A.M. Best Affirms Ratings of Legal & General Group Plc and Legal and General Assurance Society Limited

  A.M. Best Affirms Ratings of Legal & General Group Plc and Legal and General
  Assurance Society Limited

Business Wire

LONDON -- May 30, 2014

A.M. Best has affirmed the issuer credit rating (ICR) of “a” and the debt
ratings for all debt issued or guaranteed by the non-operating holding
company, Legal & General Group Plc (L&G) (United Kingdom). At the same time,
A.M. Best has affirmed the financial strength rating of A+ (Superior) and ICR
of “aa-” of Legal and General Assurance Society Limited (United Kingdom). The
outlook for all ratings is stable. (See below for a complete listing of the
debt ratings.)

The ratings reflect L&G’s strong earnings generated in 2013 and excellent
risk-adjusted capitalisation. The ratings are further supported by the group’s
well-established position in its core markets.

Following a further year of positive development across all divisions, L&G's
profit after tax increased by 12% to GBP 896 million, translating into a
return on equity of 13.9% (including exceptional income/expenses, as
calculated by A.M. Best). A.M. Best expects L&G’s performance to remain
relatively stable in the next couple of years, as the group’s enhanced
business diversification should help alleviate some of the challenges facing
the U.K. life market, such as the impact of on-going low interest rates on the
retail business or a potential decrease in individual annuities sales.

L&G's risk-adjusted capitalisation is forecast to remain robust, underpinned
by the quality of its fixed income portfolio, consistent earnings retention
and a number of softer capital items, for which A.M. Best gives equity credit
(such as the value of in-force business and subordinated debt). In 2013, the
group’s shareholders’ equity grew by 4% to GBP 5.64 billion, while declared
dividends reached GBP 550 million (GBP 452 million in 2012).

L&G maintains an excellent business profile as one of the United Kingdom's
largest life insurance groups, with a widely diversified product range that
includes savings, protection and annuities and a leading asset management
business through Legal & General Investment Management. In 2013, L&G proceeded
with a number of acquisitions to strengthen its position in the digital
solutions and infrastructure investment sectors, which are central to the
group’s strategy. L&G also confirmed its leadership position in the bulk
purchase annuity segment, with transactions of more than GBP 3 billion for the
first quarter of 2014 alone.

Positive rating movement is unlikely in the near term considering the current
evolving market conditions in the United Kingdom.

Downward rating pressures could emerge from a significant worsening of the
conditions in the U.K. life sector, L&G’s largest market. Rating pressure
could also emanate from a marked decline in the group’s risk-adjusted
capitalisation or deterioration in its financial leverage.

The following debt ratings have been affirmed:

Legal & General Finance Plc—
-- “a” on GBP 10 million 5.800% senior unsecured notes, due 2041
-- “a” on GBP 40 million 5.750% senior unsecured notes, due 2033
-- “a” on GBP 200 million 5.875% senior unsecured notes, due 2033
-- “a” on GBP 350 million 5.875% senior unsecured notes, due 2031

Legal & General Group Plc—
-- “a-” on GBP 400 million 5.875% undated subordinated notes
-- “a-” on EUR 600 million 4.000% subordinated notes, due 2025
-- “a-” on GBP 600 million 6.385% perpetual preferred securities
-- “a-” on GBP 300 million 10.000% subordinated notes, due 2041

The following indicative ratings have been affirmed for securities issued
under the GBP 3 billion medium term note programme:

Legal & General Finance Plc—
-- “a” on senior debt

Legal & General Group Plc—
-- “a-” on subordinated debt

The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Best’s Credit Rating Methodology can be found at

In accordance with Regulation (EC) No. 1060/2009, the following is a link to
required disclosures: A.M. Best Europe - Rating Services Limited Supplementary

This rating announcement has been issued by A.M. Best Europe – Rating Services
Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the
world's oldest and most authoritative insurance rating and information source.
For more information, visit www.ambest.com.

       Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


A.M. Best
Charlotte Vigier, +(44) 20 7626 6264, ext. 270
Senior Financial Analyst
Anandi Nangy-Kotecha, +(44) 20 7626 6264, ext. 271
Associate Director
Jim Peavy, +(1) 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
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