Legal & General Group Plc (LGEN) Earnings Call Transcript & Summary

Now formally open. If you have not already done so, please could I ask you to switch off your mobile phones. And I will now hand over to your Chair, John Kingman.

Thank you, Jeffrey, and good morning, everyone. Welcome to Legal & General's 2025 Annual General Meeting. It's wonderful to see so many of you here in person and a warm welcome, too, to those joining us online. We're now very well accustomed to hosting these events in a hybrid fashion, ensuring that everyone can participate. We have no plans to change this format, and we always value the opportunity to engage directly with our shareholders in this way. The sequence of today's meeting will be familiar. Following my opening remarks, I'll hand over to Antonio, who will talk you through the important progress we've been making. Under his leadership, the company's strategy has been further developed and clarified. The senior team has been further strengthened, and we have continued to deliver excellent financial results. Before we begin, I'd like to extend a warm welcome too to my group Board colleagues. In particular, I want to express my immense gratitude to 2 long-serving directors, Lesley Knox, who's just stepped down from the Board; and Philip Broadley, who's stepping down later this year. Lesley and Philip both joined the Board nearly a decade ago, and both have done the company great service over that time. Both served as Senior Independent Director, and I'm personally particularly grateful to both for their support and wise counsel in that capacity. In addition, Philip served for a long period as Audit Chair and Lesley as both Remuneration Chair and Chair of the L&G Asset Management Board. We shall miss them both acutely. At the same time, I'm delighted to welcome Clare Bousfield to her first AGM following her appointment to the Board in December. Clare brings deep U.K. financial services expertise from her previous roles at M&G, as CFO and CEO at Retail & Savings and as CEO of Insurance for Prudential U.K. and Europe. And we also look forward to Mark Jordy in the front row, who already chairs our Asset Management Board, who joins the group Board shortly. Mark brings deep and global experience of asset management from his long executive career at Wellington. I'm also very grateful to Carolyn Johnson, who's taken over from Nilufer Kheraj as Board Director for Workforce Engagement and to Nilufer, both for her contribution in that role and for continuing to serve as Independent Non-Executive Director for Climate. This is my own ninth Annual General Meeting. And in accordance with good governance practice, Board has initiated a process to seek my own successor as Chair. Our new Senior Independent Director, Henrietta Baldock, is leading that process. We've also made several significant appointments to the Group Management Committee over the last year. In December, Eric Adler joined as CEO of our Asset Management business from PGIM. Laura Mason has taken up a new role as CEO of Retail, having been with L&G for over 10 years and held leadership roles across L&G in asset management and institutional retirement. And Katie Worgan has joined us this year as Group Chief Operating Officer from Lloyds Banking Group, a new role that will drive efforts to simplify and modernize the business. We will benefit from all of their energy and expertise as we deliver on our refreshed strategy announced last June. I should also like to thank Michelle Scrimgeour and Bernie Hickman, Chief Executive Officers of Investment Management and Retail, respectively, who both departed during the year. All of our Board and leadership team members will, of course, be available to answer your questions during and after this meeting. So turning to L&G's highlights in 2024. Over the last year, under Antonio's leadership, L&G set out a new strategy and ambitious vision for the future with a goal to achieve sustainable growth to sharpen the focus of the business to deliver enhanced returns for shareholders. Progress has been rapid. We have created a new asset management business, combining our capital and investment management divisions to better meet clients' evolving needs. This change will enable us to access a wider range of asset classes to capitalize our balance sheet investments through work with third parties and to expand our international reach. As part of our commitment to sharpen our focus, we set up a new corporate investments unit to simplify our structure and to divest of nonstrategic assets. We sold the house builder CALA for GBP 1.35 billion and our U.S. Life Insurance entity for GBP 1.8 billion. In both cases, delivering excellent value for shareholders and enabling us to concentrate our resources on key priorities for the group's future. The latter transaction also crystallizes an important strategic partnership with Meiji Yasuda, one of the oldest and largest insurers in Japan, and I'm delighted to welcome them both as a partner in U.S. pension risk transfer and asset management and as a significant new shareholder in Legal & General. Meanwhile, we are firmly focused on ensuring business success translates into enhanced returns for our shareholders. We recently announced our commitment to return more than GBP 5 billion to shareholders, that is roughly 40% of our market capitalization over the next 3 years through a combination of dividends and buybacks. We completed the first GBP 200 million of these buybacks in 2024 and also announced a further GBP 500 million buyback in March this year, which we are making excellent progress on. We will then be returning a further GBP 1 billion from our transaction with Meiji Yasuda once that deal completes. In all of this, the company's values and deep commitment to the long term remain constant. In December, the Board endorsed a refreshed statement of L&G's purpose, investing for the long term, our futures depend on it. This underlines how we intend to continue creating value for shareholders, for our clients and customers and for the economies in which we operate. Our purpose is to build on what has inspired L&G throughout our history, protecting individuals’ futures and investing capital to generate returns for society over decades, but always to do so with urgency and focus. This is perhaps especially relevant now at a time of considerable uncertainty for global economies and markets. Longevity, resilience and consistency are virtues that have guided L&G through volatile and uncertain times and will continue to do so. Our long history of weathering downturns and emerging stronger is testament to our robust business model, our disciplined risk management and the strength and resilience of our balance sheet. In doing so, we will continue to invest in the U.K. where we see significant further opportunity, and we work very closely with the government to ensure that these opportunities are maximized. We particularly welcome the government's planning and infrastructure reforms, which are already beginning to make a difference in sites where L&G is keen to invest. Nevertheless, we do believe there is considerable potential to continue to take bold action to ensure the U.K. economy flourishes in the face of considerable global economic headwinds, and we encourage the government to do this. The Board is very proud of everything our teams have achieved at L&G this year. We have delivered consistently strong results for our shareholders. And earlier this year, in the Financial Times ranking of Best Employers, L&G came second out of 500 companies listed. That is an outstanding endorsement of our team's work with customers, clients, partners, communities and shareholders. On behalf of the whole Board, I'd like to thank all my colleagues in the company for everything they have done to make these achievements possible. We have great confidence in the future in the skill and dedication of our people to deliver against L&G's new strategy. We look forward to seeing the results as the business continues to transform in 2025 and beyond. I'll now hand over to Antonio.

