Legal & General Group Plc

Good morning and a warm welcome both to those of you in the room and to those joining online. Thank you for your interest in legal in general. I'm Andy Sinclair, LNG's Chief Strategy and Investor Relations Officer. So 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 the highlights from H1. Andrew will cover the results in more detail. And then Antonio will be back with some more comments on our outlook 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, again, we'll be keeping it to two questions each. Thank you for your cooperation last time around. With that, over to you, Antonio.

Thank you, Andy. And good morning, everyone. Great to see you here. So I'm pleased with what we have delivered so far in 2026. We are delivering on our promises, and this starts with our 30 million customers. We want to be the best company for them to invest and retire with, and we're doing that at scale. First, as the UK's leading annuity player, we provide income every month to 1 million retirees. Actually, you can see it on the slide. Those payments were over 3.7 billion in the first half of 2026. As the UK's largest asset manager, we're trusted to invest on behalf of both institutional clients and individuals, including more than 5.2 million workplace customers. And finally, on the right hand side, since we were founded in 1836, we've always provided protection insurance. In the first half of this year, we have paid almost 700 million to support customers and their families. and we are delivering for shareholders. As you can see on the slide, we have generated year on year predictable growth in our headline earnings. These are clean numbers, if you remember we talked about this at the full year, now that we've drawn a line under legacy issues. Core operating EPS is up 11%, that's above the top end of our guidance of 6-9%. OSG per share is up 7% year on year, and our solvency coverage ratio was 201% at the end of June. This is a strong capital position well above our 160 to 190% target range, allowing us to continue to deploy capital for growth. We are committed to increasing shareholder returns with an interim dividend per share up 2% to 6.24p and we have now completed around 450 million of our 1.2 billion share buyback program that's off a couple of days ago. L&G is now a growing, simpler, better connected business and we're firmly on track to meet our financial targets. And we have scope to deliver more as we will discuss later. So we have strong growth momentum in each one of our three market leading businesses. We have written or are exclusive on 6.9 billion. You can see it there on the slide of overall annuity volumens. That includes 5.7 billion of PRT and 1.2 billion of individual annuities. Our asset manager delivered 23 million of annualized net new revenue, ANR, in the first half, which is the highest we've ever reported. In workplace pensions, we attracted 6.2 billion of net inflows, benefiting from the onboarding of new schemes that we won last year. We now have almost 1 billion per month from recurring flows. So let me now go into each one of the businesses. As I mentioned, in institutional retirement, we have written or are exclusive on 5.7 billion of PRT year to date. This compares to 5.2 billion at the same stage last year. We have remained disciplined in what is a competitive market for the, and this is important, for the 2.1 billion of business that we have written. So as you can see, we have written 2.1 billion and we are exclusive of have since written the 3.6 billion. So just on the 2.1 billion that we have written in the first half, our new business margin declined to 4.2% and the strain rose to 3.4%. We are still beating our 14% IRR, the internal rate of return, and we're still above that hurdle, while at the same time locking in optionality for the future. In fact, this is what you can see in our numbers. In the first half, we have generated $288 million of asset optimization. This is across institutional retirement and retail, and that number compares to $212 million in the first half of last year. And you remember this from when we were sitting here back in March, we've talked about, we guided to more than 300 million of asset optimization per year. And what I'm now saying is that we can deliver more than 400 million this year and going forward, even in benign markets. Credit spreads widening, because I'm sure you're going to ask me this question, would provide further upside potential on top of that number. We are on track to hit our target of 5-7% compound annual growth rate in operating profit. Turning to asset management. Asset management is the standout performance in the first half of the year, with fee-related earnings up 37% year-on-year. We have delivered, as I mentioned before, an impressive 23 million in annualized net new revenues during the period, but