LEGAL & GENERAL WINS LARGEST EVER UK BULK ANNUITY CONTRACT:
£3BN TRANSACTION FOR ICI PENSION FUND
Legal & General Group Plc ("Legal & General") has today announced a bulk annuity arrangement with the ICI Pension Fund ("the Fund"), covering £3.0 billion of the Fund's liabilities. This is the largest ever bulk annuity policy arranged by a pension scheme in the UK.
Legal & General has identified retirement solutions as one of its five drivers of growth, and the Bulk Annuity market forms a significant part of this growth. The UK has around £1.8 trillion1 of defined benefit pension liabilities with around £600bn2 of liabilities relating to pensions in payment.
Legal & General is well placed to benefit from the de-risking of defined benefit pension funds through Liability Driven Investment (LDI), longevity insurance, buy-ins and buy-outs. LGIM has £450bn3 of assets under management and over 2,800 institutional and pension fund clients. It has over £70bn3 of assets under management in the LDI solutions segment, which achieved double-digit growth in 2013. As a leader in LDI with an increasingly international presence, it is well-placed to support clients in transition towards LDI and then on to the buyout stage.
The £3.0bn premium from this transaction will increase our stock of annuity assets which stood at £34.4bn at 31 December 2013, of which £21.1bn was derived from bulk purchase annuity transactions (£20.7bn UK; £0.4bn international). In 2013, Legal & General Retirement wrote £4.1bn of annuity premiums, £2.8bn of which were from bulk annuities, and in addition executed £5bn of longevity insurance.
Legal & General at its FY 2013 results presentation stated that it expected to exceed the £2.1bn of annuity net flows4 achieved in 2013. Today's announcement reinforces this expectation and we also reiterate our operational cash guidance for Legal & General Retirement for 2014 of £290m (2013: £260m).
Kerrigan Procter, Managing Director, Legal & General Retirement said:
"We expect to see continued growth in the bulk annuity market both in the UK and overseas. Our leadership in investment management and longevity, and our strength in both the accumulation and decumulation phases of pension savings mean we are uniquely positioned to capitalise on rising demand for liability driven investing, longevity insurance, buy-in and buy out."
1. The Purple Book: PPF / The Pensions Regulator - November 2013 on a full buy-out basis.
2. Legal & General estimate based on The Purple Book: PPF / The Pensions Regulator - November 2013
3. As at 31 December 2013
4. Premiums received less annuity payments
-ENDS-
For further information, please contact:
Investor Relations |
Bernie Hickman Ian Baker |
+44 (0)20 3124 2043 +44 (0)20 3124 2047 |
Media Relations |
John Godfrey Richard King |
+44 (0)20 3124 2090 +44 (0)20 3124 2095 |
Forward looking statements
This announcement may contain certain forward-looking statements relating to Legal & General, its plans and its current goals and expectations relating to future financial condition, performance and results. By their nature, forward-looking statements involve uncertainty because they relate to future events and circumstances which are beyond Legal & General's control, including, among others, UK domestic and global economic and business conditions, market related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory and Governmental authorities, the impact of competition, the timing impact of these events and other uncertainties of future acquisition or combinations within relevant industries. As a result, Legal & General's actual future condition, performance and results may differ materially from the plans, goals and expectations set out in these forward-looking statements and persons reading this announcement should not place reliance on forward-looking statements. These forward-looking statements are made only as at the date on which such statements are made and Legal & General Group Plc does not undertake to update forward-looking statements contained in this announcement or any other forward-looking statement it may make.