Thank you, John. Great to see you all again here today. Good morning. A lot has happened over the last year since my first AGM as L&G's Group CEO. In my first year, I'm proud of everything we have achieved and as a team, have delivered for you, our shareholders. As we shared in March, our 2024 results were particularly strong. This gives us confidence and demonstrates resilience, which is important given the turbulence that we've seen in global markets. Our core operating profit was up 6% to GBP 1.6 billion, and our Solvency II capital generation was GBP 1.8 billion. We have a strong balance sheet with a large store of future profit of GBP 14.8 billion and a coverage ratio of 232% at the end of last year. 2024 was also a very important year for us as we established our new strategy, which we announced on the 12th of June, just 3 weeks after our last AGM here. I set out a vision for a growing, simpler, better-connected L&G, becoming more capital-light over time with 3 strategic priorities: sharper focus, sustainable growth and enhanced returns. Let me go through each one of them briefly. First, sharper focus. In June, we defined clearly what is strategic, our key 3 businesses and what is not strategic and created a corporate investments unit to manage the nonstrategic assets together with a more disciplined capital allocation. Then in September, as John just mentioned, we sold CALA, the largest asset in our corporate investment unit for an enterprise value of GBP 1.35 billion. And then earlier this year, we announced our partnership with Meiji Yasuda, including the sale of our U.S. protection business for $2.3 billion, the GBP 1.8 billion that we just mentioned. This transaction is accretive for shareholders given the attractive multiples and is fully aligned with our strategy, allowing us to continue to grow our U.S. institutional retirement and our asset management businesses. I've just returned from a trip to Tokyo, where I met Meiji Yasuda's CEO and welcome them as a shareholder of L&G with 5% of our shares, demonstrating their confidence in our strategy. Second, sustainable growth. We're growing our 3 strategic businesses. Institutional Retirement, we are the global leader in pension risk transfer, writing GBP 10.7 billion in 2024, including record volumes in the U.S. and Canada and a more capital-efficient business here in the U.K. with a new business strain of just 1%. And the outlook remains strong with a large deal pipeline for the rest of 2025. 2024 was a transformative year for Asset Management. We combined our Legal & General Investment Management and L&G Capital divisions to create a single public and private markets asset manager and then appointed Eric Adler as CEO of that business. Last year, our average revenue margin increased from 7 to 8 basis points as we moved to higher-margin products. We saw particularly good growth in private markets now with GBP 57 billion of assets under management and launched a series of new funds, including a private markets access and affordable housing funds. We continue to invest to add capabilities to this business, including our investment in Taurus, a U.S. real estate equity firm, and just this week, we announced the acquisition of Proprium $3.5 billion of assets under management, 60% of which are here in Europe and the rest in Asia Pacific. And as I've said, our new partnership with Meiji Yasuda is also a significant opportunity to drive growth in asset management, including their commitment to co-invest $1 billion in our private markets business. In retail, we have a trusted brand and pride ourselves on the service we offer to our 12.8 million customers here in the U.K. across workplace savings, retirement and protection. We constantly focus on improving that service and our Net Promoter Score of over 50 is a testament to an excellent service. Our workplace assets last year were up by 7% to GBP 94 billion and with net flows of GBP 6 billion. And our Mastertrust, the larger commercial Mastertrust in the U.K. grew even faster at 22% and has now reached over GBP 30 billion. We had another record year in retail annuities, delivering high volumes at strong margins and increased our market share by 5 percentage points. And in U.K. protection, we have increased market share whilst also improving margins. I also appointed a new CEO for Retail, Laura Mason, as some of you will remember, previously led L&G Capital and other L&G businesses. On that note, I'd like to echo John in thanking both Michelle and Bernie for their role in creating the foundations which we're building today. Finally, enhanced returns. I said we return more to shareholders, and that's exactly what we are doing. We are returning more than GBP 5 billion, around 40% of our market cap to shareholders over the next 3 years through a combination of dividends and share buybacks. I'm very proud of these results, but I'm particularly proud of how we have achieved them. I've reshaped the team. Eric and Laura took up their new roles last December, and then Katie Worgan joined us in March this year as Group Chief Operating Officer. Last year, I spoke to you about our authentic sense of purpose as one of the reasons why I joined L&G. Earlier this year, we launched a refreshed statement of that purpose, investing for the long term, our futures depend on it. Investing is at the heart of what we do. The purpose reflects our commitment to our customers and clients, helping particularly DB and DC pension scheme members secure their futures. It also means we see ourselves as part of something bigger, delivering for the community and the world around us. This purpose is a huge source of pride and motivation for our people. I'd like to thank all our teams for their hard work delivering our 2024 results. I'd also like to thank John and the Board for their support and thank you, our shareholders, for the support you have given L&G and me personally. Finally, I'll close with something that I said a year ago at our previous AGM. I'm as ambitious for the future as I'm proud of our 189-year history. We have an exciting future ahead to continue to grow L&G. Thank you.

