In 2006, Legal & General achieved both record new business and record profits. Our total UK market share for the year exceeded 10% for the first time. These are the achievements of a strong and successful company.
Tim Breedon
A core purpose of our business is to make financial security easier to achieve for people at every stage of their lives.
To many retired people, the pension fund they have built up over the years is what they now depend on. To a couple, buying their first home marks a major step. To people of working age, the savings they make into ISAs, unit trusts, investment bonds and pensions are a vital source of financial security. Through our General Insurance and Protection products we help protect the lives, health, homes and belongings of millions of people in the UK.
By providing a wide range of value-for-money protection, annuity, savings and investment products, Legal & General makes a significant and valuable contribution to society as a whole. Our scale and the long term nature of our products, where customer relationships may last for decades, create a duty to behave and make decisions responsibly. Legal & General has a very good track record of doing this.
For us, Corporate Social Responsibility, or CSR, involves the proper management of our relationships with customers, suppliers, shareholders and employees, and the impact our business makes upon society and the environment. Adherence to strong CSR principles is not just part of good business, but essential to long term success.
Our customers are at the heart of our strategy. Legal & General currently supplies products or services to over five million customers. Our successful business model is founded upon providing them with good value products, quality service and a wide choice of ways to buy. We support the Association of British Insurers’ (ABI) Customer Experience initiative and we seek to apply the principles of the Financial Services Authority’s (FSA) Treating Customers Fairly initiative consistently throughout our business. We know that it’s important to our customers that Legal & General is a good corporate citizen. Research has told us how they think we should behave (more on that in the ‘Our Customers’ section) and we know that they have growing expectations. We listen to them and seek to understand and respond to their concerns.
Investing in our 9,000 employees is another key element of our strategy. Our workforce is our most valuable asset, and we have implemented a wide range of policies to maximise opportunities for all employees. Our strong, open partnership with our trade union, Amicus, is a critical part of the Legal & General culture. Our employees have told us that they want to work for an ethical company, which takes its responsibilities to society and the environment seriously, and we consider responsible behaviour, and good management of our Company’s social and environmental impact, to be important in being able to recruit and retain a talented and motivated workforce.
As one of the UK’s leading institutional investors, with over £233 billion(1) under management on behalf of investors, policyholders and institutions, we have a unique opportunity - and responsibility - to exert a positive influence on the companies in which we invest. We expect these companies to adopt a responsible approach to social, environmental and ethical (SEE) issues. We support the ABI Disclosure Guidelines, which call on companies to disclose how the business and reputational risks arising from these areas are being assessed and managed, and we regularly discuss both SEE and governance issues with FTSE 350 companies. With many of our pension fund clients showing interest in the influence we bring to bear on companies with regard to SEE issues, being a responsible and active shareholder is an increasingly important element of our investment strategy.
We also recognise our wider sphere of responsibility, in particular to our suppliers, to the environment and to the communities in which we operate. Further detail on how we manage our impact in each of these areas can be found in this Report.
We are proud of our achievements during 2006, and the progress we have made in refining and implementing our CSR policies. At Legal & General, as in many organisations, CSR grew out of a philanthropic motive. More recently we have come to recognise that it is a ‘need to have’ rather than a ‘nice to have’, and that responsible behaviour adds value to our business. The journey continues, however. Key challenges for 2007 include exploring how we can integrate responsible behaviour even deeper within our business and developing new ways to communicate our activities with our many stakeholders. This will include a review of our CSR reporting structure. As always, we value your views and recommendations.
We look forward to meeting these challenges in the coming year.
Tim Breedon
Group Chief Executive
Legal & General Group Plc
April 2007
(1) As at 31 December 2006