Legal & General Retirement.

Male and female pensioners talking on a tennis court

What we do

Helping people achieve financial security in retirement

The world is getting older and people are living for longer. Individuals often underestimate their outgoings in retirement, life expectancy and the cost of care. Many pensioners will need to rely increasingly on alternative sources of finance to fund this 'savings gap'. The over 60s in the UK are estimated to have some £1.4 trillion of housing equity and we expect increasing numbers of retirees to use this equity to supplement their retirement income.

Ageing populations at the same time expose corporate balance sheets to earnings volatility caused by predominantly legacy defined benefit (DB) pension schemes and the associated financial obligations placed on the sponsoring employer. With fewer members in DB schemes, income from contributions is often projected to be insufficient to meet future liabilities. This is worsened by increasing longevity, low interest rates and volatile equity investments. Large scale derisking of DB pension schemes is inevitable. Globally, the DB pension market is in the very early stages of de-risking. It's been estimated that something of the order of $10 trillion worth of liabilities will be de-risked over the next couple of decades.

We offer DB pension schemes de-risking investment solutions at every stage of their scheme's life cycle. Our pension derisking capabilities include matching scheme liabilities and assets using LDI solutions and longevity risk management. To be competitive in this environment you need integrated asset management strength, LDI capability and longevity expertise. You need capital and you need a track record of effective execution. Legal & General is the only company globally to offer all these de-risking solutions. This comprehensive product capability is matched by almost 30 years of experience in the bulk sector.

Our eight sources of profit

Within Legal & General Retirement we have eight drivers of profit which delivered the following achievements in 2016:

1. Back book for cash and capital

  • Existing £54.4 billion annuity portfolio. This generated £433 million release from operations and £592 million net release from operations in 2016
  • Our asset strategy is being optimised with direct investments and lifetime mortgages

2. Back book acquisitions

  • Acquisition of £2.9 billion Aegon back book in H1 2016
  • We successfully completed a £1.4 billion Lucida transaction in 2013
  • Around £100 billion of UK individual annuity back book opportunities

3. UK capital efficient front book

  • Evolving to meet anticipated demand of £2.1 trillion defined benefit pension liabilities in the UK
  • £3,338 million written in 2016, with low single digit capital strain
  • We're currently quoting on around £13 billion of buy-in and buyout deals

4. Longevity Insurance

  • £900 million of reinsured longevity insurance transactions written in December 2016
  • Total of £6.9 billion of longevity insurance deals completed since 2011

5. US pension risk transfer

  • Six deals written in 2016 totalling $448 million
  • First US pension risk transfer transaction in 2015 ($450 million)

6. Global reinsurance hub

  • First Dutch deal in December 2015. A+ rating from Fitch and Standard & Poor's. We achieved DNB registered reinsurer status in 2016

7. Individual retirement

  • Strong individual annuity sales growth of 16% at £378 million in 2016 (£327 million FY 2015)
  • Distribution agreement with Aegon to increase future flows

8. Lifetime mortgages

  • £1.5 trillion of housing equity owned by the over 55s in the UK. Long term illiquid asset creation for our annuity fund
  • Strong entry into the market since May 2015, with £620 million of sales in 2016 (2015: £201 million).

Our role and purpose

Our corporate business provides pensions derisking solutions for defined benefit pension schemes. Our individual business helps customers manage retirement assets, including a growing lifetime mortgage business.

Where we operate

We are primarily UK focused but have recently developed international businesses for pensions risk transfer and reinsurance in the US and the Netherlands.

Kerrigan Procter

Chief Executive Officer:
Kerrigan Procter
Read Kerrigan's profile


Bulk Annuities

Kerrigan Procter, MD, Retirement


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Percentage of divisional profit

Legal & General Retirement represent 43% of group divisional operating profit and are our largest business segment.


  • Total new business sales of £8.5 billion in 2016, up 190%
  • Annuity premiums of £7.0 billion, including £2.9 billion back book acquisition from Aegon and six US PRT deals totalling £347 million ($448 million).
  • £900 million reinsured longevity insurance deal transacted in December 2016
  • £620 million lifetime mortgage sales, reflecting strong growth since entry in May 2015. 29% market share in 2016

Strategic execution

1. Retail retirement – individual annuities

Retail retirement – individual annuities

Individual Annuities are in growth mode again

  • In recent years there has been around a 75% decline in sales following the government's 'Freedom & Choice in Pensions' initiative
  • However, we wrote £378m written in 2016, up 16%
  • This growth was supported by an increase in market volume and the distribution agreement with Aegon
  • We saw active participation in all parts of the market

2. Retail retirement – lifetime mortgages

Retail retirement – lifetime mortgages

Market leading customer proposition

  • Wide range and competitively priced product offering
  • Fair lending framework – unique approach which includes providing free bereavement, financial and well-being counselling services for lifetime of product
  • Innovative solutions to meet market needs – partnered with high street bank to address "Interest Only shortfall" problem

Diversified and risk-balanced book

  • Average LTV (loan advanced) of 27%
  • Average customer age of 71
  • Geographical region spread

3. Robust and well diversified asset portfolio

Increasing proportion of direct investments
Whilst maintaining overall credit quality and high sectoral diversification

4. Strong growth delivery

New direct investments and AUA


Annuity single premium and Profit before tax

Further information

Our pension risk transfer business:
Our lifetime mortgage business: