Legal & General reports its financial results within three main business segments: Life and Pensions, Investment Management and General Insurance. The Life and Pensions segment comprises the Protection and Annuities, Wealth Management and With-Profits businesses in the UK and the international businesses.
Overview of Results
Legal & General’s 2006 results demonstrate the continued strength of our core business and also reflect the first benefits of our wide-ranging capital review, as outlined in a presentation to analysts on Capital and Cash Flow in November 2006 and available on our website: www.legalandgeneralgroup.com.
Our worldwide operating profit on an EEV basis grew by 13% to £1,233m (2005: £1,092m). Contribution from new life and pensions business increased by 26% to £418m (2005: £331m) and total experience and operating assumption changes were positive at £82m. UK life and pensions Operating profit grew by 9% to £874m (2005: £801m), reflecting increased new business contribution. Operating profit from our international business grew by 56% to £156m.
On an IFRS basis, worldwide operating profit increased by 16% to £752m (2005: £647m), owing to higher contributions from both the UK non profit and With-Profits businesses.
With a record £21bn in new institutional funds under management in 2006 and a highly scalable platform, our investment management business grew operating profits by 29% to £133m (2005: £103m). Profit after tax on an EEV basis increased by 18% to £1,446m and by 59% to £1,631m on an IFRS basis.
| Corporate Restructing | Changes to FSA reporting and capital rules | Annuity investment policy |
|
|---|---|---|---|
| IFRS | |||
| Increase in SRC | £502m1 | £496m | £422m |
| Profit after tax | £171m | £496m | £422m |
| EEV | |||
| Operating profit | – | £97m | £18m |
| Profit before tax | (£216m) | £97m | (£9m) |
| Profit after tax | £171m | £68m | (£6m) |
| Capital2 | |||
| IGD surplus capital | (£0.5bn) | – | – |
| Society surplus capital | (£0.5bn) | £0.1bn | £0.4bn |
- Note: more detail of the impacts is set out in Note 2 of the Financial Statements and Note 14 of the Supplementary Financial Statements.
- 1.
- There was an offsetting negative in LGP.
- 2.
- Management estimates based on draft regulatory returns.
| Year ended 31 December | 2006 £m |
2005 £m |
|---|---|---|
| UK life and pensions | ||
| – Distribution relating to non profit and shareholder net worth | 388 | 312 |
| – Subordinated debt interest | 34 | 37 |
| – With-profits business | 95 | 66 |
| 517 | 415 | |
| International life and pensions | 75 | 74 |
| Investment management | 133 | 103 |
| General insurance | 9 | 14 |
| Other operating income | 18 | 41 |
| Operating Profit | 752 | 647 |
- 1.
- Operating profit before tax.
Significant Events
During 2006, the following events had a significant effect on the Group’s results, both on an EEV and IFRS basis. The financial impacts of these events are shown in Figure 2.
Corporate restructure – creation of pensions and annuity company
On 31 December 2006, the non profit pensions and annuity business of Legal & General Assurance Society Limited (Society) was ceded to a new wholly owned reinsurance subsidiary – Legal & General Pensions Limited (LGP). We believe this will provide greater capital transparency and flexibility, enhance Legal & General’s ability to compete in the annuity markets and ensure that both our non profit life and pensions businesses are taxed appropriately.
Legal & General Investment Management (LGIM) provides investment services to LGP on a market-related fee basis.
Implementation of changes to FSA reporting
In 2006, the FSA introduced a more realistic reserving framework for certain non profit businesses, as detailed in their Policy Statement 06/14.
Review of annuity investment policy
During 2006, Legal & General undertook a review of its asset liability matching strategy for annuity business. As a result of falling yields, property assets backing annuity liabilities were replaced with corporate bonds. We entered into inflation swaps to better mitigate negative inflation risk. As a result of these actions, a closer match between assets and liabilities was achieved, together with a lower capital requirement and a higher valuation discount rate, reflecting the higher yield. Additionally, the margin within the reserves to cover an interest rate mismatch was reviewed and reduced.
Regulatory and Political Environment
The majority of Legal & General’s business is conducted in the UK. Both our principal operating company, Legal & General Assurance Society Limited (Society), and our investment company, Legal & General Investment Management Limited (LGIM) are regulated by the Financial Services Authority (FSA). Amongst other things, FSA regulation covers sales of products and levels of risk and capital. Our business is also subject to fiscal risk in particular relating to tax treatment of savings products. Legal & General’s principal overseas businesses are also supervised by the relevant local financial regulators. Aspects of the financial services industry, financial products and sales are also subject to European Commission directives.
