Thank you. And thank all of you for joining the call today, and thank you indeed for the speed at which several of you managed to get out this morning. Jeff, myself and all of the team here at Legal & General are delighted with our results, very strong performance in operating profit at a group level. But we're also delighted with the performance of all of our divisions and even the subdivisions within the divisions. Not only did we perform well in the pandemic, just from managing our staff, managing our customers and delivering a resilient performance last year, which we leveled a pause. It's great to see us returning to normality in a sense that we're driving forward in earnings per share and, of course, in ROE. Our ROE performance was outstanding really when you consider that we're still operating under a pandemic. We very much believe an investment led growth is the solution to both the UK and the US economic growth over the long term. And we're playing an ever increasing role in investing in real assets, creating real growth, real jobs and real wages growth here in the UK. I guess our capabilities to scale up businesses is coming through in LGC for the first time materially. And I know one or two have been talking to Jeff about that this morning. We've been on that journey for a number of years. We've said that this year that LGC would be a breakthrough year. And indeed, that's what we've delivered. And it was terrific yesterday to sign the deal with the NatWest Group Pension Scheme where they've become co-investors in our Later Life business. Why this is strategically important is if you look at our build-to-rent business, the partners there, PGGM, a very prestigious and incredibly well-run Dutch pension scheme. And we've seen this sort of activity from European pension schemes, but particularly from US and Canadian. We're getting increasingly confident that we'll see the same thing happening here in the UK and that we will play an incredibly big role in getting these partners to help us scale up businesses, not just here in the UK, but increasingly international. We are pleased with our performance in the US, in Europe and in Asia, where we're seeing, again, this sort of scaling up impact having -- that's having on our results. I guess our biggest challenge, and it's a shared challenge with all of you, it's a collective challenge really is, is how do we get financial services re-rated in the UK We've seen it happen in the United States. And we're not the only industry where there's a difference in rating between the US and the UK. We're hoping over time as we continue to deliver outstanding results that, that gap will disappear and that we'll see wider recognition for the quality and the growth of our earnings going forward. That's all I was going to say by way of introduction. We'd like now to move to questions. A - Nigel Wilson: And the first question is from Louise at Morgan Stanley. Louise?

So the LGR new business margin was down versus the first half of 2020. How should we be thinking about the margin for the full year? Should it be similar to the first half or should we be looking at more the 2020 or 2019 margin? At LGI, you have about GBP30 million of that FY '20 mortality provision left. I mean, do you have any concerns that this is going to be sufficient, given the outlook in the second half. We're hearing that these might be a bit heightened versus previous years. And then finally, having a look at your sensitivity analysis on your Solvency II stresses. On the credit migration trust, this seems have moved a bit since FY '20 compared to the other ones. Is there any particular reason for this or is there nothing to think about?

I think, Jeff, those are all for you.

Yes, LGR, new business margin, I mean we know we said we traded very well last year, especially in the first half around traded credit when spreads were pretty volatile. That helped us with the margin plus there was probably a bit less competition. Certainly, we were demanding more return on our capital, so putting it to work in much more uncertain times. The level is it's around 8.4% for 72 new business margins. So it's definitely in a normal range for us. So I'd say we'd look to continue to deliver that sort of level of return, which is -- we're really in line with what we've seen in '19 and what we're seeing in the first half of this year. Obviously, as you all know, it does very little, depending on the duration of what we write and the exact assets that we're applying at any point in time, and we continue to source very, very good assets and to manufacture those ourselves. LGI, yes, there's GBP30 million left. There was obviously a big impact in Q1, in particular in the U.S. due to COVID. We follow the same methodology in terms of projecting out the IHME. And we're within that. I believe there's a little bit of prudence based on that. Clearly, there's a big range of uncertainty around that. There is some sense, but with not a huge amount of data that potentially any penetration of adverse claims into the insurance market will be slightly less due to some of the socioeconomic impact. So certainly, we are comfortable with that level of provision going into the second half. And as ever, of course, we don't make any allowance for any potential excess tests in the annuity portfolio which acts as extra prudence for us. And the credit migration, nothing really to worry about there. That's just the impact of the math in terms of your starting point in terms of rates and where spreads are and that moved the sensitivity. But nothing's changed that causing the underlying portfolio there or the stresses.

Thank you, Louise. Thanks for your questions. Next is Larissa.

A couple of quick questions from our side, please. Two on bulk annuities and then one on LGC. Actually two on LGC, if you don't mind. On bulks can you help us understand what is currently driving the dynamics? And what gives you confidence that the 2H volumes should come through? Related to that, basically, do you think there's a lag effect from a COVID shock last year or are there other factors? Then the two on LGC. How robust is the pipeline? Which areas are you seeing particularly attractive opportunities? Is it mainly a housing play ? Or are there other areas that are coming through? And then secondly, can you give us some color, please, on how much of the GBP250 million in earnings related to mark-to-market on the revaluation of the portfolio.