Thank you, Antonio. I'd now like to ask Jeffrey to run through the formal business of the meeting before we move on to questions.

Thank you, John. The Notice of Meeting was published on the company's website and made available to shareholders on the 10th of April. It's also available to view under the Documents tab on the Lumi platform for those of you joining with us today online. As in previous years and with your permission, I propose to take the notice of meeting as read and confirm that all resolutions will be decided on a poll. Thank you. I now formally propose that each of the resolutions as set out in the notice of meeting and appearing on the screen behind me is put to the meeting as a separate resolution. Further, the resolutions numbered 21 to 25 are put to the meeting as special resolutions. As a reminder, the poll is already open and will close at the end of the meeting. For those of you with us today in person, please could you complete the poll card, which you should have been given when you registered this morning. You can do this by putting a tick or a cross in one of the boxes marked for, against or withheld or by indicating the number of shares you wish to vote on for any of these 3 options. If there's anyone present who is entitled to vote and who does not have a poll card, please raise your hand and one of my colleagues will bring one to you. Finally, please could you ensure that you have signed the poll card and placed it in the ballot box at the doorway as you leave. For those shareholders who are attending online, the voting icon will appear in the navigation bar. Once you click on this, the resolutions will appear on your screen along with the for, against, and withheld voting options. Please simply select one of these options to cast your vote. Your vote will have been submitted when the voting option icon changes color having selected it, and a vote received message appears. If any person attending the meeting online is having any difficulties with using the platform, there's a user guide available in the Documents tab, but also on Page 11 of the Notice of Meeting. As is usual, the company's registrars will act as scrutineers, and the final result of the voting will be announced to the London Stock Exchange and posted on the company's website as soon as possible. If you would like a paper copy of the results posted to you, please let either me or one of my colleagues know on your way out. John, I will now hand back to you to open the question-and-answer session.

Thank you, Jeffrey. I'll now take questions from shareholders. Please may I remind you to ask only one question each to allow your fellow shareholders the opportunity to ask their questions. If you'd like to ask a question, please raise your hand and a steward will bring a microphone to you. When called, please could you give your name and state whether you are a shareholder, a proxy or a corporate representative. If you've joined us online, select the messaging icon from within the navigation bar and type your question in to question box at the top of the screen. [Operator Instructions] May I now take the first question. Gentleman here, please.

My name is [indiscernible] here. I'm a private shareholder with Barclays Stockbrokers. My only question is -- first of all, I want to congratulate you on fantastic performance for the year past. I've been a shareholder for over 20 years, and I've always liked this company. What I am asking for now, you're going to return GBP 5 billion to us presumably. I would prefer most of it to be in dividends and not through the commercial banks, banks in London who fiddle everything. Our exchequer also like you to pay dividends because they take tax from it. Somebody has to pay for the NHS, and we're sitting here should pay our share as well.

Thank you very much. And let me say first, thank you for your kind words. We like this company, too. There is a balance in these things, and we have tried to listen hard to our shareholders. Part of the backdrop to that is a sense of frustration that we certainly have that the share price does not, in our view, perfectly capture the true value of the company as we perceive it. And so we have done extensive consultation with many of our shareholders. Let me be really clear that the Board fully understands and shares the value that you and others of our shareholders attached to the dividend. It's worth remembering that this was really put to the test during the COVID pandemic when a number of our competitors chose not to pay a dividend, and we paid a dividend all the way through the pandemic. We're very proud of that decision, which we think was the right decision. And we attach a very high value to sustaining the dividend going forward. As I said, there is a balance in these things. And it's worth remembering that when we do a share buyback, obviously, for those shareholders who remain holders of the stock, which we hope -- we hope you will be in the number. By reducing the number of shares in issue, it means that those shareholders who remain in the stock own more of the company. So as I say, what we've tried to do is strike a balance. We will obviously listen to all shareholder views in formulating our policies going forward. And we are in no doubt of the importance of the dividend. Next question, this gentleman, please.

[Nick Steiner], private shareholder. Thank you for the presentations and the work you've been doing. Question is on the asset management. It looks as though the preferred way of working is with partners and partnerships who actually makes the decisions and how are these made? And sort of another thing is, you used the word global. Does that include China, India, Africa and Latin America? If it doesn't, is global the right word?

Thank you. We are excited about the potential for our asset management businesses. It's worth remembering that a number of what you'd have considered to be our traditional U.K. competitors in the asset management business are in severe decline, which we are not. we're very proud of that, and we're very excited about potential. I wouldn't say that -- we do have important partnerships. For example, we have a stake in a very exciting business called Pemberton, which we're delighted to own. And we are also open to making acquisitions in -- to build out our asset management businesses. And you'll have seen we announced one only about a week ago. So that we see as one route by which we can build out our business. As you know, our business is already international. In particular, we are very proud of the business we've built in the United States. But it goes wider than that. And we do have real potential in Asia. Recently, Antonio and I visited the teams in Hong Kong, in Singapore and Tokyo. So we do have a team in Hong Kong. I don't know whether you count that as China or not. But look, in order to be truly global, these markets are global, there's plenty more to do. I'm excited that Eric Adler has joined as the new Chief Executive of Asset Management. And I think I can tell you that even now the energy and drive in that business is remarkable. So we have high hopes. Next question, please. Gentleman at the back.

Paul Dawson, I'm a shareholder through Interactive investor. I'd just like to ask the Board; what impact has the FCA consumer duty rules had on Legal & General?