this ANNR will support earnings growth further into the second half and into 2027. We have increased revenue margins over the last three years. You probably remember first time I talked about this. Back in 2023, the average revenue margin was seven basis points. That number is now 9.6 basis points. And we are ahead of plan for a revenue margin over 10 basis points. We continue to grow our private markets franchise with AUM rising by 4 billion in the first half to 79 billion and again here we are on track to exceed our 85 billion AUM private markets target. Our cost to income ratio, it's worth spending a moment on this, reduced from 75% to 71%. This is the first time this ratio has reduced in a decade, and it will continue to reduce further to hit our below the 70% target. So we've made great progress in asset management and there is more to come. We're on track to meet our 500 to 600 million target operating profit in 2028 with more than 80% coming from fee-related earnings. This is really important. The quality of that number is more than 80% coming from fee-related earnings. So finally, retail. In retail, we serve over 12 million customers across three structurally growing markets. First, workplace place savings. Second, individual annuities. And finally, protection. Let me go through the three of them. They've all performed really well. Workplace net flows are up 35% year on year. And if you remember, we talked about this before, our end-to-end workplace profits, and that includes both the admin and the asset management part of those profits, I was talking to some of you outside about this, more than doubled to 48 million, and we'll talk about this a bit later. We continue to be the number one player in the open market in individual annuities and you can see the number there. Premiums rose by 36% year on year. And finally, our protection business saw both an increase in margins and a 22% step up in sales. And we also have new distribution agreements with two large banks that you'll see that in our future numbers. Again, we are on track to hit our 4-6% operating profit growth target. So I've talked about the three businesses. The three businesses show good momentum, as we've just discussed, and importantly, they support each other with clear synergies. Typically, you can see that 80% of PRT transactions come from asset management relationships. Eric and Gareth are sitting next to each other there. Actually, the number in the first half of this year was 98%. So virtually every single PRT deal that we did this year came from a longstanding asset management relationship. And then, and this is what you have here, 90% of the annuity assets are then managed by our own asset manager. A good example of that in the first half is the 1.6 billion of investment-grade private credit sourced by asset management for our annuity book. On the right hand side, as I mentioned, we have very exciting growth in workplace pensions, but this is particularly important to us because, and this is very specific to LNG, 95% of those flows are managed by our asset manager. A great example here is the private markets access fund that we have, which is now over 3 billion pounds. So effectively our institutional retirement and retail businesses represent control distribution for our asset manager and in the first half of this year that accounted for more than half of the ANR. Talking about the bottom of the page, for most of our 190-year history, we have used scale as a competitive advantage. We increasingly share operations and teams across business units, and our large customer base and proprietary data are a source of competitive advantage in an AI world. Two examples. We have launched an AI-driven agent desktop, which Laura talked about in the capital markets event that we did in the retail business, which is now driving efficiency improvements. And second, we were the first large UK provider to get approval for targeted support, the new FCA regime that has now also launched with AI-driven nudges supporting customer decisions. And we have seen good early engagement. We can talk about that with Laura in the Q&A. There is more to come. Work is underway to make LNG a more efficient and a more competitive business. So we understand the importance of a sustainable, growing dividend. And in the first half, the performance that we had supported another 2% dividend increase, as I said, to 6.24 P per share. But our earnings are growing faster than our dividend, with EPS up 11% year on year and OSG per share up 7%. We expect, and this is what you can see on the chart, our dividend to be covered by core operating EPS this year, and that that cover will further improve in 2027. As I mentioned at the full year results back in March, also our NSG will cover our dividend by 2027. So on that note, let me hand you over to our CFO, Andrew, over to you.

