Legal & General Group Plc

Good morning, everyone, and welcome both to those of you in the room and those joining online. I'm Andy Sinclair, LNG's Chief Strategy and Investor Relations Officer. After many years of following LNG from the outside and sitting in this audience asking questions, I'm delighted to now be part of the team. We've got great businesses, great people, and we understand the need to increase investor engagement. Our running order for today will be as follows. Antonio will open with an update on progress we've made delivering our strategy, along with a summary of our full year results. Andrew will then cover off the financial results in more detail, and then Antonio will be back up to make closing statements before opening to Q&A, at which point Antonio will be joined by Andrew and the CEOs of our three businesses to take your questions. For Q&A, we will be keeping it to two questions each, and yes, I totally appreciate the irony that I am limiting you to two questions. With that, over to you, Antonio.

Thank you, Andy, and welcome to the team. So, good morning, everyone. We've had a strong 2025 with continued year-on-year growth in our headline numbers, which you can see on the page. Excellent earnings growth with core operating EPS up 9%. If you remember, that's at the top end of our guided range of 6% to 9%. Our OSG is up 5% to £1.5 billion. That's an increase in OSG per share of 8%. Our coverage ratio is 210% after the completion of the Meiji Yasuda transaction. And this is a strong capital position that allows us to continue to deploy capital for growth. We are delivering increased shareholder returns with a dividend per share up 2% to 21.79p. And we are starting a 1.2 billion share buyback. This is the largest in our history following the 500 million share buyback that we did last year and the 200 million that we did back in 2024. We are firmly on track to achieve our financial targets and we are reshaping LNG into a growing, simpler, better connected business. Put simply, we are doing what I said we would do back in 2024. First, our three core businesses are growing. We have delivered another year of impressive new business volumes in institutional retirement and in retail, and I'm particularly pleased with the inflection point in the annualized net new revenue in asset management, which will translate into positive financial performance in 2026. Second, I promised a sharper strategic focus. Last month, we completed the sale of our U.S. protection business for $2.3 billion to Meiji Yasuda, We are growing the strategic partnership with them, Meiji Asuda, and they are building a 5% shareholding in LNG. On top of that, since creating the corporate investments unit back in the second half of 2024, we have now completed 1.5 billion pounds of asset disposals. And finally, back in 2024, I introduced a new capital allocation framework and promised stronger returns to shareholders. That's exactly what we are doing through a combination of dividends and share buybacks. I'm particularly pleased with the commercial momentum in our three core businesses. In institutional retirement, we have written almost 12 billion pounds of PRT volumes globally at a capital strain of 1.6%. We secured large transactions last year with Ford, BP and NatWest. And several of our 2025 wins will have potential for additional PRT follow-on transactions. We've also, as you can see, more than doubled the profit from asset optimization to £331 million. In asset management, as I said, we turned a corner from a revenue perspective with £34 million of annualized net new revenue. Private markets AUM continue to expand now at £75 billion, supported by strong fundraising momentum and strategic partnerships. You can see that on the page as well. This growth has contributed to an increase in our average fee margin to 9.1 basis points. In retail, our workplace DC assets grew by 21% to £114 billion. We have strong net flows and excellent new scheme wins, with £3.7 billion to be onboarded over the next 12 months. In retail annuities, we had another strong year at 1.8 billion of new business with an acceleration in the second half of the year. So we are in a stronger position delivering on our strategy and with good growth momentum. But today, as you've seen, we want to provide you with greater clarity both on the results themselves and also on our future trajectory. And why now? This is the culmination of the process that I set in train when I became CEO back in 2024. Of clarifying our strategy, disposing of non-core assets, establishing rigorous capital discipline and putting in place a refreshed leadership team. So, with the heavy lifting now done, and as a refreshed team, we have taken important steps to enter 2026 with stronger foundations, ensuring legacy issues are fully behind us. Today's presentation, I said to a few of you outside, will be slightly longer than usual, as Andrew will talk you through the detail of the three blocks shown on this slide. First, further transparency on the drivers of our performance, particularly on investment variance and what sits behind it. Second, we are giving you guidance on a 160 to 190% target operating range for our coverage ratio. This is something that many of you have asked for. And finally, we are addressing the resilience of our business model, particularly of our dividend. But before I hand over to Andrew, I will go through a few slides reiterating how positive I am about LNG's future. Our investment case is clear and compelling. First, as you have seen from last year's performance, we have strong market-leading businesses. many of them with more than 20% market share in growing markets that are benefiting from structural tailwinds. Second, we have a synergistic business model that our peers cannot replicate, linking our three businesses. And finally, that means that the whole is worth more than the sum of our parts and that we can deliver attractive and sustainable capital returns. So let me go through the three key reasons to invest, starting with our market-leading businesses. We have circa 20% or above, as I said, market shares in the three