Half Year Results 2020: Resilient operating earnings from continuing divisions of £1.1bn and a robust balance sheet

5 Aug 2020

We continue to build Inclusive Capitalism as we support our Customers, Colleagues and Communities in the face of COVID-19.

'In H1, Legal & General delivered resilient operating profits, a robust balance sheet and highly relevant products and services. Our ambition is for a similar performance in H2. We kept all our employees on full pay, executed significant commercial and investment projects, and continued to provide a reliable service to our customers without any government financial support. We are committed to driving forward an investment-led, climate-friendly COVID recovery incorporating the very best aspects of Inclusive Capitalism. '
Nigel Wilson, Group Chief Executive

Financial highlights¹

• Operating profit from continuing divisions² of £1,128m (H1 2019: £1,154m), with 3 of 5 businesses delivering growth
• Operating profit of £946m (H1 2019: £1,005m), demonstrating resilience as specific COVID-19 estimated impacts totalled £(129)m³
• Interim dividend of 4.93p per share (H1 2019: 4.93p), providing flexibility as the economic effect of COVID-19 becomes clearer
• Profit after tax⁴ of £290m (H1 2019: £874m), principally reflecting the formulaic impact of lower interest rates on LGI and the unrealised impact of market movements
• Solvency II operational surplus generation from continuing operations² was £0.8bn (H1 2019: £0.7bn

H1 2020 highlights

Our balance sheet is robust:

• Solvency II coverage ratio⁵ of 173% (H1 2019: 171%)
• Our traded credit portfolio (excluding gilts), which is actively managed, has had no defaults and has seen net downgrades to sub-investment grade of 0.6% since the start of COVID-19; compared to the market which saw 1.5%. Our £3.5bn IFRS Credit Default Reserve has remained unutilised

And our businesses continue to perform resiliently:

• LGR total annuity assets of £80.7bn (FY 2019: £75.9bn), with total new business premiums of £4.2bn
• Group-wide Direct Investment up 8% at £27.9bn (FY 2019: £25.7bn)
• LGIM AUM up 4% at £1,241bn (FY 2019: £1,196bn)
• LGI GWP up 5% to £1,475m (H1 2019: £1,409m)

1. The Alternative Performance Measures within the Group's financial highlights are defined in the glossary, on pages 93 to 97 of this report.
2. Excludes Mature Savings and General Insurance.
3. Specific COVID-19 impacts of LGR (+£32m); LGC (-£60m); LGI (-£80m); and Group Costs
(-£21m). Excluding these, operating profit was up 7%. Please see page4 for more information.
4. Profit after tax attributable to equity holders.
5. Solvency II coverage ratio on a shareholder basis, which is adjusted for the Own Funds and SCR of the With-profits fund and the Group final salary pension plans.

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