Thank you. Excellent question. So the consumer duty has now been in place for a while. And it has, I think, forced all financial services firms to ask themselves important questions about not just do we comply with all of the regulations, which clearly, we do. But are we doing the best by our customers in every way we can. And I do think there are practical ways in which the consumer duty has actually been a good discipline. I would give an example, one of the things that asks you to do is to look at all of your communications to customers and really ask yourself, are those communications truly comprehensible to our customers who may not be specialists in the financial world. And I think that discipline has been really good for us and our sister firms. It has been a considerable -- there has been a considerable cost to implementing the consumer duty, and so there's a balance in these things. But I wouldn't want you to take away the impression that it hasn't been a positive thing. I do think there have been some positive impacts even for a business like ours, which I hope has prided itself for a long period in trying to do the right thing by our customers. And Antonio talked about some of the ways in which there is clear evidence of our doing that. Next question, please.

Thanks very much, Mr. Chairman. My name is [Roland Baker]. I'm an individual shareholder, and I declare my interest in the company's business as having an annuity from you that is approximately 10% of my retirement income. I'd like to ask you about how we assess the risks of new technology with the work of the Data Technology Committee. I realize that there is an old saying that says, if you want a lot, don't ask a busy person. And indeed, Laura Wade-Gery is a very busy person. She's on the Risk Committee. She's Chair of the Technology Committee and Chair of the Remuneration Committee. I don't know whether -- how she decides what to do first when she jumps out of bed in the morning. So what I'd like to ensure is that the Data Technology Committee is being given the priority it deserves in the context of her other commitments. And I warned the Company Secretary that I may live to regret asking this question because somebody will tell me from the platform that it was blindingly obvious, and I haven't read the accounts properly, but I found it very difficult to put together what we're spending on technology in one place. So there isn't one single note to the accounts where it tells us, this is what we spent. These are the capitalized software costs, which at the moment stands at a net book value of GBP 450 billion, is it GBP 450 million, sorry? In the records, having spent GBP 642 million on the way there, we'd all like to know where the GBP 642 million went, and how the test of the Data and Technology Committee to the people who come to it with IT proposals is met when you say to them, please demonstrate to me what this will add to our bottom line, how this will benefit our customers, how this will reduce our costs, how it will improve our effectiveness and so on. So I'd like to be sure that we're giving the data and technology oversight the priority that it deserves. And then we could look forward to seeing in the accounts one place where we can see what we're spending and what we're doing with it.

Thank you very much. Let me say first, the fact that we created the Data and Technology Committee is itself reflective of a number of the points you've been making. I mean this is a really critical area. We do have a lot to do in this area. We created this committee, I think, about 5 years ago. Actually, it's somewhat unusual. If you look at big FTSE 100 companies, many do not have such committees as the Board. I think it's unequivocally a good thing that we do have that committee, and we have a number of specialists who joined the committee to aid the committee in its work. I will ask Laura if she wants to comment. But before she does, I should say the reason we ask her to do things is she does them both brilliantly and in an incredibly dedicated way. And being no doubt that she does leave out of bed in the morning and focus on these things. Laura?

Thank you, John. Yes, I would like to reassure you that I feel I have plenty of time to give to all of those duties at L&G. I think the role of the committee is, as John has said, it's unusual to have one focused on this. But I think it is a reflection of the importance that we attach to getting this right and possibly even more so as we seek to execute the strategy to build a simpler, better connected L&G, I think that the role of tech and data is ever more important in actually making us simpler and more efficient. So we have a big opportunity to simplify our technology estate. I think we've got a big opportunity to leverage the data that the business holds to be able to make ourselves both more efficient and actually to create new lines of business. And I think that we are generally thinking -- it's interesting linking to the consumer duty question. I think we're thinking generally about how we should -- how the business should be using tech and data to help us do that better job for our customers. I hope we are appropriately challenging of management in terms of ensuring the return we get on that investment. Obviously, it's only the biggest things that come to our committee. And I think I probably should turn to Jeff to answer the question about the where to -- how we account for it.

Yes. And good to see you again. Look forward to a conversation at lunchtime. And there my finance colleagues and I can take you through where they are -- you are right, in that there isn't a single figure. There is -- the number that you talk about is the investment we've made to date. We put those in the accounts for the investment we've made in systems that we then flow through the accounts over the -- what we think is a prudent lifetime of how we will use those -- that technology and the useful life that we think we've got from those investments. It's -- we think it's quite a reasonable number for a company of our size. I think you would see others with much larger figures. We've tried to be prudent in both what we invest and what we capitalize to ensure that it's realistic. So yes, they are -- there is no single place, we can talk to you later, but where those cost for and which ones we put into the business, which ones we show separately, and we'd be happy to do that. Next question, please. Gentleman here.

My name is Phil Clark. I'm a long-time shareholder. And thank you very much -- first of all, John, to you, thank you so much for being an excellent Chairman here for 9 years. The company has thrived under your leadership, and we're very grateful of what you've done for us. So thank you for that. Very sorry to see you go.

Me too.

You still seem like a very young man to me.

I agree.

And I think you'll find that BP is looking for a new Chairman. So if you're interested in another 9 years of work, there you go. Having been nice, I've got a whole load of questions, but I'll restrict myself to 2, if that's okay.

I'll allow you to because you were very polite.