The main regulatory and fiscal impact on our business in 2006 was the simplification of UK pensions regulation – the “A-Day” reforms – which encouraged greater flexibility in pension saving. During the year, the Government announced it would extend the existing Individual Savings Account (ISA) regime and encourage switching from cash to equity ISAs, which we regard as positive. On a negative note, the Government and Her Majesty’s Revenue & Customs (HMRC) decision to withdraw favourable tax treatment for stand-alone Pension Term Assurance, months after introduction, closed down the product to new customers, resulting in uncertainty for customers and sunk costs for providers including Legal & General.
Fig 4. UK Total Market Growth 1
- 1.
- Based on new business APE rebased 2002 = 100
Outlook
The Government’s proposals to establish ‘Personal Account’ pensions following the Turner Report are now being progressed through legislation. In common with the industry, we support the principle of extending access to additional pension products to a broader market, but we have reservations about some detailed aspects of the proposals. In particular, we are concerned that Personal Accounts should remain targeted at the currently unprovided market for which we believe they are suitable, and that they do not undermine the existing levels of corporate and private pension provision. We are engaged in dialogue with Government, both directly and through our membership of the Association of British Insurers (ABI), on this subject.
During 2007, the FSA intends to review distribution of financial products, but has signalled that proposals for change should be led by the industry. Legal & General, as a company utilising a broad variety of channels to market, is actively involved in providing input to this process.
Business Environment
Market Overview
The UK financial services industry has grown strongly over the last decade. Value erosion in state pensions and the phasing out of employer defined benefit provision has led to a greater onus on individuals to plan for their long term financial future. Greater awareness of the need to increase retirement provision as a result of increasing longevity, as well as robust economic growth and a strong housing market, have helped the savings, protection and investment market deliver compound annual growth of over 9%pa over the last ten years.
ABI market statistics show that Legal & General has succeeded in growing total UK market share from 4% in 1995 to the current level of above 11% of life, pensions and investment business. We believe this success is a result of our product quality, distribution strength and strategic consistency.
The institutional fund management sector has similarly grown strongly, with an estimated £3 trillion funds now managed in the UK. LGIM manages institutional and retail funds. The majority of funds under management are derived from external institutions, in particular pension funds. Historically, LGIM has specialised in index-tracking and other passive investment strategies, but in line with market developments it is also offering specialist active strategies including liability-driven investment and Structured Solutions.
Outlook
We envisage economic and demographic fundamentals continuing to provide a favourable backdrop to growth in the UK financial services sector. We expect economic growth to continue at or around trend in 2007. We expect to benefit as rising prosperity, later and longer retirements combine to increase investment in long term financial savings and investment products. We expect housing market activity, which has relevance to our protection business, to remain robust though interest rate changes may lead to some caution. Given that it is estimated only 11% of the private sector workforce is now covered by employer defined-benefit pension schemes, we see further capacity for growth in personal long term saving and pension provision.
In the annuities sector, we have seen some increased competition in bulk annuities from new entrants. We expect this trend to continue, especially for larger transactions, but we note that the potentially very large Bulk Purchase Annuity (BPA) market for open schemes remains untapped. Increasing longevity, in our opinion, creates a competitive advantage for companies like ourselves with a strong administrative and risk management skillset.
As in 2006, we believe distribution and in particular platform technologies will continue to be an important factor in our markets, and we are strengthening our position in these areas. The overall strength of the long term savings market, and further efforts by companies to reduce pension fund deficits, have the capacity to drive further growth in the institutional fund management sector. While the market will remain competitive, the flexibility inherent in our product and distribution mix enables us to pursue growth profitably.
Protection
Protection and annuities represents 23% of Legal & General’s UK new business APE – we are market leaders in individual protection with over 20% market share. This is a business built on protecting individuals and their families. Around a quarter of our total protection business comes from corporate clients who seek protection for their employees.
Key strengths
Our scale in this market supports clear competitive advantages:
Underwriting expertise
Legal & General has the largest team of life underwriters in Europe. Their expertise is at the core of our success – providing confidence in our pricing decisions. In 2006 we invested further in our capability, by opening a dedicated underwriting office in Edinburgh – attracting a high-calibre team of specialists from the local market.