markets you can see on this slide. Pension risk transfer, retail annuities, and DC. Importantly, and unusually, each of these markets have strong structural tailwinds and are expected to more than double over the next decade. In PRT, we are the market leader with a position that is difficult to replicate. First, we've been doing this for nearly 40 years and have a track record of smooth execution. Second, we benefit from long-standing relationships with DB clients and their trustees in our asset management business. And finally, we have exceptional asset origination capabilities internally, which are complemented by partnerships like the one we have done with Blackstone. In retail annuities, we see this market more than doubling in terms of flows as more people want to secure income for their retirement. We have circa 20% of this market, and in 2025, we continue to be the number one provider. Importantly, the number of our own workplace members taking out an LNG annuity grew by over 15% year on year, and we expect this trend to continue for years to come. And finally, on the right-hand side, we managed 25% of the defined contribution assets in the market between our asset management and our retail businesses. The market is growing strongly, as you know, and is expected to double by 2034 to 1.5 trillion pounds. As we mentioned at our retail deep dive with Laura back in October, there is a significant operational leverage in our business as we continue to grow and scale. We have great positions in growing markets, but what does that mean for us financially? I think of the financials of LNG in two ways, really, in terms of spreads and fee-related earnings. Let me start with the spread earnings. We are the UK's largest annuity provider with a portfolio of £93 billion, which grew 11% in 2025, as we wrote £13.6 billion of annuities between PRT and retail. That book, as you can see, will continue to grow at more than 6% per year. We invest in SAFE. and diversified investment-grade assets and operate with a track record of close to zero defaults. Given the current geopolitical and macro uncertainty, we want to reassure you about the quality of our book, and Andrew will cover this later. We will also describe the sustainable profits we make from asset optimization and the significant upside that we see as credit spreads widen. we are growing our fee-related earnings from asset management and workplace even faster. Over the next three years, we expect them to grow at more than 20% per annum. We have delivered a record ANR of 34 million in 2025. As I mentioned earlier, the full year revenue impact of that growth will now be seen in our 2026 numbers. We have increased our average revenue margin to 9.1 basis points. As you recall, we went from 7 to 8, and then now from 8 to 9 basis points, with the target to be in the double digits by 2028. We are one of the few global asset managers, maybe the only one, increasing average fee margin, and this is because we are shifting our asset mix towards higher margin products. We are growing strongly in private markets with 75 billion of AUM and on track to beat our 85 billion target by 2028. So we're already at 75 billion. Fees from our workplace business will continue to grow both in retail and asset management as we then continue to grow our assets and then administration. so we have leading businesses in growing markets but as you can see here these businesses have clear synergies between them it's the second argument of our investment case we use scale as a competitive advantage as the largest asset manager in the uk 80 of our uk prt deals are with existing asset management clients but when we transfer these clients to prt as you know the investment shifts The investor mix shifts to more direct investments and therefore we increase the fees in asset management by three times. On the right hand side, you can see that our asset management business manages over 90% of our annuity assets and over 95% of our workplace DC assets. This is pretty unique. This is a strong underpin to our ANNR ambitions. And then beyond this commercial synergies, we also have significant operational synergies across our businesses. You can see there at the bottom, our PRT and retail annuities businesses share investment and customer services teams, creating scale advantages. And also we make broader investments in technology and AI across all of LNG. And then this is the final argument, This synergistic market leading businesses will continue to deliver attractive capital returns for shareholders. Back in June of 2024, I promised we would return more to shareholders and that is exactly what we are doing. At the time, I announced a new dividend and capital return framework for the subsequent three years, 25, 26 and 27. We introduced share buybacks, and I committed to return more capital to shareholders over that period that we would have done by maintaining the 5% annual dividend per share growth. You can see that on the right-hand side of the page. So even excluding the $1 billion share buyback that's related to the Meiji Yasuda transaction, with our guided dividend growth, we have delivered on that promise. Looking forward, we are investing to meet our growth ambitions, and my priority is our growing and sustainable dividend. Beyond that, future capital allocation decisions, including share buybacks, will be assessed at the time and subject to market environment, our views on solvency, and opportunities to invest in the business. Overall, you can see on the slide that we are on track to return more than 5 billion of capital to shareholders over the period of 2025, 2026 and 2027. And we will be returning 2.4 billion of that over the next 12 months between dividends and share buybacks. So we have a compelling investment case and I'm excited about the growth ahead of us. with stronger foundations and a new team to execute on that vision. You can see on the slide the appointments I have made with a combination of both internal promotions and external hires. So on that note, let me welcome on stage Andrew Cale for his first sets of results as CFO. Andrew, over to you.