It's always worthwhile. So first of all, I share the frustration of some of the previous speakers about the share price, how it's not moving anywhere. And it's very frustrating. But I think this company is very complex. It's difficult to understand, and I can understand why the market are just to be ambiguous. And -- but it's actually bizarre that the dividend has got to 9%. And it just makes no sense at all to me. But part of that, I think, is some of the noise that you see in the accounts. So for example, we've got an investment variance of GBP 1.4 billion, which is an enormous amount of money. Now I think I understand what that is. And there's 2 parts to it. There's the corporate investments and there's the ongoing business. Now corporate investments, a lot of that stuff is what most companies would call exceptional costs. I suspect it'd be good to [indiscernible] under those write-offs of color and as its salary finance. So it would be good to discuss those in those terms. But the other part is, I can understand movements in interest rates, how that impacts gilts and therefore, generates artificial and temporary mark-to-market issues in the numbers. But I'd love to know a bit more about the GBP 1 billion for the investment variance from core businesses. How much of that is gilts and therefore, will reverse in due course? And how much is other things? And I do wonder if in future, we should disclose more. It's such a big number, if we could disclose more in the future. Let me give you my second question as well, so we just get more on the table.

Can you try and keep the second question brief, if you can.

Terribly brief. I wish -- it's bizarre that you pay dividends in June and September and get it all out of the way. Now that dividend is 9%, I just wonder if you could give consideration to quarterly dividends because that's so much better for my wife and her credit card bills. And it would be much appreciated. And I'm sure that generates a lot of interest in the shares from retail shareholders. So if you could give consideration. You've got such visibility on your dividends.

Thank you. Antonio, do you want to have a crack at...

Thank you. Thank you for the first question, which actually in itself includes several aspects, right? So John already said this, we believe that there's much more potential in L&G. I said this to you last year, I had sort of barely started. That's why we've outlined a strategy to be a growing, simpler, better-connected L&G. And exactly to your point, one of the things I saw is that we had to be simpler, both in terms of simpler within L&G, but also to your point, how we explain our story to investors. Because ultimately, if you look at the numbers that we are discussing here today, we are very resilient in terms of the earnings. We have a very good profitability from a return on equity perspective. We've announced 3-year targets that we feel very confident that we will meet or exceed them. So the market, in our view, should be basically lowering our cost of capital and believe in our growth and therefore, the multiple should be higher. You're right, the dividend yield is from memory as of last night, 8.8%, so almost 9%. And that's the function of the share price being not where we think it should be. But the share price is up 5% this year. There's a total shareholder return. We want it to be better. And we believe that the delivery of -- the patient delivery of the strategy will deliver for you, our shareholders. In terms of the second point, and I'll ask Jeff to add on the investment variance. We were very clear because we wanted to split out the investment variance that came from the corporate investments unit precisely because we wanted you to know what is an actual loss or otherwise if we sold the business that is in our Corporate Investments unit. So you mentioned salary finance and others. We've been very explicit about that. And the majority of the rest of the investment variance, as you also point out, our accounting. It's a mark-to-market of our book. And so we try, and Jeff and I do this a lot in our meetings with investors, explain what is true economic cost versus what is the vast majority of it and accounting oddity to some extent. And as you know, that will not come through in our accounts. But if I step back, what I'm doing is outlining the strategy, simplifying what we're doing, simplifying how we describe ourselves, and we hope that more shareholders will believe in the growth story of L&G going forward. And that's what will make our multiples go up and our share price go up. Jeff, do you want to say something about the GBP 1 billion?

Yes, sure. And actually, that was an excellent summary of that investment variance. I mean even within that, and as Antonio says, some of it is accounting. Even in the corporate investments, we make the note that GBP 70 million of that CALA will come back to us over time. And there are some other similar items such as when we make the longevity changes, the new accounting standards make a negative below the line that again will come back to us over time. So a number of those are in there. But actually, it is the vast majority of the piece that is in corporate investments. A large part of that is from interest rate movements. And it was very significant last year. I mean it was 100 basis points, 1% movement in 10-year gilts. If you look at our Solvency II result, then you'll see that we had similar profits. If you like GBP 1.8 billion of surplus emergence and very little of market movements because we hedge more on that basis. So we always knew coming into this that we would have a bit more noise or volatility on the accounting basis, IFRS 17 because we're very conscious on hedging our solvency much closer and making sure that we -- that allows us lots of capital headroom, lots of optionality. And so as you say, this would come back over time, but we hedge on the solvency because that's more important in some ways for writing new business, being able to deploy capital into the business and ensure that if there are large movements in interest rates, the solvency is not impacted. We will look -- in fact, it's very interesting to say. We discussed the disclosure of investment variance at the Board this very week or the Audit Committee. So it is a very relevant topic. And when it is a big number, you must -- it is for us to explain as well as we can to the market and to our shareholders what is it within there. So yes, we're very conscious of that. So again, a very relevant point. Thank you. Antonio, and also, did you want to pick up the question about quarterly dividends?

Yes. And we have no plans to move to quarterly dividends. But I think for us, back to the dividend yield, the dividend yield should go down as the shares go up. We will continue to pay GBP 1.2 billion, which as we're paying at the moment. And to the previous question, of the very -- of the more than GBP 5 billion that we're distributing, GBP 3.6 billion of that is in dividends, but we will continue to pay them half yearly.

Next question, please. Gentleman at the back.