The power of numbers
Legal & General underwrote over 50,000 policies each month last year. We have a database of over 12m customer years of experience. Every time we write a policy, this volume of data means that we can do so quickly, efficiently and with confidence in the price that we set for each individual.
Administrative focus
Each time a customer or intermediary comes to Legal & General for protection, we believe it is essential to make sure their experience is a good one. This means making sure our systems are robust, that our processes are efficient. We have invested significantly in technology and believe we remain market leading.
Distribution
Our distribution reach in protection is another great strength. We work with a range of high quality bank, building society and other tied agency brands – delivering a strong and dependable flow of new business. This core segment of our distribution underpins our continued investment in product and administration systems and processes. We own the systems used by the largest controlled mortgage adviser network in the UK, which along with advising on over £20bn of mortgage business 2006, also sells Legal & General’s insurance products. IFAs too are an important distribution channel for us, as they are for many products in our industry. The wide variety of channels to market gives insight into customer buying trends, market pricing and the needs of our distribution partners.
Margin
Protection has historically been, and remains, one of our higher margin products, and so is a key driver of our return on embedded value and EEV operating profit. This reflects our scale and efficiency and the strength of our risk pricing and control mechanisms. Pricing remains competitive in the protection market, especially through the IFA segment. However the competitive advantages that we have built, along with our market leading systems, products and distribution support our confidence in our ability to continue to build this business, profitable.
Annuities – individual
When individuals reach retirement age, many choose to secure their income in retirement immediately, and most are required to do so by the age of 75. For many personal pension savers, this means using the proceeds of their accumulated savings to purchase an annuity from a life company. This annuity will promise a given level of income – flat rate or indexed – for the rest of the individual’s life. In addition, the benefits may include income for dependants, further into the future.
In 2006, individual annuity sales accounted for 4% of our UK new business APE. Our strategy in this highly price-driven market is centred on strict pricing discipline, requiring that our target rates of return are met. This firm stance on pricing led to a lower market share in 2006 than might otherwise have been the case, given a heightened level of competitor activity in the first half of the year. Prices in the market were inadequate to meet our return requirements, and so we were comfortable to see our sales reduce. Our competitive position improved strongly in the latter part of the year, and sales recovered strongly. This long term, profit driven stance means that Legal & General sells good volumes of business, at good prices, without short term volume-driven risks to shareholder returns.
This highly disciplined approach is reinforced by our understanding of risk – we have a huge database of individual lives, over 3 million annuitant years of experience, giving us confidence in our pricing decisions and underpinning our long term profitable position in this market.
Annuities – Bulk Purchase
In 2006 we wrote over £1bn of single premium equivalent Bulk Purchase Annuity (BPA) business. BPAs represented 6% of our UK new business APE in 2006. BPAs are policies that allow company pension schemes to insure some or all of the retirement income their members expect in large block transactions. These schemes can range from a few lives in a small company, to very large policies. In each case, it is important to recognise that we are insuring the financial security of individual workers and pensioners, who will depend on Legal & General for their retirement income.
Key strengths
We have a number of key competitive advantages in this market.
- Exceptional experience and expertise. Last year was the 20th anniversary of our BPA business. Our customers and their advisers can see that we remain firmly committed to this market, and can see the reliability of our administrative infrastructure, and our financial strength.
- Reputation. Working with pension trustees, and insuring the income of a large number of pensioners and employees requires the trust of our clients. Our customers are relying on us to fulfil their promises to their members, and we take that responsibility very seriously.
- Scale. As a long established participant in the annuities markets, Legal & General has a market share in Individual and Bulk Purchase Annuities of 15%.
| Year ended 31 December | 2006 £m |
2005 £m |
|---|---|---|
| UK operating profit: | ||
| Distribution relating to non profit and shareholder net worth | 388 | 312 |
| Subordinated debt interest | 34 | 37 |
| With-profits business | 95 | 66 |
| 517 | 415 | |
| USA | 58 | 52 |
| Netherlands | 7 | 18 |
| France | 10 | 4 |
| Operating profit | 592 | 489 |
Margin
Annuities are the highest margin business category for Legal & General on the EEV basis and are therefore a key driver of operating profit and return on embedded value. This reflects the extent of the risks that we are taking onto the balance sheet, and our assessment of the period of time over which those liabilities remain in force. The headline margin we report will depend on the mix of business between lower margin individual business and higher margin bulk annuity business. However, margins consistently reflect our determination to meet our target rates of return on capital.