I'll take the first two and Jeff can take the third one. Just in terms of markets for PRT, we broadly expect the market to be about the same size this year as it was last year. So that there wasn't really a macro COVID impact. We're strongly seeing -- we're seeing a stronger pipeline in H2, hence the reference in the release to the GBP2 billion that we've either closed already or exclusive for the second half of the -- we will retain our financial discipline in the second half of the year, as we've always done in previous years, but we're very confident that the long-term size of the market opportunity in the UK and indeed internationally for the business. So the numbers that Jeff and I have used in numerous of the presentations, the GBP40 billion to GBP50 billion over four to five years, are absolutely the same as they've been over the last few years. In terms of LGC, it's across the board. I mean we invested in a number of these businesses several years ago. And whether that's in the various housing businesses, the urban regeneration businesses, the energy businesses, the SME finance, that's both in venture capital, but also in Peloton, they're all doing incredibly well. They're all performing very, very strongly. And we're very confident that they'll continue to perform strongly. Even more so because of the third-party capital that we're bringing in at scale into these businesses, which I think is a good thing not just for us and for our shareholders, but actually for the UK economy and elsewhere, that big pension funds and big asset managers want to co-invest alongside us. We've done a lot of the heavy lifting, built the management team, built the market opportunity, scaled up these businesses and a very attractive investment opportunities for the people. Jeff, do you want to take the third question?

On the mark-to-market for the GBP250 million, it sort of depends what we mean by mark-to-market, the direct investment, the alternative, those are underpinned by the transactions we've seen or pending transactions we'll be talking about in the second half. But in terms of the profit base, it's GBP55 million from the traded portfolio. Clearly, that is a pure mark-to-market. We can't predict what repeats on that, if you like, in the second half. And we wouldn't necessarily expect to see some of the BC continuing to move at the same rate in the second half of the first half, but we'd expect those to keep growing over time. I mean, Nigel covered it to some extent. The others are good quality operating businesses and underlying businesses with growth. So CALA, affordable housing, build to rent, Pemberton, we'll continue to see revenue growth there and sales growth. And those are how we put valuations on that color is real profit at the point we sell a house. That's the only time we get profits coming through. And so in terms of second half, we wouldn't double that GBP250 million number, but there are strong underlying businesses we continue to see growing.

If you look at Slide 28, you'll see that the traded portfolio delivered GBP87 million profit in 2020 and GBP55 million in 2021. So that's not been the source of profit growth. But it's really high performance of the other businesses. We'll now pass on to Andy Sinclair.

And let you results of the business is clearly in good shape. Three questions for me, if that's okay. Firstly was on LGR. You talked about this assured payment policy as being your capital-light PRT product. I just really wondered if you can tell us a little bit more about how the capital intensity and margins differ versus traditional PRT business? Secondly, on LGI. I thought there were really good protection sales growth in H1 in both the UK and the US. Just really wondered if you can tell us a bit more about the outlook here. What sort of growth do you think is sustainable? And third, on LGC, I suppose we're a little bit surprised to see that the LGC investment portfolio AUM would seem to only be around flat year-to-date. Just wondered, is this due to investments maturing and being passed on to other parts of the business? Or what's going? Just could you give us a little bit more color here on how the alternatives and trading portfolios have moved year-to-date.

Jeff, do you want to take the first and third question? And I'll take the second.

The APP, as you say, it's sort of capital-light. It's really along the way on the journey and it doesn't have some of the longevity risk. It allow schemes to really partake in the direct investments that we put to work on our own LGR portfolio and get them to buy out sooner. So we had a good example of that where we've done a transaction with AIB under APP, and we've now moved to full bias on that. So they really get exposure to our credit expertise, they transfer that risk to us and we're able to deliver the returns to them as they lock in and then they eventually move further down the track to that. So it looks very attractive to us and allows the schemes to move earlier. Clearly, the returns meet all our hurdles. We don't price in any differential way. We put the capital to work and get the returns, broadly in line with what we get from the rest of the business. We elaborate in that way. LGC investment portfolio, yes, nothing particularly going on there. I mean we're expanding the portfolio. It grows. We had reduced the traded portfolio, as Nigel said, in terms of op profit. You could see less reliance on that. So that has reduced. But otherwise, no, there was nothing in that. We look to continue to grow the investments, we give views on where we think that will be. We usually put to work a good few hundred million in any year, whether that's GBP200 million, GBP300 million, GBP400 million, GBP500 million, and we continue to do that. We continue to transfer from the traded portfolio. So there's nothing particularly going on there.

