retirement Institutional “Having built trust and a strong relationship with the Trustee over a number of years, we are delighted to have secured the retirement benefits for another 1,400 members. Our umbrella contract ensures we are able to move forward with the Trustee in a swift and effective manner as they continue their de-risking plans.”
Phil Wilbraham, Chair of Trustee “London Heathrow’s BAA Pension Scheme today announces that it has agreed a c£370 million buy-in with Legal & General Assurance Society Limited. The Trustee is delighted that this deal continues to derisk the overall pension scheme and the deal is testament to great teamwork between L&G and the Trustees excellent advisory team.”
Ken Hardman, Partner, LCP “We are delighted to have advised the trustees on the purchase of the Scheme’s second buy-in transaction. The favourable outcome was achieved through collaborative working between advisers, trustees, corporate sponsor and L&G, allowing us to optimise the drivers of pricing and execute efficiently.”
Legal & General & Mitsubishi sell Central Saint Giles to Google for $1 billion
Legal & General Investment Management Real Assets (LGIMRA) has announced, on behalf of Central Saint Giles Limited Partnership, its 50:50 joint venture with Mitsubishi Estate London Limited, that it has sold the iconic Central Saint Giles office development in London’s West End to Google for $1 billion.
The sale represents a strong exit from the joint venture vehicle for both investors after developing and owning the asset for more than 10 years.
Central Saint Giles is one of London’s more colourful mixed-use developments and one of the largest in the West End. The development, architect Renzo Piano’s first UK project, is formed of three buildings surrounding a central, public piazza.
The architecturally striking building comprises 408,000 sq ft of office space with 25,000 sq ft of restaurants and cafes at ground floor level. The building is highly sustainable, benefiting from an in-use BREEAM Excellent rating. At the western end of the site, two residential buildings contain a mix of 109 private, affordable and social apartments. The long leasehold interests of the residential buildings continue to be owned and managed by the existing owners.
The buildings have become a landmark in central London with their elevations broken down into 21 different facades in orange, green, red, yellow and grey glazed ceramic tiles. They occupy a pivotal position linking Bloomsbury, Covent Garden, Soho and Fitzrovia and were a focal point for the regeneration of the St Giles area.
Situated adjacent to Tottenham Court Road underground station where the Central line and Northern line intersect, the location offers easy access to the West End, Midtown and City business districts, and also further afield to Berkshire, Essex and South East London once the Elizabeth Line opens.
The investors in the joint venture are Mitsubishi Estate London and the L&G Managed and ReAssure funds. The sale is in line with LGIM’s business plan for the asset and concludes a highly successful partnership.
Bill Hughes, Head of Real Assets for LGIM: “The sale is a strong sign of continued demand for the highest quality central London office space. It represents an excellent outcome for our investors, derived from consistently high-quality asset management by our team over the past decade, to deliver on the business plan for Central Saint Giles. We are pleased to have concluded the deal off-market with Google, which knows the asset well and saw the potential to invest longer-term in an exceptional building.”
Yuichiro Shioda, Managing Director and CEO of Mitsubishi Estate London: “Mitsubishi Estate London has been involved with Central Saint Giles since the development phase, and this sale is the culmination of one of our flagship projects. Its acquisition by Google, a company renowned for occupying only the very best buildings, is a fitting legacy for one of the West End’s most successful and recognisable developments. We remain committed to London offices, through new opportunities as well as existing schemes.”
Legal & General Retirement Institutional Division announces new CEO
Legal & General Assurance Society Limited (“Legal & General”) announced the appointment of Andrew Kail as the new CEO of Legal & General Retirement Institutional (“LGRI”), the Pension Risk Transfer (“PRT”) division of Legal & General. This was effective from 1 January 2022.
He succeeds Laura Mason, who has moved to become CEO of Legal & General Capital. Laura has successfully headed LGRI since January 2018, with the business recently announcing it had contributed 41% of Group profits in the first six months of 2021.
Andrew Kail joined Legal & General Retail Retirement (“LGRR”) in 2021, having previously spent 30 years at PricewaterhouseCoopers (“PwC”) in a wide variety of roles. As Head of Financial Services he led PwC’s 6,000 strong team in asset & wealth management, banking, insurance, and real estate, having previously worked in its audit, strategy, regulation and technology divisions.
