PRT update

Question: Tell us about your background. 

Andrew Kail: Firstly, let me say that it’s a great privilege to introduce myself as the CEO of Legal & General Retirement Institutional. I’m hugely excited to be working in the pension risk transfer sector, which to my mind is one of the great exemplars of financial services at its very best.

So, I joined Legal & General last year as CEO of our retail retirement division and prior to that I had spent 30 years at PwC. At PwC I was the Head of Financial Services. I led our team of 6,000 people working across asset management, banking, insurance and real estate.

Question: What makes Legal & General well-placed to support pension scheme de-risking?

Andrew Kail: Well first and foremost we’re a dynamic, global business with a great heritage and a brand that people trust. We completed our first bulk annuity transaction back in 1987 and so we’re celebrating our 35^th anniversary this year. We’re the longest serving active provider in the UK PRT market and Legal & General’s roots date back all the way to 1836.

A phrase that I like to use is “One Legal & General.” We have what I believe is an unrivalled breadth of expertise across investment management, asset sourcing, transaction execution, as well as world class client and customer service teams who do an outstanding job of looking after clients and members.

We’re a large, multi-line insurer and asset manager but to put it very simply, we’re a joined-up solutions based business. I think when you add all of these ingredients together, it puts us in a pretty unique position in terms of an end-to-end support that we can offer to pension schemes on their de-risking journeys.

Speaking more broadly, I think our mission around inclusive capitalism really resonates and it’s something I’m incredibly proud to be part of. To give you a very recent example, we announced in February that we’re planning to invest £2.5 billion of defined benefit pension money over the next five years to create 7,000 new homes. By investing this in the real economy we can generate reliable returns to pay pensions while creating social and economic benefits. It’s huge exciting to lead a business which is going to change peoples’ lives for the better.

I will finish by underlining something fundamental. We are extremely proud of our track record delivering for clients. As a new CEO it is really satisfying for me to see the amount of repeat business we win. It’s a powerful reflection of the long-term relationships that we build here.

Question: What is your ambition for the business this year?

Andrew Kail: I’m very optimistic for the year ahead. The business has had a great start to 2022 and the pipeline looks healthy and is building nicely. I’m excited to have a joined a business with a great reputation for delivering momentous transactions and I certainly hope to see a few more of those this year.

But equally we’re a whole of market provider and it’s important to me that we continue to provide opportunities for small and medium size pension schemes. Of course, I want to build on the excellent 2021 we had when we completed £6.2 billion of new business. And it will certainly come as no surprise to you that we have a strong appetite to grow our business here in the UK and internationally.

I also want to touch briefly on a couple of wider ambitions, which will be important to our future success. One of our great success stories we’ve enjoyed over the past few years has been in developing innovative solutions such as our deferred premium structure and assured payment policy.

So, I’m a motor sport lover so you’ll have to excuse the analogies, but these solutions allow pension schemes to really jumpstart their de-risking journey early and put buy-in or buyout into the sat-nav. So, we want to remain at the forefront of innovation in our marketplace.

And my final point is around embracing technological enhancements. Of course, this is an extremely broad area, from asset origination to streamlining quotation processes. It’s about driving efficiencies in how we interact with the reinsurance market and helping clients to take advantage of market movements to capture pricing opportunities.

Indeed, it extends all the way down to the individual customer level. We’re really excited that we’re starting to roll out digital services to our customers this year. I would encourage you to read our client service report for more information about that and our comprehensive programme of customer engagement initiatives.

Question: What are your predictions for the market over the next five years?

Andrew Kail: I share the view of most industry commentators; I expect the market to go from strength to strength and the opportunity over the next five years and beyond is frankly phenomenal.

I think the growth the market has undergone is well understood and of course the million-dollar question is, “How can we build on this success as an industry and meet the increasing future demand?” From an Legal & General perspective, we’re very ambitious and the number one item on my list is thinking how we can continue to step up to this challenge.

Of course, we’re seeing insurers across the market looking to do the same thing. With the growing number of pension schemes approaching full funding, I would certainly expect that the record volume we saw in 2019 to be broken in the next few years.

So from a pension scheme perspective, I was talking to a really experienced member of our New Business Team the other day, who said, “I’d never heard a client say we got our buyout transaction over the line by accident.” So, it’s a message that we repeat time and time again, that it’s so crucial in a crowded and fiercely competitive market - that early engagement and thorough preparation are the real keys to success.