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1TIGHTROPE WALKING IN THE FOG. TIME FOR BEVERIDGE 2.0 AND SCHUMPETER 2.0?
BofA MERRILL LYNCH CONFERENCENIGEL WILSON, 24 SEPTEMBER 2013
EVERY DAY MATTERS
2
TITANS OF ECONOMICS AND INNOVATION.
Keynes Beveridge
BevanJobs Gates
Schumpeter
1. No great economic problem solvers and policy makers delivering Beveridge 2.0 and Schumpeter 2.0 solutions that drive economic prosperity and efficiency.
2. No major leaders of innovation – western corporates under investing capital and hoarding cash. Banks deleveraging.
3. Government policy makers finding it hard to deliver: economic “targets”, appropriate economic and welfare infrastructures.
Legal & General can accelerate growth through greater provision of our core products and core capabilities.
Berners-Lee
3
0
50
100
150
200
250
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
p
1.11 1.332.41.962.011.87 1.66
2007 2008 2009 2010 2011 2012 2013 Analystconsensus
2014 AnalystconsensusInterim Final
LEGAL & GENERAL’S FINANCIAL PERFORMANCE HAS BEEN STRONG 2009-2013.
4.75p
6.40p
4.06p 3.84p
7.65p
9.00p10.10p
Source: Bloomberg as at 19th September 2013.
Source: Datastream as at 17th September 2013.
5.97p
Dividend per share
2007 2008 2009 2010 2011 2012 2013
4
LGIM flows Up 66% to £25bn, net flows up 100% to £8bn
Bulk annuity premiums Up 900% to £670m
Individual annuity premiums Up 44% to £754m
Net cash Up 23% to £500m
Operational cash Up 14% to £537m
Operating profit Up 10% to £571m
Profit after tax Up 15% to £464m
Earnings per share Up 13% to 7.82p
Interim dividend Up 22% to 2.40p per share
IFRS return on equity Up to 16.8%
OUR FINANCIAL RESULTS REMAIN STRONG. FINANCIAL HIGHLIGHTS 30 JUNE 2013.
5
MANY ECONOMIC PROBLEMS – BUT FEW REALISTIC SOLUTIONS……
1. Real wages falling – record jobs but at lower wages (UK, US, Germany).2. Productivity falling –lack of investment, low risk, low paid labour instead of
risk capital.3. Asset prices rising – driven by QE monetary methadone, Bernanke and
Draghi “puts”, record profit margins and inappropriate housing policies. The rich and old are getting richer, the poor and young are getting poorer.
4. Government spending and borrowing unsustainable – driven by demographic changes, unfunded pension liabilities, election social contracts – inefficient spend on education, housing, welfare risk products etc.
5. Yield curves jumping (mainly upwards) in all economies – reflecting QE uncertainty, structural economic imbalances and current account deficits.
No one understands how we will exit QE – is the ‘market’ pricing the associated risk?
6
….DISTORTIONS CAUSED BY MONETARY POLICY ACTIONS WITHOUT SUPPLY SIDE REFORM.
6. Corporates under investing in Capital, hoarding cash – “risk off” after being “buried” in 2000/1 and 2007/8. China has adopted opposite strategy.
7. Technology gains remain low – Apple and Microsoft buying back shares, inefficient investment in “green” technology, infrastructure and education.
8. Banks are deleveraging and lending remains low – reflecting regulatory risk, rules and uncertainty coupled with lack of investment demand from companies and minimal innovation.
9. Goods price inflation – Expectations uncertain as benefits from Asian manufacturing decline and China focuses on domestic consumption and Indian outsourcing benefits reduce.
10. Unemployment is increasingly complex - participation rates declining in US, unacceptable unemployment in GIIPS, increasing global issues amongst student populations.
Globalisation is still occurring, but consequences are now rarely analysed.
7
BERNANKE, OSBORNE AND MERKEL: “MISSION ACCOMPLISHED”?
