Legal & General : Annual Report and accounts 2023

Cardiff Central Square investment

The economic benefits that this large-scale investment is bringing to Cardiff reflect our inclusive capitalism model, which sees us generate returns for shareholders whilst also making a difference to society.

The Interchange: Wood Street House

318

Build to Rent (BTR) homes, the tallest building in Cardiff

1st

The Interchange: Calon

120,000

square feet office element

2,500+

Employment hub

13,000

jobs upon completion

in the new developments: BBC Wales, HMRC, Cardiff University

and law firms

Central

Quay

715

we are on track to deliver 715 BTR apartments at the former Brains Brewery site

BTR scheme in the city, forming part of our Central Square regeneration

Transport infrastructure

£200m

financing to support Wales & Borders franchise to improve services for train passengers while reducing carbon emissions through electrification

employees

Net zero

designed to align with net zero carbon

14 bay

bus station and retail space transformation

Front cover: Legal & General employees outside our new office, part of our significant investment in reshaping Cardiff's city centre.

Contents

Strategic report

How we bring our vision of inclusive capitalism to life

Financial statements

Our financial statements for the year ended 31 December 2023

Governance

How we grow our business responsibly

Other information

263 Directors' report and additional statutory and regulatory information

268 Shareholder information

270 Alternative performance measures

273 Glossary

Profit before tax £m

£195m

(2022: £939m)

Profit before tax comprises all items of income and expense recognised in profit or loss (excluding tax).

Adjusted operating profit £m Earnings per share pStore of future profit £bn

Solvency II capital coverage ratio, which shows own funds on a regulatory basis divided by the solvency capital requirement, is one of the indicators of the Group's balance sheet strength and aligns to management's approach of dynamically managing the Group's capital position.

Solvency II operational surplus generation is the expected surplus generated from the assets and liabilities in-force at the start of the year. It is based on assumed real world returns and best estimate non-market assumptions, and includes the impact

of management actions to the extent that, at the start of the year, these were reasonably expected to be implemented over the year.

This is made up of our ownership share of the emissions related to the assets we invest in within the Group proprietary asset portfolio. It includes bonds, equities, and investment property but excludes cash, derivatives, or any assets already covered in our operational footprint. It is measured per unit of investment.

Measures the greenhouse gases (GHG) associated with our direct operations. Scope 1 emissions are direct GHG emissions occurring from sources owned or controlled by the Company. Scope 2 emissions are indirect GHG emissions from consumption of purchased electricity, heat or steam.

Performance measures and remuneration

The performance measures used for the purpose of determining variable elements

of directors' remuneration are aligned to the Group's key performance indicators (KPIs). These are indicated with the icon: .

For more details, refer to pages 100 to 103 of the summary of remuneration policy.

Alternative performance measures (APMs)

The Group uses certain APMs to help explain its business performance, indicated with the icon: .

Further information on APMs, including a reconciliation to the financial statements (where possible), can be found on page 270.

Full definitions of the financial metrics above are included in the glossary on page 273.

Our businesses

We benefit from scale in each of our businesses. Our businesses work together to deliver on our purpose and to drive synergies across the Group.

See more about

our business model on page 12

Institutional retirement

('LGRI')

£13.7bn

new business premiums

We take on pension liabilities from corporate schemes

in both the UK and the US. This 'pensions de-risking' gives companies greater certainty over their liabilities while providing guaranteed payments to individuals within their schemes.

Capital investment

('LGC')

>4,500

homes delivered

Our investments across specialist commercial real estate, clean energy, housing and alternative finance generate attractive shareholder returns and create alternative assets which benefit society.

Our Build to Sell business, CALA, has grown to become the 10th largest housebuilder in the UK by revenue.

Investment management

('LGIM')

£1.2tn

assets under management

We are one of the world's leading asset managers, with internal and external clients.

We are the market leader in UK defined contribution schemes.

We are also a leader in responsible investment, and continue to innovate and be recognised for our strength in this growing area of the market.

Retail

c.14 million

people's needs met

We help millions of people in the UK and the US create brighter financial futures. We support their savings, protection, mortgage and retirement needs through our retail and workplace businesses.

We are a market leader in UK Retail protection and retirement income. Our workplace savings business administers the largest and fastest-growing commercial

UK MasterTrust.

Our US protection business continues to grow due to our ongoing investment in technology and digital transformation.

See page 35

See page 37

A growing force for good."

Annual General Meeting 2024

The Annual General Meeting (AGM) will be held on Thursday 23 May 2024 at the British Medical Association, BMA House, Tavistock Square, Bloomsbury, London WC1H 9JZ, with additional facilities for shareholders to join

and vote electronically.

Dividend policy

The Group's dividend policy states that we are a long-term business and

set our dividend annually, according to agreed principles. The Board's intention for the future is to maintain its progressive dividend policy, reflecting the Group's expected medium-term underlying business growth, including measurement

of capital generation and adjusted operating profit.

Full year dividend p

Final dividend to be paid on 6 June 2024

14.63p

(2022: 13.93p)

What attracted you to Legal & General?

Three things stood out to me: our sense of purpose and commitment to playing a positive role in society, the quality and performance of our businesses, and the talent and commitment of our people.

Few businesses have such a long-standing heritage - this year is our 188th birthday.

We have seen through multiple economic cycles and societal changes, and evolved to stay relevant. We have proven that we can adapt and thrive in changing circumstances, and support our customers and partners throughout.