My name is [indiscernible]. My question is indirectly 2 parts. I must congratulate the new Board with the new Chief Executive that -- recent sold, what you have done with the money was published in all the media and so forth. And previous creation, when you sold the part, this question going back over a year, when you sell part to Liverpool Victoria, nobody knows what happened to the money of that sale. I raised this question last year, and Mr. Kingman says it's somewhere there as if you do not understand the English grammar. Somewhere there can be all over the world. Can somebody show me because I spent hours and hours trying to find out what happened to the money that you have sold a part of L&G to Liverpool Victoria. But this time, the part that been sold was well published. I don't have to worry about that. I thank the Chief Executive for the new initiatives he's taken. Also at the same token, some of the question has been raised, why don't you raise the dividend that may enhance the share price. So therefore, I'm asking Mr. Kingman before you leave, can you [enshine] on your resignation note that you endeavor to get me, [indiscernible] to get the details where the money has gone from the sale to Liverpool Victoria over years ago. Thank you very much, sir.

Thank you for your question. On the dividend, I would simply point you back to what I said earlier. On LV, I wondered -- unless, Jeff, you have an instant answer. I wonder whether it might be possible for one of the team to pick it up with the gentleman after the meeting. Unless you do have an instant answer.

I can cover it. No, no, the answer will be too similar. I think it's better go through it.

We will take you through it immediately after the meeting, if that's acceptable. We've got a number of questions online, I think, Jeffrey.

So we've got a question from Mr. [indiscernible], who has asked, what is L&G's current thinking on innovation in the context of financial services and in relation to emerging talent strategy and long-term brand strength?

Excellent question, Antonio.

So in terms of innovation, it's a really broad question, but I think we have, for a long time, thought about innovation as the backbone of society in the U.K. If you think of a lot of what we do with Bruntwood, one of our JVs, where we are focusing on best universities across the U.K. and how we partner with local authorities, universities and fast-growing companies to innovate for the U.K. So we think about innovation from that perspective for the benefit of the country and our shareholders. I clearly, as a new CEO, have thought about innovation from an L&G perspective. So how do we do things differently within L&G. I've talked about the simpler strategy. The Board actually just yesterday was looking at the app that we've launched and how we've invested in technology to make life better for our customers, which ultimately should also be better for our results and for our shareholders. And finally, I think there's an element of innovation, which is how we innovate with our people and how do we work in a different way? How do we empower people. We had a question earlier about the Tech and Data committee. The arrival of Katie Worgan as the group COO is really important for us, for us to think about innovation within L&G. So there's lots of aspects of a broad question, but it is a big focus of mine as the CEO.

Thank you. Jeffrey, should we take another online one?

Yes. Thank you, John. It's from [Mr. Silvari]. And first of all, he wants to add his thanks to you for your steady leadership. You've always been a reassuring presence for shareholders and as you have for us, employees. So he's got a question. L&G has a lot of long-term promises to keep through pensions, annuities and insurance and the business is understandably complex. In the past, firms like AIG have looked sound until hidden risks have surfaced. How can we reassure shareholders that there's nothing buried in the balance sheet that could cause trouble if markets turn?

Well, I'd like to thank him for his question because it's very, very fundamental. And I think it's fundamental to the ethos of the company and the Board. We are in the business, as the shareholder rightly says, of making very long-term promises to make payments, very important payments to members of pension schemes who depend on them for many years to come. And so the first responsibility of the Board is to be accountable for the stewardship of those long-term promises and our ability to meet them over time. I would simply say that -- this does get put to the test in the real world. I mean, even in my time as Chair, we had the market volatility surrounding Brexit. We had the COVID pandemic, and we had the interesting events surrounding the Liz Truss mini budget, all of which were tests of our resilience. And I would merely say that the company has come through all of those events significantly stronger in terms of balance sheet strength than it was when I joined in 2016. But the shareholders are quite right to say that it's very fundamental to what we do and our responsibilities as a Board. So thank you. Let's have another from the floor. gentleman here.

I'm [James Graham], a private shareholder. And the question I would like to ask is many of our competitors in the United States in the last couple of years have been pulling out of net zero commitments. They've been dropping their ESG requirements. And they've been doing this because of the view that the fiduciary duty fundamentally conflicts with the pursuit of net zero policies. I note that L&G remains a member of the Net Zero Banking Alliance or Asset Managers Alliance, I should say and remains committed to the goal of net zero by 2050. This is despite the fact that there's a growing breaking down of the political consensus in the U.K. around net zero with reform recently doing incredibly well, wealth campaigning to drop all net zero requirements. Does the Board agree that there could be time to reassess our commitment to net zero and to stop forcing our portfolio companies to embrace net zero policies that hurt their returns?

Thank you for your question, and I understand what you're saying. I'll say something and then it's possible Nilufer may want to add to it. We are very clear that our fundamental purpose is to serve our clients and their long-term financial interests, and we're in no doubt about that. I guess our load star in this is our own transition plan, which we published and very recently put to a shareholder vote and shareholders voted in favor. So in a sense, that is the mandate that our shareholders have asked us to operate under. And I think that transition plan rightly takes a balanced view of the trajectory through a transition, and that reflects a whole series of important trade-offs. And that's a process which is going to take time. We are in no doubt that notwithstanding the politics, which inevitably move around, the challenge of climate change isn't going anywhere. And we do see very significant commercial opportunity in a number of aspects of clean energy, which we're engaged in. And we also have a very large number of clients who want us to manage their money in a way that is respectful of the process of transition and climate change adaptation. And as I say, we are here to serve them. That's what we're for. But I don't know, Nilufer, whether there's anything you would like to add to that.

No, I think you sum it up well. I guess you could just add to that, that we're committed and focused on what we think is the best long-term financial interest of our shareholders, our clients and our customers. And that accords with what John just said in terms of how we look at both the risks and opportunities that climate change presents.