On LGI, thank you, Andy, for your kind words. Over the years, they've not always been so kind about LGI. But Bernie, Bikman, Seifi and the rest of the team both in the UK and the US have done an outstanding job, particularly in paying claims suddenly during the pandemic. But we did see strong growth in both the UK and the US, and we expect it to continue in both the UK and the US. We're becoming increasingly optimistic about the United States and the progress that we've been making now and we're strengthening the management team, building out its capabilities as we speak. We think the US market will begin to follow the UK market in that there will be greater use of technology. It's always been quite a long way behind the UK in terms of use of technology and the fact that we're technology leaders here in the UK in the United States. So I'm becoming increasingly confident about our capabilities in that space to grow the business. Next question is from Colm.

Nigel, so just first one on LGC. Obviously, strong results today, and I see a lot of emphasis on LGC in the presentation slides. So quite a strong expectation in terms of future growth going forward. If we think about it from a cash flow perspective, and particularly upstreaming cash to the group holding company, when we think about LGR, it's a very consistent track record of upstreaming relatively stable cash to the group. Can you just touch on LGC's remittance track record and what we should expect going forward in terms of upstreaming capacity there. And then just secondly, on the LGRI business, obviously, Laura moving across LGC. I didn't see anything announced in terms of a successor for the CEO position of LGRI. I'm just wondering if you can update on the process there, if that's okay.

Jeff, do you want to take the first one? I'll take the second one.

LGC cash flows, yes, it's in the combination, clearly, when you revalue a BP portfolio, you don't get the realization straight away, but there's a lot of operating businesses that are real profits and real cash at that point in time. CALA is GBP70 million-plus PBT in the first half that, that's -- those are real houses, real completions, money in the door. And so clearly, in the past few years, we've been investing in the business to grow those. And so we've been helping the portfolio mature and adding our liquid resources into that. But then as those mature, they start to throw off either realizations with third-party money, NatWest Pension Fund and other examples, or we sell them as they become mature anyway. Or alternatively, if they're maturing, yielding type equity, we're happy to move those across into the insurance company, which then moves the liquidity around the business. So there's a different profile across the board. But we do see that as those businesses mature, we see them throwing up a lot more cash than obviously it's been historically when we've been growing them through the realization, through third-party money and simply businesses like CALA becoming mature operating businesses that the pay dividends.

So in big picture terms, Colm, there's -- it's just like any normal regular business. LGR and stuff like that, we've invested in asset and operating assets. We've helped manufacture those assets, but then they become cash flow producing on a go-forward basis, similarly with Pemberton and other areas of the business. On LGRI, yes, I'm pleased to report that actually Kerrigan has now arrived in Asia. It's taken a while to guess there. He's been from quarantine in Thailand, quarantine in Hong Kong, so that's been a journey. It's been nontrivial interviewing international candidates, to be fair, during the lockdown period. And we've certainly been looking across the world for candidates for the LGRI position. And as you said, almost on holiday today but calling in Laura's just recently taken the reins for LGC. But we're comfortable with where we are in terms of finding successors in LGRI. Next question is from Credit Suisse.

It's Farooq Hanif from Credit Suisse. Just turning again to the APP and ISS, the alternative LGR PRC solutions. Can you talk about the sort of pipeline. And do all of these inevitably end up in a buy-in and buy-out when they mature? Second question is, you talked about the CMI-19 transition not having an immediate explicit release, but that being kind of a margin release. I mean, will this be actually equivalent in size to what happened with the CMI-18 experience for the purposes of our modeling. And then lastly, on LGC, can you just talk about the profit implications of the third-party capital. So is it simply that you need that GBP14 billion to get to GBP5 billion alternative assets, or is it that you will get realizations which improve cash, or is there some other margin that you can make on that?

Jeff, take the first two, and I'll take the third question.

The APP, yes, there's a good strong pipeline on that. Trustees have lots of responsibility. They want to understand when they're doing different things. There's been good precedence now in the market around APP, both bid party student with our own scheme, et cetera. And the ISS, we have a good number of conversations around those, instance in some of them, you have a long conversation about these alternative structures. They suit them at the time along their journey. And then suddenly they have a windfall. The markets move and actually say, you know what, we can afford a buyout now. So let's jump straight to that. And that has happened to us. But they're very useful tools to have along the way. That's almost the answer the second part of your question that yes, I mean, if we do our job properly and the schemes manage themselves, they would all eventually be run in to buy us. We wouldn't expect people generally to put it put in needs in place to sit on them forever. There may be exceptions to that, but they would be looking to buy out. So we see this as really helpful on that whole derisking journey as we say many times. We're the only ones that start all the way at the beginning in LGIM and move all the way through. And so we continue to build on that and what 50% of the cases are from LGIM this time. Yes, the CMI-19, we were prudent in the way we implemented CMI-18. And we've obviously already had the 19 table at the time. We know broadly where that sits. And so we see that being pretty neutral to implement. As neutral as you can be when you have such a big book and you're dropping in some new tables. But we have built some prudence in. We think we're conservative given the uncertain outlook on data for 2020, 2021. And so we do anticipate some of that prudence, some of those excess tests flowing through the P&L for the next couple of years, as we've said. In terms of size, it's very hard to predict. But yes, we'd expect it to be probably in the sort of high tens of millions, which is not dissimilar to the lower end of some of the longevity releases that we've had. We could get as high as GBP100 million flowing through, but that will be through P&L as we release these over time, combination of some of the experience coming through and the prudence released at '20 and '21 data and what we believe about what's happening in terms of delayed hospital appointments, et cetera, and treatment comes through and we understand the market and the outlook on mortality a bit better.