Thanks, Antonio, and good morning, everybody. I'm delighted to be here presenting a strong set of results for the first time as the Group CFO. As Antonio highlighted, today we're committed to providing greater clarity on the drivers of our performance and the future trajectory. Over the past few months I've been in listening mode. I've been engaging with investors, analysts and my own team. And it's clear we have an opportunity to provide more clarity on our performance and to reinforce the strength of our investment case. So today I'll start with our results and then I'll turn to the foundations that position us for sustained growth. So let me begin with what we delivered in 2025. Our Group Financial Headlines are strong. Core Operating Profit grew solidly, reflecting the resilience of our earnings base. Core Operating EPS grew at the top end of our 6-9% target range, demonstrating our commitment to delivering sustainable compounding returns. Solvency II Operational Surplus Generation is up 5% year-on-year. And our OSG per share metric is growing at 8%, creating increasing headroom over the 2% dividend per share growth. We're now presenting OSG excluding the amortization of transitional measures on technical provisions. This is to better reflect underlying capital generation. 2024 OSG has been restated, and going forward, we will continue to separately disclose the TMTP amortization. Our pro forma solvency to coverage ratio remains strong at 210%. That's after the major USUDA transaction and its related buyback. Now let me take you through our IFRS performance, beginning with each of our businesses. Institutional retirement delivered a strong result, with operating profit up 6% year-on-year, driven by higher releases from our store of future profit and a substantial uplift in asset optimisation. Asset management remained broadly stable at £402 million, but importantly, we now believe we've reached an inflection point in the financial performance of this business. Retail operating profit increased 4% to £447 million, driven by predictable earnings from our insurance entities, and similar to institutional retirement, also benefiting from higher asset optimisation. Across the group, expenses and debt costs were flat year on year, highlighting continued cost discipline to offset inflationary pressures and ongoing investment in the business. And so, as a result, core operating profit is up 6% to £1.6 billion, demonstrating the reliability of earnings from our insurance businesses and the turning point in the performance of our asset management business. Investment variances, while improved compared to recent years, continue to be material in 2025 at £771 million. So moving to our business P&Ls. Institutional retirement delivered another year of predictable high-quality growth. Operating profit increased 6% to £1.2 billion, driven by high release from CSM and the continued strength in the expected investment margin. Asset optimisation contributed £258 million, more than double last year, and what we believe a sustainable level going forward. Investment variance largely reflects our modeling changes in the year. Across our insurance businesses, this added £290 million to our store of future profits, but generates a day one adverse investment variance as we've seen in the past. And this effect will unwind into profit over time. The institutional retirement annuity portfolio grew to £75 billion, up 12%, driven by the strong PRT flows. The risk profile remains well matched and new business strain continued at around 1% in the UK and 1.6% across all of PRT. This business continues to deliver recurring and capital efficient growth fully aligned to our strategy. As you can see, PRT continues to grow strongly as we wrote close to £12 billion in 2025. In the UK, we wrote over £10 billion. That's about 25% market share, and this was written at attractive margins under the Capital Light investment strategy. Our overall IFRS new business margin of 6.5% reflects a continued tighter credit spread environment and doesn't capture the increased opportunities this generates for asset optimisation, which I'll cover later. Our international PRT business is down on the prior year, given an overall slower market in the US. But looking forward, I am extremely optimistic about the prospects for our PRT business. Client demand remains high, with a £17 billion active pipeline here in the UK, and we have line of sight of over 10 schemes in excess of a billion. And we expect the market overall this year to be circa £50 billion. Asset management delivered a stable operating profit in 2025, despite the market volatility in the first half of the year. Markets were positive in the second half of the year, setting us up well for what's been a strong start so far in 2026. Revenues grew 4% to over £1 billion, supported by favourable market conditions and continued progress in pivoting the business toward higher margin strategies. The rebalancing of our product mix continues to take effect with overall fee margin increasing to 9.1 basis points up from 8.8 basis points last year. However, expenses also increased by 5% as we continue to invest in growth initiatives, digital capabilities and enhancements to our operating platform. And therefore, as