LGIM Forecasts US UK GERMANY
2013 2014 2015 2013 2014 2015 2013 2014 2015
Real GDP Growth (%) 1.6 2.6 2.8 1.4 2.4 2.8 0.6 1.7 1.9
Inflation (%) 1.6 2.4 3.0 2.7 2.4 2.2 1.5 1.5 1.5
Unemployment (%) 7.5 7.0 6.5 7.7 7.9 7.6 5.4 5.6 5.4
Budget balance (bn) $(700) $(700) $(650) £(110) £(95) £(80) €(3) €1 €4
Employment (million) 136 138 141 32.3 32.5 32.8 41.8 41.9 42.1
8
UK inflation
0
1
2
3
4
5
6
Jan-
08May
-08
Sep-0
8Ja
n-09
May-0
9Sep
-09
Jan-
10May
-10
Sep-1
0Ja
n-11
May-1
1Sep
-11
Jan-
12May
-12
Sep-1
2Ja
n-13
May-1
3
%
BoE target
Forecast error
-12
-10
-8
-6
-4
-2
0FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
% o
f GD
P
Mar 13 forecast Nov 10 forecast
Forecast error
HOW USEFUL ARE GOVERNMENT TARGETS IN AN UNCERTAIN ECONOMY?
OBR forecasts of UK public sector financial balance% of GDP (excluding Royal Mail, BoE coupon payments)
UK INFLATION
42618797108115121Borrowing
723694658633612587573Gov’ntincome
765755745730720701694Gov’ntExpend
17/1816/1715/1614/1513/1412/1311/12£’bn
42618797108115121Borrowing
723694658633612587573Gov’ntincome
765755745730720701694Gov’ntExpend
17/1816/1715/1614/1513/1412/1311/12£’bn
9
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
1Y 18M 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 12Y 15Y 20Y 25Y 30Y
HOW LONG CAN FINANCIAL REPRESSION LAST?
% of stock of gilts in 2012 by duration in years
0
1
2
3
4
5
6
7
8
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50
% o
f sto
ck b
y ye
ar
0
10
20
30
40
50
60
70
80
90
100
Stock by maturity (LHS)
Cumulative stock by maturity (RHS)
Excluding QE
August 2013January 2013
% of stock of gilts in 2012 by duration in years
10
US: OBSESSED ABOUT FINANCIAL MARKETS AND S&P PERFORMANCE. CHINA: OBSESSED ABOUT CAPITAL INVESTMENT AND 7% GROWTH.
Source: Bloomberg
40%
60%
80%
100%
120%
140%
160%
01/01/2010 01/01/2011 01/01/2012 01/01/2013
S&P 500 Shanghai
15%
20%
25%
30%
35%
40%
45%
50%
78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12
GFCF % GDP
ChinaEM G20 ex ChinaG20US-EU-Japan
GROSS FIXED CAPITAL INVESTMENT IN G20.S&P 500 V SHANGHAI STOCK EXCHANGE
Source: Barclays
US
China
China
EM G20 ex China
G20
US-EU- Japan
11
420430440450460470480490500510520
00 01 02 03 04 05 06 07 08 09 10 11 12 13
£ per week, 2012 prices
Real average weekly earnings
QE: BY THE RICH, FOR THE RICH?
100
120
140
160
180
200
220
65 70 75 80 85 90 95 00 05 10
1965
=100
REAL AVERAGE WEEKLY EARNINGS AT A 12-YEAR LOW
UK REAL WAGES PER WORKER (WEEKLY EARNINGS/RPI)
Source: Barclays
Declining
1%-2% real growth per annum
1212
ECONOMIC AUSTERITY LEADS TO POLITICAL UNEMPLOYMENT.
Pre 2010 2012 2014
Sarkozy 55% 35% 34% Exit
Hollande Elected 51% 30% 2014 Euro elections.27% approval rating
Obama 65% 50% Re-electedSenate and House of
Representatives elections. 44% approval rating
Merkel 60% 63% 60% Sept 2013 General ElectionRe-elected with 41.5%
Abe 30% Resigns 2007
76%Elected 62% 62% approval rating
Cameron 54% 36% 28%2014 Euro Elections.
General Election May 201532% approval rating
Austerity casualties: Zapatero (Spain), Berlusconi & Monti (Italy), Papandreou & Papademos (Greece), Cowen (Ireland), Sócrates (Portugal), Stoltenberg (Norway)
13
UK JOBS: HARDWORKING, MOBILE LABOUR FORCE…..IMMIGRATION ACCOUNTS FOR ALL NEW JOBS.