On LGC, we have a variety of businesses, some of which are outlined in the pack which give you case studies. And as you have seen, we're having an Investor Day in October. So we can go through everything in a lot more detail. So this is really just a sample ahead of that. But the model is really that we put up equity. We hire a management team for a particular sector. We then invest in the business. Pemberton is a good example of that, NTR, build-to-rent, affordable housing, venture capital, data centers, nice living. And we ultimately look to get fees from alternative asset management platform is the expression that we use in-house from these activities. So if you take something like Pemberton, of the funds that they have under management, somewhere between 5% and 10% are actually our funds, the rest of from their 120-plus LP. And we think this model works incredibly well for us and we can scale it brilliantly well. And so we're just going to continue repeating that. And data center is another area that we think we can scale up on a go-forward basis by bringing in capital. As Jeff mentioned, we may realize some of that value on a go-forward basis. There's obviously marketings around Pod Point, which is one of our many, many, 300 different investments that we have started to scale up businesses, there's huge demand for electric vehicle charging. We have another business called , which is our electric vehicle leasing business. All of these are being scaled up. And it's demonstrating value, realizing value and building revenue from third parties, which are all part of the narrative and the economics going forward. Next question is from Oliver.

The first question is, I'm assuming that the guidance you're giving for the full year is off last year's 2, 2, 1, 8 figure. And if that is the case, if that is the case, then it looks you have to make somewhere close to GBP1.4 billion in the second half. And I'm just trying to sort of work out where that is, because if you're not -- if you're only talking about this sort of smooth release from longevity reserves to maybe GBP100 million, it's quite hard and particularly if you're saying LGC being lower in the second half. Where is the delta to that GBP1.4 billion in the second half? Second question is on LGIM. I can see an excellent ETF margin of new net inflows. But what's the -- or how does the margin on new flows, revenue margin on new flows compare to the 7 bps or so that you're getting across the book as a whole? And then thirdly, on LGI. You talked about growth, I'm talking about the UK business. You talk about sort of the growth in sales every year. And generally, you have been growing that business. But actually, almost every year, we also see a decline in the release from operations. And I know that's something to do with cat. But I'm wondering when do we see the release from operations actually growing in line with your improved targets.

Jeff, do you want to take the first and third? I'll take the second question on LGIM.

Yes, in terms of the op profit, we certainly expect to see that across the metrics for continuing operating profit from continuing divisions of total op profit. We've always focused on excluding longevity releases. We would see those numbers coming through strongly overall. And don't forget, of course, with the strong investment variance, that will flow through to EPS growth overall. So we don't focus so much on that longevity release. It'd probably be a bit too much to still say where the number looks compared to that. But we're looking at the underlying business is expecting to deliver profits in those double-digit returns across the board there.

Can I quickly just -- but I mean just to be clear, you are looking -- the guidance you're giving would imply 24, 50, 24, 40 million of operating profit in 2020 as a whole. I mean that's the right figure, is it not?

I think we just need to be careful on where we're putting the guidance around that. As I say, you can flow it through from the double-digit growth for the full year across both continuing and the op profit certainly excluding longevity releases. And then we would look to show growth overall. With the growth below that, you get good EPS growth as well then.

I'm still confused. I'm having to say. You say in the statement that you're looking for double-digit growth and operating profit over the year as a whole. Is that from last year's 2, 2, 1, 8? What does it actually mean?

We deliver growth from the total number from last year, and we've delivered good double-digit growth of op profit, excluding the longevity release. There's a combination of deliver both good growth on all of those metrics and then that delivers very strong EPS growth overall.

We're not trying to give absolute number here, but the direction of travel that you're going through, Oliver, we would say, yes, if you're looking for a one-word answer to where we want to get to. And it's double-digit growth.

Can I take the LGIM question?

Yes.

