TIDMLGEN
RNS Number : 5241Y
Legal & General Group Plc
06 December 2017
Legal & General Group plc
6 December 2017
This announcement contains inside information.
Legal & General to sell its closed Mature Savings business
to Swiss Re
Legal & General Group Plc ("Legal & General") announces
that it has today reached agreement to sell its Mature Savings
business to the ReAssure division of Swiss Re Ltd ("Swiss Re") for
GBP650m.
Swiss Re's ReAssure division is a life and pensions business
designed to manage closed and non-core in-force portfolios,
focusing on delivering excellent service and outcomes to
policyholders. By transferring the Mature Savings business to Swiss
Re we are confident that this will deliver positive results for the
existing Legal & General customers who will benefit from this
focus and economies of scale in the specialisms required.
The business being sold comprises principally retail customers
who hold traditional insurance based pensions, savings and
investment products. Its assets at H1 2017 of GBP33bn include both
unit-linked business and Legal & General's GBP21.4bn
with-profits fund. With around 1 million customers, it has largely
been closed to new business.
Legal & General's continued growth in these product areas
will be through Legal & General Investment Management's
("LGIM's") workplace pension business which now has approximately
2.5 million customers, through its intermediated retail savings
business and through its personal investing unit which offers ISAs
and Unit Trusts directly to customers.
Following this disposal Legal & General will accelerate its
growth agenda in the following areas:
-- Investing & Annuities through Legal & General Retirement and Legal & General Capital;
-- Investment Management through LGIM; and
-- Insurance through Legal & General Insurance and General Insurance
The GBP650m proceeds, to be satisfied in cash, will be received
by Legal & General at the start of January 2018 and all profits
and transfers for the 2017 financial year will be retained by Legal
& General. Swiss Re will assume the economic exposure of the
business from 1 January 2018 via a reinsurance structure. It is
expected that the formal transfer of the business will be completed
in mid-2019, subject to satisfaction of normal conditions for a
transaction of this type including court sanction. The transfer
will be effected by way of a Part VII transfer under the Financial
Services Markets Act 2000. Swiss Re has agreed an investment
management agreement with LGIM to continue to manage the funds
transferred.
The transaction is expected to generate a small increase in the
group Solvency II coverage ratio at outset, increasing to
approximately 2% on completion of the Part VII transfer. The sale
of the business is expected to generate a one-off IFRS gain on
completion of the Part VII transfer, anticipated in 2019, of
c.GBP450m. The adjusted Solvency II Own Funds for this business is
GBP659m(1) . During 2016 the Mature Savings business generated
GBP105m operating profit. The net proceeds of the transaction will
be reinvested in the attractive growth opportunities of Legal &
General's core businesses.
Nigel Wilson, Chief Executive Officer of Legal & General
Group, commented:
"This was a difficult decision as with-profits savings has been
a part of Legal & General's UK business for over 50 years.
However we have in Swiss Re a great partner, who will be an
excellent steward of the business and its many customers and
policyholders. Selling Mature Savings is the right decision for us
- another important, measured, step in growing our company and
updating our products. It will drive further earnings growth by
allowing us to focus on our successful market-leading businesses
and to accelerate the scaling up of our growth businesses.
Under-saving, including for retirement, is an economic and
social challenge for the UK, and Legal & General remains
committed to providing attractive solutions to help our customers
achieve their financial goals based around LGIM's modern workplace
savings, personal investment and intermediated product range."
1. Shareholder interest in Solvency II Own Funds as of H1 2017
adjusted for amounts to be retained by L&G in respect of the
2017 financial year.
ends
For further information, please contact:
Investors:
Laura Doyle Head of Investor Relations 020 3124 2088
Sujee Rajah Investor Relations Manager 020 3124 2047
Media:
John Godfrey Corporate Affairs Director 020 3124 2090
Graeme Wilson Tulchan Communications 020 7353 4200
Notes to editors:
Legal & General Group Plc:
1. 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 GBP15.7bn (as
at 5 December 2017) and is responsible for investing GBP951bn
worldwide (as at 30 June 2017) on behalf of investors,
policyholders and shareholders.
2. Legal & General has 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.
3. For full year 2016, Legal & General's adjusted operating
profit (IFRS basis) was GBP1,628m and adjusted earnings per share
were 22.20p for the period, an increase of 11% and 19%
respectively. Net release from operations (net cash) was up 12% to
GBP1,411m. Full year dividend was up 7% to 14.35p, with adjusted
return on equity at 19.6%.
4. In H1 2017, Legal & General's operating profit was up 27%
to GBP988m with earnings per share up 41% to 15.94p. Total release
from operations was up 13% to GBP824m. An interim dividend of 4.30p
was announced, return on equity rose to 26.7% and the Solvency II
coverage ratio was 186%.
5. Legal & General is listed on the London Stock Exchange
with the ticker symbol LGEN.LN and has an American Depositary
Receipt ticker symbol OTC:LGGNY. Further information on our ADR
program can be found here:
http://www.legalandgeneralgroup.com/investors/adr.html
For more information on Legal & General, please see
http://www.legalandgeneralgroup.com/
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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