Bonus declaration overview.

AN OVERVIEW OF OUR PERFORMANCE IN 2013

On Thursday 20 February 2014, we announced bonus rates for all our with profits plans for 2013, after delivering a return of 9.1% on the assets we hold for with profits policyholders. This return is before we have taken off investment expenses, tax and any policy charges. Over the past 10 years, assets invested for customers in Legal & General’s With Profits Fund have delivered a return of 7.3% per annum before tax.

COMMENT FROM LEGAL & GENERAL’S MANAGING DIRECTOR WITH PROFITS

Carole Avis, Managing Director With Profits said: "Our with profits customers will benefit from another year of strong investment returns for 2013 of 9.1%. This clearly demonstrates the benefits of investing with a leading with profits provider operating active management of a balanced asset mix. By investing in a broad spread of assets we continue to deliver steady growth to our policyholders who also benefit from protection from market volatility through ‘smoothing’ of pay outs."

INVESTMENT MARKETS - A REVIEW OF 2013

Investment markets were relatively calm compared to the volatility experienced in 2012.  The global economy showed signs of recovery, with growth improving to expected long-term levels during the year. Central bank action played a major part through low interest rates and pumping money into the economy to help stimulate growth – known as Quantitative Easing.

Equity markets saw another year of strong returns, the US and Japanese markets were the best performing but European and UK equity markets also produced good results. The exception was emerging markets, where increased inflation and concerns over Chinese growth had a negative impact. 2013 was a positive year for commercial property, mainly supported by activity in Central London and the South East.

Core government bond markets such as the UK, the US and Germany performed poorly due to market belief that central banks would not keep interest rates low for much longer.  Despite this, corporate bonds produced a small positive return reflecting the expectation of strong company profits.

WITH PROFITS PERFORMANCE HISTORY

The graph below shows how the assets we hold for our with profits policies have performed for each of the last eight calendar years, 1 January to 31 December. The performance is a combination of the returns received from all the investments. These investment returns are before we’ve taken off investment expenses, tax and any policy charges. You can find more information about deductions and policy charges in your policy documentation.

Please note that the returns used to calculate bonuses for individual plans over the years will not be the same as those shown below. This may be for a number of reasons, one of which is to reflect the varying features and benefits of different with profits products.

Please note that all investment returns are rounded to the nearest percent.

Past performance is not a guide to future performance.

You can find out specific product details by clicking on the relevant link in the left hand navigation.

With Profits Investment Mix

With profits invests mainly in the following asset classes:

UK and overseas shares

With profits invests in shares because they are widely believed to provide the best long-term return. Over the short term, the value of a fund investing in shares can go up and down a lot. Share prices can change dramatically in response to the activities and financial performance of individual companies, as well as being influenced by general market and economic conditions.

Fixed interest securities

With profits invests in fixed interest securities that aim to provide a stable income over a fixed length of time. These are essentially a loan, usually to a company, or sometimes to a government. The return on a fund investing in fixed interest securities comes from the interest that the company or government pays on the loan, and the value of the securities. Fixed interest securities are less risky than shares but are likely to provide a lower return over the long term.

Commercial property

Property fits well in a balanced investment mix as its returns aren’t directly linked to the returns from shares. Investment includes holdings in offices, retail space and industrial property, which can offer good prospects for long-term returns. Commercial property can provide growth through rises in the value of the property and through the steady income stream that can be received from rents.

We invest in a mix of assets, which can help to reduce the impact of poor performance by any one asset type. As the assets react differently to economic factors, when one is not performing well, another may be performing better.

The pie chart below shows the mix of assets for our with profits policies as at 31 December 2013.

 

Bonus statement mailing dates

We send all our with profits customers an annual bonus statement showing how their plan has performed over the previous year. Please use the following dates as a guide to when statements will be mailed in 2014:

  • With profits annuities - March to April 2014
  • With profits bonds - February to May 2014
  • With profits endowments and savings plans - May 2014
  • With profits pensions - June to July 2014
Important information
It's worth remembering that the value of your investment can fall as well as rise and you could get back less than you invested.

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With profits guides

Here you'll find easy to understand factsheets on 'smoothing', market value reductions and bonus declarations.

Frequently asked questions about the With Profits Fund

Take a look at the answers to the most commonly asked questions about the With Profits Fund.

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