The LGIM question, Michelle has articulated a very comprehensive strategy for modernize, diversify and internationalize. Part of that diversify is building out some higher-yielding, higher-margin products. And if you go through the detail of the results, you will see that there were very strong international flows across the business. We're doing incredibly well in the UK, Europe and indeed in Asia for the business right now. So we're very happy with that. But we're making fantastic progress in things like our award-winning, high-yield debt team, our fixed income team has just done an amazing job in the last few years. Emerging market debt team, exactly the same. And ETFs, which we highlight for the first time, I think it was an acquisition a few years ago, is seeing tremendous growth in revenue. And these are all 20, 30, 40, 50 basis point type of products. And therefore, as we build these out over the next few years, we should see an acceleration of revenue from these high-yielding, higher-margin products. We do have to invest more. Part of that is regulatory-driven, part of it is from the fact that we are expanding into new product areas and internationalizing the business. But we'd hope going forward that the growth in revenue will be greater than the growth in costs, which is what we haven't achieved in the last few years in LGIM. But still rather a new management team that Michelle has pulled together are really working incredibly diligent on these areas.

The LGI question, as you say, yes, I mean the biggest impact there has been a tax impact. We sold mature savings effectively all term business be impact on a profit basis as opposed to the old good old-fashioned lab business, and that's been the main impact overall on that. There is some other second order impacts and there's some things we do between what's reported. We've optimized some of our US business, historic new business financing, some of that appeared in the UK and that's been moving around. But generally, the underlying biggest impact has been the tax by a long way. The other, small items. So we see across the board, and sometimes it's better to look across the LGI at the top level. That's where we see the true picture coming through because of the way we use our different entities. And that shows the growth, and that continues to be that we see it in the OSG of the underlying as well, which is a good sign for us. Obviously, we don't split that out for you guys, but we do see that coming through. So that continues to grow in line with that.

Next question is from Ashik, JPMorgan.

Just few questions I have. I mean just to go back on all these questions, sorry for this again on operating profit. I mean, if I understand correctly, what you're saying is operating profit will grow at double digit, but before last year's mortality releases. So which the base is GBP2 billion basically. On that, it will grow double digits. Now what I'm trying to understand is if it grows double digit, then you're just recovering back the COVID impact from last year which was stated at GBP228 million. So I mean, are we talking about some underlying growth as well? Or are we just missing the numbers like it's not GBP2.2 billion, we are talking about GBP2.4 billion which is on the headline profit number of last year? So that's one thing would be good to get some color about like in terms of numbers. Second thing is on LGC. Clearly, the first half profit was very strong, no doubt about it, but would you be able to give some color as to what sort of say run-rate profitability we should assume for an annual like normal year, for, let's say, next year onwards, et cetera? Or say, if you can give us some return hurdles for the alternative asset. Like in this half, it was 10%. But like normally, it is like your expectation is you generate 5%, 6%, 7%, something like that. And third question is, I mean, sorry, the PRA quest is out on the U.K. solvency. I mean, on one hand, they are very optimistic on risk margin to getting reduced. But on the other hand, they are putting a bit more default stress on the matching adjustment, especially for illiquid assets. Any early thoughts that you have on that would be very helpful.

Jeff is going to take the first and the third question, and I'll take the second.

Ashik, I mean we shouldn't be giving too much guidance directly on the numbers. But to spell it out, we see good, strong underlying operating profit growth of all of the businesses in a double-digit level. And so we continue to deliver that across the divisions, we will deliver that growth, which is what we have done historically. The longevity releases have always been considered one-off and excluded from those metrics. However, if we deliver that across the businesses, we would still see growth on the overall operating profit level. And when you combine that with what we're delivering below as well, we would consider that, that will then deliver strong EPS growth, which is what we're intending to deliver. So there's good, strong underlying growth of all of the divisions which is what we've historically delivered. There are one-offs around longevity releases, which we're not taking through and not included in those numbers. But we would expect to see overall operating profit growth despite that. And then that would translate into strong EPS growth as well. LGC?

We've got GBP3.4 billion at the moment in these alternative asset platforms. We've set a target return of 8% to 10% for those assets. We've said that in the presentation, that GBP3.4 billion will increase to GBP5 billion in which case we would expect GBP400 million to GBP500 million of LGC profit coming out in the next 2 to 3 years. And that's broadly the direction of travel that you can use for your models. We're going to give you a lot more detail on how this all fits together in October and try and do a lot more work for you guys to make it even more transparent as to what we're doing. Clearly, this is a really important part of our growth driver, but it's part of the 3 businesses working together, LGIM, LGR and LGC. And where one goes, all go really, because there's so many growth opportunities for all 3 of those businesses. Jeff, do you want to take the quiz?