Source: Reuters EcoWin
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
04 05 06 07 08 09 10 11 12 13
mill
ions
Overseas born, overseas national
Overseas born, UK national
UK born
CUMULATIVE CHANGE IN UK EMPLOYMENT SINCE 2004
14
US PARTICIPATION RATES DECLINING – WHERE ARE THE REAL JOBS?
60
61
62
63
64
65
66
67
68
Jan-78
Jan-81
Jan-84
Jan-87
Jan-90
Jan-93
Jan-96
Jan-99
Jan-02
Jan-05
Jan-08
Jan-11
Perc
ent
US UK
% OF CIVILIAN POPULATION ECONOMICALLY ACTIVE (WORKING OR LOOKING FOR WORK).
Source: Reuters EcoWin
15
UNDER-INVESTMENT AND POOR INFRASTRUCTURE PUSHING UK PRODUCTIVITY DOWN.
-2
-1
0
1
2
3
4
5
Agriculture
Manufacturing
Construction
Wholesale/retail
Finance/insurance
Publicadm
in/defence
Education
Health/social
work
%
Change 97-07 Change Jan 07-13
16
Graduate employment
66%
34%
Unemployed or do low-skill jobs Graduate Job
SCHUMPETER 2.0: DO WE NEED CREATIVE DESTRUCTION IN FURTHER EDUCATION?
Student Loans in England 2005-2013
15
30
47
0
5
10
15
20
25
30
35
40
45
50
2005-2006 2009-2010 2012-2013
£bn
US student loans now exceed $1trillion For the top 100 employers the average starting salary is £25,000 and it has been unchanged from 2011.Other employers offer entry - level candidates with first degrees between £17,000 to £25,000, which has also remained unchanged for the past three years.
China now has 7-8 million graduates per year.
STUDENT LOANS IN ENGLAND 2005-2013 GRADUATE EMPLOYMENT
17
EXCESSIVE HOUSING INFLATION, INSUFFICIENT HOUSING SUPPLY – A POLICY FAILURE.
Source: Shelter
HOUSE BUILDING, HOUSE PRICES AND GROWTH IN ENGLAND
18
HOUSING VICIOUS CIRCLE: UNDERBUILDING PUSHES UP RENTS, DIVERTS CAPEX TO WELFARE, SUPPLY DIMINISHES FURTHER.
£95bn
£5bn
Housing Benefit House Building
In 1975, more than 80% of public expenditure directed to housing was spent on supply-side capital funding. By the end of the century this balance has more than entirely reversed.
HOUSING EXPENDITURE (CURRENT 5 YEAR CYCLE)
RELATIVE GROWTH IN HOUSING BENEFIT EXPENDITURE AND CASELOAD
Source: IPPR: Together at home: A Strategy for housing (index 100 = 1978/79)
19
UK, US AND EUROPE NEED BEVERIDGE 2.0. WELFARE EXPECTATIONS UNREALISTIC.
0
5
10
15
20
25
2000 2010 2020 2030 2040 2050
% of GDP
Healthcare
Social security
Interest
Discretionary
Current taxes
2007-08 (£bn)
2011-12 (£bn)
% change
Pensions 99 127 28
Welfare 90 115 28
Health 102 121 19
Education 79 92 16
Total 370 455 23
Total Expenditure 583 695 19
Source: Congressional Budget Office, Citi research Source: HM Treasury - Public Expenditure, Statistical Analyses 2012
US GOVERNMENT SPENDING V REVENUE UK PUBLIC SECTOR EXPENDITURE ON SERVICES
20
SOCIAL SPENDING % OF GDP.
“If Europe today accounts for just over 7 percent of the world’s population, produces around 25% of global GDP and has to finance 50% of global social spending, then it’s obvious that it will have to work very hard to maintain its prosperity and way of life.” – Angela Merkel
21
Source: United Nations Population Division, 2010 projections. Total projected world population in 2050 is 9.3 billion.
WORLD POPULATION GROWTH 1950-2050
LONG TERM DEMOGRAPHIC TRENDS ARE FAVOURABLE FOR LEGAL & GENERAL.