Andrew Kail, CEO, Legal & General Retirement Institutional: “It is a great privilege to lead such a successful global team in the Pension Risk Transfer (PRT) markets. There are still significant opportunities for Legal & General to help pension schemes de-risk, in the UK and internationally, through collaboration, innovation and drawing on the strength of the Legal & General Group. We provide additional security and world class customer service to scheme members while investing their savings in their communities and their environment, levelling up local economies.”
Inspired Villages appoints Legal & General’s Stephen Halliwell as CFO
Inspired Villages, an operator and developer of later living communities across the UK, announces that Stephen Halliwell has been appointed as its new Chief Financial Officer from January 2022.
Stephen is transferring to Inspired Villages from his current role of CFO at Legal & General Capital (LGC) which he has held for the last five years. Previously he held leadership roles at FTSE100 and FTSE250 companies. The seniority of the appointment reflects the growth and evolution of the business, as well as its aspirations to become the best retirement operator in the world.
The appointment follows the announcement that Legal & General has entered into a 15-year joint venture partnership with NatWest Group Pension Fund, the defined benefit pension scheme of NatWest Group, to invest £500m of equity to build later living communities which will be developed and operated by Inspired Villages. Stephen will support Inspired Villages in its next stage of significant growth, with a commitment to back a portfolio of 34 sites – equating to around 5,100 homes, 8,000 residents and an estimated Gross Development Value (GDV) of c.£4bn – as part of the new landmark joint venture.
Inspired Villages currently has a portfolio of six operational villages, four schemes under construction (including two that will become the UK’s first net zero carbon regulated energy retirement villages) and a robust pipeline of 12 legally contracted sites across the UK plus 10 others in legals/due diligence. This puts the company currently well on track to deliver its target of 5,100 homes.
In his role of CFO at LGC for the last five years, Stephen has played an active part in Inspired Villages’ growth story since its inception, holding directorships in its property companies and, latterly, its operating company. During this time, Stephen helped to transform the size of LGC’s direct investment portfolio from around £1bn to £3.5bn and built a strong, scalable platform which is creating attractive pipelines of investable assets. Prior to this, Stephen was Chief Financial Officer at 3i Infrastructure plc, the FTSE250 group focused on UK and European infrastructure investments, having been at 3i since 1998 and playing an integral part in the firm’s growth, including its IPO in 2007.
Stephen will be closely supported in his role by Tatiana Smith, Inspired Villages’ Group Financial Controller, who joined the business in March last year and has proven to be an exceptionally strong asset to it. Together, they will continue to build capabilities to deliver a first-class financial service to residents and scale the business as it grows its footprint and societal impact.
Inspired Villages offers a wide range of housing options, starting from £230,000 and ranging from 1-bedroom rental apartments to 2/3-bedroom houses for sale, all set within vibrant communities carefully designed for the needs of older people and focused on promoting an active lifestyle. Offering an aspirational lifestyle choice, it aims to improve the holistic wellbeing for the over 65s and support them in living healthier, independent lives for longer so that they can remain in their own home as they age, while being able to access necessary care and wellbeing services.
As part of the joint venture, NatWest Pension Group will acquire Inspired Villages’ fully occupied villages outright, placing them into an ‘Operational Fund’. This has the potential over time to create an investment platform that allows other pension funds to access and invest in the sector via mature assets, allowing UK pension money to be deployed at scale in order to match long term liabilities and back great outcomes for later living and UK society.
With an ageing society, we will soon have more people over 65 than under 18 but do not have the infrastructure, health-spend or social care to support this long-term demographic shift, exacerbated by a shortage of suitable later living options. There are now more than 12m over 65s in the UK with this figure expected to increase by 41% to nearly 18m by 2040; however, there are currently only 78,000 later living homes in this country and only around 8,000 new units are delivered each year.
Jamie Bunce, CEO of Inspired Villages: “I am thrilled to welcome Stephen to the Inspired Villages team. I am confident he offers the technical skills and experience necessary to support our growth plans as well as help us to invest in the development of our talented people and business processes. Amongst other things he has previously been FCA-regulated, with approvals to manage third party capital in various capacities. He also brings with him a strong proven track record and passion for developing people and building out leading finance platforms – experience that will stand us in good stead as we continue to evolve our business offer. As an incoming member of our leadership team, Stephen shares our values towards equality, diversity, inclusion and belonging and is committed to supporting the journey that we are on to build a world class culture and a truly diverse talent base. This is incredibly important to us.
“Stephen Halliwell: “I am delighted to be joining Inspired Village at this exciting point in its growth. Having recently established a landmark joint venture with NatWest Group Pension Fund which aims to deliver around £4bn of GDV, I am excited to be playing a leading role in helping the business meet its significant growth ambitions whilst it also looks to deliver the UK’s first two net zero carbon later living communities and meet the fast-growing need for specialist later living accommodation.”