On the quiz, it's a very large exercise. There's at least sort of 18 types of scenarios. So difficult I think, as an industry and commentator draw too much from that and from discussions with PRA, they're very much looking on some specific areas where they want to have numbers, a wide, wide range so that they can find an answer somewhere in the middle in simplistic terms. And there are lots of other areas they're looking at, which are more qualitative and to do with process and what assets are allowed, et cetera, or where they already have extensive data. So these are specific areas where they're looking for extra information in terms of, okay, in a range of scenarios, what could that mean so that they can feed that in. It's very hard to draw any more from that, but we get the same positive noises from them around risk margin and sort of assets being allowed into mastering adjustment portfolio. They just a lot of things they don't need to test at this stage, but there's a range of things where they do want to get some numbers back. So there isn't more conclusion than that at this stage.

Articulate the report has been balanced and measured. I don't want to have any sort of shock to the industry. And certainly, they have been supportive of the initiatives that we've been having and discussions we've been having about investing in real assets in the real economy. I have a degree of empathy or sympathy from my colleagues because it took at a huge amount of work. And I -- to Tim Stedman are the others, it's going to be an enormous amount of work between now and October. And it's just the we want to do a very thorough exercise, but we expect the outcome to be balanced and measured and not to have a material impact on our -- on our business going forward. I'll now hand over to Andrew Crean from Autonomous.

Three questions or three areas. Firstly, would you give us the updated Solvency II coverage figure post the falling yields in July? And can you talk to us about what the ceiling is in terms of when you look either inorganic or capital returns? Is 180% of this -- Secondly, on LGC, I think the alternative assets have grown at a CAGR of 29% over the last 4.5 years. And you've got -- to hit your GBP5 billion target, it's a CAGR of only 9% going forward. Do you think that, that's a bit too conservative? And then thirdly, it's clear from your final slide of the presentation you're somewhat exercised about Legal & General's valuation and I can understand why. Are you still happy to leave it to public markets to find the right level for Legal or do you think you're moving to a situation where you may need to look at slightly more dramatic actions, whether it's selling off minorities or bringing in private capital?

Jeff takes the first one. I'll take the second two.

Yes, in terms of the ratio, it's basically broadly unchanged. As you say, rates fell a bit. Obviously, we have had surplus generation since then. So within the usual sort of plus or minus, a couple of percent is broadly unchanged. There hasn't really been much that's moved otherwise apart from rates and surplus generation. In terms of ceiling, we don't, as you know, like to give the ranges around that. There's a whole host of reasons why a number may not be appropriate at a point in time. The big picture, we obviously continue to make ROEs at 20% plus. So I believe investing back in the business makes sense for us. And as a comment on, maybe 9%, we can do we go faster. People Nigel says, but there's always ways to deploy the capital to make good returns. But equally, it does depend why you've got to that level. It could be 190% for just simply because rates would increase. Is that right? What's our view on downsides from there? Et cetera. So it very much depends why you've got to a level and how sustainable, what your plans are around that in terms of what we would think to do with the capital.

Would you be able to give us in terms of the operating status generation or the status generation a split between what's going on in the equity and funds and the SCR separately? It's quite helpful.

Looking with the view to IFRS 17 and everything else and generally looking at S2 disclosures, we are sitting down post holidays to consider what we might do around that.

On the second point about alternative assets, Andrew, you sound like me. I think you can take that as a compliment around that. Yes, indeed, the math said that we could grow faster going forward. This is really -- this is our plan from last year, and we've just repeated it here. But there's -- certainly, the businesses have performed better than our expectations, to be honest about it, right across the board. I think there's a lot of third-party equity that can be brought in at that private level, which is really in part the answer to 3. In a sense, it's much easier to get equity into Later Life Living and get a fair valuation for that or into many of our other businesses built to rent or whatever and fees from it than necessarily getting the recognition from the public markets. And the point that we're making earlier on is that there's now a big delta between alternative assets or people with a broad approach to assets and the valuation of them. And there's a whole bunch of American firms that are beginning to look more like us ironically, that have a much higher multiple than we do right now. And we're on this journey from moving -- from being a traditional insurance company. And we've sold off a huge amount of our assets in the last 10 years and repositioned ourselves to be a modern investment management company, of which insurance forms an incredibly important part. We have a whole series of liabilities, pension liabilities, insurance liabilities, climate liabilities of which to create assets, to manage against those liabilities. And they offer us enormous growth opportunities, not just here in the UK, but increasingly internationally. And we're busy recruiting people and investing in activities that should continue to deliver the great returns that we've seen over the last 10 years. We think at some point, the public markets will catch up with that. We're a little bit frustrated, but not massively frustrated about it because we recognize that we have to deliver more. We have to get credit transparency, which is what we're going to do with LGC in October and what Jeff and the team are sitting down to do post the summer on Solvency II. Next question is from Greig at KW.