Our ability to meet these rates of return is sensitive to a number of key factors:
- The competitive environment – we do not pursue irrational pricing to achieve volumes.
- Our investment expertise, including the ability to source attractive yields in the fixed interest market.
- Ongoing trends in longevity, and how this must be factored into our pricing.
Risk expertise
At their core, annuity and protection businesses are based on a statistical framework – the assessment of risk, setting a price for that risk, and continually analysing the developments in those risks.
The size of our database of annuitant lives and insured lives means that our underwriting of risk businesses is informed by statistically credible data. This means that we can aim to identify those segments of business where we can be more competitive than others, while remaining profitable. It also means that we can avoid taking on business that offers inadequate returns.
We have continued to invest in and build these businesses with the support of a very highly skilled team of specialists who understand the risks that we are underwriting, and how to price for them.
A further consequence of the risks inherent in annuities and protection is that significant capital must be dedicated to them. Our financial strength is clearly important in this respect. We believe the diversity of our risk businesses – group risk, individual protection, individual annuities and bulk annuities – allows us to allocate capital more efficiently, pursuing those categories of business where returns are most attractive. A less diversified risk business would, we believe, be significantly disadvantaged in this respect.
Fig 6. UK New Business Split APE for 2006
64% of our UK new business APE was generated through savings products in our Wealth Management division in 2006.
Our savings business encompasses a spectrum of products which allow customers to accumulate assets over a period of time on a cost effective basis. This ranges from more liquid investments such as unit trusts and ISAs, all the way through to very long term structured saving for retirement through pension products.
At the core of each of these products, however, is a series of unitised investment funds, allowing access to different investment styles and asset classes. The choice of product through which these are accessed then dictates the tax basis of the investment, the timescale over which the assets are likely to be held, and the eventual benefits that are withdrawn. Access to the best investment returns, at the most cost-effective price, with excellent administration and customer service are key to success in this business.
There are three major categories of investment business – pensions, investment bonds and retail investments.
Pensions
12% of our UK new business APE was represented by non profit pensions in 2006, representing an estimated market share of 6%. A pension contract allows a customer to invest for a very long time, perhaps as long as forty-five years, in order to accumulate sufficient assets to secure an income in retirement. Pensions attract some tax advantages, including limited deductibility of contributions, but require that assets remain invested until late in life. Contributions into pension contracts can either be regular or single premium.
Investment bonds
Bonds represented 15% of our UK new business APE in 2006, a market share of 9%. Bonds are normally single premium investment contracts, which combine asset accumulation with protection. There are tax benefits to qualifying investment bonds, such as tax-advantaged withdrawal of income, however, bonds must be held for a minimum period to qualify.
Retail investments
Retail investments accounted for 38% of UK new business APE in 2006, a market share of 4.3%. These are unitised investment contracts, like bonds and pensions, but are not insurance contracts. As a result they can be bought and then sold as soon as customers require their funds. A limited amount of money can currently be invested each year in a tax-advantaged ISA.
Distribution trends
We believe the distribution landscape for savings is changing. Recognising that the core of all savings products – unitised funds – is the same, the delineation between products is, we believe, less and less significant. At the same time customers and advisors are increasingly sophisticated, appreciating flexibility in investment as well as good service.
As a result, open architecture ‘platforms’ are a growing force in this market. They offer customers access to a wide variety of funds, not just those of the insurance company. They can also allocate these unit fund investments to a number of different product ‘wrappers’. As a result, customers will no longer need to consider different pools of savings in different companies’ bond, pension or retail investment contracts. Instead, they can consolidate all their long term savings, under one overall investment policy, with a number of different product ‘wrappers’, all in one place.
This is a powerful proposition for customers and their advisers, whether IFAs, or other distribution partners. Legal & General took an early and leading position through our investment in, and alliance with, Cofunds, a leading platform business with an established reputation with intermediaries. We have also built a platform using Cofunds architecture which is now available to our banking and building society partners – reinforcing our product offering, as well as increasing the market to which our savings business has access.
IFAs and other advisors can also access Legal & General’s savings products ‘off-platform’, and we continue to write significant volumes of business this way.
We also distribute retail investment products directly over the telephone and internet.
