LGEN 4.4b buy in with British Airways Pension H2, Any idea what return LGEN expects to make on PRT business? If they are taking on the pension liabilities one would hope/assume that the bean counters have done their sums (and had them checked by an adult) and there is a reasonable prospect of making a return. Adding umpteen billions of liabilities covered by assets is one thing - but if those assets fall or fail to return as much as expected then the risk transferee could be in trouble. My only hope is that LGEN is timing this PRT business right (i.e. get in there early whilst companies want to derisk their pension liabilities but before it gets too competitive and margins are squeezed). Guitarsolo
LGEN 4.4b buy in with British Airways Pension Looks like evidence of headway in on of LGEN’s areas of strategic focus, with 27b of further bulk annuity business in bid. Not sure that this RNS will be enough to reverse the SP gloom which LGEN shares with many other financials currently, hopefully they will win more business and the actuaries they keep locked away calculating how long we will all last to price the bids have got their sums right. H2 RNS Number : 6568A Legal & General Group Plc 13 September 2018 Legal & General completes £4.4 billion buy-in with British Airways’ pension scheme: Largest ever UK bulk annuity Legal & General Group Plc (“Legal & General”) today announces that it has completed a £4.4 billion buy-in for British Airways PLC’s pension scheme, Airways Pension Scheme (“APS”), covering nearly 22,000 pensioners. This is the largest ever bulk annuity policy arranged with a UK pension scheme and also included the conversion of existing longevity insurance into a bulk annuity. As announced at the half year results, the UK pension risk transfer (“PRT”) market continues to demonstrate a high level of activity with Legal & General actively quoting on more than £20 billion, of which more than £7 billion were in exclusive negotiations at the time. Since then, Legal & General has completed £4.8 billion of UK PRT transactions, including the APS buy-in, and is now actively quoting on £27 billion of UK PRT deals. Additionally Legal & General has continued to show strong momentum in International PRT, completing £191 million of transactions since the end of June. In aggregate, Legal & General has completed £6.0 billion of global pension de-risking transactions year to date (UK PRT: £5.3 billion, International PRT: £0.4 billion, Longevity Insurance: £0.3 billion). The financial metrics and Solvency II capital strain of these transactions are in line with previous levels reported by Legal & General. Nigel Wilson, Chief Executive, Legal & General Group, said: “I’m delighted that Legal & General has transacted the largest bulk annuity to date in the UK for British Airways’ pension scheme. As we indicated at the half year results, the second half of 2018 is likely to be a record six months for our PRT business and we expect to announce further transactions in the next few months. We are actively quoting on £27 billion of UK PRT deals demonstrating the strong demand for insurance, supported by increasing affordability, as trustees seek to improve security for members and companies look to remove legacy liabilities. Legal & General’s combination of longevity and investment management expertise uniquely positions us to deliver at scale, providing solutions that benefit schemes and their members.” Laura Mason, CEO Legal & General Retirement Institutional, said: "We are proud to have delivered this ground-breaking transaction, the largest bulk annuity transaction completed in the UK market. This is a great example of Legal & General delivering for UK companies and their pension members, enabling pension schemes to provide security to their pensioners in retirement. This transaction also included the conversion of existing longevity insurance to a bulk annuity, demonstrating Legal & General’s ability to deal with a complex situation and offer innovative solutions drawing on the broad experience and capabilities of the wider Legal & General Group. The depth and scale of our Retirement business means that we can confidently deliver for APS scheme members, whilst maintaining capacity for further de-risking activity in the near term." ENDS
H1 Results Lawson 76, Hi H2, Like you I am holding L & G for the long term! I think in view of the market`s volatility during this last half year, their result is pretty good. As you imply hopefully it will improve in the next half year?
H1 Results Looks like most of the business has been making progress, but gains made were wiped out by lower “positive investment variance” 33m Vs 175m in 2017, a disappointment aggravated by being pompous nonsense. Profit before tax decreased due to lower positive investment variance as a result of volatility in global financial markets in H1 2018 (H1 2018: £33m, H1 2017: £175m). This included a £(90)m (H1 2017: £52m) loss primarily from the LGC traded assets portfolio, reflecting market performance versus our long term economic assumptions. FTSE was down 0.7% in H1 Vs up 2.4% in H1 17 but I guess they lost money in other areas, hardly a shining record for an Investment management company to hold up if they can’t make money with their (out) own money but hopefully they will do better over the longer term. Actually overall I think this is not a bad result despite the Net profit fall of 9% (exc mortality release) and EPS fall of 8% due to above and non-recurrence of mortality release in H1 2017. Int divi up from 4.3 to 4.6p. Interesting to see if this sends SP back into the downtrend, I’m holding for the long term and expected 6%+ forward yield. H2
Capital Markets Event LGIM 20 Jun LGEN a little weaker last few weeks, Wed’s event may bring a little interest. H2
Risk Taking Me too. I have been trolling these boards for many years, more off than on, and regularly sought out LKH, Games, Eadwig et al to make sense of everything. I say trolling, because on the old platform I was never able to work out how to contribute so every time I clicked reply, it wanted me to go through hoops beyond those I went through to become an ii(i) investor in the first place. Now, here I am trying again and at least it is letting me compose a message, although god knows what hoops it is about to throw up. Anyway, I just wanted to add my thanks and best wishes to the lord of the flybridge who managed to (partially) edumacate this particular dweeb.
