Our strategy

Growth driver

Ageing demographics

Ageing populations mean that pension savings need to last longer. The number of people in the UK aged 75 and over is projected to rise to nearly 10 million by 2040.

Rationale

DB pensions are in crisis with an estimated £560 billion of private sector deficits exacerbated by low interest rates; and the ageing population, illustrated by the projected doubling of over 75s in the UK between 2015 and 2050.

What we do

We can help DB pension scheme trustees take action at every stage through the de-risking journey to reduce pension liabilities and ensure that members' pensions are paid on time and in full

Progress

• LGR new business of £6.4 billion
• £1 billion in lifetime mortgage advances
• 15 US de-risking transactions
• Liability driven investments market share of 42%

All figures correct to 31.12.17

Growth driver

Globalisation of asset markets

Global wealth assets exceed $80 trillion. Our share is around 1.2%, so we’re exporting more of our skills internationally.

Rationale

We’re successful in the UK and the US, but we’ve just around a 1.2% share globally so we're leveraging our skills internationally, not just in the US, but also in Asia, the Middle East and other parts of the world.

What we do

We’re expanding our international businesses in the US, Europe, the Gulf and Asia, using our asset management and risk management skills.

Progress

• US assets of $189 billion
• LGIM Japan approved
• Winning US mandates. Net flows: $17 billion
• International AUM of £228 billion, up 28.5%

All figures correct to 31.12.17

Growth driver

Creating real assets

There’s an urgent need to invest in infrastructure and urban regeneration. Pension assets need to be invested over the very long term and we can improve returns and benefit the economy by investing in this way. Many UK cities outside London need investment to match global competitors. At the same time the UK continues to experience a serious housing shortage.

Rationale

We seek to invest the group’s £58.2 billion pension annuity assets in higher performing risk-adjusted classes. Direct investments can offer better and more predictable returns to shareholders and can create economic benefits for the UK.

What we do

We offer investment solutions at every stage of a scheme’s life cycle. From the growth phase, through de-risking with LDI and bulk annuities, right to the setting up of new DC schemes.

Progress

• £14.4 billion of group-wide direct investments
• £1 billion build to rent housing pipeline, new sites in Bath, Leeds and Brighton
• UK infrastructure schemes in Stratford, Newcastle and London Gateway
• New later living partnership launched

All figures correct to 31.12.17

Growth driver

Welfare reforms

Many families that rely on state benefits struggle to survive financially following death, disability or long-term sickness. People need help to save more for retirement and to build financial independence.

Rationale

Many families will struggle to survive financially following death, disability or sickness. Company and individual insurance cover can safeguard financial independence.

What we do

We help people safeguard their families' financial futures through providing insurance covering life, critical illness, and disability, long-term sickness, buildings, possessions, pet and travel.

Progress

• UK market leaders for retail protection, market share of around 24%
• Largest UK manager of DC assets, with £68.2 billion of assets, up 19%
• 2.7 million UK DC customers in over 13,000 schemes

All figures correct to 31.12.17

Growth driver

Technological innovation

Consumers increasingly expect digital ways to organise their finances. In the low-cost world, technological solutions can mean the difference between success and failure.

Rationale

Consumers often choose companies that can offer low prices and digital access. We believe that the market will favour businesses that build low-cost, efficient digital operating models. Our digital strategy for customers allows insurance customers to obtain quotes, apply for policies and review and renew them using mobile and digital technology.

What we do

We want to be a market leader in offering consumers digital access to life insurance, general insurance and personal investments. At the same time we need to give our customers an excellence in service delivery at a low cost, achieved through efficient digital operating models.

Progress

• Launched 'SmartQuote' and 'SmartClaim' for home insurance
• 19% of retail protection premiums were direct and 38% of GI sales were direct
• Newly created Fintech business areas
• Over 1.5 million 'My account' customers
• Led a £40 million investment funding round for Salary Finance employer platform

All figures correct to 31.12.17

Growth driver

Today’s capital

In recent years, equity investment capital has been in short supply. The UK needs investment in modern, digital start-up businesses to create jobs and stimulate economic growth.

Rationale

Consumers often choose companies that can offer low prices and digital access. We believe that the market will favour businesses that build low-cost, efficient, digital operating models.

What we do

We are committed to using our long-term capital to invest in the UK economy, creating jobs, long-term infrastructure, better housing and available capital to fund start-up businesses, whilst giving a better risk-adjusted return for shareholders.

Progress

• Investing in two new Pemberton funds
• Our investment in Pemberton saw a 46% AUM growth
• Committed investment to five Venture Capital funds in UK and Europe
• 100% ownership of CALA Homes

All figures correct to 31.12.17