Margins
Savings contracts normally expose shareholders to relatively low investment risk, since customers’ benefits are normally linked directly to the performance of the underlying assets. As a result, the risk to shareholders’ funds in savings business is relatively lower than it is for risk businesses. This means that margins for pensions and investment bonds have generally been lower in the savings business, albeit achieving attractive returns.
For all savings businesses, a key driver of returns is persistency. In order to achieve our target margins, business needs to stay on our books for a certain amount of time. Persistency in pensions has been an industry-wide issue for many years, particularly where contributions have been made on a regular premium basis.
In pensions we have reported small negative margins in 2005 and 2006. This reflects the difficulty of achieving appropriate returns on capital in an industry where legislative price limits have been imposed in some areas. Pensions also account for around a half of all industry sales, and competition is always strong. This challenging environment has led Legal & General deliberately to focus on those segments of the pension market where profitability is better. In particular we have seen progress in 2006 on high-quality corporate pension schemes, transfer business and early signs of success with our SIPP, launched in April 2006. As we continue to build the business, focused on more profitable lines, we aim to improve margins to more acceptable levels.
Bond business, which does not have any charge limits imposed upon it, reports a positive margin, reflecting our scale in this market, and the attractive economies of large single premium arrangements. This is a product market which remains attractive to many industry participants. Our scale and efficiency, as well as the attractions of purchasing bonds on the Cofunds platform mean we expect to remain profitable while still building our business in a competitive market.
Key strengths
Different advisory channels can choose to put business with a large number of insurance or investment companies. In order to continue to succeed, we recognise a number of key issues:
• Administrative capability
In order to attract savers to place large amounts of money with Legal & General, we need to ensure that our processes are efficient.
• Customer service
Savings customers are likely to come into regular contact with Legal & General. Requesting statements, increasing their investment, fund changes or surrenders all require significant administration. We continue to refine our administrative infrastructure to improve our customers’ experience of saving with Legal & General.
• Access to excellent investment funds
Our investment management business, LGIM, offers customers access to a numberof very strong investment pools, including market leading index-tracking, active equity, fixed income and property funds. Through our platform model, customers can access over 800 competing funds, should they require a wider choice.
Capital discipline
We allocate significant capital to the savings business. However, the relatively low risk to shareholders from investment volatility makes this a less capital-intensive business than protection and annuities. Nevertheless for each individual contract, the early-year expenses can be significant, and can only be paid back if the business remains with Legal & General for sufficient time. It is critical, therefore, that we monitor our pricing, competitive position and new business volumes to ensure that we are not at risk of attracting too much business with poor relative persistency, and that we are well positioned to pick up more attractive, higher persistency business.
Fig 7. Operating Profit from Continuing Operations1(£m)
- 1.
- Achieved Profits basis 2002-2003, EEV basis 2004-2006
Fig 8. EPS1 Based on Operating Profit After Tax2(p)
- 1.
- EPS - Earnings Per Share
- 2.
- Achieved Profits basis 2002-2003, EEV basis 2004-2006
Legal & General’s with-profits business accounted for 11% of our UK new business APE in 2006. Business written to the with-profits part of Society’s long term fund comprises:
- participating business where beneficiaries receive bonuses as a direct participation in surplus profits. This is now predominantly with-profits bonds business.
- non-participating business where a with-profits investment option exists. This is largely pension business.
The significance of participating business has fallen across the industry in recent years. With a fund of over £30bn, expertise in the management of the with-profits business is very important for Legal & General. In 2006, our with-profits fund achieved a further year of strong performance, with assets backing with-profits participating policies generating an 11.2% return gross of tax and investment charges and paying £596m in with-profits bonuses to customers. Its five year return of 55% has exceeded the FTSE All-Share and the FTSE 100 indices.
There are a number of key success factors:
- Financial strength. The strength of our funds allowed Legal & General to continue to invest for the long term, retaining significant exposure to equities through the bear market. Policyholders are now benefiting from this strength. The overall asset mix applicable to with-profits policies eligible for bonuses at the end of 2006 consisted of 40% UK shares, 11% overseas shares, 29% fixed interest securities and 20% commercial property.