Three quick questions. My normal question is, I wonder if you could just talk about in the first half what the sort of downgrade experience had been in the BBB asset range backing LGR and costings have improved. What the outlook in the second half for downgrades are as it pertains to solvency ratio. Second point is in the US, on your term life business, you are rolling out your U.K., call it fintech/digital expertise, which seems to be making a difference. My question is, is you really have a very large market share. Is that a constraint on what you can grow or are you going to go, or do you have the capacity to go into, say, other mortality-type products, different distribution channels, whatever and sort of the sky's the limit there? And the third question is just in terms of your own company's debt and leverage. Are you planning to issue any further debt in the next 12 months?

Jeff take the second and third. On downgrades, we haven't really had downgrades. As you rightly pointed out, Greig, we're on an upgrade trend right now. And so we can't be totally confident that, that trend is going to consider given what's happening in the pandemic. But the sectors where there have been problems, as we've articulated before, have not been problems. And our cash coming into our assets has remained at the very high 99.89%. And we're confident we'll continue to deliver at that sort of level. Do you want to take the other two questions, Jeff?

US term, that's right, yes, we've been effective in rolling that out. That obviously was very good time with pandemic and people looking to move away from paper transactions, et cetera. We're seeing delivery on that. And one of the points you made here, I mean, that in itself is change in the way distribution is done. There's a number of very strong tech-based on their past being start-ups now, they have significant sales volumes and where quite often either sells high or the main partner with a number of these that are grow in the market. They're in themselves a different distribution to the traditional brokers. They're advertising to completely different segments of the market. And they want the sort of straight-through processing that we're offering, much faster turnaround times of putting business on the books. And that is definitely paying dividends for us. We're seeing increased volumes and continuing to grow. You're right, I mean being number one in the broker market would have a limit, but the broker market is completely changing and there are new entrants that are pushing this and expanding the market. We believe we can push that further. So there's a long way to go on that before we would need to look at different products, et cetera.

Did Greig use the expression the sky's the limit there?

You know I don't believe that.

You'll have seen the slides which show the debt reducing over time. The constant growth of the balance sheet gives us lots of optionality around that. Obviously, us 180-plus solvency, very, very strong liquidity, we wouldn't need to do that. You never say never, but that wouldn't be our plans at the moment, I think it's safe to say, given the position that we're in.

The question more out to look at the Fitch ratio and the various rating agency ratios, and it didn't look like there's a lot of headroom until you sort of grow the denominator. I was just trying to understand within -- the current situation, whether there is headroom.

In my presentation, and I think I'd say actually the leverage is lower than it's been in the last sort of 3.5 years Down now. I think post the GBP300 million, we're about 20 26 on the Moody's on the Fitch. And those reduced constantly as the balance sheet grows. So there would be -- we don't feel like we need to issue at this stage, but we definitely have headroom should we want to do that. But we see it reducing over time and us then choosing opportune moments to optimize shareholder returns rather than anything else driving what we would do around that.

Yes, a great slide in the pack which we'd encourage you all to read on Page 31, which shows how much the leverage has fallen over time and will continue to fall out to 2024, which is a very helpful guidance, I think. Next question is from Ming at Panmure.

Just two questions, please. And first is on the LGCs, and you've got a target of GBP14 billion third-party capital. Now that is double of where you are now. And how much of that -- could you just give color in terms of how do you expect to achieve that and how much of that would depend on for you to achieve your 8% to 10% per annum blended portfolio return. And my second question is on the solvency ratio. Your solvency ratio has been very strong on all the reported dates. But it's really -- for example, last year, it's really the volatility in between. I mean what is really sort of the minimum solvency ratio that will keep you comfortable and while keeping the regulator happy so that you can still pay out the dividend?

I'm certainly going to let Jeff answer the second question. On the first one, the 8% to 10% return is related to the money that we put in into these investments. And that's, as Andrew was saying, that's risen quickly over the last few years. It's GBP3.4 billion we want to make that GBP5 billion. That's us as a principal investor. As an agency, we've identified that we'll rapidly increase the fees and the assets from external. So that will bring us up to GBP20 billion or above. And Andrew, I guess has the same view that I am about the opportunities we have for doing that right now. So we've got 2 sources of profit, the revenue that we get from third parties but also the return on the assets that we invest as a principal ourselves. Jeff, do you want to take the second one?

I mean they like not having a maximum, we don't have a minimum either. I mean, it's a pretty strong message last year. We were in 1 70 and lower at times, we paid the dividend. We maintained that whilst modeling some very, very adverse credit scenarios and handing those to the regulator, the Board putting a lot of scrutiny on that. We know what our adverse scenarios look like, we've talked about that many times. We build up from that sort of minimum level to then give us the flexibility we require, and that moves around, depending on the sort of subjective view of how big stresses can be, where are you at any point in time. And so it moves to some extent, which is why we don't set the absolute ranges. But we've never been anywhere near the levels where we would be having concern in conversations with regulator or the Board around the solvency.

