Press releases


Tim Sheldon, With Profits Actuary, Legal & General Assurance Society
Tim Sheldon
With Profits Actuary, Legal & General Assurance Society

16 February 2012

Tim Sheldon, With Profits Actuary, Legal & General Assurance Society
Tim Sheldon
With Profits Actuary, Legal & General Assurance Society

The Legal & General With Profits Fund returned 1.7% (before tax) on assets held for with profits customers last year (12 months to 31 December 2011).

We have been able to maintain annual bonus rates at last year’s levels for our conventional endowment mortgage customers, and for the majority of our bond and unitised pensions customers the annual addition to their policies is higher than the 1.7% return delivered by the With Profits Fund.

Customers continue to benefit from the wide spread of assets in our With Profits Fund, which has contributed to a positive investment return, and smoothing, which uses some of the investment returns held back in good years to support years with lower investment returns, such as 2011.

Total bonuses of £459 million have been added to with profits policies, up 11.6% on the previous year (£411m in 2010). The increase reflects a rise in the number of customers whose with profits policies matured over the year.

Commenting on this year’s with profits performance Tim Sheldon, Legal & General’s With Profits Actuary said; “In current market conditions the core features of with profits, which combine a balanced asset mix with smoothing of investment returns and underlying guarantees, mean with profits remains a good choice for investors seeking steady growth from a spread of investments over the longer term with some downside protection. In these uncertain times the benefits of smoothing and guarantees can provide advantages to with profits policyholders over other forms of investment. Active risk management and our balanced investment strategy ensure our With Profits Fund retains the strength and investment freedom to take advantage of potential opportunities to boost returns for policyholders.”

Inflation beating returns over the long term

Over the past 10 years, assets invested for customers in Legal & General’s With Profits Fund have delivered a return of 5.7% p.a. (gross). This is well ahead of the Retail Prices Index, which has risen 3.2% p.a. over the same period. The 10 year With Profits Fund return also outperforms the average balanced managed fund return over 10 years of 4.1% p.a. (gross of tax). 
(Source: Lipper for Investment Management and Legal & General)

Over 25 years Legal & General’s With Profits Fund has returned 8.9% p.a. (gross), which is ahead of the rate of inflation measured by the RPI of 3.6% p.a.

Endowment mortgages maturing on 1 March 2012:

Final bonus rates will deliver payouts close to target for a typical 25 year endowment maturing on 1 March 2012. For example a £50 per month 25 year endowment maturing on 1 March 2012 would have a maturity value of £33,601, which represents a shortfall of £777 against the target amount of £34,378 (example based on a level premium mortgage endowment for a male aged 29 at entry).

Legal & General has approximately 600,000 with profits customers with around 200,000 mortgage endowment policyholders. Around 41,000 endowments will mature in 2012.

With Profits Bonds:

£10,000 invested in a With Profits Growth Bond 10 years ago has a cash-in value of £14,905 today. This means that a 10 year investment of £10,000 has increased in value by 4.1% p.a. (net of tax and charges).


Further examples of investment values for With Profits Products are given in the appendix - to view this document please click on the download link to the right of this page. 

Notes to editors

The information contained in this press release is intended solely for journalists and should not be relied upon by private investors or any other persons to make financial decisions.

The return generated in 2011 is on total assets backing with profits policies and is stated pre-tax and charges. Returns generated for the assets underlying individual products will differ from this value.

  • Past performance is not a guide to future performance.
  • The value of investments may fall as well as rise and investors may get back less than the amount originally invested.
  • What a customer gets back depends on future bonus rates that aren’t guaranteed and can change.
  • We may apply an early surrender charge and/or market value reduction if a customer cashes in all or part of their bond or move out of with profits. This would reduce the amount paid.

The asset allocations for the major product classes at 31.12.2011 were as follows;

With Profits Fund Asset Allocations as at 31 December  2011

Asset allocation as at 31.12.2011
Asset typeWith Profit Growth BondsWith Profits EndowmentsWith Profits Pensions
 UK shares 23% 23% 19%
 Overseas shares 21% 21% 17%
 Fixed interest securities 40% 40% 51%
 Commercial property 16% 16% 13%


RAG status based on the re-projection mailings completed last year (2011) for policies maturing over the next five years is Green 8%, Amber 6%, and Red 86%.

The Legal & General Group, established in 1836, is one of the UK’s leading financial services companies. As at 30 June 2011, we were responsible for investing £370 billion worldwide on behalf of investors, policyholders and shareholders. We also had over seven million customers in the UK for our life assurance, pensions, investments and general insurance plans.

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