Legal & General PLC Half-Year Results, August 2012: Interview with Nigel Wilson, Group CEO.

INTERVIEW WITH NIGEL WILSON, CEO

When Legal and General appointed Nigel Wilson as chief financial officer in 2009, Britain found itself at the height of economic crisis. Since then Legal & General has performed resiliently, and in Spring 2012 he was appointed group chief executive. We caught up with Nigel Wilson, on the eve of his first financial results.

Nigel thanks so much for joining us today, your first results as group chief executive. What can investors expect from Legal and General going forward?

I think today was yet another strong set of results from the group and I'm absolutely delighted with them as indeed I suspect our shareholders will be. We'll see more of the same, a strong dividend performance going forward, a very resilient business model and indeed capitalizing on a number of opportunities that we see both here in the UK but also more international opportunities.

So the company's announced strong headline numbers, can you talk us through the highlights of today?

There are a number of different highlights. Operationally I'm particularly pleased with the performance of GI. We've had three very adverse weather events impacting on their business, but they delivered a profit in the first half. I'm also very pleased with the progress LGIMs made internationally with lots of mandate wins in the US, in the gulf and in Asia. Our UK protection business grew by 9%, and our US protection business grew by 13%. Our operating profits up 5%, our earnings per share up 14%, our return on equity 16%. All terrific results.

The UK markets are still being difficult, we're still in this turmoil of financial crisis. How have you been able to achieve this?

I think the key thing is the performance of my colleagues. I think the fact is that we have this very resilient business model, but at the heart of that business model is my colleagues commitment to our customers, that's been truly outstanding. And that's allowed us to have a platform for growth. Our businesses are proven to be largely uncorrelated to the marco events and our fund management team have managed to ensure that we've avoided most of the macro and economic shocks that have impacted lots and lots of financial businesses.

Now the dividend is up again, compared to last year. How have you achieved this and do you hope to grow it further again?

I think, as you point out, the dividend performance is terrific and has been terrific for a number of years now. 18% growth in the dividend in the first half of the year. I hope our shareholders will be particularly happy with that. I have a lot of confidence in the ability to execute well going forwards and that will give us the confidence to continue to grow the dividend.

Turning back to the economic outlook, as the UK's your biggest market, does the economic outlook continue to worry you?

I think the economic outlook worries us, because you'd rather you were competing in a growth economy and our view of the UK economy is that growths going to be quite anaemic for a number of years going forward. And that's going to make it difficult for lots and lots of businesses and lots and lots of our customers. However, as I said earlier, our business model's been very resilient over the last few years and we're very confident that it'll remain resilient no matter what the economy throws at us.

Now turning abroad, Legal & General's international businesses are also growing, so what would you say are the big stories here?

I think it is a good story. We've had tremendous success in our fund management business. LGIM had net inflows of 4 billion in the first half of the year, a large proportion of that was from our international business. Our international business now has 34 billion of funds under management that's up from about 6 billion 5 years ago. Similarly our US protection business showed growth of 13% in the first half of the year, and I'm very pleased with the progress that we've made in France and in Holland in the first six months of this year as well.

Now finally, my last question refers to company balance sheets, this is a key area of investor and customer interest. Is it possible to have too much capital in today's market?

I take that question as a complement actually because in fact there won't be many financial institutions you'll be asking them about the strength of their balance sheet. It is indeed true that we've got 6 billion plus, of shareholder assets and we've got a capital surplus of 3.8 billion. Those are very strong financial positions, our shareholders, our executives, our colleagues, our customers are all delighted that we've got a strong balance sheet. We do intend to use that balance sheet to accelerate the growth, both through organic and through inorganic means. We will retain a reasonably strong balance sheet going forward.