Full Year 2023 Results
Set to achieve our 5 year ambitions, with record new business volumes and resilient in-year profit generation
António Simões, CEO
“Everything I have seen since joining the business in January has confirmed what attracted me to Legal & General. We have an authentic sense of purpose and stand out for our market-leading businesses, performance track record and strong balance sheet, delivered by talented colleagues.
Our 2023 performance reflects these strengths. We are on course to achieve our five-year targets, and demonstrated resilience in challenging markets to achieve record new business volumes in pension risk transfer, UK annuities and US protection, increasing our store of future profit. Our international assets under management and alternative assets portfolio continue to grow, as does our position in the UK defined contribution pensions market.
We must be as ambitious for Legal & General’s future as we are proud of our history. This is the right moment to take a fresh perspective, build on our track record and set out a vision for profitable and sustainable growth. I look forward to outlining our strategy and plans at our Capital Markets Event on 12 June.”
Resilient financial performance1
· Operating profit of £1,667m (2022: £1,663m)
· Profit after tax2 of £457m (2022: £783m)
· Solvency II capital generation of £1.8bn (2022: £1.8bn)
· Solvency II coverage ratio3 of 224%, with surplus of £9.2bn (2022: 236%, £9.9bn)
· Dividend per share of 20.34p, up 5% (2022: 19.37p)
Growth in our store of future profit: up 9% to £14.7bn4
· Record volumes across our insurance businesses:
‒ £13.7bn of institutional annuities (£10.5bn retained premium5)
‒ £1.4bn of individual annuities
‒ $175m of US protection new business premium
· New business CSM contributed £1.2bn (2022: £0.9bn)
· CSM has grown 9% to £13.0bn (2022: £11.9bn)
Set to achieve our five-year (2020-2024) ambitions
· Cumulative Solvency II capital generation of £6.8bn (£8-9bn by 2024)
· Cumulative dividends declared of £4.5bn (£5.6-5.9bn by 2024)
· Cumulative net surplus generation over dividends of £0.8bn
· The Board’s intention is to grow the dividend at 5% for the year FY246, as previously communicated
1. The Group uses a number of Alternative Performance Measures (including adjusted operating profit) to enhance understanding of the Group’s performance. These are defined in the glossary, on pages 83 to 83 of this report. IFRS 17 was introduced on 1st January 2023, comparatives have been restated accordingly.
2. Profit after tax attributable to equity holders.
3. Solvency II coverage ratio before the payment of 2023 final dividend.
4. Store of future profit refers to the gross of tax combination of established Contractual Service Margin “CSM” and Risk Adjustment “RA” (net of reinsurance) under IFRS 17.
5. Net premium after deducting for funded reinsurance relating to 2023 PRT transactions.
6. Absent market shocks / events outside of our control.
Financial summary1
| £m | 2023 | 2022 | Growth (%) |
| Analysis of operating profit | |||
| Legal & General Retirement Institutional (LGRI) | 886 | 807 | 10 |
| Retail | 408 | 415 | (2) |
| Legal & General Capital (LGC) | 510 | 509 | – |
| Legal & General Investment Management (LGIM) | 274 | 340 | (19) |
| Operating profit from divisions | 2,078 | 2,071 | – |
| Group debt costs | (212) | (214) | 1 |
| Group investment projects and expenses | (199) | (194) | (3) |
| Operating profit | 1,667 | 1,663 | – |
| Investment and other variances (incl. minority interests) Investment variance excluding longevity and internal pension scheme accounting2 | (1,591)(1,106) | (795)(628) | (100)(76) |
| Profit before tax attributable to equity holders | 76 | 868 | (91) |
| Profit before tax excluding longevity and internal pension scheme accounting | 561 | 1,035 | (46) |
| Profit after tax attributable to equity holders | 457 | 783 | (42) |
| Profit after tax excluding longevity and internal pension scheme accounting | 848 | 927 | (9) |
| Earnings per share (p) | 7.35 | 12.84 | (43) |
| Earnings per share (p) excluding longevity and internal pension scheme accounting | 13.96 | 15.28 | (9) |
| Contractual Service Margin (CSM) | 12,994 | 11,938 | 9 |
| CSM (net of tax) + Book Value | 14,720 | 14,589 | 1 |
| CSM (net of tax) + Book value per share (p) | 246 | 244 | 1 |
| Solvency II | |||
| Operational surplus generation | 1,821 | 1,805 | 1 |
| Coverage ratio (%) | 224 | 236 | (12) |
| Full year dividend per share (p) | 20.34 | 19.37 | 5 |
1. IFRS 17 was introduced on 1 January 2023, comparatives have been restated accordingly. For further information please see Note 1.01
2. Excludes the accounting impacts of a longevity assumption change (see page 6 and 8) and the buyout of the L&G pension scheme (see note 3.14.iii).