Legal & General agrees £760m buy-in with Sanofi Pension Scheme
Legal & General Assurance Society Limited (“Legal & General”) announced that it has agreed a £760 million buy-in with the Sanofi Pension Scheme (“the Scheme”), securing the benefits of c2,900 retirees.
Today’s transaction represents the Scheme’s first Pension Risk Transfer (PRT) transaction with Legal & General, after being a long-term asset management client.
The Trustee was advised on the transaction by Aon and legal advice was provided by CMS. Legal & General received legal advice from Macfarlanes.
“It is always particularly rewarding to work with long-term clients like Sanofi and to enable them to further de-risk their Scheme. We take pride in providing certainty to trustees and members, and this agreement is another great example of our ability to support schemes at all stages of this journey.”
Gavin Smith, Head of Pricing & Execution, Legal & General Retirement Institutional
Legal & General completes £8m buy-in with Atkinson Northern Limited
Legal & General Assurance Society Limited (“Legal & General”) announced that it has completed an £8 million buy-in with the Atkinson Northern Limited Retirement Benefits Scheme (“the Scheme”), covering the benefits of 45 pension scheme members.
As part of the transaction, Legal & General will also take on the responsibility for payroll of the Scheme’s members by October 2021.F
The transaction involved Legal & General locking in its price entirely to scheme assets in exclusivity. This provides certainty for the Trustees on the premium at the end of the exclusivity period and mitigates the risk of pricing diverging from the value of assets.
Legal & General is a whole of market provider, supporting schemes as small as its £2.5 million transaction with the BHS Senior Management Scheme announced in 2020, through to its £4.6 billion transaction with Rolls-Royce UK Pension Fund, announced in 2019.
The Trustees were advised on the transaction by XPS and legal advice was provided to the Trustees by Neon Legal.
“We are delighted to have helped the Scheme on its de-risking journey and provide security to its members. This transaction demonstrates our ability to provide peace of mind to pension schemes of all sizes and we look forward to working closely with the Trustees going forward.”
Julian Hobday, Origination & Execution Director, Legal & General Retirement Institutional
Legal & General appoints Tanu Chita to lead strategy to deploy DC Pension money into VC growth companies
Legal & General Capital (LGC) announces the appointment of Tanu Chita as Investment Director within its SME Finance arm. Tanu will be responsible for leading Legal & General’s strategy to invest into Venture Capital (VC) growth companies via vehicles including long-term Defined Contribution (DC) pension schemes.
Within its SME Finance platform, LGC now has relationships with 11 venture capital managers comprising £128 million of committed capital and has added 5 new managers to its portfolio over the last 12 months. LGC has continued to invest in the real economy via start-up businesses in the UK and Europe. During a challenging time for smaller scale companies and newly formed businesses, LGC has remained committed to providing funding for over 300 companies, delivering enhanced returns whilst boosting job creation. Its existing portfolio includes major European VC funds such as Balderton Capital, LocalGlobe, Dawn Capital and Sofinnova Partners. Demonstrating the value of our patient investment approach, the portfolio has now delivered a 21% IRR after fees, since inception.
Working closely with LGIM, LGC is making strong progress in developing investment solutions which could increase access to VC companies for investors including DC pension schemes In his new role, Tanu will lead the next evolution of this strategy as L&G looks to share the benefits of the Innovation Economy with retirement savers in the UK and open up a significant growth market to a wider pool of investors.
Tanu joins LGC from his role as a Principal at Pantheon Ventures, where he was a senior member of Pantheon’s private equity and venture capital investment team, and most recently responsible for the investment strategy of Pantheon International PLC, a leading FTSE 250 investment trust focused on private equity investments. With over 17 years’ experience in the sector, he has spent time working in both San Francisco and London. Previous roles include working within the Corporate Finance team at Deutsche Bank.
“Tanu’s appointment reflects an important step forward in progressing our strategy to provide access to the VC sector for investors including DC pension savers. This could unlock significant growth opportunities for a wider pool of investors, and open up a sector currently dominated by international pension funds. Investing a small proportion of long-term DC pension schemes into growth companies would not only democratise access to higher returns for savers, but the sheer scale of the DC pension market means that even small allocations could be game-changing for UK VC and scale-up companies.”
Jasan Fitzpatrick, Managing Director of Principal Investing