a result, the cost-income ratio was 75%. Operating profit from balance sheet investments was £144 million, broadly unchanged from the prior year. Performance included strong contributions from Pemberton and good performance of assets within our digital infrastructure portfolio. The investment variance was more adverse in 2025, driven by in-year performance relative to expected longer-term performance and from revaluations across several assets, of which I'll cover later. As I said, we're at an inflection point in asset management's financial performance. UKDB, our largest channel, is naturally shrinking. And whilst it continues to support growth in PRT, we've not seen in recent years, we've not been replacing lost revenues quickly enough. We're now seeing higher margin, new channel growth beginning to accelerate. We've generated £34 million of N&R in 2025, which provides a tailwind to our 2026 revenues. Our targeted cost actions taken in 2025 are also beginning to come through into our numbers, maintaining lower cost growth. Therefore, our current run rate for 2026 shows revenue growth significantly outpacing cost growth, increasing fee-related earnings and reducing the cost-income ratio. Retail delivered another year of positive high-quality growth. Operating profit rose 4% to £447 million, driven by higher release from CSM and risk adjustment, and a continued strength in the expected investment margin. Asset optimisation added £73 million, more than double last year, similar to institutional retirement. Our workplace DC assets grew 21%. supported by strong win rates and our member-focused proposition. And as we outlined at the retail deep dive, we look at workplace profitability across both asset management and retail combined with an all-in revenue margin for this business around 30 basis points. In retail, workplaces broadly break even before investment spend. And for the first time, we've shown our workplace administration profit split on the slide. We expect to invest around £30 million per year on average up to 2028, higher in some years, such as 25, as we focus on member engagement and technology-driven efficiencies. So, workplace is core to our growth story in retail and the wider group. This chart shows the trajectory of the combined profit in retail and asset management that workplace is expected to contribute over the next decade. This is driven by the scale of our £114 billion assets on which we administrate pensions in workplace, benefiting from the compounding economics of growing monthly contributions and our high client retention rates. Over the next decade, we will deliver significant operating leverage from tech and operational efficiencies, and we expect the cost-income ratio from these combined to fall to below 50% from its 75% today. The result is a greater than 15% CAGR over the longer term and higher in the short term as we expect to triple our workplace earnings by 2028. And our balance sheet position is strong with a 2025 pro forma solvency tube ratio of 210%. On this slide, I've provided a detailed SOMTI II walk for the first time, including both movements in owned funds and SCR. OSG from our enforced book added 26 percentage points to the ratio before we paid our dividend and invested in new business. Other variances include the impact from market movements, which is similar to the impact we see under IFRS. Our acquisition of a 75% stake in Proprium had a further 3 percentage points impact on the Solvency after allowing for the option to acquire the remaining stake. And our pro forma closing position of 200% post the major usage of transaction and is net of the related £1 billion share buyback. This includes a temporary eligibility restriction on Tier 2 owned funds This is available to us under stress and is expected to be unwind over the next five years as we continue to deploy capital to meet our growth ambitions. Our results this year reflect both strong operational delivery and continued strategic transition. We've maintained solid momentum across each of our core businesses while simplifying our portfolio and reinforcing capital discipline. Our progress against targets is encouraging. We're on track or ahead on every measure. And I want to take a longer term view on what I see as the significant opportunities for our business, building on some of the points that Antonio made earlier today. We have great businesses, well positioned in growing markets, which will be enhanced by our synergistic model. This combination will drive compelling returns and I'm really excited about the prospects for the group. But, as Antonia mentioned, we've taken important steps to address some legacy issues. And these are now behind us. We enter 2026 with a stronger, more resilient foundation. And as I mentioned earlier, I've been in listening mode. After many, many conversations with several of you here in the room, it's clear there are aspects of our disclosure that are opaque. Today, I'm taking steps to address this and provide you with greater clarity on our results. In addition, I'll more clearly explain how we think about the longer-term trajectory of capital generation and how we're going to deploy that capital. So let me take you through each of these in turn, including some new