“The world is becoming grey. Over 60s rising from 600 million to 2 billion by 2050”
ASIA
0
1
2
3
4
5
6
1950 1970 1990 2010 2030 2050
Billi
ons
0-19 20-49 50-59 Over 60
NORTH AMERICA
0
0.1
0.2
0.3
0.4
0.5
1950 1970 1990 2010 2030 2050
Billi
ons
0-19 20-49 50-59 Over 60
AFRICA
0
0.5
1
1.5
2
2.5
1950 1970 1990 2010 2030 2050
Bill
ions
0-19 20-49 50-59 Over 60
EUROPE
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
1950 1970 1990 2010 2030 2050
Billi
ons
0-19 20-49 50-59 Over 60
22
41% of British adults believe that public spending on welfare benefits should be cut, while 31% think the state welfare provision should stay as at present levels; which leaves only less than a third of adults to believe that government should increase expenditure on welfare benefits.
Almost 70% of the pre-war generation, and 61% of baby-boomers, believe that the creation of the welfare state is one of Britain’s proudest achievements. Under 30% of those born after 1979 agree.
THE NEED FOR BEVERIDGE 2.0.
BENEFIT SPENDING NOMINAL BENEFIT SPENDING REAL TERMS
23
FALLING UK DEPENDENCY RATIOS BOOST NEED FOR RETIREMENT SOLUTIONS.
Dependency Ratio 1950 2030 (Est)Japan 12.2 1.8
Germany 7.1 2.1
Italy 8.0 2.3
France 5.8 2.4
UK 5.9 2.9
US 8.1 3.0
UK 2000 UK 2025
Sources: ONS, United Nations Population Division.
24
RISK SHARING: TIME FOR ‘BEVERIDGE 2.0’.
1942: 5 Giants – “Want, Disease, Ignorance, Squalor, Idleness”“must be achieved by co-operation between the state and the individual”Compulsion via National Insurance and Contributory benefits, but….“should not stifle incentive, opportunity, responsibility, leaving room and encouragement for voluntary action by each individual to provide more than the national minimum.”
2013: State pension plus auto-enrolment in Defined ContributionUnemployment benefits plus Income Protection Disability Benefits/Statutory Sick Pay plus Group Protection
Public Sector
Private Sector
35%
65%
98%
2%
95%
5%
100%
Individual & Occupational pensions
Accident & Health Income Protection
MotorSource: ABI & HM Treasury Public Expenditure Statistical Analyses and Deloitte calculations
25
AGEING POPULATIONS
DIGITAL LIFESTYLES
WELFARE REFORMS
HOMOGENOUS ASSET
MARKETS
RETRENCHING BANKS
GROWTH DRIVERS
RETIREMENT SOLUTIONS
DIGITAL SOLUTIONS
PROTECTION
LGIM INTERNATIONAL
DIRECT INVESTMENT
GROUP RESPONSE
PROGRESS
MACRO DRIVERS OF LEGAL & GENERAL’S GROWTH.
Over 60s will grow from 600m today to over 2 billion by 2050, Corporates move to DC and derisking. Individual accountability for pensions.
Platforms likely to double in 5 years. Guided solutions coupled with click through purchasing. D2E substantial growth replacing the Government.
UK Government deficit is £120bn, US around $1trillion – risk transfer from Government to Corporates and individuals.
Index, income and solutions businesses playing a key role in global growth markets.
Replacement of Bank and Government capital by long term debt and equity institutional funding.
KEY TRENDS
5 MACRO TRENDS – 5 WINNING STRATEGIES.
26
2009 and Ongoing 2012 2013 and beyond
STRATEGIC AND FINANCIAL EVOLUTION.
CASH PLUS ORGANIC GROWTH PLUS SELECTIVE ACQUISITONS
CASH: CERTAINTY AND SUSTAINABILITY CASH PLUS ORGANIC GROWTH
ORGANISATIONAL PROGRESS
OUTCOMES
STRATEGIC PROGRESS
• Industrialised and automated processes
• Cost of new business reduced
• Capital efficiency increased
• Identification of five key macro drivers of growth
• Banks and governments excessive leverage create “white spaces” to expand into
• No burning platforms
• Accelerated growth in annuities, direct investment and LGIM
• Three selective acquisitions• Measured international expansion• Increased digital capacity
• One firm: shared culture, beliefs and values
• Expansion of key roles - Improving talent
• 5 major profit centres in our new operational structure.