In general, the LGAS solvency ratio is about 20% lower than the group ratio. And so the regulators obviously see a different number from the number that you're seeing when they look at the regulated businesses. We have one last question, last but not least, from Dominic at Exane BNP. Dominic? And then followed by Steve at HSBC. Dominic O'Mahony: Three questions from me, if that's okay. Firstly, I'm really pleased to hear how you're thinking about Solvency II disclosures. I think they would be really useful as we go into IFRS 17. In the meantime, could you just give us some sense of what proportion of the operating surplus generation is management actions? I realize after a bit of a lost category, but anything you could say on what portion would be very helpful. Secondly, I think there was a comment about some of the reinsurance normally being done in H1 being deferred into H2. I imagine that means that the new business strain would have been higher in H1 than you would expect in a normal course of events. What would be the IFRS impact? Would there be like another positive or negative in H2 if you then update the reinsurance? And thirdly, just on lifetime mortgages, I think it's lifetime mortgages and retirement mortgages now. Volumes, I think, are up on last year. I think there's still down versus pre-pandemic times. Curious to hear your view on the outlook for that business line. Do you think that's going to recover in H2, in 2022 and beyond?

Jeff, take the first two questions, and I'll take the third.

In terms of management actions in OSG, it's relatively minimal amount. We always affected some things we know we're doing in terms of -- I don't know, we made warehouse on the liability, we used to do some reinsurance. We know we're going to do that. As you say, it's a very broad category. But it's relative …

Thank you for your patience, everyone. We have reconnected the speakers. Please resume…

Steve now from HSBC. Steve?

Three questions here. First one was on your third-party capital of GBP6.8 billion now, obviously growing strongly in the first half from GBP5.2 billion . I really want to know what sort of revenue margin you're receiving in terms of the fees from this third-party capital stream so we can sort of look at what it might be when it reaches the GBP14 billion mark in a few years' time as well. Secondly, you've previously given some information about the pipeline of U.K. PRT. I wonder if you can talk about L&G's pipeline. I know you've mentioned the GBP2 billion pretty much done in July. But if you can give some more guidance on the rest of the year, that would be very useful. And then finally for me, on the operating profit guidance. It is obviously based off of the GBP2 billion base level, but I'm wondering if you can be a bit clearer on the percentage range you're looking at. Are you sort of looking at 10% to 20%, 20% to 30%? Or we're not obviously talking about a 90% double-digit growth rate. But maybe I'm being a bit on the last question.

I'll take the first one and take the second one there, Jeff. On the first one, the fee range is between about 50 basis points to 150 basis points across the different asset classes. Clearly, the mix, we can't be certain as to what the mix is going to be going forward, but there's a healthy pricing range for those assets. Jeff?

Pipeline, yes, it's very strong. It's not dissimilar to the numbers we've given in the past It's of that order of up to GBP20 billion that we see that, obviously, a number of those deals, which we now see in, which is stronger than we probably thought at the start of the year. Some of those will naturally flow into next year as well. Given the GBP2 billion one in exclusives, we're in a strong place coming into the second half or post-holiday second half, if you like. We obviously executed very well in July. And so we are comfortable that we don't necessarily need to be hitting GBP8 billion to GBP10 billion with the good quality assets we've got to get to the metrics we anticipate for this year and hit the metrics we need. And so we can look at what's the best business out there, what's the most advantageous to us to build on top of that price. So there's plenty out there coming from a strong position. If the market, 20 to 25, we keep our market share, we get a good level of new business volume on the back of that. Profit, I don't think I'd be giving too much a way to say we don't particularly anticipate doing 20% to 30% profit growth overall. You never know. We're clearly talking, what we've done historically has always been 10% plus, 14% in the first half. Those are the sorts of numbers we talk about when we say double digit.

Okay. Thank you to everyone for participating in the call this morning. I think there's a great variety of questions, which is from Jeff and my point of view is real capital on our tools during the presentation. We look forward to seeing everyone hopefully in person at the LGC Capital Markets Day in October. We remain very confident about our capabilities to continue to deliver great returns for shareholders on a go-forward basis. And we're very happy with our portfolio of business. I think as we've alluded to, I think you should expect some further announcements on us bringing third-party capital into various parts of LGC, continuing to make very good progress in terms of executing LGIM's strategy around diversifying and internationalize, but also Jeff just talked about a very solid performance that we're going to see and continue to see from our PRT business. And Retirement Solutions business has been going from strength to strength, as indeed has LGI, particularly in the United States. So it's taken us a long time to get the portfolio into the shape it is today. And you can see the outstanding results that, that portfolio has driven, driven by tremendous people efforts right across our organization. So I look forward to seeing you in October.