H1 2018: Consistent delivery of growth from divisions

Financial highlights

• OPERATING PROFIT¹ FROM DIVISIONS² UP 7% TO £1,059M (H1 2017: £994M), increases in 5 out of 6 businesses since H1 2017
• OPERATING PROFIT¹ OF £909M, up 5% (H1 2017: £862m excluding mortality release) after increased investment in the business
• EARNINGS PER SHARE³ DOWN 8% TO 13.00P (H1 2017: 14.19P), impacted by financial markets
• PROFIT AFTER TAX DOWN 19% TO £772M (H1 2017: £952M)
• RETURN ON EQUITY¹ AT 20.3% (H1 2017: 26.7%)
• INTERIM DIVIDEND⁴ OF 4.60P PER SHARE (H1 2017: 4.30P)
• SOLVENCY II COVERAGE RATIO⁵ OF 193% (H1 2017: 186%)
• SOLVENCY II OPERATIONAL SURPLUS GENERATION UP BY 11% TO £0.7BN (H1 2017: £0.6BN)

Business highlights

Investing & Annuities

• LGR ANNUITY SALES OF £1.1BN⁶ (H1 2017: £2.0BN)
• LGR LIFETIME MORTGAGE ADVANCES UP 23% TO £0.5BN (H1 2017: £0.4BN)
• GROUP-WIDE DIRECT INVESTMENT UP 38% AT £16.3BN (H1 2017: £11.8BN)

Investment Management

• LGIM AUM UP 4% AT £984.8BN (H1 2017: £951.1BN)
• LGIM EXTERNAL NET FLOWS OF £14.6BN (H1 2017: £21.7BN), US FLOWS $11.5BN (H1 2017: $10.8BN)

Insurance

• LGI GROSS WRITTEN PREMIUMS UP 3% TO £1.4BN⁶ (H1 2017: £1.3BN)
• GENERAL INSURANCE GROSS WRITTEN PREMIUMS UP 12% TO £193M (H1 2017: £173M)

¹ The Alternative Performance Measures within the Group’s financial highlights are defined in the glossary, on pages 99 to 104 of this report.
² Represents operating profit from divisions and excludes mortality reserve releases (H1 2018: £nil, H1 2017: £126m). H1 2017 release reflects changes to LGR’s base mortality assumptions.
³ Excluding mortality reserve releases (H1 2018: £nil, H1 2017: £126m).
⁴ A formulaic approach is used to set the interim dividend, being 30% of the prior year full year dividend.
⁵ Solvency II coverage ratio on a shareholder basis is adjusted for the Own Funds and SCR of the With-profits fund and the final salary pension schemes.
⁶ Constant FX rate comparisons have been calculated by applying the average FX rates for H1 2017 to both H1 2017 and H1 2018 local currency results. Actual FX rate comparisons apply the H1 17 and H1 18 average FX rates to the equivalent periods’ results respectively.