• Becoming a destination for talent
• Net cash: 2008: £320m2012: £865m H1 2013: £500m up 23%
• Dividend:2008: 4.06p2012: 7.65pH1 2013: 2.40p up 22%
2012• UK Individual annuities up 26%• UK Protection up 25%• US Protection up 28%• Direct investments £1.2bn• Workplace net inflows £1.6bn
2013• LGIM International AUM: £52bn• Largest UK longevity insurance
deal £3.2bn • UK Savings AUA £111bn including
Cofunds acquisition• UK Bulk Annuities at £670m
plus Lucida acquisition• CALA equity purchased with no
goodwill
Return on Equity 15.4% Return on Equity 16.8%
2727
LGIM INTERNATIONAL AND LDI EXPANSION.
2008 2010 2012 H1 2013Internal External
32% CAGR
INTERNATIONAL AUM
£52bn
£15bn
2008 2010 2012 H1 2013
29% CAGR
LDI AUM
£23bn
£71bn
International:
• Europe: Record sales in H1 with 9 new clients from the region. We plan to launch our first SICAV by the end of the year.
• Gulf: Strong inflows in the first half. We have a healthy pipeline for both Index and Property products.
• Asia: LGIM Hong Kong has received regulatory approval. Significant opportunities to sell Index and Fixed Income in the region.
• US: AUM increased to £22bn (FY £20bn) with momentum expected to continue with a strong pipeline in H2.
UK:
• Strong flows of £4bn into our market leading LDI strategies.
• We rolled out, on a targeted basis, our digital solution to help smaller DB clients de-risk, ahead of its official launch later in the year.
• We continue to expand our growing range of multi- asset products to provide innovative solutions for our DB and DC clients.
2828
PROVIDING UK RETIREMENT SOLUTIONS.
DE-RISKING JOURNEY
• UK net inflows were driven by strong flows of £4bn into our market leading LDI strategies
• We rolled out, on a targeted basis, our digital solution to help smaller DB clients de-risk, ahead of its official launch later in the year
• We continue to expand our growing range of multi-asset products to provide innovative solutions for our DB and DC clients
• LGP awarded two property mandates by NEST
• We are repositioning our Active Equity strategy away from “index plus” objectives towards funds designed for DC and other target markets
Diversify InsureHedge
2929
ANNUITIES: RESPONDING TO DEMAND.FINANCIAL HIGHLIGHTS £m H1 2013 H1 2012
Operational cash generation 130 121
New business surplus 17 1
Net cash generation 147 122
Operating profit 151 139
Individual Annuities single premiums 754 522
Bulk Annuities single premiums 670 67
Total Annuities premiums 1,424 589
Annuities EEV margin (%) 8.4 8.5
INDIVIDUAL ANNUITIES GROWTH
2008 2012 H1 2013
CAGR 11%
Tied11%
Internal21%
IFA63%
Direct5% £754m
2013: INDIVIDUAL ANNUITIES - EXTERNAL = 79%
£868m
£1,320m
£754m
+44%
30
ANNUITIES: STRONG GROWTH POTENTIAL.
MARKET DEMAND
Corporates looking to de-risk DB pension schemes
L&G offer LDI, bulk purchase annuities and longevity insurance
Ability to export UK expertise internationally
Over 65 UK population expected to grow by 28% by 2025
Growth of defined contribution schemes and assets
Trend towards more shopping around
0
3
6
9
12
15
18
21
24
27
2000 2002 2004 2006 2008 2010 2012 2020
£bn
new
bus
ines
s
Internal VestingAnnuities
Open MarketAnnuities
Total Annuities2 8% CAGR
Open Market Annuities2 11% CAGR
1. Source: company estimates 2. Source: ABI
£400bn
£2,000bn
£1,000bn
£600bn
US UK Canada Netherlands
DEFINED BENEFIT PENSION LIABILITIES1
UK MARKET INDIVIDUAL ANNUITY VOLUMES
1
31
DIRECT INVESTMENTS.