- Asset liability management. There are many different policy types within the funds. A detailed understanding of the guarantees that we offer, as well as the aim of longer term returns on investment, allows us to balance the expectations of our policyholders with minimising risk to shareholders.
| Year ended 31 December | 2006 £m |
2005 £m |
|---|---|---|
| Life and pensions | 1,030 | 901 |
| Investment management | 181 | 136 |
| General insurance | 9 | 14 |
| Other operational income | 13 | 41 |
| Operating profit from continuing operations | 1,233 | 1,092 |
| Year ended 31 December | 2006 £m |
2005 £m |
|---|---|---|
| Life and pensions | 592 | 489 |
| Investment management | 133 | 103 |
| General insurance | 9 | 14 |
| Other operational income | 18 | 41 |
| Operating profit from continuing operations | 752 | 647 |
Legal & General’s overseas life and pension businesses generated £156m in operating profits in 2006. This represented an increase of £56m over the prior year. The three principal overseas businesses are in the United States, the Netherlands and France. Each business focuses on selected lines of business. These respective business lines are protection contracts for high net worth customers in the United States, individual savings and protection products in the Netherlands, and single premium savings and group protection products in France.
During 2006, overseas results benefited from a combination of increasing new business contributions in the Netherlands, favourable persistency in savings and unit linked products in France and the Netherlands, and the positive effect of our Triple X securitisation which improved balance sheet efficiency in the United States.
Legal & General’s strategy is to grow existing overseas operations profitably as part of a portfolio approach to its international operations. Investment overseas has to satisfy internal criteria, and our overseas businesses also complement our core competencies in our home market and our established business values. The Company periodically examines new opportunities in overseas markets to identify potential opportunities to build value.
| Year ended 31 December 2006 | Contribution1 £m |
PVNBP2 £m |
Margin % |
|---|---|---|---|
| Protection | 131 | 1,201 | 10.9 |
| Annuities | 191 | 1,735 | 11 |
| Savings | |||
| – Unit linked bonds | 51 | 2,612 | 2 |
| – Pensions – Stakeholder and other non profit | (10) | 1,326 | (0.7) |
| With-profits | 17 | 1,232 | 1.4 |
| Total | 380 | 8,106 | 4.7 |
| Year ended 31 December 2005 | Contribution1 £m |
PVNBP2 £m |
Margin % |
|---|---|---|---|
| Protection | 82 | 1,051 | 7.8 |
| Annuities | 177 | 1,539 | 11.5 |
| Savings | |||
| – Unit linked bonds | 49 | 2,082 | 2.3 |
| – Pensions – Stakeholder and other non profit | (18) | 935 | (1.9) |
| With-profits | 16 | 1,014 | 1.6 |
| Total | 306 | 6,621 | 4.6 |
- 1.
- Contribution from New Business
- 2.
- Present Value of New Business Premiums
Investment Management
With £233bn under management, Legal & General’s Investment management business, LGIM, is one of the UK’s largest asset managers. LGIM manages both institutional and retail funds. These include assets managed for corporate pension funds and other investing institutions as well as Legal & General’s own funds.
LGIM’s strength in its core index tracking investment product makes it the UK’s passive investment market leader, both in terms of size and quality and demonstrated by survey evidence. LGIM continues to be market leaders in the management of UK Defined Contribution pension assets with over £10bn Defined Contribution pension assets at the end of 2006.
Growth and Profitability
In 2006, LGIM had another year of record-breaking gross new business inflows of £20.7bn, an increase of 21% on 2005. In addition, favourable persistency rates and rising markets have contributed to a 14% increase in funds under management to £233bn. The major part of the total gross new business of almost £21bn is from Corporate Pension clients, and over half of it from existing clients. In addition to its strength in index fund management, LGIM grew its active management business in 2006, winning £800m of Structured Solutions new business.
LGIM’s operating profits for 2006 were £133m on the IFRS basis, an increase of 29% on 2005.
Strategy
LGIM’s strategy is to continue enhancing its core investment product offerings, which are highly scalable. At the same time we plan to build LGIM’s presence in the higher risk investment products (‘high-alpha’) end of the market. To support the delivery of this strategy we have been successfully investing in people across our business.
In line with our strategy to develop a Global Fixed Income capability, our US office was established in Chicago during 2006. The new subsidiary, LGIM America, will provide US fixed income expertise to complement and augment LGIM’s UK based fixed income skills.
LGIM’s Structured Solutions Team was strengthened during the year and significant progress was made in promoting our Structured Solutions capabilities in the corporate pensions market. LGIM is generally recognised as being one of the leaders in the field of Liability Driven Investments (LDI).
Fig 13. Growth of Funds under Management (FUM) (£bn)