Thank you Antonio and good morning everybody. I'm delighted to be here presenting a strong set of results. Importantly, these IFRS results are clean and predictable after we drew a line under legacy complexities at our full year results in March. We've delivered 7% growth in core operating profit, supported by 5% growth in institutional retirement, 10% growth in asset management, and 5% growth in retail, all while holding central expenses and debt costs flat year on year. Our core operating EPS was up 11%, and we now expect to be above the top end of our 6% to 9% target range for the full year. Our profit before tax benefits from the sale of our US protection business as we previously guided and we have a significantly smaller impact from the investment variances which I'll cover in more detail later. On this slide you can see a summary of the solid trading metrics across the group in the first half of the year with each business delivering good growth and on track to meet our 2028 targets. So let's discuss these results in more detail. Starting with institutional retirement, our largest business. We delivered £646 million core operating profit in H1, with asset optimisation increasing 38% to £227 million as we took advantage of market opportunities. This is ahead of our guided run rate, and as Antonio mentioned, we're now on track to deliver greater than £400 million per annum of asset optimisation across institutional retirement and retail annuities, even in benign markets. That's up from our prior guidance of £300 million as we've industrialised our processes. The flat CSM is a function of the sovereign-based investment strategies we're using in a tight credit spread environment. In this environment, asset optimisation is a greater driver of our profit growth and we'll discuss more of that in a moment. Further spread tightening through 2026, alongside the competitive pressure, has increased the upfront new business strain we're reporting, even though our investment approach and capital requirements have broadly been consistent. but despite markets and competition, we continue to deliver strong returns on our capital. We remain highly selective and disciplined in the transactions that we go after. On this slide, you can see our long-term track record of success in institutional retirement. We've written around 95 billion pounds of PRT over the past decade, typically averaging 20 to 25% market share. This has supported growth in our PRT assets every year, excluding market impacts. The slide also shows the impact of the move to IFRS 17 accounting. This changed the timing of profit recognition, but it has led to more steadily growing predictable stream of profits from the institution retirement business. and we continue to rigorously apply our minimum 14% IRR threshold to all capital allocation decisions. New business margins have reduced though, so let's dig into that further. In a competitive market with tighter credit spreads, we've used sovereign-based investment strategies to back our new business. And this has led to lower day one new business margins. But the optionality for the future is created through asset optimisation profits. Sovereigns, as you can see, are now 29% of our asset portfolio, up from just 10% in 2022. and asset optimisation generated £288 million across our total annuity portfolio in the half year and writing new business on sovereign based investment strategies feeds this optionality and growth. As the optimisation doesn't require large market volatility, we have the optionality to rotate across ratings, currencies and sectors in credit and in sovereigns. We increased our sovereign exposure, reduced derivative related exposure and remained cash flow matched in H1 and in so doing delivered earnings and capital with no increase in our capital requirement. We're confident in delivering asset optimisation of more than £400 million per year across our greater than £90 billion annuity portfolio. We believe we have the optionality across the various components to deliver this and we see further upside as and when spreads widen. So moving to asset management, which Antonio has mentioned is really the highlight of today's update. Fee-based earnings grew 37% year on year as revenue grew and costs were controlled. Balance sheet earnings of £53 million are consistent with our guidance of £80 to £100 million for the full year. And we have substantially lower investment variances than we've seen in prior periods. Annualised Net New Revenues were £23 million in H1, which is more than we generated cumulatively over the period 2020-2024. We're positioned well as the UK's largest asset manager with £1.2 trillion of AUM and an improving business mix, as I'll cover on the next slide. Our cost-income ratio reduced year-on-year for the first time in a decade, from 75% in 2025 to 71%, with operating profit returning to growth up 10% compared to half-year 2025. We are building momentum, but there's definitely more to come. Our A&R growth and cost discipline will drive further operating profit growth in coming periods and support the delivery of our £500-600 million operating profit target for 2028. In both public and private markets in H1, we've seen N&R growth even with net outflows in public markets as you can see on the slide. Our revenue margins have increased annually from 7 bps in 2023 to 9.6 bps in H1 2026. This contrasts with the industry trend of declining margins. We are consistently improving our revenue margins by attracting net inflows in higher margin mandates which more than offset the net outflows from the lower margin mandates. We said that 2025 would be the pivot point for asset management and we're delivering on that. The cost income ratio improved by four percentage points to 71% driven by strong revenue growth and disciplined cost management. Revenue grew 13% year on year with around half of this increase driven by net new revenues generated over the last 18 months. Cost growth of 5% reflects increased variable compensation linked to those higher revenues in the first half and our continued investment in the business. Underlying costs are flat on a nominal basis, i.e. down in real terms, reflecting the cost action we've taken in the business. So this is an important milestone, but not the destination. We remain on track, as Antonio said, to reduce the cost-income ratio below 70%. Retail saw similar trends to institutional retirement, with a small increase in the CSM release and a step up