Re: Intends to buy and develop propertie... And also, if L & G wish greater exposure to the residential property market, they should do so via a fund set up for the purpose, not with their shareholders funds. We wouldn't expect our REITS investments to be offering financial services on the side.
Re: Intends to buy and develop propertie... Thanks Bowman, that is very interesting.So presumably the flip side of "affordable rent" is; if you can afford the rent you can get a 20% discount. If you can't afford it, then you are eligible for housing association rent, which is less, and if you are the working poor and least able to afford it, you pay a premium and can be slung out on a whim.Never rented, and the above observation does not reflect my politics, simply an observation on the google. Best wishes.
JP Morgan reiterates underweight JP Morgan reiterates underweight with a target price of 258p
Re: Intends to buy and develop propertie... Whats the difference between affordable rent and just normal rent....and why do some people pay affordable and some normal
Landlord & General Even if the diversification into housing flops financially(unlikely)-at least it will have made a meaningful social contribution.It displays innovative thinking by senior management and there is no reasonwhy a company with long term pension commitments should not be able to partially match these with a stream of future rental income.(holder)
Affordable Housing at L&G-New Division Todays GuardianThe UK insurer Legal & General is launching an affordable housing business with the aim of providing 3,000 new homes a year within four years.L&G said it was in the process of recruiting a management team to run the new division, which is expected to build and buy homes to address a chronic shortfall of affordable housing.Affordable housing is a classic example of underinvestment with minimal new equity capital being deployed to the sector, the L&G chief executive, Nigel Wilson, said.Renting property: how does it compare around the world? Read moreThis is not a sustainable position either for the sector or for the 1.3m households currently on a waiting list.The affordable homes business marks L&Gs latest move into the UK housing market, where it is becoming a significant player. The insurer is already investing about £1.5bn in the build-to-rent sector, with sites in Bristol, Edinburgh, Salford, Bath, Brighton, Leeds and Walthamstow.It aims to have 6,000 build-to-rent homes in planning, development or operation by the end of 2019.L&G has also promised to revolutionise the housebuilding industry by constructing thousands of prefab homes from its new modular housing factory in Leeds. The homes are made and fitted out in the factory before being transported to their destinations on the back of trucks.The new affordable-homes business will become a subsidiary of Legal & General Capital (LGC), which focuses on areas where there has been a lack of investment and innovation.L&G said it would offer a more sustainable approach to providing affordable homes after housing associations have taken on a lot of debt over the years to fund developments.Theresa May has described the national housing crisis as one of the biggest barriers to social mobility in Britain, with 300,000 new homes a year needed to address the shortage. She has argued that key workers such as nurses, teachers and firefighters should be the priority for affordable homes.A shortage of homes in the UK has helped to support house prices in recent months, despite a slowing economy and weaker consumer spending.The average price of a home edged up 0.2% to £213,000 in April, according to the mortgage lender Nationwide, following two consecutive monthly falls.It pushed up the annual rate of growth in house prices to 2.6%, from 2.1% in March.[link]
Re: Intends to buy and develop propertie... So if LGEN's build-to-sell business is called Cala, what will it call its build-to-rent enterprise? Lala?Who is defining "affordable"? Affordable for local authorities to place families otherwise perched in hotels? Or affordable for me to retire in?LGEN no doubt has an ethical model in mind working with housing associations, a genuine attempt to ease the low end housing crisis. And hopefully make money for itself (us), not necessarily in that order. However, a layer of property head lease, property management and sub-let rental agency plus financing costs has me wondering who the deal works for most ... if LGEN remains the landlord then fine, but if it sells on its portfolio to groups like Harbourvest / Helical / Rothesay Life who securitise ground rent and lease revenue streams in order to pay out on annuity commitments then someone will already be imagining ways to exploit the situation eg whopping commissions on the building insurance like the Peverel/Tchenguiz rip off.LGEN will make its money either way I suppose.Who is the prime mover in this build-to-affordable rent industry, is there something we can analyse to wonder how it might work for LGEN and we investors?
Re: Halved it Good point BB well made sorry too late to go back and change it.
Re: Intends to buy and develop properties fo... LONDON, April 27 (Reuters) - British insurer Legal & General on Friday launched a unit to build affordable homes and said it aimed to build 3,000 homes a year within the next four years to become the country's leading private providerYears of under-investment meant the country is producing 100,000 fewer homes a year than it needs, L&G said in a statement, while the annual shortfall for affordable housing is some 30,000 homes, leaving 1.3 million people on waiting lists.Legal & General Affordable Homes, part of the insurer's Legal & General Capital arm, would provide capital and work with a range of existing affordable housing providers to help manage the properties, it said."Affordable housing is a classic example of underinvestment with minimal new equity capital being deployed to the sector," L&G Chief Executive Nigel Wilson said. "This is not a sustainable position."Many existing providers were highly leveraged and unable to raise equity to help maintain a sustainable financial structure, said Head of Affordable Housing Simon Century, a fact which limited their ability to grow."Legal & General Capital is building a more natural and sustainable model one in which institutional investors are the long-term holders of the assets working alongside the best-in-class affordable housing operators who will provide the highest-quality housing management." (Reporting by Simon Jessop; editing by David Evans)