disclosures. Over the past three years, one recurring feature in our results has been negative investment variances. It's important to unpack to see what's really driving these movements. Not all adverse variances erode at long-term value. Some result from positive impacts on future profit. So let me talk you through what's going on here, both in our annuities portfolio and in our shareholder funds. Firstly, modelling and assumption changes in our annuities portfolio. This reflects the mismatch that arises between the impact of reserving changes on today's liabilities compared with calculating these changes using the locked-in discount rates at the time we wrote the business. This mismatch appears as an adverse investment variance, but actually represents a positive contribution to our CSM, increasing the profit that will emerge in future periods. Secondly, market impacts on our annuity portfolio, where movements in asset values aren't fully matched to the movements in our liabilities. As interest rates rose in 23 and 24, we saw roughly 700 million pounds of negative variances arise as the fall in asset values was greater than the fall in the liabilities. We hold these assets for their cash flows, not their short-term price. And in 2025, we've seen this start to reverse with over £100 million of net positive movements. The risk we care most about with annuity assets is defaults. And with 99% of the portfolio investment grade, we've seen no defaults since 2008, and even then, extremely small at £25 million. Thirdly, the variance that arrives in our shareholder funds from the actual in-year returns versus the long-term expected return that we assume in our operating profit. Over the last three years, we've seen around 600 million pounds of cumulative negative variances as the higher interest rate backdrop has caused many asset classes to underperform their long-term averages. each year we reassess our return assumptions and today our average blended long-term expectation is around six percent including our cash assets which we view as appropriately conservative and finally revaluation of our balance sheet assets specific sectors such as commercial real estate and venture capital have seen more pronounced challenges since 2022 This is reflected through reductions in asset values in line with market movements and views on future performance. And then in addition to the investment variances shown on this slide, we incurred close to £200 million of M&A restructuring and transformation costs, which we report outside of operating profit. Beyond M&A related expenses, these costs reflect organisational restructuring and our multi-year transformation programmes as we strengthen our operating platform to capture the significant growth opportunities ahead. I expect these costs to remain at around £100 to £200 million per year over the next two years. Following Eric and his team's detailed review of balance sheet investments and asset management alongside my broader assessment of the overall shareholder portfolio, I'm confident the current valuations of shareholder funds are appropriate and materially de-risk the balance sheet and earnings from future downward revisions. The dynamics are different across each of the three pools of shareholder funds we invest. In corporate investments, we expect our assets to be materially sold down by the end of 2027 at current valuations, further simplifying the balance sheet and reducing exposure to sectors experiencing structural repricing. In asset management, we've completed a rigorous review, challenging ourselves on the strategic relevance of our future balance sheet investments. We transferred close to £200 million of assets that no longer meet our strategic or funding criteria into the corporate investments unit. The remaining portfolio is well positioned and will drive long-term future value for the group. We remain confident in delivering our asset management profit target of between £500 and £600 million by 2028. This is now more heavily weighted to high quality fee earnings as balance sheet investments are expected to generate around 80 to 100 million pounds of profit, approximately 50 million pounds lower than previously guided. And finally, the balance sheet investments in our insurance entities, where we have delivered strong trade of profits and where the fall in assets largely reflects routine disposals for liquidity management. We expect returns to remain stable at around 5% with opening balances broadly unchanged. So that was transparency on where we are today. I'll now add some clearer guidance on the sources of annuity lifetime value and the trajectories of our solvency to coverage ratio and debt leverage. First, lifetime value from our insurance businesses, a subject definitely close to my heart as the previous CEO of Institutional Retirement. Under IFRS 17, our earnings have become increasingly predictable and reliable, with nearly two-thirds coming from the release of our store of future profit. We added £1.2 billion to our CSM in the year through new business and locked-in interest. This represents 2% growth on what is already a very large CSM base. As we've adapted our investment strategy for writing annuities under a tighter credit spread environment, the sources