Banking austerity has expanded opportunityReady to play a bigger role in funding economic and social development
• £116m accommodation project in Clapham for Imperial College
• Unite Group• £121m, 10-year facility
• National Football Centre, St George’s Park at Burton- on-Trent
• Purchased alongside private equity £210m
• Hyde Housing Group• £102m, 15-year facility
• University of Hertfordshire student accommodation project
• £145m infrastructure debt and equity investment for a 50 year concession period
31
• Sentinel Housing, private placement (registered social housing provider in Hampshire)
32
INFRASTRUCTURE INVESTMENT.
• Tesco distribution hub at Reading
32
• Road, Rail and Airports• No recent investment
• Solaris direct debt investment
• Financing of 4 operational UK ground mounted solar parks
The supply and quality of infrastructure projects is too low.
• Education• Accommodation only
• Health• No recent investment
• Energy• No recent sizeable
investment
33
FURTHER UPSIDE FROM EXECUTING WELL IN BUSINESSES WE’RE NOT BIG IN: BUT CAN BE.
BUSINESS AREA LOGIC ACTION PROGRESS
International Index Funds
• Global homogenous customer market• Regulatory approval received from US
in 2012, Asia in 2013
• Launch in US in 2013• Asia in 2013• Accelerate growth in the Gulf
and Asia
• £9.3bn of gross International inflows, mainly in index.
Digital platforms • Platform growth level to be substantial• UK £214bn in 2012, £500bn in 5 years
• Bolt-on acquisitions • Acquisition of Cofunds
Enhanced annuities • High customer demand• Closeness to our existing products
• Investing in new system for 2013
• Premiums up to £123m from £57m
Digital Guided Solution
• Auto enrolment• Part of digital platform offering
• Make loss making IPS and Workplace platforms breakeven then profitable
• Workplace sales up around 100%
Private Wealth (including potential new products)
• Strong customer pull for our capability• Part of our digital platform offering• New products, such as ETFs, would be
close to our existing products
• Expansion in 2013
Defined Contribution Pensions, Unit Trust and Retail
• Underperformance• Strong customer pull for our capability
• Transfer of Unit trust from Savings to LGIM –focus on DC in 2013 increased
Equity release • Huge market • In “regulatory research lab”
34
2001 2005 2012Group Protection Retail Protection
£1,268m
£782m
£291m
2001 2005 2012
Unit Linked Term
$922m
$597m
$397m
PROTECTION MARKET LEADERSHIP. WELL PLACED IN RISK SHARING.
STRATEGIC SUMMARY
• UK: Increased digital engagement, expand link with housing
• Europe: Expand footprint building both Retail Protection and Group Protection
• US: Expand distribution network and evaluate new product opportunities
• Evaluate new geographies such as Australia and Canada
• Bolt-on acquisitions
US GROSS PREMIUMS
UK GROSS PREMIUMS
35
CONCLUSIONS.
1. Five major macro trends underpin delivery of five winning strategies.
2. We can reduce costs, we can employ capital more efficiently – technology, talent and regulatory certainty will drive change.
3. Accelerating the “path to profitability” in our new business model means focusing on cost effective socially and economically useful products and services for our customers.
4. Risk: learning lessons from the past, anticipating and adapting for the future.
36
FORWARD LOOKING STATEMENTS.
This document may contain certain forward-looking statements relating to Legal & General Group, its plans and its current goals and expectations relating to future financial condition, performance and results. By their nature, forward- looking statements involve uncertainty because they relate to future events and circumstances which are beyond Legal & General’s control, including, among others, UK domestic and global economic and business conditions, market related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory and Governmental authorities, the impact of competition, the timing impact of these events and other uncertainties of future acquisition or combinations within relevant industries. As a result, Legal & General Group’s actual future condition, performance and results may differ materially from the plans, goals and expectations set out in these forward-looking statements and persons reading this announcement should not place reliance on forward-looking statements. These forward-looking statements are made only as at the date on which such statements are made and Legal & General Group Plc does not undertake to update forward-looking statements contained in this document or any other forward-looking statement it may make.