Press releases

Second year of double-digit returns for with profits fund drives strong final bonus rates for with profits maturities at Legal & General.

Carl Dowthwaite - With Profits Actuary
Carl Dowthwaite
With Profits Actuary

17 February 2011

Carl Dowthwaite - With Profits Actuary
Carl Dowthwaite
With Profits Actuary

Over the past 10 years, assets invested for customers in Legal & General’s with profits fund have returned 59.8 per cent before tax. This is well ahead of inflation as the Retail Prices Index has risen 32.6 per cent over the same period and compares favourably with the average balanced managed fund return of 40.2 per cent before tax*.

25 year mortgage endowment policies maturing in surplus

The company says this means final bonus rates will deliver payouts ahead of target for a typical 25 year mortgage endowment policy maturing on 1 March.

Examples of 25 year mortgage endowment policies maturing on
1 March 2011
(Level premium mortgage endowment policy, male aged 29 at entry)
Monthly paymentTarget amountValue at maturitySurplus
 £50 per month£34,378£34,750£372
 £100 per month£69,100£69,843£743
 £150 per month£103,822£104,940£1,118 

Legal & General has approximately 660,000 With Profits customers and approximately 38,000 endowment mortgage policies will mature in 2011.

With Profits Bonds have seen a strong increase in value over 2010.

£10,000 invested in a With Profits Bond 10 years ago has a cash-in value of £13,326 today.

This represents an increase in cash in value of 11.9 per cent versus the cash in value a year ago. Over the last year MVRs have been reduced for bond customers on our With Profits Income Bonds and With Profits Growth Bonds.

Carl Dowthwaite, With Profits Actuary said: “With profits savers benefit from the opportunity to invest in a broad spread of assets, which can help to reduce risk. All of the major asset classes held in our with profits fund have performed well during 2010 with particularly strong returns in commercial property and equities. These returns demonstrate the benefits of investing with a leading with profits provider. We are pleased that our customers have benefited from the strong recovery in asset values seen over the last two years.”

* Source: Lipper for Investment Management

Further examples of investment values please see Appendix One below.

Appendix one
Further examples of investment values for With Profits Products
Pensions (Pension Plan, male retiring at age 65, £200 per month)
Plan TermTransfer value as at 1/3/2010Total payments since 1/3/2010Retirement value as at 1/3/2011Return over year
10 year£26,168£2,400£31,1009.3%
15 year£42,540£2,400£48,2327.5%
20 year£70,120£2,400£77,1426.5%
With Profits Growth Bonds, based on an initial investment of £10,000
Date of investmentCash-in value as at 18/2/2010Cash-in value as at 18/2/2011Return over year
18 Feb 2001£11,909£13,32611.9%
18 Feb 2006£10,054*£11,30712.5%

*This value is quoted before a 2% charge that applies. This charge is designed to recover initial costs, and is therefore excluded when measuring investment returns over the year.

Notes to editors

  1. The return generated in 2010 is on total assets backing With Profits policies and is stated pre-tax and charges. Returns generated for the assets underlying individual products may differ from this value.
  2. Assets under Administration grew by 3 per cent to £22.1 billion as at 31 December 2010. Legal & General has approximately 660,000 With Profits customers, spread across pensions, annuities, endowments and other savings products.
  3. The asset allocations for the major product classes at 31.12.2010 were as follows;
Asset allocation as at 31.12.2010With Profit Growth BondsWith Profits EndowmentsWith Profits Pensions
UK shares 27% 27% 23%
Overseas shares 18% 18% 15%
Fixed interest securities 38% 38% 48%
Commercial property 17% 17% 14%

For more information please contact:

Mike Connolly

Mike Connolly
PR Manager Savings

t: +44 (0) 1737 375365
m: +44 (0) 7802 503917

About Legal & General

Legal & General Assurance Society Limited.

Registered address:
One Coleman Street
London EC2R 5AA.
Registered in England 166055.