of value have also shifted, with the store of future profit now only telling part of the story. So we are now seeing a growing contribution to our earnings from recurring asset optimisation. Writing new business on gilt-spaced investment strategies over the past two years feeds this optionality. While day one IFRS profitability metrics are moderately lower due to the lower initial yield, the ability to rotate our investments to capture higher risk-adjusted spreads is scoped to deliver increased lifetime value. Asset optimization doesn't require large market volatility. We have the optionality to rotate across ratings, currencies, and sectors in credit and in sovereigns. A recent example is how we've monetized elevated relative positions in cross-jurisdiction rotations between UK and US sovereign bonds. We increased our sovereign exposure, reduced derivative-related exposure, and remained cash flow matched. And in doing so, delivered tens of millions of earnings and capital with no increase in the capital requirement. In fact, the opposite. We are confident in delivering asset optimisation of more than £300 million per year. We believe we have enough optionality across the various components of our greater than £90 billion portfolio to deliver this, and we see opportunity to deliver further upside as and when spreads widen. Turning to Solvency2 Outlook, where we are well capitalised to invest in future growth. Today we are sharing with you our medium term Solmty 2 coverage target operating range of 160 to 190%. We will continue to deploy capital to meet our growth ambitions and expect to take us into this range compared to where we sit today. How we think about our ratio changes under different market environments. The actions we might take to manage solvency depend on why the ratio is at that level and how we expect risks to evolve from that point. Interest rate hedging is a good example of where we might take action to change our approach as our solvency changes. We're comfortable that we can withstand a variety of market stresses from any point in this range. Below this range, we would seek to respond to be within the range quickly. But this is not an automatic trigger for capital measures. Our dividend is still sustainable at a lower ratio. Our 72 balance sheet on debt leverage has increased in the short term to 33%. And that's on a pro forma basis following the sale of US protection and the related buyback. This sits well within our comfort levels. The ratio is likely to remain around this level for a few years before it declines as the growth in owned funds accelerates. All three major rating agencies currently have us on strong ratings and stable outlook, reflecting their confidence in our balance sheet position. We have a strong balance sheet. but we are also a highly resilient business in terms of our flows. Our businesses continue to deliver strong, sustainable and increasingly diversified capital generation. On this slide, we outline OSG by business and its trajectory. And in the appendix, we've provided you with more breakdown of this by own funds and SCR. Through our share buyback programme, we have returned £700 million since its launch in 2024, and we will return a further £200 million in 2026. As a result of this, OSG per share grew by 8% in 2025, which is ahead of total OSG growth of 5%. We expect growth in OSG per share to continue outpacing OSG through to 2027 post the £1.2 billion buyback. The returns previously generated in our insurance businesses from this excess surplus are being replaced by growth across the group. As this transition completes, OSG will grow below 5% in 2026, returning to greater than 5% by 2028, supported with strong momentum in fee-based earnings. OSG starts from a robust base, adding more than 25 percentage points to our Solmty 2 coverage ratio each year, reinforcing our balance sheet, supporting shareholder returns, and the continued investment in our growth. Overall, we have high quality, resilient releases from our large existing book and clear visibility on compounding OSG growth through 2028. This clear trajectory underpins our confidence in the sustainability of the dividend. OSG comfortably covers the dividend on a per share basis and grows more rapidly than our guided 2% annual increase in the dividend per share. Our dividend coverage on a net surplus generation basis is sensitive to our in-year new business strain. Given the size of the annuity opportunity in front of us and the long-term potential for OSQ growth in later years, we view the investment in new business at the expense of the payout ratio to be a good trade-off in the near term. By 2027, we expect Solmcy 2 net surplus generation to cover our dividend under a range of new business strain scenarios. I want to close by returning to what I said earlier. I am really excited about the prospects for our group. Over the long term, we see a huge opportunity for growth in our core markets, and we're investing today to meet that opportunity. The investment requires some trade-offs in the short term, like on the dividend payout ratio, but these are trade-offs we are happy to make with the long-term sustainable growth of our business in mind. Let me now hand back to Antonio for his closing statements.