Thank you. Do we have any online?

We have one more from [Ms. Castillo] on behalf of Mirova Asset Management, or one of their investors. Have we considered asking corporate clients whether they are considering adopting science-based targets? Is L&G considering integrating science-based targets for nature as part of our engagement framework and process for corporate clients. If not, please, could we explain why?

Nilufer, would you be able to have a crack at that?

Yes. So the question is, are we engaging with clients on science-based targets? And the answer is, as an asset manager, we have long engaged with clients both on nature loss and climate change. And the minimum expectations that we set for companies are set out in both our climate impact pledge and our nature framework. And these cover a variety of issues around fossil fuels, nature loss, deforestation generally. So yes, the answer is we are indeed engaging with clients in that space.

Thank you. Other questions from the room? This gentleman here.

My name is [indiscernible], private shareholder. I'm just wondering if you could touch on your investment framework or philosophy on your shareholder assets. We're seeing markets moving in various ways. And how do you shift your portfolio towards asset classes, which offer the highest expected yield or lowest expected risk? Like, for example, the spread between government bonds and credit is very low. Are you shifting towards bonds, government bonds? Or are you going to the other end?

Antonio or Jeff...

Why don't I say something, and you can add. So clearly, we are -- strategically, if you think about the direction of where we're taking L&G, we want to distribute more and more funds to third-party investors. So we're using our own shareholder funds as also a catalyst for being able to attract third-party investments. So that's one way we think about it. The other thing I did last year when I mentioned in my opening remarks, we want a very disciplined capital allocation. So we look at every single investment that we do across the board, including our own shareholder funds with a return on capital and a return on cash of 14%. Jeff, do you want to add on?

Yes. And the majority of the assets you talk about sit within our insurance business. And so we look, first and foremost, at something I was talking about earlier, investing to minimize the risk and volatility around the solvency position. So we use a lot of hedges on that. We do move in and out between government bonds and corporate bonds, but we're a long-term investor. So it's very much a what is the right risk reward over a long period. And it's a very big portfolio, GBP 80 billion, GBP 90 billion. It's a total of GBP 100 billion we have of shareholder assets. And so we don't move around too much within that simply due to the scale. We make sure that, that is very diversified as well. So our portfolio is over 50% overseas with the rest in the U.K. So we're not too concentrated in the U.K., but naturally a large amount. So we ensure that we're very diversified around that. Having said all of that, we have, as we talked about in the results, seen some of what you're talking about and invested more in gilts and gilt-based strategies, U.K. government bonds because they look attractive versus corporate bonds where the spreads are very narrow at the moment. They don't offer a good return or risk reward versus investing in gilts and other gilt-based strategies and then giving us lots of opportunity in the future to trade when we believe there is the right moment. And actually, in just the start of this year after some of the tariff volatility in the markets, we were able to transfer from some government bonds into corporate bonds when there was a good opportunity in names and lots of analysis into those corporate bonds that we are very comfortable with and believe offer very long-term value. I mean it all goes back to what John said. Ultimately, we're long-term investors, first and foremost, here to pay policyholders. With what's left after making sure that's all safe, we then make sure we invest to optimize the return, looking at the volatility and liquidity as well to ensure that we can run the business and invest in new business.

Thank you. I think the lady at the back.

Good morning, everybody, on the Board, [Monica Rednam], shareholder. You had a question earlier about the cost of software and the Data Technology Committee, et cetera. I would like to point out that simpler is in no way safer as I've got a masters in IT. You're expanding overseas. That means you have more offices and more staff overseas. You have people working from home. You have a lot at risk from hackers who are now state sponsored, which they weren't when I trained, and we could get into NASA. The problem is you need to spend more on software, and I would ask that you look into this matter of putting up firewalls and somebody who can be woken up in the middle of the night and press a button and cut everybody off. So they're all ring-fenced because that's the only way you're going to preserve your data. I would ask you to tell you who's looking into this. And have you set it up already?

Thank you for your very important question. This is a very, very serious challenge, I think, for any organization, particularly any complex organization, and you rightly say with international aspects and so on. And it's one the executive spends a huge amount of time on, but also the Board and including the Data and Technology Committee, which has its own specialist cyber adviser spends a huge amount of time on. But this is -- you're dealing here with very sophisticated threats launched by very sophisticated people. And therefore, we have to have very sophisticated defenses. This is very much part of the responsibility of Katie Worgan, who's the new Chief Operating Officer, who brings a huge amount of experience herself in this area. So I can only assure you that we are absolutely on this with a huge amount of energy, and I believe a huge amount of sophistication. But there is no world in which we have no risk in this area. It's a very challenging set of things for any company as we've seen from recent events in the U.K. So thank you for your question. Other questions? This gentleman here.

Thank you. And by the way, thank you for having a proper AGM. It's a rarity, and we're very pleased with it. Two questions. You signed up to the Mansion House Accord. Will this change your investment strategy in any way? And the other point is you recently bought 75% of Proprium Capital in America. Why did you do that? And what benefits do you see by that investment?

