TIDMLGEN
RNS Number : 9396Y
Legal & General Group Plc
23 May 2016
LEGAL & GENERAL ACQUIRES GBP3BN UK ANNUITY PORTFOLIO FROM
AEGON
Legal & General today announced it has acquired a GBP3bn
annuity portfolio from Aegon.
The transaction has been structured initially as a reinsurance
contract and covers approximately 27,000 of in-payment
policyholders who will remain customers of Aegon during this
period. They will continue to be serviced by Aegon until the
effective date of a Part VII Transfer which is subject to
regulatory and court approval.
Transitional benefits will be available to offset the Solvency
II risk margin. Legal & General has chosen not to reinsure the
longevity risk in relation to this transaction. On a proforma
basis, the 'Day 1' impact of this transaction decreases the Group's
Solvency II surplus by c.GBP50m and the Solvency II coverage ratio
by c.3 percentage points.
Kerrigan Procter, Managing Director of Legal & General
Retirement, said: "We are delighted Aegon has chosen Legal &
General to secure its policyholders' annuities. Back book annuity
risk transfer deals can be executed efficiently under our
post-Solvency II model. Our pricing of this transaction is
consistent with achieving our cost of capital hurdle rate. In the
UK there is an estimated GBP100bn of Individual Annuities in back
books and we expect further consolidation of these back books.
"As well as this deal, other significant transactions in recent
months include a further buy-in with ICI in excess of GBP300m, the
UK's largest medically underwritten contract for Kingfisher for
GBP230m and our first two US PRT deals for $450m and $65m. "
Alex Wynaendts, CEO of Aegon, added:
"I am very pleased that we are able to announce this
transaction. Achieving the divestment of our UK annuity portfolio
is an important step in the strategic repositioning of our business
in the United Kingdom. The divestment enables us to fully focus on
growing our platform business. At the same time, I am pleased that
we have found in Legal & General a good home for our annuity
customers."
Legal & General Retirement has written approximately GBP550m
of total annuities year to date, in addition to the GBP3bn Aegon
transaction, with a further GBP150m in lifetime mortgage lending.
Globally as at 31 March 2016, Legal & General manages an
annuity book of GBP45.5bn, and provides annuity benefits to over a
million customers. In full year 2015 Legal & General Retirement
(LGR) completed GBP2.4bn of bulk annuity deals. LGR's operating
profit grew 49% in 2015 to GBP639m and generated GBP417m net cash,
up 22% on 2014.
As at the end of December 2015, Legal & General Retirement
had c.GBP10bn of undiscounted VIF, on an EEV basis, which over the
next five years is expected to unwind c.GBP0.4bn each year.
We are going to be holding a conference call to talk through the
transaction, the continued attractiveness of the bulk market
opportunity in the UK and US and why Legal & General is well
placed to benefit from those opportunities.
- ENDS -
For further information, please contact:
Investors:
Laura Doyle Head of Investor Relations 020 3124 2088
Media:
Richard King Head of Group Corporate Communications 020 3124
2095
Notes:
A conference call hosted by Mark Gregory, Group Chief Financial
Officer, and Kerrigan Procter, Managing Director, Legal &
General Retirement, for analysts and fund managers will take place
at 1630 UK time today. A presentation will be available at 1630 UK
time on our website: www.legalandgeneralgroup.com/investors. A
replay of the call will be available on this website later.
PARTICIPANT DIAL-IN NUMBERS
LOCATION YOU ARE DIALLING IN FROM NUMBER YOU SHOULD DIAL
UNITED KINGDOM 0800 368 0649
UNITED STATES (TOLL FREE) 1 855 287 9927
ALL OTHER LOCATIONS +44 20 3059 8125
Legal & General Group Plc
Established in 1836, Legal & General is a leading provider
of insurance, savings and investment management products in the UK.
The Group has a market capitalisation of GBP14.0bn (as at 31 March
2016) and is responsible for investing GBP746bn worldwide (as at 31
December 2015) on behalf of investors, policyholders and
shareholders. We have over seven million customers in the UK for
life assurance, pensions, investments and general insurance plans
and over one million customers in the US who rely on us for life
assurance. In 2015, Legal & General's operating profit (on the
IFRS basis) was GBP1,455m and adjusted earnings per share were
18.58p for the period, a year on year increase of 14% and 11%
respectively.
For more information on Legal & General, please see
http://www.legalandgeneralgroup.com/
Legal & General Retirement
Legal & General Retirement has participated in the insurance
solution pension de-risking market for nearly 30 years and was
voted Risk Reduction Provider of the Year at the 2016, 2014 and
2013 UK Pensions Awards and Risk Management Provider of the Year at
the Pensions Age Awards 2014. Legal & General was also voted
Insurer of the Year at the 2014 Insurance Risk Awards, Winner of
the Engaged Investor Trustee Awards in 2015, and Derisking Provider
of the year at the Pensions Expert's Pension and Investment
Provider Awards 2015. Legal & General provides annuities to
pensioners and has completed a number of landmark transactions.
These include the $900m deal with Philips in the US in partnership
with The Prudential Insurance Company of America in 2015, the
GBP3bn bulk annuity arrangement with the ICI Pension Fund, the
largest bulk annuity policy arranged by a pension scheme in the UK
to date, secured in March 2014, the UK's largest medically
underwritten deal for GBP230m with Kingfisher in December 2015 and
the GBP3.2bn longevity insurance transaction with the BAE Systems
2000 Pension Plan in February 2013. Legal & General manages
GBP43.4bn of annuity assets as at 31 December 2015.
Legal & General offers a range of de-risking solutions,
which includes buyout, buy-in, longevity insurance and
liability-driven investment (LDI), to pension schemes of all sizes.
Legal & General is also able to tailor a combination of LDI and
longevity insurance to provide "DIY buy-in" solutions. Legal &
General has expertise in investment management, all aspects of
defined benefit provision as well as an in-depth understanding of
mortality trends and longevity risk. The excellent services we are
able to provide also include payroll, administration and
communications services.
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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