in asset optimisation. As a reminder, our annuity portfolio is managed as one across PRT and individual annuities. Workplace admin profitability is improving as underlying profitability growth continues to fund investment in our proposition. In H1, we invested £25 million in our admin proposition, so admin was profitable on an underlying basis in the half year. As we've outlined previously, we manage workplace profitability across both asset management and retail, and I'll touch on this a bit more later. Our new business margins also improved for both retail annuities and protection. We have impressive growth trajectories across our retail franchises. Workplace pensions assets under administration grew nearly 20% compound over the past decade and our recent win rate suggests this momentum continues. We're not the largest but we are growing fast. Individual annuity sales have increased in recent years and we see structural growth which will further support us as the market leader. And in protection, this is a steady growth business with gross written premiums growing by more than a third over the past decade. As you can see here, our workplace pensions business is starting to open its profitability jaws. Our end-to-end profitability for the first half more than doubled year on year to £48 million. A simple doubling of this suggests a significant step up in 2025's profits for the full year. We have a strong proposition in which we continue to invest. Our app, for example, is a top rated in the market and we already have two default funds above the government's £25 billion minimum threshold. We're on track to deliver our commitment for a tripling of end-to-end workplace profits to £180 million by 2028. Workplace pensions, it's our hidden gem. A business which has grown significantly and is beginning to benefit from the scale that it has. It might still be small in the group profit context, but we see a really attractive trajectory. Turning to investment variances, I've maintained the same format as presented in March, separating out insurance and shareholder asset impacts. Importantly, the legacy items that previously drove larger adverse variances in the blue boxes on the slide are behind us, and I'm pleased with the immaterial experience recorded in the first half. The investment variance in the insurance business, the green boxes, was primarily driven by day-to-day market movements in the annuity portfolio, particularly from changes in inflation, interest rates and property, where accounting for asset and liability movements doesn't perfectly offset. The largest impact there came from higher short-term inflation expectations and no corresponding increase at longer tenors which increased our liabilities more than our assets. But importantly we hold these assets for their cash flows not their short-term price. The risk we care most about with our annuity assets is defaults and this investment variance doesn't reflect any deterioration in the underlying credit quality. These rates and inflation impacts reflect exposures that we intentionally retain as part of our strategy to manage the size and volatility of our Solvency II capital requirements. Consequently, we accept a degree of market volatility in IFRS which remains consistent with our risk appetite. Last year, for example, movements in rates and inflation delivered positive investment variance. Our store of future profit, including the CSM and risk adjustment, was down slightly in H1. The underlying fall was around 1% before the impacts from experience and modelling refinements. This is largely due to the sovereign-based strategies we're using to back the annuity business, which contribute less CSM than historic business, but, as I've said previously, increase our asset optimisation opportunities. We would like to get back to a world with wider credit spreads, which would support a return to more significant CSM growth. But we will not chase yield when credit spreads are tight. And as I've discussed earlier, we have a significant asset optimization opportunity to drive our profit growth. Our solvency ratio is 201%, which is robust and remains well above our 100% to 190%, 160% to 190% target operating range. We reiterate our intention to organically move down this operating range over the coming years as we invest in growth opportunities. Over the first half, our solvency position benefited from the sale of our US protection business to Major Yasuda, net of the cost of our share buyback announcement. We also adjust for the final dividend for 2025, which is seasonally larger than our interim dividend payment in the second half. Operating variances reduced the ratio by five points, reflecting changes to ALM management, improvements to cash flow modelling and capital model strengthening. This was partially offset by market movements, including a positive impact from higher interest rates over the period, which reduces our net of adverse inflation impacts. As you can see, our recent debt refinancing took advantage of attractive RT1 pricing and leads to a step up in the pro forma solvency ratio to 209%. Whilst we don't formally report our debt leverage at the half year, we've seen a modest uptick in the ratio due to seasonal factors like dividend payments, but to reiterate what I said at the full year, we're committed to reducing this ratio in the medium term. This slide is a reminder of our asset portfolio. More than 99% of our bond portfolio is investment grade, so less than 1% sub-investment grade. The portfolio is well diversified by sector and internationally, with our public credit more US focused, but our private credit more UK biased. Further details on this are contained in the appendix to the pack. At the full year results, I committed to greater transparency in our discussions with investors. And I heard some of you talk about the importance of cash disclosure. So we're moving there. Today, we're disclosing our stock of cash at Holding Company for the first time. And you see it's 1.4 billion pounds at 31 December 2025. Our Holdco cashes around one times our Holdco outgoings for a full year and is likely to stay at that level for a foreseeable future. We think this is an appropriate level for our business. We have further liquidity held in our business units, which is material and available to invest in growth. So we're well positioned to meet our continued growth objectives and support the attractive dividend. And on that point, I shall hand back to Antonio.