Let me take the first question and perhaps Antonio could take the second. On the Mansion House Accord, we do think this is an interesting and important initiative for our clients, which is what we care about. And we have believed for some time that for many of our clients, particularly DC pension schemes, it would be in the members' interest to have more diversification of the assets in which they hold their pensions. For a long time, that was very, very difficult because of a set of obligations that are imposed by regulators and the government about how we run those schemes. Those -- I think the recent moves the government has made to make it easier to invest money in a wider variety of assets have been hugely welcomed. So we're very positive about that. And indeed, I think we were the first major provider to launch a scheme that had a significant private assets alternative within the default fund. We signed the Mansion House Accord because we believed that we could deliver for our clients’ value, not because we thought it was a necessary thing to do for political reasons, but because we thought it was in the interest of our clients. And we work with our clients to engage with them on what's the best way to maximize value for their members. There's growing interest amongst pension fund clients in these funds, and we think that's exciting and good. I think it will also have some benefits for the economy, but we're -- our principal obligation is to our clients, and that's what I would really put first. You'll take the second question?

I will take the second question. And maybe just to build on the first one, our default fund at the moment already allocates 15% to private markets. So the Mansion House Accord is 10%. So we're already -- we ourselves, as John was just saying, are already moving in that direction. Just on your second question, so this is very exciting. So our growth -- we believe strongly in the growth engine of asset management across public and private markets. That's why Eric Adler has joined us as the CEO of that combined entity. There was a question earlier. This is primarily an organic strategy. So we have all the potential and the assets and the capabilities that we want with some gaps. And what we're doing from an acquisition perspective is filling those gaps. But if you go step back, we are the largest asset manager in the U.K. with 1.1 trillion assets, and we believe that this is mostly an organic strategy. Where it isn't is where we have those gaps. And we've done 2 acquisitions, one in the U.S. and one Europe/Asia. So the one in the U.S. was Taurus. We did an investment in Taurus. They're based in Boston. They're a real estate equity firm. And why is your question, why are we doing this? Because if we were doing this organically, it will take us many, many years to build the track record from an investment perspective to be able to then distribute those funds to clients. What we're doing is bringing a team in. If we think the alternative is just hiring a bunch of people, we're making an investment in a firm because they bring the investment track record. That was that investment in Taurus. The one we announced this Monday is Proprium Partners. As I said earlier, 60% of their business is in Europe. And by Europe, I mean, particularly Continental Europe, and the other 40% are in Asia Pacific. We have been investing in real estate here in the U.K. since the 1950s. So if you now think about it, we have the U.S., we have the U.K., we're very strong. And now we have Europe and Asia. So this gives us effectively a global platform for real estate equity, and we've acquired 75% of Proprium Partners, and that will go up to 100%. So effectively, think about it, they will be part of L&G. It's like we've hired some people that will be our real estate equity people for Europe and Asia.

Thank you. I'm mindful of time. I think we have time for sort of maybe 2 or 3 more questions, if there are any. Yes, gentleman at the back. I think you already asked one, which is fine. I just want to check there are no questions from anyone who hasn't had a chance.

[indiscernible] private investor. Thank you for [indiscernible] excellent venue. It's put in a way. If -- need a doctor in the house, we should be all right. I was just a minor point. Your legal adviser mentioned the quorum. What is that number? And is it ever -- what would happen if we didn't meet that quorum?

A question for my legal adviser.

Basically, it's 2% of -- we have to have of shares present, and we have through. And obviously, a number of people have cast votes already. So that's the minimum level. But to my knowledge, it's never happened in L&G's history.

And we hope it won't. Any other questions from someone who hasn't had a chance yet? If not, let's go to the gentleman at the back.

Thank you for your forbearance. A question for the Chief Executive. Are you monitoring the impact of weight loss drugs on future morbidity and mortality, bearing in mind you're a long-term annuity provider?

The simple answer is yes. Actually, we also had a deep dive with this Board in the last board cycle where we compared basically the scenarios that our teams had already come up with in terms of longevity versus the potential impact of the new weight loss drugs. The good news to some extent is that we had already assumed some of those improvements in our own scenarios. I think my CFO actually made this point at the year-end results. I think we got quite a lot of coverage. But it is -- because it is very important, and we are monitoring not just weight loss drugs, we monitor all developments, and we've done this for a long time. We have a very good panel that combines both scientists and our own actuaries. And so -- and that has worked really well for us. And we will continue. So the answer is, as we sit here next year, we will continue to see how things develop. But to reassure you as shareholders, it's well within the assumptions that we already had in our own projections. We tend to be very conservative and across the board, but particularly in longevity. And so we're not worried.

Thank you. I think we have one final question online, and then I'm going to propose that we move on. Jeffrey.

Yes. Thank you, John. So [Mr. Birch], who firstly just want to add his thanks to you as Chair, and he wishes you every well with your future offerings of employment.

That's good.

This is going to be [Mr. Birch's] first year of reinvestment of dividends. And as a certificate holder, he wants to know whether L&G will utilize technology to reduce the cost of producing certificates for direct holders. And I'll...

That's a question for you.

It is; indeed, it is. And it's a good question because I think we are very conscious of the cost in this. And we are looking -- we are actively looking at ways to reduce and working with Computershare registrars. And we're very happy to pick up with [Mr. Birch], obviously, he is not here today, but we'll pick it up with him separately. But one option we're looking at is to use the company nominee option as that may be a way of being able to reduce cost, but we'll pick that up with [Mr. Birch] outside the meeting and anybody else here that would be interested.

Thank you. Well, if I may, I just we move on. Thank you all for your participation. That concludes the formal business of the AGM. So I now declare the 2025 AGM closed. If anyone has any further questions or would like to speak to any of the Board or group management committee members, we'll be available downstairs during lunch. Alternatively, you can absolutely e-mail or write to us. I'd like to thank you all for joining us today and invite those of you that are here with us in person to join us for a light buffet lunch downstairs. We have some helpers at the back of the room who will happily direct you there. Thank you very much.