Today we are a very significant business -

a global leader in pension risk transfer, supporting the needs of c.14 million people through our Retail division, managing £1.2 trillion of client assets, and investing alongside them to originate new, socially valuable assets - generating returns that help to fulfil long-term pension liabilities.

With this unique synergistic approach, and our track record of consistent performance and delivery for our shareholders, clients and customers, we are well placed to continue

to seize the many growth opportunities in our markets.

Central to this success are our people. Legal & General has a reputation for the dedication and expertise of its employees. I was drawn to the Company as a place with

a rich culture, in which excellent people thrive. I'm pleased to say these impressions have only been reaffirmed now I have joined.

In short, Legal & General is a business with strong foundations, and excellent potential. I am looking forward to helping define and lead our next phase.

What should shareholders expect from you as a leader of Legal & General?

A fresh perspective. I bring experiences from outside the business, which means I ask different questions and look at issues in new ways. I am encouraging us to think broadly about our markets and how we work.

My first priority as CEO has been to listen.

By taking the time to hear from my colleagues, our customers, clients, shareholders and partners, I am learning what Legal & General means to them, getting their perspectives on what matters most, and where they see our future potential.

Looking ahead, I hope to combine strategic vision and focus with consistent delivery.

I am working with my team to articulate our long-term growth strategy, considering how each of our divisions needs to focus and evolve to address our biggest opportunities. I look forward to presenting this later in the year, and working with our people and partners

to execute our plans.

How will the experiences you bring from other organisations shape your approach?

I've learned that putting customers at the top of our priority list is how we succeed in the long run. Every decision we take should be with our customer in mind, whether that's a retail

customer, institutional client, co-investor or partner. Understanding where our clients are coming from and being able to walk in their shoes is really important - that focus keeps us compassionate and relevant, and helps

us to spot new opportunities to add value. I'll be encouraging all our teams to dedicate time to building that connection.

Having lived and worked around the world,

I bring a truly international mindset. I understand what it takes to succeed and scale in different markets, particularly the importance of understanding local culture and knowledge.

I am also focused on how we take learning from different contexts to improve and innovate elsewhere.

Finally, with nearly 30 years of experience

in financial services, I have a strong appreciation of the complexity of our stakeholder environment, and how it shapes our opportunities and success. I'm committed to ensuring Legal & General continues to be an insightful, thoughtful voice in our industry.

What are your early observations on the business?

My early observations are very positive.

The strengths I saw looking from the outside are authentic. We are purposeful and commercial; the business is full of talented and expert people. Our track record of delivery against the targets we set in 2020 shows the power and resilience of our business model.

Alongside this, I am focused on our future growth opportunities. The world is hungry for capital and expertise to support new industries and the transition to net zero; institutions want help to navigate a changing economic backdrop; and individuals increasingly need support to prepare for the future financially. With our strengths in asset management and origination, and a respected, trusted brand, we are well placed to help and to benefit.

To be successful, we need to communicate our vision clearly and crisply. My focus over the coming months is to define a strategy that shows why and how Legal & General will be as relevant in the next 188 years as it has been to date.

How important are culture and purpose to you as a business leader?

Legal & General is a great example of the importance of purpose and culture in action. Inclusive capitalism has been a powerful galvanising force inside the business and beyond it, and delivered consistent returns for our shareholders. It is motivating to hear how people love being part of Legal & General because we have a clear role to play in society, and to see this reflected in the choices we have made as a business.

Businesses have a responsibility to help solve problems. All our business divisions are shaping how society and individuals prepare for the future. Our decisions can help make that future as positive a place as possible for the next generation.

When can we expect to hear more on your plans for the business?

I have thoroughly enjoyed my first few months at Legal & General. My conversations with our stakeholders, including our shareholders, continue to help me and my team to develop our plans. I look forward to meeting more

of our shareholders at the Annual General Meeting in May and providing an update

on strategy at our Capital Markets Event in June.

António Simões

Chief Executive Officer

The long view

When we began our usual planning for our Annual report and accounts in autumn 2023, the team shared with me a selection of those we had produced over the course of my tenure at Legal & General.

It was striking how much had changed. Legal & General was a part of my life for

14 years, a third of my career. During that time, we saw transformation on a global, national and business level, of a scale that none

of us could have predicted.

I joined the Group as Chief Financial Officer, during the Global Financial Crisis. The ripple effects of which led to reflection on the role and responsibilities of financial services

companies, and in the UK ushered in a period of quantitative easing combined with public sector austerity. This sustained for nearly

a decade, until the punctuation of the Covid-19 pandemic, and then the war in Europe, spurred rising inflation, interest rates and living costs.

Politics has become more turbulent, in business 'Big Tech' has been dominant, and globally

we have recognised the need to transition to a lower carbon way of life, and the extent of change and innovation required to deliver that shift. Developed countries are grappling with the consequences of a rapidly ageing population, and looking to square the opportunities presented by advances such

as AI with the potential for equally transformative impacts on the labour market.

Our approach

Legal & General has had to be alert and adaptable in the context of these changing circumstances. I took over a business which had lost c.70% of its annuity business in the face of pension freedom reforms and disposed of around 20 Legal & General businesses

to allow us to modernise, diversify and grow.

In my early years as CEO, our annual reporting was led with the tagline 'stepping up'. This captured my belief, shared with my colleagues, that we could both positively advance and benefit from the changes around us.

I am proud that the business we built together has shown itself to be not just resilient, but able to evolve and thrive.